Commercial Real Estate How To w/ Ash Patel

Are you ready to unlock the true potential of your real estate investments? Join me as I engage in a riveting discussion with Ash Patel, co-host of the Best Ever Real Estate Podcast and revered commercial real estate investor. He unravels the art of raising capital, reveals how to leverage tenants for property value, and insists on the importance of learning from your own missteps. Buckle up as we embark on a journey through Ash's transformation from an IT professional to a commercial real estate mogul and discover how he used side hustles to break free from the 9 to 5 grind.

Our stimulating conversation also takes a deep dive into the world of triple net leases, illustrating its intricacies and how to navigate them. We touch on the current trends in commercial property demands and the impact of the pandemic on urban to suburban migration. Ash recalls his struggle to find deals initially and how he overcame it by building confidence and establishing relationships. His experiences with Joe Fearless became a pivotal point in his journey towards raising capital and nurturing passive investing. 

In the final segment of our chat, Ash unboxes his philosophy on money. He emphasizes the importance of nurturing a healthy relationship with it, focusing on net worth instead of cash flow. He shares some eye-opening experiences and conversations that shaped his perspective about money and investing. These tales of a reluctant attorney and a cash-poor doctor bring to light the dichotomy of net worth and liquidity. Tune in to this enlightening conversation to gather some invaluable insights and actionable advice that will help you scale your investments and achieve financial freedom. So, are you ready to build your empire?

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Transcript

Speaker 1: 0:00

Raising capital. One you establish yourself. Follow in yours and mine footsteps where we did our own deals. You got to make your own mistakes on your own dime. First, you've got to have social media presence. People want to know, like and trust you. Two you don't ever sell a deal. You present deals and that's it. We'd spend an hour on the phone catching up and at the end of the call they'd say hey, you know what?

Speaker 2: 0:25

I've got $300,000 that I've been wanting to invest in realistic Welcome to the financial freedom fast podcast, the show that teaches you how to buy back your time and live life on your terms. Learn how to confidently leave your nine to five from guests who've done it themselves. Whether you want to lay on a beach, travel the world or focus on your passions, this show will give you the tools to do what you want when you want. Now here's your host, matt Ammabio.

Speaker 3: 1:04

What is up? Financial freedom fast man. Today we've got on Ash Patel, one of the hosts of the best ever real estate podcast and an investor himself. He focuses on commercial real estate, which we have not yet really dug into on this podcast, and he talks about how he can bring in tenants that are going to put money into the properties that he's going to buy, rather than him having to put that money into those properties himself, and the way that he has been able to scale by bringing other people in on his properties. He has bought over $30 million of properties, raised over $3 million, and it is so cool to learn from a guy like this.

Speaker 3: 1:55

There is so much valuable information and tips that Ash drops throughout the entire podcast, so excited for you to dive into this. Before we dive into it, if you guys haven't downloaded my PDF guide, what I need you to do is to click the link in the show notes to download my PDF guide on Scaling Through Partnerships. That will teach you exactly where and how and when to find partners, to get into deals and scale your investing. If you have one property or no properties, this guide will still work for you, and will work even better for you because we can start learning this stuff while you are at zero or worn properties. So excited for you to dive in. But without further ado, let's jump into the pod Hospital. Welcome to the financial freedom fest podcast. My man, my brother. What is going on today, dude?

Speaker 1: 2:55

Hey, matt, good to be here, man, I got to tell you. You interviewed me just a couple of weeks ago and, man, I've told your story to so many people. I told my kids your story about how you lived frugally in your 20s job hop, learned how to invest by doing it yourself the first time, got partnerships and leveled up. You get to travel the world. You're living a lot of young people's dreams, man. So, without sharing your story so many times, Dude.

Speaker 3: 3:23

I appreciate that man. I appreciate you spreading the word, spreading the gospel out there and putting the good words out there. But today's podcast is not about my story. These listeners know what I have done most of them. If you haven't, you guys need to go back to the beginning, where I tell my story pretty in depth and we dig through throughout the rest of the podcast Today is all about my man, ash Patel. We're sitting here. We got a good conversation.

Speaker 3: 3:51

You have scaled in commercial real estate pretty heavily. You're the founder of InvestBeyond, multi-family host of the best ever real estate podcast, and I'm not just saying that guys like as the. It's the best ever real estate. It's actually called the best ever real estate podcast. That is Joe Farrellus's brand. So you're very close in with Joe Farrellus and we'll talk about how that relationship was built out when you started investing with him and how that went. You have been investing for 10 plus years in real estate, doing your thing and building up businesses, man. So we've got a lot of knowledge, a lot of information, a poll out of you today, and it's my job to do that. So for the listeners that don't know exactly who you are, let's just get a 30,000 foot high level view of who you are and what you're doing today.

Speaker 1: 4:48

Yeah, so do you want to start in the background or do you just want to go to today?

Speaker 3: 4:53

Let's go to today and then we're going to jump back to the beginning on how we have built up to get to that point.

Speaker 1: 4:59

Got it. So today I've got a couple of colleagues that I work with, I've got two business partners. We've probably bought over the years $30 million in commercial real estate. We love what we do. We buy value add non-residential commercial real estate. So office buildings, medical buildings, strip malls, single tenant retail, warehouse, industrial, flex, restaurants, mixed use, ground up developments anything that we think we can get a very high return on. I don't do well with residential tenants because I always fall for their sob stories, dislike having to deal with phone calls in the middle of the night, toilets, sinks, whatever is going on. So with our business, we deal with commercial tenants who are business owners and they're not adding wear and tear. There's no showers, there's no kids and pets running around our properties. They're all professional business owners and I've been doing that for over 10 years and just absolutely love it.

Speaker 3: 6:08

Right, love that, I love that, and we haven't really had someone on the podcast yet. We've had a few guys, but not someone. That focuses solely on commercial real estate, and I know you've had a stint with residential real estate in the past and I'm sure deals still come up from time to time, but I know you are not a big fan of those. So let's jump it back to the beginning, because I think our listeners will resonate a lot with your story. You spent around 15 years or so in Corbett like an IT position and they just kept you in with those golden handcuffs. So let's talk about where you were at in that position, what you were doing, why you kept these side hustles that you had and why you kept getting pulled back into the company, because I'm sure there's a lot of people out there listening that are in that situation right now and they might not even be noticing it. So let's talk about that experience you had now that you have the foresight to be able to look back on it.

Speaker 1: 7:12

Yeah, the story starts out interesting and it would appear as if I followed your advice because out of college got my first job and within six months was laid off. So within a month after that got another job making like 30% more money and left that company in about a year to go work for one of the clients. I was a consultant at the time. One of the clients offered to hire me and jumped up in salary another 40%, and that's where the good story stops. So I followed your advice, job hop in the beginning and my third job.

Speaker 1: 7:52

I became very complacent and probably fearful, so I stayed in that job for a number of years. I would always have a side hustle because I knew I wasn't going to work for somebody forever right. Even back then I knew that wasn't the way to accumulate wealth. So I started a web design company, did well, got a partner in that business and tried to quit my job. And when I walked into my boss's office I had left with a promotion, a raise and an assistant. So I stayed on longer. I gave the company to my partner and just went back to the nine to five and again got restless, started a search engine optimization company and this is back 20 years ago, when this stuff was on the forefront of the internet, and that did well. Tried to quit again. Same thing raise promotion, love to keep you here, blah, blah, blah. And this went on for a number of years, right? So finally, I started an IT consulting company and I quit my job. And the consulting company was going to make enough money to match my salary, but graded.

Speaker 1: 9:04

It was a lot of travel, a lot of work, but I thought I achieved my goal in that I didn't have to work for somebody else, I could work for myself. But again, man, that was like out of the frying pan under the fire, because I'm still working my ass off traveling, and that really, you know, it was nice that I didn't have to report to somebody, right? All of my efforts directly correlated to how much money I made, and I, my wife and I, were both W2 earners. So we'd go to our accountant every year and we'd ask you know how do we reduce our taxes? And the guy's, just like, you know, you make it, you pay it, there's, there's, no, there's nothing you can do. And I didn't believe that, man. So, you know, I started looking into all these offshore accounts and exotic investments, but those are for like billionaires, right for indignatories.

Speaker 1: 9:57

So I always heard real estate was a good way to go for taxable write-offs. So I bought my first property mixed use building in a college town, grocery store and Apartments above it. Now, here was my mindset at the time right, the grocery store had a couple years left on their lease, so I felt, awesome, once that lease is over, I'll go in and I'll run the grocery store as another source of income. So, dude, I didn't set out to be a real estate investor. Right, I just look, man. I just wanted, like, more income coming in multiple revenue streams. So that was my plan. And One day after I got all the apartments rehab and here's how bad I didn't know what I was doing.

Speaker 1: 10:38

I knew that college started in mid-August, so I got all these apartments renovated ready to go by the end of July. Try to market it for lease. That's not when they're leasing up, dude, I didn't look. I should have known that because, I'm right, college right and there's crickets Nobody's wanting these apartments other than some local homeless people that couldn't afford to pay for it. But you know, I realized that in January. February is when the kids signed their leases for the next school year, right? So these apartments sat vacant for an entire semester. That was stupid.

Speaker 1: 11:14

But when I finally did get them rented, I got a call on a weekend it was a holiday weekend, thanksgiving weekend or something and I had to unclog attendance toilet and I look out the window.

Speaker 1: 11:27

Over the store there was an HVAC company Replacing rooftop units for the store and I go downstairs to inquire what's going on. The store owner tells me it's a gosh, or AC went out, so we're just replacing the entire HVAC system. So this is like thirty thousand dollars on their dime that they're putting into my building. Right, this blew me away, because when they leave, obviously I keep their thirty thousand dollar upgraded HVAC system. Matt, as I'm walking out the door that day, the store owner stops me real quick and he says Ash, do you mind if we remodel the bathroom also? And I'm like, oh my god, like the tenant upstairs is clogging toilets, punching holes in the wall and you guys are adding a ton of value to my building. So at that moment it was a pivotal moment I dropped what I was doing, became a full-time commercial real estate investor and again just went on to buy all these different asset types and continue to grow over the years.

Speaker 3: 12:24

Have you bought anything residential after that?

Speaker 1: 12:27

Yeah, most of them ended poorly, right, um, right. Yeah, I have bought mixed use as well and for a lot of your listeners, mixed use buildings like the first one that I bought, where it's a mix of residential and commercial, are an incredibly overlooked opportunity. And I'll tell you why. Because commercial people like me, they hate them, because they don't want to deal with the residential parts and the residential investors. The commercial scares them so much that they touch them. And, man, I'll share a quick example with you.

Speaker 1: 13:01

I owned a restaurant mixed use building and I Attempted to buy the building next door. We were gonna make it into an event center. I could have had that building for a hundred and sixty five thousand dollars. It was vacant three thousand square foot first floor that you know we gutted and it was wide open. You know it would have been a great event center before apartments above there and we ended up not buying this deal.

Speaker 1: 13:29

Initially. I got a call from a buddy of mine. Is like gosh, will you help me evaluate a commercial deal? I said, sure, he gives me the address and I said, oh Listen, I know you can have that building for a hundred and sixty five thousand, because that's where we kind of stopped and we just didn't want to Bother with that building.

Speaker 1: 13:47

And he's like, okay, he's like man, this was a residential investor friend that called me. He's like the commercial scares me. And I'm like, oh, hold on, the residential scares me, why don't we partner up? He thought about it for a second and finally it was just too overwhelming To have that commercial aspect of the building. So he's like nah, I don't want it.

Speaker 1: 14:08

And I asked them before he got off the phone I said, hey, so if this was just four apartments that are in the same condition that they're in now, but drop it down a story, just take away the commercial, what would this building be worth? And he's like you know, after repair value, probably 280, 290. And I'm like and the apartments didn't need an overwhelming amount of work. So I thought to myself, oh my god, like if, if you literally had this building and took away the commercial, there'd be a bidding war from all the apartment guys and girls. So I gave him one last opportunity to see if you wanted the partner on it. He said no, and I ended up buying this building for a hundred and fifty thousand dollars. Hmm, right, but again overlooked because people just are scared of mixed-use buildings. So for your audience, man, look for those types of buildings so one.

Speaker 3: 15:01

there's a lot that I need to unpack from this, and the first area that we're going to unpack is explain the breakdown for a commercial property. So why is the grocery store owner responsible for paying for all of the HVAC system, this big cap X thing that on a residential building typically, you would be Responsible for getting that done? What is the lease Structure like? What are you responsible for as the owner and what are the tenants responsible for paying for in these commercial properties?

Speaker 1: 15:39

Yeah, good question. Every commercial property in every lease is so different Right now. A lot of your audience may have heard of triple net leases. Mailbox money, right, you sit back, just collect a check.

Speaker 1: 15:51

Now, even with triple nets, there's a lot of variation. So I've had triple nets where the tenant is responsible for absolutely everything the roof, the parking lot, the maintenance, the taxes, the insurance. You literally pay the mortgage and you collect their rent check every month. If there's a Flood in the building, if the roof is leaking, they don't even call you. It's not your problem, right? So that is a true, absolute triple net. Now I've also had triple nets where I'm responsible for everything, but I get reimbursed at the end of the year. So whenever there's a maintenance issue the parking lot needs to be resurfaced, the roof leaks, exterior lights go out it's my job as a property manager and owner to handle all of those maintenance items, but I get to build that back to the tenants, right.

Speaker 1: 16:43

Then there's other variations where tenant could be responsible for maintenance and Repair of HVAC but landlord is responsible for replacement. The devils in the details of each lease. They're all different. So in this particular case, the tenant, the store owner, was responsible for maintaining and Replacing their entire HVAC system, along with, you know, paying their own utilities Keeping their windows and exterior lighting intact. So each lease is very, very different.

Speaker 3: 17:18

And that's something that's very attractive to me. About commercial properties now, mind you, I haven't even gotten into any commercial because, for all of our listeners, the thing that I should just talked about is I don't Trust my, so I don't believe in the in the commercial space. Like I don't know the demand for commercial properties, for A store space, whatever it could be. I'm not that creative and saying like oh, this would be perfect for a baker, whoever, to come in here and utilize this space. I don't know exactly. So one of my questions, because this is definitely an area that I'll be digging into and I've had my shot at Properties and have made the offers to get mixed use properties. I just haven't had one land fully yet.

Speaker 3: 18:08

But this does bring to mind a deal that I need to have a discussion about and see where they're at on closing, because it's a deal I could have had under contract that it's a pretty good deal. Just the apartments above it would justify the price that we were paying for the building anyway. But so let's talk about the demand. How do you test the demand for the commercial spaces? And when was? Where were you doing this? Investing in this building with the event center that you bought for a hundred fifty thousand dollars. Where was that? How did you know that I can get that done, since yeah, this is nadi.

Speaker 1: 18:49

So how do you gauge your demand? I'll tell you today, post COVID, walkable suburbs are on fire, right? So the younger people in their 20s were eventually going to follow their predecessors and buy a house, move out into the suburbs. Covid accelerated that, right? So there's always this natural cycle where, when young people get out on their own, they wanna live in city centers, urban downtowns right, metropolitan downtowns Everyone wants to live downtown. All the bars and clubs and all the new dining spots are opening and then, as they get older, they want more property than want a backyard, they have kids, they move out to the suburbs. While COVID accelerated that? Because these young people were tied up in these little boxes and they weren't allowed to leave and all the restaurants and bars were closed, so they wanted to get the hell out of there. So it accelerated their move to the suburbs, which is why suburban real estate is on fire now.

Speaker 1: 19:48

Also, during COVID, we got used to not going far from home. Instead of going 30 minutes to the Metropolitan city center downtown, we would start going to our downtown suburbs and that's where new bars and restaurants and nightlife was happening in the suburban downtowns, close to people's homes. So if you can buy just about anything in a walkable suburban downtown, it should be on fire, right. And you can gauge demand by looking at how much vacancy is in the area. If every shop is full, might be one or two for lease signs, you know that's a good sign, right? If on weekends everybody's flocking, the streets are packed, there's no parking, you know that place is happening. It's hot. You want something there, whether it's office, retail, mixed use, medical, those places are on fire Because, again, we've gotten used to not going far from home these days.

Speaker 1: 20:47

And there's suburban sprawl now where people are moving away from city centers right. There's other ways to gauge demand, gauge prices. If there are for lease listings, call them up, ask what they're renting them out for, you know. Dive as deep as you can. Have you had a lot of inquiries? How long do you think this will sit on the market? Talk to brokers, talk to other commercial real estate investors. If you're in due diligence in a building, start advertising it on Facebook Marketplace and Craigslist, right, even Craxy, and see what kind of demand, see what kind of phone calls and emails you're getting to read that space out.

Speaker 3: 21:25

And now, do you only do this in larger towns, or are there any small town areas that you don't know?

Speaker 1: 21:33

I've bought stuff in middle of nowhere. But if you do that, you know that when you go to sell it it's going to be a lot more difficult because out of state buyers aren't looking to buy rural strip malls, right. So you know it's going to be a local buyer, which means there's a smaller buyer pool, there's less demand, which means your price will have to reflect that. So if you buy something rural, you have to know it's going to be difficult to sell, so that property has to have ridiculous cash flow to justify that purchase.

Speaker 3: 22:08

Love it. I think this is a great area for some of our listeners to focus on and if you haven't dove into real estate yet, this might be a good opportunity for you to just see what are all of the different ways, asset classes, that I can get into real estate and what are the options. I don't have to start with the typical duplex, although it is. You know, a lot of these are pretty cookie cutter, clean cut deals and nice and easy. Some of these commercial deals can be pretty easy, especially if you have a good tenant in place right when you're buying that property, and the valuation on those properties are typically actually easier to come in with a solid valuation because they're valued based off of a cap rate and the net operating income that you bring in from these properties. And if you guys are interested in learning with that about that, I do have other podcasts on that, michael Blanc. That's a good podcast If you're interested in learning about how to value out the commercial properties that you are taking a look at.

Speaker 3: 23:14

So where I want to transition to now is I know that in you started buying up a lot of your real estate 2015, 2016-ish timeline. You thought the market was. The market was hot and you thought it was a the high time. You thought that that was the time to sell and kind of offloaded some properties there and then that kind of moved you into your time with Joe Fairlis and at least introducing yourself to him and working with him passively. So let's talk about the decision to sell off some of those properties and then what the transition looked like after that, with investing passively, and the lessons that you learned from that.

Speaker 1: 24:02

Yeah, man, that's a great point. 2015, 16,. It was getting harder to find deals. So I hid behind an excuse. Right the years prior, everything I bought was relatively easy to turn around. It was easy to get a good deal on everything that I bought and all of a sudden, when it started getting hard, I made the excuse that the markets out of markets at a peak, there's too many out of state investors coming in, there's too much stupid money going into the market. So I'm just going to sell everything, invest passively with this guy named Joe Fairlis. I'm going to sit back until the next recession and then get back into the market, right?

Speaker 1: 24:41

So when I did that, a few months went by and I saw other people in the residential world. They were building their teams, they were getting bigger, buying bigger properties and syndicating more and just they were killing it. And I'm like, okay, what are they doing that? I'm not. Why are they expanding? And I'm sitting here on the sidelines and it turns out they were still putting themselves out there and hustling where, when it got hard, I stopped. I sat back right. That was a huge mistake. So it took me I don't know six months, eight months, to realize that.

Speaker 1: 25:15

So to get back in the game, I started putting myself out there in social media because most people didn't even know that I was a real estate investor. They still knew me as an IT guy six, seven years later, and that was a huge fault of mine. So once I started putting myself out there, I offered a mentor people, I offered to teach people commercial real estate and I started getting back in the mix. I started going to lunches where I'd be introduced to people who have properties for sale and all of a sudden, the deal started coming back right.

Speaker 1: 25:45

So it was maybe fear, laziness, bad mindset all combined that put me on the sidelines, but nonetheless, I met Joe Fearless. He actually interviewed me for his podcast and we had lunch afterwards and I didn't even know what syndication was in 2015. So he told me the deal you get 20% annualized returns by just writing him a check. I thought it was too good to be true. So I wrote him a check just in case it wasn't too good to be true, and turns out the guy's the real deal. Over the years we became friends, we've both invested in each other's deals and to this day, we're really good family friends.

Speaker 3: 26:31

So that guy you in with Joe Fearless and I know from hearing you on one of your podcasts that also taught you a benchmark. So if you were able to invest passively in some of these deals, you could get XX%, whatever that was, whether it's 20%, 25%, whatever it is and you knew that you could do that passively. If you're going to go out and create a deal of your own and you're going to have to execute and manage on that deal, you're going to want that to be exponentially over that 25% return, because if you could do that passively, why would you go and do that any other way? So what else were you able to learn from working with Joe? I know it kicked you into capital raising a bit by having the communication with him. So where did things kind of take off after that relationship started?

Speaker 1: 27:35

Yeah, by the way, good for you for doing all this research. Most people that interview me, they don't know as much as you do. So, dude, I'm impressed. Good for you, man. I take a lot of effort to research your guests and come up with all these facts, so again, I'm blown away, man.

Speaker 3: 27:55

I appreciate that man. I like to have good conversations and I think having a good background about the people I'm talking to can help me to do that. So I appreciate you saying that.

Speaker 1: 28:06

Yeah, that's why you're a killer. All right, so Back to the show. One of the first things I learned from Joe and I'm hopeful I would have done this anyway, but I don't know Joe always freely gave away his knowledge, all of it, right. He has written books. There's a 400 page book that he wrote on apartment syndication and it's the A to Z on how to do exactly what he's doing. He on his podcast. He's gone out of his way to give away all his knowledge, so I've embraced that philosophy from him Over the years.

Speaker 1: 28:47

Every time I did a deal, he would ask me why didn't I raise for that? And I'm like no, look, I'm good man, I got this. And he got tired of asking me. So he just started under his tongue saying should I raise for it? Should I raise for it? And I'm like dude, you don't know what you're talking about. Man, like there's a sweet spot in commercial real estate between 300,000 and 800,000, where that's where the highest returns are. And again, here I am.

Speaker 1: 29:17

I was lying to myself. It was fear. I didn't want to take other people's money. Maybe I was scared of doing bigger deals what if something goes wrong?

Speaker 1: 29:27

And for many years that kept me trapped inside a small window of comfort zone, right, the one thing that put me over the edge was I saw a lot of my high net worth friends that would invest in bars, restaurants, marijuana companies, crypto, all these exotic, cool, fun investments. But they never made a return on any one of them and most of them ended up losing whatever their investment was. So when I realized that in all these years, a lot of these people asked me hey, man, can we invest with you? Would love to talk to you about investing. I'm like no man. I'm good, like I got this, but if I ever do, I'll let you know.

Speaker 1: 30:08

Just, I was being stupid, right? And finally I opened up a deal to a lot of these friends. They came in and it was amazing to see, for the first time ever, they got returns on their investment. Right, all light bulbs started going off in their head on how to properly invest. So that put me over the edge. We've since syndicated a number of deals and I've been able to do five, seven, 10, 12 million dollar deals. Because I overcame that mindset issue, I got the courage to do bigger deals and take on investor capital.

Speaker 3: 30:49

Wow. And how much capital, would you say with your whole portfolio right now? How much capital have you had to raise to build up your entire portfolio?

Speaker 1: 30:59

So a lot of our deals I still put half the money in because I want the deal. Man, they're great deals. Right, it's probably been three, four million dollars. But you got to understand, in the commercial world there's no 30 million dollar strip malls, right, right. So the strip malls five to 10 million dollars. So I'll usually take half and open up the other half to investors.

Speaker 3: 31:26

I like that. I like the structure and you're putting skin in the game, You're putting yourself in there, which shows your investors like he believes in this deal. So that's going to make people feel even better with coming back and coming in with you. On deals and I am just now getting into I've worked with partners in the past and had them bring capital to the table. That's still a bit of the way I do deals, but I'm starting to work into some bigger deals now. Where I just raised last week I raised 150 grand for a deal and I'm working on raising 300 grand for another deal that we've got going on Pretty killer deal and building the confidence, I think, to get out there and put your deal as an opportunity on the table.

Speaker 3: 32:20

It's not coming out there and saying I need your money, I really need this, so I could get this done. It's like here's an opportunity for you to invest in PAS and get a great return. If this deal goes really well, you could get this return. If it goes poorly, you would get this return and if it goes all right which is probably how it'll go you'll get a decent return and it feels good to put people in that position where their money is out to work and you're actually one of the ones that is managing that money and being a good steward of someone else's money is really rewarding. Being able to get that money back to them is really exciting as well, so I'm excited for my journey in jumping into that. Are there any major tips that you would have around raising capital, bringing other people's money into your own deals?

Speaker 1: 33:19

Yeah, that's a good question. I had a conversation with somebody yesterday who wanted to be a capital raiser and she asked me do you just put the deal out there and wait for the money to come? And I'm like, okay, no, no, no, here's how you do this. So, one you establish yourself, right? Hello, in yours and mine footsteps, where we did our own deals first, I would look, I interview a lot of people that literally went from zero to a hundred. On their first deal, they raised $10 million, they syndicated a $30 million property and I'm cringing because you haven't earned the right to take other people's money yet. Right, you gotta earn that. You don't start out at the top. So you got to make your own mistakes on your own dime first.

Speaker 1: 34:07

So, raising capital, establish yourself. Establish your presence, because if I'm going to invest in one of your deals, I don't care what your company is called. I want to know who you are. So you've got to have a social media presence. And if it's not social media, look you have, I get it.

Speaker 1: 34:25

Some people are not comfortable with that. You have to have written a lot of blogs, been interviewed by a lot of other podcast hosts. You've got to have a big presence out there LinkedIn, whatever because people want to know and trust you. If you're behind the curtain, they don't ever get to do that, right? So, one, start now by putting yourself out there. Two, you don't ever sell a deal or you don't ever solicit investment capital. You present deals and that's it. It's really that simple, right?

Speaker 1: 34:56

But now one of the things I encourage people to do is put out a newsletter, because you can't just take your entire Rolodex, your entire contact list, and send out a mass email saying, hey, guess what? I'm raising $10 million for this deal. Who wants in? It doesn't work, right. So do a newsletter.

Speaker 1: 35:16

And, Matt, I did this a few years ago. I got every contact I could scrounge up for my phone, my Gmail account, and I sent one newsletter and it was just. Here's what I've been doing for the last several years, here's what's going on in my personal life, and here's a deal that I'm working on, if anybody's interested in learning more. And that was really cool because I reconnected with people that I literally knew for a year, 20 years ago, but we kind of you know Facebook kept in touch and these people would call me up. We'd spend an hour on the phone catching up and at the end of the call they'd say hey, you know what? I've got $300,000 that I've been wanting to invest in real estate, but don't know how. Right, so you can't just hit them hard with a deal. Go back and reconnect with all those people that you've known over the years. Right, Build that baseline, build that rapport again and then continuously share and add value anytime you can communicate with somebody.

Speaker 3: 36:20

That is effective. So I think, like two main steps, one is establish yourself and then two is build this communication, this funnel of people that you're presenting opportunities to and letting them know along the way, like exactly what you're doing. And I've got this five unit deal that I'm closing up this week that brought in 150 grand for and that will be. You know, that's going to be one of these first things that I'm throwing on this email list. Now I'm building out the whole email listing, finally got the tech to do that, understand how that works and, you know, building that out to keep people updated on. Hey, this is a five unit building. This is exactly what we needed to do in each apartment to raise, to be able to justify the rent that we're bringing in. With the two vacant units, there's three units that are currently not vacant and we've got tenants in there that doing well, it raises the value doing this. So I will have that newsletter out just because of this call. I am going to get that done this week. Make sure I have that prepped up and set up so I can get my list of people on this email list and get it out to them. So I appreciate that that has inspired me to go get this done.

Speaker 3: 37:37

One last thing that I do want to hit on before I dive into the final questions that I have on this podcast is something that you said on another podcast that actually you know. It struck me pretty hard and I fully understand it and did not even think about this in the past, and it goes a little bit something like this Don't focus on the cash flow, focus on the net worth, because if you're worth five to $10 million, you're not worried about cash flow, because you could sell a property for a million dollars and have a million dollars, or not sell it for a million dollars, but you could sell a property and have a million dollars cash sitting in your bank account. So if you focus on the net worth, you're not worried about cash flow. Can you dive into that a little bit more, because I think that's a big.

Speaker 3: 38:29

A lot of our listeners want to get $10,000 a month in cash flow right. But if you're able to offload a property that nets you a million dollars, you have a million dollars sitting in your bank account. That is $1,000. Is it $1,000? Yeah, it's 1,000 months of $10,000 a month, right? So you've got tons of time there. Let's dig into that philosophy a bit.

Speaker 1: 38:56

Yeah, man, this is something that is very prevalent with real estate investors. They get fixated on a monthly cash flow goal and I don't know if it's because this is what my monthly expenses are or this is what it takes to live my ideal lifestyle so I can travel like Matt and they get fixated whether it's $10,000 a month or $35,000 a month. This is my passive income goal and I'm like, okay, listen, that number can be manipulated. You could literally take all of your savings, put it into a not so good deal and your passive income number goes up right. But at the same time, if you're measuring your net worth, you take all that cash and put it into this deal that you're buying at market price. There's no appreciation. That net worth number hasn't changed. You just took money out of savings, put it into a property, got some income out of it. The net worth number is a number that never lies. As long as you're honest with your balance sheet putting down these numbers, you can't manipulate that number right. Income doesn't come into play when your goals are based on net worth. So back to what you said is yes, once you hit a certain net worth number, the passive income doesn't even matter. If you have $10 million let's say you have 10 properties $10 million you can sell one property, get a million dollars right Now. You could spend some of that. You can reinvest it and buy more properties. So that's the way you grow.

Speaker 1: 40:29

Well, I had a conversation with a 55 year old attorney Just last week and he's like you know. He told me his net worth number. It's 14 million dollars and he's like okay, so this property kicks off 50,000, this kicks off 60,000, this kicks off 100,000. So he's like I'm good because my wife and I can live on less than 210 thousand dollars a year. And I'm like like really, that's your mindset. Why don't you sell some of these properties that you have a bunch of equity in and buy some of these other projects that you can't afford To buy right now? He's telling me about all the deals that he's passed up because he doesn't have the cash to buy them. Meanwhile, he's paid down so many other properties, right. So had he focused on net worth versus cash flow, he could have bought those additional properties that he would have had Instant equity in day one. The day that you move money from your savings to this property, you could have increased your net worth number by four or five, six hundred thousand dollars because you're buying a value add property Undermarket value. That's how you build Well, right, and again, I get it. It's a difficult concept for a lot of people to understand, but just know, when you have that high net worth, I get it. A lot of your cash is probably tied up in these properties. Sell a property and see what happens.

Speaker 1: 41:50

I had a doctor that Wanted to join my mastermind and he's like I just I don't have the cash right now. And he's like I want three hundred thousand dollars a year in passive income and I asked him what is? I Didn't ask what his net worth was, I think I asked what his liquidity is or something. He said he had a six million dollar house in Miami and he's got four million dollars of equity in it. And I'm like right, like, really like you're complaining that you don't have any cash on hand, but you've got four million dollars that you can get a home equity line of credit, you can do a cash out refi, so I.

Speaker 1: 42:29

It's a relationship that people need to understand better. With money right, paying down your house, I get it. You have that feel good feeling inside, but it's a false sense of security. When people pay off their house, they say now they can never take it from me. Miss three property tax payments and watch how fast they take it from you, right? So it's, it's just, it's you got to fix your relationship with money, right?

Speaker 1: 42:56

And look, I did that to me, like I. I Went to my that same account and that told me, if you make you pay it. I asked him I'm like, hey, man, should we start paying down our house early? And he's like what's? Your interest rate at the time is like four and a half percent. He's like, well, if you can't find somebody to grow your money consistently at more than four and a half percent, yeah, by all means. But that's stupid. And I was, I don't know, 26 years old. I'm like I don't know how to grow money of four and a half percent. Man, well, what do I do? Right. But over the years you learn how to develop that relationship with money.

Speaker 3: 43:28

Yeah, yeah, and it really does come. I mean just that last point. There is like when do you know that you can put your money and get your return? That makes sense. Like I'm not, but I don't put my Capital into deals that I I know I'm not gonna be able to get that back within a year. I am a very high velocity, like I like to have my capital back Extremely quick and that means I need to buy properties with a ton of value, a ton of that equity sitting in them.

Speaker 3: 44:00

But I do see what you're saying here because I and it really clicked when I heard this because I have been playing the cash flow game. I've been buying the properties that cash flow me well and they cash flow me enough to pay my living expenses and I'm good every month now. But now it's a different game for me. I think what now that I've tackled that cash flow game? I think it is a new game of getting into other, bigger properties, building up that wealth, and Building up that wealth could come eat with even more cash flow for those properties. So we will see where I take that and of course, I keep everybody updated with what I'm doing with my investments and what my next moves are. So continue listening to the podcast. If you have any Questions on that, ash, we're gonna dive into our final questions here. What is one actionable step our listeners should take today to start on their path towards financial freedom?

Speaker 1: 45:01

Put yourself out there, right so?

Speaker 1: 45:04

hmm, whatever it is that you're going to do, you're gonna go further. If you go together right, you're gonna help from your network. Whatever look you, you're starting a business. Whatever you're doing, put yourself out there. Let the world know what you're doing Right, because you're gonna. You're gonna rely on other people to get ahead faster. It's just the weight every business works. You need your network, so build that network. Share what you're working on, be vulnerable, share hard lessons that you've learned. Don't just go out there and pat yourself on the back because you bought a car, you bought an apartment building. But, man, share some tough lessons that you learn and that's how you really connect with people Right. So build those connections, man.

Speaker 3: 45:47

Yeah, always telling people. One of the best ways to do that it's just telling people exactly what you are doing. I remember I heard that from, I think, brandon Turner, maybe Three, four years ago is like, if you want to invest in real estate, then start telling people that you're a real estate investor and make that In identity of yours and everybody that you talk to. Talk to them about real estate, because Everybody knows somebody that is either involved in real estate or trying to sell some type of property or has some type of property. Then they might be able to give you some golden nuggets of information. Whatever it may be, if you start telling people what you're doing, that will give them an avenue to give you some new Realizations or give you some new value, some opportunities.

Speaker 3: 46:34

But you can't have those if you're not telling people and putting yourself out there for exactly what you do. Whether it's on social media, podcasts or just telling everybody what you do, make sure you are embracing who you are and what you want to do and Get that stuff out there. I love that advice. Ah, and I've got one last question for you on the podcast today what is one question that you wish I would have asked, or one topic that you wish I would have covered, and how would you have answered that question or how would you have expanded on that topic?

Speaker 1: 47:08

I love hearing about people's failures, right, because that's where all the hard lessons are. So maybe what was an example of a deal you lost money on? What was a failure that you had on your journey? And For me it was I. I started to get an ego and everyone around me Well.

Speaker 1: 47:32

So the quick, the quick story here there was an estate auction where, like half this town was owned by one family and it was going up to auction. So I was going to that auction and A lot of my friends are like dude, everything this guy touches turns to gold and I started believing that right. So I was actually on vacation. I had one of my tenants one of my tenants go to the auction on my behalf. He's on the phone with me on the auctioneer. It was sold out. I couldn't hear anything and all I heard every so often is ah, she want to keep bidding. I didn't know what I was bidding for, but I'm like, yeah, man, let's go bid, bid, bid.

Speaker 1: 48:13

I ended up buying a half dozen properties and when I went to look at them, one of the buildings look like it was half blown up, literally like the front of it was gone. Half the side was leaning on like it was bad, uninhabitable. It was a bunch of junk that I ended up buying and again I thought, hey, man, look, I've done this a million times before We'll turn this around. Well, this town was ravaged by drug losses and, sorry, by drugs and job losses, corrupt officials, and it was just dying slowly. So it took me five or six years to unravel the very last property and it was a tremendous amount of headspace that it took up just because I was stupid and ego got in the way. Right, I mean, yeah, whatever I buy turns to gold. I needed that hard lesson to kind of kick me in the ass and realize, hey, man, you got to be a little bit more careful, because not everything you touch is going to work out the way you want.

Speaker 3: 49:14

I love it. Yeah, you got to be diligent. You've got to go in and know what you're buying. Don't ever think that you are too good to go and see a property, or at least have somebody check it out and see what's going on. Don't just blindly be putting stuff out there. Don't get too high and mighty into yourself and think that everything that you touch is going to turn to gold.

Speaker 3: 49:41

I had some properties out in Scranton, pa, that I bought Sight on Scene. I saw them online, knew the value was going to be there. I ended up buying them, never got into them until the day that I actually closed the property. Walked in there I was like, oh my God, this thing is going to be a CapEx nightmare. It was a CapEx nightmare and down the line we just ended up selling it. Luckily, the market worked out. We were able to make a good profit on it. But that was a lesson learned for me where it's like know the property that you're buying and know what you're getting yourself into. I love that lesson. And do not get too high for your britches man. But awesome, incredible value today that we have trapped for our listeners, for our listeners that want to find out more about you. Where can my listeners and watchers find you online.

Speaker 1: 50:44

Just go to investbeyondmultifilmingcom. We've got a commercial real estate conference that is happening October 11th, 12th, 13th in Cincinnati. It'll open your eyes to what we're doing in commercial real estate. It'll show you how to get started Again. It'll teach you how to invest beyond multifamily.

Speaker 3: 51:05

I love that. I love that. Listeners, if you want to go to that, checkout Osh's website there. I will link to that in the show notes and you can get out to that conference and meet Osh and meet his team and see what's going on out there and learn how to invest beyond multifamily. But hey, guys from the Financial Freedom Fast podcast, I'm your host, matt Amobile, and today we add on Osh Patel and we are signing off. Thanks, osh.

Speaker 1: 51:40

Thank you, man, that was awesome.

Speaker 2: 51:43

Thanks for listening to the Financial Freedom Fast podcast, the show that teaches you to buy back your time and live life on your terms. Be sure to subscribe to this podcast wherever you're listening, and follow us online at Matt Amobile. That's Matt AMA B I L E. Be sure to tune in Monday, wednesday and Friday for our weekly podcast drops. Thanks for listening. Let's retire together.