Surviving Interest Rate Carnage

Nick shares how he survived the real estate carnage caused by rising interest rates.

"We've had a chaotic three years in real estate as interest rates have risen - just total carnage in the business. The biggest expense for a real estate investor is debt. We borrow anywhere from 50 to 70% of the value of a building. If you go from paying 3.5% on that debt - $35,000 to service a million dollars in debt - to paying 7% - $70,000 - imagine if your labor cost quadrupled in a service business. That's essentially what happens in real estate.

It drives the value down of what people can afford to pay. All the buildings that you bought in 2021-2022, there are guys going broke in the real estate business right now in real time that I know. They can't sell their buildings for what they were worth because nobody else can afford to pay that higher amount of debt interest either.

We bought a lot and we had some stress. We had some tough conversations. But we got out without raising any additional money from our investors. We refinanced all of our loans and didn't have to call a single dollar from our investors. That's a massive win - many other people are calling capital calls or actually losing properties.

We were able to increase revenue quite a bit. We replaced our inbound sales team with South Africans who are actually sales trained, and our conversion rate went from 30% in the Philippines to 42% in South Africa. Revenue's up 15% year over year. But man, it's not easy. It's brutal."