Mike:
0:00
All right, everyone, welcome to the Real Estate Game Changers show. I'm your host, Mike McKay, based in Jacksonville, Florida, and each and every week we do this show with people who are changing the game of real estate all over the country. And this is a live show, so if you have any questions, please put them in the comments for our guests to answer. If anyone is in the Jacksonville area and they're in sales and thinking about getting into real estate. We are looking for some salespeople to join our acquisitions team. If that sounds like you, send me a DM on Instagram and let's talk. This week on the show, we have Sharad Mehta. Sharad, welcome to the show.
Sharad:
0:37
Hey Mike, thank you for having me on the show, man. Super excited to be talking some real estate with you.
Mike:
0:43
Cool. Um, so for the people who don't know you, could you talk a little bit about how you got into the real estate business and how that's led you to where you are today?
Sharad:
0:56
Yeah. So I start, I used to live in Chicago. I live in San Diego now. I was working. As an accountant for one of the largest accounting firms and just was looking for some freedom of time and money started looking at like what I could do with my time, you know, just to get more independent, looked at investing in stocks and bronze, uh, just wasn't very good at it. Wanted to be a full time poker player. Absolutely horrible at it. And then just came across, uh, real estate reading personal finance blog. Someone had mentioned a book about, uh, flipping in one of the comments. So I read that book. And then in Amazon, you know, there's a suggestion of, You may also like so there was a book about millionaire real estate investor and it was something about the title. I'm like, Oh, this sounds like not a bad thing to be, you know, millionaire real estate investor and real estate is a very relatable topic, you know, asset. So I'd read the book and I got just instantly kind of related to the investment strategy. So bought my first property in August, 2010. A two unit and then bought another three unit a month after and then just kind of Scaled my business from there
Mike:
2:15
And at what point did you decide to jump into real estate full time and leave accounting?
Sharad:
2:21
Just end of by the end of the year, and then I ended up leaving my job in march 2011 So from the time I bought my first property to the time I left my job, it's like six months I wasn't making enough money from real estate to cover my expenses, but my wife and I you know, we're Been very conservative with our finances. We were Living in the lower of the two incomes saving the higher income. So when I decided to leave my job It wasn't going to impact our lifestyle we You know, the idea was just this is back in 2010 11. The market was absolutely crazy. You could just buy it Pick any house you wanted to buy from MLS. The first property I bought was for 25, 000 listed on the market for 65 I bought it for 25 put 10 into it and I rented it for 1300. It's just the numbers were insane So I decided you know the worst that's gonna happen if I leave my job and pursue this full time is that I'm absolutely The dumbest person in the world. And I ended up losing about a hundred, 150, 000, which absolutely sucks. But, you know, given, you know, we didn't have any kids, the stage of my life that I was at, like, okay, you know, I can just go back to my accounting job and make that money again. But the upside was if everything works out as kind of, I'm hoping it will. The upside is infinite. Versus the downside is about losing 100 250 000.
Mike:
3:48
Hmm. So you went full time and then did you keep buying just rentals or did you start doing something to generate active income?
Sharad:
3:57
so for the first couple of years Or year and a half. I was just buying rental properties Um, I I connected with a private lender who was giving me These seven year amortized loans with a two year balloon So I was just kind of forcing myself to pay these off So all the money that I was making from rental income I I would pay off then i'll get another loan. So there's like really really quick payoff loans then 2012 13 I started Selling some properties to australian investors. So australian dollar was strong back in 2012 through 14 15 compared to us dollar so you had a lot of overseas money coming in And then 2014, I also kind of started actively flipping properties, uh, which kind of flips that you see on HGTV. But the goal always was to generate more passive income.
Mike:
4:54
Yeah. And how, how big is your rental portfolio today? Okay.
Sharad:
4:59
About 60 unit, and they're 55 of them are paid for free and clear.
Mike:
5:06
Wow. Okay. And what are they? I know you were in Chicago and then you moved. Are they mostly in
Sharad:
5:13
Sorry, the property properties were in Indiana, right outside of Chicago.
Mike:
5:17
Oh, okay. Gotcha. And are
Sharad:
5:20
in Chicago.
Mike:
5:21
is the, Majority of your property is still there, or do you now
Sharad:
5:26
No, all of them are still there.
Mike:
5:28
They're all
Sharad:
5:28
Yeah. Everything that I own is in that one area. It's a very small area of like total population of that entire county is about maybe three, 400, 000, 500 max. So it's a very small county and, uh, I own everything. Still own everything that I'd bought for rental purposes for myself. I own a property management company also. I actively flip in the area also, but that's the only market that I operate in, nothing outside of that.
Mike:
5:57
Gotcha. What made you choose that market in Indiana?
Sharad:
6:02
It's just more landlord friendly. That was the only reason. Uh, and I just happened to live in downtown Chicago, 30, 45 minutes from Indiana. So it's way more landlord friendly than Chicago. Was ever going to be
Mike:
6:17
Yeah. Gotcha. And then now you said you live in, we were talking offline, you said you live in San Diego.
Sharad:
6:26
north of san diego and karlsbad.
Mike:
6:29
Oh, okay. Gotcha. And then you, but you still do all your real estate business over in Indiana?
Sharad:
6:38
correct. Yeah, I other than My personal residence. I don't know anything outside of indiana.
Mike:
6:46
Yeah. How have you set up your business to be able to run all that remotely?
Sharad:
6:52
I'm using a lot of systems and processes So for my house flipping business, we flip about 25 30 houses. We don't have anyone local in indiana So the team is Me my project manager who lives an hour north of me inside. Um in california, and then I have one person in philippines And then the contractors which are you know 1099 over in indiana So it's a very remote virtual business and I have not been to indiana I don't even know last time I was in Indiana. Yeah, it's been at least two, three years since I was last in Indiana. So I've been to Indiana twice in last five years. I'm going there in a couple of weeks.
Mike:
7:40
and even your project manager, he's not in Indiana, he's in.
Sharad:
7:43
She, yeah, she's not in Indiana.
Mike:
7:45
Okay.
Sharad:
7:46
Yeah, so she lives an hour north of me.
Mike:
7:50
Interesting. I'm curious how, how, like what kind of processes and systems has she set up in order to be able to project manage those flips remotely?
Sharad:
8:00
I mean for one we're working with the same contractors. It's a very simple thing if you're gonna so the flips that we do It's either your typical retail flip that you think about a flip, you know selling to a homeowner Or it's a flip that we're selling as a turnkey property to an investor So when we buy a property the contractor only needs to know are we? Flipping this house to a homeowner or are we it's going to be a turnkey property if it's a turnkey property Same paint same flooring. Everything is same from start to finish if it's a flip property we'll Use majority of the finishes that we used in the last flip and carry over so we don't have to decide And then we'll change certain things. We'll might, we might change the countertops. You know, we might change the paint color a little bit just to make it different enough from the previous clip, but 80 percent of the materials will be the same. And like, she's the one who's managing all the contractors. I've never talked to any of the contractors that we have. I don't even know their names. I've never seen them. I would talk to them. So she's the one who manages all of that. Uh, so I created a software recently. That i'm founder of so we manage everything through that software. So I come from an accounting background Everything for me comes down to making decisions based on the numbers based on the data that we have in our business And she's the one who's talking to contractors managing everything on the back and she goes out there once every four to six months Just to meet the contractors And, uh, but we don't have anyone in the area who's kind of checking on their properties. It's do everything, virtually everything remote. You know, if the contractors are working on something, they'll send us pictures and videos of the house to get the next payment that they want.
Mike:
9:54
Yeah. Okay. And that project manager, and I'm curious because we're kind of looking to hire that role at some point in the next few months, like what were you looking for when you hired her?
Sharad:
10:05
So she's been with me since I moved to Carlsbad area. So she's been with me for about seven, eight years now. I moved here in 2015. So yeah, And I think I hired her 2016. So she's been with me for eight years. She was going to be my personal assistant when I hired her. So back when I hired her, she left 10, 15 minutes from where I live. So her name is Claudia. I said, okay, Claudia. You know, I had a home office and I said, okay, you know, I needed to come in work from the office. I thought that would be more effective, more efficient. So first week she came in every day and I'm like, yeah, I don't need you to be here every day. Whatever you're doing here, you can just do it from home. So just come three days a week. And the week after, and I just come two days a week. Then week after I'm like, just come one day. I'm like, you know what, just work from whatever you want. You're doing what you need to do. Uh, so she didn't have any project management background, but she was very organized, she's super organized person, very honest, super organized. So that's kind of, she's grown into the role of project manager now and manages everything. I think the most important skill in a project manager, especially if you're You know five to seven projects at a time just to be organized make sure all the documentation is there For me at the end of the day like the most important thing is to be able to Make the decision based on the number like today. We purchased a property in the morning Um, I don't even know the address of it. I know what city it's in Uh, but I know how much we're buying it for and how much profit we're expecting to make on that So that's kind of all I need to know about that if You know if we go into a new City where we get a ppc lead where we generally don't market. That's where I would get a little involved Hey, let's just make sure does this make sense or not, but if it's in You know, like four or five cities that we buy in, you know, the area. So, well, it's just a matter of making decisions based on the numbers. So all we need to know is just, do the numbers make sense? So, you know, and then she gets compensated on how much money we make on the deal and how quickly we sell the deal. So she gets a base plus she gets 10 percent off the final profit after we Also factor in the holding cost. So the longer the project takes the more the holding cost is the less money She makes but we also have to make minimum fifteen thousand dollars for her to be eligible for bonus If it's less than 15, she doesn't make anything It needs to be more than 15 and then if it goes over like 40 50 then she gets over the additional bonus
Mike:
12:48
Gotcha. Okay. And you said you had built some software around flipping. You want to talk about that?
Sharad:
12:58
I mean, it's not necessarily for flipping, but yeah, I mean, it's a all in one CRM for real estate investors to help them manage, you know, everything from the data that you have, the marketing list that you have to your seller leads, buyer leads, your projects that you have. So I created something when I moved from Chicago to New York. Uh carlsbad area where I live now I was very hands on in my business when I was living in chicago If a contractor called me and said for example If a plumber called me and said hey shirat, there's a leak at this house I would drive from my place in downtown chicago to indiana 30 40 minutes and say okay. Yes, there's a leak. Let's fix it But when I moved to cow's bed, I could not do that. There wasn't an option. So I said, all right Just why don't you call me on facetime or whatsapp and show me what's going on? So it just made me realize I didn't have to move To california to be able to do that. I could have just done the same thing from chicago Where if you call me, it's just I didn't have to drive down just because it was not that far I was just stupid enough to drive down But after I moved there, there wasn't an option So I started looking at different software that I would I could use in my business to be more efficient more effective I didn't find anything that would be a good fit So coming from an accounting background being able to make decision based on the the numbers in the business was super important It had to be super simple to use and it had to be one software that everyone on my team could use not Putting together all these different software like Portio and then using a dialer and all these different stuff that you have to use. I didn't find anything. So I thought I'm going to hire a couple of developers just to create something for myself. So I did that in 2017, I think, and just kind of started growing from there. And it. Ended up being what it is now
Mike:
14:54
Yeah. Gotcha. What was the first thing that you decided to build out on that software when you initially built it?
Sharad:
15:02
is project management software is built for very specific for my business So it like the whole idea was i'm going to build something that I need in my business If it doesn't add value to someone else, but it just makes me more efficient It's going to pay for itself in a year or two. Just From the, you know, efficiencies that I'm going to have. So once I started getting into it, then kind of, you know, the business starts getting more complex, not the real estate as the software side, but the real estate side, like, okay, you know, it would be cool if I can manage this also manage that also. And he just kind of kept growing and growing from there. And then as part of a couple of masterminds, I would go and show people what I was doing and they would get curious about, Hey, what software are you using? So there's, it started growing from there. Uh, yeah.
Mike:
15:48
Gotcha. And, um, you said you're still, you're still like, you know, running the flipping business. You said you're doing about 25 or so every year. Yeah.
Sharad:
15:58
30 flips a year.
Mike:
16:00
Yeah. And how are you sourcing all your deals
Sharad:
16:04
We do direct mail PPC. Uh, we do some paper leads like need to sell my house fast. Um, and there's another one Zolo lead. And because we flip, we have been able to buy some stuff from MLS also.
Mike:
16:22
and then who handles that though, when those leads come in.
Sharad:
16:27
Jay. My acquisition manager in Philippines.
Mike:
16:32
Okay. So it's, it's all over the, that's all virtual too.
Sharad:
16:35
Yeah. Yeah. I, I've, I've never talked to us. I, I mean, I shouldn't say I've never talked to us. I don't know. The last time I talked to a seller, it's been at least nine, 10 years. Yeah. Yeah. I would just, I would just kill the deal if I started talking to the seller. Yeah. So Jay is Jay is good at that stuff. I'm not. Yeah.
Mike:
16:56
Fair enough. Yeah.
Sharad:
17:00
It just like, so we'll, we'll just like, if something, he'll just tag me in a comment. And say, hey, Sharad, what do you think of this? And then, I mean, it's like, you just tagged me, but more for Claudia. Claudia, can we get the ARV on this property? And can you send the contractors out to get the estimate on it? So those are the two numbers that we need. The ARV and uh, the estimate from our contractors. So once, and then if it's in an area where that makes sense, then we just move forward. I'll get involved if it's like an iffy area, we're like, Oh, you know, should we buy or should we not buy? You know, that's where I'll get involved and make a decision. But the one we bought today, it's in a amazing city. So all we needed to make sure was number made sense. We didn't have to look at, you know, we didn't have to make a decision or should we buy in the city or not? I
Mike:
17:48
Gotcha. And then you, you said you built out a lot of other like kind of systems processes, you want to talk about some of those? Okay. Mm
Sharad:
17:59
mean, it's, it gets everything from, you know, starting, I'd say if you need a certain output, everything starts from what is it? The activity that I control in my business. To get that output if you put it in different contexts, let's say if my goal is to Lose weight, right? Let's say I weigh 300 pounds and I want to get to 200 pounds, right? That's my goal is to get to 200 pounds Now I need to look at what do I control in order to get to that goal? I control how often I go to the gym And what do I eat? So let's say I started 300 pounds a month or two later. I weigh myself I'm at 310 pounds Like oh shoot, you know in the wrong direction Then I go back to the input. Am I going to the gym? Yes, i'm going to the gym But what am I doing there? Am I just going to the gym just to check it off my list? But i'm going there with you know a bucket of kfc and sitting in front of the tv and eating You know, that's not really going to the gym. So what needs to happen is I need to control the Input that I have so it's the same thing in the business, right? If we need to Flip a house and our goal is to make minimum when we're flipping about 35 to 40 000 minimum on every single deal that we do So then the goal starts with all right, that's the number that we need to get to Right, so we know all right. We need to make minimum 35 40 000 on every single deal Now the other two variables that we need to look at it. Okay, how much can we sell this house for? And what's the maximum budget to fix this property for us? All right. So if the house is, let's say we use a simple 70 percent formula, we don't do anything fancy. So if it's right, we need to make minimum 35, 000. So we start with 200, 000, take 70%, it gets to 140. And let's say if it's going to cost us 40, 000. To uh, we have the property. It's simple just offer no more than 100 000 start with 80 go up to 100 If they take 100 great, if not, you know, then we move on I mean if it gets to like 105, that's where i'll get involved. Okay, you know Do we want to spend extra 5 000 like do we have enough deals in the pipeline where? You know, it's worth taking this risk of being overpaying by 5 000. So that's where i'll get involved Uh on those sort of decisions, but when it's you know, if our max was 100 000 and the seller Is willing to take 90 then there's nothing for me to decide on that, right? It just goes from All right. I just jay at that point will send me a contract to sign He'll tag me and say hey shradha. I send you a contract. Can you sign it? I'll sign it goes to the seller to sign once Seller sign it goes to escrow and at that point it just about matter of closing And then claudia will take over on their project. So it's it's super simple, but extremely effective for us Um You know, we can scale it to about 40, 50 deals a year with the same team. Maybe we may need to hire another person, but it's just, it works the way it works for me. It's amazing. I don't need to get involved, you know, but there are things going on. I own, you know, really simply, of course, I own a property management company and I have rentals. So I have to be very mindful of my time, how much time I'm putting into these, uh, you know, these different businesses that I have and the same thing on the property management company. Maybe I talked to my property manager once or. Once every week or once every other week, but it's you know, they know what the expectations are like They know what i'm gonna look at I'm gonna look at how much rent did we collect right how much money came in? What's our uh, Vacancy percentage, you know, what's our uh rent collection percentage and those sort of things If as long as those numbers are making sense There's nothing for me to get involved if there's something but I feel like okay We can add a little bit of more efficiency here Then I'll get involved, right? If you want to ramp up our business, for example, we're hiding a cold collar starting next week, just to ramp up our business a little bit, just to get a couple of extra deals. I figured if you hire one person in Philippines, we pay them, let's say five bucks an hour, that's 10, 000 for the year, even if that person helped us find one deal in one year, right? Which is very reasonable. They're going to pay their salary for next three to four years. Right. So that's kind of how we're looking at it. And Because we have jay now to manage that process I can have him manage that person But I manage the entire process from the numbers. Okay, the cold caller needs to make About 400 calls a day. So in a month, they're making 8 000 call 8 000 calls if they let's say they work 20 days in a month. They're making 400 calls a day So they're going to make 8 000 calls a day In, uh, in a month and then if we have a list of, let's say 45, 50, 000 people, they go through their entire list in six months and they start with the same list. At the end of six months and just keep doing that So hopefully we should be able to get one deal, which is very reasonable to expect But the for me it would be okay How many calls did we make? After calls did we make how many people did we connect with how many of the people did we connect with? How many leads did we have? So then I would just look at okay. We spoke with did we make 400 calls? Yes, how many people did we connect with did we connect with like 30 40 people? Yes, how many leads did we get out of it if you know, I can see if we only called 100 people so then You What is the person doing? You know, only calling a hundred people. Why are they not calling 400 people? If they call 400 people, but we only make connection with one person, what happened, do we have wrong numbers? Do we have, you know, bad numbers? Then we look at that. So there's, there's always things that you can look at and see where you need to make a little bit of tweak in your business in order to fix the process that you have, once you have a process that you've built around that, it's just a matter of just keep doing more and more of it. Yeah. Just trusting the process and let the process kind of take care of the business at that point
Mike:
23:59
Yeah, for sure. And then the, uh, the property management side, do you manage for other people or you just built that out only for your own rentals?
Sharad:
24:08
so we manage for other people It wasn't my intention but just such a property management is one of those businesses where you are Slave to two masters you have the owner and then you have the tenant and both of them are always pissed off at you for One reason or the other like nobody seems to be happy And then so I was using a property management company for my properties and they were just stealing money left and right You They hired their like siblings to work on the property you did get invoices on stuff It was just this total crap. I mean if they were stealing a little bit of money, I would have been like, okay fine You know, but if just like patently stealing then you're like, okay, you know now I need to get involved So I hired someone to manage my properties Um, and they were doing a really good job so my primary business at that point was Turnkey properties, like we'll buy these properties, fix them up, rent them out and sell to other investors. So once I pulled my properties out, some of the other investors that we were selling properties, they pulled their properties out. And then now I think we've managed a portfolio about 250 units. But it's, it's not something that we actively market for. If someone just comes to us and says, Hey, will you manage our properties? We do that, but we don't do any Paid ads or anything. We don't like a goal is not to scale that business The goal is just to kind of keep it where it's at where we're super efficient great team and As much as the property managers can they kind of enjoy, you know Doing the work that they're doing.
Mike:
25:44
As much as they
Sharad:
25:45
I mean it's it sucks to be a property manager I mean, have you like tried talking to tenants? They're always pissed off about something.
Mike:
25:54
That's why I have a property manager.
Sharad:
25:56
Yeah, exactly Yeah, no, it's it's it's a tough business to be in. So I I mean i've I i've had my property manager call me And just cry on the phone a couple of times and you know, and like I understand I would walk out of the door if I were you you were way more You know brave and patient than I am. It's it's a tough business but You know, so I like my main role with gabby Who's the the main property manager is just to like check in and just see how she's doing, you know Is she doing okay? So we just hired another person part time 20 25 hours So we just to help her with you know, taking some of the stuff that she doesn't enjoy doing Right like talking to some of the tenants and just running some admin work and whatnot. That's uh, it's it's a tough business, man It's a super tough business important business. We're super tough business
Mike:
26:53
Yeah. And then you said, um, before that you sold a lot of turnkey properties to Australian investors. Like, how did you get started with that? Initially? That seems like this is an interesting
Sharad:
27:08
Yeah. So a friend of mine who lives in chicago his Cousin was the cfo of a marketing company in australia So what they were doing this marketing company in australia what they were doing was they were getting a lot of clients To buy properties in australia and they were making a little bit of marketing fee So my friend connected me with cfo of this marketing company And then I started helping them with the properties that they were, they were buying. So essentially, you know, we were just selling this marketing company, the properties, and I was making a little bit of money on that and all the money that I was making, I was investing into more properties for myself.
Mike:
27:50
Gotcha. And then, but it sounds like you've like, really built that up over the years, like, in terms of like, is that a large portion of your business still? Or
Sharad:
27:59
No, no, it, that business died, died down in 2014, 15. I mean, it was just solely based on the exchange rate. People were buying because the australian dollar was strong against the u. s dollar So one part was the property values were low So that was one reason and then the fact that australian dollar was stronger against the u. s dollar That was another reason so people were buying more for the you know fx rate they were investing in a tangible asset and then as the U. s dollar grew stronger against the australian dollar So then people started selling just so that they could cash more in the australian dollars You
Mike:
28:35
Gotcha.
Sharad:
28:35
Yeah, we don't we don't do any like I haven't sold any property to any australian investor in last Like seven eight years now.
Mike:
28:43
Okay, got it. And what's like your vision for, I guess, All your businesses for the next three years.
Sharad:
28:55
I think house flipping and property management. It's pretty straightforward The house flipping business, I think very happy with the volume that we're doing 25 30 maybe scale it up to 35 40 if jay and claudia have the capacity If it doesn't take much of my time i'm, okay, as long as they are willing to You Scale it to the point where they feel comfortable same thing on the property management side the The goal would be to keep uh buying and as the interest rate changes. That's where our business will change a little bit Once the interest rate comes down, I think we'll start doing more turnkey properties selling to other investors That's where the property management business comes in But you know, we're at about 250 units right now that we manage including my units So that business primarily gets more properties from the ones that we are selling, uh, to other investors. So that the backend goes to our property management company. And with, uh, with my personal portfolio, uh, if I come across a good property, a multi unit, like 12, 10 unit plus, then I'll look at that. And then recently is where kind of, I spend majority of my time on. So my goal is to scale that business. That's what I see. The biggest opportunity that's, that's where I get the most excited in terms of impact that I can make. That's where I see I can make the biggest impact. You know, we have thousands of companies across the U S that are using recently and it's adding value to the business. Like they're able to make money using our software. Like that's the most. You know amazing feeling that you can get that you created something and it's helping other people make money So that's that's what we want to keep doing more of keep scaling that Um, and just you know kind of go from there. It's i'm really enjoying the ride right now
Mike:
30:54
Yeah. What are some, uh, interesting projects that you have upcoming in terms of software development at recently?
Sharad:
31:02
Uh, I mean we have an update coming next month like integrating with gmail That's something a lot of people have been asking for Uh, and there's some other stuff that we're working on that, you know, we're kind of keeping it, you know Close your chest for now Uh, that are going to be coming out like later this year or next year, but it's always, you know, I mean, like the great thing with software is that there's always something. Exciting going on whether it's it could be good It could be bad like today if you look at like so many flight delays because of a bug that came into microsoft system Right. I don't know if you read that like thousands of flights were cancelled or delayed just because it was a small bug So it's always something that You know, you could make like a small change and it's very interesting to see how it affects other people using that You know just people get so used to using a software certain way Where you had originally made a mistake and how kind of presented it but people got so used to it Over the years and now if you fix it, you know, like for example people read left to right top to bottom, right? So our activity log was always In the uh in descending order, I guess like we would have the latest messages on top the oldest one at the bottom but when you look at any other Messaging platform you would have the most recent messages at the bottom, right? If you go to your iphone texting the most recent would be at the bottom and the older one would be at top So after like three four years we kind of switched it to how all the other application like slack, you know I message everything and people just went crazy like how could you do that? You know, it just doesn't make any sense I'm so used to You know seeing all my messages on top and we said, you know Just to be more aligned with any other application that you would use. It was just amazing How like how much you know people got upset about that, but then we you have to make a decision about okay it just You know people are unhappy right now, but it just it's the right thing to do, you know So you just have to like stick to your guns and like, okay, we're not gonna pull back on this I know people are going to be upset for like a week or two It's a big change for someone who's used to you know, you know going there Uh muscle memory going there. I to the top of the chat message to see the top messages to the recent messages but then we Flipped it to how you know, you would You know See any other application, but then you feel good about that. You feel strongly about that. Okay This is the right thing to do. So we're going to keep it like this But then it's interesting to see people's reaction and sometimes you roll out something Something super insignificant like okay people are not even going to notice this and then you get people like oh my god Thank you so much. I can't believe you made that change. I go. Wow. I didn't even realize Such a big pain point you have
Mike:
33:55
mm. Yeah. What's, um, what are some challenges that you've faced over the years in, in any of these businesses that we've talked about?
Sharad:
34:08
I think the the biggest challenge with You Recently, it's still something that I struggle with is so we have people in four different countries We have some people in the us some in india Some in philippines some in bangladesh, so we have good culture in each of the individual countries But it's not we're struggling to have a company wide culture across people that are from different countries different time zones You know different languages different languages Different cultural background. I think that's a struggle that we have and I don't know if there's an easy way or if there's a way we'll ever be able to get to the point where like, okay, it just feels like one unified culture, right? I mean, everyone is on board, you know, they understand kind of the vision that we have for the company, what we're trying to build. But, you know, if you have all your employees in one country, it's, it's different than when you have your employees in different countries, different languages, you know, uh, different time zones. I think that's, that's a struggle that we have. I mean, this year I did go and visit my team in all three countries, Philippines, India, and Bangladesh, which was great. But then again, it was, you know, building. Culture in that specific country. So when I was in Philippines, I was just with the Philippines team, right? When I was in India, I was just with the team in India. So you just have to figure it out. I mean, it's a, it's a challenge that we have to figure out how to be solved and bring everyone together. So there's a little bit more communication, uh, between people from different countries. You know,
Mike:
35:46
What have you done to try to improve that?
Sharad:
35:51
I mean not not much. I mean i'll we'll share some stuff on Company slack channel. I think there's a lot more we can do i'm working with My my coach on that in helping me with that. But some of the things we do is we know Everyone's birthday. So, uh, we send them cake. We send them some gift. Um, you know, whatever they are Whatever country they're in so we'll send them something. We'll share it on our slack channel You Hey, you know happy birthday or someone's getting married, you know, someone's having kids will share pictures stuff like that Just so that kind of people know each other, you know If someone is in philippines in our support team and for example, they will never Otherwise communicate with a developer in india But if they see this developer just got married and you share pictures, you know, they feel a little connected You know with that person so doing some of those things um, you know sending uh recently Swag items like t shirt and stuff like that just to kind of you know So everyone feels like part of the team And then we personally like talking to the team and just telling them, you know Keeping them excited about the vision that we have kind of what we're building. Those are some of the things we're doing
Mike:
37:11
Yeah. Gotcha. What are some challenges that you faced as you were growing, like the flipping side of the business?
Sharad:
37:20
I think flipping side. I would say like finding contractors That seems to be the challenge and especially once I moved away from Move from california. I mean from chicago to california Just finding the right people. I mean at the end of the day It's any business when you think about it. It's a people business, right? You got to have right people you could have the best product in the world. You could have the best deal in the world You know, you can have the best opportunity in the world But if you don't have the right people to manage that it just you're not going to go anywhere. So having some bad hires Um that like really sets you back that really discourages you if you hire someone And that person ends up being, you know, not what you expected, right? Or they end up cheating you in the business, like stealing from you. That kind of really pushes you back. And then it, you have to then question, is it something like I did wrong, you know, in judging their character or did, you know, Was it my fault that led them to what they did? Or I just you know, I just made it's just a mistake that I made and it's not gonna happen with somebody else So I think like having a couple of contractors that I hired Um, you know, they're absolutely Like horrible contractors like this this one time in chicago and I was living in chicago. I remember like This was the second property I bought in september of 2010 and then we have polar vortex I think in Jan or feb 2011 And one of the pipes froze in my prop one of my properties this three unit. So I called this guy out and You know, he could just tell I had no idea what the heck I was doing And I said hey, can you uh go give an estimate? It's like oh my gosh This is like i'm saying it's gonna cost you three thousand. I'm like, okay, you know, let's just go ahead and do it You know, he just like scared the shit out of me And i'm like, okay. Yeah, just just do it now You know, I would pay no more than three four hundred dollars for the same thing But then you know, it just kind of leaves a little discretion But then on the flip side look at if he had been honest with me He would have had an amazing opportunity to just like scale with me as I was scaling Right, but he was looking for the quick dollars at that point. I think people don't think about long term enough I think for like, hey, what can I do in the short term to make this? You know make this quick buck. I think that's where people lose a lot of opportunities If you're patient with what you're doing If you're thinking about long term all the decisions that you're making right now aligns with what you want to do in the long term That's where you get some really good opportunities. So yeah, I would say like hiding bad people then on the flip side The the best thing that's happened in my business is hiding the right people like claudia j Gabby, and then even the people that I have at my software company.
Mike:
40:24
Yeah. What is your process now to make sure that you hire the right people who are aligned with the long term vision?
Sharad:
40:34
I mean, that's that's a tough part You You know if I mean it depends like if if you're hiding for a position they need to have certain skill set Right. I mean, let's say if i'm hiring someone for a customer support position So the job posting that we'll make at the end the very last line would be if you're interested reply back with this subject line Right, it might be like i'm awesome, you know, i'm super amazing If they don't do that, they automatically disqualify the fact that they didn't even go down, uh, read the entire job application. But what I've noticed, like looking back at the people that are in my company now and the roles that they are in, when I hired them, they didn't have any skill for that specific role. You know, they were just the right people with the right work ethics. They're just willing to work hard and willing to just take on anything that they wanted You know anything that I kind of threw at them like, you know, claudia, for example I hired her as a personal assistant to just help me with some admin work now. She's you know project manager and then uh Gabby in my business who's managing, uh, who's a property manager same thing with her like when I hired her I hired her Her role was going to be just helping kind of manage these properties. I mean she's actually going to assist Someone else to manage the properties, but you know, these are the people that anytime I gave them something i'm like, okay I'll do it. You know, they were they would never say no if they didn't have the answers They were like, okay, i'll figure it out They just felt more comfortable just saying, okay, can I give this to you? Can I give this to you? Can I give you more? Can I give you more? And they're like, yeah, sure, you know until you feel comfortable Okay, they're played as full, you know, they're kind of at the optimal performance level And then you start building your team around them I think just so the most important thing is to look for people with the right Work ethics like right attitude and let's say if I have someone who has the best skills in the world, right? Just the most amazing absolutely amazing resume But if that person is not honest, right the person cheats in some way like shows a blade Or just it's not honest and there's no Training that I can send this person to and say hey Can you go take this training and just it's going to teach you how to be honest Right, but if the person is honest and they show up on time, then there's any there's all the trainings in the world That you can send them to right if I have someone Again, like going back to the example of that's if i'm hiring someone for the customer support But they don't have any experience in customer support, but they're willing to learn they're willing to show up I can say all right. Here's you know, typically from the time we hire to the time we get someone on board it You know takes them out a month, but i'm willing to put another six, you know Another couple of weeks or a month Into your training because you have the right You know attitude towards work so I can have them go take a training just to learn some of the skill set that part is Easy, but they have to have the right mindset, you know, right work ethic now It's hard to you know, there's no test that you can have someone take it something, you know, you have to go Uh based on your gut feeling, right? How does the person show up on the interview? You know, how do they the questions that you ask them? Like how do they answer? Like what is what kind of questions? They're asking you about? um About the the role that they have are they are they asking you how much am I going to get paid? Like what's the incentive, you know, then that's not the right person Of course, we want to pay everyone competitive salary and give them incentives that are aligned with the the business But if that's kind of what their focus is Then, you know, they're, they're, they're not showing up with the right mindset that we want them to show up with.
Mike:
44:27
Hmm. Gotcha. That makes
Sharad:
44:30
Yeah, so yeah, you take your time to hire someone but if you feel like someone is not the right fit Then you have to ask your question. Hey, would I hire this person again? If the answer is not yes, then you have to move on.
Mike:
44:42
Yeah. Yeah. I think that's a great, that's a great tip.
Sharad:
44:46
Yeah.
Mike:
44:48
Sometimes we've invested a lot of time in people that if we ask that question again, the answer might
Sharad:
44:53
Yeah Yeah exactly. And if it's no then like this is something we do with our team if the answer is so if I have the the head of my cs team go through every single person and Answer that question would be hard that person and if the answer is no, okay, why not? Like what is You And about that person that we would not have them in so just so that you know We look for we make sure we don't make the same mistake again With the next hire that we have and another thing that really worked well for us is so we ask internally in our team Um, just like you know, we ask Ourself would we hire this person? We ask our team members and this is the anonymous feedback that they give us on a scale of one to ten How do you feel and this is every week? How do you feel? uh About working at resimply 10 would be the best company ever Super excited one would be hey, you're gonna see my two week notice tomorrow, you know And then if it's anything less than 10, then we ask them it's all anonymous. Okay. Why is it not a 10? What can we do to make it a 10? There's some amazing feedback that comes out of it You know, it's anonymous so people feel comfortable sharing it Um, they would say You know, like for example I'm taking too many calls. I don't have time to catch up on my email. It's a simple thing So when someone gave us a feedback said, okay, you take calls for three hours You take a break for an hour. You take calls for three hours You take a break for an hour to catch up on email. That was just such a simple thing We didn't think of it But then our team came up with that someone from our team came up with that and said could you start doing that? You know, so just asking that every week and then seeing if it's less than a 10 Why is it less than 10? Like what can we do? Is it something that we can do? You In our company you just make it a you know, 10 out of 10 experience for them
Mike:
46:44
Yeah. And that's like a, a thing, like an automated thing that gets emailed to them every week. And then you review what the results come back or
Sharad:
46:51
Yeah, so my my team reviews it. I just look at the number if it's less than 10, then I ask them Okay, why was it not 10?
Mike:
46:58
Yeah, you look at like the average or you look at like if any of the ones who say less than 10 or
Sharad:
47:05
Yeah, so I mean the average has to be 10, right? Every person should give us a 10 So even if one person gave less than a 10, then the average would be uh would be like 9. 5 for example Then we look at okay. Why is it 9. 5 who gave us a low rating?
Mike:
47:18
yeah. Okay, gotcha cool. That's interesting. I've never heard of anyone doing that internally. I think that's an awesome idea.
Sharad:
47:26
Yeah, no, it makes it makes a difference. I mean you can just check the team feels pretty happy about that Um, you know just they feel hurt. I mean when they actually see Something that they mention like immediately get implemented the next week. They're like, oh, this is amazing
Mike:
47:42
Yeah, that is amazing. Actually. Well, we're getting close to the end here. Uh, and there's always two questions I like to ask at the end of the show. Uh, the first is what is the craziest or most uncomfortable situation that you have ever experienced in a real estate deal?
Sharad:
48:02
Oh, it's not a deal. It's the people that I hired with I mean that I hired um So that's very crazy. It's so i'd hired this person from craigslist By the way, I also had claudia from craigslist So claudia helped me hire this another person from craigslist in indiana to just kind of oversee our project You know, uh, back then we were doing about 40, 50 flips a year. So Claudia and hired someone part time to help us kind of oversee the projects, manage the contractors, because, you know, we had tons of projects going on and then this person was doing a great job, we kind of kept giving her more and more responsibilities. But then and she was she was married with kids and all it turned out She was actually having an affair with the contractor on Her main contractor who's working the project. So just At a time having to let go of both the the local project manager that we had and the contractor That was like the most uncomfortable Situation that we were in but it was a blessing in disguise just kind of there were other things that were going on Uh that we were not aware of but yeah, that was that was very uncomfortable having that Conversation, you know and saying okay, we have to like move on from this, uh work relationship,
Mike:
49:36
Gotcha.
Sharad:
49:37
know Yeah, but in terms of deal i'll say There's one that we I thought I was going to make a hundred thousand dollars, but we ended up losing about 50 60 And this was something we bought out of our buy box at the so we bought right before the interest rate We're gonna go in so we typically buy properties in like No more than two 50 resale price. I think one 50 to two 50 is our sweet spot. We don't really buy anything below one 50 or we don't buy anything that's gonna sell for more than two 50. That's kind of, you know, for the most part, 80% of deals. That's what we feel comfortable with. So, uh, you know, I, I came across this deal with the. Seller was selling this property for 485. Um, and we had to put like 50, 000 into it or we were going to be all in for 550 and we were going to sell it for like 695 or 700. So, you know, I started seeing dollar signs all over. We ended up buying the property. This was like right as the interest rate was starting to go up. You know, this is like a very high end for the market that we invest in. So we buy this property. We're all in for 550. And we put it on the market for 6. 95 or 6. 75. It doesn't sell we just kept lowering lowering lowering and I think We ended up selling it for like 5 10 5 15 So after all the commissions, you know the interest cost that we had to pay like we lost about 50 60 000 on that Yeah, that kind of sucked But it was a good lesson to learn that just stay in your comfort zone that you feel not in the comfort zone But stay in You know the the area of your expertise that you feel comfortable with
Mike:
51:21
Yeah, for sure.
Sharad:
51:22
yeah,
Mike:
51:23
So the, uh, second question I always ask is, uh, if you could go back in time and give yourself one piece of advice when you were looking for your first deal, knowing what you know now, would you tell yourself?
Sharad:
51:40
uh first deal I mean, I would say just like make more offers But the the biggest piece of advice I would give myself is just buy more, you know Just just buy more buy more rental properties Yeah, I think I got to point or 2014 15. I slowed down buying just thinking that okay This is we've reached the peak of the market It's like the prices are not going to go up this and they're going to start to come down and I think I just kind of Took a break from buying I shouldn't have done that.
Mike:
52:15
Hmm. Gotcha. Well, well, sure. Sure. A lot of people want to reach out to you after the show. If they want to get in touch with you, how could they go about doing that?
Sharad:
52:25
Yeah, the best way would be Sharad at breesimply. com. So s h a r a d at r e s i m p l i dot com
Mike:
52:37
Awesome. Well, thanks for being on the show. This is
Sharad:
52:39
Thank you mike for having me. Thank you. This was great
