Sahil Mehta's perception of money was influenced at an early age. He told Insider that his parents immigrated to the US with limited resources, making personal sacrifices to provide for him and his three siblings.
Both the 2000 and 2008 market crashes cost his parents much of their savings due to ill-advised management from stockbrokers, Sahil said. So growing up, he and his siblings didn't want to burden their parents financially and refrained from asking for too much.
Sahil eventually moved to Berkeley, California during his senior year of high school in an attempt to get in-state tuition at the University Berkeley. His oldest brother had already been living there, and together they shared a rented room.
That move pushed him to become independent at a very early age. When he turned 18, he got his real estate license because it was a quick and affordable avenue to access uncapped income, he said.
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"That really shaped a lot of my motivation and influenced why I wanted to get started so early because I had no option. If I wanted something, I knew I had to earn it," Sahil said.
For the next few years, Sahil would use his real estate skills to buy properties with one of his brothers, Suyash Mehta. Today, they own a $9.5 million real estate portfolio, made up of five properties and 13 rental units in and around Berkeley, documents viewed by Insider showed.
They earned $189,050 in rental income, with $130,893 from Airbnb and $58,156 from rentals for the year 2020. After expenses were deducted, they saw a net loss of $115,003 for the year.
In an interview with Insider, Sahil shared the steps they took to qualify for loans and scale their holdings.
The starting point
Their first purchase was in 2019, when Sahil was 22 years old. It had a steep price tag of $960,000 in an expensive neighborhood in Berkeley — a move most beginners and young buyers tend to avoid. But Sahil told Insider that he and his brother had aggressively saved enough to have a comfortable down payment of $200,000, split between the both of them.
It was a single-family home in a desirable neighborhood that was selling for below market value. Sahil said he saw the "for sale" sign spring up on the property's front lawn.
"This is when I was sort of just dipping my toes into the investment landscape. We were a little risk-averse, relatively speaking, for our tolerance," Sahil said.
Working as a real estate agent for a couple of years, he had helped dozens of clients lock down their homes. So he had a good idea of the type of property he wanted and the required steps it would take.
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They purchased it as a primary property, to help them qualify for a conventional loan. Sahil would move into one of the rooms while they made upgrades.
Their initial goal was to redevelop and expand the home for equity appreciation. But they realized it would take much longer than anticipated to flip the house. So they made a quick decision to reformat the space by modifying a half bath into a full bath and adding an extra bedroom. This would allow them to rent the bedrooms out separately and net them more short-term rental income.
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The two additional rooms were then placed on Airbnb as a shared property for rent for the next year. This covered the mortgage and all other expenses, which were about $4,600 a month.
They avoided as much Airbnb overhead expenses as possible. Instead of hiring and paying for a management company to track, clean, and update toiletry, Sahil did it himself while he stayed in one of the bedrooms.
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He told Insider it was a lot of work because they didn't set a minimum stay requirement in an attempt to maximize its booking. This meant he was constantly cleaning and replacing products. He notes that the logistics of setting up an Airbnb is not to be understated.
"I would have to set the kitchen up, set the bathrooms up, and do cleaning routines. I didn't know any of that part, it was like just hustling and figuring it out on the go," Sahil said.
They acquired as much free furniture as they could on platforms like Facebook's Marketplace. At this point, they were still just breaking even.
"We knew there was no ROI. Bottom line, we wanted to do it with as little cost because we knew this was just to break even. So the more we sunk into it, the less we saw it coming back," Sahil said.
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After a year of Airbnbing the property, they were able to rent it out to a long-term tenant, bringing in monthly rents that were stable, and earning a couple of hundred dollars above their bottom line.
The second property and more
During the same time, the brothers had also purchased a second property after spotting a "for sale" sign in the same neighborhood. The property was a small house on a big lot, and Sahil saw the potential to buy and build it out. The list price was $1.15 million.
Sahil wanted to acquire the property but knew they wouldn't be able to qualify for another mortgage in such a short period. So they approached the agent and explained their situation.
"We talked to the listing agent, [who] was actually very motivated to get this sold for his seller," Sahil said. "We told him, 'hey, we really love this property. We know what we can do with it. It has a lot of potential. But to be honest, we're not going to get approved for another loan'."
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The frank conversation turned out to be fruitful because the agent suggested they consider a seller financing deal, which is a type of loan provided by the seller of the property to the purchaser.
Sahil said that the listing agent noted that his client, who inherited the property and didn't owe any money on it, would prefer monthly payments rather than receiving a lump sum payment.
The listing agent helped put the contract together with an interest rate of 2.8%, which went directly to the seller. The contract was backed by their assets and the purchase property. The brothers each paid $82,500 to make the down payment.
Their intention of flipping the property had to be put on hold for a second time because of the amount of work and permits required. It too would eventually be made an Airbnb that Sahil managed. After a year and a half, the house was then rented out by the room to a group of university students. This property brought in a couple of thousand dollars in positive cash flow.
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The third property was purchased in January 2020. They acquired a hard money loan in exchange for a steep interest rate of 8.75%. But six months later they were able to refinance the property with a conventional loan after they both submitted proof of increased income.
Sahil and his brother continued to use hard money loans to acquire their final two properties and repeated the same process. He told Insider they refinanced the fourth property and are in the process of refinancing their fifth property with a commercial loan.
He noted that having their properties close to a college town made it easy to rent rooms separately and, when needed, temporarily. They still plan on flipping their properties once they've accumulated enough capital.
