Buying 200M Worth of Real Estate in 16 Months with Pranay Parikh

Pranay Parikh: [0:00] We took a lot of inspiration from Blackstone and Goldman Sachs and Okay. A couple of this operators that we work with work with them. So what they do, you know, they don't send their very expensive analysts, you know, in their nice suits and leather shoes out to walk these properties. Right? So what they do is they they say, hey. We're gonna partner with people that are boots on the ground, and we're gonna take all our expertise, our efficiency, and help the system, right, the LLC improve. That's kind of what we do. And because we work with so many people, so many different groups across The US, a lot of times we're seeing what people are doing and we're able to take that and put it in process with a different group. Know, for example, we were working with one group and we were able to come up with this incentive system for the property manager and we help them improve their occupancy from 86 to 90% in a month. That's humongous.

Mike DeHaan: [0:54] Great. Yeah. Yeah.

Speaker 3: [0:55] Yeah. Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:21] What's going on, guys? On this episode of the collecting keys real estate investing podcast, we have Prane Parikh, who is a fellow GoBundance member with Dan and myself. And his claim to fame as he put in the brief messages we exchanged before we hopped on here was he has bought about $200,000,000 in real estate in the past sixteen months. So That was a So, like, you know, that that that big there's, like, what is it on, the Wolf of Wall Street where he's like, it's like, you know, I made $48,000,000 last year, and that kinda pissed me off because I made, you know, just less than $1,000,000 a week. And, you know, if my math's right, that's about $4,000,000 a week or pretty close to it. So I think you I think you beat him pretty handily there. Well, in terms of, like, value, right, not stealing cash. But, yeah, thanks for hopping on with us. So it's, like, love to hear a little bit of a brief background about you and sort of, you know, who you are, where you're from, and how the hell you managed to buy 200,000,000 in sixteen months.

Pranay Parikh: [2:21] Yeah. I wish I was taking home a fraction of that. Yeah. It'll come eventually. But yeah. So, you know, when I first graduated residency, I became a full fledged doctor. I knew that I had to do something with my money. You know? I made a good salary, but it was important where I placed it. You know, I picked real estate, I could have picked business, I could have picked stocks, but real estate made a lot of sense to me because I've seen a lot of people do really well. So I bought a four unit in Los Angeles, Long Beach, actually, to the water.

Mike DeHaan: [2:48] Mhmm.

Pranay Parikh: [2:49] And I didn't realize at the time, but it was a home run. It was doing very well. And I thought I would buy one of these a year, you know, five to ten years, I would retire and I'd be done. Right? And I after that, I spent hundreds of hours looking for my second property and then it just was hard to find. I had just gotten super lucky and, you know, I was pretty distraught, spent all this time. I should have just been working, know, making doctor money. And so, that's when I found passive real estate, and then I found that I could get 98% of the benefits for, like, 2% of the work. And so

Mike DeHaan: [3:23] So I guess first off, how long ago was this where you bought the Fourplex? And then you said you're a doctor. Was this, something that you did fresh out

Pranay Parikh: [3:29] of school, just like three years ago? Fresh out of school. Yeah. Yeah. Like, about five years ago when I graduated.

Mike DeHaan: [3:35] Okay. Perfect. So that so that's a pretty quick uprise about five years. And then you said you found passive real estate. Is that like, you mean just like the concept of passive real estate, or is that actually, like, a specific platform you're talking about?

Pranay Parikh: [3:46] Yeah. Because I didn't know you could do that. Right? I always thought that, you know, these big apartment complexes, I thought there was some rich dude, you know, with a monocle buying it. Yeah. Monopoly character. Yeah. Yeah. Yeah. Yeah. With his cane, you know, and just balling out of his mind. And I didn't realize that all these people all these people, like normal people, right, that would do it. So I connected with my partner at the time, my business partner who was also a doctor and we created a course, actually a course to teach doctors how to invest in this stuff because at the time five years ago, weren't, you know, there wasn't a hands off investor, there weren't all these books and stuff, it was just, you know, you call it country broom deals, you know, you'd have to be part of the country club and you'd have to know someone to get you in. So we created this course, we thought we were done, but we realized that most doctors, even if they know how to do something, they don't necessarily have the time to vet to find deals. And they were like, okay, Pranay, how do we get into deals if you're investing in? And they'd be like, okay, how about we add all your money together, add all our money together, maybe we can get better deals. That's how we really first started, and then we got to the point where we can buy the whole deal ourselves. And so that's where we are now. We we do JV equity. That means we bring pretty much every single dollar other than the sponsor's skin in the game in the deal.

Pranay Parikh: [5:09] And we have something called major decision rights, so we can buy, sell, and pretty much make any decision for the property, and, you know, kinda throw our weight around a little bit.

Mike DeHaan: [5:19] Oh, interesting.

Dan Austin: [5:20] Okay. So when you say a clarification too. Mhmm. You say JV equity. Does that mean you're not actually syndicating funds? You're just doing JV partnerships with all of your investors, all your friends, so to speak.

Pranay Parikh: [5:32] Exactly. Yeah. Okay. Yeah. So that's a unique position that we hold. Mhmm. You know, at the end, we're still doctors, right? And I am better in the hospital or the OR than I am in real estate. And yeah, I understand all that stuff, but I trust someone that's been doing it for thirty, forty, fifty years, then I would trust myself. So our skills is really managing people.

Mike DeHaan: [5:54] Yeah. Absolutely. Yeah. That's really interesting. And I guess to just backtrack really quick too for anyone who may not necessarily know what you're talking about who's listening. So a syndication is typically when you have a larger asset, like, usually, like an apartment complex or a commercial building. And the syndication is the whole process of, like, raising money to do so. And typically, a syndication is made up of general partners or the sponsors, which are the ones that typically find the deal, manage the deal, put in all the hard work. And then they bring in what's called a limited partner, which is either individuals or funds or in your case, like an entire JV partnership who takes up the bulk or maybe even the entire limited partnership, which will be a more passive role for typically a fixed, like, either a preferred, return or some sort of fixed return with, like, an upside based off of performance, things like that. And what that does, it allows the general partner to get into a larger deal, basically, by bringing in more hustle and typically less money. And it allows the limited partners, which are typically people who want a more passive experience with that investment to be able to get a better than average return without having to have create the opportunities themselves, have the expertise, or do, you know, any of the real grunt work to get that property done. So and if I butchered anything there too, you can feel free to correct me on anything there, Prane. But

Pranay Parikh: [7:13] Yeah. Because most syndication, most real estate people are good at real estate, and they're not necessarily good at the business of raising money. They're two separate skills. So we work with people that are really good at the real estate. You know? Just like if you need a heart surgery, you want the heart surgeon to do it, you know, not the the belly surgeon, right? You know, you really want to sub specialize. So that's that's why we're able to bring our two powers together and make it work.

Dan Austin: [7:39] That's great. So as a as a money raiser, Purney, do you individually do you generally get general partnership on some

Pranay Parikh: [7:46] of the deals too? Are you just a a passive completely with the JV? Correct. Correct. So it's very important that we so it's it's different depending on, the deal. Mhmm. So, joint venture actually in terms of power in the deal, you're actually you have investor override, which means you can decide. So say someone decides like, we're gonna paint this yellow. We say, no. Why would you do yellow? We're gonna paint it blue. Right? We have power to do that. We very rarely do. I don't think we ever have, but we do have that power. You might be talking about in terms of promote. Promote is the portion of the returns that usually go to the the general partner. So, yes, we do get a piece of that, and we pass that to our investors.

Dan Austin: [8:28] Gotcha. Oh, I

Mike DeHaan: [8:29] love that. That's also interesting. So, I mean and I love how you said this up too because it's I I think you're the first person that I've talked to that is, like, literally just building a whole business around the limited partnership side. So many people, especially in in GoBundance as you meet people, they go and try to be syndicators. Right? And they try to be like a deal finder. But you've basically looked at your environment, your expertise, and said, how can I have the same involvement, a, without having to have all of my own capital, which would tie me up into all these deals? Right? Because I I imagine that your split in these I mean, is your percentage ownership in these limited partners, these joint ventures that you do, is that directly tied to your financial contribution, or are you giving do you have higher Yeah. Benefit because you're operating it? Or is, like is that is that question kinda makes sense? So if let's say you're raising, like, $50,000,000

Pranay Parikh: [9:21] Mhmm.

Mike DeHaan: [9:21] Do you only own 10% of it if you put in 5,000,000 yourself, or do you own 10% of it just because you're the owner and then you basically raise the 50,000,000 outside of that, you work yourself into a limited partner without having to bring in your own money?

Pranay Parikh: [9:34] Yeah. So it it depends on the deal. So a lot of times, our our investors will pay us a portion of their returns because of what

Mike DeHaan: [9:43] we do. Nice.

Pranay Parikh: [9:44] Yeah. So that's that's where the kinda the difference comes from. And that's why we pass our promote directly to them. So even though they're paying for us, they're getting extra benefit from the GP.

Dan Austin: [9:56] Yeah. Yeah. So you're you're making it. You're creating extra value. Mhmm. And because you're creating extra value, there's like you're sharing that extra value. They still get some of the extra value, and then you get a piece of it for putting it all together, doing all the legwork, the sweat equity, to speak. I like that. Nice.

Pranay Parikh: [10:10] Yeah. And there's there's one difference that's we've kind of evolved over. So, you know, there's a decent amount of people who do what we do, and they're called capital allocators. Right? They find money and they allocate it to different deals. But we have a full asset management team, is rare because that's that means there's someone that we talk to the property manager for each one of our properties every week. Every week Wow. We're talking to them. We're going to we're gonna go look at it every almost twice a quarter, sometimes every two weeks to physically go to look at the property. We do that because we wanna maximize profit. And like I said, we manage the manager, right? We trust but verify. And that's really rare for allocators. Normally, because most people make their money on the front end. Right?

Dan Austin: [10:55] Mhmm.

Pranay Parikh: [10:56] Through fees, through all this stuff. So they'll raise the money and then go on to the next deal. But for us, it's very important that throughout the whole process that we're really keeping our investors first.

Dan Austin: [11:06] So does that mean when you say you're basically helping manage or you are managing the asset as you have asset management, and you made a comment that a lot of people maybe were alluding to, like, the typical syndicator make their money upfront through an acquisition fee of 2%. Exactly. They buy $1,000,000 unit or property, they're getting 2% of that as acquisition fee. Typically, that syndicator will also get a portion of the general partnership equity. And then, on the back end, we'll get that same share of equity when the property sells for hopefully what they say it should sell for on their pro form a. But what you're what I'm understanding is you're kinda taking it from a different approach. You're doing it completely from a JV standpoint, and you're doing you're acting like somewhat of a syndicator in the sense a syndicator would also manage, hopefully, an asset manager or they would be doing the asset manager itself, but you're taking on that role too.

Pranay Parikh: [11:56] Exactly. Yeah. We we took a lot of inspiration from Blackstone and Goldman Sachs and Okay. A couple of this operators that we work with work with them. So what they do, you know, they don't send their very expensive analysts, you know, and their nice suits and leather shoes out to walk these properties. Right? So what they do is they they say, hey, we're gonna partner with people that are boots on the ground, and we're gonna take all our expertise, our efficiency and help the system, right, the LLC improve. And that's kinda what we do. And because we work with so many people, so many different groups across The US, a lot of times we're seeing what people are doing and we're able to take that and put it in process with a different group. Know, for example, we were working with one group and we were able to come up with this incentive system for the property manager, and we help them improve their occupancy from 86 to 90% in a month. That's humongous.

Dan Austin: [12:52] That's great. Yeah.

Pranay Parikh: [12:53] Yeah.

Mike DeHaan: [12:54] Yeah. That's very big. So when you're going through these, are a lot of the deals that you you invest in

Pranay Parikh: [13:01] Mhmm.

Mike DeHaan: [13:01] I mean, you you underwrite them. It like, do you look at many different operators? You kinda have, like, the same operators you look like? Do you as a specific kinds of asset classes? I guess, what's your basic investing criteria that you look for as you go through this?

Pranay Parikh: [13:16] Yeah. So, you know, I tell I tell people we're simple doctors. Right? So we stick to bread and butter commercial real estate. So value add multifamily, maybe a little bit of core, but only big apartment complexes. It's easy to understand. People always need a place to live. And yes, we so our biggest our first place that we do is we vet the operators, right? And because we're bringing in a check size of 8 to 15,000,000, they will open up their books. So we'll go to their current properties, see how they're doing. Right? They can tell you anything that's happening. But right now, it's super important to look at their properties, look at the actual numbers. You know, historical track records are great, but it's also historical. So we go walk the properties that they have right now. They're owning, they're operating. We have them open up the books. And so once we feel comfortable with that, then they will bring us deals and people ask us often how how we get deals. People bring them to us. I told you we had a a deal we closed in August that has a 2.9% interest rate. Someone brought us that and they said, hey, if you want this,

Mike DeHaan: [14:19] it's yours. Wow.

Dan Austin: [14:21] Yeah. Wow. And so when you say like just for our audience too, I think this would be a help for them to understand. When you say you engage with operators, what does that mean?

Pranay Parikh: [14:29] Yeah. So people that have syndication companies, but they are good at real estate. They've been doing it twenty, thirty years, but they've just never built a robust system to raise money. Or and what we really like are people that they only work with institutions. So one of the companies we work for, we did a deal with them, and then the very next deal they did was for a 130,000,000 with Goldman Sachs. Yeah. And they asked us if we wanted to be co GP, so general partners with them. We're like, yeah, sure. They're like, okay. We need $20,000,000. It's just, you know, a little bit too much for us. But a lot of times for these people that work in institutions, the deals we do are great and they have great yield, great returns, but they're a little bit too small for institutions. So we come in and fill that gap. And because now we've done eight deals where we've raised, you know, over $70,000,000 in equity that we have a good track record in raising money. Because it's when you work with someone and you tell them they put their name down, right, and they say, hey, we're gonna buy this, let's say, $40,000,000 property. They're putting their neck on the line, you know, and they're anxious until we give them the money in their hands, right? So there's a lot of trust they're placing with us and it's trust that we've built up over time.

Mike DeHaan: [15:49] Yeah. Right. Okay.

Dan Austin: [15:50] And that's awesome. So you have operators that may be syndicating other deals or have other opportunities, and they're coming to you saying, hey. Hey, Bernay. We need your we need your money. Can you give us money? You start underwriting the deal, working with them. Exactly. Right.

Mike DeHaan: [16:04] Okay. Wow. Fascinating.

Pranay Parikh: [16:06] And some of them won't do a deal unless it's with us. So, they'll say because it it'll probably be too small for them. Like I said, they'll they do big, you know, $80,102 $100,000,000 deals. But if we're in, then we're in. You know?

Mike DeHaan: [16:20] Gotcha.

Dan Austin: [16:20] Nice. And also, you're bringing a whole system to them as well, which I think is the other selling point why you're saying they're coming to you. You're not just a bunch of wealthy doctors that are like, let's throw money at it. They're coming to you because of the value add your group is bringing outside of the money is what I'm understanding as well.

Pranay Parikh: [16:34] Ken, how I explain to other doctors, I was like, you know, if you have one doctor, that's great. But if you have two doctors looking at the same patient, that's like, you know, Cedars Sinai, that's like UCLA, that's like really good Harvard care, right? And that's what we bring and they appreciate that, that we have a lot of expertise in maximizing profit and with our asset manager. And so you're right. We try to bring as much value as we can to them because some of these deals, like, they're home runs and everyone knows it. Right? So they can go to everyone.

Dan Austin: [17:05] One more question on that then too is you Mhmm. You talked about with your asset manager. So did you learn that skill and and grow it in house, or did you seek out an asset manager? And how did you go about doing that, if so?

Pranay Parikh: [17:18] Yeah. Great question. So in the beginning, because we're still a startup, couple years old, you have to have everyone that's a generalist, right? And people that are willing to do whatever. And at some point, you move from generalists to specialists. And a lot of times sales, like you should hire like a salesperson that knows what he or she is doing. Right? And the same can be said with the asset manager. So there's a company called bullpen, that a lot of people use to find asset managers. We didn't have a lot of great luck because they were either very expensive. But if you and this is one of the benefits because we work with so many sponsors. We told them we asked them, like, who's the best person you know? And fortunately, we were able to find someone. And literally this company that works with Goldman Sachs and Blackstone and stuff, he is the best person that we've ever worked with, and we were able to convince him to come work with us.

Dan Austin: [18:14] Nice. Oh, that's great. I like the comment too. It's really good for our audience, and Mike and I have felt this. You know, when you are starting out, you are a generalist. Like, you do everything in the business. And then you grow a little bit, and you become you you're able to hire the specialist, I I guess I would say, and and oftentimes. And that transition is not always quite apparent, and it takes a little longer than sometimes you would like or you you allow yourself. But that's, like, such a it's such a key transition to keep growing in success. Because if you stay a generalist, you're always gonna be just kind of at that level. You you can't go up above it. You gotta get to that point to where you're growing expertise and hiring the best people for those roles for your business to grow.

Pranay Parikh: [18:55] Yeah. The earlier you can hire people smarter than you,

Dan Austin: [18:58] the better. So true.

Mike DeHaan: [18:59] So true. Exactly. It comes back to that concept of who, not how, right, which is so popular amongst the especially the small entrepreneur space of, you know, if you don't know how to figure something out instead of buying a course or figuring out you know, watching a bunch of YouTube videos on how to do it, go find someone who's already done it and just pay them the money. Like, you'll get there exponentially faster.

Dan Austin: [19:17] Yeah. And, sometimes out of necessity. Right? I mean, Prane, you're you're a doctor, and and, like, that's, like, a pretty important job. Like, you don't just get to in the hours, we all know, like, doctors, it's not like you're just clocking in. Maybe your job's different, but, like, eight to five or whatever. Like, you have sometimes on call and all these things. Like, out of necessity, need to find those the specialists and hire the better people, but it's also not easy because that takes time and that takes that takes effort to go and find those people as well. So that it can be done, though.

Pranay Parikh: [19:46] Yeah. And the nice thing is what we do in real estate, it's not life or death. Right? Right. You can have a failure. You know, you're probably maybe you'll lose a little money. It's not a big deal. We had now that we do most of stuff in house, but we had an army, and we can still kinda do, of people from Upwork. Mhmm. You can get the most amazing people from Upwork. We you know, while we were building up our underwriting team, we would hire people from Harvard, like Wow. Masters in real estate or working for these, multibillion dollar funds. Yeah. It's expensive, couple $100 an hour, but because they're working hourly, you will end up actually maybe it's, like, 5 thou 500 to $1,000 per deal to have it underwritten, which is Wow. I mean, that's pennies for how much you can make on a good deal.

Mike DeHaan: [20:33] Yeah. Exactly. I mean, even even for us spending, you know, a thousand dollars, we're mostly in the residential space. But, like, that's perfectly fine because we're gonna make, you know, hopefully, 50 times more of that at least. But with yours, I mean, you're talking about a thousand times more of that, you know, especially for looking at the whole upbeat.

Dan Austin: [20:47] Yeah. So Yeah. And I second that Upwork piece is you don't like, we get so wrapped up in thinking we need to hire and build a business based on the traditional brick and mortar model we see. Not today. The technology allows it, and there's the the capacity within the workplace for people. Like you're saying, you they might be $200 an hour from Harvard, but they're willing to do side work on on Upwork or maybe that's their committed job. That's what they wanna do because they like the flexibility. You can find everywhere from that on Upwork or another website all the way down to the the $3 VA that'll just clean up your inbox.

Mike DeHaan: [21:21] That all is valuable. Yeah. Exactly. So awesome. I think good transition here. I would love to dive into your whole process of raising money because I know that's a big thing that comes up with real estate investors who are doing any sort of scale regardless of the asset size. And, I mean, I imagine with your network being an MD in LA, you probably have no shortage of friends that have a lot of cash. I mean, you know, occupation and location wise, there's gonna be a lot of that. But so I guess, you know, you said you've raised about $70,000,000 so far across all these deals. Is that from, like, you know, you just found, like, the old doctors that are sitting on, like, 40 that just wanna give you 20? Like, do you actually have a fundraising process? You know, what does all that look like, a? And then also, b, depending on this process, how did you go about setting up the legalities of this? And I guess, do you have any tips for people that are doing that? Because something else that we see that's really common, especially with newer investors, they start trying to raise money, not realizing they're breaking pretty much every SEC rule that you can where they're just, like, posting things on Facebook.

Dan Austin: [22:23] Posting on Facebook, looking to start a fund. It's like, pretty sure that's illegal.

Mike DeHaan: [22:27] You can't do that. So what what did that look like on your end?

Pranay Parikh: [22:30] Let me start with the legal part. Mhmm. And so I live in Los Angeles, as you mentioned. The California SEC is a lot more strict than the federal SEC, which is something that a lot of people don't know. And if you're not based in California, I hope you don't plan on having any California investors because if you do, then they will hold you to their rules. So that's actually one of the reasons why we do joint ventures and we do co GPs because we don't sell securities. Okay. Yeah. That's very important to know. We don't sell securities, meaning we don't sell pieces of building that for an investment. We buy the whole building ourselves.

Mike DeHaan: [23:14] Mhmm. Okay.

Pranay Parikh: [23:15] And so in California, for most people, if you're not a broker dealer, meaning you have passed a bunch of tests, you work for this big hedge fund, then you can't do what is called a fund of funds, which is a common way most people get started. They see a deal like ours, is 15,000,000. They say, hey, let me raise 1 to 2,000,000 for you, you know, And that is not very legal in California. So, what we do is joint ventures. And that's tough. It's tough to get started. You can't do a $15,000,000 raise. What I would do is I would just work with someone that's buying a $5,000,000 property. There's plenty of them out there. Right? 5,000,000, 3,000,000, 2,000,000. Just get your feet wet. Do it legally because in the long run, you're gonna want because over the past couple years, you could do it however well you want no one's gonna care because the only time the legal framework matters is if things go poor, right? If someone loses money, which potentially could happen in the next couple years within your interest rates recession, then right now, you really wanna have done it right. Our lawyer is $700 an hour.

Mike DeHaan: [24:24] Okay. Yeah. Right. Yeah. That's expensive. So when when you say doing it legally, I guess what's, like, the number one thing that people need to be aware of, I guess? You know? Because, like, a lot of people, they don't know what they don't know regarding that.

Pranay Parikh: [24:37] Yeah. Yeah. So talk to so this is how we found our lawyer. We found people that have been in the business for twenty plus years. Who do you use? And it's funny when when we talk to someone new, a new group, our lawyer is like, oh, who do they use? Because there's like a handful of people that do this well in The US that are very successful, you know? So there's not that many. So try to find the right I mean, anyone's gonna write you an LLC, but the Sure. The reason the paperwork is so expensive is because it protects you. Mhmm. Not them, it protects you from being sued. And Right. That's why it's important for you to pay for it. I mean, our very first I mean, we've paid tens of thousands of dollars for each one of our PPMs.

Mike DeHaan: [25:19] And,

Pranay Parikh: [25:21] you know, I'm like, okay. Next one's gonna be cheaper. Right? And, of course, we change something and it it ends up being just as expensive, but it's it's important and that's cost of business. Right? So the thing is like and last year about no. Maybe about two years ago, all the lawyers started talking about this stuff. All this stuff I just told you about having to be JVs, can't do in fund of funds. I was like, that's stupid, who passed this law? But the law has always been in the It's just no one actually enforced it. And, you know, we had new administration, and that's kind of the problem. Right? You're at their whim Mhmm. On what they're gonna enforce. So just do it the proper way in the first place, and that's what we try to

Dan Austin: [26:03] do.

Pranay Parikh: [26:03] You know? We're always five zero six c, so we can talk about it everywhere. Right? We don't do the 506 b, even if it's a 506, like the sponsor's 506B, we just do ours 506C, you know. We can talk about it on Facebook, we can advertise, we can do all that stuff, and it just protects your butt. You know? The last thing you want, especially for any of us doing this, is the SEC. You're not gonna go to jail. They're gonna just be like, okay. You're done. No more financial investments. No more raising money. And then, you know, your whole career is gone.

Dan Austin: [26:34] Yeah. Absolutely.

Mike DeHaan: [26:36] So I guess five zero six b and 506 c, do you have, like, a too long didn't read for that to just sort of explain the difference to someone who's not sure?

Pranay Parikh: [26:45] Yeah. This is just a certification that you elect to do. So you choose what type you want, and five zero six c is probably what you see a lot of ads for CrowdStrike and stuff where they can you can completely advertise to anyone and everyone. And the reason you can do that is you can only allow accredited investors into your deal. To become accredited, you'd have to make over $200,000 per year for two years in a row, or $300,000 as a couple, or have a net worth over $1,000,000, not including your primary home, or three, this is actually new, you can pass a test. It's called the series 65 or the series seven. And that makes you FINRA approved. So FINRA is acronym for a big financial test that you could take, and SEC follows it. So those are kind of the big ways that people get that. And so as you can imagine, not everyone qualifies for that 200,000 is a lot of salary, right? So fortunately, doctors do. But for $50.06 B like boy, you can have up to 35 sophisticated investors. So those are people that say maybe use a tax accountant or maybe have invested in a deal, maybe have started their own business or as an entrepreneur. It's kind of a wishy washy definition. But you gotta have a preexisting relationship with them.

Pranay Parikh: [28:12] So you can't I can't just be like, hey, Dan. Here's this investment deal. I know I just met you today. Do you wanna invest? You know, you gotta have some kind of cooking period. They say two weeks, four weeks before you introduce a deal to them and you gotta get them on the phone and show that you have some type of relationship. But it opens you up to having a lot more investors. Right? You can ask your parents, you could ask your siblings. They don't necessarily have to make that much money. So five zero six b is a lot easier to to raise money for, but five zero six c has a lot more legal protection because it's not just you who certifies accreditation. You actually gotta have a third party that looks through their finances and confirms for you.

Dan Austin: [28:54] Yeah. It's a good breakdown. Thank you. Yeah. So if I could get this right, from my experiences, if you're advertised and you elect to engage with somebody because, like, I've had advertisements sent to me and I engage with them, they ask you first question. Are you a accredited investor?

Pranay Parikh: [29:09] Mhmm.

Dan Austin: [29:09] Yes. And then what you're saying is this for the five zero six c, they're casting this broad net. If you say, no, I'm not, then it's like, sorry. We we can't allow you in. Say, yes, Then you you have a third party to hit and manage or look through to make sure you're hitting that 200 or 300 ks a year, or that you've passed the, I think you called it series 65 test, or $1,000,000 in net worth, which is not hard anymore. They might have to change that.

Mike DeHaan: [29:36] Right? You know what saying?

Pranay Parikh: [29:38] They might have to change that one. Yeah. Well, you have to remember that your debts go against that. Right? So

Dan Austin: [29:43] Okay. So it's I

Pranay Parikh: [29:44] don't have a mail. My net worth is way negative because I own all these rental properties. Mhmm.

Dan Austin: [29:48] Right? Oh, I see. So they they will take does it have to be purely so if you have more, like, debt than equity, that debt crosses out. Okay. That's interesting. I could see where you're saying it gets a little bit

Pranay Parikh: [30:01] And then the difference is the five zero six b can't be openly advertised.

Dan Austin: [30:05] So Right. It's that relationship.

Mike DeHaan: [30:07] Yeah. Yeah. Okay. That's funny. I mean, it's kinda funny. I realize they added that test to be an accredited investor. Like, I I don't know if it's, like, difficult tests,

Pranay Parikh: [30:16] but Yeah. Well, because all these people were financial advisers, and they were like, hey. We can't afford to invest in the deals we're advertising. You know? The SEC was like, okay. That's reasonable. And if you work for a company like Yeah. Our employees are able to invest in our deals, because they, you know, they're considered knowledgeable. So there's a couple loopholes, but for most people, it's a five zero six b or five zero

Mike DeHaan: [30:40] six. Yeah.

Dan Austin: [30:41] Okay. So now you talked also about getting a lawyer and the you mentioned PPM, which is private placement memorandum. Right?

Pranay Parikh: [30:48] Correct.

Dan Austin: [30:48] Yeah. So you're getting that set up?

Pranay Parikh: [30:49] Yeah. It's kind of the paperwork. It's it's how it's what people sign and ignore and not read, but sign that they've read it saying that like, and it's bad. Like, if you read one, you're like, yeah, you know, there could be a flood, there could be a tornado, aliens can come. It's basically giving them every bad thing that could happen to the property just so they can't come back and say, hey. They didn't tell us that aliens can come and destroy this property. Like, we want our money back.

Mike DeHaan: [31:15] Yeah. Right?

Dan Austin: [31:16] Yeah. Yeah. No. I totally get that. But that but you're paying a lawyer to make sure that that's very well crafted to protect you. And then I'm assuming the same lawyer, what I've always heard the term is SEC lawyer, somebody that has securities background, is the one that's going to help you get that five zero six or five zero six designation. Is that correct?

Pranay Parikh: [31:35] Correct. In the five zero six c, it takes a lot more paperwork. So it's a 10 to $20,000 more expensive. And, you know, when you're just starting, 10 to $20 is a lot of money. You know?

Dan Austin: [31:46] It's a good chunk of change.

Pranay Parikh: [31:47] It takes a while. Once you get a couple exits, you're you know, you're you have more cash to spend, but it's it is an upfront cost, but, I'd highly recommend doing it properly the first

Dan Austin: [31:57] way.

Mike DeHaan: [31:58] Absolutely. Yeah. Real estate is a pay to play business as much as there's so many people out there just saying use other people's money, do all this stuff. Just the legalities of getting gone. I mean, you gotta especially if wanna do big deals, you gotta have the money to, you know, build the framework. Perfect. Well well, thanks for breaking down the legal side of it. So the actual money raising, you know, what does that look like? Do you have, like, a strategy for it? You know, what is, you know, there must be some process you have there for raising that much money.

Pranay Parikh: [32:25] Yeah. So, you know, before you get started, I'd recommend trying to create an audience. Mhmm. You know? And that's kind of true for no matter what you do. So my partner, doctor Peter Kim, he created this brand called passive income MD that taught how it was a blog, a podcast, we've done conferences, and he created an audience of doctors. And that's way before we had a company that raised money. And so it was a natural for them to wanna invest in us because they trusted us. We've talked to them. We've met them, got on the phone with them for years. Right? So that's how we're able to do it and in a pretty lean way because we already have a media company. If we had to build from scratch, we would have to rely on other people's audiences. That's what I'd probably do, kinda like what I'm doing right now, jump on other people's podcasts, talk about it, and that's how I would build up an audience. But this is a borrowed audience. Right? You gotta find a way to bring it back to yourself.

Mike DeHaan: [33:19] Yeah. Exactly. Yeah. I mean, that's huge. Mean, that's a big reason we started this as well, you know, is to start building that that audience. Because especially when there's so many people out there that are doing similar stuff or trying to raise money for their syndications or their funds or whatever, if you're have a little bit more credibility I mean, it's the same way that, like, Brandon Turner has been able to raise so much money, you know, coast of old goes bigger pockets. He raised 50,000,000, what, in, a week. And, you know, like like, just being able to do that strictly off of Instagram as well It's purely because of the fall under heat belt.

Pranay Parikh: [33:51] He was actually at our conference a couple weeks ago.

Mike DeHaan: [33:53] Nice. Nice. Which conference is that?

Pranay Parikh: [33:55] Yep. It's called financial independence through real estate for dogs.

Mike DeHaan: [33:59] Oh, sweet. Perfect.

Pranay Parikh: [34:00] Love it. It's in LA. Yeah. Was our keynote speaker.

Mike DeHaan: [34:02] Very cool. That's awesome. But, yeah, I mean, that's super valuable point. So I guess, you know, with as you're going through your raises is Mhmm. Feel a lot of people that invest with you, are they I mean, they're also doctors, I'm guessing, because that's just the main audience. Are these people that you kind of know through your direct network? How much of that is, like, cold where you're having to, like, sell them the deal? You know, what what does all that look like?

Pranay Parikh: [34:27] I'd probably say 80 80% warm. Like, we we actually just hired a IR person to start calling people and texting them to tell them about our deal. Because otherwise, we just, like, we send a couple emails out and we're full. So we're Wow. You know, pretty fortunate in that sense. I I think those days are gone. You know, we're now Brandon Turner. But I think even talking to him, he's having difficulty. And he his his email list is, 20,000, which is crazy, you know, of, accredited investors. Right? So I think gone are the days that you can just be like, hey. I have this deal available and just have triple. You know, one one of our deals we did last fall before everything, I think we were, like, four x oversubscribed and, like, you know? But I I think those days are kinda gone.

Mike DeHaan: [35:15] Yeah. Especially as the market

Dan Austin: [35:16] People aren't as willy nilly

Pranay Parikh: [35:17] with money.

Mike DeHaan: [35:17] Exactly. The market starts to tighten up. People get a little bit tighter. We've even found

Dan Austin: [35:21] that because we do a lot

Mike DeHaan: [35:22] of residential wholesale, and finding buyers for properties has gotten significantly more challenging. I think it's because, you know, it's probably exists across the syndication side and the, you know, flipping residential side where we're at. A lot of, like, the mom and pops, you know, the sort of casual investors probably holding it a little bit tighter to the chest because they don't rely on that to make ends meet. Whereas, you know, a lot of the professionals, they're willing to take some more risks and, you know, a little bit more sophisticated and educated to make those those decisions and take some risks.

Pranay Parikh: [35:51] Yeah. You're you're fighting versus inertia. Right? Yeah. Before, it was like, okay. You're trying to convince them to invest in stocks and bonds. I mean, stocks and bonds are down 25%, so it should be easy. But people are scared for good reason. And so they're like, yeah. Even if I'm losing 10%, you know, I'm gonna keep it under my pillow because I don't know if I'll lose my job.

Dan Austin: [36:12] Yep. Yeah. Exactly. Yeah. Or they're waiting for a better buy opportunity. Yeah. Well, lots of reasons.

Mike DeHaan: [36:17] I mean, the real thing is they're all waiting for it to top out again, you know, as soon as their hairdresser starts to know about the crypto or the house that they're flipping or whatever. Uh-huh. Then they'll all jump back in again. Exactly. Cool. For the last couple minutes here, I would love to have you talk about the other stuff that you're working on. I know you said you have your own podcast. You just mentioned the blog that you guys run. Do you have any other deals that you're raising that you could potentially talk about right now? Let's hear all that.

Pranay Parikh: [36:43] We have a current deal, that we're raising, which we really like. It's a 120 units, which is a bit smaller than we normally do, but if everything in the world changes, you gotta kinda change along with it. Normally we'd buy 200 plus units, but we like this because it's 5% cash on cash day one. Our debt service coverage ratio is 1.7, which is It's a ten year loan. So it's, we could really, you know, we could do a cash out refi. We can sell it. We can hold on it long term. So it's pretty exciting. If people wanna find out more information, it's ascentequitygroup.com forward /deal. D e a r. Yeah. So it's nice to know, what other people are doing. I think it's really important for your investors to talk about if you're trying to find investors right now, what they really care about is cash flow and debt service coverage ratio. So I would really focus on those two things. Other thing I'm working on, I have a podcast, it's called From MD to Entrepreneur. So kinda just chronicles my journey as being an entrepreneur. I talk to a lot of cool guests that are entrepreneurs themselves or they work with other entrepreneurs. You know I just think that the world would be a better place with more physician led businesses especially after all we've been through in the past couple years. But you know it's helpful for a lot of professionals but I really focus on doctors because I find that most entrepreneurs and real estate podcasts, they focus on how to be bootstrapped, right? When you have more time than money and you know, I don't have a ton of money, but I have a little bit and much more than I have time.

Pranay Parikh: [38:29] So it's coming from the perspective, like, do you maximize your time with, with your other resources?

Dan Austin: [38:36] Yeah. That's true. Well, too, and I I what I also think about when when you're talking about being an MD, your hourly wage, you just mentioned it when you have more money than time, your hourly wage a lot of times and also probably some fulfillment too, where you don't wanna give up that career that you're being truly fulfilled in. I I would imagine for a lot of folks is so high that to transition to quitting that and trying to bootstrap a business just doesn't make sense, and you're not gonna get it. So I love your perspective where you're saying, hey. There's a different way to build a business. Yeah.

Pranay Parikh: [39:05] Yeah. It's you know, entrepreneurship is one job where you leave a bad boss to find a work.

Mike DeHaan: [39:11] Yeah. Yourself. Yeah. Right. That's so true. I love it. And I will say too I mean, I don't know from you can comment on this too, Purney. But from my experience with medical folks, just especially the past couple years, there is a lot of burnout. I've talked to a ton of doctors and, like, CRNAs and these sort of things who wanna step away from, you know, their career and go and get into any sort of entrepreneurship. But that salary is much more challenging to replace than the person that wants to do that that, like, works at an office and makes $60,000 a year. You know? So there's a lot more structure and a lot more structure involved and a lot more risk there to sort of achieve that.

Pranay Parikh: [39:49] Yeah. And doesn't that suck? Like, doesn't it suck that all these people that have went into something as noble as medicine, they're feeling burned out, like that sucks, right?

Mike DeHaan: [39:59] It does.

Pranay Parikh: [40:00] And my goal is to give them the power and flexibility to really staying in medicine. I don't want all these people to start a business and quit medicine. Yeah, I mean, a handful of people will do that, but I want them to have the ability to maybe work two days a week or three days a week or whatever is reasonable to them so that they'll maybe practice thirty, forty years, right? We're having this brain drain where all these people that have been practicing medicine for twenty, thirty years, the people that have all these skills and knowledge that they're quitting, you know? And we need them. We need them to train the next generation. So if I can help them in any way to sustain, to find that passion in medicine again, then, you know, I'd consider it a win.

Mike DeHaan: [40:43] Yeah. Absolutely. I love it. Noble cause, and that is something that's gonna be very important, especially as our population ages. And now we have the second largest population, you know, millennials are coming up right behind them. If all of a sudden we all get old and there's no doctors, it's not gonna be a good time for anyone. Yeah. So

Pranay Parikh: [40:59] We're we're not that young anymore. I know. Right? Yeah. Millennials, we're we're not that young anymore.

Mike DeHaan: [41:04] Exactly. Awesome. Well, thanks so much, Pranay. We appreciate you hopping on. Do you have any other last minute tips for anybody that's listening who might wanna do what you're

Pranay Parikh: [41:14] doing or get into syndications or do anything similar? You know, if you're like me, you're probably like, okay. You wanna hear about a book. You wanna hear about a course, you wanna hear about a conference for me to tell you, but just get started. You know, I promise, like in one to two books, you can learn 80% of real estate. That's true. 80% of real estate. And the last 20%, the part that differentiates you from everyone, you gotta just trial and error. You know, Brandon Turner, his story is so amazing because he he started when he's like early twenties. He just got started. He would do all his own renovations and all that stuff, you know? And the reason now he's worth almost a billion dollars is because he got started, you know. And do you wanna be worth a billion dollars five years from now or twenty years from now? Right? So just get started. You know, there's gonna be setbacks. There's gonna be failures, like, but the earlier you get past that, the closer you're gonna be to your success.

Dan Austin: [42:08] Exactly. Perfect. Take imperfect action.

Mike DeHaan: [42:11] Imperfect action. Exactly. Yeah. That's why I always know, Dan and I, we always kinda hate on people a little bit who are like the the book or the education junkies, but they don't actually, like, do anything with their business. Whereas we're, like, definitely the opposite. I mean, I don't know. Dan, when was the last time you actually read a book?

Dan Austin: [42:26] I don't know. I know. I've learned a lot about stuff, including myself.

Mike DeHaan: [42:31] Exactly. From having conversations, I've read the, you know, cliff notes of books and get the general idea, but we've definitely done a lot of deals over the last few months despite not reading anything. So Yeah.

Dan Austin: [42:40] When it comes to technical growth, it's all of it's, yeah, it's all about just imperfect action, doing it, try try

Mike DeHaan: [42:45] again. Exactly.

Pranay Parikh: [42:46] Yeah. And when you when you run into something, you're like, okay. I don't know anything about replacing roofs. Like, let me go read this chapter in the book, not the whole book, now that I actually need it. Right?

Mike DeHaan: [42:58] Exactly. Absolutely. Perfect. Awesome. Well, thanks again, Prune, for hopping on. We really appreciate it. And, thanks so much for listening, everybody. If you could go and subscribe to our podcast and leave us a five star review, that would be amazing. And go ahead and share this with anyone who might wanna know how to start raising money or buying really big deals like Prune has. And aside from that, everybody, thanks so much, and talk to y'all next week. Prune, do you have

Dan Austin: [43:21] a Instagram handle anybody can follow you on?

Pranay Parikh: [43:24] I have a LinkedIn and a Facebook.

Mike DeHaan: [43:27] Thanks for listening, everybody. Please make sure you subscribe and leave us a five star review wherever you listen to your podcast. Also, please make sure you go and you share this with other people within your network. We are really trying to grow this thing, and the best way for us to do so is by you telling other people to come check us out. You can also follow us on Instagram. I am at Mike underscore invest. Dan is at investor man. Dan, you can follow the podcast at collecting keys podcast. And if you wanna learn how to make real money as a real estate investor or you want to grow your already existing real estate investing business, please go and check out instantinvestorprogram.com and book a call with either Dan or myself, we will see if you'll be a good fit. Thanks for listening everybody, and talk to you next week.

Speaker 3: [44:11] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts. And check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.