Investing In REITs with Minesh Bhindi
It is a known fact that the market is unpredictable. That is why, as real estate investors, it helps to invest in assets that are income or cashflow-producing. In this episode, we have Minesh Bhindi of Perfect Portfolio to talk about investing in REIT (Real Estate Investment Trust) properties. Minesh shares how he got started on his first deal at eighteen that put £85,000 in his pocket and how he was able to grow from that through the lessons he learned along the way. He also offers great insights into understanding the world of REITs, as well as defines ETF and teaches on how to manage risk. For those who need some motivation to continue in real estate, Minesh has some advice for you that will inspire you to live the life you want. —
I have Minesh Bhindi. We are talking about real estate. What I’m interested in talking about is how young this guy started. He did his first deal at sixteen and put £85,000 in his pocket. He’s over in London. Tell us a little bit about yourself and how you ended up in London.
I was born in London, so getting here was the easy part. I started working alongside my dad when I was sixteen years old. The deal that you mentioned, I did that at eighteen. At sixteen, I was watching my dad negotiate real estate deals. He worked with a consortium of investors and they negotiated deals and packages the market that the investors bought. It’s very simple. I was watching him negotiate a deal and I stood by the doorway when I was sixteen or probably fifteen and a half. He got off the phone and said, “What are you smirking at? What are you smiling at?” I was like, “That sounds easy. I could do that,” not knowing anything about what he was doing. It was an utter throw your balls into the ring moment. Instead of telling me to screw off, he said, “Show me.” You know when your balls go into your throat at that point. I was like, “He called my bluff.” At that point, I had to figure it out and I started learning about real estate, learning how to talk to people. I was so young and I didn’t understand the emotional side of the business and as a whole. I would go in and ask for things that I wanted and not even care whether the person said yes. We were working with new build developers and new build development managers. I would walk in and say, “I want 30% off.” They say, “It’s crazy.” Before they even did a counteroffer, I walked out. To them, it was like, “What happened here? This is nuts.” More often than not, I started getting the numbers that I wanted or very close to it. Whereas for me it was like, “This is what I want. Give it to me or else I’m out of here.” Very quickly, I started getting better deals.
You want to get the 30%, but you’d get a 24% discount.
No, I was hitting 28% to 29% discounts. The other guys that were organizing the deals for the consortium could only hit 24%. I was sixteen and so you can imagine how much that pissed them off.
You said an important thing, the walkaway. You have to be able to walk away. Love him or hate him, that’s one thing Trump is good at. The man will get up from the table and walk away. It’s Negotiating 101. I was telling someone, “Is there a lot of activity on that house?” He said, “No.” I said, “Give them your offer and walk away.” He said, “What if they sell it?” I said, “You told me there’s not that much activity. In MLS, there’s hardly any showings, walk away. You can go back in two days if he doesn’t come down. Give it 48 hours, walk away.” He walked away and within 24 hours, the guy called and accepted his offer.
I’ve wired money for the deposit and then the agent said, “We can’t take the deal.” I’ve sat in front of them and wired them the money. I showed them my phone and said, “The money is in your bank account. Send it back.” I haven’t had one that came back yet.
What were you doing in the heydays before the crash?
That was exactly when I was in the zone of no-money-down structures. We would go and figure out how to get value as to value properties at whatever valuation we wanted them for. We were going ahead and valuing properties at 25% above market value. We were getting a huge discount from the market value. We’d go and borrow 85% to 90% of the valuation amount and pay 30% less than the actual property amounts. We’re walking away with huge cash backs on the day of completion, not putting in any money and walking away with equity. At that point, we were selling these properties as well to investors that wanted to get involved in real estate and get those cash backs. We make money on all fronts on real estate, in the sense that we were buying our own deals, we were structuring them, we were making money on the selling of those deals, we were making money on the finance of those deals. We were making money on everything that you can imagine. We were only working with new build properties, which is not what you do.
New build properties, it sounds like you’re talking about commercial properties or you’re talking about houses.
Residential new build but nothing that was six months away from completion. These were completed units that were not buying fast enough.
Do you have a glut of houses? To go after what you want, you just need the right information.CLICK TO TWEET
Even if there wasn’t a glut, what was happening was developers wanted to move on to the next project. If they could shift 25 of their last units and get it over and dealt within 30 days, they were giving discounts. That’s what we were taking on.
How did this theory hold up during the crash?
To be honest with you, if you can manage the cashflow and you didn’t take the cashback and go and spend it, there was a fantastic opportunity to acquire a lot of property. You weren’t getting any money. You had the cash in the bank, everything was good. If you took the cashback and bought Porsches with it, you would get into trouble. I saw a lot of people get into trouble. I was very lucky in the sense that I had people around watching me, especially at eighteen years old. They’re watching and telling me that I shouldn’t be doing the things that I was doing like flying to Monaco for the weekend. I should be putting that money in the bank because something is going to happen at some point. Would I do that now? No, but that’s what we were doing then.
It’s very important. I’ve always said this, the cash extraction at closing when you borrow up as much as you can on the house is dangerous unless you take the money that you have and buy some cashflow producing assets with it, then that’s the only way to survive. If you go out and start buying boats and Porches, that stuff is not going to pay the bills when the crash hits and certain amount of properties go under or they’ll break even or they’ll turn negative. If you took all of that cash and bought some stuff free and clear, you’re going to make it through all right.
That was the biggest mistake that I noticed with investors. They took that money and got very excited. They went on holidays and bought cars, etc.
I’ve been a fan since the day I was born. I flip houses and owner finance houses about 100 a year, maybe about 120 this 2019. I don’t know why, but we’re on pace for about 120 this 2019. It’s been as tough as it’s ever been to buy houses in the United States because they’ve got so many house flipping shows. Everyone is making it look all glamorous and easy. Even those people on the shows, they’re not that easy. I know the houses they’re doing in my town, those houses didn’t sell when they said they sold them. Some of them got foreclosed on and they’re up there on TV saying they sold them and made $50,000.
That’s my one great pain in the real estate space is when celebrities like that make it look so easy because it’s not. Many people get sucked into the fact that, “It’s easy. I’m going to quit what I do and do real estate now. I’m a real estate guy, all of a sudden.”
My pet peeves are the people that do about four houses and then they have a course. They flip four houses and now they’re going to teach the world how to do it.
I have to remind those people, I’ve sold £20 million of real estate between the ages of sixteen and eighteen before I even started teaching it. They don’t believe that. They can’t believe it but that’s what happened.
You don’t get enough experience in four houses. You can read all you want to. You don’t get this stuff until you live it, which is why it’s great to have coaches and mentors. One of the things you were talking about was that you believe in short-term coaches, not long-term mentors. Talk about that a little bit.
Coaches and mentors should be there for a goal that you want to achieve. Once you achieve that goal, you shouldn’t be sticking around with the same coach and mentor. You should find the next one. A good coach and mentor should say that to you anyway. Once they’ve helped you hit a particular goal and the goal should be well-defined, they should be moving on and you should be moving on as well. It doesn’t mean you can’t be friends, but you have to move on. Big companies do this regularly. They reshuffle their executive board, simply because they know that this guy cannot get us to the next revenue goal. It’s the same situation that people don’t have that being like you can listen to someone in the motivation part of your journey. Listen to someone in the implementation part of the journey while you’re near to it. In the part where you’re looking at, “I’ve got my feet wet. I know what I’m doing now. I want to build a foundation,” listen to someone else. In the part where you want to take it to the next level, you need to listen to someone that’s done that.
There are different segments of your business too. Learn to negotiate better as a different guy than the guy that will teach you how to sell. It might be different than the guy that will teach you how to automate your business and get your business on autopilot so that you don’t have to run it different than the bookkeeping aspects of that stuff. You can’t go to the same guy for the same thing. Inadvertently, I’ve done what you’re talking about. I pick people for certain things and then get it done and then that task is over. It’s okay to want to live a good life and retire in style.CLICK TO TWEET
All successful people have. The most disappointing thing that I see as far as seminars and things like that though is when people are still attending the same seminars after many years. It’s like, “Come on, you’ve got to move on.” You should be attending a seminar run by a bank now about the type of financing when you started many years ago.
Unfortunately, there are a lot of that around. How old are you, may I ask?
I want to be 30 again. I didn’t find my butt with both hands until I was 36. I think between 36 and 58, about 2,000 houses in town and a bunch of storages and a whole bunch of mistakes. Those 2,000 are the ones that worked out. That didn’t count the ones that didn’t work out that we couldn’t close. When people go, “You’ve done 2,000 deals.” I’m like, “No, I’ve probably done 10,000. I only closed on 2,000.” Are there major differences in London and the US? Do you do stuff in the US?
My real estate investing now is transferred into using REITS and letting analysts, geeks and nerds that want to focus on that 24/7 do that for me. We stopped buying real estate in terms of actual physical houses probably in 2011, something like that. My focus turned into using REITs. I’m using now high leverage strategies from a market perspective to generate the better returns that I was seeing. I haven’t done anything in the States. I have a lot of friends that do a lot of real estate in the States. One of the things that you guys are doing well is the economy. It’s fantastic. Say what you want about President Trump. He’s doing a fantastic job as far as the economy goes. Most people should agree with that. Most people will agree on the fact that maybe you should skip class as well. As far as the economy goes, anyone that disagrees that what he’s doing with the economy is great isn’t looking at it strictly from an economic perspective.
REIT is a Real Estate Investment Trust. What kind of REITs are you in? Big commercial buildings or land development or all the above, what are you in?
All of the above. We put our money into an ETF. The ETF, in essence, is going by a bunch of REITs.
What’s an ETF?
I’m going to put my money into an Exchange Traded Fund. It’s like a fund of funds. They will then go and take all the money that’s pooled together into that, particularly ETF and put it into the particular REITs that we want to go into. It’s a REIT ETF that we use. With one stock purchase, it instantly diversified into eight different housing sectors that are constantly being managed to increase the cashflow, constantly being managed for me. I don’t have to deal with tenants. I don’t have to deal with mortgage brokers. I don’t have to deal with anyone.
What kind of returns are you able to achieve in these REITs?
Since inception, this particular one and the ones that we use is an 8.48% compounded growth, 4.52% dividend yield and we generate an extra 12% a year with our option income strategies that we use. This is completely hands-off. With one stock purchase, you’re buying 154 different real estate holdings and diverse finding the eight different real estate sectors with one purchase. The yearly fee for doing this is 0.12% that the fund charges the manager with that for you. They bought $64 billion worth of wealth being managed through the ETF. It’s a pretty big hands-off way of doing it. For anyone who likes a hands-off approach, you can do it because you can do it straight from this thing anywhere in the world.
Yeah, that’s what we teach. My company is called Perfect Portfolio. We teach people how to approach three different asset classes what I think are the most important ones, which is gold and silver, real estate and the stock market. We teach people how to safely invest in these things. My mission after 2008 turned into trying to see whether we can make safe investments because many people are attracted to risky stuff. As you know, with what you’re doing, it’s very safe. It’s very stable, but someone will want to go ahead and take that extra risk for no reason. We want to bring that back.
Did you manage this with minimal risk? How do you manage these accounts? How do you look at your risk side?
The most important thing for me with an investment is to have a managed control risk. The point of what we do is we’re not leveraging. We’re not using any tools that are going to force us out of the market. We’re not going to get into any situations where we’re not in control. We want to make sure that your risk is tailored to what you’re comfortable with. For me, my goal is to not use any leverage. I don’t want to have any leverage in the market whatsoever. Even though it’s the same principle of leverage, it’s marked to market. Every single second of the day it’s being adjusted. If it comes down, you don’t have to wait for the bank to come and knock on your door, they’re just going to sell your positions. We want to avoid that scenario. Regardless of that, that’s how we manage it from an actual account management perspective. In terms of real estate, one of the biggest risks I saw in real estate for me was when we were buying a property and a particular area would go down in value. All of a sudden, that particular area would go down in value. I didn’t want that risk. Doing it this way, I’m diversified all over the USA. I’m diversified in eight different sectors and most importantly I got the world’s best nerds, geeks and analysts working to make sure that they are generating the highest return for their investors simply because they want more money in capital drawings in a fund. The harder they work, the better the results they get. The more capital in billion dollars, the more will go into the fund. We manage and tailor risk in multiple different ways.
You teach this stuff in the REIT department. How are you looking at it? How are you minimizing your risk? How are you sizing up all the deals and why you feel comfortable? If anyone’s interested in that, you can go to REInvestorSummit.com/minesh. How much does a person need to get started in this particular strategy?
You can test it for $10,000 but generally, the average investor comes in with about $30,000 to $50,000. We work with 155 clients a year. We don’t go over that. After so many years in the game, I learn what my number is, which allows me to continue focusing on my investing as well. It’s steady at $50,000. We’ve got investors that get comfortable with $30,000 to $50,000 and then they will go up. We’ve got a couple of guys with $10 million-plus invested using our strategies.
Most people start small. They put their little finger in or something and then they get comfortable and learn the lay of the land and then say, “I get it. I’m willing to get in.”
They should. That’s why we put so much of our training out there for people to scrutinize. You should be scrutinizing everything that I’m saying and figuring out whether it’s right for you or not. If you look at me with an eye for scrutiny, it’s better than looking at me like, “This guy might have the answer.” No. Scrutinize me, question us, speak to my team and understand exactly what we do before you get in. One of the things that we do is once somebody is a client, they get weekly coaching calls for life. You’ve got people that joined in 2010 that are still doing the strategies now and they’ve got coaching calls without paying an extra penny.
Tell us a little bit about that coaching. Where does it start and where does it end?
It starts online. We go check out the training on real estate that we have, see whether you like it as I said, scrutinize it. Don’t just fall in love with me, scrutinize it and understand whether it’s right for you or not and what we do. You speak to the team and we make sure that it’s a mutual agreement. It’s as simple as that. We want to make sure that your goals are not to turn $1,000 into a $1 million next week because we’re not going to be able to help you with that. You’ll do that, you’ll speak to the team, I’ll review the application and then once you’re in, it’s as simple as that. We’ll send you the logins. You go through the training. It takes about six to seven hours to go through the training and then you’re in. You get one coaching call with our head coach who invests his real money. I know people might go, “Why is he exaggerating on that?” Because most of these guys that are selling investment stuff are not investing their real money. When you ask them, the only answer they’ll give back is, “I’m saving up so I can start investing.” They’re not investing because it doesn’t work. It’s as simple as that. Our guy invests his and his family’s money using our strategy.
That’s a lot of proof of the pudding. My family and my money are all in what I do. When I asked someone to loan me the money to buy these houses and give them a first lien and you pay him a rate of return, I’m loaded up to here with it. I’m a wholehearted believer and I think that makes a lot of sense that the people that are coaching you are doing the strategies that they’re teaching. That’s important. How you think is how you are.CLICK TO TWEET
That’s one of the reasons why I didn’t want to take on 500 clients. I want to work with people that are good at what they do and do it. They can help people because they’ve been helped themselves.
Have you been able to transform some people’s lives through this strategy?
We’ve got clients since 2010 when we first started, we’ve got ex-Wall Street traders. We’ve got single moms in Indonesia. We’ve got people that travel on holiday. One of our clients send us a testimony, “I can’t believe I made a 2.7% return this month by placing it outside of a 7-Eleven.” My main goal is to allow people to experience more time, more freedom and more ability to live life. My real goal is to allow you to manage a fully balanced portfolio from one of these anywhere in the world. You’ve got to make sure it’s an iPhone because Samsung sucks. Any smart device, any laptop, you can travel anywhere in the world.
I do everything with my iPhone. People go, “Where’s your computer?” I said, “It’s in my hands.” I don’t even have a desktop computer hardly anymore. I might have to go there and rent something. Go to REInvestorSummit.com/minesh and you’ll get a free consult over there. You’ll figure out how to connect. If you want to learn more about how to invest in these REITs, be diversified, get some hands-off investing done and be able to do it from your phone. That’s key because being able to be anywhere in the world and take care of your business is a dream come true for what people are shooting for.
That’s what they should be shooting for. One of the things that I find completely unacceptable is when normal people that have never done this before, all they want to do is have a lifestyle that they can enjoy. You were born on this planet and then some tell you, “You can’t enjoy that lifestyle. You’ve got to live a budgeted lifestyle. You’ve got to live frugally. You’ve got to do these things.” At the end of the day, you can do what you want to do. It depends on the setup that you have and it depends on the strategies that you implement. For me, I don’t believe any of it. Living a good life is not just for people inside of the little club. You’ve got to get the right information. Once you have the right information, a strategy that you want to approach it with and then go do it. You’ll live the life that you want to live. You won’t be dependent on sitting there going, “Look at that club over there. They’re doing it. Look at these two guys on this podcast. They’re doing it. I can’t do it because my advisor said no, my teacher said no, my parents said no.” All of those people were idiots. If they wanted a life and they didn’t get it, they’re idiots as far as I’m concerned. You’ve got to go after what you want. You just need the right information.
You’re talking a lot about mindset. You’ve got to do a paradigm shift in your mind. How you think is how you are. If you think you’re going to be poor, you will be. I want to thank you for taking the time to come on.
It’s my honor. Thank you so much for having me.
Make sure you go to REInvestorSummit.com/minesh. I know three very successful people who can’t read or write. They got going and started making money and being literate got in their way. They figured out ways to handle it. Think about that. There are people that have handicaps that you can’t believe, that you can’t even imagine. They’re still successful despite the handicap. They learned to deal with their deficits and go around them or go under them or go over them and figure out some way to deal with it.
We have a client that’s deaf and blind. Our training is online and he figured it out. We have people that said, “I’m not good at math. I don’t know how to deal with the stock market.” That’s why you buy an iPhone, it comes with a calculator. You don’t need to know math. The biggest thing for me is to believe in what you want. There are so many people that don’t even believe in what they even want for their lives. It’s okay to want to live a good life. It’s okay to want to retire in style. It’s okay to do these things. Believe it, that’s 99% of the game.
It was refreshing to speak with you. I hope my audience will soak that up. If you’re not where you want to be, please change your mind and get where you want to be. It’s not going to happen overnight. It won’t be a bed of roses. The way you’re living right now is not a bed of roses, so get on a different path. I appreciate your time, Minesh. Go to REInvestorSummit.com/minesh and get a free consult and see what he’s up to, see if it’s for you. You never know. You don’t know if you don’t try and you don’t listen. It’s very educational at the least. Thanks for coming on, Minesh. I appreciate you. I hope you are achieving your goals. If you’re ahead of schedule, keep pushing. If you’re behind schedule, keep pushing. We’re out of here.
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