Former electrical engineer, James Kandasamy, joins Jonathan on this episode of Real Estate Launchpad to share his journey to multifamily investing. He began by buying single-family homes in 2013 and switched to apartments two years later. In a short period of time, he has acquired more than one thousand apartment units valued at 65 million dollars. His story is an inspiration for those wishing to break into multifamily investing. Be sure to listen to hear about his experience as a new multifamily investor, obstacles he encountered and overcame, why he picked multifamily, transferable skills from his previous line of work, and more!
Why make the switch from single-family to multifamily investing
James began his career in real estate investing with single-family. He purchased 13 single-family properties. He found deals at a good price and was making great money in a matter of a few years. He heard friends talk about multifamily – it was scaleable, more hands off… Those were great, but false appreciation was the key reason behind the switch to multifamily. No matter how nice your single-family property is or how much you spend to rehab it, it will appraise based on the homes around it. However, multifamily appraises based on the net operating income. You can buy multifamily, put some work into the property or management of the property to create value, false appreciate it, and then refinance the property. By refinancing it, you are able to take cash out to reinvest in other deals!
Issues James faced (and conquered) in transitioning to multifamily investing
Breaking into multifamily investing is hard. Brokers do not typically bring deals to new players because they do not have the experience or respect. James began looking for off-market multifamily deals with cold calling and sending letters. One seller responded which turned into his first purchase of 45 units. James shares that off-market buying takes a lot of time, but it is the best way for a new investor to get started. Brokers don’t give good deals to new people, and off-market will eliminate bidding wars and overpaying. He shares that once you have a deal under your belt, brokers are more willing to work with you!
How to source capital for deals
James began his single-family investing with his money and a few investors. He shared his success, and through word of mouth and meetups he told others his story. James creates a large amount of content catered to passive investors. He has free webinars and Facebook groups to educate people. He brings in tax experts and attorneys to educate his following and potential investors. Most of his capital is sourced through high net worth families looking for passive income. Through his blogs and email updates, he continues his outreach and education.
Transferable skills from your current job to real estate investing
James was previously an engineer and senior manager. In his management, he had to understand people and what motivates them. He also had to manage projects. These skills from his previous job translated directly to real estate investing. His people and project management skills from engineering were applicable to working with contractors and property managers alike. James shares that if you are working, you may have access to training on things similar to project and people management. He says to take advantage of this because those apply to real estate. Real estate is simply a tool to create wealth, and at the end of the day, to be successful, it is simply about mindset and persistence. Those two things apply to all businesses.
In This Episode James Kandasamy says…
- [1:52] Who he is and what he does
- [6:26] How to save money on labor costs
- [8:05] Why he switched from singly family to multifamily
- [14:00] Issues he faced in transitioning to multifamily investing
- [20:48] The changing definition of value ad
- [23:09] How to find good deals
- [26:14] Sourcing capital for deals
- [29:18] Information on his company’s structure
- [35:43] Transferable skills from his previous job to real estate investing
- [38:31] Why he does property management internally
- [40:19] James’ view of the current market
Resources Mentioned In The Episode
- Jonathan@MultifamilyLaunchpad.com – Learn to be an asset manager and Investor
- Bellwether Enterprise (sponsor) – contact Will Oldham email@example.com