The Ultimate Guide to Diversifying Your Income through Real Estate

John Harcar (00:00.925)
All right, hey guys, welcome back to our show. I’m your host, John Harcar. I’m here today with Kiran Vedantam. Hope I said that right. And we’re going to talk about growing passive income and diversifying into maybe other businesses. Guys, remember, at Investor Fuel, we help real estate investors credit or, I’m sorry, let’s start that over again. I’m going to start the intro over again, okay?

All right, hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here with Kieran Vedantam. And what we’re going to talk about is growing passive income and diversifying. Remember, guys, at Investor Fuel, we help real estate investors, service providers, really all real estate entrepreneurs, 2 5x their business. And we do that by providing valuable tools and information as well to help them build that business, to live the life that they want to live. So Kieran, welcome to our show.

Kiran Vedantam (00:55.512)
Thank you John for having me. so happy. I love the name investor fuel. That’s what the investors really need some fuel to keep the momentum up to keep the motivation up. I love your name. I appreciate you having me on your show.

John Harcar (01:08.813)
Yeah. Yeah, fuel your business, fuel your life. And I’m super excited to talk about, you know, the growing the passive income. I know that’s been a topic for a lot of people and especially with diversifying stuff. I mean, I think that’s important. But before we get into all that, tell our audience a little bit about you, your background, you know, what you’ve been doing, how you got into real estate.

Kiran Vedantam (01:29.678)
Thank you. It’s always good to talk about ourselves, right? I love to talk about myself too. I have a tech background. I worked at Intel for eight years and after working there in corporate, I have come to realize that we need to have something wherein we can get some passive income and that’s what triggered our interest into real estate. We were doing land syndications back in 2002, 2003.

John Harcar (01:39.061)
Hmm.

Kiran Vedantam (01:55.264)
in Arizona wherein we bought big parcels of land then we split it and sold individual parcels then I learnt about syndication how we can pool money and do it at scale after that we got into buying single family residences like everybody else then we got into commercial real estate wherein we really have seen cash flows on drugs really there was so much of cash flow for good commercial properties then

Based on the income that we’ve been earning with my tech background and all these real estate projects, we were able to buy businesses and we own a family fund center in Arizona along with a flooring store. So we were able to diversify and then now my mission like I would call it is to spread this gospel on how you need to diversify and how it is very feasible and possible to diversify if we keep our minds open. And I have a

John Harcar (02:47.775)
Mm-hmm.

Kiran Vedantam (02:48.898)
passive investor real estate club that I run in Phoenix, wherein we talk about all these and I invite guests like you who can talk about how to generate passive income mainly real estate focused and I’m a mortgage broker also. So we have a real estate brokerage and mortgage brokerage based in Phoenix area and lot of our funnel is through those companies and we have a team of mortgage brokers, real estate agents and we are looking to grow that team as well.

John Harcar (03:17.215)
So family fund centers are still around, huh? They used to have one in Southern California where I grew up. That went away a long time ago.

Kiran Vedantam (03:25.172)
As long as there are kids, John, is business for family fun centers.

John Harcar (03:28.207)
That’s true. That’s true. All right, so let’s go back a little bit. You were in tech, right? What prompted your interest in real estate?

Kiran Vedantam (03:37.902)
The biggest thing is back in the day, YouTube was not big and you were just into books. I used to read lot of books around having some kind of an income that can add to what your primary income source was. So having this additional source of income was very much of interest to me from the base. And then I have come to realize that most of the millionaires actually have earned millions through real estate.

Donald Trump like it or not back in the day was not a politician but he his books along with Robert Kiyosaki’s really inspired me to think that okay real estate is the way to go and me coming from India I’ve seen the back home people who are really wealthy were the ones who were developing in real estate and who are selling real estate so have come to realize that globally that’s that could be a ticket wherein we can get into real estate so coming from tech background to real estate

two different worlds but at the end of the day the fundamentals stay the same wherein you are looking for opportunities to automate some of this and you are looking for opportunities to make the best of what you learn.

John Harcar (04:38.815)
Hmm.

John Harcar (04:50.929)
OK. So tell me about your first introduction to real estate, right? Not through the books, but your actual physical doing something within real estate.

Kiran Vedantam (05:01.24)
See the very first one that we had was buying our primary home and then realizing that after holding it for three years the value doubles and then when you sell it all the cash that you make out of it is tax free. That was something that I had no idea when I bought my first home but I have come to realize when this asset started cooking and the value started going up and with that first sale I was able to take all the money and then

John Harcar (05:22.197)
Mm-hmm.

Kiran Vedantam (05:27.16)
put it into a land syndication. That’s where we made a lot of money. would say that’s the biggest project that really triggered my interest more than my primary home. But primary home, buying it and then letting it cook and give me the returns was the first foundation that I can, that I know for a fact that that has really put us into the path of investing in other real estate projects. The land syndication project, it was in a small little dusty town called Buckeye in Arizona, wherein we bought

John Harcar (05:46.037)
you

John Harcar (05:54.943)
Buckeye, I know Buckeye.

Kiran Vedantam (05:57.378)
You know, it’s growing tremendously after 20 years. I’m seeing that there is so much of growth in that area. But still there is a lot of opportunity for landing there. More than the land, I learned the concept of syndication at that point of time. These days we see more about syndication thanks to YouTube. We learn about it a lot. But back in the day it was new. And then I have come to realize that some of my other friends that I made through

networking groups, were into hotels and they were all pooling money to do big projects. I always wondered how would people buy a project for 10 million dollars like will they have cash for it? That was something that was kind of a roadblock for me always thinking I’m never going to have so much money but when I realized that we can pull off those projects by syndication and pulling other people’s money and executing it is what opened my eyes but the very first project

I would say is the primary home.

John Harcar (06:58.121)
the primary home. what, why land? You why didn’t you just go buy more homes?

Kiran Vedantam (07:05.806)
See looking back, land is a good opportunity because especially for people with limited experience that I was when I got into land is you don’t need to know too much about development because the horizontal development is much easier. You hire a surveyor, you split the parcels, then some land has an opportunity wherein you need to bring utility lines in there.

Maybe you need to do rezoning all of that you hire professionals and it’s not as complicated as you trying to develop let’s say an apartment complex or or a Or even building a single-family home for that matter. It has so many moving parts. So for me, I thought land was a shortcut and That’s that’s where we went. But then after land if you are if you gain the knowledge to develop more projects

which is like building hotels or building apartment complexes. That’s where you have to graduate from but I picked land because of the simplicity.

John Harcar (08:08.885)
Okay, now did you seek out a mentor or someone who has done, you know, been involved in land to help guide you along or how did you really learn, you know, how to evaluate, how to underwrite, all those different things?

Kiran Vedantam (08:23.682)
Yeah, there was a group, it’s not there anymore in Phoenix. There used to be a real estate club and I was part of it along with my wife and we used to diligently attend that and that group was run coincidentally by a mortgage broker who basically put the group together for all like-minded real estate investors to come together and discuss and network and even participate in some projects. So that’s how I got introduced to this land and I met

John Harcar (08:37.844)
Mmm.

Kiran Vedantam (08:52.522)
I met the real estate agent at that time inside the group and then I was so confident that this is going to work because they were all part of the group and I’ve seen him present multiple times in the group. So that’s how I met them. So I would say for the audience sake, okay, what’s the best way to meet people is going to these networking groups and thankfully now with the technology, we are able to meet people on zoom. Like I met you through technology. You are not in any of the real estate clubs that I go to.

So this is how we meet people and that’s what really gets us started. You see them and then you hear what they are doing and then you actually see some of the projects and that’s going to build the inspiration.

John Harcar (09:31.955)
Mmm.

OK. What kind of challenges or maybe hurdles did you face when you did this first deal or started along the path?

Kiran Vedantam (09:45.144)
See, the first challenge obviously is getting the funding in place. That is the first challenge because once the mind is made up that hey, this is a good project, this is going to work, the numbers are good, then the next immediate challenge is okay, how am I going to get the money? The thing that I learned over the years, John, is once you have a project that has good values and returns and if it’s underwritten well, money is…

Never a problem for that matter because I discussed that project with few of the people in the networking group and they jumped on like the first few people that they presented to they jumped on to it. But the fear of not being able to have the money to execute was the biggest challenge. But once I overcame that fear and realizing that you can pull off any project as long as you can stand behind it.

John Harcar (10:16.095)
Yeah.

John Harcar (10:34.159)
Mmm.

Kiran Vedantam (10:42.71)
and you make up your mind, that challenge can be kind of overtaken for that matter. then having the right people around you who can keep your mindset up and not water it down is something that I also found it challenging in the beginning wherein I was rubbing shoulders with other friends and who are not into real estate and whenever I discuss a project they were like

Why don’t you focus on your tech job? Why are you doing all this? So they water down your mindset and that’s also a challenge for us to overcome.

John Harcar (11:10.293)
Hmm.

John Harcar (11:14.879)
So it sounds like being in proximity to some of these folks that have done it maybe helped overcome your fears?

Kiran Vedantam (11:23.246)
100 % that is the biggest challenge I would say if I have to look back on what’s the biggest challenge is getting to the mindset of wherein you feel confident that you are able to do it and that confidence is reinforced by the people that you interact with, the people that you surround yourself with, the people that you see, the people that you know, the kind of projects that they are pulling off and once you talk to them. What I also found John is

John Harcar (11:48.053)
Mmm.

Kiran Vedantam (11:52.172)
Most of the people who are successful, right? If you are able to reach them and then tell them that this is what you are planning to do and this is what you need help with, 95 to 100 % of them are going to sit down with you and then try to understand and help you. Even if they have nothing going on. Has that been your experience also?

John Harcar (12:10.1)
Yes.

John Harcar (12:15.273)
Well, yeah, it’s been an experience of a lot of folks I know. It’s that people are afraid to go out and ask for that help, whether it’s an ego or a pride thing. I mean, everybody I’ve come across, majority of people I’ve come across in this business have been very eager to help. You just got to ask for it.

Kiran Vedantam (12:34.862)
Correct, especially in real estate industry, maybe it might not be true in all the industries, but in real estate especially in mortgages, when you are trying to finance a property, the mortgage brokers really want to try to figure out a way and help you. Even if they cannot help you, they will try to find another lender whom they can pass the baton to. It’s always the case, even real estate, even very accomplished real estate developers, are going to just

take time and then think through and put the brain with you. So I found this to be particularly interesting that in this industry you’ll see that. I mean, me coming from the software background, I did not encounter such openness in that industry when I compare it to this one.

John Harcar (13:03.967)
Yeah.

John Harcar (13:16.925)
Sure. So you did this land deal. What was next? How did you get into mortgage? How did you get into, you know, to have a retail brokerage?

Kiran Vedantam (13:28.182)
See the mortgage brokerage and real estate brokerage were a natural progression into what we are doing because I was so into investing in real estate in my sphere. I was one of the first guys starting to invest in all these different projects. So people were coming to get advice and ideas from us. So me and my wife, we thought, okay, if you are going to be giving out advice, why not actually get our own license? That’s how it started.

John Harcar (13:56.991)
Okay.

Kiran Vedantam (13:57.3)
Once we got our license, then more and more people started to come to us. Then it literally became like a funnel for us to help and talk to lot of people who are aspiring real estate investors. And every real estate deal needs a funding source to it. And then we thought, okay, we should have a mortgage in place so that we can have everything under the same roof. And then it’s much seamless for the customers. Believe it or not, we went into Tytal. We had a Tytal company for many years. We sold it a couple of years ago. So that was a good

John Harcar (14:11.775)
Mm-hmm.

John Harcar (14:23.794)
Okay.

Kiran Vedantam (14:27.342)
everything under one roof kind of a setup because then you can have a confident buyer walk into your office and then you are going to be able to strategize their wealth plan and then see where they have interest and where they have plans where their mind is based on that we were able to strategize and put everything together. running this real estate brokerage like even now we have agents joining our team we love to help new agents come into the fold because

John Harcar (14:48.039)
Okay.

Kiran Vedantam (14:56.578)
We are able to mentor them and that is fulfilling because I’ve been in the industry for 20 years now. Same with mortgages. Now we are licensed in multiple states and we are recruiting people in our team. Helping them get on with this profession is something that is very viable and people don’t realize even if they are working a full-time job, if they have plans to transition. I’ll be able to help them. I’ll be able to tell my story and inspire them to come into the industry.

So all of that motivated us to have these businesses as the pillars for us and the funnel for us and from there is where we built other opportunities around it.

John Harcar (15:36.021)
Okay, now let’s kind of start touching a little bit of our topic today and that’s kind of the generating passive income and diversifying. So starting with the passive income, mean, how can someone start to build passive income?

Kiran Vedantam (15:49.784)
See passive income, if you ask me this question John about 10 years ago, I would say buy real estate, right? That was a big thing. You buy rental properties, then it’s going to cash flow. You pay off your mortgage. Tenant is going to pay your mortgage. That was like the biggest formula. But now things have changed with the interest rates being so high, the cap rates have changed. So we have to kind of tweak the strategy. I would say the first step to it is, okay, you need to

John Harcar (16:04.479)
Mm-hmm.

Kiran Vedantam (16:17.56)
figure out a way wherein you don’t go to work and the paychecks have to come in. It can be as simple as starting a business and there is so many people who are retiring from their late years who are in their 60s and 70s these baby boomers are retiring so there is so many businesses in the market right now that you can examine and see where your interest lies and how much time you can spend and most of these businesses if you buy them I am seeing that you will be able to pay off that amount that you are

John Harcar (16:35.445)
Mm-mm.

Kiran Vedantam (16:47.406)
paying the business for between one and a half to three years and after that you can either sell the business or You will be able to continue to run it wherein it’s paid free and clear for you So that is one opportunity

John Harcar (16:51.87)
Okay.

John Harcar (17:00.597)
How does someone find these businesses to buy?

Kiran Vedantam (17:05.738)
mean we use BizBuySell.com that’s a great resource you have a lot of businesses being listed. I heard that CoStar and LoopNet acquired that domain and they have improved it tremendously in the last six months. I have seen so many new features. You’ll be able to see it in any market and it’s a global marketplace of all businesses listed. So that is a great place to do business but businesses can

John Harcar (17:26.549)
Okay.

Kiran Vedantam (17:32.514)
can become from passive to active very quickly if it’s not managed properly, if the processes are not in place. So I always like to gravitate and keep an eye on the real estate opportunities because there is always opportunity in real estate and I try to gravitate from having a business, earn the money and then still put it back in real estate because one day the vision is to sell the business also and have real estate give us a passive rent.

John Harcar (17:39.359)
Yeah.

John Harcar (17:55.519)
But 100%. How does someone choose what type of business they want to buy? What are some things to look for outside of interests that that person may have? But what are some specific things to look for when you’re buying a business?

Kiran Vedantam (18:13.518)
Ultimately, the interest is gaining passive income. Interest in the business is a bonus, but at the end of the day, what I have come to realize after we used to own a hospice, we used to own a title company, then flooring company, and then we have amusement park. What I realized is all businesses pretty much have very similar framework. You have the marketing and sales department, then you have the actual implementers of the execution team.

and then you have the ownership group which operates the finances and make sure that all the key process indicators are all in place. So regardless of what business it is, the good news is the metrics are the same, the framework is the same. So it doesn’t matter what business that you can go for, but it’s a big bonus if that interest is in the line of what your hobbies or your liking is so that you can at least know what’s happening. Otherwise, there is professionals everywhere that you can hire, consultants that you can hire.

John Harcar (18:49.941)
Mm-hmm.

Kiran Vedantam (19:11.544)
to boost up the business. What is interesting John is we need to have some common sense they call it right. Some common sense on to understand hey is that business dying or is it progressing how the demographics are and then you need to be able to underwrite it better and you need to be able to any business that you are buying you need to give it at least two years for it to cook and for you to understand and for you to come up with the key process indicators.

John Harcar (19:19.573)
No.

Kiran Vedantam (19:40.354)
The good indication is if some business has been running for the last 20 years and if the guy is retiring then that’s a good sign. But then you have to see how the business is progressing and if it is having like the revenue going down year after year after year in the last 5 years that’s a bad sign. So there are few ways that you can underwrite it but overall I would pay attention to what you think the business can make in the next 2-3 years.

John Harcar (19:57.215)
bright.

Kiran Vedantam (20:09.186)
based on the data that you have provided from the last 2-3 years.

John Harcar (20:12.677)
OK. And I just had the question I was going to ask you. Why is it important to diversify nowadays? You mentioned diversifying, and you bought several different types of businesses. Why is that so important?

Kiran Vedantam (20:27.886)
There are two different schools of thought. Some people say, hey stay in your lane, just do what you are really good at and leave the rest. While the other school of thought is, okay you need to diversify. What I have come to realize is, especially in the businesses, there is a time the market is very cyclical. When there is a cyclical market, I love to have a business wherein if one business is going down, the other one hedges itself out. Like for example,

We were in real estate and mortgage businesses. Both were pretty much running in parallel and when we had the recession, when we had the dip, both were going down in parallel. Then we had a hospice. Hospice was totally independent of the market trends and what’s happening in the market. So also is a family fund center. It might have a little bit of a dip during recession, but overall it’s not as parallel to the other one. So I love to diversify that way we can hedge one business against the other is number one. The second thing is

Our skill sets will be more brighter like your brain will be much sharper if you are going in multiple directions is what I have come to realize because back in 2019 me and my wife we decided to just retire that’s why we started selling our businesses we sold our hospice we sold our title company we thought we are not going to do anything this is good enough and but then what I have come to realize the brain is going to become duller and duller if you have only one thing or two things going

John Harcar (21:47.477)
Mm-hmm.

John Harcar (21:53.557)
Right.

Kiran Vedantam (21:55.288)
So that’s another spiritual way to think that you need to have multiple irons so that your brain is sharp and then even with the market adjustments with an earthquake we are able to still sustain.

John Harcar (22:08.649)
Got it. What kind of trends are you seeing right now in the industry, whether it’s real estate, whether it’s buying businesses, whatever it is, mortgage, what kind of trends are you seeing nowadays?

Kiran Vedantam (22:20.024)
With real estate what I am seeing is the interest rates have really put a big dampening on the spirit of the investors who have big plans to buy. People are sitting on lot of cash and they are looking for lot of deals and the deals are not coming because people who bought it before with lower interest rate they are not selling and people who have money right now the cash flows are not making sense. So there is like this almost like a deadlock. So

John Harcar (22:39.817)
Mm.

John Harcar (22:43.987)
aren’t making sense.

Kiran Vedantam (22:49.248)
I want to this deadlock kind of relax. Something dramatic has to happen or just time has to heal it. Wherein the sellers come to realize that, okay, it’s okay for me to let go of my three person mortgage and start to bring more inventory to the market. So this deadlock is causing a lot of anxiety for real estate investors. That’s what I’m seeing. That’s why the property values are not dramatically going up. The inventory is super tight and buyers are unable to afford. That’s what I’m seeing in the real estate industry.

John Harcar (23:08.617)
Yeah.

Kiran Vedantam (23:18.934)
Mortgage, of course, there is no refinancing business anymore. A lot of people have very low interest rates. So it might be some time before we see refinancing and market churn happening.

John Harcar (23:31.113)
Got it. If someone was wanting to get into investing, know, buying businesses and whatever it is, what kind of advice would you give? Like what would be a first step, maybe some tools or resources that they can educate themselves with.

Kiran Vedantam (23:45.806)
The first thing is, the government wants us to become a business owner. So that is a big thing. There are so many resources and support groups that you can join to learn about business. Before you pull the trigger on the business, I would say you should join these support groups. SBA has lot of resources on how to operate a business. I would try to do that. And then I would actually try to work in a business, maybe without compensation, if they’ll allow you to watch the business and help the owner.

That will be a good way for you to get your feet wet on any business. And like I said, John, the framework is similar. Once you understand any business is very similar to operate, then you’ll have more confidence into getting into it. And then when it’s to the actual business negotiations, there is a lot of ways you can negotiate seller financing and you can even get a loan on it or you can pay cash outright. So whatever you do,

John Harcar (24:18.902)
this.

Kiran Vedantam (24:41.326)
You have to make sure that you have a fallback plan in case that doesn’t work. How are you going to handle it? Do you have the capability to absorb the loss, roll over, just gather the experience and move on to the next or is it going to completely crush your savings? So I would try to especially the first two businesses that you get into, I would be very careful and think that okay, worst case what’s going to happen. I don’t want you guys to lose.

John Harcar (24:50.854)
Mm-hmm.

Kiran Vedantam (25:07.31)
out on a business where you have to foreclose your home. That will be a pretty bad dilemma to be in. So I would say go slow, analyze the market, try to work in a business. I think that’s going to get your confidence up and then you’ll be able to pull the trigger.

John Harcar (25:10.888)
Right.

John Harcar (25:23.221)
Got it. Wow. I mean, that’s awesome, awesome information. If folks want to reach out to you and they want to talk to you about maybe syndications or diversifying or whatever it might be, what’s the best way that our audience could get in touch with you?

Kiran Vedantam (25:38.84)
They can go to my website. My first name is K R A N. My wife’s first name is the same. So kiranandkiran.com is my website. So you go there and you can you can just submit a form and we’ll be happy to get in touch with you. Especially if you are wanting to get into real estate or mortgages. Yeah, you want to become a professional in that industry. We would love to help you.

John Harcar (26:02.721)
Awesome. Well, Kieron, thank you so much for coming on our show. I mean, it was a pleasure speaking with you and you dropped some great information. know, guys, I hope you guys had a good show, right? I hope you took some good notes. And you know, if there’s any interest at all or any questions that you might have, reach out to Karen, man. It seems like a wealth of information. Karen, thank you again. And guys, I hope you had a good show. We’ll see you on the next one. Cheers.

Kiran Vedantam (26:29.678)
Thank you, John.