[00:00:00] So the big question is this: how are real estate investors who don't have a ton of free time, don't have access to off-market deals, and didn't start life on third base, how do we grow a real estate business conservatively to support our families, finally leave the corporate rat race and build a legacy?

That is the question. And this podcast will give you the answers. I'm Ed Matthews. And this. This is real estate underground.

This is the real estate underground podcast show, number 48. Hey everybody, it's Ed Matthews with the real estate underground. Today is actually a really cool show. Thank you for joining us today. With me is Irfan Raza of Raza Homes. He is based in the Philadelphia area, and we were just talking about how we actually share a love for Temple University.

For those of you who know me, I also love Villanova. So, you know, don't worry about that. But Irfan, thank you so much for [00:01:00] joining us today. I really appreciate your time, and I'm looking forward to having this conversation. Welcome. Yeah, thanks for having me out. I really appreciate being here.

I'm an open book. So excited to hear what you have to say and excited to answer these questions. Yeah. Don't tempt me. So we're going to first talk about why temple football. No, never mind. Um, you and I have gotten to know each other through our mutual friend, Greg Andrade. You know, I'm curious about, and I'm sure our audience is curious about who Raza Holmes is, who you are, and what you folks do for a living.

So why don't we start with what Raza Holmes does for a living? Yeah. So our primary focus has been for the last 10 and 11 years To buy single-family, small multifamily residential real estate. And basically, we use the burr method, which means by rehab, rent out refinance. And in order to do that, what we found is there's a product or there has been a product in Philadelphia where you can buy a vacant [00:02:00] distress product.

Rehab that product, run it out, and then refinance it. So that's been our main goal, the main mission, for a long time. And, uh, in order to get that goal going, right, I had a goal of 10 units when I initially started 30 by 30 and then a hundred units by 35 years old. Right. So in order to progress and buy more units to get more unit count.

I also had to start a marketing company, a direct marketing company, which, as a byproduct, wholesales properties. So it's a wholesale company. The primary focus was the acquisition of Raza homes. The secondary focus was to make a little bit of money through wholesale and properties as well. Okay, fantastic.

So yeah, that's been our primary focus is, is rental real estate. Then number two focus is direct marketing. We don't more recently has shifted over more to profit based, which means that it was, it's been more [00:03:00] wholesaling and less acquiring for rentals. Okay. So I want to get into that in terms of background though, you know, one of the things that I pride myself on, and I suspect you are a similar personality type, is being a numbers person.

You're a CPA by training, right? Yes, I am. I graduated from Temple, passed my CPA license as soon as possible, and got the certificate as soon as possible. And then, I remained in the career for about eight years. Um, and it actually was a successful career, too. So. I became manager at a regional CPA firm. And honestly, I like what I did.

I'm somewhat of a numbers person. I like the help that I was given to small businesses and larger businesses. I also like seeing the number side of business where I can learn. The ins and outs of businesses. So yeah, that's where passion came to. Yeah. And one of the things, so, you know, a former consultant on my end and sales and marketing guy, but when the technology world and, you know, one of the [00:04:00] things that I realized pretty early on in my career is that the lessons I learned about the process around numbers, around cash management, around marketing and how companies operate it.

Were. Eventually directly applicable to the things that I do in my own business today, right? And I'm sure that's the same for you. Yeah, I got a great deal of training in the corporate environment, and it's even less than that. Just writing an email, right? Like, I can't tell you how many times that. I've had to politely request somebody to reply auto and email, right?

Like that's something you learn right away in a corporate America. So, but yeah, from as little as that to learning the ins and outs of businesses, right? Like you learn a great deal. By reviewing books, books, and records, so. Yep, absolutely. And so, being a natural business person and someone who's gone to business school and become a CPA and pass that exam.

And my wife is an accountant, so I know how hard [00:05:00] that CPA exam is. Can't pass again. What's that acronym that can't pass again? Yeah, exactly right. But going into real estate where there are certainly commonalities. There are also, you know, it's, it's a pretty big career change to go from a career as a CPA and an accountant into real estate.

Right. That's probably a pretty big left-hand turn. So, what drew you into real estate is that you're obviously highly trained, and you understand a lot of different asset classes, but nevertheless, real estate was the one that kind of caught your attention. I'm curious why don't think it's just one answer, right?

It started when I was growing up. I had a strong attraction to building. So I worked a little bit of construction, worked at Lowe's, and worked at Home Depot. Okay. And then I actually even wanted to be an engineer out of college, but then I changed paths into accounting. I just thought that business was better suited to me.

I think it was also at Temple, where I was. [00:06:00] Temple University saw great change when I was at school there. There was a huge development boom around campus. And I was just very interested in seeing what people were doing and what students were paying for this property, that property for rent.

When I was going there, they were paying 400 or 500 per room. Now it's like 600, 700. And if you're staying on campus, it's even higher, right? Yeah, it's crazy. As a guy who writes that check, it's ridiculous. But hats off to the people who actually own those properties. So I had a great deal of desire to learn about real estate.

And I actually. I got ahead of the accounting curriculum while I was at Temple, uh, which allowed me to free up two classes so that I could take anything I wanted. And I didn't take like the dance class or like the ridiculous class you're weaving or right. Yeah, I didn't take those classes. I took real estate. I took two real estate classes, which allowed me to get my real estate license.

So you talk about [00:07:00] career change. So, as soon as I got it, I was already kind of educated in real estate. As soon as I got up. I took my CPA after I was done, my CPA, I had, or while I was taking it, I was like, Oh, I'm going to do this. I'm going to do that. I'm going to get my MBA. After I was done with my CPA, I didn't want to look at another textbook again.

I didn't take my sales agent test till maybe around 10 years later, right? There was a cutoff. That if you don't take your test within 10 years, you'll lose the credits that you took, right? Eight and a half years later, I took the sales agent test and I passed that, but it wasn't like a drastic career change I made to get into real estate while I was working.

I had this idea to buy a duplex and live on one side and rent on the other side that never panned out, but I got really into Looking at real estate and finding real estate. And I started realizing that there was a bunch of opportunity in Philadelphia. And that's, that's kind of [00:08:00] how I bought my first property. I bought my first property, I believe like a year, a year and a half out of college, then I bought the second two, three years later, and it was a very slow building process.

And then, in 2016, when I turned 30, I had 30 units. Congrats. That's awesome. And then the thought came to mind: I need to make this bigger and better. Right? So that's when I went full-time, and that's when I really started focusing on real estate as a full-time career. So, at that time, I had a real estate sales agent license. I mean, you could call it lucky, but I had a real estate sales agent license.

I had 30 units. I had a nice flip on the books, ready to go. What? And then, I also had the nicest real estate agent transaction, which is over a million dollars, primed and ready. So, I had a very nice start and got into real estate for a soft landing. Yes. Yeah. So you burn your boats, leave the CPA firm, and [00:09:00] start full-time with Raza Homes.

So that was 16, or was that sooner or later than that? It was 2016. So, uh, was 30 years old. Yes. All right. And so your goal was how many by the time you got to 35? A hundred units. How's it going? I'm 36 now, and we met and exceeded that goal. I think I was a little bit late, like a few months late, to get into that a hundred-unit mark, though.

We'll give you a special dispensation. We'll call it a win no matter what, regardless. Oh, we can change the metrics and, say, before you hit 36, right? Yeah. Fair enough. Right. When the metrics don't work, change the game. Right. That's the truth. Right. So, in the asset classes that you pay attention to, you mentioned single-family homes, and you mentioned small multi in your terms; small multi means what?

I think the biggest multi-unit I have is six units, and then I have two or four units that I bought separately at different times. So I guess combined, there are eight units, but yeah, that's basically what I was [00:10:00] comfortable with the last six years or so, where I wanted to create a factory-like setting, right?

By unit, churn it out. Get another unit, turn it out. And these smaller multis were in that path, right? It allowed me to do the same thing over and over again. Yeah. And you know, the thing is, is that you know, you mentioned the burr method and your business and my business, if we looked at it from 30,000 feet.

So I'm in much, you know, I deal with much larger multifamilies. It's the same business. I tell people all the time that, you know, we buy. Unloved buildings from landlords who probably aren't that great at their jobs. And then we, you know, make them clean and safe and then ultimately make them beautiful where people can be proud to live.

Right. Do you raise money for those multifamily units? Sometimes. Yes. That was the slight difference. That's why I didn't get completely in there. I do raise money, but I raised money for a first-position mortgage, right? That was my main gig. Right. And now I'm starting to get to the level where [00:11:00] I feel confident enough to raise money for a bigger project.

whereas my projects, if they required a hundred thousand dollars, I could call one of my former colleagues up and say, look, I'm doing this project. I could use a hundred thousand. Do you want a first-position mortgage on it? Right. It was a nice, clean, easy transaction. I guess you would call it now.

The progression is, well, maybe larger multi-families could work for me. It is kind of the same thing, just as you were mentioning. Yeah, buying a 20-family is the exact same process. And now I have more contacts. I'm building my network, and I think the money raised would be pretty easy at this point.

So, I don't see that as impossible anymore. Yeah. When I talk to other investors like you, you know, and I think we experienced this ourselves, the problem isn't necessarily finding money. There's a lot of money out there in search of deals, right? The challenge is actually finding deal flow in properties that make sense.

So I live in Connecticut, [00:12:00] so I'm a little further up in the northeast, but I'm curious what you're seeing out there regarding price corrections. Now, with the Fed making the 3 or 4 moves they've made, what are you seeing in terms of price pressure and moving from that seller's market to more of a either equilibrium or a buyer's market?

Is that happening in your area? So it's kind of difficult to tell for sure what's happening. There were periods in the last six months where there was a month or two where we just saw no traction at all. We had properties that would sell at the prices that they would sell them, and they were not moving, which really scratched our heads.

In the direct marketing and wholesale worlds, you really have to pivot, pivot fast, and make changes to products that buyers are willing to buy, right? Um, what that made us do was get more aggressive in our price negotiations. And [00:13:00] then that allowed us to sell to investors at a more substantial discount than previously had.

In Philadelphia, our market stays generally consistent. So that discount was maybe 5%, and we saw that 5, maybe 5, 10% discount was enough to start moving the properties again. I would say that, yeah, yeah, there was some challenge. There were some challenges in some months. But I think if you can pivot your business and correct the pricing yourself, you'll be able to move those properties to a retail level.

We do some retail-level flips as well, but not that many. I think I have one right now on the market. We priced it more aggressively from the start. Based on the views and the saves, it will probably go under contract. But I would also say that the views and the saves are far higher than they've ever been in relation to the offers we're getting, right?

So the numbers are changing, and I think you just got to [00:14:00] build a better product, price it aggressively, and you'll still have movement, right? People have to buy houses. There's still meat on those bones. There's still meat on the bones for me. Margins are slimmer, but people must buy houses, right?

For whatever reason, they have to buy houses. And I mean, there are a lot of people who also buy houses in cash. So interest rate is not always the driving factor. It mostly is. But I think that properties will be moved. Even in the worst years, housing inventory sales were never at zero; there were still millions of houses being sold.

So, yeah, you just have to put that was true in 08 and 09, when everybody thought the world was ending economically. Right? Exactly. People were buying up houses left and right, fixing them up, and still selling them. That's when I first got started. I started buying in 09, right? So. It was a lot easier at that time.

There were good times when we were buying stuff off the MLS. So, yeah. And you know, the, the [00:15:00] interesting part about it is, you know, and we're probably tumbling into some level of recession now, right? Even though the U S economy grew a little bit in the third quarter. The interesting thing is. Oh, eight, oh nine, 2010, 11, right?

Deal flow was easy. Getting the money was a lot harder, whether that's because of the credit market seizing up or people feeling the impact of those credit markets on their own net worth. The stock market took a tumble, and the bond market was crazy. And now it's an inverse, right? Where. Deal flow is deal flow.

And I don't mean that in terms of inventory. There's still inventory out there, but deals will pencil out deals that will cash flow. Those are a lot harder to find. And now you've got it. I was reading Hunter Thompson's book about raising capital. Which is excellent, by the way, and he was saying that there's, you know, over 2 trillion with a T, [00:16:00] 2 trillion dollars sitting in the bond market right now.

And, you know, if those assets perform as designed, the holders of those bonds are losing money relative to the inflationary market, right? So that's just capital preservation. But the fact is, is that there's a lot of money on the sidelines just ready to go if you can find a deal. Now, the question is, how do you find that deal?

Yeah. And I think that direct marketing has allowed me to find deals and has allowed me to do it after my own heart. Yeah. So deals are created, not found. Right? Yeah, exactly. Right. So, and there are other things that you might have to do, you might have to. Think differently than everybody else thinks. For example, in Philly, we do a lot of land-ground-up development, right?

So, with new construction, you might have to pivot there. What we've chosen to do is pivot geography-wise. So we've expanded our geography to get a larger pool. Of target area and increase our volume that [00:17:00] way. So there's a whole bunch of things you could do. Yeah. So tell me more about that. What are the markets that you're currently looking at?

We've been in Philly, Philly, Philly for the last 10 years, the last six full-time. We more recently started to say, well, let's go out in the greater Philadelphia area. So what that also means is a little bit of South Jersey. I live in central Jersey, so I live a little bit of central Jersey and then everywhere from Lehigh Valley to Wilmington, Delaware.

Okay, so that's a big cut of the world, right? Oh, yeah. So, we're going from our metro to metro pretty much, um, or surrounding metro. So, we've had some initial success with that. I'll be the first to admit after you make a decision, it's not the easiest thing to, it's not the quickest thing to have that play out.

When we started saying Wilmington, Delaware, Lehigh Valley, and everything in between, it took us three months to get our first lead in those areas. And

[00:18:00],

 it probably took another two months to get something under contract after our first year. And now, we started having discussions at the beginning of the year; we've wholesaled a few properties in Lehigh Valley, a couple in Wilmington, Delaware, and I just settled on my first property in Lehigh Valley.

So it's almost a year later that I'm actually starting to make real moves in Lehigh Valley. Yeah, but that is something that the listening folks should really pay attention to, right? I always talk with investors who say, you know, I sent out 4,000 postcards to a particular market and got one lead.

Well, my first question is, how big was that market? And secondly, how many times did you touch it? And almost to a person, they'll say, yeah, I sent out, you know, one batch, and it didn't work. So I don't do it anymore. It takes 7 touches minimum to create awareness, and that is between the postcard that they're receiving, Irfan Raza's face, the website, the logo, the value that you bring 

[00:19:00] to the building owner to be able to then create that awareness so that you can start to build rapport in a relationship.

Then build over time, some level of trust, right? So you start to stalk Irfan on Facebook and check out his website and see the other deals that he's doing and look at reviews that are online, and you start to realize, okay, Irfan is actually a straight-up guy who deals fairly with building owners then, and only then.

Are people going to start picking up the phone, hopping on your website, or sending you an email saying, hey, I might want to talk about selling my property as well. That takes time. Absolutely. Absolutely. 

Just setting up a website takes time. Right? I have multiple websites. I try to make my professional presence as professional as possible.

Right? And then. It all combines together. If somebody looks you up, they should see and be comfortable with you. And it's getting them to look [00:20:00] you up, which is also difficult, right? You mentioned seven touches. We sent out the same batch of Miller, the same list, at least three times. Yeah, if we're sending out mailers, the cold calling list that we do, we hit those lists twice a month at the very least.

Right. And if we get a connection, we'll follow up consistently. If we get a connection with somebody, that's. Open and willing to discuss with us. We're falling out consistently. So it is easy because it's just a consistent, dedicated effort. The opposite side is not that easy because you must absolutely put in that consistent, dedicated effort, consistency, and perseverance.

100 percent matter. Right. And follow up—you always hear these statistics about, you know, most salespeople not following up, and you know, we're in the marketing business. We're marketing to building owners. We're marketing to investors. Those are our clients and customers, and we create awareness within that world, build relationships, and become friends, right?

People like to do business with [00:21:00] people they like and then ultimately build trust. Right. Putting yourselves in a position where you were in the right to do business and serve those people. It takes a long time. There is no get rich quick. And if you're in this business thinking, I'm going to send out a bunch of mailers and make a whole bunch of money.

It doesn't work like that. As Irfan, you just said, it is not hard; it's not complex. Let's put it that way, but it is difficult. And I think that's the best way to say that's the best way to say it. Right? Like there's no secret sauce. Everybody asks me, Oh, how do you do this? How do you do this?

Well, well, what did you do last night? Oh, I watched Netflix. Well, that's your first problem right there. Well, why didn't you pick up that book I told you to read last time? I told you to read it. Why didn't you sit there? For an hour, instead of being on Instagram, sit there for an hour on a dialer and dial for an hour.

Yep. And that's not the most comfortable thing to do, right? It's not in my nature to [00:22:00] do something like that, but I have other things in my nature, right? I would rather spend an hour Trying to find a cold caller to dial for an hour. There are other things that you could do with your time that you're more comfortable with doing, but there is something that you could do to better yourself or better your business.

Yeah, it comes down to priorities, right? As you said, you will binge-watch The Watcher on Netflix, or will you read a book on how to raise capital or operate a multifamily more efficiently? Right. Yeah, exactly. I always find it interesting that when I meet people who have always dreamed about being in the real estate business but haven't quite pulled the trigger yet, I ask them, you know, what's stopping you?

And they're like, Oh, time. Okay. Well, let's see. There are 168 hours in the week. You work 60 of them, right? You go out two hours a night to dinner and hang out with your friends every night. Then you go out Saturday to the tailgate and Sunday to church and do everything you do. And that's another [00:23:00] 16 hours.

The fact is that you know, I've done the math. It's 26 hours. Oh, and you have to sleep, right? So there's 56 hours. There are still 26 hours in the week. So what are you doing with those? You're playing Fortnite, Call of Duty, and you know, you're binge-watching Netflix. What are you doing? And that's time you can use to better yourself and grow your business.

And I think one of the things people often get stuck with is mimicking others, right? So you might be mimicking people in a job that barely get to work on time, clock out at 5 p.m., and go home. And then they're talking about what they saw on TV the next morning, right? Uh, Philly's own world series right now.

So I'll make an exception for that. I get it. The Eagles are great, and the Phillies are about to win a championship. Knock on wood. So there's definitely a sport. Right now in Philadelphia, you can talk about some, but generally, that's what most people talk about, right? They're not talking about, Oh, I wake up super early.

[00:24:00] I go to the gym every single day. After I got home from work, I read a book and put in effort to build my business. Nobody talks about that. And I think one of the major things you must do is start surrounding yourself with people like that. Yeah. People who are building themselves.

I think the easiest way to do that is probably a gym group. Right. So those people tend to wake up early every morning, go to the gym consistently, and you can surround yourself with a disciplined group of people. Right. And I think that the next step is for younger people. Less experienced viewers try to find somebody or some financially savvy person, identify what they're doing and what decisions they have made, and try not to mimic them but try to implement those ideas and model what they did.

Right. I mean, Tony Robbins says, you know, success leaves breadcrumbs, right? The fact is, is that. How you did it, how I do it, and how somebody else does it, 

[00:25:00] There are clues that are things that we learned along the way. If you hang out with me, I always tell people, you know, give me a call, and you buy me a cup of coffee.

And in that 20 minutes that we're together, I'll tell you everything I know, right? Happy to do it. And that 20 minutes usually turns into 45 or more because I can talk for days, but you are the sum total of the people you hang out with. Yeah, that's another choice. 

Yeah, and you can choose your friends, right?

Getting the right people in your group takes a while, but it's like everything else. Consistent, disciplined effort, trying to find the right people, trying to find the right groups. Here in Philadelphia, we have a pretty large networking circle as well. We're very friendly with each other. We sell deals to each other.

So I mean, naturally, the guys that you like what they're doing, you like how they're spending time with their families on the off days, and you want to, you want to get that in your mind, you can reach out to them and say like, look, let's get together for dinner and just getting around 

[00:26:00] Those types of people.

I think that's the right answer for the most part. Yeah, man, you can go to meetups. Like, you know, I participate in a really small, there's five of us, a mastermind. We meet every couple of weeks and we talk about here, the deals, you know, here's what's working. Here's what's not working. I need help with this. And I find that just knowing that calls are coming up in 2 weeks.

I am looking to do everything I need to do to serve that group and help them grow their businesses. And I know they're, you know, the way it works. The reason it works so well is they're doing the same thing. So they're helping me too. Right. Rising tide. I'm not shy about that at all. I have a business coach.

I also participated in the national mastermind, and we met three times yearly. The guys there are rock stars. I mean, everything's relative. So you can look at me and say, Oh, this guy has over 100 units. He's a rock star. But these guys, I mean, there's 500 units plus owned by multiple people, [00:27:00] right?

There are double-digit flips done by multiple people a month. Like 10 a month, that equals 120 years. These guys are not messing around. These guys are not messing. So I was very, very, very lucky to join that group early on. It's allowed me to build my career as well. Just being around these guys that are just taking it to the next level.

And look, they're smart guys, but I look at them, and I'm like, Oh, this guy's not really that much smarter than me. This guy didn't come from. A background or money that is any more than where I came from, right? He was relatively relatively low income. One of the guys lived in a neighborhood about 10 minutes from where I grew up, and he has over 800 units.

So, I think allowing yourself to see allows you to open up your mind and believe in yourself. And that's the keyword, right? Is belief. When you hang out with people who are more successful or a little [00:28:00] smarter, you know, I always tell people as real estate investors, we're all reading the same book.

I may be a few chapters ahead of that guy. And Irfan, you're a few chapters ahead of me. We're all learning from each other. Right. And, you know, it's a big world out there. You don't have to compete for deals. There are plenty of deals if you know where to look and what to do. But I think the point you're making is key in that you have to surround yourself.

And I'm not talking about cutting off the guys you went to high school with. You go to the ballgame with them. You go hang out. You have dinner with them. You do have a couple of beers with them on a Friday night. We're not saying cut out your friends. What we're saying is to make more friends. Right. And hang out with us a lot and learn from them.

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Go to ctreiafunding. Com or call us at 860 876 8000. You mentioned a little while ago about books, reading, and priorities, right? People like you, me, and others like us; I always say leaders are readers. As the CEO of your business, I'm sure you [00:30:00] consume a lot of information, whether that's books, audiobooks, podcasts, or blogs.

You know, I'm curious who you're paying attention to these days, what you're looking at, and what you're reading. So I'll tell you what I'm reading, but I just bought a flat-top griddle. It's like a Blackstone flat-top griddle. I had just been consistently watching YouTube videos on what to cook on the griddle.

I'm trying to learn a lot from that. So that's what I'm consuming right now, but I know that has nothing to do with real estate. It's still interesting. So I'll go back to like reading-wise. I can't remember the name of the book that I'm reading now. I'm about 10- 15 percent in, but the most impactful book I've read recently is Who Moved My Cheese?

Oh, yeah, yeah. I read that a bunch of years ago. So I could not tell you a more impactful book based on a timeline of what we're going through right now. At the beginning of this year, in 2022, I refinanced a 30-year fixed [00:31:00] loan for 3. 75%. Now I'm getting quoted for seven, eight %. Yeah, right. So the cheese.

In the book, the cheese has moved, right? Like the cheese has gone elsewhere. And he, it's a really short book. There are a lot of analogies in that book, but it really clicks, right? It really, really clicks to this time period. So I actually suggested that we were talking about friends hanging out with the right people.

One of my good friends, I called him up and I'm like, look, I'm losing a little bit of confidence. I need you to like, cheer me up about real, he's in real estate too. And he's a very positive person. He's like, let's go out to lunch. So we went out to lunch. He's like, you got to read this book. I read the book, and it was exactly what I needed to read at the right time.

Oh, that's awesome. Yeah, I know. It's a fantastic book about embracing change, recognizing the world's changing, and being okay with that. Right. Cause the really, the only consistent thing about this world is change. Yeah. Absolutely. Changes all the time. Every day. And people will ask me, like, [00:32:00] what are you doing with these interest rate changes?

How are you surviving this and that? It might be a bit brash, but I'll answer like, I'm a business owner, right? All I do is see a problem and figure out a solution. I don't always get it right. So, I'm not saying I will come out of this better than ever. I'll make mistakes along the way.

But. One of the major things I do is be presented with a problem and find a solution; interest rates changing is just a different problem and a different solution. I have to find that problem later. So let's talk about that a little bit. So, how are you managing the fact that the Fed has raised interest rates?

I believe 4 times in the past 12 months. Honestly, when that started happening and interest rates started rising, I was losing a lot of sleep. The lender pulled out when I was in the middle of a large refinance. And said, we have to increase your rates. So I was scrambling. I had to find another lender.

I was scrambling to get [00:33:00] things done, and I got that done, but I started also worrying about, well, what's going to happen here? What's going to happen here? And my mind started wandering two years out when I focused on what I could do right now. Right. What I can do right now is make sure that I have enough working capital.

What that meant for me was that I had inventory lined up for the next year to place this guy here, place this guy there, and get this permitted permit. Take a long time in Philadelphia. So get this permitted; get the plans drawn up here. I had all this inventory. My whole mission is to build the biggest real estate portfolio I can build.

So it goes against my mission to sell. And I had to sell, I had to take this 10 000 gain, this 15 000 gain. I even took a loss on one of the properties, but I was happy to even take that loss because if I had refinanced the property, I would have lost even more working capital, right? So, all that being said, I really made it [00:34:00] a mission to alleviate any cash stream in the future.

Or in the next six months, I made those changes. And I mean, now I'm in a good space. I was happy to have this interview with you. If you had talked to me six months ago and said, Oh, can you do a podcast with me? I might've told you I'm not in the right mind space here. I like everything, man. Yeah.

To have this interview. But, uh, yeah, it was just, again, consistent effort to get me in the right spot that I needed to be at the time. Right? You know, going back to your business training, right? I also think it's a high degree of emotional intelligence, right? To recognize I'm under a little bit of stress here.

Okay, let's take a breath. What do I need? What do I need to get through the next 12 months? What will my business look like three or five years from now? Okay, well, to get there, I need working capital. How much do I need? All right. Well, I spend 2, 000 a month plus debt. So let's say 5 000 a month.

Every month, no matter what, so that I can pay my payroll, pay my bills and make [00:35:00] sure my mortgages are serviced. Right? So now, you know, you need 60,000 in cash, which comes down to risk tolerance. How much of that 60 grand do you need right now? And how much of it are you confident that with your pipeline of deals and projects, you will be able to fund the rest of that financial need?

That's definitely the simplified version of things. I'm not that smart. You're the CPA here. There are so many moving pieces, right? Your interest rates go up, and your DSUR gets lowered, right? Right. And now you are going to do this bird, a true bird, leave no money in the deal. And now you're leaving a hundred.

250,000 into a whole package of refinancing that you're about to do. So there's that; you have to look at vacancies in your portfolio. We do a very good job of keeping our portfolio like 96 percent occupied. We are very good at that in the winter, we have seasonal, I can't think of another word, but seasonal depression in our [00:36:00] portfolio, where if we do have a unit come out, it might take a little bit longer for us to run that unit.

So all these things factor into working capital. What am I going to look like in two months? And also, we do very heavy construction. We're spending a little over probably a hundred dollars a square foot in construction. So we do a full gut rehab, reframe, and install all new utilities or mechanicals.

Yep. And just managing the draw schedule. So we're pushing out, paying out draws to contractors, and spending 40 000 making sure that we have draw schedules aligned with that to relieve our capital needs. So you did a great job of simplifying it, but I would say that it takes a lot of time and effort to identify how weak or strong you are in that work and capital needs.

And sometimes you also just don't get it right. Sometimes you can't pull the draw. Sometimes you get stopped by your license inspections unit. There's a [00:37:00] whole degree of things. Sometimes your, your units, like say you're trying to refinance a bird deal. Sometimes you put a unit out to lease and instead of taking a month, it's taking you three months to find a qualified.

Applicant, there's so many different factors that could change up how your, your cash is looking at any other gate any day. And you really just have to identify and find your risk tolerance. I found that I don't like my balance of money going. Any lower than a certain threshold of dollars, me too. So when it goes below that threshold, I start panicking.

What draw can I pull? What can I do? What expense can I hold off on? So that's another way to look at things. Yeah. I get a little fidgety if we drop below six months' reserves. Right. And COVID taught me that it used to be three, but being an Irishman, I planned for mushroom clouds on the horizon. And then I'm pleasantly surprised when the world doesn't end and okay, we have enough cash to get through.

All right, let's keep going. So I couldn't hear that saying [00:38:00] mushroom clouds. I don't know if I stole it or I made it up. I couldn't tell you, but I say it all the time. So I thought you were going to say potato famine. Oh, Hey, there you go. That's where I go with that. I really enjoyed this conversation. I'm curious about, you know, your non-real estate life when you're not chasing deals and wholesaling and burring your way to your financial empire.

What else do you like? And you're not researching your flat iron grill. What else do you enjoy doing? I'm a fisherman now. So I bought a boat during covid right after covid hit. I didn't really have too much to do. And I, I was basically just presented a boat and it was at a great deal, great price. I had to say yes, I bought the boat, learn how to, I got my captain's license.

I used to fish as a kid from six to like 16. I was pretty into it. And then I got back into that passion. So yeah. If he's following me on social media, you will see me on my boat and I named [00:39:00] the boat real estate. So R E E L estate. So, uh, that's what I like to do on my free time. I also have two kids.

One is five. One is three, both boys. I spend. A good amount of time with them. So at five o'clock PM, I stop what I'm doing, and I'm with them. I go pick them up from daycare. I'm with them until they go to bed, anywhere from eight to 9 PM. And then every weekend is dedicated to them. If I have to work, and there's some, some cases that I have a little bit of overrun if I have to work, I'm waking up super early, like 4 AM, 5 AM, and I'm working from 5 AM to 8 AM.

So I'm not missing any time with them. So that's like my dedication. And then my final thing you'll ever do to be a dad, right? Yeah. I mean, it has been so far. So I have a 19-year-old and a soon to be 20 year old, and a 15-year-old. And I can assure you. So I'm about 10, [00:40:00] 15 years ahead of you. It is the best thing you'll ever do.

Yeah. I remember, uh, I mean, before I had kids, the mastermind that I was talking about. People were saying that too, right? Like surrounding yourself with the right people. You said chapters; you're a few chapters above me in that realm. And you're telling me that it legitimizes that I am making the right decisions right now.

So you only get 18 years with them, right? And that's the best-case scenario, right? That's the case scenario. And then they go off to their lives. And much as I'd love to say, I'm the most important thing in my daughter, Katie's life. I begrudgingly, no, I'm not right. So, she's living out, and Mag is my little one.

Same thing. They're living their lives, and hanging out with Mom and Dad is not as cool as it used to be. And honestly, the time flies, too. Like I feel like it was just yesterday that we were having our firstborn. Sure does. The 13 years is all I have left now. So I'm [00:41:00] basically counting down.

I should start doing days or hours now. So really make sure I put that focus in there. Absolutely. Yeah. There are only 13 more fishing seasons, 13 more Superbowls, 13 more World Series, and go Phil's, by the way. And it's a short, very short period of time relative to the lifespan. Yeah, I agree. I agree. Irfan, I've really enjoyed speaking with you.

If someone wants to learn more about your business or how to shoot the breeze, become one of your friends, or join the mastermind you belong to, what's the best way for them to reach you? Almost all my handles are Airon a Raza or Airon dot a dot Raza. So Facebook airon.Raza.

My personal gmail is airon dot a dot raza@gmail.com. So I-R-F-A-N dot a dot RA z@gmail.com, and you can pretty much get me any way you wish to get me. I think I'm even on Twitter; Elon Musk just bought Twitter. So that's probably the hottest thing ever. [00:42:00] Yeah. Everybody's paying attention to it now, right?

You can even get me on Twitter. If you want to, Irfan. A. Raza. So well, Irfan, thank you so much for your time. I really learned a lot, and I'm grateful for your knowledge, and I'm sure our audiences are as well. So thank you so much. And it's really good to see you, man. Thanks. All right.

Thank you. Appreciate it. The real estate underground podcast was a Clark Street capital presentation. Thanks for joining us. If you enjoy the show, please like it and share it with your friends. Also, leave a comment. If there's a topic you want us to cover, we read every comment.

If you'd like to learn more about Clark Street Capital and our upcoming projects, please feel free to contact us and join our investor club at Clarks. com slash join or the underground insights newsletter at Clarks. Com slash newsletter. Until next time, happy [00:43:00] investing.