Achieving Higher Rates Of Return With Non-Residential Commercial Real Estate – Ash Patel

 

Think multifamily is passive? Wait ‘til you hear about nonresidential commercial real estate! Ash Patel claims he found himself in this space because he was really bad at residential tenants. If you feel the same way about your investment management skills, or even if you simply want something to help diversify your portfolio, then this episode is for you. Joining Ava Benesocky and August Biniaz in a highly informative conversation, Ash demystifies the world of nonresidential commercial real estate. He explains things like triple net properties, industrial flex buildings, strip malls, and more. He also gives us a glimpse of his incredibly inspiring career in real estate, why he stuck around in nonresidential, and why you should consider doing the same. Tune in for more!

 

Get in touch with Ash Patel:

LinkedIn: https://www.linkedin.com/in/ashbpatel

Instagram: https://www.instagram.com/bigapatel/?hl=en

 

If you are interested in learning more about passively investing in multifamily & Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner, click here. You can read more about CPI Capital at https://www.cpicapital.ca/.

#avabenesocky #augustbiniaz #cpicapital

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• Ash Patel – LinkedIn
• Invest Beyond Multifamily
• BizBuySell.com
• CPI Capital
• Rocket Fuel
• Who Not How
• Art of the Deal
• Facebook – Ash Patel
• Instagram – Ash Patel
• Ash@InvestBeyondMultifamily.com

 

About Ash Patel

Ash Patel left a 15 year long corporate career and has been a full time Commercial Real Estate Investor for over 10 years. He is a value add investor and has purchased retail, warehouse, flex, office, industrial, land, mixed use, medical, restaurants and has done ground up development. From vacant buildings to fully leased triple net properties, the consistent theme is extraordinary returns. He is a hands on property manager and also teaches others how to invest in non-residential commercial property through his Mastermind at Invest Beyond Multifamily.

 

Achieving Higher Rates Of Return With Non-Residential Commercial Real Estate – Ash Patel

We have some exciting stuff coming up. For people reading, I’m not sure if we mentioned it yet but we are in Naples. We are excited because we are boots on the ground in the area we want to be in, and we are going to Tampa to speak about the ins and outs of capital raising.

Is it a cool thing that we came from a country with the second-largest land mass country in the world right after Russia? It’s six different time zones or something, insane like that. Maybe even more. In Florida, you have a similar population to the whole country of Canada in one state. Within four and a half hours, you can get anywhere in the state. You can be anywhere in the state for four and a half hours. We will be driving two hours North to go to Tampa, and we are speaking on stage.

The ins and outs of capital raising. We are going on a property tour. It’s incredible.

We are driving to Jacksonville, which is a 4.5 or 5-hour drive from Naples, looking at a few properties, but everything is in our backyard beaches, airports, private jets, assets, and investors.

It’s pretty much in heaven.

 

 

We love Florida.

We love doing deals in Florida. We are excited to stay tuned. There are some pretty incredible deals coming your way.

A thousand people move to the state every single day and they want to steal our governor and make him the president. We have been waiting for this episode for a long time. It’s taking too long. We are excited about our guests being on here. I was talking to him about the show before we started. I was speaking with him. In the research, I was doing something for him. I already learned something from him. I’m very excited to have our guest. Ava, maybe you can introduce our guest and we can get the show going?

We are joined by Ash Patel. Ash Patel left a fifteen-year-long corporate career and has been a full-time commercial real estate investor for many years. He is a value-added investor and has purchased retail, warehouse, flex, office, industrial land, and mixed-use medical restaurants and has done ground-up development. From vacant buildings to fully least triple net properties, the consistent theme is extraordinary returns.

He’s a hands-on property manager and also teaches others how to invest in non-residential commercial properties through his mastermind at Invest Beyond Multifamily. We believe this interview with Ash brings great value to both active and passive investors looking to learn how to invest in non-residential commercial real estate. Welcome to the show, Ash.

Welcome, Ash.

Thank you so much. Glad to be here. Congratulations on your move to Florida.

Thank you so much. We are excited to have you on the show. Ash, tell us what you are starting in commercial real estate. Did you start as a passive investor like a lot of people do?

I didn’t know passive investing existed. I didn’t know much about real estate investing at all. What got me into commercial real estate investing was, my wife and I would go visit our accountant every year. We would say, “How do we reduce our taxes?” This old grumpy guy would mutter like, “If you make it, you got to pay it.” We are like, “There’s got to be a better way.”

I started doing some research and always read that real estate was a great way to offset taxes. I went out and thought, “I got to buy some real estate.” I looked for things that were out of the box. I didn’t want to buy a typical residential house. I looked for commercial buildings. I found a mixed-use building in a college town. Here’s the reason this building attracted me. On the first floor was a grocery store and there at least was expiring in a couple of years.

Above that, college kids rent out apartments. Here’s how dumb I was at the time. I thought, “Once the store lease is over, I will go in there, run the store for additional revenue,” and there we go. I now own the building. I’m in the convenience store business and I have college kids renting apartments above me. What else could be better?

As I bought the building, I didn’t know what to look for. The roof was shot, the apartments were uninhabitable, the gas lines were red tag and three-story chimneys were falling on the sidewalks where college kids walk. I got in there and rehabbed everything. I advertised the apartments for lease in early August, which was great because school starts in late August. My apartment sat vacant for an entire semester.

I went to college and I remember this, college kids will sign their leases a semester in advance. Everybody already had their apartments. I sat vacant for an entire semester. Lesson learned, but once I did get the apartments leased out, I was up there constantly patching holes in the wall and unclogging toilets. Cleaning up after these college kids. I was out there one weekend unclogging a tenant’s toilet and I happened to look out the window. I could see the rooftop of the store.

There was an HVAC company out there replacing rooftop units, so I went downstairs. I asked the store owner what was going on and he said, “Our A/C went out, so we are replacing the entire HVAC system.” It blew my mind that they were putting $30,000 worth of investment into my building. I have college kids that are destroying my apartments and I have commercial tenants that are adding value to it. As I was walking out that day, the store owner stopped me again and said, “Do you mind if we remodel our bathroom?” I thought, “Is this real life?” I’m like, “Please, have at it.” That was a pivotal moment where I stopped what I was doing. I started an IT consulting company at the time. I shut that down and became a full-time commercial real estate investor. It was by accident.

Maybe you could briefly touch on what is triple net when you are talking about commercial real estate in particular asset classes. Office space, I believe, has a triple net. Some commercial storefronts have a triple net. Maybe describe what that means.

Let’s demystify triple net because everybody assumes when you have a triple net property, it’s mailbox money. You made it now. Let me explain that to you. The true triple nets or absolute triple nets are going to be your Starbucks, Walgreens, and McDonald’s. Those are what people think of as triple nets, where if the roof blows off, the parking lot needs to be resealed and a meteor hits it. You don’t even get a phone call.

The tenant is responsible for everything, insurance, taxes, maintenance, roof, and parking lot. Now, there are so many variations of the triple net. I have purchased triple net properties where the landlord is responsible for everything, but you get to build back your expenses. There are other triple nets where the tenants will be responsible for tax, insurance, and a limited amount of maintenance. They will pay for roof and HVAC repairs, but they will not pay for replacements.

The devil’s in the details of all of these triple net leases. Unless you see words like absolute triple net or zero landlord responsibilities, it’s not going to be what most people think of as a true triple net. There are all kinds of variations. There are limitations where we will pay a CAM charge, Common Area Maintenance that covers taxes, insurance, and maintenance. Every year, it can only go up by 5%. There are so many variables, so when we Look at commercial deals. We have to read every one of the leases, and some of them could be 40 to 60 pages long.

 

Do you stick to the leases that say absolute triple net?

We don’t want those because Starbucks, Walgreens, and McDonald’s returns are so low. There’s still trading at five caps. Interest rates now are closer to eight. Those are for people who are 1031 buyers who are parking money or want a steady coupon for the next ten years. There are no returns in those. They have to be cash buyers because financing those doesn’t make sense. You are upside down.

It’s truly mind-blowing when we look at your background and your experience in commercial real estate. As a whole, you got the retail, warehouse, flex, office, industrial land, mixed-use, medical, and restaurants, then we were talking about triple net from vacant buildings. Tell us, why not focus on multifamily? The reason I ask is because it’s an asset class that you are already familiar with.

Every guru out there talks about multifamily. You have it in your Invest Beyond Multifamily.

Why venture into all these other asset classes?

I have never been asked that before. I’m going to think out loud. It’s because we chase high returns, but the real honest answer is I’m bad at dealing with residential tenants. Those college kids ran all over me. In all the single-family houses and the small multifamilies that I have had, I listened to every sob story and believed everybody’s stories. I would let people go for months at a time then I would get so frustrated and pissed off that this person was messing with me. They had no intentions of paying rent. I was bad at it.

I can’t compete with people like you who have these teams, systems, and years of experience built up already. The level of competition is one. The fact that I’m bad at it is two. The returns and the asset classes that we follow are much higher. I would rather deal with business owners as tenants versus residential people living in my properties.

That’s the key. Our tenants are all business owners. If they see trash in the parking lot or they see something out of place, it behooves them to make it right. A lot of them, in their lease, are responsible for exterior lighting, parking lot maintenance, or paying all the utilities. There are also longer-term leases with commercial.

 

 

We don’t have turnover. We don’t have to go to their apartments and pay a lot of money. We don’t have people destroying our commercial properties. We have never had to evict a commercial tenant. We self-manage our entire portfolio, so they are easy to manage. With apartments, when you get to 40, 70 or 80 units. It’s a pain point. We have to start hiring leasing managers and maintenance people. With commercials, we can self-manage everything.

Is there a particular property type within all the asset classes that we spoke about that you are focused on? I got an email from you that you are hosting a webinar on Industrial Flex. I’m not sure what flex means exactly, but industrial, I understand. Is there a particular property type that you are focused on, or would you invest in anything as long as it matches your regional focus?

We will invest in anything as long as the returns are close to 20% cash-on-cash or higher. If they are lower than 20%, there has to be a huge value added on the back end. Industrial now is very hot. To explain what industrial flex is, everybody knows what an industrial building is. Those big factories and warehouses are all classified as industrial. Flex spaces are flexible in size. The typical flex building that most of your readers would buy would be a building with a number of garage bay doors and man doors as well.

They are very flexible in their uses because we have had churches, cake decorators, tint shops, pest control, landscapers, and fire suppression companies. We have had all of those as tenants in these flex spaces. They are also called flex because there’s a combination of retail, office, or warehouse in each of these buildings.

If there’s a landscaper, they want all the space to store their trucks and lawnmowers, they don’t need an office. Let’s say there’s an HVAC company where there are a couple of people in offices. You can easily put up drywall or frame and a little bit of HVAC. You have a little bit of office, but you still have room to store equipment and pull vans in. If they are a church, they don’t want any warehouse. They are going to finish the whole inside. Flex space for each tenant is flexible. As the new tenant comes in, they often, on their dime, will make the space that suits them.

I have officially learned two new things from Ash already.

It’s a great asset class because the returns are so high, and the tenants know that they are getting whatever space they are getting as is. It’s amazing how much money they put into your building. There’s not that many people chasing them. We are doing a webinar. I’m going to try to give everyone as much value as I can in 30 minutes, but I’m going to teach the audience how to find the right flex space, no matter what the price range is, how to manage, find tenants, and improve them. For you too as well. I would encourage you to look at those flex buildings. They are by far the easiest to manage because the expectations of the tenants are so low. It’s a metal building.

Take a look at those flex buildings. They are by far the easiest to manage because the expectations of the tenants are so low. Click To Tweet

I already signed up. Talk to us about an acquisition. Our company is focused on multifamily value ads in Florida with a hyper-focus on Jacksonville and Tampa. Being focused on this one market and asset class takes all of our time. I’d have to say most of our time, but how are you able to underwrite and assess all these different asset classes and property types?

 

 

Do you have a model for example? When we were focused on multifamily, a BTR deal camera long and the underwriting model was completely different than the multifamily value at model because it was a big purchase contract. The houses were being built and delivered in phases. The model was different. Do you have a certain model that you modified depending on different property types? Talk to us about the whole acquisition process.

For underwriting, I have seen multifamily underwriting spreadsheets. They are intricate and phenomenal. For us, our deals have to work on the back of a napkin. Our underwriting is very simple. If it’s not in astronomic cash on cash return on the back of a napkin, we don’t pursue it unless we can find something that nobody else sees.

In terms of acquisitions, I have 2 awesome business partners, 2 colleagues who work with me as well, and a network of people who do mostly multifamily or mobile home parks. When they see commercial deals, they will bounce them off of me. It’s also looking for mispriced, mismanaged, or mis-marketed deals. For your readers, one of the best ways to find commercial deals is to look for residential realtors posting commercial deals. Some of our best deals have been brought to us that way. They don’t know how to price them. They often just use comps or a dart board. Often, they are vastly underpriced. If you can get a first mover advantage by constantly looking for residential realtors posting commercial deals. That’s one way.

 

Can you make a difference between commercial brokers and residential brokers, and how do they appraise a property or assess a property?

Commercial brokers will use NOI in the cap rate. A true valuation of what the property is worth. I would say 95% plus residential realtors do not know what NOI or cap rate is. No fault of their own. It’s not the world they live in. When they price a property, they do what they are used to. They find comps not realizing that this building has mom-and-pop and national tenants or the income from this is higher than this. All of these factors come into play.

If you guys and girls can keep your eye on residential realtors posting commercial deals, it’s a great way to find good deals. Another creative way is to get on BizBuySell.com, and nobody does this. It’s a site where people go to buy and sell businesses. Here’s a crazy thing that I have learned, business brokers know very little about commercial real estate. Commercial real estate brokers know very little about buying and selling or valuing businesses. It’s a very fine demarcation line that doesn’t get crossed.

If you can find a deal on BizBuySell.com or from a business brokerage site where you can go in and find a business owner that’s selling a business but, “The property is included as well,” or, “I will sell the property as well.” The property isn’t an afterthought to them because they are more focused on the business that they have built. They are more interested in selling that.

If you can say, “Do you have any buyers just for the business? I want to sell the whole thing. How about this? I will buy the building and sign a lease with the people who want to buy the business.” There’s a bunch of creative ways that you can slice and dice those deals. Again, there’s not a lot of people doing that.

The other thing is we can find commercial real estate brokers who are not very good at their job. We have great deals where they have their little website. They only put the deals on their website, but they won’t put them on LoopNet, Crexi, or any of the other sites. If you can bookmark those and constantly stay on top of them, that’s great.

There’s less competition, too.

Before we go through the rest of the questions, this is a dream that’s being sold as far as real estate. Ava and I are both real estate professionals. We realize about multifamily, the syndication process, and real estate private equity. We fell in love with it and cofounded CPI Capital, but there are a lot of people who get into real estate for different reasons, like yourself, when it comes to tax reasons. People want to work differently. They want to get involved in the investment world.

 

 

If somebody’s reading and they have invested in real estate before, but it already seems convoluted enough. Now, Ash Patel’s model is all these different business models, asset classes, and property types, does that become too cumbersome for them to one day look at warehouse, industrial flex, office, or medical? Should they start somewhere? What would be your advice to them?

Do they feel like you provide them with this diversified portfolio as it is?

As a GP thing. We haven’t talked to him if you syndicate his deals or not, but I’m saying that somebody is reading and wants to follow the path of Ash. It might seem too cumbersome to come and try for their acquisition criteria to be this broad.

I get what you are saying. I don’t chase assets. I chase returns. If multifamily starts spitting off 20% cash on cash returns, I’m going to learn from you guys. I’m going to try to figure out the multifamily game. Look for returns. Anything that you do, whether you invest in the stock market, startup businesses, or real estate, the one metric that should carry across all of your investments is cash on cash returns.

 

That’s what I focus on. To answer your question, I don’t know the answer to that. Maybe I was lucky because I started with a mixed-used building, went on to do retail, then warehouse, medical, and all these other things one by one. I learned a little bit from each one of those, but start somewhere. One isn’t harder than the other. Whether it’s a warehouse or retail building, there’s a learning curve on every one of these assets, so pick one.

Once you start with one of them, it’s easier to transition into the next. Even with retail, no two retail leases are the same. There’s always something to learn. My advice to everybody is to look at returns. Do not have blinders on. Look at every asset class that’s out there. Find the best way to get the highest return on your money.

You talked about it as far as self-managing the properties and assets that you own. Talk to us about that. A lot of times, multifamily advertise that this is somewhat passive because you have a property manager who handles everything, and they charge, depending on the size of the property, 3% to 10% or 3% to 7% of the rental income for the property management. It’s very much hands-off. When you are buying these property types that you buy, you self-managing it. I’m guessing that they are all in one certain region that you have access to. Talk to us about the whole process.

They are all over the Midwest and the Southeast. Managing something remotely or on-site is not much different. COVID is what made me not go on-site to my properties. I’m an extreme extrovert, so I love going to my properties, hanging out with the tenants, finding out what’s going on with their businesses, and seeing them thrive. During COVID, we ended up moving out of the city for the summer, and I was away from all my properties, so we just put systems in place.

I learned how to get things done without going on-site. I will give you a couple of examples. I have an office building, and if I need to do a showing, it’s silly for me to drive an hour to go do a showing. Find your super user tenants. Give them a discount and pay them a little extra, but have them do these showings. They are already a champion of your building which is better than somebody who’s already a tenant to show a prospect the office space.

If there’s an HVAC company plumber that needs to get in, it’s the same thing. Have a lock box on the building and have a tenant let them in. For marketing, we have used brokers in the past, and for a very specific property, for example, a 30,000-square-foot big box store, you need a broker because that’s a unique tenant to find.

When you have a normal office, a restaurant, a 2,500-square-foot retail space, or a flex space, you can advertise those on your own, find your tenants, and not pay the broker commissions. Property managers will charge 6%, plus they will charge us a commission if they find tenants for you. It’s very easy to manage commercial properties relative to multifamily. Once the tenants are there and they keep renewing, there’s very little to do.

 

 

Do you teach this? Do you coach the stuff of investing for investors?

I do. Again, it happens by accident. During post-COVID, I had a bunch of multifamily people reach out to me and say, “We are getting killed in multifamily. We have tenants that aren’t paying. We have tenant-friendly laws. We can’t evict them, and we can’t find any good deals because the competition is so stiff. We heard a commercial might be a good way to go. Can you talk to us?” I agreed. I had about six people on a Zoom call for about two and a half hours.

At the end of that, they said, “How do we keep learning?” I said, “You don’t. I don’t have the time. I’m inundated with what I have going on. I’m sorry.” They kept insisting. This was a couple of years ago. We started season one of the commercial mastermind. I didn’t know what I was doing. Each class was four hours long. We went for 6 months, and by month 4 is when people’s mindsets started shifting.

Keep in mind, that most of our students came from multifamily and mobile home parks. We had a couple of people that already had millions of dollars of commercial properties. They wanted to get into commercials more. Mindsets started shifting. People started taking down commercial deals and started quitting their W-2s. We are now entering our fourth season. I only take twenty students at a time. It’s an intense course. We meet every Tuesday for about 3 to 3.5 hours. Classes are recorded.

You help underwrite deals amongst each other. You talk about deals you have under contract and there are partnerships that grew within this mastermind.

There are organic partnerships that grew, but I will teach everything from how to find the deals, underwrite them, manage them, remote manage, increase the value of it, raise capital, dispo the properties, and deal with brokers and bankers.

Let’s get to the next question here and try to use the best of our ability. We know he’s a super busy guy.

Ash, do you syndicate these deals? How do you fund the equity and what structure do you use?

Fund or syndication. How do you JV? How do you do all this stuff?

We do all the above but they have to keep in mind that, in our world, there are no $30 million strip malls. Most of them are $5 million to $10 million. If you get a whole-food strip mall, it might be $15 million to $20 million. With Apartments, it’s not uncommon to see $50 million, $60 million, or $70 million properties. Our down payments are always 15% or 20%. We don’t raise as much capital as the multifamily folks do. We syndicate. We have a fund. We will do joint ventures. Every deal is different, but again, our raises are much more limited. We usually come in for half of the raise. If we are raising $2 million, we will put $1 million in, and then we will raise the other million because we want a part of the deals.

The GP is investing $1 million. Are these LP investors, co-GP, or joint ventures you would call them?

On rare occasions, they are joint ventures if they come in with a large dollar amount, but for the most part, they are LP investors.

Investors will have exposure to this type of commercial real estate.

Our splits are different on every deal. The very first deal that we syndicated, we gave our investors an 18% preferred return, which we then bumped up to 22%. It’s a 30/70 split instead of a 70/30. We get this 70% at the end, and investors get the 30%. We have done 50/50 splits with 8% preps. Each deal is so different.

Let’s switch the conversation now. We talked about all these different asset classes, and people want to learn. This is the way. A lot of time, we bring on expert guests and then talk about it for an hour, and people don’t have a weight that they could get involved in that business type. In this case, you have someone here who’s going to be able to be your coach and be a mastermind to deal with them. Maybe you have deals in your area and you are like, “I have been wondering, I want to buy this pharmacy or this gas station. I wish I had like-minded people that would be interested.”

Here is your chance to get involved, and I will probably want to chat with Ash myself because I would love to diversify into triple-net properties as well. Let’s talk about you as a podcast host as well. You are an investor and entrepreneur. We are hosts as well. We have learned a lot through our journey of being hosts. I believe you co-host a show with Joe Fairless, the longest-running podcast ever.

You have interviewed many great minds in the real estate investing world. We had a few questions to see what you learned in that journey and if it was similar to us because Ava and I, it feels like it is a mandatory course once a week or twice a month. We have our show. We do research on our guests, so we learn a lot and then we interview our guests. We learn a lot about them. It’s been educational for us. We create content to connect with like-minded individuals and partners as well. We want to learn a little bit about your journey as a host. Give us a quick rundown overall before I go with the specific questions. How was it? Did he enjoy it, or what’s going on?

The podcast was started by Joe. He’s done over 1,600 of them. He called me one day and he’s like, “If I change my podcast to be all commercial. Would you be one of the hosts?” I’m like, “Yes.” He was shocked. I’m like, “Yes.” I don’t hear from him for months about the podcast. I’m like, “He forgot about me.” I was pissed. When I got a call from his team, they said, “You are starting next Wednesday. You are doing four episodes every Wednesday.”

I’m like, “I don’t have any equipment. I don’t know what to do.” “Joe didn’t tell you?” I said, “No.” “You will figure it out.” I got thrown into the mix. Luckily, Joe had done an episode on what equipment he uses. I hurried up and bought the equipment. In the first episode that I did, Joe sent me a long email, and he was not happy because a few months earlier, I criticized him. I’m like, “You asked too many softball questions. Here’s a list of harder questions that you need to start asking.”

He throws his back at me. He’s like, “A minute for of this interview, why didn’t you ask that question? That was one of your questions.” I’m like, “I don’t know. This is a lot harder than it looks.” He’s like, “You have no energy. I have seen how you welcome people who come into your house. Why can’t you do that in the podcast?” I’m like, “I didn’t know I was supposed to.” I’m going to get fired. I was panicking.

I was a terrible host for many months and started getting a little bit better as each one went on. This is not easy. It looks easy, but there’s a learning curve. My hats off to you two for what you do, but you are right. It’s like constantly reading a real estate book on different subjects. You will learn everything from how to invest in farmland, set up a fund, deal with foreclosures, get rid of investors, and take on investors. When deals are going well, what to do? When deals are going bad, what to do?

 

How many podcasts have you done?

A few hundred. I have no idea.

You said you do four every Wednesday.

Correct.

A quick thing, I was on Joe Fairless’ podcast, and that’s the same show that Ash runs as well. Joe put me under the gun more than anybody else. I was giving him my background, a high guy involved in the syndication world. He came and asked proper questions.

That was Ash telling him.

He probably read my list of questions.

Maybe we can touch on that, but before that, this is something interesting that we noticed. We notice a lot of these high achievers that we interview on our show, including yourself. They are big on things like health and longevity. They look at life differently. There’s a consistent book they all read. Is there something that you have noticed that is something that’s consistent and contributes to these people’s success?

Maybe they are all very punctual, which hasn’t been the case. In most cases, it has, but is there something you notice from intruding so many real estate investors that is consistent among all of them, “If you have these types of characteristics, you probably have a high chance of being successful.” Billionaires say a lot of them have ADD or have very creative minds. Is there something amongst these real estate investors that you notice that you are like, “There seems to be a common theme amongst these people?” Is there something you remember?

I don’t know if it’s a character trait, but the people who are very successful always have systems in place, systems in people. For a character trait, I’m the opposite of most of the people that I interview. I’m undisciplined, I stay up late and hang out a lot on weekends, but I’m a visionary. I have learned to hire integrators. That was a very hard lesson. I learned that way too late in life, but that goes back to having the right people in the right systems.

People who are very successful always have systems in place. Click To Tweet

I know a ton of people who do their morning routines, prayer, meditation, exercise, gym, and gallons of water all before I even wake up, and they are not very successful. They are trying, but they are not there. I honestly believe it’s people in systems around you. Joe Fairless is the opposite of me. The guy is extremely disciplined, heads down, and gets things done. I want to go out, network, hang out with people, and grab drinks with people. I want to hang out with real estate people. That’s how I get things done.

The way he gets things done is by being hyper-focused on writing books, his blogs, podcasts, websites, and marketing, all his systems and his people. We are complete opposites. I don’t know that it’s character traits. Read the Rocket Fuel. If you are a visionary like me, you might be hard on yourself thinking you are a scatterbrain, “Why can’t I ever follow through on things?”

My wife said, “You never follow through. You start something and you don’t finish it. You have all these open projects.” In my whole life, I thought that was a detriment until I read that book. It turns out it’s not. It’s just how visionaries are and you have to have somebody next to you that’s an integrator. If you are an integrator who can’t come up with these wild ideas, get a visionary to partner with. People in systems are more important than any character trait out there.

 

I wonder if I’m the visionary and you are the integrator or vice versa.

Why don’t I host the show where we get to the bottom of that? That would be fun.

That would be awesome. Last quick thing here before moving to the next segment of our show. You are organizing a mastermind that we discussed already. There’s also a conference you were talking about as well.

October 11th through 13th, 2023 in Cincinnati. We have a two-and-a-half-day conference where you come into town and great speakers lined up. The second day is property tours just from mastermind students. You will see properties that are $150,000 to a couple of million dollars, and you will hear the stories behind them. These were people that didn’t have any commercial real estate experience. You will hear the stories of how they did it. You will see the numbers behind it. I want to give everyone that opportunity to get a head start in commercial real estate. It’s a great networking opportunity as well. Limited to 100 people.

The mastermind is limited to twenty. That’s as far as you want to talk about the mastermind.

Thank you for allowing me to do that, but that’s enough. Go to Invest Beyond Multifamily if you want to see more.

Let’s get to the next segment of the show. Thank you for sharing all of that with us, all your wisdom and knowledge. I enjoy talking with you.

We learned a lot. The next segment on the show is the Ten Championship rounds of Financial Freedom. We are going to ask you a series of questions. Whatever comes to mind. First question, who’s been the most influential person in your life?

Probably my wife. Most supportive and influential. She leads by example.

Most of our guests say their spouse in most cases, they don’t want to get in trouble.

I thought about it. That took a second.

Next question. What is the number one book you would recommend?

It doesn’t have to be a real estate book. It can be any book.

I would say either Who Not How or Rocket Fuel.

If you had the opportunity to travel back in time, what advice would you give your younger self?

Don’t waste time and create a bucket list, which I did, and spend your free time checking those boxes off because that bucket list sat for many years. Now, I’m finally getting around to checking those off. In my twenties, I should have been working on going to those places and learning guitar.

Don’t waste time. Create a bucket list. Click To Tweet

Next question, what’s the best investment you have ever made?

A land deal that we bought for $8 million and wholesale for $12.4 million.

What’s the worst investment you have ever made? What lessons did you learn from it?

I was in a moment where people around me were like, “Everything you touch turns to gold,” and that was because the market was going very well, maybe in 2014 or 2015. There was an estate auction in a river town that had been ravaged by drugs and job losses. I had such a big head. I thought, “I’m going to go buy that whole town.” Another real estate investor was buying some stuff as well. Just like all the other properties had bought prior, I was going to go in there and turn them around.

Here’s how stupid I was. I was on vacation. I had one of my tenants who was in that town, go there and bid on my behalf. I couldn’t even hear him on the phone. All I heard was, “Do you want to keep going?” I’m like, “Yes.” After I hung up, my wife was like, “What did you buy?” I’m like, “I have no idea, but I bought several properties.”

I come back and visit them. One of them was a building that looked like a bomb hit it. The front half was gone. It was unsalvageable and it took me years to unravel these buildings. It took a tremendous amount of head space. It was the kick in the butt that I needed to learn that not everything I touch turns to gold. It was me getting a big head. When times are good like they have been for the past years, keep in mind that they are not always going to be good.

Donald Trump talks about in his book, Art of the Deal, that you should always visit the property you buy. In some cases, we can’t, but to at least be able to see what you are buying is good advice.

You would think most people would do that except me.

Next question. How much would you need in the bank to retire? What’s your number?

I would say $10 million.

I have a feeling he’s figuring that out through cashflow produced on his triple net properties.

No, this is one of the biggest mindset hurdles I try to get people to overcome. Everyone that comes into my mastermind has this number, “I need $35,000 or $40,000 a month in passive income so I can retire.” No, you don’t. You don’t need any income. You need a net worth number because if you have $10 million in the bank, you can retire. If you have zero income coming in, awesome. You can then start making investments, but I see so many people making bad decisions based on hitting that $35,000-a-month passive income number.

I have a student who owns a couple of businesses that he’s fed up with and hates, but he’s trying to hit his number. He won’t sell his businesses even though they take up all the time that he should be investing in real estate because he’s trying to hit that number. I have people who hate their job and they won’t quit even though they have millions of dollars in equity in their house and liquid in the bank but they think they need this passive income number to retire.

If you have $10 million in the bank, I promise, you don’t care at all about passive income because you can then go out and make more money. Focus on net worth instead of passive income. Passive income can be manipulated. Net worth is a number that doesn’t lie. If they have a passive income goal, get rid of it. Have a net worth number.

Focus on net worth instead of passive income. Passive income can be manipulated. Net worth is the one number that doesn't lie. Click To Tweet

Great perspective. I respect that.

Next question. If you could have dinner with someone dead or alive, who would it be?

I’m a huge fan of Leonardo da Vinci. Not many people know about him, but I can’t speak Italian so that probably wouldn’t work.

Have a translator there. We had people talk about family, grandparents, or certain books they have written or read multiple times. We have talked about people a bit scientists, athletes, and Jesus. Those are the majority of the common ones that people have said. Leonardo da Vinci was pretty versatile. It wasn’t only art that he did. He did mechanics as well.

He was an inventor. He is one of the most underrated people in history.

Next question. If you weren’t doing what you are doing now, what would you be doing now?

Let me decipher this question a bit. Some people would be a race car driver or a mountain climber. Be as extravagant as you wish or as subtle as you’d like.

This might be a boring answer, but I’d be doing exactly this. It sounds stupid, but even if I hit the lottery, I would still do this. I used to say, “I love my job,” when I was in the corporate world. It was a lie. I hated my job. Anybody that says, “I love my job,” ask them if they won the lottery, will they keep doing that for free. The answer is usually no. I have thought about this a lot. Even if I won the lottery, I would keep doing this. It keeps me sharp and has a ton of fun. This is what I would be doing. I wish I learned it earlier in life.

Exactly where you want to be.

The same here. I would never stop private equity.

Ash, book smarts or street smarts?

Always street smarts.

If you had $1 million in cash and you had to make one investment now, what would it be?

A commercial property. A value add. Let’s take maybe a strip mall or industrial building that has a fair amount of vacancy and does not have the greatest tenants. The most upside is possible.

Thank you for that.

This has been great. Maybe you can let everybody know what’s the best way that they can reach you.

You can find me on LinkedIn. It’s Ash Patel, Cincinnati. I’m on Facebook and Instagram. My email address is Ash@InvestBeyondMultifamily.com. You folks are awesome. It was a pleasure being here. Thank you both so much.

Thank you as well.