WS356: The Advantages of Multi-Family Investing with Sanjeev Silla

On today’s episode, we are joined by Sanjeev Silla to talk about various aspects of his business, such as broker relations and the types of deals he is currently focusing on. He also explains why he chose multi-family over other investments such as stocks or single-family investments.

[INTRODUCTION]

[00:00:00] ANNOUNCER: Welcome to The Real Estate Syndication Show. Whether you are a seasoned investor or building a new real estate business, this is the show for you. Whitney Sewell talks to top experts in the business. Our goal is to help you master real estate syndication.

And now your host, Whitney Sewell.

[INTERVIEW]

[0:00:24.3] WS: This is your daily Real Estate Syndication Show. I’m your host, Whitney Sewell. Today our guest is Sanjeev Silla. Thanks for being on the show, Sanjeev.

[0:00:32.3] SS: Thank you, Whitney. Thanks for having me on the show. It’s my honor to be on this show. Thank you.

[0:00:36.6] WS: No, I appreciate you and your time and I know the value that you’re going to bring today to the listeners. Before we jump in, I wanted to tell the listeners, or remind you to go to the contact us page at Lifebridge Capital and complete the information, so that way you and I can have a conversation and I can connect with you and try to help you any way I can.

But jumping in, Sanjeev, he’s a multi-family investor. He’s an IT professional with an MBA, who worked for the top global IT consultancy and servicing firms, Accenture and Dell, highly specializing in executing large transformation programs and managed global teams.

Started his consultancy service in September of 2016 and provides management solutions to health plans in North America. He’s focused on multi-family investing and that focus has been part of multiple deals as co-sponsor, KPLP. And he and his friends started Infinity Investments and co-sponsor two deals worth approximately 20 million dollars last year. And Sanjeev looks to continue to grow is multi-family portfolio in the United States. Look forward to learning about your steps and getting here, Sanjeev, and getting into multi-family and why multi-family versus some other investments that you could have. Tell the listeners who you are, how you got here and why you’re doing this multi-family investing.

[0:01:53.1] SS: Thank you, Whitney. That’s a great introduction. Before I begin, I would like to again, thanks for having  me on the show. First of all, thank you for your service, what you’ve done in 2005-2006 as part of [inaudible 0:02:05.1]. Thank you for that. Congratulations on your other year, totally years 2005, I believe. Third thing, the show, what would you’ve been providing to all is the most valuable content. Very detail. People like me. Not only me, anyone wanted to invest in real estate, especially multi-family, any investment, this is a great place to start.

I mean, in the last few years, I don’t watch news. I don’t listen NPR. I mean, I do listen NPR mostly from the understand economic perspective. The last few years, I’ve been investing my time, coming to seminars, listening to podcasts like Whitney. Thank you for your service on that.

[0:02:43.9] WS: I appreciate that. Thank you so much.

[0:02:45.8] SS: Thank you. Thank you, Whitney. I’ve been investing since 2016. To give a background, myself and my wife came US in 2004. We grew up in India. We came here in 2004. In 2010, three things happened to me, to us; one is we had a second child. My son now is nine-years-old. We had one in 2010. The second thing, I took a new job with Accenture, which changed my career possible with the big picture, thought-leadership, how to communicate, how to delegate leadership skills, that’s number two. Number three is I was actually stumbled in to Rich Dad Poor Dad book.

That changed my whole mindset. A job is not one thing. We need to focus on passive income, so that’s where I start in 2010. 2011 we moved to Dallas. I got an option, I can go anywhere in the US, the guy I used to watch with Accenture. I travel across from the East Coast-West Coast a couple years. We moved to Dallas, we know it’s most happening place in the US, we thought this is the best place to move on. We moved to 2010, officially 2011 to Dallas, then things started happening.

Since our [inaudible 0:03:53.1] that, “hey, I know. I need to do – get passive income, what’s the best option?” I was looking at stocks. I was looking at single family. Then I look at stocks, which we talked briefly before the meeting, right? We cannot control if something goes wrong. I cannot call COA, “What’s happening with my stock?” I cannot control that one. Second with single-family homes, where I see not scalable. You have to manage toilet and tenants, everything, which I think we can buy one of the two of three, won’t base on the income level. Then I found the way, a multi-family, the way to invest, get passive income. That’s how I went into multi-family and real estate.

[0:04:31.6] WS: Okay. So, you looked into stocks and I appreciate you talking about we can’t control it. I’ve heard somebody talking one day about this exact topic and he said, “No matter how much I invest in Apple, no matter how many iPhones I go by, or tablets, it’s not going to affect the stock, right? I can’t control it. I can’t do anything. I can’t touch it.” That’s awesome.

I think you had mentioned that you also looked into single-family as well, right? As opposed to multi-family. What did you discover there and why multi-family? What’s your determining factors in going with multi-family?

[0:05:05.7] SS: The reason, again as I mentioned clearly in our documentation ideal right, is that I had a cash flow, right? In multi-family. Which you have a cash flow in the single-family too. But again, it’s linked at one or two homes, right? Maybe three, based on the income level. It’s not scalable. Single-family is not scalable, right?

Number two, if someone is not renting your single-family, it’s one or zero. If someone’s not renting, your income will be zero, right? Number three, you have to manage each property with different location. I cannot bring a property management company, because it’s a different location. I can’t bring – because I can buy a home, there’s no guarantee I can buy a second one next to this. There’s no levels out of expenses there. Based on this reason, I went to multi-family.

[0:05:45.7] WS: Sanjeev, or let’s say, talk about your team that you all built, you all started this Infinity Investments and you all been a part of a couple deals. Give me your goal in this, in Infinity and what you’re all looking to accomplish and let’s talk about how you’re going to get there.

[0:06:00.7] SS: My friends, so [inaudible 0:06:01.8], we started this company Infinity Investments back in 2017. So, we all know before we get into business because we are like-minded, we’re all from the same culture. We understand we are all – it’s like-minded. It’s work as a team, right? That’s number one, you need to have a good team in place. Number two years my partners, they do have experience earlier in doing a multi-family deal. It’s a small, small deals by themselves and they have the experience how to manage that.

I have a team we can supplement my skills. We have looking to a café, so it could be day-to-day operation of my apartment is number two, right? Number three is we define the goals as mentioned. We define the smart goals, which is a very key thing of anybody to have a sector, they need to have key smart goals. They should be able to define, once we have a smart goal, we need to define the criteria, where we want to buy.

I’ve been investing across the country, but I live in Dallas. I still feel Dallas is one of the most happening place in the country. When I moved in 2011, the population around six million people. Now seven years down the line, or eight years down the line, we are almost seven million people. The way things are going by 2030 will be 10 million, 11 million, with us, right? It’s much happening place.

We define the criteria. Again, and we thought, we have to look at B or C class properties, maybe at least 60 to 150 units. We have specific details that are meant with smart goals. Also, we put this timeline. Maybe in the one year, we want to make sure that we have at least two deals under the contract. That’s exactly we did. I know, the first deal took almost seven months to get a first deal, but I will tell you and all here, when we moved to this country, it took me seven years to buy a home, because we’re not sure where to buy the home and which location. It’s confusing, because I don’t have an education at the time, right?

So, but I’m happy to say that after seven months we formed a team, we were able to get a contact in a deal in seven months. Because of the education, you need to have mentor. We have been part of the [inaudible 0:08:06.2] group. I mean, wonderful. So, once we earned the contract, we’re able to close a deal in 60 days from that. And the second deal, we’re able to close nine weeks from the first deal. The reason is we got these most aptly placed at Dallas and with the minimum from $70,000. These two deals within a mile apart. So, we can level expenses, not only in our income. We do have [inaudible 0:08:31.8] the expense. That’s how we end up with two deals last year.

[0:08:35.7] WS: Nice. So, I was going to ask you about how long it took to go from the first deal to the second deal and I’m glad you elaborated on that. Even talking about building your team and you all being like-minded, a lot of that’s important. I’m sure you all bring different qualities to the team. But lso having a coach, having a mentor, we’ve stressed that so many times on the show and heard so many people talk about. They had this coach, or had a mentor. That’s really what helped push them and give them some guidance and some confidence in doing this business and moving forward a lot faster.

[0:09:05.3] SS: Absolutely. I can give you an example, if you don’t mind?

[0:09:07.7] WS: Yeah, please.

[0:09:08.6] SS: 2014, some of my friends we formed a team, we wanted to buy an apartment. In 2014, we went to in Fort Worth, which is 30 miles from here really. The [inaudible 0:09:18.7] looking at the financial statements. You’re not there yet. I learned the hard way. So, then we understand that there’s a way to achieve this one. It’s not just well, the financial. That’s why you need to have a team where they can leverage the experience in the financials to buy a bigger deal. It’s all because of education and mentor. The mentor, giving it a lot of confidence.

Also, it’s just confidence. Look at the market down, just look at the job market, various factors, right? We talk about population grow, job growth, income level, median income. I mean, it’s just so many factors that would feel you confident you can go in the right direction.

[0:09:55.1] WS: What’s the team’s next goals? What are your goals over the next year, or anyone? How are you getting there?

[0:10:00.7] SS: You read my mind. So, our goal is to go 1,000 units by next June. That’s our goal, we put earlier this year. But last few months, we’ve been working on. We wanted to stick to the fundamentals. It does not mean that I have to get a thousand units next June. No way. I want to make sure that we have a goal where our numbers make sense, where our returns enough for the investment is there. If I don’t go, I don’t make a deal. So, still we are looking at the deal, we’re working on – yes, by end of next – but not end, but June, that summer 2020, we should be a thousand units, especially of B and C class properties.

[0:10:35.6] WS: Nice. I guess, tell me some steps that you’re taking. That’s a big goal, right? I mean, that’s a big goal and I love that. Tell me some things that say you don’t have to happen over the next month, that’s going to help you get to that goal.

[0:10:48.4] SS: So, absolutely. We do two things, right? One is we wanted to talk to brokers, have a relationship with the brokers. That’s where you will get more deals. So, we talk to every week, every month, it’s a lot of what. Since we have four people, we talk to various companies in Dallas, across the country, where we see a lot of potential. Not in Dallas, across any – like Atlanta, Phoenix, whatnot. We are a team with specific markets, specific to broker companies, that’s number one.

Number two is we keep informing our investors what we have been doing, what our goals, what we have been doing and expand our investor database, the number two. This is the two main things we do. And number three, keep educating yourself. “Hey, what will happen – going to happen in the economy?” Nobody knows. We’re not going to bother, but we keep updating on economy and what’s happening and making sure that we’re doing a right direction. Again, don’t get me wrong, this has been – there will be risk, but we want to make sure that we do stick our fundamentals and going to go step by step in the right direction.

[0:11:48.2] WS: Now are you all – I’m going to come back to the things you just talked about, but I wanted to ask you to clarify, are you all strictly looking in Dallas right now, or are you looking in numerous markets?

[0:11:57.1] SS: Right now, we’re looking from – at least the next one, maybe want to focus only in Dallas, at this point of time. We’re open to other areas when there’s an opportunity with our meeting of goals and expectations.

[0:12:07.8] WS: Okay. So, having this team in place, is there one teammate that is focused on meeting broker? Because it is – those relationships are so important, right? We all know this. If you’re listening to this, you have to know those broker relationships are so crucial and so important. Is there one person on your team that has that role and task, or is it like each of you have the brokers that you all are building the relationships with? What does that look like?

[0:12:31.6] SS: And so, outside, I just want to highlight, we do have a full-time jobs. I have my IT consultancy and my friends; they own different companies. At the same time, we do have deals. We need to make that’s top priority, making sure that they’re working on deals, make sure they’re working on the [inaudible 0:12:44.8], we’re making sure that we are running our operation. Number one priority. That’s the number one goal.

Number two is yes, we do have people – we work with multiple people. Example, I work on some brokers and my friends work with multiple – Again, this is not about [inaudible 00:12:58]. We need someone to underwrite the deal and making sure you talk to the finance companies, lenders and talk to the property management companies. You cannot use the same property company everywhere based on the market, based on the more topics. We need to change that one.

We’ve seen [inaudible 00:13:14] big picture perspective; in a sense we’re talking about Accenture changing my career. The company taught me, think with the big picture. If you look at my IT consultancy [inaudible 00:13:22] big picture, I’ll [00:13:26] with the company, because I learn a lot from them. Not only myself, but look at the big picture. We do have a multiple – our team looking at multiple, it is not just brokers. Yes, we do have, talked to multiple brokers with different team.

[0:13:37.8] WS: Okay. Then tell me, or elaborate on how you and the team are continuing to educate yourself. What’s important that you’re learning right now and how are you finding that information?

[0:13:46.4] SS: Number one is we have to be [inaudible 0:13:48.0]. We had to look at the deal, but there’s so many deals in the market. But you need to focus on what deals you want, number one, right? As you mentioned, we’re looking on you know B-class of C-class, or at least a 100 to 150, or 200 units, what make sense. Number three is going back. You need to educate yourself.

Listening to podcast like you, Whitney. It’s great information. You’ve got a lot of quality guests. We can share the experience. The people like me, I want multi-family. That’s my career 2.0. I’m tuning myself into multi-family podcast and go to seminars, go where – Among the like-minded people.

If you’re watching the news, it’s not going to help, to be honest. You have to go to a conference. Maybe [inaudible 00:14:28] you have to step up and make sure that your time, this time commitment is important. “Hey, I have kids, I have a family, a job.” Yeah, that’s fine. What’s your goal? My goal is I want to retire in the next five years. I mean, not only me, I wanted to also family and friends, we want to be financial freedom in the next few years. Based on goals, you need to come in and ask yourself and be proactive.

[0:14:51.5] WS: Okay. I like how you’re talking about focus on what deals you want, right? Don’t just have this like, “We’ll just take everything or anything, or look at every –” You don’t have time to look at everything, right? What happens and maybe this hasn’t happened to your team, what happens, let’s say one of the partners comes to everybody and says, “Well, okay. I found this 40-unit deal over here that maybe we should look at?” Is that something that you all are then going to say, “Okay, it’s out of what we’re looking at. We feel like we should focus back on the 100, 150 units.” Or is it going to be something that you all are going to take into to account and look at?

[0:15:27.5] SS: No. See, example, like example 40 is not obviously a no. None of our partners will say yes. Because the reason is it’s not manageable. I mean, if you haven’t managed a property, I think you have 60, 70 units to manage a property, right? I mean, beginning a property management company, for me time [inaudible 00:15:44] think it’s 40, 50 units and as we talked about. It’s all about scalability. Go bigger.

Yeah, but if 60-units, if numbers make sense, if you like the location, we look at the median income, even if economy comes down, we should be able to sail the boat. Example, right? The two deals we have in Dallas, next to a preschool, elementary school, high school, middle school, they can walk from there. It cannot go wrong, even if the economy goes down. I don’t see a reasons to go away from those apartments with good school district. It’s center of Dallas. They can go anywhere in Dallas, they can [inaudible 00:16:15] on there. It’s most happening [inaudible 00:16:18] legacy, where so many things happening because of area. Always look at demographic, look at the location and you can go from there.

[0:16:25.2] WS: So, aaybe you can elaborate a little bit too on the buying criteria. A couple other things about your all’s criterion and you talked about the units Class B and C. Anything else as far as, let’s say you’re talking to a broker and he says, “Sanjeev, what’s your buying criteria?” How do you answer that?

[0:16:39.1] SS: A couple things, so we wanted to say an example, chiller-boiler. The central [inaudible 00:16:43] system, so definitely won’t stay away from in future. There reason is, if something goes wrong, if they’re going to impact all the tenants. That’s not feasible. Dallas in summer, it will go to 100 degrees sometimes. It would be good how to enough – We’ll try our [inaudible 00:16:58] and we have enough reserve for chiller example. Yeah, why not? We can go for the deal.

But we need to go into specific details of that, of that one. What is the income? What else we can go to property, right? It should be income optimizing the expense. That’s been the opportunity, right? If something is coming up in the future, that could be an option. Why not, right? Make sure that we have enough capex on that, [inaudible 00:17:19] on that. That’s one of the criteria, which I’m talking about. Also, no [inaudible 00:17:24], you know? There is few things we can take a look at. Again, I cannot really categorize anything, but go by deal by deal, right?

[0:17:30.6] WS: Sure. What’s been the hardest part of the syndication journey for you?

[0:17:35.2] SS: Before joining the – you know before it starts doing this one is I thought, money is a dollar. It’s not really money, because it can leverage teams [inaudible 0:17:43.5]. Number two is getting the right deal is more challenging to do, if you ask me. Getting your money is not a big issue. To me, getting the right deal where the numbers make sense, that is going to be more challenging at this point of time.

[0:17:55.9] WS: Yes. You all are overcoming that by the broker relations, I assume?

[0:17:59.9] SS: Absolutely. We are working on, so yep.

[0:18:02.5] WS: How are you all preparing for the “downturn” that everybody says is coming?

[0:18:09.1] SS: Two things, right? We undergo the deal, that’s not exactly – you need that to mentoringship, right? When we write a deal, I know that my partners talk well. When they had this deal initially, when they got by themselves, did not have much capex. They thought they can take it from the capex. No, but yeah, example, right? Redefine what capex we need.

I mean, doing as usual and even before closing and writing, number one is you have it, what cap [inaudible 00:18:36] you? It wasn’t a due diligence. We did all the things what we need, we’ve got a capex. Number two is reserves. We do have some reserve money if something goes wrong. Also, we have working capital, that’s number three. And also, example, right? When I buy – maybe I’m buying at seven cap, I mean, maybe six cap. When I’m selling my property, make sure that I’m very conservative. That’s what, we may do maybe at least seven caps, 7.5 based on the market.

Make sure that they have enough room on there was in cap. Again, nothing is because everything is risk. There was now. We did what we can do based on our learning, based on our experience from my coaches and mentors, we do have those things in the place.

[0:19:13.5] WS: What’s a way that you all have improved your business recently, Sanjeev, that we could all apply to ours as well?

[0:19:18.9] SS: Sure. If you look at this one, recently we were actually implementing some of the capex one. The second thing is the value. Now one of the apartment, like 95, 96 and all we did – at least some of that capex, this is the opportunity to raise the income or rent, right? I mean, because it makes sense, the [inaudible 00:19:37] investment and we did small capex, we were able to do some of the material upgrade selling. Some we had to do, but we thought this is the right time to do, or [inaudible 00:19:47] income.

Also, we’re looking at fewer things, so probably not [inaudible 00:19:51] views, right? Talking to both your smartphone [inaudible 00:19:55] in the rooms. Example, just an example, when you look at the market what’s happening, where we can apply the customers, tenants and we can stay with more time with our apartment.

[0:20:05.3] WS: What is your best advice for caring for investors?

[0:20:08.7] SS: Thought investing. Don’t watch. You need to invest. I know, make sure that is more than a deal, you should talk to the people and trust them. I mean, again, make sure that start investing and also, you need to have education. I said three things, right? Start investing, education with smart goals. You need to have a goals in place, I would say.

[0:20:28.9] WS: And what about the one thing that’s contributed to your success?

[0:20:32.7] SS: Persistence. You need to find education. Educated with goals, that’s exactly. You need to keep working. Past seven month, I have an example, we know how to get a deal. We know what – we’re going in the right direction, but it’s a matter of time. Keep going and keep networking and keep listening to podcasts like with me and go to seminars, or the podcast, or whatever is most convenient for you.

[0:20:54.4] WS: And before we have to go, Sanjeev, tell the listeners how you like to give back.

[0:20:57.6] SS: Two things, so what we do is from the business perspective, the apartment and we have kids in apartments. We actually, recently we given a backpack to [inaudible 00:21:06] kids go to school, we give backpacks, some of things we do as part of my business.

Second thing is myself and my family we’ll do – actually, we’ve been doing small things. An example, we grew up in India, back home the schools where I went, my primary school, middle school, we understand that people may not be focusing on their eyes. So, e checked their eyes and we forwarded the lenses. We run the camp with almost six hundred kids in the both schools.

We do small, small things, Whitney. In the future, we want to focus on how we can help back home, anybody in local communities on the education, on the children, or kids going to school. That’s my areas, Whitney.

[0:21:44.7] WS: Awesome. So, Sanjeev, you’ve been a great guest. I really appreciate your time today and taking the time to just share with us I mean, about so many aspects of your all’s business and your team, broker relations and your focus on all these specific types of deals and how you all are growing and the importance of goals and where you all are moving in the future and just the focus on what deals you want and how you’re educating yourself as well. I’m grateful for your time. Tell the listeners how they can get in touch with you.

[0:22:09.6] SS: Thank you, Whitney. Thanks. It’s my honor to be on the show. They can reach me on social media, or they can give me a call, or e-mail. My e-mail is silla.kumar. Let me spell for you. [email protected]. My phone number is 623-628-5921.

[0:22:30.9] WS: Awesome. Thank you, Sanjeev. It’s over with.

[0:22:32.7] SS: Thank you so much. Thanks for the time.

[END OF INTERVIEW]

[0:22:34.5] WS: Don’t go yet. Thank you for listening to today’s episode. I would love it if you would go to iTunes right now and leave a rating and written review. I want to hear your feedback. It makes a big difference in getting the podcast out there. You can also go to the Real Estate Syndication Show on Facebook, so you can connect with me and we can also receive feedback and your questions there that you want me to answer on the show. Subscribe too, so you can get the latest episodes.

Lastly, I want to keep you updated, so head over to lifebridgecapital.com and sign up for the newsletter. If you’re interested in partnering with me, sign up on the contact us page so you can talk to me directly. Have a blessed day and I will talk to you tomorrow.

[OUTRO]

[0:23:15.3] ANNOUNCER: Thank you for listening to The Real Estate Syndication Show, brought to you by Lifebridge Capital. Lifebridge Capital works with investors nationwide to invest in real estate while also donating 50% of its profits to assist parents who are committing to adoption. Lifebridge Capital, making a difference one investor and one child at a time. Connect online at www.LifeBridgeCapital.com for free material and videos to further your success.

[END]