Our guest today is Sandhya Seshadri, a syndicator and asset manager. In this episode, we dig deep into how to successfully invest in multifamily. We discuss the 5 key steps to passively invest in multifamily, how to find the best deals, and what to look out for when investing. If you are someone who is either raising capital or has the capital to put into someone else’s deal, then this episode is for you!
Learn more about Sandhya and her journey at reiclarity.com!
“The more you learn and know about something, the less of a risk and gamble it is.”
Sandhya had a successful corporate career in engineering. At first, she started investing in the stock market as she wanted to get savings on taxes on her capital gains. However, she soon realized that real estate was the best way for her to diversify.
Sandhya chose passive investing in multifamily because she didn’t want to deal with the 3Ts (tenants, toilets, and trash). She found this asset class to be the safest because apartments are a fundamental need.
“You should roughly make $200k on a $100k investment today, within a five-year span.”
Sandhya shares her 5 key steps to take to succeed in passively investing in apartments.
- Clarify your financial goals. Remember that any real estate investment in multifamily is not going to be liquid, so you won’t have access to those funds for 3 to 5 years.
- Define your overall personal goals and strategy. Your strategy should be different if your plan is to leave your day job or you just want to invest on the side.
- Vet your sponsorship team very carefully, especially if you plan to stay as a permanent passive investor. Find a sponsorship team with a strong track record in a market that is going to be cash flowing. Social media and podcasts are a great way to network, find sponsors, and dig deeper into their track records.
- Choose a market that has a diversity of jobs and is landlord-friendly to minimize your risk. The market is one of the most important things when analyzing a deal. Sandhya’s advice is to factor into your market study the median household income within a 1-mile radius.
- Plan your financials off of the deal. Sandhya suggests conservative underwriting. This means you want to have an exit cap rate that is higher than your entry cap rate by at least .75 to 1 point. Validate every number by having the sponsors justify them.
“You need mentors to help you accelerate your path.”
At the end of the episode, Sandhya picks action steps from the REI Clarity Framework that are the most valuable for her. These are “Establish Your Mentors” and “Take the Risk”.
Establishing your mentors can start with books or podcasts. You can figure everything out on your own, but it’s way faster with mentors to learn from. The more you get educated and the more knowledge you have, the lower the risk is.
Mentioned in the show:
- Sandhya’s free checklist to vet a sponsorship team
- Her LinkedIn
- James Kandasamy – Passive Investing
- The REI Clarity Framework
Learn how to grow your portfolio and reach incredible success the right way! Visit us here for everything you need to know: www.shineinsurance.com/reiclarity.
Special thanks to Sandhya Seshadri for taking the time to share so many great insights with us
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Show produced by Eni Horvath