This podcast interview of Neal Bawa is hosted by Jonathan Farber of the Millennial Millionaire Real Estate Podcast.

In this episode, Jonathan Farber interviews Neal Bawa on his journey from discovering the benefits of real estate investing to building a business holding over $265 million.

The Best System for Analyzing Properties and Working with Virtual Assistants

by Neal Bawa | Millennial Millionaire Real Estate Podcast

Hot topics discussed:

  • Choosing your market
  • How to know when you know enough
  • How to get boots on the ground

Jonathan Farber: This is the millennial millionaire through real estate podcast.

Neal Bawa: And by the way, there’s 10 pillars. There’s five per cities and five for neighborhoods within these 10 pillars. When I teach them, I point out certain metrics that are more important for appreciation. And other metrics that are more important for cashflow. So, you can have your cake and eat it too.

Voice-over: Listening to the millennial millionaire through real estate podcast, where we discuss tangible tips, tricks, and best practices for becoming financially free. The show is designed for people who want to either start real estate investing, or for those who want to scale their real estate business.

Jonathan Farber: What’s going on, everyone. Jonathan Farber, your host of the millennial millionaire through real estate podcast. I hope you’re all well and healthy. For any first-time listeners, thanks for being here. The goal of this show is to explore ways to become financially free through real estate or to increase passive cashflow through real estate.

A little background on myself. I work in corporate America at a software company and my side hustle is real estate. I currently own eight rental units and looking to add more this spring, I have house hack, bird flipped, and done short-term rentals to name a few strategies. My current focus is 20-to-30-unit apartment buildings in Ohio and Kentucky. I love to network and learn. So, if you’d like to connect further, feel free to find me on LinkedIn, Facebook or biggerpockets.

All right guys, today, we have someone who has really impacted my life in the last year. If you guys have been following along in the Facebook group, or just heard me talk about it, if you’re a, an investor friend of mine, you you’ve definitely heard the name.

Neal Bawa. Neal is a technologist’s turned real estate investor who has some of the coolest systems and tools I have ever seen. Like there were sometimes, on this actual episode where I was so impressed or, or like, so blown away, I didn’t even know how to respond. Like I was speechless even thinking about it now, moving, getting a little bit, so excuse this intro, but seriously, his tools are incredible.

And a lot of them, I fully adopted into the way that I analyze deals or work with virtual assistants or just manage my time. He just got so many tools, so many more than I’ve heard anyone else. The only other person I could probably think of what this, it has a lot of tools or step-by-step how tos is Joe Fairless, but even Joe does it very differently than Neal does.

So. it’s just really cool and the, Neal lives in the Bay and the way we first connected was I was looking for a better way to understand neighborhoods and analyze cities. I could not find one system for this. There were so many different scattered ways. Some people would say, find a Starbucks and anything around that other people would say it’s based on median income or medium rent or population, there was no system that I could find, with at least ways to track all the data easily. So, I found a new YouTube video that Neal put out that went viral, where he talks about his system for analyzing cities and neighborhoods. And it’s incredible because he just walks through the step-by-step guide of how he does it.

So, I could link to that in the show notes, but it was just the first way. And it really helped me now build my system for analyzing cities, deals, neighborhoods, et cetera. So ne Neal has become a full-time syndicator. And what that means is you guys know the fall, the podcast, that means he buys larger assets.

Typically, multi-family properties with investor’s money. He puts his own money into the deal to some extent, but most of the deal, is paid for as a down payment, goes with investors capital. So, we’ll get into the more of that in the show today, but that’s his main primary business along with now bootcamps and training.

He does, before getting into syndication, he worked at a technology company. And fell in love at real estate, as he collaborated on a couple of real estate projects through that company. And, now he does it full time, as I mentioned before, and he’s the CEO and founder of Grocapitus, which now is a portfolio of over 2000 units and $200 million in value.

That’s just a crazy amount, which is incredible. So, he walks through the whole system of how he did it, how he built it up and what he recommends for you guys to do, if you’re thinking about scaling a small or large portfolio. So that’s the main focus of the episode and systems. Yeah. So, the main focus or the main learning from the episode is how he scales with these systems.

Like he has a process and a system for everything. And it could be anything from how he personally analyzes deals, which he doesn’t really do any more. He has other people do it for him or how he works with virtual assistants. And this is something as some of you guys close to me now, virtual assistants and remote employees have been a core foundation.

The last quarter for me that I’ve added a couple, but he has over 20. And he talks about how he hires them, how he trains them, what he helps, what they do for him and all those sorts of things. So, it’s really interesting to hear his take on it. Today’s tangible tip is I delete social media Monday to Friday, and I know that sounds a little insane or some people don’t know if they can live without it, but I found it too distracting.

And now I’ve had some cases where, because I’m posting more. Or because I have some virtual assistants helping me with social media that they have to post on my behalf and then I need to just check it and see that it turns out okay. But I’m not using it really, during the week. And what that did for me was just free me up to focus on what actually mattered during the week.

And I think I’ve given this tip before, if not, maybe in the future, but yeah. Instead of using Instagram or Facebook typically, now I’ll just go either on BiggerPockets or LinkedIn, if I need to scratch that itch of going on social media, if I’m bored. So, these kind of replace those, but you could be amazed I’m I’m calling you guys out.

I’m actually doing this as a challenge right now, unexpectedly. So I think this can make a huge difference. So I want to challenge you guys, if you are feeling like you’re wasting time on social media, which a lot of people I know do during coronavirus. I challenge you to deactivate the apps, delete the apps, nothing will happen.

There’ll be able to read down them free, download them, but do that from Monday to Friday. And you’ll be amazed how weird it feels and how much about bad habits you’ve developed with social media. And now you can actually start to undo some of that habit and think about what you could do to replace that.

Like the first time I thought about it. I couldn’t believe how much time I spent. And I had the thought if I had just done other productive things in that time, I’d already achieved my goals. So that’s how it started for me. But I think you can make a huge difference for you guys too. Yeah. So I know that was a little bit of a rant, but it gets me fired up because I mean it, and it’s made a huge difference for me.

So that was today’s tangible tip without any further ado, incredible episode today with Neal Bawa. All right, Neal, welcome to the podcast.

Neal Bawa: Yeah. Thanks for having me on Jonathan.

Jonathan Farber: Yep. And, like most guests was just going through how I first got exposed to your content. Just doing some brush up on notes before we were talking about that.

we’ll get into all that, but really just. Enjoying what you’ve been doing more so with this new reality of COVID times and webinars and zoom, and you’ve been creating a ton of content. So we’ll link all that and we’ll probably talk about it, but, is that something that has always been a part of your strategy before we get into your story and all that? As far as just content creation and being a leader on the digital and social fronts?

Neal Bawa: Yeah. I, my belief has been that there is the. One methodology of being very aggressive in sales and telling people all the good things about multi-family and constantly bombarding them with that information.

Multi-family multi-family best in the world. Nothing like multi-family and that’s, that’s kind of a very standard sort of thing that I’ve seen as an investor, because I’ve been investing as a passive investor in multi-family for more than a decade. or there’s the methodology of producing pure content, whether that content is good or bad, whether it supports your argument or not.

And becoming a thought leader. That’s a very long process, but it is much more powerful. I would say based on my results, I’d say it’s 10 X, two 50 X, more powerful than just bombarding people with projects and information. Good information about multi-family right. Pro information. I do, content like I did a webinar on Thursday on Wednesday night where I had, 480 people watching an hour long event.

That almost had nothing good to say about anything. I mean, it was, it was a very negative event because it was about how the federal reserves of the world and their interest rates cuts have damaged the world economy in a way that is almost, we may not recover from it for decades. But what was interesting is that at the end of that webinar, even though I really had no good news, not, not much to share people came to me and said, I, you know, I don’t want to leave my money in the bank.

I’m going to invest with you because I think you understand the problems we’re about to face. And most of those investors were older investors, even though the folks on the web that are watching my webinars are younger investors like they’re your age or your, or younger than you. And, but that older audience actually likes the fact that I understand the impact of macro economics.

And I had to spend an incredible amount of time doing research on that and to build my thought leadership platform. And so it’s a. It’s a very intentional process. It’s a very long process. And I’ve been on that journey for, you know, since I don’t know, 2012. and, and so now we’re, we’re seeing the results of that. So encourage anybody that has that level of patient or patients to try it.

Jonathan Farber: Yes. And I was on that webinar. And to your point, there wasn’t that much positive information, but because it wasn’t a sale or some of the other people that in my mind have lost a lot of their quote unquote credit in the business, by just saying there isn’t a problem.

Real estate is great. This is why it’s better than stocks. It’s still salesy and pushy as opposed to painting the full picture, which it’s a long game. And it’s something that you’re becoming a thought leader in that space. In my mind, the most organic, and I’d say natural way by presenting all the facts and then let people make their own decisions.

So really cool stuff there, Neal, and we’ll get into all that later, as far as strategy and social, but. For those that don’t know. Do you mind just giving me a quick background on how you got into all this and where it’s led you to today?

Neal Bawa: Yeah. So I am a technologist, a recovering technologist about a successful  tech career. I ran a successful tech exit, actually worked closely with the company that you now work for NetApp, for a decade. and. As I was going through that process, I came to a couple of realizations. Number one is that you can never really get rich as a technologist. You can be well off. You can have lots of money, but you getting rich involves paying lower amounts of taxes.

And what happens is that my salary went from a hundred to 200 to 300 grand and that’s as that happened. Our progressive tax system kept taking more and more of it away from me. And, and so there were years when I was being 49.2% of my income in taxes. And I realized that there has to be a legal way around this.

And by through research, I found out that the game is rigged for real estate. Now it’s, it’s a legal process. I don’t mind doing that. You know, if, if people find that this is wrong, then they should change that lobby to change the laws, right. Talk to your Senator or Congressman. But what I found was that a, the richest people in the world.

All invested in real estate to a much heavier level than the ordinary investor. The ordinary investor was much heavier invested into stocks. Whereas the richest people seem to be much more invested in the real estate market. So I was like, these people know something and what, what they knew was basically the tax benefits, right?

Because the ordinary investor didn’t need the tax benefits as much, but as you get richer, you need that tax protection and tax sheltering and tax deferment more and more. And that’s what these people knew. And so I started looking into that. And then realize something else. I realized that real estate had somehow become this magical trillion dollar market without being metrics driven.

Right. So in technology we had terms and acronyms that were universal, right. So when I say bomb, In, in technology, it means bill of materials, regardless of what company I’m talking about, whether it’s net app or Microsoft, everybody knows what that means. So there was a lot of non-inflammatory nature and methodology and systems that were there in technology that were all the way across, but they didn’t seem to exist in real estate.

Everyone was making stuff up as they went along. Right. And then the last thing that I learned was that there was just a huge amount of bullshit being shoveled. In real estate. I mean, people would just say stuff that it would take less than 60 seconds on Google to prove them wrong, but they were quite comfortable thing.

It we’re in tech were terrified that someone is going to flame us on Twitter for saying stuff like that. Right. So you go to extraordinary lengths to add clauses and pauses and caveats to everything that we say and in real estate and just like. Who cares. I’m just going to say shit. Right. And so I was taken aback by how large a sector.

It was, you know, multi-trillion dollars for people to be saying this kind of shit. And so I was like, well, there’s gotta be a place for somebody who comes from technology, who is always going to be a niche player. And, you know, to be honest, it’s, it’s okay to be a niche player in a $10 trillion business.

Cause you can get to a billion. Right. So, so, so I was, I was like, I want to be that niche player. And say it as it is. And I wonder, I wonder that if I say it as it is when I drive people away, because that’s what I’m going to end up doing. I’m going to drive people away from my argument because they don’t like my argument.

How many of those people will stay behind? And how many of those people that stay be fine will become. Raving fans, right? Because every company in the world needs raving fans. And as it turned out, the answer is a very substantial portion, stayed behind and a very substantial portion become raving fans on the internet.

Right? So now there’s 6,000 people a year that take one of my courses. And what’s interesting is that I don’t even get their email addresses because of course it’s courses on But they seem to come find me. Right. Which is the best definition of raving fan. They go take a course and then they’d search on the internet.

They find me and then start to follow me. And so the answer was, if you tell the truth and you make it as unvarnished as you can, I’m sure I have my opinions and my own feelings. A very substantial number of people start to follow you when you start to get a lot of word of mouth and you yourself before this interview started talking about how you found your way to me and how many people you’ve referred to me.

So that process actually works. The key of course, is you’ve got to be patient about it because it’s a very slow start. And then it’s almost a. A hockey stick sort of acceleration in terms of your brand. And I think it’s easier to do in real estate because to be honest, technology is filled with people like that, that say it like it is and use F-bombs when they’re talking on podcasts with millions of people, they’re just very straightforward.

And, and I, I enjoy the fact that I am con often in conferences. Completely being the, you know, what was the guy at Nouriel Roubini who in 2006 predicted the 2008 crash. I’m the guy that basically goes up there and say stuff. Like, I think everything that I just heard in the last 10 minutes was total and utter bullshit.

And people accept that from me right there. They’re not kicking me off the stage. They bring me on the stage. Because they’re like, there has to be one guy like him amongst these 30 speakers. So eventually they named me the mad scientist and multifamily, just so that people would know this. Guy’s going to come in here and he’s going to break some stuff.

Jonathan Farber: Well, even like last night watching one of your, your neighborhood, webinars. Was interesting. It’s just using facts and numbers instead of fluff and feel when someone was doing Q and a and would just type in and say, this market’s in the path of progress. And I just loved your answer. Say I haven’t seen anything to indicate that I don’t believe that’s the case, but some people would say, Oh yeah, like I heard it was.

Or I talked to someone in that area. They’re building stuff. If the numbers aren’t there, it’s very easy to take as neutral and factual information instead of he’s right. Because, or he has this opinion because it’s not based on anything. It’s not formed from foundations. Okay. I guess just digging into that a little bit more.

a lot of this audiences is maybe out of state investors, so they’re, they are trying to acquire this information or to try to pick that golden zip code or state or city they’re reading, maybe Millichap reports or MSA reports maybe they’re lost or they’re not exactly sure. So I guess I’ll, I’ll open it from broad question. Where do you think most people get it wrong that are looking to invest at a state?

Neal Bawa: the biggest thing that I’ve seen people get wrong is that they will listen to one person that is credible. So they know a person, they, they think it’s a person that really knows what they’re doing. And that person says, you know, I like XYZ place and, and that person goes on and then provides a deep, detailed explanation of why they’d right, like XYZ place and then tells me a success story about XYZ place.

And most people believe that that is enough. Right. So understand this real estate has very high returns compared to let’s say bonds or stocks. you know, it has higher returns. It is only natural that people will have success stories in not just the best market, not just the good markets, but they’re going to have success stories in the worst markets.

Right. And that’s perfectly okay. Because even in the worst markets in the U S rent growth has been relentlessly positive for the last, you know, 10 or 15 years, except for one small dip in two quarters in 2009 and one quarter in 2010. Right? So except for that little dip, rent growth has been positive when rent growth goes up, people make money.

So the question that people really should be asking themselves is not can XYZ, who I like make money in XYZ market. The question is. Looking at the numbers, looking at the methods of the methodologies, what are better markets that I can make numbers? Where can I be more lazy? I always tell people, I want you to be very ambitious in trying to be lazy.

It’s super important to do that. Right. So the first thing I don’t want you to do is to basically say I’m going to go to a market that is, that has the most job loss in America at this point. It’s, it’s a, it’s a market in Louisiana, right? I can’t remember Lake Charles. Right? So Lake Charles at this point has lost a humongous number of jobs in the last six months.

And, and there are people who say, I’m going to go to Lake Charles and because there’s jobs being lost, there’s going to be a lot of deals to be had. And I’m going to grab one of those deals and I’m going to bargain like crazy. I’m going to make lots of money. And the answer is maybe you will or you’ll lose your shirt.

Right. What I’m telling you is that what you’re doing is actually something that you would never consider doing after I gave you this example, right? So you’re in a plane and you’re going from Los Angeles to New York and the plane goes at 550 miles an hour. Right. And, and when you were going on that plan, you’re going to this place Lake Charles in Louisiana, what is happening is that the plane actually has a 200 mile headwind, right?

So now the plane is not going at five 50. It’s going at three 50. Right. And not nothing that you can do is going to make the plane go faster than three 50. You have to understand you have no power to make it go faster. Right? It’s going to go at three 50 no matter what, the only thing that you can do is you can run from the back of the plane, to the front of the plane.

And now you’re going at 350 miles an hour and one millions. Right. That’s all you managed to achieve. Right. And people think that they have the power to achieve more. No, you don’t. That’s all you did. You ran from the back of the plane to the front of the plane. It’s speeding up the plane by a million of a mile.

Right. And you gave yourself lots of kudos for that. And then you can have a plane that’s going from New York to Los Angeles. And that plane is going at five 50, but it has a 200 mile tailwind. Right now that plane’s going to go at seven 50, once again, regardless of what you did, regardless of how marvelous or handsome or amazing you are, that plane’s going to go at seven 50.

Right? So what I, what I tell people is real estate is this river that’s flowing and you doing anything with it is not going to stop the river. You cannot bam real estate, right? No, one’s powerful enough to do that. So the best thing that you can do is figure out which river is flowing in the right direction, the fastest and jump into that river.

As opposed to saying this guy made a lot of money in this one place called Dalton or, you know, or, you know, Dayton, Ohio. And they knew how it was not a bad place to invest in, but I use it as an example because I’ve heard some horror stories right there of people that jumped in because other people were making money and.

And to me, I think that from the numbers perspective, purely Dayton is not a good place to invest in. I look at five main characteristics when I’m looking to invest in cities and there’s many others. And over time I’ve refined my formula and has lots of other pieces to it. But I think part of the average Joe investor, that doesn’t have huge amounts of money to spend on software and technology.

These five really lead you in the right direction. There’s population growth. There’s income growth, there’s home price growth, there’s crime reduction and there’s job growth. These are five big metrics that you should track for any city that you’re looking at. And these metrics are not like magic. You can make money in a city that does poorly on all five of those.

But what I’m saying is you can’t be lazy. You have to work your butt off. You have to be very lucky and you have to, you get the timing, right? Like you don’t want to be in one of those cities in the middle of the Corona virus pandemic. Right. If you’re in that city in 2017, you’ll do well 2018, 2019. Yes.

  1. No, you’re going to have serious problems getting your principal back in one of those cities. So understand that today in May, 2020 in the middle of the coronavirus pandemic is a very good time to understand why metrics matter. Because high quality cities are still doing well. Rents are holding up.

Occupancy is holding up, but lower quality cities from the metrics perspective, they’re not lower quality, but from, you know, from the metrics perspective, they are, are not holding up. They’re already starting to see rent Spall. We’re already starting to see occupancy fall. We’re already starting to see people lose, population.

There’s a very easy way to test this out type in Columbus, Ohio. Population growth into Google and Google is going to give you a very nice graph and that graph is going to have three lines. And I want you to notice that Columbus, Ohio, every time a recession starts, there’s a big spike there. Like more people come into Columbus and you’re like, where are these people coming from?

Well, look at the next line on the spike. And you’ll see a city called Cleveland. And you notice that every time there’s a, a decline, every time there’s a recession, there’s a downward spike in Cleveland. Those are the people that are going to Columbus. So it’s very important to plan for recessions in your business plan.

When you’re, when you’re looking to invest in real estate, a lot of people just simply ignore the fact that that recessions are going to come in, whatever city you are looking to invest in. Right. Do that, that do that population growth thing on Google and make sure it’s a city that doesn’t lose population during a recession.

If it’s steady Eddie, like Cincinnati, Cincinnati seems to just ignore recessions. Right? So it’s steady. There’s, there’s no loss of population. There’s no gain of population. People who live in Cincinnati, like living in Cincinnati, they’re going to live there all of their life. That’s great. I like that. But people in Cleveland seem to think that this is a city, that’s an in-betweener for them, right.

They’re just, you know, coming from somewhere and going somewhere and they’re living in Cleveland for a while in the middle. And so when the recession happens in a burst, they all leave. So those are cities you have to be very careful about. And these five metrics really help you determine. Which cities are stronger and which cities are fundamentally weaker fundamentals matter during a recession more during a bull run fundamentals, don’t matter.

We’ve all heard of stock markets that have two kinds of investors, right? The fundamentals investors. And the momentum investors, right? And often in the stock market, you get these momentum stocks and you look at them and from a fundamentals perspective, you’re like Warren buffet is never going to touch this stock.

Right. Cause the fundamental stock, but the momentum is incredible and I’m going to make lots of money. Yes you are. Right. The question is how well can you time your run? Right. The same sort of thing happens with cities. There’s going to be a lot of people making money. For example, in Detroit, Michigan, I mean, I think more money.

I made more people. I made money in Detroit than anywhere else in the last six or seven years. My question is, did they all exit in March, 2020? Because if they didn’t exit, that is going to balance out. I don’t know how much but school that is going to balance out in the next 12 months. Right. So I’d much rather look at how much the money they made in a year from now, then looking at it today.

Jonathan Farber: Makes total sense. And. Well, just from learning about you the last couple of months in quarters, and then speaking to other people in the space, these are some simple metrics that I think oftentimes to your point, initially, people they kind of overlook, or maybe they’re just momentum investors in real estate where they know someone that put a tutorial on BiggerPockets about how they did a successful deal and had a high cap rate and all this, but it’s not backed by anything.

So. Well, I like that a lot about your strategies and your teachings is they seem to encapsulate kind of the best of everything or the safest ways of everything. Not nothing is binary, nothing is good or bad. There’s all facts and statistics behind it. But I like about your strategy for the everyday investor, someone that’s considering it.

It seems like to me, it gives you the best chance to be successful from a cashflow perspective and a slight appreciation perspective and a future growth. Potential now exit strategies differ. And some people are just looking for our cashflow, play versa, get in and hold forever type place. So they do differ.

But is that kind of your methodology or way of thinking and teaching that these five pillars and this outlook of teaching is to help people just from an overall standpoint of cashflow appreciation and safety for the future.

Neal Bawa: Absolutely. And within the five pillars, and by the way, there’s 10 pillars. There’s five for cities and five for neighborhoods within these 10 pillars. When I teach them, I point out certain metrics that are more important for appreciation. And other metrics that are more important for cashflow. So you can have your cake and eat it too. For example, if there are metrics such as a median household income at the neighborhood level, if you’re investing between 40 and $70,000 of median household income, that neighborhood is going to be a cashflow neighborhood.

The moment you go over $70,000 of income in a neighborhood. It becomes an appreciation neighborhood because above 70,000, your cash flow is going to be low because the homes in that neighborhood are going to be too expensive to cashless. So when you’re buying a rental property or a duplex, it’s not going to cashflow well, but the incomes in that neighborhood are high.

And one thing that we’ve noticed is when incomes in the neighborhood are high, they tend to stay high and get higher over time. Right. Not maybe in the middle of the coronavirus pandemic, but a year from now, they’ll start blowing up again and they’ll probably go up faster than a neighborhood that’s at 40,000 or 50,000.

So now you get a significant amount of appreciation by going in, into an area where people have higher disposable incomes, because people with higher disposable income spend money and they attract other businesses. And when those businesses come in, It results in a good cycle. And then, you know, home prices go up again.

So you get that appreciation. So you don’t get that positive cycle unless incomes are rising very strongly. So my point is that within the metrics, you can take a cashflow approach. You can take an appreciation approach and you can take a dual approach. So I tell people our dual approaches, it is on a neighborhood level, 55 K to 70 K is a dual approach because now you’re buying in a, in a B area, not a C area, right?

Lots of people on the web say things like I’m buying a C class building or a B class building, but here’s, what’s our after years of searching. I could not find a succinctly written statement that says here’s an A-class, here’s a B class here to see class. Because what I realized is that these were words invented by brokers who twist and turn every B in a B building into a and every C building into B based on whatever argument they want to make.

So what I realized is. I have to create my own BNC methodology. This is not the common methodology. This is just what Neal Bawa thinks. And from what I found 40 to 55 K of, of income in a neighborhood made it a seed neighborhood right now. It could be an, a building. If you build a brand new building in a C neighborhood.

It was in a building in a C neighborhood. Right. You couldn’t get, but you couldn’t make that building in a building an, a neighborhood just because you built it. Right. The neighborhoods income, it controls the quality of that neighborhood. And then once you’re beyond that 55 K to 70 K, that becomes a B neighborhood.

And then from 70 to 85, K it becomes a B plus neighborhood. And then beyond 85 K becomes an 80 neighborhood. Right. So as those numbers go up, I found that there were. There was such an incredible amount of bullshit being peddled. I mean, there were people selling C minus neighborhoods as AA neighborhoods in print saying those things.

Why? Because they Starbucks had opened up. So as it happens, Starbucks is not just looking at income of neighborhoods. They’re looking at streets with high levels of traffic. So if there’s a street with a hundred thousand cars a day, and there’s an intersection with another a hundred thousand cars a day Starbucks, doesn’t give a damn if it’s a C neighborhood or B, they care about the fact that there’s 200,000 vehicles, they’re going to cross that area and see the Starbucks sign.

Because they know that they’re going to get a massive number of people that are going to stop there. Right. And that’ll become their daily place to stop for their coffee. So people make these justifications up. So what I said is I’m going to, I’m going to do two things. I’m going to come up with a set of metrics and then I’m going to stick by them.

And the stick by them part proved to be horrendously painful for me. Because I had to give up on 75% of these very lucrative opportunities where I had investors banging down my doors to, to invest in them, but I couldn’t invest in them because they didn’t match the metrics. And so that part of it became very painful when I became successful.

And also it forced me. To take my statements back, which was horrible. So I’d go to a conference and I’d stand up and I’m answering questions that is 500 people in the room. And there, you know, somebody is running around with a mic and asking me questions. And so this guy says, you know, you, I, I saw in the podcast last week that you said you shouldn’t invest in Boise, Idaho, but for the last three years, all of your podcasts, that Boise is the best place in America to invest.

You are not consistent. You don’t know what you’re talking about. You’re right. You’re, you’re a fraud. And then I had to explain to them is that no, I would be a fraud. If I kept saying that Boise is a good place to invest in over the last three years, prices and Boise went up 50%. Incomes in Boise went up 12%.

So Boise went from the, in my opinion, the best place in America to invest in to one of the bubbliest places in America. It’s one that has a huge real estate bubble. So now I have to basically go back to saying, don’t invest in Boise, even though it’s got strong job growth it’s because home prices go up 17% a year when incomes only grow up 3% a year.

How does that match up? But I constantly get attacked by people saying three years ago, you said XYZ city was good. And now, you know, I’m noticing that it’s income levels are low or it’s job growth is low. So one of the things that I had to reconcile with there is no great city. There’s only great cities today.

And tomorrow they will change tomorrow. They will get hurt in Orlando has been a great city in my list for four years. Unfortunately, I don’t think it’s going to be a great city going forward because the coronavirus hits cities with international tourism, the hardest San Francisco, Los Angeles, Miami Orlando have very high levels of international tourism.

Right. Domestic tourism seems to have been hit a little bit less because people can jump into their car, Miami drive to Orlando, and they’re okay with doing that. They don’t want to go to, to, an airport and get infected. Right. So, so Orlando is going to have to deal with the fact that international tourism is going to really hurt for the next year, year and a half.

And a lot of those businesses that were relying on that tourism would shut shop over the next 12 months. So my opinion of Orlando changes, even though the underlying fundamentals are strong, this happens all the time. You know, new Orleans get hit by a hurricane. Well, it’s it’s fundamentals change.

Same thing happens with Houston when it gets hit by a hurricane, same thing happens to New York when it gets hit. So same thing happens when Amazon decides to plug in a headquarters in Virginia. So everything is subject to change. The biggest dogma is actually in sticking with the same argument all the time.

And I see people just sticking with it because they said it two years ago. I think that there’s too much of that going on in our, in our industry. Everyone needs to Revit, reevaluate everything every year.

Jonathan Farber: Okay. There’s just so much to dig into there, but so much good nuggets. okay. So. I love what you had to say earlier, and it made more sense.

They’re hearing that there aren’t uniform terms in real estate, like there are in technology. Like if you say, build the materials bomb, but the same thing in real estate, that’s C class, you go to a different city. Brokers are pointing out different properties, different neighborhoods saying they’re a or B and.

Now myself as someone that got into real estate, sort of creatively and living in a new market and then talking to a lot of out-of-state real estate investors, it is a little disturbing to see what some of these out-of-state investors are being positioned as a or B or being told from out-of-state.

without some of this data, or I guess, foundation of 10 pillars and five. Five and five. So I guess just hearing that and for someone listening, that’s considering out-of-state investing in 2020 today, they might be a coastal investor where they can’t get cash flowing or cap rate returns in their neighborhoods or areas.

how much of this information do you feel like someone needs to have in order to take action? Because what I usually ask this question as is. How much planning needs to go in before executing, because as you probably see a lot of times, there are people that maybe have paralysis analysis and they can’t take action.

So I guess just to make this as tangible as possible, how much of this research do you think someone needs to have innate and understood before they can take action? Or do you recommend taking action into an actual investment?

Neal Bawa: the straightforward answer is if you follow the system that I gave you and note that it’s a system that’s free, there’s no upsells.

You don’t ever have to come back to me. You don’t even have to know me personally, just go to, click on the location magic course, laying it’s several hours. Take the course, take the Excel spreadsheet and you don’t have to talk to me again. And. My, from what I have seen, and this is what people who’ve taken this course, you know, there’s five to 10,000 people a year that take it.

What they tell me is that it takes them now about 10 minutes to decide whether they should be investing into a particular city and a particular neighborhood 10 minutes. Right. And I built the system for that because one of my, the criticisms has been there’s lots of other great metrics that you don’t use in your system.

For example, I don’t use school quality. Right. And, and the, the metric, the, the criticism is very valid. But what I had to do was to build something that was, that was something that an end user could apply in 10 minutes to a particular address and convince himself good place to invest in bad place, to invest in something in the middle.

And the more metrics I used, the less impact they had. So what I found was that if I used crime and jobs together, Then schools actually are a variant of that. So low crime neighborhoods and neighborhoods with a large number of jobs actually tended to have better schools, almost universally. So 99% of the time that particular factor was taken care of what I was going for with simplicity.

What I wasn’t going for is completeness. There are definitely places where my model doesn’t work. For example, universities within a one mile radius tend to mess up my model because students have zero income, right? So when those, that income that zero income gets reported, those areas tend to show.

A very low level of income, even though they’re perfectly fine. So I haven’t found an easy, free way to get around that issue though. I pointed out in my course, here’s a $39, you know, way to get around the problem, right? So that not everything can be done at, at the free level, but I was very obsessed with the idea of the system has to be free.

It has to be one that. Anyone can do independently without coming back to my website for data every single year. Right? So they have to be independent and it has to be done in 10 minutes, which is why I had to give up some very important metrics. So the short answer to your question is that if you use my system in 10 minutes, you will be a 1% investor.

You’ll be in the top 1% of the investors that are investing in the United States. Now you can go from that 1%, 2.1%, by going beyond my system by, you know, buying memberships to websites like, like local market like housing like neighborhood So go from 1%, 2.1%. But what I found actually is that.

When you keep looking for another website that’s going to do better. And another and another that’s when analysis paralysis comes in. So what I tell people is if you get to the 1% level, right, don’t try and game the system to say, I want the best investment in America because you’ll never get to it anyway, right at that point, start to take action.

So what I believe is that my system, the free version, you know, is good enough. For you to start taking action, it’s going to keep you away from things that will completely destroy your equity. And, and I believe that it’ll, it’ll guide you towards cities that are going to do well. It’s going to guide you towards neighborhoods that are going to do well.

And then everything beyond that, is you, your ability to negotiate your ability to manage your ability to exit at the right time? None of that is, are things that I control. Those are X factors that you have to focus on, but I don’t want analysis paralysis. So I w I hesitate to say that after you look at my system and you look at a neighborhood and look at a city now go and do like a lot more research.

No, all you have to do is boots on the ground, because remember my system, doesn’t tell you things like, is there are, is there a row of four pawn shops next to this property? Or is there, you know, a prostitute group standing there every evening at six o’clock in the evening? Or is there a group selling drugs on the other side of the street?

Right? Or are there boarded up homes? It doesn’t tell you any of that. So what I would suggest is use the system. If it looks good, get on a plane these days, of course, getting on a plane is a little challenging and people are telling me, so what should I be doing? And my answer is very simple, very, very simple.

Use this wonderful website called Craigslist, right. Spend $10 and post a job. And that job should say something very specific. Here’s an address. And what I want you to do is to, I use Google maps and, and, and draw that address printed out on a piece of paper and then draw out every single street that you want somebody to look at using a red pen.

Right. So draw all the streets. And I usually go kind of in a square concentric level around the area. Cause I want to go out one or two blocks in each direction. Right. And then, so draw back and then take a picture of it. Then go to Craigslist, spend 10 bucks and post in the city that you’re going to, let’s say you’re going to, you know, Louisville, Kentucky, and you’re going to a certain part of Louisville post that and say, I need somebody.

Who has a car to go and drive these streets for me and upload a video to my Google drive account. And this in this video, I want you to start at this home, stand outside and look at the home directly and then pan to the left very slowly and then pan to the right very slowly. And then I want you to get into your car and start driving in one of those two directions, go around the house.

And then when you finish up, I want you to finish up exactly where you started. This video should be at least five minutes long. I prefer it to be 10 minutes long and have that person uploaded to your Google drive the stuff that you’re going to learn, watching that video. You would not learn if you were there yourself because you would not have the discipline to do what you told other people to do.

Jonathan Farber: Neal. That is some of the best advice I’ve ever heard on this podcast, or just real estate investors in general. I, I, that is. That is so tangible. Like anyone it’s basically overcoming anyone’s excuse to say I can’t do it in general, or I can’t do it right now. And acknowledged in technology, you can.

Neal Bawa:  There’s people that will answer that ad in 15 minutes, you’ll be forced to shut your ad down an hour and a half, because there’ll be so many people bombarding you with requests to do this job because everyone on the planet has a phone.

Pretty much everyone on the planet has a Google account that they can upload this to. Right? So th th the, this 10 years ago, when the smartphone, you know, 11, 12 years ago was just coming in really didn’t happen because people would do all kinds of cloogy things with cameras. And, and then, you know, the, the, the video wouldn’t work and sometimes it was MP4 and just all kinds of trouble.

Now, none of that stuff matters at all. So you have boots on the ground at every city, every neighborhood and every little rural area in the world. You’re 60 minutes away from getting a video. I once did this in 60 minutes. I posted, I already had something written up, so I cheated. I posted it and then 15 minutes later, somebody called me and he seemed very articulate person.

He was a local student. He lived about two blocks away from the home. And I said, when can you do this? He said, Look, all I need to know is that you’re going to pay me. And I said, yeah, I’m going to pay you through PayPal. I’m going to pay you $30 deposit right now. What’s your PayPal address? He read it out to me.

And while I was talking with him, I tapped on my app and I said, okay, you now have $30 in your PayPal account and I’ll send you $50 more when you, when you send me this video. And so he’s like, Oh, I’m on my way out the door. And then about 30, 35 minutes later, the video appeared on my phone because he had sent it to me as a, as a dry bling.

And in that instance, I actually, that was one of those properties where actually the property looked a little too good to be true. And I immediately learned why by just watching the video. So it saved me a humongous amount of time and, and airplane fairs and things like that because eventually I would have figured out why this property was too good to be true.

and, and, you know, basically the problem was the property was right next to areas that were, that were retail stores for marijuana. And wild marijuana was legal in that area that had created a bunch of a nexus of undesirables in that particular area. You see what I mean? So there were, there were these warehouses that one, after the other were all leased out to marijuana and that created all kinds of problems in the evening and night.

Right. I didn’t know that, but it was very obvious once I watched this video, that that was the case. So I do give people instructions, like, you know, hold the phone, take a friend with you so that he’s holding the phone. you know, make sure you don’t hit anyone. You know, all of those sorts of things have to be mentioned.

but, but I think what people don’t do is they don’t challenge themselves. The other thing that they do is they believe greatly in their own competency and the fact that everyone else is. Incompetent and can’t do what I do. And while I learned a long time ago that I was the most incompetent person of all, because I only have eight hours, but the rest of the world out there has an unlimited amount of time.

Because of that in almost every situation, I am the least competent person because I ended up not doing a bunch of things. So over time I started to rely on systems, processes and on management rather than trying to do everything myself.

Jonathan Farber: Okay. There’s a lot there, but just for the sake of time, Neal , everyone can check a lot of that stuff out. So can you just bring us up to where you are today in the business and what your day to day looks like?

Neal Bawa: so I apply the system that I talked about to multifamily student housing, senior. Haven’t done senior housing yet, but public storage. That’s my portfolio, about 265 million. There’s about 3000 investors that are registered and looking at our projects there in eight States and all of them, except for one, which I’m not going to do again, our Southeast Southwest.

so, we, I hang my shingle on a website. multifamily That’s multifamily followed by the letter We do about 50 webinars a year. Some are town halls, somewhere webinars there’s one every week. There’s one. there was one this week, about 50,000 people. Watch those webinars. The webinars only have one.

A strict requirement. They are deep dive knowledge based of webinars. And if there is a pitch it’s restricted to 30 seconds somewhere during the webinar. So a lot of people love them. They enjoy coming and learning the location magic course that I mentioned to you that talks about these 10 metrics and how to, how to measure them.

Is on the same website. So you can go to And then click on courses and click on location magic and take the course and rest assured no one will ever send you an email trying to sell you a CD or some 10,000 or a hundred thousand or a million dollar course. That’s not going to happen.

So, it’s, it’s it’s for you and hopefully you pass it on.

Jonathan Farber: And I can attest to those I’ve been on just since being exposed to your content. quite a few of those and. To your exact point, there’s no sale. It’s just tactical applicable information. That pretty much anyone who’s looking to invest in real estate should have, or would like to have.

So, very cool Neal, just for the sake of time. if it’s cool with you, I guess we can go to the, the rapid fire kind of show, wind down and talk about some tangible stuff day to day and, get you out of here that way.

Neal Bawa: Ready!

Jonathan Farber: Okay. Awesome. networking. Everyone talks about it. You hear it, you’re an average of the five people you hang around, any advice for the people out there or anything repeatable that you do on a day-to-day basis, as far as any masterminds, ways that you network groups, you’re a part of, how you like to surround yourself with the right types of people.

Neal Bawa: Yeah. right. A strategy of networking. How many people have a written down strategy of networking? I often in my webinars talk about a written strategy of networking. Go when you’re going to a meetup, how many people do you want to meet? How many people do you want to talk about? How many business cards did you follow up on the next day?

Did you follow up within 48 hours? Give yourself benchmarks. Networking is about taking action. It is not about talking with people and shaking their hands. Whether you’re doing it virtually on zoom, or you’re doing it at an actual meetup, have a goal, have a system, have a target for yourself and your networking will be 10 X better.

Jonathan Farber: Couldn’t agree with that more. Do you have any systems or tools that you use to plan your time, organize your time, your weeks and your days to make sure you’re always focusing on high-impact productivity or productive tasks?

Neal Bawa: my calendar, I, you know, I, I schedule everything on my calendar. I schedule my lunch break.

I schedule, you know, time off. I schedule every piece on my calendar because what I, you know, all I have is my time. And so you’ve got to fill your time with very productive activities and do it in 15 minutes and 30 minute and 60 minute blocks. So that by itself, I think is a very key thing. The second tool that I recommend to everybody, and I believe, I believe this is the greatest book of all time.

It’s called the miracle morning. That is a great tool because it allows you to structure your morning and your day. And it allows you. If you follow it, you’ll read it. A hundred times more books than you would read otherwise. That’s why I call it the greatest book. Not because you know, the books read by itself, but it gives you the gift of reading. So check out the miracle.

Jonathan Farber: Awesome. Okay. How’s awesome. So we will link all that, Just from following your content, your webinars, and just talking to your, you’re definitely a very technically savvy person. And just also your technology background. there’s probably too many to answer or given just one question, but what are some of your favorite, apps, tools or websites that you think most real estate investors should be living on or have, have opened on a day-to-day basis?

Neal Bawa: well, obviously Excel is one, but beyond the beyond Excel, I, I want you to understand that real estate is a team game. It’s a team sport. So learn the collaboration tasks that, apps that other people in the trade are using these days more and more people are using free Slack accounts. Use that because what you don’t want to be doing is sending emails.

Email is evil. Slack channels are forever. So even though that Slack bothers you as much as email from a disturbance perspective, but it’s very powerful. So look into Slack as a tool. I think it’s incredibly, incredibly powerful. And secondly, don’t hesitate to pay for tools in real estate. I find that people are looking to buy a $200,000 home using $50,000 of their hard-earned money and are afraid to buy a $39, report from

So it’s not about the tools. It’s about the mentality that today information is extraordinarily cheap. The $39 report from neighborhood scout used to cost $1,000 in the eighties. And because of the democratization of the internet, it’s now a 40th of its price, but it’s not a 40th of its value.

Jonathan Farber: Hmm, that’s a great tip with so many data points and mediums out there. What are your favorite ways to stay educated? What platforms and any specific people you like to follow on those platforms?

Neal Bawa: I do podcasts, but I don’t like to do chain podcasts. But what I find is that if you find somebody that you think is like you, then you may want to continue following them, but don’t follow them from podcast to podcast, which is natural. Like people just listen to every single podcast that somebody has. I like a guy named Victor Monash, personal friend of mine, and is very, data-driven used to be a technologist at Microsoft and, and.

You know, so I, I like to follow him, but what I don’t do is listen to the espresso podcasts every single week. What I’ll do is I listen to three or four podcasts and they’re seven minutes each, which I like really. And then, then when I finished the podcast, I look at what are the things I’m going to schedule on my calendar today based on what was in the podcast.

So that last step I think is what most people miss. They listen to a podcast and they go, this was a great podcast. I listened to a podcast and I go, I need to immediately put something on my calendar.

Jonathan Farber: So good. Neal, any tips or, day-to-day applications of virtual assistants leveraged time savers, things you do to run your business.

Neal Bawa: I have a feeling you’re going to say yes. So the, I, I claim to be an expert at using virtual assistance. So I have 27 employees of which 19 are virtual assistants. 12 of them are full-time employees. They’re mostly in the Philippines though. There are some in India and some in other countries. I find that virtual assistants are like magic.

I tell people that I live better than a King did a hundred years ago because. I have both technology. I have the fact that, you know, things that used to cost $10,000 to build an hour, $10 to build. and then I have. All these people helping me run my life. All these people helping me run various aspects of my life.

So I can basically relax at home and work less. So I do a lot of podcasts. If you type in Neal Bawa, virtual assistant, you’ll see a lot of podcasts. Listen to them because this, this topic requires a lot of, you know, thinking it’s not something they can do in two minutes. To me, the biggest magic of all in real estate is the use of virtual assistants because I’ve never seen an area that can benefit more from the use of virtual assistance than real estate.

So if you’re not using, if you’re a beginner in real estate, use virtual assistants, if you’re, if you have a billion dollar portfolio, use more virtual assistants, but there’s no scenario in bitch, you cannot get better. Very, very fast. By using by using virtual assistance. Every scenario we’ll see an immediate increase in your productivity.

Jonathan Farber: Quick while we’re on it for a beginner real estate investor. Now who’s maybe saying they don’t have anything for a virtual assistant to do what would be the first task that you think someone as a beginner could use a virtual assistant with help for.

Neal Bawa:  Firstly, write down the things that are preventing you from doing real estate, because you’re too busy and assign those things to a virtual assistant.

If you are, if you’re like, I don’t have the time to write a process, you don’t have to write one. Do you have this thing called a smartphone? Does it have a voice recording application? Speak for five minutes, make mistakes, go backwards, change things, speak. They’re very smart. They’re going to figure it out.

Just speak to your phone. That’s all you need. Five minutes. 90% of the tasks that I assigned are either at screen captures with the audio or just me speaking to my phone. And yes, it’s not as perfect as you designing that seven page document with screenshots that you never will have the time to do. But it gets the job done and it gets it off of your head at the moment that you have the urgency, because two hours from now, you’re not even going to care.

Right. You’d never going to actually get it done. So when it happens, when you’re like this needs to be something that’s done by a virtual assistant, make sure that within five seconds, the voice recorder app on your phone is on.

Neal, what’s next 

Jonathan Farber: for you in 2020 and beyond 2020. What’s next for me. I have no idea.

Neal Bawa: I’m I’m, I’m still reeling from the coronavirus pandemic. I’ve never felt so out of sorts because I could deal with, the 2008 pandemic because I could look back at the past, no, not pandemic, but you know, recession. I could look at, you know, 2001, these were recessions recessions happen all the time, but the Corona virus is a.

True black Swan events. So I don’t have no idea what next year looks like for me. My focus right now is simply to do a better job of managing my properties and protecting my investors. My messaging to investors is consistently I’m not giving you any cashflow. I’m holding all the cash cashflow that was giving you I’m building war chest, because I don’t know how bad this is going to be.

And from what I’m hearing people in real estate frivolously, nonsensically say stupid things like, Oh yeah, the worst is over. And they don’t. It’s like you don’t understand macro economics, right. Two months is far too soon, but the kind of damage that hurts real estate to happen, that damage will happen in six months in 12 months in 18 months.

It kind of happened today. That’s not how real estate works. So what’s happening for me in the next year. I have no idea. I mean, I’m in a fog right now.

Jonathan Farber: Okay. maybe the next year, it’s a good segue into anything fun or random interests or hobbies outside of real estate. Anything top of mind, like that?

Neal Bawa: Coronavirus took away my, my hobbies too. So, I mean, I am a cricket fan. Cricket is that unknown sport, which is the second largest sport in the world that Americans have never heard of that. And they used to think it was boring when it was five days. And then they thought it was boring when it was a day. And now of course we shortened it down to two and a half hours like a baseball, you know, Game and that’s shorter.

Variant is the one that catches my attention. So for the moment there’s no cricket. so I grow tomatoes. So my, my most successful video is one on my Facebook that talks about, you know, kind of growing these monster tomatoes that take over your garden and. Threatened to kind of, you know, run out to the, to the block.

And then at the end of that video, I talk about how I generate a million dollars a year of equity by, by using that tomato garden in the back. So if you’re interested, go to my Facebook group, magical multifamily and watch my tomato video.

Jonathan Farber: Awesome will do. And we’ll post that. Is that the best way, or what is the best way for people to learn about you follow your content or connect.

Neal Bawa: I think the magic of multifamily groups. So, you know, go to Facebook and take magical multifamily. All of my content is posted there in some way or the other. So if over time, you’re part of that group, you’ll get to see all of it.

Cool! And Neal, 

Jonathan Farber: last question of the show. It’s often said and, and discussed about bring value to people as a way to start the relationship off in the right way. what is a way if there is one that if someone wants to reach out to you to bring some value, they could do.

Neal Bawa: I think the answer is really straightforward. If you believe you can bring value to me, reach out there doesn’t need to be a menu or a list. just understand that many other people are doing that.

So I may not respond to you, but there is no harm in reaching out to me saying I can bring value to you in this way. You know, and I generally, I might have a short response, but I will respond back to you so you can, you know, you can find my email address through, you know, It’s Neal, [email protected]. If you think you’re bringing value, reach out to me. I have no objections to that.

Jonathan Farber: Okay. Awesome. Well, Neal, I was taking notes throughout this. I’ve been loving your, your content and, your information so far just since I’ve been exposed to it. So I just want to say thank you for doing all of that and thank you for coming on.

I think you’re helping and saving people so much money than, They may even know is possible just through getting a base education in something and making it a little bit more quantifiable. And I love that. you kick it off by saying you are a former, w what is the exact wording is covering technologists or covering technologists.

So, very cool. And there’s a lot of people in the tech space that, listen and can probably relate to that. So, Neal, before we hop just any last parting word or call to action for the audience. 

Neal Bawa: Yeah, know this what you cannot measure, you cannot manage, measure everything.

Jonathan Farber: Okay. Thank you so much.

Neal Bawa: Thanks so much. Bye guys,

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