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Show Summary
In this conversation, Karan shares his entrepreneurial journey in real estate, discussing his three businesses: raising capital for multifamily properties, single-family home redevelopment, and property management. He emphasizes the importance of education in real estate investing and how he and his wife took courses to understand the construction business. Karan also talks about building a community through social media and webinars to educate potential investors about navigating uncertainty in the current market. He highlights the stability of real estate as an asset class and shares valuable lessons learned throughout his career, including the importance of investing in the right locations and learning from others’ experiences.
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Investor Fuel Show Transcript:
Karan (00:00)
lot of uncertainty that what’s going to happen, right? But for uncertainty, you need to understand that what happened when this uncertainty existed in the past. So we are looking at historical data and we’re trying to come up with a conclusion that every time this happened, every time a recession hit, how did real estate perform? How did stock market perform? How did the overall economy perform? What happened?Kristen (01:53)
Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Karan Shah, who is a real estate entrepreneur. He’s the owner of three different businesses. He’s involved in property solutions, raising capital and property management as well. So we have a lot to get into. Thanks for being here. So you’ve been able to do a lot, you know, within the real estate industry. I’d love to talk about what got you started in the first place.Karan (02:07)
Thank you.So I was looking for something that is more tangible, something that I can build and feel proud about it after many years. So I was looking for different businesses and real estate kind of hit me to certain extent because a lot of…
Rich people are into real estate and I have seen in my family and people I know who have been heavily investing in real estate and that has been a boon during the time of inflation, during the time of uncertainty. So that’s where I kind of landed into like, okay, let’s see how can this be done? There are not any major restrictions of who can buy, who can sell and things like that versus there are some qualifications that’s that needed versus this one is you learn stuff and you can just do by yourself. So there are some of the low, ⁓
hurdles and with efforts you can learn whatever needs to be done and that’s why I got into real estate.
Kristen (03:09)
Amazing.I mean, I think that’s a really good perspective on it. It is kind of, it’s something that a lot of people can get started with. You just really need to learn the information. How did you go about acquiring that knowledge?
Karan (03:22)
So ⁓ one of our businesses is redevelopment. So actually took a course which really teaches you how to do it because I am originally not from this country. I came from another country so I didn’t know how construction works here. So I deeply believe in education. I have got MBA in finance and I’ve done mechanical engineering before that. So education has been important to me always. So I knew this is something new to me. So I really want to get into it. So I did a course that teaches how every single thing works in the construction business. ⁓ And this one is more for single family renovation projects.So we took a course, me and my wife, we spent like probably six months to do the whole education and then another year to actually find our first deal. But that’s when the ball started rolling. then within a year we did like three deals and then just things keep happening. We found a good team and ⁓ that networking opportunity that we got by joining that course actually allowed us to. ⁓
get things moving faster because wherever we got stuck, we had other people who had gone through that problem. things like that kind of just keeps rolling and one after the other things worked out and that’s how we ended up being in multiple businesses doing different types of work all related to real estate.
Kristen (05:21)
That’samazing. I’d love for you to talk more about building a network because I think that is really important. Important starting out, you know, having people that can help you take that next step in your business.
Karan (05:32)
Yes, absolutely. when we started, for example, we look for contractors, we look for attorneys, we look for all these different people. You need a team of people to actually do any kind of transactions. And it sounds overwhelming because, OK, I need to find a contractor. I need to do this. I need to do that. So even after the education, you still need those.people to do the work and how do you find them and how do you read them and you are like new in the business so you want to go with somebody who has been already tested and things like that. So it was much more easier when you’re part of a network. Hey I used this guy last job it worked well check it out if you think it’s a good guy to work with right so that kind of helped there. Real estate agents contractors all that thing just by the network you’re able to do that and at the same same pace there were other new investors who looking for contacts and yesterday only somebody reached out do you have a good painter like yeah sure.
go ahead use this guy I would highly recommend him so things like that really helps you to keep ball rolling if you’re stuck somewhere that is somebody who has already resolved that issue before and they can guide you of how you should go around doing that so I have seen everything I want to
go for deposit given to contractors, work not getting done, go into court for tenants not paying rents and all different reasons. So everything was first time, but we just have a network of people whom you can reach out and say, what should I do? And they are able to really guide you and you can feel a little more confident that, okay, I should be able to deal with it.
Kristen (06:53)
Absolutely, I mean it’s great having people that have done it and there’s proof that it can be done because I think it’s a really scary industry. You’re dealing with money, your money, other people’s money and there’s a lot of risk there. Even the safest routes have risks so I think it’s really important to do that. Talk more about kind of what area you focused on in the beginning and how you’re able to expand into other areas.Karan (07:19)
Sure, so first we started with this redevelopment. As I said, I took that course and that was me and my wife and then like that’s how we started, right? And I did like few properties and then we realized that the money is made only while we are working and it’s a lot of stressful work to actually.execute those projects, getting the finished product that the customer like, buying, selling, lot of efforts goes in. And that’s when I realized, and then I realized that, okay, there is multifamily, which I can do the same thing, but it can really exponentially give you returns over a longer period of time. So that’s when we realized that, and then we realized the second phase of it, okay, this is what we can do as well. So whatever capital we made from the renovation projects, we would buy a multifamily. And that’s how we ended up buying a lot of multifamilies. And that’s how I got experience with smaller multifamilies.
Kristen (07:42)
Right.Karan (08:05)
And then as I get did that, I realized that the valuation of smaller multifamilies is based on the value that was sold nearby, not based on NOI. And that’s when large multifamilies came into play. that’s like, this is mind blowing. Like this is where the money is made and this is how. ⁓I can continue doing it and still be more efficient with my time in terms of my return over investment and stuff like that. So that’s how I kind of gradually drifted towards this and that’s when I talk to somebody who wants to get into real estate. I’m like, don’t waste your time doing all these three things. Get into this and that’s how partner with somebody who knows it and then you can get there faster. that’s the thing. just, don’t know what you don’t know. And as you keep doing it, you realize this is how it should have been done.
Kristen (09:24)
Totally, I mean, I think, yeah, that’s the thing that everybody learns where you think you’re going down the wrong path. It’s hard to learn unless you’ve done it and can learn from it in the moment. So talk about, you’ve kind of honed into which properties and which types of investments that you feel like work best for you. Talk about the property management side. When did you realize that there’s an opportunity there?Karan (09:50)
So,We were trying to deal with different property management companies and I wasn’t really satisfied with the way the work was done. And that’s why I thought that anyways, growing the business, let me hire a couple of people and see how it goes. I won’t say it went smoothly the first time, but you learn stuff as you hire people, you figure out things. And as I said, I got MBA degree, so I know how a business should be run, systems, process and people, and how you build each one of them. And then we created all those things and that’s how we were able to really run the business.
Kristen (09:58)
Yeah.Karan (10:21)
very efficiently and able to get a better return for our investment. Since we are in a tough market, New Jersey, relative to other markets, so your property values are so high, so getting returns out of that for my investors was hard if I just give it to outsource it completely to a property management company. So we were trying to keep our costs down, and at the same time we were able to get a better…quality because we’re able to provide better services, we are on top of things, making sure tenants are happy, they are renewing the lease and things like that. ⁓ we just wanted to learn stuff so that we can grow faster and optimize and maximize our return for our investors who are investing with us on those deals.
Kristen (11:01)
Yeah, that’s amazing. I think that that’s a really interesting pivot and there’s definitely a need for better property management out there for sure. What are some of the things with your company that you really pride yourself on?Karan (11:16)
⁓ It all started with, I guess, me and my wife, but now we both are busy with our, we have our jobs as well, so I work for a private equity firm, so I’m busy there. On top of it, I’m running multiple businesses. I have a team of contractors, team of people I trust, and able to grow the business. So that’s what I’m proud about, that from nothing, we were able to build something that is gonna last. ⁓for a pretty long time and it’s gonna, the amount of satisfaction we see from the investors who are investing us, from the people who are renting from us, from the people who are getting the houses once they build are so happy to see the final product. It just makes you feel proud about everything you do to make people’s life better. So we were investors, we’ve been investing for so long and he’s like, this is a great way of investing with not any headaches and things like that and they’re just happy with the returns they’re to generate.
Kristen (11:59)
Yeah.Karan (12:09)
which is the win-win for everybody. That’s what keeps me excited.Kristen (12:13)
Yeah,that’s amazing. mean, it’s really impressive that you’re able to juggle all of these things in a full-time job as well. ⁓ And then talk about kind of raising capital in that whole side of it and building that business up.
Karan (12:25)
Yep, so I had started with friends and family, guess, as you get started. ⁓ then friends, friends were interested and just started growing, right? Everybody’s referring me to different people who are interested, somebody interested into real estate, and that’s why they want to invest with me and learn some stuff. And I’m happy to do that. Some people are like, just take the money, do whatever you want to do. Just give me money back with a decent return. And that makes them happy. So I’ve got friends who were with me in engineering college who are investing with me. And I’ve got friends, friends who I never met and they’re like,hey, this is exciting, how can I be part of it? But now as we are growing, we are doing different things. I have got an Instagram channel where we share our projects of what development we are doing, what are the upcoming projects, and then we have YouTube channel, we have Facebook, LinkedIn, all those different platforms where we are trying to reach out to more people, educating them about real estate. We started doing webinars, so right now we are doing a monthly webinar educating people about what’s going on, like my next webinar is in next week.
⁓ on Tuesday when we are discussing how to invest during uncertainty that is existing right now with all this uncertainty. is, how do you invest? So there are some people who have all these questions and then they are not able to find the answer so we are able to educate them. We are not going to talk about any specific deal. We’re just going to talk about more.
what’s happening, how that can help them, and how they can take decisions of investing during this ⁓ time when everything sounds uncertain, but there is always a trend. So we’re gonna talk about how trends ⁓ we can looking at historically and how that could be used to make future decisions. So yeah, we’re doing a lot of different things there to educate people.
Kristen (14:00)
Yeah.Definitely, I’d
love for you to kind of dive more into that because I do think there’s a lot of information being thrown around and I think people are very scared to enter the market right now. I would love to just hear your perspective in general about where we’re at.
Karan (14:56)
Yeah, sure. So overall, there is definitely lot of uncertainty that what’s going to happen, right? But for uncertainty, you need to understand that what happened when this uncertainty existed in the past. So we are looking at historical data and we’re trying to come up with a conclusion that every time this happened, every time a recession hit, how did real estate perform? How did stock market perform? How did the overall economy perform? What happened?So basically, we are learning from our past to certain extent, and then we using some data points to say,
okay,
based on what data we have right now, what do we expect the near future gonna look like? So instead of thinking there’s uncertainty, but if you try to trend the uncertainty, you can see a pattern. And then that’s what we recognize and say, this is the pattern. Every time you see that uncertainty, this is what happens. So this is what we think is gonna be happening in the near future. So we’re using data and we are using historical information and all those things to come up with a holistic view of what we think is future gonna look into.
look like. ⁓ that’s kind of the high level details about the webinar we are going to do next week.
Kristen (16:02)
Yeah,amazing. And then I’d love for you to talk about, you know, people who are interested in passive, passively being involved in real estate, you know, similar to, or, you know, relating to your fund. ⁓ Can you just talk about the stability of real estate and how it’s good as an asset class? I’m sure people are kind of looking at the stock market and seeing if it’s a good bet for them to diversify their money. If you could just talk about that in general.
Karan (16:30)
Sure, so…So the, so there are two portions, right? We, have, uh, different opportunities to invest, but basically if you’re investing as a debt, right? So now how does that debt sit in the stack of all the different, uh, investments opportunity that are there, right? So there is a, portion of investors who want more certainty. And that’s why that comes into play and say, okay, you, what, what, what do you think if you feel too much risk, okay, why don’t you invest in debt investment that is going to definitely give you better than what stock market is going to
give you, mean, risk adjusted return that you’re to get out of stock market versus here because that way you can be a little more certain of this is how the returns going to get generated. And then what’s it’s backed by a real estate asset itself instead of, you don’t know something happens tomorrow. Somebody say something, the stock market goes down, goes up. If you don’t want that volatility, there’s that option. If you want to invest in equity, you can do some calculated understanding of where the market is trending. What do you expect five years from now? Where do you expect?
⁓ things are trending and then you can look at the data and then take some calculators some of our investors like to dive put the Funds in both of them. They want a little bit of debt So they get a consistent cash flow and then they want to do some equity which is for the growth purposes ⁓ And another thing we do is we try to assign some goals with the funds that investing instead of just investment So that way they can see okay five years down the line I can use this capital for that and then we say okay ten years down the line We would do something like that with your funds so that way we are able to make them feel
little more comfortable that okay this is how you should invest instead of just thinking everything is risky and just not doing nothing because a lot of people end up putting their funds in bank accounts where they feel safe but then they’re getting eaten away by the inflation that we are expecting happening right now
Kristen (18:19)
I mean, that’s such good information. I think that’s gonna help a lot of people who are kind of maybe confused or not really know where to put their money. So, you you’ve given a lot of good advice on multiple areas of the market. I would love for you to talk about maybe something that you wish you learned earlier in your career that you can share with people now.Karan (18:39)
Sure. So as I’m about multifamily, right? I started doing it in New Jersey and lot of my friends are like now thinking of starting it in New Jersey and that’s what I advise them. Guys, don’t do it in New Jersey. There are better places where your rent to property value ratios are different and you can better cash flow. End of the day, you want to have…passive income with less headaches because the laws are not that favorable in New Jersey for tenants. I’ve gone through the court process. I have gone through all those pains and that’s why a lot of times my agent is like, no, no, I want to buy something next to my house and do it this way. I’m like, yeah, sure you can do it, but let me tell you the pros and cons. the pros are your returns are not going to be as good as there is more risk involved if the tenant doesn’t pay. There’s all that factors versus if you invest somewhere else, you can have somebody else have the headaches and you can still get equal or better returns than you
would
I get by doing yourself. So I try to advise them that it’s not always best to do everything by yourself and learn and get through the whole thing to learn stuff, learn from other people’s mistake. So that’s why some of my friends trust me and they’re like, okay, let’s do it that way and see how it works out. So that’s one of the advice that I give people is like, it doesn’t mean that you just invest in your backyard because that’s not the best place to invest. You invest where it makes sense. So you need to learn a little bit, but at the same time that is going to give you five times better return than just
doing what everybody else is doing and just following somebody your neighbor is doing and just buying a house and just renting it out.
Kristen (20:03)
I think that’s a really good point because I think a lot of people starting out don’t even realize that they don’t think it through where it’s like, yeah, I don’t have to invest where I live. I can do remote investing. I can do investing in a neighboring county. ⁓ And I also think that when we’re talking about a good market, bad market, there’s pockets of good markets everywhere. There’s pockets of bad markets everywhere. So I mean, it’s really good advice, I think.Karan (20:28)
Instead of just learning yourself, work with some expert who has been doing it for some time and then talk to few of the experts, you know, and then you can see, okay, is there a common trend that everybody’s talking about and you get it, okay, makes sense, guess, versus just going with your gut instinct, which a lot of people do is not the best thing to do.Kristen (20:44)
Yeah, there we go. Yeah. Well, wonderful. I think you’ve given really good practical information for people. Tell everyone where to find you.Karan (20:52)
So yeah, we have a Instagram page where we share ⁓ all the deals we’re working on and lot of.Information of our current properties and current projects that we are doing so value plus capital is the name of our company where we discuss where we educate people and we Provide information of some of the things that is happening in our life So if we look also for an Instagram LinkedIn Facebook We also have a Facebook group as well as a LinkedIn group where a lot of busy professionals can come and find us and we talk about what’s going on in the market and We also do webinars. So if you want to be part of our webinar
you can go to our website valuepluscapital.com and then you will be able to find the next webinar information so ⁓ that will be where you can find us.
Kristen (21:39)
II definitely encourage everyone to check that out. The webinars are such a good way to learn. So thank you so much for being here, Karan. And thank, yeah, thank you everyone for listening. I hope you learned a lot and got some inspiration for your own business. And to learn even more, check out those webinars, check out his website, because I think that there’s a lot of value there. So thank you for listening, and we’ll see you back next time.
Karan (21:47)
Thank you, thank you. Happy to be here.
