JF2078: REIT Investing With Minesh Bhindi

Minesh started negotiating and selling real estate at 16 years old with his dad and since then he has helped his investors purchase £20m with this strategy. At a young age, he feels he was able to negotiate great deals because he had no fear of losing a deal. He discussed a useful strategy he used before the 2008 crash. Minesh shares his current strategy of focusing on REIT, real estate investment trust that helps him create cash flow.

Minesh Bhindi Real Estate Background:

  • Started negotiating and selling real estate at 16 years old, with his dad, they pioneered a unique no money down transaction in the UK
  • Helped investors purchase over £20m with this strategy
  • Based in London, UK
  • Say hi to him at http://perfectportfolio.com/ 

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Best Ever Tweet:

“It’s very important with any investment to get the fees down as low as possible.” – Minesh Bhindi


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how you doing. Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever; we don’t get into any of that fluffy stuff. With us today, Minesh Bhindi. How you doing, Minesh?

Minesh Bhindi: I’m fantastic. Thanks for having me on the show, Joe.

Joe Fairless: My pleasure. Anytime I have a chance to have anyone on with a fancy accent, I always welcome the opportunity. A little bit about Minesh – he started negotiating and selling real estate at 16 years old with his dad. Since then, he has helped investors purchase over £20 million worth of real estate with this strategy. It’s a unique, no money down strategy transaction in the UK. So we’re going to talk about that. So with that being said, Minesh, do you want to get the Best Ever listeners a little bit more about your background and your current focus?

Minesh Bhindi: Sure. One thing I’ve just got to correct – the £20 million of property was actually between the first few years of being involved in real estate. So between when I was 16 and 18 and a half, 19, something like that. Since then, we’ve really brought out the idea of no money down investing into the UK back then. Since then, I’ve made a transition to investing with REITs and really leveraging time and lifestyle with real estate as well by using REITs, using options to control a sizable amount of real estate and also get a very, very good return. So that’s been my transition over this period.

Joe Fairless: Okay. So let’s talk about how you started, and the unique no money down transaction that you did early on, and then we’ll talk about what you’re doing now.

Minesh Bhindi: Sure. So when we started, what you could do back before the 2008 market crash was you could buy a property and you could, in essence, do an instant remortgage on that property. What that allowed you to do, in essence, is negotiate a really great deal, and then on the day of completion, you’d buy the property with cash, and then instantly remortgage it at the true market value; that, in essence, gave you a cashback back, and that was really how I got involved when I was 16.

I was watching my dad negotiate deals. One day, I was just watching him and he got off the phone and he said, “What are you smiling at?” and I said, “That looks easy to me. I don’t know why you think it’s so hard.” So luckily, instead of telling me to screw off, he said, “Well, show me,” and then I had to prove it that I could do it. And very quickly, I started getting really good deals because I didn’t have a fear of being attached to any deal. I didn’t know this back then, but evaluating in hindsight, I just didn’t have fear, because I knew that if this deal didn’t happen, I still had to go to school, I still had to do my homework.

So very quickly, I was starting to getting better deals with a lot of people that were in the consortium that my dad was negotiating deals for. Then at 18, I was negotiating a block in London’s Canary Wharf neighborhood, which is the financial district of London pretty much, and there was just a deal that was just really, really good and I decided to get involved myself. So that’s when I bought my first properties. And it was three properties in that development, out of the 18 that we were negotiating.

I got a £68,000 cashback on the day of completion and a quarter of a million pounds in equity. So that’s really what we were doing, and to get into that deal, it cost me £500 per property. So it was a £1,500 total just to put a reservation down on those. So that’s sort of what we were doing back then, and it was pretty easy to do, and obviously, it partly led to the financial crash that happened in 2008, that everyone knows about. It was a part of the pot when it came to the cold storm that caused that.

Joe Fairless: Okay. So since that strategy is gone, no longer doing that…?

Minesh Bhindi: Yeah, it would be very tough for anybody to do that right now.

Joe Fairless: So what are you doing now?

Minesh Bhindi: So [00:06:45].12] little light bulb had gone out in one of the apartments, and so I said, “Well, the spare light bulb’s in the cupboard. Just change the light bulb,” and he refused to do it. He said, “On the contract, it says that I need to call you.” I didn’t have a management agent at this time, because the way that we were buying property, we were buying them for capital growth, as well as cash flow. So you’ve got a very sensitive balance when it comes for that part of the strategy. I understand if you’re buying, for example, single-family homes, you’re really aiming it to be in certain parts of the state as a cash flow strategy. So it might yield you 20%, but really, from a capital appreciation perspective, it’s not going to do much. Whereas we were trying to do both in London.

So I had to drive 11:00 p.m. on a Saturday night to go change a light bulb for a guy, while being a multimillionaire, while having a property portfolio, etc, etc. So at that point, I was very, very frustrated and angry on the way there, and on the way back, I decided that this wasn’t for me anymore, and I needed to find a better way of doing it. A lot of people that I was around were involved in real estate, but weren’t doing the things that I had to do back then, like go and change light bulbs at 11:00 p.m. at night. So I made a decision. I was like, “Okay, I’m going to go to zero net cashflow. I’m going to hand all these properties over to a management agent and go figure out a better way of doing it.”

So I started speaking to people, started understanding what they were doing, started understanding what I was missing with real estate, and then I discovered REITs, and then I discovered how to use REITs. We were already doing options when I  was trading the stock market, so I just came into it as a combination of things, and implemented the strategy that we have, that we use on gold and silver and in the stock market over to real estate… Which is amazing to me, because most people don’t even know that’s possible.

Joe Fairless: Please educate us on how you use REITs to get that cash flow and also get the upside on your investments.

Minesh Bhindi: So a REIT is a real estate investment trust, and in essence, how it works – it’s a company with managers who are solely purposed on making you money. They have got to return you an ROI so that they continue to receive your money and other people’s money. So what they’ll do is they’ll focus and they’ll say, “Okay, I’m going to buy residential property in New York, and I’m going to set up a REIT.” So now, if you want to get involved in a residential property in New York, you put money into the REIT, they’ll go and buy the property, manage the property, deal with all the headaches of the property, and then give you a dividend at the end of it, which is your cash flow return. So that’s, in essence, a REIT.

Now what I like to do is I like to invest in REIT ETFs. ETFs are exchange-traded funds. In essence, these are funds that have a diversified portfolio of a particular asset class. So while a REIT is a particular asset class, is real estate, an ETF is going to go, “Alright, there are residential REITs, there are healthcare REITs, there are commercial REITs, there’s all these different types of REITs; we need to invest in everything.” So for me, one stock purchase diversifies me into eight different real estate sectors, across 154 different real estate holdings. With one purchase of a stock, it cost me 0.12% of a yearly fee. I’m in a fund which has $64.2 billion in it. So you can imagine the negotiating power when it comes to going and finding a deal.

This is the other advantage of REITs that most people don’t realize. If you’re an individual and you go in and try to negotiate a deal that you’re trying to, hopefully, hold on to, because it depends on your next year’s income, versus REITs or an ETF that goes in with $64 billion behind them, which one’s going to get a better deal? It’s very simple.

The most important thing about REITs and REIT ETFs is that these are managed by full-time nerds, accountants, lawyers, and statisticians that are looking at the market all across the USA and trying to identify what the best investment is. And the reason for that and why they will never slack, unlike you and I– I remember, I’ve gotten into deals, and then I’ve had to admit that this was a bad deal. Well, if I was them, I’d have $100 million pulled from my fund. So they don’t have the slack that we do as retail investors. So as a result, since inception, they’ve had an 8.48% compounded growth rate, with a 4.52% dividend.

Now, that cash flow on the dividend side isn’t as much as what you would expect if you were buying single-family homes, for example, somewhere around a 20% cashflow. However, you’ve got none of the work, you’re doing zero effort into actually doing this, and you’ve got a completely diversified portfolio across the entire USA. So from a stability perspective and from a freedom perspective, it works. The best thing about it is, I’m currently traveling in Bogota, Colombia, and my entire real estate portfolio travels with me on my iPhone. I don’t have to worry about it. I don’t have to do anything with it. It’s continuing to generate me money, and all I’ve got to do is know when to get in and when to get out and what to really invest in.

On top of that, we have our options strategy which allows us to generate an extra 12% a year of cash flow. So you’ve got the compounded growth rate since inception of 8.48%, you’ve got the 4.52% a year dividend that’s coming in and you’ve got a 12% a year cash flow by utilizing options, and the entire yearly fee for holding this fund and for having all these nerds do all the work for you is 0.12%. That’s what I do now.

Joe Fairless: What are the tax benefits, if any?

Minesh Bhindi: Well, you’re still going to pay up the gains tax. If you sell, you still got that, depending on what country you’re in… And I don’t really like talking about tax. That’s something that you’ve got to talk with a CPA about. But really, it’s very, very similar to having your own real estate portfolio.

Joe Fairless: Got it. So REITs do pass the appreciation through to their investors?

Minesh Bhindi: I would highly recommend you guys speak to your CPA to confirm that.

Joe Fairless: I know, I understand that. But generally speaking, it’s not really a tax strategy question, it’s just black and white question. Generally, do you know if REITs pass depreciation through to investors?

Minesh Bhindi: I’ll have to confirm that, and simply because I’m based in London, so I’d have to speak to the CPA.

Joe Fairless: Yeah, a little bit different. Well okay, so what tax forms– and it probably is completely different from US so, but I’ll just ask… What tax form do you receive at the end of the year to show your gains or losses?

Minesh Bhindi: I’ll have to confirm that as well.

Joe Fairless: Oh, okay. Alright, because then–

Minesh Bhindi: Simply because these are publicly listed rates. So, in essence, you’re investing through a broker account. So it’s not a private equity situation.

Joe Fairless: Right, got it. Because one component of it is taxes, and with private investments like syndications, investors in the US, they’ll likely get a K-1, and that K-1 will probably show a loss, although no guarantees, because the depreciation is passed through, assuming that the operator passes the depreciation through… And then it gets recaptured whenever it’s sold. So it’s not all sunshine and rainbows, because then you eventually have to pay it, but it’s just years down the road, whenever you actually sell the deal. But then there could be a 1031 option, so that the passive investors could continue to defer that. So I was just wondering if there’s anything like that with REITs, but that’s fine. We can—

Minesh Bhindi: Yeah,  I think it’d be different, simply because– and I’m not familiar with syndication structures, so forgive me on that, but I think it would be different simply because the return is reflected in the price of the stock, as it’s a publicly-traded stock. So I think it would be slightly different in that sense. I’m not sure with a syndication whether you get full title ownership of the property through a syndication or not, but with a stock, you’re not getting that; you’re getting the ownership in the stock.

Joe Fairless: Got it. So what are some ways that you’ve optimized your approach investing in REITs that you weren’t doing at the beginning?

Minesh Bhindi: Wow, okay. So before, what I was trying to do was – I was trying to purchase multiple different REITs, trying to guess the market. It’s like trying to pick a stock, and you’re going in there going, “Okay, I want New York real estate. I want Detroit real estate. I want healthcare here. I want commercial real estate here”, and unfortunately, that is just like picking a stock. Obviously, different REITs have different risk structures and things like that, and then you’ve got to get involved like you’re picking a stock, which I don’t want to do, simply because for me the goal is lifestyle. For me, the goal is to be able to travel, look for opportunities in different places, like I am right here in Colombia, and still manage my portfolio, and still enjoy life, and I don’t want to be reading returns papers, etc, etc.

So what I eventually did was transitioned from finding individual REITs to investing in a REIT ETF, and anyone can go and purchase a share of that – the symbol is VNQ – and that really was the set-off point for me in terms of really coming up and solidifying not only my investing with REITs, but also the Property Profits For Life strategy that we teach, too.

Joe Fairless: So for someone who’s never invested in a REIT, what are some questions they should ask about the REIT prior to investing to pick the right one?

Minesh Bhindi: Number one, it’s got to be diversified into at least five different real estate sectors for me. Number two, it’s got to have–

Joe Fairless: And is a sector meaning an asset class, or a market, or what?

Minesh Bhindi: Yeah, like a market. So for example, there’s healthcare REITs, there’s hotel REITs, there’s industrial REITs, etc, etc. So at least five of them. It’s got to have at least 5 to 50 different real estate holdings. So you might be in a healthcare REIT, but you’ve got to make sure that there’s more than one building that they manage, so that it’s diversified. And then really, you’ve got to look at the provider. And that’s why, to make it really simple for people, out of all the research that I’ve done and what I do with my money, VNQ is the best one. It’s the biggest one. It’s the best one. It’s the one that’s used by most billionaires, hedge funds and private family offices. So you can go do your own research, but really, we’ve done it all for you.

Joe Fairless: All roads lead back to that one, based on your research?

Minesh Bhindi: Yeah, exactly.

Joe Fairless: Alright, cool.

Minesh Bhindi: One other thing… One other thing I’m gonna mention is the yearly fee, because really, the yearly fee is very important. People don’t realize it. If you’re paying a 2% yearly fee, versus a 0.12% yearly fee, just get a compound calculator out and work out what that’s going to cost you over a period of 20 years. It’s very important with any investing to get the fees down as low as possible, and that’s really my message… And that’s why VNQ is one of the best – because it’s got so much economies of scale. The fees are almost nothing,

Joe Fairless: And that is the Vanguard Real Estate Index Fund.

Minesh Bhindi: Yes.

Joe Fairless: What else should someone know about investing in REITs who’s never invested in REITs, that we haven’t talked about already?

Minesh Bhindi: One of the main things is that the REITs are a lagging indicator to the stock market, in my experience. So what might happen is you might say, “Okay, the stock market’s going down and REITs are going to go down,” but what you’ve got to realize is that property moves at a much slower pace than the stock market. You can’t just sell in and out of property like you can a stock. So it’s important to be much more patient with a REIT than a stock.

Anyone who’s had experience with the stock market at all, you’ve got to be able to react on the fly. But with the REIT, it’s important to understand how the REIT’s going to perform, it’s important to understand when you get into a trade, it’s important to understand what type of parameters you set for that trade, and then have patience. If you start reacting to a REIT the way you react to a stock, you’re gonna cost yourself money.

Joe Fairless: One benefit of REITs is the liquidity, right? You can bounce in and out with a couple pushes on your phone?

Minesh Bhindi: Yes, but the problem with that is that you shouldn’t really be trading in and out that often. With everything that we do at Perfect Portfolio, we want to invest long term. So we want to be long term investors in real estate, long term in the stock market and long term in gold and silver, and that’s how we approach it. The real thing that we do is hold these assets long term, they’re going up over the long term. It’s a great time right now to be involved in real estate, especially until 2035-ish; it’s going to be fantastic.

Then for the short term cash flow, we use options to do that, and we use a simple option strategy to get that working. What we really specialize in is helping people actually execute. We’ve now coached people in 46 different countries, and our job isn’t really to give you a massively creative strategy. I firmly believe, after almost 20 years of doing this, it’s not about the strategy, it’s about doing it that matters. So that’s what we do. We coach enough people around the world to understand how to make someone successful with this, if they’re serious and committed as well.

Joe Fairless: You mentioned 2035, 15 years from now. Why’d you mentioned that number, not five years from now or 12 or 20 or 3?

Minesh Bhindi: To put a range on it, because that’s what you’ve got to do to hedge yourself nowadays. I would say somewhere between 2030 and 2035-ish. And that’s simply because we’re entering the prime spending years of the millennial class right now. They’re just about turning 30, they’re about to receive tons of inheritance funds, and that’s going to go into real estate. That doesn’t mean there won’t be a correction, but any pullback in real estate will be a buying opportunity until 2035.

Joe Fairless: You mentioned earlier, you’re a multi-millionaire. I heard that correct, yes?

Minesh Bhindi: Yes.

Joe Fairless: How did you make most of your money?

Minesh Bhindi: Through actually doing deals. Obviously, I have a business that teaches people how to invest as well, that did pretty well at the beginning, and then what I realized – the mistake that I made with that was that before, when I started, when I was buying physical real estate, I was spending a lot of time actually on the education side of the business, and not enough on my own investing. It just happens like that when you’re traveling for two weeks out of every month. So this time around, after 2010, when I started what was first known as Gold and Silver For Life, before we merged everything into Perfect Portfolio, was that I didn’t want to do that. I didn’t want to sacrifice my own investing for any business, not just an education business, but any business. So now, we will only work with 155 people per year, and if we get those 155 people by March this year, for example, we won’t take any more until next year; it’s as simple as that. So my main focus now is my own investing and my own portfolio, but I also have, obviously, an education business, and it’s not a charity.

Joe Fairless: What deal did you make the most money on?

Minesh Bhindi: Oh, wow, I can’t say that there’s one deal. I don’t think I’ve ever had a really big– well, obviously I’ve had purchases which had a sizable amount of money, but then it was trumped by following my own strategy and the accumulation over a period of a year; it trumped any one particular deal that came in. And that’s what I like to tell people – it’s not about one deal, it’s about how are you going to do this for the next 20 years.

Joe Fairless: Okay, just pick one though. Just any deal that you made a decent amount of money. I mean, it doesn’t have to be the most. We don’t have to know exactly first place, but what’s the deal that you made a lot of money on?

Minesh Bhindi: First deal I ever did was a £68,000 cashback on day one, with a quarter of a million pounds in equity; that was a pretty good deal. There was another deal that we did 200k on on the day of completion. It’s just these sorts of things, but however, I do want to stress that the setup of my businesses and my investing made it so that these were momentary periods of celebration, because the consistent growth of the business and the investment portfolio outperformed any short-term momentary hikes that we had, basically.

Joe Fairless: On the flip side, a deal you lost the most money on?

Minesh Bhindi: The deal I lost the most money on wasn’t actually a real estate deal. I lost $100,000 in three day. That was in the stock market, before I really figured out how to invest in the stock market properly. I was over-leveraged on a position and it did not go right. So I was down $100,000 in three days. That’s the most painful one that I remember.

Joe Fairless: That would be painful, and I imagine that is etched in your memory. Well, we’re gonna do a lightning round, but first, what’s your best real estate investing advice ever for real estate investors?

Minesh Bhindi: Understand what the goal is. There’s a lot of people that are very attracted right now to the ego side of “I want to own 10,000 doors”, for example, or etc, etc, “I want to own 50 buildings.” Figure out what the goal is first, because I think there are a few people in the world, but I don’t believe that everyone that’s involved in real estate is truly in love with the actual property. I think most people want the security, want the freedom and want the future that successful real estate investing can give you.

I don’t think they’re attached to the actual property. So understanding the goal and what you’re doing it for is very important, because then you can find the right strategy, then you can decide, “Okay, do I want to get involved with REITs? Do I want to get involved with a syndication plan? Do I want to go and buy this myself? Do I want to do the work for that?” You can go and decide what you want to do. So understanding the goal of what you’re truly in it for, and not just because someone’s saying you need to earn 3,000 doors, I think that is the number one most important thing that you can do.

Joe Fairless: Love it. We’re gonna do a lightning round. Are you ready for the Best Ever lightning round?

Minesh Bhindi: Sure, let’s do it.

Joe Fairless: Alright, let’s do it.

Break: [00:24:39]:03] to [00:25:22]:06]

Joe Fairless: What’s a best ever research tool you like to use when identifying investment opportunities?

Minesh Bhindi: ETF.com and TradingView.

Joe Fairless: Best ever way you like to give back to the community.

Minesh Bhindi: I’m involved in a bunch of different charitable things, but I don’t want to talk about those.

Joe Fairless: Okay, how can the Best Ever listeners learn more about what you’re doing?

Minesh Bhindi: They can go to perfectportfolio.com. I’m sure you’ll have a link in the show notes anyway, so they can click on that and come take a look at our trainings. Again, what we specialize in is actually helping people generate results over and over again. So once you’re a client, you get access to a weekly coaching call for life, without any other cost for that. We’re really looking for friendships and client relationships, rather than just trying to get as many people in as possible. So yeah, come and have a look, see what we have, see if it’s right for you, and then we can go from there.

Joe Fairless: Minesh, thank you for being on the show talking to us about REITs, why you champion REITs, and your journey that’s gotten to this point, and some things to look for when you’re selecting a REIT, as well as the REIT that you like, VNQ. So thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Minesh Bhindi: It’s been a pleasure. Thank you so much.

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JF1894: World Traveler, Entrepreneur, & Real Estate Investor Discusses International Investing with Elena Maurel

Elena owns property in many different countries and is involved in even more deals. She answers a few questions that someone who is thinking about investing would ask, like what’s the most investor friendly country to invest in? Which country is least investor friendly? Those questions and more will be discussed. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“It’s better to diversify your portfolio” – Elena Maurel

 

Elena Maurel Real Estate Background:

  • Active real estate investor, entrepreneur, and consultant
  • She has been involved in over 1,000 real estate transactions totaling more than $100 million
  • Based in London, England
  • Say hi to her at https://elenamaurel.com/
  • Best Ever Book: Atomic Habits

 


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JF1769: London Investor Shares How To Scale Two Real Estate Businesses Totaling €100 Million with Nicole Bremner

Nicole has built two successful real estate companies, and is on the show today to tell us how she did it. She’s currently working on a wide range of projects, from €200,000 to €5,000,000 projects, which are both being sold as of this recording. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“It was quite easy to take that money and invest in a gentrifying area and make money” – Nicole Bremner

 

Nicole Bremner Real Estate Background:

  • Founder of two real estate companies based in London
  • Develops and invests in real estate, has close to 100 units both residential and commercial, valued at close to €100 Million
  • Based in London, Greater London, UK
  • Say hi to her at http://www.east-eight.com/
  • Best Ever Book: Oversubscribed by Daniel Priestley 

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Nicole Bremner. How are you doing, Nicole?

Nicole Bremner: I’m great, thank you.

Joe Fairless: I’m glad to hear that, and looking forward to our conversation. A little bit about Nicole – she is the founder of two real estate companies based in London. She develops and invests in real estate, and has close to 100 units, both residential and commercial, valued at close to 100 million pounds. She is, as I mentioned, based in London. With that being said, Nicole, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Nicole Bremner: Sure. I started in property after being in banking, actually. I was in banking for a number of years… Most recently I was on Wall Street at Goldman Sachs, and I started on the 15th of September 2008, when everything was just collapsing, which was a really interesting day, and not a very fortuitous day to start a new contract at the bank I’d always wanted to work at.

So anyway, I then found out that I was pregnant with my second child anyway, so I left, moved back to London, and had a third child, and still was just looking at what I could do when I grew up, so to speak. I was just really struggling, banking wasn’t for me anymore, not with three young children… So yeah, I just renovated my house, really loved the experience; was still in talking terms with my builders, and it was my partner then who said “Why don’t you give property development a go?” At that time I didn’t realize that anyone could do it professionally, so I really did think it was just the housebuilders who could do that. That’s really a bit of a background.

Joe Fairless: And now you’ve got 100 million pounds’ worth of property, so there’s a lot that transpired from then to now. And just so I’m understanding, you’ve got around 100 units, residential and commercial, valued at around 100 million pounds… So with quick math, that’s basically a million dollar a unit average, right? Sorry, I shouldn’t say dollar; a million pounds a unit, right?

Nicole Bremner: Yes. Now it’s actually probably closer to 200 units in total, spread across 11 different projects. We’ve got one project with 49 units plus a commercial, so there’s 50 straight up; then we’ve got another project with 15 plus a large commercial, others with 21… So yeah, it’s a whole range of different projects.

The prices tend to range from the cheapest one-bedroom units outside of central London, that might be, say, 200k pounds, and right up to — we’re selling one beautiful apartment which is all over Nest Seekers in the U.S. at the moment, actually, and it’s on at 5.25 million. So yeah, a whole range of projects at various prices.

Joe Fairless: So let’s just start from 2009(ish) or 2010. When did you move back to London and complete the renovation of your house?

Nicole Bremner: That was 2009. I moved back, and then in 2010 I started the renovation. What was interesting though, that was a bit of a catalyst as well, is that I got back from two years in New York, living in Manhattan, and I realized that my flat that I’d left had earned more than me, even though I’d been working in banking… So I was able to sell that flat, take the money and then invest that into more property in a very up and coming area, that — I’d kind of liken it to Brooklyn; it was sort of Brooklyn before it went crazy. That’s the area of Hackney. Very cool, very trendy, lots of creatives in the area, just like Brooklyn, and lots of beautiful buildings there that had been neglected… Including my very first project, which is now my home; it was [unintelligible [00:05:55].18] so it was quite easy for me then at that point to take that money, invest in this great new area that was gentrifying, and make money on that.

Joe Fairless: But you had renovated your home, but you hadn’t – from what I can tell so far – done any ground-up development or renovations on other stuff, correct?

Nicole Bremner: No, not at that point. Apart from just putting on a lick of paint on my flat that made a lot of money, I hadn’t done anything, no. So it wasn’t until about 2011-2013, around then that I started looking more seriously at property and started doing renovations on properties in Hackney. And then finally in 2013 I did my first out-of-the-ground – or into the ground, actually – development, where we dug a lovely basement. We stripped back this beautiful house, back to three walls, no ceiling/roof, really built out that project and it became a really beautiful home that we sold to quite a well-known musician. That was my first real build experience, and that was in 2013.

Joe Fairless: How do you teach yourself how to do that, in a relatively short period of time?

Nicole Bremner: Well, I was really lucky, because I was able to joint venture with a very experienced real estate investor, who had been doing it for about 30 years… Avi and I were introduced through an architect, and one of my joint venture partners pulled out at the last minute on a property, so my architect introduced me to Avi, Avi had already done his homework on the property, so as soon as he walked into the property, he went “Yup, let’s do this.” That felt very, very quick, but anyway, it’s been a very good decision, because over the last 6-7 years now we’re either working on or have done about 12 projects together… And that’s how I learned. I learned everything from him. He really was and still is my mentor in this whole property development process.

Joe Fairless: For that first project you partnered with him on, what did he bring to the table and what did you bring to the table?

Nicole Bremner: [laughs] I brought very little. I think I brought money and that’s about it. Money and eagerness, and a huge willingness to learn. I didn’t even realize that we could get bank finance, that’s how green I was. I thought we had to use cash for everything. I thought that the only bank debt you could get was your mortgage on your home, and you’d be committing mortgage fraud if you’re trying to do any sort of development… Which is true, you can’t; but I didn’t realize that there was development finance.

One thing I did do was I ran my own building team, because my builder and I had gotten along really well; we’d done some projects together before, and I was able to bring my knowledge of running a building team, project managing to the partnership… But he obviously already had that anyway, so… Yeah, it really was just my part of the cash, and my eagerness to learn.

Joe Fairless: And now fast-forward to 12 projects later approximately, what are you doing versus what is he doing? And have you brought in any other joint venture partners to fill in any other areas?

Nicole Bremner: What we’ve done is we’ve very clearly split the tasks. Initially, I was running my own build team and so was he, but then we clearly saw that he was able to do it so much more efficiently than I could… So I parted ways with my build team. Then I started focusing on the finance raising, and the dealing with architects, and investors, and helping with the marketing of the completed projects. I still do go along to the construction meetings when I can, but mainly I leave the construction very much to him.

As far as other joint venture partners, we haven’t really worked with anyone that has additional skills to what we have. Occasionally and very frequently we work with other investors, particularly with crowdfunding. We were able to raise 6.4 million from the crowd, people with as little as 500 pounds, and being able to invest in our projects… So we’ve got — I think the latest count was 169 investors, which is a full-time job in itself, just communicating with them.

But as far as other principal partners, it’s tended just to be the two of us, and then occasionally some high net worth investors have come through more silently, as investors.

Joe Fairless: So you have chosen a path that can be incredibly rewarding financially; conversely, it can also be incredibly draining from a mental capacity standpoint, emotionally, and then also financially, if things don’t work out… So what are some things that haven’t worked out as planned, and how did you approach those challenges?

Nicole Bremner: Well, I can give you many examples, unfortunately… Right now, as I’m sure you’ve seen all over the press, we’re going through Brexit here in the U.K, and it’s just been a disaster. It really has. I don’t think there are any businesses that have benefitted from this, and even down at the local nail bar, the ladies there were saying how quiet they are… And friends who have security companies, and recruitment companies, everyone is just getting a battering right now… Because there’s just no visibility.

That came at a time when the government also announced tax reforms on landlords. That was also quite catastrophic for many landlords. Thirdly, they increased the tax for people buying more than one property.

Joe Fairless: Man…

Nicole Bremner: All these things just created this perfect storm for investment in the U.K. The government is really sending a message with the tax reforms that they want to try and professionalize the industry, and they don’t want the regular person to be able to participate in this industry anymore; they just want the big corporations.

So that’s really the headwind that we’ve been facing. With that in mind, I’ve got a number of examples. One that’s been quite public, and that I’ve been really open and transparent about, is this beautiful five-million-pound property in West London. We bought that really cheaply at the time, put a lot of money into making it just the most beautiful apartment you could find on the market, and then we had this three-pronged attack of the tax changes plus Brexit, and the whole market for luxury, prime property in London just evaporated overnight. So now we’re left with this stunningly beautiful apartment that we’ve had to short let unfortunately, which takes the shine off something new… And we’re getting, luckily and finally, after 15 months on the market, we’re getting some low, cheeky offers… Which are fine; I welcome cheeky offers, they’re offers all the same… But we’re getting offers that are even lower than the money we’ve spent on that property, which is a really bitter pill to swallow… But sometimes you’ve just gotta cut and run, don’t you…? So we’re trying to work out what to do with that.

Joe Fairless: So is the thought process, “Hey, there might be some change in the headwinds, or change in the direction of the way the wind’s blowing, so let’s hold on to it”, or is it, like you said, “Cut it, and let’s move on”?

Nicole Bremner: It depends which of us you ask on which day… [laughter] [unintelligible [00:13:11].19] headache it’s causing… So today I’m feeling quite positive; it’s got short-term lets booked right out until August on the property if we want them… So my current thinking is that we’ll hold it. The rental income covers the interest cost on that, and I really just don’t believe we should sell it for less than we’ve put into it… So we’ll hold it for Brexit to settle down. Because all these things – look at the tech bubble, and the world financial crisis of 2008… Everyone forgets, people move on, house prices recover. Everything goes back to normal. If you look at long-term charts, these are short-term blips. So my current thinking is that we hold it, weather the storm, and wait until things turn. Then we’ll get five million or six million for it, so… That’s my current thinking. But ask me tomorrow and I might have changed my mind and decided to “Let’s just take anything for it!”

Joe Fairless: Yeah, fair enough. Therein lies the challenge of any developer… And perhaps you can challenge me on this, because first off, I’ve never developed anything, so there’s that; I don’t have experience with what I’m about to say, so I’m coming in from just an academic standpoint. My theory is when you do a development, it’s not cash-flowing, therefore you have a lot of cost upfront, and if things change when you eventually have it developed and it’s stabilized, then there could be some trouble from a financial standpoint… And then conversely, if things change positively, then even better. Or if they do what you think they will do, then great, you accomplish what you were set out to accomplish. So my question is “How as a developer could this challenge, this five-million-pound property in West London, how do you attempt to mitigate the risk from that happening again on future deals? The development risk – how do you approach that for future deals?”

Nicole Bremner: Yeah, that really is the million dollar question, and you’re absolutely. That is when most developers come unstuck, and the number of developers who unfortunately go under is very high, and the reason is simply cashflow. As you pointed out, these developments are really cash-hungry, and if you don’t have the cash to put into them… Us property developers by nature are all glass half full; we share a lot of traits with gamblers even, we really do. We set up this base case, mid case, best-case scenario, and no one ever believes that we’re gonna hit the base case, ever. They always think we’re gonna hit the mid and above. And yet, when we do hit that, we’re just completely under-prepared for that.

So I think that the only way to mitigate against these occurrences is by holding much more cash than you thought you needed, and even double that again.

So just to tell you, some developers are doing really well right now. I had the fortunate opportunity to interview Tony Pidgley, who’s the chair and founder of the Berkeley Homes Group here in the U.K. The largest housebuilder in the U.K. They’re having a great time right now, because they have been hoarding cash over the last decade, because they could see that properties were getting expensive, so they were going against the grain, holding on to cash. Right now they’re sitting on huge amounts of cash, and they’re not at the beck and call of lenders; they’re able to just to go out and buy, and landowners are wanting to buy not just because of their name, but because it’s just an easy transaction. There’s no waiting for banks to come through, and things like that.

So yeah, if you’ve got cash, cash is king, and you’re going to win every time… But property developers are always chasing that next deal, and it takes a lot of discipline to hold back the cash that’s needed, and I’m guilty of that.

Joe Fairless: Let’s talk about a success story. What’s a project that you’re really proud of?

Nicole Bremner: I think the project that I’m most proud of hasn’t quite finished yet… But we bought this beautiful rooftop development around City Road, which is sort of a tech hub of London… And we bought it off — I’m not sure if you’re familiar with Simon Cowell, the judge of X Factor, but we bought it off his brother, Nick Cowell; he’s a pretty lovely guy, who’d owned an estate agency here in London… And they were selling it with planning permission just for two flats, on to of this really beautiful building.

My business partner Avi could see that there was quite a big gap between the ceiling of the top floor and the roof of this building. We got an engineer up there and worked out that we could probably get another floor on this building without increasing the visibility of that additional floor from the street view, which is what the planning department are worried about.

Sure enough, our architect did this beautiful scheme, went back to planning, but unfortunately the planners didn’t even look at the scheme and just rejected it. So fast-forward two years later, we’ve finally won on appeal, so we over-doubled what we had previously bought, and now we’re building it out… But my goodness, it’s being a challenge. Sometimes you feel  like you’ve got obstacles at every turn… But with this particular project, it’s just beautiful. The computer-generated images that we’ve got currently are just really lovely.

Every time I walk through this site I just get this beautiful feeling. The views are lovely, and the feel of the project is beautiful. I just can’t wait for it to be finished, and stand in these lovely apartments, looking out over London… And hopefully, if things go to plan, one of them will be my homes, so…

Joe Fairless: Oh, nice.

Nicole Bremner: …I’m very excited about that.

Joe Fairless: What is your best real estate investing advice ever?

Nicole Bremner: Best advice is cashflow, and it comes back to what I’ve said before – develop the discipline to understand that this is not about short-term gain; this is about building a long-term legacy… And if you can have the discipline and develop that discipline to hold back cash and know when to say no, your career is going to last your life’s time, rather than just be for the next couple of years.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Nicole Bremner: Sure, let’s do it.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:19:25].12] to [00:20:07].11]

Joe Fairless: Okay Nicole, best ever book you’ve recently read?

Nicole Bremner: Oversubscribed (I think that’s the name) by Daniel Priestley… But pretty much anything by Daniel Priestley.

Joe Fairless: Okay. You are introducing a new author to my world, so thanks for that. Best ever deal you’ve done, that you haven’t talked about already?

Nicole Bremner: Englefield Road, in Islington, Central London.

Joe Fairless: How come?

Nicole Bremner: We did it at the height of the market; we bought low, renovated beautifully, on-time, and sold within a couple of months at a peak, just before the market bottomed out… And also, it was just a stunningly beautiful development. This is the one that was bought by quite a famous musician. He’s a lovely guy as well, and has invited me around a couple of times to see what he’s done to the place, and see all his musical instruments. That was a great deal.

Joe Fairless: Best ever way you like to give back to the community?

Nicole Bremner: I sit on the board of two charities. One is for [unintelligible [00:20:55].19] which sounds very weird, but a cause close to my heart… And the other is for cancers of the neck and throat, which again, is something that’s very close to me, having experience in that area. I sit on these boards, and I’m really excited to give back in that way as well, and any other way I can through mentoring or advice on investments.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on?

Nicole Bremner: I’m prolific on all social media – Instagram, Twitter, LinkedIn, Facebook… Or you can go to my website, NicoleBremner.com.

Joe Fairless: Nicole, thank you for being on the show, sharing the successes as well as the lessons learned from being a developer, and how you got into it, how you initially structured the deals with your partner, and how roles have evolved and how you two have settled into what your strengths are, in your areas of focus.

Thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

 

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Best Ever Show Real Estate Advice

JF263: She Went From Homeless to Having a Multi-Million Dollar Portfolio in TWELVE MONTHS. How’d She Do It?!?

She has an incredibly inspirational story, but that’s not all! Today’s Best Ever guest shares with us her rocky road to success, how important relationships are and some impractical ways to generate leads you may not have heard of before. You’ll go from eating Ramen Noodles to eating caviar if you listen to her story and take some action!

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More than anything else, our mindset controls our situation.

Kemi Egan’s real estate background:

–          Author of international bestseller The Power of Real Estate Investing based in London, England

–          Host of Turbo Charge Your Success podcast

–          Co-founder of Freedom Academies and Freedom Investment

–          Went from homeless to having a multi-million dollar real estate portfolio in just 12 months

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