810 Palak Shah:

When we launch a new business, it is easy to fall into the trap of simply creating a job for yourself except instead of 9-5 it becomes around the clock. It can be hard for those who leave the corporate ladder to learn how to think like business owners and grow a business around the time freedom and lifestyle YOU want.

Palak Shah is here to talk about how she went from being a high paid mechanical engineer to launching a real estate business now worth $10 million that she runs just 30 minutes a week – you heard right – just 30 minutes a week.

MELINDA

Hi, I’m Melinda Wittstock and welcome to Wings of Inspired Business, where we share the inspiring entrepreneurial journeys, epiphanies, and practical advice from successful female founders … so you have everything you need at your fingertips to build the business and life of your dreams. I’m a 5-time serial entrepreneur and the CEO and founder of Podopolo, the interactive app revolutionizing podcast discovery and discussion and making podcasting profitable for creators. I’d like to invite you to take a minute, download Podopolo from either app store, listen to the rest of this episode there, and join the conversation with your questions, perspectives, experiences, and advice … Because together we’re stronger, and we all soar higher when we fly together.

Today we meet an inspiring entrepreneur who has built a fast-growing real estate business now worth $10 million dollars using the principle of BRRRR – that’s Buy, Rehab, Rent, Refinance and Repeat.

Like many women climbing the corporate ladder, Palak Shah got fed up with all the long hours and travel and decided she wanted to create a business around the lifestyle she wanted – and she wanted a lot of time freedom as well as financial freedom.

We dig deep on how she build Open Spaces Capital, and how she’s helping other women do the same with Open Spaces Women.

Imagine for a moment not having to work more than 30 minutes a week. That’s right, 30 minutes a week. And having the peace of mind that your wealth is growing beyond your wildest dreams without you having to burnout on an endless to-do list.

It sounds almost fantastical, yet today’s guest on Wings proves that it is entirely possible to build exactly that type of business.

Palak Shah is the founder of Open Spaces Capital, a real estate firm she built as a stay-at-home-mom to $10 million in asset value. Palak had spent 17 years as a top paid mechanical engineer climbing the corporate ladder when she realized on maternity leave, she wanted more flexibility to focus on her children. When her request to work from home part time was rejected, she quit her high paying job and launched her profitable real estate company, and how she also teaches women how to ‘BRRRR’, that is “Buy, Rehab, Rent, Refinance, Repeat.”

Today we talk about the “high earners’ paradox” and why it can be hard for women to leave what seems like the financial security of a hardworking and high paying corporate job … to grow significant wealth on their own terms. Plus why hard work is not the secret to success.

Let’s put on our wings with the inspiring Palak Shah and be sure to download the podcast app Podopolo so we can keep the conversation going after the episode.

Melinda Wittstock:

Palak, welcome to Wings.

Palak Shah:

Thank you for having me, I’m excited to be here.

Melinda Wittstock:

Well, you like so many women get fed up with corporate, because it’s just such a rigid structure. It’s hard to live your life and balance everything as a mom and six years ago you caught the real estate bug and you’ve never looked back. What took a mechanical engineer with that kind of domain expertise into real estate specifically other than other things in entrepreneurship you could have done?

Palak Shah:

That’s such a great question. We had bought a rent-ready rental that was close to where we lived and just seeing how that cash and how the mortgage was getting paid and how it was appreciating made me think this could be a thing. And one of the things that I always grew up with was, you know, just we were all employees. And the way we grew up was high income, climb the corporate ladder. And that just owning that rental made me realize the concept of wealth and building that wealth and passive income. And I caught the bug.

Melinda Wittstock:

So isn’t it so interesting that we’re all sort of acculturated in going for that high salary, but that high salary, like you’re always at the behest of someone else, you don’t really ever get to the point where you have financial freedom. And everything we’re taught about money actually keeps us playing a much smaller game than any of us have to. And so it sounds like you kind of woke up to, okay, let’s generate real wealth here rather than, you know, basically, okay, even if it’s a high salary, you’re still a wage employee.

Palak Shah:

Yes. And as women, you know, especially working in a conservative industry like engineering, you’re always working harder than everybody else to show everyone how smart you are and how worthy you are of a promotion. But being in business for yourself, whether your building wealth or not, it just allows you to get out of that entire grind of trying to impress your superiors all the time.

Melinda Wittstock:

Well, we do talk on this podcast a lot about how a lot of women have this underlying belief that we don’t really deserve it unless we’ve martyred ourselves with hard work. This has come up a lot recently on the show and that’s when women entrepreneurs get to the point where they realize actually, you know, they’re more productive doing less. It’s kind of paradox, but have you found that to be the case?

Palak Shah:

Yeah, it’s so counterintuitive. I think we I really had to understand that. And once I really figured that out, I realized that it wasn’t about all of the things I was doing. It was about the decisions I was making that was making me the most money.

Melinda Wittstock:

And I guess inherent in those decisions is making decisions that have the maximum amount of leverage. I always like to think, okay, if I do this one thing and prioritize that what’s the return on investment of taking that decision and doesn’t have multiple returns on investment potentially? Like how can one action have a multiplicity of results? But I don’t see a lot of people necessarily think that way because I think most people are pretty linear.

Palak Shah:

Right. And you know, being able to leverage your skills, your time, your money, your team, I think that’s what allows us to grow exponentially. But it’s so hard to wrap your head around it. that you’ve always worked, like you said, in the linear direction.

Melinda Wittstock:

So, take me through the early genesis of your company, Open Spaces Capital. What were some of the challenges and early lessons along the way?

Palak Shah:

To go take one more step back, I was an engineer and I was making decent money as, you know, making six figures plus. It was great until I had kids and I really just wanted time because I never saw them. I was traveling all the time, never saw them. And so coming into real estate investing, I realized that I to be able to scale this portfolio as fast as I wanted to and be able to spend time with my kids the way I wanted to, I would want to quit my job. Now we became a single income family. So one of the biggest issues I faced early on was lack of capital. And that was one of the biggest lessons that I had to learn was that when you’re in business for yourself, if you can figure out how to finance and how to generate capital to scale your business, that makes you unstoppable, that can unleash you.

Melinda Wittstock:

Mm-hmm. 100%. Well, time is actually more valuable in a weird way than money. A lot of people say things like time is money. If you think within abundance mindset, there is an abundance of money. But there’s not necessarily abundance of time. So how can you maximize your time? So you’re using your time in the way that you really want to use it yourself. I think once you get your head around that, it becomes sort of an operational or organizational principle of the kind of business that you’re going to build. What’s a business that actually suits you and the lifestyle you want? I see a lot of female entrepreneurs and male entrepreneurs basically creating businesses that just become, they become like employees of their business. –

Palak Shah:

Yeah, you get another nine to five for yourself, yes. –

Melinda Wittstock:

Right, so going back to that first question though, what were some of these operational challenges and whatnot, you know, six or years ago in the market, how did you apply those principles of leverage and like maximizing your time and all of that in practice in the early days?

Palak Shah:

So one of the big things that when I first quit my job, I sat down and I did a lot of soul searching because it was a very tough decision. I had worked really hard to build that career and you know gain that reputation in the industry. And I decided that if I was going to quit my job and I was going to build a business, it’s going to be on my own terms. And there were three things that were kind of like the guiding principles behind any decision that I was going to make. And I decided that was the lens with which I was going to look at how this business would be built. One of them was generational wealth, second one was passive income, and the third one was time and location freedom. So I wanted to make sure that anything I do in the business and any, you know, any kind of processes I put in place, they should be able to run without me being physically present or working on it myself. And it’s hard to do, right? Because everything that doesn’t require time or your physical presence, that takes longer to build than actually just taking action and finishing that task. So the way I look at it is, you know, we’re in real estate with all of our building assets, I feel like the processes that you put in place in your business and the systems, they are yet another asset within your business because it takes a while to build it, but then once it’s built, it really pays for a long time. That in the very beginning, it was very hard to wrap my head around it because I, you know, as I said, I’ve always been an employee. And when you’re an employee, somebody else has the vision and you’re given goals to fit that vision but when you are working for yourself you have the vision and in the beginning because you don’t have a big staff, you’re the one who has the goals and then you’re executing them. So it was a very interesting process to go from just being the executor to being the visionary and then you know building it out so other people could execute the goals that I had.

Melinda Wittstock:

100%. you talk about the high earner’s paradox where it’s really difficult to leave something behind. There are other books and whatnot that talk about this in the context as a great book called The Big Leap, where most people kind of they get to their zone of excellence. And they’ve got this comfortable life and great salary and it’s certain or it feels certain. And but they’re not really operating in their zone of genius as opposed to zone of excellence. And it’s really difficult to make that leap because you’re basically jumping into the unknown. Um, and so people can get really stuck in this kind of high performing groove, um, but miss like a much bigger opportunity. It is something that a lot of entrepreneurs just kind of do. But I think most people probably don’t understand. So is there advice you would give somebody who say like you in this high-performing corporate job like a really great six figure, even a high six figure salary and thinking about making that leap, like what would be the first thing you would tell them that they would need to do?

Palak Shah:

Yeah, that’s such a good question because I think when we’re in that corporate world, that is our world view. That’s what we’re looking at. And it’s very hard to look outside of that and realize that there is an entire world of opportunity outside. I think the big thing is if you look at your superiors, right? You think in the corporate world, you think, okay, if I just get the next promotion and the next promotion, I’ll be all set. But if you look at your superiors, whenever I look at my superiors, they were working longer hours, it’s not like the higher up you move, you’re certainly going to gain all this time, right? You’re going to actually lose time. It’s like a pie eating contest. You eat pie and the reward is just more pie. So you just continue doing that. And so if you think about your superior and look at them as your future, is that what you really want? And that’s number one. And then the second thing I would say is, the finances and wealth and money aside, would have gained from building my own business. And now we have three businesses that we operate, two of them are seven-figure businesses. I think that what I’ve really gained from this is more than the tangible things we talk about. It’s really given me an understanding of what my potential is. Because in corporate, it was always dependent on other people valuing it a certain way, whereas working for yourself. The big thing is you really get to figure out what you’re made of and what you’re capable of. And so that’s kind of the thing that I think most people who leap into entrepreneurship, the money is a risk and you’re unaware whether you can or cannot achieve what you have set out to do, right? You don’t know that. But what you’re going to gain out of it is finding yourself and finding your higher potential. And I think making that the goal is, you know how when we, when we set a goal to work out, health coaches always say that don’t make your goal weight loss or don’t make your goal X number on the scale, make your goal the journey and make your goal enjoying working out. That’s what businesses like as well make your goal to enjoy that process and enjoy the journey and that and itself it’s so valuable. I think that that really eliminates a lot of the fear of risk that we have when we want to make that leap.

Melinda Wittstock:

100%. Okay, so let’s get into your business. Open Spaces Capital and you have a strategy called BRRRR. It’s a strategy it stands for “buy, rehab, rent, re-finance, repeat.” So, take us through that strategy and how you came about that strategy.

Palak Shah:

Sure, so the BRRRR strategy has actually been around for decades. And a lot of veteran real estate investors told me that they had been using the strategy for many decades. The acronym is new, it’s become a buzz word within the real estate industry, but the strategy has been around for a long time. And the thing that appealed to me the most about it is number one, you could start with a finite amount of capital and scale infinitely, I guess. And the second piece was that it’s mostly market cycle, agnostic. And you know, as we’ve seen the market change and shift so many different times during our lifetimes, I think finding a strategy that is market cycle, agnostic and has that longevity… It was really important to me. And I really didn’t want to be involved in real estate from a transactional perspective. Like I didn’t want to flip properties. I didn’t want to become a real estate agent. I didn’t want to start trading off-market deals. It’s called wholesaling. I didn’t want to do any of that because that’s– like you said, yet another job. I would have just created another job for myself. Well, this built when you create assets. So that’s what appealed to me about the strategy. And just the longevity of it, I think that was the biggest reason we chose to move forward with it. So we started with single family homes about six years ago, and then we moved over to a small multifamily. Now we do large multifamily as well. Our portfolio is worth about $10 million at this point. and we’re just going to continue to grow it. And it takes about 30 minutes a day to run the business, which is pretty amazing.

Melinda Wittstock:

It’s amazing. You’ve got $10 million assets that takes you half an hour a day.

Palak Shah:

Yeah. I mean, I worked way more hours to make a very small fraction of that money.

Melinda Wittstock:

So OK, so take me through this. So you buy a property and you kind of rehab it. Okay, so you’re renting it, that’s giving you cash flow income.

Palak Shah:

Mm-hmm. – Right.

Melinda Wittstock:

Now, where does the refinance of that come in?

Palak Shah:

Yeah, so what you do is you start with around $20,000 to $25,000. If you were talking about just a small single-family home, start with $20,000 to $25,000. You borrow the rest of the acquisition and the construction money, you renovate the property, and when you renovate the property, forces to force it to instantly appreciate. And then you rent it out, it’s also called stabilizing. And then when you take it to a long-term commercial lender, they can refinance it and you pay your original lender back, you pay yourself back, you pay your lender back, now you have an asset that is cash flowing that you own, and you take the funds that you originally put into the property and recycle them into the next one and the next one and the next one. And so that’s how this strategy works.

Melinda Wittstock:

So where do you see yourself with this then? If you’re $10 million in assets right now, where are you going to be 10 years from now?

Palak Shah:

We’re going to continue to grow. And you know, through this process, I really found out that I was just so passionate about helping other women do the same thing that I was doing. That’s, you know, that’s been an absolute adventure. And I think that’s a movement that is about to happen that where women are taking control of their finances and building wealth. And I feel like that’s my purpose is to continue building wealth and continue helping other people build wealth for themselves and their families.

Melinda Wittstock:

So, do you have a course, or do you just work with women informally or how does that all work?

Palak Shah:

So yeah, we have our education arm of our business is called Open Spaces Women and we teach people who come into real estate investing with some money and some time. They have a little bit of time to spare. They have a little bit of money to start with. We teach them how to build their first million dollars in assets in about 12 months. And then we say it takes about three to five years to reach financial freedom.

Melinda Wittstock:

Okay, so again, about a million in 12 months, you say about three years to get to financial full financial freedom.

Palak Shah:

Three to five years, yeah, to reach financial freedom, yeah.

Melinda Wittstock:

And financial freedom being defined as? Being able to live on the cash flow from your rentals?

So this is actually a really good thing for people to be doing while they have a job or say for instance, an entrepreneur like me, with a business that’s funded and it’s really scaling and growing and I have a little bit of extra cash. It’s kind of like a potential great side hustle.

Palak Shah:

Absolutely.

Melinda Wittstock:

In that three-to-five years, that side hustle is growing. So by the time you’re onto your next gig or your next startup, if you’re a serial entrepreneur like me, that sort of makes a lot of sense.

Palak Shah:

And it has also has huge tax advantages for high earners, whether you have a job or your business, it allows you to take a lot of tax advantages because as you scale your business, as you get all aware, the more you scale the more the tax implications are going to be for your business. And real estate investing is such a great way to do not have to pay all those taxes.

Melinda Wittstock:

100%. We’ll add one more tactic to this. Get a really great whole life policy. Yes. Get the pays off dividends that you can borrow against for the initial capital, you know, around this, right?

Palak Shah:

Yes. Infinite banking. Yes. another layer to add to the strategy.

Melinda Wittstock:

So how do folks get in touch with you for the Open Spaces Women?

Palak Shah:

We are on Instagram at Open Spaces Women. We have 141,000 followers right now. We put a lot of content out specifically geared towards reaching financial freedom through real estate investing, specifically for high earners who are trying to exit or trying to make work optional. So there’s a lot of great content there. So Instagram is a great place to find us. You can DM me, ask any questions.

Melinda Wittstock:

And so as you coach people or through your own lived experience on this, what are some of the biggest mistakes people can make? And how can you avoid them?

Palak Shah:

I think the number one thing I see a lot of new investors think about is we always think that that very first deal is going to be everything. So I find new investors spending so much time analyzing that very first deal and not taking action. And before you know it, you know, year to years have passed by and you could have been getting advantages with taxes, debt paydown, cash flow, appreciation during all that time. So the big thing is, I think, waiting. And you know, I started in my late 30s, so 100% guilty of the same thing, but that’s what I think that’s the biggest mistake that we make. And the second one is really thinking that everything is going to be 100% straight line, no hiccups, I think the big thing going into any business is just knowing that there’s going to be ups and downs, but overall your trajectory is still going to be positive.

Melinda Wittstock:

Do you think people can get too attached emotionally to that first property or like try and make it look so beautiful to begin with or like just get so attached that they’re, I don’t know, they’re nervous about what the tenants are going to, all that kind of stuff. How do you deal with the emotional attachment or the need to really detach?

Palak Shah:

Yeah, I think we watch so many HGTV shows, and we see a lot of people flip property, so It’s very tough to understand that rentals is a whole different ball game. You want to make sure you’re renovating for your tenants to make sure the place is attractive and comfortable. But this is not a flip and this is not an HGTV show. But you know, as I tell all new investors, even if you renovate your property a little bit more than what you were supposed to on your very first deal, you can always learn from that and change and pivot for your next one. And we call it the, we call it the Goldilocks zone of renovation where you want to make sure you renovate it enough to make the property comfortable and attractive to tenants, but not so much that the return on that investment is just not there anymore.

Melinda Wittstock:

So you’ve got to figure out some sort of personal detachment. I mean, I know people who have kind of cash flowing properties who’ve actually never even seen them, you know, who’ve like worked some sort of broker to do all that and do you recommend having a property manager that’s not you and you know that kind of thing.

Palak Shah:

Yeah, so we about 30 to 40% of the people we work with live in very expensive markets like New York and California and they’re investing out of state. So we always tell them that the big thing that you want to do is make sure that there’s boots on the ground, somebody you can trust who is not going to benefit whether or not you purchase a property. And having that unbiased party in your corner at any given point in time, that’s what’s going to allow you to make decisions that are not related to somebody else benefiting, right? Because an agent’s going to show you a property they benefit when you purchase the deal. So I think that having that unbiased boost on the ground person is really helpful when you’re investing out of state. Also building a solid team. And I always tell people if you’re never been to that location where you’re going to invest, I would advise you to take a trip once. You don’t need to be there all the time. We buy our property site and seen. We spent three, four weeks in Spain with our kids in summer. Last year, we purchased 11 units while we were out of the country. It’s completely sight unseen. So it’s totally doable. You need to know your numbers. You need to have a good team in place and have a boots on the ground person who you can trust who can be your eyes and ears at the location.

Melinda Wittstock:

How do you find that boots in the ground person that you can trust? What are their qualifications? What are they really doing for you and such?

Palak Shah:

There’s like a continuum of the skill set that you’re looking for. It can be anywhere from a college kid with just a phone who’s paid $10, $20 an hour who can walk around and show you the neighborhood and the property all the way to a home inspector who can do a formal home inspection of the property and big at paid no matter whether you purchase the property or not. So that’s completely unbiased the way they’ll provide you with the inspection report. So it can be anywhere in that continuum depending on what you’re trying to achieve and what your level of comfort is and how much you want to spend. And then when you’re choosing, I like the home inspector idea and then even the college kids.

Melinda Wittstock:

So when you’re making a decision to purchase, did I hear you say that you’re not really going through an agent? Or are you?

Palak Shah:

There are multiple ways to build a solid deal pipeline. You can either go through real estate agent. There are also some really great wholesalers. Wholesalers are people who are experts at helping distress property owners sell their property without putting it on the MLS because not all properties are fit to be on the MLS. MLS is the multiple listing service where anytime you open Zillow or Redfin the properties that show up on there are usually pulled from the MLS. So yeah, so there are wholesalers who specialize in off-market deals and building those connections when you have a solid deal pipeline so that you can constantly have access to deals from realtors as well as off-market deals.

Melinda Wittstock:

So, Palak, you mentioned already, you know, people can find you on Instagram and I recommend anybody who’s looking for a side hustle right now, which is like many, many, many, many, many, many women and other entrepreneurs that they kind of check you out. So what’s the best way?

Palak Shah:

So yes, so the best way to reach us is on Instagram at Open Spaces Women. You can DM us and we’ve got a lot of great resources for investors who are wanting to get started.

Melinda Wittstock:

Fantastic. Well, thank you so much for putting on your wings and flying with us. Thank you for having me.

Palak Shah:

This was fun.