Table of Contents - 1700 Units in 5 Years with James Kandasamy
Dave Debeau [00:00:09] Everyone is David Debeau with another episode, the Property Profits Real Estate podcast today zooming in from Austin, Texas, you've got James Kandasamy. How are you doing today, James?
James Kandasamy [00:00:20] I'm doing very well, Dave. Thanks for having me on your show.
Dave Debeau [00:00:23] My pleasure. So James is a very accomplished real estate entrepreneur who focuses on the multifamily space. He's done some amazing things in a relatively short period of time. He's also a best selling author and he knows a thing or two about multifamily and raising capital for doing big deal. So looking forward to jumping into that, James. So, first of all, just the big picture, from what I understand, you know, you haven't been doing real estate for a super long time, but you've done a superb job with what you've been doing in a short period of time. So you've built up a significant portfolio over the last five years or so, is that correct?
James Kandasamy [00:01:06] Yeah, we started single family in 2013, but multifamily where we raise money and all of that is two thousand and two thousand fifty
Dave Debeau [00:01:14] probably fifteen point five is about five years since the time that we're recording this. Yes. Why did you why did you decide to switch from single families to multifamily investing?
James Kandasamy [00:01:25] I think single family is an awesome place to start, but I think the scalability is a problem. And I think single family, you know, you can work very hard to find deals that are below market value and you can basically get good deals, get cash on cash return. But the power in commercial real estate, such as multifamily is, you know, you you just can't find a single family. You had the power of where you can add value, value, add you can increase the A.I. and you can basically to cash out refinance. And at the same time, back outside is just so much just because you built up that equity.
Dave Debeau [00:02:03] So you're basically it sounds like you're doing a burger with multifamily properties is
James Kandasamy [00:02:07] absolutely, absolutely if you know the right term is but by rehab, refinance and repeat. Right. So that's what we do in multifamily space, which is a big space and big money as well. And I started I started with the rentals in single family, OK?
Dave Debeau [00:02:22] And then he decided you saw the light. He said, hey, let's do this on a bigger scale. So so between 20, 15 and now what is your portfolio look like?
James Kandasamy [00:02:31] My portfolio is almost 130 million dollars asset under management. And this is like me as a single all everybody else is sort of passive investors and almost seventeen hundred units across nine apartment complexes in central Texas, Austin and San Antonio.
Dave Debeau [00:02:47] So you focus just on that market area right now is I guess.
James Kandasamy [00:02:51] Yes, we focus on one one market because we are vertically integrated company, which means we have asset management, property management, money, race, everything. Just my wife and I had no one was doing this whole thing. So we have to be integrated. And it's important that property management companies focus on one submarket because there's so much of sharing and market knowledge that can be utilized well in.
Dave Debeau [00:03:14] That's interesting, James, because I see a lot of people, especially when they're getting into the space that you're in, they've got buildings and spread across multiple states, which I mean, they're going after the good deals. But you've got to create a whole new team every place you go. Sounds like you guys are focused on one market. So therefore, you've got very, very specialized market knowledge. Plus you've got your team set up already. You don't need to go. Yeah, yeah.
James Kandasamy [00:03:42] Well, you know, market is hot right now, right? Even during this recessionary period upon my own investing, when single family investing, it's very hard right now. So you need to find some kind of value proposition on why you are different from another buyout. And if you're another guy who just coming out from out of state and trying to buy a deal in another state. Right. You're just another another buyer. Right. But if you are a local guy who knows the local market, who are able to optimize your operation to, you know, to squeeze all the juice out of an investment, you have a different value proposition. Right. So that's important. I think that's why we focus on one market.
Dave Debeau [00:04:22] Well, it makes a lot of sense. But you talk about the importance of being a local guy. Do you have any challenges, James, because you don't look or sound like a good ol boy from Texas?
James Kandasamy [00:04:34] I'm not. Absolutely not.
Dave Debeau [00:04:37] So has that. So how do you how do you get in there and very quickly let people know that that you are a guy?
James Kandasamy [00:04:47] Yeah, well, I mean people I mean, I think people judge you just by the knowledge that you bring to the table and by your credibility and your track record and you build that slowly. Right? I mean, starting up was really, really difficult, right? I mean, not because I'm not from Texas. It's just because you are a newbie. Right. And you're a newbie and you're trying to deal multi-million dollar deals. I mean, which broker is going to listen to you right now? Which broker going to risk 100 or 200 thousand of his commission to some new guy who was coming and saying that he want to buy you apartment complexes? Right. So nobody will do that. So we when we started, we started by by buying off market deals where we went direct to the sellers and we bought data from the sellers without brokers involved. So once I have one deal that I'm known by a lot of brokers in the market, in fact, a lot of brokers start calling me who are you in this market buying some of the deals that we want to we want to broker because they lost commission and.
Dave Debeau [00:05:43] Yeah, yeah.
James Kandasamy [00:05:43] What do you do with these deals? Why is there we need to feel because we had newbie's. Right. So yeah. So the track record and credibility makes a difference when you start talking to brokers and start talking to sellers even when you go through brokers.
Dave Debeau [00:06:00] All right, James, so very interesting, I want to I want to dove in a little bit more about that transition from single family homes into multifamily, because a lot of our listeners are there. They're thinking about making that transition. They don't know how to go about it, most of them. Well, just let me know. What was how big was the first multifamily that you bought off, Mark? Well, how many units
James Kandasamy [00:06:24] was out for 40, 45 minutes?
Dave Debeau [00:06:25] Forty five year. So, yeah, most people are going from a single family home to a triplex, home to forty five doors. So just walk us through how you were able to make that leap so quickly. How did you how did you, were you taken seriously by the seller and how did you finance that first big deal. Because that's a pretty big deal.
James Kandasamy [00:06:46] Sure, sure. Sure. So first of all, when you and single family I mean, we are like 13 single family before we jump to multi-family, right. 13. Yeah. And we had that. We have like we have like two right now. Right now. So we are selling S.V. as time passed by. So first of all, you have to set your mindset that I am going to go back. Don't think of what type of Quad's or buying five or six units, because once you go above five units, you go into the commercial space. Right. And that's very important. So first of all, is a mindset. Second is you have to be able to do syndication where you raise money from others for the down payment. Right. So you are the the primary driver on the seat, which we call syndication. And you have to convince a group of passive investors to give you money so that you can go and buy these big deals. So that's the second part. And so you have to let the syndication techniques, what are the legalities and how do you raise money and all that? Right. So and that is, of course, you have to to make that leap, you know, to convince people to invest with. Do you have to tell people that what have you done in single family? Why are you different? Right. Because there's a lot of people out there who want to go back and why they should be giving money. Right. So if that have behind you. Right. So all that counts in to give them that confidence and that allows us to buy from buying a hundred thousand dollar houses. We bought almost one and a half million dollar. Forty five units multifamily.
Dave Debeau [00:08:14] So the one and a half million dollar, that first big deal. Forty five units, one point five million. Now, I'm guessing you needed to raise well,
James Kandasamy [00:08:23] four hundred thirty thousand
Dave Debeau [00:08:24] or thirty, but then that renovation cost to work
James Kandasamy [00:08:27] on that was all included.
Dave Debeau [00:08:29] Well, that wasn't clear. All right.
James Kandasamy [00:08:30] So we got an 80 percent loan. And I mean, it comes with the rehab included in the 80 percent, 80, 80 percent of the loan was also included in the loan itself. So we did a draw and that basically gave us only four hundred thirty thousand to do that. We have the rehab was like three hundred thousand something, if I'm not mistaken. OK, it was like five years ago.
Dave Debeau [00:08:51] So. So that first deal raising the four hundred and thirty thousand dollars, how many investor partners did you have for investors? About one hundred thousand each.
James Kandasamy [00:08:59] Yeah. Some investors invested more. Some of the lowest was thirty thousand. The biggest was like one hundred seventy thousand.
Dave Debeau [00:09:06] Now those first investors were the people that you already kind of knew who had a preexisting relationship with
James Kandasamy [00:09:13] SBA, particularly with something called a five or six B, which is basically friends and families. And that's what we say when you're dealing with a single family, you have to tell people that you are doing single family, people, people. Wow, this guy is so cool, right? So this guy is doing things that other people don't do. Right. And a lot of my investors, that four to five people that I have in my first deal, they already they already made their mind when I was telling them my single family story. Nice. If you if you are doing multifamily, let us know. We will jump on it because they already, like, impressed with you on your single family story. So, I mean, that's how you build reputation, especially if you are working really hard on your single family. I'm sure a lot of your single family investors also worked very hard on this family. But, you know, they probably didn't think that one day I need to go big. One day I need to tell people that that's what happened with. So when I find my first multifamily, I told this, you know, maybe like 20, 30 of my of my friends that already know, I probably said, OK, I'm going to come in immediately. So it was unsubscribed within two hours.
Dave Debeau [00:10:14] So how did you how did you initially figure out what you needed to do legally to structure this, to stay compliant with the Securities and Exchange Commission?
James Kandasamy [00:10:26] I have a mentor who walks me through on how to do the paperwork. I mean, of course, a lawyer does it right, but it's very simple. Now you have a profit split. The lawyer will usually the lawyers will be able to tell, you know, what kind of legal document that you have to do. It is pretty simple, what you call a simple process. And we already know the legalities of the syndication model. And so we just followed that when we get the deal.
Dave Debeau [00:10:51] Excellent. Excellent. All right. Fantastic. And is that pretty much the same model that you continue to use over the last five years? If you had seventeen hundred dollars now that that was your first forty five. So you got sixteen hundred and fifty five more to go
James Kandasamy [00:11:08] in the next four years. Right. So we bought forty five units and then the next year we bought 174 units. Right. And then we went to the third bill with one hundred and fifteen. It's almost like eight months after the second deal and after that we buy like double double deals. We usually buy like four hundred units together, 700 units together. So that's how I was able to do I mean, my last 12, 19, we bought 300 plus another. Maybe like around 800 units in one year, it's crazy, right? I mean, I don't even think about it
Dave Debeau [00:11:45] because if you think back now, huh, never mind. Your context has grown as expanded so much. I'm single one. C2C houses 100 grand each or whatever was forty five units. Now hundreds of units, all in one fell swoop. And you're at the point where it doesn't seem like it's a big deal.
James Kandasamy [00:12:06] Yeah. Yeah, correct. That's how you have to talk to people like me.
Dave Debeau [00:12:10] Exactly.
James Kandasamy [00:12:11] Because you sometimes do when you talk to people like me. I mean I'm not bragging myself. I mean, I'm just saying you have to talk to people who are already done big things because we said as though he's not a big thing. So he may not be you may think that, oh, that's really achievable right now. If you talk to someone who is doing a triplex, you may be thinking, that's my next step from single family. Right. So I'd say I'm not bragging myself. I'm just saying that do you have to look for people who have done bigger things than you to grow to that? To that?
Dave Debeau [00:12:38] And it also depends a little bit on your market. So, for example, you know, you're getting a forty five unit building for one point five million. That would get you maybe a triplex in some cities and some bigger city like Toronto and Canada, Vancouver. And you. Could there be a single family home in some places.
James Kandasamy [00:12:59] Yeah, yeah, yeah, yeah. I mean, it's it's crazy, right? I mean, I live in Austin, which is a much more expensive than San Antonio. And I had the same thoughts that what you are seeing in Austin was like what, maybe single family houses were like hundred thousand at the time and. And I know someone told me why not go to San Antonio by, like a fifty thousand dollar house? I said something else too far. And he said, well, if you're going to make like forty thousand dollar equity, why don't you just drive that? That hits me like Hawk. I'm I'm actually being lazy of not driving one and a half hours to get that forty thousand dollar equity ride I just want to buy in my backyard. Right. So sometimes they are good deals. If you drive around like two hours from your place and you just have to work harder.
Dave Debeau [00:13:44] Yeah. You know, that's exactly. So you went from that first deal. You had your first four investor partners somehow at one point, five million dollar deal. Now I'm guessing. But once you enter the four hundred. Unit five, seven hundred units, now you're talking much, much, much bigger numbers. How have you expanded your investor base since then? Are you focusing more on accredited investors? What what what does your raising capital side of things look like nowadays?
James Kandasamy [00:14:19] So we started it for investors. Right now we have like almost two hundred twenty investors that invested in. Invested thirty five million dollars total in the seventeen hundred. So the thing is, what has changed in our capital raising on nothing much have changed. We really we do a really good job on each of these deals. I mean, as I said, we haven't integrated we worked really hard on each of these deals and that's what propels anybody out there. When you focus on one deal and you're doing a really good job and you give really good return to your investors, the list keeps on growing because they start telling everyone else, hey, that's one guy who's giving extraordinary return. And so the word spreads. Right? So and people believe someone who referred you right then to want you listen to Facebook or, you know, some some random media. Right. So and that's how we have been growing. We just grow by word of mouth. And even though recently I've started doing a lot more marketing of myself, because I think people just need to get that opportunity to invest with us. But, you know, it has been organic and by word of mouth and by doing a good job on your deals that you own and showing that sincerely to your investors. And, of course, you have to communicate very well to investors. Right. So and I do a really good job communication with my investors.
Dave Debeau [00:15:38] Excellent. All right. Fantastic, James. Time flies when we're having fun. And we want to find out more about you. Find out about your book because you've got a best selling book, Passive Investing in commercial real estate. First of all, how can they get the book? And second of all, how can they find out more about
James Kandasamy [00:15:55] this book was launched like 12 months ago. We have sold almost two thousand copies. It's listed as one of the top 15 real estate investing books by by Jim Cramer The Street. So if you want to get my book, go to passive investing in real estate, dot com, passive investing in real estate, dot com, and you should be able to get my book over there for free, actually. So, I mean, there are some small processing fee like three dollars something, but you should be able to get that book, which is being sold at nineteen dollars, something in Amazon for for free on my website. So passive investing in real estate dot com. If you want to get hold of me. My website is a chief investment group. Dot com achievers like HIV achieve like achieving a goal achieve investment group dot com. There's a link. I'll invest with us. You can go and click and fill in your information and you should be able to get hold of me through that link and beat my passively as well just to get to know us and get to see some of our deals and build a relationship with this.
Dave Debeau [00:16:54] Margaret James, thank you very much and congratulations on all you've accomplished in a relatively short period of time.
James Kandasamy [00:17:00] Awesome. Dave David comes with a lot of hard work. Absolutely. Thanks for having me on your show.
Dave Debeau [00:17:07] My pleasure. All right, everybody, take care. We'll see you on the next episode. Bye bye. Well, hey there. Thanks for tuning into the property profits podcast. If you like this episode, that's great. Please go ahead and subscribe on iTunes. Give us a good review. That would be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You get a PDF version at investor attraction book, dot com again, investor attraction book, dot com ticker.