30-year-old Real Estate Billionaire

Read this article last week and was impressed by this guy's story.

https://www.forbes.com/sites/nathanvardi/2017/07/1...
Something that struck me: I just read through the thread about how tough it is to get funding no matter who you are and how much experience you have-- so it's crazy to think that Paul, a 22-year-old college dropout, convinced the Austin Police Retirement System to invest 25 million in '09. Even before then, to convince people to put money into deals with him when he had just dropped out as a 19/20-year-old kid is pretty wild to me. I guess this dude must be one hell of a salesman, on top of being a good investor.

Just wanted to share this, and see what you guys think. Especially about how this guy got started.

Comments (47)

Jul 25, 2017

wow.. thats pretty awesome

Jul 25, 2017

Oh man... I love when this guy comes up. Somehow the law suits and people not getting their money never come up. Ego the size of his home state, and top level execs bailing on a regular basis. Ask the locals how they feel about him, and you'll hear people singing a very different tune.

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Jul 25, 2017

I'm actually quite curious to hear both sides, any articles portraying another side? Can you elaborate more?

Jul 25, 2017

Read some posts and articles. Former employees seem to say it's a terrible place to work with low comp, shit culture, long hours, shady business. apparently insiders say AUM is inflated, nothing close to a billion

Jul 26, 2017

Granted these are just allegations but the plaintiff seems sophisticated so I'm sure there has to be some truth to his claims. Also the part about the restaurant seems to kind of messed up as well. I guess he likes to run his business like a gas station:

http://www.mystatesman.com/business/investor-files...
It appears this group was discussed last year: https://www.wallstreetoasis.com/forums/world-class...
The reviews on Glass Door are hilarious. You can clearly tell they are trying to cover up their shit show with fake positive reviews.

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Jul 25, 2017

Something stinks about this guy...
"The first property Paul acquired, in 2007, was a 13-unit apartment building in south Austin that he bought for $1.1 million"
How'd he get $1.1M tutoring? Even at 70% LTV, he still needed $400k. Who has $400k lying around at 20 years old?

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Best Response
Jul 26, 2017

My interpretation of the article is that his capital first came from his Dad's fellow OBGYN colleagues. What the guy has done is really impressive, but don't be fooled. He's a rich kid who started with his rich dad and his friends. The "rags to riches" story in America so few and far between it's practically nonexistent. Where I see a success story of some guy who made a shit load of money, 99.9% of time they came from money. Nothing wrong with that by the way, but to put things into context it's a lot easier to multiply capital when you have easy access to it.

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Jul 26, 2017

He got "a small loan of a million dollars"

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Jul 25, 2017

These guys are constantly posting jobs online. Assuming turnover is a big part of world class capital culture.

Jul 25, 2017

My understanding is that the old adage of "If it's too good to be true..." applied here in spades.

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Jul 25, 2017

Thanks for sharing- what a striking story! Yeah the most crazy part is how the fuck he raised so much money at a young age to do these deals. I think half the battle of becoming rich off investing acumen is raising and wielding capital - same could be applied to finance where for example, pre-2008 banks gave highly prop traders a lot of capital to make bets with. Nowadays, it's so hard to wield large amounts of capital in lucrative profit sharing schemes especially when you are young and Nate Paul did this after 2008. It's hard to believe.

If our goal is the become mad rich off investing, it's so crucial to think about ease of raising capital in profit-sharing partnerships, so I wonder: in what industry or asset class is it easiest to raise large amounts of capital for investing? I mean if you can raise $10 million in real estate partnerships and return 10 percent, i'd choose that over raising only $1 million for a traditional diversified stock portfolio returning 20 percent. For any hedge fund or bank to just give you a million to invest is freely in the capital markets is hard for some guy in his 20s, almost unheard of these days. You really have to be a budding, hustling guy to raise money from private investors on your own.

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Jul 25, 2017

Wait, I thought World Class Capital was a shit firm...

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Jul 25, 2017

Yea i just read some posts and articles. Seeems like the guy is inflating his AUM

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Jul 25, 2017

There are so many young guys in RE striking it rich like Tim Gurner, Paul Blackburne, Johnathan Hallinan (guys in their 30s worth over $100m) from Australia. You sure don't see guys in their 30s making this much in finance

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Jul 25, 2017

"Paul's World Class Holdings"

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Jul 25, 2017

Name reminds me of Prestige Worldwide.

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Jul 25, 2017

Definitely gets a D+ for the name.
Out of college I interviewed at a HF called, "Prime Opportunities"

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Jul 25, 2017

Just because AUM is claimed to be over $1bn doesn't make him anywhere close to a billionaire. Think about what % of the equity he has in these deals. I'd guess less than 5%. You aren't raising huge sums as a young guy and keeping a big part of it unless you have a mega rich family member (which he may).

I've seen these things negotiated and it can really go either way: there's a chance he has a very small amount of equity share in these deals and gets lots of management fees and there's also some non-zero probability that he has a rich uncle that gave him a sweetheart deal when he started.

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Jul 25, 2017

in the forbes article, it said for his partnerships he "kept upwards of 50% of profits". Wtf, how realistic is that?

Jul 25, 2017

It's extremely unrealistic unless he was hitting massive returns and even then it would likely be only a portion of the overall promote.

Look, when you're younger and getting big capital commitments the investors tend to have you by the balls. There's no reason for them not to. What's your argument? "But I've been buying buildings for 5-7 years!" The big LPs have been doing it for as long as he's been alive. He's probably just a bullshit artist. But if he's not, then great for him. Some random 30 year old is worth 50-100mil on paper! He's not exactly rivaling Zucks.

Screw Forbes and their terrible website.

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Jul 25, 2017

Almost wonder if it's a paid article listening to all the complaints. Like he paid Forbes to write a piece for imagine control purposes.

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Jul 25, 2017

The 50% profit is after an 8%-10% preferred return. The structure is stated later in the article which is fairly common in the HNW / Syndication world. I was in this space prior to my current job within REPE. Insane what we were able to charge to our investors and the waterfall splits. 3% equity fee within the project budget and a 50 / 50 split after an 8% preferred return.

Jul 25, 2017

Damn

Jul 25, 2017

You're correct in that it's very realistic in the syndication world. However, it's not nearly as realistic in the institutional capital world. He's likely just playing up his biggest success stories.

Jul 25, 2017

I would assume he used the HNW syndication model because later in the article it uses Harvey Bookstein example to state the structure and how he uses HNW individuals.

FORBES probably doesn't understand the difference models between institutional capital and HNW money. Therefore, lumped then all together to make this article look more interesting. But props to him at age 30 to do half the things he did whether or not it will work only time will tell.

Aug 1, 2017

@NuestadtMI" Would there be some sort of 90/10 Equity Contribution between the firm you worked for and the HNW Investors? Or was it 100% HNW Money, of which your firm took a 3% equity fee and 50% of profits beyond the 8% pref return?

Jul 26, 2017

Well shit my bad for posting about it, just seemed like a cool story from a reputable source. Thanks for the color everybody!

And with regards to the billionaire forum title, Forbes put him at a net worth of 800MM in the article and I rounded up.

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Jul 25, 2017

You're good dude; you're neither the first nor last person to be impressed with the guy.

The dude is a living, breathing PSA to always operate with the highest integrity and to protect your reputation viciously.

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Jul 25, 2017

No animosity toward you. It's a cool story in concept - there are just so many questions it doesn't answer, plus the article is dogshit. On top of everything already said:

  1. He's not even a billionaire. I'm closer to being worth $150,000,000 than he is to being a billionaire. The title is pure clickbait, as if him being worth $800,000,000, if he is, wouldn't be impressive enough.
  2. "If commercial real estate prices stay strong, he could be a billionaire soon." is a sentence with minimal meaning. "If" and "could be" mean it's pure conjecture. What does "stay strong" mean? What's his path to the remaining $200,000,000?
  3. "In order to buy, he hit up his obstetrician father's buddies, charmed high-net-worth individuals, and then landed pension and insurance money." This sentence shows that the author doesn't really know what he's talking about. Thre is an absolutely massive difference between raising money from your "father's buddies" and getting pension fund and insurance (lifeco?) money. The two are not even on the same level.
  4. "He raised funds in dozens of partnerships to do deals and kept upwards of 50% of the profits." "Profits" here is way too vague. He might get to keep 50% of the free cash flow after hitting certain return thresholds as it goes through the waterfall. He might refi, pay down LP equity, and then sell, meaning overall he gets 50% of the money. "Profits" just, again, doesn't mean anything, and is a clear reflection on the writer's industry knowledge.
  5. "With the $25 million he started raising from the Austin Police Retirement System in 2009, he produced an annual (and now fully realized) internal rate of return of 24.8%, net of fees." First of all, 2009 was a very unique year in the industry. Second, is this a project IRR? An IRR for his investors? His GP IRR?
  6. "Joseph Liemandt, founder and CEO of Austin's Trilogy Software, adds, "His general business acumen is unbelievable, and he is always talking about the long term."" Sounds like the kid is missing out on some short-term profits if he's always thinking long-term.
  7. "Driving around his hometown in a Bentley, Paul proudly points out key development properties he owns in the heart of Austin." Lol
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Jul 26, 2017

Totally agree with you..... Each point covered. Thats what was on my mind, but felt too lazy to type......

"Never Drive Faster Than Your Guardian Angel Can Fly"

Jul 25, 2017

Naw man you started a good discussion. Props

Jul 25, 2017

inbefore Nate joins WSO like that Tobin lady did in the IB forum.

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Jul 25, 2017

Jesus I thought I would be the only one to notice something like that. I really want to see it happen.

Jul 26, 2017

I think he already did: https://www.wallstreetoasis.com/forums/world-class...
I think he created the handle @KH415 just to respond to the discussion above. lol

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Jul 25, 2017

@My Name is Jeff @Sil

You two could get this guy fired up too.

Jul 25, 2017

[Hangman's door opens, sound of my neck breaking]

Jul 26, 2017

Somebody please forward this thread to Nathan Vardi so that he may educate himself.

I stopped reading Forbes in college because of how clickbaity the titles are.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

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Jul 26, 2017

I am still trying to figure out what type of track record/AUM he had when that Austin Pension Fund invested in him. Anybody know about this?

Jul 26, 2017

Huh, and here I was thinking that @heister had somehow made it reaaaaally big

Jul 26, 2017

Hey, the difference between me and this guy is I will actually get there.

Follow the shit your fellow monkeys say @shitWSOsays

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Jul 26, 2017

Had a close friend who worked at World Class Capital for a few months and he could attest to all of the above. They asked him to start his first day/training on a Sunday, 2 hours after he arrived home from a 20+ hour travel day. He also mentioned that nobody could leave the office before Nate. He left shortly after he started.

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Jul 26, 2017

Interesting story, thanks for sharing

Jul 26, 2017

It was clearly mentioned by him that funding came through family & family friends....... But have reservations about his valuations....

"Never Drive Faster Than Your Guardian Angel Can Fly"

Jul 26, 2017
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Aug 5, 2017
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