In 2015, Sahil Mehta helped sell his first property in the Berkeley, California area at the age of 18, earning a commission of around $ 2,000. This reinforced his interest in continuing real estate sales and investments, which only grew in the following years.
“It was such an amazing feeling, not because of the amount of money but the feeling of accomplishment,” Mehta told CNBC Make It.
Now, at only 25 years old, Mehta co-owns five investment properties with his older brother, valued at around $ 9.4 million. He also works full time at Golden Gate Sotheby’s, helping to manage and close sales.
To save money for her first property, Mehta worked at Sotheby’s while continuing her education at the University of California, Berkeley. In 2017, he and his brother, who is his business partner, bought their first home for $ 950,000. The brothers rent four of the properties to students and families, and operate one as Airbnb. After mortgage payments and property taxes, they earn about $ 25,000 a month in rent, which they also share.
Mehta says he was lucky enough to get the job at Sotheby’s in college, which saved him a fair amount of money when he was still very young. This year he is on track to earn approximately $ 350,000 from his day job. He recognizes that potential investors need a lot of money to get into the game, and obviously it’s easier to buy properties when you can share the cost with someone else, which everyone else does. world can not do.
He also learned expensive lessons along the way. Mehta bought a duplex in January 2020 and planned to turn it into a single-family home, but local housing ordinances prohibited it. He estimates that he lost tens of thousands of dollars before renting this property on Airbnb, and now makes sure to do his research before buying.
Mehta and her brother plan to add more properties to their portfolio in the coming years. They are also saving to buy their mom and dad a house near them in California. Mehta says it’s the least they can do for their parents, who immigrated to the United States from India and worked hard to provide a stable future for their children.
“There are no proportional things I can do for what they did for us,” he said. “That being said, without conditions or anything, we’ll do what we can for them.”
Here are four tips from Mehta for those interested in real estate investing.
1. Choose a path
The most important steps in real estate investing happen before you buy anything, Mehta says.
“It’s all in the pre-planning phase and then making a deal when the pieces fit together,” he says.
To get started, determine what you are actually interested in buying. There are many types of real estate investments: single-family homes, multi-family homes, commercial real estate and REITs (Real Estate Investment Trusts), to name a few. And within each category, there are different ways to make money including flipping, house hacking, and more.
Each strategy has different costs and risks. Investing in a REIT is similar to buying a mutual fund, for example, and requires a lot less time and energy than renting a house. Buying properties “gives you more control and responsibility,” which is riskier but can also come with a higher return, Mehta says.
“Choose an appropriate option based on your current financial situation, risk appetite, experience and level of involvement,” Mehta explains.
When choosing, it helps to understand your “why,” he says. Once you do, choose the strategy that aligns with it. “Everyone has a different motivation and purpose. Being clear about what it is for you will help you navigate through the noise.”
2. Do the math
Not all real estate automatically earns money. Mehta says every investor should “become an expert at calculating cash flow and realizing equity potential,” something he learned while working at Sotheby’s.
Real estate cash flow is the difference between a property’s income and expenses. You could think of this as rent less the mortgage payment, but it’s not the only cost you need to consider in a rental property, for example. There are also operating expenses and savings for future upgrades and emergency repairs, Mehta says.
Mehta also considers the added value he can add to a property through physical improvements. This could include updating the kitchen or renovating the bathroom. Mehta and his brother are currently adding a second floor and a unit in the backyard of one of their properties, which he says will add about $ 1.5 million to the total value of the property.
3. Be unconventional
Everyone has access to Zillow, Redfin, and other online ad sites. If you’re bidding on a property that many others are, there’s a good chance you’re not getting the best deal, Mehta says. “You have to think and work outside the box to have an edge over the competition,” he says.
Mehta suggests trying to contact the sellers directly. “I personally bought my first two off-market properties, just driving through the streets of my favorite neighborhood and seeing signs for sale set up before homes hit the market. “
Mehta also suggests connecting with local real estate agents. They often know what is going to be listed before it actually is.
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