How to Build a Rental Portfolio (Fast) That Gives You Financial Freedom

Ashley:
If you’ve ever wondered how to take your real estate investing from just a side hustle to a multimillion dollar business, today’s guests have the exact blueprint.

Tony:
Yeah, that’s right, Ashley. They’ve built a $10 million portfolio and engineered their escape from the corporate world, all while raising a family Medium Poll created a framework that makes their B strategy so efficient, they’re able to build long-term wealth incredibly fast,

Ashley:
And they’re pulling back the curtain on this entire process from market selection to financing strategies and even more. If you’ve been curious about supercharging your portfolio, but you weren’t exactly sure where to start, this is the episode you’ve been waiting for. This is the Real Estate Rookie podcast and I am Ashley Kehr.

Tony:
And I’m Tony j Robinson, needy Pollock. Welcome to the Real Estate Rookie podcast. Super excited to have you both.

Niti:
Thank you so much for having us.

Tony:
Thank

Ashley:
You for having us. We’re excited too. Now, you guys have been experienced podcasters on the BiggerPockets Real Estate Podcast, but welcome to the Rookie Podcast where our listeners are way more engaged, way more awesome. For the audience, can you give a high level overview of your portfolio?

Niti:
I love it. Thank you again for having us. So yeah, to give everyone a quick backstory, Paula and I were in corporate for a long, long time. We followed the traditional route of getting a college degree, trying to climb the corporate ladder for about 15. I did it for 15 years. Paula did it for around 17 years.
And then we realized we needed to kind of build wealth. We had income, but we didn’t really have wealth and we really wanted to spend time with our little kids. So we started investing in real estate this back in 20 15, 20 16, and we started with just single family rentals, rent ready rentals. And we quickly realized we wanted to scale a little bit faster than that. We wanted to be able to retire in four to five years instead of waiting 15, 20 years to be able to retire. And so we found the birth strategy. We scaled in about four years. We built a 10 million portfolio of single family homes, but also duplexes, triplexes, quadplexes, slightly larger properties as well. And we were both able to quit our corporate jobs and now we do real estate full time.

Tony:
So you guys have built a successful portfolio, and I think a lot of rookies are in the same situation that you guys were in where they’re working the corporate gig, they did the American Dream, went to school, got a career, they’re doing all the things, but they just feel that something’s not right. So I guess maybe tell us about that moment when you realized that the corporate lifestyle wasn’t for you. What specifically triggered that decision to go all in on real estate? Did you guys have a horrible boss? Was it something else that happened? What was that moment for you guys?

Niti:
We all had that.

Palak:
We worked till our late thirties and everybody told us that that was the right thing to do, become financially stable, and then think about having kids. So that’s what we did. And so we had two kids back to back and I remember, and that was maternity leave is next to nothing. And I remember going to work and on a conference call and I had to do it from my office. I had to pump while I was on the conference call and I’m sitting there pumping and trying to get on this call and do the thing, and I’m looking around and I’m like, wow, is this what I worked so hard to achieve? And that day onwards, every day I was like, I got to get out of this. I can’t do this anymore. I want to be with my kids. It’s just feels very unnatural that you work so hard and then you never see what you waited so long to achieve.
And we’re first gen immigrants. We don’t have a village. We were constantly struggling. We were stressed out all the time. And so after months of turmoil, and I mean as a woman who’s built up a career, I felt like I was letting everybody down by choosing to get out of corporate. And so months later, we decided we were going to become a single income family, and I started pursuing real estate full time. So we would work on it together in the evenings when the kids were asleep. And then during the day, I would go off and do whatever I could with the two kids. And it’s funny how in corporate you feel like everybody else decides what your capability is and how far up you can go. And then when you start working for yourself, you’re like, wait a minute, I’m way better than I thought I was.

Ashley:
And you’re still used to one downside is you’re so used to somebody else telling you what to do or which path to take or whatever in a W2 job. And then when it’s just you, the possibilities become endless because you’re not told what to do. But sometimes that shift is hard not having that guidance or even somebody say, you have to work from nine to five. Now it’s like, oh, maybe I can just sleep in today. And getting into that work mode too, having to push yourself. It really is a drastic change.

Palak:
Or the other way around, if you’re really motivated and excited, you could really go off and overwork yourself. You really have to understand what your rhythm is and what works best and how to make decisions without seeking other people’s approval. And what is your strategy and what is the right step? And I completely agree that people, that’s why I think us as real estate investors, we start chasing all the shiny objects because the opportunities are endless. And nobody tells you that you have to stay in this lane. This is your strategy. Stop looking at other

Tony:
Discipline I think is something that’s very hard for anyone that’s entrepreneurial to really focus in on. But I couldn’t agree with you more Pollock, because I remember the moment as an adult when I really realized that I couldn’t be a traditional W2 employer for the rest of my life. And it was my first big boy job after college. And I came in, I thought I crushed it. I thought I was doing incredibly well. My annual review comes up and they’re heaping all this praise on me. Tony, you’ve done a phenomenal job. You’ve been such an invaluable part of this organization. And they gave me a 2% raise. And at the time, I think I was making $65,000. So I went from 65,000 to 67,000 and I was like, what am I doing? Is this really all that’s there? And I think the benefit of being an entrepreneur is that you get to decide and prove what your value is in the marketplace. And if you are valuable, people will reward you by paying you money. And if you are not valuable, people will show you that by not paying you money. So it is very clear, but I think the benefit is that you get to prove to yourself how valuable you are

Niti:
A hundred percent.

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Ashley:
So once you made that transition from quitting your corporate position and you’re focused on real estate, what kind of things did you get into? Did you chase a different strategy and try different things out? Kind of tell us the path you took from there.

Niti:
Yeah, we tried everything under the sun. So we actually got some really good advice when we first got started. So we had a couple of mentors and one thing that we learned pretty early was they said, look, you build wealth in real estate by owning real estate for long period of time. You don’t create wealth in real estate by buying and selling constantly. So that became sort of our motto is like, all right, whatever we are going to do, we are going to buy real estate and hold onto it for a long period of time.

Ashley:
You chose Burr strategy. Most people are if they don’t do a burr’s because they’re scared of the rehab process, so maybe they choose a different strategy. How did you become comfortable and confident in managing contractors managing rehabs to actually be successful at the birth strategy?

Niti:
Yeah, and I think that is really one of the hardest part, as you said at the birth strategy, is like how do you manage the rehab? And especially the way we do rehabs is we don’t have to be at the job site every day. That was, again, one of our things. We didn’t want to be there every day.

Palak:
And

Niti:
Even doing a lot of DIY projects, we’re definitely not doing DIY because that just takes up so much of your time and there’s not great ROI on that we could easily outsource it. So the key is to really find good contractors and you have to talk to at least 10 or 15 contractors to be able to find the right one and knowing what kind of rehab you have to do. So figuring out what is the right level of rehab even, are you rehabbing it to flip, which we were not, or are you only rehabbing it to put it just a little bit of paint on the walls where it really to be able to bur it needs to be somewhere in the middle is the Goldilocks owners. Not too much rehab, but also not too little rehab. And

Palak:
Knowing who your stakeholders are, right? You need to know who are your stakeholders, who are you doing? Who’s your end customer that you’re rehabbing for? So one of them is of course your tenant. You want to make sure your properties appealing, comfortable and safe for your tenants for that area. What are the other products that are being offered and how to make your product stand out for the right price. But then the other stakeholder in the burr strategy is the appraiser. You want to make sure that your property appraises to where you want to do appraise so you can get the cash out that you need so you can move it to the next deal and the next deal.

Niti:
And again, once you learn the skill of how to estimate rehabs, mistakes will be made along the way. That’s why we always say, whenever you’re coming up with a rehab estimate, always put 10 to 15% contingency at the end of it because you know that your rehab is always going to go. There’s always be surprises at every rehab. There’s steps that you can take to minimize those surprises. Things like doing a home inspection and knowing ahead of time what surprises may come up. And then building that into your rehab budget, getting two or three different quotes from two or three different contractors so you can really kind of vet that you’re actually covering everything and not missing anything, and you’re getting a reasonably good

Palak:
Quote. And knowing that contractors are creatives, they’re creatives, you have to be the one to manage the project well. You have to be the one to keep things organized, document things, and make sure you’re staying under budget and on time and you’ve hired this person to do the work. Once you take ownership of that, it becomes a lot easier.

Niti:
And one more tip, if I may. So it is really having a good boots on the ground is so critical. Having somebody who can be your eyes and ears, who can visit the property a couple of times a week, maybe three times a week, sending you pictures and videos of what’s going on, and that they’re an independent third party so that they can be

Palak:
Unbiased,

Niti:
Unbiased right as the rehab is going on. And so having that really ensures that the rehab is coming along well and also paying your contractor in certain phases as in when the rehab gets done. So don’t pay 50% upfront to your contractor because a lot of people do that. And so paying the contractor for the work after it’s done and having it inspected by a third party is really, there’s so many safeguards that you can put into place, but ultimately, as you said, Ashley, it is still a risk. But at the end of the day, that’s a skill worth mastering and you will make mistakes. But Brr is such a forgiving strategy in that sense that it’s not like a flip where if you go over your budget, then you’re going to lose money on that property, right? With Brr, you can do a cash out refi, maybe you get a little bit less equity upfront, but because you’re keeping holding onto it for a long period of time, you can refi in two or three years when the equity goes up and the property value goes up and then pull that cash out eventually.

Tony:
Now, need and Pollock have already given us a glimpse into their framework for scaling, but how exactly did they implement this system? So up next, they’re going to share specific strategies they use to literally double the size of their portfolio, including their commercial financing techniques most rookies never even think about. But first, a quick message from today’s show sponsors.

Ashley:
Okay. Welcome back from our short break. So Pollack, you mentioned the appraisal process and how this is also a key component of doing the B strategy. Can you give us some tips and tricks as to what we should be focused on for an appraisal? What will actually increase the value of the property?

Palak:
Yeah, that’s a really good question. I think that the big thing is you have to really understand what properties are being appraised around, where your property is and at what amount. So doing that comparison will allow you to know what rehab you should be doing. That’s the easiest way to figure that out. And then knowing that when the appraiser walks in the door, you want to make sure that they’re wowed. They want to look at a property and be like, yes, this is a fully renovated property. So a lot of times I notice that people especially burn investors, they say, oh, it’s a rental, so we’re only going to do this or that, and that’s not going to wow your appraiser, and that’s not going to make them appraise your property higher. You want to make sure they walk in the door and they feel like it’s a fully renovated property.
We also recommend preparing a document for your appraiser that you can send to them, because most appraisers, the way they work is they’re going to be on the field running around doing their site visits certain days of the week, and then certain days they’ll sit down and they’ll sit at their desk and they’ll prepare the reports By then that apprais already forgotten about your property, they’re going off of their pictures and some of the notes that they took. And so what you want to do is you want to prepare a document and give it to the appraiser that lists everything that you have done to the property. Really nice pictures because sometimes the property is already rented out by the time the appraiser goes in, and then you are at the mercy of how clean your tenant is and how tidy they’re keeping that place. So you want to have nice pictures for the appraiser that are professionally taken before the tenant moved in and providing them that packet is going to allow them to really view your property in the light that you want it to be seen.

Niti:
Yeah, every time, by the way, we’ve sent, we’ve increased our appraisal by 10 to 15,000, just having it documented. Here’s all the work at it. Here’s the breakdown of we updated the kitchen. This is how much it costs us to do all the upgrades. This is the before and after pictures. These are the relevant comps that we think,

Palak:
Yes, put in the comps in there because you don’t want the appraisal to choose their comps. You want to give them,

Niti:
Nudge them a little bit, nudge

Palak:
Them, and very respectfully you are just giving them all the information. Then it’s up to them whether to take that into consideration or not. But preparing that really helps. And if you are local, don’t be afraid to go meet the appraiser at the property and learn from them and ask them questions. What all do you need? I’ve also noticed a lot of times appraisers don’t go into certain parts of the property if nobody’s showing it to them. So if you give them a list of items, there have been times when appraisers don’t realize there is a garage or there is a mud room where there is an entire laundry area, unless you list it, especially in these rentals when you’re renovating old homes, they prepare certain areas like the washer dryer, we’re going to get creative and put it somewhere, and so the appraiser may not even know that they need to go there and check for that. So listing all those things really helps.

Tony:
Yeah, I think one of the best things that a rookie can do as they’re starting the rehab process and they’re eyeing a refinance on the backend that’s going to require an appraisal, is to try and get your hands on other appraisals from that local market. Because if you can see, hey, here’s an appraisal that was done last month and here’s the radius that the appraiser used. In some markets, maybe the radius is only a quarter of a mile. In other markets, maybe the radius is five miles. I know for me, in my suburban neighborhood, the radius was literally like a quarter mile. But in Joshua Tree where I invest, they’ve used comps that were seven miles away because it’s a different landscape. So knowing the radius, how does the appraiser account for variance in lot size? How does the appraiser account for variance in bathroom count? How does the appraiser account for variance in condition? And you can make some guesses, but if you can actually get your hands on something, I think that’s one of the best ways to really educate yourself on how appraisers in that market work.

Ashley:
I actually just had an appraisal done. I just got it back two days ago, and I’m always learning something new by looking at the appraisal. So this appraiser, the property, it didn’t have a first floor bathroom except for in the master bedroom. So there was actually a $4,000 deduction in value because there wasn’t that bathroom that was accessible to the common area, and it was under the functionality part, the line item, but that was something I’d never seen before. I guess this is also probably the first house that hasn’t had a bathroom that isn’t in a master bedroom, but there’s just little unique things there that I wouldn’t even think of that an appraiser can deduct or add points. This property too had a basement and about 40% of the basement was finished and a bedroom was added in there. The bedroom value in the basement was only worth $4,500 compared to a bedroom on the first floor or second floor above the grade was $7,500 per bedroom and value. So just seeing these little tiny things and how these little thousands of dollars in different places can add up or decrease your value.

Tony:
A lot of the appraisal is, it’s like more art than science, and you could have two appraisers go to the same exact property and come up with two different opinions of value. So needy pocket. I guess one question for you guys. Have you ever had to challenge an appraisal? You’re doing your refinance in the backend, the value doesn’t come back where you anticipated it would, and you’ve had to go back and try and get the correct value. Have you guys ever experienced that? And if so, how’d you deal with it?

Niti:
Absolutely. That’ll happen if you’re investing a lot. That’ll happen a few times along the way. And so when it does happen, a couple of things that you could do that we’ve done. So one is you can respectfully challenge the appraisal. So you can kind of send back an email to the appraiser and to the lender to say, Hey, look, these are the comps that we think that really reflect the kind of work that we’ve done in our property, and this is what we think the real value really should be. And again, having that appraisal document upfront that you give to your appraiser does help put your point across even before they write up the report. But you can kind of say, look, you can definitely challenge that and do it respectfully because the appraiser is under no obligation to go back and increase the value.
So if you’re kind of rude or if you’re be like, Hey, you don’t know what you’re doing, this really should be this. They’re just saying, no, thank you. I’m good with where I’m at. And so be respectful when you’re requesting a change in the appraisal. But if it doesn’t happen, then another thing that you can do is just either ask the lender if you can order another appraisal now, you’ll have to pay for that additional appraiser, whatever it is, five, $600 for a different appraisal. So that will come out of pocket for you. But if that can increase your value by a few thousand dollars, it’s going to be more than worth it.

Tony:
I know we spend a lot of time on appraisals, but I think it’s such an important part of nailing the burr process is being able to actually achieve the appraisal that you want. So we appreciate you guys kind of breaking that down for us. But the next thing I want to hit is your scale framework. And I know that you guys have put this together and it kind of underpins how you both have been able to build your portfolio so quickly. So let’s just kind of go through what exactly the scale framework is. So the S, what does the S stand for?

Niti:
S stands for scalable acquisitions and deal analysis. And before I jump into that, if I may offer just a quick of why we came up with a scale framework, because what does it mean? And so when we first started doing Burr, we noticed that people, there is no one way to do burr. People are doing burs in many different ways depending on the kind of rehab they do, who does the rehab, how they finance it, how they even look for deals. Some people were becoming wholesalers so they can get the best deals where some people are like, let me become a contractor so I can save money in the construction piece. So there’s many, many different flavors of burr. So we are like, okay, how do we do implement burr in a way that makes the most sense for our lifestyle and how we want to build our business? Again, kind of going back to time and location freedom, building it in a way that we can build systems and processes and teams and

Palak:
Scale fast

Niti:
And scale fast. So that’s kind of how we came up with the scale framework and that defines every step defines how we specifically did every, implemented every step in the B process. So S stands for scalable acquisitions and deal analysis, so that’s the buy part of the process. So a lot of times people will look for deals in multiple markets or they’ll look at all the deals that are coming to them, but I don’t think that’s the right way to do it. So the right way to do it is kind of put it backwards first, really figure out which market and which zip code you want to invest in, and then identify your specific buying criteria or your ideal property avatar. It’s like really figuring out is it a three bed, one bath you’re trying to buy?
Is it a condo, which we advise against. Condos have HOAs and you really don’t want to do that. But really defining what your ideal property avatar. It should be a three bed, one bath or a three bed, two bath. If you’re just starting out, it’s really good to start small. Don’t start with a three unit or a 10 unit building because that takes a lot of learning curve. So start with a small project, three bed, one bath. You say, okay, I’m going to kind of find a property that needs a new kitchen, a new bathroom, new flooring. And then once you do that and you narrow it down to say, one or two zip codes, that eliminates 80% of the deals that are out there. So now you’re only focusing on the deals that make sense for you, for your strategy, and then start looking at deals. And then the deals that come to you will be, and then when we start looking for properties, we tell all the wholesalers and all the realtors we know this is the kind of property we are looking for in the zip code. So we get all the deals coming to us that are actually what are buying criteria

Palak:
Is. And the more specific you are, the more you’re going to stick in their mind. And now they know that you’re not just somebody who’s dabbling in real estate, you’re serious about it. You’re very specific about your criteria, and that allows them to send those deals off to you. And so having that predictable deal analysis and then building that deal pipeline, getting very specific on your property avatar.

Tony:
I think just one follow up question to that, you hit on an important point that you guys are focusing on the business of scaling, not necessarily the business of finding off-market deals, which is wholesaling. So how are you identifying the wholesalers that you end up working with? Are you going to Facebook groups? Are you going to local meetups? How are you identifying these wholesalers? Where are they all hiding?

Niti:
So it’s all of those things. So once you decide which market you’re investing in, say you’re investing in Philadelphia, I would go on Facebook, type in Philadelphia real estate investors. There’ll be a few Facebook groups that pop up. A lot of them will have anywhere between five to 10,000 members, something like that. Join as many Facebook groups as you can. There will already be both investors and wholesalers in those Facebook groups. You can just post a question in there, Hey, I’m looking for wholesalers. Would you recommend some? And then there’ll be some people who recommend wholesalers or there’ll be wholesalers who will introduce themselves, just build a network of wholesalers. Your first goal should be to give your email to as many wholesalers as you can. Now, when you do a deal with them, you do want to vet them because wholesaling is a wild west. There’s not really a lot of rules around wholesaling and there is around realtors, there is no rules around really. It’s a very new industry, so you have to be careful as to who you’re doing deals with. So you make sure if you do a deal with a wholesaler that you vet them and you check for references and you make sure that’re legit,

Palak:
Never wire money to a wholesaler directly. Yeah, yeah.

Niti:
There’s things that you learn and to anyone really, right? You really want to make sure that you’re sending money to the right people and all that. But yeah, first goal is to get as many wholesalers, as many list as possible, list as possible, Facebook group, Google local meetups, all that stuff.

Palak:
And you’re right, it’s unregulated. So you want to make sure you vet the wholesaler, ask for references, make sure you’re involving a title agent and an attorney if this is your first time. Also, if first time investors, we always recommend for first time investors, it’s okay if you pay a little bit more for the property. Working with wholesalers and buying off market deals, that’s for your second, third deal, first deal, make it as predictable as simple as possible.

Niti:
And we, by the way, still do 50% or 40% of our deals through MLSM

Palak:
Ls. Yeah,

Niti:
There

Palak:
Are some great deals

Niti:
On. So there’s really good deals if you know what you’re looking for. Again, if you have a good Brian criteria, these deals kind of come to you in that

Palak:
Sense. Yeah, our first bur, we found it actually in a Facebook group and a wholesaler had posted it and he said that there is a really cute grandma’s house up for sale. It needs work. Does anybody want it? And I remember we went and saw it, and so is it okay if I tell you guys the story? It’ll take two minutes. So we went with our contractor to look at this property, and this wholesaler is a pretty big name, so they hold open houses. So there’s like 20 people looking at that house, and they do this because they want to make sure that everybody feels like they need to jump on it right away. It’s a good tactic. So we went there, we had no idea how to do any of this. So we went there with our contractor and they were like, if you want it, we need a check for $5,000 written to this title company.
And we’re like, oh, we didn’t even bring the checkbook. Our contractor lived around the corner. So he went home to it and he called his wife and he’s like, can you write a check for 5K? He went and got that check. He gave it to them and he was like, don’t cash it, please. This is just to hold the property. We went home, we wired the money, and then we are like, can you send us a picture of that check torn up? And that’s what we did. And of course, we still work with that contractor because of that.

Ashley:
Yeah, I mean, wow, what a nice contractor to do that for you.

Palak:
Yeah, I mean, you learn these things along the way and build your team who will back you up when you need them.

Ashley:
So let’s move on to the C. What does the C stand for?

Niti:
Yeah, so C is the construction without the DIY, right? So this is the rehab phase in Burr. And really the key here is knowing what kind of rehab you’re doing. So again, looking at comps before you even start the rehab or come up with the rehab budget, look for properties that’s sold in the area that are going to be, that you’re trying to make your property sell for. So if you’re trying to sell your property or get your property to RV for let’s say 200,000, look for properties that are sold in that zip code for around 200,000 that were rehabbed, right? So you’ll see, okay, this is how it did the kitchen, this how did the bathroom. So you can have now have a template to follow to say, okay, if I redo my kitchen and my bathroom and the flooring, that’s what going, give me the $200,000 arv.
So figuring out what your property is going to look like, getting quotes from your contractor, building it that 10 to 15% contingency, and then really putting systems in processes in place to be able to manage your rehab. I think that as we talked about earlier, is really, really important. So we have a WhatsApp number of our contractor. We are always using that for them to send pictures, videos as the rehab is getting done. And same thing with the boots on the ground. So having those systems and processes in place to manage your rehab really, really helps. And again, our goal is to have a nice comfortable place. We put in nice flooring. We always have a template. So again, thinking about scaling, we have a template. So all our kitchens look the same in all our buildings, right? Because yeah,

Palak:
They look exactly the same.

Niti:
We went through once and selected the best looking cabinets and the best looking appliances and the countertops and the flooring. And once you figure that out, you don’t really need to change that. So everything is down to a science and all the contractor has to do is just be like, all right, follow the list.

Tony:
Let me ask, I think one of the bigger challenges for a rookie is finding a good contractor. So let’s say that we dumped you guys in the middle of a brand new city somewhere you didn’t know, somewhere, you didn’t have connections somewhere, you didn’t already have contractors. Where are you going to identify the right folks to work with?

Niti:
Yeah,

Palak:
Yeah. Nii has a really good hack on finding contractors.

Niti:
So one is of course you could go online and look for, you can go to Facebook groups, you can Google Angie’s website. It’s called Angie’s Now instead of Angie’s List, there’s different websites that you can look for to get a list of different contractors that you’re going to call. I never worked with the first one. Always call 10 or 15 contractors. One really cool hack that Palak was talking about is depending on which city you live in, you can go to the county website for that city and search for a house that was recently renovated. So find a house on Zillow that’s sold for say, $200,000 or whatever the amount you’re trying to get your property to look like. Put that address in the county website.
It’ll show you sometimes what the permits are for that property if rehab was done on that property. And in the permit is the name of the contractor. So not every house is going to have a permit that was rehabbed, but it’s a really quick way. If I did it right now, I’d probably in an hour, I’d find at least 10 to 15 contractors using that. And I know these contractors are doing business in my neighborhood because that’s how I found them. I already know what the product looks like because I saw the pictures of those properties in Zillow

Palak:
And they pulled the permit.

Niti:
They

Palak:
Didn’t just wing it.

Niti:
Exactly right. So another plus is you want your contractor to pull the permit. So you do that, and you’ll come up with 10 or 15 contractors, call every single one of them. A few questions you want to ask them, how big is your crew? You don’t want somebody who’s just like a one man army because it’s going to take forever to finish your project, at least two or three people on their crew, if not more. You want to ask for how much do they charge per a kitchen and a bathroom? And then compare the rates for different contractors to make sure you’re not getting charged a lot and tell your contractor that you’re trying to do a rental, not a flip, because that also kind of makes a difference in the materials they use.

Ashley:
Yeah. So we’ve talked about the S, we’ve talked about the C, and now we’re going to talk about the A for Ashley. So is it you need to become friends with Ashley, you need to listen to Ashley. What is the A

Niti:
Stands for adding cashflow, right? And so this again goes back to figuring out how you can maximize the rent for that house. So are you deciding the right kind of finishes? Like for instance, we always put in a washer dryer in all our properties. We always put in stainless steel appliances. We always put in brand new cabinets and granite countertops because again, those are small things that don’t cost a lot, but they really look good and they attract a lot of great tenants. So how do you get your listing to stand out is by picking the right finishes that don’t cost a lot, but really maximize the rent that you can get.

Palak:
And then adding cashflow is all about how to manage properties in a way that not only maximizes your rent, but also makes your tenant happy without you physically answering all their questions. It’s all about how to get out of the way and have a team manage your tenants. And that’s how you can scale the borough process is by not becoming the property manager. And if you are the property manager, still having a team in place that does all of the day-to-day operations of managing your tenants.

Niti:
Yes. And one last thing I’ll add is having the tenant. If we find a good tenant, we never increase their rent for as long as they’re there because we want, one of the biggest costs that you’ll have is the turnover between tenants and the vacancy. And so if you find a good tenant, just keep them there forever in 3, 4, 5 years if you can. And then when they move out, you can always then increase the

Palak:
Rent. And when we go buy properties that a landlord has owned for a long time, you’ll find that the rents are way under market. There’s a reason for that. It’s because they’ve kept that good tenant at low rent because it costs a lot more to go kiss a bunch of frogs until you find another good tenant. So that’s what they’re doing, right? That’s basically what we’re repeating.

Tony:
Well, we’ll be right back with medium Pollock after our final ad break, but Ricky’s, we just hit 100,000 subscribers on the real estate rookie YouTube channel, which is an incredible thing to say out loud. So thank you to all of the rookies for coming on this journey with us. We love, love, love making this content for you. And if you haven’t yet subscribed, you guys can find us on YouTube at realestate rookie. We’ll be right back after a quick break. Alright guys, so we’re back here with N and Pollock, and we’re going through the scale framework, and we’ve already hit the S, the C, the A. So let’s finish things off by talking about the L and the E. So what does the L in this framework stand for?

Niti:
So L stands for leverage and commercial finance, which is the finance part of B, the refi part of Brr. But really it also includes the how do you fund the initial purchase and the rehab, right? Commercial financing is really one of the most important things if you’re trying to scale your rental portfolio. And that’s one thing that we learned pretty early on and public call how many 90 banks to really figure it out. And it takes a while to figure it out. I come from a finance background, it took me like six months to even

Tony:
Wait, did you say 9 0 90 banks?

Palak:
So you have to understand, we started when it was very tough to get financing for new investors. It’s much easier now, and we didn’t know how commercial financing worked. So in calling 90 banks, it allowed me to learn about commercial financing and found a lender that was a right fit for us.

Tony:
I love that because we talk so often about the power of talking to multiple lenders and getting exposure to different banks because every bank, every credit union has a slightly different product offering. So Pollock, when you were calling these places, just run us quickly through your script. What were you saying? What questions were you asking?

Palak:
If somebody wants to replicate this process, it start with a Google sheet slash spreadsheet. That’s where everything starts in our world. So build a giant spreadsheet to remember which bank I called, what was the number, what was the contact that I talked to, because the first person you talk to will probably not be the right person. They’re going to ask you questions and then transfer you to someone else who I talk to. Who am I waiting for a call back from? And then once I do get a call back, just continue populating the spreadsheet with the terms that they talk to you about and ask questions. And if you’re a brand new investor and you don’t know what the terms are, then feel free to ask them that. Like, Hey, what should I consider? There’ll be points at closing, there’ll be interest rates, there’ll be tons of things that they can go over and everybody’s slightly different.
So as you start populating that spreadsheet, you are going to learn a lot and you’re going to understand the lingo as you start talking to more and more. It’s all about repetition, right? And we hear a lot of new investors feel this imposter syndrome, like, I’m not an investor. How can I talk knowledgeably? Well, it’s all about repetition. The more you do it, the more confident you become and the less you feel like an imposter. And then when you call lenders, make sure that if you don’t have an email address with a proper website already, go buy a domain name and get a proper email address so you come across as a legit investor instead of [email protected], which is fine. But if you want to come across as a legit investor who means business, make sure you are coming across that way by getting that email address, having a company name, having an elevator. What is it called? Elevator. Elevator pitch. Elevator pitch where you can explain what you do in 30 seconds. Hey, my name is Pollock. I’m investing in Baltimore area. We’re investors. We buy distressed properties, we renovate them and we rent them out. We’re looking for lenders to help us scale this business. Are you the right person? Just figure out what you’re going to say. Write it out, script it out. And then once you have that down, you can build your 90 lender spreadsheet.

Tony:
I want to give a quick hack here because I actually tested this out a couple months ago, but I went into chat GPT, and I said, I need a list of 100 banks and credit unions within a 50 mile address of my city, exclude any national banks like Chase, bank of America, et cetera. It asked me a few follow-up questions and then it worked for 62 minutes is how long chat GBT worked on this response. It came back with 100 local credit unions and regional banks with phone numbers, names, and websites for each one of them. So if you want to shortcut the building of that list, go to something like chat GBT. But I think that’s an incredibly cool

Palak:
Go to chat GBT.

Tony:
Yeah.

Palak:
And better yet have chat GPT script out your script, your elevator pitch as well.

Tony:
Well guys, let, let’s finish things off by talking about the E. So what is the E in the scale framework?

Niti:
So E stands for exponential growth, right? And really if you do everything that we said, which is focusing on, there’s really three things that you want to focus on to be able to scale your portfolio. One is your mastering deal analysis, because without that, it’s hard for you to scale. Don’t rely on your contractor to do that, for your realtor, to do that for you. You really need to master deal analysis. Second is mastering commercial finance, right? So everything from hard money to when you go to refi, really want to master that to be able to scale. And the third piece is managing your team. So managing your contractor, managing your realtor, managing your property manager, learning those skills of how you’re going to use them so that they’re doing their job really, really well. And then putting in systems and processes and teams along the way that really help you scale. So that’s really exponential growth is when once you do all these things, and as we said, you could build a business just off of wholesaling or just being a construction company. And eventually if you want to do that, you can, but then don’t let that get in the way of building your portfolio because ultimately it’s about creating wealth. And

Palak:
Every piece of the board process is its own active business. Like you’re saying, wholesaling and construction, all of that is its own active business. Could you build all of those? Absolutely. But should you focus on building wealth and passive income? If that’s what you’re after, that’s what we did. That’s what the scale framework is all about.

Ashley:
Well need Pollock. Thank you so much for joining us today on the Real Estate Rookie podcast. We are so thankful to have you to share your experience and your journey with the rookie investors. Can you let them know where they can reach out to you and find out more information?

Palak:
Yeah, you can follow us on Instagram at Open Spaces Academy. That is the best way to get in touch with us.

Niti:
Yeah, thank you so much for having us. It was great being here.

Ashley:
Thank you for having us. And will you guys be at BP Con this year in Las Vegas?

Niti:
Yes, I think I’m certainly going to be. And I’m actually doing a three hour session in BP Con, so yeah.

Ashley:
Awesome. Tell us about that real quick. Give us the elevator pitch.

Niti:
So the elevator pitch for that is really learning. So it’ll be the scale framework that we talked about, but in much more detail, right? Things that are working in this market that you need to be doing right now for every step in the process, case studies of deals, if you’ve done everything from single family to duplexes to even large 10, 15 unit buildings, there’ll be q and a and a state of the market in that as well. Things that we are, because we speak to lenders every day, we speak to title agents, realtors, so just what’s happening. And I analyze deals all over the US and every single in many, many markets. Every week. Every week I look at literally 50 to a hundred deals. I have a perspective that I can share on what’s going on in each of the different markets. If you can be there,

Ashley:
Yeah, awesome. You can go to biggerpockets.com/conference and check it out and we’ll see you guys hopefully in Las Vegas.

Niti:
Alright, so there’s a cool freebie that we can give out, which if you’re interested, it has a retirement calculator because a lot of times we’re like, wait, how many rentals do I really need to be able to retire? So having a retirement calculator that we’ve built out that says, here’s how much my income is right now. If I wanted to replace that, how many rentals would I need? There is a building, an investor brand, because as public said, building an investor brand really helps you attract the right team members that you’re going to hire in the future.

Palak:
Also has a plan where you can start from, Hey, where do you want to be five years from now? And reverse engineer back to what steps, what tangible action you can take today to make that happen. So breaking it down and reverse engineering your retirement plan. So building a plan, and then how to take action. And you can use the code BiggerPockets to get it for free.

Ashley:
Well, thank you so much for sharing that with the rookie community. That sounds awesome. I’m going to have to go check that out. So thank you guys so much for joining us today. I’m Ashley. And he’s Tony. And we’ll see you on the next episode of Real Estate Ricky.