#174: Building Wealth Through Fixed Income Funds
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Welcome to another episode of the Richer Geek Podcast! Today, we're joined by Nic DeAngelo, President of Saint Investment Group. Nic is a wealth of experience in real estate investing, having managed a portfolio exceeding $206 million. His insights into fixed income funds and triple net leases are invaluable for investors seeking stable and flexible investment options.
Nic also shares strategies for navigating economic uncertainty and leveraging AI in investment decisions. This cutting-edge knowledge will help you enhance your investment portfolio.
In this episode, we're discussing...
Institutional-Grade Real Estate Insights: Nic shares his experience managing over $200 million in assets, offering listeners valuable insights into institutional-grade real estate investments.
Understanding Fixed Income Funds: Discover the benefits of fixed income funds, especially for high earners and those looking for more stable and flexible investment options.
The Power of Triple Net Leases: Learn about the advantages of triple net leases for landlords and investors, including the structure and benefits of having high-credit tenants.
Navigating Economic Uncertainty: Nic discusses the impact of inflation, interest rates, and political factors on real estate investing, providing strategies to mitigate risks and leverage opportunities.
Utilizing AI in Investment Strategies: Explore how AI is transforming investment strategies, from underwriting to market predictions, and how it can enhance decision-making processes.
Resources from Nic
LinkedIn | Instagram | Saint Investment Group
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Hey everybody. Welcome back to another episode of The Richer Geek Podcast. Today we have Nic DeAngelo. He's president of Saint Investment Group. This guy, I don't know, he's pretty much done at all. We're talking 24 projects, and 500+ loans, 20+ state portfolios. Leads that veteran team that acquires institutional grade real estate assets. And now we're going to also talk about some of the types of things about fixed income funds and some of the things you may not realize that you can do. How are you doing, Nic?
Nic DeAngelo
Mike, I'm doing great, great to catch up with you here. We were just figuring out that we've known each other for a minute and spoke at some of the same events. So always great to catch up with you, man.
Mike Stohler
Yeah, our dear friend, Hunter Thompson. And I mean, he's just kicking it too. And it was great to meet you at the conference where we both spoke. It's been a couple of years ago, but just like where do we know these guys? You know, where do I know Nic from? It's a small circle. And it's a great circle to be in.
Nic DeAngelo
Absolutely.
Mike Stohler
For our listeners that don't know, Nic, give us a little background, where you came from, and how you got started in creating Saint Investment?
Speaker 1
Yeah, I mean, my eyes were locked up in real estate from an early age. So I was blessed to kind of see some people, some friends and family be really successful in real estate. I'm a lifelong entrepreneur with the idea that I always wanted to be a professional investor. I thought that was the only way to do that, because early on, the industry wasn't as evolved and sophisticated like it is today, it wasn't as easy to invest in. There's always options, LPs GPS, great syndicators, great operators, it wasn't like that back then. So you kind of had to have a lot of your own money. It was kind of not as transparent. So I went heavily into entrepreneurship. I've been able to, with an amazing team, build and sell some great companies along the way, and be investing in real estate all the while. My career started in the real estate side very early on with a couple family offices. So I'm classically trained with just absolute behemoths, lions, you know, giants of what they do. And I worked very closely with the patriarchs of those. And I was blessed to make early friends with amazing mentors and learn as much and try to add as much value as I could. So fast forward to today, we, Saint just crossed 200 million, 206 million in assets under management, like you said, we're just over 500 loans in our portfolio. And we're focused on fixed income today. And that really was a lot of our investors are a lot older generations, very successful. Many are successful entrepreneurs in their own right. And they were just kind of hammering us going, you know, the syndications are great. But we're transitioning in a life stage that is looking for something more stable and a little more flexible. So we leaned all the way in to the fixed income side and saw a big opportunity to deliver there. We offer, you know, some pretty amazing high returns and a lot of flexibility. And we focus on rock solid kind of 2030 year plans, the mortgage industry, that's kind of where we're at today, a little start to finish.
Mike Stohler
For those people. It's like, okay, fixed income, yes, you know, I make a salary that's fixed income, someone that's on commission, it was I wish I had fixed income or not. Give us a little bit. What do you mean, as far as what you do? How do you do it? What do you mean by fixed income?
Nic DeAngelo
All of those are a degree of fixing of income. On that side, what we focus on is an investment vehicle for high earners that balances out whatever else they're doing. So on my side, being an entrepreneur, there were times where if you look at a quarter, or you look at a year, we're killing it, right, the company's just, you know, the growth is ridiculous. I mean, it's, you know, stratospheric growth, everybody's doing well, all companies' good culture is good. But we have lumpy months, right? So one month might be 3x what the next month is, one might, one might be very green, and the next month might be slightly red. Those are scary things, but those are growth problems that we experienced. And I was like, I'm losing my mind on some of this. Because of cash projections, a lot of things got complex. So what I leaned into was basically all my, you know, all what I personally took call them when I was making quite a bit and on the entrepreneurial side, I was putting it in real estate, with the goal, that my cash flow from my investments would, instead of having really bumpy months, that it would hedge that and it would just start to be a little bit more smooth. That's our goal with the Income Fund and we pay a set return, there's nothing more stabilized than a literal fixed income return. We pay on our high end 12% For our highest share class. And that's, you know, a lockup period of only 36 months. So our goal was to literally deliver for people that were either moving towards the retirement side and they said, Look, I can't be tied up for too long. But I do want a higher return in the market than I'm seeing other places today with less risk, or, on the entrepreneurial side, which is really where my heart is like, my background, it was to help people that have high incomes, but might be experiencing lumpiness or might want to hedge their bets of wherever they're at, in their career, to have that other source of income at a high, you know, return that they can trust. So that's where we 're the background of it, and a little bit about some of the details kind of behind that.
Mike Stohler
And I know in the past, you've been into it, you know, I don't think we talked a lot. But some of these phrases that in our podcasts in the past you've been involved in triple net, to and some syndication, some industrial, what is a triple net?
Nic DeAngelo
Sure, a triple net lease is a lease structure that is remarkably advantageous for the landlord, or the investors really both. And what that does is it creates an expense profile, taxes, insurance and maintenance, that are built into the fees that the tenant incurs on a monthly basis. So they have their base rent on one side. And then they pay their triple nets or their cams. Both are this similar terms, often overlapping, that cover their taxes, insurance and maintenance for that same period. So what creates the goal at the end of that is that the landlord receives essentially a net income.
Nic DeAngelo
Triple Net leases are most commonly associated with really high credit tenants. So you have this dual amazing benefit of having, you know, we have multinational companies as tenants for some of our previous syndications and their triple net leases. So if they pay, you know, $100,000 a month, and then they have, you know, I don't know, $20,000 a month in triple nets, then what happens is, the landlord receives $100,000 a month, because the tenant has incurred and paid for those expenses of the building. And for the operations there. It is an extremely landlord and investor friendly structure. And it's something that really benefits the tenants in a big way as well, because the landlord still manages things like the maintenance still manages big items, and manages the backend things, but the expenses are shared differently, which allows the landlord to operate the business, I mean, much more efficiently.
Mike Stohler
Absolutely. And you know, ladies and gentlemen, some of the examples, a lot of the big corporations, you know, perhaps like a Walmart or Home Depot or Walgreens, what they do is they'll build something on land, but then they'll sell the land. Because then they get money back in order to build another one, then what they do is they sell that land and sell this asset to investors.
And then all you do is just take care of the property. And if someone if the thing is, is if they leave, you just rerent it to someone else, lease it for you know, 5, 10, 15 year contracts or more. And you have to know what you're doing everybody just don't jump in by Walgreens.
Or something like that. Go with the professionals, learn how they do it, get a mentor, and then take it from there. Nic, so everyone's concerned about, it's an election year, since 2020, it's just been up and down crazy. You know, we had COVID Then we had the great resignation. And then we have now the interest rates and GDPs and just printing of money, Wall Street, you know, China sneezes, it goes down, and then it goes back up, kind of bombed some of the fears. Talk a little bit about the economy, some strategies, and why it's okay to be scared and be cautious, but it's still okay to invest right now.
Nic DeAngelo
I love that mentality. And I think you hit the nail on the head, Mike is, I mean, I'm biased, I started the best moves I've ever made in a real estate bar none. Unquestionably, we're at some of the worst, quote unquote, worst timing that I've ever, you know, heard about that great financial crisis, right? The GFC. I mean, we were buying 10 million a week of distressed assets.
Nic DeAngelo
And those deals came out fantastic. So I am wildly optimistic about the US overall over a long period of time, and in downturns in the market, this is the best time to be buying now. Absolutely. So all that to be sent. I'd say the good news is one I think it's a huge opportunity right now to you know, you mentioned some things that tapped on like political concerns and that the world is an interesting place right now. But the greatest thing about we could all be very frustrated about things like Congress gridlock and problems and right versus left and But what's very interesting as the American system can bend very much without breaking, and so I'm very proud of our country for that, and that as annoying as our system could be with enough efficiencies at times that we do over the long term have stability that most other countries don't experience.
Nic DeAngelo
What I am concerned about, and what I do see as longer term concerning trends. I mean, I hate to ring this bell, but it's inflation. And I've been saying this for I guess, about two years now. And I'm like, I think we're talking about decades here, not months. And most even friends in the industry are like, no, no, no, this is a supply chain issue, this is going to go away, this is going to resolve. And I'm like, that's not what we're seeing. Those aren't the charts, we're seeing those aren't the drivers sure supply chain 1824 months of re establishing a stable supply chain after COVID. Okay, but we're outside of that 2022, middle of 2022, we're looking at what was 9.1 9.2% CPI, for inflation. That's crazy. Now, you know, we've seen a huge reduction in rate, which is really good. But we've seen some surprising trends. We've landed right around that low threes mark, plus or minus depending on the metric you're looking at. But the last couple of months have been going up. And not only have the last couple of months been going up, we're now seeing the PPI, which is often overlooked—the Producer Price Index—going up, which is a little more concerning as it is often a precursor to CPI, which is inflation. So the crystal ball here is leaning a little more towards those trends that we're all worried about popping up. And it looks like those are popping up. You see it especially with the big names like Rick Rieder, Bill Ackman, and Howard Marks. I mean, three huge names. Those gentlemen are openly saying we have 10 to 20 years of inflation ahead. They're betting on interest rates built into their equations of 5 to 6% for two decades. So, you know, that's kind of what we're seeing in line, which isn't my favorite thing as a real estate investor to be calculated in the fives and the sixes for rates. But I think there's opportunities in that for investors. That's why I started there saying, when the market readjusts in the world doing this right now, I think there's opportunities for investors in there, even with some very shaky inflation headwinds that we see. How are you leveraging? You know, if you're gonna see five to 6%? You're looking at some of the interest rates, do you just get a bigger LTV? Do you sit there and say, You know what, I'm just going to hedge it instead of playing this at 20. I'm going to raise 40%, I'm going to do more to kind of mitigate that type of payment. That's a great question. On the industrial side, we've paused indications candidly, because industrials that the timing is very different for industrial, I know you guys crush hotels, right? You know, you look at hotels, you look at multifamily, even some self-storage, there's a huge benefit that those industries have and those market segments have, where you can ride the wave of market trends up and down. And you can kind of embed into that. So the benefit of triple net leases, or what we talked about, the downside of any of those is that you have one tenant, yep, right one. So if you miss time that market cycle, with a single tenant asset that say 150,000 square feet, which is very expensive, lots of money every month, you actually could screw up a five year cycle, seven year cycle, 10 year cycle. So that's something that we are seeing in the industrial side, we have pause indications there and focus more on the mortgage side, because the mortgage industry that supports a lot of, you know, huge amounts of the US real estate economy is so rock solid, and it does have a longer term stability. So what we're doing on the mortgage side to counteract that, is we're just being more aggressive with purchasing, we're saying, Look, we need bigger discounts on the mortgages that we buy, the pools that we buy, have mortgages to offset some of this longer term, 1020 year risk. I mean, we're selling the partners that we buy it from the financial institutions, the banks, they don't always appreciate that a seller is taking a little discount, right. But they understand the conversation that's being had. It's not as offensive as because we're really transparent on our numbers on the buy side, that's really what we're looking at is really making sure that we're buying the right mortgages, we're filling the portfolio with smart buys that we're, you know, not over our skis on too much ask too many assets and not enough cash or vice versa. It's just really building on the expectation of, you know, the higher cost of capital into that.
Mike Stohler
And yeah, and it's something that we can do as experienced investors, and a lot of people if you're new to this, and you know, you don't know really about how you're buying into its, you know, we can build it into the structure of when we look at and wait when we do our due diligence, we add those numbers in and sometimes you'd like for in the hotel industry, we're starting to see some depressed assets, because they just were mismanaged.
During COVID, they've been just kind of writing and burning and burning and burning the fuel. And we're starting to see that. But now we're looking at how can we build it up? And what can we build in? And now I have to sit there and say, okay, like you said, six 7% interest rates. And I have to build that into my performer. And it's just something that you learn. We're all saying that two and 3%, we wouldn't be learning anything. We are just be vacationing in Bali or something like that.
So Nic, are you using AI at all? Are you using? You know, that's kind of like the big thing as far as using AI to help you invest in you know, the power of that?
Nic DeAngelo
Yeah. So I really like Ray Dalio in many, many ways, especially his earlier books which were fantastic. There's so much to learn from Ray. And one of the things that early Ray Dalio did that was so mind blowing was incorporate AI before anyone else was doing that. Right. And more recently, I disagree with Ray Dalio more and more on a lot of his final points that he makes. But that first 90% of what he's done on many of these huge studies, huge books, huge research projects that he's done have been so, so enlightening. So we've actually been tapping it into AI in interesting ways for the last handful of years, especially as it relates to underwriting and checking assumptions. It's trying to get advanced kinds of predictions, and marking that versus what are human made predictions and more, I don't know what, you know, traditional methods, and checking both against each other, and then back checking those what actually happened in the market, you know, six months later. So that's been very interesting. I wish there was a program that really, really, really was locking at an extremely high level. And I can say, this is the clear winner. But we're testing that more and more and more. And we're also testing how it looks at the end of the day when you are overlapping AIs with AIs, and comparing AI projections with each other. So those are two things we're just seeing in the early stages of that. I'm also liking the research component of AI right now, what was I playing with earlier? I'll try and just give a shout out to non-affiliates. I think it's called Consensus. And since AI, it's basically pulling like high level sources together to help with information. So you know, you or I might go into a very high investment situation, we'll look at things like the Bloomberg terminal, which is like I don't know, huge, huge, hugely expensive, inaccessible to the average investor, it's 1000s and 1000s a month, but consensus offers the everyday investor, really, really valuable resources. And again, I might be getting the tool wrong, because I've been playing with some this week. But things like the higher level scraping of information, the higher level compiling of information, chat, GPT and open AI are great. But the more niche tools, you know, going out the top sources, and then more of the predictions and projections, that's the top ways we're finding for AI right now. And then a whole bunch of little fun stuff. You know?
Mike Stohler
Yeah, you know, I found out about ChatGPT, and some of the more common ones. And ladies, gentlemen, if you do this in writing your blogs and things like that, be very careful, because I found out that I can write the same article using three different AIs, and the biases.
Among the three, you know, one, I can tell it's like, okay, but I know where this has come from, because it'll say landlords suck, and you can do this and just don't pay your rent, and you can get away with murder and things like that. And then the other one is different. Like, you really have to still fact check. AI is still new, everyone. Don't get yourself in trouble, back check and make sure it's good for your state wherever you live in and the type of government you have within the state. But I was just doing that the other day. And I'm like going, Wow, this is really biased towards the tenant. You know, I just asked him a very simple question. It's like not in Arizona. Yeah. So you have to switch to California.
Nic DeAngelo
Maybe that's California..
Mike Stohler
It was a California AI, had to guess what it was like, just don't pay your rent for six months. I can't do anything about it. I'm like, get down. How about five days?
Nic DeAngelo
Look what's happened in LA County on their rent collections. I'd caution people for that but...
Mike Stohler
That's right. So before we wrap up, let's get into Saint Investment. Everybody, it's Nic DeAngelo, saintinvestment.com. When people go there, what do they click on? What are some of the resources that tell us a little bit about the website?
Nic DeAngelo
Saint is really an investment project. For us. It's an investment platform. The goal was saint. And the where the name came from, is that you know I started a nonprofit many years ago and I was so head deep and just know that was down in the entrepreneur side that I wasn't able to really service the nonprofit and do the things that I want to do with it, and the nonprofit, the things that were most important to me, the number one was entrepreneurial education and investing education.
Those were the number one things. So I donated time at school. I tried to spend a lot of time but I was just limited because we're good at 100 hour weeks, right? And so really crazy scheduling. So what we did at Saint. I just like, we're already doing the research, we're already doing all the work, right. So the goal was Saint at our resources section. So saintinvestment.com/resources, is to give it all away for free. It's to literally say, we're doing this economic research, we're doing this research on new business trends and new strategies. Here's a whole section of our findings. So we hold monthly webinars where we dive in and talk about all kinds of things, you know, the coordinators transfer of wealth of all time, $7 trillion, being passed around the debt passing down from the baby boomers to future generations, huge trends that we're seeing in the real estate sectors. And the goal is just to give that away, because the more educated investors are, the more they understand the benefits of real estate, the strategies in the economy, how to navigate successfully, because you know, I love the country, I want people to be successful, especially in kind of the wonky times rent. So, it's all free, I don't even think there's a login for any of this stuff, you can go and watch the videos, you know, do whatever. And if you guys have questions, or if you know, the audience has questions, or they're watching, they can drop questions, and we'll answer them. So we try to just be as transparent as possible.
Mike Stohler
And that's fantastic. You know, so many people are gonna, you know, why do you do this for free, you can make more money, and this or that, and I just, I really thank you and applaud you for allowing people to learn, because that makes them better investors and also better LPs, because now they know, the question to ask the GPS, to better be informed so that they don't get taken advantage of, you know, so thank you very much for that. Yeah. How else can people find you? LinkedIn?
Nic DeAngelo
Yeah, add me on LinkedIn. You know, hit me up on socials, on Instagram, we post a lot of cool stuff I respond to a lot. Still, the best way is going to be the site website. The resources section has, like, you know, it's just really, that's where all the gold is. But I'm on LinkedIn, I'm on Instagram, and I'm pretty active. So if anyone wants to connect, I'm around and can always chat.
Mike Stohler
Fantastic. Nic DeAngelo, saintinvestment.com. Before we leave, I've got to plug our sponsor. That's always important. Today's episode is brought to you by REI Words, your real estate based website. And you want your DR rating (Domain Rating) to go up, you're trying to get social media, you're trying to get blogs, you're trying to get known. Contact REI words. They are your go-to SEO agency for increasing traffic to your real estate website. Check them out at reiwords.com.
Nic, it's been fantastic having you on the richer geek podcast. Have a great night.
Nic DeAngelo
Much appreciated, always great catching up with you, man.
Mike Stohler
Thank you, sir.
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ABOUT NIC DEANGELO
Nic DeAngelo, known as the "Fixed Income GOAT" in real estate, leads Saint Investment Group with a $206M+ portfolio spanning 20+ states. As a seasoned investor and economic strategist, Nic's data-driven insights and engaging speaking style have made him a sought-after guest on top podcasts and conferences. His belief in real estate as the cure for Wall Street's shortcomings drives his mission to simplify complex economic theories and inspire audiences nationwide.