The Power of Adaptation: Ehab’s Real Estate Strategy for Success

Dylan Silver (00:00.77)
Hey, welcome back to the show. I’m your host, Dylan Silver. And today on the show I have Ehab Shoukry. And Ehab is a full-time real estate entrepreneur who operates six companies. And he’s in the Houston area right now. before we hopped on, I said a fellow Texan. So Ehab, thank you for coming on the show.

Rehab With Ehab (00:19.79)
Yeah. Yeah, I think I should say yee-haw, right? Is that the right response?

Dylan Silver (00:25.026)
Yeah, that’s exactly right. We could probably spend a whole podcast just talking specifically about Texas culture and Texas real estate culture specifically here, but I digress. Ihab, I like to start these shows by explaining to folks how you got into the real estate space initially.

Rehab With Ehab (00:45.722)
Yeah, awesome, Dylan. Yeah, well, so I’m old enough where there used to be these late night infomercials on TV about getting rich quick through real estate. So that actually kind of got me excited seeing the guys with the fancy cars and yachts back in the early 2000s. But that was kind of my first exposure to it that I knew about this whole thing of real estate. I didn’t even know that existed. My parents were super middle class people, never invested in anything in their life, not even the stock market.

The idea of investing and building a business and, you know, not just working for your whole life for somebody was really very foreign to me. So that’s kind of what got me first interested in it. And then, you know, just did some more research online and, and really just developed a passion for wanting to build a business and create financial freedom.

Dylan Silver (01:35.214)
So, Ehab, I hear that and similar to many folks, it doesn’t sound like you came from the real estate space. It wasn’t like you had it handed to you in a sense from following in a parent’s footsteps or a cousin or a brother, right? This was new to you.

Rehab With Ehab (01:49.464)
It really was. mean, my parents were the ultimate risk averse people. know, all the money that my parents had ever earned or saved was money that they got from their jobs. Not even, not even putting anything in a 401k or the stock market or any type of investment whatsoever. mean, they were very old school. You know, you buy your house cash, you pay for your car’s cash and you live well, well, well below your means.

Dylan Silver (02:15.608)
Dave Ramsey before Dave Ramsey.

Rehab With Ehab (02:17.496)
Yeah, yeah, they’re the OG Dave Ramsey’s.

Dylan Silver (02:20.462)
I love it. I love it. have so when you were getting into the real estate space What was your your your life like at that time? Were you were you in school? Were you working a job? What was your life tangent to it? You know, I’ve heard a lot of people go accounting to real estate for me I didn’t think it was a natural transition, but some people said, you know, there’s a lot of these I was selling cars at the time working for Nissan and just was tired of working 12-hour days

What was your life like when you were just getting into the real estate space?

Rehab With Ehab (02:52.088)
Yeah, so my first deal was at 27, so I had finished college, I had started my healthcare IT job working for one of the big hospital systems here in Houston. And, you know, I just was starting to get a little bit bored in my job and wanting to be challenged. You know, fortunately, I say fortunately, I got passed up for a job promotion. So it kind of like that that was going to kind of be my next challenge. But since I didn’t get that promotion, I was starting to look outside of my job to figure out how I could how I could challenge how I could grow.

and discovered real estate investing. So, you know, right around 27 and had a full-time job. I was an IT guy and, you know, picked up the, the rich dad, poor dad book and learned about, you know, investing and wealth building from, from Robert Kiyosaki reading that book. And rather than trying to reinvent the wheel and, you know, build a business outside of real estate, said, let me do what 80 and 90 % of the world’s millionaires and billionaires have done. So that’s, that’s what got me into real estate.

Dylan Silver (03:52.76)
So you work in the IT job, deciding I want to venture into the real estate space. If you can recall, I know sometimes it can be difficult. From the moment in your mind where you’re thinking about I’m going to try my hand at real estate, I’m going to see how this works, to explore this field, to the time that you got your first deal, how much time was that? From the idea in your head to when you got your first deal?

Rehab With Ehab (04:18.468)
Yeah, probably around 90 days. Like I remember buying a, a tape audio set, Ron LeGrand. That’s who it was. Ron LeGrand, this, this tape set that I bought, used, think off Craigslist or something. And I listened to that, started going online, checking out like, you know, a lot of the big forums out.

that were out there like bigger pockets at the time and even some some forms that some guys are doing that they’re not really around anymore on flipping houses rehabbing and just going through that progression probably took me about 90 days to get my first deal cuz i was i was really hungry for it.

Dylan Silver (04:58.348)
And so that first deal, fix and flip, wholesale, was it a short term rental? What was that first deal like for you?

Rehab With Ehab (05:04.216)
Yeah. So again, being influenced by like the TV shows and everything, you know, HDTV was blowing up then, probably still blowing up now. And so in my mind, I was like, I was going to go fix and flip something. Right. And yeah, so was pretty much a pretty, pretty light fixer upper. guess when I think about compared to the things I’m doing today.

Dylan Silver (05:22.466)
Yeah, I mean for people who, you know, go purchase a pre-1950s home as their first fix and flip, they break down some walls, there’s some, it can be a huge undertaking. So when you found that first deal, walk us through on a granular level how you got the deal, what it was like getting it under contract, and then it was a fix and flip, so then ultimately your exit.

Rehab With Ehab (05:48.324)
Yeah. So, you know, I didn’t own a house at the time and this is how, you know, green I was. I actually just kind of bought it with a pretty conventional mortgage where I didn’t have to put a whole lot of money down. I got the sellers to give me $5,000 and hold back for some repairs in that loan. So I was able to kind of get some of my repair budget in that loan as well. And at the time I probably had about

$10,000 in savings in the bank, right? So not a whole lot of money when you want to get started in real estate investing. But again, I didn’t know what I didn’t know at the time. I remember buying the property for $67,000. The rehab, I thought it was going to be $5,000. was way off. It ended up costing me about $15,000. So that $10,000 was pretty much like all my reserves and barely paying the mortgage after that on that first deal. And it was cosmetic. So paint.

I think we updated a few cabinets, a little bit of tile, some carpet, which, know, carpet, know, think LVP and all that stuff wasn’t even a thing at the time, so we put carpet in the house. And ultimately, I thought the sales price on it was gonna be around 110, so I was gonna make a pretty decent profit. I was off on that too. Not surprisingly, for my first deal, I ended up selling it for $97,000. But all in all, I walked away making $8,000 as a 27-year-old.

buying my first real estate deal and I literally thought I was like the wealthiest person in the world.

Dylan Silver (07:15.954)
Alive I know the feeling it’s it’s utterly incredible proof of concept, right and so It sounds like you got that deal off the MLS, right? So it’s an active listing and you made an offer Was it was the offer that you made in line with what it was listed for did you make it under the the list price the ask price? Do you remember those details? I know it’s a long time ago

Rehab With Ehab (07:39.76)
Yeah, yeah. mean, pretty close. think they’re asking 75. We offered like 65 and landed at 67. So yeah, I mean, wasn’t super creative in any way on this deal. Just looked on MLS, found it on MLS, hired a realtor to help me find the deal. You know, didn’t, didn’t know about any other type of creative type way of finding deals like, you know, postcards or calling people. Just, just went after the MLS.

Dylan Silver (08:03.734)
Okay, so 5,000 to 15,000 rehab, right? So when you were ballparking the estimate before you went ahead and made the purchase, how much did you know about the rehab space?

Rehab With Ehab (08:19.564)
Not a whole lot. I was a member of a local real estate investment group at the time, which was called the Rich Club here in Houston, a real estate investment club of Houston. And I connected with a few investors in the club. And one of them actually allowed me to go to their project and walk it before they got started and to try to estimate their repairs. Because when you’re getting started, you really have no idea about any costs at all, right?

Dylan Silver (08:43.724)
No idea.

Rehab With Ehab (08:45.86)
So, I remember walking in and kind of throwing a ballpark number out there and I think I just got lucky because he said, yeah, you’re actually pretty close to my estimate. So that was kind of my training to go out and estimate the rehabs on that first deal that I bought, which of course I really, again, didn’t know what I was doing.

Dylan Silver (09:03.18)
You know, I got fortunate because I worked for a real estate wholesale company when I first got started who gave us a rehab estimate. And I don’t know exactly how accurate that initial one was because it changed with time, but it made me realize, okay, I can estimate certain things here. I can estimate, you know, flooring, countertops, bathroom, foundation, roof, windows.

doors, paint, so on and so forth to infinitum, right? Practically. But before that, this would seem maybe obvious to our listeners, I had no idea whatsoever how to estimate anything, and I just figured, you know, can’t just come up with these numbers, but to a fair degree, once you do like a handful of these, it’s not as crazy of an undertaking as you might think. It actually…

shakes itself out pretty evenly. At least that was my experience. in your case, that rehab was 15K, you go and sell it, you make the $8,000 profit, you’re still working in IT, but I imagine you feel like you’re on cloud nine, like you just got the secret sauce.

Rehab With Ehab (10:19.364)
Yeah, because you know, it’s kind of like, know, when you have a full time job that was, you know, paying pretty well in IT and you’re able to kind of supplement it with an extra eight grand for the year. I mean, it’s, it’s almost like, you know, newfound money, right? And it just, it just felt incredible, you know, and, especially since my, my parents were just so confused by, by this undertaking just to begin with, they didn’t even understand why I was buying a house to fix up and sell.

If I wasn’t gonna live in it right just wasn’t it was a foreign concept to them so just the fact that can come back with that check that said eight thousand dollars on my name on it was was just proof to myself to my family and you know a complete game changer my life.

Dylan Silver (11:00.494)
You’re braver than me. At this point, I can’t even tell the people in my, you know, what I’m doing, because they’re just so crazy. You’re doing what? You know, it’s like, yeah, yeah, yeah, yeah. At this point, I just tell them I’m living on a ranch in Texas, because that’s, you know, 50 % of the truth. But the other 50 % is I’m hosting a podcast, wholesaling, real estate license, you know, working on these sites. Sounds like a lot, but as you know,

Rehab With Ehab (11:19.344)
Okay.

Dylan Silver (11:27.022)
and I’ve said this on other podcasts, real estate entrepreneurs and operators tend to have the ability to see opportunity and just go for it, and that can be a huge risk. So for you, the next step after you got that first fix and flip, made the 8,000, back at work, what was the next step for you?

Rehab With Ehab (11:39.354)
Yeah.

Rehab With Ehab (11:46.8)
The next step was just to go figure out how I was going to get another property. and you know, I, did the one good thing of telling everybody, my circle, my family, my friends about what I was doing and, uh, was able to get kind of a, uh, a lead from a friend of mine whose parents were actually kind of in distress with this, this second property that they had. And that ended up being my second deal, buying that property, fixing it up as well. And, uh, and kind of doing the same thing over again.

Dylan Silver (12:14.88)
Okay, so now you’re two flips deep, still working in IT. At what point did this become a full-time, I’m leaving IT, I’m gonna go do this full-time for you.

Rehab With Ehab (12:26.608)
Well, you know, again, not knowing, um, really what I was doing at the end of the day, except for strategically wise, I went on to flip houses really from the age of 27 to 40. And, know, flipping houses, what I, what I didn’t learn at the time was that flipping is, is really a job and it’s not necessarily a wealth building strategy. Um, you know, you make your profit and it’s real, you’re really excited when you get that check, whether it’s 8,000 or.

Dylan Silver (12:38.296)
Okay.

Rehab With Ehab (12:54.352)
30,000 that I’ve done on some flips before, but you’ve got to keep flipping to replace that job income. And at the age of 40, when I had been doing this for 13 years and really had, was no closer to replacing my job income than I was at 27 when I got started. That was when I kind of had a real pinnacle moment in my life that I realized, and it was kind of really unfortunate. One of those, Oh crap moments that I realized what I had been doing for the last 13 years was not the right strategy.

Dylan Silver (13:22.86)
Wow, this is, again, to our listeners, I’m always amazed, amazed by hearing these conversations with real estate investors because the, people are, once they’ve done something for, you know, talk about 13 years, it’s hard to look at and be like, this isn’t working, to adjust. Most people wouldn’t even be able to start that journey while we’re doing the IT, you know?

Rehab With Ehab (13:23.618)
Yeah, yeah, it was a big moment for me.

Dylan Silver (13:52.694)
I would even throw myself into that category. I had to leave the car business in order to get into real estate because my brain couldn’t handle doing both. So not only did you do both, but you had the ability to reflect on this and say, this isn’t the right strategy. So at that point in time, you’re active in the real estate space, so you have your real estate network. Did you decide, I’m gonna go and get some short-term rentals? Was that the next step for you?

Rehab With Ehab (14:18.53)
It wasn’t again, still again, not knowing what I had done wrong, just knowing what I, I did do the flipping thing for 13 years, wasn’t the right strategy. I think at the time, wholesaling was just blowing up all over the place. So I actually went and hired a wholesaling mentor thinking that that was the right solution to creating consistent cashflow. And again, wasn’t the right solution either, as you know, I mean, it’s also a job. It’s something you have to keep doing to keep, to keep earning income. And as soon as you stop.

you, you stopped making income, but the one great thing that came out of that mentorship and that experience was it was my fourth wholesale deal. And my mentor looked at me and said, had don’t sell this house, keep this one because by keeping the property, now you’re going to be able to start renting it and start, start creating some consistent cashflow from it. And that’s ultimately what you want to get to in life so that you can replace your job income one day.

So that was the first real aha moment I had and I guess the first step that I actually took toward building wealth and replacing my job income.

Dylan Silver (15:27.022)
So you have that first rental. What did you make of that first rental? Was it short term, mid term, long term?

Rehab With Ehab (15:33.388)
know, Airbnb short-term rentals weren’t really a thing. This was me at 40, so this was probably just nine years ago. Even though they’ve been around for a long time, it just wasn’t getting the attention that obviously it has today. So it was just a traditional long-term rental. It was a $54,000 house in Houston, because you could still buy them at that price point. It rented for $1,100, $1,200 a month. So again, it looked good on paper as far as all the cash flow goes.

And I actually went on to buy a second house, rental house, same price, same numbers. It’s kind of in this, this, you know, blue collar area. And then a guy came to me with a package of six houses for $300,000. So again, 50,000 for these each house. So, and I bought six. So very quickly I went from having no rentals to having a portfolio of 12 rental houses, all in that price point of buying them for around 50 to 55,000 and renting them for 11 to $1,200 a month.

Dylan Silver (16:32.95)
Unbelievable. What were those things cash flowing on a month to month?

Rehab With Ehab (16:34.254)
Yeah.

Rehab With Ehab (16:37.636)
You know, they, you know, always on paper, these, you know, C and D class properties look really good. you know, your mortgage is like 400 bucks a month on each one, which is nice. And, know, you’re getting 1200. actually the six package that I bought were all section eight. So, you know, I kind of, that was my first experience with section eight.

Dylan Silver (16:44.046)
Yeah.

Rehab With Ehab (16:58.736)
And the guy I bought him from was actually, you know, I asked him like, tell me a little bit about it. He was like, Oh yeah. Every month on the first of the month, go and knock on everybody’s door and I ask him for the rent payment. And I was like, Oh gosh, this is definitely not something I want to be doing, but you know, that’s how he, that’s how he operated it. And it worked for him. Um, but yeah, I mean, so, you know, realistically I was probably netting three, $400 a month on each house. Um, and so, you know, it wasn’t a bad deal. I bought them just using, uh,

Dylan Silver (17:11.448)
Yeah.

Got in.

Rehab With Ehab (17:28.014)
conventional investment loans, putting 20 % down and buying them that way. And, you know, it wasn’t a bad deal, except for the fact that I quickly ran out of money with down payments and couldn’t buy anymore. So that was my big problem at that point, after I got the 12.

Dylan Silver (17:44.318)
Wow, $300, $400 a month is pretty impressive at any time, pivoting here at Ehab, so you are purchasing these, but they’re requiring 20 % down. So now you run into a capital issue. So at this point, are you having to sell off some of them to engage in other projects? Are you raising capital? Are you partnering with people? How did you move from there?

Rehab With Ehab (18:10.756)
Yeah, at this point, so my career had kind of moved. was working at one of the big four consulting firms at the time doing healthcare, IT consulting. And I started talking to a buddy of mine on a project that we had in North Carolina. And I started telling him about real estate investing and how great it was. And he said, and mind you, I’m living in Houston. He lives in Ohio and we’re both working on a project in Charlotte, North Carolina. And he said, I want to invest with you in Houston.

So we go out and I was actually able to find two small multifamily deals, an eightplex and a triplex. He put up all the money. I found the properties in Houston and we operated them for about a year and a half, ended up selling them. And I was able to cash out off those, off that sale about $150,000 cashing out. So total 300,000, we split it 50 50.

And so I made 150,000 and took me about two years and I was back in business.

Dylan Silver (19:11.054)
Wow. Okay. This is new now. So this is a new strategy. So break this down to me. I heard two years in here. So was it a flip that took two years?

Rehab With Ehab (19:23.536)
No, was, was a, these were kind of buy and hold. So I kind of bought them. Um, the, for the eight plex I needed, I renovated it some, you know, kicked everybody out that was paying 400, $500 a month. And that one kicked them all out, renovated it and started renting it out again at like $800, $900 a month. So that was that strategy. Same thing, same thing with the triplex. It needed a little bit of a, you know, cosmetic update, kick, kick those people out, rented it back up at a higher price. And me, because we did that.

Dylan Silver (19:26.85)
Okay.

Rehab With Ehab (19:51.63)
the value of them had gone up and we operated them. rented them out, again, long-term rentals for a year and then decided to sell.

Dylan Silver (19:58.062)
At that point, do you still have the Section 8?

Rehab With Ehab (20:01.966)
I do still have the section 8, yes, yes.

Dylan Silver (20:04.0)
Okay, so you had both of these and are you, you’re still working in IT, are you managing all these? Did you use property managers to collect rents and so on and so forth?

Rehab With Ehab (20:15.44)
I’m still managing them. Yeah, managing them. Yeah.

Dylan Silver (20:17.45)
Okay, wow. So this is a huge time investment, I’m imagining.

Rehab With Ehab (20:23.704)
Yeah, you know, it was, you know, being an IT guy, I definitely wasn’t doing what the guy was doing that I bought the Section 8 houses from, which was knocking on people’s doors. I was giving them bank account information to make deposits and I was giving them instructions to take a picture of the deposit slip and text it to me with the address on it so that I know every time they make their deposit. So that was my very rough system that I had in place to…

to cut down on the amount of time it would take to manage it myself.

Dylan Silver (20:55.52)
Okay, so basically these people were going to the bank, whichever bank it was, making a deposit. The bank knew that there would be rents coming in, so they accepted it, photo, send it to you, okay, I got my rent in.

Rehab With Ehab (21:06.83)
Yeah, exactly. Yeah, because you know, the clientele is working with, we’re not sophisticated enough to like go online or to sell me or to, you know, you create an account online on some payment system. just, that wasn’t the crowd I was, you know, I was renting to. So I had to put this system in place.

Dylan Silver (21:23.02)
Now with Section 8, I don’t know, and you’re my first guest who’s dealt with Section 8, if people cannot make the rent, what’s your recourse? Are you able to, is there an eviction process? Is it subsidized by the government? How does this work?

Rehab With Ehab (21:40.046)
Yes, section eight, mean, you have people in different positions. Sometimes section eight, subsidizes the full amount. and so, you know, you’re not asking the, the, the renter for anything. Sometimes section eight’s doing a partial amount and it could be like, it could be a thousand dollars that section eight’s paying and the renter is paying $50. So if they’re not paying their part, I mean, you really have to ask yourself the question, am I going to report them to section eight for 50 bucks a month, or am I just going to be okay collecting the thousand dollars?

You know, and so just it depends on how much section eight’s paying versus the renter

Dylan Silver (22:11.85)
Okay, wow. This is super impressive stuff. Okay, so you go from, you still have the job, section eight, you’re doing triplexes, know, multifamily units, right? At this point in time, you still haven’t gotten into the Airbnb space. But are you seeing it on your radar? Is it something that you’re aware of at this point in time?

Rehab With Ehab (22:35.28)
You know, I wasn’t really aware of it until I had been reflecting on everything that I had been doing again, more reflection here. Um, still my 12 houses were not, you know, and again, 12, 12, you say 12 houses to the average person. That sounds like a ton of rentals, but when you’re in it, when you’re in it and you’re making, you know, 300 bucks a month, 12 times 12 houses, that’s 3,600 bucks in.

Dylan Silver (22:53.196)
Yeah.

Rehab With Ehab (23:01.722)
positive cashflow every month. I, mind you, I had a six figure job working for a big consulting firm. I was so far away from replacing my job income that I still was trying to figure out what, what the right strategy was. So, you know, I said, okay, I’ve tried houses. I’ve tried a few of these flipping. I’ve tried all these different things. Let me go more into multifamily because that’s where, you know, you, you hear, you can get more zeros from them, more, more income.

Dylan Silver (23:07.18)
Yeah.

Rehab With Ehab (23:30.976)
And I bought a sixplex, a fixer upper, started rehabbing it, was getting to the end of my rehab and a friend of mine came to me and said, hey, you have, why don’t you consider Airbnb in these instead of just long-term rentals? And that was the first time I heard about Airbnb. And I, so I, of course, my first question was, what’s Airbnb? Cause I didn’t know what it was. And he explained it to me and he explained to me how much more money this property would make. And actually what he was asking me was.

Would I rent these apartments to him so that he could go Airbnb? Because he wanted to do rental arbitrage. He wanted to rent from me and then go put them on Airbnb. But he made the mistake of telling me how much money he was going to make on Airbnb. And I said to him, you know, I think I’m going to try doing Airbnb myself. So I took all six of these apartments, furnished them and put them on Airbnb in 2017. And that was my first experience with Airbnb.

Dylan Silver (24:25.294)
Wow. Man, your buddy is a man after my own heart with the rental arbitrage. What a move. so 2017 Airbnb getting into the space, at that point in time, what was Airbnb like? Was it just the same experience that it is today with app, website, seamless advertising everywhere? Or was it not there quite yet?

Rehab With Ehab (24:29.84)
Yeah.

Rehab With Ehab (24:50.532)
No, I think it was definitely kind of, you know, starting to really take off and get well rooted in its processes. I think I missed kind of this wave where you could just throw anything on Airbnb and just make a killing. That was maybe a few years before I got into it. So it was definitely starting to get a little bit more competitive. I did a good job with the interior design and the property. So my units actually did really well.

They actually qualified for something at the time called Airbnb plus which was like a very small select group of properties that they were selecting each city to kind of showcase them so. Airbnb came out they took the photos they listed it for me and you know i was able to kind of really showcase those six apartments on their Airbnb plus platform.

Dylan Silver (25:38.296)
Wow, there’s so much that we could dive into. We quite literally have time for probably three other podcasts to talk about short-term rentals, to talk about, I see here we didn’t even get a chance to really talk about the slow flip, right? But the Houston real estate market as well, I’m very curious to get your perspective on it. You mentioned earlier in the show, buying homes.

Rehab With Ehab (25:52.528)
Yeah.

Dylan Silver (26:01.934)
even more cost effective homes for 50, $60,000, right? but we are coming up on time here, Ehab, as much as I would like to continue this conversation here. Where can folks go to get ahold of you?

Rehab With Ehab (26:15.662)
Yeah. So, know, my, one of my students came up to me and said, Hey, you know, your name’s Ehab. So you know, you got to call yourself Rehab with Ehab. Right. So I think pretty much if you search Rehab with Ehab, that’s going to be me. My website’s rehabwithehab.com. My Instagram’s Rehab with Ehab. You know, I’m really passionate about teaching people how to create financial freedom. Cause as you heard on this podcast, it was really a struggle and really a journey for me.

But fortunately, I finally figured it out. didn’t really get to talk about it too much, but you know, was able to quit my job in 2019. I’ve been crushing it with Airbnbs. My business makes about six figures a month with my Airbnb business. And so I teach people how to do the same thing. And you can get all that information on rehabwithehab.com about my academy, about what I do and about how much I love to help people build their dreams through real estate.

Dylan Silver (27:09.002)
Ehab, thank you so much for coming on the show. We’ll have to have you back. Thanks for coming on, Ehab.

Rehab With Ehab (27:14.82)
Love it, man. Thank you.