https://youtu.be/R728ph0dhnw
Ash Patel, a full-time Commercial Real Estate investor and managing partner of Invest Beyond Multifamily, transformed his career after 15 years in the corporate world. His journey into commercial real estate began with a pivotal discovery: the superior benefits and passive profit potential of non-residential properties over residential ones.
Over the last 15 years, Ash has specialized in purchasing, developing, and improving diverse commercial assets including retail, warehouse, office, industrial, and mixed-use, consistently achieving extraordinary returns. Known for his hands-on approach and unique method of identifying and enhancing commercial real estate, Ash also mentors aspiring investors through his formal Mastermind group, sharing the strategies for building wealth and passive profit in this lucrative sector.
#CommercialRealEstate
#PassiveIncome
#RealEstateInvesting
#MixedUseBuilding
#ValueAdd
0:00 – Start Here: Mixed-Use & Why Commercial?
1:14 – From IT Guy to Real Estate Investor
3:43 – Why Commercial is Easier & More Profitable
5:56 – Debunking Commercial Real Estate Myths
7:12 – How We Find Mis-Priced Commercial Deals
10:39 – Investing Anywhere: Asset Agnostic Approach
13:00 – The Truth About Triple Net Leases
14:36 – The Power of National Tenants
18:18 – Commercial Interest Rates & Insurance Costs
21:17 – Diverse Commercial Asset Classes
24:27 – Actionable Advice for New Commercial Investors
25:39 – Connect with Ash
Enhance your real estate investing knowledge !
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This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:00:01 – 00:00:14:00
Ash Patel
For anybody that’s investing in residential, find a mixed use building. And the way you underwrite those is the apartments should pay for all of the expenses. Whatever retail you have on the first floor should be pure profit.
00:00:14:02 – 00:00:27:07
Aaron Fragnito
All right, ladies and gentlemen, welcome back to Passive Cash Flow Podcast. I’m your host, Aaron Frank Nieto. And we have an interesting guest today, the famous, the successful Arsh Patel. How are we doing today ash.
00:00:27:09 – 00:00:30:02
Ash Patel
Aaron great and great to be here man. Thank you.
00:00:30:04 – 00:00:52:16
Aaron Fragnito
Absolutely. So I enjoy connecting with you at the Best Ever conference. Just about a month ago or so where I was presenting in the Pitch Slam, which, regrettably, I did not win. But I got some great feedback from you and the other judges there. And, you know, we started talking about your investment strategy beyond multifamily and, since then, I’ve, I’ve gotten to learn more about your business model.
00:00:52:16 – 00:01:03:18
Aaron Fragnito
Oh, man. You’ve planted a seed in my head about going beyond multifamily. So I want to have you on the show here to learn about how people can expand beyond multifamily to build their wealth. How’s that sound?
00:01:03:23 – 00:01:06:08
Ash Patel
It sounds phenomenal. Let’s get to it.
00:01:06:10 – 00:01:14:13
Aaron Fragnito
Absolutely. So before we get started here, why don’t you just give us a little background, kind of how you got started in the space and, start with your company as well there. Yeah.
00:01:14:13 – 00:01:40:15
Ash Patel
Aaron, I was an IT guy for 15 years. Right? I was on that corporate ladder. Never enjoyed it. Knew that was. It wasn’t going to be what I wanted long term. It paid the bills for a lot of years. I always had a side hustle. I had everything from a web design business, a sports supplement company, an SEO company, and I always wanted to do something that can get me out of the 9 to 5.
00:01:40:17 – 00:01:57:21
Ash Patel
And it was by accident that I found real estate. I, my wife, and I would go to our CPA every year. We were both W-2 earners and we’d ask this guy, hey man, how do we reduce our taxes? And without even looking up at us, he just grumbled, if you make it, you pay it. And I’m like, get the hell out of here, man.
00:01:57:21 – 00:02:18:22
Ash Patel
There’s got to be a better way. So I always heard real estate was a great way to offset taxes. I didn’t understand how depreciation works or any of the write offs really work. So I figured, okay, let’s go out. Let’s go buy some real estate and see what we can do to reduce our taxes. So the first piece of property that I bought was a mixed use building in a college town.
00:02:18:24 – 00:02:45:10
Ash Patel
It had apartments above a grocery store, which was essentially, you know, a liquor store for college kids. Right. Just beer trucks in and out of there. And I got this place rehab, rent it out. And every holiday weekend, every big weekend, I’d get calls from tenants, toilets clogged, sinks clogged. This is leaking. So I’d have to go down there because I didn’t want to pay somebody else to do the work that I could do.
00:02:45:12 – 00:03:06:18
Ash Patel
And one day it was a Saturday morning. I was out on site. A tenant had a clogged toilet. So here I am in the bathroom unclogging the toilet. I could look out the window and see an Hvac company on the rooftop of this store. And they’re replacing Hvac units, rooftop units. And I’m thinking, what? Like I didn’t call them.
00:03:06:18 – 00:03:25:18
Ash Patel
What’s going on? So I go downstairs and I talk to the store owner, and I said, hey, what’s going on, man? I see all these guys running around in the roof. He says, our Hvac went out or, sorry, he says, our AC went out. So we’re replacing the entire Hvac system. And I’m like, okay, am I going to have to pay for any of this?
00:03:25:20 – 00:03:43:08
Ash Patel
And he’s like, no, man, it’s in our lease. It’s our responsibility. I’m like, yes, let’s go. As I’m walking quickly out the door, he stops me. He’s like, gosh, do you mind if we remodel the bathroom down here? And I’m like, waiting for the cameras to come out of the woodwork. Is this real life? And I’m like, nah, man, have at it.
00:03:43:10 – 00:04:12:18
Ash Patel
I get home and I read this lease again. Sure enough, he’s responsible for everything, including the parking lot, exterior lighting and everything within his four walls, all the mechanicals I literally drop what I was doing at the time became a full time commercial real estate investor. I’ve since had a fair amount of residential as well, but every time I get into residential, I kick myself and I think, why doesn’t everybody do commercial?
00:04:12:20 – 00:04:40:03
Ash Patel
So we manage our entire $50 million portfolio with two people, three people total, myself and two others. Right? So we don’t have property managers, we don’t have leasing managers. We do it all in-house in a home office. So managing commercial is a million times easier. The competition is much less and the returns are significantly higher.
00:04:40:05 – 00:04:45:00
Aaron Fragnito
Yeah I mean I understand that now is that a triple net lease you had with that commercial tenant.
00:04:45:02 – 00:05:05:19
Ash Patel
No I would consider that a gross lease. He was just responsible for some maintenance items. But I pay the taxes, I pay the insurance. And what I want to stress here is there’s an evolution that we have to break with real estate investing. Everybody buys the house down the street so they can keep an eye on it.
00:05:05:19 – 00:05:30:11
Ash Patel
It’s a neighborhood they like. And then they might buy another house. They might buy a duplex. Then they’ll buy a quad. If you’re successful, you’ll move up to a ten unit, a 16 or 20 unit, and then you become a multifamily investor. Yes, cycles got to be broken. It’s vicious right? It’s the returns are so low. You’re competing with a huge field out there.
00:05:30:13 – 00:05:51:18
Ash Patel
The barriers to entry are very low. I’ve asked people over the years, I mean, why don’t you invest in strip malls? Why don’t you invest in office? And the response I always get. Oh, commercials too hard. Well, now it’s not commercials. Too expensive. I can find you a commercial property for the same price as a single family house in your neighborhood.
00:05:51:20 – 00:05:56:12
Ash Patel
Like, it’s just mindset is all that’s keeping people from doing it.
00:05:56:14 – 00:06:12:05
Aaron Fragnito
Yeah absolutely. Or I’ve heard the excuses. Oh insurance costs more or the debt costs more. But it’s all relative you know just a number on a screen. You know and generally you can put down what, what are you doing these days on the debt side. Maybe 30% down for a commercial.
00:06:12:07 – 00:06:13:16
Ash Patel
20 to 25.
00:06:13:18 – 00:06:32:10
Aaron Fragnito
Okay. All right. So pretty similar to, I mean, quite frankly, I mean, if you get agency debt, you know, on, parking, as we do when you start to get into the larger apartment buildings, it’s 30% down for agency, right? Fannie Mae, Freddie Mac. So you’re saying with commercial, you could actually get up to 80% LTV with 20% down?
00:06:32:10 – 00:06:33:01
Aaron Fragnito
Is that correct?
00:06:33:04 – 00:06:43:21
Ash Patel
Correct. And that often comes after building a track record and having lender relationships and liquidity. If you’re starting out, you might be at 2,530%.
00:06:43:23 – 00:06:49:00
Aaron Fragnito
And how are you usually financing these opportunities. Local banks, regional banks. Or is there a more of a.
00:06:49:02 – 00:07:12:00
Ash Patel
100% local banks. Our deals are pretty heavy value add. There’s a lot out here on the deals typically. So any large bank isn’t going to touch our deals. We don’t have institutional capital wanting value add deals. So it’s always a local lender as close to the property as possible.
00:07:12:02 – 00:07:30:15
Aaron Fragnito
Okay. So walk me through a deal if you can. As far as like how you source these opportunities as generally brokers or wholesalers or do you, do you know direct mail marketing and then just underwriting them as well looking you know, for triple net leases or single Nat or whatnot. And then, what type of, you know, assets you tend to focus on with your business.
00:07:30:18 – 00:07:54:18
Ash Patel
All right. So there’s a lot to uncover in that question. How do we find the deals? You would think broker relationships, because in the multifamily world, broker relationships track record or key in our world, they mean very little. If a commercial broker has a deal, they know how to price it to the market. So we look for mis marketed, mispriced or mismanaged deals.
00:07:54:20 – 00:08:21:20
Ash Patel
I’ll give you an example of each one. So mis marketed my two favorite commercial brokers. They only list deals on their own mom and pop website. They don’t put it on loop net, they don’t put it on correctly. They don’t put it anywhere else. Besides, you know, their little website that some kid made in a basement. So we scour that site all the time, and whenever they put deals on there, it’s usually a home run.
00:08:21:22 – 00:08:48:14
Ash Patel
So that’s one example of mis marketed mispriced. Now there’s good brokers and there’s lazy brokers. We’re selling a $7 million strip mall right now. Our broker that we listed it with, red. Every one of the dozen leases that we had, some of them are 70 pages long. He literally like, not just comb through it, not just ChatGPT did he read every word in every one of those leases?
00:08:48:16 – 00:09:10:16
Ash Patel
This way he knows how to exactly price the deal. Now, there’s a lot of brokers. I would say the majority of them, they won’t do that. They’ll rely, give me the numbers and I’ll find you a price. You know, the numbers don’t always tell the whole story. Who’s responsible for Hvac repairs, replacements, plumbing problems, all of that impacts your price.
00:09:10:22 – 00:09:39:14
Ash Patel
So, brokers that Miss Price properties. Another good example is one of our, mastermind students found an office building that said it was 8000ft², and it was $400 a square foot. Makes no sense. He dove into it a little bit more. They didn’t add the second story, so it’s actually 16,000ft², right? So when everyone’s whenever somebody looks at this listing, they’re going to think, oh my God, this guy’s nuts.
00:09:39:14 – 00:09:45:09
Ash Patel
Its price too high. Yeah, I’ve into it a little bit. Right. Buying the mis marketed mispriced deals.
00:09:45:11 – 00:10:08:09
Aaron Fragnito
At People’s Capital Group we help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth.
00:10:08:13 – 00:10:13:15
Aaron Fragnito
So find out if you qualify at People’s Capital group.com.
00:10:13:17 – 00:10:39:19
Ash Patel
Mismanaged is fairly easy. It’s a property that’s got maybe a high vacancy when all of the surrounding properties are fully leased. It’s, tenants who haven’t had rents raised in decades that’s mismanaged. So we look for those three things in terms of triple net gross leases, I don’t care asset class. I don’t care as long as it’s nonresidential.
00:10:39:21 – 00:11:00:10
Ash Patel
So even geographic location, we’re agnostic. We’ve got holdings all over the Midwest and Southeast, whether it’s office, industrial, medical, bars, restaurants, retail, you know, flex, ground up development. If we can make a killing on it, we don’t care what it is or where it is.
00:11:00:12 – 00:11:20:08
Aaron Fragnito
Interesting. Now, that’s got to be difficult, though, because we’re going into a new market and a new asset class. There’s a lot to learn. There’s a lot of connections to be made. And a lot of information to fully grasp and understand. You have trouble, you know, developing a good, dream team, you know, on boots, on the ground in these markets when you’re buying these assets.
00:11:20:10 – 00:11:43:09
Ash Patel
Now, the biggest advantage you can have in terms of property management, because, again, we, we manage everything in-house is at each of your properties. Find a super user, find the one person who’s really passionate about their business they’re building that they’re in and their community. And they will be your eyes and ears. They will do showings for you.
00:11:43:11 – 00:12:06:12
Ash Patel
If it’s an office building, they’ll unlock doors. They’ll present the building probably better than anybody else because they actually have their business there. If there’s, contractors that need to get in, they’ll facilitate that. We can also hire local residents or realtors to help us out a lot. I didn’t say commercial. I said residential, right, to help us out with commercial properties.
00:12:06:14 – 00:12:19:16
Ash Patel
A lot of them are hungry to learn and break into the commercial space. So, you know, just be resourceful. But, we don’t ever think twice about buying in remote areas even thousands of miles away.
00:12:19:18 – 00:12:34:21
Aaron Fragnito
Interesting. So instead of hiring a commercial leasing agent who’s going to charge you a reasonably high commission, and they want, a commission every time the lease renews, you might hire a residential realtor who’s hungry to break into the business and charge you lesser fee.
00:12:34:23 – 00:13:00:21
Ash Patel
For the lease up. So we do a lot of that ourselves. Right. If it’s a very unique space, like 40,000ft² of big box vacancy, we would employ a broker. That’s where their relationships with all the big box retailers comes in. We’ll still give it a shot. And we’ve still, you know, we still have our group working on lease ups as well alongside with a broker.
00:13:00:23 – 00:13:36:02
Ash Patel
Yeah. Aaron you also mentioned triple net or you know, there’s this mystical thing about triple net properties and people think it’s just mailbox money. But I’ll demystify some of that one. Not all triple nets are created equal. Right. So you have to look for the words absolute triple net no landlord responsibility. Those are typically your McDonald’s your, you know, national fast food chains that are, the top 10%, but a lot of triple net leases.
00:13:36:08 – 00:14:14:11
Ash Patel
You’ll notice that the the taxes, the insurance, everything gets paid by the landlord. They can charge the tenant back, but it gets even more granular sometimes. There’s, Hvac repairs or the tenants responsibility. Replacements are the landlord’s responsibility. Or break it down even further. The tenant will pay for the replacement, but they amortize it over time. So if they have three years left on their lease and the new roof or new HBC system goes in, you’re amortizing that over 5 or 10 years, you only getting three years of payments from the tenant.
00:14:14:13 – 00:14:20:11
Aaron Fragnito
Right? Right. Okay. So you might end up paying the majority of that Hvac replacement cost. Yeah.
00:14:20:13 – 00:14:36:17
Ash Patel
And that’s what makes commercial difficult right. The devil’s in the details of all the leases. That’s why that broker read every one of our leases. Because every one of them was written by a different attorney in a different year. And every one is completely unique.
00:14:36:21 – 00:14:49:15
Aaron Fragnito
And that’s because you’re buying kind of a mismanaged property that just had a, a bunch of different types of leases. And sometimes the tenant might have their own attorney who drafts the lease. Well, I’d imagine generally that the landlord is drafting the lease. Right.
00:14:49:17 – 00:15:06:13
Ash Patel
The landlord will draft the lease in most cases with national tenants. They have their own lease. They’re not signing yours, you’re signing theirs. But then there’s redlines that go into it, right? There’s back and forth. So every lease gets changed, no matter who the tenant is.
00:15:06:15 – 00:15:17:18
Aaron Fragnito
Right? Right. Okay. Do you find it easy to, work with national tenants and national brands, or is it kind of more difficult? In some senses.
00:15:17:20 – 00:15:46:17
Ash Patel
It is difficult because they have a lot of leverage. Right. And they most of them know that. But you do whatever it takes to land them. I’ll give you a good example. We had 37. Well we had 31,000ft² and was big box vacancy. We got O’Reilly’s auto. They came on for a 15 year lease, no tenant improvement money, meaning they just took the space as is.
00:15:46:22 – 00:16:08:13
Ash Patel
They’re putting millions of dollars in renovations, and then all of a sudden they’re like, hey, we just found out you have 6000 square foot of vacancy next to us. We want that too. But we don’t want to pay for it. And we’re like, and at the end of the day, we would have done it right because getting O’Reilly, that one signature yielded us $2 million in profit.
00:16:08:15 – 00:16:34:07
Ash Patel
Just signing that lease the day we signed that lease with them, $2 million in profit. So, luckily our team is awesome. And they negotiated, I think, $6 a square foot for that. For that additional 6000ft², which is a huge win, because if they probably knew this, but, if they said we’re going to walk from the deal and they kind of did, we would have done it.
00:16:34:10 – 00:16:56:19
Ash Patel
We would have said, okay, take it. We need this deal. Yeah. Because no matter what, they’re adding millions of dollars in value. Whenever we sell this center, we’re selling it now. But, the new buyers are going to see a 15 year very high credit tenant sign for 40% of the square footage of the strip mall. What a safe investment, right?
00:16:56:21 – 00:17:06:18
Aaron Fragnito
Yeah. So you’re saying the idea there, the strength of the lease will essentially lower your cap rate and increase your property sale price? Is that what you’re indicating.
00:17:06:18 – 00:17:26:18
Ash Patel
In addition to attracting coastal buyers? So if we had all mom and pop tenants, the buyer for a property like that is likely going to be somebody local. Yeah. If we have all triple net national tenants, somebody from Alaska or overseas can buy it because they’re very easy to manage.
00:17:26:20 – 00:17:46:10
Aaron Fragnito
I got it. Okay. And also, the other, storefronts will probably lease up more quickly, in a hop for a higher square foot if you have, more popular store there, you know, like a Walgreens or something, bringing in a lot of, traffic, then you’re going to ideally get a higher price per square foot for the other units.
00:17:46:10 – 00:17:47:07
Aaron Fragnito
Would that be safe to say.
00:17:47:10 – 00:18:01:21
Ash Patel
You nailed it? Right. So this particular strip center has to anchor tenants. They have O’Reilly’s and Dollar Tree. Sure. And you know, if you think about all the traffic they bring in, who wouldn’t want to be a neighbor to them.
00:18:01:23 – 00:18:24:10
Aaron Fragnito
And of course yeah. Yeah. All right. That’s interesting. That’s interesting. Yeah. So and then also with you know, so the other objections, you have the cost of insurance and the interest rate on commercial properties there. What, what are you seeing right now with interest rates on loans, your for new acquisitions of commercial real estate?
00:18:24:12 – 00:18:31:21
Ash Patel
Aaron, we’re underwriting at seven and we’re usually landing somewhere within a quarter point of that okay.
00:18:31:23 – 00:18:32:07
Aaron Fragnito
Okay.
00:18:32:13 – 00:18:34:02
Ash Patel
So we’re higher than multifamily.
00:18:34:06 – 00:18:42:10
Aaron Fragnito
Yeah. Yeah. And why is that. Because it seems like a very safe long term investment. Why why are the interest rates so high on commercial real estate?
00:18:42:12 – 00:19:08:13
Ash Patel
Two reasons. One, there’s no agency debt available on value deals. So it’s whatever lender does the deal. They hold it on their books the entire time. There’s no secondary market where they can trade these loans. So if you think about when you have a residential mortgage, every six months or so, you get a letter saying, hey, now Capital One is going to manage your loan, and now Chase Bank is doing it right.
00:19:08:15 – 00:19:21:12
Ash Patel
They sell these things as commodities, right. Value add commercial deals. There’s no secondary market to sell them or trade them. So there’s no intrinsic value other than what the original lender puts on it.
00:19:21:14 – 00:19:49:06
Aaron Fragnito
At People’s Capital Group, we help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth, so find out if you qualify a People’s Capital group.com.
00:19:49:08 – 00:20:08:23
Aaron Fragnito
Got it. Okay. And as far as insurance goes, I mean insurance has skyrocketed on us. We used to underwrite deals $800 a door. Now we’re underwriting them at $1,400 a door for insurance. You know, just about a two year period or so. That’s how much it’s gone up by, What are you seeing? I guess you do a per square foot in commercial.
00:20:08:23 – 00:20:09:16
Aaron Fragnito
Is that right?
00:20:09:18 – 00:20:37:01
Ash Patel
Now, every asset class is different. It comes down to, replacement cost, age of the property, age of the roof, current condition. Our costs are very reasonable. We might have gotten a 5 or 10% increase over the last year. Sorry for the strip mall that we bought for five. Selling for seven for, it’s 100,000ft². We pay around $10,000 a year in insurance.
00:20:37:03 – 00:20:58:19
Aaron Fragnito
Okay. Sounds, nothing. Yeah, that’s that’s very cheap. Yeah. I’m thinking 100,000ft² would probably be, like, 70 units in residential real estate, something like that. And that would be, far more than that. You know, it would be like, $80,000 to $90,000 a year in insurance. So far, more than commercial.
00:20:58:19 – 00:21:01:05
Ash Patel
Yeah. It’s not a big line item for us.
00:21:01:07 – 00:21:17:24
Aaron Fragnito
Yeah. Wow. So that that’s actually extremely cheap compared to residential. That’s interesting. And then let’s just pivot briefly to like warehouses and other types of commercial real estate that you invest in. Are there other asset classes beyond strip malls that you also own?
00:21:18:01 – 00:21:33:19
Ash Patel
Yes. Everything from medical, industrial REIT, warehouse, bars, restaurants, office. Again, we’re asset agnostic, right? So we’ll buy anything anywhere. If it makes a lot of money.
00:21:33:21 – 00:21:43:24
Aaron Fragnito
And do you trouble managing different types of assets like over the last ten years? There’s so much to learn. There’s so many different service providers, you know. Is that is that one of your challenges?
00:21:44:01 – 00:22:04:07
Ash Patel
You know, I’m thinking back to the beginning. I’ve been doing this for 15 years. In the beginning, I’m sure there was a bit of a learning curve. But once you understand one asset, you understand the majority of the next one and the next one, the underlying principles stay the same. It’s just some of the dynamics change what office users want.
00:22:04:08 – 00:22:15:03
Ash Patel
Is it going to be different than what a retail user wants versus a medical versus an industrial right. You just have to understand what your tenants needs are.
00:22:15:05 – 00:22:35:11
Aaron Fragnito
Interesting okay okay. That’s great. All right so it sounds like you have a wealth of experience and, and success in this space, you know, and since we spoke, like I said, you planted that seed in my head like, you know, maybe we should start looking more at strip malls and different, you know, commercial. We I mean, I see office deals there.
00:22:35:11 – 00:22:56:18
Aaron Fragnito
Just giving them away right now, you know, 40% vacant, you know, huge buildings, big parking lots, nice locations. You know, they’re just, like, super cheap. And, I do think office is going to come back. I love actually the idea of strip malls. I mean, I see them in Jersey here. You were saying one of the lowest vacancies for strip malls and is is one of the states.
00:22:56:18 – 00:23:15:20
Aaron Fragnito
The lowest vacancy is Jersey. You know, I could see that, you know, it’s a really densely populated state with great traffic. So you definitely got my wheels turning. And, from our past conversations here, you know, and I, we do own some mixed use real estate. In fact, one of the first buildings I bought was a store front and four apartments above it.
00:23:15:20 – 00:23:41:00
Aaron Fragnito
I, I own it today. It’s probably, four in value and still cash flows after two refinances. So, yeah, I do like the space. It’s definitely, very attractive and industrial to I know industrials done very well in the last, 5 or 6 years. I’ve heard some great stories from other investors. I know in that space, medical, I mean, the medical industry is just going to continue to grow as the demographic ages.
00:23:41:00 – 00:24:09:15
Aaron Fragnito
So I think medical is a great place to plant your flag. And, office, if you have the stomach for it, you know, in the cash reserves, you can do well by scooping, for a great price base in this time and then, leasing up the building, maybe at a lower price per square foot now, but growing that over time, especially if you make the building have the amenities that a lot of, you know, there’s a lot, like, outdated office space that just kind of doesn’t have the the amenities and the whistles and the bells that current office tenants are seeking.
00:24:09:15 – 00:24:27:01
Aaron Fragnito
So if you can kind of reposition that in a nicer all building, there could be a lot of value there as well. So got the wheels turn on my end, my friend. I’m very, curious to learn more about, you know, how you make sense of these different, asset classes. How can people connect with you and learn more about what you have going on these days?
00:24:27:03 – 00:24:29:23
Ash Patel
I’ll tell you everything, but how much time do you have?
00:24:30:00 – 00:24:35:20
Aaron Fragnito
Well, we’re usually to do about a 30 minute podcast here, and I think we have about 3 or 4 minutes left. So what do you have to say?
00:24:35:20 – 00:24:57:12
Ash Patel
I want to give your audience a little bit of actionable advice. Right. So what you’re doing mixed use buildings for anybody that’s investing in residential, find a mixed use building. And the way you underwrite those is the apartments should pay for all of the expenses. Whatever retail you have on the first floor should be pure profit. So you have a safety net, right?
00:24:57:12 – 00:25:23:09
Ash Patel
And it gives you an entrance into nonresidential commercial. Now for office it’s very simple to underwrite office today, look for at least 15% cash on cash and at least 20 to 30% vacancy. And look for recent leases signed. It’s that easy right? Those three things and you can start underwriting office. So if somebody signed a lease in the last year for an office, that’s great.
00:25:23:09 – 00:25:53:20
Ash Patel
There’s demand. If all the leases were signed pre-COVID, well, they might just be running the clock down right. So two very simple, actionable items for your audience that I really want them to pursue. And if they have any questions, email me. It’s Osh at invest beyond multifamily.com. I’ll give you my cell phone number. It’s (513)Â 520-1233. And that’s my number that no one else has access to.
00:25:53:20 – 00:25:56:22
Ash Patel
So if you text me first, it’s just me.
00:25:56:24 – 00:26:04:12
Aaron Fragnito
That’s awesome. I love how transparent you are. That’s great. That’s great. And then, you also have, like, a mastermind group that, you operate, is that right?
00:26:04:14 – 00:26:25:00
Ash Patel
I do, for four years. I started this again. Not by choice. I had a bunch of apartment people that wanted to learn commercial. I gave them hours and hours of my time, and I was a one man shop at the time, so, I had no desire to be a coach or mastermind guru. They kept pushing, and this thing just evolved.
00:26:25:02 – 00:26:39:09
Ash Patel
We’ve done 4 or 5 years of this. We’ve got about 100 students. We’ve never had a single student lose money on a commercial deal, ever. So we do meet ups a few times a year, but every Tuesday, it’s a zoom call.
00:26:39:11 – 00:26:42:18
Aaron Fragnito
Okay. That’s great. How can people learn more about your mastermind group?
00:26:42:24 – 00:26:47:10
Ash Patel
Just go to invest beyond multifamily.com okay.
00:26:47:10 – 00:27:09:22
Aaron Fragnito
Invest beyond multifamily.com. Very cool. Yeah I’m going to check that out myself my friend. You know I mean listen we’ve been very successful in the multifamily space and I’ve done about 300 transactions here in new Jersey. We’ve learned the market well. We have the in-house property management company, the infrastructure in place. It wouldn’t be that hard to scoop up a couple strip malls and add to the portfolio or an office building or warehouse space.
00:27:09:22 – 00:27:29:07
Aaron Fragnito
So I do come across deals there. I usually just say, now we’re we’re really just focused and built for multifamily. But, you know, I think I’m going to open up my mindset a little bit more. The more we talk, the more you inspire me here. And, it’s good to have an open mindset that at the end of the day, like you said, we look for really great deals.
00:27:29:07 – 00:27:38:02
Aaron Fragnito
And if he’s out there to make incredible returns for our investors, we want to move on them and wants to advantage of them, you know? So, but that’s amazing. So, one more time. What’s that website.
00:27:38:04 – 00:27:41:20
Ash Patel
Invest beyond multifamily.com.
00:27:41:22 – 00:28:07:07
Aaron Fragnito
Excellent, excellent. All right, ash, I really appreciate you coming on the show. My friend. You are a wealth of information and, inspiring to our listeners and, to our listeners out there, if you’re getting value out of the passive cash Flow podcast, share this with a friend, share with a colleague, share it with someone that you think could, grow their passive income, their passive wealth, whether they’re invested in real estate or not?
00:28:07:09 – 00:28:31:09
Aaron Fragnito
We cover all different types of topics. We have tax specialist insurance, Rias, real estate investors. And we cover all different types of topics here on the Passive Cash Flow podcast, we have over 170 episodes come up with a new one every single month. And, be sure to subscribe. We are on YouTube and all the major podcast platforms there, so be sure to subscribe on those platforms if you haven’t yet.
00:28:31:11 – 00:28:51:12
Aaron Fragnito
And please share this with a friend if you feel like you’re getting value out of it. Of course. I’m Erin Frank Nieto, co-founder of People’s Capital Group. We help people build and preserve their wealth in new Jersey apartment buildings. But hey, after listening to this episode, I might have to change my, marketing message here. We may have to get all of our our members to change this back here.
00:28:51:14 – 00:29:09:21
Aaron Fragnito
It says helping people invest in real estate. Okay, good. We want to get a new plaque in the office here. Because that’d be expensive. So if we get into beyond multifamily, we can keep a lot of our our plaques in the office in our marketing materials. So that’s a good way to kind of transition there. But thank you so much, my friend, for coming on the show.
00:29:09:21 – 00:29:10:23
Aaron Fragnito
I appreciate your time.
00:29:11:00 – 00:29:11:19
Ash Patel
Thank you as well.
