Episode Transcript

Welcome to Episode Three of Season Two of the Growing Empires Show. Today I'm here with my special guest, Tejas Gosai, a commercial broker and friend from the Lehigh Valley and today we're going to talk about why Tejas came to the Lehigh Valley and why he focuses primarily on commercial and investment real estate here. Stay tuned.

Welcome to Growing Empires, hosted by real estate entrepreneur and trusted investment advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

00:39

Today my guest for the show is Tejas Gosai. Tejas’s exposure to real estate began at 17 when he led major development projects alongside his father as they opened an 89 room hotel. While at Ithaca College, Tejas double majored in marketing and legal studies with a minor in economics. Following his graduation from from Penn State Law, he recommitted himself to real estate development undertaking several more hotel projects in the Pittsburgh market and cutting his teeth at publicly traded real estate investment trusts based out of Philadelphia. Tejas and I've been working closely together closing large scale investment deals, and he's got a wealth of knowledge about business, economics, and investing. So I'm so excited to have him share his knowledge with our listeners today. So Tejas, welcome to the show. Thank you so much. Thanks for having me. Today, we're going to discuss three topics that we came up with. One is going to be about multi market investing and kind of what makes people come to the Lehigh Valley and what's been happening around the globe as far as how it pertains to investment properties. We're going to talk a little bit about legacy investing, and investing for your future and then we're also going to talk about business and what to expect over the coming years and how to adapt and win with systems. Awesome. We got a lot to get through, huh? We got a lot to get through.

02:00

Yeah, I feel like this is a perfect avenue to be able to talk about what's happening because there's not enough people in the valley that take the time to discuss our macro and micro economics viewpoints. And yeah, it's fun to do deals with you guys and your team. It's very difficult the valley is cutthroat. There's there's nothing soft about being in the valley and I love it because some New Yorkers come out this way and they think we're country bumpkins, which is true to some degree, but it's insane to try to buy and sell property out here right now. Yeah, yeah, no doubt no doubt about it. There's there's so many different avenues and so many different types of buyers and purchasers. And, you know, so many different ways to skin the cat. Right. There's just so much opportunity out here. And I think, you know, to some extent, we're also the secret untold, you know, I don't think that people that are already investing here, get it and people see stuff on the web, especially about like, you know, our warehousing industries, and just stuff that is really what employs that tendency here. Right. It's a big factor in our market. But I still think that we're a little bit of that untapped market, you know? Yeah, totally. It's an exponential curve. So going back to one of your questions, the reason that I moved here, I'm very fortunate, I got lucky, I married a girl from the Valley. And we had had a marriage deal. She gave me 10 years with my family in Pittsburgh and that's where I built hotels and gas stations and did a bunch of fun stuff and then we came here because my children are young, and, you know, we want our parents to have the benefit of living near the kids. So coming here, I did not know what to expect and then getting into the real estate game, getting my license. I quickly like I think I caught it right at the beginning of the exponential curve about four years ago. So right when I got in, I saw how quickly everybody is moving towards an inventory problem. And you've been dealing with this for over a decade now. And so when I first got into this I, I just wanted to focus on that. I was like it, you can have a million buyers, but it doesn't matter at the end of the day if there's no inventory, so my focus from the first day and still today is just inventory, inventory, inventory. How do you get it? How can you, you know, just get the opportunity to sell it, which will talk into some of the off market stuff. But sure, yeah, it's insane right now. And every day, it's like more and more, but one specific thing that's time sensitive is the laws that changed in New York that are making our Valley not just one of the best places to invest in the northeast, it's now like 10 times more of a magnet because of what's happening in that state. Sure. You're seeing that too. Absolutely. And for our listeners who may not be up on the latest news from New York, I think we should probably talk a little bit about it because it is had an insane impact on the New York rental market and, and how people now need to move their money, you know, to really make a profit.

5:06

Yeah, to set the stage - so 2016-17 we started to get some big development in the Valley and we got Tower Six, this big $50 million building, now we have multiple $50 million buildings. Everything is expanding like crazy. And just now in the past 60 days this law changed. And you can help me with this. So yeah, as I understand it, New York State passed a law you cannot buy out tenants, basically? Correct. And you can't do the rental trick of renovating and then upping the rent. Yeah, it's rent controlled. So you know, they put some serious restraints in part of the economics of good investment properties as you increase the income and decrease the expenses. So if you now are limited to what you can increase, you know, you're tapped out. You know, it's like buying that premium property right. You can't go up from there. You can only go down, you can only fall. And that's kind of what New York is experiencing from from everything I've read and heard.

06:00

One guy that I spoke with, he's like, look what what they're doing is making it so that the next generation can't take advantage of what we created over the past 30 years. And so now we're being driven out of New York, we can't be in New Jersey, and no one wants to be near Philadelphia. It's too expensive. Scranton doesn't make sense. So we're like just the next pool that they can head to. And that is now going to elevate our entire market ridiculously because that's brand new money that it has to move over here. And you know, a lot of these investors, immigrant investors, I guess I can say, and don't you feel a little bit like you know, now that people are starting to get wise to the Valley, you know, the inventory problem is not something that's going to go away anytime soon, right? I mean, we're, we're so good, right? We're so hot that now everybody's moving their money for a variety of reasons. I mean, people used to just invest here just to have, you know, not have all their eggs in one basket. You know, you would have your money in IRAs and stocks and different things in the people would go into the Valley and go to where the cap rates were good and also have real estate investments. Now that people are being forced to move their money, even from other real estate investments, you know, in other states, I'm finding that, you know, now we are also getting that demographic where, you know, if I was only getting a 2% return or a 3% return in New York, I now think that six, seven or eight in Pennsylvania is like hot stuff. Amazing. Yes. Toys R Us. It's like, let me buy everything in there. Grand sale, right? Absolutely. So, you know, we're also getting a flood of people that are brand new to investing, have invested for years and years and years and other states and just want to move their money. And, you know, it's great for us, right? We've got more clients more business, but it does create a little bit more stress on the ongoing inventory problem. So yeah, and that's been a problem in the valley for however long and now it's that much more of a problem.

8:00

You've been a huge advocate of trying to almost slide out under the radar, right? You and I both look at the business, I think from a very business sense, business oriented. And when you compare us to the typical real estate agent out there, you know, they don't see the bigger picture, they don't see that all we're trying to do is just facilitate good deals for our clients. But we also live and breathe investments. That's all we do all day. There's a critical component there that I think is so essential to business and it's just understanding what the need is, and being able to facilitate a solution to the challenges that our market faces, right. We could be like every other agent and be like, oh, you know, I'm sorry, there's no inventory. But that doesn't work for our clients. They want to move their money, they need to move their money, and we have to, we're obligated to find solutions or quite frankly, they're just going to find another location. Right. And let me add to what you're saying. You're saying finding a solution. It's not, it is that but the inherent solution is the trust, like the word trust, because all you, you are like, I mean, I look up to you with what you've done with your business over the past however many years because you have this, and you kind of told it to me before you have this generation one of when, you know, 10 years ago, you were doing this, you have all these amazing, they were buyers, they were younger buyers, then now 10 years later, they're 1031-ing into other properties and so you have your younger batch of buyers that are moving into the market. And that right there is like the clients, they don't actually want to go to another agent for a listing, they want you, correct, because you vet the property, you look at it the right way, you're not going to list a piece of junk. Right. And, you know, so that's the problem with the solution. It requires a lot of trust. And on the other side, too, like when I'm trying to list these elderly gentlemen and ladies that don't want to give up their properties, it's a trust thing. They're entrusting me to work with a Jennifer or work with, you know, clients that can solve this problem.

9:58

So, so yeah, that solution is great, but it really does inherently go against the grain of Pennsylvania Association of Realtor language and, and our specific Greater Lehigh Valley MLS. Yeah, you know, I think real estate is a very selfish business, right. And I can say that because you know, we all had to grow through that mold, right. As a real estate agent you're about, let me get the next check. Let me get the next commission. Let me sell this property. And it's a lot of just sales, sales, sales. Our market has been, and it's probably not just our market, but you hear a lot of oh my God, she's just another Realtor, you know, and it's been a challenging thing, because, you know, he had such a bad reputation. And I think what you and I do differently is that we're creating long term relationships. It is not at all about the sale. The sale is just a function of the business relationship. Yes, I'm so happy you're saying it that way. Keep going. Yeah. So and you have several different models and several different ways that you can, you know, just create service upon service upon service for your clients to really customize things for them and of course we do, too. And that's how we've gotten to know each other so well. But, you know, to me, it's not about the next real estate deal. I'm not having you buy junk because you are going to have me manage your property and then you're going to want to hold it and you're going to want that investment to grow. And if it doesn't grow, because I sold you junk, you're gonna look at me and be like, what the heck, you know, but if I can tell you what properties to buy, because we've analyzed it in depth ahead of time, you buy the right investment, I put it on paper with you, we know exactly what the metrics are, what the goals are, then I give you the property management services to facilitate achieving those goals. You know, now you're in a position of very passive, you know, real estate investing. And you what you're doing too is like, you are taking that crystal ball and putting it on paper and saying look, I'm not wrong here. I have volumes of data from my personal property management company. Right. And then the market to say like you have a more limited risk for sure, because you're an agent that is factoring in everything that you can look at to make the most calculated decision. Right? Your legacy investing in like generational real estate sales work is because you're closing the gap on the buyer and seller side. And then you have the data and metrics to show that I did sell them this property six years ago, and it's been tracking at this run. I'm assuming that's what you do. Oh, absolutely. Yeah.

12:26

The episode will continue in just a moment.

12:30

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13:33

So let's talk a little bit about the future of business. I know we've talked a little bit about the different marketplaces and what's been happening, why people are investing here. You have your sights set on anything that deals with our economics. I constantly watch your videos about you know what's happening next in the Lehigh Valley, you know about gross domestic product. I mean, do you know about all the functions of the economics that support the investments in this area. I want to know a little bit about how you a) use that to forecast your business, right? And how that makes you change what you may or may not be doing. And what do you personally see as a future of our business? What do you think is going to happen in the Lehigh Valley over the next couple of years? And, you know, where do you suggest people put their money in, you know, different types of things like that. So, sure, by all means, start with whatever you want. Okay, cool. Thanks for that. Um, yes, I'm a nerd. And I guess I can say this, I got my license, January 1 2017. And with my legal history, and all that other stuff, I never got my license wanting to be the best Realtor. I didn't want to like, that wasn't my goal. I looked at it as this is a license that will get me in front of the wealthiest people in the Lehigh Valley and surrounding, as long as I have a magnet that you know, can attract it, and so obviously the inventory is the magnet. So from day one, I have probably spent $10,000 to date on just economic conferences. I go to the Lehigh Valley Economic Development events. I go to some Lehigh University economic development stuff. I've gone to a couple classes, like my broker, Loren Keim, is a professor there. So I really, like my goal is to try to go find all the pieces of information that everyone is looking for. And then I turn it into some type of media and try to distribute it to people. So what people think is like, yeah, I'm doing this for the most, going back to being selfish, I'm actually trying to be the most selfish person here because I don't think anyone else has a better pulse on what is going on with the market than I do. And you know, I stake my reputation on that. So I tell investors that we are at the tip of an exponential curve that started around 2016 and the Lehigh Valley as a whole is one of the best investment environments in the Northeast. Colliers International just voted as one of the top five fastest growing industrial markets in the Northeast. In 2016, we had a $38 billion GDP, we were the 73rd largest economy in the country. In one year, we went up 1 billion to 39 billion in GDP and we went up eight spots to the 65th largest economy in the country. And so now, this like prism of everything that you and I are doing on the micro level, and then, you know, the Jaindl family building stuff, and all these folks moving to this area, it's really creating just a perfect prism. Like, that's not going to stop. So the biggest question I get asked is like, oh, the economy is going to crash, blah, blah, blah. We don't know what's going to happen. Trump this, reelection, everything. So I tell people that with everything that I've studied and everything that I know about Allentown, Bethlehem, Easton, the Poconos is that we are an insulated environment. We're an insulated economic environment. Oh, absolutely. Whatever happens in anywhere else in the country or the world, it will not affect the Lehigh Valley because of our, our location, our highways, we have three cities that have three colleges next to them. We have river fronts in front of each city. We have the warehouses. We have all of this stuff and now we're past 42 billion in GDP. Like, I don't care what happens anywhere else in the economy, like we're not going to have a slowdown and if there is a slowdown in the rest of the economy that is better for us, because we won't be a place that will have a downturn and more people will want to invest here.

17:48

Sorry, that was a long sentence. No, that was that was insanely helpful. Because I think that, you know, again, like going back to that trust factor, right. People want to know that not only do you know what you're talking about, but they can believe what you're saying. Nobody wants to be the first investor trying out the newest tech, right? You just don't want to be there. You never should be the first person in the brand new restaurant, you should never be the first person buying investments in an untested market, you know, and it's a very similar thing here. And to your point about the insulated bubble, right, when we're looking at helping people invest, you know, the one thing that I say is that there is a clear path of things that I will tell you absolutely without a shadow of a doubt to stay away from. And that's, you know, when you're breaking things down into and it applies to both commercial and multi unit investments, the A, B and C class, right. You can find a ton of A class here, that's what the developers are building right now. Don't buy it. Don't buy it. Don't. Because everything has to take a slight change, right? I don't think that we're going to tank in a way that, you know, the rest of the economy could but because we do, we can sustain that change. But you know, when you have a B and C class property those will always be the employees of the economy, right? Yeah, 100%. They’re your industry employees, they're your warehousing employees, they work at the hospitals, they, you know, work for the universities. Night shift. Absolutely. That keep our economy going, there will always be jobs for those people, which means that you can always sustain rental properties in those B and C class markets, right. And you know, those people that live in the A class, when they have to be a little bit more frugal, you know, what they’re spending, move to the B class, right. So, you know, that's just something that we help educate our investors on and just say, look, you know, we want to make sure that you can weather all storms, you know, no matter what happens outside of the Lehigh Valley, we want to make sure that you're prepared and set up for success and I don't want to have to tell you why you've got to decrease your rent in half, right? Because I don't want you to even buy that property. I want you to buy smart, invest, you know, invest in the value add, you know, and get that appreciation.

20:00

And that's what we're going after it. Yeah, it's fun to see what is happening because, you know, we both have friends in a lot of other markets and a lot of other places. And it's just not, I was fortunate enough when I graduated law school to catch the early end of the oil and gas wave in Pittsburgh. So when I was there, I built hotels specifically for oil and gas and nobody knew what that industry was at that time. And, and actually, I went through this so it was 2007-08 in the Southwestern Pennsylvania region and the whole economy had burst, except for Southwestern Pennsylvania, Eastern Ohio, Northern West Virginia, we were completely insulated because we had drillers and they were staying everywhere and spending all their money on everything. And it was just like a perfect storm that we rode, and then I moved here and I can't help but think I got lucky enough to be in a very similar circumstance where I do think the economy is gonna be very fickle and at the same time our industry as a whole like, Jennifer, you own your brokerage, you have a title company, you do, you know, your property management, you've taken the steps to insulate your company, so that, you know, you can weather the storm at this point, it's yours to lose, if that's fair to say. Correct. And that's what I'm trying to go for. Like I'm a newer person trying to establish a reputation here to be able to weather it because we have we probably have three or four new agents every day in the valley. And this market isn't a secret. Yeah, and everyone's coming here now. It's like more and more people want to be here. So it's like, what is Opendoor and all these big box companies, what are they going to do to destroy us? Well, you and I are both in commercial and residential. That's one win. And then they have these other avenues and stuff but I see, that's what I see as happening like the franchise wars are going to get way heavier in the next couple years and by the end of it, who knows what's gonna end up and last point I'll make doing things the old way just will never work again. I think that there's there's two things that you said to me over the time that I've known you that I think is just a way to just kind of bring this all home is that you know, we consider ourselves real estate doctors right? Yes! We're not real estate agents, we are real estate doctors. 100%. It's our job to fix every problem, find a solution for anything that our market faces, that our clients face, or that our industry is just doing naturally, right? Unfortunately, we see all too much of that but uh, you know, and the last thing you know, that I'll end with is that you know, and I think this says a lot about your just character is that you know, you stay morally and ethically sound while priding yourself in your craft, so you will do whatever it takes to master your craft, but you still want to remain morally and ethical, you know, and everything that you do and it shows in your work. So I thank you very much for all of your insight and your, as you say economic nerdiness, thank you for sharing all that. That was fantastic and it was a pleasure speaking to you. I'm sure our listeners will have thoroughly enjoyed this and I can't thank you enough for your time. Same thing here, Jennifer, it's awesome. I will look forward to coming back one day.

23:24

For more information about how Jennifer can help you plan, develop, and manage a strong real estate investment portfolio visit GrowingEmpires.com.