Do you want to learn how to get out of your own way and live the life of your dreams? Abbas Mohammed at the early age of 24 years old uses confidence and knowledge to conquer limiting beliefs that hold many other people back. He learned to leverage technology, the use of Virtual Assistants and other people's time and money. He's a General Partner in 258 units and a passive investor in over 1,300 units. Abbas is all about compressing time by hiring coaches and learning from others' mistakes so he can achieve his goals faster than anyone else! In this episode you will hear Abbas talk about systemizing his business, his leverage of technology and other people to compress timeframes and his experience and strategy towards scaling.
Table of Contents:
- Where To Listen To The Podcast
- It’s All in Your Head
- From 350K to 2 Million
- How Limiting Beliefs Make You Take the Conservative Approach
- Two Things the Real Estate Business Is Made Of
- Ditching the Limiting Beliefs Is a Work in Progress
- How To Get Your First Deal
- The Happy Years Come After You Let Go of the Limiting Beliefs
- How to Reach Abbas Mohammed
It’s All in Your Head
Darin: Abbas Mohammed is a young guy of only 24 years old, but he doesn't let his young age get in the way. He believes if you are confident and knowledgeable, then others will see that. They will trust in you if you could help them achieve their goals. This guy is a go-getter and he's found a way to leverage technology to scale his business.
We are both from the same multifamily mentorship group, the Brad Sumrok group. Abbas lives in California, I live in Dallas. He actually reached out to me. We had a call a while back and this guy is a go-getter and I love his story. He's just a force to be reckoned with. So, I expect big things coming out of this guy. I'm going to kick it off with how many properties and how many units are you currently invested in?
Abbas: I've invested in 1,300 units passively and 258 as a general partner.
Darin: We will talk more about the real estate side, but before getting into that, I want to get into, one, you're a young guy. How old are you?
Abbas: I just turned 24.
Darin: I have people who reach out to me on Instagram. They're like, "I'm too young to get into this, who's going to want to partner with me? How do I do this?" So, if you're a young guy, listen to this guy, because he's figured out how to do it.
Abbas: It's all in your head. That's what I figured out. I got into real estate when I was 18 years old. My biggest fear at the time was I got in as a real estate agent.
The Limiting Beliefs of an 18-Year-Old
Abbas: I always thought, "Well, who's going to list a million-dollar house with an 18-year old that doesn't know what he's doing?" What I realized later on is, it's all about the confidence that you show people and the knowledge you bring to the table. If you don't know what you're doing, people just realize that very quickly. Once you understand what you're doing, and you show the confidence and the commitment, people don't really care about your age anymore after that.
Darin: That’s interesting. My daughter recently graduated high school and she's doing a few things. One of the things she's talked about is, "I want to sell the multimillion-dollar homes down in Highland Park." I'm like, "You're probably going to have to cut your teeth on something smaller than that to start out with." But, to your point, you could climb up that ladder pretty quick if you have the confidence and the knowledge and the commitment. When you said you got into real estate at 18, what do you mean by that?
Abbas: I'll give you my background as well. Growing up, I was born in Iraq. My family didn't have a lot of money. In fact, when I was a kid, I always remember we had to sleep on concrete because we couldn't afford to buy beds. It was pretty bad, we didn't have a lot of money. Then after the war, we left for Syria. From Syria, we ended up moving to the US when I was 11 years old. At the age of 18, I was selling cars. I was a used car salesman and I was also going to college. Then I just looked at that.
Ditch the Limiting Beliefs To Change Your Financial Situation
Abbas: I'm like, "I don't think I could ever change my financial situation or my family's financial situation if I'm just selling cars, or if I'm just going to college to work for somebody." What I decided to do at the time, and this was crazy for me to do this, to be honest with you. Going back, I don't know if I would've done it again. I just got my real estate license on a credit card, I didn't have the money to actually do it. So I had $5,000 on my credit card. I'm like, "I'll just spend two grand to get my real estate license.” I just got into real estate. When I got in, I spent three months basically knocking on doors but I didn't get a single thing out of it.
I was knocking on hundreds of doors a day. After failing that, I had to go back to get a job basically, because I ran out of money. So, I went back, I got a job as a used car salesman again. I started making phone calls pretty much every day for 12 hours before I finally got my first transaction. It took me literally a year of cold calls to get one deal.
Darin: One year to get one real estate deal?
Abbas: Just one listing. I wanted to quit every single day when I got into real estate. But the nice thing about that is it took me a year. By the way, one of the things I did early on is I hired a coach. I've hired coaches throughout my life. To me, that was very important. That's why I could grow so quickly.
How To Quit From Your Limiting Beliefs
Abbas: I hired a coach and I wanted to quit every day. One of the things my coach told me is, "Look, if you don't believe in yourself enough to keep going, just believe in me. Believe in the stuff that I'm teaching you, and eventually it's going to work out." And I did. I was like, "You know what? I'm just going to quit on the idea of quitting. I'm just going to keep going with it." So, I did that. A year into it I got my first transaction. Then within a year after that, I got so many transactions. I became one of the top agents in the Bay area.
By the time I was 21, I was making $350,000 a year. I was 21 years old. That was more money than all my family had made combined, which was great. I was seeing a difference in my life. But then I realized I got stuck, I was working 16 hours a day. I got into business to make money, but also to have time freedom. What I realized is that I was working 15-16 hours a day.
I never saw my family anymore and I always missed dinners. I'm like, "You know what? There has to be a change. I have to do something different." That's when I went back.
I just completely changed my business model. This was about two and a half or two years ago. I decided to simplify my business. So I went back and cut down all the complex stuff in my business. Then I started setting up systems, setting up processes, and hiring virtual assistants would change my life completely.
From 350K to 2 Million
Abbas: I hired hundreds of virtual assistants. Over the next two years, I went from being one of the top real estate agents in the Bay area to top 15 nationwide with Remax. I was able to go from 350 to two million in the sales business and profit. All of that happened within two years. But then I decided I've just had enough with sales. It's now boring. I've solved all the major problems. That's when I decided to get into multifamily earlier last year.
Darin: A lot of people talk about using VA's. Some people dip their toe in and use one or two. You said that you have hundreds of VA's. Where do you see the benefit of using a VA? How does somebody go about finding a VA? I imagine there's some work upfront to educate them and to train them, but then you see the dividends on the back end. Talk about that process.
Abbas: It's the same as if you were hiring an employee. Whether you're hiring a virtual assistant or you're hiring a regular employee, it's all the same. The only difference I've noticed so far is with a virtual assistant, you're getting an employee at a much cheaper cost. Instead of having to pay somebody $25, $30 per hour, you end up paying $5, $6 per hour.
It's just a lot more cost effective, and you could scale faster because of the lower cost. But having said that, there’s something I realized about a lot of businesses, myself included two years ago. When I started wanting to hire virtual assistants, the problem that I had was everything about my business was in my head. It all depended on how I would operate the business.
The Right Systems and Processes to Combat the Limiting Beliefs
Abbas: One of the problems that I had is I thought nobody could do what I could do. That was true because I didn't have the right systems and the right processes. So, my first step was to systematize my business. What I mean by that is, I took every single thing I did and decided some of my business activities were just too complex. I was never able to scale them. So, I actually completely cut down some business activities. But then the things I did keep, I simplified. I made training modules, I made training videos, and then I hired virtual assistants. The reason I did that is because I didn't want to hire someone and then just not know what to do with them, not know how to train them.
So, I systematized my business. Then I went out, hired my first virtual assistant back in October of 2019. What I realized, this was an interesting thing, I was working 15 hours at the time. Instantly by hiring a virtual assistant, during those eight hours she was working single day, she was doing as much work as the eight hours that I spent. So, I was like, "Wait. Now I could work eight hours less per day and get the same production." Then I was like, "Well, what if I hire a second person?" I went on and hired a second person. Now two of them were doing the same amount of work that I used to do in 16 hours. So, then I'm like, "Well, that's interesting. What if I hire a third and a fourth and a fifth?"
The System of Printing Money
Abbas: I just kept going with it. Now I have 25 full-time VAs in the business. It's like printing money basically at that point.
Darin: But you had to make the investment. You said a number of things. One, when you paid for the real estate thing on your credit card and that may or may not be a wise decision, but you invested in yourself. Then you said you hired coaches to help you. You went into leveraging other people at a lower cost than you are. So, they were all investments. You had to systematize and spend the time to really think about, "What components of the business can I document and systematize and then offload to somebody else?" Can you share any examples on maybe one piece of that?
Abbas: I could give you a couple, but one example is the underwriting. I was able to completely automate underwriting and I still do. If we find a property that we are actually going to write an offer on, I will underwrite it from scratch just to be on the safe side. But here's how I did it. I basically did a lot of underwriting. One of the things I recommend to people is if you're going to delegate something, you have to be an expert at what you're delegating unless you could afford to hire people that are much better at the task than you would be.
So, for example, video editing. I will never try to learn video editing. I'll just hire someone who's much better, even if I have to pay a higher cost. But for underwriting, because I want underwriting to be done a specific way, the way I do it.
Abbas: I don't care how other people do it, I want it done my way. Having said that, number one is to become an expert at what it is you're trying to delegate. If you're not that great, you're just not going to be good at delegating it. The second thing is, I like to take on big tasks. I have this whiteboard behind me for a reason. Anytime I want to delegate a task, I basically write it down. Then I break it down into what I call sections.
So, section one, section two, section three. The way the sections are, is similar to book chapters. In a book you might have 12 chapters, 15 chapters, and then within those chapters, which are sections, I have the mini-steps. For example, with underwriting, section one is how you find the deals. Within that, it has the mini-steps which are, you've got to log into this email. Then you have to read the emails to find properties that match X criteria. Once you find those properties, you want to put a star on them. You want to move them to this folder. Those are the steps.
Then section two, what documents are you supposed to pull? Or what are the different documents? Then I explain the different documents. This is what the operating or offering memorandum means. This is what the rent roll means. So on and so forth. I break it down into sections, then mini-steps, and then at the end of that, I film a video. The reason I like videos is because I personally don't do well with manuals and written handbooks. I just don't like reading a book on how to do something. I'd rather watch a video.
The Process of Overcoming the Limiting Beliefs
Abbas: That's what I do for my employees. I just filmed a video and uploaded it to YouTube in a private section. Anytime I hire someone, I just have them go watch the videos. I never have to train anybody on that task again.
Darin: They always say that in order to really understand your topic, teach somebody else. That process that you go through forces you to really know your stuff.
Abbas: There's so many things where it's like, "Okay, now I'm ready to teach this." Then I'm like, "Wait, hold on. I don't understand this specific aspect too well. Or maybe this, I don't understand this too well." Then I go and study further. It makes me much better at what it is I want to teach, which is phenomenal.
Darin: So then these VA's, they might be doing a little sliver of a task. Then when you combine them all, it gives you the high view picture as to where to spend your time.
Abbas: 100%. Then you're not bogged down. I remember when I was doing everything myself, I was just bogged down all day long on doing little things that didn't actually matter all that much. What happened is, I was thinking too small. I was never able to actually step back and look at where the bottlenecks are in my business so that I could grow.
Two, three years ago, I realized that the bottleneck in my business, and still today in any business I'm in, is me. I'm always trying to get myself out of the business as quickly as possible. I am one guy and if I'm in the business, I will bottleneck the whole thing.
Darin: A lot of people listening understand the word underwrite, but there are new people who are looking to understand and get to know the business. That word can mean a lot of different things to different people. How would you define underwrite?
Abbas: Underwriting real estate basically is evaluating properties and seeing what they're worth right now. Seeing what the upside potential might be, if these are properties you should be possibly investing in or not. There are a lot of factors we look at with the market and the specific property. There’s a lot of things for us to decide if a property is good enough for us to write an offer on.
Darin: There's a lot of Excel spreadsheets out there that are templates. We're focused mainly on multifamily investing. There are multifamily investors all across the country that underwrite deals. They have a template, an Excel spreadsheet, and then they're going to gather data from other documents. They're going to put that into the Excel spreadsheet. Then they're going to have certain assumptions that they’re going to include in that template.
And so, they may pull some data from the offering memorandum that the broker provides. They may pull some data from the actual rent roll or from the trailing 12 P&L for the property. There's all these assumptions. I've been doing it for four years. You've been doing it for a year. One thing that I learned is that in the beginning, you start to underwrite and you have all these decision points. It's like, "I could use 3% for the interest rate, but I'm going to use 3.3% to be conservative."
How Limiting Beliefs Make You Take the Conservative Approach
Darin: "I could use 75 LTV, but I'm going to use 70 LTV to be conservative. Then I could push the rent from 900 to 1000, but I'm going to say that I'm going to put it to 950." Every time you take that conservative approach, all of a sudden that makes your underwriting not work. After a time, you have to learn where you can use industry standards or be a little aggressive, and where you can't.
Abbas: When I first started underwriting deals, I would get negative returns. I'm like, "Why am I getting negative returns?" I just didn't get it. What I realized is I was being so conservative, on so many different things. To the point where no property in the world would ever work out on my underwriting.
With underwriting, you have all these different spreadsheets. Everybody has their own little thing that they use, for the most part, but it all really just comes down to the person who's underwriting. How good is that person and how creative are they? And how much do they know about real estate? How much do they know about improving the properties?
You have to be conservative in some aspects, but you also have to be competitive with the market. If you're not competitive, you could spend your entire life underwriting and you'll never get a property. One thing I'll tell you about multifamily, and real estate in general right now, is there's a lot of demand. If you're not very competitive with the market and what's going on, you're just never going to win a property.
Choosing the People With No Limiting Beliefs
Darin: You can learn from others. If you hire a coach, or you get involved with a group, and you start talking to other people that are winning deals, you're like, "How are you doing it?" Then you find out that they're including some things in their pro forma’s that you weren't even thinking of. You start to learn from that. Part of the learning process is learning from others. Just like a coach, you want to learn from somebody who’s already done what you want to do. You know, investors that you want to learn from, people that are still winning deals. Like, do I want to listen to investors that won deals 10 years ago but can't win a deal today? I don't think so.
Abbas: The market is changing so quickly. I've been doing this since February of 2021, about a year or so now. Having said that, even during this one-year period I've seen so many changes in the way we have to underwrite to continue to win deals. It's gotten more competitive in just literally one year. Imagine if it's been five years since somebody's done a deal, it's a completely different market. That's one thing.
The other thing I did, and I continue to do is, I go and see who are the people that are winning deals. I jump on their investor webinars, and I may or may not end up investing. But I just want to see what they are doing and what I can replicate in my underwriting. The market is always changing, and if you just have one model, one way of doing it, and you stick with it forever, you're going to be outdated.
Staying on the Edge
Abbas: You're going to stop winning deals at some point. I'm always trying to stay on the edge of what's going on right now in today's market by jumping on these different webinars every single time.
Darin: What does that mean, jumping on other investor webinars?
Abbas: When you connect with other real estate syndicators, they start sending you the deals that they're working on. So, I signed up for these webinars that they do. It’s where they basically go into detail about the deal, and the offering, what they're going to do, and what they have evaluated. How did they win this deal? I go into these webinars, I'm just writing down notes, "Okay well, wait, they're introducing wifi?"
I haven't thought about wifi before. Let me go back and see what the cost of wifi is. Are there other properties in the areas that we're underwriting that have wifi? I get all these different ideas and then I start investigating further. That's one of the best ways to stay current with the market and what's going on right now.
Darin: If you're trying to learn the business and possibly invest passively, that's the first step right there. Pick your market. If you want to be in Texas, then find syndicators in Texas. Or if you want to be in Arizona, find syndicators in Arizona. Reach out to them and get on their investor database. It's just their email list. When they have a deal, like Abbas said, they're going to send you an email with, "I'm going to be presenting this opportunity next Tuesday at six o'clock." Sign up, regardless of whether you're going to invest or not. And then you'll learn.
The Right Network of People
Abbas: You'll learn so much. I also recommend hiring mentors and coaches because there's so much information in multifamily. Looking back over what we did this past year, I don't think there was any way I could have done this without having a mentor in the business.
Having the right network of people that are doing this actively right now, then also having mentors that you could ask questions and help you understand the different things that maybe you don't understand, is crucial to growing in this business.
Darin: Does the group just hand you a deal?
Abbas: Not at all. It might seem that easy when you listen to the sales pitches sometimes, but it's not anywhere close to that.
Darin: If you are serious and you're committed, there's a ton of value from joining a group and getting plugged into an ecosystem of investors that have already done it. From coaches and methodology, and already having the vendors that have been vetted, there’s huge value in that. What I caution you on is, don't just write a check and expect that a deal will come to you. You are still going to have to bust your hump and learn.
Abbas: It's a business. It's probably the toughest business I've ever been in. If I compare this to the sales business that I built, the sales business was very competitive. I live in one of the most competitive markets in the nation. But even so, that was so much easier to scale and grow than the multifamily business. It's a very hard, competitive business because you're dealing with smart people.
Jump Out of Your Limiting Beliefs To Compete at a High Level
Abbas: You're dealing with people that are committed, that have employees, that have all these systems in place. If you want to jump in and actually break into the business, you have to compete at a very high level.
Darin: When you say "one of the toughest businesses", there are certain things that are really tough about it. Then there are certain things that are just really positive about it and welcoming, which is so different. I've been in a lot of different industries and it's pretty competitive. The guys at the top typically don't want to share their secrets. What I found in the multifamily world is there's a lot of partnering that goes on. People are very open about how they achieve their success and help the next guy up. You may compete on a deal, but when that deal's over, the people are still very open. That's a plus. On the other side, as a new guy, I don't think you can win a deal unless you partner with somebody that has experience.
Abbas: The brokers probably want to see some sort of track record that maybe you've done this before. Or maybe someone you're working with has done this before, so if they take the property off the market, you’re going to be able to raise the funds. You're able to go through the loan process and not have all these issues along the way, otherwise they might not trust you enough. As you go through the process, it gets easier because then you build that track record for yourself.
Two Things the Real Estate Business Is Made Of
Darin: This business, I've heard people say over and over again that it's made up of two things: finding deals and finding investors. Some people build up their investor database, build up different leadership platforms, whether it be a podcast, or writing a book, or having a meetup. You talked about what you do with your VAs, with your employees, that you record these learning videos. I've also seen you come out with webinars. Talk about some of the topics that you provide in those webinars, and are these webinars free?
Darin: Free learning to people. In exchange for what they're learning from you, maybe they'll end up investing with you some time down the road. Or maybe you just help them out. Talk about some of the topics that you share with other people and how that benefits both them and you?
Abbas: In terms of raising money, the way I've been doing it over the past year is networking one on one. Networking is phenomenal because you get to meet people one on one. You talk, you learn what to say, what not to say, and how to say your story correctly. You’ll learn all these different things and then you also connect with people on a deeper level. That has been great in my first year. It was crucial that I did that. However, I'm now pivoting more to webinars, speaking events, and all these different things. I get to communicate with many people at the same time versus communicating one on one. It’s fine at the beginning, but I want to scale that up, that's why I'm moving on to that aspect.
How To Choose the Right Market
Abbas: I've been doing it so far, my target this year is to focus a lot on speaking events, meetups, and webinars. What I'm doing right now is speaking about the market, like how to choose the right market. I have webinars lined up on how to analyze a property, how to analyze a neighborhood, the difference between single family houses and multifamily houses. I’m positioning these webinars not for people that are already in the business, but for people that are outside of the business. That market is much bigger than the people who are already in the multifamily circle.
I'm trying to keep them as simple and as basic as possible, just to get people introduced to multifamily. Then convert them to investors along the way as I continue to educate them. Another thing I've been doing is teaching people about virtual assistance. That shows them how I operate my business and gets them introduced to who I am as a person. I also start sending them real estate webinars until they're like, "Tell me more about this, or I want to invest into your next deal."
Darin: I like that strategy of going outside. How do you reach those people?
Abbas: That's one of the things that we're working to get better at right now. I've been doing it through meetup.com. I've used Facebook advertising and these sorts of things. I'm working on something different. I don't know if you know Russell Brunson? He’s the CEO of ClickFunnels, and a genius when it comes to marketing. One of the things I'm building is The Dream 100 List. That means, the 100 influencers that already have the people that we're looking for in terms of investors, like business owners.
Dream 100 List
Abbas: Right now, my three big lists are business owners, real estate agents, and people that work in tech. That's because these three groups have already invested in my deals before. I know I could grow that even further. We're building that Dream 100 List of influencers we could connect and build a relationship with to put content out there about real estate or other things that could draw people to my website.
Darin: It took me a year to get my first syndication deal and people asked me, would you have done anything different? I'm going to ask you that question. Would you have done anything different having started about a year and a half ago?
Abbas: On our first deal, we struggled a lot with raising funds for it. It was a very small deal, six and a half million dollars. We only had to raise two million and we struggled with the fundraise. I didn't think that raising money was as hard as it was. We didn't really go in as prepared with our lists and the contacts. I went in and I had a list of people, but it wasn't really inclusive of all my contacts, all my network.
I realized that you should have everybody on your list. It doesn't matter if you think they're qualified to invest financially, like if they have the money or not. Add them to the list anyway. I realized that a lot of people who I thought might not be in a position to invest, actually ended up investing. The people who I thought would invest, ended up not investing. You just have to add everybody you have in your contact list.
Limiting Beliefs in People
Abbas: After we closed that deal, I went on Facebook. I went up through my phone contacts. There was not one person who I had their email with that I didn't add to the list. It just grew my list tremendously. On the second deal, I emailed those people and a bunch of them ended up jumping in. It was great, so just add in everybody. Obviously you have to make sure that they're sophisticated or accredited, but if they meet that qualification, just add them in.
Darin: I had this exact same experience. I remember going through my phone and I was like, "Oh, this guy will definitely invest. Like, he's an entrepreneur. He owns a number of businesses. He's got a lot of cash." When I talked to him, he’s like, "Darin, I'd love to be involved, but I just put a bunch of capital in this other business. The timing just isn't good." Then there were other people that I'm like, "Ah, I'm not even going to send a text or an email to this guy." I said to myself, "Darin, you can't make that decision for them." That's basically what it is. It's changing the mindset from, "I need money to do my deal” to "I’m presenting an opportunity."
Why are you going to bypass certain people in your network? You're forming a judgment on them. I had the same experience. There were some people that I almost bypassed and they're like, "I've never done this before, but can we grab a coffee? Let me understand it a little bit better." Then they've invested in a number of different deals with me.
Fear of Rejection Is One of the Top Limiting Beliefs
Abbas: Part of it for a lot of people who are doing this maybe for the first time, is just the fear of rejection. I remember all of my list. I'm like, I know this guy and I don't really know if I want to send him a message or if I want to call them about investing. What if they say no? It's a family friend or whatever. I don't want to embarrass them. The truth is, it was just all in my head, just like the whole age thing, just like pretty much any problem you have. "Oh, I can't scale my business or hire other people." It's all in our heads. All these things that go through, all these issues that we put, all these walls, are all in our head.
I took that and I'm like, "You know what, if somebody rejects me or someone rejects investing, I don't even care. I'm just going to move on to the next person." I just did that and you know what? Nobody ever complained. I didn't have one person say, "Why did you email me this deal? Or why did you call me?" In fact, I had a guy recently call me, he was a real estate broker, he's like Abbas. "You've sent me so many emails. It's insane." I'm like, "You're either going to invest or you're not going to invest. Are you going to invest?" He's like, "Because you've sent so many emails, count me in on this deal." You're going to get people because you're tenacious and you're just persistent.
Ditching the Limiting Beliefs Is a Work in Progress
Darin: The other thing I would say, and I would add this to social media, and what you're doing with the webinars. There are certain people who don't necessarily hit like or comment, or maybe they don't respond to the email blast. All of a sudden, you may see that person a year or two later and they're like, "You know what? I've been seeing all your stuff and I'm interested in finding out more about it." But in the beginning they weren't. For some people, it takes time to see, "Are they really staying in this business? Do they really know what they're talking about? Are other people investing with them? Or, are other people getting good returns?" For some people, it takes a while.
Abbas: It's all about their relationships. That's important as well, not just with investors, but also with the brokers. Like the brokers, they have so many buyers they could choose from. The question is, "Why would they choose you?" It's not just about the price. Going in, you might think it's just about the price, but the reality is they want to work with people that they like and trust, that are going to close these deals. You have to build relationships with the brokers, with the vendors. And you have to build their relationships with the property management companies and the investors. It's a very relationship-heavy business.
Coming from the sales business, I was not very focused on relationships. I was very transactional. It was all about, "Look, I'm here. We're going to do the deal. Once we do the deal, I'll probably never see this person again."
A Big Shift
Abbas: I want to make sure I do a great job, but I'm transactional. It's all about, "Hey, I'll get you the results you expect, and then we're done." When I got into multifamily, it was a big shift because I realized that it's a very small community. There's not that many people, relatively speaking, in comparison to other businesses. Everybody knows each other and you just have to make yourself known. You have to keep showing up, putting in the work, and then people will eventually start looking at you, and trust you and what you're doing.
Darin: You mentioned brokers. If you buy a deal and everything goes smooth, on the next deal, it's between you and this other person that they don't really know, who do you think they're going to pick? They're going to pick you. They are confident that you're going to be easy to work with and do what you say you're going to do. So, what markets do you focus on?
Abbas: Right now, I only focus on The Dallas Fort Worth market. I believe there's already a lot of growth that's supported by numbers. There are a lot of people moving in. It's number one in terms of net migration. The rent growth there is just insane. Rents are going up like crazy. I thought about going into other markets as well. But honestly, there are just so many deals in the Dallas Fort Worth market. I just haven't had the reason really to expand beyond that.
Darin: That makes sense and it's a hot market. I spend a lot of time in Dallas and Texas markets and people say, "Why aren't you going to other markets?"
Without Limiting Beliefs, Everything Is in My Backyard
Darin: I'm like, "If I lived in some place that wasn't such a hot market, then I probably would. But why would I do that when everything's in my backyard and I could just hop in the car, drive there and check it out?"
Abbas: You have people like me in San Jose looking at your market, why would you look at another market?
Darin: That's the interesting point. So, you're in California. How did you pick Dallas?
Abbas: One of the reasons I didn't like single family houses and investing in single family houses, even though I sell this stuff. I could buy a single family house anywhere in California, and I would buy it cheaper than anybody else out there. It’s because I have better ways to access those deals because they're in my market. I get a commission because I'm a real estate broker. So, I could buy them cheaper, but even then I decided not to do it.
When I looked at California, I'm like, I don't want to invest in a market that is anti-landlord. It has all these laws on what you can and cannot do. I just don't like that, the rent growth limit control and all that sort of stuff. So, I decided to pick Texas and Dallas in particular because I looked at the data. I'm super data-oriented. I’ve looked at a bunch of different things and studied a lot of markets. I like Arizona, Florida, and Tennessee, but Dallas and Texas, in general, have been my favorite.
Darin: I'm originally an East Coast guy. I'm from Connecticut and I spent 14 years in South Florida. I've been in the Dallas market for 11 or 12 years and I have to say, it's crazy.
The Dallas Fort Worth Market
Darin: People are friendly, it's clean, good cost of living, good workforce, lots of jobs. The growth here has been crazy. I just don't see it slowing down. When you look at other markets that are so expensive to live in, I’d expect that more people are going to continue to move in.
Abbas: The median home price in a lot of these other areas that I mentioned like Nashville, for example, or Phoenix, is right in the $600,000, $550,000 range. We're still sitting at 292,000 in the Dallas Fort Worth market. There’s a lot of room for growth in single family prices. That's important because these houses have been going up in price, people get priced out of buying. Now, they have to focus more on just renting. And so, that gets more competitive. Their rents go up.
Another factor is the net migration patterns. A lot of people are migrating to the Dallas Fort Worth market. It's important to look at net migration patterns because we hear a lot of people are moving to Austin, which is true. Austin is a great market, but then there are also a lot of people moving out because it's getting too expensive for them. The net migration pattern looks at how many people are moving in after the people who have already moved out are accounted for. You see insane population growth and real estate housing prices are going up. That just pushes the rents even further, which is great. It's all about supply and demand.
Darin: You didn't want to invest in single family. Why do you like multifamily over single family?
Single Family vs Multifamily
Abbas: Number one reason, to scale. I just didn't want to deal with having to buy multiple single family houses. Generally, when you're buying single family houses, I just find it much harder if you're trying to buy out state. It's always easier if you're buying something that's closer to you. So, the management gets better. The problem with single family houses is I didn't want to invest in California. That's number one.
The second thing is I didn't want to buy a bunch of different houses and then have a bunch of different roofs to maintain. All these different things that come with a house, the boilers, and all these different things. I just wanted to invest in apartments where everything is at one spot. We could hire a property management company, they could stay on site. I don't have to get calls for the toilets, calls to replace a light bulb, or any of these different things.
The other factor about it is you could buy many at a time. Like the last deal we did, it was 194 units. Just thinking about that, how many single family houses would I have to buy to be the equivalent of that? Based on the real estate prices in the Bay Area, that would have been 30 houses. That would be significantly more difficult to manage, significantly more difficult to scale and maintain. It's just not worth it. I don't like single family houses because of that.
Also, I had the numbers on them, the appreciation is great in California, but the problem is the cash flow. The cash flow is so low, it's insane. Like you have to put down at least 30% just to break even.
How To Get Your First Deal
Abbas: If you have a problem, like the roof goes out, or whatever, now you're negative 12, $15,000. It just didn't make sense. It's not scalable, because you're always having this money problem of cash flow. I didn't want to go that direction.
Darin: How did you get into your first deal? Who did you partner with? You don't have to talk about the individual names, but how did you meet them? What was your role versus their role?
Abbas: The first deal I did was 64 units. It was six and a half million dollars. I actually did not find that deal. Remember when I said I spent the first year networking, I basically was calling 12, 15 people every single day. My calendar was full just with meetings every single day. As I was going through that process, one of the people I met, his name was TJ, Tanweer Janjua said, "You know what Abbas, I would love to get to know you better and maybe work on a deal."
About a month later after we had a phone conversation, he called me. He said, "I have this deal that we just got an offer accepted on. I want to talk to you and see if you might be interested in working with me on it." We met and had a very long meeting. Whenever you're partnering with people, you're together for multiple years, at least three years, maybe five years on a property. You want to make sure that you have the same values, you have the same expectations. We met for many hours and realized we are similar in the way we think, we want the same things for our investors, and have the same expectations.
Partnering Together to Combat the Limiting Beliefs
Abbas: We ended up partnering together on it. His role is the asset manager. My role is investor communication. We've learned a lot from operating that deal.
Darin: That's important for listeners. If you're getting into a large-scale multifamily, you need to partner with somebody that has experience. People need to know that you're looking to partner. They're not going to just show up at your door. You have to go to conferences and meetups and tell people, "I'm interested in partnering." Then you get the phone call. If you don't tell people, you're not going to get that phone call.
Abbas: It's a team sport. With multifamily, the numbers are so large. There's so much going on at any one time, it's just hard for one person to manage all of it. You do have to partner. Also, you have to find out what is really your value proposition, what are you actually bringing to the table? When I first got in, I thought, "Look, I want to manage these assets. I want to be an asset manager," but then as I thought about it, I live in California. Unless I move to Dallas, I would be a completely useless asset manager.
Nobody would want to work with me on that aspect. I decided I had to shift my focus to acquisition and fundraising. Now my focus is to get really good at acquiring properties by knowing how to underwrite really well, systematizing that, building relationships with brokers, so that then I could get the deals. The other thing I want to be really good at is raising funds. That's what I've been working on, and that's my focus.
Become One of the Best
Abbas: I'm not going to be an asset manager on a deal. I'll find other asset managers to work with me on it. You just have to be really clear on what it is you offer other people and then become one of the best at that offer.
Darin: I've seen two different business models per se in the multifamily world. One is, you get two or three guys together, and form a company. Maybe one guy is good at acquisitions, one guy is good with investor relations, and one guy is good with asset management. Then they get deals and start hiring asset managers, and they grow a company under that brand of three people.
Another business model is what you're talking about, you figure out where you want to focus. And you don't necessarily have to create a company with the same three people. You could end up partnering with different people on different deals. But you focus on your value, your sweet spot, your strength, and then you partner with other people that fill in the gaps.
Abbas: That's a really nice breakdown. There are people who have done both models very successfully. I know Rise48 in Arizona has done the three people model where they each have their own little task that they focus on, and their own departments. They've done a great job with it. I personally will focus more on what I bring to the table, and who's going to be the right fit for the deals as we progress. Sometimes the person that you're trying to partner with might not be available to work with you on that deal. Or maybe they just don't want that specific property.
Choosing the Right Fit
Abbas: That way, you get to choose other people if you have to. However, one thing I focus on is doing business with the same people over and over because I already know them and how they work. Two of the people I worked with on the first deal are TJ and Juan Cordoba. We ended up doing business together on a second deal because we already knew how we operate. I didn't have to go vet them out. Then we added more people. On the next deal, ideally I would want to work with the same people if they're available. I already know how we communicate, how we split responsibilities, it just makes things a lot easier.
Darin: That's important to know. If you don't build the model where you're building a company with the same people, you want to make sure that you have relationships with multiple people. I remember talking to one guy, he was new to the industry. He’s like, "I got this guy in the Midwest and he owns over 2,000 units. He said he'd partner with me."
I've got an experienced guy and I'm like, "All right, well, here's a scenario. You're out busting your butt, running after properties, underwriting properties, going on proper tours. All of a sudden, you get one and you're in your best and you call that guy up. He says, 'Joe, I'd love to work with you, but I just signed on with somebody else and the timing's just off.' Now, what are you going to do?" You have to have more than one, unless you're in a company that operates that way.
A Relationship Business
Abbas: I'm so focused on that, that's why I go to all these different events, these multifamily events. That's why I'm signed up to different Masterminds with people that are going after the same thing and investing in multifamily. I want to have a lot of people that I know I could trust, like, and I want to deal with. That we're on the same page with a bunch of different values and things. If I do come to that point and the person that I'm expecting to work with me is not available, I could call someone else to fill that position.
It's very important that you know people. It is a very relationship heavy business. You have to have contacts, you have to have people. I feel like when I first got in, one of the mistakes I made was that a lot of the conversations I used to have were very surface level. We talked about surface level things. "Yes, I would want to do business with you," but we really never got down to the nitty gritty details. It's important that you do that early on with as many people as possible, so that you're clear on what their expectations are and what your expectations are.
For example, let's say you meet someone, and I remember meeting a few people early on. I'm like, "Let's do a deal together." When the time came to actually submit an offer, then we started talking about, "Well, this is what I want you to do, this is what I'm going to do. This is how we're going to split responsibilities, how we're going to split profits and all these different things."
The Right Time To Get Rid of the Limiting Beliefs
Abbas: They were like, "Well, no, I don't know if I'm comfortable with this. This is how I want to do it." But then, when you're at that point where you're actually writing an offer and then there's the best and final, and then there's the tour, things are very time sensitive. That is not the right time for you to start figuring things out.
You should have done that prior, you should have done your homework prior. It's very important that you clarify those things. For example, me and TJ, I know if we're going to go in on a deal, he's going to be the asset manager and I'm going to be the acquisition person. I'm going to focus on that aspect, he's going to focus on his aspect. After we close, I know I'm going to be the investor relationships guy, he's going to be the asset manager throughout the deal. We have very clear expectations of what I'm supposed to do and what he's supposed to do. When we have a deal that we're going after, we're not trying to figure that out. It's already done. We already know what we're going to do, and we're just going after it.
Darin: It's weird, in this business which is different from many businesses, people talk about money pretty openly. The experienced people, maybe not the newbie, are comfortable having those difficult conversations. "You know what, that doesn't work for me. I want a bigger percentage on my deals. Well, you know what? Then maybe it's just not a fit." Or you cave and you offer up that percentage to the other partner.
The Happy Years Come After You Let Go of the Limiting Beliefs
Darin: But they're open to having that, and they've had those conversations over and over again. The quicker that you can not have happy ears. In sales, you could have happy ears. You hear the client say one thing and you think they're going to buy. It's the same thing with partners. They could say one thing and you're like, "Oh, this guy will partner with me."
Abbas: Looking back, we all made these mistakes as newer people. A lot of times people are just not comfortable getting into those specific types of details. Personally, I'm open about money and finances because it's essential for you to continue growing that you run a profitable business. If you're not talking about these things and the expenses, for example, I pay for a lot of expenses to run my business. Of course I want to talk about the profits. That way, I could make sure I keep expanding my business. Otherwise, if it's all ambiguous, then it's not really a business. You're just hoping for the right thing to happen.
Darin: Another thing I get asked a lot is what percentage should I give to the partner that I go to?" I said, "You know what? I don't have an answer for that. Every deal is different, every partner is looking for something different. It depends on the roles and expectations that you're going to manage versus what they're going to manage. The experience level, the balance sheet, what they are bringing to the table with investors versus you, and other relationships." Every deal is different and you just have to have that conversation, see if it works.
What if It Doesn’t Work
Darin: If it doesn't work, you either move onto the next person, or you adjust your expectations so that you take a smaller piece.
Abbas: One thing I will also add into that is, when you're doing business with people, you want to do business with them all over again, multiple times. Because then, you would know them better. You know how they operate. It's important for my partners to not feel like they got the short end of the stick. I want to make sure that they feel comfortable, they feel happy at the end of the deal, and we're all on the same page on everything.
If you win on one deal, but they end up going out and feeling like, "Hey, you know what? I just didn't get what I think I deserve. This guy got too much, this guy's too greedy." Then you'll probably not do business with them again, and establish that negative reputation. Just don't be too greedy. You've got to be fair. We have to be nice to other people because remember, it's a team sport. If they're not stepping in to help you close those deals, you're never going to close. Having 100% of nothing is literally nothing. So, there's no point.
Darin: What's the next big stretch goal for you?
Abbas: My target next year is to get to 1,000 units. That's my number one target.
Darin: Right now you're at 258. You're talking about GP units?
Abbas: Correct. I want to add another 1,000 units on top of that.
Darin: What do you like to do outside of work?
The Most Essential Skills To Grow a Business
Abbas: I watch a lot of marketing stuff, I watch a lot of Russell Brunson, and I read a lot of books about marketing. I just enjoy learning more about marketing because to me, that's one of the most essential skills for you to grow a business. So, I spend a lot of time on that, and I don't consider it work because I actually enjoy it. I do it after I'm done with work.
Darin: Investing in yourself is huge. There's a lot of people out there that are skeptical about it. Like, "Oh, this self-help industry, all these conferences and then they're just looking to make money." Yes, they're looking to make money, but they're looking to help you fast track. You said that you don't think you would've gotten that deal had you not joined a group. I could say the same thing. I’ve joined a group, the same group, and it took me a year to get my first syndication deal. Some people told me, "You're crazy to spend that much money on it." I'm like, "Well, at the end of the day, I don't think that I would've gotten a deal if I didn't do that."
Or maybe I would've had to get a much smaller deal. I partnered with Raj Gupta out of Chicago on that deal. About half the money was raised in the group, and half the money outside the group. If I wasn't in the group, I wouldn't have met all those people that invested and so the deal would've been half the size. I'm amazed by, and you even mentioned it, that you're involved in some Masterminds in addition.
Highly Successful People Have No Limiting Beliefs
Darin: I’m amazed at all the people that I interview that are highly successful and make great money. They continue to invest in other Masterminds and in other conferences, trying to level up and learn from other people that are ahead of them.
Abbas: It's essential. The way I look at my life is, there is so much I want to accomplish. I'm only going to live say to 60, 70, 80 years. For me to accomplish outsized returns in my life, I have to learn to compress time. You can't compress time effectively unless you have mentors, unless you have coaches. When I first got into the sales business, my real estate sales coach taught me sales. He taught me how to prospect, how to market, and all these different things. That saved me decades of work that he had to do in order to get to that point.
When I decided to do virtual assistants, I had to figure that out on my own. I made so many mistakes, because it's not as big of a topic out there. There are not many coaches that teach virtual assistants. I had to figure that out on my own and I wasted so much money and time learning that. So I decided after doing that I never want to figure anything out by myself ever again.
If there's someone that has already done what I want to do, I just want to pay them for it. When I got into multifamily, I just went and signed up for a mentorship program. It did cost more than I thought it would cost. But I learned so much in such a short amount of time.
Abbas: I decided I want to learn how to speak and get better at selling on stage. So I joined a different Mastermind and paid a different mentor. What I learned in literally just one week, would've taken me 10 years plus to figure out on my own. So, it's all about compressing time. The faster you can do that with other people, the better off you're going to be.
Darin: You said you were 24, I forget it after talking with you. You literally forget that you're 24 years old because you do have confidence in yourself and you've built up a knowledge base. Even through this conversation, you build trust. If people want to reach out to you and get to know you better, what's the best way for them to do that?
Abbas: The best way is to either email me firstname.lastname@example.org. If they want to participate in multifamily webinars that I'll be hosting over the next year, they could go to theabbasgroup.com/investor and they could sign up right there. I'll email live webinar links for them to attend.
Darin: I really appreciate you coming on. I applaud your success. You figured out at an early age how to push a lot of those limiting beliefs aside and charge forward. I give you a lot of credit for doing that. Listeners, I hope you enjoyed that one. Until next week, signing off.