Ground Up Development: $160M Raised Without Advertising

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen 0:00 Introduction & Guest Overview 4:20 From Single Family to Multifamily Syndication Journey 8:35 Why Development Makes More Sense Than Value Add Today 14:30 Raising $160M Without Any Marketing or Advertising 19:45 Finding the Right Partners for Ground Up Development 24:05 Quick Questions: Education & Mentorship Recommendations 28:00 The Single Family Mistake That Cost 10 Years 34:55 COVID Retail Deal Gone Wrong & Lessons Learned 38:40 The Perfect Development Deal During COVID 42:30 Using AI to Catch Fraud & Streamline Operations MASTERING GROUND UP DEVELOPMENT 🏗️ In this powerful episode of The Real Estate Investing Club podcast, I sit down with Venkat Avasarala from Stryker Properties to discuss his incredible journey from buying single family foreclosures in 2007 to building a portfolio of 5,470 apartment units through ground up development. This conversation is absolutely packed with actionable insights for anyone looking to scale their real estate investing business and achieve true financial freedom through multifamily development. WHY GROUND UP DEVELOPMENT BEATS VALUE ADD RIGHT NOW 📈 Venkat shares why he completely exited his $3,500 unit value add portfolio in September 2021, just before interest rates skyrocketed. He breaks down the economics of why building Class A properties in high income areas is the only way to achieve 20% IRRs in today's market. With construction costs at $250,000 per unit and rents needing to hit $2 per square foot to make deals work, he explains why targeting affluent markets with $80,000+ median incomes is non-negotiable for development success.  This episode is mandatory listening for anyone serious about transitioning from value add to ground up development, anyone struggling with capital raising, or anyone looking to understand where the real opportunities exist in today's challenging multifamily market. Venkat's straightforward, no-BS approach to real estate investing will inspire you to take massive action toward your financial freedom goals! 🚀 #RealEstateInvesting #MultifamilyDevelopment #RealEstateSyndication #GroundUpDevelopment #PassiveIncome Want to learn more about our guest? Connect here: https://strykerproperties.com/ Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

00:00all right we are back with another episode of the real satan vesting club i hope you guys are

00:12having a great week great day whatever day it is for you and whatever whatever whatever that

00:17intro that i usually say is i hope you're having a good day it's gonna be a good day for a second

00:22reason on the show here because we got venkat avasarala i hope i said that right on the show

00:27with us from dfw era he's with striker properties they do multi-family 5 470 apartment units

00:35in their portfolio and so they are doing ground up development today but they used to be doing

00:41value-add multi-family so if you guys are interested in either of those subjects if you're interested

00:46in multi-family if you're interested in development this is the episode to hop on to venkat i think

00:52thanks for hopping on i'm excited to jump into it all right all right i told you before we got on

00:59here we always like to start with stories we like to hear how people got to where they are

01:03so why don't you take us back to the beginning of your story in real estate and tell us how you got

01:07here so um you know i was buying in 2007 i was buying uh single family homes from foreclosures

01:16um bought about 20 of those and held in my portfolio and then by 2014 um it stopped making

01:24sense so i switched to multi-family uh but then quickly realized that if you want to buy even a

01:29smaller property you need millions of dollars and if you use all your money you do one and done

01:34all right so that is when i moved on to syndication basically so starting 2016 onwards i invested passively

01:43on few other deals signed as a guarantor on couple of fanny fredido deals and that's how i built my

01:49resume and by 2016 i was ready to start doing my own deals i started with 100 units 1960s property

01:57in norman oklahoma that was my very first property i live in dallas but nobody would trust me to give me

02:02a deal so i had to go outside my town and uh and dallas is pretty hard it's still hard right um so i had

02:10earned my stripes so demonstrated my ability to raise money to put together a deal arrange loan

02:15operate it and everything right my ability to do rehabs and everything and then uh i did another 120

02:22unit deal in phoenix and then uh dallas brokers felt comfortable and they gave me a 306 units

02:29right they were nice otherwise they wouldn't give me 60 units uh and this was what june 2016 to february

02:372017 seven months passed oh wow my first second and third deal a third deal is my dallas deal

02:43seven months ago i was shop liver seven months after i was i was good enough to buy a 15 million dollar

02:50deal today it's funny how that works but back in 2017 15 million is a lot of money yeah anyway and

02:57then i didn't look back and put together a portfolio of 3500 units mostly in dallas um but uh few in

03:03denver and few in uh phoenix but 90 percent of the uh because i live here and it was a good market

03:10then around um until covid arrived everything was good and then we saw the reality of the classy

03:18properties right uh the crime the non-payment of rent and then we had this blizzard in february of 2021

03:28i remember that sealed the deal for me it's like because our properties are not equipped to deal

03:33with that kind of weather um not that it would come again and again but it was hard to deal with

03:38the aftermath of that uh that um winter storm so sold pretty much 95 percent of my portfolio i don't

03:47own anything in texas anymore in the c class and b class space i sold everything as a portfolio sale in

03:53september 2021 just before the rates increased right so that was a great timing so got out

03:59made decent money and then uh moved on to development why development because i wanted to buy class a

04:06properties i didn't want to do any development i want to buy something existing and just um you know

04:12operate it and uh but they were all trading at two three four cap believe it or not yeah two caps

04:18yeah when people were projecting they were projecting those rent growths and the cap rates

04:22were insane it's like it didn't you couldn't do it responsibly get a deal done exactly and there's no

04:28money for anybody it's just a lot of hopium right so that is when i decided you know what i need to

04:33build a class property if i need if i need it but then what happened is like uh we saw that

04:40during building we can easily make that uh 20 irr right i mean because we we are adding value to the

04:46land here right so and then once you build it and hold it in your portfolio the irrs get watered down

04:53because what will you do it's a brand new property of course you'll increase rents uh and burn off

04:57concessions but there is no value at company so i said like you know what i'll do something between

05:03a somebody who just uh build and sell it empty building or somebody who builds and holds something

05:11in middle so we will build it we'll fully lease it up stabilize it and then sell it when the price

05:17arrives around three to five years is the horizon that we set ourselves and my very first property

05:23i built in princeton texas just north of dallas um it was 156 units built it during covid time we broke

05:32ground two weeks before covid broke out and nobody said anything we continue to build so that one we got

05:40out april 2022 we sold it at 35 occupancy at four cap as if the property is 95 occupied those were the

05:48dates right i mean anything goes everything goes we didn't complain the buyer didn't want to wait

05:54because they started jacking up the rates and they just want to get it done pull the trigger oh yeah take

05:59it uh yeah agreed upon price though so we got out of it and then the next project is 338 units in

06:08kyle texas just south of austin right on highway 35 it's a 75 million dollar deal um so that one is

06:15already built leased up ready to sell as soon as the rents turn last three years was really horrible

06:22right because they've been increasing interest rates quantitative tightening and then we have this

06:27russia war people dumping our bonds our bonds bond yield spiked and then there is tariff war and then

06:35there is uh immigration enforcement we survived all these things and still standing you know there's

06:40a lot going on right now there's a lot going on and all of these have effect on people and housing

06:44and stuff yeah so on the development side you know i've i've never done ground up i've uh um you know

06:50i've had deals brought to me and i've considered it but i've never actually pulled the trigger so i'm

06:54always interested what is in your opinion what is the hardest part about doing ground up

06:59so the first thing is like i mean are you starting with raw land or are you starting with uh a zone

07:06piece of land right 10 years ago you you buy like let's say 10 acres piece you take it to your city

07:12they'll zone it for you no problem spot zone right but now all the cities have comprehensive plans so

07:19they already decided that okay this area i'm going to put industrial this is where hotels go this is

07:23where this go so now you have to fit in otherwise it will be an uphill task you may like a 10 acre

07:28parcel but they put in their comprehensive plan like 50 year plan they envision that to be industrial

07:35area they're not gonna they're not gonna they're not gonna give you the opportunity so you need to

07:40know all these things that is the hardest part if you will um and then there is this nimby aspect

07:46right all my projects that i'm building right now are in very affluent areas that's what made sense

07:51it's not just classy because it's new building it's classy because it's in the areas where housing is

07:57freaking unaffordable million dollar homes right if you if i'm 80 000 uh wage earner and if i want to

08:05send my kid to the school where that millionaire is sending i can't get in unless you get into

08:11apartment so that is that is the angle i chose um so then the nimby aspect sets in right so that's why

08:17i usually try not to if i am doing land projects and zoning and all that i did a few of those

08:23but i don't mix these two because it becomes too long right so i do a land project and then sell

08:30the parcels off uh but then my ground up development projects i start with a piece of land which is

08:37already zoned and entitled and ready to go got it okay so your your process is basically you have

08:42two separate processes you have an entitlement and then you have development i've actually we had

08:47somebody else on that said the entire thing is development i just it screws my brain to think of it

08:52all as development you can but if the landowner allows to keep it the keep the property under

08:59contract and give you a couple of years to do all that or any year to do all that then of course we

09:04can do it but i'm building in areas where they don't play that if you go out of the town sure but

09:12if you want to build in prime areas why would the landowner uh give you all that kind of time i mean

09:18time is money right so it didn't work out for me but uh yeah less than let's say 60k income area 70k

09:27income area you can go and do that do it entire one project because you're not bringing in investors

09:32until you're ready to break ground so all this time you put you put a token amount and then you just

09:38go with the city and you know do all that while the landowner is carrying the land so so you guys are

09:45looking at their comprehensive plans and that's how you're kind of deciding where you're going to

09:49be buying and so you look at the plan and you find the the parcels in that area and you go to those

09:53owners you're like hey we want to buy this can we make a deal absolutely um so once once you have

10:00well actually before that how do you decide how are you deciding where like what municipalities

10:05you're going to be going to um are you looking for you know median household income um property

10:11value what what specifically are you looking for to like in 20 minutes you should be able to get to

10:17a high paying job when i say high paying anything not the eighty thousand dollars right so look at look

10:22at all my projects i have a couple of them in salina um which is very very affluent area but in 20

10:28minutes 15 minutes you can get to frisco where all the high paying jobs are um and then i have one in

10:34frisco downtown one in round rock highway on right literally on the highway uh 35 which connects

10:40mexico to canada very high throughput a high income area and i have one in kyle in hayes county again

10:46high income area so yeah income is is non-negotiable the reason is construction you cannot build it like

10:52for the cost you were able to 10 years ago right it's expensive the garden style deal will cost you

10:58250 000 so in order to produce the rent to make that kind of deal make sense you need to be in high

11:06income area right so that is that is what actually drives so two dollars per foot in dallas uh is kind

11:13of the benchmark that we go by where are we getting two dollar rents right oh rents two dollar rent per

11:19square foot two dollar per month yeah got it that makes sense um so what i mean i guess on that topic

11:26what do you feel i mean there are no developments happening in the lower income areas generally but that

11:33is where a lot of people need the supply they are but that is where light tech comes in right uh low

11:40income tax credit properties like well you get a free property uh you go to federal government you win

11:45the four percent nine percent uh deals and then uh you go sell those tax credit to bank take the money

11:51and if you're short money you approach your city they'll help you sell bonds or something

11:55so there's no investors per se right i mean you basically get a free apartment but you have to

12:01operate it for 15 years um and they won't pay your developer fee up front they'll pay it over the

12:08time so it has pros and cons too but i didn't i chose not to go with that area because that needs a

12:15totally different mindset uh temperament and all that because that those are the income those are the

12:20places where stuff happens even in a new low income yeah yeah yeah that makes sense um all right so

12:28are you guys completely are you completely through with value add you guys aren't even looking at new

12:32you know what i am looking for is like you know the conditions for value add is again coming back

12:39uh at the moment everything is standstill right because uh rents are dropping uh because look 2021 and

12:462022 we were literally creating 600 to 800 000 jobs every single month and a lot higher before that

12:53now we barely create any jobs and this is all planned right so as the federal reserve increase

12:59the interest rates and do the quantitative tightening which is removing money out of the economy

13:03well there's no money there's no businesses there's no jobs especially small businesses

13:08they create have the jobs in the country so when the jobs go down run from creation that is

13:14600 000 per month to almost zero over the last three years period rents followed that because

13:2121 and 22 they looked at those job numbers and they and the industry started all these projects they

13:27all got delivered in 23 and 24 uh and there are no jobs to be found uh like before so we had a

13:35left so now we have to digest that we're almost done by by summer next month next year will rents will

13:41start growing again and that is uh a great time for to look at serious have a serious look at value add

13:49again but newer product only newer product because you it's hard to even ensure these older ones

13:54anymore yeah and by newer you mean what 90s 2010 and later would be perfect but anything with the

14:03two in front anything with the two in front that's a good litmus test right there i like it

14:08um so we're gonna i'm gonna bounce us around here a little bit um and talk about your let's go back to

14:15that first deal that you mentioned um it was 100 units you think you said it was in oklahoma

14:19um you know raised that sounds like that was the first deal that you raised money yeah and a lot

14:24of people that listen to this podcast that's where they're at they're at that deal that they need to

14:27start raising money so let's talk about that process how was it for you on that first deal

14:31where you raised capital how'd you do it and um how has it kind of evolved since then so um that was

14:39my very first raise 1.2 million dollars uh took about three weeks four weeks maybe uh to close it i

14:46didn't mean much difference again because you know my background is it most of my investors are

14:52it people it people stay at laptop all the time they get paid well they don't have time to do shit

14:59i mean they're just on the laptop i mean that's the nature it's always deadlines high stress and all

15:04that so whenever they get a chance they they talk about they play with stocks but that's about it they

15:08can't they don't have time to do uh and even good old days people used to keep rentals but now rentals

15:14are losing money every month right so they need some diversification so that's why they invest with

15:19me i raised 160 million dollars since 2016 uh no advertising nothing um so only word of mouth uh

15:27either people i know or the people i know i know right so what one degree separation so that is how

15:33i raised all my money but yeah it was 1.2 million dollars and i don't call them individually what i

15:40strongly believe is to put together a really really good convincing deck um and share not just

15:49the deal particular start with why i am doing if you sell them on why everything else sells them

15:55themselves right people directly jump into oh you know it's 160 unit it's like nice and no

15:59i'm not gonna start with i'm gonna start with what are our options we can do in stock market we can

16:04lend money to somebody or that that that and why this has to be part of your portfolio that resonates

16:12to them and this is the way to achieve the why right so one you have to focus on why first right

16:18yeah and when you do that and then the tax advantages and all that comes all the way at the end

16:24a lot of people start first right oh bonus depreciation yeah if you lose there is no

16:30there is no profit no issue of paying back that bonus depreciation right so that is how i approached

16:37and um in my it career like i mean i use a lot of management and all that so pitch decks and all that

16:44i mean i did quite a bit of it so you need to hone in on how to influence people by telling them exactly

16:50what they're interested in that fluff and all that so that is how i was done and and also my very first

16:58deal i had a partner who has already done few deals so i wouldn't risk going into the deal saying

17:05that you know what i'll jump and then figure it out no i i need somebody even on my development

17:11deals right i mean i always have even all the deals i'm doing right now i have a very very senior

17:16partner so he comes in manages day to day and if they have to deal with city he will do it

17:23but everything else i they're all for purpose my projects but i won't go in without somebody who

17:29has at least 30 years of experience in the in exactly what i'm trying to do because that there's

17:35no replacement for that right i mean how will you replace experience i need to live 30 years and

17:40have all the war wounds to to replicate that person which you know it's not practical so you

17:46specifically partner with people who have extensive experience in specifically what you're trying to do

17:51i think that's a really smart way to do it and especially i always say this on the podcast for

17:55people who want to to get into real estate they want to get into a specific type of real estate

18:00multifamily industrial mobile home rv whatever um always go out there you can invest in somebody's

18:05deals as a limited partner that'll get you exposure or you can partner with people who are already

18:09doing it and get on their team somehow um so how do you go about creating these partnerships what

18:15is your process to to find them and then i see okay um i i chop it up into that okay deal identification

18:23right and then development activity of course a construction management uh money raising arranging

18:29loan and all that i can do all of them but when it comes to entitling and all that i need help

18:34i know the process it's just that uh you know you have to say the right things when you go into

18:40this meetings with the city and all that you cannot just say whatever right it has to align with their

18:45plan then it becomes easy if you say anything which get their spidey sense up uh mostly what

18:53what problem is cities are worried where you'll build a pigsty over there that they cannot ask right i

19:00mean they cannot um ask those questions so you need to read their mind and tell them what they need to

19:05know so this comes from experience right so that is why i i bring somebody like that but otherwise i

19:11arrange the loan i raise the money i do the investor management i do i do the asset management like

19:17lease up and all that and in the construction activity that is where i only get involved when

19:24decisions have to be made big decisions have to be made the minutiae i don't have time for that right

19:30i mean that is better left for my i trust my quality is which uh which facets gonna go into each

19:35here you go oh yeah you know we need to do a select fill on this land i mean we can buy the

19:41dirt from there i don't care i mean just whatever is you know does get the job done and use your

19:48experience nice right on man well hey we have already run down the clock before we move on i always like

19:55to ask people um you know from your experience if somebody wanted to get involved exactly in the type

20:00of thing that you're doing ground up development or value add multi-family what is the one piece of

20:05advice you would give them to get started so what happens is like um everything is very daunting

20:11right it makes you question yourself man am i am i cut out to do this right i had no idea 160 i will

20:18be able to raise 160 million without any advertising nothing like nothing i'm very laid back i do a webinar i

20:24don't call anybody and i says like look if you want to get into this deal you got to be on the

20:29webinar there's no other way right and people show up and they you know invest with me uh and then

20:35brokers gave me deals i'm able to you know do all this stuff so how do you beat that right how do you

20:42feed the self-doubt the first one is the toughest one obviously right uh how do you gain confidence

20:47on yourself and how do you give other people confidence that you are trustworthy and they should

20:52award you a deal work with you and all that that is being in a circle right you need to find

20:58yourself in an ecosystem you need to see success enough times where it should become mundane to you

21:05right i mean like oh yeah that guy did it that guy did it that guy did it i mean i don't have two

21:10horns i can do that too um it's it's the mindset mostly and once you have that mindset you speak

21:16differently right i'm not just talking about jargon or lingo it's just you speak with confidence you

21:22speak with knowledge and the second thing i would say is just drill down know everything about that

21:28small the mind that you want to master in know everything and anything about it and talk to old

21:33people i'm telling you there's it's not on internet you need to talk to the old people like for suppose

21:39in 2008 what happened in 70s roc 80s roc days what happened like how was the distress how did you guys

21:46navigate it old people man just take them to lunch and just take two hours of their time and eat their

21:52chew their brain out right uh that is where the wisdom is knowledge we can get from books and

21:59talking to people and all that but wisdom is something that you have to make that guy go

22:03relive that moment and tell you the gist so that you don't have to live that you can see things and

22:09that's how i got out in september 2021 where everybody thought i was a fool when i'm selling

22:15everything in september 21 people are traveling on each other to buy those c-class properties at four

22:20caps i got out and some of my investors are pissed it's like look you're leaving money on the table

22:25uh i may not invest with you again it's like that's totally fine yeah i this is scary i need to get out

22:32right so i got out so that happens because you need to know when the music stops yeah yeah i mean i like

22:40what you said how you need to surround yourself with people who are doing what you want to be doing

22:44um and that's why we always you know whenever anybody says something like that i always like

22:49to stress if you guys want to get involved in real estate find some kind of mentorship program find

22:54some kind of you know group anything where people are getting deals done they're not talking about it

22:59they're actually out there getting deals done because you you learn by osmosis you learn by just

23:04sitting there you know taking everything in that uh that you're hearing and and it somehow i don't know

23:11how it works but somehow you just it becomes part of you and you kind of you go into conversations

23:16with sellers stronger uh more confident like you were saying brokers will sniff it out because it's

23:21their job to make sure pick the right horse and put it in front of seller so that they can earn their

23:26keep right yeah but if they are wrong they won't get a second chance the word gets out and nobody will

23:31hire them so they're they're they're reading everything you're saying the way your body language

23:37everything so you got to be super careful and and and that comes from confidence of knowing it

23:43right just not i i didn't read a book or anything i lived through that i saw that guy do it you know

23:50and then you talk totally different there you go all right well with that i'm going to push us into

23:56the quick question ronda you ready all right starts with education it could be any form could be a

24:02mentorship program you've been a part of a conference you've gone to book you've read anything i just

24:06need two recommendations one for general life wisdom and then one for real estate um so i didn't

24:12take uh on the life wisdom you know um real estate especially is a people's game you know what how

24:18donald trump is stopping all kinds of wars and stuff like that where do you think he got it from

24:23why does he send whitkoff to put it because real estate people are good at otherwise we cannot get

24:30anything done we build consensus we are born to bring people together solve problems uh

24:38swallow ego that's that's who we are that's why we we are in this business right so how do you do that

24:45right so you need to know how to talk to people right so there's this book by dale carnegie um you

24:51know how to win friends and influence people written back in 20s very much relevant right now um people

24:57just sometimes come off uh you know wrong and and you know relationships get ruined and deals get

25:03broken and all that so that is from the life standpoint read that book three times uh because

25:07it's it's you cannot observe everything and every every inch of it is very valuable but coming to

25:13mentorship back then 10 years ago i joined a guy called brad samrock uh he was in dallas uh not sure

25:21where he is right now but uh i spent about a couple of years there and that's where i i i saw so many

25:26people getting deals done and that that's what i saw such as being mundane like i said right oh that

25:33guy this guy this guy this guy did it right um no mentorship is perfect uh they're all for profit

25:38they're for their profit not yours so yeah you may have to try a few test uh test drive a few but i'm

25:44telling you if somebody wants to give their knowledge for money give it give them the money i'm not like

25:50no no within reason of course right if you can buy somebody's 20 30 years experience

25:56for for dollars i mean that that's a great deal that's a great deal a lot of people just stuck

26:02up like look i'll do a free program and all that but you're burning daylight how many years we have

26:07on this planet and you want to save three four five six ten twenty thousand dollars and give up

26:13years and cycle my dad people are getting ahead of you right so time is money uh don't don't be

26:20afraid to pay people but pick the right one of course reviews and all that do your due diligence

26:25but do not be afraid it's a good deal to pay for mentorship right just pay them absorb everything

26:31they have learned energy fee like that so that's what i would say but uh yeah it doesn't have to be

26:36bad somehow but anybody in but look look i mean in this day and age it's easy to find people

26:41yeah could not agree more and i like the uh the suggestion for how to win friends and influence

26:46people i never liked the uh the title of that book but the book itself is just killer it's it is the

26:52best book for how to have how to communicate with people correctly or not correctly but just in the way

26:59that creates the best result for everybody involved so i was really boss an australian boss when i was

27:04working at pepsi uh he used to say may i request you he's my boss and i stole it and that is how i

27:12talk to people even my employees yeah and that humility and humbleness i'm telling you man it diffused

27:20any situation request i only request i order nobody um that's one of the things that stood out in that

27:27and that book for me yeah was uh um always or what was that i can't remember how he actually

27:34phrased it but it was like a person's name is the most important thing to them or something like that

27:38and ever since i read that book i i remember everyone's name like i'll meet them their name

27:43is in my memory and every time i'll use their name and it's uh it's amazing you know you gotta

27:48all the all the recommendations that they have in that book are killer but um you know certain ones

27:52stood out to me all right i'm moving us on to the next question this is for your younger self let's

27:59go back to the venkat who was just starting out in single family back in 2007 go back to him look

28:06him in the eye give him one piece of advice moving forward skip the single family

28:11you wasted 10 years gold in years yeah you would have put a zero extra zero next to my network that i

28:20done that you know i'm gonna i'm gonna put that in the bucket of i wish i got started sooner so

28:25anytime somebody comes on you know 90 of the guys that come on the show i ask that question they say

28:29i wish i got started sooner i always point it back to you the listener if you have not got started yet

28:35just go out there get a deal done doesn't matter what it is it could be you know it could be a shack

28:39just get something done make sure the numbers work but get it done you're going to get that ball

28:43rolling 10 years down the line you're going to be thankful that you started today where you're

28:48sitting right now um and that brings us to the next question this is about the u.s it is a big

28:53place there is a ton of opportunity out there give me the single metro you're most excited about

28:58investing in today i would say um it depends by asset class um because whenever we talk about real

29:07estate there is property taxes involved and depends on who pays it differs i love dallas man i mean dallas

29:14has so much ahead of it but it's becoming a little bit uh expensive right uh it's not like the dallas

29:2110 years before so now you have to cater to the people who have money right i mean that's true for

29:26most of the things most of the metros right i mean you 10 top 10 is doing like 80 of the spending in

29:35this country they're keeping us afloat right it's a case of economy everything changed in 2008 right

29:41when we started from uh reserves bank reserves there was zero right back then before 2008 but

29:47now we are in abundant reserve regime that the federal reserve has to print a lot of money right

29:52so when the printing happens there is something called contillion effect and what it does is when

29:57the money gets printed the people close to the printer will benefit the most and the printer

30:03sort of banks chase bank bank of america your credit union they print money not federal reserve

30:08they print money by issuing the debt that's all money gets created money gets uh lent into existence

30:15right so who are there close to them us right or anybody who can take advantage of it right so

30:22um but the bottom end people who are working stiffs you know working for 15 or 15 dollars and

30:28or they're barely getting by or 20 dollars 30 dollars 40 dollars it's it's just not enough right so

30:34it wasn't like that before um you know previously if you have a million dollars how do i make money

30:40okay i'm gonna start a shop or this that now just stick it in the stock market you you i mean there is

30:46obviously risk but i mean the things are getting doubled and tripled in months yeah months right and

30:53i feel like with ai that's only it's going to continue initialized the country is becoming

30:58financialized right so what is government telling us they've reduced the pattern day trade limit from

31:0425 000 where you cannot day trade if you have 25 000 unless you have 25 000 they dropped it to 2 000

31:10what is the message they're saying that look live on your computer make money there trade and all that

31:17right so in this world um this is it's a case shape world right so you have to cater to the people who

31:23have money um so whatever you do do that i mean you want to build a hotel build upscale everything

31:29upscale upscale upscale upscale upscale because that they're the only ones who have money everybody else

31:33is trying to you know living they always live paycheck to paycheck but now they're paycheck

31:38to the paycheck after paycheck that is how they're reminds me uh uh of alex hermosi i mean i'm sure

31:45you've heard of him um he has that same message where you know if he gave himself advice starting out

31:50he would say just focus on you know focus on the rich people focus on the people with money

31:55it's only give services to them yeah it's it is it's unfortunate but it's the it's it makes sense

32:03um because people with without money uh you know we do mobile home parks rv parks and those are

32:09actually the people that tend to not have as much money and so there's definitely a way to

32:14no but then again you let you own that land they're renting the land i mean it's the art i mean you'll

32:19keep the house or something like that right but if you go buy a c-class apartment right now let's

32:25say if you go to south dallas and buy a c-class good luck collecting grant right it's so hard and

32:31the cities are all pro pro uh tenants and forget about all that they don't have money yeah inflation

32:39has taken off i don't believe three percent four percent inflation inflation is a lot more than that

32:44their paycheck didn't keep up with it because they were not close to the printer yeah yeah it is uh

32:50it's pretty crazy all right but moving on to the next one this is about finding deals it all starts

32:56with getting in contact with the seller and pending that purchase agreement so what is your favorite way

33:00to generate leads and find new deals so i haven't uh made a habit of reaching out to sellers and all

33:06that again look it may work if it's a single family home or a 10 unit 20 unit perfect right and of

33:12course they're not very savvy but if you try to reach an owner who owns the like let's say i own

33:17300 unit apartment if somebody reached out to me and says that uh you know what i want to buy your

33:22property let's not pay the brokers i say you know what i want to sell it through brokers how do i know

33:27that you are giving me that so we are very savvy right we don't entertain those kind of things and

33:31after the first time we won't even appreciate that right so i didn't make a habit of doing that

33:37uh i started with 100 units 120 units 300 units and up and up all my projects are like 85 to 100

33:43million each even development projects right so since i i played in this league i focused and shared

33:50in building good rapport and relationships with the brokers they are the ones who bring you off

33:56market deals right they build you once they all they want to know is like man once we bring this deal

34:02make a fair offer i'll get it awarded and now you do exactly what you said you would do don't come

34:07and retrade me i'll lose my face in front of them and close it don't give me excuses and all that i know

34:12it's hard i know everybody cannot do it but i picked you thinking that you can get it done now get it done

34:17and if you do that your phone keeps ringing right not from just this one day everybody every other

34:24broker so execution right so impress win that first deal from broker execute the heck out of it and

34:31everybody your phone will be and you don't have it yeah brokers are i mean you can think of them as

34:37the uh the cold callers that are on your team just out there out they're pounding the pavement they're

34:41having the conversations already and so you might as well just step into that flow and uh and have

34:47the conversations with them makes it a lot easier that's for sure um all right next question is about

34:54lessons learned not every deal we get into goes the way we expect it in fact pretty much every single

34:58time something is gonna go wrong and that's when we get to learn a lesson so what was the deal that

35:03went a little sideways for you and what was the lesson you pulled from so that is the deal uh in

35:07full share texas just uh in houston metro right next to katie 145 000 income and we wanted to build

35:15a hundred thousand square feet uh retail complex so we acquired the land december of 2029 uh we pre

35:22everything is done right we pre-leased it even before we break ground right and uh arranged bank

35:29loan and everything uh and we are supposed to break the loan in april of 2020 and then in march 2020

35:36code came out and then banks are there wait go get all your leases re-endorse the world has changed

35:44how do we know that they're gonna occupy them right yeah when we went there they said that are you crazy

35:49i don't know if i'm gonna have a business right so yeah we got stuck and then uh we still salvaged it

35:56i mean uh we drastically and then the inflation wave what we were under contract with our gc uh for

36:03105 a foot or something and that number went to like 180 jesus christ right and that's right and even for

36:12me to go after him he went out of business yeah right so when these kind of things happen okay now you

36:18had a pivot but we still built it we only built 25 000 square feet uh we kind of sold piece of

36:24parcels of the land we uh we sold everything except just one piece left not piece it's actually a

36:30building it's a daycare uh there's no loan or anything that's one thing that we have to sell

36:35and then that project will be done but we're not going to lose money i was afraid where we're going

36:39to lose money on that um but you know we're going to actually a lesson it's not going to be a killing

36:45but we'll do decent double digit returns the lesson there i guess is uh i mean you never know what can

36:52happen yeah covet is not something you can predict it's not something you can prepare for so um just

36:57expect the unexpected to happen and and when it does happen just roll the punches absolutely and and

37:03now we are putting these things in the offering documents like look there can be a war there can

37:08be over kind of thing there can be shutdowns there can be anything right so see the thing is if you

37:15set the right expectation people will understand that i mean most pressure comes from your investors

37:21right so they would understand but then again who would have imagined covid right i mean last time

37:26something like that happened is 150 years ago or something it's like 1918 but now we have to put it in

37:31there right something like that happens then uh you know just manage expectations and all that because

37:36some people just don't once they're passive investors man they're busy that's where they trusted you and

37:41gave you money and some people don't even reach the um updates that we send and all that they said

37:46that look didn't you say it was a three-year project why is it taking five years um so that that's the

37:58challenge so the more you can think of these kind of things and not just to see why if basis but to

38:04person to person right you want them to know this getting in so that they don't worry too much oh yeah

38:10this happened yeah yeah the communication is absolutely key in pretty much every area of your

38:16business but especially with investors they just want to know they want to be kept in the loop um and

38:21if you keep them in the loop uh even the bad news you know it's not going to be it's not going to be

38:25good but they won't freak out so long as they're kept in the loop all right uh so that was lessons

38:32learned let's talk about your highlight reel sometimes things go right and uh there are deals

38:37that kind of stick in our mind is one of our favorites so go back to that deal for you what

38:41was it and tell us a little bit about it um so all my um multi-family value ads i sold i made money

38:50some more some less there are a couple of properties we just bought or before covid so not so much on them

38:55but for the most part we did really well there was properties where we used to send 12 cash flow

39:00those were the days 2018 19 and all that right but the one i'm really really happy was that uh 156

39:07unit my very first development project my god man i wish everything is like that we broke down

39:13covid broke out nobody stopped us we continue building it and these guys don't have any other

39:19work right everybody stopped so now we had plenty of materials and cheap material i mean we were we

39:25actually when covid broke out if you remember oil price went to zero

39:29nobody is driving no no it didn't go to zero it goes to negative 35 a barrel meaning i would pay you

39:38to take off this oil from me because i don't have anywhere to keep it that's funny right and take the

39:43oil for free and for taking they gave you 35 so those were the conditions i know i'm not wishing

39:50another covid or all that but that really went well because we had surplus care um you know and and uh

39:57surplus material surplus labor and all that nobody stopped us we built it it leased up quick uh and then

40:03we sold it at 35 occupancy at four cap as if it's 95 oh yeah it's not ever happening yeah so that was a dream

40:11come true that sounds like a good one all right second to last question this is a new question

40:16we've been asking um it is about ai i try to implement ai in as many places i responsibly can

40:23in my business i'm a huge proponent of it so are you using ai in your business and so how are you doing

40:28it so yes of course right so first thing is um when you uh right now i don't type anything starting

40:37i turn on the word turn on the dictation and then just speak my whatever i wanted to say

40:43without breaking a flow right then i take it and give it to chadgpt and says that look

40:49and i give it the tone right this is for my investors right this is the tone make it very easy right

40:56layman terms and all that uh if i'm using any acronyms put them like that and then it nicely

41:01creates that so investor communications is one of them uh that's something we do every day um but

41:09then when you contracts previously we don't need to understand what the hell that is and we have to

41:15get hold of a lawyer and he was busy in the evening i have to wait until the evening and all that right

41:21so now i still do that it's not like i'm going to do without lawyer but i'm not going to bother

41:26them right so the less times i call them the less billing they do right uh and then i get

41:33everything from chadgpt right i mean i keep it interactive uh so that i know what i'm getting

41:38into i have a lot more awareness now than what i had before chadgpt so that's one other way and

41:45then the property management started to bring ai into different different aspects on how to uh look

41:51for fraud um oh my god i mean that became a huge problem because people will do whatever to survive

41:58so there are some services if you give them hundred dollars they're going to give you pay stubs

42:03fake id and all this is very big on this for some reason and uh it's it's it's a disaster

42:12the class a property if you let somebody in like that i mean if you cannot catch it it's a problem

42:17so we started using ai tools to you know catch these people at application um and we asked them

42:24to upload everything so don't bring anything just upload everything so it becomes it flows into this

42:29app and it spits out yep that's fraud um those are some places that we are using that i can think yeah

42:36yeah that that's uh that's i haven't heard it used in that specific instance but it makes a lot of

42:40sense the fraud one and then contract review we i i absolutely love um i i do perplexity for

42:46contract review but like just recently we got a uh a cell tower lease somebody wants to put a cell

42:51tower on one of our rb parks that's a great and i had never like ever even considered cell tower

42:57leases what they look like i didn't know anything about them and so i put the thing in the chat gbt

43:01i said what do i need to care about in this contract and it spit it out it was like you know this is this

43:06is where they're trying to get you this is what you know all these things we still had you know people

43:10look at it but it at least it prepared me and and gave me a context for this type of contract that i

43:16had never dealt with before so yeah i love that all right well that brings us to the very last

43:22question this is for the listeners you've given us a lot to think about i'm sure people want to

43:26reach out get in contact with you this is a two-parter where can they find you and then what can they

43:30expect when they reach out so they can visit my um my website uh striker properties s-t-r-y-k-e-r

43:38properties dot com um so striker is that um you know that it's like a tank on wheels it's in our u.s

43:46army the it does most of the tank things right um but it's on wheels it's quick agile cheap um so

43:54that's what uh inspiration i have on on a real estate business i don't have a huge office a lot

44:00of people um mouths to feed and all that you know what will happen if you get into that now you're

44:05forced to do the deals even when things are when you shouldn't be doing because you need to pay all

44:10those bills right yeah but i want to do big stuff i'm building 100 85 to 100 million i'm building one

44:15in frisco downtown it's 100 million dollar deal right in frisco downtown so i want to do tank stuff

44:22with striker profile i like it i like it it's a striker properties dot com um and uh yeah if they

44:32you ever want any advice or any way just get in touch or invest in one of your deals

44:37absolutely and there's a form and we can open a call there you go all right i will put that link

44:45in the show notes so if y'all want to reach out to venkat all you got to do is click the little more

44:49in the description it's going to pull down that full description and in there you can find his links

44:53all right man that wraps it up thank you very much for hopping on the show

44:58all right uh and for everybody who is with us today thank you guys for showing up you are the

45:05reason we do this so if you guys have any questions reach out to me gabe at the real estate investing

45:09club.com if you guys want to support the show just leave us a review or a comment or anything like that

45:13other than that i hope you guys have a great week keep rocking real estate and i look forward to seeing

45:18you on the next episode

45:20you

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