I Built a $12K/Month Rental Portfolio While Working 9-5

After a fateful encounter with a real estate investor on vacation, Pratik Shah's eyes were opened to the possibilities of real estate investing. Now, just eight years later, he has a rental property portfolio producing $12,000 per month in pure profit. Even better, he accomplished it all while working a 9-to-5 job, buying rental properties on the side, and managing them from afar. No creative financing strategies, no off-market deal hunting, just picking the right properties in the right markets. Pratik's secret to a six-figure passive income stream in under a decade? Move markets when deals no longer make sense. Pratik has switched investing markets three times now, going where the cash flow is and the prices make sense. This has helped him grow his real estate portfolio while other investors complain that prices in their markets are too high. The proof that his repeatable strategy works? An income-replacing amount of cash flow every month that could easily give him the financial freedom many of us dream of. Pratik turned a bad tenant who burned down his house into a huge payday, simple networking into rare real estate deals, and a duplex into a portfolio of just under 20 rental units! In This Episode We Cover How Pratik built a $12,000/month passive income stream while working 9-to-5 When it's time to switch real estate investing markets for better opportunities How Pratik made a six-figure win out of a burned-down house No more rentals? Why Pratik is pausing on rental properties for a different strategy Want more off-market deals? Why you need to go to meetups and connect with investors on the BiggerPockets forums! And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1171 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  This investor bought his first property less than 10 years ago. Now he makes $12,000 per month in net cash flow, even though he lives in a high cost of living area. This could be you if you just go out there and take that first leap. Today, we're going to hear his basic, repeatable real estate investing formula that almost anyone can follow to take control of their financial future.

• 0:29Dave Meyer?

  Hey, everyone. I'm Dave Meyer and the head of real estate investing here at BiggerPockets. And on this show, we teach you how to achieve financial freedom through real estate. Our guest on the show today is Pratik Shah. He's an investor based in New Jersey. And Pratik discovered real estate investing and bought his first property in 2017, when he wanted a way to use the earnings that he got from his W-2 to generate additional wealth and some passive income. And that is still his philosophy eight years later. Work a day job, save money, and buy a new property when the time is right. That approach has helped him grow to almost 20 units in eight years, spread between three different markets. And today, we're going to hear the lessons Pratik learned

• 1:14Dave Meyer?

  from overcoming a very difficult tenant situation with his first property, how he got comfortable investing outside the expensive market where he lives, and why keeping his day job has allowed him to scale even more quickly. Let's bring on Pratik. Pratik, welcome to the BiggerPockets Podcast. Thanks so much for being here.

• 1:32Speaker 01

  Thanks for having me, Dave.

• 1:33Dave Meyer?

  Yes, it's going to be a good time. Let's just jump right into it. Tell us a little bit about yourself and your background, how you first got into real estate.

• 1:40Speaker 01

  Sure. So I'm a pharmacist by training, live in Jersey. I got into real estate, I was actually on vacation with my wife in Italy. And we met an investor on a boat to Capri. And we're just talking to people that are on the boat. And he's like, oh, I'm from Jersey as well. I'm like, look, that's same here. And he told me about what he did and he's in real estate investor. So I got intrigued. We came back home and connected with him. We had dinner and a long story short, fast forward there. We, I actually bought my first deal off of him.

• 2:11Dave Meyer?

  How big was this place?

• 2:12Speaker 01

  It was three bedrooms, two baths. So on each unit, it was top down and it had, I inherited section A tenants. So that's a story in itself. Um, but yeah, it was in a rough area. This was in 2017. So the market was, you know, going high, but it was, it was still climbing a ladder. So I got in on a great point and honestly I learned a ton off that house itself. Whether it's managing tenants, managing toilets, you know, you hear the toilet story.

• 2:40Dave Meyer?

  It's always toilets.

• 2:42Speaker 01

  I never knew what a flapper was until I actually had to.

• 2:46Dave Meyer?

  When you were looking at these deals, did you have multiple options or was this kind of like, this is the deal you should buy? Or how did you pick this one?

• 2:53Speaker 01

  So when I met him and I got intrigued about real estate investing, I started listening and do my own homework. Right? So I was listening to bigger pockets. I was reading books, just understanding how to analyze deals. And then when we met for dinner and he brought his opportunity for me, he was getting to a bigger commercial space. And so I was curious, like he was 1030 wanting some houses and I was like, oh, okay. These numbers pencil in and why not buy a unit from someone that I could get experience from, that can kind of hold my hand through the first deal in a sense. Since I do have a W two job, this wasn't my full-time gig and it kind of helped me along the way with the goods, the bads and uglies. But it really got me a great, I guess, a dive into the pool of real estate investing.

• 3:34Dave Meyer?

  That's the best way to do it, man. The, the number one goal for your first deal should just be to learn. It's not to hit a home run.

• 3:40Speaker 01

  Yeah.

• 3:41Dave Meyer?

  Ideally, you do both, but yeah, absolutely. Just to learn. How did you finance it?

• 3:46Speaker 01

  Well, I mean, good question. After our vacation to Capri in Italy, I did have to build up those funds back. I kid. No, so but no, I had it. I had enough saved and luckily with 25% down, we were able to finance enough to purchase the house.

• 4:01Dave Meyer?

  That makes total sense. I think it's a great way to do it. As I talk about on the show a lot, you know, having a W2 job does have some of its benefits. And I assume being a pharmacist, pretty, pretty solid paycheck comes in. So that's a great way to start getting into real estate investing. So you did this first deal here, Pratik. What, what did you do after that?

• 4:19Speaker 01

  So after that, I was playing basketball with the same investor that I bought the first deal from.

• 4:25Dave Meyer?

  You guys do a lot of fun stuff. It sounds like a good guy to hang out with.

• 4:28Speaker 01

  It's all by chance, you know? And so we're playing basketball and we're sitting on the side and he's telling me about another house that he's offloading for a 1031 exchange. And I'm like, hey, first one went all right. Let's let me hear it. And we talked offline and I bought a second property off the same investor as well that I met in Capri, another multifamily around the block from the first one.

• 4:48Dave Meyer?

  Okay, so very nice. And how was it similar situation with inherited tenants? Was it section eight?

• 4:53Speaker 01

  Section eight tenants, both up and down, both units. And these tenants were a little bit more challenging than the first unit that I bought.

• 5:01Dave Meyer?

  Okay, what was going on here? Was it non-payment or just personalities?

• 5:07Speaker 01

  Yeah, personalities more so. Section eight, you're pretty much guaranteed payment from the, from the government. So that part was always covered. It was getting entry into the unit, the upkeep of the unit. I was constantly getting summons from the township for litter outside the house. So they weren't keeping up the unit as much as I would like them to.

• 5:26Dave Meyer?

  Ah, sorry to hear that, man. I mean, I know there, there was always risk. There's risk and reward, I think, with inheriting tenants. It's not always bad, but like, these things definitely can happen. So what did you do about it? Did you hold on to the property?

• 5:38Speaker 01

  Ah, no, this is too much of a headache. Like I said, I have a W2. Don't have the time to manage bad tenants, bad properties. So I actually went and tried to sell the property and had it listed to sell in 2019.

• 5:51Dave Meyer?

  Honestly, I love it. I think, you know, I rant about this all the time on the show, but people say like, buy real estate and never sell. I just completely disagree. Like, if there's a deal that's just not working for you, get rid of it and go do something else before you burn out or lose your money on a bad investment. It's better to recognize that this isn't working for you, whether it's financial or lifestyle wise. Like if it's not working for you, just go sell it. That's a better thing to do. So what was your plan? You went to go sell it? Were you gonna just 1031 or move it into something else?

• 6:20Speaker 01

  Yeah, you know, I had started going to meetups in different markets. Most, you know, Pennsylvania is not too far. So I started hopping into Pennsylvania as well. But to be able to do that, I wanted to offload this property.

• 6:31Dave Meyer?

  Yeah, okay. That's a pretty good solution. Did it work out?

• 6:34Speaker 01

  It would have. We were set to close on July 31st of 2019. I'll never forget the date. And on July 27th, three, four days prior, I get a call late night and it's the fire inspector of the city calling me to let me know my house is on fire. Everyone's safe, but the entire unit is damaged. Fire, water, everywhere. Firefighters are breaking in through every window. Yeah, that's the call I got three days before closing. Obviously, the deal fell through and so I was not able to sell a burnt down property. And that started my journey from just being a new investor to a essentially a flipper in a sense, because I do have to learn construction in that sense at that point.

• 7:20Dave Meyer?

  All right. Well, that clearly that's a very different business, being a buy and hold investor and having to rebuild a property from scratch. Sorry you had to go through that, but I think there's probably a lot of lessons that our audience can learn from, given that you had to do this. So let's dig into that. But we do have to take a quick break. We'll be right back.

• 7:37Henry Washington?

  Quick word about a new pro perk you'll want to know about. Aven, if you're a homeowner, there's a good chance you're sitting on equity that you're not using. The problem is tapping into that usually means a cash out refi, a traditional second mortgage, or weeks of paperwork just to get approved. Aven built something different. It's a credit card, but it's backed by your home equity. So you get a lot of the rate benefits of a HELOC with the flexibility of a card you can use anywhere. Rates are typically well below a standard credit card. Approval is fast and mostly online, and you can use it for anything. A renovation, paying down high interest debt, or just have more breathing room in your budget. And if you're a BiggerPockets Pro member, there's an extra reason to check it out.

• 8:16Henry Washington?

  Get approved for the Aven card and you'll get a $400 statement credit after spending $400 on your Aven card. Enough to cover your entire annual Pro membership. Head over to aven.com/biggerpockets to see if you qualify. Aven Financial, NMLS #2042345. Cards issued per 2020 license from Visa USA, Inc. by Coastal Community Bank. NMLS #462289, member FDIC. Equal housing lender, subject to approval, terms apply. Visit aven.com for details.

• 8:40Dave Meyer?

  Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost Segregation Guys is the go-to firm, having done over 12,000 of these studies with 500 million in total depreciation identified. Head to costsegregationguys.com/bp to get a free proposal and see your potential tax savings.

• 9:20Henry Washington?

  If you own rental properties, you know the job does not stop at closing. There's tenant screening, rent collection, maintenance calls, and the paperwork that comes up with all of it. If you're managing more than one to two doors, that workload adds up fast. That's where Mind, BiggerPockets' preferred full-service property management partner, comes in. Mind is built specifically for real estate investors with experienced property management teams, local market expertise, and purpose-built technology. They support leasing, rent collection, maintenance coordination, and reporting. Whether you're managing one rental or scaling towards your 10th, Mind is built to grow with you. It frees up your time to focus on finding your next deal instead of fielding maintenance calls.

• 10:03Henry Washington?

  And it's not just about time. If you're a BiggerPockets Pro member, Mind will save you $500 for every home you onboard, up to $10,000 in your first year. Check mind.co to save time, money, and frustration. That's M Y N D dot C O.

• 10:20Dave Meyer?

  Are you looking for a simpler way to find your next investment property? Lennar Investor Marketplace is a free platform built for real estate investors. Create an account and get access to investor-ready new construction homes, plus real-time data on projected rents, returns, and neighborhood insights. Everything is one place, so there is no need to piece together information from multiple sites. There's also support for financing and property management to help make the process easier from start to finish. Create a free account at biggerpockets.com/lenar and start analyzing deals with more clarity today. Again, that's biggerpockets.com/lenar to sign up now. Please consult your own legal and tax advisors to evaluate the risks

• 11:05Dave Meyer?

  of any real estate transaction. Lennar is an equal housing opportunity builder.

• 11:14Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with investor Pratik Shaw, talking about how Pratik had a really pretty tough start to your investing career with, it sounds like, difficult tenant situation that moved into a unfortunate catastrophe where you had a fire burn down your entire property. So, help us understand this. Like, how did you go from not having any experience to rebuilding a multifamily property? Where did you even start? What are the steps that you had to go through?

• 11:40Speaker 01

  Well, first, obviously, it was the insurance company. So, I worked at the insurance company to line up just claims, et cetera. Started interviewing contractors. You know, I had never done that before in my life, but understanding, you know, what to ask, the right questions. The biggest stories you hear now are just the trustworthiness of contractors to really getting References from other people through forums like BiggerPockets itself. That's how I started that process. And once I locked down a contractor, working with the insurance company to make sure their systems match for, of course, payments and stuff. And from there, it was just selecting material from, from scratch. I mean, when I'm saying material, I mean, your handles that you want in your kitchen cabinets.

• 12:25Speaker 01

  What type of towel holder do you want in the bathrooms? What type of flooring, et cetera, that meets the insurance company's needs as well from a financial standpoint? But then something aesthetically pleasing you want for your own unit as well. So it's kind of marrying the both and learning how to work within a budget of an insurance company, but within the style of the current state, right? Because the unit was about 20 years old, so you wanted to kind of transform it since you now have the ability to.

• 12:49Dave Meyer?

  For sure, yeah.

• 12:49Speaker 01

  So I spent a year until we got it completely rehabbed and updated. I had the house listed and to sell July of 2019. A year from that is the summer of COVID. And that was when the market was just starting to take off. And so fast forwarding a year, when that unit is ready to be sold, I had it listed and, and at a, at a six-figure increase from what I had initially listed for the year before.

• 13:15Dave Meyer?

  Oh, damn, that's awesome. I mean, so I, I know it's hard to say because it's probably a big pain in the butt, but like all told, financially, did it actually work out better that the fire existed?

• 13:27Speaker 01

  Financially, yes. I mean, I would wish this upon nobody.

• 13:31Dave Meyer?

  It took so many years off your life, I'm sure.

• 13:33Speaker 01

  Oh, my God.

• 13:34Dave Meyer?

  Got a bigger check at the end of the day.

• 13:36Speaker 01

  Yes, yes. It worked out for all intensive purposes. And I learned a lot. Quite honestly, I mean, it's not a lesson I would want to learn. But in hindsight, I learned so much. It made me so much more comfortable continuing my investing journey through other markets.

• 13:49Dave Meyer?

  Yeah.

• 13:50Speaker 01

  Just from the experience I gained from just tenant management to construction, to selling properties and working with insurance companies. I just learned so much just within this one deal itself.

• 14:01Dave Meyer?

  Yeah, man. I mean, sometimes the, the, the forcing function is actually beneficial to you long-term in your investing career. Like you're, you're never going to set out and set a goal for yourself to like, have to renovate a property like this when you're that early in your investing career, under these exact conditions. But there is a way to spin these things that sometimes happen in real estate. If you have the right perspective, it sounds like, like you do critique, you figure out a way to make this work for you and to help you sort of build your portfolio. So, once you got through this, it sounds like it took a full year. But once you were almost back to square one where you wanted to be in the summer of 2019, what did you do from there?

• 14:39Speaker 01

  Yeah. So during this whole time, I wasn't just sitting and managing and crying. I was networking on BiggerPockets, looking for meetups. And I found a meetup in the Lehigh Valley of Pennsylvania, which is only an hour away from me. So it wasn't too far, even though it's a different state.

• 14:54Dave Meyer?

  Great market.

• 14:54Speaker 01

  Great market. And I started going there, networking with investors. That's one thing I love to do, just talk real estate. And I met an investor there. And rinse and repeat of my first story. I networked with him and I bought a deal off of him. It's my first deal in the Lehigh Valley. New market, new area, whole new clientele. And it was great because I was able to, in a sense, just like the first time, transition to a new space, but with the comfort of just having someone there to be kind of like a mentor or coach, if need be. And that was my first unit in that space. Built my comfort for the area. I inherited tenants. They were great tenants this time around.

• 15:34Dave Meyer?

  Wow, you went back to it. Okay.

• 15:36Speaker 01

  I went back to it.

• 15:37Dave Meyer?

  Touched the fire once. You're like, I'm just gonna do it again.

• 15:40Speaker 01

  So my, my wife would say, I don't learn, but I like to say that I'm just more comfortable. And so...

• 15:45Dave Meyer?

  Well, you learned how to deal with it. You knew that, like, you could probably deal with the worst-case scenario, if, if it happened again.

• 15:52Speaker 01

  Yeah. But it was the best case. So where I took on and I, and I learned the intricacies of the area. Every market, it has its own specifics. Lehigh Valley has a lot of inspections from townships. But I learned how to network with the inspectors, et cetera. And lo and behold, from there, I ended up buying 11 more units. So now I have 12 units in the Lehigh Valley.

• 16:10Dave Meyer?

  Let's talk about this, because a lot of people in, in today's market... Live in areas where finding cash flow or the type of deal that they want to buy is inaccessible, either because it's too expensive or there's just not that kind of inventory on the market. So you basically said you chose Lehigh Valley, but was there other markets that you were looking at as well?

• 16:31Speaker 01

  I was looking at Indianapolis at the time and Cleveland, which are all great markets still to this day. But I think I liked the aspect of still being able to self-manage to a degree because I was still smaller at the time.

• 16:42Dave Meyer?

  Yeah.

• 16:43Speaker 01

  Where I take, you know, 10% typically is property management costs, sometimes 8%. And that was a big chunk of change. So I was able to place my own tenants and what I've identified by placing my own tenants in that area is if I do the legwork early on and really identify the best tenant for that unit, that will make my real estate investing journey so much easier.

• 17:07Dave Meyer?

  Yeah.

• 17:07Speaker 01

  Because I'm not just putting someone in there that meets, you know, cred score, a background check, et cetera. I'm talking to the people. I'm getting a feel for their, for, for why they need the unit. And I think that speaks so much more in the long run because they treat your house better. They, they pay on time. There's so many less issues down the road where I don't really need a property manager for that, that you, that area itself.

• 17:30Dave Meyer?

  Yeah. And it creates mutual benefit, right? Like it's good for you. Obviously you're probably going to have less turnover, less wear and tear on your property.

• 17:38Speaker 01

  Yeah.

• 17:38Dave Meyer?

  But you're also finding someone who's going to be really happy in the unit that you're offering, which is just a win-win situation. This is, I think, a really important pivot point for a lot of investors is really getting people in the fastest and at the highest rate is not always the best situation. If you find people who are going to truly love living in your house and who are going to take care of it, that's like a mutual benefit that will make your life easier, but it also will improve your returns. You'll have fewer vacancies. You'll have less wear and tear, less maintenance costs, and that's just a benefit for everyone.

• 18:11Speaker 01

  And I'll, I'll share a quick story. One of my tenants in one of the houses in the Lehigh Valley that I placed, and it's a high rental market. So once, once, I've never had a vacancy in that area amongst all 12 homes. You have people wanting to rent the next day. And so I had a unit open. I had a bunch of applications and I went there. I, I'll do phone screens from my house and I'll narrow it down to maybe five or 10 folks that really want to move forward and have them see the unit. And I I found this guy that wanted to rent the place and I did a background check and I came up with some red flags. Right. And the red flags were from prior drug use and selling, et cetera. But when I talked to him, I really found a sense of genuine nature and authenticity from speaking with him.

• 18:52Speaker 01

  So I confronted him like, hey, David, I like you and I really want you to use this, uh, rent this unit. However, I saw that there's some red flags and he explained it to me. He's like, hey, this was in the past. Full, full disclosure, I'm a better person. I've changed my ways. I just can't get a house because this comes up and no one will rent to me. And some of it's just through a conversation. That's where I mean, where I'm able to do it myself and physically see the person. I, I was sold on the sense of genuineness and I rented it out to him and he's one of my best tenants. I mean, he's putting backsplash in the kitchens. He's redone some of the flooring, painted the walls, pays on time every month. He's been there for five years, if not longer. And he's one of my favorite tenants and all because I gave him a chance.

• 19:37Dave Meyer?

  Fantastic.

• 19:37Speaker 01

  And that's something you're not going to get from a credit score check, a background check, et cetera, when you're checking boxes. Cause he would have never met those.

• 19:43Dave Meyer?

  Yeah. Well, good for you for, uh, for doing the work of being a landlord and actually, you know, meeting people, talking to people, doing the networking. We talk about it all the time, but this is, it's a relationship business. It's a people business. And you were able to find a great tenant who likes your properties, taking care of it. That's the type of mutual benefit that we are always trying to promote here. All right. So that was what 2021, you say?

• 20:06Speaker 01

  2018, all the way till current. We're still going.

• 20:09Dave Meyer?

  Okay.

• 20:09Speaker 01

  And like I said, I was still, you know, I was just throwing darts at a map, honestly, looking for other markets. So I did find, I did dive into another market too. And 2020 was my first year. And this is a complete left field because this is not near my backyard. It was not drivable. I still have never been to this area.

• 20:25Dave Meyer?

  Really?

• 20:25Speaker 01

  It was in, yeah, North Carolina. There's a big army base in North Carolina and.

• 20:31Dave Meyer?

  Fayetteville.

• 20:31Speaker 01

  Fayetteville. Yeah.

• 20:32Dave Meyer?

  Okay. Yeah.

• 20:33Speaker 01

  Yeah. For brag, for brag.

• 20:34Dave Meyer?

  Yeah.

• 20:34Speaker 01

  And so I had a buddy, shout out to Travis. Uh, he was, he was a buddy of mine and he's like, I, he lives in Raleigh and he's like, it's an hour away.

• 20:42Dave Meyer?

  Did you meet him somewhere super cool, like paragliding or backcountry skiing?

• 20:48Speaker 01

  I, I wish, I wish. This is more boring as in we work together.

• 20:53Speaker 01

  It's completely opposite, but it's funny. It's funny you say that where we were listening. We both had mutual interests, not only from work, but from real estate investing as well, or at least intrigued about it. And we heard there was this lady on BiggerPockets and she was from Fayetteville and he's like, hey, that's like an hour away from me. Let's look at this market. I'm like, sure. And we dove in there and have a bunch of units in Fayetteville as well now.

• 21:15Dave Meyer?

  I want to talk to you about this though, too, because when we talk about out of state investing, I think it's intimidating for people just to do one market that they are not intimately familiar with, but you're doing two. And I'm curious, like the pros and cons and how that's working out for you. But we got to take one more quick break. We'll be right back.

• 21:34Dave Meyer?

  For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple. I asked Hostinger's AI to build a clean site for her business and it had a working version up in minutes. No coding or designer needed. Plus, its AI agent helps with SEO, website copy, and email marketing after launch. You get domain, website, email, all in one account. And right now you can get Black Friday and Cyber Monday pricing

• 22:17Dave Meyer?

  through December 14th. So snag Hostinger's services at their lowest prices before the sale ends. Create your website today for just $1.99. Go to hostinger.com/realestate and use code REALESTATE for an additional 10% off Black Friday and Cyber Monday pricing.

• 22:35Speaker 03

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters. So you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.

• 23:05Speaker 04

  New and exclusive holiday decor just launched online at The Home Depot. Check out the viral Grand Duchess collection with smart holiday lights you can control from your phone. Easily customize the twinkle across trees, wreaths, and garlands to match your holiday vibe. Create stunning light effects, then switch it up with the tap of your fingers. Even the man in red will be impressed. Shop the holiday decor you want, online only, at homedepot.com.

• 23:36Speaker 05

  Are you ever shopping online and suddenly a discount that helps you save pops up? It makes your day, sometimes even your week. Want that feeling month after month? Well, new customers who save by switching their home and auto insurance to Progressive save hundreds. Cue your happy dance. Get your quote today at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers, not available in all states.

• 24:03Speaker 06

  Hey, listen. Power up your play with Nintendo Switch 2 and experience Link's legendary adventure, now reborn in vibrant detail on our fastest and most powerful system yet.

• 24:16Speaker 06

  And harness the power of the Ocarina with the built-in microphone.

• 24:25Speaker 06

  The Legend of Zelda: Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.

• 24:36Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with investor Pratik Shah, talking about how he scaled his portfolio, first by pivoting to the Lehigh Valley in Pennsylvania. Then, you just picked a market in North Carolina that you'd never been to, to have a second out-of-state market. So, tell me first, why you wanted to find another market? Were there just not enough deals in the Lehigh Valley? Or did you want to diversify? What led to that decision? Because it can be a lot of work.

• 25:04Speaker 01

  It was honestly both. I think just increasing the deal funnel, right? And as the years progressed, it was getting harder and harder. Numbers were getting shorter and shorter in terms of cash on cash returns. You have more investors that are more interested in the market as well. So you have a lot of competition through other investors that are trying to get in. So I figured if I look for multiple markets, I have a better chance of getting some deals and increasing my deal flow.

• 25:28Dave Meyer?

  Did you have some certain amount of units you were trying to build towards per year? Or were you just basically trying to take any opportunity you saw?

• 25:35Speaker 01

  Any opportunity. I, you know, I didn't care much for the numbers or how many doors I had. I was more so just trying to increase the passive income. Like I mentioned, I have a W2 that I love, I enjoy. I have no desire to give it up. But I just, I feel like I'm a real estate junkie. I just love crunching numbers and when it makes sense, just why not pull the trigger, right? So it's been working out so far.

• 25:58Dave Meyer?

  Man, this is like the kind of investing I love. It's like we're talking about keeping your W2 job and being really analytical about investing. We, we share a lot of, uh, philosophy around real estate investing. So what was it like? You, you know, I actually always advocate for people to go to these places before they do, uh, long distance investing. How did you get comfortable with a place you had literally never been?

• 26:21Speaker 01

  It was quite a bit of anxiety at the first where not being able to see, walk the unit and having, trusting an agent to do that. Uh, but once you build out the team and get a good rapport with the people that you're working with, you have that sense of comfort, right? And so we did a trial deal and it worked out and that kind of was a proof of concept to purchase more and out of state as well.

• 26:43Dave Meyer?

  In my experience, the calling of contractors and maintenance thing is probably the first thing that gives people anxiety about investing long estate. But the thing I have a hard time with not having been somewhere is knowing what neighborhood to buy within a market. Cause you can do a ton of analytics and look at all the numbers and all that and say, I, I know Fayetteville. I, I mentioned it because it's traditionally been a really strong market, but within every market, there's good neighborhoods you want to buy and there's ones you probably want to stay away from, whether it's because it's just not the kinds of assets, there's not the right housing stock, it's not in the path of progress. So like, How did you figure that out without ever having gone?

• 27:23Speaker 01

  Dave, I don't know if this speaks to you, but I'm sure it speaks to some people. I printed out a Google map of Fayetteville.

• 27:28Dave Meyer?

  Okay, I like this, yeah.

• 27:30Speaker 01

  I went with my agent that I was working with and I told him, all right, like I printed out for myself just to circle neighborhoods and I got on the phone with them and we went to neighborhood to neighborhood. Cause everyone knows every city in itself, no matter how small it is, has different neighborhoods, right? Different school districts. So I circled what's a good area for school districts? What streets? He was like, he mentioned, I'm not gonna say the street because I don't know if anyone lives on this street, but he's like, this street, this road, stay away from.

• 27:55Dave Meyer?

  Right, yeah.

• 27:55Speaker 01

  You know, do not go anywhere near that because that is just rough. So I would have X's on my printed out Google Maps. I would put X's on the map and it pretty much had essentially a treasure map in a sense of where I circled and where I Xed. And I went on Zillow or go on Realtor.com, wherever, and I would just look for properties within my buy box of like three beds, four beds, et cetera, in those circled markets on my map. And that's kind of how I went by block by block. Cause like you mentioned, there's some areas that you just don't know that they're near manufacturing sites. So people don't want to live there and you can't tell that always from just a Google map, right? So that's where doing your homework is very important and also having a good relationship with your agent that is boots

• 28:36Speaker 01

  on the ground, that has that intricate information of the street by street knowledge is very, very important and critical.

• 28:43Dave Meyer?

  Okay, but why have you still not gone?

• 28:46Speaker 01

  Why would I? I have no. North Carolina, I don't know. I don't know. It's worked out. I would love to go one day if, if, if the stars align, but you know, I've learned.

• 28:58Dave Meyer?

  You're braver than me.

• 28:59Speaker 01

  I've learned, you know, it's not needed. Honestly, if you have trust in a team and like I said, if you do the work ahead of time before you pull the trigger and get the right team behind you, you don't really have to be there physically.

• 29:12Dave Meyer?

  Do you notice a difference between the performance of your deals in Lehigh Valley and Fayetteville? Are they both doing well?

• 29:17Speaker 01

  Yes. And you have actually mentioned this before. So I laughed to myself when you asked me that question because you've mentioned Fayetteville before. And I've noticed that the appreciation has stalled somewhat to a point where Fayetteville was historically a cash flowing market. And with most markets over the past five, six years, they've all appreciated pretty much across the radar. I don't think the rents have kept up as much. So I've noticed that the rents aren't as keeping as much as the appreciation. So that's analysis I need to do. I still have those units because they're doing well for me for what I bought in with. But you know, my IRR on my equity, I gotta go back and do those equations.

• 29:56Dave Meyer?

  Yeah, that, yeah, that makes sense. I mean, doesn't mean you can't buy there, but probably means you have to pay less, right? You need to just be a little more disciplined about what you're offering.

• 30:04Speaker 01

  Exactly.

• 30:04Dave Meyer?

  So it sounds like you're sort of like going through that exercise of trying to figure out like, should I hold on to this? Or is there a better deal? So have you done that analysis? And is there something else you're going to try and pivot to?

• 30:15Speaker 01

  I have started transitioning into flipping side of things. So I've looked into another market. So sorry, Dave, I'm going to add a third market on your plate.

• 30:23Dave Meyer?

  Yours is like, okay, I work a W2 job. I got into this to be a rental property investor. Now I have properties in three different markets and started flipping. It's very, it's an unusual track, but I like it. Honestly, I say it's unusual, but honestly, I'm doing the exact same thing. Like my portfolio looks pretty similar. So maybe we're, we're more similar. But so tell me, first, tell me why? Like, what about the analysis led you to think flipping might be the better way for you to go right now?

• 30:50Speaker 01

  Quite honestly, it's, I, it's like I mentioned, I have a W2. So I have this capital. It's harder to find long-term deals that pencil. And I've traditionally stayed to single family and small multifamilies. And with just residential buyers, I'm getting beat out. I'm still putting in offers, but I'm getting beat out to a point where it doesn't make sense to invest. But when you have someone emotionally invested into the porch or into the house and the location that they're going to spend the extra money that they want to, which rightfully so, where it kind of beats you out as an investor. So I started working in Newmarket, Pittsburgh specifically. And I know you guys have mentioned this before on the podcast. And I started doing flips in the Pittsburgh, Greater Pittsburgh and suburban market there.

• 31:30Dave Meyer?

  Okay, nice. And what, what was the analysis there? You just did the math and that made the most sense to you?

• 31:35Speaker 01

  It was, it's a balance between passive income that's coming in from the properties that I have in the other two markets and coupling that with just maybe some, just a different space of higher returns, even though obviously they're, they're shorter timeframe. You have capital gains taxes that are different from short-term gains versus long-term gains, of course, but in a sense of just doing construction, I, I kinda got maybe that bug was put in with that Elizabeth house.

• 32:02Dave Meyer?

  Mm hmm.

• 32:03Speaker 01

  But I just enjoy it, like, you know, being able to look at a house and seeing how, what type of flooring, what type of paint do you want? And to be completely honest with you, and I hate if this is a secret's gonna get out, it's so much easier. I mean, I don't, once, once you find a deal that pencils and you find a trustworthy contractor, which is hard in itself, but once that's done, I mean, the hardest step is really figuring out what color combinations and paint palettes you want to match the flooring, really. And it's quite easy in that sense, um, where, you know, three, four months, if it's a typical cosmetic rehab, you could make great returns just in a few, in a short timeframe.

• 32:41Dave Meyer?

  That makes sense to me because I'm actually, I, well, knock on wood, I'm supposed to close on my first flip that I'm gonna be actively involved in on Friday. So I'm also trying to do the thing, because I've done some passive, uh, flipping deals before, but I'm gonna try this out. Uh, how are you managing that with your time? Because like, you work full-time, so how, how much time does this take? And is it, you know, is it getting to the point where you're sort of like reaching a limit in terms of how much you can contribute time-wise to your portfolio?

• 33:08Speaker 01

  Yeah, so, I mean, in terms of the deal flow, that's the agent. The agent brings me deals and within a few minutes, you could kind of pencil in to see if it makes sense to dive in a little bit deeper or doesn't make sense for your returns at all, right? And you always wanna be cautious, even if you're a trust agent, you wanna do your due diligence and look at comps and analyze them and get a real comfort for if you trust those comps. But once that's done, once you lock into dealing, actually get it, of course, after running the numbers, I have, I have a contracting team out there that I've got, I've built a relationship with that's very trustworthy and the communication's on point. And so I've been working with them, which I really enjoy. So then it's really just picking the material and the specs of what you want. And you know, like I mentioned, I have a W2

• 33:50Speaker 01

  job. I'm working throughout the day. I travel quite a bit for work as well. But in the evenings, I'm able to just ahead of time, if you give the contractor, this is what I want ahead of time, it helps you out because it saves the back and forth with with them, right? If you give them all that stuff in a spreadsheet in advance, they can review it. And then it's just more of an execution timeline where you're more of just a project manager. That's all.

• 34:11Dave Meyer?

  Would you do multiple at one time?

• 34:13Speaker 01

  I haven't yet, but I would love to. I mean,

• 34:15Dave Meyer?

  Okay, you're just going for it.

• 34:17Speaker 01

  I'm just going for it. You know, it's my, my philosophy is just jump in. Um, you could always figure it out in the backend. But if you have the means to it, of course, if you're not completely stretching yourself. And quite honestly, I enjoy this. I mean, I, I actually enjoy just running numbers, running deals, seeing them come through. It's fun for me. And I think that's partly why I've been able to jump in quite a bit where I I'm thoroughly having a good time doing so.

• 34:43Dave Meyer?

  That's, I mean, if you're enjoying this and you're making money, I mean, just keep going for it. That's awesome. So before we get out of here, Partik, just tell us, like, what's the state of your portfolio today?

• 34:51Speaker 01

  Sure. So I have just under 20 units that are split between the Eastern Pennsylvania markets and North Carolina market. I dive into anything that's single family and small multifamilies, of course. And so that's been steady rolling, cash flowing just around 12,000 a month net after expenses for those units. And like I mentioned, I'm moving into flipping. I'm just trying to increase that business and that side of things, look, always looking at new markets. And one thing I haven't explored yet, which I'm super interested in is private lending.

• 35:23Dave Meyer?

  You know, I love private lending.

• 35:25Speaker 01

  I, I, like I mentioned, I have a W2, so that that does afford me the luxury of doing that. And I love real estate and I love crunching numbers. So if I'm able to lend to somebody to do the work where I physically may not Be able to, since I have a full-time job, by the same point, understanding the risks associated with that, knowing that I understand how to crunch numbers, it gives me a good opportunity where something that I've super, I've really been intrigued in, but haven't really jumped in just yet.

• 35:52Dave Meyer?

  Very cool. Well, is there like, are you working towards a, like a unit goal or a passive income goal? Or are you just going to sort of do this for as long as you can because you enjoy it?

• 36:04Speaker 01

  I would love to have one unit and getting, to get 12,000. Dave, I would love that.

• 36:09Dave Meyer?

  That's everyone's dream.

• 36:11Speaker 01

  But no, I don't mind how many number of doors. I think it's more, you know, I have an unofficial goal of like 25,000 and there's no reason behind that number, but I would like 25,000 a month and cash flow, that would be nice. But that doesn't mean I'd quit my job. I truly enjoy what I do. So I just, at the end of the day, just want to keep growing. I want, I want to keep having fun, right?

• 36:30Dave Meyer?

  It's a great attitude.

• 36:31Speaker 01

  I've understood the market of just renting and purchasing long-term investments, which has been going well. I'm trying to learn, of course, about just the flipping business. And of course, at the same time, I would love to privately lend as well.

• 36:44Dave Meyer?

  Sweet. Well, good luck to you, Pratik. We'd love to hear from you in the future as you update and continue on this path. Maybe we'll have you back to hear how you've been growing in the next couple of years.

• 36:54Speaker 01

  I appreciate it. Thanks for having me, Dave.

• 36:55Dave Meyer?

  Thank you all so much for listening to this episode of the BiggerPockets Podcast. I'm Dave Meyer. See you next time.

• 37:01Speaker 03

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters. So you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.

• 37:31Speaker 04

  New and exclusive holiday decor just launched online at The Home Depot. Check out the viral Grand Duchess collection with smart holiday lights you can control from your phone. Easily customize the twinkle across trees, wreaths, and garlands to match your holiday vibe. Create stunning light effects, then switch it up with the tap of your fingers. Even the man in red will be impressed. Shop the holiday decor you want online only at homedepot.com.