January 7, 2020

JF1953: 60 Homes, 12 Units, And One Storage Facility In Just Three Years with Angad Guglani

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Angad started in this business as a real estate agent in college. He got that business rolling by helping students find housing. Now with a bunch of single family homes, multifamily units, and a self storage facility, Angad has a ton of knowledge to share with us today. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

“Figure out where you’re going to get the money to buy the deal and where the revenue is coming from” – Angad Guglani

Angad Guglani Real Estate Background:

  • Real estate investor for three years
  • Has built a portfolio of 60 single family houses, 12 multifamily units, and a self storage facility
  • Based in NYC, NY
  • Say hi to him at http://cooperacq.com/
  • Best Ever Book: The E-Myth

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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Angad Guglani. How are you doing, Angad?

Angad Guglani: Doing well, Joe. How are you?

Joe Fairless: I am doing well, and looking forward to our conversation. A little bit about Angad – he’s a real estate investor for four years, has built a portfolio of 60 single-family homes, 12 multifamily units, and a self-storage facility. In three years. We’re gonna dig into that, I’m very curious how you were able to do that. Congratulations, first off… And secondly, based in New York City, New York. Where you do you live in New York City?

Angad Guglani: I’m actually in Greenwich Village. I went to NYU, so I kind of stayed in the area.

Joe Fairless: Oh, a very nice area of New York City. Alright…

Angad Guglani: Yeah, we have some parks here… It’s nice.

Joe Fairless: Do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Angad Guglani: Sure. I started in real estate about 5,5-6 years ago. I started when I was 19, I got my real estate license. I went to NYU, I went to the business school there (Stern). I know we’re kind of in the headlines the last couple of days…

Joe Fairless: What happened at NYU? I don’t know.

Angad Guglani: Well, the class president of the grade below me just got put away for insider trading at 23…

Joe Fairless: Oh, busted. Okay.

Angad Guglani: Pretty young. I hope I didn’t give it any more PR, but anyways… I was a student there, and I kind of ran into someone who was doing rental brokerage. He told me he was making a lot of money doing it, so I said “Let me get my license and let me see what this is about.” So I got my license and I realized actually I have no business, I have no clients, I have no owners I can represent… But I ended up coming up with the idea that I could basically start a student-run brokerage for college students looking to get apartments… Because at NYU and other colleges in the city about 20,000 students move off-campus every year, so it’s a lot of rental deals that happen. And most of them had a broker involved, and the broker made about a month to two months’ commission, which for their average rents of 3k-4k it was  a pretty good chunk of change.

So anyways, I started a business that kind of tapped in that market. At first it was just me, and then  I hired ten of my friends to go run around and show apartments.

Joe Fairless: When did you have that business? At 19, or 20?

Angad Guglani: At 19 and 20 — I basically ran it all throughout college.

Joe Fairless: What year were you in college when you started the business?

Angad Guglani: I was a sophomore. I think that was back in 2015. Anyhow, so I ran that and we were doing really well. I was making six-figures a summer, three months.

Joe Fairless: Wow.

Angad Guglani: The numbers were pretty good. We would do 100 deals a summer, because most of the kids would move during the summer, and the average commission was between 3k and 6k. And because I kind of ran the team, I would get splits off of all the friends that were working for me… So I would make money on my own deals, and their deals.

Joe Fairless: How many friends did you have working for you as a sophomore in college?

Angad Guglani: The biggest we ever got was ten or eleven. And they were all licensed. You have to be licensed by the state of New York to represent someone in a real estate transaction. So it’s pretty easy to get a license; I’d kind of coach them through, I’d get them on the online class, and that’s how we were doing it.

Joe Fairless: And how did you advertise?

Angad Guglani: Actually, I created a website called OffCampusApartments.nyc. It’s still up there. If you ever google “student housing new york city” our website still comes up on number one or two. And then I also made a partnership with NYU directly, so if you were to call them at the time and ask for a broker, they would send you to my company.

Joe Fairless: Did you get the majority of your leads through that?

Angad Guglani: About 50/50. In the beginning the majority, then the referrals from the school, and then as our website got SEO, as it got web presence, we got a lot from the web page, and then we did Facebook ads… It was  a good time, because brokers were doing really well back then. Now margins have compressed a lot, because most of the listings are available online, through different websites [unintelligible [00:05:02].05]

Joe Fairless: What did you have to do in order to get that partnership with the school? I know you were a student at the time, but did you have to do anything else?

Angad Guglani: It just came down to going to the guy’s office and just sitting there for a couple hours, until he took with the meeting, and… He was a nice guy. I think it was the guy who ran the student affairs at the time… So it wasn’t as hard as you would think.

Joe Fairless: Had someone else approached him about this idea before?

Angad Guglani: A few people had, but most of them were not students; they were older people. It’s pretty frustrating, running around with college kids and showing them apartments, so a lot of people start businesses like this and then quit after a year… But being that I was 19 or 20, and just very ambitious, I took it in stride, so I kind of enjoyed it.

Joe Fairless: And what aspects would some people find frustrating, working with college students trying to find apartments?

Angad Guglani: Oh, New York renting is crazy; it was crazy then, and it’s still crazy now. You have to get a whole dossier of documents, like tax returns, bank statements, photo ID, employment letters, pay stubs… You have to assemble that. And because kids aren’t working themselves, you have to ask their parents for this information. And kids are pretty disorganized, so you basically end up having — if you’re doing a two-bedroom or three-bedroom deal, you have three kids, three sets of parents, you have to assemble all these documents, and they’re kind of running around like a chicken who had their head cut off… It’s a lot of coordination, and a lot of times these deals don’t even go through. So unless you’re really passionate about it, it can get pretty frustrating.

Joe Fairless: Alright, so that’s this business. Then what happened?

Angad Guglani: Like I said, I was doing pretty well. I was making some money and I was living very inexpensively, because I was 19 or 20. I wasn’t spending any money, so I was saving it… And I realized the money in real estate is not on the brokerage side. I’m not saying — I mean, there’s certainly brokers who make a lot of money, but I’ve always wanted to be on the ownership side. And through a mutual friend I met someone who lived in Philadelphia and he turned me on to Camden, New Jersey. He said this area is getting about 2,5 billion dollars of government money put in in the next 5-10 years. It used to be the highest crime area in the country, but there’s real signs of change…

When it started, it was me and two best friends; we went there for a day, saw some property, and realized the numbers really do work.

Joe Fairless: Okay. So what did you do?

Angad Guglani: So we bought our first house — like I said, it was me and two partners; not because I needed the money from them, I just wanted to share the experience with–

Joe Fairless: How much did you have in your bank account after the brokerage stuff, before you bought your first house?

Angad Guglani: Between 200k and 350k.

Joe Fairless: Good for you. Isn’t that incredible? Do you think that’s incredible? It’s tough to look at it from your own perspective, I know…

Angad Guglani: Living in New York you see people that spend that much money on one week vacation, the people in hedge funds..

Joe Fairless: [laughs]

Angad Guglani: Especially the startup guys. I read stories about guys that are 24-25, raising a hundred million bucks, and I’m like “What am I doing?”

Joe Fairless: Well, that’s different. They’re raising that much money; you earned this money yourself. There’s a difference there.

Angad Guglani: No, I’m very appreciative–

Joe Fairless: I’d say it’s more impressive what you did than raising a hundred million dollars.

Angad Guglani: Thanks for that, Joe.

Joe Fairless: Alright, so Camden, New Jersey, you bought your first house, two partners… What information should we talk about regarding that transaction?

Angad Guglani: Sure, I can run you through it. So we bought it on an auction website, totally blind; we had no idea what we were doing. We ended up getting a pretty darn good deal. We bought it for 33k, put about 12k into it, so we’re in for 45k… And we had the property management company running it, and they were kind of wrong company, so it sat vacant for 4-5 months, and my partners got frustrated… So I ended up buying them out.

So I bought them out, and eventually it was just me in a single-family house… And we ended up getting a tenant – or I ended up getting a tenant – and I think I rented it for $1,450 a month. We were all in 45k at this point… So that was the first deal. The rents came in every month, and it was great.

Joe Fairless: How did you and your partners structure that deal?

Angad Guglani: When I had the partners, it was basically a third, a third, a third. We each put in about 15k. It was into an LLC.

Joe Fairless: So that was the first deal. You have 60 single family homes, 12 multifamily units and a self-storage facility… So what happened?

Angad Guglani: Yeah, that was in 2016 when I bought it; 2017 was when I bought the partners our. In 2017 I bought about five houses, because I had the equity, the couple hundred grand… So I was able to buy these houses in cash, fix them up and rent them out.

After I built a portfolio of about five I realized I really can go to a lender; that was the hardest part, was finding a lender… Because lenders don’t wanna lend to LLCs when you’re buying houses for 50k. I mean, it’s very hard to get the financing. But I found a lender that would do a blanket refi, so they basically tied the five properties into one loan and fully cashed me out at 75% LTV.

Joe Fairless: Okay. And then what did you do with it?

Angad Guglani: I basically got the money I started with, plus a little bit more back out after the cash-out refi at the end of 2017. And then in 2018 I kind of got my feet wet; I learned the different players in the market, I aligned myself with a really good property management company, I trusted and aligned myself with some good brokers that were kind of the guys who were doing the most deals in that market… So I was able to pick up 30 single-family houses. Actually, not 30; probably 25, and then I bought a five-unit building in 2018.

Joe Fairless: So how are you running the numbers and evaluating if  these homes are worthy of purchase and not something that you’re just gonna sink money into?

Angad Guglani: Sure. My business is buying distressed real estate, as a lot of people are. So you basically need to figure out what this thing is gonna be worth once you fix it up, what the bank is gonna appraise it at… The numbers work. This is a high-yield market. You can go on the MLS and buy 10%, 11% caps all day long. But I like to buy deals where I get unlevered returns of 16%, 17%, and the only way to do that is to buy them distressed… So we’re talking REOs, estate sales, people that need to sell them quickly, off-market deals… Those are the types of deals I buy. And on those deals, as long as you know [unintelligible [00:10:58].08] on the back-end,  you know what you can buy it for, and you can guesstimate what you can fix it for, and you have a pretty good formula.

Joe Fairless: So you’re renting them out though, right?

Angad Guglani: I rent all of them out, yeah. I sold a handful for strategic reasons, but the majority of my business is BRRR method – buy, rehab it, rent it, and then refi on the back with a commercial blanket loan, tying all the assets together, pulling it out.

Joe Fairless: What are some strategic reasons why you sold some of them?

Angad Guglani: I realized that I don’t want to do construction jobs more than 25k, reason being I live about two hours away from the market… And you’re not gonna get an ace contractor that’s willing to work in Camden. Most of the contractors in that area wanna work in the suburbs, where they can do retail jobs. They don’t really wanna work for investors.

So if I’m gonna be hiring sub-optimal contractors, they’re gonna overcharge me, because I have a New York cell phone number. They think everyone in New York has a bunch of money. I’m just gonna get eaten alive.

So I would rather sell that deal off and make a little bit of money because I bought it well, to some guy who’s gonna do the work himself, [unintelligible [00:11:58].17]

Joe Fairless: And how do you manage that process? Even if it’s less than a $25,000 construction job.

Angad Guglani: Less than $25,000 my property manager has a handful of handymen that do a lot of work for us, that can take those jobs on. We’re talking patch and paint. New flooring, new kitchens, some painting and a little bit of drywalling. It’s not major structural or mechanical stuff.

Joe Fairless: So right now you have 60 single-family homes?

Angad Guglani: Correct.

Joe Fairless: What do you think the 60 single-family homes are worth?

Angad Guglani: They’re worth probably around 80k a door, so about f.8 million…

Joe Fairless: That’s great. And about how much cashflow do you receive on a monthly basis as a result of having them?

Angad Guglani: Right now I’ve kind of grown pretty quickly… Which has been good, but it hurts you in the beginning as far as cashflow. So I’m buying properties — I buy about five a month, so I have a backlog of about 18 houses that aren’t rented right now, that are undergoing minor construction, that are gonna be on the market… But as far as my underwriting goes, I make about $300/door in cashflow after it’s fully financed.

Joe Fairless: Okay.

Angad Guglani: So the 60 would be about $18,000/month in free cashflow, and you’re amortizing your loan, so that’s another kicker to it.

Joe Fairless: What lender do you use?

Angad Guglani: I use two local community banks, but I’m kind of now in the process where I’m speaking to some of the national commercial mortgage lenders. There’s a few that have entered the space in the single-family rental aggregation space, and I’m speaking to them.

Joe Fairless: And who are they? The rental aggregation lenders.

Angad Guglani: You have CoreVest… CoreVest was spun out of Colony Capital, and that’s owned by a bank. They’re pretty big. Blackstone has one called Finance of America. There’s another one called Rock Capital. Goldman Sachs has one called Genesis Capital… There’s 3-4 of them. I’m sure there’s more that I’m missing, but…

Joe Fairless: What type of terms are you looking for with a group like that?

Angad Guglani: Rates have gone down a little bit, which is nice, but we’re looking at 5.5% to 6.5% on a 7/1 ARM loan, that seven years fixed rate and then adjust every year after that, on a 10-year or 30-year term, that amortizes over 30 years.

Joe Fairless: Cool. And you have a self-storage facility.

Angad Guglani: Correct.

Joe Fairless: Tell us about that.

Angad Guglani: It sounds a little glamorous, like self-storage facilities are these big facilities… [laughs] To be honest with you, this one is about 20 garages. Each of these garages is 20×10, so it’s about 4,000 sqft. of storage, and then there’s about a 1,000 office that’s leased to a single tenant, on the other side of the lot.

Joe Fairless: And how much did you buy that for?

Angad Guglani: I got a really good deal, I bought it for 120k.

Joe Fairless: What’s it worth today?

Angad Guglani: It’s tough to say. There’s no real comps… But I’m projecting a net operating income on that facility of about 40k… Plus we have a lot that we can build some more units on. So once we finish building them out, we have to go to the zoning board to get approval to build out some more units… But I wanna get the net operating income up to about 50k. So if you wanna back that into like–

Joe Fairless: Yeah, I just did… So that’s the cap rate, you’d say, about 10%-12%?

Angad Guglani: 10%-12% cap, because it’s not a core buy for anyone, so they’re gonna want a real nice yield if they were to buy it. So you’re talking about – what, 400k?

Joe Fairless: Yeah, 50k in NOI, 12% cap, 416k valuation.

Angad Guglani: Yeah. And I didn’t even spend any money on it. To build the units it’s probably gonna cost 70k-80k.

Joe Fairless: How did you find that deal?

Angad Guglani: That deal was actually on the MLS.

Joe Fairless: Huh.

Angad Guglani: But it was on the MLS for like a day… My whole strategy is buying deals directly from the listing broker, especially on stuff that they don’t wanna sell. Most of the listing brokers don’t wanna sell properties in Camden because they’re low on the nominal value amount, where they’re not gonna make much commission off it. If you go directly to them and they’re getting the full 6%, they’re gonna put your deal first, and they’re gonna get your deal done.

Joe Fairless: So are most of your deals marketed deals, and then you just reach out directly to the listing broker and make offers?

Angad Guglani: I would say 15% of the stuff I buy is MLS-listed… I have relationships with some REO companies, asset managers, so I get a lot of deal flow through that… And then I have a direct to consumer line called Cash for Camden, where we do direct marketing, and we’re getting deal flow through that…

Joe Fairless: Right. What percent of your deals do you get through the REO companies?

Angad Guglani: About 50%.

Joe Fairless: That’s a lot. Okay. And I won’t ask you specifics about them, because —

Angad Guglani: Yeah, it’s pretty paramount in the business, so…

Joe Fairless: Yeah, yeah, so I won’t. But I wanna ask you about it conceptually. How did you get introduced to them, or how did you choose to introduce yourself to them?

Angad Guglani: I  got kind of lucky… An attorney that I had been introduced to to help me on another matter – they were a client of his. So he put us in touch. That’s how I got that direct relationship.

Joe Fairless: Let’s say that relationship went away; if you would try to replicate this, how would you got about replicating this?

Angad Guglani: Something I’m trying to do now – I’m really trying to build systems and processes. That’s my goal for 2020, is really get a lot of this stuff automated. But what I would do is look at the deeds. I’m obsessed with the county clerk’s office. I look at all the deeds and all the mortgages; that’s how I get all my data. So I look at the deeds and I look at who’s selling a lot of stuff. If there’s one entity that’s selling a lot of stuff, they probably are an REO entity. Figure out who’s behind it, look at the addresses on the deeds and work  your hardest to try and get in touch with them.

Joe Fairless: Love it. What’s a deal you lost money on?

Angad Guglani: There’s one deal I lost money on, and that was because I got scammed by a contractor. That’s when I put that rule in place that I’m not gonna do jobs over 25k. It was pretty terrible.

Joe Fairless: [laughs] He really did a number on you, where you made it  a policy moving forward not to ever work with [unintelligible [00:17:33].20]

Angad Guglani: [laughs] Yeah, it was a tough one. This was in 2017-2018 I think it was… But  did my job right. My job is buying distressed real estate cheap. I bought the house for 20k. I could have sold it the day of closing for probably 30k-35k, but I didn’t. I wanted to fix it up. So I hired a contractor who had grey hair, who really talked the big game, said “Stanley’s been doing construction for three generations”, and I really trusted him.

So we had a really trusting relationship, and speak every day, and he started trying to add value to me. He’d drive around and say “Hey, did you see this house?” So I really trusted this guy. And I would give him his draws by bank wire whenever he asked for them. It started out good. He did some good work, he would send me pictures and I’d wire the money right away.

And all of a sudden, coming around Christmas time he started saying “You know what – this job is costing me way more. You need to frontload some of the draws”, because the roof needed way more than he needed… And I know nothing about construction. And by this time I had a really good relationship with this guy… So I basically paid him the entire draws for the project, 45k, and the project was only about 40% done. That’s when things really got wrong. He basically walked off the job. And if you were to google him, you’d figure out this guy’s been sued a bunch of times, he went to jail… I had actually done that, I had actually read that, and he explained it away. He’s like “You know what, don’t trust what you see… There was a lot more to that story. I’m a good guy.” And I trusted him… But I learned my lesson.

So I bought it for 20k, I spent 45k with this contractor, then I had to hire another contractor. It turned out all the work he did, he never pulled permits for. The 20k worth of work he did, we had to rip it all out. It cost me another 40k-45k.

Joe Fairless: Aw…

Angad Guglani: So I bought it for 20k, I’m in 90k for the rehab, so we’re in about 110k, and I listed it at 115k or 117k, something like that… So I think I lost about 10k between holding costs, commissions, and all that stuff.

Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?

Angad Guglani: Have a business plan, figure out what your niche is, what your strategy is, and figure out where you’re gonna get the money to buy the deal and where the revenue is gonna come. Are you just buying it for yield, are you buying it because you’re trying to refi it out, or are you buying it to flip it? Really figure out the sources and uses.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Angad Guglani: Yeah, sure.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:19:58].28] to [00:20:40].03]

Joe Fairless: What’s the best ever book you’ve recently read?

Angad Guglani: I read it about two years ago, The E-Myth. It really changed the way I think.

Joe Fairless: What’s something from that book that you’ve incorporated into your business?

Angad Guglani: Really focusing on trying to build the business, and systems and processes. It’s really hard for me; I’m not a systems thinker, but I think that’s really the only way to build a lasting organization, is to have processes and employees [unintelligible [00:20:58].16]

Joe Fairless: Best ever deal you’ve done?

Angad Guglani: Most of the best deals have been this year, but I’m superstitious. I don’t like to talk about things until I’m done with them… So I’d have to say probably the first deal, I think I did pretty well on that one.

Joe Fairless: Best ever way you like to give back?

Angad Guglani: My goal is once the portfolio is fully stabilized, it’s to give 10% back to local charities; 10% of the net operating income. I haven’t started that, because I’m cash-strapped as we’re growing this… But eventually, that’s my goal, is to really give 10% back to the community.

Joe Fairless: And how can the Best Ever listeners learn more about what you’re doing?

Angad Guglani: Sure, you could check us out online. The company is Cooper Square Acquisitions, cooperacq.com, or you can reach out to me directly at ag@cooperacq.com.

Joe Fairless: There are a lot of impressive things about what you’ve done, and I won’t summarize all of them, but I will say what you did as a college student, and what you built, where you saw the need and then — I mean, six figures, a third of  a million dollars earned as a result of the brokerage business as a college student – it’s just inspirational for anyone… And then what you’ve done to build the portfolio, and the smart ways you’ve gone about finding deals, and getting deal flow, and then obviously executing… Because anyone can be a spreadsheet millionaire, but it’s all about the execution. So just very impressive… I really appreciate you being on the show.

I hope you have a best ever day, and I’m looking forward to talking to you again soon.

Angad Guglani: Thanks, Joe. I really appreciate your time, and I hope to speak to you soon as well.

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