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April 5, 2022

How To Provide Helpful Added Value With Kavitha Baratakke [EP095]

Are you looking to provide added value to other syndicators and passive investors? Kavitha is an inspiration to those looking to provide added value. She's invested in twelve multifamily deals, two land development deals, and one build to rent (BTR) deal. Kavitha believes in having a creative mind, being authentic, and doing what works for you. Follow in Kavitha's footsteps and provide helpful added value today! Listen and learn!

Table of Contents:

Introducing Our Guest, Kavitha Baratakke

Introducing Our Guest, Kavitha Baratakke
Photographer: Ronnie George | Source: Unsplash

Darin: Kavitha Baratakke lives in the Austin area. She spent 20 years in corporate America and found financial freedom from real estate investing. She wasn't sure where she wanted to focus. But she found her way when she surrounded herself with like-minded people. She now loves teaching others how to get involved.

Before we hit record, we were both sharing how to pronounce each other's last name, that's funny. So I hope that I didn't butcher it. But in any event, hey, I wanted to share a little bit on how we know each other and then we'll get into it. Kavitha and I know each other. We're both part of the same multifamily mentorship group, Brad Sumrok group out of Dallas. We met some fantastic people through that group and Kavitha is one of them.

When I was doing my first syndication deal, she was investing in different properties and she was just getting going. And she's been off to the races ever since. I see her all over the place, on social media. I see her at different conferences. She's speaking on stage. This girl's just on fire. So I'm very interested in hearing what she's got going on. So with that said, how many properties and how many units are you currently invested in?

Kavitha: So I'd say about 15 properties right now, that's where I am. But that said, I don't have all in multifamily, about 12 in multifamily across 2000 plus units. And I'm doing two land development deals and also one land development plus a BTR construction deal.

Darin: So BTR, I know what it is, but can you share with the listeners what BTR stands for.

Discover How To Save Taxes and Build Wealth

Built to Rent

Kavitha: It's Built To Rent or Build For Rent. It's called BTR, BFR, depending on where you hear it. Essentially, it is a hybrid between single family and multifamily. So you can think about it as one level multifamily where you essentially have a pool of single family homes. Maybe a smaller footprint single family home. But the entire complex is rented. So it's not sold. It operates as one unit.

Darin: That's fantastic. So that's been in a short time. I mean, when I first met you, it was probably three and a half years ago and you've been busy.

Kavitha: I have. Lot's been going on. So it's been good. It's been great and it's been a lot of learning. It's been a lot of growth, just connecting with the right partners. I've been blessed. I think every day I do this gratitude journal. I'm grateful for the opportunities that are coming my way. The right people that I really enjoy being around. It's not just doing deals. It's about who you're spending your time with, right. And I love the people I'm working with.

Darin: Can you share with us a little bit about your background before you got into real estate investing, what were you doing? I think you were in IT, but give me and the listeners a little bit more perspective on what your background was.

Kavitha: Sure. Just like every Indian, I was stereo typecast into IT role.

Darin: Hey, I don't think you could say that.

Kavitha: Well, a lot of Indians are in IT. So we carry that. When you walk in, you're like, oh, are you an IT or you're doctor or you're a dentist? It's kind of like limited career paths.

Darin: Or engineering.

From IT to Multifamily

Kavitha: Or Engineer, software engineer. So I was technically an engineer, a software engineer. I came to the country to do my master's in '98 and I just stayed. I worked in corporate for about 20 years, 19 years to be precise. But I also worked in India for a year before I came. So overall, my corporate career was 20 years long across three companies, one in India and two here, IBM, and Atlassian here. That's where I started. And of course, like all of us, I have a second career now in real estate. I transitioned slowly. Initially, it was single family homes, then apartments. Then I got in and it's been land and all these new things are coming up.

5 Step Process Ad

Darin: That's fantastic. Are you full-time now in real estate or are you still working at W-2?

Kavitha: No, I've been full-time since 2019. So three years now, I've been full-time. I did my first GP, general partner. For those of you who don't know what a GP is, essentially the person on the other side of the deal, actually putting the deal together. So I did that first one as a co-GP on a deal in Atlanta. And then after that, the minute I saw that, okay, I just needed to understand what is next for me. I had already financially freed myself, thanks to my portfolio of single family plus apartments. I was passively investing in apartments three years before that.

So it just gave me enough leeway and say, hey, I have enough passive income. I didn't replace my tech job, but in any means, my tech job was paying pretty well.

Passively Investing in Multifamily

Kavitha: But the way I looked at it was it replaced the income I needed for day-to-day expenses. So I'm like, what do I have to lose at this point? I go all in and focus on real estate versus trying to do a full-time job, trying to kind of multitask. I'm a single parent. So it was just too much on my plate, so I decided I'm going to jump all in and see what happens.

Darin: That's fantastic. You say you jumped all in, but you did take a few steps before that. You said you were passively investing before. Did that help you learn the business a little bit and help you make that decision to go all in?

Kavitha: Absolutely. I passively invested for a couple of years before, obviously it taught me the business. And I went to a lot of these apartments I was investing in. I was looking at underwriting. I was not only investing passively, but I was also on a hunt for my own little apartment complex. So the goal when I joined the Sumrok Group was I'm going to buy my own 20 or 30, whatever unit apartment. And I wanted to sell these single family homes and essentially 1031 into apartments. Because I just thought it was a logistical headache to own these homes. They were just all over the place. But the fact is I never sold any of them, which is not a bad thing.

Darin: You still haven't sold any of them?

Kavitha: Nope.

Darin: You still own them all.

The Fear of Pulling the Trigger

Kavitha: I own every house I've literally bought. I sold one that I actually lived in because of the whole primary residence, no taxes thing. But besides that, every single home I bought I actually kept. And after COVID, I was like, that's not been such a bad thing. Single family homes have done really, really well. So I don't think I regret that, but looking back, I really wanted to get out of the single family home business and get into apartments. And my goal was, I'm going to find this 20 unit in San Antonio.

So I spent most of 2017 and 2018 especially looking for that apartment. But I could just, things never came together. People always talk about getting frustrated, trying to do deals. And I'm like, hey, the frustration's real. I went through it. I went through it for almost a year and a half, I'd say. The first part of 2017, I just was learning.

Then I started looking and looking. And 2018, I spent most of the time looking. But 2019, I had just given up. I said, what I thought was expensive was no longer expensive. You saw the prices going up every single day. I think part of it was this fear of pulling the trigger. Because real estate, stock market, we all see market cycles.

The fear of going in was how long will this cycle last? We had already come to what nine, almost from 2010 till '19, it was a bull run in real estate. So I'm like, it can’t last forever. There needs to be a dip. We’re all sitting there anticipating a dip. So I think part of it was just that fear of pulling the trigger, buying it too high, and all of that stuff.

Kavitha Added Value Even If She’s Fearful

Kavitha Added Value Even If She’s Fearful
Photographer: Jason Dent | Source: Unsplash

Kavitha: So of course, in retrospect, that never happened and in retrospect, everything is in hindsight is 2020. You don't know what you don't know. So I feel like I took the best decision I could and met someone in one of the events. They asked me to come into their deal. They felt like, "Hey, you can do this because you have good connections. You can talk to people. Why don't you come into our team for this deal?" And I said, I'm going to try. I don't know. I didn't ever want to be a GP, I just wanted to buy my own apartment, but I'm going to try it out. So I did that.

And then I realized it just really came easy to me. I wasn't really struggling. I was actually enjoying the process, especially being on the capital side of things. So I said, hey, this is it. This is what I enjoy doing. So I really needed that to know what I'd be doing to quit my job. I just didn't want to quit on like, okay, I'm just going to quit and not know what I'm going to do with my time and I'm going to figure it out. So for me, I needed some certainty there, like okay, what is it that I'd be focusing on? But once I got that, I just ran with it.

Darin: That's fantastic. Because you speak a lot, you talk to a lot of people at conferences. For the listeners' benefit, how do you inspire people to take that first step, even though you are scared?

Kavitha: I think fear is never going to go away no matter what you do. Like something new you do, you're always going to step outside your comfort zone.

The Backup Plan

Kavitha: So I feel like whatever step you take, it needs to be a little calculated. See, I'm not a reckless person, I just didn't go quit. And I was like, okay, we are homeless or we don't have food, whatever, right.

It wasn't even just that I was banking on my reserves. I did have some cash flow coming in. I did the math and I said, okay, even if I have to live a little lean for a few months, I know that I have the potential as a person to make that money. And if not, guess what, there are plenty of tech jobs out there. I'll give it a year, if it's not for me, I'll go back to a tech job. So I did have that backup plan.

So I feel like as long as you've sorted out, okay, how are you going to support yourself over that time you are going in full time? Have a goal in mind. Like what are you hoping to achieve? And then also have a backup plan. What if it fails? How long are you going to wait before you give up?

I mean, yes, there'll be fears, there were fears. 2020 happened right after a year I quit. And everything was shut down in March, April, and May. So I did have fears. I called a friend and said, do you think I should be looking for jobs? It's plain and simple, for three months I've been sitting at home and I felt a little scared that, okay, I had quit a perfectly good job at that time.

The Adjustment Phase

Kavitha: And he said, "No, this is where you're meant to be, stay on." So I think you need support of people who believe in you. I think that's been very critical for me. I'm grateful. I still send a note of gratitude to my friend for keeping me on course. Because there are going to be challenges. There are going to be setbacks. Maybe it's not COVID, maybe it's something else.

So I feel like as long as your heart is in it, and you know when you are dedicated and you're passionate about something. I felt like every day for the first few months when I quit, I did have this adjustment phase, I'd say. Because let's say you are a person who's been working forty years of your life. Literally you've come through school, 12 years of school, four years of college, two years of grad school, 20 years of career. And then suddenly what, you just stop.

Darin: That's a long time.

Kavitha: It was just like, oh my God, I've just been going and going, going all my life. And suddenly I'm like, I can walk my daughter to her bus stop. I can walk the dogs in the morning. So it was just having this adjustment phase of is this what I want for myself?

So I think you have to be prepared for all those shocking things. But I think shock is a good thing. It wakes you up, it makes you really appreciate things you haven't done much of. And you've just been on this rollercoaster the whole time.

Play With Your Strengths to Provide Added Value

Kavitha: So I felt like a lot of good things. I felt that that period of stillness made me very creative and set me up for what I was going to do next. Slowly but surely, I realized, hey, I'm really good at branding and marketing. It just comes to me and I feel like I know what to do next. And sometimes it's just like, okay, throw it on the wall, see what sticks. I tried a few things, it didn't work very well. Then I backtracked and I tried other things, so that worked out really well.

It's a matter of just trying different things and seeing what works for you. So when people ask me about marketing or branding and building investor database, whatever that is, I say, there is no one right way to do it. What's my way might not be your way. I mean, I did a lot of webinars. And I focused so much on investor education that it was very gratifying for me. I was learning a lot because I was bringing all these guest speakers. And I'm sure you feel the same way, doing all these podcasts and hearing people's stories. I mean, you feel like your life is enriched in a big way, right? So I felt like I learned so much as doing that.

But then people ask me, oh, I'm not comfortable in front of doing a webinar. Should I be doing it? I said, no, it doesn't matter. If you're comfortable picking up a phone and talking to an investor, that's what you do. You play to your own strengths. There is no one size fits all here.

The Importance of Setting Goals

The Importance of Setting Goals
Photographer: Markus Winkler | Source: Unsplash

Kavitha: Like I have a colleague, he works with me on some deals. And he's really good at one on one with people, he's built a small network. But his network is such that they invest in every deal with him. There's so much loyalty there. There is a bigger paycheck dollar amount there. So I don't feel like there is one way of doing what we do, which is syndicating or getting money together or doing deals. There's always multiple ways. And you just have to find what plays to your strengths as a person.

Darin: I think that that's extremely well said. And I believe wholeheartedly in what you said. I want to touch upon a few things that you brought up. One was, having a goal in mind. I think that that's very important. Somebody had told me the story about, imagine if you go to an airport and you walk up to the lady at the counter, and she says, "Can I help you? Where do you want to go?" And you say, I don't know. Just give me a ticket.

That always sticks in my head. Because they said that's like not setting goals. If you don't know where you want to go, then how can people help you get there? So for the listeners' benefit, look, each one of us has this little nudge. This little gut feeling inside that's telling you that you're either in the right place or you're not in the right place. And if you're not in the right place, you need to take action to try to do something about that.

Take the First Step

Darin: Kavitha did that. What I learned from a lot of people and what happens to a lot of people is that the first step doesn't always end up being where you land. Like you ended up going. You started with passive investments. Then you joined a group. But your goal was to buy a small deal to sell your single families into that.

But then an opportunity came your way to become a co-sponsor, a GP on a larger deal. You tried it out and you actually found like, you know what, I enjoy this. And it's financially lucrative as well. So I applaud you for doing that. And I think that happens a lot.

Sometimes you take a step and then something happens and you pivot. But if you don't take that first step, typically the next one doesn't present itself.

Kavitha: Absolutely. I think what you said, you hit the nail on the head. People hesitate with the first step. Because there's so much uncertainty, so much unknown that they're stepping into. But they just want to see, yes, you want to have a goal of where you want to be. But you're not going to get there on day one. You're not going to know how you're going to get there even. You just know that you want to get there.

And as you take that first step, more opportunities present itself. If you feel it in your gut, I mean, a hundred percent. I couldn't agree with that more. I read this book called The Alchemist, I'm sure people have talked about it.

Darin: Great book.

Kavitha: Amazing book.

Darin: Read that book if you haven't read it.

The Alchemist

Darin: It's great. The Alchemist, it's awesome.

Kavitha: So the first time I read it, Darin, actually I did not understand it at all. I just wasn't receptive. I was like, okay, it's a story, it's this guy, it's the shepherd. He's trying to find something, whatever. I didn't read much beyond the superficial into that story. But I think in different points in my life, I had a different level of maturity and ability to actually absorb what was said to me. So they say, when the student is ready the teacher or the master appears or whatever. I never really saw everything in that book until I was ready to grasp everything.

So for me, that book was sort of this. I knew in my heart that I wasn't feeling good about where I was. I was doing this job, it was paying well, stock options, all of that stuff. But I wasn't waking up excited about it. It was just this as nagging like, oh my God, I have to go through with this. So for me, that had to change. And I had tried changing jobs, all of that stuff. People have gone from one place to another, hoping that feeling will change and they'll be more excited about something. I think that's the feeling which is telling you to do something about it. Not to just push away.

And I felt like even when I took the first step, it wasn't exciting. It was just this co-GP thing. It was exciting, yes. But then I quit my job and I was like, okay, what am I going to do next?

Listen to Your Heart

Kavitha: There is this fear and uncertainty and not such a good feeling for initially. But you have to push past it. You have to keep pushing past it. Once you have that goal, you're pushing past that fear and uncertainty and heading in a direction that I'm like, okay, this is my goal, I'm just going to keep doing these things. And if this doesn't work, I'll try something else.

So there is this certain uncertainty that you have to go through before you become. And when you land a place like the second step, let's say, and you land it and you feel like, oh my God, this feels good. I know I'm in the right place. And I have also landed in places which hasn't felt good and I walked away from it.

So since then, I've relied so much on my gut, heart, whatever you want to call it. Let your heart be the guide. And I walked away from people, from deals, from things which looked very lucrative to me from a financial standpoint. But I felt in my heart that something wasn't right, or I didn't feel comfortable.

So right now I think I've gotten really good at listening to my heart and my gut. That is something that everybody should think about because once you feel that, it's a nice feeling inside. You are aligned to whatever your purpose is. You are aligned to wherever you are supposed to be, I truly believe that.

Darin: That's huge. And you started on a journey really more for you. I mean, for you to maybe make your single family investments more manageable by selling those and finding a 32 unit.

Serving Others and Imparting Added Value

Serving Others and Giving Added Value
Photographer: wes lewis | Source: Unsplash

Darin: But where you ended up and what I see you do now, it's not just about Kavitha. I mean, you say now, like okay, I'm invested in over 2000 units and like it's nothing. But when you go back three or four years ago, you probably couldn't ever have imagined that you'd be where you are now.

But where I see your focus now is really on serving others. It's your website to educate other people on passive investing. And it's bringing other investors into deals. It's speaking, like talk to us about the first time you were asked to speak on stage. I mean, was that something that just came natural?

Kavitha: I wouldn't say natural. The good thing about my tech career was the last job I had before I quit, it put me in a lot of uncomfortable places. So I was in front of clients all the time and talking about products I really didn't know. And walking into a room where I felt like I knew the least of everybody in that room. But I had to be the authority.

So I think that prepared me for a lot of discomfort. Being in front of people and talking about things I necessarily didn't know as much. And when I fell into real estate and actually knew, talking about it was easy. Because now you're coming from a place where it's like, hey, I've been through hell talking about things I don't really know very well and still facing questions, facing the audience.

Sharing Added Value Thru Speaking

Kavitha: So for me, I felt like being in a place where I felt like I was the authority when I'm talking to investors was fairly simpler process. That said, of course we all have public speaking issues. So one of the things I did do, and I feel like I really need to go back to was do Toastmasters, amazing group of people.

People you connect with and you really see your own because people will say, ah, you said so many ums, uhs. And they're counting all that stuff. I know I still probably really use a lot of filler words because I've been out of Toastmasters since the pandemic. One of the reasons I joined the Toastmasters is I went back to IBM and joined their Toastmasters. Because I just felt like I was stuck at home working all the time and I really needed to go out and meet people on a regular basis.

So that took me out of the house every week. And also of course, helped what I was doing, which was doing webinars with people, talking in front of an audience. So it loosened me up to the extent that I feel like I rely more on talking from my heart right now and not being in my head.

I think that's what slows people down. Like they're in their head so much. There's so much fear in that head that it really prevents us from talking what we really feel.

A Major Ripple Effect

Kavitha: I'm having a conversation, it doesn't matter, whether I'm on the stage, whether I'm in front of a computer, I'm still having a conversation. And I'm talking about something that I know and I'm sharing it with people. So that kind of alleviates a lot of anxiety about speaking in an audience, for me.

Darin: That's great. I don't know if you've had this experience. But I think that it also comes with, you mentioned the word getting uncomfortable and having to speak about things that you didn't necessarily know everything about initially. But as you do it more, the first time you're probably nervous. The second time you're nervous, but not as much as the first time. Then you may stay nervous. But you always know that in the end, people end up giving you positive feedback and so it's all worth it.

But I think that what happens with you, a lot of people when they first get into real estate investing, they can't see it. They can't see that your success is not only going to help you financially. But it's also going to put you in a position to teach others.

So I think there's a major ripple effect. So you have your network, you're just trying to figure out how to do it yourself. You figure it out and then all of a sudden you start talking onstage. I believe you have a YouTube channel. You have all this education on your website and now you're starting to educate other people. And then one or two or three or four or five of those people may go do the same thing and start educating their network. It's fantastic.

Talk a little bit about your education platforms. What do you offer on your website and YouTube channel?

Find Out Where Added Value Can Be Given

Kavitha: Sure. So education has always been my focus since I started. I felt like it’s one of the things I want to talk about. This is because I did go to Brad Sumrok. I went to Dallas every month. We all were there and it was great to network with people. All of that stuff was good. But from a passive perspective, I didn't feel like I needed to be so committed to go somewhere. So one of the goals when I started my education was how can I condense that information I learned in the Sumrok group without people having to come somewhere, pay a bunch of money and actually learn? How can I bring it to them?

So I always focused on that initially, whether it was just learning about apartment investments or I even invited people with multiple asset classes. Frank Rolfe came and talked about mobile home parks. I had a CPA come talk about the tax advantages of real estate. So I felt like to be a well-rounded investor, you not only need to understand that asset class that you're investing in. But also understand the implications from a taxation, asset protection, and other standpoint.

So in my head, I was trying to plug the gaps of where I felt like I didn't know enough. And also where I felt like I wish somebody had taught me this without going through two years to learn this stuff.

A YouTube Channel Created to Disseminate Added Value

Kavitha: So I was trying to condense that information. So that was my goal when I started and it continues to be of course. That's where my YouTube channel is going. How can I assimilate all this information that I have learned for more than 12 years now? But how can I assimilate that and put it out there for people to consume? Also, how can I shorten the process for them? They don't have to go through as much to learn.

That of course has evolved into me talking to people. Instead of talking to people one on one and as a business owner, a small business owner, you're constantly talking to people. As you're trying to scale, that becomes unscalable. When you're talking to people one on one and explaining what you do, start from ground zero.

So what I discovered along the process, I think this was the engineer in me is reusability of content. Once I built this database of content and now people say, hey, what about real estate for tax purposes? I'm like, wait a minute, let me send you this webinar. It's been done by my CPA. It's the authority on this. I'm not the authority, let me share it with you so you understand how this works.

Or if they ask me about syndication, I'll share a video that I've done on syndication. So for me, it sets me up to talk to my investors on a more personal and their goal basis rather than waste time on. Here are the fundamentals of syndication or here's the fundamental of how we operate apartments, whatever that might be. So it's served a dual purpose, if that makes sense and what I wanted to share.

Experiencing Pain to Sharing Added Value

Darin: That makes sense. And it goes along with what you said, you said there's no one right way. And you also said that you wanted to bring it to them and you wish that someone taught you certain things. So you took all of that and then said, what were the things that I was missing that I really wanted? And you brought that to the people.

Kavitha: Right. And I think if everybody starts thinking that way about, let's say I got from place A to place B and I'm happy in B, right. I mean, I could quit today and I'll be fine. I don't need to do any of this. People ask me, why are you working so hard? Because now you're working on your passion and it's not about money anymore. It becomes about, hey, how am I going to help other people do what I'm doing? Because I see the pain, I know the pain, I've been there.

So I think if everybody starts thinking like that, like okay, where was I? Where did I get? Now how can I give back and help people who are in my position? Because I know the pain points. So I feel like if you want to bring investors, all of that's a secondary.

If you solve pain points of people that people have, and if you add value to their journey, the business is going to happen. It's just about what you give and then you get.

So for me, that's been a huge learning process. And I started with Tampa January 2019 when I met Rod Khleif, that was the event that triggered it all.

Provide Added Value to People

Provide Added Value to People
Photographer: Kelly Sikkema | Source: Unsplash

Kavitha: And Rod always insists on just add value to people, forget what you're getting. Just focus on adding value, and the rest will come. And I do feel like that is really, if I have to distill down my success or whatever I've been through so far, the people far more successful, that's one of the things about real estate I like. It's very humbling because you think you're successful, then you look up and you're like, okay, never mind. I haven't done anything.

Darin: It's humbling, but at the same time, it's very collaborative, right? I mean, you have those people that you look up to like, oh man, I haven't done anything. But they're willing to put down a hand and tell you how they got from where you are to where they are. And then you're doing the same thing to people that haven't even invested in their first deal yet. It's a different industry from that perspective. Every other industry I've been in has been kind of cutthroat. People at the top don't want to share their secrets with other people. But in this real estate world, it just seems like everybody is out to help one another. Because I guess for a number of different reasons. One, it takes a lot of people to do these big deals.

Whether a number of different GPs plus all the limited partners. I mean, there's a lot of people involved. And so that very well could be one of the reasons. Two, I don't know, the people just seem like they have a heart for giving back, even after they become financially free. I've interviewed so many people that I'm like, why don't you just sit on the beach?

Kavitha: That's real.

We Thrive When We Are Purposeful

Darin: You have enough, but they're like, "Why would I do that? I have an opportunity to help other people achieve that."

Kavitha: And honestly, at the end of the day, our life has to be meaningful. Doing things for myself or doing things for ourselves in general doesn't bring us as much happiness. It's incremental, right? You could drive a nicer car, you get a nicer house, everything becomes a little bit nicer. But it's not going to make you that happy for that long.

Darin: I agree. In the beginning, you may tell yourself you're doing it for your family, right. I'm providing for my family, I'm fighting, kicking, and scratching. So that I can send them to a better school or have them live in a better school district or whatever the case may be. But then after you get to a certain point, it really becomes other people. And that's where so much joy comes in, when you help somebody else.

Kavitha: I mean, definitely we all have our family first and foremost, it's us, our families, we do it for others. I mean, I think once your family's cared for and you're able to even impact your extended family, then it goes on to, okay, what am I doing? What's the bigger purpose of my life?

I think when we are purposeful, we thrive. Tony Robbins, I'm a big fan of his. He says, it doesn't matter how much money you make. I mean, the most billionaire could still be very unhappy. He calls it the science of success, but the art of fulfillment and fulfillment is an art.

The Science of Success

Kavitha: We can make as much money as we want. Let's say, I go tomorrow, sit on a beach, I'm going to be bored by day three. I don't know. I don't think I could just sit around and do nothing. It's just not in my DNA. I want to be doing something, I want to be purposeful. I want to feel like my life has a purpose. So for me, this is my purpose right now. And if that changes, it changes, I don't know. Like we don't know what the future holds and I'm open to it. I'm like, bring it.

Darin: Bring it on. I'm ready for it. Hey, earlier you talked about something that I'd like you to talk to the listeners a little bit about is perseverance. Look, you went in the first year, year and a half. You were trying to get a deal and you were not successful but you found a way to persevere. And I think that whether a listener is looking to get involved in real estate investing or scale up or start their own business or whatever the case may be, like you said, it doesn't happen necessarily overnight. So how do you persevere in those difficult times to push past it and get through it?

Kavitha: I think I always tell people I was trying to do something that I wasn't good at, which was acquisitions. Again, you have to play to your strengths. I feel like if one way doesn't work, maybe try another way. So let me give you an example. I was trying to do acquisitions, I was not really good at it.

Do Something Different and Give Added Value

Kavitha: I didn't enjoy schmoozing with brokers. It's not my cup of tea. I'm not cut out for it. So when I looked at it from that standpoint and looked at multifamily, all of these syndications are a team sport.

So then I started thinking about, okay, how could I do this differently? Obviously, what I've been doing is not working. I mean, they say if something's not working, doing the same thing over and over again, it's just stupidity afterwards. So you have to think about what is it that is missing here? Why am I not successful? Maybe I should be looking at it differently.

So for me, that was sort of the wake up call where I knew what I was trying to do wasn't working for me. So I started looking at, okay, what are the opportunities out there? I mean, obviously, all these people are doing deals that I'm not. So I'm going to approach these people. Or in my case, it ended up that they approached me, which was a great thing. But I was also trying to see what else I could be doing. I was open to the possibility.

So I think everybody who's feeling stuck. I mean, go to a conference, go wake yourself up, do something that you haven't done before. And people say, oh, I went here, I did this. Let's say you want to raise money. You keep going to these same conferences, you're not going to find money there because everybody's trying to do what you're doing. Go to a conference that you wouldn't otherwise go. I mean, I'll give you an example. I sponsor community events.

When Something Is Not Working, Change It

Kavitha: Now this is a pool of investors that is untapped. So I can't go to an investor, real estate investor conference and get the same pool of untapped investors. So I feel like when something's not working, change it up, try something else. What else could be doing? And that's when your creative mind comes into play.

It's about what you are going through and not what someone else tells you to go through. Do something different. Go to a conference which makes you think again, gets you out of the rut. And I feel like when you are in the rut, in that rollercoaster, you cannot be creative, you can't. Go take a vacation and start over, refresh. Think about what else you could be doing when you feel like that frustration.

Darin: I love that you talk about that creative mind. When I think of creativity, I think more of artists and musicians and actors and actresses. But really, in business, there's a lot of creativity that can happen. And you also said go on vacation or, I would liken it to you get someplace where you can think. Where you can think about answering some of those questions that you pose to yourself. Like, what can I do differently? Who can I meet that's different? What are my strengths? And how can I play up to those strengths? Those are all fantastic questions to ponder for yourself to go after it. So I love that.

A lot of people, when I interview them, they have a thousand or 2000 or 3000 units. To listeners, it just sounds like, well, those people are different. Those people, whatever, it was just handed to them. Or they had the experience or they had the background. But we all started with one investment, right?

There’s a Lot of Sexism in Real Estate

Darin: You had that one co-GP opportunity and then all of a sudden it felt good. And you then continued on with that. So what about being a woman in the business? What's your perspective on that?

Kavitha: It's been definitely interesting. I was a woman in tech. Again, underrepresented, women are really underrepresented in tech. So from that standpoint, it was nothing new to me. I always joke, you go to these tech conferences, real estate conferences, the restrooms for women, there's no line. The restrooms for men has a line outside. So you know what the demographic is like right there.

Darin: It's a little different than going to the watering hole. Like going to a bar, and it's the opposite.

Kavitha: Right. So you know where and what the representation looks like. And also, I think there's a lot of sexism in real estate. For example, I used to be flipping, not necessarily flipping homes, I would fix up, I would buy fixers. I bought homes in auction and I used to fix it up.

At that time I was dating someone, he was a big guy. We walk into this house and the contractor immediately turns to him and starts talking. And he had nothing to do with this. He was just accompanying me to this house. It just speaks to how society is even today. Because they naturally assumed that he is in charge and I'm just following him around. But I was paying them, I was doing the rehab. So, I mean, that's just a small example, but I've seen it every step of the way.

Added Value Comes From Being Fearlessly Authentic

Kavitha: And I think you get underestimated a lot as a woman in the business. It doesn't matter what you do, tech or whatever, you always have to speak louder, be out there. I mean, today's International Women's Day. And I made this posting about women's rights in the timeline of women's rights over the years. One of the things is we didn't have the right to vote. We didn't have what we consider today as basic rights. So for me, I thrive on this brand of authenticity. I'm just going to be fearlessly authentic. And I don't give a sh**.

Darin: That's okay. You're just being authentic.

Kavitha: I know. I don't care, but I'll just be myself. And I've had a variety of experiences as a woman. My daughter comes back and gives me feedback about how someone did something to them, to her. And I always say, speak up, just go for it. It doesn't matter, don't worry about what people think. As women, I think we are especially sensitive to what people think and perceive of us. I don't know if it's age or whatever, I'm just immune to it now, I don't care. And I think that's just helped me move along very aggressively and just do things and say no to people. I think that's a skill we all, men, women, we need to learn more of is to say no more often and know when you mean it.

All of that has been growing on my part. It's been learning from my part. I grew up in India where, as a woman, there were certain things I didn't do and I couldn't do. I couldn't go out after six o'clock, that was the curfew in my house for a woman.

Find Your Own Voice

Kavitha: If you're a guy, you could stay out late, but once it gets dark, you better be home. I went back, I was thirty something, and my mom's still ensured that I was back home before 6:00 PM. So that was a reality. It's unsafe for a woman to be out after dark.

So those were all the things I grew up with. So for me, being in the country, this country, and just experiencing a life as a woman is far more freedom than what I grew up with. But that said, obviously there are still blind spots. There are still places where I felt like men explained in meetings, talked over, all of that stuff, right. I mean, that happens, it just happens. And I've learned to find my own voice. I've learned to speak up. I've learned to speak up when I feel confident about what I'm saying and that I need to have a voice in that conversation.

Darin: Fantastic. Congratulations to you and to other people that you mentor. I tell my son and my daughter, I said, you got to have thick skin in life. A lot of what you just talked about is just that. You got to have thick skin, getting into your own company or in real estate investing, you're going to hear no. You're going to hear no, you're going to lose deals. You're going to have people that don't want to partner with you. You have to know that going in that you're going to have a bunch of no's, but you keep persevering to get that yes. And when you get that yes, it gives you the confidence to keep going for the next one.

When the First Yes Comes In

Kavitha: You're right. Once that first yes comes in, it gives you, it boosts you up for further. And even if you do have a setback, I think the fact that people see you and they recognize you as someone who's capable of something gives you a lot more confidence. I mean, of course you have that confidence within yourself. But it's also the supporting people. Like, I know of this lady in Florida, she follows me. She sends a small note saying, you inspire me or something like that. It makes my day, it really does. So thank you, Kristine, if you're listening to this podcast.

Darin: Fantastic. So I think that it happens with women in the multifamily businesses that in the beginning, there's not that credibility that is automatically attached to you. That story that you talked about with your ex-boyfriend, he was a big guy and he got the attention. But then once you do your first deal or your second deal, and then all of a sudden people start waking up and they're like, whoa, what is she doing? I've seen you take off and I'm so happy to see it. I love all the success that you've had thus far. So, hey, what would be your advice to somebody that's just looking to break in? Let's start with a passive investor, and then also talk about somebody that is looking to transition from passive to active.

Kavitha: So I'd say from a passive perspective, educate yourself. I see a lot of fear in investing.

Darin: So where should they educate themselves?

Educate Yourself So You Can Offer Useful Added Value

Educate Yourself So You Can Offer Useful Added Value
Photographer: Tim Mossholder | Source: Unsplash

Kavitha: Gosh, there's so many resources out there, Darin. I feel like last five years, there's more resources out there than when I started. There's just podcast. I mean, you're welcome to my channel, you can go to Cherry Street Investor Education. You can watch Darin's podcasts. There's so much out there like Bigger Pockets.

And I mean, there's no dearth of information. But if you really want education in a more structured way, maybe you want to go to an investing mentoring group. Or I know in Austin we have multifamily meetups. Or whatever asset class you invest in, commercial real estate meetups, those are great places to network with people. Not only network, but also learn because most of those events, they will talk about something relevant to investing.

So I feel like education or lack of it keeps people in fear. When you educate someone, they suddenly understand the risks and the merits of their investment. And it makes it a little less intimidating to step into it as a passive. Now on the active side, I feel like most of that is just fear of, oh my God. Like if you are raising capital, I don't want to take other people's money. That's the biggest objection that I've seen. I don't know if people will give me money.

So all these fears actually keep you from actually even trying it out. I heard this on some podcast and I don't even remember which podcast. And they said, if you feel like you are afraid to take someone's money, think of two things. The first thing is you're giving them an opportunity they wouldn't otherwise have.

From Fear to Understanding to Showing Added Value

Kavitha: Reframe that thought as an okay, I'm asking people or begging people or whatever that word comes into your head. Reframe that thought as I'm giving someone an opportunity to do something with their money, which otherwise they wouldn't have access to.

And then think about how am I adding value to this person that I'm asking money from? It's a give and take, life is a give and take. When I feel like I'm adding value to someone, I feel like they will come to me. I don't chase investors, I do not. I add value to their life. If they want to invest with me, they'll come. If they don't, I have people who watch my webinars for six months a year before they decide to invest. I'm like, take your time. No rush here, no pushing here, it's your call. You invest when you're comfortable. So those two things have really worked for me both from a passive standpoint.

Removing the block of not understanding something. And moving people from fear to understanding that makes passive investors comfortable investing. The second one is just letting people take their time getting into an investment and presenting it as an opportunity.

Darin: So you said a lot of good things there. I think that on the passive side, one of the steps you brought up, it has no cost. There are free meetup groups all across the country. So if you go on into your phone and you go into your apps and just download the app Meetup. Then put in multifamily or apartment investing and most likely there's a free meetup group somewhere in your area. But it's scary going for the first time.

Give Added Value by Helping Others Grow Their Wealth

Darin: You don't know anybody. You don't know if they're going to ask you all these questions that you don't have the answers to. But that's the first step in fear, is breaking that down. And then when you get there, you'll realize one, you'll learn something. Two, if you went out and shook somebody's hand, you most likely met somebody that was very genuine and nice and wanted to help you. But that fear can hold you in your house. Get out there and take that first step. And then that gives you the confidence to go do the next thing.

The other thing you've talked about now on the GP side, on the active side, you hit it on the head. I mean, raising capital is the piece that you love, right? But that's the piece that so many people fear. And I think that that switch of I'm not looking to get people's money, you're presenting an opportunity. And I know I've been a passive where I put a hundred grand into a deal and I didn't do anything in that deal. Then all of a sudden, three years later, I got my hundred grand plus another hundred grand. I'm like, that was pretty cool.

If you're doing that for other people, you're helping grow the wealth of other families. The other thing I found is that there were certain people that I thought were no-brainers that would invest that did not, for one reason or another. Then there were people that I was like, this person most likely is not going to invest, but I'm like, I got to at least give them the opportunity.

The Next Big Stretch Goal For Kavitha

Darin: And then that person's the one that's like, hey, teach me more. And they invest. It's like, you can't make that decision for them. You need to present the opportunity and let them make up their mind and whether they're ready or not.

Kavitha: Right. And the other thing I want to speak to is also as an active, I mean, capital raising is not for everybody. Maybe that's not your strength. Again, leverage your strength. If you enjoy the operations part or the acquisitions part, focus on that. This is a team sport. Find someone else to do the other things that you don't enjoy doing.

I don't feel like you have to push yourself into a specific bracket or a bucket just because you have to. I mean, you can just focus on one thing that you're good at and figure out a team or pull partners together that are good at other things. So don't try to be a Jack of all trades, just focus on your lane, what you're good at.

Darin: Absolutely. That's great advice. You've done so much thus far, what's your next big stretch goal?

Kavitha: So the next goal, every year,I focus a lot on capital and talking to investors. So the next goal for me from an investor standpoint, and it's been this goal. I started with multifamily, I moved into land development, now I'm doing new construction with partners, of course. And now I'm looking at senior living. So I really like senior living from a long term standpoint. I feel like it's an asset class that will have a lot of growth in the future, in the next 10, 20 years.

Investing on Land

Kavitha: So I'm hoping that I'll transition there and I'm already working on a project that I haven't announced yet. But I feel like that's my progression right now. So I'm constantly looking at, yes, multifamily is getting really squeezed from a cap rate standpoint, returns are becoming harder, so where should I put my investor dollars?

At the end of the day, I'm working for my investors. They are my number one priority. And I'm looking at where is their best use of money and what is the lowest risk that I can take? What asset class, or where it's going?

So I like land. Because a lot of people don't understand land that and is not about buying land and just waiting for something good to happen with the land. You actually add value to land. And the way you do it is the entitlement process. There's a lot of appreciation of land just with the entitlement process, without even counting on market appreciation.

So that's kind of what I found really interesting when I got into land. And I feel like there's some things that land doesn't work really well, where there is no depreciation. Because it's this land, land doesn't depreciate. There's no cash flow because generally land investments, you just have a lock-in high equity growth that we don't see multifamily. But it's great for people who want to grow their equity, but not for cash flow.

I'm kind of looking at, okay, where am I going to find that cash flow if multifamily is getting squeezed? I like senior living long term. I'm hoping to hang my hat there, and that's kind of what's my goal next. And obviously my raises have been going exponentially 2X every year.

What Kavitha Do Outside of Work

Kavitha: And just trying to keep up with the pace and hire more people and expand my team and scale this better. So I have joined a business coaching program to figure out how to do that. Because I think I've just been winging it so far. Just figuring out things as I go along. But I think I'm at that stage of I've done enough winging it, now I need to rely on real help.

Darin: Well, that's fantastic though. It's like every level you get, there's another challenge ahead of you. One cool thing about real estate is like, it's all in your mind as to what you can go after. So you start with single family, you do multifamily and you do big multifamily, now you're doing land and new development, you're looking at senior living. Sometimes I look around and I'm like, look, somebody built these skyscrapers. Somebody built these huge shopping centers and why not me? Why not you? Why not?

So there's so many different avenues to go in and to stretch, so I like that. You're the first person that has said that they want to do senior living that I've asked that question to. I know a few people that already do it, but in terms of wanting to get into that business. And I think there's a lot of growth in that business moving forward. Hey, what do you like to do outside of work for fun?

Kavitha: I like to dance. I'm a salsa dancer. I have been dancing since 2007. A long time. I go out every week. I used to go out twice a week, maybe next year I'll be an empty nester, I'll be dancing more.

MS 150

Kavitha: But right now I just dance one day a week, I go out religiously, it's my de-stressor. When I'm in town and not taking vacations, I always dance. I like hiking. I like being outdoors. It kind of totally resets me.

Darin: I've seen pictures of you in social media riding the bike.

Kavitha: Some bike as well.

Darin: You were doing some kind of race or whatever, I don't know what it was.

Kavitha: MS 150. I'm actually signed up this year but I got COVID. I was a little sick earlier this year, so that kind of derailed my progress a little bit. But MS 150 is this ride between Houston and Austin. So you ride with a group of people. It's over two days, you do 75 miles each day. And it's an awesome ride. It's a fun ride. So I like riding the bike.

I haven't done a whole lot lately because we've had so many cold spells in Austin. But I do have a Peloton at home and I like working out. I'm a workout junkie. I need my endorphin high to keep going. So I have to hit the gym or do something, I need to stay active.

Darin: That's fantastic. So if listeners want to get a hold of you, what's the best way for them to learn more about you and possibly get a hold of you?

Kavitha: Sure. They can go to my website, Cherry Street, like Wall Street, cherrystreet.us. For some reason, people always Google me as cherry and it doesn't pull up necessarily, so it's cherry.

Cherry Street

Kavitha: You have that cherry because my logo has two cherries in it. So they always say you have that cherry business, right? I'm like, no, I don't do cherry business, but you're okay, that works. So it's Cherry Street. It was the first apartment I lived in College Station, it was on Cherry Street. So it kind of signifies my journey when I started doing apartment investments, I was like, okay, what am I going to call my company? I mean, Cherry Street sounds like a good name.

Darin: So cherrystreet.us.

Kavitha: Yes. It actually redirects to cherrystreetinvestments.com, but either one works.

Darin: Fantastic. Well, Kavitha, I really appreciate you coming on. It's been awesome watching all your success and listeners, I hope that you enjoyed that one until next week. Signing off.

How to Reach Kavitha Baratakke

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Darin Batchelder

Wealth creation through real estate provided me with a new passion to get the word out and let others know that they have an alternative to investing in the stock market.

If I can inspire and educate just one person to take action that results in life changing wealth creation then the work to launch and grow this podcast is well worth the effort.

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