Aileen (00:00):

Welcome everyone to today’s episode of the, How Did They Do It? Real Estate podcast. We are your hosts Seyla and Aileen. And today we have James Kandasamy. He is the principal director of acquisition and investor relations at achieve investment group. He has over five years of experience in real estate with more than three years in multifamily acquisitions and asset management today, James controls 1700 multifamily apartment units valued at over $130 million. He is also the author of passive investing in commercial real estate, insider secrets to achieving financial independence. Thank you so much for joining us today, James. We’re really excited and happy to have you on the show.

James (00:36):

I’m happy to be here, Seyla and Aileen. I think you guys are doing a really good job doing this podcast and educating others.

Aileen (00:42):

Thank you so much. So before we get started, can you share a little bit more about your background and how you did get started in real estate?

James (00:50):

My background is, I’m electrical engineer when MBA and recently I got my CCIM designation being, I came from Malaysia, like probably like 10 years ago to the US through a company transfer. And three years ago I resigned from my job after buying like almost, I think almost 300 units. At that time, we were like 300 units and we were going to 700 units at that time and we buy I think we bought like five apartment complex. Why resigned right now? We have like nine and we under contract on one more. So yeah, that’s how I got started.

Seyla (01:24):

Awesome. So how did you get started with your first multifamily deal or syndication and what were some of the major challenges you have faced along the way.

James (01:33):

There’s a lot of challenges, right? So, so when I, I was, I started with single family first in 2013. So because I didn’t have the money to do multifamily too big, right? Two big million dollars, right? So it’s single family. You can buy 20, $30,000. You can buy deals in Austin or even San Antonio. So I started buying single family, but I think we didn’t have the money. And so we bought like almost 13 houses and we build up almost 400,000 of equity from 2013 to 2015, we started looking, going direct to sellers, to indirect, yellow that a marketing stack called texting cold calling. And that’s what a lot of people do in real estate. Right. They try to go direct to the sellers and in real estate, you can, you can do that, like stocks, you can do it, or you can go to the company and buy the stock at cheaper price.

James (02:20):

Right? Stock is all stay in price everywhere. Right? So, real estate, it depends on prices because it’s a direct buyer seller agreement kind of thing. So we bought a really good prices. We follow that method called burrow, which is by rehab or refinanced and rent. Right. Actually we did buy, we have rent and refinance, right? So that’s what we did and repeat the last one. So we did that like almost 13 houses and we buy our first multifamily 45 units because 11 houses and it was too much work with the houses, right? So we say, okay, let’s buy the 45 units because now we can have a manager to manage that entire apartment. Right? So, so we bought a, we had like four investors at that time using syndication for the multifamily single family house. We own it ourselves. But once you go to multi-families is much larger scale.

James (03:11):

We, we use indication method to buy this big apartment complexes. And then from there from [inaudible] to, we are like, it sounds 100 units right now, major challenges is always the mindset, right? So whether you can do it or not, right. Even buying the first house is also very hard, probably because it’s not easy to buy a house for investment, right? You can buy a normal house for living because you’re not going to live on it. And all that. Everybody buys houses, but buying a house for investment, especially buying at a really good price. It’s very hard to do, but you know, you listen to podcasts, you read books or you there’s many ways that people share in real estate. Real estate is one way that people like to share their knowledge, right? The biggest problem for people to get an in real estate or get ahead in real estate is because they don’t want to do it.

James (03:59):

Not many people really want to do it kind of thing. They say, yeah, I want to do real estate, but are you, do you have that burning desire or not? Do you have that really? You really want it or not. The guys who really, really want it, who will give up we’ll sacrifice. A lot of things is the one that’s going to come up very successful. So that’s the biggest challenge. A lot of people challenge is like, they cannot get out of their mindset. They cannot go beyond that. There are limitations. They don’t have the burning desire. Everybody want to be successful real estate. Everybody liked to be, but whether they really, really they have that burning desire or not, that’s, that’s the biggest challenge.

Aileen (04:39):

So when you say we for your single family homes and your multi-family, who do you, who are you talking about when you say we bought,

James (04:45):

Oh, we miss me and my wife to worse. We as a family. Correct. But it’s a generalization for everyone, right. Anybody who want to get started, they have to be, they have to have that burning desire. And that is just missing from a lot of people.

Aileen (04:58):

That’s great. So today in your company, is it just you and your wife still going forward?

James (05:03):

Two of us running the entire show, we have like a 1700 units right now. Almost 130, $35 million in assets.

Aileen (05:13):

Congratulations. Yeah.

James (05:14):

And of course we have our passive investors, which is very important. Right. So, but, but in terms of the GP side, we are the two people.

Aileen (05:21):

And so Seyla and I are married as well. And I would really like to get your advice on how do you make this partnership work and become successful. And how do you communicate on a day-to-day basis as both husband and wife and as business partners?

James (05:34):

Oh, that’s the question that nobody has asked me in any point, that’s a really good question. Because it’s like, oh, you always wonder, how does husband and wife team works. And a lot of husband, wife team, I mean, they are, I mean, most of the are people who like the husband really want to do it, but the wife doesn’t want to do it. And there’s a lot of people who wife want to do it has been done already. But when you find both want to do it, that’s really good. So, but you just don’t understand that it’s not going to be easy. Right. And first of all, you have to separate what one person going to do and what the other person going to do. And like, for in our case, and I’m the investor relationship, underwriting, finding the deals, underwriting, asset management, she does the property management, construction management. Right. And I’m an asset manager. I talk to investors. I like to go and step on her too a lot because she’s a property, my own, everything runs on multi-family based on property management. So I like to always step on the door. Right. And sometimes sleeping at night will be out. What about that? Did we hire that guy? Did we do this Guy?

James (06:34):

We try to split it, we can split it. It’s very hard because it’s like, we know its part of your life, right? Your relative part of life. And you always managing projects. There’s no such thing as you let it go and all that. Right. So, so I need to, I mean, I I’ve been better, not stepping on a toe, but I still step on it something once in a while, because we have, I mean, like, for example, if you hire third party, property management, you’re going to be calling them, finding out what’s happening, what’s happening. Right. What did all do? Right. But here, because it’s your own wife. You can ask her very easily, right? During lunchtime, or during dinner time, you can ask to say what happened to that guy? What happened to this project? Right. So, which can be a bit distractive. I mean, we have not been very successful in saying not going to, we are not going to talk about work yet. Even though sometimes we agree not to talk about work, but we have not been very successful in splitting work and real life, but you know what we have been really good with not interfering on each other’s domain. Right. But it’s also, that’s also another vertical integration, Right. That’s what we’ve. Do all the time, completely vertically integrated.

Aileen (07:43):

24 hour access.

James (07:46):

Yeah, 24 hours access to a third-party property manager. But I think you just have to understand that everybody’s what’s the spouse strength is and what’s, and you just have to respect that this is the, her Strength. Like I cannot do property management. Right. And she, she probably cannot do asset management underwriting. Right. That’s what, how I do it. So you just don’t understand that each person play a role and try to give space to each person to execute their work, as I said, but we have not been very successful a hundred percent yet, but at least probably 50 to 60% we are successful.

Seyla (08:20):

Thank you so much for sharing. We appreciate that.

James (08:23):

Make sure you understand what the strength of each other is and try to split the work. Yes.

Seyla (08:29):

James, you mentioned about the vertical integrations. Will you be able to elaborate in more detail what that is?

James (08:38):

So we are vertical Integrated Company. They must be doing asset management, property management, and construction, everything on our own. And also we raised the money yourself as well. And it just how we got started. When we started single family, we used to do managing the residents ourselves, and we just continued on property management. We find, we found a lot of a weakness on third-party property management, and we all extinct that hunt. This is the biggest third party property management. And if they do this kind of worst job and there’s nobody else, who’s going to do a better job than us. And especially in syndication, we really want to make sure that we control the whole process because we do a lot more difficult projects and we don’t rely a lot on market swings, a market demand. So we like to control a lot of our value at projects. So that’s what meaning of vertical integration. We have everything in house and it’s just a lot more efficient because property management is integrated with asset management and raise the money ourselves as well.

Seyla (09:33):

That makes sense. And so how will you be able to share with us, how are you able to find deals and especially nowadays and for your company, you’re able to move from 42 units to over 1700 units pretty quickly. What, what is the secret of finding those skills?

James (09:49):

I don’t know. Sometimes we feel like we are really slow now because I see some people are buying every month now, we do one or two deals per year kind of thing. Right. But I mean in a little bit is quick. Right? So how did we grow quickly? Right? I mean, so first of all, let me address your original question. How do you find deals? Finding deals? You just have to do things that other people are not willing to do, especially when you’re starting up. Right? So you have to go like what normal people want to do. Right? Normally 99% of the people don’t want to work hard. Right? Everybody thinks that just go to a broker, build relationships with brokers, go dinner with them, go lunch with them, say hi to them. They’re going to give you a deal. When keep in mind brokers, they have a fiduciary response it to the seller. They’re not going to sell cheaply to some new guy who, and then they’d want to risk their 200, 300,000 of commission to this new B.

James (10:41):

Right? I mean, market is hot. Multifamily is very hot right now. There’s so many buyers out there. So you always have to think as a newbie, why this broker want to sell to you. Right. You can’t be, I mean, there’s no reason the broker going to sell to you unless they’re your brother or your sister or your father or your kids. Right. So then they’ll sell to the parents over right then its okay. But most of the brokers are not right. So why they want to sell to you. So there’s no real reason for them to sell to you unless you buy somewhere where in a location where nobody else want to buy, right. Or the price is so high or I don’t know. There’s no reason for a broker to sell to a newbie. There’s completely no reason other than they, they’re going to all price to you.

James (11:20):

Or you’re going to buy somewhere where nobody’s buying switch boards. You do not want to do on a real estate. Right? So you want to buy all this bite, right? So working hard to find deals. Isn’t a year to be the, you have to put yourself on the shoes of the broker. So what does brokers do every day? They may call to sell us. So now you, you be part of the broker and then you start making calls to the sellers. And that’s a lot of hard work, right? That’s what we’re paying brokers for. Right? Because they find the deals and they have the fiduciary responsibility and all of that. So if you can do that kind of work where you’re able find deals directly from the sellers, you may not find a lot of sellers are willing to sell to you, but you’ll find one guy who might sell at a good deal to you.

James (12:02):

And there can be hundreds of people who want to sell a deal to you, but they may not want to give you the price. That makes sense. Right. So, but that’s a lot of hard work, right. As I said, I mean, everybody wants to be successful real estate, but not really want to work hard for it. Right. So yeah, that’s what you have to do as a newbie. Right. So I think the second question is how did we scale so quickly? I mean, we just keep on buying because we have really good track record. I mean, first of all, we bought it, right. And we also operated right by shanty, my wife, she does the operation very well. And we were able to turn around very quickly. Right. Because you know, we are probably really good people in terms of managing the projects and managing the people.

James (12:41):

So both of that combination, we were able to turn it around quickly. So buying it right. Managing and right then you can absolutely get really good value increase. So once you get a really good value increase, now you’re paying back your investors. Now you is going to tell to other people, right? And, and so when they do all, this is a cascading effect, right. You’re buying it, right. You’re managing dried. And now you’re giving to investors, going to refer to other people. It’s just a, it’s a cyclic, it’s a cyclic process. Right? So now you got to get another deal. You also buying it, right? So now your investor base is exploding, right? So that’s how you can grow very quickly. But as I said, you have to do things that not everyone also want to do. Right. For example, vertical integration, how many people want to do property management?

James (13:27):

I’m sure everybody says a thankless job is a worthless job. Don’t waste your time. That’s not your skill. Right? So that’s an indication that not many people want to do, but if you are doing it, you have an advantage. Right? How many people have said that let’s do yellow letter marketing Qualcomm Acela do right. Most gurus out there teach you to build relationships with the brokers. I mean, it doesn’t make sense, which broker is going to talk to a newbie. Right? So I mean, so as I said, listening to this kind of podcast, talking to people like me, as I said, you have to do things that other people are not willing to do. It’s a very simple concept. Very simple concept. If you want to think same, like, will you become same? If you want to be different from people, you have to do things differently by like what Albert Einstein says, right? I mean only stupid people do the same thing over and over again, expect different results. Right? So this knowledge has been there for hundreds of, Years, it’s nothing new. Right. And you can do all that in the U S the U S is a capitalist country gives operating to anyone out there to come up on, on the society to make money. I know unlimited, but as I said, capitalist country reward, people who works hard and things different. Right.

Aileen (14:45):

So you have to be willing to put in the work.

James (14:48):

Yeah. A lot of work. All right. So yeah. That’s what it is.

Seyla (14:56):

Yep. That makes sense. Thanks, James. And you mentioned we had to do what the brokers are doing. Do we need some type of a license or anything to be able to reach out to the sellers?

James (15:06):

Oh no, no. You can buy real estate without a license. Okay. And then, I mean, but license of course gives her fiduciary responsibility and all that. Right. But, but as I said, if you find really good deals, you go direct to the sellers.

Seyla (15:21):

Would you be able to share what are the most effective ways to reach out to the sellers? And how do we find those sellers?

James (15:30):

Effective ways is like you, of course, you have to find their contact numbers. First you verify property lists first, right? What are the target properties first? Then you find the Sales behind that deal. And you try to reach out to them, to yellow at marketing or through skip tracing, where you can find their phone numbers. You can find the addresses and all that. Then you start reaching out to them. No rocket science here just pure hard work. So Yeah, the most effective is you have to try different, different ways, like three ways, right? One is a yellow letter send to them. Right. I mean, postal office has been there for hundreds of years. Right. Second is you call them? I mean, phone service has been there for hundreds of years, right. That is texting. Texting probably will be new, maybe 10, 10, 20 years. But these are pretty well-known methods out there. Right. So you said the methods yet you reached out.

Seyla (16:25):

Yup. Have you found a lot of success in reaching out to the sellers directly?

James (16:29):

In the beginning? Yes, because I was looking for smaller deals, like less than 150 units, which is still a big,

Seyla (16:38):

For someone who just started this. Yeah.

James (16:41):

When we first started getting into the units, that’s done. Right. You’re done kind of thing. So yeah, absolutely. You can find deals above, below 150 units. Once you go above that is in the sellers, become a bit more sophisticated. It becomes harder. But as I said, you can start with 5,000 units. And once you do one or two deals, now the broker starts chasing you with all the off-market deals. Now they are willing to give you the best deals because you’re no more newbie.

Seyla (17:08):

So does that mean that the new bees always getting the worst deal at the beginning?

James (17:13):

Absolutely. I’m not joking guys. I mean, why should we broker Reese a hundred, 200,000 of the commission, not only commission, they also lose the face to the seller. That makes sense. Because the way the brokers work is say to understand the brokers also fight for the listing. They go to like these 10 sellers, they say, please give me the listing. Please give me the listing. Right? And a broker will say, okay, what’s your specialty. The broker will say, this is my specialty. This is my resume. This is, I do this. I do this for you. Okay? How much you predict the price. They’re going to give you three prices to the seller. They say, this is the highest price. It’s a strike price is the lowest price. Okay. Then that, then the seller will have like five different brokers like that. Right? So every broker, this broker promised me the best.

James (17:57):

Okay, I’m going to give it to him. Now, the broker cannot mess up by giving it to a newbie. Right? We can be, sometimes they very shaky, right? You can, you can drop the price or lost. You can ask questions, which is not, doesn’t make sense. And let’s say throughout that process, two months closing process that newbie dropped the ball, not the broker lose their face, right? So now they lost their commission and they also lost their face to the seller because they, they did a lot of packaging material to convince the seller, to give the listing. So the brokers won’t play that game with newbies, Right? So, I mean, if someone telling you that a newbie got a deal direct from broker, as I said, there’s two T two reasons. One is I didn’t, you’ll be paying very, very high price or the deal is not really, the deal is miscalculated. The miss analysed, right? Second is they’re buying somewhere where nobody else touches, right? High crime rate area, or somewhere in the middle of nowhere. Right? That’s the two reason, right? So there’s no way that broker will give a good deal to a newbie. The second thing the broker would always, they make you to newbies. When the newbie comes from out of state, let’s say, for example, they are in Texas. They go to Florida and buy a deal. And that could be the most expensive deal that the newbie is doing. And the brokers giving it to the new movie because nobody, no locals want to buy that deal. For some reason, either is overpriced or is a bad area or something that locals all know. But this newbie from out of state doesn’t know.

James (19:25):

Right. So it makes it, so that is a two, a few reasons that a newbie can get a deal from the brokers. As I said, the third reason is of course they are, they’re either the brokers, their parents, or their friend, or their brother or sister or their children, then you can get a deal, right. So if not, they won’t give you,

James (19:44):

It doesn’t make sense. So, I mean, this is all normal brokers, right? They are brokers, which is like a misclassified broker. Sometime there’s a real estate agent who was Bali selling houses. Right. And then they, their, their friend or their family said, Hey, I have this apartment. Can you sell it for me? They think that all brokers are the same, right? Even the single family, how that can be a mistake in the brokerage classification, because that is not a multifamily broker. That’s probably a single family house broker. That could be a chance as well. Yeah. If, if it’s an agent which is always sell houses and suddenly become a farmer because they know the seller knows the agent only believe, I mean, he may have sold a hundred houses and the seller have one apartment. I say, just give it to the same guy. And if you find that kind of broker, yeah. Then you can get a deal. Other than these few deals. There’s no real reason for brokers to give deals to newbies.

Seyla (20:40):

Thank you so much for sharing that. So one of the things that you mentioned as well was to making sure that you buy, right. What does that mean?

James (20:49):

Just by right, means you have to buy it at the right price. Right? So for example, you need that buffer when you buy, right. Especially when you’re doing, when you’re buying in a hot market, when the, when you’re going through bidding process, right. It’s very difficult to buy, right. When you’re doing a bidding process. Right. All, I mean, you have to buy below the market value. That’s what I call us buy. Right. If you buy at the market values, it’s the same thing, right? I mean, if you’re buying a, a grocery or let’s say you’re buying a vegetable from, from a grocery store that is a retail price, but we’re buying the same vegetable from the farm. That’s the wholesale price. And it tastes better too. Right. For you, but it’s fresh too. Right. So it’s a different value. Right. So buying the vegetables from the farm is buying right. Buying the same vegetable from a retail. It’s okay. You’re not buying it right in real estate because they’re not buying it below the market, religious buying another real estate. Right. So that’s what I mean by buyer at you always buy it at a discount.

Seyla (21:54):

So is there any or expected discounts that you should see, especially now during the COVID situations? And

James (22:01):

I would say like 10% discount is a good, good number. 10%. Yeah. Because there’s no late fees. There is no, I mean, the delinquency is higher right now. And also the lender side, there’s higher reserves right now requirement. Right. That didn’t know a few of those would cost you at least a 10% reduction in price.

Seyla (22:20):

That makes sense. Thank you for sharing that. And finally, you mentioned making sure that you’re managing it right. Is there any recommendation or tip or trick of how to manage it correctly?

James (22:33):

Very tightly on a daily basis, make sure that everyone’s, that you are managing as per your plan before you close. When you close, you’re saying like, whenever you have like 50 units or a hundred units in the first two years. So to make sure that it’s, that plan is being followed up. Right. And of course you have to manage it very tightly to make sure that there’s a budget for everything you have to measure actual versus budget performance on a very tight basis and all that. So that’s what is managing, right? I mean, we’ve got, there’s a lot more things than that. I mean, it’s not, I don’t want to simplify that, but at least make sure that the property management and asset management is working very closely to meet the investment objectives.

Seyla (23:16):

Yep. So that definitely is another topic. That’s a big topic. There’s a big topic. And possibly would like you to come back on James at a later time as a [Inaudible]

James (23:25):

As you talk about a topic. Yeah. We can do that. Yeah. It’s a, I mean, all of these is not very simple. Right. It’s super complicated. Right. So I don’t want to say it’s very easy to do this very, very hard to do, but you know, I mean, as I said, you have to think differently to, to really be exceptional than everyone else.

Seyla (23:45):

And James right Now, you already control over 1700 units. Yeah. So what’s next for you and your company?

James (23:52):

Ah, that’s a really good question. We want to look to ground-up construction right now as we go. And because we are not really rushing to buy deals every month. I mean, because as I said, we are the single GPS and we are very particular about taking care of our investor expectation. Right. And we do not want to buy deals just because deals are available and capital is looking for deals because then you become normal, right? We want to be tried to be different from everyone else. And part of being different is to buy that deals. That’s a really, really good deal because as I say, it’s a cascading effect, right? It’s a cycle when you buy good deals, when you make good money, your investor’s base keep on referring, keep on referring to other people. Right. So, and we want to keep that cycle going, right? So we want to make sure that we always have a good investor base who are happy with our performance at the same time coupon, referring to other people. So, so we have, so it is always very hard to find deals that meet our box, but that’s okay. It’s a long-term play.

Seyla (25:06):

So James, how has real estate investing impacted your life? So,

James (25:10):

Oh, it’s crazy. Right. I mean, first of all is a lot of fun. So your brain is always working. If you are looking on W2, job sometimes become very monotonous. Right. So I was 22 years corporate employee. And I like to go into department, which is like always crazy, right? There’s a lot of problems kind of thing so that I can go and solve problems. It’s more, more, more fun. But there are a lot of people in my company who doesn’t want to do all that. They want job security, they want stable job. They want everything to be running like clockwork every day. But like, for me, I like to have more, the clock might go the other way around,

Seyla (25:44):

So that’s going to fix it. Right. So yeah,

James (25:47):

It’s a lot of creative thinking and the overall, because it gives us the financial freedom for our life right now. Right. Because now we can spend a lot more time with the family a lot more time with the family and we make a lot more money too, compared to working at the same time. It gives you a lot of choices. Right. So I can, I can avoid all the traffic, which even though it sounds very simple, but you know, it’s a big thing when you go, can you go somewhere with other traffic? Yeah. But of course you do not want to have that headache of not buying it right. And suffering. Right. So as I say, we take it one thing at a time.

Seyla (26:22):

So what is one thing that, you know now about the real estate that you wish you knew when you first started?

James (26:29):

Hmm. That’s a good question. The one thing about real estate I would have known is, I mean, I of course have known that everything’s going to appreciate it. I would have buy more, but that’s a hindsight 2020. Right. So it really, I mean, I think the progression that we followed is a really good progression. We start with single family, we buy rehab refinance and go to multi-family. We’re doing a really good, but I mean, I mean, I don’t want to say that I should have bought more because we are also very lucky because the past 10 years, the relative price going up, right. I mean, if the price is going down, then I cannot stay there. Right. So it’s very, it’s a very not right statement if I say, if I buy more. Right. So, but just, I think we did all the right things as we go along. Right.

Seyla (27:18):

So what tools or techniques have you used to improve the efficiency of your personal life or your business

James (27:24):

Business hour? A lot of things we ask, we slack, [inaudible] Slack, Slack. Asana all, that’s a really good tool. Dropbox, a Google drive, everything is good. We have, we have a lot of tools on the property management side. Right. And yeah, these are the key tools that is running our life right now even that is still, we mess up, mess it up by, and let’s use all these tools to manage your life.

Seyla (27:48):

Thank you. And so James, if our listeners wanted to find out more about you and where can they go

James (27:53):

Achieve investment group.com achieve is like achieving a goal ACH achieve investment group.com. And you want to own invest with us, just go to a link called invest with us or there on the main page. And you can definitely click and register yourself. Send me a mail James@achieveinvestmentgroup.com. I have my own Facebook group, which has like 7,000 people. It’s like a hundred people joining every week with the 40% rejection ratio. So it’s not like any, it’s not like everyone turning as a rejection. I mean, that’s more for people from outside out of the us because there’s no reason for them to be in that group. Yeah. Multifamily investors group is in Facebook, multifamily investors group. And I in Facebook, you can find me I’m in LinkedIn as well. And if any of you want to get my book, which is a top 15 real estate book, you can go to passive investing in real estate.com, passive investing in real estate.com and get the book for free.

Seyla (28:53):

You so much, James, thank you so much, James, for coming on to the shows today, to talk to us about how to find the right deal and making sure you buy it right. And making sure that you’re managing it. Right. So yeah,

James (29:04):

Absolutely happy to add value to you all and the listeners.

Seyla (29:08):

Thank you so much.