Gerald Lucas

“Life is a blank canvas and you hold the paintbrush.” Gerald Lucas

When I was four years old I noticed a price tag inside a children’s book I was reading. I’m not sure how the price was explained to me but my four year old mind understood “book = money”, so I got a stack of white paper, a stapler, a magic marker and a box of crayola crayons and I painstakingly copied the entire book--page by page (words and pictures) and then went door to door trying to sell “my book” to my neighbors. This was my first failed business venture. A few years later, I started a landscaping business that I ran for 7 years until I graduated from high school. I can remember coming home exhausted, dehydrated and covered in grass clippings after a long day working in the hot sun. I used to put the cash that I earned into an empty fish bowl until one of my parents could take me to the bank to deposit the money into a savings account.

I’ve loved music for as long as I can remember. I asked to play the violin when I was a kid and the summer before high school started, I auditioned to study under Norman S. Goldblatt, a local legend violinist and conductor who went to Julliard and had been a pilot in WWII. Next to my father and uncle, Mr. Goldblatt was the greatest man I’d ever known. Mr. Goldblatt was a real renaissance man--he didn’t just teach classical music and the violin, he knew and shared insights about the history and language behind the music we studied. He taught me how to prepare and how to practice and he required all his students to tape record every lesson with him. He used to say, “you notice little things listening to a recording that you’ll miss trying to hear while you’re playing.” When I struggled to play a technically difficult piece of music at full speed, Mr. Goldblatt said, “you have to slow it down before you can speed it up.” I struggled, but in my last year studying with Mr. Goldblatt, I performed at Carnegie Hall.

I wasn't sure what I wanted to do when I finished high school. I didn't envision myself earning a living as a musician, but I did see a Newsweek article that ranked professions. The #1 ranked profession in that particular Newsweek issue was "actuary". If you don't know what an actuary is you are not alone--actuaries analyze statistics to calculate insurance premiums--fun stuff! Actuaries make accountants seem like party animals. I'm embarrassed to admit that I chose my career path based on a random magazine article I read. I soon discovered after working at an insurance company that being an actuary was boring as hell and clearly not for me. My instincts told me to tough it out so I wouldn't waste the hard work I'd already put in. After thinking about it, I realized that the time and effort I'd already spent studying actuarial science was a sunk cost that I was never going to get back but continuing to work in a job that I didn't like was a big mistake. I found work in information technology and soon applied to graduate school.

When I was accepted into the graduate business program at MIT, I decided to focus my energy again on entrepreneurship. I took on a leadership role at a local Internet start-up company that assembled, sold and leased Internet kiosks during the first dot com boom--TV interviews, glossy write-ups in business magazines--it was all very exciting. At one narrow point in time, our company had as many Internet kiosks as any of our US competitors. While most of my classmates were interviewing for traditional jobs in banking and management consulting, I was all-in on our start-up. I tried to make ends meet on the side writing business plans for other startup companies-- I even wrote one business plan that was very similar to what ultimately became facebook (I’ve since learned that ideas are a dime a dozen-execution is what’s crucial). As the payments on my two big school loans were about to begin, my Internet start-up fantasy exploded in my face and I had no job prospects. My apartment lease was about to expire, so I was about to be broke, jobless and homeless. Desperate, I went to a local temp agency and did data entry for 2 weeks to try to scrape together money to move and begin the next chapter. I looked for work in the Internet space ultimately working for a few years at DoubleClick which is now part of Google.

I began my career as a real estate investor completely by accident, with a little help from my Mom. My mother, who is an accountant, had been telling me to buy a home to take advantage of tax deductions property owners enjoy. I thought it was a good idea but kept procrastinating and putting it off. Lucky for me, Mom persisted, visited me on her week off from work and found a local real estate agent to help find property. I had no savings, but made an offer to buy a small tenant-occupied condo anyway. When my offer was accepted, I had to use a credit card cash advance to come up with the down payment and closing costs. While I waited for my tenant’s lease to expire so I could move in, I noticed that similar apartments in the neighborhood were renting for significantly more money per month than my tenant had been paying. I realized that instead of moving in, if I kept the tenant and became a landlord and increased my tenant’s rent, his new monthly rental payment would cover my new mortgage and condo fees, plus leave me with some extra money at the end of each month. At that moment, a light bulb went off in my head and real estate became my passion. I immediately tried to learn everything I could by reading, studying and seeking the advice of experienced real estate investors in my area. I began building a small portfolio of properties by partnering with people who had money to invest--I did all the work, used their capital and we split the profits.

I made one very expensive mistake after one of my most profitable years as a real estate investor. After my windfall year, I was brimming with overconfidence and somehow convinced myself that my past success and experience would allow me to handle a huge investment in a real estate market I wasn’t familiar with hundreds of miles away. When my business partner and I purchased the property, we hired a local property management company, immediately began making surprise visits to our new apartment complex, and instituted an on-time rental-payment bonus system to encourage our tenants to pay their rent on time.

Despite all our efforts and the years of combined property management experience we both brought to the venture, the apartment complex we bought was a bad investment. Unfortunately for us, bad investments rarely improve with age. The icing on the cake was that we paid too much money for this bad investment. I’ve learned over the years that a bad deal is worse than no deal at all and overpaying for real estate is one of the most dangerous mistakes you can make as an investor. Two other factors that were completely out of our control made matters even worse:

1. The price of oil hit an all-time high; our buildings were heated by oil, and as landlords we were obligated by the state to provide heat to our tenants for nine months of the year. 2. A lawsuit brought against the local water company tripled the cost of our quarterly water bill. Despite trying every cost-saving strategy we could think of, we were losing well over $10,000 a month-yikes! In order to sell the apartment complex after several failed attempts, we had to make good on a threat to our lender to stop paying our mortgage if the lender didn’t allow our buyer to assume our $1 million bank loan. By the time we finally sold the complex, my business partner and I had lost over $800,000. It’s easy to see how things could be better, but the truth is that they can normally be worse than they are. Two months after we sold the apartment complex, Lehman Brothers filed for bankruptcy protection, the world’s monetary system almost collapsed, and real estate transactions ground to a virtual halt. As hard as it had been to sell the apartment complex before, it would have been almost impossible to sell in the middle of the global financial crisis. Things could have ended up much worse.

Around the time I released my first book, I was approached by an Australian pension fund looking for new investments for their clients. The pension fund was interested in U.S. residential real estate because they wanted to buy into the market before prices started to rise again and because real estate provided a good hedge against Australia’s inflated currency. Over the years, I’ve noticed that successful people don’t find opportunities—they create them from possibilities we all encounter on a regular basis. This Australian pension fund had presented me with a possibility that I needed to transform into an opportunity. In less than two weeks, I developed a comprehensive strategy and written investment plan and thinking back to what the venture capitalist told me carefully handpicked the initial team of real estate professionals to implement it. This required a great deal of passion, perseverance and focus to get everything and everyone lined up in time to execute the plan. I had to use all the knowledge, learning, personal relationships and skills I’d developed over the previous decade. After I convinced the pension fund to invest in my local market, I worked collaboratively with them to form a Real Estate Investment Trust (REIT) and produce an investment prospectus that was based on the two-day presentation I’d initially prepared and presented. I was named chief investment officer of the REIT, and I traveled to Sydney, Melbourne, and Canberra, Australia’s capital, on a one-week whirlwind tour to pitch our investment plan to the pension fund’s investors. The investment tour was a huge success, and in a matter of a few months, we’d raised over $100 million and had a thriving real estate investment business.

In early 2017, I received a call from a local real estate titan who had made millions both as a real estate investor and as a mortgage note investor. He was developing a plan to launch a groundbreaking new fund that combined residential real estate and mortgage notes and he wanted some input and advice from me on the real estate portion of the business plan. His revolutionary idea blew my mind, because most alternative investments have only one type of asset, which makes them vulnerable to market fluctuations if that asset performs poorly. Combining mortgage notes and real estate would create a kind of buffer or hedge against market changes by providing additional avenues to buy, sell and profit from both types of residential real estate assets. I was so excited by the idea that I asked him if he was interested in partnering. He said he’d be honored, so we started meeting regularly and officially launched NNG Capital Fund a few months later.

Books:

1. “Dare To Succeed”

2.“Real Estate Investing Secrets”

3. “Short Sale Specifics”

Degrees:

1. MBA (New Product & Venture Development): MIT Sloan School of Management

2. BBA (Actuarial Science): Howard University

Awards:

1. Expy Award for Outstanding Public Speaking: National Association of Experts, Writers & Speakers

2. Best Seller’s Award from National Academy of Best-Selling Authors

3. Named one of "America's Top Business Leaders" in Fast Company Magazine

TV Appearances: