Manage episode 177417629 series 1000354
On this episode of the InvestFourMore Real Estate Podcast, I have a great conversation with Abhi Golhar. Abhi has become a fantastic investor who flips more than 30 houses per year, but this number did not come easily. It took him years of mentorship, moving around the country, and near successes before he made it. Abhi found success not from finding the right strategy but from finding the right attitude. He started investing in 2002, but he did not realize true success until almost ten years later. During that decade of trying, he never gave up.How did Abhi get started investing in real estate?
Abhi attended the University of Michigan where he pursued a degree in electrical engineering. He was a decent student but always wanted to be an entrepreneur. In high school, he started a computer repair business, which he loved. In college, it did not take him long to discover real estate after reading Rich Dad Poor Dad. Shortly after entering the world of real estate, he met a couple of real estate investors from Detroit. When he was 18, he started investing in notes and bought a flip and a rental. His investing did not go as planned. He made no money on his flips and barely broke even on a rental property after experiencing a water disaster. He escaped his first venture into real estate without losing any money, but he gained a lot of knowledge.
After college, Abhi moved to Nebraska to chase a girl. At a real estate investor networking event in Nebraska, he met one of his mentors. Afterword, Abhi learned about wholesaling. He also learned that rejection is good. The more you're rejected, the better the chance the next person will say yes! Abhi started knocking on doors to find motivated sellers. He was making money by wholesaling a few houses and finding deals for his mentor.
Yet Abhi was not yet setting the real estate world on fire, so he moved to Missouri to learn from another mentor. It was now 2007, and he lived with an investor who was developing land. Abhi was making a little money wholesaling, and he was selling cars on eBay to make ends meet. Eventually, he moved to Atlanta to follow another mentor he had met.
When Abhi moved to Atlanta, it was right before the real estate crash. You would think it was a horrible time to invest in real estate, but he made it work. He realized that he had to change his attitude by taking responsibility for his actions and life. He started his own company and learned how to sell houses to large corporate buyers. He took the time to plan his business and not just work inside of it. Over the next few years, he built his business up to where he was doing more than 30 flips per year, in addition to buying rentals and even building new houses.How does Abhi view the current market and make money within it?
Abhi works within a hot market in Atlanta. Just a few years ago, he was buying tear-down properties within the city for $85,000. Those same properties are now selling for $160,000! In this podcast, he talks about how he likes to make money by following the path of growth and unique deals. In one case, he bought a lot of land that sat above three sewer lines. No one else wanted to deal with the hassle, but he took it on and will make a ton of money on the deal.
Just like me, one of his biggest challenges is dealing with contractors. He is constantly looking for new crews and working to keep his current crews on track.
Abhi has some great advice for real estate investors. He thinks the first thing any investor should do is get to know themselves. Figure out what you like to do and cater your investing around those skills. Build a strategy based on your strengths—not what others thing you should do. He also believes that knowing the market is one of the most important things any investor can do. The better you know your market, the more money you will make.
Abhi also has his own podcast and radio show, which you can find at Realestatedealtalk.com.Build a Rental Property Empire has been completely revised
My best-selling book Build a Rental Property Empire has been completely revised and re-written. You can find it here on Amazon.Transcript
[0:00:58.8] MF: Hey everyone, it‘s Mark Ferguson with Invest Four More. Welcome to another episode of the Invest Four More Real estate podcast. Today, Abhi Golhar joins us, I hope I got his name close.
[0:01:09.2] AG: You did.
[0:01:10.5] MF: Awesome! He has his own podcast, Real Estate Deal Talk, been an investor since 2002, involved in flips, buying whole deals, multi-family and even new constructions. I’m excited to talk about how he got into real estate and learn more about him. How are you doing today?
[0:01:27.5] AG: Fantastic, thank you very much for having me on.
[0:01:30.2] MF: Loving to have you on. I’d love to start with what first got you involved in real estate, was that something you always want to do or did you happen into it? How did you get started?
[0:01:39.2] AG: that’s a good question. I’ve always been very entrepreneurial in nature and I’d like to think most real estate investors are pretty entrepreneurial. Wouldn’t you say? Like, you have to be able to put on a bunch of different hats, you have to be — you have to do all the checks and balances, you have to do accounting sometimes, you have to be the lead generator, you have to be the capital raiser, all of these things. I think inherently, we’re all entrepreneurs.
So when I was in high school, I started this little thing, it was very similar to, It’s like an early version of geek squad, we didn’t sell or anything like that. But back in the day when computers were about the size of maybe like as tall as your hip, that’s where I started. I started renovating computers, I guess. I started fixing computers for our neighbors and then grew into a small little kind of side gig when I was in high school and I thought to myself, “Wow, this is kind of neat.” Two things happened, one I discovered my entrepreneurial nature and then two, I really liked doing stuff that was really hands on.
At the time, that was working with computers, a really large computer, fixing software’s, fixing hardware issues and then I went to college and I’m like, “Hey yeah, I get to play a little bit more, it’s going to be fun, more hands off on more hands on stuff. I went to Michigan, got my four year degree in electrical engineering and for me that was a whole lot of fun but then I realized during that process, wait a minute, this is fun, it’s cool but it’s not as rewarding as I want it to be, but I’m still loving entrepreneurial side.
My first semester at Michigan, I was totally humbled, I had no idea what I was doing, I’m like, “Oh my goodness, this is so much harder than I expected, I’m going to fail in life.” Doom and gloom and terrible. One of my buddies Tommy gave me this book, everybody’s heard of it, it’s called Rich Dad, Poor Dad and I had read a lot of books before then and then after that, that really spurred my interest in real estate investing. I’m like, “Wait a minute, all these wealth, these generational wealth builders, this families, this massive people…
What do they have in common? They always have a portfolio of real estate. I thought that would be super cool right? It seems pretty neat.
[0:03:57.7] MF: That’s awesome. It’s funny because I went to University of Colorado and I was in Civil engineering but I ended up switching my first year over to business because it was nothing like what I expected it and I’m like, “You know, I don’t want to be a civil engineer my entire life, that doesn’t sound like fun.” It’s totally different. You don’t really think about things through when you’re younger but kind of a similar path.
[0:04:21.4] AG: Yeah, I completely agree, you don’t think things through when you’re younger. I was even contemplating going over to IOE’s just make engineering industrial operation in sharing side and because everybody on campus, they’re like well, you know, IOE’s just make engineering look sexy. I’m like, I can see that you know? You couple business with processes, with operations and things like this and I’m like, “Yeah, that seems like a lot more enticing to me and something that would be more my speed,” but I was so far into my electrical engineering thing, you know how it is. I mean, it’s not like all those credits will transfer.
I was reading all this books, I attended a couple of networking events and I met this guys and they were investing in inner city Detroit, I’m like,”All right, cool.” I was 18 at the time, I had no idea, again, no idea what I was doing completely like beyond stupid and I ended up wholesaling from properties and buying and selling notes or brokering notes or assigning notes or whatever the technical legal term for that would be at the time.
I saved up a little bit of cash and I purchased a couple of projects two or three projects in Detroit, one of them is a rental and two were flips and that’s how I started. I’m like, “I’m going to do everything possible, it’s going to be super great,” and this is the height of the real estate market, this is 2003, 2004, 2005, when anything was legal you know?
Man did I have my posterior handed to me on a silver platter, I remember, and I’ll finish this story up in about 15 seconds, 30 seconds at the most. I remember finishing my classes at Michigan, sometime in the evening, I got a call from my contractor and he’s like, “Hey, you need to go out to your rental,” I say, “Why?” He’s like, "To go and left the shop back for you, it’s all good, just head out there, I have to go, I can’t be here right now, I’m like fine.”
I get to Detroit, by the time I get there, it’s super snowy, it’s a blizzard, pull up into the rental that I’m renovating at the time, hear running water, go down stairs and when you meet me, I’m like five foot five, 120 pounds. I see the shop vac. The shop back kind of looks right back at me, I stared down the shop back and I’m like wait a minute, I know what you are but I can’t move you because you know, I’m 120 pounds and I lift five pounds at the gym for my bicep curls.
I go down stairs, I feel the running water, I’m like, “Holy cow, this is terrible but in that moment, I realized one thing. That I didn’t know anything and that was probably the most powerful moment and that’s… I took off after that. I’m leaving a lot of the story out. It was a very tough time, it was a scary time, mom and dad had no idea I was in investing in inner city of Detroit and I wasn’t about to tell them. It was kind of funky.
[0:07:04.6] MF: What happened? Did the pipes freeze? I’m assuming? Or…
[0:07:08.8] AG: Two things happened, one, there was some type of leak somewhere, I could never figure out where it was but then the pipes also froze because I didn’t do anything properly. I didn’t keep the heat on, it was something that I thought, you know what? I’m rehabbing it, I don’t really need a whole lot of stuff that’s on right now in the property.
So great, pipes froze and that night, well first, I didn’t have any help so I went door to door that night, in the city of Detroit, imagine that, and it’s not very fun, I mean, it’s a very humbling experience, knocking on doors, asking for help.
Luckily there was a neighbor that said okay, I’ll help you out, then we toiled until 2 ‘clock in the morning, it was a very weird experience for me. We just couldn’t move enough water out to the basement and I thought to myself, “Well, water’s not going anywhere and I’m not going anywhere because it’s a blizzard outside, so let me just fall asleep.”
Unfortunately, I didn’t have a bed, I didn’t have any mattresses, I didn’t have any sheets, I had no heat, so I slept in the second story of that house, that night, freezing, cold, alone, crying. Yeah, I cried, I’ll admit it and that’s when I realized, I’m like, “I know nothing but then at the same time it’s amazing that I know that, and I just need to put myself around people that know more than I do and just learn.”
[0:08:31.8] MF: Right. What were your next steps from that? Well I guess first, before I ask that, you’re investing in Detroit kind of right before the crash? Did you end up keeping those properties during the crash or did you get rid of him? What happened with those?
[0:08:45.2] AG: I got rid of them luckily, I got rid of them so I was able to get rid of the flips, I made no money on those flips, I probably lost a couple of hundred bucks on those flips and then the rental, I remember that next week, I pretty much took a pause from classes, did nothing, back home or anything, I was in Detroit, I was able to find a contractor, get the water out of the basement and I just said, “You know what? The heck with it. I’m just going to wholesale this property out, there’s somebody else that showed interest in that area, I’m like okay, “Good luck,” and barely made that. Keep in mind, this was a time when everybody else was making tens of thousands of dollars in real estate in Detroit and I was the only one that was like sitting here failing because I had no idea what was going on.
I didn’t have the knowledge, I didn’t have the mentorship and I certainly didn’t have the payment. It was a very interesting experience.
[0:09:43.1] MF: Right, well I would say too, at the same time you’re extremely young in college and had some horrible disasters happen, yet you didn’t lose everything, you made out okay. It’s a relatively cheap education compared to what could have happened.
[0:09:57.7] AG: Yes, that is true, that is very true.
[0:10:01.5] MF: How did your real estate career progress after that?
[0:10:06.2] AG: That experience scarred me for a while, you know? I don’t’ want to do rentals, I clearly can’t handle myself with contractors so the next best option for me was let’s go ahead and move to Lincoln Nebraska, follow a girl because that seemed like the right thing to do, we talk about being young and making dumb decisions.
[0:10:29.3] MF: There you go.
[0:10:31.4] AG: That’s what I did and it’s funny because in every step of my life and in every big move that I’ve made, real estate has always been there. Now, whether I knew it or not, it was kind of always hovering around. When I moved to Lincoln, I did the same thing, I’m like, “Hey, you know what? Let me go to a couple of networking events, let me just see what people are doing,” and I naturally gravitated towards real estate, I didn’t really know why at the time.
Wow, all the big wealthy generating people, all this multi-millionaires, billionaires, they have real estate in their portfolio, that’s what I kept holding on to in the back of my mind. I go to a couple of networking events and I meet this awesome guy, his name is Andy. I think he’s a Vietnamese fellow, a really good guy, humble guy, amazing wife, great family, I mean, just the best type of person that you can ever meet and even to this day, I can barely understand what he says but there is something that he taught me in Lincoln, he said, “I’s okay to be rejected, what do you mean?
No it’s not, are you kidding? Rejection is just terrible. :Who likes rejection,” he’s like, “I do. I’m like,” why? He said, because it gets me deals, okay Andy. We have to sit down and have a drink, you have to explain this to me because I clearly am losing something here. He’s like, listen, if I knock on a hundred doors and I get the door slammed shut in my face 50% of the time, I can work with that, even if it’s 80% of the time, I can work with that.
Because that means that 20 people that are willing to talk to me about their property, even if it’s out of the 20 or even if it’s out of the 10, even if I have one or two or three sales, you know what? I’m making money and I’m buying rentals.
He got me out of my funk, whether he knows it or not, he is the one that help me get out of my real estate funk in being scared of everything real estate back then. He said listen, you are going to knock on doors, I’m like, I hate knocking on doors, you’re, he’s like, “You’re gg=oing to nock on doors, I’m like, I hate knocking on doors, he’s like, you’re going to knock on doors, I don’t care. Here are all the addresses, knock on doors and you are going to do everything that it takes to talk to somebody. Okay Andy, that’s fine, I’ll do what you say. That’s how I started.
Door after door after door, and I moved away in Nebraska not in the summer time mind you, this was like in the fall where things were getting cold and I guess that’s the other thing that continues to stay with me with the snow in the cold, everywhere that I went, very frustrating. In Lincoln, that’s where I build that tolerance for rejection in this real estate world. Now, I don’t care, you give me your phone number and addresses, I have no problem door knocking or calling until my fingers are numb from dialing or my jaw hurts form talking so much.
Because that’s the stamina that I’ve built over time.
[0:13:25.6] MF: Nice, were you wholesaling houses there in Lincoln, what the main goal was?
[0:13:30.3] AG: Yes, wholesaling houses and if Andy thought it was a good enough a purchase for him then he would buy it, rehab it and turn it into a rental. I was starting to get back around the rehab scene a little bit and I saw homes that he had just purchased that were in bad shape, I saw home that were currently being rehabbed and I also saw homes that he had finished and also then subsequently tenanted.
It was a really good, a contrast for me to see and to help kind of lift my spirits a little bit because you know what? Quite frankly I was still scared.
[0:14:05.2] MF: Did you keep building in Lincoln or did you end up moving around again?
[0:14:09.3] AG: Yup, I moved from Lincoln. I was in Lincoln for about three months, thankfully, and then I moved to the small little town in Missouri called Wentzville and I moved in with — at the time I didn’t know David but we had met through a mutual mentor and my mentor said, “Hey, you know what? We’ve been talking since your days in Ann Arbor, I know this great guy who lives in Wentzville, you guys should room together.”
All right, great. I’m like following with the Universe’s plan here. Because I’m leaving Lincoln, that relationship is over, relationship with Andy was kind of a conclude mentor mentee relationships. He and I will talk on a regular basis and now I find myself in Saint Louis, then I drive to Wentzville and at the time, this is late 2097, early 2008. Wentzville is the super small town, it’s about 40, 45 minutes west of Saint Louis and I lived on the corner of highway Z and N and you will not believe.
I had to take David’s four wheeler to get to the nearest Walmart. I was like total Boonville, USA is kind of where I used to live. Surprisingly enough, David was a real estate developer and he was building a subdivision and this was now like reaching that height of that crash, right? He was borrowing from investor, he was doing a lot of work and then I saw his — I saw what he had to do, how he had to maneuver with the business and with the architects and with the city planners and talking to investors and raising the capital and still doing the project.
I got to see all of that first hand. I was living with a guy. So it was a crazy experience and he let me live there for 10 months, rent free. Thanks David, if you’re listening. I learned from him but I was still a little scared and I was still wanting some more, I’m like, “Okay, I have to start making money for myself. How do I make money for myself?” Two things came to mind. Wholesaling, what I did back in Ann Arbor, wholesaling houses and also the broker these notes, I kind of got back into that a little bit and just to survive, I was buying and selling cars.
So I use to find cars on Craigslist, specifically classic cars, like you’re 65 Mustang GT fast back, two plus two A code, four barrels, v8 engine, that kind of thing. I used to put them on the contract and sell them on eBay. I used to facilitate a lot of those transactions until I got a call from my other mentor who lived in Atlanta and he was like, “Hey, why don’t you come down to Atlanta, there’s a lot of opportunity here form a real estate perspective.” So I packed my stuff up and I go to Atlanta.
[0:16:59.4] MF: I’m curious, real quick, with David and developing things, how did it end up working out when the real estate down turn hit with him?
[0:17:08.9] AG: That’s a good question. I think two things happened. I don’t know the entire story of the outcome, outcome but what I do know is he was able to sell off a good amount of his lots and then I think he may have lost a few but how many, what that ratio is, I’m unsure of. From my eyes, he did everything that he needed to do.
I mean, when you have the value of real estate plummet and then you end up in kind of Smallville USA and you’re hoping that your piece of real estate still stands, then it becomes a little bit of an issue. Quite frankly I think he negotiated something with bank on some long term note, I think that’s what happened. I don’t think he lost anything if memory serves me right.
[0:17:56.0] MF: I’m always curious to ask people who went through that or know people because I think there’s a misperception that every single investor who is around that time went bankrupt and it really, I mean, it was bad for a lot of people but it wasn’t the end of the world and a lot of people made it through okay.
[0:18:09.7] AG: Yeah, I completely agree and I think if there’s one thing that we can all learn from that crash is one, you have to be willing to be flexible, you can’t be super stubborn and you have to be willing to be like, “Hey, let’s work together, let’s figure something out,” and finding deals and hustling to do what you’ve got to do becomes priority especially during those times. So I completely agree, I think if you bought it for the right numbers, you didn’t lose money.
This is not a plug for Suze Orman, but I like what she says about stocks, right? “You only lose money if you sell your stock. If you’re selling your stock at the bottom, you lost money but if you hold on to it,” like, can you imagine Fannie Mae at $3.25 a share? You know what Fannie Mae is right now? It’s in like the $20’s. Imagine if you bought a thousand of those shares, unbelievable. But anyway, we’re not talking about stocks, we’re talking real estate.
[0:19:05.8] MF: Yeah, I completely agree about yeah, there’s a lot of people, a lot of landlords who went through it and they didn’t sell and they’re fine. They did just fine going through it and a lot of places rents didn’t even drop that much. It was the housing prices. Anyway, what happened in Atlanta?
[0:19:22.2] AG: All right, Atlanta. I feel like this is monopolizing your time.
[0:19:27.1] MF: That’s what we’re here for is I hear stories and how people found success.
[0:19:32.1] AG: There you go. My mentor in Atlanta gives me a call and says, “Hey, you know what? The market is absolutely crazy over here, but I’m starting to see a correction.” And I’m like, “All right, what do you mean?” He’s like, “Watch the news.” I watch the news and I will not forget this, this is January 2009 and there is some reports that there’s some report of a trader at Société Générale or some bank overseas that starts doing some crazy stuff and it’s totally not legitimate transactions. Those transactions are not legal.
Then everything else happens. It’s not that that was the turning point for this crash or for the growth, for the inflection point but it was definitely, that sticks out. I remember watching the news, watching CNN and they say, “This trader’s going down,” and then after that, boom, Lehman Brothers. “Oh my gosh. What is going on right now?”
Everything starts to just turn and he wants me to move to Atlanta in this? I mean, I like my rent free scenario in Boonville, USA. What do I have to do in Atlanta and what’s rent like? I was struggling with that. He said, “Don’t worry about it, come to Atlanta and we’ll figure that out.” So here I am, continuing to wholesale and continuing to believe that there’s a little part of me that still has this love for real estate. So I decided to start my investment company, it’s called Summit & Crowne, and I started it in March or May, I’ll look at the records, June of that year, 2008.
He said, “Okay. Here’s what we’re going to do, we’re going to talk to folks that are selling real estate, and we’re going to connect them with buyers.” I’m like, “That’s what I’m already doing, what’s the difference?” He said, “Well, sometimes these buyers are larger buyers and as the market is turning downward, you’re going to find buyers that are real players in the market come to you because you have what they want, which is good inventory that isn’t crap, that fits their model,” and that’s what we did for a good year or two.
That was my kind of rebirth, I suppose, into this real estate world. Starting that LLC, just totally clicked for me. Then I said, “Wow, I understand a little bit more of this game and I used that continued to use the completed transactions as leverage on myself. Not to get anything from anybody, just to leverage my — to leverage those deals to say to myself in the mirror when I woke up in the morning, “Hey, you are a confident guy, you understand this game, you will continue to understand this game, you will never know everything, which is fine because one, you’re a student of life and two, now you know how to put people around you that are significantly better than you,” like you Mark.
[0:22:38.4] MF: I don’t know about that.
[0:22:41.8] AG: “And crush it together,” and that was what I told myself every single day in the morning. It does wonders, you know? The mind is such a powerful tool. If you tell, if you command something, it’s there. The quality of your life, I think Anthony Robbins says it the best. The quality of your life is directly proportional to the quality of the questions you ask yourself every day. If you stand in front of the mirror and say, “Oh I’m fat, oh I’m fat, oh I’m fat”? Or do you stand in the mirror and say, “Oh hello. I love you.”
[0:23:13.5] MF: I’m guessing your whole career kind of took off in an upward motion after that, by the sound of it.
[0:23:18.7] AG: Yes, pretty much. Kind of speeding up to where we are today, Summit & Crowne does about 30, 35 flips a year and I feel like it’s good for us, it’s not super big, it’s not super small, it’s just there, we do — I feel like we do good work for the community and we donate a lot of our time to help communities improve to just some good causes as well. I love investing in multi-family, I love single family rentals, I love flips, I love new construction and I’m sure we can continue talking about that but that’s kind of where we are, it’s a lot of fun.
[0:24:00.8] MF: One thing I have, if you’re doing that many flips, how are you finding most of your deals? Are you doing direct marketing or are you just finding them all over the place?
[0:24:09.0] AG: One of the things that I would say we do better than most is really develop good relationships of wholesalers and that’s just yeah, “Hey, it shouldn’t be a text then let’s do a deal.” I want to know what’s going on in your life right? I would come to you and I would say, “Mark, let’s have a good productive meeting. Tell me what’s going on, tell me who you are, tell me what you love to do, what is your passion for life?” And it’s as a result of those conversations over and over again, that wholesalers just send us deals.
It’s incredible to me, that’s my number one go-to. My total number one go to are wholesalers in the market that are good wholesalers that know what they’re looking for, they have a little bit of experience and it’s the relationship, that is just key for me. I like yellow letters, I recently saw a blue letter because I get yellow letters and blue letters as well. Apparently a blue letter is like a new thing now, I don’t know. That’s where it starts for me, it’s the relationship with the wholesaler.
[0:25:11.6] MF: I’ve gotten a lot of pink letters lately.
[0:25:14.8] AG: Pink letters too?
[0:25:17.1] MF: No, it’s funny, I bought I think seven out of my last eight flips from wholesalers and I was almost always primarily the MLS before that and then we do auctions, it’s always evolving. I see a lot of — It’s funny because I talk to this wholesaler who is, they’re doing a lot of business and they’re like, “We love working with you, it’s so straight forward, you always do what you’re going to say.” They’re like, “Working with these other investors, it’s ___ show,” you know?
[0:25:43.0] AG: Yeah.
[0:25:43.4] MF: If you can do what you say you’re going to do and follow through, it will help you so much in the future.
[0:25:48.8] AG: I agree, if you’re a good guy, or a good gal, and you treat people right. People like people who are like themselves or who they want to be like, another Anthony Robbins thing. Don’t worry, I’m also not pitching Anthony Robbins. But I like to believe that’s true. Why would I want to look for work with some investor that has a ____ show instead of working with Mark who has incredible content, he’s providing the investor community, he has good videos, great books, all the stuff and he’s known the market he buys, there’s no crap and he says he’s going to do what he’s going to do and that’s it.
I want to deal with somebody like that, who is a man of integrity. Otherwise, there’s just no point and I feel like in this world, sometimes wholesalers and agents and this types of people and even investors, institutional, they get such a bad rap because people are crappy. But if you’re not a crappy person then you’ll get so much ahead just by showing up and being nice.
[0:26:53.5] MF: Yeah, completely agree and there’s so many people out there trying to sacrifice or gain a few hundred dollars on one deal and they end up sacrificing 10 more deals.
[0:27:05.1] AG: Right.
[0:27:05.9] MF: The long term game, if you’re worried about a couple of hundred dollars on one deal, you’re never going to survive in this business.
[0:27:11.4] AG: Yup, I couldn’t agree more, I don’t get it, it’s like, try not to make a million dollars on one deal. Let’s not be in a scarcity mindset, people, because you will not grow form that. If there’s one road to disaster, that’s it, having the scarcity mindset, that will bite you in the posterior every time.
[0:27:30.4] MF: Yup, great information. I’m curious, are you still mostly in the Atlanta area? Were you primarily investing now?
[0:27:36.5] AG: Yup, still mostly in Atlanta, we tried Charlotte. I like charlotte but then I should have thought to myself — One of the reasons that we went to Charlotte was this; Maybe about a year, a year and a half ago, Atlanta was booming with activity. The city was taking forever on permits so in order to get permits, the length of time for either demo permits, let’s say a combination of both demo permits and build permits and then to start a project and be shovel already was anywhere between four to five months and I thought to myself, “Well that’s annoying.”
I have money that I’m paying on just on a monthly basis, that’s a very expensive Starbucks latte if you do all the math or that’s a very extensive breath. That becomes a problem so I’m like, “Hey, you know what? Let’s take a look at Charlotte.” I love Charlotte. I mean, I think the people are amazing, the city is great, you can see where Charlotte is going to grow to, I feel like Charlotte’s a mini Atlanta, you can take a picture of Atlanta, put it on transparency for those of you that are listening that are old enough to understand what a transparency is and that you can impose that or you can super impose that if you go to the skyline of Charlotte, you know exactly where Charlotte’s going to be in 10, 15 years. It’s incredible.
Charlotte has so many builders and so many opportunities but one thing that Charlotte is missing is a very unique kind of voice. If you go to Charlotte and a lot of the renovations that are done there are your traditional kind of house your craftsman build, no big deal. But the moment that you start putting say a farm house look or a modern home build or a farm house build or a prairie modern look, something that looks a little sexy or something that’s different, it flies right off the shelf. So I thought to myself, “Well heck I can make this happen and I can get faster yield, larger yield in Charlotte than I would be getting in Atlanta.”
Well, come to find out, managing projects remotely is annoying if you, again, don’t have the right team. We didn’t have the right team for a little while and we had to sell the projects, which we did at a pretty good margin. It helps to buy right and so we ended up selling the majority of our projects to other builders and to other investors and we still have one or two that we’ll probably just keep those rentals. I haven’t fallen out of love with Charlotte yet, but I feel like the contractor situation as markets get hot becomes very annoying.
You know, contractors will generally say then, “Oh I don’t need you. I can go find anybody else to do,” and the materials start to increase in cost, the labor starts to increase in cost, and then it starts to become a little bit of a problem and then if you are out of state and they know that, they’ll just start taking advantage of you unless you have a physical presence in the city, then it’s difficult to control what’s going on. So we’ve sold off a bunch of stuff to Charlotte, again we’re hanging onto maybe one or two as rentals and we moved all of our operations back to Atlanta.
Probably the best decision ever. Why? Because we’re able to focus more on Atlanta. We can find better deals, have more conversations, have more meetings, get better yield and even if we were getting the same yield in Charlotte, why am I going to beat traffic, the three and a half hours that it takes to get on a one way trip, on a one way drive to Charlotte just to get the same yield? It doesn’t matter, you know? I am not interested in that. So to answer your question, simply put, we’re in Atlanta.
[0:31:03.2] MF: It makes sense. What is the market like there? I mean here in Colorado, it is insane. It’s just crazy that there is no houses for sale, they are not really building. What’s it like in Atlanta?
[0:31:13.4] AG: Yeah, Atlanta is starting to spread out a little bit. So we were in a little community called Kirkwood in East Atlanta back in 2000 — I always say “back in the day”. Like maybe about two and a half, three years ago we were buying lots. We were buying teardown opportunities anywhere between 70, well $65,000 and right about maybe 80, $82,500. We never paid more than $85,000 for a teardown opportunity in Kirkwood.
Today, are you kidding me? You can’t purchase a teardown opportunity for less than a $160, $170,000. There’s no way, right? So that tells me a couple of things. One, we made the right decision. Two that we’re starting to see a crazy inflation of prices. So that’s why buying it at discount even in a hot market still makes sense for us and if we are not paying attention to the numbers, which I’m sure we’ll get to too but if we’re not paying attention to the numbers then once that artificial kind of inflated number starts to pop then it’s not going to go say from a 100% — it won’t drop by two or three percentage points. It will drop by significantly more to correct and normalize to what those prices really should be.
So Kirkwood, Atlanta if you take a look at Atlanta as a whole, Kirkwood yeah you are looking at north of 20 and then east of 75, 85. If you look at area, Atlanta is going south west. So now communities like west are tremendously popular. Atlanta has something called the BeltLine. It’s this new initiative that’s been built up by the city. It has amazing trails, houses by the belt line, you can get from one neighborhood to the next neighborhood, you have a lot of restaurants along the BeltLine as well and it’s a great little thing. I mean you have to visit. It’s so cool and what’s crazy is everybody wants to be by the BeltLine. Everybody wants to be by the BeltLine.
So west end is seeing some of that growth and I would say it’s still great even west end. Sellers know, “Hey, BeltLine, that means an automatic $60,000 bump to the upside on the acquisition price, on their sales price.” Okay, you’re either going to have to make a decision and see if that $60,000 is really worth it for a long term acquisition once the BeltLine comes around that area. Will it be worth that? So it’s that risk.
[0:33:52.7] MF: Oh sorry, I was just going to say, when you are investing are you primarily looking for these growth areas or are you going anywhere you can find the deals?
[0:34:00.9] AG: I like looking for growth areas. I also like deals that are challenging. So for instance we own a lot on 945 Hill Street in Atlanta. It’s right near Grant Park at less than a minute drive from Grant Park. Grant Park is this amazing little area, super historic area as well. The homes there, the nice super nice homes will range from anywhere between $600, $800,000. As you start going west of Grand Park then those homes start to drop in value a little bit but not in a bad way. They’re just not as close to the park and the zoo.
So you’re probably going to start seeing valuations anywhere between 400, 450, 500 as you continue to go west then you’ll hit Hang Aaron, and then your property is worth like nothing. So Hill Street is pretty big north and south street and we own 945 Hill. It’s a challenging lot because three of Atlanta’s oldest sewer lines run diagonally through the lot. So this is a good thing, well it’s a good thing and a bad thing.
It’s a bad thing because it’s annoying to deal with. You have to have resources, you have to have the knowledge and you have to know people in the city or you have to know the right people with the city to handle the project and work with them a little bit and see what you can do. It’s a great thing because most investors don’t have the knowledge to do it and most new investors don’t want to touch it. Most pro investors that do single family new construction they’re not going to do it. Like, “Why would I do that?” So therein lies opportunity.
So in this particular deal, we purchased it for a super small amount, probably about $42,000 and this was about a year and a half, two years ago and we have the ability to just to hold land if we need to. That’s a result of investing properly. For those of you that are listening make sure that you have a little bit of cash on hand for an opportunity. So we bought it for around 42 and when we went to the city the first time they said, “No. We have to condemn the lot.”
I’m like, “That doesn’t make any sense. I mean you have to buy the lot from us. You can’t condemn the lot, you have to purchase it and you should have told us that.” So they said, “Okay, we’re not interested in buying it right now. Let’s talk about it later.” Come to find out a year later they’ve rezoned that lot to a duplex lot and the house right across the street was a new construction home. A three bed, two and a half bath.
I think it’s at 944 Hill and that sold for $415 or $420 a year ago so what do we have here? We have a gem of an opportunity, right? I’m all in right now into this land right around say $55, $60,000 with the interest and a little bit of development cost and maintenance and stuff but I can build a duplex and each side I can sell for, even if I sell it for $375 my cost to build and my cost to capital will make sense. I mean that’s a pretty sizeable net on that specific deal.
So these types of deals will be absolutely loved. Even in west end, if we can find something that makes sense would be great. I am not going to go Riverdale just yet, unless it’s going to be a single family rental or that kind of thing. For me, spending time and traffic now that interstate 85 south doesn’t exist. Part of it is gone, so not really interested in sitting in traffic. But yeah, I like growth areas and I like areas that have opportunities that are difficult opportunities.
[0:37:34.1] MF: No that’s great and one thing too, my challenge is you touched on earlier about finding contractors in the hot market. Sometimes they abandon the investors and go to the home owners because they can make more money. How are you finding your contractors? Are they relationships overtime or is it a constant process for finding new good contractors?
[0:37:53.9] AG: I think it’s a constant process. I think it has to be just like finding people to run an organization, you always need new blood and you always will need fresh perspective on things and you need smarter better talent, faster talent. I think you always have to be looking. Sure, we have some long term relationships and they are not going to go anywhere but we also need that one guy or one gal that says I’m going to step up to the plate and build something you’ve never seen before.
And that can give us a little bit of an edge and if that edge will make us an extra 25 or 30 or 40,000 on a flip or a new construction deal then hey, guess what? It was worth it. So I would say again, go to those events, shake some hands, see who’s doing well, see who is not doing well and here’s a little secret and a little tip, in every market everywhere there is one guy or one gal that has done so much research. They have paralysis of analysis and they’ve created a spreadsheet.
The spreadsheet could be maybe two or three megs in size with information. If you are able to find that person, befriend them, take them out for coffee, let them know, “Hey,” you are interested in working together, which you are honestly and genuinely and there is potential here on the real estate world, they maybe are interested in sharing their contacts and sources of deals. You know why I know this? Because I have done that.
There’s an Excel spreadsheet that only a few people have in Atlanta that has like 450 or 460 names of contractors, of plumbers, of expeditors, of all the contacts that you need to know along with notes, along with the last time they’ve used them, along with the last updated contact information and it’s a massive list. Very similarly, if you can befriend say somebody that runs an HOA and get all of the addresses and all the names and all of the phone numbers and all of the email addresses of the home owners in that that subscribe to that HOA, how cool is that?
So that’s what we did in Home Park. One of the guys, he was part of the HOA and then I think he stepped away from the HOA but he was interested in investing in real estate. So this gentleman said, “Hey, I know you guys. I have seen you guys everywhere. What’s going on? What’s the story?” And we didn’t know what his intentions were. He wanted to do a deal. He wanted to do a deal so badly, he compiled — I am going to have you send this Excel spreadsheet just so you can take a look, just between you and me.
But it’s every house. It is 2,000 homes in this neighborhood called Home Park which is pretty much like a rental community for Georgia Tech students and also, there are a good number of home owners there too but I have everybody’s name and phone number, email address, when they bought the property, what’s currently going on with the property, are there squatters in there. I mean it is unbelievable the amount of data that this person is collected, so this works.
[0:40:51.9] MF: Wow, that’s great advice and you’re right, there are people like that in every market where they research themselves to death but never actually do a deal. I mean they do do some deals but what they love to do is research and compile data and if you are an action person or someone like me who is not as good as the details and partnered with them, it could be a great experience.
[0:41:12.1] AG: Yeah, I completely agree. Just imagine, right? You have two 2500 homes I think that’s the size of the spreadsheet. You have 2500 homes, I mean, I’m speechless. I’m sure even if it’s one percent of that, give me one percent I’m sure there’s opportunity there.
[0:41:31.5] MF: Oh yeah, for sure. Well great information. We’ve talked a lot about your past, your history, what you’re doing now. One thing that I think a lot of people can learn too from this is it didn’t happen for you overnight. It didn’t even happen for you in a couple of years. It took you a long time to really get to this level.
[0:41:48.4] AG: It took me forever. I started my journey 2002 and there’s some folks who will say, “Well, not really, you’re in Michigan.” I disagree. My mind, I may physically like my physical body may have been at the University of Michigan, my posterior may have been in class but my mind wasn’t there otherwise my GPA would have been significantly higher. Actually to this day if mom and dad still don’t know my GPA. Mom and dad if you’re listening, sorry, you will never know.
But my mind has been there and if you are so consumed by something allow yourself to be consumed a little bit not to the point where you are ignoring other people and family members and siblings and kids, don’t do that. But be consumed enough to where you’re spending time with everybody that you need to, you are fulfilling your obligations, but then you are hitting go every other time and you have to. I went from Ann Arbor not knowing anything to Detroit to the failing, to Lincoln Nebraska following a girl, to meeting Andy, facing my fear of rejection.
To St. Louise, then to Wentzville, Missouri 10 months of rent free with a good buddy developer who was at the height of the crafts doing a lot of good things and then Atlanta during the height of the crash and then the complete downturn, learning, learning, learning and then you meet so many cool people, so many awesome people, your student of life and you realize there is one thing and you have to understand your objectives with all of this.
Don’t let anybody tell you that, “Hey, yeah you need to be flipping or you need to be doing this.” Don’t pay the $50,000 for the courses because quite frankly you don’t need them. Talk to Mark because he is doing good stuff come talk to me, hit up realestatedealtalk.com but I think for me it is know yourself and know your objective otherwise real estate will become a job and we want real estate to be a business. We talk about real estate being a business. The business of real estate investing.
We want to build a real estate business but then we end up building a real estate job and that, for a lot of people, isn’t really what they imagine. So continue to hold that future of what you want in front of you and tell yourself what you want every single day and you will get it just keep that objective in mind and know yourself. If you are a guy or a gal that enjoys watching Lost but then you are investing like you are watching Wheel of Fortune, which is super predictable and you are probably not going to have a lot of fun.
I mean Pat, I love you but I’m not a big Wheel of Fortune guy. I’m a Lost kind of guy. I am the adventure seeker, I like getting the edge. I like doing bigger deals, a little bit riskier deals than — with experience you can minimize that risk. But on the flipside, if you love to rent and you love passive cash flow, I mean, there are so many people that are crushing it right now in that world. One of my mentors here in Atlanta he has a 100 homes. He cash flows at minimum $250 a month on a hundred homes, are you kidding me? That’s $25,000 a month in net.
[0:44:51.6] MF: Yeah, that’s huge and like you said there are so many different ways to do things and I think another lesson too is that you didn’t just sit back and wait for it to happen too. You are going after it however you could. I think there’s a lot of people who just think they’ll buy a course or read a book and then things will just magically happen and it never works that way either.
[0:45:10.7] AG: It never works, and that’s why I love your site. Everything about it screams action. I can’t remember the name of the movie but in the movie this guy said, “Worrying is like a rocking chair, It gives you something to do but it doesn’t get you anywhere,” right? Very similarly, in this world if you want to be a real estate investor, or a wholesaler, or a builder, or a developer, or whatever your aspirations may be, get off of your butt, let people know what you are about and do something.
Because then you can get in touch with Mark, you can get in touch with me, I’d like to think for super cool people, have a conversation and we can at least point you in the right direction. If you are continuing to listen to podcast after podcast, after podcast, after podcast, I mean it gets really annoying. Podcasts are great, awesome information but if you’re listening to this stuff and you are not taking any action then shame on you.
Stop this, stop watching TV, stop listening to podcasts, wake up an hour earlier, go work out, meditate and write in your journal and then after that just start crushing it in the morning. If you are not doing that then you have no reason to be listening to this because at the end of the day are you really going to do anything about it?
[0:46:20.5] MF: Yep, that’s great advice. One thing I always here from people is, “Well, I have no money, I have no credit. I can’t do anything,” and yeah, it makes it tougher. I always ask them well, have you actually talked to a lender to see how bad your credit is or how bad is it and they’re like, “Well, no.” Like, “Okay, why don’t you go talk to a lender to see where you’re at and see how you can fix it?” they’d be like, “Well, I know it’s bad.” I’m like, “Go do something to figure out what you had to do,” and people just won’t do it so.
[0:46:44.6] AG: Right, exactly. I think for kicks you should do a podcast that’s like just super depressing. “Yeah, I don’t know. You know just man, god I hate my life and I am just not a — I have to do what now? Phone calls, emails? No, I have no money. I can’t do that.” That’s terrible. Yeah.
[0:47:10.1] MF: Well, unfortunately it’s true though. But hopefully you know the good thing is everybody can change and fix those things if they get the right mindset though.
[0:47:19.9] AG: Everybody has the opportunity. You have the opportunity, I have the opportunity and everybody listening to this has the opportunity. The question is are you going to do something about it and I love human beings, I love people and I am an optimist and I like to believe that you will. You will.
[0:47:42.1] MF: That’s awesome and great insight, it’s amazing how many people — I mean, I talk to a lot of people in my podcast, other successful investors and almost all of them have the same positive outlook, they’re spending time on themselves and like you said, writing in your journal, meditating, planning out their life. They are just not out there working a 100 hours a week constantly not thinking about things. So there’s so many trades that successful people have that others can learn from.
[0:48:08.8] AG: You got it. You have to sharpen the saw and that saw is you and if you don’t pay attention to ourselves, then I don’t even know what to tell you.
[0:48:22.1] MF: No, this has been great. A lot great information. I mean we’re almost up to an hour here now so we have to head out soon. But one thing — a couple more questions for you real quick. One you’ve mentioned before what’s the best way to get a hold of you if you want to check out your podcast, they want to get in touch with you, how can people do that?
[0:48:37.9] AG: Great question. So I have been doing like the social blitz lately. I feel like I am everywhere but it’s a lot of fun. The home is realestatedealtalk.com but if you’re so inclined now checkout the radio show. It’s Local to Atlanta but go to biz1190.com, hit tune in at the hours of either 4 AM, 3 PM or 8 PM every day.
I have a weekly podcast as well. I was trying to be like Mark, just started it so it’s a lot of cool information and Mark, you’re going to have to be a guest on mine as well. That’s also called Real Estate Deal Talk, we have a weekly YouTube show and six Q&A’s about real estate investing that are published every single week. So you can find us anywhere eon social but really, if you want to start somewhere, go to realestatedealtalk.com.
[0:49:26.4] MF: Awesome, we’ll have links to those of course in the show notes as well. One last thing I’ll ask you here before we head out; if someone’s brand new, they want to be successful in real estate, do you have a piece of advice for them about anything? What can they do to try and be a little more successful getting started on their journey?
[0:49:44.3] AG: I’ll give you two bits of advice how about that?
[0:49:46.3] MF: Oh, bonus.
[0:49:49.7] AG: The first we just touched on; get to know yourself. Get to know who you are at the core and develop that core to be unshakable. Because I guarantee you, not every market is like this one. There will be markets in the future where it’s not going to be as pretty, it’s not going to be as fun, but you know what? That’s when billionaires are made. Get to k now yourself, understand your investing personality and you’re ravaging. What is it that you want for the long term? Why are you even in this? You look back 40, 50 years from now, will this moment be your moment that you’ll remember for those 40 years and say, “It’s because of this day at this coffee shop, I wrote everything down and that’s when it started for me.” So get to know yourself, your personality and your strategy and I talk a lot about them, I’m sure you do too as well, Mark.
The second thing, if you are investing as a flipper, if you’re investing as a buy and hold single family rental investor, if you are a wholesaler, if you are a developer, if you are a builder, if you’re an agent investor, or whomever you might be, get your numbers right. Understand the parameters under which deals make sense and we don’t have enough time to go into to talking about that today but understand those numbers, your ARV numbers, the percentage of ARV, what’s the big difference between after repair value of fair market value and develop that good gut feel where the market is.
Don’t get obsessed over the numbers that everybody else tells you because most of the time, those numbers are incorrect. You have to adjust those numbers, your after repair numbers and your acquisition numbers so that you are happy and you can sleep at night. As it stands right now, I am probably not doing as many deals as I could be because I’m not a big fan of where the market is, so I’m okay with that.
If I’ve developed my formula and if the deals don’t fit that formula, guess what? I’m not buying them. People might criticize that and say, “Well, you’re not doing so many deals this year.” Quite frankly, I don’t care. Because if the deal doesn’t work for my formula, I’m not going to do it. Make real estate boring and you’ll be super successful.
[0:52:03.1] MF: That’s awesome advice, the same thing for me, I’ve kind of focus more on flipping and stop buying rentals because it just doesn’t make sense right here. You have to adjust your strategy and getting yourself in the trouble is easy if you just buy to buy and don’t think about what you’re doing.
[0:52:16.4] AG: You got it.
[0:52:17.0] MF: Awesome. Abhi, thank you so much for being on the show, great advice, I love both of those. Numbers are so important. I always tell people, know your market better than anybody else and you’ll be successful because so many people don’t take the time to learn their market and it’s so important.
Awesome. Well, we’ll have to do this again. I’d love to be on your show, we’ll have to keep in touch, thank you again and awesome work.
[0:52:36.4] AG: Hey man, you are fantastic and thanks for having me, I appreciate it bud.
[0:52:41.0] MF: Same here. All right man, have a great weekend and yeah, we’ll talk soon.
[0:52:45.7] AG: You got it
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