Aileen (00:02):

Welcome everyone to today’s episode of the, How Did They Do It? Real estate podcast. We are your hosts Seyla and Aileen and today’s guests. We have Pancham Gupta. Pancham is the host and founder of the gold colour investor podcast, a professional real estate fund manager, and a co-founder of [Inaudible] capital, which controls over $43 million in assets using his engineering background and his 14 years’ experience in FinTech industry. He has created systems and successfully built a portfolio, which is cash flow over 10% and he has invested in five different States and internationally. We’re so thankful to have you on the show today, Pancham how are you doing?

Pancham (00:37):

I’m doing great. Thank you. Seyla and Aileen for having me on your great show, honour is mine.

Aileen (00:45):

Thank you so much. So we’d love to hear a little bit more about your background and how you got started in real estate. If you can please share that.

Pancham (00:52):

Sure. I would be happy to. So, you know, before I get into that, I came to this country in 2003 to get my master’s degree. And the idea was at the time that I’ll get my computer science degree and work here for a few years and then go back to India where I’m originally from to start something of my own and fast forward few years in 2009 and 10, we actually sold all of our furniture, everything to finally move back for. Good. And then I and my wife find out that, you know, we are expecting our first born first kid, and we were like, you know what? It’s very hard to move countries. Let’s, you know, have our first baby here and then we’ll make a call. And that guess what we decided to stay here for good. And in 2011 and 12 I started investing in this country and then started investing in real estate.

Pancham (01:52):

I read this book, rich dad, poor dad and cash flow quadrant. And if you guys have read that book, you would know on the left side of the quadrant, you know, there are 90% of the people who control 10% of the wealth and they will have to work really, really hard for the money. The, you know, and on the right side you have you know 10% of the people who control 90% of the wealth and they tell all the people on the left side what to do, right? So my goal was like how we can move on, like how I can move from the left side to the right side. And real estate was one of the wakers that I thought would be a good one. I started investing in 2012 and started buying single family duplexes, triplexes, and had expanded into five different States.

Pancham (02:37):

And you know, slowly it became a full-time job on its own because of this expansion into this portfolio. And as you know, all of these guys, if they’re contractors or property managers, or if you have to talk to tenants, like all of these guys are only available during the work week, most of the time and during the work hours. So you have to take the phone call like, you know you know, during lunchtime and all that. Right. So I was trying to make it happen, but it became kind of a job at that time. And I was really, really passionate about this side. And I found, found out that I’m so passionate that I was spending nights and weekends and my train rides, learning about this stuff. And even when I go to my kid’s soccer game, I was listening to podcasts and all that. So that’s how I actually ended up in real estate. And, you know, I don’t know if that answered your question.

Aileen (03:32):

No, thank you so much for sharing. And so you mentioned that you were invested, you started off as single family, and then you invested in five different States. Why did you decide to invest in five different States instead of focusing on just one and how did you choose those different places that you are investing in?

Pancham (03:49):

Great question. So I started first here in New York. I am from New York and I’ve worked in New York City. So I live in one of the suburbs and houses here are not cheap and you know, they don’t cash flow that much, but back in 2012, when the market was really down the dead cash flow. So I bought my, you know, two rental properties here first. And there was still very, very, you know, from the national average point of view, very expensive for that day and age. But there, it was cash flowing. And but after that, you know, I got the bug. I’m like, you know, what, I’d really need to expand. I started listening to bigger pockets. I was active on the forum you know, at least reading wise, not actively contributing, but really learning and, you know, still started looking for States which were tenant friendly, sorry, landlord friendly. And the price point was not high and they were cash flowing. So that’s how I, you know, started going into like Ohio Pennsylvania, Georgia, you know, started looking into these States and started buying there.

Aileen (05:01):

That makes sense.

Seyla (05:03):

Thank you. And you mentioned that you started out and with two rentals in New York and then after that, how did you scale up quickly to five States and with triplex as well. And how did you get the down-payment and what was the strategy that you use?

Pancham (05:25):

Yes. So my, the way I expanded was there were many different strategies. I applied to different States and what I used to do, I used to find properties all the time on redirect fins or depending on the state, which one was more accurate. I would use that tool and I would go and spend a lot, a lot of time. And then whenever I would see the deals that they’re making sense from number point of view, I would fly down there. So I did that a lot for Ohio, but for Pennsylvania, which was driving distance from my house, I did a completely different strategy.

Pancham (06:02):

I actually bought Oreos you know, like completely rundown places. And I would go and buy those gash and they were not expensive. I would buy those cash and I, we can talk about numbers too, but basically rehab them and then rent them out. Right. And in Georgia, I actually did a completely different strategies, was more Airbnb. So I wanted to kind of try all of these things. You can call it like just a shiny object and that I had that syndrome. So that’s how kind of I managed this, like my strategy was to try different things and try. So for the rehab project, since it was closer to my house, I could go more regularly. It was only three hours drive, or depending on the place, it could be like two hours.

Pancham (06:54):

I would prefer that to be where I can oversee things, but for the other places, I bought more stabilized products and different strategy. One was long-term rental, one was short term rental. And to answer your question on the down payment, that was all the savings that I was doing. Like, pretty much we were living very lean. I would save up all the money to basically go buy up this stuff. That was my you know, it’s like a kid in the candy store whenever I used to come home after kids are to bed at 10:00 PM, I would open up the computer and I would see these properties. And I would like, it was like a, you know, what a kid would feel when they go into the candy store. Right. Oh my God. I would find on by that, that, that, that, you know, it’s that was how I started.

Seyla (07:41):

Well, at least this is a really good candies that can multiply themselves over time. So do you try the long-term rental? You try the short term rentals and in your opinions if you have to do it again which one would you recommend?

Pancham (08:02):

So that’s a great question. And you’re talking about only small properties, like not bigger multifamily.

Seyla (08:08):

Yeah. We know we’ve got to get into multi-families.

Pancham (08:12):

So in the small properties side, I would say that if you’re willing to put in hard work, and if you’re local, then short-term rentals can be great. Like, there is a lot of hard work that’s needed to make them successful. It also depends on how much demand is there in your area. Like where I am in New York, there’s not so much demand in my specific part of the area, but there are many other areas where there’s a lot of demand. So if you’re in a place where it’s, let’s say you’re in Florida or a more tourist friendly state, and you know, a lot of tourists visiting, I would say Airbnb can be a great, great strategy. It’s just that you have to have systems in place because there’s turnover constantly like a hotel, like people come in and when they go out, you have to completely wash all the sheets and you have to assist them so clean it, and then you have to turn it for the next guy.

Pancham (09:05):

If they’re coming in the following day, you have to do all of that. In Georgia, we had five bedroom and four bathroom place. It was a massive 3000 square foot place. And imagine washing, you have only one washer dryer in the unit and you have to wash five units worth of five bedrooms, worth of bedsheets and the comforters. And then you have to clean all the four bathrooms, all the living room and all that in three to four hours because the next day someone else is coming, right. So it takes a lot of hard work and it’s not easy, lot of, a lot of work, but I would say that.

Aileen (09:45):

So at what point did you discover the multifamily space?

Pancham (09:51):

So, yeah, going back to what I said, like, know, I started finding this as a job where even though I was really passionate about these things, I felt that it’s taking way too much time and there should be a much, a good way to kind of scale it up. Right. And I, you know, along the way I was also, I did a flip as well, where I was, you know my friends, my family all knew what I was doing and they all wanted to invest, but I never took any of their money because first I didn’t need it. And I been feel comfortable. And but then I started thinking that all these guys who want to invest and I’m into this space, why don’t we, is there a way to scale up right. And looking for it. And I was listening to all these podcasts and syndication seems seemed like the way to go.

Pancham (10:41):

And then there were many asset classes like multifamily, self-storage mobile, home parks and, you know, different asset classes, which I could focus on. But given that I really liked the residential part of it because you have this good feel factor of creating a nice community for your tenants place to live for them. So we chose multifamily as a way to scale, and that’s when I stopped doing any of the single family stuff started focusing on multifamily. And initially before we did our syndications, I started looking at all these five States and I had broker relationships with all these people already. So I called all of them up. I’m like, you know what guys I’m done with my single family duplexes. Let’s focus. If you have anything drive 1530, 40 units do tell me, and we’ll, we’ll look at it. So that’s how I, you know, I got the mind-set shift to switch to multi-family.

Aileen (11:42):

And so after that, after you made the connections with the brokers and decided to do the mind-set shift to multi-family, how did you find your first deal and how long did that take for you?

Pancham (11:54):

So I have a long story there, but I’ll tell you the short of it. It took me three years, but along the way, we were under contract on many deals and none of them panned out for whatever reason, like 12 unit 24 unit 44 unit 78 unit. So but in 2017 we found our first deal. It was in Charlotte 44 unit property. And we bought it for 2 million. We’ve sold it since its 3 million for 3 million, and we raised some capital for that. I can go into the numbers if you guys want, but yeah, that’s in 2017, took us three years to find it. And so how did you find the capital to raise for that first deal? Yeah, so for that deal, right, we raised 781,000 to be exact. And we had all these people who were already coming to us, friends and family.

Pancham (12:54):

Right. All of that capital was from friends and family because they already knew that, you know, what I was doing and what kind of things we’re trying to do. So they were prepared. And when we were under contract on that 78 unit, which we never closed, we had already prepared them that, you know what, we will need this much capital, but that didn’t happen. And then this came along and, you know, they were all prepared. So that’s how we started. We started with our friends and family who kind of knew what we were doing. And we were, you know, flipping, we did one flip where I actually got a capital from friends and family. And we did that as a loan. So yeah. Did that answer your question?

Aileen (13:37):

Yes.

Seyla (13:37):

So you raise the capital from your friends and family as a loan. How would you be able to elaborate? How is that different from a syndication and participated as a

Pancham (13:50):

Yeah, no, we actually did a syndication for that. So it was not like it, we did a JV. So, you know, like anytime you have investors involved who are completely passive, meaning they have no active role, right? You can, my understanding, again, I’m not a lawyer, but my understanding is that you cannot do a JV because if you do a JV, a joint venture with them where one person is completely passive, they’re not doing anything other than giving you capital. You are actually selling a security to them. So you have to not, you like, you have an option, you have to, you must do a syndication at that point or you actually get a loan from them, right. Like, you know, you take a loan on certain interest rate. So we actually did this thing as a syndication where all these friends and family came in as LPs into, into a deal.

Seyla (14:47):

So Pancham, you mentioned that when you get first 44 units in Charlotte and what was the most challenging part of getting to that person?

Pancham (15:01):

Mind-set. So I tell you that this is even more true today, actually given where the market is, but back in 2017, when we closed the first deal before that I told you, right, we had many, many deals that went under contract on, but we never bought the main reason why we couldn’t go to the finish line was that we were always feeling that we are, you know, doing something wrong or there is that we have view chasing the market. So let’s say the cap rate was 10%. It may sounds very high these days, but yeah, it was, we looked at deals with 12% cap rate back in 2016, 15. And whenever we were, you know, either under contract or our offer, not getting accepted, a broker is coming back and saying, oh, no, it’s not 2 million. It’s 2.2. I’m just making it up. Right. And it was like, oh, it goes from 12 cap to 11 capital, 11 and a half. No, we can’t overpay for this. So you know, so we, so things like that happened, or when we were under a contract where we agreed on the price, then we’ll find something on the property, which is easily fixable, but we would not, you know, have the like issue. We had this one 12 unit in Ohio where everything was great. The property was beautiful. Like, you know, it was amazing. And except there was a flat roof on top and it was bad. And we told the seller, the broker to tell the seller to replace the roof. And he said, no, we backed out. Right. So naive if we had done every single one of those deals, like we would have done amazingly well.

Pancham (16:49):

Right. Okay. Other than that, 78 units. So to answer your question, I went the long route, the reason we couldn’t close is that we were thinking that we are chasing the market. We were, we are engineers. Like, I’m an engineer. I have this feeling of this analysis paralysis, like, Oh, you know, analyse the thing to a state situation where you’re paralyzed to make a decision. Right. So we, I, that’s where I was. And I actually got help. I got help after that, where we hired a mentor to help us with just that one part. And when we bought this deal, 44 units, that’s exactly what happened, where, you know, we were thinking that we are overpaying, but we were told that, no, this is the market, and this is fine. So, you know, we just needed that little bit of push that. It’s all good.

Aileen (17:45):

So what was that shifting period, or that point in that actually made you realize you needed a mentor?

Pancham (17:54):

Because we were, you know, so I have a partner, right? Me and my partner, we have, after every single one of these deals, we would discuss, man, like, you know, it’s like a kid in a candy store that, you know, we will get excited. Oh my God, this is amazing. We will go there, fight and look at this deal. And, and then excited for two, three weeks. And then this thing happens and we’re like, Oh man, so much work. And yeah, we, you know, we would feel disappointed. And then one day we were introspecting and we’re like, you know, what, why are we not able to close on anything what’s wrong? And we were like, you know, I don’t know what’s wrong with just, let’s find someone who can tell us what’s wrong. So, you know that’s exactly the shift was like, we were like, you know what, we want to do this. We, we understand all the concepts. We understand the market. We were educated enough to kind of do all the numbers, being engineers. We were like very good with all the other aspects of it, the mechanics, but it was just a mind-set. Yeah.

Seyla (18:55):

Awesome. Thank you for sharing that story. And Pancham after the answer, after you closed a $2 million propane for your first deal how were you able to scale up to $43 million of assets today? And can you walk us through the journey?

Pancham (19:16):

Sure. Let me tell you the journey in terms of the deal sizes. Do you want to do that or okay. Yeah, so we did a 44. That was a first syndication. Then we did a 28 unit very close to that one. And then we did a 76 unit. Then our fourth one was 242 units. Then we did one 32 units, and now we are under contract on you know, one 26 [inaudible] syndication. So we now going back to your question, how did we scale up and what that’s the question, right. The answer to that question is that we scaled up because we were trying to, at the same time we were buying and looking for deals. We’re also trying to build up our investor base by talking to people. And we had sold our second deal, which was the 26 units first.

Pancham (20:15):

And then we sold our first deal, 44 unit. And we did really much better than our you know, projections and estimates and investors really liked what, you know, we basically did what we said we are going to do, but we did more than that. So I think it kind of became like a word of mouth, so to speak the, this book area. So the friends and family came with more friends and family and we, that’s how we expanded and were also part of different networks. And, you know, people helped us along the way in our journey. And you know, it’s a team sport, you can’t do it alone. And so that’s the long and short of it, like, you know, just slowly doing things and expanding the horizon and the mind-set at the same time.

Aileen (21:07):

So from going from the 76 unit to the 242 units, was there much of a difference between jumping from the 76 to a 242 unit?

Pancham (21:18):

A lot of difference to the price point was almost four times, but yeah, no, I think the biggest difference was that can we raise that much capital you know, because we had a $7 million raise on that one and it was pretty big one. So we obviously we had partnered with, we had partners and we didn’t do it alone. I would say the mind-set shift definitely was needed from $5 million deal to almost $20 million deal. It was a big leap of faith, but at the same time, we were confident on what we were doing so that we will be able to raise that much capital. So that’s why I mean, that’s the only way I can explain that.

Seyla (22:13):

You mentioned that you were able to raise $7 million of capitals, and like you mentioned earlier, somebody said to 242, it’s a really big jump. And what was the in additions to word of mouth from families and friends. What other strategies did you use to raise that $7 million of capital?

Pancham (22:35):

Okay. So for that, yeah, it was you know, I had left my job just then when we did this deal. So where I was working before, I was not raising capital from the people who were, you know other than some very good, very good friends who I was working with for the last 14 years. Right. They knew me from the work. And they knew what I had done at work too. And so I started reaching out to that network right. Of people. So that was a big boost right before I was very quiet about it when I was working full time, but when I quit, so that was one big boost. And then then yeah, you know, we had sold our deal. So they, more and more people had started talking to us, but we had not given them any opportunity to invest.

Pancham (23:30):

So when this came along, they saw that. And that’s what happened, right. Even now, like we did one deal in the middle of July middle of COVID 132 units. So there were a lot of people who didn’t were not able to get into that deal because there was a lot of uncertainty and fear and doubt. And it’s still there is, but now we are doing another deal. And that deal, we have seen that more people are coming in with who were not, who never invested. So just, you know, a snowball effect, I would say,

Aileen (24:14):

As you’re building up your business, you were still working in a very high paying W2 job. So it sounded like there was needed another mind-set shift to be able to quit your high paying position in order to go to full-time real estate and focus on this. Can you talk a little bit of the mind-set shift there?

Pancham (24:32):

Absolutely. There is, as Tony Robbins says, 80% is mind-set, sorry, 80% is mind-set. 20% is mechanics. So it applies to everything. And that part is actually, I’m glad that you asked that question. That was one of the most difficult parts for me and my family. You know, the, everyone, like I had very high paying job. I have not really replaced my salary even now, but I’ll tell you that with that kind of salary, my parents, my wife, my friends my extended family, every single one of them said, like, why are you quitting? This is stupid. That this is not good. What about the benefits you’re getting? What about this pay check? And, and all the, you know, Porex of business class flying and these hotels and you know, all that. So, and I told him, yeah, you guys are right. My wife would tell me that, what if it doesn’t work?

Pancham (25:24):

And I used to tell her what if it does work? You know? So anyway, it got to a point where I decided, you know, what, I really needed help again, to help have someone help me quit my job. In the day I make a decision. I go to my wife and tell her, hey you know, I’m thinking of hiring a mind-set coach to help me quit my job. And she’s like to do, I’m like, you have to quit my job. She was like, why do you need to pay somebody to help you teach how to not make money? Okay. So you’re paying someone to not get money. I’m like, yeah, it sounds simple to you. But it is not simple for mind-set. I, you know, I hired a mind-set coach and my first call, I was like, you know, I want you to help me quit my job.

Pancham (26:30):

And yeah, that’s what I did. And it’s still, I tell you, it was not an easy decision because having, you know, family, you have a house mortgage, if all these things. And then on top of that, this health insurance is very expensive in this country. And we had some of the, one of the best plans that any corporation can offer. So if it takes into account, all of those things, and it’s very hard, extremely hard to do that. And but you know, you have to take a leap of faith and do what you’re passionate about, and you can only, you only live once. So that was the thing.

Seyla (27:07):

So do you mind sharing, how was the last day at work look like when you walk in there?

Pancham (27:14):

Oh, the last day of work was actually not that bad because I had given notice almost four months before I quit, because I had a big team, like multiple teams. And I had teams in San Francisco, New York. And I wanted to do right by the company. So I gave them much, I had noticed, and I had prepared my replacement and all that to do this. So last day was not that bad, but I’ll tell you though, the last day of my W2 career was 3rd July. So my first day without a job was 4th of July, which is Independence Day. As ironic as you call it, but I would always remember, and everyone celebrates that. So

Aileen (28:02):

Congratulations.

Pancham (28:04):

Thank you.

Seyla (28:05):

If I have to ask in your own minds, you have to give advice to someone who wanted to take a leap of faith like you, and partly quit the job and pursue your passion or their passion. What would you have to tell them what to do in order to make that decision?

Pancham (28:23):

First of all, stop listening to other people. No, I’m kidding. But I would say that, you know, it’s all about the mind-set. You have to really think that, is that something that you are going, whatever you’re doing today, just in your head first, think about it. That what, if you put yourself in a situation, what if 10 years from now you’re doing the exact same thing, right? Would you be happy? Would you regret that if you were to not make any change now 10 years from now, you will be at the same place? Things are not going to change by itself. You, as Jim Rohn says for the things to change, you have to change. So yeah, you have to chalk that out in your head that, you know, when I used to think that like in 15, 10, 20 years, I don’t see myself doing this.

Pancham (29:21):

So if that’s the case, why am I doing it now? What is going to change between now and 20 years that these things would be different? Are you working anything active? Are you working on anything actively that will make that change? If the answer to that is yes, then yes. You’re already working towards that. Right? So that’s good. That may take one, two, three, four years to plan out and that’s totally fine. But as long as you have a plan, that’s good. But if you don’t have that plan, but you don’t like what, where you are today, then you have to make a change. And I would say, start planning for that change and without making, without having a plan there’s this is good, planning to fail is failing to, Oh, is failing to plan is planning to fail. So yeah, that’s my advice.

Seyla (30:11):

Wow. That’s a really powerful message. Pancham. I really appreciate that. So what is next for you and your company?

Pancham (30:20):

Next for me and my company, you know, my goal when I quit, the job was two to four, one to help people with their personal finances and second teach them our personal finance that still stays the same. So I do that via podcast. And then providing these opportunities. So goal is to really grow the company, become a better husband, better father you know and better with anyone that I deal with add value to their lives. I think I can grow in all of these areas much more. So yeah, that’s the focus really grow the company to the next level, the podcast, to the next level, and become a better person and contribute.

Seyla (31:04):

What is one thing that, you know now about real estate that you wish you knew when you first started?

Pancham (31:12):

That, you know, scale up the amount of time it takes to do one deal with a single family home and to do 100 unit deal is probably very similar. And the mechanics are different, but pretty much the same steps. So do the bigger deals.

Seyla (31:32):

How has real estate investing impacted your life so far?

Pancham (31:37):

It has changed the, you know just like the rich, that word at book, the sorry, the cash flow quadrant book that you know, you are in that I quadrant. So you start seeing how your money starts working for you when you do that. And so just seeing that in real life happening was definitely very enlightening. And I would say that has changed the course of my life completely.

Seyla (32:07):

What is one thing that sets the successful people apart in the real estate investing business?

Pancham (32:14):

Mind-set, do what you said you will do and follow it through. So that’s I think that’s it.

Seyla (32:23):

What tools or techniques have you used to improve the efficiency of your business or personal life?

Pancham (32:30):

So I’m actually we are improving on this all the time, but I’ll tell you using Slack Asana as our project management software, talking to all the people, we have people working you know, for a company and overseas as virtual assistants and all that. So we, you know, that really has helped us and pen and paper, to be honest, I’ve gone back to pen and paper for my to-do list every morning. I actually write down what I want to accomplish today. Like for today, your podcast was one of them and you, and then I, you know, just follow that through. I’ve tried many tools, none of them work as good as pen and paper for me.

Aileen (33:16):

Thank you so much for sharing Pancham and thank you for sharing your journey with us today. And so if our listeners wanted to find out more about you, where can they go?

Pancham (33:25):

They can go. I actually have a great report put together for them. It’s a, my top six reasons to diversify outside of Wall Street. And my entire podcast is about that. They can go and find that report on the gold collar investor.com forward slash download again, it’s the gold collar investor.com forward slash download. And that’s the name of my podcast as well.

Aileen (33:50):

Thank you so much. We’ll also add that in the show notes, so everybody can find out where they go to find out more about you. So thank you so much, Pancham.

Pancham (33:57):

Thank you. Thank you for having me.