Josh Cantwell: So, hey, there, guys, welcome back to Accelerated Real Estate Investor with Josh Cantwell. I have a fantastic, fantastic interview for you today. Today, I’m interviewing my friend Pancham Gupta. Pancham is the host and founder of The Gold Collar Investor podcast. He’s a professional real estate fund manager and also the co-founder of Mesos Capital, which owns and controls over $125 million in assets, 100% in apartments. He earned his master’s degree from Carnegie Mellon University. He’s passionate about teaching personal finance to people, especially helping investors understand the alternatives to the stock market.

He is an immigrant from India, has a fantastic story, and in today’s podcast, we’re going to talk about number 1, how to structure your real estate syndications using two different asset classes, two different classes for passive investors. Number 2, we’re going to talk about his specific criteria to pick markets to invest in, both as an active and passive investor and what six markets he is actively investing in, and why. And he has one specific criteria, I think that you’re really, really going to love. Number 3, we’re going to talk about why the top five brokers in any market control that market and how to negotiate and network with those top five brokers.

We’re also going to talk about number 6, when he immigrated to the US from India, why he had to wait eight years to begin investing in the United States. We’re also going to talk about number 5, why he hired a personal mentor and coach to quit his high-paying job in the fintech world in New York City. You’re going to love the story about why he hired a mentor to quit his job, which is fantastic. And number 6, we’re actually going to talk about some of the things that he did to hack some extra time so that he could learn about apartments, learn about personal finance, gain back some more of his time in order to level up his education in the apartment space, in the commercial investing space when all of us realized we have very little extra time. So, you’re going to love this interview on the Accelerated Real Estate Investor podcast with Pancham Gupta. Here we go.

[INTERVIEW]

Josh Cantwell: So, hey, Pancham, listen, so excited to have you on the show today. Thanks for joining me.

Pancham Gupta: Thank you, Josh, for having me. We’re on the East Coast. It’s noontime. We love to chat apartments.

Josh Cantwell: Absolutely, love to chat apartments. So, Pancham, you have $125 million in assets. I could tell, kind of getting ready for the show, you’re like, I love to talk about apartments. I’m so excited to talk about apartments. You’re a professional real estate fund manager, the co-founder of Mesos Capital. I’m interested to just hear like, what’s going on in your world today? What are you working on right now that you’re excited about? And what gets you going? What gets you up in the morning and gets you started?

Pancham Gupta: So, I’ll talk about the mechanics first. Right now we have about $100 million worth of transactions going on. We have three deals that we are buying. We have two deals that we are selling and we’re doing one of our biggest deals, about $65 million, just accepted LOI on that last week. So, very, very excited about that. So, that’s what’s going on. What gets me up every day? It’s really making sure we add value to all parts of the business, whether it’s investors, whether it’s tenants, giving them home, and/or whether it’s our employees, our property management company and our employees who are working with us every day and making sure that their life is impacted in a positive way every day.

Josh Cantwell: Love it. Love it. You got your master’s degree from Carnegie Mellon. It’s interesting. Actually, I toured that college, that university when I was looking at schools. Obviously, a tremendous amount of horsepower, smart business people come out of that place, but everyone kind of starts from somewhere, right? I’ll be interested to hear more about that and where you kind of got going. But let’s talk a little bit about your money making strategy for a minute. So, Pancham, help us understand when you structure an apartment deal, what’s your typical structure look like? What kind of deals are you looking for?

Pancham Gupta: Sure. So, when you talk about structure, you mean how we do GP/LP, so, therefore, we offer investors. That’s what you’re talking about?

Josh Cantwell: Sure.

Pancham Gupta: Yeah. So, we are structured. We have a pref model. So, we have two classes within our pref. We have Class A and Class B. A is we give out 9% preferred return with no upside, and Class B is 7% preferred return with an upside. And we do the 70/30s split at the back end, 70 for the investors and 30 for our company on the profit. So, that’s more or less what we are doing as far as structuring goes. And then on the value-add side, we are focused on six markets and we have certain criteria on what kind of apartments and what kind of markets we are in, but the main strategy for us is really value add and buying these deals and adding value to them, increasing their NOI, then either select or cash-out refinance and return part of the capital or all of the capital to the investors.

Josh Cantwell: Love it. And you mentioned six markets. Help us understand how did you pick those markets? What did you like about those markets? You don’t have to tell us the exact markets if you’re not comfortable, but some people have that secret sauce. This is my favorite market.

Pancham Gupta: No, there is nothing secret here.

Josh Cantwell: No, but just help us understand what criteria did you use to select those markets? Why did they make sense for you?

Pancham Gupta: Absolutely. So, the markets, there is no secret here. We have in North Carolina, three markets there – Charlotte, Raleigh, and Wilmington MSA. In Florida, we are focusing in Jacksonville, and then we have Columbia and Charleston in South Carolina. So, why we picked these markets, right? There is really a lot of metrics that we look at, but at a very high level, we have overall job growth and overall population growth in these areas. If there is a job diversity within these cities, we look at that. We see what areas, where are millennials moving to? Where are builders developing? And we look at data from airlines. Where are the airlines creating the most segments to for their flights? Are they adding any segments to any certain number of cities? We look at U-Haul and United Van Lines data statistics, which comes out every year in January. Which cities took the most one-way rentals last year and the year before when they were moving, renting these trucks out?

So, there are like that we look at and after that, we find out, within those markets, the submarkets we look at. What kind of area median income that particular submarket has? How much is the median household, the house value within that one to two-mile radius of the property? Are there some markets that we’re looking at? So, all of that goes into at a very high level our market picking. And then we also add one more criteria, which is very personal to us is that we want to be on the flight in the morning and be there by 9:00. If we cannot meet that, we won’t go to the market. So, that cuts off I’m in New York, that cuts off all of the West Coast to be added. Even the great markets like Dallas and all of that, we don’t go there just because we can’t be on site at 9 am for the first meeting.

Josh Cantwell: Yeah, love it. That’s some of the best. And you did that in such a short amount of time. Some of the best quick-hitting, hard-hitting market selection criteria that I’ve heard in a while, and I appreciate you sharing that. Pancham, where are you located that you are flying in and want to get there before 9:00? I’m just curious where you’re flying out of, and where’s your home office?

Pancham Gupta: So, I’m flying out of JFK or LaGuardia in New York City. And one of the most used airports, but yeah, pretty much in all of that, there are flights, there’s very good frequency, and that we can be at the site at 9:00 or 9:30.

Josh Cantwell: Love it. The reason why I asked you is obviously, you’re not living in all the markets that you mentioned. You mentioned six markets in North Carolina, two in South Carolina, one in Florida. And so, help us understand from a property touring selection review process and then physically touring the building and then management, obviously, there’s a number of different times in the process of buying an apartment that you need to go on site, right? Get the offering memorandum from a broker, possibly write the LOI without even seeing it, but you got to eventually see it. So, help us understand how to you, what are some of your gold nuggets, if you will, for management and underwriting virtually from New York into those markets?

Pancham Gupta: Sure. So, that’s a very broad question. Let me break it down the answer. So, we have certain filters, criteria on the asset that we are looking at within these markets. We have certain submarkets that we are looking at. And then within those submarkets, the kind of asset we’re looking at, we have a very detailed checklist of that. So, I’ll go over some of those criteria real quick that, for example, we are looking at only 100-plus-unit apartment buildings. They have to be built after 1985. They have to have pitched roofs, they cannot be flat roofs. They have to have HVAC system, no chiller system on them. There should be no cast-iron pipes. They have to be PVC, no aluminum piping. So, all of that stuff.

So, we have that list and we kind of put that list on top of that filter on top of all the deals that we are getting from all these brokers who control. All five brokers pretty much control any market for multifamily these days. And so, we are on all of their list and we get them and we filter that out. And once the things that come through that filter, then we find out how much they are asking and we have an underwriting team that they get the data. We have our Dropbox kind of a place where all these memorandums go, we stack them up just for the archiving purposes to really see where these are going.

And then we have our online tools like Yardi Matrix, CoStar, all that. We take the data from that. Our underwriter goes and underwrites these deals to our metrics that we just discussed, like they had to have gone right to 7% cash-on-cash and all those things. That’s if those things meet, the criteria meet, and if we really like the property, we would then schedule a tour at that point. Before we used to do this that we would schedule a tour only after submitting the LOI, but now, we have reversed it and we go and visit our property. First, our acquisition manager goes to these properties so we tell him to go visit. He usually goes and secret shops it. And then he goes to all the comps and he creates a report, if the report is good, then we fly out. Actually, we go out and check it out and talk to the broker meeting one side and all that.

And then, after everything checks, I’ll be participating in the letter of intent, the best and final, and all that CFO call for offers date and then, if we win the deal, then the entire process of acquisition starts at that point. And all during this time, we obviously talk to our insurance guy to get a form and chart and scored. We talk to our tax guide to get a form. Every jurisdiction is different. Every county is different. They have their own tax laws on how that it’s a point of sale, that it’s not a point of sale and all that. So, we figure that out. And then we also talk to our lender. So, by the time we tour it, we have pretty much done everything when it comes to underwriting, talking to a debt guy, talking to our insurance, talking to our tax guy. If there is literally nothing at that point, which we do not know other than what’s on site, so we just go and check that out. And once they check that out and everything checks out, basically, we end up getting processed.

Josh Cantwell: Right. Got it. Yeah. So, so much of that underwriting is done upfront virtually. And I think that’s part of the point here that can all be done using Yardi, using their Yardi Matrix, using CoStar, using comps, using obviously the offering memorandum, checking what kind of comps that the broker’s given us in the OM, and doing a lot of that due diligence upfront, right?

Pancham Gupta: Exactly.

Josh Cantwell: And a little bit different because, Pancham, in my model, really is apples and oranges compared to yours, which is kind of an interesting discussion, and that we’re buying kind of close to home. I’m from Cleveland, Ohio. I like to buy in my market. I’ve got assets all over the place, Houston and Dallas and Oklahoma and Atlanta. But we’re focused really on Cleveland because Cleveland’s a very good cash-flowing market. There’s not all the appreciation, there’s not all the job growth, there’s not all the population growth that you’ve mentioned, but Cleveland from an opposite perspective, again, comparing apples and oranges, has a lot of older apartment stock that has not been significantly upgraded.

And our model because we’re local and because we own the construction company, we can actually go into a building that might be 50 years old to a significant value add. With these apartments, maybe are a lot of brown, boring laminate countertops, brown, boring laminate floorings, old brown carpet, old boring cabinets because Cleveland’s a kind of rust belt town, rust belt area. Same with Columbus, Cincinnati, Pittsburgh, Indianapolis. These rust belt types of towns enforce the appreciation through a significant value-add play versus what you said, which I love, is the fact that you’re like, we don’t buy anything that’s older than 1985. So, you’re buying stuff that’s 35 years old or newer that doesn’t have some of that older stuff that you mentioned. Like in Cleveland, almost every building I buy is going to have old cast iron pipes. We’re dealing with that all the time. Talking about no chiller, a lot of our buildings have boilers and chillers, right?

Pancham Gupta: Yes.

Josh Cantwell: But that’s the diversification opportunity. There are different types of operators, different types of risk profiles that passive investors can jump into. Pacham was playing more of that. Look, population growth, job migration, those kind of things is going to force the value over time. And that’s smart. Ours is more of a construction play to force the value of the building to be better and look better than all of the other buildings in town. That’s a smart play, but really completely apples and oranges models. And I think that’s the cool thing about this discussion. So, I appreciate that.

Pancham, let’s go back for a minute to talk about your start. You graduated from Carnegie Mellon. You’re like, hey, I’ve got a master’s degree, smart school. A lot of intelligent people go there. But what was it about apartments? What was it about multifamily that really intrigued you? And what were some of your early challenges? What were some things that maybe you stumbled on getting into the business?

Pancham Gupta: Sure. So, let me back up real quick on that one. So, I actually was born and brought up in India. And in 2003, I came to US directly to Carnegie Mellon to get my master’s. And the idea at the time was that I will get my master’s, get some years of work experience, and go back to India and start something on my own. And in 2009, I actually, literally me and my wife, we sold everything except the bed in our apartment to go back to India, actually, and we find out that we are expecting our first kid at the time and we’re like, okay, you know what? It’s hard to move even houses, forget countries in this situation. So, once the baby is born, we’ll decide after that. In 2011, we decided we’re calling this country our home and we are going to stay here forever.

And that’s when I started investing in this country and read the purple book by Robert Kiyosaki, Rich Dad, Poor Dad and the Cashflow Quadrant really was the one that really flipped my mind. I was working in New York City and had a great career in finance, a fintech career, and I started buying properties slowly. I bought two properties locally before we bought our own home, and then I bought properties, slowly scaled it up to five different states. These were small properties, single-family homes. I actually see you on your website before the podcast, you’re from Middleburg Heights, or your office is in Middleburg Heights, Ohio. I actually had a property in Middleburg Heights.

Josh Cantwell: Nice.

Pancham Gupta: I had a property in Cleveland, a couple of locations, Cayuga County, and so, I had these properties. I had property managers managing this. And I started really loving this business so much, even though it started as investing for me, and I decided I want to make it a full-time job. I was going to my son’s soccer games and listening to podcasts all the time. And people are thinking, oh, this guy is a dork with these big headphones on and not talking to us and all that. So, really, I wanted to scale the business up, and it was getting very hard with the scaling into these five different states and smaller properties. So, syndication was the way to go, and I started learning about that business and actually hired a couple of mentors and got into the business. And we did our very first syndication in 2017 where we actually raised capital. We’ve done some deals before that, but really where we actually raised capital and registered with SCC, did all that stuff. That was 2017. And then I quit my job and I’m doing this full time now.

Josh Cantwell: Love it. Any regrets about quitting the job?

Pancham Gupta: Yeah, there is only one, which is that I should have done it sooner.

Josh Cantwell: Right. Good for you, man. I love the smile on your face. If you listen to this podcast audio-only, Pancham’s got a big, beautiful smile. You could tell he’s happy about his decisions. That’s fantastic stuff. So, Pancham, coming the first circle then, after that amazing immigrant type of story and coming to school and having a regular job, quitting the job to be a full-time real estate entrepreneur, what kind of advice would you give our audience that you learned along with your journey? And what advice would you give your younger self?

Or maybe the advice that you’ll pass along to your kids about what you learn because a lot of people, even that are born in the US with so many advantages, are afraid to jump in. They’re afraid to make the plunge. Here, you came in from a totally different country, maybe not even knowing the language, lots of challenges, had to sell everything you owned. All you had was your bed. Your wife is newly pregnant. Lots of amazing opportunities, but challenges too. And here, you have a $125 million portfolio. There are obviously some things that you would maybe do differently or things that you would do faster. What kind of advice would you give based on your experience?

Pancham Gupta: That’s such a great question, Josh. The way you ask that question, no one actually has asked me that. You’re so right that there are so many challenges when you come into this country, totally different culture, you’re dropped into this thing and you have to figure everything out from scratch, from where to buy groceries and how to talk and the culture, the food, and all that is very different. And imagine then, on top of all the challenges that you’re mentioning, I came here from India. And India actually has this H-1B visa thing with US, so I cannot even do any of my own business until I have my green card. And I actually got my green card in 2011. That’s when I started investing here.

So, before 2011, I actually couldn’t even start a business in this country, let alone thinking about it. So, there were a lot of challenges. And now going back to your question that, what advice? So my advice is that it’s all about what’s your why that, if your why is strong enough, you’re going to figure out a way. And yes, there are issues and challenges with everyone. I had that too, like my family when I was quitting my job, which was a very high-paying job. I call it golden handcuffs in New York City. And my parents, my wife, everyone was against it. Everyone started saying that what if it doesn’t work? And I always said what if it does?

So, the question is, that’s the positive mindset, and how do you get that? You have to surround yourself with positivity. You have to listen to people who talk about the mindset. Everything is between the years that you have to work on. And for that, I actually even had a mindset coach to help me quit my job because it was really hard for me after being around this environment to quit my job. So, I would say that my biggest, biggest advice would be that if you want to do something and you’re why is strong enough, just focus on that one thing and do everything in your power to learn about that, spend all of your free time in just focusing on that one thing that you want to do.

My commute was three hours total, one and a half hours each way. I was on the train every day for one and a half hours. I would listen to podcast lists, read books. I would not even waste a single minute of my free time, I was just educating myself. So, I would say, educate yourself. Go after that one thing, and things will start happening. It’s like this, you’re driving on a foggy road, and if you’re driving from New York to California and the road is foggy, you won’t see all the road. You would at least be 10 feet ahead of you. And when you move 10 feet forward, you will see the next 10 feet. So, that’s what will happen.

Josh Cantwell: Yeah, love it. Wow, that’s a fantastic piece of advice. I love the analogy. Thank you for that. And man, just so awesome meeting you. I’m so excited for doing this. You’re a breath of fresh air, my friend. This is really fun. So, Pancham, let’s finish up with our final five, right? You ready for this?

Pancham Gupta: I’m ready, fire.

Josh Cantwell: Okay, quick answers. Number 1, Pancham, what’s your favorite way to find deals?

Pancham Gupta: Through brokers right now.

Josh Cantwell: Got it. What’s your favorite way to fill your capital stack with investors and private equity, just the whole stack?

Pancham Gupta: So, private equity and the senior debt with Fannie and Freddie agency loan and those are the two things, so high net worth individuals and agency debt.

Josh Cantwell: Got it. Pancham, what do you think’s your favorite piece of advice that you’ve ever been given? I know the least favorite piece of advice that you’ve ever been given, which was stay with your job. I know you…

Pancham Gupta: High paying job.

Josh Cantwell: So, which one do you think you like the most? Which one do you think you subscribe to?

Pancham Gupta: I would subscribe to the fact that go after your passion. A lot of people in this world, there are more failures because of fear than people actually attempting and failing. So, just go after it.

Josh Cantwell: Pancham, what do you think is, for you– I think for every entrepreneur, there’s, I think as they’re building, especially someone like you living a fintech job, highly paid, New York City, and this huge commute, young family, your life today has to be totally different than it was just a few five years ago. Like everything about it, no more commute, the family’s probably gotten bigger, you’re flying to these amazing cities to look at buildings, you have a team that you’ve built, you’ve invested a $125 million portfolio, so many things have changed. You have to have spent a lot of time thinking about this change. And I don’t think enough people, Pancham, think, think, think like, where am I going to go next? What’s working? What’s not working? So, what’s your favorite way now to decompress and think about the future?

Pancham Gupta: That’s a great question. Three things, number 1, I actually go out in the morning, either on a run or a walk or a bike ride. That’s one way. Second, I do meditation. I do the SAVERS routine, which we can go into if you want, but basically, there’s part of it, which is meditation, which keeps me grounded. And I have this grateful exercise that I do every morning, what three things I’m grateful for? I just know that that helps me decompress. And then finally, the third thing is the special breathing exercises I do to kind of really decompress, calm my body. We had this buyer’s interview call with the $65 million deal on the line. Before that, I would just do these deep breathing exercises just to make sure I am calm, grounded. So, that’s what has me really think. And thinking is the most difficult part, I tell you that, that’s the most important part.

Josh Cantwell: Yeah, I just spent before this interview about three hours with my team looking at P&Ls through the end of August. And man, it was three hours of thinking of just me and my buddy Glenn and my partner Tyler and then our CFO Roberdo, just thinking through thousands of units, what’s working? What’s not? Where our expense is too high, too low? All these indicators and a little bit of it is brain damage. It really is mind-numbing, like little I feel my mind going numb, but at the same time, like I feel now that we’re done with that, I feel so much better. Like, it’s just the art of thinking, what are we doing? How are we doing it? What’s working? What’s not? Most people just in the rat race are just go, go, go, go, go to make money or go, go, go to pay the bills, it’s crazy. People don’t take the time to think. So, I appreciate your advice on those three things.

Last question, Pancham, as everybody has mentors, leaders, people they look up to, you mentioned a couple of them. You actually mentioned kind of almost a mentor that helped you quit your job. That’s the first time I actually ever heard of that. So, who do you think is the mentor or the leader that you’ve looked up to that’s had the biggest impact on your life?

Pancham Gupta: Yeah, I would say the same guy who really helped me get off my own head. It’s a funny story that if you have time, I can quickly do 2 minutes and 30 seconds. So, the day I decide to hire this guy, see, I’m working this full-time job, my parents are against it, my wife’s against it, and I’m also having a hard time because even though I want to quit, I couldn’t because all of that and I was also thinking the same thing that it’s really a high-paying job, so…

Josh Cantwell: Second-guessing yourself.

Pancham Gupta: Yeah, you start second-guessing yourself. And you know what? I decide that I want to hire this coach, like help me get out of my own head. So, I go to my wife that day and say, “You know what? I’m going to hire a mindset coach to help me quit my job.” She was like, “To do what?” I’m like, “To help me quit my job.” She said, “Just go quit the job. Why you have to pay someone to help you not to make money? Why don’t you just go and quit? Why do you have to hire someone?” Dude, I wish it was that simple. You had the number. She supports me. Everyone supports me. Like, they’re just helping. They’re scared. They care for me so much that they don’t want me to get hurt. Anyway, so that’s the guy. That’s a long-winded answer to your question that helped me quit my job, the guy is Trever McGregor. If you just Google him, you’ll find him. But I hired him to help me quit, get out of my own head.

Josh Cantwell: Yeah, I love it. I love the fact that your wife said, “Why are you paying him to make less money?”

Pancham Gupta: Yeah, to not make money at all.

Josh Cantwell: Oh, that is fabulous. That’s awesome stuff. Pancham, listen, this has been a super fun interview. Thanks so much for jumping on. Where can our audience learn more about you, about your investment opportunities, about yourself, and just engage with you?

Pancham Gupta: Sure. I have a podcast, The Gold Collar Investor podcast. I’m on LinkedIn, Facebook. They can find me there, but if they want my Top 6 Reasons to Invest Outside of Wall Street, they can go to TheGoldCollarInvestor.com/download. They will find those reasons and also the alternatives. And we talk about a lot more than multifamily as part of that report. So that, and then, yeah, we have our website MesosCapital.com, that’s our multifamily investing company. So, anyone is free to check that out.

Josh Cantwell: Awesome stuff. Pancham, listen, I had an absolute blast today. Love some of your new perspectives. Thank you so much for joining us today.

Pancham Gupta: Thank you for having me, Josh.

[CLOSING]

Josh Cantwell: Well, listen, guys, as you can probably tell, I had an absolute blast getting to know Pancham and his story of immigrating from India. His commentary from his wife about hiring a coach and spending money on a coach to actually make no money after quitting his job, I thought that was absolutely fabulous. And so, if you enjoyed this interview, don’t forget to visit his website, TheGoldCollarInvestor.com.

And also, don’t forget, if you enjoyed this as much as I did, go into iTunes, YouTube, wherever you get your podcasts, Spotify, and make sure you subscribe. Don’t forget that, leave a rating and a review, but make sure you subscribe because you don’t want to miss episodes like this. You don’t want to miss the insight, the content, the value, the little nuggets that Pancham shared. You don’t want to miss the stuff, especially on the next episode that’s coming out. You’re absolutely going to love it. So, thank you so much for joining me today, and I look forward to our next podcast next time. Take care.