Dominating Multi-Million, Multifamily Syndication Deals: An Interview with Paragon Investment Partners
The following conversation was conducted over email and edited for flow and clarity.
Nikki Dade and Pam Dorsey are the co-founders of Paragon Investment Partners. Through their company, Nikki and Pam acquire and manage prime residential apartment communities that give their investors passive cash-flow and pay-out opportunities. This dynamic duo aims to safeguard investors’ capital while maximizing cash returns.
Acquania Escarne of Wealth Noir (WN): Nikki and Pam, thank you so much for your willingness to share your real estate investment journey with Wealth Noir readers. Before we dive into how you are building a real estate empire, can you tell our readers a little more about yourself and Paragon Investment Partners?
Pam Dorsey of Paragon Investment Partners: Nikki and I are multifamily real estate investors focused on acquiring B-C Class properties that generate passive income in working-class communities. We founded Paragon Investment Partners with a desire to build a solid, multifamily investment portfolio while introducing value-add opportunities for investors and the community.
In addition to Paragon Investment Partners, I own and operate a HR consulting firm, PFD Business Solutions, following a successful 25-year career leading Human Resources programs and teams in prominent companies like NPR and Spacex. I owned my first home at the age of 21 and have 10 years of experience leading the renovation, rental and sale of residential properties in Prince George County, Maryland. In addition, I am a licensed Title Insurance Producer in Maryland and freelance as a notary signing agent, executing mortgage signings.
Nikki Dade of Paragon Investment Partners: I am a licensed Realtor, serial entrepreneur and an expert in the local market who brings a wealth of knowledge and expertise to real estate investing through keen market analysis, deal valuation and savvy business acumen. Not to mention, I am still a 9 to 5er and serve as the Executive Vice President of a non-profit youth sports organization, Team Fire Elite Organization.
Prior to co-founding Paragon Investment Partners, I owned and operated Faces of Dimensions, a lucrative hair and make-up studio servicing the Washington, D.C., metropolitan area for over 15 years. I am a proud graduate of Howard University and hold a MIBA in International Business from Huizenga School of Business & Entrepreneurship at Nova Southeastern University.
Both Pam and I have creatively found a way to navigate work and families while still achieving success by partnering and mentoring with more experienced investors and entrepreneurs taking action in multifamily investing. We firmly believe in the power of networking, partnering, and most importantly, mentorship, to build a sustainable business.
WN: Wow, the two of you are very busy. Why did you decide to team up and invest in real estate together?
Pam Dorsey of Paragon Investment Partners: Nikki and I are related by marriage and have known each other for over 25 years. We have quite a history and consider ourselves kindred spirits. As we mentioned earlier, I’ve been in the residential space for over 10 years and I’m a licensed Title Insurance producer. Nikki’s a licensed Realtor and was a private money lender before she even knew what it really meant. We were constantly sharing entrepreneurial interests and ideas on separate paths on our journeys to build legacy wealth for our families and gain financial freedom.
One day, we said, “What are we doing here? It would make much more sense for us to pool our resources together and build an empire together.” Paragon Investment Partners, Inc., was born and the rest is history.
Nikki Dade of Paragon Investment Partners: The artist Neo says it best, “I’m a movement by myself, but I’m a force when we’re together…You make me better.” We compliment each other extremely well. Our partnership is a force to be reckoned with.
WN: Haha. I love how you two bounce off each other’s energy and teamed up to make an impact. How did you get involved in real estate investing? What is your current real estate portfolio?
Nikki Dade of Paragon Investment Partners: I believe we have tried all forms of investing from stocks, bonds, mutual funds, notes and retirement accounts. However, we have always come back to real estate. It is the most “tried and proven” method to building sustainable wealth and financial freedom.
I decided to take a stab as a private money lender about seven years ago with a friend who was working on new construction projects on the West Coast. I earned 15% on the dollar within a six-month timeline. I had never earned that much on any of my investments in that short span of time. That really incentivized me to dive just a bit deeper into the world of real estate investing as a new course for my investments.
Pam Dorsey of Paragon Investment Partners: Having owned my first home at the age of 21, I knew early the power of homeownership and the value of real estate. I owned and lived in that house for 16 years. I rented it for a period of time and then completed some renovations and sold it for a profit of $150,000. I have always been good with money and invested in stocks and other investment vehicles but always maintained an interest in purchasing more properties. Once I finished paying my kids’ high school and college tuitions, I had greater flexibility to step back into the real estate game more aggressively.
Paragon Investment Partners is invested in 300 units to date that are valued at over $20 million. They span across a duplex in Baltimore, Maryland, 152 units in Thomasville, Georgia, and 146 units in Colombia, South Carolina. We were able to acquire the vast majority of our units by partnering with a proven team, all while working full-time jobs.
WN: It’s amazing how much you have been able to accomplish in real estate while working and running businesses.
I am also amazed at how you both have been able to dive into the world of multi-family syndications, which does not have a lot of female players. Can you explain what it was like to enter into this space? What were some of your challenges in the beginning?
Pam Dorsey of Paragon Investment Partners: Nikki and I were keenly aware that we were the double minority in most rooms. We’re playing in a male-dominated space. However, we don’t think there is anything about multifamily investing as females that we’re not able to do or access.
Our main goal is to ensure that all of our decisions are extremely logical, strategic and practical. When emotions are high, intelligence is low. Men are pretty simple, bottom line, performance-driven people. So, we tend to cut out the frills regularly.
Nikki Dade of Paragon Investment Partners: That said, we did a few things to enter this space. First, we hired a mentor and joined a coaching program. Our motto is “pay now or later through mistakes.” We also read a ton of books because we believe education is vitally important.
After that, we hired an advisory board, worked to build our team of attorneys, lenders, brokers, etc. And we focused on building our business infrastructure like our business entity, website and business credit.
Then, we prioritized networking, attending live events and, ultimately, we created our own Meetup, Paragon Partners with Women Multifamily Investors Meetup, to introduce this opportunity to more women investors interested in investing either passively or as an active investor while navigating life obstacles such as motherhood, family and their careers.
We found it necessary to collaborate with other women to share similar experiences as it relates to balancing work, career, household and family obligations. We’ve made adjustments with our schedules and were extremely deliberate and intentional with our time.
WN: Ok, so let’s dive a bit deeper into what is multi-family syndication. More specifically, how can you invest in these deals? Can you walk our readers through your first deal?
Nikki Dade of Paragon Investment Partners: Multifamily syndication, which is also known as apartment syndication investing, in simplest terms is several investors’ funds pooled together to purchase larger acquisitions. In most real estate acquisitions, the investor solely sources the deal, funds, manages and collects the profits on the project. On the other hand, in a syndicated investment, the responsibilities are shared among the group.
Here is a breakdown. Multifamily syndication is split into two categories. One category is the General Partnership (GP), which is the person that finds the deal, manages the asset during the investment period (normally 5-7 years), secures financing, performs due diligence, and conducts day to day operations during the specified investment period.
There are several ways to join the GP. You can be a sponsor of a deal or someone who is called the syndicator or lead in the group purchase. Or you can co-sponsor as a signatory on the loan or sub-syndicate, which means you assist in raising capital for the deal.
The second category is Limited Partnership (LP). To be a member of the limited partnership, you normally invest capital, say $25,000 to $100,000 for the project. As a limited partner, you enjoy the benefits of ownership, without the headaches, and collect what we call “mailbox money” over the course of the hold. “Mailbox money” is another term for passive income.
Pam Dorsey of Paragon Investment Partners: There are a few more qualifying steps in terms of how you can become involved with these types of projects. Sometimes it matters if you are an accredited investor or a non accredited investor. Your specific investment goals also matter. But for the sake of this conversation this is a pretty good overview.
The beauty of real estate syndication is you are able to scale rather quickly. For example, we started small with two units and jumped to 154 units in a week by partnering with our more experienced mentor and partner. Our first syndication was 152 units in Thomasville, Georgia, with an $8.6M purchase price. We had to raise $2.5M for a 70/30 split. For that deal, the estimated preferred rate of return was 7%.
We were truly fortunate to be a part of this project. This is one of the highest performing investments that we have been involved into date. Most importantly, we have been able to consistently pay our investors their 7% preferred rate of return despite the current COVID-19 pandemic.
WN: I understand deals vary. But in your experience, how much have first-time investors invested in a multi-family syndication deal? Are there investment minimums or limits?
Pam Dorsey of Paragon Investment Partners: It does vary. Some deals we have seen will allow for a minimum investment of $25,000 but the majority of the deals we have been introduced to have had a minimum investment of $50,000.
Nikki Dade of Paragon Investment Partners: That’s the beauty of this particular business model. It’s befitting for any level of investor, a beginner or seasoned veteran. We’ve had a pretty good mix of people in our groups of investors. The greatest part of it all is you can earn while you learn and build your investment portfolio at the same time!
WN: What was the greatest lesson you learned while investing in real estate?
Pam Dorsey of Paragon Investment Partners: Scared money will not make you any money. You should have no fear of investing – if you are afraid, you probably should not invest. While there is risk with any investment, you should not be afraid to jump out there. Like anything else you would invest in, it is important for you to do your research and be completely confident in your investment decisions. One thing that we can be sure of is the proven advantages of investing in real estate. Ninety percent of the world’s millionaires have been created by investing in real estate.
Nikki Dade of Paragon Investment Partners: I couldn’t have summed it up any better! I second that!
WN: Now earlier you said you both have other businesses and jobs. How do you balance it all? What are some tips you can share with anyone considering becoming a serial entrepreneur?
Pam Dorsey of Paragon Investment Partners: Mindset is an integral part of achieving the maximum level of success in your business. Financial freedom to Nikki and me is also a mindset. For us, that means knowing the power of money and time and how to make your money work for you. The freedoms that are available to you are endless when you understand how to replace your ‘employee’ mindset, which is working a 9-5 job and building other people’s businesses and dreams.
Nikki Dade of Paragon Investment Partners: Just Do It! Take action. You can go to many events, meetups, read books, listen to podcasts, but until you actually make moves, you are no closer to freedom. We are women of action! We get it done.
WN: That’s great advice ladies. Thank you. What is the most common question you get asked or you see come across from your community?
Pam Dorsey of Paragon Investment Partners: We usually get, “I want to do what you are doing. How can I partner with you?” There is a lot to this answer. We usually suggest people book time with us, so we are able to discuss their interest, commitment and what value they plan to bring to the partnership. Partnerships go both ways. Although we are an open book and willing to share whatever information and access to people in our network that can help people on their real estate journey. However, we work best with those who can bring value to the relationship – that way, we all win!
WN: If you could flip a switch and get everyone to do one thing related to their personal finances, what would it be?
Nikki Dade of Paragon Investment Partners: I think Pam and I would both say to pay closer attention to your credit to maximize your purchasing power. Starting out, you may be asked to personally guarantee some of the accounts you open, but that won’t be for long. If you establish your business entity and financial infrastructure correctly, you should be building business credit from the very start. Leveraging your business credit will allow you access to ‘other people’s money’ for future investments. Use your own money as little as possible, if at all.
WN: So what’s next for Paragon Investment Partners?
Pam Dorsey of Paragon Investment Partners: We are dabbling in short-term rentals in a few states. We are always interested in knowing other parts of the real estate business. For example, we also have a construction partner that we will be working with on a couple of development projects in the Washington, D.C., metropolitan area in the coming months. Again, these are both different from the multifamily investments we have primarily focused on in the first 2 ½ years we have been in business, but we are excited about learning however it comes to us!! Stay tuned!!
If you want to connect with Pam and Nikki check out their website and follow them on social media (Facebook; Instagram; Twitter). To hear more about their real estate investing journey, also check out their podcast episode on The Purpose of Money Podcast.