Welcome to week 19 of the Crushing it in Real Estate Podcast! This week we have Bobby Sharma who is a Real Estate Investor located in the San Francisco Bay Area. Since 2012, Bobby has accelerated his meet up group to more than 4000 members and has amassed a portfolio of 600 rentals in the Midwest through partnerships. Join this week as we dive into Bobby’s real estate journey! Enjoy!
Meet up group: https://www.meetup.com/Bay-Area-Multifamily-Moguls/
Bryan: [00:00:00] Hey guys, welcome to another episode of Crushing in Real Estate. This week we have Bobby. So, Bobby is an out of state investor who started in the Bay Area. Currently, Bobby is a meta post in the San Francisco Bay Area. Well over 4,000 numbers. That’s amazing! Bobby, welcome to the show. Can you walk us through how you got into real estate?
Bobby: [00:00:27] Yeah. Thank you, Bryan. Thank you. And it was great to meet you last week and, thanks for inviting me to your podcast. I’m truly honored. But yeah, I started out in 1988 in Southern California, I did what’s called house hacking, before, that was a very popular term. So, I got a three-bedroom, two-bath house and put an ad in the local paper.
There was no internet or anything at that time, but people did read the newspapers back then. So that’s how old I am, but pre-internet. So yeah, I put an ad in the paper and the phone started ringing the next day. And then before I knew it, I had two roommates and they pretty much paid for… it covered the mortgage. The insurance and taxes, I had to come out of pocket. But yeah, I lived in a nice three-bedroom, two-bath house with two great roommates for a long time. So that’s kind of how I got started.
Bryan: [00:01:41] In which part of LA was this?
Bobby: [00:01:43] I was actually in Riverside
Bryan: [00:01:45] Riverside?
Bobby: [00:01:46] So yeah, near Corona. And on the way to Orange County, that’s where I was.
Bryan: [00:01:53] And what was Riverside life back from 1988? Just out of curiosity.
Bobby: [00:01:58] It was still booming. At that time, it was coming close to the end of the real estate cycle, but it was booming. There were a lot of jobs, people from Orange County that couldn’t afford Orange County were moving into Riverside.
But a few years later, at market turn, in a very volatile kind of a way, but I bought actually near the top. But you know, of course the market has come back even in Southern California, even in Riverside. But it’s come back, but it took them about 35% cut back then they took 35% died after the peak.
Bryan: [00:02:52] Oh, wow.
Bobby: [00:02:53] Yeah!
Bryan: [00:02:54] This is back in 1988?
Bobby: [00:02:56] [inaudible] and happened in the early nineties.
Bryan: [00:03:00] Early nineties. Okay. That’s some good history for some of our listeners to know about the history of Southern California and that’s awesome, Bobby. So, how’d you transition from house hacking in 1988, 1990s, to what you have right now?
Let me ask you this question. How did you end up in the San Francisco Bay Area?
Bobby: [00:03:21] I was working in a tech company and I always knew that I wanted to be in the Bay Area. Like this is the capital of, you know, technology. And, I worked for a Japanese company and they were having a hard time finding engineers over here. I worked for Mitsubishi Electric at that time, and one day my managers had flown out through the Bay Area and he interviewed a bunch of people. He didn’t like any of them and he couldn’t afford a whole, but many of them. So, he was just saying, you know how frustrating it was to find engineers over here. And I said, you know what? I’ve always wanted to go up to the Bay area. So, I said, you know, if you’d like, I can move up there and you can find somebody down here and he’s like, let’s do it. You know? So, I ended up in San Bruno and then it got into a tech startup, which we did pretty well in 2000, this [inaudible] if we fast forward now, we’re in 1999, 2000 era. So, I did pretty well with the tech startup at that time. And so that’s how I ended up in the Bay Area, Brian, but always because of my degree was in computer and information science, I always knew that that’s somehow, I have to kind of navigate my way to Silicon Valley.
Bryan: [00:05:06] Yeah! Have to agree with that one. Similar for myself. I started my tech career in LA. And when I was in LA, I knew what I had. I had to come up to the Bay Area because obviously this is where it’s cracking, you know, you have to be here. And then I think you started real estate a little bit before I did, but I didn’t start real estate until I got to the Bay Area.
So, I live with this guy named Sean Pan and he’s like, hey, do you want to do real estate with me? I’m like, okay.
Bobby: [00:05:34] So Sean is a rock star.
Bryan: [00:05:37] He’s a rock star. That’s basically how I got into real estate. It’s a very similar story, but we were comparing apples to apples. You’re way ahead of me, Bobby.
Bobby: [00:05:46] No, no, an old man like me. You’ll be way ahead. So great for you.
Bryan: [00:05:52] It’s only three years from now. A young man, Bobby.
Bobby: [00:06:00] You’re doing great. I’m really proud of what Sean, Tom and the stronger mom. And what you guys are doing is just phenomenal. So yeah, 26 flips in the Bay Area is no joke. Right. So good.
Bryan: [00:06:13] Awesome. Thank you, Bobby. So fast forward a bit. How’d you get into your first real investment property in the Bay area?
Bobby: [00:06:21] Yeah, so again, I got married and being Asian, just sticking, the house that I bought in Fremont, I always thought that I couldn’t really afford that house. Even at that time, I thought I was paying way too much and I will only pay at 370,000.
Bryan: [00:06:47] 370? Oh my god! Fremont?
Bobby: [00:06:51] Fremont, three-bedroom, two-bath with a big yard. And, but you know, being conservative, I always felt like I was overpaying, you know, someone that did was, we didn’t have any kids back then. So, when I found a house where I could create like an in-law unit, even back then. I created a separate entrance, a separate kitchen, and what happened was, housing was in such high demand. And I was able to section off completely a big part of the house. There was always a techie or a student that was looking for a place like that. It had its own master bedroom, master bath, master everything. So, there was always a demand for at the unit that I had. So that’s how I did my first investment. And then, in 2010, the market dropped right. 2009. Oh. And by the way, I sold that house in 2007, August, late August, early September of 2010, I’m sorry, 2007 sold my Fremont house at about, I bought it for 370, sold it for, 520.
Bryan: [00:08:24] Oh, wow!
Bobby: [00:08:25] But then I sat on the sidelines because I felt like the market was just out of control in 2007-2008. And then in nine, 2009, it started to like, correct. And, and so in 2010, I went back into real estate. I bought at the courthouse steps. I bought a house in San Jose and then I bought a house in Oakland.
And luckily the one I bought in San Jose did not need a lot of work. And I think it was less than 5,000 hours. And I did most of it. I, on the weekends, I’d go out there. I’d paint. I’d fix the windows. I think the only thing that I’ve paid somebody to do was some plumbing, some plumbing work, but everything was below $5,000.
And you know, I rented it out and, it’s been a rental since then. And then in, in Oakland, however, I started to do fix and flips. And…
Bryan: [00:09:41] This is back in 2010 in Oakland?
Bobby: [00:09:43] And 2010, 11, 12. I still had my day job, but doing a few flips on the side. And so, I accumulated a little bit of money. So fast forward to 2014.
Bryan: [00:10:02] Four years later.
Bobby: [00:10:06] 14. There was an event in Kansas City about real estate and got the email and I looked on southwest.com and the event was Saturday-Sunday. And so, I just said, you know what? I’ve never been to Kansas City. I want to go try it out. And so, I flew out there to the real estate. It was like a big meetup event. By the end of that trip, I had put a down payment on four homes because when I looked at the prices, it was like, oh! You mean to say, I can buy in a B neighborhood, like a three-bedroom, four-bedroom house. For about $60,000, like, you know, that’s just the rehab costs in Oakland and I’m getting a completely fixed home for $60,000 – $80,000.
So, I ended up with four homes there.
Bryan: [00:11:21] Congratulations!
Bobby: [00:11:22] Yeah. Since then I still kept a couple of them and I sold two. So, I sold two to generate a little bit of profit, but I kept the rentals. So that’s how I got into my out of state investing.
Bryan: [00:11:39] Oh, wow. It’d be traced back a little bit. As you mentioned that you’re fixing your Fremont property. What was the rules and regulation light back in two thousand and… what year was that again? Two thousand and?
Bobby: [00:11:52] 2001, 2002? Yeah.
I didn’t do any structural changes. The only thing I did was I closed out the door from the master suite. I was able to close out that door. I did hire a handyman, a licensed some kind of a jet. He used to be a GC, but then he gave up his GC to do handyman work and we knew what he was doing.
He put, he’s got the frame, he locked it out, but you know, we didn’t put a full kitchen. It was like a kitchenette. We didn’t run any new electrical. We didn’t run any new gas. So, but I would, I’m sure if the city had shown up [inaudible]
Bryan: [00:12:48] That’s why I was wondering, it’s like, you know, you made it sound a little bit too easy. That’s not the Bay Area I know, you know, Right.
Bobby: [00:12:57] And then nothing’s easy, but I did all that without a permit. But the work was, we weren’t moving anymore walls, we weren’t pulling any more song kits or anything like that. So it was pretty, pretty cosmetic, to be honest.
Bryan: [00:13:18] Okay. I mean that $5,000 and what you did was… whoa I can imagine that, especially during this time.
Bobby: [00:13:26] No, nowadays, no way.
Bryan: [00:13:28] Yeah. And for our listeners, when Bobby is referring to Kansas City, he means Kansas City, Missouri.
Bobby: [00:13:37] It’s very true. Very true.
Bryan: [00:13:41] You’d be surprised at how many people think Kansas city’s in Kansas. It’s very misleading though.
Bobby: [00:13:48] Very misleading.
Bryan: [00:13:49] So that’s awesome. I mean, you mentioned that you bought your four houses, you sold two of them, but that’s just a small picture of your success, you know. So, I saw on Facebook recently that you closed on, I believe in 92 units?
Bobby: [00:14:04] 160 units.
Bryan: [00:14:05] 160 units. Congratulations. So, we all want to know, how did you make that transition over to 160 units?
Bobby: [00:14:14] Yeah. So, before that transition, I actually partnered with some other friends that I met at my meetup. So, you know, for the folks that are listening to Bryan’s podcast, who, maybe, hesitate, going to meet ups, meet ups are great place to network to find connections, to find your future parkers.
So, I’ll tell you a quick story. I met somebody at another meetup, we exchanged business cards, long story short. We ended up becoming partners and they owned a bunch of real estate, also in Kansas City. Him and I were talking and having coffee one day and the streets that he was naming were in his properties were the same streets where I own some properties, or the same zip codes. So, we connected and we grew that company. When I met them, they were at 110 doors in the Midwest. And fast forward to now, you know, we are now at about 600 doors in that company.
Bryan: [00:15:28] So what is the time span of this? So, you met this person?
Bobby: [00:15:32] Over four and a half years,
Bryan: [00:15:35] Four and a half years. You ask him for 100 to 600. That’s amazing. I like that.
Bobby: [00:15:42] Yeah. And it’s the power of connecting with people. It’s the power of the network. It’s the power of meetups. It’s the power of establishing trust and so on. But yeah, we were fortunate, you know, our investors, we work closely just like you do with investors.
So, we had that going. And then there was a gentleman that had spoken at my event three years ago, I’m with my family. Him and I were having lunch actually. And he said, listen, we’re about to go into contract. You want to help out with the due diligence? You want to help out in the… you want to invest? You want to operate a company?
And so, we just, we were just brainstorming and long story short, we ended up putting that property under contract. It was the seller. This is an example of how sometimes you just get lucky, seller had sold properties earlier to my partners. He had a huge portfolio in Minneapolis. He was getting older and he wanted to play golf in Florida and move out of Minneapolis and just live in Florida. He was extremely wealthy and he basically came to my partners and said, listen I don’t want to go through a broker, if you guys make me a reasonable offer, the property is yours. And he said, look, you already know the Minneapolis market. You’d already know what the regulations are, what the demand is. And Minneapolis was one of those markets that people don’t think about very often, but there’s a big housing shortage in Minneapolis, especially in what’s called a workforce housing. So skinny C plus kind of neighborhoods. So, we raised the capital. We raised the money for the down payment and some cap X. And so, we just closed on it a couple of months ago. That one was a syndication. It was a five and six B and a. So that was… I’ve invested in other people’s syndication, but this was the first time I did my own syndication.
Bryan: [00:18:18] Congratulations, Bobby.
Bobby: [00:18:20] Thank you, Bryan.
Bryan: [00:18:21] So a couple of things I want to highlight in Bobby’s story, he says the power of networking, you know. When people tell me, or when people say now your net worth is your network. So that’s absolutely true. And I see it in Bobby’s situation. I see it in my situation. I think what Bobby and myself included by having our meetup, like we can meet so many different people and just, you know, right off the bat, like, who you have synergy with, you know, it’s like you’re going to meet a hundred people, 200 people, but all you really need to meet is what one really good person.
Bobby: [00:18:59] Yeah.
Bryan: [00:19:00] And together you guys can accomplish a lot, you know? Yeah. So that’s one of the stuffs I want to highlight in that. And for you guys that are listening to this podcast, so 5 or 6 B in syndication means that you can fundraise to noncredit investors and taking 35 non-accredited. Alright. So, back up a bit. A credit investor is someone who has I believe over 200k in income and one over $1 million in net worth.
Bobby: [00:19:31] Yes.
Bryan: [00:19:31] So awesome. Bobby. Hey, Bobby, just out of curiosity, like how would you go about the fundraising process and how did you leverage your meetup for that?
Bobby: [00:19:40] Yeah, so, you know [inaudible] over the years I’ve built a database of my accredited investors. So, I’ve got maybe a couple hundred, maybe 250 people.
Bryan: [00:19:57] That’s really impressive.
Bobby: [00:19:58] Yeah. Yeah. And so, I reached out to them and it was, you know, I’m basically saying, Hey, you know, and I already know that they’ve already invested with me or I’ve invested with them. And so, we have a good working relationship, good rapport, and we only needed like 10 or 15 people. We didn’t need a lot of people for this one. So that’s how we raised the capital for… in a five or six B, you’re not allowed to advertise per se. You know, you’re not allowed to broadcast it in public and all that. So, but as long as you do it to select… we actually did a zoom meeting. We sent out an email to our accredited investors who we already had our own relationship with. And we said, listen, we were thinking about doing… here are the numbers. If this is something that’s of interest to you, please reach out to us. So about 35 people showed up and 18 invested.
Bryan: [00:21:19] Oh wow. That’s really amazing.
Bobby: [00:21:22] Yeah. And the partners, myself. My two partners, we also put in capital. And so, we have skin in the game just like the investors have skin in the game. We put in our own capital.
Bryan: [00:21:37] Okay. That’s, that’s really good to hear. For you guys listening, Bobby has skin in the game.
Bobby: [00:21:43] We have skin in the game.
Bryan: [00:21:44] Definitely. And I know there’s some of my listeners that they ask him a question, the last indication podcast, how I was wondering if you could help me clarify it. Some of them are wondering, is it perfectly legal to send out like a five or six C mass email to other, I forgot, like Facebook group or something like that. If it’s perfectly legal, I just want to run it by you. So, they…
Bobby: [00:22:09] I believe it is a five or six C because that’s under the general solicitation. You have to have five or six C. A file with the SEC and all that. So does a five or six B believe in, if I was 6C, you can go to a crowdfunding platform and post your deal over there. You can broadcast it. There are no restrictions. I think there’s some additional paperwork, if they’re non-accredited and you have to make them. Maybe I have more disclosures in if I was 6C, but yeah, you can broadcast that. In fact, I’m working on my next syndication most likely will be a five or six C.
Bryan: [00:23:00] Okay. Wow. Fantastic. Bobby. That’s awesome. So now as part of the episode, I just want to change the gear a little bit and talk a little bit more about your motivation and your goals and what do you want to accomplish? You know, so we’ll start short. What is your, by this time end of next year, what do you hope to accomplish? And five years from now, what do you want to accomplish?
Bobby: [00:23:24] Yeah, so my motivation was mainly to free up my time. I wanted to be able to kind of do things that I enjoy and it was to replace my income from my day job, which is the motivation for a lot of people. Right. A lot of people want to have passive income that replaces their W2. So, whether you work at the tech or you work as a nurse, you work as a doctor, whatever that is, you know, people strive to replace that W2. So, for me, too passive income, that happened about three years ago. And then I said, you know what? I’m not one of those guys that hates their day job. Right. In fact, I was very fortunate. I worked for a great company, great managers. I didn’t hate my job. Like some people dread going to work. I had no problems going to work. I did that in my next goals are to maybe do that five or six C. There’s a new model that we’re working on which will allow people to get cashflow appreciation-depreciation, but in a very simple kind of a way. So, if I can get that project… that project is almost come off the ground and it’s almost there, and I’m working on a tech startup. It’s still working out the kinks. You know because we come from our tech background. So, we’ve got the tech DNA in our systems. So, in our needs I have a little pipe dream for building a certain technology for a real estate. That’s my long-term goal. That’s a 10-year, five-year kind of an effort. I work on it every day. I’ve got a team, developers, designers, my partners. We’re funding it ourselves. So yeah, that’s my long-term goal to see that come through successfully.
Bryan: [00:25:55] And that’s very admirable, you know, I think I have the same type of goals as well. People always ask me Bryan what’s in the real estate and I just tell them it’s because I want to free up my time so I can start a tech company.
Yeah. You know, so I think real estate is a great vehicle to kind of use that to kind of free up your time to achieve other dreams and ambitions you have. You know, I always like to ask people and myself, this question, what would you do today of money was no longer an issue.
Bobby: [00:26:26] I would travel a lot. I would take care of the family, but I would take care of a lot of people that don’t know how to be entrepreneurial. Access to entrepreneurial systems, right? You’re very fortunate. You get to travel a lot. I get to travel a lot internationally and I go to kind of some off the beat in a beaten path kind of places where not a lot, it’s not those places that are often known tourist traps or anything. It’s not like Paris or Rome or Greece. I go to some really strange places. And what I see is lack of opportunity. So, I’d like to long term, see if I can help maybe one city or one place, just get more entrepreneurial, you know?
Bryan: [00:27:28] I like the huge impact, you know.
Bobby: [00:27:31] One little impact.
Bryan: [00:27:32] Yeah. I like that a lot. I was listening to, I guess like a different podcast, I think this, Indian billionaire, [inaudible]
He’s on the first, I forgot, spaceship to the moon from India.
Bobby: [00:27:52] Oh Naveen Jain, yeah!
Bryan: [00:27:55] Yeah. He’s telling in his short speeches, like life is all about creating, freeing up your time to create the impact and the crazier and the more he’s like, the more you believe into it, the crazier people think you are, but that’s okay. You have to keep pushing for your passions, you know? So, I really appreciate that.
Yeah. So, Bobby, what kind of advice would you give someone that’s just starting out on the investing side?
Bobby: [00:28:22] Number one, you know, surround yourself with positive people, surround yourself with positive and ethical people. People that have high degree of honesty and work ethic. Right. And they’re positive.
I was very fortunate that when I started my meetup… one of the things I like about the real estate, these events that you and I hold, the groups that we run, a lot of people, the vast majority are very positive, very helpful. They seem, you know, they don’t mind sharing the wealth. They don’t mind sharing their knowledge. They don’t mind making connections. So, I would say if you’re starting out. Go meet and create your network, network on people and surround yourself with positive people. And I think you will, you can do really well just from being in that environment.
Bryan: [00:29:31] I agree with that. And it’s all about having the abundance mindset to you. The mindset, you know, there’s a lot of everything, it’s okay to share, you know. And also, I, you know, now that I’m also a meta post, I think that the culture that you just defined really stems from you, yourself, Bobby, I think is because people see that you are selfless and you’re willing to help without any monetary or social gains or whatever. He creates this culture. When you’re a meetup group that people like to help each other and share their [inaudible]
Bobby: [00:30:02] Thank you, Bryan.
Bryan: [00:30:03] I see that a lot.
Bobby: [00:30:04] Thank you. Thank you.
Bryan: [00:30:06] Awesome. I guess now that we’re, since we are approaching the end of the show, what would you have done differently if you started your real estate career all over again?
Bobby: [00:30:16] And if I had to do all over, I would surround myself. I would do more deals. I would take a little bit more of a, of a gamble if I was younger. As I get older, I’ve become a little bit more conservative, but I look back and I say, you know what? I was too conservative in my twenties. I should have been more aggressive in my twenties. And I would say what I would do differently is I would spend every free moment, reading, listening, going to the events and doing deals. Just do deals – small deals, large deals, but make sure that the numbers make sense, right? Don’t get carried away with whatever HGTV is telling you, you know. Don’t get carried away with some of the Facebook noise about people making, you know, half a million for a bit.
And I’m waiting for the day when somebody in Facebook groups, they made a billion dollars on a slip. Something crazy like that. But they’re out there they’re posting, you know, stuff that is not quite accurate. Maybe they got lucky ones, but sort of… but being realistic, you know, study the market. But surround yourself with people like Bryan and Sean and Tom and, you know, just be around good, solid, you know, human beings.
Bryan: [00:31:58] Wow. I like that a lot, you know. So, I think you bring up a really good point too. It’s “don’t quite believe everything.” You see, there’s always a backstory to everything.
Someone may see wildly successful and for you, you get this shiny object syndrome. You’re like, how’s I going to make so much money? You know? I always tell people like when you see something too good to be true, it’s probably too good to be true. Especially in real estate, you know, numbers of eye-popping. There’s probably something wrong on the deal. If someone tries to partner you and offers you like 18 to like 30% return and like six months, it’s not real, you know, it’s too good to be true. So just always do your homework first. You know, like knowledge is one thing that you’ll always fall back on.
Bobby: [00:32:45] Yeah.
Bryan: [00:32:46] Also like there’s plenty of resources out there. You know, feel free to reach out to Bobby, myself, using other forms and sources to ask her questions. And slowly through time as you network and meet more people, you realize like, what are the true returns? What are the true numbers, you know? So that’s super important.
Bobby: [00:33:08] Know your numbers.
Bryan: [00:33:09] Definitely! Know your numbers. Hey, Bobby. Um, I guess the last question I’m going to ask you is what is your favorite book?
Bobby: [00:33:19] Oh man. I would have to say Making Friends and Influence People is up there on top. Of course, everybody says Rich Dad, Poor Dad. I think I read, Making Friends and Influence People way before I read Rich Dad, Poor Dad. And that really changed how I operate and work with people. I think that’s been one of the key reasons why I’m kind of successful in real estate because real estate at the end of the day, it’s a people business. Right. So, I would say, that book, if you haven’t read it, then get a digital copy or whatever, but read that of course first at Poor Dad is so important and influential, but I think, everybody on this planet has read it.
But those two.
Bryan: [00:34:21] Okay. Awesome, Bobby. So how can our listeners reach you or find out more about you?
Bobby: [00:34:27] Sure. Sure. Yeah. So, so my website is really simple. It’s bayflip.com. B-A-Y-F-L-I-P dot com. And my email is firstname.lastname@example.org so they can get hold of me there. If they Google me or if they go to Facebook or LinkedIn, Bobby Sharma, they’ll find out I’m on. I’m on Facebook. I’m on LinkedIn.
Bryan: [00:34:51] Yeah. Include that in the show notes as well.
Bobby: [00:34:55] Right.
Bryan: [00:34:55] Thank you, Bobby. Thank you for being on the podcast. I appreciate it.
Bobby: [00:34:59] I appreciate you inviting me. Thank you, Bryan.
Bryan: [00:35:02] Awesome. Thank you.