I Cracked the Code for More Cash Flow & Less Risk (Rentals + Private Lending)

Summary

---

Episode Overview

Podcast: Real Estate Rookie (BiggerPockets)
Episode: I Cracked the Code for More Cash Flow & Less Risk (Rentals + Private Lending)
Date: November 17, 2025
Hosts: Ashley Kehr, Tony J. Robinson
Guest: Shalom (founder, NV Investment Group)

Main Theme:
Ashley and Tony interview Shalom, a real estate rookie who quickly diversified into private money lending, flips, and rentals—balancing a full-time job and navigating rookie mistakes. The episode is focused on actionable lessons for new investors curious about multiple real estate strategies, especially private lending as a way to boost cash flow and mitigate risk.

---

Key Discussion Points & Insights

1. Shalom’s Entry into Real Estate (00:40–05:07)

• Background: Shalom discovered real estate during college via a friend’s internship suggestion and dove into real estate finance as a major at Baruch College.
  • “I learned so much about institutional real estate… I just loved that sphere. I felt that I’d never actually applied myself in anything so hard as I did with real estate.” – Shalom (00:47)
• Institutional Knowledge vs. Hands-on Practice: Most experience was underwriting, asset management, and learning about large-scale deals—but little practical investing.

2. First Investment: Private Money Lending (05:07–13:18)

• Why Lending First?: Personal circumstances didn’t allow owning property, so Shalom turned to private lending for its flexibility and solid returns comparable to rentals.
• First Deal Details:
  • Was approached by BiggerPockets author, Grace Gutenkopf, for $300K (she needed fast closing for a Tucson, AZ flip).
    • “She called me up, she’s like, Shalom, I’m closing on a property in Tucson, Arizona. I need 300 grand tomorrow. You in or you out?” – Shalom (07:25)
  • Used his own ($50K) and parents’ home equity ($250K) to fund the deal. Negotiated terms: 11% interest, six months, with early repayment option, first lien position, and partial funding for rehab to protect equity.
• Networking to Find Deals: Built relationship via social media, kept in touch, and said “yes” to opportunities.
  • “I never say no to an opportunity. We kind of kept in touch and when she needed money, she, she knew who to call.” – Shalom (11:24)

3. Structuring Lending Partnerships (13:18–14:18, 16:45–19:20)

• Family Lending Structure: Pro-rata split on the promissory note and mortgage, shared risk equally.
  • “We eat together or we starve together, but in one way we're getting in and out of it together.” – Shalom (13:18)
• Loan Terms with Borrower (Grace): 11% annual interest, interest-only payments, principal at end, monthly updates, six-month term with possible extension fee (negotiable).
  • “Everything that — it’s your deal, it’s your money… Be comfortable with the terms.” – Shalom (18:33)

4. When Lending Goes Wrong: Lessons from a Troubled Deal (19:20–25:15)

• Bad Borrower Experience: After initially smooth payments, a borrower defaulted on two New Jersey properties. Instead of expensive foreclosure, performed a “cash for keys” exchange—borrower walked away, Shalom took title.
• Exit Strategy: Finished renovations, kept properties as rentals (now cash-flowing assets).
  • “So I finished the construction, I put them up as rentals, and now they're in my rental portfolio. And they cash flow pretty well.” – Shalom (21:20)
• Risk Management Changes: Now more conservative — pulls credit, requires more borrower equity, focuses on deals where he’d be comfortable taking ownership if needed.

5. Building a Rental Portfolio (25:15–32:23)

• Transition to Rentals: Pushed by a client, diversified income from W2, lending, and now rentals.
  • Acquired 9 doors in a year — 3 in New Jersey (including ones from defaulted loan), 6 in Milwaukee.
  • Selected Milwaukee for better cash flow and landlord laws; conducted a day trip to vet the market.
• Buy Box: Focused on 1–4 units, looking for low-maintenance properties, specific neighborhoods (avoiding certain zip codes), and structures with minimal yards to avoid city fines.

6. Operational Tips for Out-of-State Buying (29:25–32:23)

• Boots-on-the-ground strategy: Visited neighborhoods in person to gain market knowledge beyond what maps reveal.
  • “You can look at it on a map… but when you're actually there, you can really clearly identify… the neighborhoods…” – Tony (29:25)
• Leveraged property managers for deal flow and smoother transitions.

7. Private Lending Fund Basics (36:50–38:50)

• Raising a Fund: Now pools capital (from family/friends) via a preferred return and profit split (between general partner and LPs); offers security for his extended family to diversify beyond their day jobs.
  • “I feel like it was my job to… keep our wealth, but if we don’t work tomorrow, we still can kind of eat the fruits of our labor.” – Shalom (37:25)

---

Notable Quotes & Memorable Moments

• On fear vs. action (analysis paralysis):

  “A lot of people who I network with… have golden handcuffs where they don’t want to do a deal themselves because they always do analysis paralysis… It’s really, really tough to get every single expense underwritten to like, the cent value.”
  — Shalom (03:27)

• On risk in lending:

  “Do your research about the borrower and the deal. Make sure it’s something that worst case scenario, if you had to own, you’re comfortable with it.”
  — Shalom (41:03)

• On leverage:

  “Low leverage is really, really good… On that first rookie deal, I bought it all cash… my agreement with my mom was, once we refinance this property, I’ll give you your money back plus the interest. And I didn’t have a bank weighing over me.”
  — Shalom (39:28)

• On rookie mistakes:

  “I was a little bit naive and kind of went on a deal, and it did kind of go wrong… But what saved me was I didn’t give him all the money. So I had some equity in these properties…”
  — Shalom (19:39)

---

Timestamps for Key Segments

• 00:40 – 05:07: Shalom’s background, education, and how institutional experience shaped his mindset.
• 05:07 – 13:18: First private money lending deal — how it came about, structuring, using family capital.
• 14:18 – 19:20: Structuring deals, terms, and risk management in private lending.
• 19:20 – 25:15: What happens when a private loan goes wrong (turning failed flips into rentals).
• 25:15 – 32:23: Expanding to rentals — market selection, buy box, and out-of-state strategies.
• 36:50 – 38:50: Creating a lending fund — why, how, and for whom.
• 39:28 – 43:14: Rapid-fire advice to rookies (leverage, due diligence, dealing with defaults).

---

Practical Advice & Takeaways

For Aspiring Private Lenders:

• Start with borrowers you trust and deals where you’d be comfortable owning the asset if things go wrong.
• Always structure deals with clear terms (interest, fees, extension clauses), and use lawyers to draft documents.
• Control money flow with rehab draws, requiring proof of completed phases.

For Rookie Investors:

• Diversify income sources early (W2, lending, rentals).
• Don’t obsess over perfect underwriting—take smart action once you’re comfortable with the numbers.
• Physically visit new markets to gain insight and confidence.

On Partnerships and Networking:

• Leverage family/home equity to get started if you don’t have enough capital.
• Maintain relationships; social media and networking can lead to unexpected, big opportunities.

---

How to Reach Shalom

• Instagram: @nvinvestmentgrp
• Website: nvinvestmentgrp.com
• Phone: [phone]

---

Ashley: “Thank you guys so much for joining us for this episode of Real Estate Rookie. And we’ll see you on the next one.” (43:49)

---

Transcript

[A]

Tony, I love when we get to talk to rookies who have jumped into not just one, but multiple strategies early on. Because let's be real, most of us start with one deal and slowly branch out.

[B]

Yeah. But today's guest went from lending to flips to rentals, all While balancing a W2 and navigating some tough rookie lessons. And that's what we're diving into today. How to diversify as a rookie and what you learn when things don't go according to plan.

[C]

Cool.

[A]

Welcome to the Real Estate Rookie Podcast. I'm Ashley Hare.

[B]

And I'm Tony J. Robinson. And let's give a big, warm welcome to. Shalom. Shalom. Thanks for joining us today, brother.

[D]

Thank you so much for having me. I'm super excited to be here.

[A]

So, shalom. How did you get first started in real estate and what pulled you towards real estate investing in general?

[D]

Okay, it's a loaded question. Let's. Let's rewind back to Covid. I was in college. I went to Baruch College. I had no idea what I want to major in, but my friend did this internship in real estate. He's like, hey, if you want to learn more about it and maybe get paid while you're sitting at home doing nothing, try it out. Right. And so I applied. I got in, and it was amazing. I learned so much about institutional real estate, what it means to underwrite a deal. Look at gross rent, net rent. What does vacancy mean? What are building expenses? How do you. How do you value building with a cap rate? Noi and I just loved that sphere. I felt that I've never actually applied myself in anything so hard as I did with real estate. And so I loved it so much, I changed my major to real estate finance and doubled down on learning as much as I can about real estate. After that, I've interned at many different companies within real estate private equity with Mac Real Estate Group. I've worked at different public REITs, doing retail work and underwriting deals, development deals, and then couldn't find a job at real estate no matter how good my resume looked like. When I graduated school, I was looking for a job in New York, but I couldn't find one real estate job in New York. And that's when my first real estate deal kind of landed in my lap. The phone rang, and it was a deal I couldn't refuse. We'll jump into that in a minute. But that was my first private money lending opportunity.

[A]

Yeah. So first of all, I want to get into how private money lending was actually Your first, you know, insight into real estate investing. But I want to mention the fact that your major was real estate finance. I didn't even know that was a major. And I want to go take a community class now to learn about real estate finance. But I think that's awesome. But that must have set you up for some kind of success. What did that major actually entail? Is that deal analysis? Is that how to structure the financing on a deal that set you up for becoming a lender?

[D]

Yeah. So this major essentially is getting me ready to work at an investment bank. Think like JP Morgan, Wells Fargo on their real estate underwriting teams, or at a private equity firm where I am underwriting either value add deals, development deals, or managing a large portfolio of thousands and thousands of units. Right. So it's a very high level. And once you get into these fields and you intern in these places, you get very kind of like you're a professional in one certain aspect. Like you only do asset management.

[A]

Like, it's very niche.

[D]

Yeah, very niche. Yeah. You're only doing property management, or you're only underwriting construction costs, or you're only underwriting different value add deals, not development deals. So that's what the major kind of prepared you for. It taught you a lot about how, how Fannie and Freddie Mac work, what does the national mortgage market look like, and different ways that institutional real estate moves. Whenever you want to finance a skyscraper in New York City, it's very different than when you go in and get an FHA loan and putting down three and a half percent. Right. Your rate on a skyscraper is probably a floating rate. It's probably tied into a bond that several pension funds and life insurance companies are investors of, versus when you're putting down 3.5% FHA property, it's a lot simpler of a deal. Right. But it's also okay. This loan gets collateralized with a thousand other loans and then gets sold in a bond to bond investors. So I learned kind of the theory of real estate, but never practicing the real estate. I also noticed that a lot of people who I network with back in the day that are working at these real estate companies kind of have golden handcuffs where they don't want to do a deal themselves because they always do an analysis paralysis, like they analyze a deal to the very T. And oftentimes, like, you guys know this very well. When you're doing dealing with single family or two, three, four unit properties, it's really, really tough to get every single expense under, underwritten to like, the cent Value, so you know where your noise is going to be. So that's kind of where I started with my college and then kind of grown into, made the transition into like real estate investing myself.

[B]

Shalom. It's interesting because you, you started at the most advanced version of real estate investing as it exists, which is like the large institutional type investing, whereas most people slowly kind of graduate up to that level. So I'm, I'm curious, was that experience what led you to think of private lending as your first deal? Because a lot of new real estate investors, they don't, I don't even think they understand or comprehend what it means to be a private lender, let alone have the confidence to make that their first deal. So how, if at all, did your experience working in, you know, private equity lead you into becoming a lender on your first deal?

[D]

So yes and no. It, it kind of gave me the idea of private lending because I saw private credit funds invest hundreds of millions of dollars into the residential space across the nation. And I saw that that was an opportunity, but I didn't think it opportunity for me because I don't have $100 million. I don't know about you, Ashley and Tony, but I don't have $100 million just lying around the bank. And I didn't think it was an opportunity for me. Certain life circumstances came about where I couldn't commit to a rental property. And I was looking for an investment that was very similar to one with the return without the commitment to one. Because whenever you buy property, you have closing costs, you have transaction fees, you have to manage the property. You're kind of getting kind of getting married in this, in this scen. And then if you want to exit out of it, it's also a hassle. You got to put on the market. You got to wait to find a willing buyer. There's going to be concessions and negotiations. It's just too much if you have to get in and get out. With private lending, it's a very short term investment, but it has a very similar return as to a rental property. If I compare my very first rental to my very first private money deal, I think the returns in the private money deal actually more than my first rental. But I was looking for that where I can invest my money into four or five months because I may need that chunk of change in four or five months. And then that's where private lending kind of came about. My first deal was. I don't know if you guys want to jump into that.

[A]

Yeah, yeah, please I'm intrigued.

[D]

I don't know if you guys know this. She's a Bigger Pockets author. Grace Gutenkopf.

[A]

Yeah, we know Grace.

[D]

And she called me up, she's like, shalom, I'm closing on a property in Tucson, Arizona. I need 300 grand tomorrow. You in or you out? I'm like, huh? I'm a 22 year old kid, I don't have 300 grand lying around. I'm like, okay, send me the details, I'll take a look at it. And give me like a day to figure something out and I'll get back to you. So she sent me the deal and the deal penciled really well. She was buying the property at 275,000. She was putting in 60 into it. And the ARV was in the mid-400s, like 420 to 430 around there. And the deal made sense. She had a clear exit strategy of how she was going to refinance out of the deal. And she was offered me an 11% interest rate for six months. But there was an option to pay off earlier without a penalty. And the deal really, really made sense. I would have a first lien position on the property. I wouldn't be giving 100% financing because she would put 10% down for, for the construction costs and I would only give her the other half the construction costs. And so it was like, well, this deal really makes sense financially now let me see how I could figure out the money. And I was actually at bpcon listening to Matt Faircloth's keynote and he was telling us how to raise private money in this challenging kind of market. And I copied his method without knowing it was what he taught. Because after this, after he mentioned it, I went and I researched how many people own their house outright. And over 40% of people in the USA today don't have a loan on their primary residence, according to U.S. census. I mean that is an astonishing amount. So if 40% of people are like that, Ashley, Tony, we all know somebody probably in our lives, whether we know it now or not, but we probably know somebody in our lives who has a house that's paid off, that has equity there and might be willing to invest it. For example, a lot of people follow Dave Ramsey method of paying off debt as soon as possible and then throwing everything at your house. That's a great pool of people in our country who could have equity to invest with you. And so my parents kind of fell into that category. They came to America in the early 90s and they worked their butts off in order to kind of create financial freedom for themselves. They partially is paying off their mortgage. My dad paid off our 30 year mortgage in like 15 years and we had a property that had equity in it. So I approached my mom. I'm like, mom, I don't have the full 300,000. I have 50 of it. Do you want to come in as a private money lender and give me the other 250? And she's like, pitch me the deal. And so I had some good experience in private equity pitching deals to MDs and directors and associates and whatnot. And so I laid it out in front of her and she's like, this sounds like a no brainer, let's pull the trigger. And that was our very first private lending opportunity.

[A]

I love this story. I have to go back to the beginning as how did you get connected with Grace where you were in a position that she gave you the phone call to say you in or you out? How does someone do that type of networking to get connected with investors who are looking for lending?

[D]

Yeah, social media is very, very big. I mean you guys know it, know it best but. And something I'm working on right now in order to get out there more and more on social media. But I follow Grace for a long time. I don't know how I found her, but I was into real estate and she was posting a lot about real estate and I was stalking her page 247 looking at her clips and like I already know how many units she owns and what she does and Cedar Rapids and different kind of flips she does and whatever. And one day she was like, hey, I'm looking for partners on this deal. She was going to do like a 20 unit in Cedar Rapids. And I'm like, hey, I don't have the money, but maybe if the opportunity is good I could find the money. So I was like, okay, let's get on the call and just talk about it. So I put on the story and I never say no to an opportunity. Ended up, she never did the deal. It wasn't for my appetite, but we got in contact and that is what now, now she had. She was able to reach out to me if she needed something. Right. And so we kind of kept in touch and when she needed money, she, she knew who to call.

[B]

Shalom. I think it's, it's an interesting story and I love how it all came together. But I think maybe one more nuanced part of this that you partnered with family on this first deal as well, and we've had a lot of conversations. You know, Ashlyn even wrote a book on real estate partnerships about partnering to buy real estate. But I don't know if we've ever had a discussion on partnering to lend for someone else to buy real estate with that money. So how did you and your parents structure this partnership with, you know, them bringing 250, you bringing the other 50? What did that structure look like?

[D]

So we were on the mortgage and on the promissory note and we owned a portion of that note proportionate to a portion of the money we had in the deal. So my parents owned. What would that be like a 6, 6 of the deal. And I owned one sixth of the deal. And we were on the note together, which meant we kind of had risk together. And there wasn't like I wasn't guaranteeing them some kind of return. I showed them the deal and I said, these are the risks that could happen. Worst comes to worst, we foreclose in a property that's worth more than we have into it because they'll be doing construction and the ARV is there. Or we go and we finish the business plan and then sell the property. Right. There's a few exit strategies here, but on that first one it was, it was a true partnership is like we eat together or we starve together, but in one way we're getting in and out of it together.

[E]

Let's talk about a real estate backed investment with major tax advantages. Car washes. PBR's Opportunity Fund offers accredited investors access to a high margin, recession resistant industry with passive income tax efficiency and significant upside potential. With operations in prime locations using best in class technology. Managed via a vertically integrated team, this fund is designed to deliver strong, stable returns. Backed by over $1 billion in assets under management. PPR has provided passive returns to thousands of investors since 2007. Don't miss out. Learn more [e-mail] PPRCAR that's biggerpockets.com PPRCAR.

[C]

You know, a lot of us work hard to build savings and start investing. But let's be honest, trading can feel like a full time job. The charts, the timing, the constant second guessing, it's stressful, right? You're always wondering, am I making the right move? Now you can eliminate all of that with QuickFund AI. QuickFund AI takes the emotion out of trading with an automated system that does the work for you. No staring at screens all day, no overthinking every move. Just smart automated trading strategies that can run while you sleep. And here's what sets QuickFund AI apart. With their Quick Fund guarantee, qualified clients receive up to $300,000 trading capital, 12 months of waived service fees, and a money back guarantee on the software itself, giving you the power to trade smarter without tying up personal assets. So if you're ready to trade smarter, not harder, visit QuickFund AI to get started. That's Q U I C K F U N D A I quickfund A Where technology earns for you My assistant's great. He's also terrible because he's me. Turns out multitasking isn't a great business model. Belay knows real estate investors grow faster when they spend time closing deals not.

[E]

Buried in admin work.

[C]

That's why they built the Executive Assistant Task Calculator, a free tool that reveals how much valuable time and money you're losing every week. Once you know your number, Belay can match you with a US based executive assistant to take those tasks off your plate so you can get back to building wealth. You're just one assistant away from doubling your deal flow. Text biggerpockets no space to 55123 to download the free calculator today.

[A]

Today's show is sponsored by Baselane. They say real estate investing is passive, but let's get real. Chasing rents, drowning in receipts and getting buried in spreadsheets feels anything but passive. If you're tired of losing valuable hours on financial busy work, I've found a solution that will transform your business. It's Baselane, a trusted BP Pro partner, Baselane is an all in one platform that can help you automate the day to day. It automates your rent collection and uses AI powered bookkeeping to auto tag transactions for instant cash flow visibility and reporting. Plus they have tons of other features like recurring payments, multi user access and free wires. To save you more time and money, spend less and managing your money and more time growing your portfolio. Ready to automate the busy work and get back to investing? Baseline is giving BiggerPockets listeners an exclusive $100 bonus when you sign up at baselane.com/biggerpockets okay, so I want to know how you've structured this deal with Grace as far as the private money lending. So we have a rookie listener that maybe wants to go out and do private money lending is their first first deal. How did you structure the actual payback of that loan? Was it monthly payments of principal and interest? What did this look like and would you do it again?

[D]

For sure. I mean the way we did the deal is I. It was my very first deal. So Grace dictated a lot of the terms and in hindsight I could have charged more if I wanted to, but I didn't know what the market was. So it was an 11% interest annualized and she would be making monthly interest only payments throughout the period until she refinanced the property and then pay me back the lump sum. I gave her the money for the purchase the property and then initial $30,000 in construction costs and then she would bring in the other 30,000 in construction costs to get the the project finished to where it has to be. She agreed to send me monthly emails or bi weekly emails on updates that are happening. So I knew when the new roof came on, when landscaping was done, when the bathroom, the kitchens were in, and what kind of trouble she was having. Additionally, I knew when she was starting to refinance. It was before all the construction was done and she kept me on updated along along the way. This allowed me to know when my money's coming back. So our deal was for six months, but she really paid me off in four. So I knew my money is coming back earlier and I could probably plan to do something with that money when it comes back. Whether invest into that loan or buy a property or go buy a Lamborghini, I don't know.

[A]

But we don't recommend that. No, but what one follow up I have to that is, was there any kind of extension? Like did you know what would happen if six months came and maybe she couldn't refinance or if it was somebody doing a flip the house in itself. Was there any kind of like contingency or anything put into your contract? Your agreement, the promissory note that stated what would happen if the six months came due and she couldn't pay?

[D]

This was two years ago, so I can't tell you exactly. I'm pretty sure we had something in there. Like if we go past six months there's like a 1% extension fee or half percent extension fee. All these things are negotiable and for those out there that want to lend private money, I really recommend it and I stand by it because I'm still doing it today. So kind of goes to question when I do it again. Absolutely, I still do it today and all these things are negotiable. So the interest rate is negotiable. Your origination fee, if you want to charge one is negotiable. Extension and prepayment penalties are negotiable. Everything that it's your Deal. It's your money, right? So you should be. Be comfortable with the terms that you're putting out there for borrowers to. To. To use and work with now.

[A]

Shalom.

[B]

This first private money lending deal sounds like it went pretty well. But have you ever had a situation where you lent money to someone and it didn't go according to plan? I think the worst case scenario is that you've got to take a property back. But I guess, did they all go smoothly, or have you had any situations where maybe the operator didn't execute the way that you would hope they would?

[D]

For sure. I mean, this one went really well because of the quality of the borrower. I want to say, right? Grace is amazing what she does. She has a lot of experience and there's a lot on the line for her to lose. I don't think she would just run away with my money if she had the opportunity to. But there was one time when I got a little bit naive and kind of went on a deal, and it did kind of go wrong. So someone came to me. They were an experienced investor as well, but their credit wasn't as good. That's why they couldn't go to a typical hard money lender. They came to me, hey, Shalom. We want financing on these two properties that they're buying in South New Jersey. It's my backyard, so I kind of know it pretty well, but. And I said, hey, listen, I'll finance these properties for you. Here are the points I want to charge. Here's interest rate, and here are my terms. They agreed to it. We sign off on it. For the first three months, everything was great. They were doing renovations, they're making payments. And then payments just stopped. I called them up, and I'm like, hey, what's going on? He's like, I'm going through this. This happened. And I'm a little bit of a softie. So I'm like, okay, I'll give you a little bit of slack. I won't do anything. But two months went by, no payments. Three months went by, no payments. And I'm like, okay, now we have to act and do something. And so me and him agreed that, hey, you don't want two foreclosures on your properties because it was two separate loans on two deals. And I don't want to pay 30, 40 grand to a lawyer to get these properties from you. So if you want to just hand me back the properties and I cancel the mortgages, then we can kind of do like a cash for keys. But There was no key. Just give me the properties and walk away and I'll figure out what to do with these properties afterwards. What saved me was I didn't, I didn't give him all the money. So I had some equity in these properties and they were in good rental markets. So I didn't have enough equity to go on the foreclosure auction, sell them, and walk away with either my principal or some profit. But they did, they were almost done, right? So I finished the construction, I put them up as rentals, and now they're in my rental portfolio. And they cash flow pretty well. The cash flowing thing, like 200, 300 bucks a unit. And there was some other stuff in there with some stop work orders and construction delays. But that's a story for a different day.

[A]

I think that's a really interesting, like, exit strategy. You know, as a money lender, you usually think like, okay, I'm gonna have to take, you know, back the property and then I'm gonna have to sell it, put it up for auction, do whatever through the whole foreclosure process. But you actually finished the deals and rented them and you made, made it work for you. So I think anyone that's maybe scared of that happening, here's like another aspect you could look at when you're underwriting a deal to lend on is, okay, worst case scenario, could I use this as a rental too? And on the piece how you said you didn't give them all the money, were you doing like draws with them for the rehab?

[D]

That's right, yeah. So for the rehab, they would need a complete. Like we did it in separate phases. So I guess phase one was demo, Phase two was flooring. Phase three was like some plumbing and electrical face force, kitchen. As these things were done, we would release the money for those things. So they would say, okay, materials cost me five grand, labor cost me three grand. Okay, so give us an invoice for that. We would see release $8,000 in a wire. And we also had to confirm these, these things were done. So whenever we have larger things that require a permit, say electrical plumbing inspector will come out there in order to view that these things are actually done and to code. And if it's something cosmetic, doesn't really require a permit, a simple picture or a few detailed pictures, send them over to me. And then, okay, I see there's new vinyl there. I'll release the, the, the draw.

[B]

Shalom. Based on what you learned from this deal going sideways, what are you doing differently now as you're Looking at borrowers and projects to lend for.

[D]

Fair question. Yeah, I'm looking at the borrowers as a whole and the deal as a whole in order to say, okay, worse comes to worse, do I want to own this property or what's my exit strategy out of it if I, if I have to foreclose on it, Right. There's an option of selling it as a non performing loan because there's a lot of investors out there and they were vpcon that buy these non performing loans. That's what they do. That's their business model. Another thing is I could charge my default interest and take it to the sheriff's auction and sell as a foreclosure. Right. Or I could take it back, keep his rental. If I would foreclose on Grace's property in Arizona, I probably would not have kept this rental because it's on the other side of the country for me. And to manage a rehab that far away, something I wasn't comfortable with at the time, but a property in New Jersey where it's maybe like a two hour drive for me, it's easy. I can go there with my brother, we can hang some drywall, we can do some paint, we can figure it out. It's a lot easier for me to justify keeping that property as rental. We pull credit for all of our borrowers now and we are more conservative with these deals. So we require borrowers to come with more equity as a down payment or bring us deals that are bought at a better basis. So if your ARV is ideally we're looking at 65% of loan to cost. Right. So whether you buy it right or you're really good with construction, you're doing a lot of the work yourself and only buying materials. Some kind of balance there in order to get some more equity out of the deal.

[A]

Now. Shalom. Besides those two rentals that you got from somebody not paying you, do you have any other investment properties in your portfolio or is it purely the, the private money lending?

[D]

I do. I own three doors in New Jersey and I own six doors in Milwaukee. So we started buying, I want to say in two weeks will be a year. And in a year I accumulated nine doors total.

[A]

Congratulations.

[D]

Thank you, thank you.

[A]

I guess we need to pivot there because, you know, we've touched a lot on the private money lending. But how did you end up in the Milwaukee?

[D]

And so this kind of ties it all in together in November of 2020? Actually, no, a little before that, one of my long loyal clients who now became one of my friends. We were eating dinner together, we just closed the property. And he's like, shalom, you know, I'm gonna stop doing business with you if you don't own any rentals. I'm like, what are you crazy? He's like, you know, you gotta diversify. Because as real estate investors, we have our. Back then, I was in my W2 job, so we, we have our W2 income or active income. We also need to diversify with rental income. And I'm not. I knew back then that I wouldn't be financially free from just one or two duplexes, but it is diversifying my income. I'm getting money through appreciation, I'm getting some money through cash flow. I'm getting money from my W2 and some loans. So if something were to unplug and my one source of income would just stop, I could still live from the other three or four sources of income I had. And that kind of gave me an alarm like, hey, shalom, you need to buy a rental. Let's start figuring out where and how. I live in New York City, so I'm not touching a duplex here for 1.1, $1.2 million. That just is not feasible for me. So New York City can't do it. New Jersey doesn't have the best landlord tenant laws. And that didn't make me feel too comfortable. I mean, unless I was getting these properties like that, I kind of didn't have a choice. But so I'm like, okay, for now, New Jersey is not going to work out. The prices are also higher there. The places where I was finding a lot of what I liked in a market was in the Midwest. Think Kansas City, Chicago, Milwaukee, a lot of cities in Oklahoma and Texas. And so I did what I think on a few podcasts ago, Tony, you flew down somewhere into the Midwest to go look at a market. So exactly what I did, I hopped on a plane, I went there, I got out of here like 4 o' clock in the morning. I flew to. Flew to Milwaukee. I walked the area, I met with a couple agents, met with some property managers, and then I flew back the same day. I didn't wait book for a hotel. I came back 11pm but it really taught me a lot because now I knew more about Milwaukee, where the good areas, where the bad areas and what I could do there. I looked at at least 20 or 30 deals from different wholesalers and the MLS before one fell on my lap. And okay, this one makes sense. I'm buying it under market value. I have tenants who are paying market rent or slightly below market rent. There's some value to add here. It's nice. Three bed, one bath apartments. Families live here and they lease for a long time. So I was really comfortable with that. After I bought the first one, I'm like, okay, this is not so hard. I thought it was going to be like this big thing where you're going to have people calling you 247 as like, someone broke my window, my toilet is not flushing, or I'm getting this flooded or that, whatever. And I'm like, oh, this isn't too bad. I could probably do another. And so my next deal I found was on the MLS and I used a DSCR loan to buy that. So I put down 20%. And it was great because my property manager, who was, who is managing my house, that first duplex, said, hey, one of my clients looking to sell, do you want to buy it? And I'm like, okay, let's do it. He already knows the building, he already manages it, so it's easy kind of transition. And yeah, that was those, those my first two. First two rental deals.

[B]

Shalom. I think there's something to be said about just hopping in the. In a car, plane, whatever, and just going to see and get a feel for it. Now, obviously you can, you can invest remotely and you're proof of that. I'm proof of that, right. Like, you can do it remotely. But I, you know, the same reason I went to OKC is because, like, I just want to get a lay of the land and you can look at it on a map and I think get a decent sense of what the city looks like and how it feels. But when you're actually, like, there, you can really clearly identify, like, okay, once I go through this underpass, the neighborhood kind of changes a little bit, right? So on the map, it all looks the same. But let me make sure that I'm north of, you know, this overpass. So let me make sure that I'm on the. The east side of the airport, not on the west side, because it looks very different on both sides. So for all of our Rickies that are listening, when I went to okc, I did a very similar thing. I left super early on Monday morning, stayed Monday night, and then left super late on Tuesday night. So I was only there for one night, but I got two full days. Met with contractors, met with agents. I aimlessly drove around town. Like, literally, I was just, like, driving up and down random streets just to kind of see what the neighborhoods look like. And it gave me so much more confidence. Say, like, yeah, I actually am looking at the right place. So I. I love that approach. But as you went into this new market, Shalom. What did your buy box look like? Because I think you mentioned a duplex. Are you focused on small, multifamily, and if so, why? Like, how did you define what your buy box looked like?

[D]

Yeah, so right now I'm looking at one to four units, and I'll look at some small commercial. Just putting my lender hat on as well. I. I know that small commercial is harder to finance, so it's like I'm playing a seesaw there a little bit. I like the one to four unit space, and I'm very particular about what I want to buy. For example, when I went there, I know that whenever you have a side yard or a really big front yard, people dumping garbage is a big problem. And if the city drives by and they see garbage in your front lawn, you're getting a fine really quick. And those fines add up pretty fast, too. So I said, okay, I want a minimal front yard as possible possible. Maybe even no backyard. There's street parking, so I don't necessarily want a garage if I don't have. If I don't have to have one. And my first property meant all those boxes where I literally have zero front yard, zero backyard. There is no. No lawn to cut or barely any stone to shovel, just like that little bit of sidewalk in the very front of the house. And if I weren't. If I didn't go there, I wouldn't know that. I also figured out that I don't want to be in these one or two zip codes. I found that out very quickly because I personally didn't feel safe walking on the street in those zip codes. But on the outskirts of those zip codes, beyond where the houses are really nice and trading for like 300 grand versus where the houses are trading for, like 60 grand, there is that, like, little. Little sliver in between where appreciation is maybe coming in the future. You can still get cash flow, still get quality properties for a good price. And it's like the best of both worlds in a way.

[B]

Now we have to take a short break, but when we come back, we're going to dive into some advice that Shalom has for other rookie investors looking to get started. And we'll hear that right after a word from today's show.

[E]

Sponsors want to earn passive income every month without the hassle of property management. If you're an accredited or high net worth investor, PPR Capital Management offers a proven solution. Since 2007, PPR has helped nearly 2,000 investors earn over $100 million in consistent, predictable, passive returns. Headquartered just outside Philadelphia, PPR manages a $1.1 billion diversified portfolio designed to provide steady income and long term growth. With decades of in house expertise, their team strategically mitigates risk to help investors achieve their financial goals. See how a PPR fund could fit into your portfolio. Visit biggerpockets.com ppr today that's biggerpockets.com ppr.

[C]

You know, a lot of us work hard to build savings and start investing. But let's be honest, trading can feel like a full time job. The charts, the timing, the constant second guessing. It's stressful, right? You're always wondering, am I making the right move? Now you can eliminate all of that with QuickFund AI. QuickFund AI takes the emotion out of trading with an automated system that does the work for you. No staring at screens all day. No overthinking every move. Just smart automated trading strategies that can run while you sleep. And here's what sets QuickFund AI apart. With their Quick Fund Guarantee, qualified clients receive up to $300,000 trading capital, 12 months of waived service fees, and a money back guarantee on the software itself, giving you the power to trade smarter without tying up personal assets. So if you're ready to trade smarter, not harder, visit QuickFund AI to get started. That's Q U I C K F U N D A I quickfund AI where technology earns for you. You know you're in trouble when your assistant is also you. Imagine getting hours back each week so you can focus on growing your portfolio, not managing busy work. That's the reality with Belay. They match real estate investors like you with remote staffing solutions that save time and help you scale faster. Because the truth is, you're just one assistant away from spending your time where it matters, finding deals, funding opportunities, and closing contracts. Belay even created a free tool that shows you how much time and money you're leaving on the table by not delegating. Want to see your number text? Bigger pockets, no space to 55123 to get Belay's free executive assistant Task Calculator. Remember those dreams where you show up to school and realize you forgot to wear pants? My first Black Friday was like that, except instead of pants, I forgot to make sure my payment system could handle more than two transactions at once. And instead of waking up relieved, I woke up to 47 angry customer emails whether you're an established business or bracing yourself for your first Black Friday this year, you need a platform that won't abandon you when things get crazy. Shopify powers millions of businesses and 10% of all US E commerce for a reason. There are thousands of templates streamline website creation so your site looks good and and works flawlessly. AI tools write product descriptions and enhance photography to increase your reach. Shopify's marketing tools push your brand through the holiday noise. Shop pays expedited checkout, reduces abandoned carts and boosts conversions. Plus, their 247 support team has your back when you need it most. This Black Friday Join thousands of new entrepreneurs hearing that for the first time with Shopify. Sign up for your first free trial [e-mail] bprookie that's shopify.com bprookie go to shopify.com bprookIe and make this black Friday.

[A]

One to remember you just realized your business needed to hire someone yesterday. How can you find amazing candidates? Fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job noticed on other job sites. Indeed sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking and it works. Sponsored jobs on indeed get 45% more applications than non sponsored posts. The best part? No monthly subscriptions or long term contracts. You only pay for results. And speaking of results, in the minute I've been Talking to you, 23 people just got hired through Indeed Worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed and listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at indeed.com sponsored SL Rookie just go to indeed.com rookie right now and support our show by saying you heard about Indeed on this podcast. That's indeed.com rookie terms and conditions apply. Hiring Indeed is all you need.

[B]

All right guys, welcome back. Now Shalom, I want to get into some rapid fire questions that I have for you, but before we do that, I know you mentioned that you you've almost like raised a fund now for your private lending and I I think it's obviously a slightly more advanced strategy, but I do think that there are lessons to be learned on how you put this together. So what is, what does it mean that you have a fund now for your lending? Who are the people that are inside of it and how do you structure it so that, you know, the people who are giving you the money, they get paid that you're able to generate some revenue. Like what's the structure of this fund look like?

[D]

Yeah, so with our fund, we have a preference preferred return for our investors. Beyond preferred return, the interest rate gets split between the general partner, I mean there's no deal there. So beyond general partner of the fund and the limited partner of the fund, then origination fees have their split. Any profits on selling any loans, they have their split. And right now all of our investors are friends and family. I, my, my, all my family came from the Soviet Union in the early 90s and they, they figured out a way to become, to become successful and financial free. But they stopped working tomorrow. They, they don't have any security. They're all maybe doctors, nurses, lawyers, architects, but they don't have any, anything else beside their job. So I feel like it was my, my job to go ahead and figure out, okay, how can we still keep our wealth, but if we don't work tomorrow or someone gets sick or something happens, we still kind of can eat the fruits of our labor. And so real estate is like an easy answer for me there. But also diversifying into stocks and all that kind of stuff. But you have to be more about the fund. So that's kind of how the fund works. You have a kind of a minimal return that we're aiming to give investors. Plus the rest is split between the GP and the LP in certain ratios based on what that activity is.

[B]

I love that concept, man, because I, you know, as we talk to more and more people who are in the private lending space, it really does feel to me that it is maybe one of the best vehicles for passivity, but also outsized returns. So it's really got my, my like head spinning on like, man, I feel like I should almost start a debt fund, you know, and you know, because like worst case scenario, I can use that debt fund to fund my own deals, right? Like there's no pipeline. I can, I can just fund my own deals with the money that I'm raising and like the system that feeds itself. So let's get into the rapid fire question.

[C]

Shalom.

[B]

First one is, what's the biggest lesson that you took away from your rookie deal?

[D]

Low leverage is, is really, really good. On that first rookie deal, I bought it all cash. I mean I was getting private money from, from my family. So the same money that paid off Grace, that's what we used to buy that, that, that duplex. But I didn't have A bank weighing over me, right? So my agreement with my mom was, once we refinance this property, I'll give you your money back plus the interest. And I didn't have a bank weighing over me. So when three months in, one of the tenants didn't pay rent and had to do an eviction, I wasn't sweating and be like, okay, how am I going to pay this lender back? Right? And so a lot of people these days, they want to do 100% financing deals, whether it's a fix and flip or rental. And I'm like, that sounds really scary. For me, I want to put down 20 or 30% and my goal for my portfolio is to have about a 60% loan to value across all my properties. I mean, some will have higher loan to value, some will have less because of where they are in the payback period and how we bought the deal and all that kind of stuff. But my goal is, I think 60% is a sweet spot. And when you compare this to what institutional players are doing, they're not financing their deals at 90 or 85% loan to value. They're pretty conservative on development deals and on value add deals, they are closer to 50 or 60% loan to value. So if the guys who are doing hundreds of millions of dollars are borrowing less, I think I should follow in their footsteps because they know a thing or two. Right.

[A]

What's one piece of advice you'd give a real rookie that wants to get started as a private money lender?

[D]

I'd say do your research about the borrower and the deal. Make sure it's something that worst case scenario, if you had to own, you're comfortable with it. And if you had to, if the deal went wrong, then you have a clear exit strategy. A good way to do that is educate yourself, learn what are non performing loans, how does the foreclosure process looks like, what is the default interest rate and when can you charge it? In addition, I would have a lawyer do your loan docs because they put a lot of that stuff in that you wouldn't think of. I would never think of. Okay. Ashley, New York is a really bad foreclosure state. So if I'm doing a private money loan to you, I also want to have the right to your llc. So if I have to foreclose on you, I could probably get rights to your LLC and reassign your LLC to myself pretty quickly and take control of the property that way versus taking you to the foreclosure court and doing it that way. So a lawyer would know that, but a typical person doing their first loan wouldn't. So shell up to two grand and get a lawyer to do your loan docs.

[B]

Shalom. Last question. When evaluating a borrower or a deal, as the lender, what is the most important thing to focus on?

[D]

That's a tough one. I mean, we look at a lot of things, look at experience, we look at credit, we look at the way that you communicate with me if you send me stuff and you're like all over the place and all messed up when you send me docs. I can only imagine how you are in a construction site dealing with contractors and subs and paying invoices and all that kind of stuff, right? So if you communicate to me an email like, hey, Shlom, here's the docs you requested. Here's LLC information, my credit information, and the deal review and the appraisal, all that kind of stuff all in one email by force. There's a Google Drive. I'm like, well, that's pretty cool. They're organized, they're great. They communicate really well when there's a problem or something comes up. In my review and I have a question about it and you're kind of evasive about it. It makes me like, what are they hiding? Right? So be honest and be organized because that's a big thing that I can't measure like with a credit score or with your experience. But it does hint to me what kind of borrower you'll be like for a second, third deal as we do it.

[A]

Well, Shalom, thank you so much for joining us today. We really appreciate having you on the podcast, sharing your journey, sharing your experience. I think this might be the first time we've had a rookie on that was a private money lender for their first deal right out of the gate. So where can people reach out to you and find out more information?

[D]

Yeah, this is awesome. You can find me on Instagram at Envy Investment Grp. You can also find my website nbinvestment grp.com and if you want to call me or text me, feel free to do that. My number is 973-737-9905.

[A]

I'm Ashley, he's Tony. And thank you guys so much for joining us for this episode of Real Estate Rookie. And we'll see you on the next one.

[E]

Let's talk about a real estate backed investment with major tax advantages, car washes. PBR's Opportunity Fund offers accredited investors access to a high margin, recession resistant industry with passive income tax efficiency and significant upside potential with operations in prime locations using best in class technology. Managed via a vertically integrated team, this fund is designed to deliver strong, stable returns. Backed by over $1 billion in assets under management, PPR has provided passive returns to thousands of investors since 2007. Don't miss out. Learn more [e-mail] PPRCAR that's biggerpockets.com.

[C]

You know, a lot of us work hard to build savings and start investing, but let's be honest, trading can feel like a full time job. The charts, the timing, the constant second guessing. It's stressful, right? You're always wondering, am I making the right move? Now you can eliminate all of that with QuickFund AI. QuickFund AI takes the emotion out of trading with an automated system that does the work for you. No staring at screens all day, no overthinking every move. Just smart automated trading strategies that can run while you sleep. And here's what sets QuickFund AI apart with their Quick Fund Guarantee, qualified clients receive up to $300,000 trading capital, 12 months of waived service fees, and a money back guarantee on the software itself, giving you the power to trade smarter without tying up personal assets. So if you're ready to trade smarter, not harder, visit Quick Fund AI to get started. That's Q U I C K F U N D A I quickfund AI where technology earns for you.