biden tax changes impact on real estate investors

Today, Abhi Golhar owns a multimillion dollar real estate portfolio. He hosts the Think Realty podcast (among the Best Real Estate Investing Podcasts currently airing), teaches other entrepreneurs how to build and buy businesses, and has written several bestselling books.

But Abhi didn’t start out a real estate investing superstar. Brian interviews Abhi about his mistakes along the way, his first investment properties, and how he scaled his investment property portfolio to become a cash cow.

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What short-term fix-and-flip loan options are available nowadays?

How about long-term rental property loans?

We compare several buy-and-rehab lenders and several long-term landlord loans on LTV, interest rates, closing costs, income requirements and more.

live off rents podcast transcript

Brian: Happy Tuesday, it’s Brian Davis here, co-founder of Spark Rental, and I am so pumped to be hosting Abhi Golhar of the Think Reality podcast, he’s the host there. He’s also a national speaker and entrepreneurship coach. He has an enormous real estate portfolio, and he is going to take us behind the scenes in his real estate investing business today, give you all the tips, tricks, and hacks. So, on that note. Welcome, Abby. Thank you so much for being here.

 

Abhi Golhar: Hey, thanks so much, man. I’m super excited to go through the barrage of questions that you and some of the. readers of your newsletter have asked, so do bring it. Let’s make it happen, man. I’m so excited. I cannot wait to do it.

 

Brian: Well, good. Here we go. I’m going to dive right in. Let’s rewind the clock all the way to the beginning, and let’s talk about your first real estate deal that you ever did. So where was it? How much did you spend on it? How did you fund it? What are the terrible mistakes that you made? Know. Tell us all about it.

 

Abhi Golhar: I hated that deal so much. Well, let me just say I never make any mistakes. I’m a perfect pro all the time. And just like what you see on HGTV, that’s my life. The most perfect. Firstly, I’m a prince. Did you not know that you need to? You know you need to up your royalty game here, right?

 

Brian: What is this? A first date?

 

Abhi Golhar: So, listen, everybody gets everybody goes to this school of hard knocks. Everybody goes through the school hard knocks. If you’re listening to this and you’re a pro and you don’t know good school of hard knocks talking about, first of all, you’re full it OK because you probably made as many mistakes, if not more mistakes, then than you need to. But listen, if you’re new and you’re listening to this for the first time, you’re going to make mistakes. You’re going to suck at something, you’re going to screw up somewhere and it’s OK. My first deal was in Detroit. How did I fund it? That’s a kind of a longer story, but we got a little time. So, when I went to the University of Michigan, finished my four-year degree in electrical engineering from 2002 to two thousand six. The in the year in 2002, my first semester I like. Are you familiar with the Square Root Club? The Square Root Club is so my academics were so bad. I was part of the Square Root Club, and the only way that you join the square club is when you’re if you square root a number that’s lower than your actual GPA. So that was ridiculous. So, the only way that works is my GPA was lower than it was like 0.98, like my first semester because I came in with a chip on my shoulder, I’m like, Yeah, of course, I dominated the high school, but I was so bored in high school.

 

Abhi Golhar: I started a computer repair business. I was dual enrolled at two at a community college and my dad’s college, where he was a professor at. He’s still a professor there at Western, and I was doing international, and the ID in AP classes and I was still playing soccer. I was beyond bored in high school. I’m like, this is not even challenging. Let me go, do something else. And so here I am. I walk into Michigan, arguably one of the hardest engineering colleges in the world, and I’m like, wow, I got this. No part of the square root club screw GPA is higher than your GPA. And I was I got to a point were. This is like pre like I had my Motorola V six 600 cell phone and it’s like a flip phone and it had like the lights on the outside, you know what I’m talking about? I do. And my buddy Tommy calls me and he’s like, if you’re listening, dude, you changed my life, man. So, he calls me. He knocks on my, you know, he I’m trying to find something to knock on, right? He knocks on my door. He knocks on my dorm room door. And here I am.

 

Abhi Golhar: I’m like, curled up in a corner. Like, I’m like this. This is me. I’m like in my dorm room and I’m like, this. I’m just sitting here like this. Like-kind of reading a book, looking at some magazine. Or maybe I was studying for a class and I’m like, literally kind of like shivering. I’m like, right here. I’m like, oh my God, what’s going on? I had to come out of my room for days. Ok, I’m coming back now. I haven’t come out of my room for days. I hadn’t eaten. I look like shit. I felt like shit. And he’s like, hey, I’m going to give you a lot of books. One of the books is thinking Grow rich acres of diamonds. Rich dad. Poor Dad, Cashflow Quadrant. And I read all of those. All those books. The classics, right? Like, I mean, you have to read the classics and. That got me thinking that got my entrepreneurial drive back a little bit, and it came it finally, it finally came to meeting two mentors. The first mentor taught me everything about entrepreneurship that I wanted to learn. The second mentor did not. In fact, he was probably the greatest gift, but also the greatest curse that I had going through my engineering college. So, first mentor, I will call him Mike. He taught me how to buy and sell cars on eBay.

 

Abhi Golhar: I would go to You can do this right now. You can go to search Tempest or Craigslist it for sale. Craigslist and find cars and trucks for sale and find like old classic cars. We would put a purchase agreement on those classic cars with an exclusive marketing clause, so we would only market the cars on eBay. We would actually never transfer title to our own names or anything doing wholesaling cars. Yeah, for a period of three years in college, I was selling. We bought and sold like. They are like eight to 10 cars a month, and the average margin we would make per car was like seven to eight thousand. So, think about those numbers for a second. That’s in great numbers. Yeah. And I’m like sitting here doing a full load of engineering classes. I’m like, why am I doing this? Like, why do I even care? So anyway, long story short, I actually did finish my engineering degree. But during the process, like my sophomore junior year, I really like, I read all these books and I kept reading like one up on Wall Street by Peter Lynch and just every single book I was reading outside of my academic curriculum. I was probably reading a book a week, and I still read a book a week, just nonfiction straight nonfiction. Right now, I’m finishing up principles by Ray Dalio for the third time I’ve read that book.

 

Abhi Golhar: It’s an incredible book. So here I am. I have a little bit of cash set aside, and I look to a mentor who’s going to teach me how to invest in real estate. I said, Great. Not a big deal. Come to find out this guy is a complete fraud, but that’s not the best part of the story. Best part of the story is its sophomore year, its sophomore junior. I think its sophomore year. It’s fall time in Ann Arbor, and if you’re not familiar with the weather in the state of Michigan, it’s absolutely crazy. Sometimes it’s raining, sometimes it’s sleet, hail and snow, and I get a call on my Motorola flip phone from my contractor and he’s like, He’s like, hey, bro, hey, man, you know, we got a problem with the property in inner-city Detroit. You need to go check it out. I’m like, well, you know, hey, you’re the contractor. You’re supposed to fix this thing. What’s going on? So anyway, I drive after classes, it’s like 9 p.m. I drive to inner-city Detroit by the time I get there. It’s a full-on blizzard. I can’t see anything. I run over the mailbox hanging a left turn in my driveway. I walk into the family room, I see a shop vac and I hear running water and I’m like, Oh, that’s interesting.

 

Abhi Golhar: Now I know what to shop for. But when you meet me in person, I’m five foot five, a hundred and twenty pounds and I’m the best white-collar worker. There is like, I look at a sledgehammer, I’m like, I’m not going to pick that up. I go to the gym exclusively like, do five-pound curls because they’re not 10 pounds. Like, I’m always doing things at a discount or like cutting corners somewhere if I can’t. So, I’m like, I’m just not going to do this work. But my mentor number one Mike taught me, hey, if you’re in need of help, ask for help. So, I go outside and what do you not do in inner-city Detroit at 10:30 at night? Knock on doors asking for help, especially if you’re a short brown dude. And so, you’re. So here I am. Inner-city Detroit. I knock on a few doors on you, and you get that. Not that this is not like the trick that I’m looking for on a Halloween night. And so anyway, I eventually find a neighbor and he come over. We start moving as much water out of the basement where it was flooded up to my eyeballs as we could. We can get any water out and so I move. I make my next move, which is to the liquor store and Jack Daniels, and I have a really intense conversation that night.

 

Abhi Golhar: I go upstairs to the second to a second floor and I fall asleep there knowing that I’m alone. I’m wet, I’m cold. I have no family support because my mom and dad had no idea what I was doing at the time. My brother hated me. My peers are like, What the f you’re supposed to be in class and studying? I had a reputation of not completing my assignments and homework on time. I was in a good like group member, but for me, I was just beyond academics. At that point, I didn’t really care not to say that if you’re in school, you shouldn’t pay attention, you should absolutely pay attention. But like, I’d gotten to the point where it just didn’t matter. And I was failing. And for the first time, I felt alone, like truly, truly alone, with no support. And that deal, like I had a little bit of cash from the buying selling cars, I got into a really big deal. I was trying to renovate the house and I ended up having to just wholesale the house to somebody else. They took over payments. They finish it. They made a killing. And here I am, tail between my legs. Going to class the next day.

 

Brian: Did you lose money on the deal?

 

Abhi Golhar: I did. I lost about a couple of thousand bucks. It’s like five or six thousand bucks,

 

Brian: Which when you’re in college is a lot of money. I mean, it’s a lot of money for adults too, but it’s a lot of money when you’re in college.

 

Abhi Golhar: Yeah, it really was. And that was my I mean, outside of my academic failures, this was also like a real-world failure. And I’m like, how like, how do you trust people? Because I have a major trust problem? Still do. How do you trust the business partners, right? Number one? Number two, how do you trust the people that are going to do the work for you? How do you trust that it’s a good deal? How do you trust the market? How do you do that? Like, how do you do that? And when you’re 18 or 19, who are you going to talk to some bullshit, dude? Or do that? That’s going to give you like a $25000 course on flipping real estate. Or you’ll get inspired by watching HGTV or YouTube videos. No. Like, no, that’s not something you do. You actually have to be in the shit and deal with it. And that’s when you learn. And unfortunately, I was dealt shift at a very young age. So as much as I created my own hell in that moment, I ultimately realized that was one of the best things that ever happened to me. The trials and tribulations exceptional. Looking back,

 

Brian: Yeah, I mean, if there’s one thing that I’ve learned about real estate investing is that it’s a team sport. You know, you can’t go it alone. You need help, you know, from a realtor to property managers to a whole slew of contractors to mentors and partners, and you need help across the board. And when you try to go it alone, you end up by yourself in the hood with a bottle of Jack Daniels with a fun house. I mean, like,

 

Abhi Golhar: You know, really, it was like a handle. I probably shouldn’t have driven to class that day, right? Like, I should have walked it off. That’s the truth. There’s no I in team. And once you figure that out, then rule number one, go find yourself a damn good team. Rule number two, hold on to that team.

 

Brian: Absolutely. Well, so tell us about, you know, how you scaled from there. You know, what did you start doing differently? You know what? What changed in your investing from that first terrible deal? That was such a nightmare?

 

Abhi Golhar: I realized that I needed to get OCD like I needed to really understand numbers. So, if you’re listening to this and you’re like, hey, I don’t know a pnl from anything, I don’t even know what a pnl is. Well, I’ll tell you what. Go to Google. Get off your lazy ass and go, learn this stuff. If you don’t understand how to use technology, you’re going to lose the game. It’s that simple. Like, for me, it was a combination of a couple of things. Number one, understanding deal sources and deal flow number two, understanding how to talk to people. Number three, understanding the numbers. And Number four, learning how to use technology to grow in scale. If you’re 75 or 80 years old, if you’re in your mid 40s or late 40s or 50s or like in your 30s and you’re like, well, how do I use? How do I do this in real estate? Use technology to grow in real estate? Guess what? You’re going to be passed over by opportunities, and lady luck is just not going to see you. Have you seen your day because you need to understand the power of technology and the power of what Brian built-in Spark Rental to really help you No, I’m not even like I’ve looked at it? I’ve created a login.

 

Abhi Golhar: I mean, every program has its pros and cons, but like, I’m seeing nothing but pros. And listen, I love single-family rentals and I don’t manage my own stuff. But when I did, I needed the support of technology, and I didn’t have it back then. I didn’t have a Spark Rental back then, you know. So anyway, those are the four things that shifted my thinking. And this also applies to businesses in real estate because in my world, I invest in businesses and I use the K ones, the passive K ones to go invest in real estate, either as an LP or I rarely do like I rarely operate myself anymore. But like whether it’s a multifamily limited partnership or if it’s some kind of deal that I’m getting into with somebody else, that’s going to be the foundational core support of long-term wealth building. Because real estate, for me, I might say something controversial on your show, but for me, real estate is the slowest way to build wealth. There is, but it is the strongest way to build wealth. Building businesses gives you cash flow and gets you there quicker with money and bank. But you need now a place to put that, and then you need somebody else to run the business. Thankfully, I’m in a position where I don’t have to do both.

 

Brian: So, with these, so you’re finding partners out there like boots on the ground, real estate investors and you’re basically serving as the money guy. You are not out there sourcing deals or overseeing renovations or managing apartment complexes. You’re not doing any of that from what I gather. Yeah. Ok. So, you’re partnering with guys who are out there on the ground, doing the stuff day in and day out, and you’re really providing the funding for it.

 

Abhi Golhar: You got it. Yep. And so, the flow of money looks very simple, let’s say easy as an example, let’s say Spark Rental. Like how much do you charge for Spark Rental? What’s the monthly? Is there a monthly?

 

Brian: There is no monthly right now.

 

Abhi Golhar: It’s free. Ok. So, let’s say you make I don’t know, let’s say, make a quarter-million dollars and Spark Rental a year, right? With sponsorships and podcasts and stuff and then the software. So, you’re making a quarter million a year and you don’t have to use any of that. Let’s say you have a full-time job. You’re doing Spark Rental on-site, and all the Spark Rental income for you is just, hey, kind of free cash flow after you pay taxes. What I would do is I’d take all of that and push it into a real estate deal. So, the same thing that I do is I look for businesses to buy that are already creating cash flow and or and have a high enough EBITDA, and I’ll take a portion of that EBITDA and start pushing it. I mean, yeah, you have to pay taxes. You can’t shelter taxes. That’s like the dumbest thing in the world. You can get creative. Go find yourself a good CPA, but you take six figures. You take one hundred hundred and fifty-two hundred thousand a year and you start moving it into real estate investments. I don’t care if it’s a single-family home in Birmingham. Like, I love college football teams and I don’t really. I’m not like, I’m a Michigan guy through and through. But you know, I, you know, go Buckeyes. If you I don’t care. Like, I was recently speaking at an event, and I said, hey, how many of you have kids that go to Ohio State University and, yeah, whatever. And they all knew I was a Michigan guy, so I was getting a lot of shit for it anyway. And I just said, hey, thanks for paying your rent on time illustrating that. Real estate never lies. You know, and the fact that you can get income every single month from that, but you have a business, you have your main business, a Spark Rental, that’s funneling the acquisition of real estate opportunities. That’s the sweetest thing of the whole wide world.

 

Brian: Yeah. So, you know, for you guys listening, Abhi and I were talking before the show, you know, he made a similar point. He said, you know, real estate, it’s a slow way to build wealth, but it’s a strong way to build wealth and how it is. It’s a slow and steady way to do it, but it is somewhat predictable, and you can. Real estate investing is one of the few investments in the world where you can very accurately predict your cash flow in the long term. You’re not on a month-to-month basis. You know, one month you might have a $5000 furnace bill or whatever, but you can predict your cash flow in real estate, and you can predict your returns in real estate in the way that you can’t necessarily elsewhere. And starting a business, there’s a much faster and higher upside potential there. It also comes with some more risk, whereas real estate grounds your returns in something that’s physical in the real world. So anyway, I just want to clarify that point there.

 

Abhi Golhar: And if you’re young, if you’re young and you’re in your 20s, go start a business like what are you? What are you doing? Just listening to information like go, go find like a Shopify store idea like Shopify store owners right now that you can buy their stuff for like one hundred or two hundred thousand dollars, you can buy the entire store and they don’t know how to manage it. They also don’t know how to value the business because they’re just not savvy business owners. That’s an opportunity right there. Like maybe partner with them or figure out some way to make it work and then use that cash flow and start buying real estate. There are zero excuses in today’s world.

 

Brian: ย And when you’re young, you know you do have a higher risk tolerance, you know, especially when you’re not married, you don’t have kids. You know, you can go out there and start an online business or an in-person business. And, you know, if it doesn’t work out the way you want it to. Maybe you didn’t risk the far right. I mean, you can always go back and get another job. You can always go start other businesses. So, when you’re young, take advantage of that freedom because the older you get, the less your risk tolerance becomes. So, you know, take some shots while you’re young. If they miss, it’s not the end of the world.

 

Abhi Golhar: It’s totally. I mean, you know, you and I are in our late 30s, right when I look at risk and now it’s definitely like the strategy has shifted, right? I look at now, how do I? The first part of the equation is getting rich. The second part of the equation is staying rich. So, the question is how do I effectively do the latter and how do I also continue to do? The former and the former really comes down to a couple of things, right? It’s like, you’ve got you need, you need the right team, you need to be religiously OCD about the numbers in your deal. You need to understand the people that are operating your deal. And if you’re going to get in bed with them, great. Have an exit clause. You have the have what exit means in the operating agreement of you of your entity. And if something goes wrong, hey, at least you can protect yourself. You have a parachute. And that was just a matter of finding deals that make sense, whether it’s real estate or otherwise.

 

Brian: Absolutely. So, you know, let’s turn a corner here for one second, I want to hear because we’re nearing the end of twenty twenty-one. I’m curious to hear your thoughts on where the real estate industry is headed in. Twenty twenty-two and that could be, you know, real estate markets. And obviously, they’ve been very hot in twenty twenty-one. It could be changes in technology, industry wide kind of stuff. However, you want to answer that question. I’m curious to hear your thoughts about where you see real estate heading in 2022.

 

Abhi Golhar: Yeah, rates are going to go up. Supply and demand, it’s probably not going to ease up until late next year. I can’t see it easing up until late next year, not earlier this year. The days the average days on market was less than a month. It’s like 6 months and are national Association of Realtors. Yeah, that’s right. A balanced market for those of you that are new is roughly about six months, so it should take roughly about six months to sell your house. Anything less than that is insane. Like when you have, what’s the big? Well, who’s the big homebuilder? My God. Lennar. When you have Lennar homes selling fifty or seventy-five thousand above asking price, they’re cheaply built crap homes selling fifty to seventy-five thousand dollars above. Something’s wrong, right? Then you wonder, Wait a minute, it’s not. Something’s wrong. There’s not enough supply to meet the demand. And when that happens, then there’s a really big clash. Prices go up and then everybody thinks, well, I can make any. I can make a lot of money real estate. Well, it’s easy right now if you’re a drooling idiot to make money in real estate because real estates on the up and up. But do I expect a major correction? No. People will. People talk about, well, their shadow inventory on the market and all these pending foreclosures. So, it doesn’t really happen. Yeah. And even if you took all of the pre-foreclosures that are supposedly coming in the next months? You throw that on the market. Sure, it might increase the days on market from, I think, maybe two months where we are now, maybe one point eight, two months to where we are now to like maybe three months. So great. All those will be absorbed because there’s demand to buy that supply.

 

Brian: Yeah. And all of those homeowners would then become renters and fuel the rental market in that case.

 

Abhi Golhar: Yeah. I mean, and let’s be honest, we’re renting the American dream. We’re no longer owning it. I had one of my before I did the Think Realty podcast, we had the Think Realty radio shows and actually syndicated radio show in the Wall Street business network. We were in 53 cities nationwide, and I remember even then three years ago talking about this concept of wait a minute. We’re renting the American dream, we don’t have to buy it anymore, and in some instances, it makes more sense to rent than buy.

 

Brian: I mean, I’m a landlord and I still rent my own, my own residence.

 

Abhi Golhar: Yeah, I mean, if I remember correctly, I think Grant Cardone does the same thing, right? He’s like, just, I rent. What are you talking about? Something else to consider, too, is. When I’m looking at buying homes and I’ve said this for now years, when I look at buying a single-family rental or even multifamily, I’m not looking at primary markets. Why?

 

Brian: Because they’re overpriced, and the numbers are terrible. The cash flow is non-existent.

 

Abhi Golhar: Yeah, you’re going to buy it like a four cap in the hood in Atlanta because everybody wants in. Right? Or some family office that needs to deploy $100 million by the end of December needs it. Listen, if you focus on like, I’m not like, I’m not going to say any specific cities. Columbus, Ohio as an example or like Grand Rapids, Michigan as an example, Kalamazoo, Michigan as well, my hometown. If you look at tertiary markets, that’s the play. You can not only find value, but you can also find the right cash flow for your dollar. A lot of folks will say, Well, there’s one hundred and fifty-two hundred dollars a month good enough in cash flow. That’s up to you. Frankly, the higher, the better. But if you go to markets where you might have to get on a flight, you might have to travel a little bit. It might be a little outside your comfort zone, maybe three or four five six hours of drive time to get there. You’ll still find value, but then that’s where you don’t have to self-manage. If you’re building a portfolio, you can hire somebody. They can use the Spark Rental Automated Property Management software.

 

Abhi Golhar: You can turn them on to that and just portfolio. Hey, man, like I said, I’ve done this for a little bit, but you know what I mean? Like, that’s kind of what I’m seeing the tertiary. And if you feel uncomfortable saying investing in Grand Rapids Michigan or Columbus, Ohio or something like that, then go secondary market. A secondary market generally is going to be thirty forty-five minutes outside of a primary market. So, an example of that in Atlanta, say, would be Alpharetta, Georgia. Go to Alpharetta. Right? I mean, if I were to buy a home right now in Atlanta, I would not buy in Atlanta. I would buy in Alpharetta because I can get more home, more land for my dollar. And frankly, I want to stay away from people. And have you driven? Yeah. And have you driven the highways in Atlanta? They suck. Like, who wants to drive in traffic? I take the HOV lane. I’m one person. It’s my express lane through Atlanta. Like, it’s nuts. Yeah. Anyway, you know, it was the idea.

 

Brian: Well, so to just build on what you just said? You know, first of all, I agree with you a hundred percent and we talk quite a lot on Spark Rental about investing long distance, going where the returns are much better or better coverage or better. But also, it’s not just about the numbers. Some of it is also about regulation, and the primary markets tend to have very anti-landlord laws. Your very tenant-friendly laws that make it even harder to earn consistent money as a landlord. And, you know, sometimes people will interpret that politically. You know, obviously, this is not a political issue.

 

Abhi Golhar:

 

Brian: But you know, what does matter? I mean this. It does impact your returns as a landlord. And so, I grew up in Baltimore. Most of my early career real estate investments were in Baltimore, and I had a terrible time with all of them because Baltimore has such a terrible anti-landlord law, and they’ve just gotten worse since then, too. So, I actually I just sold my last property in Baltimore a couple of weeks ago, and we broke out a bottle of champagne to celebrate. I was like, Thank God, I’m done. I don’t have any more Baltimore properties anyway.

 

Abhi Golhar: No, and I don’t think Maryland is it’s not a non-judicial state like Georgia’s judicial state. Illinois, for example, is not. It is a judicial state, which means you have to go through the court system if you want to evict somebody. And generally speaking, like if you even look at all what the family offices are doing and rights and funds, they’re generally buying an only non-judicial state. It’s very that means it’s very business-friendly for investors like you and I to go in and make the impact and the moves that we need to from an acquisition perspective.

 

Brian: Absolutely. Yeah, I had a property take 11 months to evict a tenant, and when I did finally evict him, you know, he had punched holes in every cabinet door and scratched up all the hardwood floors. And he, you know, he used every trick in the book to prolong the eviction, but it took almost a year to get this guy out because he was a professional tenant. And, you know, anyway, a bit of a tangent.

 

Abhi Golhar: Yeah, I mean, yeah, we could talk about that. I mean, if we wanted to go political, I think Brian would have to like, we need to devote another hour and a half to this show.

 

Brian: Oh yes, easily. Easily. So, we put out in our newsletter yesterday a call for some questions from the audience. You know what they wanted to ask you? So, I’ve got a couple of questions here that we picked as a random sample. So, Ashley, and I’m going to paraphrase her a little bit just for for clarity and to keep it brief. But excuse me asking at what point should I cash out my investment properties? She says I was investing for five years. Is it OK for me to sell my properties? And yeah, so what would you say to Ashley?

 

Abhi Golhar: No, it depends on the mindset, and it depends on where you are if you have a better opportunity, if you’re looking at investing in a business. Us then use real estate as a tool. Don’t forget money in real estate as a tool. It’s you can sell it. If you want to sell it, you can keep it if you want to keep it. If you want to go buy a car, go buy a car. Like I’m just saying do whatever you want, that’s going to make you happy in the long run, but also that will have a driving impact on your dollars. That’s the most important part. So, if you have, say, a portfolio five or portfolio of 10 single-family rentals Ashley, for example, but you’re seeing a business opportunity where if you invest $100000, then you’ll make one hundred and fifty or two hundred thousand a year and a two-year time frame. Hell, yeah, to do that deal, you’re not going to do that on a real estate deal. There’s no way unless you buy super distressed, you raise the capex on a large multifamily you want. Even the ten thirty-one, because it’s not like kind exchange, but like maybe you can roll over some profits, maybe even do an OC qualified property acquisition in a qualified OC fund, maybe you can get away with that. But listen. If you have a better opportunity where your money is making more money, then do that if you like, I look at my SFR portfolio on an annual basis and I say, what’s the bottom five percent? And can I tolerate the bottom five percent if I can’t tolerate the bottom five percent? I’m going to move it into another business that I’m going to buy. It’s that simple. Like, I show no emotion when making these decisions. It’s never emotional. It is only logical because you work hard for your money. Your money should be working harder than you do for it.

 

Brian: Yeah. These are investments. This is not your home, right? These are just investments. There should be no emotion than it whatsoever. So, yeah, great answer. All right. We have a question from Brandon, who says, what’s the best way to structure my real estate investing business? Should I have a holding company and be incorporating each property? It says it affects financing options and also relates to liabilities. So, what are your thoughts for Brandon?

 

Abhi Golhar: Sure, Brandon. I would look into either a Delaware or Wyoming LLC from the protection and just being anonymous perspective. Both Delaware and Wyoming are great. If you want to stay anonymous, it helps with overall asset protection. Is that then should you have a controlling interest in the individual entities that you set up in the states in which you’re buying properties? One Property per LLC If your CPA says, hey, it’s going to be an accounting nightmare, screw your CPA and go find somebody else like, say, See you later, really? Fire your CPA and go find another CPA that actually understands how to do basic accounting. It’s not hard, right? It’s just different entities owning 10 properties instead of you owning 10 properties. The reason you want to do that if your tenant slips and falls and has and has a nose that one entity owns 10 properties, then you know your kind of screwed because now your liability exposure has just increased by the factor of 10, assuming that all properties are equally valued to be around the same. If I’m looking at financing options, you shouldn’t have an issue with financing, like if you’re going with non cu.m non-qualified mortgage financing, they’re only going to do B2B loans, which means they’re only going to lend to an LLC. They’re not going to lend to you personally. They will take a look at your credit experience and cash to close, but they will want to have an entity formed unless you’re going to Bank of America, Wells Fargo, in which case, why are you listening to this podcast?

 

Brian: Absolutely. So, I just want to clarify, so you are not proposing a Delaware Series LLC, you’re proposing having either a Wyoming or Delaware LLC as your master legal entity and then opening up individual LLC for each property in the state where those properties are located.

 

Abhi Golhar: Yes. So, example, I live in Georgia if I want to buy 10 properties in Georgia. Georgia LLC one two three four five six seven eight nine 10. If I want to go buy 10 properties in Alabama, my Wyoming LLC will have a controlling interest in Alabama property one Alabama Property, two Alabama Property three LLC. Each of those LLC need to have need to have an operating agreement. They need to be registered in that particular state. They need to have an I-in and you need to show the ownership that goes right up to the main holding entity. And that holding entity, of course, needs to have its own I-in. You need to have your own operating agreement and you need to treat it as if it’s a real entity. The problem that a lot of people make the mistake that probably a lot of people make two of them. Number one, you never set up an operating agreement stupid on you. Number two, if you need to have a board meeting or you need to have meeting notes that you have to take, then take them. If it’s just a pass-through LLC, then you don’t need any of that. A lot of mistakes that one mistake a lot of folks also make is they’ll just go ahead and do a straight S-Corp election for an LLC. Don’t do that. The legal ramifications like you have to follow so many IRS guidelines if you have an S Corp elect LLC, that could be a little bit of a challenge. So, push your CPA on that. I don’t think you need an S Corp LLC until you’re at least making $100000 a year.

 

Brian: Yeah, absolutely. And one other mistake that a lot of people, a lot of real estate investors make with their losses is co-mingling funds. If you do that, you lose all of the asset protection benefits of having an LLC in the first place. So, at that point, you might as well just own the properties in your own name. So do not mix your business money and your personal money.

 

Abhi Golhar: Don’t do that. And also, the same applies with co-mingling with self-directed IRA investors. If you’re a self-directed IRA investor, do not put yourself in a position where your transaction is considered prohibited. Big fines, big no-no and from the moment that you engage in a prohibited transaction, let’s say that was five years ago. All of the gains in your IRA until, say, year to date. The ten years of deals that you did. Guess what it goes? Guess what happens to those sellers? Bye bye. All right. And you get penalized.

 

Brian: Yeah. So, by the way, we put a link in the comments here, too, where you can look at some lenders who specialize in working with real estate investors and they all lend to legal entities. So, if you’re worried about borrowing money as a legal entity, don’t worry about it. There are plenty of lenders out there who are happy to work with you. All right, last question this is from David, and David says, what should I be looking for in a multifamily management company in the 50 unit plus apartment complex range that says, I’ll be investing long-distance, OK?

 

Abhi Golhar: Long distance, David, whether you’re a domestic or international investor. One thing that they’ve done it before and they have in-house management, a lot of management companies will just be created. There’s two trends one, if you have if you’re an operator, you’ll outsource your management. I don’t necessarily believe that’s smart. I had Joe Fairless on my radio show. This was two and a half years ago, and he and I got into it about that. Love, Joe. He’s a fantastic guy, and what they’re doing is phenomenal. But he and I got into it with outsourcing management. I think controlling every part of your supply chain matters. So, if you’re going to be the GP and if you’re going to actually control that 50-unit apartment complex have in-house management because you can properly affect the dollars inside of management. There are a lot of people believe that, hey, outsource the ship. You, if you do that, I’m going to hunt you down and I’m going to strangle you. That’s something that I would absolutely look at. How do you tell a man a good management company from a bad one asks for references to walk the properties or managing three? Interview their staff if they’re friendly and nice and inquisitive and they have a really good energy and vibes about them. You’re pretty much golden. Like, yes, you have some other due diligence you’ll probably want to do. You’ll want to look at the technology that they’re using.

 

Abhi Golhar: Keep in mind, throughout this podcast, I’ve used the word technology at least three or four times if you’re kind of catching a drift here. You know, if you if you’re not up to snuff on technology, spend us spent. I was going to say semester spend a quarter. You have time between now and the end of the year. You get up to snuff with the technology you want and need to grow and scale of business. But that’s one of the criteria for me, right? Like if I’m buying, if I’m going to go buy a portfolio somewhere, I’m going to look and management company that uses technology because I need my dashboards like my team will need dashboards to look at if you’re doing everything on your phone, in notes, on iPhone. It’s not a business that’s bullshit, right? Like how are you able to? How are you able to do anything you can’t scale worth anything? So that’s something to technology. Have they done it before? Get references. Do they actually have in-house management? As a management company, I’ve also now seen management companies outsource and outsource the management, which is so weird. It’s like, why would you? But that’s your business of managing properties. Why would you outsource your business of managing properties anyway? People drive me crazy sometimes. So, if you find that happening, just I would, I will stay away.

 

Brian: Yeah. And you know, I couldn’t help but notice in your answer there that a lot of what you propose to people do involves being there in person, you know, walking the properties that this company manages, you know, speaking in person to their employees. So, you know, I thoroughly encourage people to invest out of state, invest long distance, but you are probably going to have to go and physically visit the city where you plan on and investing, you know, at least once or twice before you shell out tens or hundreds of thousands of dollars there. So anyway, it’s piggybacking on what you said.

 

Abhi Golhar: It’s worth it. Listen, you have zero excuse, right? Like, here’s if you wanted to spend one day in a city and you’re like, Abhi, you’re telling me you have to fly there. Yeah. Spirit and Frontier have less than 50 dollars for flights if you plan accordingly. One two, if you get there early enough. Your out-of-pocket costs is. Nothing to drive around, because you would have the property manager to pick you up the airport, give you a tour and drop you back off, so that’s easily arranged. Number two, they’ll probably buy you lunch if they don’t buy your lunch cool lunches on you 15 20 bucks, maybe for lunch and then a coffee to get you going throughout the afternoon. If you’re like a do two or three coffee kind of guy or gal, you’re all in for thirty-five dollars plus you’re 50. Let’s call it a hundred dollars round trip ticket. One hundred and fifty bucks. Get your ass on a plane and go and go through the motions and go meet people. Yes. Yeah. Like, I’m notorious. One thing I’m notorious for jumping on a plane in the morning. Now, like Brian, I know each other. I’m going to go fly to him a gazelle.

 

Brian: So okay.

 

Abhi Golhar: All right. Never mind. I’ll figure. Brazil is a country. I’ve been dying to a dying to visit, so we’ll make that happen. Yeah. Like, let’s say you lived in Miami, or you lived in Orlando, or you lived in Texas somewhere like I would fly there in the morning. I would meet you for lunch and I’d be back in Atlanta by dinner. Like, invest that travel time because it shows people your commitment.

 

Brian: Yeah. Or, you know, you can also make a weekend out of it, you know, take your spouse or your significant other. You take the kids, you know, go have a fun weekend, make a trip out of it and then you can write it off.

 

Abhi Golhar: So, yeah, absolutely. And if you’re thinking, well, man, I don’t really have a budget for this, then you know what? Don’t invest in real estate until you do. It’s that simple. There are a lot of folks that will say, well, you can invest with no money down, et cetera, et cetera. Yeah, OK. I mean, you’ll get to the point where you can understand some of those strategies, but you need dollars to invest. You need. Take twenty twenty-five, thirty-forty thousand dollars and put that money to work, put it to work and then have a little contingency budget, five hundred bucks like that’s what it takes. If that’s what it takes, then hustle and go do what it takes. I don’t like we’re so freaking lazy, sometimes like not everybody listening. You’re not lazy listening to this. But if you are lazy and you’re listening to this, you know, make some changes in your life.

 

Brian: All right. Well, speaking of hustling, I want to hear about what you are up to, both with your think reality podcast and in the other sides of your business. Because you have multiple businesses going, you are an author, you are a national speaker, you are a coach, an entrepreneurship coach. So, tell us about everything that you’re up to.

 

Abhi Golhar: Yeah. So, I have to preface this by saying I have the privilege of doing a lot because I’m surrounded by amazing teams. I can’t do everything that I can do without their unconditional support. And I mean, man, like they run my life.

 

Brian: The recurring theme in this episode you need to have. You need to have a team.

 

Abhi Golhar: You need to have a team. If you think you could do it all by yourself, you just can’t. So, the thing about your podcast is it’s great. It’s I love doing it because we’re actually going to change up the format. So, Brian, I will let you know what that is, and I’ll have you on the podcast in January as well. It’s going to be we’re changing up a little bit. Usually, it’s been good interviews with amazing people, but I want we’re switching it up to be a little more controversial. Generally, I’ll record the podcast once every other month, and we’ve got this big like LED screen behind me. It’s a lot of fun, so we’ll have you on. It’s great. The point of that podcast is to drive home this idea that you can start here, that you can start here, and you can end here. And the difference is less than what you think it is. It’s not this entire scary monster of an animal that we believe wealth to be Harvard. I think it was Harvard that did. A study is saying all it takes is $70000 a year for you to be happy. Now, happiness is a different definition. Many of us have different definitions of that. But generally speaking, you’re not going to see a crazy increase in the quality of your life after making seventy or seventy-five thousand dollars a year. Many of you might be thinking, are you kidding? Be like, I need at least two hundred and fifty million dollars in monthly recurring revenue that’s coming in. No, you don’t.

 

Brian: Ok, Warren Buffett. Yeah, yeah. Yeah, not exactly.

 

Abhi Golhar: The second thing that I’m up to is a company called NTP Hub. It’s a company that I co-founded in Twenty Seventeen with my really dear friend Chris Chopra. We started from nothing. We took on no investors, no angel, no equity, no partners, nothing zero. And today we have a team of forty-eight employees, half of which are offshore. I think this year we’ll be doing about three points five million in revenue, and we use technology six. We’re using five times. We built a proprietary technology platform to help the nursing industry. I’m a huge believer in and registered nurses and nurse practitioners, and the fact that they’re the first responders and thanking them is one of the best things that I get the privilege of doing through NP Hub by helping them in their educational process. Third, I work a lot with streamlined funding based out of Austin, Texas. They are very near and dear to my heart. I definitely do see a lot of deal flow from Streamline, but at the end of the day, they wanted to build a major like a massive loss next level technology platform, which I’m helping them do. I acquire businesses. Oh God, that probably would probably take me about 30 minutes to list everything. But one of my favorites right now is dental. I’m investing heavily in the dental industry and the medical industry because I love it. We can have an offline conversation about that. But I mean, it’s one of my absolute favorite industries to take a look at. And then, you know, any SaaS platform that I find seems interesting. So, Brian, are you selling Spark Rental?

 

Brian: Well, you know, maybe an offer? We’ll see.

 

Abhi Golhar: So, you know, just stuff like that. But really, at the end of the day, I love having conversations with people not to sell them anything because like, I don’t really have anything to sell. I’m not the guy that I’m very selective about my coaching. I don’t really like charging for coaching either. It’s not even my thing. It’s just let’s go on a ten-year run together. And the last time I did that, we ended up doing fairly well financially. So that, to me, is a lot of fun. I’m. I’m an eternal entrepreneur. I’m always looking at stuff. I love doing deals. Yeah, you know, we all screw up. Sometimes I’ve I’m sure I’ve screwed up the process. Yeah, it’s part of the process. But do things that will constantly push you outside the boundaries of your comfortability? And now the uncomfortability becomes part of the circle in which you can play in your sandbox gets bigger and bigger. And whether it’s a business that I’m buying or a piece of real estate that we’re investing in, it just it’s truly a privilege to be able to take advantage of this, knowing that the teams are in place that helps me do the due diligence, ensure the right people, do the math and then talk intelligently about it to whether it’s the financing or just my wife.

 

Brian: I love it. Well, so Abby, where can people connect with you?

 

Abhi Golhar: Yeah, guys, you check me out if you want to. I got to think Realty podcast, you know, thinkrealty.com/podcast. You can find me anywhere online at abhi golhar. I write for LinkedIn. I’ve been writing a lot about technology on LinkedIn recently. You can follow me. I think I’m writing two or three blogs a week on LinkedIn. I’ve got one or two blogs a week on my on my domain, just my own website abhigolhar.com. I’m starting to read back up on Instagram. I just lost interest because I’ve been just really busy on the private equity side of things over the last two and a half years. And so, I don’t know. You just find me, find me, email me, you’ll find my email. It’s me responding. Or it’ll be my team is fine.

 

Brian: So, we’ve put a link in the comments to thinkrealty.com/podcast and Abhigolhar.com So thank you so much for joining us today. This is a lot of fun, and we hope to have you back sometime soon.

 

Abhi Golhar: Of course, you got it. I’m looking forward to seeing you. Seeing you in Brazil, maybe in the next couple of months. Let me see what I mean.

 

Brian: Come on down. We’ll be happy to have you. All right, guys. We’ll see you next week. Have a good one.

 

 

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