The School Of Cash Flow

Having a profession doesn’t mean you can’t go into real estate at the same time. Just like our guest in today’s episode, Harry Nima Zeggara of Nima Equity LLC, a physician who is also into real estate business. He and his wife are both physicians, but it did not stop them to be more financially educated. Harry sees investments in real estate as an alternative source of income, especially because they are taxed more because of their profession. Tune in and discover how finding alternative sources of income can also benefit you.

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Watch the episode here

Listen to the podcast here

The Benefits Of Finding Alternative Sources Of Income With Harry Nima Zegarra

It is not uncommon for people to tell me that they do not have any time to invest in real estate, but what they may or may not know is that there are different ways to invest in real estate. Some ways of investing in real estate may take more time than others. For example, flipping and rehabbing homes is more on the active side and it takes up more time. There are other ways to invest, as we have covered in previous episodes. We have had many folks as guests that invest passively through syndications, joint ventures, or other similar models. It is more about finding what fits your goals and what you want to achieve. If you know you are committed to investing in real estate, you will figure out a way.

My guest found that commitment to invest in real estate. He is doing it. In fact, I am so excited to hear more of his story. He is a full-time medical physician, among many other things, and he has been able to grow his real estate portfolio. His name is Harry Nima Zegarra. He is a Pulmonary and Critical Care Medicine Physician, real estate investor, and entrepreneur. He is the Cofounder and Manager of Nima Equity LLC, which is a commercial real estate syndication company where he helps physicians to earn passive income, lower their taxes, and achieve financial freedom.

He has experience in rental properties and owns and manages nine properties across the Dallas-Fort Worth Metro Area. He is a general partner in 784 units in four different states. He met his wife Mitsi in medical school in Peru. They finished their training in Pennsylvania and Virginia, and he works at a tertiary medical center in Dallas, Texas. Harry and Mitsi love the outdoors. They have two boys who love playing basketball and soccer. They love to vacation in Cancun and Florida and they enjoy time at the beach, Disney, or Legoland. He is also an avid runner. Without further ado, let’s get started.

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Harry, how are you?

I am good. Thank you for having me here in your show.

Reading your bio, we have a lot of things in common. For example, I have two boys. I am curious. What are the ages of your boys?

They are 6 and 10 years old this 2022 and go to the same school. They play and fight together. They play the same sports too, like soccer and basketball. It is fun.

We have kids of similar ages. Mine is one year older than both of yours. I have two boys and they are both in scouting. They would be swimming. I take them to Disneyland and Legoland as well. Geographically, you are based in Texas, correct?

That is correct. I am in Dallas, Texas.

Real estate is all about connections and relationships. I know that we met through our common friend, who was a past guest on my show, Todd Sulzinger. How do you even know Todd? That is how we got connected.

We have known each other already for some time. We are part of a fund investing group, which is a group that we work together with other sponsors. It mainly focuses on capital raising and marketing. There are all types of sponsors and some sponsors have been here from 1 year to 10 years or more even.

You are a physician when you have got into real estate not too long ago. I want to understand how that all happened. How did you get into real estate? How did the evolution of this all go about?

It goes back to when we were back in Peru. My wife and I are physicians. We both went to the same medical school, and we were in the same class. My parents got divorced early and I was raised by my mom. She did not go to college but she did have different small ventures and businesses. One of them was real estate. She owned a small hotel. Also, she bought two smaller apartment units. I was able to see her hard work and witness how real estate helped her through life to raise my sister and me and to put us to medical school. She was able to help me to some degree to come here to the US. We were exposed very early in life.

When we came here to the US and because of the nature of our training, my wife and I were training and working in different states initially. We were in Pennsylvania doing my residency with my wife too. When I applied to pulmonary and critical care, we moved to Virginia. It was 2011 and we decided that we did not want to rent. We wanted to become homeowners. As you can imagine, it was 2011. It was not a stable market in real estate. There were a lot of foreclosures and short sales.

To be honest, I have not heard the word short sale. I did not know the meaning of short sales at that time. It was a very interesting experience. We started the process about three months before we moved to Virginia. You have all the experience and you know that short sales sometimes take a long time. We were stressed out in all of that, but we were able to close 3 to 4 days before my training started in Virginia. It was exciting and stressful to some degree. We were able to buy that small townhouse through a short sale.

After a couple of years, we moved to Texas after my training to start initially in private practice, and we decided to sell that townhouse. We were nicely impressed. The townhouse had appreciated a good amount. We sold that townhouse and moved to South Texas as I was in private practice. In South Texas, we were also considering staying. We bought a piece of land there and we were wondering and having plans about building a house there.

In the end, we did not stay in South Texas. We finally moved to Dallas, where my wife had some family and friends in common. We also decided to sell that piece of land. Also, it had appreciated in a matter of even less than a year. We were very primed when we came here to Dallas. We love the area. Our kids love their school. It was clear to us that we wanted to be involved in real estate when we came here to Dallas.

When you moved to Dallas, what other types of investing did you do? You sold your first townhome out of state and you bought a piece of land over in South Texas. When you knew that you were focusing on real estate investing, what kind of property tax were you delving into at that point?

I started when we were about to sell the piece of land in South Texas. Until now, we were with the mentality of a consumer. We do not want to spend on rent. We want to save. We were not having the mentality of investing or looking at the future. We are physicians. We spend a lot of time in classrooms and many years in medical schools. Unfortunately, we do not necessarily have good financial education there. We were finishing that and moving here. We were thinking about saving money and not having to spend on rent. It worked very well.

Before coming to Dallas, we started doing more education about it. It is the classic BiggerPockets and the White Coat Investor for physicians. They were all talking about all the benefits that real estate brings, including taxes. That is what we decided. We came to Dallas and almost immediately, we knew that we loved the area. We wanted to settle.

We bought our first home about six months later. After that, we started investing in real estate initially in residential real estate. We started buying small single-family houses in the Dallas-Fort Worth Area. We have transitioned a little bit more to commercial real estate. It is more like in the apartment complex syndication model.

You switched over to multifamily at that point. For folks, knowing that you are a doctor and medical physician, you are a high-income earner. People would think that you are like, “Why are you even considering real estate?” People think that you probably have it all. Is it something that you wanted to build while growing a medical practice? What do you see real estate for you in the long run? Is it going to be something that is going to replace your job or maybe you still like your job? I am not sure.

We saw this as an alternative for income. We are physicians. In general, we are believed to be successful, and we are good earners. At the same time, we were taxed the highest. One of the realities in life is not how much you make. It is also what you take at the end with you. Being a physician, you do not always have freedom in terms of your time and hours. Especially because of the pandemic, we found out how vulnerable we are if we depend on one income stream.

You can understand my wife is a family medicine doctor and I am a critical care doctor. We were on the frontlines in 2020 when everything started, even before there was any specific treatments, vaccine, or anything like that. If something had happened to her or me, that was it in terms of our income. To some degree, that is scary for anyone who has a profession and does not have a backup plan or other sources of income. That is when we decided to start investigating and educating ourselves about these other assets or investments.

Was it because of the fact that you were on the frontline during COVID that you started thinking about this as another source of a viable way of making another income?

We had to start a little bit earlier, but that put everything in perspective. We said, “We need to continue doing this.”

Alternative Income Source: Physicians spend a lot of time in classrooms. They spend many years in medical schools, but unfortunately, they don’t necessarily have good financial education there.

How did you make the transition where you started? You started bringing on partners and it sounds like you also have your own syndications now too. How did that evolve? At what point did you start using other people’s money?

Initially, we started with single-family houses, and we became landlords. Our first home, the first one we bought, we were self-managing. You can imagine two physicians with full-time jobs and two small active kids was not a good idea. After three months, we had owned the property, then the AC broke. We were saying like, “What have we done? It has been the worst investment we have ever done. All the cashflow in the first six months is gone.” We found quickly that we needed help. In real estate, what do you do? You leverage other people’s money and experience.

We decided to hire a property manager. Thankfully, because of that, we were also introduced to off-market properties at that moment. We started doing more investigation and networking. We started meeting wholesalers and other intermediaries who would bring us these properties at a discount price with the BRRRR method because some of these properties are in distress. It is either the situation of the seller or property that is in distress. For some reason, this cannot be financed by the bank. It cannot wait for a month and a half or two months to close.

We enjoy working together with other professionals that can understand that with the contractors, property manager, lender, and the person at the title company. At the same time, we felt good in the sense that we were helping to move the economy but also to provide some affordable and safe housing for some hardworking people who needed a place to live. We started doing that and we enjoyed that at the beginning. My property manager is a very good friend of mine. I appreciate him. We work and have grown together.

The thing is that at some point, single-family houses are very difficult to scale. Also, it becomes a second job even with a property manager. As much as we enjoy talking, we spend a lot of time together talking about different problems that happen on their day-to-day when you have a good number of properties. At the end of the year, you find yourself dealing with taxes, insurance, mortgages, and all of that.

Another important point is that when you are the sole owner and manager of all these properties, all the decisions, responsibilities, and, most especially, liabilities are only on you. When we decided to do more education and then start exploring other venues, that is when we discovered commercial real estate in the form of syndication. To that point, we did not have an idea that we could go with other investors and buy this big apartment complex that has millions of dollars together. We did our research education, and then we transitioned there.

You are doing a lot of this learning and networking in the middle of COVID. Was it fair to say that a lot of this networking and education you have got was done virtually? Did you meet a lot of people in person?

Initially, it was virtually. There were some challenges at some point. When you also buy off-market properties, you need to go and see the properties yourself. You do not have that much time to make a decision. It was a challenge. I am in the medical field and I try to take all the precautionary measures to get there. When I was vaccinated already, it was easier.

We always think that property managers are one of the biggest key players. You need to have a good one if you are trying to grow this business. Were you already friends with this property manager because you had mentioned that you are good friends? Did you guys become close friends because you met in the business?

We became good friends. It started off with great things that I am very grateful about. Real estate has brought relationships and friendships that I could not have imagined that I would develop if I would not have done that. We were growing together. At some point, he was my project manager in the houses where I was doing the renovations. It is pretty much the same concept. You leverage money and people. You need to trust other people in order for your business to grow.

How did you find him initially?

I was asking around and looking for Google, recommendations, and all of that. I was about to work with three different property managers at some point. I penciled down until I found out that I was working way better with him. It is a lot of conversations and referrals. I am talking with people who have worked with him.

You have got to do a lot of networking. This is a team sport. You get to leverage people’s experience. They know something that you may not know. You were leveraging their knowledge. It all comes together. I love that about real estate. In the multifamily deals you are doing, what areas are you going for when looking at multifamilies? Are there certain geographic locations? I also want to know what metrics you are looking at when you pick those locations.

We are mainly in the Midwest and also in the Southeast area. I am mainly looking at what we call landlord-friendly states. We have seen that during the pandemic. There had been a movement of population to some of these states. We partner up with other experienced operators because we understand we have one and a half years in this field. We need to rely on other operators who have been around longer than us and also operators who are doing this full-time.

Doing underwriting or looking for properties is a very hard job. Many of these people who are doing this are doing this full-time. We need to rely on their experience. That is where we go. In terms of metrics, we are looking at the migration of population, types of jobs, diversity of jobs, and prices of the houses around the area that we buy.

I know you are a general partner. Were you a limited partner? Did you invest passively as an LP before you became a general partner in other syndications?

We do both. We are a general and limited partner in most of the projects that we go. Also, it adds another layer of certainty for our investors that we are going with them, we trust in the project, and we also have skin in the game. It is also very good to see how different sponsors and asset managers communicate with their limited partners or investors.

The fact of the matter is that you are also raising funds. How has that experience been? Do you like raising funds? What is that like for you?

A couple of years ago, I would not imagine doing this. It came naturally. We decided to start this journey in multifamily and mainly being on the capital side of the business. Initially, it was organic. It was mostly with friends, family, and colleagues. Most of them knew that we had been doing real estate already for a couple of years. They knew that we were careful about the money and doing good business. Once we decided to spread the word about that, they were on board. We have been grateful and blessed. In our first year and a half, we have been able to participate in four projects.

We are big proponents of education. That is one of the most important things. I usually believe people tend to invest or do things in things they know, understand, or are familiar with. That is part of the reason why so many people are only in the stock markets or only doing mutual funds or in 401(k). They do not know other things. When you do not know other things, you are scared and nervous about it. You think it is a scam or something like that. I always tell people to always start doing some research and education, and then we can discuss and move forward after that.

Can you walk me through or describe a typical deal you would go after or you have done? Is that something you can talk about?

In our investment group, we partner up together. We usually try to look for properties over at least 80 units. Usually, we are looking for Class B or Class C. If anyone is new in this, it is a little bit on the older side, but still, the population is blue-collar and good people trying to work hard and progress in life. We are looking for these markets that I mentioned before. In general, we look for value-add properties or projects where you can get what we call the best of both worlds, which is cashflow and appreciation.

Our times are usually in the market, like 4 to 6 years. We try to hit 16% to 20% per year. It is getting more difficult because of all the competition and people paying an over-asking price. Sometimes, some underwritings are a little bit scary. We try to be conservative. Most of my active partners also invest in our projects. We have skin in the game. We want this to work well for us and for our limited partners too.

Alternative Income Source: There’s a point where education can take you to just some place. After some time, you need to take action.

What type of financing do you typically do? Are you doing 70% to 80% LTV financing? What are you guys typically doing for leverage?

The usual structure is 7% to 8% preferred returns. After that, we do a 70/30 split in terms of finance because they are mostly value-add properties. We use bridge loans. We usually try to refinance at year three. At that point, we aim to return part of the capital to our investors.

How many deals have you gone through? Are there any open funds that you are raising money for?

We are grateful. We were able to participate in four projects in different states. One was in Kansas City. One was in Warner Robins, which is two hours from Atlanta. One was in Waco here in Texas. It is one and a half hours from home and one was in Jacksonville. We are actively looking for projects and mostly doing 506(b). Because of that, we are not able to disclose openly about our projects. We are close in general to getting into another project soon.

I am curious how you balance out your time. You are a dad. You and your wife are doctors. You are a runner. I do not even know what you do not do. How do you balance it all? What is your team like? Do you have virtual assistants? How do you do it all?

I always think, “When there is a will, there is a way to do things.” As long as you are doing it and it is fulfilling you and still feel excited about things, you continue doing it. We are very passionate about real estate. We still love medicine. Contrary to some other professionals who want to quit their job and do real estate, that is not the case with us.

We found out that some physicians who are active real estate investors feel the same. They want to continue being physicians or maybe not working that many hours. For example, myself doing nights, weekends, or holidays. It is being able to control your time and spend more time with your family. That is one of the things.

To answer your question, that is very important to ask for help for other people. After 1 or 2 months, when I started working with my property manager, I also started working with a VA who helps me. Initially, she was helping me to try to get more off-market properties, but I finally decided it was too much already on my plate. She helps me now with the management of the paperwork of all the documentation that we need to do for the end of the year.

My wife also has been instrumental. We are partners in life. We are friends. We have two beautiful children. They are the most important thing for us. She scaled down her time in clinical practice. Now, she is taking a break from medicine to focus a little bit more on our kids. During the pandemic, it was very difficult to balance all of that and have a specialty. What is more important for us is our kids. We are focusing more on that. Since she is not working and focusing on the kids, things are even better.

Is your wife also actively involved in all the syndication and multifamily stuff you have got going on as much as you are?

She has been instrumental in terms of her support. She started going a little bit more into real estate because of what she had heard about the real estate professional status. I cannot do that because I have a full-time job. I have a W-2, which would make it impossible to get it. In her case, she can do it. If she can do it, that is going to impact my taxes greatly at the end of the year. It is not just the passive income but also the active and my W-2.

It is more about what you keep versus what you make. That is smart. You are the first physician I brought on as a guest but I do know a lot of medical professionals that invest in real estate. They do it a lot of times. I meet medical professionals saying that they first got into real estate investing for the tax benefits. They could use the cost segregation and the losses out over there to offset their W-2 income. It has been amazing talking to everybody. Everybody does it for different reasons. Real estate is a great vehicle. I am going to go back to talking about VAs again. I have VAs as well. How did you find your VA? Where are they based?

I am also a part of a couple of Facebook groups for real estate investors from landlords to wholesalers. I learned very quickly how they are able to leverage other people’s expertise. My VA, I have worked with her already for a couple of years. She is also in medical school in the Philippines. She had these talks with me about medicine. She is also planning to hopefully come to the US at some point. I found her on one of the websites for VAs, like Upwork and Fiverr. It is also through a lot of screening. I do not remember how many VAs I went through to get to her.

I myself have two full-time virtual assistants also in the Philippines. It has been great. It is the fact that you could arbitrage the cost of labor overseas, and it makes sense. They could do it for a lot cheaper and sometimes just as well as somebody here locally. That has been amazing. What do you see next for your business? Any other big plans for 2022 or even down the line for what you are trying to do?

We have been around in commercial real estate for some time. We are very grateful for the success that we had in 2021. In 2022, our goals are bigger, and we are betting more on education. I am big in YouTube education. Almost every week, we release an educational video about syndications and real estate passive investing. I am trying to get out there to spread information or the word about other ways to invest passively.

In general, we are also planning to bring to our investors at least 3 to 4 projects a year. The reason why we are not going a higher number is that we are also planning to invest passively in all these projects that we are bringing to our investors. Because of that, we are very excited to be on both sides of the active and the passive side of investing.

What has been your biggest mistake in real estate investing so far and what have you learned from it?

If you ask anyone who is in real estate and in syndication, “If you have had any problems?” If for any reason that person answers no, it is either he is lying or he has not been long enough. In residential real estate and commercial, I am leaning more on my experienced partners. At some point, they have problems with the property manager and also with the asset manager. That is something very important now that I am more experienced in this field.

When I am going to go and work with a team, one of the things is that I look that they are doing this full-time. Also, I look at a dedicated asset manager that works directly with the property management company. It is exciting to raise money to look for a hand for the deal and all of that, but the most important part is after you close. In a good property, an asset manager can do great or bad things. That is important for us.

What is your overall take? What is your outlook in the multifamily space even in the next 5 to 10 years from now?

It is intriguing to some degree. We have seen prices skyrocket. There is a lot of influx of money in the market, and because of that reason, people are still paying a lot, which makes some of the projects out there in the market risky to invest in. We still feel like the fundamentals of investing passively in apartment complexes out there are good. Still, we have a lot of deficits in housing in the US. Unfortunately, this is not going to change in the next 2 or 5 years. I cannot tell you about ten years. That is very far down the road. At least, I do not think these fundamentals are going to change anytime soon.

In terms of advice for folks that may be newer to the journey of real estate investing, what do you think an investor should know? What advice would you give to a new investor starting their journey? What resources should they tap into?

This is another thing that many investors in real estate say like, “I wish I would have started earlier.” One of the things like, “The earlier, the better.” The second thing is education. Education is fundamental. Go on there, be a sponge, and get an education. There is so much out there. There are conferences and meetups. There are even audiobooks if you are driving every day or you are not able to read that much.

Alternative Income Source: Education and knowledge is important, but without action it doesn’t take you anywhere.

That is how I do most of my education with audiobooks and podcasts like yours, for example. That helps a lot. There is a point where education can take you to someplace. After some time, you need to take action. Education and knowledge are important, but without action, it doesn’t take you anywhere. That is one of the most important pieces of advice that I would give to someone who wants to start in real estate.

I encounter a lot of people that are there for education. For years, they never take action. You always got guys who do not want to take the action part. You jump right in after you get a sense of what you are doing, and then you keep networking with more people. Follow people that have already done what you want to do. Investing in real estate, how has it impacted your life?

I mentioned this at the beginning. We now have other income streams added to our W-2s. That has been very important in terms of our security. We still have not replaced our income because, as physicians, we are high-income earners. The more you make, the more difficult and the longer it takes to replace your income. That is one of the things. Fortunately, we have a clear path for that, which we expect to reach.

The second thing is in terms of mindset. We now see the future with hope. In the past, it was like, “You are a physician. You need to keep working. You do not see a clear path to get out.” I have talked with some physicians and friends of mine that have talked with their mentors. They asked them like, “Would you change anything when you are retiring at age 60 or 70?” What they said is, “I would have spent more time with my family and do more things that I love.” It was very impactful for me and that is the reason I am doing this.

I love it because it has also given you more freedom in your mind to do other things. Are there any big goals you are working on in 2022, either personal or business?

We are grateful for what we have and what we have accomplished. I would like to mention this book, which is called The Gap and The Gain. It is written by Dan Sullivan and Ben Hardy. It is about how entrepreneurs see success. It starts from the point of gratitude and being grateful for what you have accomplished and what you have in life. We start from that point, and we are happy.

There is something important also on the personal side that happened to me. In my bio, I mentioned that I like to run. In 2021, I ran a half-marathon after ten years. My bigger goal in 2022 on the personal side is with my family too. I am running another half-marathon. Hopefully, before the end of 2022, I will run a full marathon. We will see. I am not sure if I am going to be able to make it, but at least I am going to try.

Is there anything I should be asking you that I did not ask you yet?

No. Thank you for this interview. I am very grateful. I had a good time.

There is another question I like to ask towards the end. What does success mean to you? It means different things to different people.

Success to me is to be good with my family, wife, and kids. It is to wake up in the morning and see that they are there with me and they are healthy. All there is, to be honest with you, doesn’t matter that much. They affect our life, profession, business, and all of that. What matters the most is your family and with whom you spend your life.

Lastly, how can somebody get a hold of you?

We have our website in our company. It is syndications in apartment complexes. It is called NimaEquity.com. We also have our YouTube channel about education and investing passively in real estate.

I want to talk about YouTube quickly. Are you meeting people on YouTube organically? Has YouTube been good for you in connecting with folks that have not met you yet?

We took the decision to go into YouTube. It is a work in process, and it is starting to grow. We are getting some tractions and views. We are feeling very good about that.

That is a wrap, folks. That is all the time we have. Thanks, Harry, for joining me on this episode. I loved everything you talked about. You have a good balance and you focus on the family. I love the fact that you are able to manage it all. You are committed to growing this real estate business, and yet, you are still committed to medicine. Your story is inspirational. To my readers, feel free to reach out to Harry if you have any questions for him. Thank you for checking out this episode. Remember to leave a review on iTunes as it helps me attract more great guests like Harry. Until next time, live life abundantly.

Important Links

• Nima Equity LLC
• Todd Sulzinger – Previous Episode
• BiggerPockets
• White Coat Investor
• Upwork
• Fiverr
• The Gap and The Gain
• YouTube – Nima Equity
• iTunes – The School of Cash Flow

About Harry Nima Zegarra