Earning More Than $100K at 19 and Now Running His Own Firm
JUL 28, 2022
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About

In this episode, we welcome Angad Guglani, Founder and Principal at Cooper Square Acquisitions. He built his portfolio by utilizing the BRRRR method and was making 6 figures before he even hit 20 years old. Today, he reveals his strategies for success, how he’s taking on bigger value-add deals with an in-house construction team, and why it’s his goal to buy small businesses. He also digs deep into the impact of inflation on real estate and the opportunities in the horizon for the industry.

 

[00:01 - 03:23] An Early Start in Real Estate  

  • Angad on buying his first house at 16
    • Succeeding with the BRRRR method

 

[03:24 - 15:14] Building A Vertically Integrated Company

  • Why he’s acquiring boutique multifamily buildings
    • They require less rehabs than single-family homes
  • Forming a construction team in-house 
    • Handling historic rehabs with a 23-people team
    • The challenge now is finding labor
  • Angad’s goal for his company: organic growth
  • Is the BRRRR method dying?
  • His perspective on the current market
    • Rents may keep pace or exceed inflation
    • The tenants are still the most important thing

 

[15:15 - 18:10] Investing in Businesses

  • What are businesses worth investing in according to Angad
  • Real estate vs. business investment

 

[18:11 - 19:21] Closing Segment

  • Reach out to Angad! 
    • Links Below
  • Final Words



Tweetable Quotes

 

“If inflation keeps ripping the way it is, the rents… hopefully they keep pace with inflation.  In the past have exceeded inflation, right?” - Angad Guglani

 

“I like to review all the applications myself before approving them… A great tenant can make a terrible property an amazing deal.” - Angad Guglani

 

“That's a beautiful thing about real estate is, at the end of the day,  people need a place to live.” - Angad Guglani

 

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Connect with Angad! Visit the Cooper Square Acquisitions website or email him at ag@cooperacq.com.  

 

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Want to read the full show notes of the episode? Check it out below:

 

[00:00:00] Angad Guglani: When you're buying a piece of real estate, you're underwriting it, your competition, everyone's underwriting the deal. Everyone knows kind of where this deal's going to go. You're going to spend this much on the rehab. Your rent's going to be this much per foot or this much per year, this much per month, whatever it is, you figure out what your NOI is going to be. You figure out what your, the term loan is going to be at. And you know, you basically know, day one, what it's going to be now, granted you have to execute and you have to find the deal and the numbers could change depending on the market, but you kind of know that going forward. Versus if you buy a business, you can get in there and really say, oh wow. I had no idea we could take this company, in this vertical that we weren't even playing in. 

[00:00:46] Sam Wilson: Angad Guglani started in 2016 with one single-family house. Now he runs a vertically integrated real estate investment company owning and managing 150 residential units without raising outside equity. Angad, welcome to the show. 

[00:01:00] Angad Guglani: Hi, thanks for having me, Sam. 

[00:01:01] Sam Wilson: Hey, man. The pleasure's mine. There are three questions I ask every guest who comes from the show: in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there? 

[00:01:09] Angad Guglani: Sure, let's do it. So I started in, well, I grew up in Pittsburgh, but really started my real estate career in New York City, on the brokerage side, mostly residential rentals. Then I started investing in Camden, New Jersey and I've kind of expanded out to the general South Jersey, Greater Philadelphia Metro area, like the suburbs, and I live in Philadelphia now.

[00:01:28] Sam Wilson: Gotcha. 

[00:01:29] Angad Guglani: How did I get there? I guess a lot of, lot of BRRRR deals. 

[00:01:32] Sam Wilson: Yeah. Talk to us about that. I mean, that's kind of what you said there, you know, in your intro was that, you know, you started in 2016 doing a lot of BRRRR deals. What was that process like? Can you tell us how did you do it so that somebody else who listened to this show may think about this as a potential strategy?

[00:01:47] Angad Guglani: Yeah. The first thing I did is I started out in brokerage and I think it's a great way to start. I started, I got my real estate license. I was like 18 or 19 years old. And I was going to undergrad in New York at NYU. And I realized a lot of students were moving and they needed apartment. So they were paying rental, brokerage commissions. And I was like, wow, that's pretty cool. They're paying 3, 4, 5, 6, $7,000 in commissions. Each time they would move. And I'm like, wow, I could do that. So I got my license. I started doing that and started a company around that basically. And that was kind of my first foray into real estate. I mean, I learned a lot through that. But the number one thing that gave me was kind of the capital to start doing deals, really, and the capital to support myself. So my first, my first,, really year into it, I was already clearing mid six-figure like, you know, over 130, 140,000 bucks. And I was like 19 years old.

[00:02:37] Angad Guglani: So I was like, wow, this is great. And that was kind of my jump into real estate. So I basically did that for all throughout college and for a few years after, and that money that I'd been saving up is what I used to start buying real estate. So I bought my first house at 16. I actually had two friends that I had partnered with at the time, just 'cause, you know, I'd never done any buying real estate before, I said, might as well have some friends help me. And so we did the first house together. I ended up buying them out, you know, at the end of that, And then 2017, I bought five single-family homes. These are all rehab, significant rehab, then rental, and then, you know, refi type deals. And at the end of 2017, I believe was when I first, you know, was able to, to refi, refinance all the equity out, plus some, and then I got all that cash back and was able to then just kind of snowball the, the equity from there.

[00:03:23] Sam Wilson: Gotcha. And that's really the way that you've built your portfolio is just continuing that BRRRR method. What are you buying right now? Have you moved into any bigger assets or is it all single-family? 

[00:03:35] Angad Guglani: No. So yeah, I haven't done any big communities the way a lot of people do. They do like, you know, the big apartment communities, but what I really like buying now, what we really like focusing on is I call them boutique multifamily buildings, like anywhere between like 3 and 15 or 20 units. I think those are really cool because. They sell for significantly higher cap rates than, like, a big multifamily building. And you can go in there, a lot of times they're owned by mom and pops and there's two types of mom and pop investors, right? One is just basically, like, just this family business. And maybe they're not as sharp to the current market conditions as, you know, someone like yourself or myself in the industry.

[00:04:17] Angad Guglani: And then there's kind of like the slum lord variant. So we like to buy from the prior, someone that's, you know, kept up with the property, taking good care of it, but now it's just kind of wants to retire. They're in over their head, 'cause you know, all these, a lot of landlord-tenant issues arose during COVID that drove people crazy. So if you're a small mom and pop, it's tough for you to navigate those. So we like to buy from those types of people and then we, you know, fix the units up, getting the current market and operate them pretty well. I think that strategy's a lot more scalable in single-family. Not because I think single family's unbelievable business because you, your loan tendency is great. The amount of equity can create because you'll get really good pricing on them, that's awesome. The fact that you could sell it to a homeowner or hold it, whatever. It's cool to have all that multiple exit strategies. The issue that we run into with the single-family strategy is not lack of deals, it's not lack of capital. It's construction labor, we just have 23 people in our construction team in-house, and we just cannot find enough people, even third-party contractors to help rehab these homes. So, you know, these boutique multifamily buildings, they need a lot less work per unit than buying a whole house, right? So that's kind of what we've moved the strategy into.

[00:05:27] Sam Wilson: Do you feel like those particular sizes of units are what is just available in your area? Like, is that just common...

[00:05:36] Angad Guglani: Correct. Yeah. So there, I mean, I wish there were like 10, 15, 20, 30 unit buildings. Just not many of those in South Jersey, it's an old, an old area, right? So a lot of those types of, like, 30, 40 unit buildings, I think those were built in the fifties and sixties. And there wasn't that much building over here then. And it was mostly single-family stuff that was built around that timeframe. So we have these small, like, under 10 unit buildings all over the place. And there were generally just big houses that were like mansions that were chopped up over the years. So we have that type of product and we do have some purpose-built multifamily, and then we have some big communities and stuff too. But those, those I stay away from just because they're trading at like, you know, 4, 5, 6 cap rate stuff and those are, you know, not the stuff we buy. 

[00:06:19] Sam Wilson: Right, right. That makes a lot of sense. Yeah. I mean, 'cause the, what you're describing there that, what did you say 8 to 20 unit that's, I would think that's a very specific asset type, you know, for your location. Tell me about this. You said you have 23 people on your construction team right now, correct?

[00:06:36] Angad Guglani: Correct. And then the number fluctuates. We hire people. There's some attrition but, yeah, so we have a head of construction and to him report our whole construction team, which they're all W2, we pay for their worker's comp and do everything the right way. And, they're experienced or mostly experienced people. We have teams like, you know, teams that help, you know, do the sheetrock, teams that do the framing, teams that, you know, in conjunction with the licensed electrician, will do some of the basic electric work, teams that'll help do the plumbing work in conjunction with the licensed plumber. You know, that's, we have basically specializations within the team, within the company of, of people that do everything.

[00:07:09] Sam Wilson: And that's, that's your own in house construction crew. 

[00:07:12] Angad Guglani: Correct. Yeah. In-house construction. 

[00:07:14] Sam Wilson: Are you guys doing, I mean, 23 people, you, at this point, you said you have 160 units. I wouldn't think that's enough units to support a 23-person construction team. Are you doing outside work for other people as well?

[00:07:26] Angad Guglani: So you're right on the fact that the 160 units is not enough to support staff outside, but the reason we have that many people and we could hire, if you could, if you told me had 20 more people tomorrow, I would hire them tomorrow is because we're rehabbing so many units. We buy distressed, fix up, and then, you know, rent out long term. So right now in our pipeline, I can tell you how many we have, just homes that are, or homes and units that are just sitting, waiting to be worked on. We have seven that are construction-ready, seven that are permit backlogged, and seven that are waiting to put in the permit. So about 21 units that are, that are waiting. So then that makes sense why we have as many people as we have and how we could afford to double and triple our size if we could get the people. 

[00:08:09] Sam Wilson: Yeah, shoot, man. Absolutely. Absolutely. So, so an eighth of your portfolio is in construction phase right now.

[00:08:17] Angad Guglani: Correct. And frankly, that's, that's actually good. I mean, there have been times 30, 35 units out of a hundred that are getting rehab. 'Cause these rehabs are big deals, man. They take two months plus. 

[00:08:30] Sam Wilson: Oh, wow. 

[00:08:30] Angad Guglani: And they're no joke. They're no joke. Most of the products we buy, everything's average age is built in the early 1900. Some are even in the late 1800. So we're talking full gut rehab, like full-on gut. We're taking the house down to the studs, you know, looking at the framing, making sure it's okay. Putting in new plumbing, putting in new electrical, whole nine. 

[00:08:48] Sam Wilson: That makes a lot more sense. I'm sitting here, you know, thinking. Okay. You know, 21 units, like that shouldn't take that long, but this is a whole different, a whole different ballgame on the construction side that you're describing. You know, when you're doing historic rehabs like that, I mean, we always sat on a historic project. It's like, Hey, whatever, whatever your budget is just double it. And you might be close if you're lucky. 

[00:09:12] Angad Guglani: Yeah. Tell me about it, man. It's no joke. And, you know, thankfully we haven't really, I know a lot of bigger developers have issues with, you know, I guess the materials that they're buying in bulk and stuff. Haven't really run into many materials issues. It's just been finding labor. 

[00:09:26] Sam Wilson: Right. 

[00:09:27] Angad Guglani: And I wish we had, you know, a ton of subcontractors we could turn to, we just haven't been able to find many that are, you know, most of the subcontractors nowadays want to, want to do residential work, like, you know, homeowner work 'cause it pays better. 

[00:09:40] Sam Wilson: Right, right. Yeah, absolutely. When you think about your company and you want to fast forward four or five years, where do you want to take it? 

[00:09:47] Angad Guglani: So personally, what I really want to do with my, you know, business career is I want to set this business up in a way where I can kind of leave the reigns the next, next year or so. And this business will be like a regionally focused real estate investment company. 'Cause I really feel, I feel like you have to be focused on one region, and the way we're vertically integrated, it kind of makes sense where we do all our management, all the construction, all the maintenance, everything in-house, under one roof and one office.

[00:10:14] Angad Guglani: So I want to kind of create this business, so it runs like a machine here. And it grows organically, you know, whatever the available deals in the market are that meet our criteria, we buy them. We're not trying to set the world on fire and triple our size in one year. At one point I was trying to do that because the deals were so good in the market. Now it's kind of like a needle in the haystack strategy where you have to look at, you know, a fair bit of stop to find the good deals. And, you know, if we could put on 30, 40, 50 units a year BRRRR method, I would be thrilled and, and, and just want to pass the reins off to the team and let them kind of take over. And personally myself, my goal is to buy businesses rather than real estate. would love to buy small businesses and turn them around versus just being a real estate. 

[00:11:00] Sam Wilson: I want to hear more about that. 'Cause I think there's the, I'm with you on that, in that there is great value in buying businesses. Someone else that I interviewed earlier today, and I don't remember who it was. So I can't even tell you what episode will be on when this goes out. But they said this is their conclusion, is that BRRRR is dead. They said that, you know, not being able to predict where interest rates are going, not being able to predict the cost of financing, like, they said, I think BRRRR is, if it's not dead, it's dying. Do you agree with that? 

[00:11:30] Angad Guglani: I would, I would disagree with that based, and I think it's a lot based on your market, right? So South Jersey really is a sleepy kind of quiet market. We never had institutional capital come here. I don't know, from this area at all, it just kind of came out, came out as a good opportunity living in New York. I figured this was a good place to go. Because, you know, north Jersey is very competitive. It's like a derivative of New York, South Jersey is kind of sleepy. So we have plenty of deals here that you could do as a BRRRR. Now, as I'm facing. And I'm sure a lot of other people in our market that I speak to are facing the shortage of labor and not being able to turn units that way, but it's not like we can't predict interest rates.

[00:12:12] Angad Guglani: I was on a call with a banker this morning that we've worked with extensively last year, doing some term refinances. And he was saying, okay, you know, you're going to be seeing rates. The last deal we called 400, 4%. Unbelievable. And he's like, okay, now just underwrite for five, 5.75%, or like worst case 600. And keep in mind, our yield on cost on these things is like in the high, you know, 900 to sometimes even 1100 to 1200. So we have a nice wide spread, so I'm not too worried about that. I'm not too worried about interest rates going up in our market at least. 

[00:12:51] Sam Wilson: Gotcha. 

[00:12:52] Angad Guglani: And, and keep in mind, like, rents are rising quite fast. So even if you take a deal and you're paying five and a half, 6% interest rate that straight is these are five-year fixed terms, right? Where do you think your rents are going to be in five years? If inflation keeps ripping the way it is, the rents are going to go all, hopefully, they keep pace with inflation. In the past have exceeded inflation, right? If you look at the last couple of years, if they keep in pace with inflation or exceeding inflation, even if you're paying 5 or 6% interest rate, you know, your cash flow year two, year three is super generous, right? If your rents keep rising 6, 7, 8% a year. 

[00:13:26] Sam Wilson: Yeah. I hear you on that. I would not challenge it, but I guess the other side of that is at some point, you know, the renter, no matter where inflation is going, the tenant just can't afford the increases. If the economy takes a dive and jobs go away and suddenly there's, you know, a glut, like, you're, we're, we're at a labor shortage right now. I think that tide unfortunately may turn. And if it turns, suddenly people don't have the income to support the rent increases. It's going to be a very interesting way that that plays out. But I do, I do understand that historically speaking, yes, rents have outpaced inflation. 

[00:13:57] Angad Guglani: A hundred percent, I mean, and that, and that goes down to unit type, right? And unit mix and how you underwrite your tenants. So like, we like to see, you know, I just signed a lease yesterday in one of the units. And I like to review all the applications myself before approving them, which I know it sounds a little bit micromanaging, but, you know, I found, I almost have a phrase that we say, which is like a great tenant can make a terrible property an amazing deal. Not to say terrible properties are probably great, but the tenant is the most important thing.

[00:14:24] Angad Guglani: Or you could have a great property that you spent hundreds of thousand dollars rehabbing, put a bad tenant in, and you now have a terrible investment. So anyway, it's very important the tenants you put in, but now these tenants that we're putting in, the rent is $995. It's a small, like, one-bedroom apartment.

[00:14:38] Angad Guglani: The tenants are making, I think, just making minimum wage. They're making like, it's a couple, they're making $4,500, $5,000 a month. They're four times coverage, four and a half, five times coverage over the rent. So and these are minimum wage jobs. They're just over minimum wage jobs and one's at a hospital and one's at, one's at a school. So, like, these are pretty stable and that's what a lot of our tenant base they're, they're not working at these high flying jobs that, you know, that you can really fire people from. So that's why I feel personally feel comfortable with the environment going forward on the macro side. 

[00:15:14] Sam Wilson: Got it. I love it. I love it. Tell me, lastly, last, last topic here, buying businesses versus real estate, what type of business are, or businesses are of interest to you? I know you said. You a year or so, you'd like to leave the reins of your company in, in, in other hands. So there's got to be something on the horizon you say, Hey, here's some businesses I think that are out there that are worth investing in. 

[00:15:37] Angad Guglani: That's a good question. And frankly, I haven't really looked at many deals on the business. I looked at a handful, but I really think it's deal-specific and market-specific, right? And I think it comes down to really, like, I want to move to a different area where I would love to live somewhere warm. I love golf. It would be great to live in an area where you could play more golf and I would want to get in that area, get in the community and figure out what's for sale. And as long as the business has legs where you can figure out a way where you can grow it, I mean, most of these businesses are trading anywhere from four to seven times EBITDA on the high end, really and you can get some sort of SBA financing on the debt side. So your return on equities going to be much higher than it is in real estate, as long as you don't screw it up. Not to say that I'm going to have the expertise to run it, great, but I'm just saying, like, if you really buckle down and try to figure out how to, how to work this business.

[00:16:24] Angad Guglani: I think you could really do something with it. So, I'm finishing up my MBA at the University of Pennsylvania, the Wharton school. And there are a handful of kids every year that graduate from that program that does this, which is called a search fund where they mostly go out and raise capital from institutional investors and high net worth. And they go out and buy businesses. And personally been, you know, fortunate enough for the real estate to, to have the capital to do that myself, but it's not unheard of path. And that's really what, what I find to be quite exciting.

[00:16:51] Sam Wilson: Absolutely. Absolutely. Yeah. It is amazing in the business side of things, how they do trade at different multiples than what your real estate plays do. 

[00:17:02] Angad Guglani: And you can grow it, right? Like when you're buying a piece of real estate, you're underwriting it, your competition everyone's underwriting the deal. Everyone knows kind of where this deal's going to go. You're going to spend this much on the rehab, your rent's going to be this much per foot or this much per year, this much per month, whatever it is, you figure out what your NOI is going to be. You figure out what your term loan is going to be at. And you know, you basically know day one, what it's going to be now, granted you have to execute and you have to find the deal and the numbers could change depending on the market, but you kind of know that going forward. Versus if you buy a business, you can get in there and really say, oh wow. I had no idea we could take this company. And this vertical that we weren't even playing in. Or maybe the previous owner didn't have much of a sales staff. We could put in a sales staff. And instead of, you know, day one, knowing what your income could be. Once you get in and operate this thing, you could see, you could really turn the income of that business a lot more than you could turn the income of a real estate property.

[00:17:53] Angad Guglani: That being said, it's overly simplified. It could be really tough too. I mean, that's a beautiful thing about real estate is, you know, at the end of the day, like people need a place to live. There's always going to be some sort of demand than you could be at a company that has no demand, like your product go obsolete. So there is risk as well. 

[00:18:10] Sam Wilson: Certainly. I love it. I love. Angad, thank you for taking the time to come on today and share with us your story of how you've built a real estate firm, you know, without outside equity, how you've done it via the BRRRR method, what you guys are looking at right now, and just what you see opportunity on the horizon for you personally, but also just in your real estate investments as well. Certainly feel like I've learned a lot from you today. So thank you for taking the time to come on. If our listeners want to get in touch with you or learn more about you, what is the best way to do that? 

[00:18:38] Angad Guglani: Sure, they could just go on our website. We actually just redesigned it. cooperacq.com. C O O P E R A C Q, our company's Cooper Square Acquisitions. You could email me at ag@cooperacq.com and, yeah, look forward to connecting. 

[00:18:52] Sam Wilson: Awesome. Thank you again for your time. Certainly appreciate it. 

[00:18:54] Angad Guglani: Thanks Sam. Have a good one. 

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