After getting involved in the distressed property side of the real estate industry in the wake of the early 1990s real estate crash in Boston, Nick Petrocelli founded his own distressed asset management company and took it national in the early 2000s.

Today, his Braintree Hill offices occupy the catbird seat to view the impact of the foreclosure crisis and its aftermath.

Nick Petrocelli

Title: President and CEO, Nationwide REO Brokers; Braintree
Age: 46
Experience: 18 years in the industry, 10 as founder of Nationwide

So, how did you get started in the industry?

If you want to go way back, my goal was to purchase distressed real estate, fix it up, rent it out, become a landlord. Through that, I recognized the opportunity to become a Realtor. In the mid-90s, I became more involved in working as an REO broker for banks. Fannie Mae, BayBank, Bank of Boston, all those guys back then. When inventory started to slow up in Massachusetts, the banks were still struggling in other areas. And one bank said [to me] “We wish we could clone you, and put you in some of these troubled areas where we can’t get good service.” So I took on a role for the banks of training their agents. They would send me a file on a property that was maybe in Western Massachusetts, and I would find a local agent, give them the drill, and send them the file. At that point, the relationship was pretty much between the bank and that individual, but that individual would pretty much lean on me as a resource and I’d take a referral fee. So the paperwork would come through my office, we’d make sure it was all consistent, and the banks were looking at the same quality of paperwork. The banks found that to be an attractive model….and we branched out nationwide in [1998]. We got up to selling 100 properties a month through this referral system, and that’s when I learned that I didn’t invent the industry, that there was actually a real industry out there in asset management. I decided to take it full scale. In 2002, we incorporated, moved over here to Braintree, I left my other real estate position, and that was it.

Did you see this coming? There weren’t many people operating in this space before the bust.

Oh, yeah, I saw this coming. The software that this company operates on today was not available in the marketplace. I had searched high and low…and ultimately I said there’s nothing out there that meets the needs of what we need to do. There were all these “rockstar lenders.” I saw the loan product that was going out there, and I used to say to people, “what’s going to be the thing that hurts this market?” And everybody would say, “interest rates.” But it was always loan product. It was the loan product they were putting on the streets….I felt like I got hit by lightning a little bit. Because I had a very clear view of what was going to happen, and I think that’s what made me go like a maniac [to grow my company].

What was the biggest challenge in trying to launch your own firm?

Building the infrastructure was a daunting task, because nobody else had the vision for what I was trying to accomplish. Literally a fight every day, to say, ‘no, we’re gonna run banks, we’re gonna run hundreds of millions of dollars in property.’ So the infrastructure we needed to build had to be airtight, had to be bomb-proof. No one saw that, because we were perceived as a real estate agent. We fought hard for a contract with a major lender that we had been working with through the whole referral period. Kind of an underdog situation, but we had been outperforming everybody else, and maybe 2004, 2005, we landed a major contract – and at that point it was all about capacity. How much could we handle? Because the banks were getting busier and busier. We increased our space, we increased our management, built an executive team here – which has been intact since day 1, since they day they’ve got here, they’ve all stayed – and I took the company as high as I could vertically on that one client, which I knew was high risk. But it worked, because everything was the same – everybody could teach everybody everything. Once I got enough momentum, through that one client, I said ‘now we’re going to put our footprint down,’ and I went out and got a bunch of new clients. That obviously affects your ROI but at that point we could afford to do it. So we got to a point in 2009 where we were selling 1,500 homes a month, and then I think we bumped into the robo-signing.

That was a pretty big rock.

A pretty big rock. So inventories have been declining since, but we think that [the 50 state attorneys general] settlement will have some impact on inventories. I know the field’s getting a little smaller – it got very big very fast from 2007 to 2009 – and in addition to that we’re taking on a lot of different service lines. One in particular is our property management, we have title services, we offer eviction services in addition to our traditional REO services or in combination, and we also offer field services. We’re currently gaining momentum in all of those areas. Currently inventories are at a low, but we’re targeting more market share.

Petrocelli’s Top 5 Things to Know When Launching Your Own Firm:

• Have a Vision – You’ll meet plenty of naysayers starting out. Don’t be afraid to think big in order to build a strong foundation for your company.
• Time kills good ideas
• Don’t take no.
• Answer halfway through the first ring
• Have faith. Petrocelli said he remembers telling a guy who was in the midst of firing his firm that in six months he’d be their number one service provider. And he was.