Amir Khan - From Music To Real Estate Investing
LISTEN TO THE FULL EPISODE ON:
Amir Khan is a published composer who bootstrapped growing a music school to a $300,000/year business. Nearing retirement age, he decided to put together a 5 year plan to own 80 single family homes free and clear in 5 years. He has substantial real estate experience as a landlord, wholesaler, flipper, new construction operator and property manager. He also owns and operates a 14 unit apartment complex in Texas and has a portfolio spanning Texas, Illinois, and Ohio.
In this episode, you will be able to:
- Achieve financial freedom through strategic real estate investing.
- Unlock the potential of self-directed IRAs for real estate investment.
- Discover passive income strategies through real estate investments.
- Build a robust real estate portfolio with seller financing.
- Master the art of overcoming challenges in commercial real estate investing.
The key moments in this episode are:
00:00:00 - Starting in Real Estate
00:07:23 - Learning from Mistakes
00:10:12 - Overcoming Challenges
00:12:46 - Passive Income Goals
00:14:43 - Dream Prime Homes Strategy
00:16:26 - Financing with Private Lenders
00:18:20 - Finding Properties and Market Strategy
00:26:57 - Offering Double-Digit Returns to Private Lenders
00:28:02 - Scaling Strategy and Accessibility
00:28:29 - Conclusion and Gratitude
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Amir Khan
Some agents just get their license, and they assume that they have all the training they need. But here they're trying to work with investors and five minute chat with an investor, and they'll immediately know that you can't work with this person because they don't understand what the investor is trying to do. Not to say that investors are more sophisticated, it's just that they're coming from a different point of view. You just have to understand that. So anyway, so we did that. That went really well. Within a year, we did 50 properties that included duplexes, single family triplexes. We also set up a management company, and we did really well.
Mike Swenson
Welcome to the REL Freedom show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities and real estate. I'm your host, Mike Swenson. Let's get some REL Freedom together. Hello, everybody. Welcome to another episode of Real REL Freedom, where we talk about building time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. If you want to get started on your real estate investing journey or learn what you want to do next, make sure you check out our website, freedomthroughrealestate.com. that's freedomthroughrealestate.com dot. We have a lot of great articles. All of our podcast episodes are up there for you to learn and figure out what's going to be your best path of where you want to go in real estate. Now, for today's episode, I'm excited because we always have people that come from different areas, different backgrounds to be able to also double dip into real estate. And so today we actually have somebody that comes from a music background also doing real estate as well. So I have Amir Khan. He's been involved in real estate for 20 years, a business owner for over 14 years. You have a music school in the Dallas area that you've run since 2009, grew it into a $300,000 a year business. Real estate experience includes single family homes, multifamily landlord, wholesaler flipper, new construction operator, property manager. You own properties in Texas, Illinois, and Ohio. And so we're excited to hear more about how you're doing that and how you're building and growing that and what you want to do with that in the future. So welcome to the show. We're so excited to have you.
Amir Khan
Thanks, Mike. I'm excited to be here.
Mike Swenson
So why don't you give us a little bit about your background outside of real estate, and then why real estate? And we'll go from there.
Amir Khan
Sure. So I'm not going to bore everyone. I know your audience is interested in learning how to passively and earn income through real estate investments. So I'm not going to bore with my personal information, but I'm going to start by saying what my real estate journey started in year 2000. And my music school, I'll mention that because it was around that time that started as well. So right around year 2000, I was in Dallas. I was working for my brother. I was in working for him. And it was in commercial real estate, but it was a job. And I always wanted to be an entrepreneur. And I quit. And I just, without any training, I just started buying homes. And it's like classic example of not knowing anything. Now, I did read, I started with Carlton sheets, you probably know, no money down. And so I read that years ago. So that was there. But the first, I still remember my first property was a duplex in Fort Worth, Texas. A huge home. I think it was three bedroom, two bath upstairs, three bedroom, two bath down. Huge property. But it was an older home. So without annoying anything, I had gotten into real estate as a landlord. But right around that time, I had a friend of mine who was also in Dallas, and he asked me, hey, what are you doing? And he was a business owner as well. And I told him, hey, I just started buying homes and I'm figuring this out. And he said, well, why don't we work together? And so we formed a company and it was pretty interesting. We very quickly decided what we wanted to do, even though while we were learning, he ran at that time a very profitable dance school in Dallas. And so he had a lot of high net worth people that were his clients. And so we started what we were, we started doing this. We would buy homes from wholesalers in Dallas area, most like it was mostly in Fort Worth, Texas. And we would buy homes vacant. And these were all low price point, I mean, 60, $70,000 homes. And we would buy them. We would put renters in them, we would cash flow them, and then we would package them as in a set of 3456 properties. And then we would sell them to out of state investors from California, New York, who could, you know, for them, a $60,000 home was unthinkable, you know, somebody coming from California. But so this is very important because, you know, I know about you guys, you guys are educating real estate agents as well. And so I work with real estate agents all the time. But this is a very, I want to share a story with your audience, and it's a very important learning point. And what it was, was while we were figuring out how we're going to sell our portfolio to our clients, because I didn't have a mentor and I was reading books. But when you learn something from a professional in the field, that is really, really goal. So I went to my escrow officer, who was, we were closing a lot of deals through her, and I told her, look, I'm trying to do this. How can I do this? Do I have to get a lawyer? So she said, oh, no, all you need to do is on your contract, on your buyer side, you need to put an or assign. Now, I said, okay. And we did tons of deals just doing that. And it worked perfectly fine because, you know, it's legal. But here was the learning point. Right? When we were doing this, we were well known in the community. People were taking notice. And so there was a real estate investment club ran by, at that time, a lady who was a real estate agent was a veteran, and she was around for like 20 years plus. So she invited us and she put us on our table and told us, hey, just tell everyone what you're doing. So I explained what we are doing, and she looked at me and she was shocked, and she said, you can't do that. That's illegal. And I told her, no, it's not illegal. We are closing at our title company with an attorney. It's not illegal. And that told me right at that point, that what? You don't know, you don't know, right? It's your job to get educated. It's your job to understand how things are done. No matter it comes from books, it comes from mentor, or it comes from a course like what you guys are running, which is great, you know? So I come across real estate agents all the time, and it's a mixed bag, right? Some agents just get their license and they assume that they have all the training they need. But here they're trying to work with investors and five minute chat with an investor, and they'll immediately know that you can't work with this person because they don't understand what the investor is trying to do. Not to say that investors are more sophisticated, it's just that they're coming from a different point of view. You just have to understand that. So anyway, so we did that. That went really well. Within a year, we did 50 properties that included duplexes, single family triplexes. We also set up a management company, and we did really well. But because we didn't have a map and we got into the business without planning what we were going to do after five years. Specifically, if you don't understand real estate cycles, there's a 13 year cycle, but then there's something like Covid could happen. I mean, a lot of things can happen. So what is your backup plan? Or what is your plan b or plan c? So we didn't have a plan b, plan c. We didn't have any plan. So year 2000, if you remember, were the years when, if you were breeding, you could get a loan. So, you know, and so when that started changing, some of our investors couldn't get the loan. The loan terms got different and suddenly we just couldn't continue what we were doing. And so that was a very big learning experience for me. And so I had to step back and I had to then do other things. And that's where I started my music business. So I have a background in music. Again, I'm not going to go into that. You can check out my LinkedIn profile for information on that. But I started a music school in 20080 zero nine around that time and build it up to six figure income is now literally like part time work with a full time income. And it just runs really well by itself. I have ten employees and I don't teach anymore, but I run that. But, so, but real estate was still in my system and I just hadn't figured out how I could continue doing that and have a decent income. So I was dabbling in and out. I tried, you know, I did some flips here and there, did some wholesaling. We did a fix and flip where I lost money. And that's another experience I've learned, is very good learning experiences. You meet some real estate investors and they claim that they've never lost money. And I can tell you that, you know, anybody who tells you that is either lying or is probably the luckiest person, because any successful real estate agent, investor that I've ever worked with or known, they've always lost money at some point in their career. So. And when you do that, you have very good learning experience because, I mean, that will teach you. Nobody wants to lose money the second time. The first time is always okay because it was a mistake or you worked with someone that you shouldn't have worked with, but you don't want to repeat that mistake. So it's a very, very good learning experience. So anyway, so we kept, I kept doing that, but nothing was sticking. And so around 2000 is when I really made up my mind that, you know, commercial real estate is something that I wanted to do. It was a challenge, because I can tell you, in Dallas, I tried for one year networking, meeting with anybody who was doing commercial real estate, and I found it was like it was a private club where they would let you come into their meetings, but they would never want you to invest with them. But as a passive investor, they would take you, give them the money, but they would never accept you as a partner, always saying, oh, you just need more education. And I'm like, okay. And, you know, whatever I needed to read, whoever I needed to network with. And I knew I had the education. I knew, I knew whatever needed to be, had to be in my knowledge base. I found the same thing with the banks. When you go to a bank, the bank would say, well, you know, you've done a lot of residential, but we would like to see commercial on your resume before we can give you a commercial loan. And it was, and I knew that there's a way to break this. So I actually found my own mastermind group, and we were trying to do our own syndication, and we worked on it really hard, and we had some very high net worth people on my network group, but we just couldn't crack. That was just very hard. Became very close. But then I was so motivated on my own that I was able to buy my first commercial property in 2021, which I still own. It's a 14 unit apartment complex where I have no partners. So I went in by myself, figured out everything, did my due diligence, which is very different from residential real estate, but it was doable. I did it. Same thing with the banks. I mean, there were ways on how to convince them. Yes, they're looking for experience, but they are looking for other things as well. They're looking at your network, they're looking at how you work, how you are as a person, how you withstand risk and all those things. I actually had to write them a plan, and I actually went through a whole brrrr process through. When I bought it, we improved the management. We came in and we made some improvement, and we increased the net operating income by 30%. And I just refinanced and took all my cash out. And then we're trying to redo it again. So as long as you have plans and you can present it to the financing institution, they also look at this as who they're dealing with. So anyway, once I did that, I still were not satisfied with the income. Again. When you own something, you're responsible for repairs, you're responsible for every other thing. So I was always in that mind frame that I needed a passive way of earning income, which means I'm, by the way, 59. And so I'm like, five years is my retirement goal, right? So I wanted to make sure that in five years, I'm not going to be doing this over and over again. I just wanted a system that's going to work for me for the rest of my life. So in just last year and 2022 is when I started working with my mentor, Scott, who showed me a system that he's been using for many, many years. It's a. It's slightly different, but it's based on, you know, what you would say, an iteration of. When you do one strategy, you learn something. So let's talk about this. All real estate strategies work in their own way. If you are in landlording, it works. If you're doing fix and flip, it works. Each one of these have a risk factor, and each one of these have pros and cons, right? It's a matter of how you approach it, how you manage it, where you're going to be extremely successful, or you're going to be moderately successful. But for example, I've been a landlord all my life, and I can tell you, yes, it's exciting that you own a portfolio. Yes, it's exciting. That's on your, on your. As a net worth, you're showing you have all these assets, but at the end, a rental is where, you know, repairs are your responsibility. So all the cash flow that you're anticipating can be washed off by this one bad tenant or something bad happening to your property. That is something not very predictable, and that was something not working for me, and I was very, very frustrated about that. So this guy, he had figured out a way where he can still have these properties, but have no responsibility as a landlord. So I'm just going to briefly tell you what we do, what my company does. Dream prime homes. Right now, I buy single family homes, primarily single family homes in the midwest. We buy them on cash. These are really low price point homes. So as you may know, Midwest has a lot of inventory in the sub 30 grand price range. These homes are not in great shape, but they're habitable. So we look for homes that have no major issues, like no problems with the roof, no leaking roof, no foundation issues, no the mechanicals have to be working. Other than that, we go in, we buy them on cash, we don't do any repairs. We then sell or finance them on a 30 year mortgage to three types of people, homeowners people who work are hardworking people, but don't have enough savings for like 30 grand to go the bank route. But they make enough income to make the rent. So we would, at a low down payment, between three to $5,000 down payment, we can sell a finance to them. Number two are tradesmen, like roofers, contractors, plumbers. They buy homes and they improve, and some of them sell them or they will live there. And the third is, believe it or not, investors. There are a lot of investors who don't have 30, $40,000, and they would love the opportunity to get into a rental with $3,000 down and making, I dont know, whatever the comparable rents are. But they find the arbitrage in there between what they can pay me and what they can go out and do. And so thats what we do. Now, this is the one side of the picture. The other side of the picture, which is the exciting part, is that we finance them by our private lenders. So I have my own private lenders. These are normal people who have money sitting in their retirement accounts not doing anything or doing like 4%, 5%, 6%, or even 8%. But then they have to pay all these fees to the mutual, mutual fund companies. So what we help them do is move them over to a self directed IRa, and in case somebody doesn't know, self directed Ira, you have to learn about this, and you have to educate people about this, because that's what opens up the door for real estate investments to all the retirement money that's out there. And I've been told it's in trillions of dollars. So we help people. I work with custodian companies, and so we, if they have a self directed Ira, then they're ready to go. They don't have to do anything. They can invest in real estate. If they don't have a self directed Ira, then we help them set up an account, and then we walk them through the process. So that's what I'm doing right now. We already have a portfolio in Texas, Ohio, and Illinois. We are moving to other states as well. But that's the background.
Mike Swenson
Yeah, that's amazing. And, you know, I love what you said about working with agents. Sometimes agents may not think the right way that an investor would want to think. You know, they seem to be a little bit more of a linear thinker versus more creatively and looking for options and trying to find different solutions. And so, yeah, I think that was one of the hardest things for me to learn coming from residential real estate is how to think differently about approaching investments. And it's, it's not that I can't think differently, it's that I've been trained to think a certain way for so long and so it took time to kind of take a step back and, and figure that out. And then two. Yeah. To be able to find a great opportunity in the market and serve a good need. So how are you guys finding these properties? Obviously you don't have to share all your secrets, but more about like identifying the specific locations. Obviously you're looking for a certain price point, but are you developing relationships with people, boots on the ground or how are you identifying kind of those, those areas where you're targeting?
Amir Khan
Yeah, great question. So yes, that is part of the system is aware and how to find properties. And so we use a combination of strategy. They are on the MLS. People say that you can't find good deals on the MLS. They hate the market all the time because remember, they are. And I'll give you specific examples. So first let me address this. So we are finding them on the MLS. We are finding them through wholesalers. And then we also are a community of about 500 investors who use this specific strategy. So within our network, we also, for example, if I buy, I put a contract on four homes and I end up closing on three. I might wholesale one to people in our group. And so that's actually a one better in terms of trust. There is a better trust factor there. And so it's easier because they've done some underwriting ahead of time, so it's a lot easier to buy. And so I'm doing the same thing with my experience and all that. I don't waste my time in doing things like going and finding properties. There are people who are already doing that and they're very good. I just tell them the criteria, that this is what I'm looking for. I tell them I buy box, tell them this is what I'm buying and they just bring the property to me. If it still meets all my criteria, I would just put them on under contract. Same with the other side. Remember I told you in our system we also have, like you said, boots on the ground that helps us fill the property. Now I'm in Texas. All my properties are. I have one in Texas, but it's south Texas, it's not in Dallas. So all my properties are remote investing and that's also something I had never done before. And there is a little factor of being uncomfortable about that. But once you understand about your system talks about leverage. That's what you teach. And in real estate, if you understand leverage on top of not just leverage of other people's money, but leveraging other people's time and skillset, then you have a really powerful combination and then you can use it to your benefit. And so I'm not trying to reinvent the wheel where people are already there. That's what they do. So our boots on the ground, there's specialists who fill properties, and when they fill the property, they get commission for that, right? So they have an incentive in doing that and they understand our system. So, yeah, to answer your question, we are getting them from a variety of sources. But because we, and there are many investors who do something similar to this, they buy on cash what we are buying, the type of inventory we are buying, most of the fix and flippers are not doing that. And I'm going to share this secret. It's not a secret, but I'm just going to tell you why our system is different and why we don't have other competitors in our market. You'll appreciate that. So when we start real estate, I started real estate, everything that was taught to me was never buy in a market that's not appreciating. Never buy in a declining market. I mean, that's just like a fundamental. You do the exact opposite. We buy in markets where there is actually declining population, declining appreciation specifically. We're not talking about Detroit, where that's an extreme example. So you have most of the population moving out of the county and out of the city, and now you have a lot of inventory, but not enough people even living there. So that's a complete imbalance. I'm talking about over the 20 year period, decline of 1234 5% decline consistency consistently. So what's happening is those fix and flippers are not going in there because they can see in ten years, if I fix this house, I don't really see that, right. So we don't have competition from those people. So we go in, we buy them on cash, so that way we can close quickly, and that gives us a slight edge over those people. So we are in markets in St. Louis. Missouri is a very, very big market. We are across from the river into these smaller pockets like Cahokia, Illinois, East St. Louis, which is again Illinois side. Toledo, Ohio is another market. So there are other markets as well. But in our case, I would only buy where we do have a network and our boots on the ground that can help us implement our system.
Mike Swenson
What I really love about what you're doing is I talked to so many people, agents, investors or whatever, and we talk about a certain strategy or a certain way that they can invest. And what I tend to hear most often is, well, my market's a little bit different, or that doesn't work in my market, or I can't do that. The price points too high. Well, either. Then you got to change your strategy or you got to change your market.
Amir Khan
Right.
Mike Swenson
Those are your two options. If you don't believe that your strategy is going to work in your market for what you're trying to do, either a different strategy or a different market, and you're looking up saying, hey, I can't buy these houses in the Dallas area yet. I can buy these houses in other areas. And so I think that's a big hang up for so many people as they give excuses why they, they can't do something. And for you, it's, well, let's go find where in the, where in the United States can we do that strategy and then find it and grow and develop and get better and stronger versus just saying, I'm in Dallas. That's not going to work here.
Amir Khan
Sorry.
Mike Swenson
I guess I just won't invest in real estate. It's not going to work for me. Right.
Amir Khan
Exactly right. No, and I understand maybe 40 years ago, that was an argument you could make because before the Internet, you couldn't do all these things. Now what I do, I literally, I closed on a property three days back. I did a walkthrough just prior to the closing with the agent, and they did that. They instantly sent me a document confirming that, you know, I've seen the walkthrough, and we are ready to close. I mean, all these things, obviously, you couldn't do that, you know, 40 years ago because you had to be there or you had to have your rep there. And then it's just. But with this day and age, with all the technology you have, there's absolutely no excuse for you to say that, oh, I cannot do this. Especially if you're living in a country like United States with so many different states, with so many different variety of homes, people doing SDR. I mean, I have some partners who are doing SDR, and they're doing exceptionally well. In certain Florida, in California, they're doing very, very well. So, I mean, you can do this.
Amir Khan
Absolutely. And so that's what I'm doing now. And that's what my goal is for the next five years, is to have my own portfolio. So very quickly, let me just go back and that'll tie into everything and we can close on that is my goal is to completely retire in five years with a portfolio of at least having 80 properties or more in my portfolio. So when I buy a property, my company, Dreamprime Homes, holds the deed. My private lender has a lien on it for five years. So our note to our private lender is we give them double digit returns, by the way, so they have an incentive of, you know, so five year note, they are paid off in five years fully. Then after five years, my company owns the property free and clear because my tenant buyers are on a 30 year mortgage. Do you see that? So in five years, my goal is to have at least 80 plus properties and my goal is to have my personal income. And that's what I'm helping my clients, who a lot of them are close to retirement or have retirement accounts. They don't need the money for five years. And I can show them how we can double it, more than double it in their retirement account because they're not paying any taxes there, then they don't need to withdraw the funds right now. So it's compound interest. We're giving them double digit returns. Compound interest. Plus they're redeploying the loans back into new loans. Right. As the. Because when we do a five year term, a five year mortgage for them, it's a principal and interest. So they're getting a part of their principal back into their account. But, yeah, that's what my goal is for the next five years.
Mike Swenson
I love it. Yeah, well, a lot of times people are thinking about scaling up and going bigger and bigger. You're going smaller and still finding a great way to scale it. So I love your strategy. For people that want to reach out and learn more, how can they do so?
Amir Khan
Yeah, so they can reach out to me through our website right here on the screen, dreamprimehomes.com. and I'm very accessible. Just send out a message to me and I'll be happy to chat with you.
Mike Swenson
Well, thank you so much for coming on and sharing your story. It's exciting to hear people find a different niche in the market and find a great way to fulfill their retirement dreams and time freedom dreams through doing that. So thank you so much for coming on and sharing.
