How to succeed in real estate while working as a busy professional?

Here to talk all about it is our guest, Pranay Parikh. He is a medical doctor, serial entrepreneur, and podcast host. Over the past 16 months, he's bought over 200 million in real estate while practicing medicine full-time. He's the host of the podcast From MD to Entrepreneur.

Pranay also discusses what JV equity is and offers advice on how to bring the best people into your team.

[00:01 - 06:59] A Doctor Turned Real Estate Investor

• Pranay shares his interest in real estate, why they created a course for LPs, and how they founded Ascent Equity Group
• Coming in as JV equity, they have more power because they are bringing in pretty much all the money
• Create something of value for free long before you approach others and ask for anything

[07:00 - 14:33] Establishing Credibility and Raising Capital

• When you are connected to people that are well-known in the industry, it gives you credibility

• Having a long list of leads does not matter if you don't have deep connections with many of them
• Pranay and his team focus on investor relations and structured a model where their investors hit their preferred returns faster

[06:49 - 19:37] Building Powerful Partnerships and Teams

• Pranay was able to scale the company while working as a doctor with the help of his partners

• Hiring the right people is also key
• You're not going to get hiring right all the time and you got to be willing to do an experiment
• Culture fit is critical
• Don't have the person who has a need to make the final decision on the hire

[19:38 - 22:55] Closing Segment

• Pranay talks about their recent success
• His advice: always work to build your list
• Reach out to Pranay!
• Links Below

• Final Words

Tweetable Quotes

"Not only do we bring in all the money, we handle investor relations. We have a vendor network that's nationwide because we work with so many people." - Pranay Parikh

"If you're in some other field, it's like, oh, you know, these doctors are playing real estate. But now we've been doing it and now we're actually one of the biggest in the area." - Pranay Parikh

"People spend so much time and cognitive bandwidth on the hiring process. Just know that it's a trial." - Pranay Parikh

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Connect with Pranay at AscentEquityGroup.com and email him at [email protected].

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Want to read the full show notes of the episode? Check it out below:

[00:00:00] Pranay Parikh: If you could focus a hundred percent on real estate and none on your financials, how much would you grow? 200%, 300%, right? Sky's the limit, right? And it's not just providing capital, it's taking your investor relations, like basically, you convert your whole financial arm into acquisitions and asset management. So there are companies that have been built with the same thought process in the beginning, you know? They don't even have systems built out to accept investors.

[00:00:41] Sam Wilson: Pranay Parikh is a medical doctor, serial entrepreneur, and podcast host. Over the past 16 months, he's bought over 200 million in real estate while practicing medicine full-time. Pranay, welcome to the show.

[00:00:53] Pranay Parikh: Sam. Thanks for having me. Super excited to chat.

[00:00:56] Sam Wilson: Absolutely. As am I. Pranay, there are three questions I ask every guest who comes in the show: in 90 seconds or less, can tell me where did you start, Where are you now, and how did you get there?

[00:01:05] Sam Wilson: Yeah, so

[00:01:05] Pranay Parikh: I started in the Bay Area, born and raised, went to school at UCSD, and then medical school and trained at USC for residency. So kind of born and raised and lived in California. But I've lived all over. I practiced medicine, but I realized that I always needed to do something up with my money to be smart. I got into real estate. I realized that active real estate, it's a lot of work. I don't want a second job. So that's when I found passive real estate. I realized that there wasn't any good resources for an LP for an investor, so we created a course. We've had thousands of people take it. But after graduating our course, most people said, you know, actually now after I'm learning all this stuff, I don't have time for this. And can we just invest in the same deals you do? Maybe we can come together, get better terms, better bargaining power, and that's how Ascent Equity Group got created.

[00:01:59] Sam Wilson: Wow. Okay. I like that. So let me just clarify then you're not an active sponsor. You pool money from your investor network and you guys come in as one single check investor into deals. Is that about the sum?

[00:02:13] Pranay Parikh: Correct, correct. But the way we come in is is unique. So we come in as JV equity. So that's how, you know Blackstone, Goldman Sachs, they don't have, you know, their people in nice suits walk around on the property doing maintenance and leasing stuff. They partner with boots on the ground and what they do is they bring in operational efficiency. So we actually have a full asset management team and we could take over if needed, but instead, because someone else is focusing on leases, maintenance, all the stuff that's super important but doesn't move the needle in profit, we're really focused on how do we maximize profit. And because we work with sponsors all over the US, different property managers, we are able to pick and choose what works and implement it everywhere.

[00:02:56] Sam Wilson: Tell me about the JV equity process. This is not anything I have personal experience in, so I may not even know the right questions to ask necessarily, but can you give me kind of the breakdown of the way the deals are structured? You know, basic terms that we should normally look for or that you, of course, you can structure anything in what you want, but maybe the way you guys do business, if you don't mind giving us kind of the backstory on that. I'd love that.

[00:03:21] Pranay Parikh: Yeah, so JV equity means we bring in 80 to 97.5% of the equities, pretty much all the money in the deal, right? And that comes with some rights, often called major decision rights. And you know, it varies on each deal, but we can tell them to buy, to sell. We can change the name of the property if we want. Basically, we have investor override for any and pretty much every decision we get to approve the budget, which is a big deal. We get to determine what capital calls happen and when they happen and who's responsible for them. So it gives us a lot of power and we're able to do that 'cause we're bringing in pretty much all the money. So the question is, why would the sponsor want to give up that and give up some of their promote, right? But that's because not only do we do bring in all the money, we handle investor relations. We have a vendor network that's nationwide because we work with so many people. We have full asset management team where we're on the phone for each of our properties with property management every week, every week. You know, some of our operators weren't doing that and they had to set it up for us, but we're like, we don't care. You know, it's really important for us to find things that are going wrong immediately, you know, and we're able to go in and a lot of times increase occupancy even better than some of the sponsors are, you know? And that's because they're busy with focusing on the day-to-day stuff, you know? I'm not saying that we're better than the sponsors, but we work in hand in hand and we are able to focus on different things, you know? So because of that, they give us these rights and they also let us pick their best deals. So an example of a deal that we closed on in August, August, 2022, so, you know, two months ago. The debt on it was 2.9% fixed for nine years. That's a deal that anyone would kill for. It was a loan assumption, but, you know, it was brought to us because we bring so much value to the sponsors and we are able to pass a lot of that value on to our investors.

[00:05:15] Sam Wilson: This is a robust system that you've built, and correct me if I'm wrong, going through your bio here, 200 billion in the last 16 months. Has this all been in the last 16 months that you've built this? You know, it's kind of like celebrities, you're like, yeah, you know, I'm on overnight celebrity at 10 years into making.

[00:05:35] Pranay Parikh: So, you know, I mean you could say I started one day when I went to medical school. Right? I have that shared background with a lot of people and a lot of people trust doctors. And a lot of doctors trust other doctors. And we're cheating in a way 'cause my business partner, I have two, Mithulan Jegapragasan and. Peter Kim. Peter Kim created this brand and media company called Passive Income MD, and you know, we do which I also help him with. But there's conferences, there's a blog. There's a podcast, hundreds of thousands of, you know, the list is 40,000- 50,000 doctors on it. So, you know, we started with that, you know, and it doesn't carry over, right? You know, our list is a fraction of what his list is, but you know, that name-brand recognition helped us a ton. So we get a lot of free publicity just because him and I are both associated with the other company. So, yeah, it seems like we did a lot and we did, you know, it's not to belittle the stuff we did, but we had a really great foundation and I'd actually recommend to your audience, like, build something, build something of value that you're providing for free long before you need to ask them for anything, you know? And they'll go with you everywhere. You know, we've done a course, we've done conferences, and now we're doing masterminds. We've done, you know, podcasts. Now we do this. Like, they'll go with you because they know you, they trust you, they like you.

[00:06:59] Sam Wilson: Bringing in and having the framework to bring 97% of the equity, or up to 97.5% of it, and then knowing even what rights to ask for along the way or how to negotiate those properly with the right sponsors. I mean, that sounds like years of just kind of in the trenches, work to develop that sense of what those things should even be. Can you speak to that at all?

[00:07:25] Pranay Parikh: Yeah. You know, In the beginning, we realized that we didn't know a ton. We knew a lot about passive real estate. We knew how to look at deals, how to vet them. We didn't know how to set up a structure, right, LLC, all that stuff. So we asked around who's the best and the most expensive lawyer around, you know? And we triangulated who was the best. Everyone said this one person. They're like, okay, how much do you like, let's do it. Like, I don't care how much it costs, Let's just do it, right? And our legal fees are $20,000 to $50,000 per deal, per deal, yeah. Yeah. But you pay for more than just legal fees. You know, you pay for protection, you pay for contacts. You know, when you are connected to this firm that is well-known in the industry, people, it gives you a lot of credibility, right, that they took you on as a client. It's not that, you know, they'll take anyone, right? They had faith in us and now that we're a kind of theirs, they have a ton of other clients, and they've referred us a ton of business and it just gives us that automatic, like, hey, you guys use these guys like, you guys must be pretty legit. Like, you guys aren't some small company that's like group of people, you know, 'cause it is like if you're in some other field, like, oh, you know, these doctors are playing real estate. But no, you know, we've been doing it and now we're actually one of the biggest in the area that are doing what we do and probably the biggest non-institutional JV players.

[00:08:55] Sam Wilson: How do you find a sponsor? I mean, at this stage, let's use me, for example, put myself in the spotlight. Like, you know, we're raising our own capital, we're doing our own deals. It would be a unique and very strange shift in our business model to say, all right, well, okay, so all of our investor group, thanks. You know, now we're going to work exclusively with you. So how do you find the sponsor that is in need of 97.5% equity with the right track record?

[00:09:26] Pranay Parikh: So there are many companies, I mean, let me ask you, Sam, if you could focus a hundred percent on real estate and none on your financials, how much would you grow? 200%, 300%, right?

[00:09:39] Sam Wilson: Yeah.

[00:09:39] Pranay Parikh: Sky's the limit, right? And it's not just providing capital, it's taking your investor relations, like basically, you convert your whole financial arm into acquisitions and asset management, So there are companies that have been built with the same thought process in the beginning, you know? They don't even have systems built out to accept investors, either they have been institutional from the beginning. So one of the sponsors we work with, we did a deal with them and they were like, hey, you guys want to be Co-GP on this next deal? We're like, yeah, great. And it was a 430 million deal with Goldman Sachs and the Co-GP was 20 million. I'm like, yeah, that's a little bit too much for us. But this group, they only do institutional plays other than with us. So they actually will show us a deal, and if we say no, they won't do the deal at all because it's too small for them. So it's a way for them to get exposure to different deals, you know, different markets, and get diversification outside of institutional players.

[00:10:40] Sam Wilson: What's it been like? I mean, I know, you said you get to tap into the network that you and some of your partners already have, but what's it been like for you personally going out and raising large sums of money being kind of, and I'm not going to say it newer 'cause you're, you're ahead of a lot of people in the game, but what was that, I guess, early part of your journey, like going out and raising capital from other investors?

[00:11:03] Pranay Parikh: It is tough, you know. Even if you have a list of, like, a hundred thousand people. I actually think if the list is too big, you probably don't have a deep connection with many of them. And I think an ideal list is a couple of thousand that are pretty active. And, you know, our list, we were looking at this, we were gaining 10 people signing up for our list a month, you know? Now we get that like a day or more But in the start, it was tough, you know, just 'cause we had a list of like 40,000 people that are our ideal audience, it doesn't mean that they're going to automatically go to everything we do, you know? They're more likely do, and the people that do come over, they're going to be a pretty hot lead, you know? But it's not automatic. So, you know, we realized, I was calling people, I was texting people, you know, it's always, it's always like herding sheep and doctors are even worse. They will wait 'til the last minute, you know? Almost all of our deals will be oversubscribed by a million dollars. And that's because at the very last day, people will be like, oh, yeah, I thought I had more time. You know, And they'll be like, oh add me to the waitlist. Where were you like two weeks ago, you know? But they were working. You know, like, think about it, doctor, like how do you get time to go wire to the bank? You know, it's like totally understandable. It's tough. There's no, you know, unless you're Brandon Turner, there's no way to just be like, oh, hey guys, this deal's open. Oh, it's closed.

[00:12:27] Sam Wilson: We're full. Yeah, it is, man, herding sheep. That's exactly the way it is. And I don't know that that's different for, you know, any sponsors out there that are raising equity where it's like, oh, my gosh, okay. You know, get in and get it done. Lots of people sign up, but the ones that finally wire the money are the ones that get in on the deal. So that's really interesting. One part of the conversation there I didn't actually get to hone in on was the terms. When you guys set up a JV equity deal with a sponsor, how are the terms different for you maybe than typical splits in a syndication?

[00:13:03] Pranay Parikh: So we are able to negotiate a lot more, right? So, you know, we can get the maybe 8, 80, 20 or to 10, 70, 30 when someone else would get, you know, like an 8, 70, 30. Plus also part of the promote comes to us and we normally pass that to our investors. So, you know, 15, 20, 25% will go to the investors. So our model is, you know, there's a property level split and our investor level split. So that's how we get to pay the investor. You know, if the promote is large enough, some people will just take that, but we find the promote is not that big, so we just pass it to our investors.

[00:13:40] Sam Wilson: When you say pass it to your investors, what do you mean by that? I'm not sure I understand.

[00:13:43] Pranay Parikh: Put it into waterfall so it all, it becomes one pot of money. So like, say the sponsor gives us 10, 70, 30, right, the 10 goes directly to the investors 'cause our waterfall is Return of capital 80, 20. And then of the 70 or of the 30 promote that goes to the sponsor, they'll give us like some 15, 20, 25% of it, and then we put that into our waterfall so it goes down all the way to them.

[00:14:12] Sam Wilson: Got it. Got it. So they hit their preferred returns faster that way as well, so, okay, okay. That's really interesting. And I know all this is up for negotiation between you and the sponsor and every deal is different. Certainly, I can't think of any deal I've done yet to date that was exactly the same as the one before it, but was just really curious how you guys established terms on that. That's really cool. How have you effectively scaled this business and stayed on full-time as a medical professional? That sounds like just a lot of work.

[00:14:43] Pranay Parikh: It is. So I couldn't have done this without partners, right? So I have two other partners, both doctors, but actually both practice a little bit less than I do. And we hired people, right? We hired a project manager, we hired a director of investor relations. We have a couple of VAs that do a lot of data entry, social media, you know, and it's so a lot of people are reluctant to hire more people, but I think it's important, and especially if they are able to help you get into more deals, then it makes a lot of sense. So that plus I work nights, so I'm able to do a lot of stuff during the day, like this podcast. And by working overnight.

[00:15:20] Sam Wilson: Wow. All right. So you work all night and you work all day. When do you sleep, I guess is the question?

[00:15:26] Pranay Parikh: Yeah, I sleep like 2AM to 6AM and 8 or 7 to 11 about.

[00:15:32] Sam Wilson: Wow. Wow. That's wild. Wow, man. Good for you. Good for you. That's a schedule that sounds grueling to me, but I guess if you're used to it, then you're used to it. Pranay, tell me this. What advice would you give if there's somebody out there looking to add members to their team? What's something you did in order to find the right people to bring on? 'Cause I think that's a fear for a lot of us, myself included, is bringing on team members adds responsibility, maybe they're not the right fit, maybe they are the right fit, and now you got to find something for 'em to do all the time. How did you do that effectively?

[00:16:04] Pranay Parikh: Yeah, and you know, I talked to Brandon Turner couple of months ago now about hiring, you know, and he's hired a ton of people. And he said, you know, just expect that half the people you interview are going to suck and half the people that you hire are going to suck, right? So if you go into knowing that, and it's it's not that they suck, it's just that they're not a good fit, so if you know that you're going to have to experiment or try people out, then it's kind of different, right? You don't spend as much effort. People spend so much time and cognitive bandwidth on the hiring process. Just know that it's a trial, right? Just like you're trying different shirts on or you're trying different lipstick, you know, for the women out there. And you try it on, you get a, you know, you use it for a week and you're like, yeah, you know, this is not a thing for me. It reminds me of like the Casper bed, right? You get a hundred nights to try it on. I remember all the jobs that I was hired for that I was not even remotely qualified. So the big thing is, like, are they a good culture fit? And are they willing, are they coachable to get to where you need to be, right? And it depends also what life cycle, where's your business and the life cycle of a business, right? If you're in the beginning, you need generalists, right? People that are willing to do everything. Like, if you're probably under five, definitely under five, but probably under 10, you need people that are willing to pick up anything, any slack, you know? And they don't have shame in doing what, in medicine we call the gut work, like the stuff that just sucks, you know? Like, having to go get coffee or go get, like, call this person that just left an angry voicemail, you know? When people are busy, people are busy. If you're trying to get a specific goal in mind, then you need to hire someone that has done that. For one of our companies, we tried to get a COO, and she hadn't worked for this specific business type in the past, and it just, this didn't work out because she didn't know how to scale the company up because it was a mostly digital company. Everyone was remote and she was used to doing something else. So if it's a leadership role, you kind of want to make sure that they've done the exact thing that you're looking for before.

[00:18:15] Sam Wilson: That's a great point. I love that. And I like the idea that, it does suck that it is kind of like trying on shirts 'cause there is, I like your phrase there, cognitive bandwidth that goes into bringing on a new team member, and then what if it doesn't work out and the disappointment of it, and then retooling that and going out and then rehiring for that position. And that's a really frustrating process. And there are ways to kind of, I think, work around some of that, but then also just realizing that, like you said, half of it's just not going to work and getting used to that idea, but then the other half are going to be amazing.

[00:18:48] Pranay Parikh: Yes, exactly. And so you want to be open and willing to look at people. I heard this thing recently, forgot who said it, but don't have the person who has a need make the final decision on the hire. So if you need a marketing person, if you need a marketing analyst, for example, don't have the head of marketing make the final decision because they're going to feel the needs, right? They're going to feel the burn and they're going to be more desperate. So the final decision is made by the CEO or someone else, engineering or you know, someone that's related, but not necessarily their direct report. And I thought that was pretty interesting 'cause you're going to be so into weeds, you're like, okay, it doesn't matter. I need this person, you know? And you're going to have that like bias and it happens to all of us.

[00:19:37] Sam Wilson: Yeah, no, that's a great point. I like that. I like that a lot. Let somebody else that's not in the thick of it make the decision. That's pretty cool. Absolutely. Awesome. You've covered so much here with us today from being a full-time doctor to now going out and raising huge amounts of capital. What's one success here that you guys have had recently, maybe that you didn't expect?

[00:20:01] Pranay Parikh: We're actually in a raise right now. It should close in the next day or two. And, you know, we pulled out all the stops, right, because everyone's been telling us that it's such a hard market to raise money in. And we were fully subscribed in a little bit over a week which is pretty fast for us. You know, we typically close in two weeks. So, despite everything that's going on, we think we have a good product and a good story, so we're pretty excited about that.

[00:20:27] Sam Wilson: When you say pulling out all the stops, what things come to mind?

[00:20:32] Pranay Parikh: Yeah, and I think this is important to make sure that you're always, you know, between deals that you're always building up your list and marketing channels. So, you know, we marketed with different Facebook groups. We did a bunch of podcasts like this one, and we've just been really, really working on building up our list. We've probably grown like a 30% in the past, actually 50% in the past, like six months our email list. And that's an anticipation of the less people wanting to invest and the people who invest and investing less. So, you know, potentially we'd have 25% less money going into a deal. And so the goal was to double our email list and, you know, we'll probably be close to around 75% or 175%. So we're pretty happy with that.

[00:21:24] Sam Wilson: Absolutely. No, that's cool. I love that. Absolutely love it. Pranay, thank you for taking the time here to come on the show today. This was an absolute pleasure learning from you finding out how you have scaled your commercial real estate business. We never even got into you what it is you guys are investing in. If you can just say that real quick. That way our listeners, if they want to get in touch with you and learn more about you know what it is you're investing in, while you're on that, go ahead and tell 'em how to do that if you can.

[00:21:48] Pranay Parikh: We keep it very simple where we do value add multifamily. We don't do development, we don't do self-storage, we don't do industrial, We don't chase what's hot. We just do simple. We believe that people will always need housing, and especially now that housing is single family homes are getting too expensive. We think we have a great product for most people. And so if you're interested our website is ascentequitygroup.com. You could reach me directly at [email protected], and then I have a podcast where I talk all things about entrepreneurship. It's called From MD to Entrepreneur.

[00:22:24] Sam Wilson: Fantastic. Pranay, thank you again for your time today. I certainly appreciate it.

[00:22:28] Pranay Parikh: Thanks, Sam. I had fun.