The stigma around the syndication business probably stems from people who have never done real estate investing. Coming out from that negative view, Vinney Chopra – a multifamily syndicator with over 35 years of experience in real estate – breaks down the misconceptions surrounding it, believing that if done right, syndication is nothing short of being legal. Vinney shares the ways we could achieve that ourselves to make the most of the business, starting with how he started digging and eventually developed strategies with multifamily syndication. Giving advice to those who are new to this, Vinney shares the ways you can make money and investors follow you.
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How To Scale Multifamily Syndication with Vinney Chopra
Our guest is Vinney Chopra. Thanks for being on the show again, Vinney.
Thank you, Whitney. Thank you for inviting me. It’s such a pleasure.
Vinney has been on the show numerous times now. I would encourage you to go back to WS01, WS161. We started a series starting at WS176, going through some key parts of this business that you need to know and learning from Vinney’s experience. Vinney came to the US with only $7 in his pocket. Now, he has over 35-plus years of real estate experience and fifteen-plus years in multifamily syndication, investing in managing experience including overseeing management of over $220 million of real estate assets. Vinney, thanks again for being on the show. What are we going to discuss now?
We’re going to talk about the investors, how to syndicate multifamily and how to scale up. That was the world I got to know about for many years now when I became a broker in California. I was looking into what should I do with my broker license and I stumbled into it. One of my good friends said, “Have you looked into multifamily?” I looked at multifamily, but they were too expensive unless you want to buy 15 units, 20, 200 or 500 units, that’s when I decided, “How could we get family and friends involved?” That’s the next logical way to do it. By looking into that, I discovered a whole new life and a different world, which is the syndication world.
A lot of people frown upon it. I want to discuss that a little bit because it’s not a gorilla. I say that to everybody. It’s not a gorilla as you think. A lot of people say, “It’s illegal. It’s this. It’s that.” The people can come after you and this and that but if you do it right, if you learn it right, there is nothing like this business. Syndication in not only multifamily, syndication in flipping business and wholesaling business or anywhere. You could also use that because all you’re doing is pooling the money together legally from investors.
There is a little bit of negative stigma around this business. However, I felt like that’s going to be mostly people that probably have never, maybe not even done any real estate investing, especially the syndication business.
[bctt tweet=”Transparency can bring a high level of confidence and trust.” via=”no”]
I have to put my name into the shoes of the investors. I wanted to know where we are, what’s happening and why they’re able to lose money. That’s the wrong word. Some of the investors have lost money. It’s very hard to lose even would $10, not to talk about $500, $1,000, $2,000 or $100,000. That’s why I love the fact that in the USA, we have the SEC ruling, Securities and Exchange Commission ruling. I bring it up with every investor that I’m so thankful that we are abided by, we are governed by. We are totally compliant with the SEC ruling. We’ve got to say that to anybody we’re meeting with. The other part I find is that I’ve been in sales all my life, motivational speaking and all. I always feel like let’s hear the other person, let’s find out about them and build a relationship with them. Those things are very important. Dale Carnegie’s book, How to Win Friends and Influence People is a great book. We have four copies of that. Our children read them. We read them. It’s so wonderful to talk about how to build relationships with human beings. Investors list is a big one. That’s what we’re going to talk about.
Getting started, a lot of people are very intimidated when you think about having to talk to an investor for the first time. When we’re first getting started, I hear people say, “I’ll start with friends and family.” Some people say, “I’ll never use friends and family.” I didn’t come from a wealthy family. Accredited investors were not somebody I knew growing up. However, I’ve had to build that organically. How do you recommend that?
I would say for the new people starting out, you’ve got to start with the circle of influence. We have six circles of influence. The first one, definitely the people who know you the best are the family, the relatives and friends. There’s a lot more knowledge now that is given in people’s hand how to underwrite deals better, how to look at emerging markets, how to learn from a mentor or coach who has done it and things like that. There is a lot more out there to take you into a space in collaboration where you will not lose money for the family and friends. In my case, if some people have followed me, I took a different step. I didn’t want to get family and friends involved. At that time, I didn’t know if I’ll be successful. Now, my family and friends say, “Vinney, we wish we had spent millions with you. You have doubled the money for a lot of people. You have tripled the money for some people.” All that is hindsight.
I feel confident that the knowledge is there. That we can learn and find the great deals and underwrite them conservatively, that’s the other part. As a syndicator, you’ve got to have the knowledge and you’ve got to have the gumption to do things right, keeping the investor in mind. Over the years, we had managed 26 indications and properties and all. We always felt if in one quarter the cashflow was low, we were able to give them back our management fee so that the investors got their percentage. Sometimes we gave them our portion of the GP side to give them their returns. In some properties, I never took my GP side but kept on giving investors for two, three quarters. We defer it when we sell. We have done that way.
Let’s talk about investors. The biggest thing is that the new people who are starting out in syndication, you’ve got to start a list of everybody close to them. Don’t say, “I’ve thought about everybody.” That’s not the way to do it. You’ve got to put it down. Put their name down, their phone number down, where they live and then you write next to the Excel when did you talk to them, the other parties that have a credibility kit. The credibility kit is so important also. That is where you are able to show the investors in an educational way. I call it an educational brochure.
The educational brochure is so important. It cost me $10,000 to make these 30 pages of the brochure. I got it reviewed by the syndication attorney because the language has to be correct and all graphics and things. I wanted to make it so simple for my investors to understand why multifamily, why we are so excited about it and how the benefits come with the taxation, depreciation and value add? Why the property changes from this to this and how do we do the limited partnership, the preferred returns and the cap rates?
This is the educational brochure that I provide to my students for free who join my academy. I give all my PowerPoints, everything I’ve designed over the years, no holds barred. My goal in life is to teach as many students to do well and they will do well better than me. The good part is the investors are the goal. We’ve got to start there. We need to look at one investor, not just one family member but maybe ten-fold because they’re going to tell more people about it. Every tree has a different branch and leaves. I believe in that very much. My retention percentage used to be 89% or something in my 37-year career when I was in sales consulting, motivation speaking and raising and all that stuff.
I always looked at my client as not one client but 40 times in that business. In investors, we could say ten times and that has paid off big times for me. I teach that like putting a sheet around your investors. That’s a big thing, Investor Fusion Theory. I’m an engineer. I always look at what will happen. In Fusion Theories, when you drop something very positive and then the fusion starts and they tell more people, the list increases exponentially. I started from zero. It went to six investors, it went to sixteen and then 38. I went right away to 38 and then it went to 76. I doubled it in a few months because as you start giving the returns to the investors, they feel good about you and you ask for feedback. You want to teach your investors and give them knowledge. When I got my investor’s list going, people will not be giving money for anything unless you answered all the questions in their mind. We’ve got to get into their psyche.
We send them a small newsletter with some news clippings or even links now. Digital newsletters are great. I used to do it otherwise before. Those are great because we want to educate our investors. They will not drop the money right away unless we have shown them why that emerging market is great. That’s why I teach my students, you’ve got to make sure in a Dropbox, you keep on putting all these news articles, everything you get. The best place to get them is the operating memorandum of the emerging market where you are going, try to get some new operating memorandum. In the operating memorandum, you have so much knowledge about that area, the graphs, the data, the demographics, jobs, who are the employers and all those things. It’s very important that we show that to the investors why we are going where we are going.
As a syndicator, the money has to follow you. You can’t get there and then you start sending LOIs out and you’re spinning off the plate, which I call it with the investors, has to keep on going. You’ve got to make sure that the investors will come to dance with you. I collect 98% of my money on time. I shared that in Western Nation also and some of the broadcast. I give 2% interest from the day my investors wired the money into the LLC account, never commingled. They start getting it from the day they wired the money up to the day of closing. This might be a little bit better. It’s so important that we talk to investors not just one time. We’ve got to keep constant in touch with them because there are so many things happening in their life. The more interests you’re showing them and share with them in the first meeting, the three-point rule everything because SEC ruling says that we cannot talk about the deal right away, not at all.
We have to meet with them and have a pre-existing relationship. I highly recommend that all our new investors who want to be syndicators, to get the syndication attorney and look at their articles. One of the very best person, Kim Taylor, SyndicationAttorneys.com, she’s got so many articles that teach you how to approach the investors. I would highly recommend everybody to download that or go on my website, you can download there. The key thing is you want to make sure that we are doing things properly to increase the number of investors.
Start from family, friends, the circle of influence, people at your work, their friends and their friends and then we go into the Meetup groups and the local Toastmasters group, Rotary Clubs and wealth groups. I like to talk to people. Don’t go to Meetup groups where everybody is looking for other people’s money. Go to places where people have money. The other parties that people should go into are charities or charitable organizations which are great and become a part of them because nonprofits are awesome. A lot of people who have wealth are congregated there. They meet over there, and business leaders meet there and all of that.
[bctt tweet=”As a syndicator, the money has to follow you.” via=”no”]
Early on in my life, I used to grab seven people together into a restaurant and pay for their lunch. I like to sell in bunches, I call it, like the monkeys and bananas in bunches, it’s the same way. You’re able also to do that. Try to meet with people. In some of the offices, if you have some people who are good friends of yours, they can invite more people from their businesses and you could meet in a meeting room. You can rent or even at that same business in the evening time, if they allow you to meet up with them. That way you could build relationships and also get more social.
On social media, all the new investors should have a good website. You don’t have to pay too much money. You could do that by paying $80 or $100. I give my students all my contacts from the Philippines and they can build their website like mine. I don’t mind because they are not a threat. My students are not a threat to me. I want them to be successful. The thing is you’ve got to put that impact. People will not invest money with people who they don’t know. They’ve got to understand where they’re coming from, how much learning they are doing, who is their mentor or coach, what they’ve done and their track record, but then credibility and brochure needs to be there. At the same token, they’re going to google you, LinkedIn, Facebook and all that. I would highly recommend that investors should start writing also some blogs, some media presence. Don’t become a podcaster. It’s a lot of work. The thing is you could accomplish a lot of things in other ways.
You talked about selling in bunches and getting started, I can say that is very intimidating for somebody that’s trying to build that list in the very beginning. They’ve never done a deal and they don’t feel confident enough to get in front of a group of people to sell themselves and their business. Even before that, when we’re first building these lists, what are some ways I can be reaching out to investors to grow my list when I have never done a deal before?
It all starts from one. I remember the time, somebody gave me their friends and I went and sat in the living room. I talked about that investor friend, he’s a good friend now. He’s invested millions of dollars. He said, “Vinney, what’s your experience?” I said, “Zero.” He asked me, “Are you moving to Texas?” I said, “No.” He says, “Do you have property?” “No.” Everything was no, but because I was genuine and I said that I’m learning and this is it. I had five slideshows I had put together in a PowerPoint to start, to show him. I took it right back to why multifamily, why this and why that. He liked it. He said, “I’m going to write you a $50,000 check,” and he did.
You’ve got to start with the people you know. Don’t think that people don’t have money. Everybody’s got money. $26 trillion money in the USA is in their retirement funds. Everybody who are 30 years of age, 45 or 50 years of age, they have accumulated that retirement money, some of it. That’s where we’ve got to start from the family, then go outward to relatives and friends. Look at the business people that you may know. When you go to dry cleaning, maybe that dry cleaning owner is a great candidate for you because he’s seen you come there. You go to the car care center, banks and all these places.
Everybody you come in touch with, you try to say these three things. Don’t say, “I’m looking for investors.” You say, “I am looking for equity partner investors.” You’ve got to say that because they are partners with us. They are limited partners. They have a preferred rate and we give it to them 7%, 7.5%, 8% or whatever. It’s very good to say that I’m always looking for equity. They like the word equity. Nobody wants to give you the money and then not have an equity share in that particular business or apartment. I say investor at the end. If you say, “I’m looking for investors,” then it’s so far away. The investor word puts them so far away from us.
We are looking for equity partner investors and we buy apartment buildings that have a value play. Value play means we buy them at a certain price and then we increase the income by increasing income and reducing expenses or we call it momentum plays, which they are 90% occupied already. By saying those few things like an elevator pitch is very important. You rehearse that pitch and you say that and you will find, “I want to talk to you about it.” That’s where it starts. It was not easy for me. It won’t be easy for anybody. The biggest thing I can also say to the audience is to join a Toastmasters group. It will be $40. I compared that to a Dale Carnegie course, which is amazing. I did that too. The thing is in the Toastmasters, they were teaching us so much stuff. They were giving us so much great information. The best thing is they put you in front of a small group and you will get good at it. That’s a good one. Mostly business leaders are in that group and that is a good way to share with them what you do.
How often are you reaching out to your investors or how often are you emailing them or mailing them something physically? How often are you in touch with them?
I would say monthly. Monthly is a good time for most of the investors because you don’t want to bombard them with too much. Monthly is a great way. Some will read it, some won’t read it. The thing is the constant contact. Never send information without your picture on it. You’ve got to have your beautiful signature within your email. For years of being in this country, I have always had my business cards with the pictures always. I never give one business card. You should give two to everybody or three to everybody. This is one that will exponentially increase your contacts. I’m telling you, always give three or four business cards to everybody. I’ve always been giving two in my clientele. In my syndication business, I give three to four literally. I go through cards like anything. The thing is if they like you and they want to tell more people about you, they’re not going to give their card away.
I got taught by a good mentor of mine way back, Tom Hopkins who’s a great mentor of mine, How to Master the Art of Selling and I learned. I cut my teeth in that. David J. Schwartz and The Magic of Thinking Big, Jim Rohn and Zig Ziglar, my great mentors, Tony Robbins and Robert Kiyosaki. The thing is we’ve got to be presenting ourselves to investors all the time. If we don’t have a property, other people are trying to come to them too. They’re thinking about, “Should I invest money here or there?” If they are getting some newsletter and you’re telling them about the positive news that you’re underwriting some properties, maybe some pictures of the properties, even though you don’t have it yet, the more you tell them, the more they will be sticking with you and say, “I want to invest. I promise or I try to commit $50,000 or $100,000. This money is to be with Vinney.”
I returned $9 million. I closed a deal and I closed another one three weeks before that. A lot of money came back. People are calling me and they say, “Vinney, when is your next deal coming?” They want to invest with me. It will come. You’ve got to have a small CRM. I don’t believe in very sophisticated CRMs. The thing is you’ve got to have a small CRM. MailChimp is a good one. ActiveCampaign is what I use if anybody wants to know. Another very good one is Airtable. My nephew shared it with me. He was with Facebook, a very young man going places. He went through all my academy. He says, “I spent 150 hours learning.” Some lectures, he saw twice or three times, he said. He’s able to be at such a high level now without even getting coached by me at all. He joined my master coaching. Otherwise, my academy teaches everything because that’s what it all puts together.
Vinney, we’re always selling. That first conversation, do you find that it’s like giving your elevator pitch and then pretty much stopped talking or do you find that you want to keep elaborating or judge their interests first before you spill too much on them?
[bctt tweet=”People will not invest money with people they don’t know.” via=”no”]
Whitney, you’re 100% right. The biggest thing is you want first to get to know them to break the ice and find common ground. That’s so important. Where did they go to school? Where are you from? How long have you been living in that community? People lose that. The thing is you’ve got to have four, five things you’re going to tell them, to every single person that you are local, that you’ve been working for so and so the company and that you’ve been learning to do multifamily. You have been to so many seminars just to build you up. Unless you have elevated yourself, they’re not going to listen to you. You’ve got to say that and then open up, shut up and let them speak. You’ve got it.
You’ve got to be quiet and let them speak. What about asking for referrals? When are you comfortable asking for referrals?
Always, Whitney. The thing is you can even say that right up front. I used to do that all the time. I’ll say, “Whitney, I would like to go over this special brochure and plan. It may be suitable for you or it may not be, but I want to let you know that you won’t hurt my feelings at all.” You’ve got to use that word. You won’t hurt that feeling. You are disarming them. They are more open to find out more about you. You say, “After we are done, I hope I would have added value to you. If you don’t mind, maybe this might not be the right situation or timing for you to invest with me, but maybe you want to share that with your friends. If you don’t mind, I may ask you for some referrals.” You’re saying that upfront. In the end, you’ve got to ask for referrals. That is the real key to success in any sales and marketing.
You’re telling them, “I hope that I’ve added value to you.”
That’s how I designed my educational brochure. It is not to sell them but it’s to educate my investors. They love that. It’s digital. I even print them out in color. They look at it. They take it home. Usually, I like to meet with both spouses because that’s the best way. Otherwise, objections come up more often. Frequently Asked Questions, that’s the other one on my website. Your audience can also go on my website. They could copy paste the whole Frequently Asked Questions. Some investors ask me, “Vinney, why do you make 4% acquisition fee?” My good friend attorney, who I was also teaching how to do syndications, we drafted this three-page form, the whole explanation or what it takes to be a sponsor, a syndicator and what we go through each and every step. We showed them our fees. Nobody had any objection to it.
They’re educated. They know what to expect. They know where you’re going. They know you know how to dance, so they’re willing to get on the floor with you.
The biggest thing is that you’ve got to be genuine. You’ve got to build your business. Transparency is the number one thing. That’s what I decided many years back and I’ve never looked back. It has given me so much success. In every slide I sent to them, every PowerPoint I have done in the quarterly meetings I do, we only pay quarterly. There is a slide there that they can ask for anything, invoices, bids, bank statements, you name it. They can ask for anything. They could go to any property they’ve invested in without telling us. They can shop there. They can take pictures. They can interview the staff. All that transparency brings their level of confidence and trust so high and that mushrooms into more and more business. They tell more people about it. The biggest thing I’d like to say to your audience is be conservative in your underwritings. I didn’t purchase anything in the previous year. I’m ready to purchase this year. A little bit adjustment is coming or it’s not going to be as bad as we thought from all the indications. The interest is not going to go as we thought two, three times, only maybe one time at the most. Things aren’t in the positive sense. That seminar that we had in San Diego for the multifamily, a lot of gurus are talking about that.
Vinney, I appreciate how you’ve gone through how to scale our list of investors especially from getting started to ask for referrals in that first conversation, emailing them monthly and how important CRM is. Thank you again, Vinney, for being on the show.
Thank you so much, Whitney. I appreciate you. Congratulations on this great show you are putting together. The Syndication Show, I love the name because that is the way to scale up. I hope you will move millions of people into syndication.
Tell the audience how they can learn more about you, Vinney.
They could learn from me and they’ll get all the work I’ve done for many years in my academy. They can text the word LEARN to 474747 or call (925) 766-3518. My team will pick up.
Thanks again, Vinney. I appreciate the audience also being with us. Please go to Life Bridge Capital and connect with me and go to our Facebook Group, The Real Estate Syndication Show so we can all grow our business and learn from experts like Vinney. We will talk to you soon.
- Vinney Chopra
- WS01 – previous episode
- WS161 – previous episode
- How to Win Friends and Influence People
- How to Master the Art of Selling
- The Magic of Thinking Big
- The Real Estate Syndication Show Facebook group
About Vinney Chopra
Vinney (Smile) Chopra, a founder and Chief Executive Officer of 3 companies and President of 2, came to USA with $7 in his pockets. He has over 35+ years of Real Estate experience and 15+ years of Multifamily Syndication Investing & Managing experience including overseeing management of $220 Million in real estate assets. MONEIL PREMIER COMMUNITIES are all Self-MANAGED by Vinney’s well trained 67 full-time professionals along with thousands of contractors and vendors!
His expertise includes picking right markets, underwriting well, raising $5 million to $8 million in a couple of days, negotiations for Win/Win/Win, driving corporate growth strategy, investor relations and asset management, and business & culture development.
Vinney is passionate to coach and mentor and teaches his skills to other investors so that they
don’t make the mistakes he made. Vinney has an undergraduate degree in Mechanical
Engineering and a Master of Business administration degree from The George Washington
University. He lives near San Francisco, married 39 happy years to Kanchan and have two
great grown-up children.
If you want to learn or invest with Vinney, text “Syndication” to 47 47 47‼️