Transcript for “On Getting Started from a Brand New Investor with Khan Malik | The Real Estate Investing Club #24”
Gabriel Petersen 0:02
Hello and welcome to another episode of real estate investment. Place investors go to learn tips, tricks and stories from other investors in the field. Today, we have a special guest with us. So buckle up, grab your pen and paper and enjoy the ride.
All right, we are live. Khan. Thank you for joining us today. How are you doing?
Unknown Speaker 0:28
Well, thank you for having me on. I’m doing great man. How’s it going? Right
Gabriel Petersen 0:31
on it’s going well going well, where are you? Where are you calling from?
Unknown Speaker 0:35
calling from here in Bellevue, Washington, and I know you’re not too far and even Bob.
Gabriel Petersen 0:40
That’s right. 30 miles is all this separates us. You know that you’re actually the closest person that’s been on the show so far. So that’s, uh, you know, go Washington.
Unknown Speaker 0:49
Washington. Stay, man. Everything’s done, right.
Gabriel Petersen 0:52
Yeah. All right. To get it get us started. Why don’t you introduce yourself, you know, you already said where you’re from. So it induce yourself. Tell us who you are and how you got into real estate in the first place.
Unknown Speaker 1:05
Oh, yeah, yeah, so, um, I’m born and raised here in Bellevue, Bellevue, Washington, you know, I played high school football. Um, that was my main goal when I was you know, like 15 I just want to be like a football player, you know, so I would I was really focused on down there weights every day. I was starting, you know, as a defensive back and they’ll be high which was a you know, stay winning team. Um, so yeah, I was doing pretty well there but then I ended up breaking my collarbone.
Unknown Speaker 1:44
Yeah, and the junior year. Okay.
Unknown Speaker 1:47
So that made me kind of rearranged my focus. Yeah, you know, per se I was kind of bummed
Gabriel Petersen 1:53
f1 those are that’s gonna be hard to heal.
Unknown Speaker 1:56
Yeah, hard to heal and plus junior year and you’re Like really focused on, you know, sports and then that just gets taken away. Like you can’t really do this anymore. It’s not healthy for you young. So I kind of rearranged the focus. And then I started, you know, doing like running started classes at the local. It was like, you know, we do last year in high school at community college, get credits for university. So I started doing that. Two years later, I went to u dub. I’m working on my degree, studied economics. After that. I started working in sales. I work for a company called Data sphere, they’re they’re owned by Sinclair broadcast. So Sinclair broadcast owns a lot. Uh, basically the whole conglomerate of new stations, like ng five, you know, all over the United States. So we probably will partner with them and then sell like, you know, advertisements to local businesses. all over the United States, okay? It was like cold calling, right? Like, kind of like wolf of Wallstreet style.
Gabriel Petersen 3:08
I actually think I got a I got a few calls from you guys at some point.
Unknown Speaker 3:12
Unknown Speaker 3:16
That that was like, you know, that was a good experience. I think everybody should do cold calling. If you especially in this business and real estate, you should do cold calling. Yeah, for sure. Yeah, it gets you gets you, you know, things can get you used to rejection, which is necessary. But yeah, I started you know, I did pretty well there. And then, you know, I started selling cars and whatnot. That’s all I did. I was a sales guy. So then, then after that, I got kind of bored. I was like, you know, I’m spending a lot of time here. I should probably do something where I don’t have a cap on my commission. So then I got my real estate license. That was like four and a half years ago. And then why guy, I just applied the same skill set that I was doing that sales working for somebody else. I was, you know, cold calling, you know, working my sphere of influence. And slowly, you know, that builds up. And I started doing very well, you know,
Unknown Speaker 4:19
as a broker,
Unknown Speaker 4:20
yeah, as a broker, as you know, as top producer. I made immensely great contacts in the real estate industry, as a broker, you know, being partnered with lenders, various lenders, clients, and then you see that some of what your clients are doing these, some of these guys are full time real estate investors. They just buy, you know, properties rehab fix and flip them, they would, you know, just do a cash out refinance on the property they bought, and then they just slowly built up their whole portfolio. So, Having all the inside info and observing all these guys and seeing you know what they’re doing I got into that about three three years ago. I even partnered with some investors
Unknown Speaker 5:14
and I started buying some small condos.
Gabriel Petersen 5:19
Okay, okay so condos is how you really got into into investing at least you got into real estate as in through brokerage and through being a broker and then you entered investing through condo were you flipping them or what were you doing to them?
Unknown Speaker 5:35
Yeah, I was uh, you know, I was just buying them and then I would get them at you know, pretty like wholesale rate. Pretty much wholesale rate from from the sellers. And usually the sellers were distressed I mean it there’s always deals out there you have to find them. You know, sometimes these these sellers they their contract their foreign workers the contract is up and then they have to literally leave the country and sell whatever they own in the middle there’s a condo, like a 300 400 you know, up to half a million dollar condo here on the east side that’s a sell as soon as possible and they’ll sell you usually for like 50 Grand 100 grand less than what it’s actually worth on the market. And I, I saw saw that opportunity and it’s really about having an eye for opportunity having an eye for what’s, what’s out there. Yep.
Gabriel Petersen 6:40
So you so as a broker you worked with a lot of I mean, there are a lot of overseas employees here and you work with people who are we’re looking to transition out of their condo. So kind of take us through what are you doing right now like what is your What is your main bread and butter when it comes to real estate investing
Unknown Speaker 7:01
I was able to recently you know, in the past two years, I was able to
Unknown Speaker 7:08
buy a nice piece of residential property. It’s about you know,
Unknown Speaker 7:15
seven units, seven units. So it’s like a small apartment building.
Gabriel Petersen 7:19
Okay. Yeah, residential. That’s a, that’s not a single family seven units. That’s, that’s commercial grade.
Unknown Speaker 7:26
Yeah, it’s actually residential. But what’s really cool is a lot of residential places, you can do modifications to them to add more space. Um, so they’re really residential and zoned residential, but you just add more space and then have them rented out, you know, gotcha. Okay. Okay. So it’s like taking and taking advantage of the space. But yeah, seven units. It was originally like five, you know, traditional four or five or five bedroom house, but turned into more.
Gabriel Petersen 8:01
Okay, so your house hacked you, you turned a single family into a you’re you’re renting out individual rooms, right?
Unknown Speaker 8:09
Yeah. Yeah. God Yeah. Okay. So, um, it’s, it’s I think it’s easier to do sometimes like like in this in this way because when you do it like that, then it’s especially in high you know high cost of living areas when you’re renting out single single units and single rooms instead of like a whole house for like four or five grand you’re going to get way more renters and then it’s going to be way easier to find a renter in times like these, you know, where people are losing their jobs and people are on unemployment So yeah, I, I, I got that opportunity. And then I have I have them rented out. I have them rent I got it. I bought deals and new construction.
Unknown Speaker 8:59
New Construction sounds good.
Unknown Speaker 9:00
Yeah, and I negotiated with the builder. So that’s also another technique that as a real estate investor you can use is they say follow the builder. Okay. So whenever these you know, these a huge you know conglomerate, you know builders they they snatch up neighborhoods and you see these big residential projects going on with like 810 houses, right? That’s where the money is going to be made. That’s where they’re projecting to see, you know, increase the buyers which is in this neighborhood that all that there’s like eight houses they all got bought up within a couple months.
Gabriel Petersen 9:43
Yeah builders do their due diligence when it comes to demographics and where where where the shifting is taking place. So that’s if you follow the builder in terms of buying in there. Wait, that is a that is usually a good idea. So you, you you found an individual builder You went and you asked in how did that work out? How did that situation play out?
Unknown Speaker 10:06
So I negotiated the price with them. So it was it was listed for about 1.249 so that was the listing price 1.249 it’s it’s in Newcastle.
Gabriel Petersen 10:23
Okay, so really nice area.
Unknown Speaker 10:25
Yeah. So Oh, you’re familiar with that. So yeah, it was listed for that 1.249 and got it down to like you know, 1.1 point two around 1.2 Okay, so um, you know, it was just able to save like, you know, from 50 grand on it and then I’m right on purchasing it appreciate it immensely so that I mean, apart from that, you know, yeah, there’s there’s some equity made on the on the house, you know, um, but My what I want to do what my goal is I think what every real estate investors goal is is to buy and hold. Yep. is to buy and hold. It’s get yeah get the cash flow you know, because it becomes a sort of oil
Gabriel Petersen 11:16
free yeah that’s right where to put it okay so this house in this so is that your only buy and hold right now is the is the the house hack you didn’t use Newcastle?
Unknown Speaker 11:31
Yeah, that’s the only one right now.
Gabriel Petersen 11:33
Okay. And it’s doing pretty well you your cash flow and you’re above you’re in the in the black?
Unknown Speaker 11:40
Yeah, yeah, it’s uh it’s, it’s cash flowing. Yeah, it’s cash flowing. And I’m working on some other flips right now. I’m in the in cuz, especially right now the markets going to I think tank for a bit, um, because of the pandemic so we can have some clips as well. And then there’s a lot of people who are being foreclosed on as well. Now,
Gabriel Petersen 12:05
yeah, unfortunately that is that is happening. Yeah.
Unknown Speaker 12:09
And yeah, of course. Yeah.
Gabriel Petersen 12:12
So I’m gonna shift gears just a little bit here. You kind of talked a little bit about what you’re doing, what your goals are. I kind of want to go into the you know, the inner workings of how you do what you do. Um, you said you do a lot of cold calling, but kind of go into how do you find your deals? And like what criteria do you use to define whether one deal is a buy or pass?
Unknown Speaker 12:40
Usually how I go about finding them is to really pinpoint where there’s a there’s a need, there’s a need. I think real estate market is shifting towards a towards, you know, the tradition from the Trinity. Additional sense of like buying and selling like, you know, using agents and whatnot to buyers doing their own due diligence and researching. Um, there’s a lot of real estate companies popping up like there’s a there’s, you know, whisper real estate. I don’t know if you heard them there, you know? Um, yeah, this whisper this this other companies and they just specialize in finding off market deals. Okay, okay. Yeah, off market. So when you find off market deals, it’s, it’s it really when you try to pinpoint where the off market deals are, it It puts you in a place of advantage because not everybody’s going after that. Yeah. So usually the deals get, get, you know, snatched up by investors, there’s a bunch of people, you know, especially in this state, Washington State, you know, where, where there’s a lot of opportunity for real estate, we have a 12% And appreciation rate, you know, highest in the country, we’re seeing an immense growth in real estate in this country. So a lot of investors are snatching up deals when they see it pop up on MLS. Yeah. So for for average guys, you know, like, you know, guys were, you know, small business owners kind of like us, you know who are working on our own. We’re not like part of like, you know, huge investing companies and you know, these people would like, you know, hundreds and hundreds of billions of dollars who are just fine. You know, buying everything though. So that makes it hard for us. So we have to be a little savvy. We had to be, you know, a little smart and I think the off market deals is where that comes in and doing your research and then it’s not about a high number of calls like in traditional cold calling, but it’s about the quality of deals you can find and then putting putting a good offer for
Unknown Speaker 14:59
Gabriel Petersen 15:03
so to find the deals that you’re just talking about there, you said it’s not really about volume so much as it is about quality. So how do you go about making sure that you have a high quality? You know, data set to be working from to identify people who are motivated to sell?
Unknown Speaker 15:26
Oh, yeah, it’s, it’s really about
Unknown Speaker 15:30
asking the right questions. You, you ask them, why are you trying to sell where you going to move? How soon you want to sell? Um, usually when they’re not as relaxed, they’re like, Oh, I’m just trying to what, do you have any offers? You know, and you know, what, what do you think? How much is it worth? Usually when those types of things come up or questions? There’s an opportunity, they’re just not there. If they’re just like some people just like put it on the wall. And like, whatever, I just want to see what, they don’t need to sell it, or they don’t want to so they just like testing the waters. Um, that’s kinda you can kind of I think that’s what I call them. Yeah, yeah, right. Yeah. Yeah. So I mean, yeah, you have those but you also have serious people, a lot of people in residential real estate, there’s always people buying selling. There’s always some opportunity to be found. And, and, you know, if you see a neighborhood where a property was sold, a house or land or anything that was sold, you can contact the adjacent owners and say, hey, these guys sold it’s a good time to sell would would you accept an offer for this? So something like that really scolding
Gabriel Petersen 16:51
tactic. I’ve never I’ve never heard that used before. So what so what tools do you use to to one get your get your data and to skip trace the the right owner
Unknown Speaker 17:06
get get data and then get to the right owner. Yep. So for data you can use that you can use any MLS database public records, um, which, yeah, public records, MLS databases, you can see all the info tetany, you know, on the property when it was when it was purchased, how much they put down on it, who the broker was, and whatnot. But yeah, public records come in handy for that.
Unknown Speaker 17:40
Okay, all right.
Gabriel Petersen 17:42
All right. So I’m going to shift shift gears one more time here. We’ve gone through your business, you know what you’re doing, how you’re doing it. And so now I’m going to ask a little bit about your experiences. I mean, we all know real estate has ups and downs. It’s a roller coaster. So kind of take us through the you know, the trough. One of your one of your valleys. So what has been the hardest thing you’ve experienced so far? And what did you learn from it? And then and then take us to the peak. Tell us about you know, what, what, what do you love about real estate? Why are you in it? What gets you up in the morning?
Unknown Speaker 18:15
Oh, yeah, definitely the hardest thing about real estate is and being in this business. I mean, you’re obviously self employed, you work for yourself. So and in this business, you’re not getting like a constant paycheck. So you really have to be self motivated. You’re not gonna nobody’s gonna hand anything to you. Nobody’s gonna you know get give you anything. So you really have to wake up every day and say, I’m gonna go get it. Um, you have to go out there and and you know, get get the deals. And once you change, I think your mindset from sitting and expecting things to come to you to pay. I’m just going to go Then grab it from itself, it your whole, your whole life changes. So I think that’s the hardest thing for, for me, for me to, you know, when I was working a job, you know, you just go to your job, and then they just give you leads or whatever and then they tell you what to do and you just make sales, like you’re an employee, a W two employee, and they they really dictate what you do and how you’re just kind of like, you just sit in and you do whatever it is that they tell you to do. Yeah, and then if you if you have any, if you have any input whatsoever, like no Shut up, okay, we’re paying you. You know, so, yeah, that’s the hardest part. That’s the hardest, hardest mentality change. And then yeah, it’s not gonna be easy. It’s not like, Hey, I’m just gonna be an entrepreneur. I’m just gonna invest in real estate and then you’re and then all of a sudden, you’re making big bucks. No, it’s really, you’re gonna be broke for a while. You’re gonna be broke for a while. You’re gonna not make any money, but then Once you get used to being broke, and you’re like, Okay, I can handle this. That’s when your mentality changes and you realize it’s not really about the money. It’s really about controlling, controlling your destiny controlling your business and making you grow, then I think that’s what I love about it. That’s what I love about it. I love real estate because there’s
Unknown Speaker 20:29
Unknown Speaker 20:31
Yeah, some direction I can control what I do and is there’s ownership in real estate, there’s real wealth in real estate. There’s, you know, legacy in real estate, and there’s not all of those things in anything else. Right. And, and it’s real estate as part of what has made a lot of people actually most of the self made millionaires in The nice states are self made through real estate.
Gabriel Petersen 21:04
I’ve heard that before. Yeah, I heard that. That statistic it was something like 70% or something like that.
Unknown Speaker 21:10
Yeah. And, and land and real estate ownership is so valuable. It’s always been valuable in all cultures, um, you know, since ancient times because it’s been, it’s been leveraged through conquest to, through, you know, trading through through, you know, through, you know, the Gentry, they it’s just very, it’s very special to me. I’m very as, as you can see, I’m passionate about land real estate. So yeah, that’s great.
Gabriel Petersen 21:43
Yeah. All right. We’re making one more shift here. And I want to ask a little bit about kind of what what makes you effective in real estate. So tell us what is the one habit that contributes the most to your success in investing
Unknown Speaker 22:00
Um, I would definitely say
Unknown Speaker 22:06
you have to know how to deal with people.
Unknown Speaker 22:10
Um, so I got that advice from a good a good friend of mine. I mean, he’s a little older so we’d like kinda like an Uncle, uncle figure or you know, his name is yeah mentor his uh, his name is Sanford Ibraheem, Sanford Ibraheem, he’s the retired
Unknown Speaker 22:33
retired CEO of Raytheon group.
Gabriel Petersen 22:36
They make a graphics cards right.
Unknown Speaker 22:40
I think radio, so radio was like a mortgage. It was a mortgage. Okay, okay. It was a mortgage based business and he did really well. You know, in his life he made like brock obama, you know, government. He had, you know, connect to a government and he’s, he’s retired now, and he’s still running companies like 60 in his 60s. just running running company because that’s what he loves to do.
Unknown Speaker 23:02
60s, young 60s, New 30.
Unknown Speaker 23:06
Yeah. And yeah, so he, I asked him about what’s your advice for somebody starting on building so you’d have to know how to deal with people. You, you, you literally have to know. And it’s, it’s, it’s, it sounds very simple. But once you really see, you know, what, you know how people are you you’ve you figured out how valuable that is. So especially in this industry, all the real estate is owned by people. Yep. So and then you’re going to be negotiating with people, they have their emotions and and they have their emotions invested in the life savings, which is usually real estate. Right? So if they’re not going to just give it to you, they’re not gonna they have their emotions invested to it. You know, it kind of hurts their ego if you lowball if you lowball somebody is gonna hurt their ego.
Gabriel Petersen 24:00
That’s absolutely true. I’ve experienced that many times. And the hard part about that is that one person’s idea of a lowball is another person’s idea of a fair market value, especially when you’re looking at property here in, you know, high valued areas like Seattle, where houses are worth $500,000. And if you’re looking at, you know, flipping that house, and you have to offer them, you know, $300,000 because they have $100,000 worth of repairs in their property, and they think their house is worth 500. That’s a been though if you you, unless you set that up, set that conversation up correctly, then then they will easily take offense to two or $300,000 offer, because Zillow says 500 and they believe they’ll more than anything else, and so that you say I think you’re absolutely right. And you definitely have to set conversations up and understand that you’re talking with with the person and And make sure that they they know that you’re not trying to lowball them to take their money.
Unknown Speaker 25:10
Gabriel Petersen 25:11
Yeah. All right. So we’re at the end of our segment here. So before we cut off here, though, tell people how can they get in get in contact with you? And then what is it that you that you’re looking for? if somebody wanted to bring you say a deal, or just what is it you’re looking for in real estate?
Unknown Speaker 25:31
Okay, all right.
Unknown Speaker 25:35
All right. Cool. Yeah. Well, all you guys out there listening. If you want to get in contact with me, you need help with any type of real estate transaction lending private lending. You can reach me on my cell phone. You can text me it’s 425-289-9002. I’m here in Bellevue, Washington. I go all over the Seattle area. Yeah, Yeah, pretty much and then what what I’m basically looking for and looking to help people with and if you’re coming to me and you have any questions is especially in these times and times the pandemics interest rates are extremely low. So if you’re looking to buy, um and or invest you have an existing property it’s it’s a really good time to do it make some cash make some money and then you’re seeing now especially with unstable, you know, employment times like make, make, you know, make an empire make make your own business you can do that it’s possible like look at us. We we didn’t have anything before we didn’t have a business before but we we found the techniques, we utilize these techniques, we worked hard and we found
Unknown Speaker 26:54
deals that make us money and I can do that for you guys, too.
Gabriel Petersen 26:57
So, there you go. You heard it. All right. Well, Khan, thank you very much for hopping on here. I appreciate it. Everything you had to say and I’m sure everybody listening and watching also appreciate it as well. If you’re watching listening, you want to get in contact with Khan. You can reach out to him on LinkedIn or he just put his phone number here for you. So you text him there. Otherwise we will see you guys around. Thank you for joining us on another episode of The Real Estate Investing club. More information on how to work with Peterson go to WWW dot investing club calm otherwise, we will see you guys in the next steps.
Transcribed by https://otter.ai
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The Real Estate Investing Club is a podcast and YouTube show where real estate investing professionals share their best advice, greatest stories, and favorite tips in real estate. Join us as we delve into every aspect of real estate investing – from self-storage, to mobile home parks, to single family rentals, to real estate syndication!
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Topics you’ll learn more about throughout our episodes:
– Using the BRRR strategy to buy income properties
– Flipping houses the right way, building quality housing and taking home a large payday
– Using hard money and bridge loans for real estate investments
– How to bounce back from bankruptcy and build a thriving empire in the wake of failure
– How to use property management companies to help scale your real estate business
– The best online and offline tools out there to take your real estate investing business to the next level
– How to do out of state investing without risking your shirt in the process
– Going from broke to 300+ deals in a month (really!)
– Investing in commercial real estate
– Stories about brand-new investors and the lesson’s they’re learning as they take on their very first flips and rentals
– How to use Google Ads and Facebook Ads to crush it in off market real estate marketing
– How to fill your pipeline with off market deals using direct mail, voiceless mail drops, and text blasting