From Engineer to Real Estate: 5 Key Lessons for Success

Dylan Silver (00:01.144)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show, I have serial entrepreneur, real estate developer, engineer, Harvard Business School alumnus, global operation leader, philanthropist, digital content creator,Rashid Rich Shaikh, welcome to the show.

Rashid Rich Shaikh (00:25.118)
Thank you. Appreciate it. Thanks Dylan.

Dylan Silver (00:28.0)
It’s a pleasure to have you on the show here. I always like to start off at the top by asking guests how they got into the real estate space.

Rashid Rich Shaikh (00:38.25)
Hey, thanks Dylan. So first of all, you know, my base is engineering and operation management. So I did, you know, operation management for about 19 years or so, 20 years.

And then after that, started 2015, I started real estate development. So for the last, I’ll say 15 years, I’ve been doing real estate development. I buy raw land, go all the way to developing and building luxury homes and assisted livings. So that’s kind of what I do.

Dylan Silver (01:15.244)
Now, when I talk with engineers, I find it interesting because two things are happening. First, for younger engineers, I think there’s some job security, but they’re also seeing that maybe there’s not as much job security as they thought, although there still is that job security. And then number two is that they realize, well, how can I build and scale a business that isn’t gonna maybe take away completely from my time in engineering? Now,

Granted, that’s not always possible with real estate, because sometimes it’s very time intensive. But other times you can build, not necessarily completely passive, but a semi-passive real estate business. You mentioned using your engineering background to do development, so that’s pretty intensive. When you were looking at getting into real estate, why did you lean that route instead of maybe single family fix and flips, or wholesale, or all the other options that you could get into real estate with?

Rashid Rich Shaikh (02:12.884)
So that’s a series of questions and honestly I have addressed all these questions in my YouTube videos. So if you really want to go out and look at every single answer whether that is passive versus the active income, passive versus active real estate, I have done a lot of tweets on this matter as well. And then, you know, why real estate and why starting a business and all that. I think everything has a reason. So when I was at the almost at the

At the peak of my career in operation management, have gone through around the globe and set up facilities in countries from Europe, America, Latin America, South America, China, Middle East. I’ve done all those things. So after that, said, you know what, I want to really do something my own where I could really add the value of my engineering and operation skills into whatever I’m going to present to the world.

I looked at 100 different businesses, kid you not, 100 different businesses, from services to sales to product to all kind of things. And I found myself into this whole situation where I said, you know what? At this time in my life, I need a little bit of business which is less risky.

And also it could be long-term, you know sustainable and I could add a value So this is where I started doing real estate now in the real estate there are different aspects you could do you know, you can buy and and and and fix it and up it and then sell it or you can hold and rent it and you can do all those things So like I said, I have YouTube videos on that for me. I didn’t believe that I was you know, right fit for fixer-upper

Fixer Upper really is good income, but it is really not something which can take you to the next level. So I basically did do Fixer Upper. Fixer Upper is always the first, you know, it’s getting into the market. So I did only two or three Fixer Upper.

Rashid Rich Shaikh (04:17.414)
Then I realized that, and then I also did real estate agency. I mean, honestly, I said, you know, that’s not for me. So I’ve done those things, but then I have quickly came to an understanding that I really need to utilize my skills. I really need to get some land and develop it and then, you know, sell it in this way. I’m using all of my skills, but I’m adding the value. It’s value creation at each step. So, you know, I was able to add far better value.

and get a better product out in the market much faster and more cost effectively. So I gave even my company name ValueMax. So my slogan is maximize the dollar value. So whatever dollar you are going to spend anywhere, if you do spend with me, then you maximize your value. You increase your value of the dollar. You increase the value of your house if you’re selling with me. You increase the value of your dollar if you’re buying with me. And how?

we can get into it, but basically that’s kind of what my value creation model is.

Dylan Silver (05:20.482)
So in land development, there’s a couple, there’s so many different strategies with land. I’m in Texas. You mentioned before, you’re in Massachusetts, so two totally different climates. But in Texas, we’ve got lots of open land and there’s so many different plays from storage facilities to RV parks to mobile homes to building out subdivisions. But one of the other plays too is just developing raw land. know, dividing it into plots.

Rashid Rich Shaikh (05:36.756)
Mm-hmm. Mm-hmm.

Dylan Silver (05:48.994)
getting the zoning right, getting permits from the city, getting city electric and sewer out there, and making it improved. What was your strategy for land?

Rashid Rich Shaikh (06:01.834)
So you’re right. A lot of people will actually buy a raw land. First of all, buying a raw land in Texas versus Massachusetts is totally two different games because Texas has a lot of land and you can just buy in the towns and cities that are a lot more collaborative with you because they want you to develop. Over here, it’s other way around. You know, they don’t want you to develop because it’s already, you know, very thickly populated and

Most of the time, especially if you’re doing residential, if you’re doing residential, towns and cities don’t like it because they believe it’s more burden on the city because the kids have to go to school. And if you have two kids, it’s going to be, you know, easily, you know, 10 to 15 thousand dollars per year per kid, you know, just from the from the town, not even from the state. And if you add the state, that’s almost 30 thousand dollars, you know, per student. And if you have two kids, that’s 60 thousand dollars, there’s no way you’re to pay taxes.

more than 15. So the state and the town has to pay every time somebody build the house. So they’re not too much into building, you know, single-family homes or even duplexes. And that’s the reason it’s very, very expensive. It’s very difficult to find land. And then the cities and towns are very, very difficult and the bylaws are, you very tough, all that kind of stuff. But even then, I could have bought land and developed it. First of all,

It is difficult, it’s not impossible. So opportunities are always there everywhere. I don’t believe that there’s no opportunity. There’s always opportunity. If I want to move to Texas, I believe honestly that my life will be easier, but that’s a decision I have made. been living here. So anyway, so the land I could develop and then just get rezoned or repurposed or subdivided, and I don’t have to even develop it, and I can sell it and make some money.

Dylan Silver (07:43.459)
Yeah.

Rashid Rich Shaikh (07:56.36)
But I believe that I’m creating value at every stage and it’s not easy to find the land. If I am adding only 20 % value just by getting it approved, then I’m adding another 40 % by developing it. Then I’m adding another 60 % by building it. Then why not do all that? So again, my model has been doing all those aspects.

Dylan Silver (08:18.35)
So as someone who is a builder, but you’re also finding the deals yourself, but you also have another career, which is engineering, where were you when you were starting out, where were you finding the mentorship? Where were you finding the skills to learn how to be a builder? Were you self-taught? Were you part of a group that was, we’re going to raise money and raise capital and learn to be builders? How did you become a builder?

Rashid Rich Shaikh (08:32.243)
Ha ha ha.

Rashid Rich Shaikh (08:42.196)
So that’s another very good question. So I do not do any engineering for anybody anymore. This is 100 % my, I spend my 100 % time as far as my own real estate development. use the word development. That means buying, you know, like buying raw land, getting it approved, developing it and building it and then selling it.

Okay, so I do all those things myself and I use my applied engineering skills. I do not work for somebody as an operation manager like I used to do. I don’t do that.

I do spend some time in, you know, on philanthropy. That’s my fun side of things. I do that, but I don’t really do any other way of making money. My way of making money, and even I do YouTube videos, I don’t make any zero money from it. The only money I make is when I actually buy the land and develop it and sell it. So now that I started it, I kind of self-taught myself. I had a couple of people around me who were already, who actually have gone through the same path.

Dylan Silver (09:34.668)
Now, at what… Yeah.

Rashid Rich Shaikh (09:44.362)
They were engineers and they have gone into that. They didn’t teach me anything. wouldn’t even actually, everybody tried to tighten their chest with whatever they know. So I went to two people when I was starting it. I always had entrepreneurial mind. I did try in 2001 to start e-commerce business. It was very early days of bringing goods and services from China. And in 2001, and I…

Dylan Silver (09:51.64)
Yeah, not teach you anything.

Dylan Silver (10:10.104)
Yeah.

Rashid Rich Shaikh (10:13.638)
Unfortunately, September 11th hit, I lost everything I had, and I couldn’t afford to stick in that business. Even though if I would have stuck in that business, it would have been great, but I couldn’t stick in that business. That’s reason this time, when I started in 2015, I said, you know what? Actually, sorry, 2011, I told myself that I’m not gonna do that kind of risky business. I’m gonna do something which I can touch and feel. So.

Dylan Silver (10:36.632)
tangible.

Rashid Rich Shaikh (10:38.51)
All I was able to get from the other people who I was inspired by, that I, they said, hey, whatever you do, you will do fine, go do it. But that’s all I got. a matter of fact, one person gave me that, the other person said,

you’re too late. In 2011, he said, hey, you’re already too late. You lost the good market. It’s no point of going there. So I decided to put myself in. And that’s the reason I do these YouTube videos. And I teach people because I don’t want to be the same person. I want to be the person teaching others. Because I believe whenever you teach, that’s the best charity. When you teach others and if you can change other people’s life, know, God takes care of you. let’s go.

Dylan Silver (11:21.006)
100%. I think your friend’s advice was overly optimistic that, maybe they knew you so well, they said, Rich is going to succeed in anything he does. But I think in the real estate space, you talk about building out.

subdivisions. It’s risky business, as you know, because now you have holding costs unless you’re using all your own capital, which sometimes you may. But typically you have some type of, you know, financing source or a loan or private money. And these people are waiting on their return or you have deadlines coming up. And then if you’re not selling all the properties when you think you need to sell them by now, you need a bridge loan. And so you have to be constantly hitting these deadlines. And then on top of that, even if you bought the deal at the absolute right price,

Black Swan events do happen, like with COVID, right? In which case, you know, who was doing a lot of development right in the middle of COVID? It was probably trickier. So these things do happen. And so as you were embarking on this new journey, there was also a lot of risk. I’m curious,

What has been your approach to managing risk and do you think that there’s a one size fits all strategy when it comes to land? And I say that because when I’m doing single family home fix and flips, wholesalers will often say if you can get a deal at 70 % of ARV minus the repairs, that it’s a good deal. Well, are there any similar formulas for land?

Rashid Rich Shaikh (12:52.372)
Well, there are definitely formulas and none of those formulas are any, I would say, hard yardsticks. Everything, in my opinion, has to be looked at and it all depends on your risk assessment at that time. So I think you’ve got to be innovative and you’ve got to really see your risk, you know, your you know how risk averse you are and what is your

personal situation. When I say personal, your personal mean your company, your banking relationship and all those things. And I think that changed with the time. Again, if you have lots of deals coming, see where I am in Massachusetts, you don’t have a lot of, you know, land deal comes your way. So instead of just keep doing the land deals, I actually have a cascade where I have certain, you know, certain deals at a different stage. So

I do have in my YouTube videos, I have explained some of the formulas for people. But I think for the sake of time here, I would say the formulas are out there. Everybody has the formulas. It really all depends on your personal situation.

Dylan Silver (14:08.366)
want to pivot and ask you about, no one has a crystal ball here. I don’t want to get too far down a rabbit hole, but I lived in Boston, Massachusetts for about six years. I’m from Northern New Jersey, and now I live in Northern Dallas in a town called Denton. I say this to people, I’m closer to Oklahoma than I am to Dallas, but we still consider ourselves Dallas. Go figure. But when I lived in the East Coast, Northern New Jersey and then Boston, and honestly what stops me from moving back is I know just how expensive real estate is.

Involved in this single-family home space as a realtor as a wholesaler and as an inspiring and aspiring investor I’m thinking well. I already know it’s not easy to crack in over here. It’s got to be harder to crack in over there Do you feel like? because of the price of real estate and be because of

where we’re at with how difficult it is to get financing, that it is more challenging to be a real estate investor in the East Coast unless you’ve got tons of capital. Or is it there’s a spot for everybody?

Rashid Rich Shaikh (15:17.264)
No, I would say it’s a lot harder here in East Coast than, you know, even in Florida or Texas, for sure. It’s not even a doubt. Why I say that? Because I talk to some people and I know how the, how towns and cities treat you. I had, I actually have a friend who came to visit me from Texas and he was telling me things. We will never have those type of things here.

Dylan Silver (15:26.094)
Yeah.

Rashid Rich Shaikh (15:44.008)
And the other thing is you don’t even have to deal with a lot of time with conservation. You don’t have to deal with, you know, frost protection and all those type of things. I don’t even know if you even know what I’m talking about. frost protection is, for example, over here, you have to dig more than four feet because we have freezing temperatures here. So if we have to build a house, we cannot build on a slab. Like we have to do like half the basement anyway required. But then that’s reason we end up building a whole basement.

Dylan Silver (15:51.64)
Right. I have no idea.

Rashid Rich Shaikh (16:13.202)
because you are digging minimum four feet anyway. So you said you might as well dig eight feet. And then that’s the reason in Northeast, you see a lot of homes, a lot of buildings have basements, you know, because you need to have a frost protection and then you need to insulate. There’s a totally different ballgame building, buildings in East Coast versus on Texas or anywhere in South. Go ahead.

Dylan Silver (16:36.814)
From an engineering perspective, what’s the reason this frost protection, is it so the concrete doesn’t expand or something? What’s the reason for this?

Rashid Rich Shaikh (16:43.89)
No, no, no, because if you have, because the water seeps and it goes through, the frost will go through and go all the way to four feet. Beyond four feet, frost does not go. So just think about it. If your concrete has a frost, then of course it will contract and expand and it will crack and it will leak.

Dylan Silver (17:09.134)
So then that’s why they’ve got to dig deep. Because out here in Texas, I’m sure you’ve seen this before. We don’t do, there’s hardly any, I’ve honestly can say I’ve never seen.

Rashid Rich Shaikh (17:11.06)
Yeah, absolutely.

You don’t have to deal with it.

Dylan Silver (17:21.206)
I’ve seen one basement in San Antonio, but I have hardly ever seen basements. And the homes will be on pier and beam, which when you’re looking at it, when you’re from the East Coast and you see these homes that are on pier and beam, and sometimes, Rich, you’ll see these homes that are on pier and beam, but it’s like shoddy and they’ve got cinder blocks underneath the home and you’re thinking, wow, I haven’t seen that before. But all over the place, it really is a…

dark contrast to what I grew up with in the East Coast where every home to your point has a basement. And that basement, it’s not, it’s, you know, an extensive

It’s a lot of work and it’s a lot of capital in order to get the digging done, in order to install the basement. So it kind of does make sense that if you’re going to dig four feet deep, you might as well dig eight. You mentioned a couple of fix and flips when you were just starting out. I’m curious, did any of those fix and flips have foundation issues?

Rashid Rich Shaikh (18:18.044)
Very good question. Absolutely.

Absolutely. One of my fix and flip, the biggest problem was that I tried every single thing in the book and I could not stop leakage, water leakage to the basement. So there’s a lot more. Honestly, we will be spending a whole show and maybe we should do another show if we’re to talk about frost protection and water leakage to the basement and what are the different ways. But I mean, that was one of my…

Dylan Silver (18:36.908)
Hmm.

Rashid Rich Shaikh (18:51.676)
I mean, I would say still that taught me a lot of lessons. bear in mind, I did end up making money. I didn’t lose money, but I couldn’t sell the house right away. I actually put it on rent. I put it on the rent for five years. And that’s the reason I’m saying, you know, you should be ready as a backup to hold and rent if you cannot. Yes. So that’s what I did. And then I end up making actually money on it.

Dylan Silver (18:56.845)
Yeah.

Dylan Silver (19:12.494)
Yeah, have to

Rashid Rich Shaikh (19:19.112)
because I was able to solve the problem and the market changed a little bit too. And matter of fact, I made money in the renting too. So it was a good lesson, but at the end of the day I sold and I was happy.

Dylan Silver (19:28.129)
awareness.

Dylan Silver (19:33.452)
So we have four big markets out here in Texas. Of course, Dallas, DFW, Dallas, Fort Worth, you’ve got Austin, you’ve got Houston, you’ve got San Antonio. And of these four cities, you would think while they’re four major cities in the same state, they should all kind of keep around the same pricing. But Houston has by far…

by far lower pricing than the other three, not even close. And I’ve even looked online, I’m like, how is this even possible? Right? But it’s because Houston has so many more issues with, you know, being near or below sea level with the flooding, homes are harder to ensure. And that just creates a litany of, you know,

downstream effects, which makes it so that less desirable area to be a landlord, because you might have long terms of vacancy if it’s flooded, which means that the rents are not going to be as much. It means you’re not able to get as much for the home. And so honestly, to people who are looking at investing in areas, one of the more interesting places to invest in this area is Houston, because of some of those unusual issues.

Rashid Rich Shaikh (20:41.884)
Yeah, mean, the thing is, just, I think it depends on supply demand, but also in my, I don’t know, but maybe Houston, I don’t know that market that much, honestly, but it seems to me that the labor availability could be more because they are closer to the border and whatnot. And, you know, the labor could be cheaper.

material price is about the same. And then also is the land value. So I think it’s a labor and the land value. That’s what I can understand sitting here. But I am not certain what are the other factors. It definitely are the factors. And one of that could be supply demand. You know, also depending on where, you know, different companies are out there and more people go in certain area and, you know, the supply demand.

you know, situation is different. So I would say it’s it’s plight, demand, labor cost and the land cost.

Dylan Silver (21:42.136)
Yeah.

Dylan Silver (21:45.784)
To your point, that’s the biggest port in Texas, right? So have the port of Houston.

So I was looking at getting a modular home from overseas actually. So I was saying, this real? Can I really, people have been trying to dissuade me from doing it. They said, don’t get a modular home from overseas, are you crazy? I said, I’m looking at doing it. But it would come in through the Port of Houston and then shipped up to Dallas. So an interesting play if I end up doing a land deal. But we are coming up on time here, Rich. Where can folks go maybe to get ahold of you or to reach out to you or to learn more about what you got going on?

Rashid Rich Shaikh (22:21.492)
Well, there’s a lot to discuss. First of all, I would say that if you just want to learn from my experience, I am absolutely out there on the YouTube. This is one of my life mantra that I like to teach people, especially youngsters, even though I’m a 19 year old. But if somebody is younger than me who want to learn, who want to learn more on real estate, then I encourage them to visit my YouTube channel. And by the way, it’s 100 percent free.

No commitment. It’s you know different topics. So there are two YouTube channel what I have one is rich vmax slash youtube and the other one is Zindagi TV. So it’s Rashid Sheikh my full name R-A-S-H-I-D Rashid Sheikh S-H-A-I-K-H-D-Z-I-N-D-G-I Z-I-N-D-G-I-T-V. Zindagi mean life. So Rashid Sheikh Zindagi TV

Or if you just Google my name, Rashid Sheikh, you will find a couple of YouTube channels. And I think there’s a lot of good material out there. And I promise you, Dylan, that I’m gonna send you a couple of those too. And maybe we’ll do more podcasts. I’ve been approached by several, you know, podcasters as well. That is really, I really love and enjoy teaching others and, you know, propagating the knowledge. I think that’s the best legacy anybody can leave.

So the other thing is that honestly, I’m also now building senior livings and assisted livings because I believe that’s very much in demand. It’s going to be more demand because our senior population is increasing and that’s going to be needed anywhere and everywhere in the world, not just in, you know, whether that is China or US or any big economies, going to need these type of housing and livings. And then, you know, if you want to build home with me, I do luxury homes.

Dylan Silver (23:58.945)
April. Yep.

Rashid Rich Shaikh (24:15.818)
I have a subdivision which I only 14 houses subdivision a matter of fact while talking to you I got two calls people want to come see right now I said well half an hour not right now But so I have two showings right now and I do custom homes mostly in this area 1.5 to 2 plus 5 2.5 million dollar homes So that’s kind of different ways But again, I have a website V max is value max. My company name is value max

And why I named ValueMax is because I maximize your value. So if you work with me, I maximize your value, whether that is your house value or your dollar value. So if you want to really learn how to improve your home, you know, what are the steps to even improve your kitchen, your baths, your floors, all free in my YouTube videos. But if you really need one-on-one discussion or if you really want to build something with me, then basically you can also go on my website, VMAX-Reality.

REALTY-REALTY.COM or you can reach me on Twitter at RichVMax.

Dylan Silver (25:23.606)
Rich, it’s a pleasure to have you on the show today. was great connecting with you. Thank you so much for coming on.

Rashid Rich Shaikh (25:24.81)
You

Thank you. Thank you. You have a great personality. I’d love to stay connected. Thank you.