This week, Dr. Forrest Bryant interviews Abhi Gholar from Real Estate Deal Talk, a radio and podcast host in his own right that knows most everything there is to know about single-family, multi-family, and syndication.
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FB: Welcome to the High Speed podcast, this is your host Dr. Forrest Bryant and we are excited to have a special guest on today. We’re here to help our listeners on their path towards freedom and legacy and we do that by mastering business, finances, family and lifestyle. And so our guest today is Abhi Gholar. Abhi, how are you doing today?
AG: I am great Doc. Can I call you Doc? I’m going to call you Doc.
FB: You can, you can. I answer to anything Doc, Doc B anything like that and Forrest works fine too.
AG: Hey. There you go. I’m doing great. Thanks for having me on. I’m really excited.
FB: Well, I’m excited you and i’ve been getting to be good friends. We’ve been in contact for awhile now. And got a lot of mutual friends and Abhi the host of Real Estate Deal Talk (https://realestatedealtalk.com). So, you know tell us a little bit about your podcast and your radio that you are doing. And tell us a little bit about that.
AG: Yeah, So if there’s one thing just in terms of influence and marketing that I always suggest this is to get out there and listen to good information and then use that information to your benefit. Then, use that information to your benefit. And if you have the opportunity to jump on or be a guest to somebody’s podcast or just add value in some way. Absolutely take advantage of that. But you know Doc what I’ve been doing here over the last maybe 2 years is really putting out awesome content or at least what I feel is awesome content. Otherwise, I’ll get a lot of hate e-mail. So that’s good. At Least I think I have a good information out there. I have a weekly podcast that’s called “Real Estate Deal Talk”. I’m the host of “Think Realty Radio” which is a daily radio show that’s nationally syndicated on the Wall Street business network and all I do is talk about real estate investing, different strategies, tactics that I’m using in my business as a multi-family syndication. And just acquiring single family rentals on the side just for me. And also, the successes and failures of others along with my failures because this journey that we’re on in the real estate space it’s not riddled with success quite frankly. Not all the time. It’s also riddled with failure. And I love talking about that and the mistakes that we’ve made and all the gold nuggets that we’ve learned from that. I’m also the managing partner of Summit and Crown here in Atlanta, Georgia and we identify multi-family apartment complexes. We also like mobile home parks. And again, just you know kind of beat the horse here, I like my single family rentals. Some people don’t like them you know what, I like them. I like them. I’m sure we can get into that too.
FB : Yeah, Now that’s great. I think my listeners just got real excited listening to you say that because that’s a lot of things that we talked about on a regular basis. And so another very excited to hear what you have to say on these things. So we’re flipping the tables on you. You’re used to be the one asking the questions but today you get to answer all the question. I know you’ll be great. So you know tell us let’s start you mentioned failures we all have those I know you’ve got a very rich history you know with your education and your family. Give us a little back story on who Abhi is and how you get to this point?
AG: I was born in a little town called Portage, Michigan near Kalamazoo,Michigan it’s in southwest side of the state. Kind of halfway between Chicago and Detroit. About my parents are immigrants. They came from India. My dad came here. He flew to Detroit and took a one-way cab to Ann Arbor where he finished his Ph.D in IOE (industrial Operations Engineering). I can never get it right, sorry Dad. And now he’s been a tenured professor at Western Michigan. He’s been teaching there since I think 85 and I was born 84. And so a lot of my life I grew up in an academic world. You know I grew up loving Mathematics and sciences, english and the arts and music and sports. My parents did a very good job of having me be a very super well-rounded kid. And not just focus only on Math only on Science or only a combination of those 2. And they recognized that the arts and literature and music and dance is just as equally as important if not sometimes more important than mathematics and science. And so I grew up in this super academic household and I remember like I always had this want to learn about stocks and bonds and mutual funds and real estate ever since I was like 6-7 years old. And my dad always used to tell me, he’s like “Don’t worry about that right now. You know you’ll figure that out later.” And so he kept telling me that and telling me that this was all the way to my senior year in highschool. Like come on, what is the guy have to do? Right? Understand how the markets work and so I didn’t really get a whole lot of that education because the emphasis to my parents credit was focused on getting into a good college which I did I also attend University of Michigan. I pursued my Bachelor’s in Electrical Engineering finished in 2006 not because I was forced to do that but because I really enjoyed technology and back then it was a very different time. You know your computers you had like supercomputers I like to call them even though they weren’t really supercomputers. They were just really tall computers you have the towers and everything like this. And I first started my entrepreneurial career in highschool I created like an early version of geek squad which was to go around the neighborhood knock on doors and say “Hey, it’s Abhi, and do you have a computer that needs a repair” because I’m sure as heck that you don’t know a whole lot about computers. You know like let a kid help you out like switch out hardware, fix software issues. And so that’s what geared me toward my Electrical Engineering degree. Im like hey I’m really good at this stuff so why not get a degree in it. Well, I mean I can keep on going but I like I think when I was in Michigan I was super poor. I failed at first. My first semester at Michigan I was humbled. Are you familiar with the square root club Doc? Do you know what a square root club is? It’s a super elite club at Michigan where if you don’t do well on your first semester. Depending on how badly you do you’re admitted to the square root club. And it’s where the square root of your GPA is actually higher than your GPA. And for you Math nuts out there. I know you’re already laughing your faces off but for those of you that are like sitting out and you have a calculator. It’s when the only time this happens is when your GPA is less than 1. The only time it happens and so i thought geewhiz there has to be a better way. And I’m like in the corner of my you know 5 by 5 dorm room. And I’m like sitting at this corner like twitching like holy cow I’m like have this genius Indian parents and I’m going to get slapped if I go home and present these grades. I need to feel better about myself and my buddy Tommy gives me this books everybody knows this book it’s called “Rich Dad Poor Dad” by Robert Kiyosaki. And it lifted my spirit a little bit. I thought to myself geez there’s a lot more here than just a degree than I’m going to get I finished but I need to start focusing more to financial future and that’s where it started from.
FB: Yeah that’s awesome. You know let’s kind of go into a little bit where we are right now. I know you talk with a lot people, you have clients. And you have a lot clients that you work with a lot in the medical community and your syndications that you’re looking at a lot of different types of projects and different areas. Kind of fill us in on Abhi’s take on where you feel like we are in the market right now. With an eye towards and a focus on real estate specifically in multi-family real estate. Where do you feel like we are right now? And it’s early on these evergreen types of podcast that may live on for a long time, it’s currently early 2018.
AG: I’m feeling a little worried. Only because I lived in Atlanta and we have really good broker relationships here just like everybody listening that’s syndicating from multi-family. Everybody has good broker relationships. I mean it’s like getting into a betting war in a place where nobody should be going or should be paying the amount that they’re paying for a crappy property. That is what’s happening right now. Both for the multi-family and the single family. Just very recently maybe 2 and a half or 3 weeks ago I interviewed Doug Duncan who’s the chief economist at Fannie Mae and that was for the radio show. And I said Doug you know what you guys are the ones with a have the crystal ball right? Like come on guys, I’m sitting here with the snow globe. Like I’m trying to figure out like what’s going on? If there’s going to be a correction when do you think it could happen? Or when do you think it would start? He said if there’s going to be a correction, look for it at the end of 2019. I said, “Okay, interesting!” But the opposite argument could also be made where demand is high, inventory is low. So it’s not like there’s a whole lot of predatory lending out there. It still make sense to buy. And on the single family, I feel like we’re a little you know, the prices aren’t making a whole lot of sense. And I look to the multi-family because I need to keep buying stuff or atleast stuff that makes sense and ‘stuff’ being a technical term that we’re using here. And I feel like that I’m constantly being bid out by folks that are whether they are inexperienced or they’re willing to go places and pay more for a lower cap rate. I don’t understand it. It’s just, I’m a little flabbergasted. So where do we feel that we are right now? I feel like we are a place that we need to be checking our gut more frequently. And we also need to be in a place where we should be okay without buying something and not be afraid to say no I think we shouldn’t buy just because we have to buy or we should buy just because we have capital to deploy. I think that’s the worst position to be in. And if we pay attention to that I think we will make out okay. Otherwise. we will make stupid decisions and it happens all the time.
FB: Great point. Just to support your statements there. I hear that from other syndicators. And really the discussion as you alluded to is the same in single family and a lot of different markets. Your having this bidding words. And I think we are getting bid up and I know some syndicators that normally do 4-5 projects per year they’re happy to do 1-2 now just because the deals are not there. And so, I think you have to set parameters on what’s an acceptable deal and you know something that is a good deal to you and not get out too far over your ski tips. As you might say taking marginal deals. So you agree with that?
AG: Yup, I go exactly to what you’re saying. I completely agree. And if you are new and you’re considering getting in to this game as well like, pay attention to what sellers of multi-family apartment complexes are telling you. If you’re not used to reading financial statements, go figure out or go to take a class to figure out how to look through financial statements. It’s very easy to hide stuff in financial statements like it’s so easy and that’s what happens and the brokers they’ll say well hey you know we represent the seller and it’s up to you to do your own due diligence okay. But you’ll get a super nice glossy looking deck and it’s also called an offering memorandum. And it will show you like oh man here all the comps and wow it’s nice and thick glossy paper. So it must be good. No, no it’s BAD like don’t trust the paper you have to trust your own due diligence. Like look at the distribution look at the density of 3 beds, 2 baths to 2-1s, 2-2s and see what effects that has a local area there. If you are not doing this kind of level of research you’re going to shoot yourself in the foot. The question is “what kind of gun you are going to use?”
FB: That’s a good one. And you know I think that also we got a lot of early inexperienced investors and they learn about what we’re doing and they get real excited but you know I think now is the time that you got to be cautious and we talked about dry powder on our shows sometimes and you know. Now is the good time to be making sure that your not getting too anxious to go out and buy things. Make sure that you still get good deals. But you know the other thing I think that’s important is knowing that things will go on sale in the future and make sure that you’ve got your dry powder and you got access to capital so that you’re able to take advantage of those sale prices when they come up down the road.
AG: Absolutely. You know what drives me crazy, Doc? Everybody gets geared up for the day after Thanksgiving, right? And we all know that everything is going on sale. America is on sale, right? And we are willing to go on to great links to do the due diligence right? The homework. We going to compare all the newspapers and find the best deals and we going online and wake up at midnight so that we can buy the amazon echo or whatever. But we are not willing to go to that length when we are identifying multi-family or single-family opportunities, heck, even a stock. The way that people buy stock saying, hey Doc what’s in your portfolio right now? And you know I like a little bit of this, a little bit of that. Oh okay, because Doc likes it that means I’m going to go ahead and buy it that’s not true. You have to jump on the quarterly calls. You have to look at the financials. Go where the information is.
FB: Good stuff there, Abhi. So you know let’s you know we talked about kind of going on a high level. So let’s back it up just a little bit. Let’s talk about syndications kind of in general and we can kind of break that down a little deeper into the multi family asset class. Let’s look at why would somebody who’s of the majority of our listeners who are physicians and dentist and small business owners that you know have some good money to invest. Why should they think about syndications? You know what are some of the pros and cons and why should they consider doing thatand look at multi-family to fit that kind part of their portfolio?
AG: Well I think you have to look at multi-family for multiple just for a variety of reasons right. If you are looking at. Let me start with single-family then we’ll jump to multi-family real quick. I you want to jump to a single family, think of economies of scale. If you have 1-3 bed 2 bathroom house and that goes vacant, you are at 100% vacancy right? If you have a 100 units or you’re a part of a syndication and it takes down a 100 unit apartment complex. Hey, you know what you’re pretty well hedged. You know even if you have 2 or 3 or 4 or 5 or 6 or 7% of vacancy that’s okay. You can work on fixing that. But it’s not you’ll have a 100% vacancy. The other challenge with single family rentals is they’re scattered throughout the city. Imagine having a 100 single family rentals. That’s like going gray prematurely. Like, that’s total stress nation you don’t need that. Versus a 100 units all in one place makes sense. I think one of the cons of having a 100 units all in one place is kind of the same thing right? Well, if the HVAC systems breaks down, obviously you have back ups but that could affect a larger number of units and all of a sudden you’re offering concessions etc. But generally speaking if you have good management like we have a good in-house management which is generally I think unheard of but if you have good management and you’re able to address some of this challenges early on then you won’t you just won’t have that type of breakdown. I like single family don’t get me wrong I like single family because it’s a more liquid asset class for me. And then it’s relatively new comparatively speaking to the entire wall street world. And they like it to you and they I just like being a little bit diversified. Multi family though you get so much right? You get to reduce your risk. You’re reducing the risk because you’re with other accredited investors through the syndicator that sure to have a proven track record. And you can adjust your investment to a more comfortable overall risk level for you. But I would also say you have to figure out what type of investor you are to begin with. If you’re a dentist and you’re thinking of yourself of geewhiz, you know what I love watching Star Trek Voyager like back in the 90’s and I’m still like an adventure risking type of person then passive investing in a multi-family apartment complex may not be what you’re looking for. You might be looking to take on additional risk with greater returns which is totally a okay. You’ve got to do what make sense for you. But if you’re looking at opening up and diversifying into different passive income streams then multi-family make sense. You get to reduce your risk there’s so many tax advantages with multi-family as well. You can depreciate, which is huge right, that’s incredible. And if you’re able to segregate your cost then you can depreciate a multi-family unit significantly faster and there’s a very specific way that you could do that. You get the economies of scale, you have cash distributions, you have capital appreciation, you have asset protection. So it works, it just works. And I think one of the biggest one for me is the economies of scale, Doc.
FB: Great, great points there Abhi. Tell us a little bit about some of your syndications that you guys are doing. You know what kind of areas and how big are the units? And how many units per project? You know give us a little overview you know about the projects you guys have done or are currently working on.
AG: Yeah, great question. So we focus on the Southeast. And we love Atlanta and the surrounding areas. Now, we just alluded to the kind where the market has been. Let me tell you, we’re not buying a whole lot right now. We’re kind of sitting around and kind of figuring out what makes sense. We’re exploring the mobile home park arena as well because we feel like people that can’t…If we have affordability that is driving downwards then folks will take a look at mobile home parks. So we’re kind of exploring that a little bit. Generally, our apartment complexes you’re looking at a minimum of a 100, 120 units. I mean it’s the biggest biggest biggest benefit that we have is in-house management. For us, that’s a total total total win. We’ve raised roughly 60M in private equity over last many years. We’ve done 43 different transactions. Well that’s actually inaccurate that’s 43 closings. In December. there was one deal that have 5 different transactions. So I can probably update that for you. And we’re also catering to now roughly over 2700-2800 families. And we get really excited about by creating the impact for these families by growing farms in the communities. So we’ll give the kids an opportunity to provide…the internships. So we’ll give them internship over the summer so they understand on how to take care of crops and things like that. So that’s really a huge benefit. We’re starting financial education classes for the kids as well and also for the parents because you know they need that. So just a quick little light overview nothing that you can’t find either on the website and then for any other operator out there. I mean I’m happy to provide case studies I think, Doc, I’m going to get case studies to you on a PDF basis for every single property that we’ve done so you can absolutely expect that.
FB: Excellent, excellent. And also just to point I let you answer the question but it’s a little rhetorical. But, self-directed IRA funds. If somebody has a self-directed IRA funds. Can they invest those in a syndication?
AG: Absolutely, if you are not taking advantage of the power of a self-directed IRA. I think you are losing the game of life. I think you’ve gotta call, Doc, and you all have to have a one on one a heart to heart conversation like that ultimately where you need to be.
FB: That’s a good one. We might need to quote that. You’re losing the game of life.
AG: Losing the game of life, I mean…and then imagine like we are talking a self-directed Roth IRA that’s even better. All the gains there…one, you have to title things properly if you’re going to make sure you’re not doing anything that’s going to violate UBIT right. You’re unrelated business income tax. That’s a big no-no. You can’t lend money to family members, direct family etc..But if you follow these rules that could be a very powerful tool and if you’re using a self-directed Roth IRA I mean holy cow you’re totally winning.
FB: You know we’re talking about mistakes earlier you know. Open up the book and tell us you know, if you want to be on a personal level what’s the biggest mistake you’ve made in real estate investing or if you don’t want to be personal if you just want to share you know one of the biggest mistake that you seen somebody else make in the real estate investing?
AG: I’ll share one of mine. This was during the college days for me I totally failed. Here’s how I did that. I was in college and I was driving back and forth between Ann Arbor and Detroit like this is inner city Detroit. This isn’t like just inner city Detroit. This is ghetto inner city Detroit where I had no business being. But I bought property there because I didn’t know any better I trusted the wrong mentors. Mistake #1 I didn’t scrub my mentors. I didn’t figure out who exactly my mentor was and really get to know this person so that’s mistake number 1. Mistake #2 is taking on 3 renovations as a college kid with 17 credit hours in Electrical Engineering Classes at Michigan which is one of the toughest program in the country That’s probably not having the foresight to understand that was mistake number 2. And then I get the call. The call from my contractor who says Abhi, you need to go to your property and you just need to deal with it. And I’m like that’s what you’re here for. You should be doing this. And so, I really didn’t understand how to manage contractors either. And I said to him “why can’t you just do it I’m all the way here at Ann Arbor, whatever.” He’s like “I have to pick up my kids.” I’m like “okay I understand that.” So when I leave Atlanta it’s like 6-7 o’clock in the evening and I drive we finished up all my classes and my study groups after that’s what it’s called study groups after the day. And then I drive from Ann Arbor to Detroit. By the time I get there it’s an absolute blizzard. It is just bad news I pull up into the driveway. I opened the front door, I see a shop vac. I’m like okay I know what a shop vac is. What Am I going to use it for? And then, I hear it and then I hear the running water in the basement I go downstairs. And I’m like up to my ears. I told the story different times in different ways I tell folks I’m up to my ankles, up to my knees. Quite frankly it was a lot of water and I like to exaggerate a little bit with the amount of water that was there. But for me that was a lot of water. It was roughly maybe like shin level. And for me, that’s I’m like a 5 foot 5 guy so like for me that’s you know up to my nose in water. And so, I’m like I tried to take the shop vac down the stairs and tumbles down the stairs and the shop vac is wet. It’s a terrible situation and I’m freezing because there’s no heat in the house obviously. And now it’s like maybe 10-1030 at night after I’ve just made the massive mess of things in the house. So I decide alright I need to buckle up and I need to go door knocking at night. So you know you have those folks in the single family world that will go knocking on doors to find deals. I was knocking on doors to save my life. It took me until maybe 1130-1145 at night until I found the gentleman who said you know what man I’ll help you out and we toiled away until maybe 2 or 3 o’clock in the morning. And I said go home and it’s not… nothing is happening the water I couldn’t even find the source of the leak because it was underwater at this point and I have no idea what was going on. So he went home and I didn’t have a bed on the 2nd floor so I curled up into like a small ball at the corner of the master bedroom and I fell asleep. In that moment I had no idea what I was doing and I realized that I was vulnerable. Mom and Dad would kill me and they’d probably kill a third time if they knew what was going on. And I cried. I had no help. My mentor abandoned me. What was I going to tell my Mom and Dad who I think are my heroes. I’m not going to admit that I’m failing at this stuff. They would be like why are you not focusing on your classes because that’s just who they were back then. And I didn’t really know what to do. So I just went to class the next day. I dug my car out of the snow and went to class. And I was just in this daze of not caring. Until I decided to take some action. But I feel that the biggest the mistake that I made was jumping to quickly an jumping in without understanding who I was. That investment personality piece especially in the beginning is so so important. For physicians out there, for dentists out there, you provided a tremendous service to the community believe me. I absolutely hate getting crowns and whatever and fillings rather. I have one crown I don’t know why I’m admitting this. But you know. For me feeling comfortable even for my physician, I don’t like getting blood taken. You know the Docs make me feel comfortable. You guys are doing awesome service to overall healthcare of this country. But understand yourself before you jump in the real estate investing world. Do your homework let the operators results speak for themselves. You should be able to connect with other investors. You should be able to connect with the operators themselves. They should be able to provide info on all of their deals, like do this. Otherwise, you are also making a mistake. But anyway, I think I’m deviating. Sorry.
FB: That was fantastic. Thank you for sharing that story. I think you know I think that our listeners need to listen to that. And know that you know you can get burned. And you know it’s important to make sure that you getting educated and you are not moving too fast. And that you do understand yourself and that you surround yourself with good people. And you know just make sure that we got a lot opportunities to…we call it joint venturing you know making sure that you’re not trying to do everything on your own. When you try to do everything on your own it’s very easy to fail and to fail miserably. So I appreciate you sharing that story.
AG: Yeah, My pleasure.
FB: So we’re kind of getting to the end here, Abhi. Do you have a favorite quote? Or you know a book that you are reading right now or a favorite book that you would like to share with our listeners?
AG: Yeah, one of my favorite quote comes from Rockefeller and I think about this all the time especially I’m designing my life. Whether its multi-family investing, single-family investing whatever, startup investing whatever it is that I’m always doing. And I have this written down. I have a lot of these quotes written down but I love this one the most. “It is wrong to assume that men of immense wealth are always happy.” Quite frankly, let’s modernized that quote a little bit. “It is wrong to assume that men and women of immense wealth is always happy.” Quite frankly then the question, the next question is “what does wealth mean?” And for many of us listening wealth isn’t only or shouldn’t only be a just a financial figure. If it is only a financial figure and if you’re a physician and you’re only working for the money then I feel like that you’re also failing at life. Because there’s so much more that you’re missing out here. It’s not just about a quarter million or the 200,000 or the 175,000 that you’ll going to make doing whatever. That’s not it. It’s “let’s create impact.” Let’s figure out a way to do that together. And that can be done in a variety of ways. And understand what wealth means for you and structure your life accordingly.
FB: Love it. What about a book?
AG: The books that I’m reading right now. I love “Principles” by Ray Dalio that is really like he is such a… I feel like he has this Frank Sinatra kind of swag about him. I tweeted him that I didn’t get a response. He has this really cool vibe about him. You can just see that this book is written for those that that is uniquely positioned to scale and grow. And it just offers those small tidbits just tweeks just like if you’re like if you’re in a golf course and if you have Tiger Woods right there. Your favorite golfer right there helping you with that millimeter touch. That millimeter. Tony Robbin says that right? You can swing like Tiger Woods, you’re just a millimeter off. That’s really it. The 2nd book that I’m reading is by the grandfather of syndication Samuel?, what’s his last name? Samuel Freshman. I’m sorry. I apologize. The grandfather of multi family syndication Samuel Freshman. The book is titled “The Principles of Real Estate Syndication.” I cannot stress how incredibly awesome this book is. So I would pick the both of those books if you can.
FB: Awesome. That some really good input there Abhi. We’re kind of wrapping it up. We’re going to go our members only part of the podcast starting in a minute. But if somebody’s listening and they’d want to get in touch with you. What’s the best way for them do that?
AG: Oh you know dial 911. Huh. I should have that right 911realestate.com. or something. Just for you physicians and dentists out there, haha. Really though, I would say the best way to get intouch with me is to go to realestatedealtalk.com . If you’re on LinkedIn, or if you’re on Facebook, or Instagram or Twitter. I’m all over the place. I’m on Youtube. Just look me up Abhi Gholar. Don’t worry if you can’t spell my name, google will auto-correct it.
FB: Thanks Abhi. Don’t go anywhere we’re going in to our members section. And for our listeners I think if your ears were open hopefully you got a ton of value out of Abhi’s share there. It was fantastic. Thank you for listening. Thanks for listening to the High Speed podcast. If you want to listen to some of our other podcasts just check us out on our website or on iTunes and make sure to like us and share it. And be sure to check out High Speed Alliance for our next meeting coming up. Thanks for listening! And Thank you Abhi. Did fantastic!
Hi, this is Dr. Forrest Bryant and I want to thank you for listening to the High Speed Podcast. We want to remind you that the information we share on this show is impersonal and only our opinion. You should not take impersonal advice and apply it to your own situation without discussing this information with us or with another license professional that’s familiar with your situation. Our opinions are just that and this show is for education only. This is in no way a solicitation or offer to sell any securities or other types of investments. Thank you and have a great day!