Scaling Multifamily and Building a Tech-First Lending Solution with Derrick Barker

Derrick Barker is the co-founder and CEO of Nectar, a real estate tech financing company that provides liquidity to commercial real estate sponsors across the country. Nectar has completed more than 140 deals across 29 states, deploying over $40 million to lower middle market and middle market operators who need access to equity trapped in their existing assets.

After leaving Goldman Sachs, Derrick built his real estate portfolio to more than 4,700 units and $400 million in asset value across multiple brands, including Civitas Communities, a multifamily platform focused on transforming distressed assets into quality housing, and DOMOS Co-Living, a co-living concept renting larger units by the room.

Derrick began buying real estate from his dorm room at Harvard, where he also founded a student organization connected to Wall Street that became his first major business success. After graduating, he spent three years trading complex securities at Goldman Sachs while simultaneously building a 500-unit portfolio in his hometown of Atlanta before leaving to focus on real estate full time.

Derrick Barker on Multifamily Growth and Tech-First Lending

When Derrick Barker was four days from his earnest money going non-contingent on a Koreatown property, his lender came back short. He had equity sitting across his portfolio at 40% and 50% leverage. He didn't want to refinance. There was no clean way to access it without tripping a covenant. That's the problem Nectar exists to solve.

Building Nectar meant becoming a technology company first. Derrick went through Techstars, built AI-native processes from the ground up, and created tools his borrowers use to run their businesses more efficiently. The platform is built to provide both data and liquidity to commercial real estate operators.

In this episode of The Dealmakers' Edge, Aaron Strauss and Derrick Barker discuss how he built a multifamily portfolio while trading at Goldman, how Nectar is structured to give sponsors access to trapped equity without tripping existing loan covenants, and why relationships matter more in the age of AI than they ever have.

1:44 - Starting his first business at Harvard and how it connected to Wall Street

3:14 - What it felt like walking onto Goldman's trading floor right after the crisis

5:37 - Why rebuilding the community he grew up in drove his early real estate bets

6:59 - What the Civitas model was built on and why distressed assets were hiding demand

8:07 - How DOMOS Co-Living came out of watching single people navigate shared apartments

11:29 - Being four days from non-contingent earnest money when his lender came back short

13:01 - Why Nectar had to be a technology company 

15:39 - Running businesses with his wife since college and what makes it work

17:54 - Why he anchors his identity outside of the next success

19:52 - Keeping his personal life low leverage and cash flowing while taking big swings

21:26 - Why relationships matter more in the age of AI and advice for anyone starting out

Nectar | Nectar LinkedIn 

Derrick Barker on LinkedIn

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Transcript

Aaron Strauss: You're listening to The Dealmakers' Edge with A.Y. Strauss, diving deep into stories behind commercial real estate leaders.

Hello, everybody, and welcome to The Dealmakers' Edge. Today, we are joined by Derrick Barker, who's the co-founder and CEO of Nectar, which is a real estate tech financing company.

Derrick is going to share his journey from going to school at Harvard, working as a fixed-income trader at Goldman, buying real estate aggressively at a young age, coming out of the GFC while he's still at Goldman, building a portfolio and multiple brands in real estate, and finally the story of how he developed Nectar as a business model—one that he actually needed himself at times during his development experience.

So without further ado, here we go. Hope you enjoy the episode.

Hello, everybody, and welcome Derrick Barker to the podcast. I know Derrick's actually been feeling a little under the weather lately, so I appreciate you taking some time. You get a pass. It's nice of you to power through. I appreciate you being here. Your career has been really exciting to date, and you're doing a lot of interesting things. Thanks for making the time.

I'd love for our audience to get to know you, to share your story. If you wouldn't mind, maybe you could talk about where you grew up and then from college and what you did thereafter. It'd be wonderful.

Derrick Barker: Thanks for having me on the show. So I grew up in Southwest Atlanta, in the Atlanta, Georgia area. My dad was in the military, so I was a military brat. So I moved all over. But since my mom and dad met in middle school, both families were in the same neighborhood, so I kept coming back to Atlanta.

It's also where I graduated from high school, at Westlake High School, which is southwest of the city.

After high school, I ended up going to Harvard University. I played football there and started a student organization that ended up growing really quickly and being my first real big business success. So that's how I got into—I was always an entrepreneur. I started little businesses in high school that honestly helped pay for all of my high school desires. But that was when I really got into business.

But it was connected to Wall Street. We were connected to all of the investment banks and large PE shops as our customers.

I started college in ’06, and ’07 and ’08. So it was really a great business in ’06 and it was good in ’07. In ’08, it went away.

I always thought I was going to go work on Wall Street because, growing up, I wanted to be an astronaut. But when I got into Harvard, I was the first person from my high school to ever go to Harvard. My dad and everybody was like, “Hey, go do something and make some money.” That was the goal. I figured out, “Yeah, I'm cashing in on this degree in some way.”

Everybody at the time who wanted to go make money went to Wall Street, went to work at Goldman Sachs.

So after ’08, I was like, “Well, there's going to be no Wall Street, so let me figure something else out.” That's how I got into real estate. I was like, “Well, real estate has crashed. If I'm going to be young and get started, I might as well start now when everything is falling apart.” So from growing up in Atlanta, playing sports, and making it to the real estate industry.

Aaron Strauss: That's great. When you were at Goldman from 2010 to 2013, you were in fixed income, right? You were a fixed-income trader. What was the environment like? I guess that was the very tail end of the GFC. Like Lehman had just collapsed in ’08, so all of Wall Street must have still felt like a total shell of its former self.

What was the vibe like there? Did you like it? Was it fun? Did you hate it?

Derrick Barker: Honestly, it was great for me. It was great to be a young person. I got there right after. So I got into real estate, but then it turns out I still got a job at Goldman on the trading floor, trading fixed income.

It was like entering into the scene after a big disaster had happened. Literally, that's how it felt. That was the vibe. You could tell something bad happened. You still had remnants. There were still people getting fired and leaving and crying from the trading floor. There were still issues, but it was a lot of hearing stories.

When I was there, there was still a lot of volatility, especially in some of the fixed-income markets. We traded structured products and muni taxes, structured products, and there was a lot of volatility. So you still saw a lot of excitement. There were also a lot of periods of low volume.

But one thing about Goldman—I got to learn what it meant to be a professional, what excellence looks like, how to manage risk. They give junior people a good amount of responsibility, a tremendous amount of responsibility, honestly, at a very young age. I benefited from that tremendously. So it was really good.

Aaron Strauss: It's a first-class organization, so it gives you a polish that you don't have if you don't spend that time at a big Wall Street shop. I know, if I'm getting it correct, while you were at Goldman, while you were managing that probably super stressful job, you were also buying real estate too. You bought, I think, hundreds of apartment buildings—hundreds of units, I should say—in Atlanta during that period while you were also at Goldman at the same time. Is that right?

Derrick Barker: Yeah. So when I was in college, I started buying real estate with a couple of my college roommates because we didn't know we were going to be able to get jobs. Turns out we were also able to get jobs. Then I kept that going.

Yeah, at Goldman it was an intense job. It wasn't a chill job, but it was great. But yeah, I would continue to buy and build real estate. I always wanted to be leaving my home. In seeing how it was devastated by the financial crisis, I always wanted to see, “What can I do to come back and rebuild the community that really created me, where I came from?”

I was able to do that while at Goldman—continue to buy and renovate first single-family, then small apartment quads, small apartment complexes, and then eventually larger apartment complexes, even while I was at Goldman.

By 2013, I had about 500 units, a little over 500 units down in Atlanta. At that point it was time to—sorry, I said 2023, I meant 2013. By that time it was probably time to go ahead.

My boss was like, “What are you doing? Are you a real estate guy or are you a trader?” And I had to—you know—got to a fork in the road, and I decided to come and really continue to rebuild back at home where I grew up.

Aaron Strauss: That's awesome. I know you've built under a few brands. You've had this—if I'm saying the names correctly—but Civitas Communities, DOMOS Co-Living, and then more recently this super cool venture, Nectar, which we'll certainly talk about.

But maybe you can talk about a couple of the brands you've been building under the Co-Living space, which I know has had certain iterations, especially in New York. I've watched it. Civitas Communities, I imagine, was like the core buying vehicle for a traditional multi.

Derrick Barker: Yeah. So we started out with no brand, actually. We were just buying properties. Then we started Civitas.

So my first organization I started with my roommates was Veritas, which is the Latin for truth. We started that, and it became really big. So we felt like we were going to keep going with the Latin.

So Civitas is just a Latin for community—we were building communities. We were going in. We were buying really distressed assets. A lot of them had gangs. A lot of them had really dilapidated—

We were creating communities. We were gutting the assets. We were putting in new management. We were making them much nicer. We were kicking out the gangs. We were putting in services, working with nonprofits. We were getting after-school programs for the kids—building real communities.

Turns out that had a hugely profitable business model. You take something that was a blight that nobody wanted and was really cheap at the time—in 2010, 2011, 2012, 2013, 2014, 2015. Those were even bottom cheap.

Then if you built the nicest thing in the community, all the people who live there who have good jobs and want to be in the community, they come. You'd be surprised how much demand there was just for quality communities. So that's what we did with Civitas.

DOMOS Co-Living—what we saw was a lot of people, as we pushed rents—I mean, it costs money to do all this construction. You pull rents, rents go higher. There were a lot of families, but there were also just single people living together.

There are just inefficiencies with that. When one person doesn't pay rent or when one person wants to move out and “who takes the TV?”

So we figured that we could help facilitate that. We started the co-living concept. And that worked tremendously. We were able to rent by the room.

Then we continued to expand that. We expanded that in [inaudible]. We tried to build some things ground up, but it turns out that we were much more successful just buying apartment complexes and taking the larger floor plans and renting them out by the bedroom. Even today, we have maybe about over a hundred of those units.

Aaron Strauss: That's great. How about raising capital? Did you bring in a lot of outside capital? Was it friends and family to start? Did you scale up to a certain level of investment?

Derrick Barker: Almost all of the capital that we raised, especially initially, was from high-net-worth individuals and family offices. We didn't have very wealthy friends or family to start out.

But when I was in college, we raised money from some donors—some of the people who were donors to Harvard and endowed scholarships.

Then we got a reputation and we raised money from multiple high-net-worth individuals. As you get a reputation for a few deals, the communities—your real estate communities—are just not that big. They certainly weren't.

Atlanta was not a huge real estate community back in the early 2010s. So when you have a reputation, you start to just meet more people who are investors, who invest in other deals, and they see how we operate.

So a lot of the way that we got financing were just a few families—an older real estate family whose patriarch built a large portfolio. He came in, he helped us get started. He co-signed our debt. He helped us with some coaching, investment, and introduced us to some friends. We had a lot of that.

When you first start and you have a few people doing that, then you get to meet a lot of people. That's really how we got started, built relationships, made good returns, and kept going.

Aaron Strauss: That's great. And then I think your current venture, Nectar—if I'm correct—really sprung out of a demand that you yourself witnessed when you were growing your portfolio. You can have a really nice asset mix. You can have great cash-flowing multifamily real estate, great long-term assets, but there's always a short-term cash flow need.

Whether you need to do CapEx or you need to buy another property or you need to take out some funds personally that perhaps you just can't because you can't refinance the whole property. So you created your own proprietary business to solve for that specific question.

Maybe we can just talk about Nectar from a big picture. First of all, did I describe that history correctly? And then maybe walk us through the company from a macro perspective—what it is, what value it provides, and what it's doing would be great.

Derrick Barker: Yeah. So I started Nectar after I built a real estate business. We had multiple properties that were stabilized in different phases of development, yet we still had capital needs.

Specifically, we were under contract to buy a property in Koreatown, LA. We were under contract. We were about four days before our earnest money went non-contingent, and the lender pulled back proceeds. We needed to add another half a million dollars.

With the liquidity covenants, with the equity that we already had committed, with all of the other pools in our liquidity, I was like, "Well, you know, I just don't have another half a million dollars I can just put in at the moment without being a real strain in the business." But we have these assets. We had 40%, 50% leverage assets, 60% leverage assets that we didn't want to refi, but they have plenty of equity in them. I said, "Well, it doesn't make sense that I can't get liquidity in any way in order to fill this gap."

So that's really where I decided, hey, sponsors, commercial real estate property owners need a way to access the liquidity that they have trapped in their assets. A lot of sponsors own stabilized cash-flowing portfolios. They have equity. So what Nectar does is we provide liquidity to these sponsors so they can continue to run their businesses.

When I built Nectar, we said, hey, for this company to work, it needs to be a true technology company. I was not a technology person, so I went through Techstars. I got into the technology universe, and we built core technology to operate as a tech-enabled lending company. In the age of AI, an AI-first, an AI-native company at our core. We provide AI tools and products to our customers so that they can be more efficient and run their businesses more efficiently as well.

Aaron Strauss: It's very cool. So I have to work vis-a-vis the sponsor who has an existing loan on the property, is not allowed to encumber it any further. It's probably a breach of the loan documents to say, "I'm going to put any other debt whatsoever." So how do you secure your loans that you're making to the sponsors?

Derrick Barker: Personal guarantee. Typically, we can lend against an entity. It doesn't have to be the property-owning entity per se, but we always have a personal guarantee, and we always attach to an equity structure, really. It's effectively a structured equity-type structure that allows us to attach and not require our sponsors to trip any covenants.

Tripping a covenant on your loans and going into default is not helpful for anybody. So we are specifically flexible so that we can make sure to provide the capital in a way that works with the existing capital stack.

Aaron Strauss: Okay. So more like a pledge to the membership agreement or something along those lines that works within the scope of the loan. It certainly is a great need, obviously, because I saw you did more than 140 deals across 29 states. You've put out over $40 million in the product, which is still pretty new. Certainly liquidity has been the name of the game in the last several years with rising interest rates and everything else.

What are your plans for Nectar broadly? Do you want to really scale it to a significantly higher level? Do you like where it is? How's it capitalized? Do you need more equity for that, for the core business itself?

Derrick Barker: We're decently well capitalized, and we've been able to generate quite good returns. But we do want to scale. We are looking to scale. As I said, we spent a good amount of time really, especially as AI has developed, building our AI-native processes so we can just be very fast and efficient and have a scalable platform to allow us to do more and more deals.

That's our goal. Our goal is to be a provider of both data and liquidity to lower middle market and middle market sponsors in the commercial real estate space.

Aaron Strauss: That's awesome. I know you're in business with your wife as well that you met in college. Is it rewarding to work with a spouse every day? I had to choose the right word very carefully, you know, because my spouse could be listening or other spouses could be listening. But I know it's not always the most simplistic thing. But clearly it works, and it seems like even in business together throughout your whole relationship.

Derrick Barker: That's true. That's true. We met when we were teenagers, actually. We started our first organization together when we were in college. We started a business together to help pay for our wedding, actually. At the time, I had just left my job at Goldman, and I had this real estate business that was really sucking cash. It was taking all of our money. "How do we do this?"

We started an import-export business. So we've been running businesses together for a long time. We have very complementary skills, so it helps. We have a good partnership where I do certain things that are my things. She does certain things that are her things. I know that she has my back. I have hers. That helps. Plus counseling. So I say those things make it very, very rewarding because we know that we're aligned.

Aaron Strauss: When it works, it works. That's awesome. How do you manage? I mean, you're clearly just an entrepreneur through and through. You've started and scaled businesses. You love being in the business world. You're very creative. But like we alluded to, there are a lot of ups and downs. There's cash crunches. There are equity issues. There are investor issues. There are day-to-day failures.

I'm in the failure business too. All we do is try, make mistakes, move on again and again. But how do you manage the mental headspace that goes into being an entrepreneur? Because it's very lonely. It's very discombobulating and disorienting.

You have your spouse as a partner, so you have someone to talk to. But how do you manage the headspace in a way that allows you to keep moving from business opportunity to business opportunity, riding the highs and lows? Because that's a big thing too. It's called The Dealmakers' Edge. We try to get to this point because a lot of people listening to this are probably on the cusp of launching their own business, their own portfolio. They're struggling. Everyone's struggling in their own way. But how do you manage your headspace? It'd be very compelling to hear.

Derrick Barker: I mean, you have to be anchored to something other than the next success because what's more likely is the next failure. Entrepreneurship is mostly failure with some highs, some big highs.

It's like what an old mentor said: in entrepreneurship, you have higher highs and frequent lows. And that's true. But you have to be anchored. I have an identity that's anchored in something else. I'm also a believer in Jesus and Jesus Christ. That is where I anchor my faith.

So I'm not worried about the ups and downs because I already know that in the end I'm going to have what I need. I have what I need today. I'm here. I have a warm house. I have a beautiful family. I am surrounded by people who love me. I get to go on adventures every day.

You have to just be down for the adventure every day and for that life. Sometimes when you're going on an adventure every day, you're going to come back and you're going to get punched in the gut. That just is what it is. If you're not ready for that, then don't do it because that's most of what it is.

You have to be able to have that and then come home and hug your kids and kiss your wife and say, "Today was a great day." That's how I live. That's legitimately how it is. You lost a deal. We lost some money. I come home. It just is what it is. It's the life I chose. Today is still a great day.

Aaron Strauss: I love that. That's really, really compelling. Faith as a value. Very powerful. Always a ton of respect there. Of course, gratitude. Without that gratitude, what's the point? Because there are always negative things to focus on every day, and then you'll waste your whole life just harping on those few downer points.

But there are so many wonderful things to be thankful for. Your health alone. I know you're going through it right now, but I'm glad you're up for this conversation.

Derrick Barker: One other thing about a way to make it is like in the real estate business, at some point you're going to make some money, hopefully. Stay low leverage. That's what I say. Stay low leverage and have cash flow.

So we are able to take a ton of risk, and we do take a ton of risk. But when it comes down to it, our actual life is very low leverage. Our actual household has positive cash flow. We have a low-leverage, cash-flowing lifestyle. Then we take a lot of risk.

Ultimately, I'm not living on my net worth. I am going on an adventure with my net worth, and maybe it'll be bigger, and maybe I'll wipe out. And it's all okay because my life is low leverage and cash flowing and is not leveraged to whatever the next success is. So that's another thing that gives you peace of mind.

Aaron Strauss: That's super important. The best way to put yourself out of business is to live as if you're always going to keep earning more and more and that there's never a downturn because ultimately lifestyles are hard to pare back. But it's relatively easier to not get to some crazy lavish lifestyle to begin with if you can. So very meaningful, for sure, managing that flow.

Anything else, Derrick, I could have asked you but I didn't, or I forgot, that you'd love to share? If somebody gets on your calendar and says, "Meet me for coffee. I'm starting my career. Give me some advice. Talk to me." What are those points besides which we've already covered?

Derrick Barker: In the age of AI, relationships matter more. They matter more than they ever have. So get in front of people, actually. That's one thing that's just crucial. However, also figure out how to leverage AI.

I'd say pair those two things. Figure out how you're going to invest in yourself so that you know that you're equipped to leverage the tools that exist today because they're powerful. But there's nothing more powerful than relationships, so make them. Get in front of people. Go find the people who are doing the things. Figure out how to be helpful. Go to the conferences. Pick partners well.

Another thing is who you're partnering with. You never know where they're going to end up, so treat them well. But also pick them well because bad partners can destroy perfectly good deals.

If you're looking to invest in real estate, be invested in some low-leverage, cash-flowing assets. We do have a fund where we have several dozen low-leverage, cash-flowing assets. We make 12% distributions every quarter, and we have for the past three and a half years. If you're interested in getting in from a sponsor perspective, get out there and tie a deal up and don't be afraid. You're probably going to lose money [inaudible].

Aaron Strauss: That's great. Yeah, fear is an obstacle. Keep moving forward. Have faith, discipline, focus, family, good mental health, physical health. That's what it's all about, right, Derrick?

But listen, I really appreciate you taking the time. I'm going to watch your career continue to be successful. Nectar is a super cool product. Can't wait to play around with it a little bit. Just keep doing great work. Keep being a role model, an example, a success story, a man of faith. This is all great stuff.

I really appreciate the time today. I wish you so much continued success and good health, and we'll continue to watch the success. So thanks again, Derrick, for making the time.

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