BiggerPockets Podcast 118 with Himanshu JainTranscript
Link to show: BP Podcast 118: Condos, Multifamily, and Dealing with Management with Himanshu Jain
Josh: This is the BiggerPockets Podcast Show 118.
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Josh: What’s going on everybody? This is Josh Dorkin host of the BiggerPockets podcast here with Mr. Brandon Turner. What’s up Brandon?
Brandon: What’s up? What’s different about me today besides the fact that I’m holding my dog in my hands?
Josh: You’re probably uglier than you were yesterday?
Brandon: No I did not do my hair today, it’s down.
Josh: Look at that! It looks beautiful.
Brandon: All the people listening in their cars can’t see but trust me I’m a handsome devil.
Josh: In his own mind. You know what’s different about you today? You’re one property richer.
Brandon: I am, that is true. I closed on my house today which actually brings me to today’s Quick Tip. So lessons learned on number 43 for me. This was what I learned today, in the past I’ve always offered cash generally if I’m going to use hard money or private loan, I’ll say cash in the offer anyway. And then we usually just write something like he’ll be using private lender. So we did that when we said cash and then we wrote another part that he’ll be using a private lender to fund this.
Anyway, Fannie Mae was the center of this property and they freaked out on that a week before closing or a few days before closing and said after I had given a $7000 earnest money and they said no, you said cash here we will not allow you to use a lender. We will not allow you the escrow to prepare a note in deed of trust, we will not allow that. That was fun and so they said you’re going to lose your earnest money if you can’t close this in all cash. Luckily I refinanced my apartment complex last week so I got the cash for that and hadn’t paid off all those loans yet I had no problem.
But still had I not had that cash I would have lost $7000 because I said the word cash and Fannie Mae did not like that that I had a private lender. Anyway I guess that’s a thing that most people know but I did not know that people could freak out over that.
Josh: You’re going up against the Government.
Brandon: The Government, they’re mean, they’re pushy.
Josh: They are pushy.
Brandon: Somebody else said that the other day that they were told at a, it was at a guru conference or whatever. They told them, go just make a bunch of offers and offer cash on all of them. When you get an offer accepted just go out and find financing for it not a big deal. But clearly that was a big deal and it could be a big deal especially if you give a lot of earnest money like I did. Anyway, quick tip.
Josh: Quick Tip, write the offer stating what you’re actually using it to pay.
Brandon: Even though it’s cash it’s just not my cash that’s not cash to them and they didn’t like that. I get it.
Josh: You live, you learn, you won’t do it again man.
Brandon: Yes, so next time it’s going to be…
Josh: Or Miss Fannie is going to smack you.
Brandon: Yes, I don’t like Miss Fannie.
Josh: You guys today we got an interesting show we’ll get into that in a minute. Before you do if you guys are fans of BiggerPockets of the BiggerPockets podcast I definitely want to just take another second to ask you guys to please jump on iTunes and leave us a rating and a review those things really help us. And also if you know people who are interested in real estate share the podcast, show them how to listen to the podcast. I just showed my nephew how to listen to the podcast and he was blown away.
He said, “Oh my God this thing is awesome”. He was taking notes, I was watching, it was really fun. So share it with people let them know how to listen to the show. A lot of people don’t really know how to listen to podcasts and don’t really get them. But it’s an amazing medium and hopefully you can help spread the word about it. So with that why don’t we get to today’s sponsor? And today’s sponsor is Podio.
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Josh: Fancy, fancy.
Brandon: I know, a lot of investors that use Podio and they really, really like it so check it out.
Josh: And a big thanks to Podio for the sponsorship we really appreciate it. Today’s guest is Himanshu. Himanshu is an IT consultant who decided to diversify into real estate a few short years ago. Himanshu’s story is unique because he bought a condo and a 20-unit apartment complex is almost the same time. And we’re going to dive into the tools and compare and contrast his experiences. We dive into really some important stuff on condo and investing which you need to hear if you’re planning to invest in condos or any property with an HOA and of course if you know me I’m about to rant and rave about that stuff.
Another highlight in the show is Himanshu’s discussion on how he uses not just one but three Property Managers to look after his properties. After hearing his reasoning you might do the same thing it’s really an interesting theory. So stay tuned and with that enough talking about the show let’s get into it. Himanshu welcome to the show it’s great to have you here.
Himanshu: Thanks for having me, it’s good to be here and I think you guys are doing a great job for a lot of real investors like me.
Brandon: Thank you.
Josh: Thank you.
Brandon: Thank you I love to hear that never get tired of that. Let’s start at the beginning, the only thing I did you get started never get tired of hearing. How did you get started investing in real estate?
Himanshu: I’ve been an entrepreneur for quite some time. I came here to US as an IT, I had an employment at time I think it was 2001 when I lost my job after the 911 thing. And then I realized being in America you got to be on your own. You just don’t want to be at the mercy of somebody else running it. So I started on my own, I started doing my independent consulting, I have an independent consulting firm that I’ve been running. Having done that for the last 10 years or so now I realized I wanted something more spatially from a retirement perspective.
I think that’s when I started looking into something what my options are and I looked at a lot of different options. But I was looking for something passive, something that would not involve me too much so that I can continue with my IT and then do this as well. And that’s where I came along for real estate and I almost 2 years I did a lot of studying never got the guts to go into it. I think it was almost around I would say 2011-2012 when I bought my first property.
Josh: What got you over the hump? You’ve been thinking about it but what finally made you pull the trigger?
Himanshu: I think it was just, I looked at a lot of properties and I was sure that I wanted to get into multifamily. I think the economies of scale would make sense and I think that one made sense to me. And it so happened actually I was looking at a couple of multifamily properties but the whole transaction takes pretty long. And it so happened that during this process I started traveling to Chicago and the need for me in Chicago was I was going on weekends with my family and my wife and I started thinking we’re going to be traveling here for so long why not we look for something in Chicago itself.
And because the way the market was we started looking in Naperville area and we found a foreclosed property. I bought it to make it as a vacation rental also that’s something which I can use on the weekends and maybe during the week I could rent it out. So that was the idea.
Brandon: That’s something that we’ve talked a lot about lately and we had a show a couple weeks ago I think it was, on vacation rentals. I love that idea, if you want to travel to somewhere anywhere often why not have a property there? Let me ask this first, condo or single family house?
Himanshu: It’s a condo.
Himanshu: The reason I took a condo was because I knew I don’t live there it’s more of a [inaudible][09:00] for me. So I wanted something which could be taken care of by somebody mostly and then I have to deal with the small things, mostly internal the outside is pretty much taken care of.
Brandon: And that’s one of the benefits of the condo, how does that work out for you?
Himanshu: That worked out good actually, it was a nice location and we furnished it. And being in the location, being in Chicago it was easy to furnish it. So we furnished it and then it worked out okay. I have horror stories on the other condos I bought later but this one was okay, this one motivated me to get into other condos as well.
Brandon: We’ll get to those. You bought it as a vacation rental. Can you explain how you currently use it? Do you still have it I’m assuming as a vacation rental?
Himanshu: Yes I do so what we did we furnished it and we listed it on [inaudible][09:56] so it’s done [inaudible][10:00]. Three or four other sites, flipkey is one of them and then there’s a lot of sites that I’m using to rent it out. Along this way I came across some other folks like we’re always looking for business housing or for people who are traveling corporate housing. And I travel quite a lot for my IT world I always say it’s not money because I’m basically out when I’m on projects. I’m used to the concept for corporate housing because I’ve seen and I have used that in the past.
I used to do a project in China, one day I was traveling to China so I was staying in a corporate housing and that’s where the idea came we should sell something like this and somewhere in the US. And when we got a chance we did it in the Chicago area.
Josh: You said you bought a foreclosure the first one. Why did you go with a foreclosure? This may be a really basic question but for those people who don’t know, what are we talking about when you bought a foreclosure?
Himanshu: Foreclosure, I think I would say I’m a value guy who is always looking for a value, I won’t say cheap. I’m always looking for value and I think foreclosure made a lot of sense. These properties that I’m talking about these were, during peak time they were about$145-$150. And I think I bought it for $110 or something. And there was not a whole lot I could do on the first one, there was some basic things. I had to upgrade the flooring and all that but I think it was the things that we liked about it was it was new, I think it was built in 2001-2002 so it was pretty new. It was nice, it was open floor plan and everything. So those were pretty decent for the price.
Josh: Were these REO’s? You didn’t buy them at auction did you?
Himanshu: Not this one this was just a foreclosure I bought it through an agent. But then I bought some others in auction later.
Brandon: It was an REO then.
Brandon: You talk about condos, have you expressed any issues, difficulties with condos overtime? A lot of people, myself included are not big fans of HOAs and assessments and things like that. Have you experienced any issues or is it pretty smooth going for you?
Himanshu: I have run into issues with the second condo that I was talking about. This is something which I bought through auction and I didn’t even see this one. I had my realtor go in and he did a Facetime at that time and he just walked me through the condo. The unit was in a good location, nice location, I just bought it. When I bought it I went through there’s a Home Association Owner questionnaire that you have to get it answered through the HOA. The idea was to rent it out and they mentioned that they had some cap on rental but the rentals but the rentals were allowed so I bought it.
And when I bought it I was told at that time that later on when everything was closed that they cap of 3 rentals only and it was a very small subdivision. And I think it was next to another subdivision, they both looked like the same. And I thought this was on a 200 units but in fact it was just 15 20 units in one. So that 3 unit cap became an issue because then I couldn’t rent it out. The Association had a lot of other restrictions that you have to stay there. You cannot have your family or somebody like close family is fine in the sense your immediate family is okay. But I cannot give it to my brother or somebody.
So you have to be using it and those restrictions kind of put me in a situation where either I had to sell it off or do something with it. But we liked the location so much and the unit so much that we decided to, it so happened that the first rent unit which was a vacation rental my idea was that I’m going to make the second one as a vacation rental and I’ll rent the first one out completely on a long-term basis which I did.
And I moved all my stuff to this location. And just being on the lake kind of like a pond or lake it was a nice location. I thought this would go well for a vacation rental and now I was in a situation. My other place was already rented out and I couldn’t rent this out. So I went on to a third one so I bought a third one, moved the stuff there and I’m using this as a personal now.
Brandon: That’s something where I’ve never really heard of happening before where you go and buy a place and a condo or a place with a Homeowner’s Association. And then after you buy if you find out you can’t have this as our rental you have to live here or have it empty.
Josh: Some of the HOA’s will have a percentage but you could only have a certain percentage of rentals. And the problem is they don’t always tell you the numbers upfront.
Himanshu: I think that’s the problem because they were not upfront about it and that’s what me off. So you got to be upfront if you had told me then I wouldn’t have gone for it.
Brandon: Is there a way that you know of? Can you really nail that down from the Homeowner’s Association President maybe and say, look, am I going to be able to do this? Or is it just you throw in the dice?
Himanshu: I tried to reach the Association President and I said this is what the situation is. And I think just being a small community that it is like 15 20 units and most of them I think they are the owners and they are retired some of them. I think the way the Association is run I think it’s pretty close-knit. Had it been a bigger community probably would have been different but just being so small probably made an issue here.
Josh: That makes sense, it sucks but you’re making the best of it, you figured out a way around it. You rented the other ones out, you got the vacation rental condo, you got the original one that you turned into a regular investment and now you just have a second property for yourself. Is that also in Chicago?
Himanshu: Yes all this is around Naperville area.
Josh: You don’t live in Chicago right?
Himanshu: I don’t I travel there almost every other week. My daughters they learn dance so we travel there for that every other there.
Brandon: Your first deal was that one condo. What was your second deal then?
Himanshu: The second deal as I said I was already looking for multifamily apartments. I bought a second one which was a 20 unit building, these are not a building I would say this is on one street. They have these 10 duplexes so that’s what I bought in my second deal.
Brandon: That’s a big jump for a second deal.
Himanshu: I wanted to start with that it’s just that the first thing happened before.
Josh: He’s a bold man.
Himanshu: I almost put in 2 years in going through all these and I was sold on the concept of multifamily. I was sold on the concept of the economies of scale that comes with a multifamily. I just wanted to start there I just didn’t want to start at 2 or 4 because knowing that the ultimate aim is to get into multifamily so I just wanted to start at that.
Josh: So when you bought the 10 duplexes you bought them as some kind of package correct?
Josh: So you didn’t finance that through conventional financing I’m assuming.
Himanshu: This was like a commercial home.
Josh: What do the numbers look like on that property of you remember?
Himanshu: At that point it was listed for $900 and then it capped it for somewhere around $800 - $900 on that. So I paid around $840 for that.
Brandon: So how did you end up finding this you said commercial? Did you put a large down payment down or how did that work?
Himanshu: I think what helped me mostly was that I already was running a business for the last 10 years, the IT business. So that kind of helped me because that way I could show it to them because from a manager’s perspective I can manage it, I can run it. Though I didn’t have any background on the real estate sites so I did put 20% down at that point.
Brandon: You bought the 10 duplexes, I have a question about that. Can you subdivide eventually up and sell all the duplexes off separately? Or are they a package no matter what?
Himanshu: I can I think that was one of the reasons why I went for it because that was my set strategy in case if something goes wrong. Then I have an option I can sell them individually too. I think that was the reason why I liked it because these being 10 duplexes rather than being one building with 20 units. Because the selling process at times could be, so.
Brandon: I read a book, I wish I remembered what it was called it was one of my real estate books that I’ve read. But the guy did that strategy I think he bought like 20 or 30 duplexes all in one area. And their plan was to sell each one off to owner occupants. If you’re financing a 2 or 3 or 4 unit property it finances just like a single family. So you can buy with commercial and eventually sell them all off with some financing issues. I think that’s really, really smart, it’s the wholesale concept. Buy wholesale, sell retail.
Josh: What are the duplexes worth on their own? Are they worth what you paid or are they worth a little bit more? Can you sell my retail for more than you paid?
Himanshu: I think yes you could because I probably paid lower than what you could pay if you were to sell them individually. So definitely yes and I think that was one of the reasons why I took the approach. Again I think I’m going back, I was more worried about the exit strategy than the buying in. Because I want to make sure that going out I have a way out. So that was one of the reasons. If you want to do a condo conversion, you want to do something like that you could.
Because on that street itself there are a lot of family owners, people who are staying on like individual. The duplex being as a single family home too so they have those combinations.
Brandon: That’s smart, you said you bought something with the exit strategy in mind. And I think that’s a lesson that a lot of real estate investors could learn, buy with the end in mind. And then you don’t have necessarily know exactly what you are going to do but it is a good idea to have those exit strategies.
Himanshu: It’s always good to have two or three options available to you. Because you don’t know what is going to be there 5 or 10 years from now.
Brandon: Do you think, knowing that you started with both the 20-unit and a condo, you had two separate experiences starting here. What do you recommend for people listening to this show right now and getting started with that? Do you think that was a good idea starting with 20 was that as huge learning curve for you? Or was it pretty imaginable that people could figure that out?
Himanshu: I think it depends on the individual where you are coming from, what your background is. I don’t think it was that big of a jump for me as such. It could be the fact that I kind of lived for two years as I said ask you mean that I have something. So I was living with that and then I was very clear that I don’t want to manage these. I wanted something that could be managed by somebody else because I’m not good at it all. I’m not good at any of these, doing these things, I really get frustrated even if I have to do small thing in my home so I’m not good at it at all.
Josh: You’re not a handy-man.
Himanshu: I’m not at all. I just wanted something which would sustain the cost that would come from the management.
Brandon: I think that makes perfect sense. I think that’s one of the reasons a lot of people try to get into multi-families because of those efficiencies you get. You got one maintenance person or one maintenance crew that can handle things. You got one roof, you got one driveway parking lot, those are the benefits of the multifamily and the management is great. Because generally speaking property management is built into the cost of a multifamily property.
Where is in a single-family it is usually not because you are competing with homeowners. While we are on the topic of multi-property management we can determine that you said you used property management what’s that been like?
Himanshu: I’ve been through issues, as I’ve been hearing on the podcast people been have been and I’ve been reading through all these things So it’s been good and bad there have been both sides to it. Initially when I was looking for a property manager my idea was that my intent is that I should have somewhere around 250 to 300 units by 5 years so that’s the plan. So to do that what I was planning to do is I have gotten access to build them now where I have my property being managed by the property manager.
I was looking for property manager that would manage it in my subsystem so BDM is what I’m paying for and I have all properties listed in BDM and managed there by the property managers. So I don’t want to go into a property manager system I wanted to be my own system where I have the control. I can consolidate the reports, I can see how I want it and that was the idea. So at any point of time if I buy other units I can add it to it and then I can give it to other property managers.
Being in IT I’ve seen, we have worked with vendors so typical strategy is always to have 3 vendors that you’re working for for anything. And that was my plan that if when I get into multi properties that I will have 3 property manager who will manage the whole portfolio. That way I have always a backup plan in case it doesn’t work out with one property manager then I can go to the other one.
Josh: How do you work with 3 property managers? I’m just curious. Are they all managing different properties at any given time?
Himanshu: Once you have this 20 units managed by one and then one set by another one this would be manned by the second party and then like that. I could give them different properties. And that way I always have some options in case if things doesn’t go well. The other thing is I know how the others are operating and then I can compare them. That gives me an option of knowing and checking who is doing a better job compared to the other one.
Brandon: Do you let them know that you’ve got the other ones managed by somebody else?
Himanshu: Yes, when I was talking to them I told them this is my strategy, this is what I’m looking for. Some liked some didn’t like it but I think the idea was I said I’m open if you’re new to this. In the sense if you have managed but if you have done something on a smaller scale the advantage of being with me would be that I can give you this property 20-60-80 units at some point of time. So if you’re willing to work with me I’m willing to take a chance with you and then we can grow together.
I think that was the idea and that’s how I found the property managers so I did narrow down to 3 and then I just picked one. I like him the way he’s managing it, but I think what happens is he has grown big as well in his need of acquiring and growing big the focus shifted and I think that’s where my property suffered a little bit and that’s what I didn’t like. I don’t want to spoil, just say what the relationship at this point of time because I’ve already paid for it. I want to make sure if he can improve that and still continue using it. So I’m watching it now so depends if it doesn’t work out now I might have to look for somebody else now.
Josh: I like how you phrased, ‘I’m taking a chance with you”. I think it’s pretty telling, that’s how it works. As an investor it’s a two-way street. A lot of people, property managers will interview you and a lot of people forget that they have to interview the property manager. And at the end of the day you need to make sure that you’re comfortable with this person. Don’t just hire the first property manager because they’re available and you are taking a chance on them. And if they don’t do a good job you need to get rid of them and move on and find the next one.
Brandon: Do you want to hear an update on my story Josh?
Brandon: Two months ago we talked about on the podcast and it’s only been like a month in recording time. But in reality it’s two months ago I hired a property manager. Anyway, it’s been rough, there definitely is a lower-level service as I mentioned before. But I’ve not gotten rid of her yet because of the same reason you just said. I’m watching very closely and I’m trying to encourage better behavior and better work.
Josh: Is it working?
Brandon: I think so, so the tenant’s gone. The reason we gave it over to her was because it was a difficult tenant that caused us stress. That tenant is gone, it’s taking twice as long to fix the place up and get it re-rented. To get it fixed up and turned over as it would for me. I’m like, he gave us notice and he’s going to be out on Thursday I’d have a crew there on Friday. For them it’s like well we’ll get the crew in there the end of next week some time. I understand they have a lot of properties, but.
Josh: That’s not something to understand. There’s a sense of urgency in this business.
Brandon: Obviously they might have 20 of those at one time.
Josh: That’s their problem.
Brandon: Sure but I can’t…
Josh: They in the business of serving you and their job should be to get it done immediately. Because every day that you sit with an empty property it’s money out of your pocket not out of theirs.
Brandon: You forget I live in Podunk, Washington though where the contractors are out smoking for like 6 days straight and then they’ll come to work for a little while.
Himanshu: I think you’re right because I see this same behavior too as well. I don’t see the urgency in getting things rented out or getting certain things done. I think that’s probably more of an owner thing not a property manager.
Brandon: Nobody will ever take as good a care of your property as you will. That said, here’s one benefit I have noticed. We don’t have a sign in the front yard for the house yet because the house side doesn’t look good enough. However, she’s already got 2 applicants for the house. Now that is something I couldn’t pull off because I don’t have this massive marketing machine of ‘for rent’ signs all over town that people call about but other properties she can funnel them.
So we may actually get this thing rented out faster than I would have and I didn’t expect that I never even thought about that. So who knows? Maybe it work out, I’ll tell you next week.
Himanshu: I just want to add to what he just said from a tenant placement perspective. As I said I’m kind of watching them now. So what I have done is started opening up my other avenues as well. So I have brought in another tenant placement company who was helping me to market the unit that I have empty. So I have 2 or 3 people now working for them and I tell them up front that I have this person marketing it and then you are also marketing it. Whosoever gets it first they get it. To me what matters is that it needs to get rented out quickly and [inaudible][29:40].
I think a little bit of that helps too certainly if you have some kind of completion in place I think that helps. And now at least I’m seeing more happening or more interaction from both sides, both of them are trying now.
Josh: That’s fascinating like an Uber-fication.
Brandon: Gamifying the entire thing.
Josh: Compete to who can sell the unit and whoever sells the unit gets to manage the property. That’s really interesting I’ve never heard of that before.
Brandon: I like that.
Josh: And it’s working out okay.
Himanshu: Yes it’s working out okay we’ll see.
Brandon: Is that property in Chicago as well or is 20-unit in local?
Himanshu: No, 20-unit is in St. Louis.
Brandon: Why did you end up buying local for that one? Did you look elsewhere? Or did you just decide that they’re better deals where you were at?
Himanshu: I think for multifamily I’m not at that point where I could buy a bigger property somewhere remote. I think I want to buy and manage it locally somewhere. Something which I can access anytime I need to. And even when I bought this I bought it in a location I was very particular about a location where I’m buying it. I wanted to buy in a location where I could manage it on my own as well. So if I have to I can, I don’t need a property manager. I was not looking for a rundown property, a property maybe in a D class very aware, I would not be comfortable managing it. So I bought it in an areas where I could manage it.
Josh: Makes sense.
Brandon: Makes perfect sense, I like the ability to drive by my property. Even though I’m not managing directly and being able to just drive by check out my property manager what they’re doing maybe micromanage a little bit. Maybe that’s a bad thing. I had to trust them to, I have a hard time, and again had I not been in this area hiring this property manager, this was a serious situation this was what actually happened. We called about a week after the tenant was supposed to be out and we said we’re just wondering what the status is on getting that tenant, making sure they are out.
And she goes, oh I have no idea. It was like, it's not my job to have to do that. Again I am sticking with it a little longer we will see because it’s not her it’s me. We will see. Moving on. We talked about financing, what did you do after that? You got some more properties after that correct?
Himanshu: Yes as I said I bought another condo which was done through an auction process and I furnished it and that’s my vacation home now. Recently I have bought another property with the auction, and going through the rehab process now. So I just started on the rehab on that. So I am thinking of flipping it, the idea being I want to kind of go through different aspects of the real estate transactions and see how it is and then just fix certain things that I would continue doing for long.
And the other advantage of doing a flip is if we find we are able to sell it at a decent price that gives me enough ammunition to go buy a bigger unit. I using the flip process to funnel my, push my multifamily agenda in a way.
Josh: That’s great. So in the notes we’ve got something talking about some kind of story where some neighbors were complaining on some unusual activity.
Himanshu: I think this was in the family unit and what happened is the unit is rented to an old lady and then suddenly they started seeing a lot of expensive cars coming into the area. I said the street where I said there are some owners as well they are the ones who reached out to some of the other renters and then probably nothing happened for a day or two. I think I was traveling to Chicago that time and then somebody called me directly, somebody got my number and they called me and they said this is what is happening it looks like there might be some problems or something going on.
I was nervous, that was the first time I was hearing all that, is it okay, this is strange. So I called the property manager and the next day we were there. I was there, the property manager was there, we made sure that people saw that we were there and made sure that we contacted the neighbor that complained. Made sure that we are there we are taking care of it and we thanked them for reaching out to me. That was really nice of him and we went in and we spoke to the lady. It seems like her son was there he had just come out of jail or something, so we gave them a design made sure that he was so. The property manager took care of it the way it was supposed to be.
Brandon: That shows good management, you can’t always stop problems. You will get drugs in your unit, you will get problems, you will get people that aren’t supposed to be there. What good managers take care of them effectively and efficiently quickly and you guys proved that. Well done!
Josh: It also proves that the importance of making sure you know your neighbors. Anytime you buy a property obviously before you even buy you should get to know the neighbors I think, I believe in that for me. And then once you bought it you really want to make sure this and we’ve got your back, hopefully you’ll have ours, you’ll watch our backs and let us know if things are happening. And not just the people next to you, the people down the block, the people across the street and you’ve got an army of eyeballs watching your place.
Himanshu: I think I did something similar based on what I heard on one of the podcast is that somebody did reach out to the neighbor and they gave them their card an offer in case. I did the same thing. I bought another property through an IRA and this is a single-family home and I did the same when I heard the podcast and liked that idea. I just went and gave them the card and said this is incase if you see anything. Because I was going through a rehab process and just wanted to make sure if somebody sees anything they could at least reach out to me. That was a good tip which I made use of.
Brandon: What do you mean that you bought a property inside of an IRA?
Himanshu: I had some money in IRA which I had invested in mutual funds and I wasn’t seeing any results there. So I decided to take that off so I bought a single-family home and I bought this through a local network so I bought it through a wholesaler. I think this was a [inaudible][36:42] or something that he got. And so I bought it at the selling price and then I rehabbed it and so this is going to rent the 1st week of March.
Brandon: What’s the benefit of buying something inside of an IRA using your IRA funds for that?
Josh: I’m guessing it was in a self-directed IRA correct?
Himanshu: This is a self-directed IRA, yes. I think I’m being real estate and lost money in stocks I’m not a big fan of stocks. I think I want to be in something that is more tangible like real estate is in a way, you see what it is. And spatially being local so the more you could see about it the more you can feel and touch it the good it is. I’m not looking for anything to support me now, it’s all I can do for my future retirement and the kind of like them a lot going forward.
Brandon: Cool, cool.
Josh: You wanted to talk about the agent thing didn’t you Brandon?
Brandon: Why did you become a real estate agent? I heard earlier before the show you just got your real estate license recently why is that?
Himanshu: I think my going through this experience as an investor I found there was a lot of lacking when it comes to getting the transactions through the agents and it could be just my experience. But I definitely felt that the way things are going through real estate agents as such have not changed spatially from a technology perspective if you look at it. They are not using the technology the way you could use now. I think that was one of the reasons, I think a lot of things was still being done the old-fashioned way which, again coming from an IT background and coming from a different perspective altogether I was looking for something which could be done quickly but efficiently.
I think was one of the reason where I felt that this could be an opportunity where I could help other investors as well that was one. The second was that I thought this was a good way to build your network. Because the intent is that some point in time I want to buy bigger apartment complexes. I want to buy 200 - 300 units so I want something of my own and then I also wanted bigger transaction and I think that would be a good way to get into it at least from an exposure perspective. I think that was the reason I went into the real estate.
Josh: I am assuming that you are not actually buying and selling properties for other people or are you? You’re still doing the IT thing full time right?
Himanshu: I’m doing the IT thing full time and then I am buying and selling. I’m not doing any homes I’m only working with investors. So I am working with investors, I’m helping them with commercial as well as multifamily.
Brandon: Let’s take this over to the…
It’s time for the Fire Round.
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Go with your free account and see if you can buy from BiggerPockets learning to snag your next deal. And with that get into the Fire Round. The Fire Round, these questions come straight to you from the BiggerPockets Forum and I’m going to fire them at you.
Number one, do you ever buy foreclosed properties before they actually go to auction like in pre-foreclosure? We touched on it but we didn’t talk much about it.
Himanshu: I would if I see something which is a good deal yes I would.
Brandon: I know you said you bought one that was like condo or something like that was an auction right?
Himanshu: I bought couple which was in auction and one which was a foreclosed property.
Josh: What are your thoughts on the rules of thumb that are often tossed around BiggerPockets like the 50% rule, 2% rule? Any feelings on those?
Himanshu: I think those are good rules for first set of evaluations or just to see if it makes sense or not. But I’m not totally driven by it also, I’m more to look for the location of the property is because based on that rule I don’t see most of my property was qualified on that rule but they are still working fine. I think it just depends on what makes sense. I would say this because I’m not looking for the immediate cash to live on I think it makes sense for me to be okay. I think it’s just a good thumb rule but I won’t just rely completely on it. If something else makes sense I will still go ahead and act on that.
Brandon: Have you ever had to do an eviction? If so how did that go?
Himanshu: Yes, I think first year was good I didn’t have to do anything but last year we did 3 evictions. And again I’ve not been involved too much I think I just let the property manager handle it for me. This is what I’ve learned, we did not go through the complete eviction process I think the tenants left before once the process was started. So we didn’t have to get into the complete eviction process as such. But I did lose money on that.
Josh: How do I find a good real estate agent who understands what I need as an investor?
Himanshu: I think you just got to talk to people and see what makes sense. And I would like an agent who has invested himself. I think that’s the big thing for me because having worked with the agents in Chicago area and here I think especially when you’re coming from an investor’s perspective it makes a lot of difference if somebody has invested himself as an agent. Because they can understand and they can point you to the things that would make sense form an investor perspective.
Brandon: Time for the World Famous…
Brandon: These questions we fire at everyone every single week. Number one, what is your favorite real estate related book?
Himanshu: I would go with [inaudible][43:39] which is real estate. I think that’s one book, it’s what changed my perspective about how things should be and I would say that’s the one.
Josh: What’s your favorite business book?
Himanshu: For business books I would say it depends on where you are at that point in time because things are changing constantly so you could not just have one book which could be a favorite. I know in the time when I was looking at my IT consulting work at that point I like Blue Ocean Strategy. This was about going into newer areas and how to differentiate yourself, I think that’s one good book that I like a lot.
Brandon: I’ve heard of it but I never read it yet.
Himanshu: That’s one and then recently through the podcast I came across that 10X and that makes a lot of sense for me now. So I would say two would be the books, my favorite business books as of now.
Brandon: We’ll link to that in the show notes at BiggerPockets.com/show118.
Josh: Hobbies, what do you do for fun?
Himanshu: I like to travel quite a lot, so I’ve traveled, trekking, camping is another thing that I like with my family. I like to cook too so cook with my kids, kind of a family thing. Those are the things that I like to do.
Brandon: What do you believe sets apart successful real estate investors from those who give up, fail or never get started?
Himanshu: I think it’s just getting started that’s the key thing. The good thing about real estate is you could start at any level and there’s so many options in it I think that’s what I like about it. There are always going to be self-doubts, there are always going to be people who would say things that is going to work or not work. I think you just need to go and take your first step I think that’s the key thing you just go and do it.
And then there will always be learning, there will always things that, you are going to make mistakes. But I think it’s just the fact that even if you do something wrong a mistake you just go and do it again. I think just doing it I what is important.
Josh: Himanshu where can people find out more information about you? Do you have a website?
Himanshu: They can find me at investmenthimanshu.com that’s one or I’m in BiggerPockets that’s another good place. I’m not there very often but I’m not, I would like to be there more often.
Josh: Thank you so much for coming out we definitely appreciate you sharing a little bit about your journey. And we’ll look forward to having people share any insights, any questions they have on show notes at BiggerPockets.com/show118. Thanks for being a part of the show Himanshu.
Himanshu: Thank you guys, thank you both, thanks for having me.
Brandon: Awesome thank you.
Josh: Alright guys, big thanks to Himanshu for all the feedback and the stories and sharing his advice with us. Lots of interesting stuff I know you were definitely into the whole multi manager idea aren’t you?
Brandon: Yes cool idea if only I had 3 property managers in my area I could trust I might try that.
Josh: It’s hard enough to find one.
Brandon: It’s a tough thing. But cool show I look forward to see where he goes with his investing, He’s a very smart guy and he is doing this the right way.
Josh: Absolutely and you dominated the show a little bit I didn’t really do a lot of talking. You kind of cut me off a few times you were kind of, signals and…
Brandon: You fell asleep for like an hour and a half there.
Josh: I might have, no, great show. Alright guys thanks again for listening to the BiggerPockets podcast show 118. As always we really appreciate you being a fan and you checking us out and listening and spreading the word. Please take some time to jump on our space our social network BiggerPockets.com and get involved. Connect with us, connect with other investors in your area. Join us on Twitter, Facebook, LinkedIn, GPlus and otherwise keep listening, keep learning and make things happen. So until next week I am Josh Dorkin signing off.
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