Scaling Your Wealth Through Real Estate: The Henish Pulickal Way

John Corcoran: 11:19 Yeah. Yeah. So you start your company. And what were the early days like? Was it, was it hard to get the first few deals? Was it you? Were you. !no name provided!: 11:30 It was. Yeah. Absolutely. Henish Pulickal: 11:31 I mean it’s still, you know, you still when you’re starting something off like that. I actually took a partner that had a lot of experience in real estate and flipping houses, but not a lot of experience with Pre-foreclosures, so kind of complementing each other’s skill set that way. And I had some people working with me. He had some stuff going, but early on I was able to get people to come with me, train and do some door knocking. So it took a few months to get the deals in And once they started coming, you know, we were getting ten, 12 deals a year and they’re all making money, which is great because I can employ different creative financing strategies, seller carries and subject to’s, taking over existing mortgages, things like that. And so once, once I got a good routine going, it was a good run for several years. John Corcoran: 12:15 Yeah. And then Covid happened. Probably a lot happened in between. But as you mentioned earlier, I think it was before we started recording that there was a moratorium put in place on foreclosures for a business that was focused on Pre-foreclosures. How did that affect you? !no name provided!: 12:33 Yeah, it was tough because. Henish Pulickal: 12:35 You know, I was getting used to having those flips and coming through. So I tried to pivot to trying to buy things on the market or from agent relationships, which worked out okay for the most part, but they weren’t guaranteed profit makers like the pre foreclosure stuff, because I could always make it at a buffer where it’s going to work, as opposed to, I hope that this house that I bought for 700,000 will sell for a million. John Corcoran: 12:58 A little thinner margin. And it’s in California. Henish Pulickal: 13:02 Correct. And then also, you know, not being able to buy those properties subject to or seller carries or something. Now I’m carrying the burden of a hard money debt as well, which. John Corcoran: 13:10 What does that mean? But not being able to buy it is subject to explaining that. Henish Pulickal: 13:14 Yeah. Subject two is say for example, I’m buying a house for 700,000. Well, that person might owe $650,000 on their mortgage with $30,000 in arrears. So I might be able to pay that 30,000in arrears, give the seller another 10 or $20,000 and take over their 3% mortgage. John Corcoran: 13:29 And is the lender okay with that? Henish Pulickal: 13:31 No, not necessarily, but they’re not going to they’re not going to accelerate the foreclosure clause or do on sale clause if they’re getting paid. They’re typically so busy with their crappy loans that if I’m making their loan current and making their monthly payment, it’s not triggering any red flags. Like, let’s go see what’s happening here. Right. They’re just happy to get their payment because they’re a servicer and they’re saying, okay, great, we’re getting paid. And by the time, you know, something might be noticed, it might be years later. But typically I’m turning these things around in 3 or 4 months. John Corcoran: 14:01 So you’re looking to fix it up, turn it around. Sell it. Got it. Henish Pulickal: 14:05 Pay off the original mortgage. And then I get my split there. John Corcoran: 14:08 Got it, got it. Yeah. You also, along the way, started a real estate brokerage. So you started hiring agents and doing traditional listings and helping people to buy properties as well. Talk a little bit about that and how that developed. Henish Pulickal: 14:25 Yeah. Of course. You know, I had my license in zero nine, but then I got my broker’s license in 2017. Thinking that, hey, I don’t want to pay a broker on all these fat splits. Yeah. And then also knew that I had some skill sets at real estate that I could share with other people. And at that point, I was just kind of attracting agents as opposed to trying to go recruit them. So people interact with me either on the other side of a transaction or met me through an event and say, I want to do what you’re doing and ultimately get them on and get them trained and get them to do some kind of traditional real estate stuff, which is hammer their sphere and then also do whatever kind of lead gen they preferred, which varies from from realtor to realtor. John Corcoran: 15:04 Yeah. Now how to talk a little bit about developing. Is it fair to say it’s a boutique brokerage? Exp Realty is the name of it. Not, you know, not a huge brokerage or anything like that. Henish Pulickal: 15:15 Oh, I need to update my LinkedIn, I apologize. Yeah, I switched over. It is a pretty big brokerage. That Exp is up to probably 90,000. I think it’s one of the top three in the nation now. Wow. But I joined actually another newer boutique kind of spin off of Exp called Aro Realty of America. It just opened last fall. I got to update my profile. But yeah, already up to a couple thousand agents already out to 13 different states. Oh, wow. And they’ve got some of the top producing agents in the US. The two founders respectively, do $1 billion and the other one does $2.6 billion in business a year. Wow. In retail transactions. So we’ve got some good people. I didn’t know that either. But yeah, Mark Dimas is our founder. He actually will be in my office in a couple of weeks to do a presentation here. But yeah, he does. He’s number one rated by Wall Street Journal in the United States. Wow. With $1 billion in sales a year. So. John Corcoran: 16:05 So you’re a broker then within the agency, correct. Got it. Okay. Henish Pulickal: 16:09 So I’m a broker associate. So I quickly found out within, you know, the first year of having my own brokerage how expensive it was to maintain the tech, maintain the ID and the integrations with the MLS, having your own marketing department for your branding and having to do graphic design and everything, that was just a lot of overhead and versus joining a bigger platform where they charge, you know, reasonable splits and and gave me the leverage that for the training, the marketing, the tech support, the compliance, which is a lot of onerous work. Yeah. And a lot of behind the scenes work, which isn’t as rewarding versus let me just go out there and sell and service people. John Corcoran: 16:46 Yeah. So let me ask you this then. I, you know, someone who has bought real estate over the years and followed it up from time to time. There seems to be a pattern in real estate where a group of brokers will do well, or a group of agents rather, and brokers will do well in, you know, in one brokerage. And then all of a sudden they all start to go somewhere else, chasing like a better commission split or something like that. And then a few years later they go somewhere else. How do you avoid that sort of thing? How do you build a culture with the agents that work for you and try to prevent that sort of thing from happening over and over again? Henish Pulickal: 17:23 Yeah. I mean, you know, attrition is a common thing. You want to try to minimize it. Ideally, you’re listening to the, you know, I just had this earlier today where one of my agents was very successful at day trading and enough where, you know, in his 30s, he quit his day job because he makes a huge amount of income off of that. But he’s interested in pursuing residential care facilities as his outlet. And so he just got licensed in that as well. And I was sharing with him that, hey, you shouldn’t pass up on the real estate sales. You should still be a very public agent as opposed to a secret agent, because of the network that knows and trusts you. There’s something there. But then I always try to keep in touch with my agents. I have regular meetings, see where their goals are and help them directly if I can. If not, connect them with the right people or resources so they can achieve those goals within my organization. Stay here and grow. Like for example, two of my agents that have worked with me have already started their own successful construction companies, you know, under my umbrella, which is great, you know. So if I can empower them to become their own entrepreneurs and business owners, or even to have them have agents work with them, and I can teach them that structure, then that’s a recipe for retention right there. John Corcoran: 18:38 Yeah. Let’s talk about you. Another element to your business is doing infill development. Smaller infill development, which is, you know, very popular in the urban areas and in California, because we’ve got a lot of well, there’s not a lot of land left and a lot of parts of California, except for like underdeveloped little parcels of land that maybe has like one small house on it or one small commercial facility, but it really should be an eight unit or a 20 unit residential, you know, property, because we have a housing crisis here in California. So talk a little bit about how you got into that. Henish Pulickal: 19:15 Correct. Yeah. So mostly because they kind of fell in my lap. You know, I’d get deals pitched to me from other people or even people on my team saying, hey, what do you think of this deal? Does it work? And, you know, I’ll give one example. I’m doing one in North County, San Diego, where an agent on my team pitched to me and said, hey, what do you think of this? You know, a little 900 square foot house in Vista? The seller wants 700,000. I’m like, that seems overpriced. And then when I looked closer at the lot, it was a 26,000 square foot lot. So more than half an acre. It was surrounded by multi-family apartments. And I was like, well, there’s a good chance that I could turn this into a multifamily apartment. Yeah. And at that point, I was like, let’s dig in, get an architect on it. Confirmed. I could do 21 plus units here. So in that case, I went to the seller, who was a savvy mortgage broker or real estate broker himself. And I said, hey, we’ll do this deal. You know, I’d like to get creative on this because we want to get plans to build something that’s going to take us two, two and a half years to do. Right. It takes forever because of all the red tape here in San Diego or in California in general. In that case, I negotiated what’s called a recorded lease option, where the seller said, hey, actually, I just need $70,000 to pay off a small mortgage that I have, and I’ll lease the rest of it kind of as a carry. And we recorded it on title, so we can’t sell it to someone else where I just paid him $2,200 a month, basically a 4.75% rate on the 630 remaining that I owed him. Meanwhile, there was a tenant on site that we just bumped the rent from them for 2000 to 2200. So I covered my holding costs entirely on that one. In the meantime, we’ve now got it bumped up to a 33 unit with 34 parking spots. We’ve already gone through four four reviews, two design reviews, and two cycle issues. And we’re on, you know, the home stretch to get this permitted as a 33 unit. We’re just going through noise traffic and air studies right now. We should have permits to build in a few months. And you know, then I’d pay that guy off with a new construction loan. Or I could even sell it entitled. Right. Someone will pay a premium saying, hey, right, we’re getting through these hurdles with the city. Will pay a premium per unit for you to just sell it to us and we’ll build this thing. So that’s one of our better ones that we’ve got going right now. John Corcoran: 21:26 Yeah. Very cool. And you also developed. You don’t do many hotels, but you did a hotel recently. Talk about that one. Henish Pulickal: 21:33 Yeah. It actually fell into my lap from the entrepreneur organization that I’m a part of. And I think you are as well that we were a guy that had done 4 or 5 other hotels and hospitalities. So he pitched it to me when he was negotiating the offer, and I was asking for advice or an experience here, as we call it, in SEO. And so I was like, well, I’m not going to have any experience in this, but I like the deal enough where not only will I put some money in, I’ll also bring some people in to bring some money in to get this deal done. So that’s it came from an SEO contact and so we were able to buy it. It wasn’t easy. None of the banks liked the deal, but why not? It was because it was expensive. It was a unique property. It looked like crap. If I showed you pictures of it, it would look like this. Imagine like the worst rundown flea motel you could find on route 66, in the middle of Oklahoma. Like, it was a piece of junk. John Corcoran: 22:28 But it was in Mission Beach, San Diego, which is a big difference, right? Henish Pulickal: 22:33 Which is a premium area, right? John Corcoran: 22:34 But yeah. Henish Pulickal: 22:34 Very nice. None of the other buyers had the vision to say I could remodel this place and make it nice. Everyone thought they’d have to demolish it, take 2 or 3 years for permits and then rebuild the new place. But Adam had the experience, I had the vision, and we agreed that we could remodel this thing at a reasonable dollar amount and get it up and running pretty well. And that’s what happened, you know. So we were able to bring in the money, the bank debt was secured, and the bank was also owned and run by an EO member that had faith in us that we would do a good job. John Corcoran: 23:07 And that must help with getting your way through underwriting for sure. Henish Pulickal: 23:11 It wasn’t easy because the loan committee was trying to kill it. I knew some people in the loan committee and they’re like, we’re trying to figure out every way to kill this deal, and the owner is pushing us to get it done. John Corcoran: 23:20 Wow. Yeah, it’s definitely good to know the owner of the bank for sure. Henish Pulickal: 23:24 For sure. Yeah. So that panned out well. And, you know, we had a grand opening party a few months ago. The project came on beautifully. It’s got great reviews, so clients seem to like it. And actually I was able to exit out of it pretty recently, about a month ago to another investor in the deal who was eager to scoop up more shares. And I was okay with tripling my investment and that worked out. John Corcoran: 23:47 Wow. Amazing. Talk about ADUs. Well, first of all, explain to people listening to this. What an Adu is and why they’re significant now. Henish Pulickal: 23:57 Yeah. For sure. This is a huge part of California that’s just zoned for single- family zoning. You know, people have five, six, 10,000 square foot lots that have a two or 3 or 4 bedroom house on it. So they got big backyards or space on the second floor to add basically a guest house, a second unit or more on these properties. And so that’s some legislation that has passed over the last several years to make them progressively easier to permit and build, because and that’s putting. John Corcoran: 24:23 That’s putting it modestly. I mean, it is way easier than it was, particularly in communities like mine where, you know, even going through a design review could kill and could kill, you know, that type of project. And I say that having previously served on a design review board. Henish Pulickal: 24:38 Correct. Yeah. So, exactly. So basically now if it meets the very liberal code and, and it meets building code, then you’re going to get it approved. Your neighbors can’t stop you. The community can’t stop you. So for the most part, everyone’s getting their guest houses approved. And because it’s so much cheaper to build a house than to buy a house, the economics are pretty good if you wanted to rent it out, but we’re finding at least half the people that are building these are building them for family, you know, adult children that need to stay nearby and can’t afford California pricing or, you know, parents, retired parents that might need to move back in with their family to to live somewhere because they can’t afford it. But, you know, for two, three, $400,000, you can build a nice guest house in your backyard. And how some people earn, you know, at least 12 to 15% return on your cash in terms of rent as well, because of how much in demand a nice unit is for rent. John Corcoran: 25:34 Yeah. Yeah for sure. Yeah. That’s interesting. It’s quite an area to get into right now given the underdevelopment in California of housing and how much it’s needed. Well, this has been great. I really enjoyed hearing your story. I’d love to wrap up with my final question, which is my gratitude question. I’m a big fan of practicing gratitude and also giving our guests an opportunity to acknowledge a few people who have helped them in their story and their journey. So who would you want to acknowledge? Henish Pulickal: 26:06 Yeah, there’s been a lot of people along the way. I only joined EO two and a half years ago, but from that, it’s been immensely helpful to have a network of other entrepreneurs and business owners who have had the challenges of honesty and will share the truth of their experience with me. So there’s been no shortage of EO members who have been super helpful early on in my career. You know, when I had a job still from 2002 to 2009, the original bosses that I had at that subprime mortgage company that I worked for were very supportive, very helpful, and gave me a lot of promotion opportunities and learning opportunities as well. So very grateful to them. And in fact, you know, both of them have been investors in my projects recently as well. So it shows that they still have some confidence in me 15, 16 years later to work with me again. So that’s been nice to have. And, you know, I find that if you treat people well, they want to stay in your network and will reciprocate accordingly. And so kudos to all those people that I’ve gotten to interact with and, and hope hopefully they appreciate our relationship enough to continue it on. John Corcoran: 27:10 And where can people go to learn more about you and connect with you or ask you any questions? Henish Pulickal: 27:14 Yeah for sure. I mean, I’m on all the social media. If you can just type in my name, you’ll probably find me on LinkedIn, Facebook’s Instagram, otherwise my company website calhomeco.com has a lot of information and easy ways to get ahold of me and schedule an appointment as well. John Corcoran: 27:28 Excellent. Thanks so much. Henish Pulickal: 27:30 Thanks, sir. Outro: 27:34 Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.