Real Estate Credentials to Boost Your Investing
Osama Emara shares his real estate investing experience and how and why he earned real estate broker and mortgage loan originator credentials.
About Today’s Guest
Osama Emara is a real estate broker and mortgage loan originator. After his residency, Osama bought his first investment property, a duplex. He lived on one side and rented the other side. A couple of months later, Osama bought his second property, for which he got 30% cash on cash return! In the past few years, Osama got his real estate license and bought additional properties. Recently, Osama got his mortgage license. He is excited to start his career in lending and helping people buy homes and build wealth through real estate investing!
Summary
This week, Nate Hedrick and David Bright sit down with pharmacist, real estate broker, and mortgage loan originator Osama Emara. Osama shares his real estate investing experience, why he has chosen real estate investing to fill his time, and how he manages to keep up with his growing portfolio as a busy pharmacist. Osama further explains why and how he chose to pursue additional credentials related to the real estate industry.
Osama spends a few moments sharing the benefits and liabilities of having additional real estate credentials as well as various types of loan products. He also explains how negative experiences at the start of his investing career drove him to get his real estate license and later pursue education to become a mortgage loan originator. With a growing real estate portfolio, Osama found that his finances started to get a little complicated, so much so that he was better at troubleshooting the problems that arose than his team members. With his knowledge and passion for real estate, additional credentials offered him ease of access to funds and properties that he would not have otherwise had. Osama also shares that he originally intended to use his credentials for himself but has since helped friends and colleagues to purchase homes and investment properties.
Osama’s advice for pharmacists who intend to keep their focus on their pharmacy careers while moving into real estate investing is to have a process for vetting tenants, preventing a lot of problems from the start.
Mentioned on the Show
- BiggerPockets Podcasts
- BiggerPockets Books
- BiggerPockets Forums
- Email Osama Emara at [email protected]
- Connect with Osama Emara on Facebook
- YFP Real Estate Investing
- Join the YFP Real Estate Investing Facebook Group
Episode Transcript
Nate Hedrick: Hey, David, how’s it going?
David Bright: Hey, good, thanks. How are you doing?
Nate Hedrick: I am good. It is a Friday night that we are recording, so I was remarking about our very nerdy behavior late at night on a Friday. We could be cool, but instead, we’re recording this awesome podcast for all of you. So welcome.
David Bright: Yeah, and you’ve had a busy day too because you were saying that you got in late from doing an open house, so what’s going on there?
Nate Hedrick: Yeah, doing an open house for a — our rental here in town that we’re turning over, the tenants just left here at the end of September, and so it’s time to get new tenants in. And so one of the ways that I like to do that without taking up all of my time is to do one or two or three open houses. So if I get a bunch of interest in a property, I’ll just say, “Look, showings are this two-hour block or this 1.5-hour long block on whatever day,” and that way, everybody can come through in one fell swoop and I’m not trying to coordinate a 5 o’clock showing for one person and a 9 o’clock showing for somebody else. It’s just too much work. So yeah, I was doing that, we had a bunch of people go through, a couple of good applicants. So it’s looking like we’ll get that re-rented pretty quickly, which is awesome.
David Bright: I know I have heard about that strategy from people like you and from my property manager. I’ve not done that personally. But I’ve heard about that strategy. Yeah. Because that’s not a part of the process that I’ve jumped into personally. But that’s also kind of the theme of the show today, right, is like different strategies to be kind of more and less hands-on in the investing and different roles that you can take in that process.
Nate Hedrick: Yeah, I think that’s spot-on. And like you said, there’s no wrong way to do it. I have property manager for some of my properties. And I have my own — I do my own management for some because I feel like I like to have my hands a little bit in it so that I can understand it whereas, again, you looked at it and said, “Look, this is not my speed. I don’t want to do it.” I think that’s great. And so today, we actually, we interview Osama Emara. Osama is a pharmacist, a real estate agent, a real estate investor, and most recently, a mortgage loan originator. So a ton of things, all active at the same time. I think it’s really interesting. Really excited to bring his story to you guys because it’s just — it shows how deep you can go and not everyone has to do that, but it gives you some of the options that you have if you wanted to keep adding licenses to what you’re doing.
David Bright: Yeah, and one of the things I like about this episode is although I’m assuming that most investors are not going to get this many different credentials, right, most investors are probably not going to do as many different things as Osama has done, but I think there’s still three things in there. One is that there’s opportunities that you may not have know about of roles that you can take on, licenses and credentials that you can get in this process that can help your investing if you want to be more hands-on on that spectrum of hands-on v. hire out and build a team. So those opportunities may be there, and those may be things you’ve never heard of. Second thing is Osama offers some great advice just based on being a realtor and being a loan officer and being an investor himself and ways to just break through barriers in growth because he has those experiences, which is really cool. And then three is we also just have that discussion of you don’t need these credentials to be an investor. You can still learn from really smart people like Osama that have these credentials, but you don’t need them yourself. But if this is inspiring and you’re like, that’s really kind of intriguing. I want to look into that more, then maybe this will plant a seed.
Nate Hedrick: Yeah, I love that part of this. Again, that’s kind of how a lot of the stuff that I do listening to podcasts is oh, I didn’t just come up with that idea on my own, right? I heard it on a show and then took it and ran with it. And so hopefully this sparks a couple people out there. And that’s why we’re excited to bring it today. So definitely take a listen. Some of the overarching themes that I really like in here, it’s just talking about finding ways to create or identify problems and then create solutions for those problems. You know, Osama tells a couple of stories about times where he was working with a client or working with himself and trying to get a loan closed or get a deal closed, and it wasn’t working the way he wanted it to so he went back and he figured out how to fix the problem himself. So really great themes in here. I hope you guys get as much out of it as we did. So again, with that, we will take you over to the interview with Osama.
Nate Hedrick: Hey, Osama, welcome to the show.
Osama Emara: Thank you.
Nate Hedrick: We’re so glad to have you here. This is pretty exciting. We got referred to you by another pharmacist who said, if you’re looking to talk to more real estate investors, this is the guy you’ve got to speak with. So excited to have you on tonight. I appreciate it. Well, why don’t we get started, why don’t we jump right in. Tell us a little bit about your pharmacy background.
Osama Emara: So I went to pharmacy school in Oregon and then I did my residency at a hospital in Washington, and I still work there. It has been great. I like it, but I’m always looking for something to do when I’m not at work. So real estate is that thing.
Nate Hedrick: It fills the hours. I love it.
Osama Emara: Yeah.
David Bright: Yeah, so with that then, could you tell us a little bit about your real estate why and then your journey so far in real estate?
Osama Emara: So my first property that I bought was back in 2017. I had a job down in Vancouver, Washington, and then I was able to find the duplex right by the hospital. So I had already listened to some Bigger Pockets podcasts before that. And so I was like, yeah, I want to do this. I want to do this house-hacking thing. So I’m going to buy a duplex, live in one side, and rent out the other one. The other side was already rented, so it made it easier. So I just moved in, I did some updates, and I still have that property now. And then kind of like I started thinking, I was like, OK, I want to have another income stream that does not come from me having to be at work. So I don’t want to go into work, clock in, to get paid. Like I want to find something else that I can do to have income without me doing that and something that will give me more flexibility as well. So as I looked into different things, I decided that it is real estate that I want to do. I do not like the big fluctuations in like the stock market, for example. It just doesn’t fit my personality. I would rather have like an actual, tangible asset that I can manage and see and then even if the market shifts, like those swings doesn’t happen very rapidly, like overnight like the stock market, for example.
Nate Hedrick: I definitely can resonate with that. I love being able to physically see the property. And even the properties I’ve never stepped foot in, it’s just nice to know that I have an asset sitting somewhere rather than just an imaginary piece of paper in a computer someplace. Like I totally get that. And so what does your portfolio look like today, then?
Osama Emara: Well, I own nine properties plus another piece of land that I’m hoping to be able to develop.
Nate Hedrick: Cool.
Osama Emara: And my properties are either like single-family homes or duplexes.
Nate Hedrick: All those are in your home state of Washington, then?
Osama Emara: That is correct, yes. All of them are in Washington.
Nate Hedrick: Very cool. And then I know before we hit record, we talked a little bit, but you also have other licenses as well. So you’re like me, you’re crazy. And you went out and got other licenses, right? So tell us a little bit about that too.
Osama Emara: So I am a licensed real estate agent in Washington. I have had my license for about three years now. And I just recently got my mortgage license, so I am basically like a licensed loan originator.
Nate Hedrick: This is awesome. To me, like on the surface, it almost feels like you’re a physician and a pharmacist. Like you can prescribe and you can dispense. Like isn’t there a — like isn’t there a problem there? I love it. I think that’s cool. And we’ll dive into that, actually. But I think that’s really inspiring. And how long — so you just got the mortgage origination license, but how long have you had your real estate license?
Osama Emara: Almost three years now.
Nate Hedrick: That’s great. That’s awesome. And so I guess, there’s a lot of debate — you’ve gotten that after you started investing — and there’s a lot of debate among investors about whether or not it’s worthwhile to get your real estate license. And I have my own opinions on that, but I’d love to hear yours. What do you think about should you or should you not? Or why did you decide to go ahead and do that?
Osama Emara: Well for me, so when I bought that first duplex back in 2017, I didn’t really like the experience I had with an agent I had at the time with the transaction. And then just a couple months later, I bought my second property and there were issues with that transaction, there was a problem with the appraisal, and my agent didn’t want to deal with it and basically told me, this is not going to work. But — and I was actually able to make it work with the lender and we got it fixed, we got it figured out. So when I did that, I was like, OK, well, if I was able to make this work, then I should be able to make other ones work too.
Nate Hedrick: I’m already better at this.
Osama Emara: Yeah. So that’s when I decided to get my real estate license. And I got it shortly after.
Nate Hedrick: And I guess, have you found — I guess I’ll tell you my experience, but one of my favorite advantages is just the quick access to the MLS or if there’s a property that comes on the market that I want to go see, I don’t have to call up another person, ask them if they’re available at 4 o’clock or over my lunch break. Like I can just hop over to that property. I’m the agent. And as long as I schedule the showing in the system, I’m good to go. That’s like my favorite thing. It’s just made it so convenient.
Osama Emara: Absolutely. And also, like when you are an agent and when you’re speaking with other agents or investors, it is — like in my experience, it has been a little bit different. And then you’re able to get more information from the MLS and you also practice — I’m not sure about other states, but in Washington, a real estate broker has to be licensed with a real estate firm in order for the license to be active. So you would be working under a designated broker or a managing broker so that when you have questions, then you can ask them. And I think that’s how it usually works for most brokerages. So it’s kind of like having that support and the extra knowledge and the extra education. I found that to be useful for me.
David Bright: So one thing that goes with that, though, is because there’s definitely a lot of investors out there that do not get their license. You know, Nate did, I have not gotten my real estate license. So what are some of the downsides of getting a real estate license? Or why would an investor have like logical reasons to not get licensed as a real estate agent?
Osama Emara: Liability.
Nate Hedrick: Mhmm.
Osama Emara: So there are some investors who are like, yeah, I don’t want to have the liability of being a real estate agent and I am bound by certain laws because if you are not licensed, then you’re not bound by all the laws that real estate agents are licensed for and held to account for. So like a regular investor who is not an agent could, for example, just use any kind of contract with a seller. You don’t really have to abide by any certain rules or anything like that, where for me, as a licensed real estate broker in Washington, I would have to disclose in writing in the contract that I am a licensed real estate broker and then that automatically holds me at the higher standard than any of other buyer who might not have an agent.
Nate Hedrick: That’s a super good point, and it’s actually pretty relatable to all of our careers in pharmacy. Like you are now a drug expert. If you give advice, and you do that as a pharmacist, you’re doing so under the guise of ‘I’m a professional, I should know this stuff.’ And it’s the same thing with real estate. If I give someone advice or give them an opinion of value or things like that and it needs to be known that I’m an agent and that I’m an expert in that particular market, for example. So you’re totally spot-on. That liability changes, and some investors don’t like that or some people just don’t want to take that on as an extra piece to deal with.
Osama Emara: Exactly. And just thinking about the state regulatory bodies, they’re not really our friends. So the regulatory bodies, like whether it’s the Board of Pharmacy — the Board of Pharmacy is not really on the side of the pharmacist, it’s the opposite. The Board of Pharmacy is — their main objective and mission is the consumers.
Nate Hedrick: Protection.
Osama Emara: Yes. So the Board of Pharmacy does not really protect pharmacists. The same for the state licensing department that licenses real estate agents. It also doesn’t really protect the real estate agents. They protect the consumers. So that would be like — I think for me, that would be the main thing. Another reason is like the costs because getting a real estate license and that comes with costs as well. So whether it’s the initial education, the test, and then the monthly fees and the commission splits with the brokerage, and then you have like MLS fees, you have the fees for the key boxes and all of that. So it adds up. So if you’re not using it, then I’m not sure how beneficial it would be. But I think it would be beneficial to just at least take the class because it does have some useful information.
David Bright: So with those costs, could you ballpark for us those costs? Because I’m wondering if there’s some kind of break-even where if you would do this enough, it might be financially worth it from that standpoint.
Osama Emara: Well, there are some costs that we can do that, yes, but some others that we cannot. So the costs that we can kind of like say what they are, so for example, the cost of taking the class. So it will depend on the school, but let’s say for example like $750. And then taking the test, background check and all of that, so let’s say now we’re up to $1,000. So that is the cost to get licensed. So it’s pretty minimal. And then you have the MLS costs. So in my market and my MLS, I think it’s about maybe $260 every six months.
Nate Hedrick: Same. Actually, almost spot-on. I think it’s exactly that, like $255 or something. Yeah. That’s cool.
Osama Emara: Yeah. And I think it’s like $15 a month for the access to the Supra box. That’s the box, the key box that’s used in my MLS. So these are the costs that we can actually know what they are. But then the other costs is like the cost that will come with being a part of a real estate firm. That just varies from one firm to the next one. There is no — I don’t think there is even like an average. It just — so I think like minimum, like for a firm to just allow you to keep a license active and not have any kind of productivity, maybe like $150 a month, $250 a month? That’s just to keep your license active and not expect any productivity from you. Versus other firms that’s like, you know, yeah, you need to have at least like, for example, like four transactions a year in order to just keep your license active. So that part depends, yeah.
Nate Hedrick: It’s probably somewhere in the neighborhood of if you’re doing one deal a year, right, you’re probably breaking even, depending on the size of the deal and the complexity and the costs and all that, but otherwise, it may not be worth it.
Osama Emara: Yeah, but if you’re doing just one deal a year, then yes, you are — you might be saving a little bit in commission, but at the same time, you are having these costs plus the liability and not having someone to assist you —
Nate Hedrick: Exactly.
Osama Emara: — with the transaction. Because like if you have a good real estate agent who is helping you with the transaction, they can bring — like if they’re a good agent, they can bring in a lot more value to you than what you could have potentially saved.
Nate Hedrick: Great point.
David Bright: Yeah, and one other thing that I’ve noticed not being on the agent side, but every time that I see behind the scenes just a little bit, I realize how much work is involved too. So there’s definitely work involved in saving that money. It’s kind of like a second job. Would you agree?
Osama Emara: Absolutely. Yeah. Whether it is like searching properties, making relationships with other real estate agents, keeping up on the market, if you’re buying investment properties, keeping an eye on the investment market, on rents, and having relationships with contractors and handymen and where to get materials from and all of that. A good agent who does investments would help you with all of that. And each one of these points can save you a lot of money.
David Bright: So are you then providing that service to other people? Or are you using — mostly using your license for yourself then?
Osama Emara: So for the first like two years, I was just using it for myself. But about a year ago, I started working with clients. So I actually helped one of the pharmacists I work with buy an investment property. I helped one of the pharmacy technicians I work with to buy their first home and a couple other people at the hospital. I also have some friends who I helped like sell their house and buy their next one.
Nate Hedrick: That’s awesome. I love that. I’ve gotten to help two other pharmacists at my current job to buy a house. It’s really fun when they’re like, ‘Hey, don’t you do real estate? Can you help me out? Like also, why do you do real estate?’ So very cool.
David Bright: That’s awesome.
Osama Emara: And you know, of course that will come with like if they have any — because like for example, if you’re buying an investment property and it’s your first one, then it’s a big decision to get into it. So it helps to know someone who has done it who can show you and share with you what they do. And if you need help with anything that has to do with that, whether it is like identifying property, calculating income, figuring out if it is actually a good property or not, if you need work done, which inspector to use, which contractor to use, or should you do this fence, should you not do that, kind of things like that. So I think it comes in handy.
David Bright: Absolutely. So the real estate license is most likely the most popular kind of license that a pharmacist investor would grab to help take their investing to the next level or even if they just want to create a second income stream through helping people buy houses here and there. But originating loans is drastically different. So can you walk us through like why did you choose to get that license? And what’s it doing for you?
Osama Emara: Yeah, so like just very recently, I was helping a friend, I helped them sell their current home and then they wanted to buy another one, which was a new construction. We were under contract for like four months and then two days — so like almost for a month later, two days before closing, the lender that they chose was like, ‘Yeah, we’re not going to be able to do this loan.’ So we kind of like scrambled to find them another option. We found them like a private money investor who helped them close the deal, and then they are refinancing. So that was like one example. I was like, OK, I do not want to deal with anything like this again because it did cost my clients $7,000 in fees because the lender was charging them over $300 a day for the delay in closing.
Nate Hedrick: That’s crazy.
Osama Emara: Yeah. So like imagine this. Imagine if financing is not an issue for you. Like how many properties would you buy?
Nate Hedrick: It opens up a lot of possibilities.
Osama Emara: Exactly. So there are like a lot of lending products out there. But not a lot of people know about them. And then understanding the nuances and how to structure deals and how to do that, which I have done — this last year, I have done like a few deals. And a couple of them were using creative financing. So one was using like private money, so I basically had a couple of my friends lend me the money to buy the property and then I just refinanced after that. Another one was buying a property subject to, which basically, the seller basically deeds the property to me so now I am the owner, but he still has his mortgage on the property. And then afterwards, I will refinance it into my name and then pay off his loan. So understanding things like that and there are other kinds of loans too, for me, it would help me kind of like be able to finance more properties and grow my portfolio and also I can use that information to help my clients to find the solution to the problem they have.
Nate Hedrick: And those different loan products, like that’s really — I think that’s super important. So talk to me a little bit about that. You know, you mentioned different products that you talked a little bit about creative financing, I think people who aren’t in this space or who haven’t dealt with this before, what does that actually mean? You mean I can’t just go to the big banks and they all have the same loans sitting out there and they all just say, ‘It’s 20% down and here’s your rate and have a great rest of the day,’?
Osama Emara: There is a lot more variety than that. So the normal loans or the loans that people usually use to buy their homes are usually either like conventional loans or some kind of a government loan like an FHA, VA, or USDA loans. These are kind of like the standard loans that people usually use to buy homes. But there are situations when someone might not be able to get one of those loans because so when someone goes to the bank, they get one of these loans, the bank will originate the loan and then once the bank originates the loan, then the loan closes, the bank basically sells that loan on a secondary market. And then they get extra gain and then they get all the gain. So in order for them to be able to originate the loan and sell it again, they have to follow certain guidelines. And those guidelines are either done by Fannie Mae, Freddie Mac, or HUD, or the VA, for example. But sometimes, you have a client who doesn’t fit the box. So they make good money, they are able to afford a home, but for some reason or the other, they do not fit that box that these entities that would buy these loans would require. So what do these people do? Like if there are no other products, then they just can’t buy a home. That’s it. But the other products that are available like, for example, like bank statement loans. So if someone has a business — like let’s say that someone like a pharmacist just opened an independent pharmacy and they have that business for less than two years. Well, they will not be able to get a conventional or government loan because they are required to have two years of business tax returns in order to qualify for a loan. But if they have the business for like a year, then they would qualify for a bank statement loan, which would just look at how much their business makes and how much their expenses are and then based on that, they would qualify and they can get a loan. Yeah, these products can solve a problem for someone who actually needs them. And since they are solving a problem, they also charge a little bit more. So the interest rate for that might be like maybe 1% higher than conventional loans or maybe just a little bit more than that.
Nate Hedrick: And help me, you are originating these loans, right? These aren’t coming from the bank of Osama, right? Like these are — you are sending these off somewhere. So talk to me about what does that process look like? Like who is actually doing the lending for these? Because I think that’s something that I think people might miss.
Osama Emara: Yeah. So I signed up with a mortgage broker. So like someone who originates loans is usually one of two spaces: The first space is with depository institutions, so that would be like banks and credit unions. And then the other type of places that would offer loans are mortgage brokers. So the bank or the credit union, they would be using the money from the people who deposit money with them to make that loan and then immediately sell that loan and get the money back. As a mortgage broker, they basically have a wide variety of lenders that they get their money from, like a lot of different places like Wall Street hedge funds, insurance companies, wherever they get their money from. And then they are willing to give people loans to buy homes. I also have access to conventional and government too, so I can originate a conventional loan or an FHA or VA, for example, or other products like jumbo loans. There’s actually something that was like really neat about me becoming — this is actually a great benefit of me actually becoming like a mortgage broker. So I don’t know if you guys heard about like doctor loan programs.
Nate Hedrick: Mhmm. Absolutely.
Osama Emara: And so, all of the ones I have seen before, they do not include pharmacists.
Nate Hedrick: Right. I’ve seen that a lot.
Osama Emara: However, when I became a mortgage broker, now I actually have access to lenders who will do these doctor loan programs to pharmacists, which the nice thing about it is for example, you could buy a home for up to $750,000 with $0 down payment, which is amazing.
Nate Hedrick: It’s incredible.
Osama Emara: Yeah. So if someone can afford the payment, they just don’t have the cash, which happens. Some people have expenses or they already have the money tied in other investments, they just don’t have the cash. But if they had the mortgage, they would be able to make the payment. And not having mortgage insurance, it’s a lot lenient, and it goes by credit score. So if your credit score is this much, then yes, you don’t have to put down payment. If credit score is this, then this much, then you can put down this much. Those are very good products they have. So for me, being a broker, a mortgage broker, I can have these products and then I can offer them to other pharmacists who want them.
Nate Hedrick: I absolutely love that. And two really cool things about what you just said: One is that you’ve got a new way to help your clients, right? Whether it’s just somebody in the pharmacy that wants to buy their first house or somebody that you know and you want to help them out from the mortgage standpoint. Like you have a new way to help them out in a way that you couldn’t before. And again, you saw a problem and you’re basically trying to fix that yourself, which I think is crazy and awesome. And then the other neat thing is that you said you signed up with a mortgage broker. So this isn’t just like you striking out and like hanging the sign on the wall and saying, “Hey, I do the loans now.” Like you have support, you’ve got help. It’s not just striking out and hoping for the best. Like you’ve got a plan in place, which I think is just incredible. It’s neat. It’s neat to see you grow that and build that.
Osama Emara: Yeah, and one of the reasons why I got my license is like in this last year, for example, I have done quite a few loans for myself, like refinances and purchases. So it got to the point where my finances were getting a little bit complicated and then I would talk to a loan officer and it was like, this is what I want to do, and then they would tell me, ‘Oh, no, you cannot do that. That’s not allowed.’ And that yes, it is allowed. Here’s the guideline. So it was that point, it was like, OK, I need to do this myself. Another example, like right before we speak, I was talking to a client I have, and he wanted to — he wants to buy an investment property. So we were kind of like going over kind of like finances and stuff, and his debt-to-income ratio was going to be a little bit too high because his family owns a four-plex that he ended up getting the loan on just by himself.
Nate Hedrick: Oh, wow.
Osama Emara: So that is not very good for him because all of the debt is coming up on his credit report, but the income is not just his. So this kind of like harms his debt-to-income ratio, which would kind of like prevent — might prevent him from getting loans or getting a bigger loan. So now I have another product that could help with the problem that where you basically can move the property into an LLC and get a rental property loan for the LLC. So this way, you still keep the property in the family and it doesn’t harm him. And then it improves his debt-to-income ratio so he can use a conventional loan to buy his next property and get better terms because he’s going to hold onto it long-term.
David Bright: I think there’s so much good in there about how you can coach someone — just like having a good real estate agent to help someone identify what they need, like you’re then able to help coach people to different loan products, different strategies, and different opportunities that are out there. Just like where you ran into hurdles, like you didn’t just stop. You said, “No, here’s the guidelines. I can find a way around this.” Like you pushed through, and that helped you to continue growing in your investing, and now you’re able to do that for other people, which just sounds fantastic. One of the things I know a lot of people listening to the show are full-time pharmacists that are trying to think about like, what could I do outside of that that still doesn’t interfere with my day job? This sounds like a ton of work, like being a realtor, being a mortgage broker. How do you get that all done? And are there assistants to help you? How do you manage all that?
Osama Emara: Well, I like it. So it doesn’t really feel like work to me. And I already learned about all of these mortgage products, for example, for myself before. Now I’m just learning more about it. So it excites me to do that. And I like sharing with people and I like helping people to be able to do what they want to do. The issue that I sometimes run into is, is the person actually willing to do this? Do they really want to do it? So just making the decision because you can coach someone on how to do something because you have done it before, but they still don’t want to pull the trigger, for whatever reason. You can lay out the way like OK, you need to do this — like a very simple strategy, for example, like someone wants to buy an investment property is like — they own a primary home, they don’t have any other properties, so it’s like, OK, I want to buy my first investment property. It’s like OK, really simply. Just do a cash-out refinance on your primary, pull out the cash, use that to buy your next home. But then they don’t pull the trigger on doing the cash-out refinance to get the money to buy the next one, even though they know exactly what they need to do. Just the information by itself is not sufficient. It’s just a person actually needs to be willing to do it and they actually want to do it.
Nate Hedrick: It’s such a good point. It’s something that — actually, it’s funny, I was just listening to a Bigger Pockets episode, and I feel like David Green on that show talks about this all the time, about how like everybody knows how to get a six-pack abs at the gym, but we don’t all walk around with a six-pack for a reason. It’s a ton of work. You have to actually take the steps that we know and the information that we have, and you have to apply them and do them. You have to diet, you have to work out regularly, you have to count your calories. That is the difference between those that are successful and those that just read about it and are like, man, I wish I could be successful. So it’s cool to see somebody taking it and running with it and going after that six-pack, Osama.
Osama Emara: Exactly. There is a saying I heard recently. It was like — or actually, it’s kind of like a question: What’s the difference between someone who has a business and someone who doesn’t? The one who has a business started. That’s all they did. They just started. If you don’t start, you’re not going to get there.
Nate Hedrick: I love it. And so really quick, we talked a little bit about the process for getting a real estate license because again, I think that’s much more in line with what most people would be looking to do. But what about the process for getting a mortgage license or signing up with a mortgage broker? What does that look like?
Osama Emara: So it also has a class, just like the real estate license, and a test. And then after you do that, then you apply for the license and then you find a broker or if you just want to leave with the work you do now and then just be basically an employee with a bank or something. So you can do that too. But yeah. So it’s kind of like the same, like pharmacy license or real estate license.
Nate Hedrick: Except the pharmacy license comes with the six or eight years of school in front of it. This is a little lower hanging fruit, but yeah. One of the other things I think might be helpful too now that you are a loan originator, from your perspective, would be just what are some of the things, especially for our listeners who haven’t bought a property yet, right? They’ve never walked through that process before. They may have bought their own personal residence, but maybe it’s just once. So like what are some of the key things that a pharmacist needs to consider when they’re looking at a loan product, specifically for investment property loans? But in general, is it the rates they should be focusing on? The down payment? Like what are those things that you have seen with your experience that are super important to keep in mind when comparing rates or products?
Osama Emara: So I guess the first thing is like you have a good deal, then just being able to get financing. That is really the first thing. Are you even able to get financing for it? Regardless of what the rate is or what the cost is to get the loan. Because this is something that I kind of like struggled to have this mind shift on, which I used to think a lot about how much this is going to cost me, how much am I going to pay, how much am I going to pay. Now I have been able to make the switch. So now I think, OK, if I do this, how much would I make from it? Because this has prevented me before from doing a deal because, oh, I think I’m paying a little too much for this or I’m paying too much for that. But then I would still have made money on it. So I didn’t do it because I was thinking about how much it’s going to cost me, but I should have thought of it as like, OK, how much would it make me? And if I had thought of it that way, I would have done the deal. So when looking at financing, the first thing is like, OK, can I get a loan? That’s the first step. And if I can, then it’s like OK, can I get the loan with someone who I know would be able to close, someone who I can reach when there’s a problem, and someone who can solve a problem when there is a problem. And then after that, it’s like OK, what’s the cost for the loan? And what’s the rate? Because you could have someone who will tell you, “Yeah, I’m going to give you this loan with this rate,” like 1% loan, $0 cost, but then that just doesn’t happen, right? So there are some lenders, like when people look online, for example, for online lenders, you’re going to find lenders who have like really good rates. But then you’re not able to get ahold of them, it might take like three months to close. I had one of those before. And then like being able to talk to the loan officer or the processor when there is an issue to have actually someone who is trying to kind of like help make it work versus like someone who just doesn’t really care, is like ‘I have so many other loans that I don’t really care about this one, and I will have to spend a lot more time on this one, so I would rather just not deal with it. I will just give them my rejection letter or just let it lapse.’ Or if you have like a property under contract, then you have earnest money tied up and then something happens and then you cannot get ahold of the loan officer or an issue comes up and you might be — even though most people would have like a financing contingency, in some markets, a lot of people are just waiving the financing contingencies just for the offer to be competitive or in some markets, they are — like the financing contingency doesn’t go on until closing. It expires before closing. So you kind of like have to know before closing that this loan is going to go through. Otherwise your earnest money might be at risk.
David Bright: No, that makes really good sense that you need to have just like you have a realtor that you trust, you need a lender that you trust, that you can communicate, that can help you, that can coach you, that can solve problems. And that makes a lot of sense. Then from your standpoint too, I’m sure that you’ve seen things that trip people up in the process where either they didn’t plan or didn’t know or things you’ve already mentioned, DTI or maybe credit increase or other things like that. What do you see that kind of trip people up that they need to be thinking about as they’re getting their financial house in order to buy a first rental property?
Osama Emara: Well, obviously credit is important. So if there is anything on credit that would not look good or something that would bring down the credit score, then start working on that and get that better. If there is — like sometimes with finances, like if someone is going to have — is going to get like a conventional loan, for example, whatever money that you’re going to need to come up with for the down payment, you’re going to have to show two months worth of bank statements to show that this money has been in your bank account for at least 60 days. Some people don’t know that. So some people think like, oh, I was actually, I have lent my brother money, he has the money, so he’s just going to lend it to me and then I’ll use it for the down payment. But then when you get there, they don’t do it like two months in advance. So if someone is planning on doing that, then whatever money you are going to use for a down payment and closing costs, just have that in your bank account at least two months so that it will show up on the previous two months’ bank statements. Sometimes, like people might not disclose that they have — like someone could have a house, but they also are renting an apartment somewhere else. Like say they have a part-time job in another place, and then they are renting there. But let’s say they just forgot to disclose that as one of their liabilities on the application, they just didn’t know about it, but then when they submit their bank statements, well, it’s going to show that there is a regular payment going to this apartment complex or something. So well, now that was not known before, so now we have to recalculate the liabilities and the debt-to-income ratio. And depending on how much difference that makes, that could make or break the loan or it might not allow someone to use a particular product and they have to use another product that would tolerate a higher debt-to-income ratio, but it would also come at a higher rate, for example, and things like that.
Nate Hedrick: Great tips. Love that, especially the one about having the money in place in time. I’ve actually seen that trip up deals before myself. So that’s some great tips. And I think the overarching kind of theme there is prepare and talk to people in advance rather than try to force everything through a small window.
Osama Emara: Exactly.
Nate Hedrick: That’s great. Well, Osama, I want to switch over to our final infusion questions. So these are three questions that we ask every guest that’s been on our show. So we’ll dive into these and get your take. The first one is what is one tangible strategy that you use to make sure that your investing works hand-in-hand with your career as a pharmacist?
Osama Emara: So I think the most important thing about having like rental properties is choosing the right tenant. So screening the tenants well and then having a good tenant because if you have a bad tenant, it’s going to take up a lot of your time and then it’s not going to make it fun to be an investor. If you do a good job with screening tenants and having good tenants and having no problems coming from that side, then it will feel like a pleasant experience. And then you won’t have headaches working as a pharmacist.
Nate Hedrick: Super important, especially if you’re doing your own property management. Absolutely.
Osama Emara: Yep.
David Bright: What’s one resource that’s been most helpful to you in your real estate journey, whether that’s a book, podcast, person, author, website, whatever that would be?
Osama Emara: Bigger Pockets. Yeah. There’s a lot of information on Bigger Pockets that I listen to a lot of podcasts and I read some of the books, and I’m on the forums too.
Nate Hedrick: Perfect. And then No. 3, our last one, what’s one piece of advice that you’d give a pharmacist that’s contemplating a start in real estate investing but hasn’t pulled that trigger yet?
Osama Emara: Well, if you’re looking something to supplement your income or if potentially you’re looking to invest more and just having the income from the investments kind of like completely replace the W2 income from working as a pharmacist, then it’s a good way to go.
Nate Hedrick: Great, to get started. I love it.
David Bright: Very good. And then in case people want to know more or reach out to you now that you are an agent, a loan officer, everything there, how can people find you?
Osama Emara: I’m not sure I have to kind of share my email address for the mortgage brokerage, but it is O — first initial of my first name — and then my last name, so [email protected]. I am also on Facebook under my name, Osama Emara.
Nate Hedrick: Perfect. We can put that in the show notes as well so people can track you down and reach out for literally any need that they have. I love it. I think it’s cool.
Osama Emara: Yeah. And I am currently licensed as — so as a real estate agent, I’m licensed in Washington. But as a mortgage broker, I am just licensed in Washington now, but I will be expanding — I’ll be getting a license in a few states, so I will start with kind of like Oregon, Texas, Florida, probably Hawaii too. And I’ll just license anywhere where I have clients. But there are some of the loans that they actually don’t need to have a license, like some of those — I don’t need to be licensed in all those states like some of the commercial products or the rental property loans and things like that. I can do these in most states now.
Nate Hedrick: Now you’re making me want my Hawaii license. Like that’s the one I want to get next so I can go out there and sell houses. Well Osama, I really appreciate you being on the show today. This has been super inspiring and really just an interesting take. Again, I hope people reach out and I’m excited to see what you do next. So again, appreciate you being on the show today.
Osama Emara: Thank you for having me. It has been a pleasure.
David Bright: Thanks so much.
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