Disrupting the Real Estate Game: Insights from Ash Patel
Ash Patel is a seasoned commercial real estate investor with over 10 years of experience in the industry. He got into real estate by accident while working a W2 job and has since transitioned into a full-time investor in non-residential commercial properties, including office, warehouse, industrial, medical, and ground up development.
Ash believes in out of the box thinking and is not afraid to venture into commercial real estate instead of the more popular route of residential properties with showers, kids, and pets.
Ash is also the host of a daily real estate podcast, “The Best Ever,” which is one of the longest running and most comprehensive sources of information on real estate founded by Joe Fairless – a former-advertiser-turned-real estate-investor who now controls over $2.7 billion worth of commercial real estate as co-founder of Ashcroft Capital.
Ash shares his accidental journey to success in non-residential commercial properties
- Atara praises Ash’s ability to provide valuable information in a concise manner
- Ash started as a W2 employee for 15 years before discovering real estate as a side hustle
- His first building was a mixed-use project with college kids living above a grocery store
- Witnessing the store owner replace the AC system and remodel the bathroom for free inspired Ash to become a full-time commercial real estate investor
- Ash invests in non-residential commercial properties, such as office, warehouse, industrial, medical land, and ground up development.
Ash explains how he got started in real estate and why he chose commercial real estate over residential
- Ash invested in non-residential commercial properties, including office, warehouse, industrial, medical land, ground-up development, and anything that doesn’t have showers, kids, and pets.
- Ash got lucky and was exposed to both residential and commercial properties on his first investment.
- The out-of-the-box thinking and the attractive idea of having tenants improve the property instead of causing wear and tear made commercial real estate more attractive to Ash.
- Commercial tenants improve the property and put money and time into it. If they ever leave, the improvements they made stay with the building.
Debunking the myth of triple net leases in commercial real estate
- Triple net leases are not completely passive income as many assume
- Landlords may still have responsibilities such as snow removal and repairs
- Some triple net leases are not true triple net leases
- Absolute triple net properties like McDonald’s or Walgreens have lower cap rates
- The value play is finding a property that can be converted to a triple net lease and sold at a compressed cap rate
- Ideal strip malls have a mix of anchor tenants, mom and pops, national tenants, and vacancies that can be filled to add value and convert to triple net leases
Insights on High Cash Flow Triple Net Leasing Deals
- Ash started as a real estate investor accidentally but ended up falling in love with it after having a mixed-use project with college students as tenants.
- He invests in non-residential commercial real estate such as office, warehouse, industrial, medical land, ground-up development, and triple net leasing.
- Ash offers 15% cash on cash returns to his investors, but the first deal he syndicated offered an 18% pref with a 30/70 split, which now has a valuation of 7.5 million.
- In the current market, Ash is still seeing high returns but no longer needs to offer astronomical returns because the market is paying six to 8% pref and 15 to 18% IRR.
- Ash prefers any investment that can make a lot of money upfront or at the end, whether it’s high cash flow or lower IRR.
- Ash shares an example of buying a triple net strip mall from the developer before the tenants moved in. The initial cash flows were 12% in the first year and went up by 2% annually. In five years, they can raise the rents to market prices and hit a home run.
Ash shares tips on sourcing amazing real estate deals
- Mis-marketed or mismanaged deals
- Partnering with wholesalers who can’t value the properties
- Finding properties before they hit LoopNet and CoStar
- Smaller brokerages and networking
- Looking where no one else looks
- Going to bizbuysell.com and asking to buy the real estate along with the business being sold
His passion for real estate and what drives him to invest in it
- Ash finds passion in finding a deal and putting it together before anyone else does
- He enjoys the process of turning a property around and seeing the businesses that benefit from it
- Ash forms friendships with commercial tenants and enjoys being around them, as they are business owners trying to grow just like he is.
Ash discusses his history with Joe Fairless and investing in his deals
- Ash was interviewed by Joe Fairless for his podcast in 2015
- He invested in Joe’s deals, initially feeling skeptical but intrigued by the potential for high returns
- Ash and Joe became friends over the years, with Ash eventually joining Joe’s podcast as a guest
- Ash’s two partners in his investment firm are both women who balance him out well
- Despite the current market uncertainty, Ash’s firm is buying more than they did two years ago
- They are stress testing every deal more heavily and being cautious about economic headwinds such as rising interest rates and vacancies
- Ash advises everyone to stress test deals and be cognizant of the risks of losing other people’s money, even in uncertain market conditions.
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About Atara Twersky
Atara Twersky, is a real estate owner, sponsor and syndicator. She is principal and founder at Ascendo Capital LLC. Atara is also an attorney in NYC and the bestselling author of the children’s book series, Curlee Girlee, inspired by her own young curly-haired daughter Atara is the host of a popular Real Estate podcast to help women understand their Real Estate Investments options so they can be informed investors. For more information on Real Estate investment listen to Atara’s podcast Bridging the Gap: Real Estate for Women.