Equity Sharing in Real Estate: A Smarter Way to Invest in Silicon Valley

Kristen Knapp (01:31)
Welcome back to the Real Estate Pros podcast. I’m Kristen Knapp and I’m here with Rob Rohan, broker in Silicon Valley and CEO of EQS Equity Shared Properties. I’m so excited to have you here today. Thank you so much for being here.

Rob Roham (01:43)
Thank you. Good to be here. Thank you, Kristen.

Kristen Knapp (01:46)
Awesome, well you’ve been in the real estate world for over 35 years, so let’s go back to the beginning. How did you get into it?

Rob Roham (01:55)
That’s right, yeah, 35 years in Silicon Valley selling real estate, all kinds of properties. You know, I was in college and I wanted to find a good job that I can support myself through college. And I sort of was told that I can do real estate part-time, make a lot of money and go to school and live well. So I jumped in both feet and…

Shortly after realized, no, this is not a part-time job. You’ve to really work hard at it. And so I just kept going and stayed with it. And it’s been a great journey for the last 35 years.

Kristen Knapp (02:34)
I think that’s definitely a misconception of the industry, that it’s very flexible and you have a lot of…

Rob Roham (02:40)
Yeah, your own schedule, you work when you want,

you don’t work when you don’t want. No, no, you work. You want to make money, you want to have a good business, you better work.

Kristen Knapp (02:51)
Absolutely. ⁓ And then what’s kept you in the business? What do you love about it?

Rob Roham (02:57)
Well, you know, there’s a lot of self satisfaction in this business when you help people buy a property or sell a property. ⁓ They’re happy. They get what they want and that makes you feel really good. yes, a lot of self satisfaction, lot of rewards and just great to work with people, enjoy different types of personalities, different style of people and meet new people. It can be a fun business if you…

if you do it right.

Kristen Knapp (03:29)
Yeah, and so did you start out as a realtor and then work your way to a broker and now start this company? that the evolution of it?

Rob Roham (03:35)
That’s right. That’s right. I started as a realtor. worked hard. I worked my way up. I became a broker. I had my own company for several years. I have recently joined Compass Real Estate, which is one of the largest. But this whole new EQS company has nothing to do with Compass. And I got to a point that I realized, you know, a lot of people like to buy real estate in Silicon Valley.

but it’s so expensive, it’s so pricey that not many people can. Yeah, some people have stock accounts, big stock accounts that can take out two, three, four, five million and buy a property. Otherwise, man, you just need a lot of money to put down and leave it sit there for several years. And it’s difficult. So this whole concept of EQS, equity shared properties,

It’s just the property share concept, just like a ride share concept that we do with Uber and Lyft and what have you. But this is for properties and what better place to get in and put your money in and invest in real estate, especially in Silicon Valley.

Kristen Knapp (04:48)
Yeah, talk more about the Silicon Valley real estate market.

Rob Roham (04:52)
my God, it’s a crazy market. It keeps going up and up and up and up and it doesn’t stop. It’s one of the best locations for real estate in the entire country, if not in entire world. There’s a lot of demand. The tech industry is growing like crazy and it’s going to continue to grow in the next several years. So the demand for housing is great. There’s a shortage of housing here.

And real estate is just phenomenal. It’s just doing well and it has done well and it’s going to continue to do well. So it’s a great place to invest in real estate.

Kristen Knapp (06:18)
Yeah, and for people who aren’t really familiar so much with Silicon Valley, like what area does it cover and why is it so important in the tech industry?

Rob Roham (06:28)
Yeah, good question. Silicon Valley, basically what we call South Bay is from San Jose all the way up to San Carlos. And maybe probably further too before you get into San Francisco, but this is the center of all the tech industry. Google, Facebook, Amazon, ⁓ NVIDIA, ⁓ Tesla, Microsoft.

They’re all here and there’s a lot of people that work in these companies. They’re doing well. They have jobs. They have stock accounts. They need housing. There’s going to be a lot of growth in this segment of the market and in this area. it’s a good place to be actually. And the weather is fantastic. The weather is excellent. About 70 degrees year round. I mean, you can’t beat that. That’s why we pay these high prices here because it’s

Kristen Knapp (07:18)
Yeah.

Rob Roham (07:27)
Beautiful here.

Kristen Knapp (07:29)
Absolutely, I actually grew up in San Carlos, so it’s very near and dear to my heart. And I kind of saw, I mean I was very young, but I saw this tech boom and all these people come to San Carlos and the surrounding areas. And it was really crazy to see. And now going back, I mean it’s just, it’s a different town completely.

Rob Roham (07:33)
Yeah.

Yeah, a lot of growth. You come back, you see big buildings, and you’re like, wow, where did these come from? Huge, I mean, all over the place. There’s just so many tech industry campuses and buildings that have gone up in the last several years. That’s crazy. Even for someone like myself who lives here, when I go out to an area that I haven’t been to for a year or so, let’s say, you know, whatever, Mountain View or… ⁓

Whatever, you just go and you go, wow, what happened? Where did these buildings come from? So it’s great. It’s great.

Kristen Knapp (08:23)
Yeah,

it’s a great place to do business. And then going back to equity shared properties, I liked your analogy of kind of like a ride share. Can you explain just how it works with investors from start to finish?

Rob Roham (08:35)
Yes,

absolutely. So equity ⁓ share is simply a group of people that put their money together and go buy a property. With the high prices here in Silicon Valley, the average home costs about $2 million for a decent home in a decent neighborhood. Nothing fancy, just a decent home. So $2 million, if you have a million dollars to put down as a down payment,

your payments would be about $7,000 a month. That’s not including property tax, insurance, repairs, vacancies, maintenance, and all that. $7,000 and some change is just your mortgage payment. So, and that home, a home at $2 million is going to rent for about $4,000 to $5,000 depending on its location. So, there’s a huge negative cash flow. EQS brought the idea of putting our money together

We invest ourselves with the investors to have skin in the game and to make sure everything goes well. So we bring investors together, we pool our money, we pay cash for the property, no mortgage, no negative cash flow. We handle everything from start to finish for the investors. So it’s a hands-off, passive investment for people that want to get in and do nothing.

We do everything from sourcing, searching, finding the property, purchasing it, repairing it, getting it ready for ⁓ rental market. We have a professional property management company in place that will handle the management of the property along the way. We have professional accountants that handle all the paperwork. We have ⁓ legal counsel that takes care of all the documentations for the LLC and the purchase and everything else.

So this way we can all be part owners with no headaches, no negative cash flow and hold onto the property for five years because really real estate is a long-term investment, right? It’s to be absolutely sure that you’re going to make money and have a safe investment. You want to hold onto this thing for four, five, six years. And that’s the plan.

Kristen Knapp (11:21)
Yeah.

Rob Roham (11:39)
It’s a five year old, we buy cash, have professionals in place to manage it and run it. And in five years, our exit strategy is to sell, divide up the profit, and we are gonna make profit. We’re all gonna be happy, and it’s a great way to get in and enjoy the ride. It’s a great ride.

Kristen Knapp (11:58)
I love that.

I love that. And how does it differ from just a traditional fund?

Rob Roham (12:04)
⁓ Traditional funds, well, we do have the funds. We have funds available or property in place. So when we have a property in place, you have an option to ⁓ say yes or no to the property if you want to jump into the pool or not. Or when we have funds available, then you come in, put in the money and the fund, once the fund is closed, then we go out and purchase a good property. Like I said, we put

our own money into the pile. So we have skin in the game and we have great motivation to find a good property, take good care of it, and make sure it’s an area of high appreciation and growth so that we can all make the most money possible at the end of five years. So those are the two separate options. And by the way, we also have an option to buy, we have funds for single-family properties or funds for multi-units, apartment buildings.

So if an investor is looking for more of a cashflow along the way, then multifamily is a good option for them. But if they want a ⁓ bigger appreciation percentage down the road, then single family would be a next best thing for them to invest in.

Kristen Knapp (13:19)
Yeah, I think that’s a good point to bring up. What if somebody is trying to make some passive income, but they want to have a lower risk? What would be the best option for them?

Rob Roham (13:30)
Yeah,

yeah, great question. Well, to have more income, you know, the funny thing is what we say in real estate in Silicon Valley, there is no cash flow. know, the prices are so high, there’s plenty of appreciation, but not much of a cash flow because caps are high. The return on investment in terms of cash flow is not quite there because of the high prices. So they want cash flow, yes.

apartment buildings is still a good option that gives you more income ⁓ and probably a bit less appreciation because The demand for single-family housing is so great here. There’s such shortage of housing in this area That’s caught. That’s what causes great appreciation in the next five years. So Yeah, I would say to answer your question if they want more cash flow rather than appreciation

then you have to go out of the area, Sacramento, Stockton, other parts of the country possibly, then you get much higher return on investment dollar for dollar. But truly, and I’ve run the numbers between all different areas, a few sample areas, truly, once you take that appreciation amount over five years and divide it up,

over a five-year course, you will make so much more money than going out of the area for that little bit extra monthly cash flow. So this is a much better investment, more long-term. So five years is not that long before you know it’s gone and you’ll get your money back.

Kristen Knapp (15:18)
Yeah, and I think that’s a really good thing to bring up because I think a lot of people probably get impatient and want a return right away and it’s scary to hold property, especially in the changing landscape. ⁓ What would you say to those type of people?

Rob Roham (15:32)
Well, ⁓ yes, it is. Well, it’s scary because most people buy properties with a mortgage. So you have a monthly mortgage payment. And then if you get vacancies along the way, then there’s no money coming in to pay the mortgage. That’s what’s scary about it. But when you buy all cash, there’s no headaches, no problems. Even if you get vacancies.

It’s still sitting there. You know, the good thing about investing in real estate is that tangible assets, you can feel it, touch it, see it, it’s there, it’s not going anywhere. It’s not like your investment, stock market investment where God knows what’s going to happen. Who knows if some big company comes in, buys a whole bunch of shares or dumps a whole bunch of shares and all of a sudden your investment is half of what it was. Real estate is solid.

It’s stable. It goes up. And when the market changes, and I’ve done this for 35 years, when the market changes, I’ve been through a couple of down cycles. When the market changes, real estate goes down slowly. It doesn’t just drop overnight. It takes a year or two before it goes down 10 % maybe, right? So it’s not bad. It’s very safe. That’s why I tell a lot of my clients,

take some money out of stock market and put it in real estate, especially in these changing times. It’s solid, safe, and it’s not going anywhere.

Kristen Knapp (17:06)
think that’s such a good read on the market and a good interpretation of ⁓ it. Is there a win that you’ve had recently that you’d like to share? Like maybe a really great return you’ve gotten from a property?

Rob Roham (17:20)
Yeah, well, I recently, well, I did a couple of flips in the last ⁓ couple of three years and they were excellent. And, you know, we bought them at, you know, fair market value because the market is so hot, multiple offers and crazy last couple of years, not right now. And you buy a fair market value and then you add value to the property by remodeling, expanding and redoing the whole thing to make it look nice and

pretty and exciting and desirable for buyers to buy. And that’s what we did and we sold it at a great profit and it was wonderful. Unfortunately, that market is gone now and the flipping thing is risky. It’s good if you buy at the right numbers, at the right price, then you have plenty of margin. But unlike the last few years where you could buy at any price,

put some money in it and sell it at a higher price because the market kept going up. Well, that whole market is not there. It’s a little risky, but that’s why EQS is a great option right now. It’s a solid plan to hold and sit and hold and keep the property for five years. And we know it’s going to do well. It’s going to go up.

Kristen Knapp (18:37)
I love hearing you talk about it because you’re so enthusiastic and you make me excited about it. ⁓

Rob Roham (18:42)
Good, you should

get in. It’s a great option.

Kristen Knapp (18:45)
Yeah, so you know as you’ve built this business and as you’ve just been in the industry for so long what have been some of the standout lessons that maybe you’ve learned like maybe from a deal going completely wrong and you’ve learned along the way

Rob Roham (18:59)
Yeah, good question. Some of the lessons I’ve learned in real estate is, number one, in real estate, don’t be greedy. That’s a great lesson because, you know, a lot of people want to buy a property and they won’t buy it because the seller won’t come down an extra 10, 20, 30 K and they walk away from the deal and they could have made twice that much or more.

Kristen Knapp (19:09)
Hmm.

Rob Roham (19:28)
if they would have bought that property because of its location or whatever it offered. So don’t be greedy. When you buy real estate and you hold it for a few years, you’re gonna make money, especially in Silicon Valley. So what’s the big deal if you made 100,000 or 90,000 in five years, right?

The thing is to get in, to buy, get in, sit and hold. Now like the old saying says, there’s an old saying in real estate, don’t wait to buy real estate, buy real estate and wait. I’ll say it again, don’t wait to buy real estate, buy real estate and wait. And that’s such a good advice because, and you will do well once you get into Silicon Valley real estate.

Kristen Knapp (20:08)
Mm-hmm.

Rob Roham (20:21)
and have the ability and the plan to sit and hold for a few years. There is no going, you cannot go wrong with Silicon Valley Real Estate, period.

Kristen Knapp (20:36)
Yeah, and I think a lot of people, especially kind of with the changes in the market right now, are waiting and waiting and want it to be perfect and they’re not gonna go in this year, maybe next year. And you could totally miss out.

Rob Roham (20:48)
Exactly.

rates are high, yes, but some people think that it may come back down to the 3 % mark. No, I don’t think so.

The average interest rate was

5 % on average.

there’s no timing in real estate. You can’t time real estate. You just have to buy.

Buy and wait.

Kristen Knapp (21:14)
So what’s next for your company?

Rob Roham (21:16)
Well, next for our company is we’re going to be promoting EQS among everybody in this area. I’m ⁓ really excited to be able to help more people buy a piece of Silicon Valley real estate. You know, ⁓ the guy who started Coca-Cola said, I want everybody in the world to have one Coca-Cola a day.

So I want everyone in Silicon Valley or in the United States to have one piece of Silicon Valley real estate. And with EQS and the plan be put together, it’s possible for anyone and everyone to get a piece of the action here and own a piece of real estate in Silicon Valley. So I’m really excited about that.

Kristen Knapp (22:08)
Yes, and I think you made a lot of other people excited as well. So how can they find you?

Rob Roham (22:11)
Great.

Yeah, they can call me at 408-888-5700 or you can visit our website at eqs-properties.com and ⁓ you can book a free consultation or just request more information and once they’re ready to take the next step, we can give them all the legal documentation to either

review it themselves or run it by their attorney to make sure it’s all good and kosher. Everything is done by our legal attorney. Our attorney is a long time syndicator himself. So he knows everything about syndication, pooling money together, SEC, the Security Exchange Commission rules and regulations and all the laws that go along with doing this kind of thing.

everything is done right and it’s a good setup. It’s a good option.

Kristen Knapp (23:19)
Awesome, well I encourage everyone to please check that out. I think that they can learn a lot from you and hopefully get a piece of Silicon Valley real estate.

Okay, well, thank you so much for doing this today. I think people learned a lot and learned a lot about the area as well and why it’s so special. So thank you so much for being here.

Rob Roham (23:36)
Sure, thank you. Thanks for your time, Kristen.

Kristen Knapp (23:39)
All right, and everybody, thank you for listening to this podcast and we’ll see you next time. Bye.