Mohit Chopra talks Important Real Estate Processes that Saved him Millions

[00:00:07] [SPEAKER_00]: Hello and welcome to the Movers and Shakers Podcast. My name is Gino Barbaro, co-founder of Jake and Gino,

[00:00:12] [SPEAKER_00]: multifamily investor, educator, father, and mentor. Today's guest is Mohit Chopra, an engineer and project

[00:00:20] [SPEAKER_00]: manager by profession. He ventured into real estate in 2013 and multifamily in 2020. Since then, he has

[00:00:28] [SPEAKER_00]: focused on value-added properties in Ohio, North Carolina, and Tennessee and successfully implemented

[00:00:35] [SPEAKER_00]: our three-step framework across seven properties, six of which have more than doubled in value within a

[00:00:41] [SPEAKER_00]: year. And more importantly, Mohit is on a mission to increase his passive income and, not or, or but,

[00:00:50] [SPEAKER_00]: and create better living conditions for his residents. Without further ado, welcome to the show, Mohit.

[00:00:56] [SPEAKER_01]: Thank you, Gino. Appreciate you inviting me to be on the podcast.

[00:01:01] [SPEAKER_00]: Listen, I remember meeting you at MM5 and you were out there and you were probably a little skeptical,

[00:01:08] [SPEAKER_00]: who's this Jake and Gino guy? And I'm not really sure. And what made you join the community? I mean,

[00:01:15] [SPEAKER_00]: you've been doing real estate since 2013 and you had been in multifamily since 2020. What made you

[00:01:20] [SPEAKER_00]: decide to join and what were some of the benefits that you derived from joining as soon as you started

[00:01:24] [SPEAKER_01]: joining? So yeah, I mean, I, you are right. I was a little reprehensive of like the commitment as well.

[00:01:31] [SPEAKER_01]: Right. But meeting you in person, I have been having conversation with like for like maybe like

[00:01:39] [SPEAKER_01]: seven plus months in conversation in terms of joining. And I never felt the pressure. That was

[00:01:45] [SPEAKER_01]: the one positive thing in terms of there were other groups that were really pressurizing in terms of

[00:01:50] [SPEAKER_01]: joining now or, you know, specialties and all that stuff. I never felt that. So that was a good

[00:01:54] [SPEAKER_01]: comforting factor walking in into MM5. But when I met you and met all the other members, I had a lot

[00:02:04] [SPEAKER_01]: of detailed discussion in terms of what the community provides. And then I got to learn more details of the

[00:02:10] [SPEAKER_01]: basic framework. And I met the coaches. I think that is what changed my mind in terms of, yes, I need to

[00:02:17] [SPEAKER_01]: join this because I think the coaching of working one on one with folks who can drive you

[00:02:25] [SPEAKER_01]: deal by deal as well and give you directional guidance on the basic frameworks of buying right.

[00:02:31] [SPEAKER_01]: And even if you find the right opportunity, the right way to finance and structure the deal

[00:02:36] [SPEAKER_01]: that has, that was at that time, I thought was a good value. It wasn't good value. It was a great value.

[00:02:41] [SPEAKER_01]: I think I've learned a lot from that. We've done multiple deals, utilize coaches calls to go through

[00:02:49] [SPEAKER_01]: the underwriting, making sure that we have done our due diligence prior and during the due diligence as

[00:02:54] [SPEAKER_01]: well. So from my perspective, I'm, I have no doubt I'd made the right decision at MM5 and it's been good so far.

[00:03:05] [SPEAKER_00]: It's interesting Mohit, you use the word apprehensive. That's a nice way of saying, I don't really trust

[00:03:10] [SPEAKER_00]: these guys right now. I'm like, you know, I'm not really, I'm a little bit on the fence, but you know what?

[00:03:14] [SPEAKER_00]: It's one of those things where once you join, you've put a lot of hard work and effort into this. I always

[00:03:20] [SPEAKER_00]: say this on all the podcasts with the Jake and Gino community members who really excel. And I think in

[00:03:24] [SPEAKER_00]: anyone, in any program, it's not just the program. Obviously we have an amazing program because of our

[00:03:30] [SPEAKER_00]: coaches. It's not just Jake and myself. We have an amazing program because of the community members.

[00:03:35] [SPEAKER_00]: There's quality people in this community. We have an amazing community because we've been doing it for

[00:03:40] [SPEAKER_00]: years and we are continuing to do. We just closed on a four unit yesterday. May not seem like a lot,

[00:03:46] [SPEAKER_00]: but four units is four more units. We closed on 300 last year. But what I love about you and what

[00:03:51] [SPEAKER_00]: you said to me was you've saved me from doing bad deals. Everyone thinks about getting into multifamily

[00:03:57] [SPEAKER_00]: and running in there and having to get that right is I need to do the next deal. No deal is better

[00:04:02] [SPEAKER_00]: than a bad deal. Talk to the listener and tell them how did you avoid making, I don't want to say

[00:04:09] [SPEAKER_00]: catastrophic, but it can be a really big mistake by buying that wrong deal. What did you do to avoid

[00:04:14] [SPEAKER_01]: that mistake? Yeah. So I'll, yeah, I was just going to start with that as well. Cause I think

[00:04:20] [SPEAKER_01]: everybody gets a real, uh, I struck with the, the, the thing of like getting more properties or owning

[00:04:28] [SPEAKER_01]: more properties, but I think the journey is, is, is a bigger piece of it, right. To making the right

[00:04:33] [SPEAKER_01]: decision. And a part of the making right decision is to know when to walk away from the deal. Um, so

[00:04:39] [SPEAKER_01]: this was actually the first deal we'd started working on right after joining Jake and Gino. So,

[00:04:44] [SPEAKER_01]: uh, and, and this is the reason I tell you the most value I got is from the deal that I've done,

[00:04:50] [SPEAKER_01]: but actually also from the deal that I walked away. So this deal was a class A asset, mixed

[00:04:56] [SPEAKER_01]: use property in Columbus, great sub market. Um, but as part of the buy, right criteria, if you delve

[00:05:05] [SPEAKER_01]: more into that as to what's covered by the, your framework is also due diligence with regards to

[00:05:13] [SPEAKER_01]: financials as well as physical. So the physical due diligence, everybody's aware of what to look

[00:05:17] [SPEAKER_01]: for in terms of main criteria and for classic property, in most cases, physical due diligence

[00:05:22] [SPEAKER_01]: is not going to create much issue. Um, but it was a financial due diligence and some of the,

[00:05:28] [SPEAKER_01]: the checks that imbalances that we have in your courses and the framework that really helped us

[00:05:35] [SPEAKER_01]: bring out the fact that there were some financial irregularities in terms of what was

[00:05:40] [SPEAKER_01]: told in the OM and the, uh, and the, and the spreadsheets that were provided to us versus the lease

[00:05:48] [SPEAKER_01]: that were lease audit that we did. Uh, it weren't matching up. Um, at that time,

[00:05:54] [SPEAKER_01]: we had invested close to 10 to 15 grand in inspections and other stuff. Uh, we had about 60% of the capital

[00:06:02] [SPEAKER_01]: raise committed as well. Um, but when we looked into the numbers, we went back to the seller, tried to

[00:06:10] [SPEAKER_01]: talk to them and try to negotiate on the price based on what you told us it wasn't accurate.

[00:06:15] [SPEAKER_01]: And what we see in numbers, this is the right price and they didn't go much down. Um,

[00:06:22] [SPEAKER_01]: and we had to walk away. So we did walk away from that and that deal never got traded. So

[00:06:29] [SPEAKER_01]: that tells you like we were in the right direction. We were

[00:06:32] [SPEAKER_01]: not wrong in terms of what our price point was.

[00:06:36] [SPEAKER_01]: And, uh, but at the same time, you have to make tough decision, tough decisions sometimes to walk

[00:06:41] [SPEAKER_01]: away because you would rather lose 10 to 20, 30 grand that you've put in the deal so far versus

[00:06:47] [SPEAKER_01]: losing millions later on when you are owning the property. I love that. You've, you've been on a

[00:06:52] [SPEAKER_00]: great journey these last three or four years. Can you share with the listener how your journey of

[00:06:58] [SPEAKER_00]: the buy rate criteria, how that's changed and transformed. And now all of a sudden wanting

[00:07:02] [SPEAKER_00]: to become vertically integrated. That didn't, that piece wasn't there a couple of years ago,

[00:07:06] [SPEAKER_00]: not having that epiphany. Let's talk about that a little bit, because it's important. And I think,

[00:07:11] [SPEAKER_00]: Mohit, the biggest epiphany that I've seen you've had is it's all of a sudden you're becoming

[00:07:15] [SPEAKER_00]: a multifamily entrepreneur. You're seeing this as a business, not just as just an investor,

[00:07:20] [SPEAKER_00]: getting some capital, putting deals together, but this could be a really amazing, impactful

[00:07:24] [SPEAKER_00]: business. Would you mind sharing with us? Yeah, absolutely. I think it starts with

[00:07:29] [SPEAKER_01]: the first piece that we have talked in the buy right criteria, like understanding what market

[00:07:34] [SPEAKER_01]: you're operating in. Right. And when we started operating in Ohio and North Carolina markets,

[00:07:39] [SPEAKER_01]: we started building our basis there. Uh, and then recently we have had more success in Ohio,

[00:07:45] [SPEAKER_01]: because of the sheer volume that's available for trading there right now. And as part of learning

[00:07:51] [SPEAKER_01]: experience, again, we have had our success and failures in terms of, I wouldn't call it failure,

[00:07:56] [SPEAKER_01]: it's a learning experience when we've had to build our own team in terms of construction,

[00:08:01] [SPEAKER_01]: in terms of repairs. Um, but as we build our business, we, and at that time we started working

[00:08:07] [SPEAKER_01]: with Jay Cantino and understood what first thing I got to understand more is what is I'm looking in real

[00:08:12] [SPEAKER_01]: estate for, right? Like I know people think that's real estate is sexy. Let's jump in, let's invest.

[00:08:17] [SPEAKER_01]: But what is the purpose? What are you trying to get out? Are you trying to look for long-term

[00:08:22] [SPEAKER_01]: appreciation later on? Are you looking for cashflow immediately? What is the criteria?

[00:08:26] [SPEAKER_01]: What is the metric that will drive success or what will showcase you that this is a good deal

[00:08:31] [SPEAKER_01]: for you? And not every deal is a good deal for everybody. Uh, so we decided again, uh, you call it,

[00:08:39] [SPEAKER_01]: and I've, I really liked that the way you call it, uh, profit per unit. We call it cashflow per unit,

[00:08:45] [SPEAKER_01]: right? And that is one criteria we'll look for as well. And as we delve into building our portfolio,

[00:08:50] [SPEAKER_01]: we realized, yes, closing the deal is one aspect, but building onto the profit,

[00:08:57] [SPEAKER_01]: there are two aspects to it when you can either raise rent or you can reduce your expenses. Right.

[00:09:02] [SPEAKER_01]: And we are realizing as we have stabilized our portfolios that one of the easier and better ways

[00:09:10] [SPEAKER_01]: to do that is to see how we can manage our properties better. Uh, yes, we do our asset

[00:09:16] [SPEAKER_01]: management. We go visit our properties every month, make sure they are performing well and

[00:09:22] [SPEAKER_01]: you know, they're being maintained well as well, but more from operational costs. Uh, one of the

[00:09:29] [SPEAKER_01]: components that we're looking for is how we can increase the overall NOI, uh, by reducing the cost

[00:09:33] [SPEAKER_01]: factors. Um, and one of them ties into if we bring, now we have a portfolio of more than a hundred units

[00:09:41] [SPEAKER_01]: across within like a five mile radius. So what we are thinking of is bringing the repair and

[00:09:47] [SPEAKER_01]: maintenance in house, like hiring full-time maintenance person, because every time you send

[00:09:52] [SPEAKER_01]: the plumber, they're going to charge you $150 for each repair. So you spread it across five,

[00:09:58] [SPEAKER_01]: 10 repairs that you have. That's more than what you will pay full-time person. Um, and sometimes

[00:10:04] [SPEAKER_01]: actually, uh, I looked at the numbers actually two to three, uh, uh, sometime in some months,

[00:10:09] [SPEAKER_01]: it has been Forex what we would have paid if they have it in house. So that's kind of the

[00:10:14] [SPEAKER_01]: next level of maturity in terms of understanding how we can improve the price per unit, right?

[00:10:20] [SPEAKER_01]: So there are certain base work that we do as part of our underwriting, but as you get through

[00:10:25] [SPEAKER_01]: meet your targets, how to get to the next level again, I'm just trying to see what's the most

[00:10:31] [SPEAKER_01]: efficient way to get to it. Not squeezing too much. Again, we want to make create a good

[00:10:38] [SPEAKER_01]: environment for our tenants. I don't want to stop making repairs because when a repair is needed,

[00:10:44] [SPEAKER_01]: repair is needed because the tenants, this is their home. Um, we just want to make sure how

[00:10:48] [SPEAKER_01]: we can more efficiently manage those expenses so that we can get the same repair done, but it costs

[00:10:54] [SPEAKER_00]: less to us overall. This is important. What you said, there's a couple of things that I need to

[00:10:58] [SPEAKER_00]: extrapolate and really to pull out and to share once again, real estate is about you. There are people

[00:11:05] [SPEAKER_00]: out there who want to preserve wealth. They're going to go out and buy a assets that deal doesn't work

[00:11:10] [SPEAKER_00]: for Jake and Gino and probably not for Mohit. Why would you pay it by a two or three cap class

[00:11:15] [SPEAKER_00]: a asset? Well, it's not going to create wealth. It's going to preserve wealth. So understanding what

[00:11:20] [SPEAKER_00]: the asset and what the investment strategy is for you. And it changes with the market cycle and it changes

[00:11:27] [SPEAKER_00]: with your maturity. And the other thing that I really want to pull out is don't wait to start.

[00:11:34] [SPEAKER_00]: Because if you're thinking you need to have all the pieces put together, everything in alignment,

[00:11:39] [SPEAKER_00]: if Mohit had said to himself, I need to have my property management, asset management,

[00:11:43] [SPEAKER_00]: vertically integrated and ready to go, he would never have started. But he said, it's part of the

[00:11:48] [SPEAKER_00]: journey. It's part of the process to learn as you're underwriting deals. And there aren't mistakes,

[00:11:53] [SPEAKER_00]: there aren't failures. They're only learning lessons and opportunities to see what you've done

[00:11:58] [SPEAKER_00]: wrong. And then you can pivot from that. And then you can come to the community, ask questions and

[00:12:03] [SPEAKER_00]: say, how should I do this? And how should I do that? And then you learn from that. So don't be stuck with

[00:12:09] [SPEAKER_00]: fear and say, I can't do this because I don't even know where to start. You start small and then you

[00:12:14] [SPEAKER_00]: start and continue to figure it out. And multifamily is a team sport. Mohit's got a great team behind him

[00:12:20] [SPEAKER_00]: and around him that helping him out. But there's one piece, Mohit, that I really want to jump into

[00:12:25] [SPEAKER_00]: is you said you want to create better living conditions for your tenants. And I'm going to

[00:12:29] [SPEAKER_00]: share with you our mission statement. We create communities that empower people to become the

[00:12:36] [SPEAKER_00]: best versions of themselves, whether it's an employee of ours or a team member, whether it is a resident,

[00:12:44] [SPEAKER_00]: whether it was an investor, when we were actually, you know, syndicating deals, or when it is a,

[00:12:51] [SPEAKER_00]: um, it is a Jake and Gino community member, any one of those, that's what we're trying to do. We're

[00:12:57] [SPEAKER_00]: trying to create a great empowering community. And for you, it seems as if you've noticed that,

[00:13:02] [SPEAKER_00]: hey, your residents are your customers, and you need to take care of them. What inspired you

[00:13:05] [SPEAKER_00]: to put that in to really highlight that?

[00:13:07] [SPEAKER_01]: Um, so there are multiple factors behind it. One, I think that was one of the core principles

[00:13:13] [SPEAKER_01]: that really connected with like with Jake and Gino, right? That's part of your foundational

[00:13:18] [SPEAKER_01]: principles as well. Um, and also it just makes more sense when we matured our portfolio and we looked

[00:13:27] [SPEAKER_01]: at the attrition that we are happening or the turnovers that are happening before and after we

[00:13:33] [SPEAKER_01]: put capital and improving the property, right? There is a substantial difference in terms of

[00:13:38] [SPEAKER_01]: the quality of tenants that you get. Um, if you put appropriate capital and create better living

[00:13:45] [SPEAKER_01]: conditions, it's just going to attract better tenant base as well. And also, um, if the tenants are

[00:13:51] [SPEAKER_01]: happy, you don't have to do every turnover. You're losing at least a month with turnover costs. You have

[00:13:57] [SPEAKER_01]: additional capital put in at least even if it's our base paint job, right? You have to do that as a basis.

[00:14:03] [SPEAKER_01]: Um, so you, all those additional from a business perspective, also, it's makes more sense to take

[00:14:10] [SPEAKER_01]: care of your tenants in appropriate way. Excuse me. Um, what we have also utilized is we have also

[00:14:16] [SPEAKER_01]: tested our markets and when we go in, we go a little bit higher end in terms of the repairs that we do.

[00:14:24] [SPEAKER_01]: We put stainless steel appliances and in the LVP flooring also, we go a little higher end on LVP

[00:14:31] [SPEAKER_01]: flooring. The quality of flooring is a little better than what they see across in competing properties.

[00:14:36] [SPEAKER_01]: And that also keeps the tenant more attracted to the property that we live in. They're more

[00:14:40] [SPEAKER_01]: happy in terms of the quality of product that they get. Um, and we have less turnover as well. Um,

[00:14:50] [SPEAKER_01]: and the last piece I would highlight here, like I know most of the times we create higher end products and

[00:14:56] [SPEAKER_01]: try to get higher end rent from the private pay. We also have not discriminated that against when we go

[00:15:03] [SPEAKER_01]: for improvements, we improve all of our units across those assets. And some of those units are

[00:15:11] [SPEAKER_01]: being rented out to section eight tenants as well. And yes, we have some negative

[00:15:18] [SPEAKER_01]: predomination in terms of section eight tenants, but we have our checks and balances in place. We have the

[00:15:25] [SPEAKER_01]: screening criteria, we will define. We have our regular inspections of the units that we normally do

[00:15:30] [SPEAKER_01]: for our unit, all of our properties. And so far I have had zero issue with section eight tenants in

[00:15:37] [SPEAKER_01]: any of my properties. And we have received rents on day one for all the section eight tenants.

[00:15:43] [SPEAKER_01]: It does take time. Uh, there's that one aspect that it does take time to get established, but once

[00:15:49] [SPEAKER_01]: it's there, we have had good success. So in the end, I would highlight as long as you take care of your

[00:15:54] [SPEAKER_01]: tenants, you take care of the capital in a right way. It's a long-term benefit for you as well.

[00:16:02] [SPEAKER_01]: Short-term you might have to spend the capital, but that's a capex, right? It doesn't,

[00:16:06] [SPEAKER_01]: in fact, your bottom line or NOI. Um, but it does create a better environment for a long-term.

[00:16:12] [SPEAKER_01]: It's a long-term, uh, game or thought process that you have to keep in mind as an investor versus

[00:16:17] [SPEAKER_00]: a short-term gain. I'm not going to wait till the end of the show. I want you to share your email

[00:16:21] [SPEAKER_00]: address right now, because if anybody's interested in your feedback on section eight, and they want to

[00:16:26] [SPEAKER_00]: say, Hey, I had problems, help me out Mohit. What am I doing wrong? Reach out to Mohit. And Hey,

[00:16:31] [SPEAKER_00]: I'm an investor. I love this long-termism. I love the fact that you're focusing on the customer.

[00:16:37] [SPEAKER_00]: It's an underutilized investment strategy because the C tenant is often neglected and we're trying to

[00:16:46] [SPEAKER_00]: create the Chick-fil-A of customer service. And you're doing that as well. And I think anyone who's

[00:16:50] [SPEAKER_00]: a limited partner who wants to invest in a deal, that's what they should be focusing on operators

[00:16:55] [SPEAKER_00]: who understand who their customers are and trying to create long-term value for their properties.

[00:17:00] [SPEAKER_00]: So what's your email address? How can they reach out to you?

[00:17:03] [SPEAKER_01]: Sure. Uh, it's Mohit, M O H I T at M V capital group.org.

[00:17:10] [SPEAKER_00]: All right. I love that. Reach out. I mean, if you're seriously considering investing and you want

[00:17:15] [SPEAKER_00]: to get together with an operator who has experience, who's building an enduring organization, who's

[00:17:21] [SPEAKER_00]: focusing on the right parts of the business, it's not just the buy, right? It's the finance, right?

[00:17:26] [SPEAKER_00]: And it's the manage, right? Which is really, really important. And looking at costs, cutting costs down,

[00:17:32] [SPEAKER_00]: but also making sure that he invests in his properties, making sure that he's delivering

[00:17:36] [SPEAKER_00]: quality to his residents. So they stay because an empty unit and a one that's turned over are two

[00:17:42] [SPEAKER_00]: of the highest expenses that we can have. So building the customer experience and the customer journey

[00:17:48] [SPEAKER_00]: is really important. Mohit, for anybody listening right now, how did you get started? And give people an idea,

[00:17:55] [SPEAKER_00]: give them a couple of steps, what they can do after they get off the podcast and say, wow,

[00:17:59] [SPEAKER_00]: let me get into multifamily. What should I start doing?

[00:18:03] [SPEAKER_01]: Yeah. It's a, I think it's a very common story among most of the real estate investors, right? Like,

[00:18:09] [SPEAKER_01]: so I, you introduced me that I have the engineering background with an MBA as well. So I'm in a corporate

[00:18:15] [SPEAKER_01]: role, been working 20 plus years, immigrated here when I was in twenties and went through the American

[00:18:22] [SPEAKER_01]: dream of working in a big corporate with the ambition to achieve success in the corporate ladder,

[00:18:31] [SPEAKER_01]: right? Realizing later on that it's just, you are just one other, I guess, number in the big corporate

[00:18:39] [SPEAKER_01]: market that you work with, right? So you, and you could be anytime on the chopping block as well. So

[00:18:45] [SPEAKER_01]: that kind of made me realize, and that's why the reason in 2020 is because we had those difficult times

[00:18:50] [SPEAKER_01]: and a lot of attrition was, a lot of downsizing was happening. So it just kind of woke me up. I got

[00:18:57] [SPEAKER_01]: to do something different. And at that time I had just finished my MBA as well. So I had learned a little

[00:19:06] [SPEAKER_01]: bit more about how to do something different. So I started investing small single family home,

[00:19:09] [SPEAKER_01]: went right into duplex and quadplexes, which we'll still consider residential family.

[00:19:15] [SPEAKER_01]: And then started working and joined groups. Again, I think I did, luckily I was lucky enough to find the

[00:19:24] [SPEAKER_01]: right people or join the right groups, including Jake and Gino, where I got the education first before I

[00:19:31] [SPEAKER_01]: spent too much or took too much risk myself as well. So what I would suggest, yes, find good partners,

[00:19:40] [SPEAKER_01]: people who have already successful, give your time and effort, create value for them in terms of what you

[00:19:47] [SPEAKER_01]: can do, right? When I did my first multifamily deal, my first partner, again, was very successful,

[00:19:56] [SPEAKER_01]: and he's still a good friend of mine. It's part of another group. And they came in because I found a

[00:20:02] [SPEAKER_01]: good deal. It took me seven plus months to find a great deal in a tertiary market. But anybody can get

[00:20:09] [SPEAKER_01]: that value by putting the effort and time. So you find the right partner, get the education appropriately.

[00:20:16] [SPEAKER_01]: Uh, and once you find the first deal, I know it's people say that, but it does create a

[00:20:26] [SPEAKER_00]: a wheel of success as well. You will keep finding more education times action equals results.

[00:20:33] [SPEAKER_00]: Take time, learn the framework, then start taking ask action. And I love how you said,

[00:20:39] [SPEAKER_00]: understand where your value is, because your value may change over time. You may not have the money in

[00:20:44] [SPEAKER_00]: the beginning, but you may have the sweat equity, or you may have this, the money and looking for

[00:20:49] [SPEAKER_00]: somebody with sweat equity. And it really is a team sport. Um, it's interesting that we talked about

[00:20:54] [SPEAKER_00]: the deals you didn't do. Would you mind sharing a deal that you did do? Because I think it's great

[00:20:59] [SPEAKER_00]: and all people want to find their first deal. And Moe, it's important what you said. We bought our

[00:21:03] [SPEAKER_00]: first deal after 18 months of struggle. You were a lot smarter. You've got an MBA. You're here.

[00:21:08] [SPEAKER_00]: You work. I wasn't a smart dude. I was a pizza guy. It took me and Jake a lot longer. But after

[00:21:14] [SPEAKER_00]: that first deal, ironically enough, three months after that, we got our second deal and things

[00:21:19] [SPEAKER_00]: started to fall into place because I think it is psychology. It's like, oh, wait, hold on a second.

[00:21:24] [SPEAKER_00]: This is not that complicated. I mean, this is not hard. I got to find some money. I got to find a

[00:21:29] [SPEAKER_00]: deal. I got to put some systems in it. Once you learn the framework, things start falling into place

[00:21:35] [SPEAKER_00]: and you don't have to do thousands of units a year. You could do one or two deals,

[00:21:39] [SPEAKER_00]: nice deals for the next three or four years. And you look back and go, wow, I've got three

[00:21:43] [SPEAKER_00]: or 400 units here. How did that happen? And that's what ended up happening with Jake and myself.

[00:21:47] [SPEAKER_00]: So let's dive into a deal that you did that you focused on and you created that buy right,

[00:21:52] [SPEAKER_01]: finance right and manage right with. Yeah. So, I mean, like I said, we've done through

[00:21:57] [SPEAKER_01]: the first one that we did was a totally different deal compared to the second one. So I'll start with

[00:22:03] [SPEAKER_01]: that. The first one was a very stabilized property. It was just undervalued because the owner had owned

[00:22:09] [SPEAKER_01]: it for a long time, but the property was an immaculate condition. So it's very rare to find

[00:22:15] [SPEAKER_01]: those kinds of assets where the rents are low and the capital is up to date or the capex is up to date.

[00:22:21] [SPEAKER_01]: So we found that and that was lucky, I guess, after seven plus months, I did find that diamond in the

[00:22:27] [SPEAKER_00]: rough and it's not lucky. That's the thing. Everyone's going to say that's luck. It's not

[00:22:30] [SPEAKER_00]: luck. It fell in my lap after seven months. You were working hard for it. You found a mom and pop

[00:22:36] [SPEAKER_00]: that didn't know what they had. So don't think everybody, oh, that deal is not rare. It's only

[00:22:40] [SPEAKER_00]: rare when you're like, wow, I can't believe I found this. No, you found it because you put in the hard

[00:22:44] [SPEAKER_00]: work and you knew what you were looking for and you knew the value was there. Those are a lot of

[00:22:49] [SPEAKER_00]: components. I'm not going to say that luck doesn't play into it. I don't really believe in luck. I think

[00:22:53] [SPEAKER_00]: the harder you work, the more you know, the more action you take, luck will follow. I mean,

[00:22:58] [SPEAKER_00]: hey, I was lucky to find my business partner, Mike. Was I lucky? No, I just got in into partnership

[00:23:03] [SPEAKER_00]: with Jake. I had an opportunity. I knew the value that I could deliver it to my business partner.

[00:23:07] [SPEAKER_00]: My business partner knew the value. We were just able to meet at a certain time when we needed each

[00:23:12] [SPEAKER_00]: other and boom, I didn't mean to steal your thunder, but it's not luck. I just want to reiterate that for

[00:23:17] [SPEAKER_00]: anybody listening, it is a component of putting in the effort as well. No, you're absolutely right.

[00:23:22] [SPEAKER_01]: I mean, I was underwriting at least 30 to 40 deals a week at that time.

[00:23:28] [SPEAKER_00]: Wow. That's a lot of effort. Yes.

[00:23:31] [SPEAKER_01]: So it is a numbers game to your point. Everybody says a numbers game. It literally is a numbers game.

[00:23:35] [SPEAKER_01]: You start underwriting deals after deals. You hone in on certain areas. You know the market,

[00:23:42] [SPEAKER_01]: you know the details around the expenses. You know how much the water is going to be per unit. You know

[00:23:52] [SPEAKER_01]: you can quickly underwrite deals. So I was able to do that. And then we found this one. And then after

[00:23:59] [SPEAKER_01]: that, we found the second one, which was a value add, a little different. The third one was a totally

[00:24:07] [SPEAKER_01]: different game. The second one was a little value add. The third deal was three out of the 16 units

[00:24:13] [SPEAKER_01]: were occupied. Now, this is one of the biggest example I was sure you know that was the buy right,

[00:24:20] [SPEAKER_01]: manage, finance right criteria comes in handy. And we are doing the manage right as well now.

[00:24:25] [SPEAKER_01]: We bought this 16 unit townhome style unit. And this is the other piece I really like. We love

[00:24:30] [SPEAKER_01]: time. So just like you guys. Right. And I have actual theory behind it also data supporting that why

[00:24:39] [SPEAKER_01]: townhomes are better. But again, like any asset class, the deal has to make sense. The numbers

[00:24:44] [SPEAKER_01]: have to make sense. In this one, three out of the 16 were occupied. So you had more than 80%

[00:24:50] [SPEAKER_01]: vacancy. Now, the reason it was because the person who was selling it had bought it in a really bad

[00:25:01] [SPEAKER_01]: condition. They had done basic builder style finishing. We got it for 1.2, 16 unit.

[00:25:10] [SPEAKER_01]: What's the unit mix? Are they two bedrooms?

[00:25:13] [SPEAKER_01]: Two bedroom and three bedroom townhomes with garage. So we know at that time, they were renting

[00:25:22] [SPEAKER_01]: three units at two bedroom at $750 and the three bedroom at $950, which was way under market. Now,

[00:25:30] [SPEAKER_01]: this was again, this is where the knowledge of the area comes in. This was on the cusp of

[00:25:34] [SPEAKER_01]: the good area ending and the like not a good area starting. But we know that we can create a product

[00:25:41] [SPEAKER_01]: that will cater to the needs because it's at the edge of the good area too. It was really bad shape from

[00:25:49] [SPEAKER_01]: exteriors. So the buy right piece comes in, we got a good deal. We got seller to finance a part of it as

[00:25:56] [SPEAKER_01]: well. On a secondary. So we had our, we did put in quite a bit capital as well as part of closing.

[00:26:03] [SPEAKER_01]: Now, in terms of finance, right? Everybody said, I have to get a bridge loan.

[00:26:07] [SPEAKER_01]: We were able to fight it out. We were able to find a lender, a bank who not only gave us the purchase,

[00:26:14] [SPEAKER_01]: 75% of the purchase, but they also gave us 85% of the rehab as well. So now we don't have a time

[00:26:23] [SPEAKER_01]: block on our head, right? So we are able to execute our plan. Now, just because we did the buy right at

[00:26:31] [SPEAKER_01]: the right price and you had the financing appropriately, we had issues while going through

[00:26:40] [SPEAKER_01]: the execution of the plan. Like again, in most cases you will. In this case, we had two major

[00:26:45] [SPEAKER_01]: issues. We had to fire not one, but two general contractors because at that time we hadn't built

[00:26:51] [SPEAKER_01]: that internal team, right? So this was part of that learning and building process as well. The growing

[00:26:56] [SPEAKER_01]: pains where two GCs, we had to fire. They stole a lot of money in terms of like they took money in

[00:27:04] [SPEAKER_01]: advance. They didn't finish the work. We had to bring in second one, the same thing happened.

[00:27:07] [SPEAKER_01]: And then we went in and we actually brought in our GC, an existing partner from Cincinnati area,

[00:27:16] [SPEAKER_01]: different area. And we built our team in-house and we finished that product. We finished the rehab.

[00:27:24] [SPEAKER_01]: We have a hundred percent leasing complete. I think there's only one unit left on that.

[00:27:31] [SPEAKER_01]: We targeted 1,300 and 1,500 rent. We are getting 1,500 and 1,700 rent on that unit.

[00:27:39] [SPEAKER_00]: What do you think that asset's worth right now per unit?

[00:27:43] [SPEAKER_01]: It's after we leave out the last unit, it's going to be worth 2.4 million.

[00:27:47] [SPEAKER_00]: I need people to understand this. This is only a 16 unit deal, which will probably produce

[00:27:54] [SPEAKER_00]: conservatively $300 per month in net cashflow. So 16 times 300, you do the math around $5,000 a month

[00:28:03] [SPEAKER_00]: in pure cashflow once Mohit has gone and pulled all of his existing capital out of there. So he's got a

[00:28:10] [SPEAKER_00]: 16 unit desirable townhome style, two and three bedroom townhome with garages that's going to be

[00:28:19] [SPEAKER_00]: cranking out one deal can change the trajectory of your life and the trajectory of your thinking.

[00:28:26] [SPEAKER_00]: Cause now all of a sudden he's seen the value of bringing something in-house, going through those

[00:28:31] [SPEAKER_00]: pains, getting punched in the face with the, with the, with the contractors. And you know,

[00:28:36] [SPEAKER_00]: I wish I could say, give me a show of hands who hasn't gotten ripped off by a contractor.

[00:28:40] [SPEAKER_00]: That's part of life. Even if you're not in a multifamily that happens to you all the time,

[00:28:44] [SPEAKER_00]: that shouldn't stop you. But what you did was you bought the asset properly and you financed it

[00:28:49] [SPEAKER_00]: properly. Great terms, by the way, loan to cost. I love it. Jake and Gino community, we don't do

[00:28:55] [SPEAKER_00]: bridge financing. We don't do the short-term crap. Cause if we give them back the keys, like you see

[00:28:59] [SPEAKER_00]: everyone else doing, but it's important. The reason why you, when you bought it properly, you were able

[00:29:05] [SPEAKER_00]: to do the manager, you were able to take a little bit of the risk off. Cause if you had overpaid on that

[00:29:09] [SPEAKER_00]: asset or not financed the property, you would have been under a time constraint and you would have

[00:29:14] [SPEAKER_00]: failed on the deal. So, you know, congratulations to you. One, one last question before we, before

[00:29:19] [SPEAKER_01]: just, just one last, sorry, I will just have one more thing. I think, sorry, but you're absolutely

[00:29:25] [SPEAKER_01]: right. It's if we did not have the time, if we did not have finance, right, we would be under right now

[00:29:30] [SPEAKER_01]: because the bridge loan will be due and we are not done stabilizing. So again, it's our, it's up to us

[00:29:35] [SPEAKER_01]: when we want to refi that property now. And the second point, you started the conversation by having the

[00:29:41] [SPEAKER_01]: right team. So I would like to hear say that if I was on this deal by myself, I don't know how

[00:29:47] [SPEAKER_01]: mentally stable I would be. So having a partner, being able to work through these challenges together,

[00:29:55] [SPEAKER_01]: I think people underestimate the, the mental health and the toll on mental health in real estate as well.

[00:30:01] [SPEAKER_01]: So having the partner to talk to going through these issues, even just, you know, using the language

[00:30:08] [SPEAKER_01]: that you have to, in terms of getting through these situations, but getting back on track and

[00:30:12] [SPEAKER_01]: having accountability as well. Right. That plays a big role. I think people underestimate the value of

[00:30:18] [SPEAKER_00]: that aspect as well. Mohit, your shirt says Jake and Gino. If it had just said Gino, I probably would

[00:30:24] [SPEAKER_00]: have quit years ago because it's like, you're an entrepreneur. You're all by yourself. It's not

[00:30:29] [SPEAKER_00]: just a real estate business. It's every business. And as entrepreneurs, I think we need to understand

[00:30:34] [SPEAKER_00]: that it could be a lonely life and you can go talk to your spouse. You can talk to your kids,

[00:30:39] [SPEAKER_00]: but they don't understand the pain of making payroll. I've been making payroll since 1994.

[00:30:45] [SPEAKER_00]: I'm the last person that gets paid and that's painful. And you can't really convey that to somebody

[00:30:50] [SPEAKER_00]: else unless they're in the same boat rowing with you. So that's really, really important.

[00:30:55] [SPEAKER_00]: How did you find these deals? Give me an idea of, of, of finding these deals.

[00:31:00] [SPEAKER_01]: So most of my deals we have come through, I would say 60% of the deals have come through

[00:31:06] [SPEAKER_01]: broker relationship. Even the, the tool that two of the deals that came off market were pocket

[00:31:12] [SPEAKER_01]: listing through a broker, right? So again, pocket listing is basically when the broker is not really

[00:31:18] [SPEAKER_01]: advertising it across the entire world. They have their selected investors that they know will close.

[00:31:25] [SPEAKER_01]: And this is part of the puzzle as well. When you close your first deal and you build that relationship

[00:31:29] [SPEAKER_01]: that you can close, right? Uh, they will come to you with more deals as well. Similar to the one

[00:31:35] [SPEAKER_01]: pocket listing I'm talking about. And we have had two or three from wholesaler as well. We have done

[00:31:40] [SPEAKER_01]: deals with wholesalers. Although I would say you have to be really, really careful when working with

[00:31:45] [SPEAKER_01]: wholesalers and we have been. And that is why I want to make sure that we have the buy-write criteria

[00:31:51] [SPEAKER_01]: we are well honed in and we know the market, we know the price that we're getting in. And we know the,

[00:31:56] [SPEAKER_01]: the capex that we have to put in before we close anything with wholesalers.

[00:32:00] [SPEAKER_00]: Before you give out your information, I want to make this point once again,

[00:32:03] [SPEAKER_00]: when Mohit was working in an underwriting 30 deals a week and putting in all that work,

[00:32:08] [SPEAKER_00]: it gave him the understanding and the expertise in that market. So that when his first deal came,

[00:32:15] [SPEAKER_00]: he knew without having to spend three hours that that was the deal.

[00:32:18] [SPEAKER_00]: And when his 16 unit townhome came through, he knew what rents were. He knew what expenses were

[00:32:24] [SPEAKER_00]: in the market. He understood that that was his buy-write criteria. So do all that work on the

[00:32:29] [SPEAKER_00]: front end. Although it may be painful in the beginning, it really pays off in the longterm.

[00:32:34] [SPEAKER_00]: Now, if any listener wants to get ahold of you, they want to learn how to become an investor in your

[00:32:39] [SPEAKER_00]: deal. They want to learn more about your strategy. They want to learn more about section eight housing.

[00:32:43] [SPEAKER_00]: How can they get ahold of you?

[00:32:46] [SPEAKER_01]: Yeah. My website is www.mvcapitalgroup.org. My emails,

[00:32:54] [SPEAKER_01]: Mohit, M-O-H-I-T at mvcapitalgroup.org. And I'm on LinkedIn as well, as well as Facebook

[00:33:05] [SPEAKER_01]: and on Twitter as well.

[00:33:08] [SPEAKER_00]: Awesome. Mohit Chopra coming from India 20 plus years ago as an immigrant,

[00:33:12] [SPEAKER_00]: starts working the corporate dream. That's what everyone is taught that that's the dream. And for

[00:33:18] [SPEAKER_00]: some people it is the dream, but it seems as if the majority of the Jake and Gina community,

[00:33:22] [SPEAKER_00]: it starts to become a nightmare because we all know that we're built for greatness. We all know

[00:33:26] [SPEAKER_00]: we're built for something more. We all know that we want to build something for ourselves.

[00:33:31] [SPEAKER_00]: And for some of us, that's the life that we want to lead, becoming an entrepreneur,

[00:33:35] [SPEAKER_00]: becoming a multifamily entrepreneur. Mohit starts investing in 2013 in single family homes.

[00:33:40] [SPEAKER_00]: He pivots in 2020. And like most investors, they start out with single family homes because of the

[00:33:45] [SPEAKER_00]: limiting beliefs. They don't know how to get into it. But in 2020, he shifts into multifamily.

[00:33:50] [SPEAKER_00]: And in 2023, he's at MM5 and he looks up, he meets Gino. He says, you know what? I'm going to take

[00:33:57] [SPEAKER_00]: your shot. What's the worst thing that can happen? And 18 months later, he's on Movers and Shakers

[00:34:03] [SPEAKER_00]: talking about over a hundred units. And the journey has just started for Mohit and the evolution.

[00:34:10] [SPEAKER_00]: His life hasn't changed. It's just being transformed through multifamily and through the lens of looking

[00:34:15] [SPEAKER_00]: at it from buy right, manage right, and finance right. Mohit, I want to thank you for being on the

[00:34:21] [SPEAKER_00]: show for sharing your story. Any final words? No, I think, thank you again, Gino, for having me on.

[00:34:29] [SPEAKER_01]: I think, like you said, key pieces to the puzzle are in front of you. You find the right way to put value

[00:34:35] [SPEAKER_01]: in terms of what you are contributing, find the right partner, do the hard work. And even though it's

[00:34:42] [SPEAKER_01]: frustrating in the beginning when you don't have success, eventually you will get success if you

[00:34:46] [SPEAKER_00]: continue on. You will. Thanks everyone for spending part of your day with Mohit and myself.

[00:34:51] [SPEAKER_00]: And go out there and make it a make it happen day. Take care, everyone.