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Start Young Go Big in Real Estate with Angad Guglani - CREPN #228

Commercial Real Estate Pro Network

Release Date: 12/26/2019

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Commercial Real Estate Pro Network

I think when you go well, with any kind of investment, you kind of have two choices. You can invest based on the recommendation of others, or you can invest based on your own knowledge. And certainly, maybe alongside recommendations for others where you can actually do your own due diligence on the process. That's what self direction is all about.

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Today my guest is Jake Marmulstein. Before grant before founding his company Groundbreaker, Jake held a number of roles involving real estate and technology, supporting the growth of early stage digital technology ventures, while working with the government on foreign direct investment by Fortune 500 companies.

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So Darrin, the BIGGEST RISK for Groundbreaker in as I as I look at our business, and what we're doing is really managing expectations with people. Software is a living, breathing thing. And it is very challenging for people to evaluate. who aren't typically Software buyers and a lot of people in real estate aren't. So our job is to be good stewards of the, you know, good stewards to other people.

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It's a great question. It's not something that I you know, honestly think about on a daily basis. I guess I'm you're a little more. You know, you see, you see A lot more different scenarios as being an insurance than I probably do when it comes to risk. But I'm gonna I'm gonna give a bit of what might be a bit of a surprising answer here. I think the BIGGEST RISK is a combination of plagiarism and misinformation because in the space, let's call it mentorship or online programs or coaching, consulting.

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Today, my guest is Jason De Bono. Jason is the NuView Trust Company, Vice President and in a little bit he's going to share with us the benefits of using a self directed IRA.

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Commercial Real Estate Pro Network

I think the BIGGEST RISK for a self directed account is that you take responsibility for all the investments, and it's a risk of personal accountability, right? If you keep your IRA in the stock market, one really nice benefit is that when it goes up and goes down, you know, you can kind of finger point your way around around it. Risking in a self directed account means you're taking on all the risk.

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I'll answer it and maybe the most common risk that people assume when they think of short term rentals or specifically Airbnb s and that is major parties. People messing up your your place. With my experience, it's not the major risk, it is something you can hedge off. And this is how you do it. 

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Start young and go BIG in real estate is a rare investor story. 

So many prospective real estate investors think about investing, yet so few actually pull the trigger and invest.  Angad Guglani is the rare exception. He has accumulated 84 doors by 25yrs of age. 

He got the bug for real estate when a classmate at NYU told him he earned $300,000 a year as a real estate broker.  

Fast Success

Find the solution for the problem.  Angad recognized his need for clients to be successful.  He also knew that his fellow students were always searching for apartments off campus in the city.  

Angad launched Off Campus Apartments NYC, an apartment leasing brokerage website and Facebook page, marketing himself as the students real estate broker.  The formula was simple; approach landlords with vacancies to list their apartments and market their listings to the NYC students looking to live off campus.  

His brand became recognized as the go to resource for students looking off campus housing.  In no time, Angad had more business than he could handle, so he started hiring his friends. During the summer, they would hustle to find listings from landlords.  

Apartments in New York, rent for $3,000 to $7,000 per month and the average commission paid to an apartment leasing agent is 1 to 1.8 times the monthly rent.  

Angad and his friends were able to help more than 300 students lease apartments in that first year of business.  Their reward was several hundred thousand dollars in real estate leasing commissions for working a summer job.  

Real Estate Investor

The money from leasing apartments was great, and it allowed Angad to save a lot of money.   More effort equals more income. But, after the lease is signed, you have to start all over.  Where will the next deal come from?  

Angad recognized that leasing was a treadmill.  How could he get a more stable, predictable source of income?  Become the investor.  

Investing provides a residual income.  It may be slow, but it builds wealth. So, before Angad graduated from NYU, he purchased his first rental house with his savings from his summer job.  

Benefits of Starting Young

When you start young investing in real estate, the benefits are many. Namely, your stakes are low, you have nothing to lose.  After making a lot of money and saving most of it, he had the ability to invest his savings in his first rental home.  

It takes time to build equity in real estate, and because Angad started early, he now has substantial equity that is his.  Most of his real estate investing peers have gotten into real estate through syndication, where they have to give away most of the equity in order to do the deal. 

When you have no investors, you have complete control.  You do not have to answer to investors, nor share the cash flow nor equity. 

Real Estate Investment Challenges

There are numerous ways to lose money in real estate.  If you pick the wrong market, you can get stuck. The key to rapid success is picking a market on the fringe of a vibrant market that is in the process of gentrifying. 

You want to have a neighborhood where business and government are attracting jobs, which necessitate housing for the workers.  

When you buy property before the prices increase, you can create a lot of equity.  Angad incorporates the BRRRR method, buy low, rehab, rent, refinance and repeat. Because he got in early, he has accumulated multiple cash flowing properties in short amount of time.  

Investment Strategy

Angad’s investment strategy is go buy distressed single family and multifamily houses in Camden, NJ.  Sellers range from bank owned, short sales, estate sales, broker relationships and auction websites. The numbers on a typical deal look like this:

  • Purchase Price:   $30,000
  • Repairs budget: +$20,000
  • Total invested:   $50,000
  • Monthly rent:   $1,100
  • All expenses including mortgage: - $   850
  • Net monthly cash flow:   $   250/ month / property 

Long Term Goal

Cooper Square Acquisitions is Angad’s real estate acquisition firm.  Acquisition is the key to making money in real estate, you make your money on the buy.  

By focusing on a specific market, Angad has been able to nurture relations with real estate brokers.  The brokers recognize him as a closer, and bring him deals before taking them to market. Infact, Angad sees the real estate brokers as his client.  This is because they make him money. 

In 2019, Cooper Square acquired 65 new properties.  For 2020, they plan to do 200 additional properties.  The long term goal for Cooper Square is to replicate the model of scaling distressed single family properties in a market that is gentrifying.  If they can acquire hundreds of doors in a market, they can operate with additional efficiencies similar to a multifamily property. 

Exit Strategy

Single family properties provide multiple exit strategies.  They can be sold to investors or homeowners. This is not lost on Angad.  He recognizes that a strong market has good jobs, and eventually, his renters will want to own.  His hope is that he is able to create future buyers, and sell his portfolio to his current tenants. 

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

 

BIGGEST RISK: 

I would say the biggest risk being very concentrated in one market and one to expand will be concentrated in the other markets. Right? Well, we'll have heavy concentration in a handful of markets. Is something systemic like a major flood or ice storm like that was the example you gave. And something like that where, you know, I don't frankly, I don't read the policies as well as I should.

We have a master insurance policy, and I'm sure there's some sort of cataclysmic event that might happen that probably voids the policies. And if that were to happen, that would be very dangerous. Number one.

Number two, or, you know, like you said, if you have a major, you know, act of God event and your policy doesn't pay out and you have fixed expenses like mortgage and taxes and stuff and you fall behind on those, that's another big expense. Big risk. So, yeah, basically anything that comes of concentration, I would say is this is the BIGGEST RISK. 

For more go to: 

Email: ag@cooperacq.com