Prasanna started investing in multifamily just three or four years ago and he and his team already manage over $500 million in assets. What I liked about talking with Prasanna is his team's focus on the impact on society. We are typically talking investor profits and don't get me wrong these guys are focused on the bottom line but their purpose is so much bigger. They are focused on creating jobs. They are focused on creating amazing communities for tenants to live in. And they are focused on building wealth for their investors and their families but this is more a byproduct of executing on their mission to have an impact on society.
Table of Contents:
- Where To Listen To The Podcast
- The Right Team Has Huge Impact on Society
- Building a Platform That Has a Positive Impact on Society
- Nanban and Orion Are Working Together to Create Impact on Society
- Funds Are a Way to Go
- Implementing Strict Rules Around Your Impact on Society
- Trust Takes Time to Build
- How to Reach Prasanna Kumar
The Right Team Has Huge Impact on Society
Darin: Prasanna Kumar lives in the DFW area with his wife and three children. His background is in the biomedical field with large corporations such as Abbot, Medtronic, and Boston Scientific. He’s responsible for launching products around the world. He places great importance on building the right team and looking for ways to impact society.
Prasanna: It's been a fantastic journey so far. I'm glad I met you three years ago, I was so excited. I met you in the Brad Sumrok group. You're the very first gentleman I met. I'll never forget that.
Darin: We both were part of the same multifamily mentorship group, the Brad Sumrok group. But we didn't meet there, we met at another meetup. We went to a couple, Mark and Tamiel Kenney who run another mentorship group called Think Multifamily. They had a meetup group at their house, and we met there. There were probably 20 to 30 people, it wasn't a huge showing.
We met there and we clicked. Whenever we see each other at conferences, we'd chat. Do you remember who was speaking that day at that meetup?
Prasanna: It was Mark.
Darin: He had one of his students.
Prasanna: One of his partners bought a property in Memphis. Then they started sharing their success stories. It was more like a family gathering of 20 to 30 people.
Darin: It's a small world because the gentleman that talked about his success story was Chihiro Kurokawa.
Prasanna: I remember the name.
Darin: I didn't even speak to him that day. But I recently partnered with him and David Lagat on another deal in West Texas. It's a small world once you get into this syndication space.
Orion and Its Vision to Have an Impact on Society
Prasanna: Congratulations. I'm so proud of you. I remember Chihiro, that was his first deal. You got a great partner, David Lagat, a successful entrepreneur. I wish you all the best.
Darin: Thank you very much. How many properties and how many units are you currently invested in?
Prasanna: I want to start by thanking, first of all, all my mentors, including Brad Sumrok. Raj Guntnur has been instrumental in teaching us. On top of that, I want to thank friends like you who have been teaching and supporting us. Most importantly, our investors who have been trusting us. Quick background about ourselves. Orion, I chose the name. It is the representation of the star constellation.
The vision was to build a constellation of apartments. That's how we all started. Myself, Suresh who lives in Houston, and Shivesh who lives in Dallas. We three started the journey together four years ago. But we have been investing in acquisitions in Texas for 10 years. We always had a vision to build an organization. We’re not really looking at buying and selling properties. We are building a company, an organization with a purpose.
So we measure our success, not by how many properties we own or we sold. We measure our success by how we are impacting society. And we also believe in building a strong, coherent network of investors, a community. That's how we go by.
I never thought when I started this journey, I would be in this situation. We created 50 plus jobs this year alone. 50 plus jobs and some of them are in Canada. Some of them are in Texas, some of them in India.
How COVID Impacted Society
Prasanna: I never dreamt of creating jobs. When I held my corporate job, I used to work on life-saving medical devices like pacemakers. Millions of lives have been saved on the job that I worked. That was very fulfilling. But when I transitioned into real estate, I always wanted to impact society, and it is happening. That's why I love this job.
Last year with COVID, a lot of people could not afford to pay rents. I'm sure a lot of my friends who own apartments have done a good job taking some of the responsibility for bearing the lost rent. The tenants could not pay last year because of COVID. We indirectly benefited the society by absorbing those losses.
And we do some charity work at Orion Multifamily, and then we created jobs. That is how we start measuring our success. We did not have one job created two years ago, now we have 50 people working. But just to answer your question directly, we were at zero portfolio three, four years ago. This year, Orion is closing 2021 at half a billion dollars in portfolio management. We never chased it.
Never did we plan to build half a billion dollar business. Just this year alone, we acquired over $300 million in Texas. That is the byproduct of our hard work. That’s a byproduct of the trust that our investors have, and that is happening. We don't set goals to buy a billion-dollar portfolio, we set goals on how we can impact society. How do we make our investors happy? The rest is just a byproduct.
Closing the First Deal
Darin: I remember we met at that meetup group and then we saw each other at a bunch of conferences. Then I got my first syndication deal before you guys got your first one. You were busting your hump, working hard, and were like, "How do you get one?" You were ready, and you were working really hard. Then all of a sudden, you get one. It was like the train went through and you just kept loading up.
I've seen some people do that, where getting that first one's tough. But then, once they get the first one, they've learned and they're off to the races. You mentioned Raj Guntner who was one of your mentors. He was one of your partners on your first deal. So he helped you guys get your first deal. You learned a lot from him and then you were off to the races. Talk about that a little bit.
Prasanna: I really sincerely thank everybody who helped us, and we want to help everybody who helped us. That's our philosophy. It's not an easy journey.
It was never an easy journey and it should not be. Nothing can be that easy to become so successful. It was a lot of learning, a lot of patience, and hard work.
I'm so blessed to have my copartners, Shivesh, who, by the way, owns a mortgage services company in Texas, and Suresh. We work very hard, but we have passion. Everybody should have passion, otherwise the work will become stressful. You should never be stressed, you should enjoy it. That's what we are enjoying. We work very hard, but it is never a stressful thing, we enjoy it.
Building a Platform That Has a Positive Impact on Society
Prasanna: We started our first deal with Raj. It was $16 million in total. We bought it through a seller who was in California. It was a off market deal. Our investors are going to do very well. We are going to do extremely well. Again, we were new. Honestly, we were learning a lot. We learned from Raj, from people like you, the platform that Brad built and the platform that is out there. There’s a lot of good people out there.
You continue to learn. Even today, we learn. It never stops. Market is always changing. Nobody expected COVID to show up, it disrupted many things. Change is the only constant thing. You have to continuously learn and adapt. We started when the market was hot, in 2018. Then we bought our second property, three of us, in Fort Worth. It was extremely challenging. After we bought it, the next day COVID happened. It was a perfect storm.
Darin: The day after you closed?
Prasanna: Yes, COVID happened. It was tough. We sailed through, we didn't give up. We fixed a lot of issues. Now, the property is back to 95% occupancy and healthy.
The point is don't give up. Be resilient and trust what you're doing and have a good team. Team is very important.
Darin: A good team and a good network. You talked about COVID. When it happened, Brad ended up bringing everybody on the line. You heard different syndicators with different levels of experience sharing how they’re handling the situation. For somebody that had one or two properties and is new in the industry, it’s a huge benefit to hear from other people that had more experience.
How Do We Take It From Here
Prasanna: After that, we were thinking, how do we take it from here? It's COVID, we don't know what's going to happen in the next few years. There were a lot of uncertainties, but we believe in what Warren Buffet says. When others are greedy, be fearful. So we took that approach. We started buying more during COVID because the business we are in is a fundamental necessity for humans. All of them shall have a roof to stay.
It's not hospitality, or retail, or office space we are in. We are in a business that actually fulfills human necessity. So we believe today that is one of the strongest factors for us to choose multifamily. It has done very well and is continuing to do very well. Therefore, we decided that interest rates are so low, let's go buy more properties.
We believe there is land for everybody. There is a multifamily for everybody. There's a deal for everybody, there's a house for everybody. There is no lack of availability of deals. We just go buy good deals and then we continue to buy. That is what has happened this year. We closed December with $155 million portfolio we're buying. With that, we end the year with half a billion-dollar asset under management.
Darin: I have a lot of syndicators that said, this is a good business. You're helping grow the wealth of other investors. You are also improving the community that you purchased by putting more rehab into it and improving the property. That's an improvement to the tenants and all the people that live there. But you came at it from a different kind of perspective. When you say you want to impact society, what does that mean to you and your team?
We Give Back What We Get From Society
Prasanna: We are all here as human beings to help each other. That's the fundamental difference between humans and others. We get a lot of benefits in society directly, indirectly. For example, from you, you could be benefiting me. Then I have a responsibility to give back in different ways and form and shape back to society. It may not be directed to you, but to society. So we have a happy society and prosperity exists for everybody.
Therefore, we were thinking that when we buy, most of our assets are blue-collar jobs. People struggle to make ends meet. From that regard, we have been through these challenges. Most of us have been through these challenges when we are growing up. It wasn't easy for everybody. Even Warren Buffet had a tough time growing up, a lot of challenges. So we have a charity organization where we dedicate some part of our revenue to feed back into society.
We also have a program where we choose tenants who cannot afford to pay rents, especially single moms with kids. We want to directly help them through certain programs that we have launched. When I was growing up as a student, I needed help. I really thank those who helped me. We bought a 384-bed student housing on the Austin campus itself. We’ve started a program where we can help students who need financial help.
We even offer a free living for those who qualify for our property. Those are the smaller examples of how we want to help give back to society. On the job creation side, think about acquiring new properties, then you add jobs back into the property. Those are our direct impacts on society.
It’s More Satisfying to Have an Impact on Society
Prasanna: We have more programs coming in this direction where we want to help charity donations. To me, that is what is more satisfying. We never calculate how many units we actually own or manage, we don't even look at it.
Darin: So 50 jobs, that's a lot of jobs. I've heard other syndicators where they're growing and they add an asset manager or two. How do you get 50 jobs?
Prasanna: We take pride in serving our investors because without them, we don't exist. Taking care of them, providing A-class service requires a good amount of staff to support that. We believe in quality work. Quality doesn't come cheap. We have to have people supporting all the operational work that is happening. So we have hired quite a bit. Asset management, as I mentioned, we have properties in Houston, in Dallas, Austin. We are buying some in the secondary market.
Darin: What's the team in India responsible for?
Prasanna: Some of the mundane work, taking calls, responding to investors, all those emails and stuff like that. That way, we can focus more on strategic initiatives, myself, Shivesh, and Suresh.
We are structuring our organization more like an institution, we’re not just sponsors. That is not our vision. Our vision is to build a purpose-driven organization that impacts society while we offer superior returns to our investors.
Darin: Using that word institution, most syndicators are raising capital for the deals from high net worth individuals. Is it the goal to eventually have more institutional money coming into your camp versus having to go out to high net-worth individuals? Or are you just looking to scale the current platform?
Nanban and Orion Are Working Together to Create Impact on Society
Prasanna: We started with a friends and family, and then that number exploded. Now we have thousands of investors in our network. Our goal is to create wealth and financial freedom for all our trusted investors. With that, we created an equity channel, equity partner called Nanban. That's another organization which started in Dallas. They are heavily focused on creating financial freedom. They’re doing a lot more charity work for investors who are interested in investing in hedge funds.
That group and Orion joined together to create a platform for investors investing in real estate. So that one channel is going to target our retail investors, if you will. Another channel for us is large institutions. We have closed two deals. We’re closing a large portfolio with institutional investors coming from New York and California. We already started the journey and they're part of our investments. They're multi-billion dollar companies investing in our deals.
Darin: That’s a little different from a lot of syndicators. One, how did you get your foot in the door with these large institutional players. Two, how do they look at the deal differently than somebody who's investing 50 or 200 or 100 grand? Because they are most likely writing multimillion dollar checks to get part of these deals.
Prasanna: To have a relationship built and working with a large scale institutional private equity firm is not easy. You have to have some minimum qualifications, credentials in order to just have a step in the door to have a conversation with them.
Darin: Is there a standard, like a minimum credential?
No Minimum Standard
Prasanna: There is no minimum standard. It goes back to the founders of the company, what they do and how well they're managing their assets. What is their investment philosophy? How are they running the operations? They're going to look around the 360-degree angle because they're taking the risk to invest with us.
Darin: Are they looking at a certain size, so what you needed to be? You said you're going to be closing on a deal that's going to get you to 500 million in assets. Was it after you were 100 million in assets or 250 million in assets? Did that matter or it didn’t matter?
Prasanna: Yes and no. There is no hard number. You have to have 250 million assets in management, no. In this business, it's all about relationships, very important. That's why I remember when I first started my journey, this gentleman is a part of the Brad Sumrok group.
He mentioned, don't go on a search for deals, go search for good people.
You have to have good people for a long, successful journey. That's what we worked mostly on. Building strong relationships with brokers, with lenders, with private equity groups. They will look at you as solid leaders who can run this organization.
What's my background? Even my background from a corporate world was more in marketing and strategy. If you look at a multifamily business, you're just a P&L. It has a P&L. You got revenue coming in, you got expenses and you got free cash flow. But if you know how to manage every line item, it's another business. For us, multifamily is not just real estate. The way we look at it is, it's a business.
How to Build an Organization That Has a Strong Impact on Society
Prasanna: You have a financial team, marketing, operations, investor management, and lending. So you got to look at a 360-degree business, not just one property you buy and sell. You can do that. That is a short-term success. What we took as an approach was how to build a strong organization that can support all functional areas of this business. I come from a strong marketing business strategy background. Shivesh has been doing lending, brokerage for 15, 20 years in Texas. Suresh has lived in Houston for 21 years. He does all this backend infrastructure operations world.
We have a perfect team that brings a solid background. That's how we projected ourselves, we are not just someone who buys and sells property. We run an organization, we know how to run an organization. That made a huge impact. When you talk to those institutions, they’re not looking at you as a one-trick pony who can buy and sell. They're looking at a 360-degree angle. Tomorrow I could be looking very successful, but can I continue to be successful? What are the risks? They do risk profiling and a lot of background checks on you.
Darin: You said you've dealt with two, did you meet them at a conference? Did somebody introduce you to them, or did you cold call them?
Prasanna: No, we don't cold call any investor. They come to us because if you do a good job, the news spreads by itself. That's our philosophy. We did not cold call. It has been word of mouth. Some of the brokers we work with, they allowed working with us. We close all the deals on time, even during COVID.
How to Present to Investors
Prasanna: They say, "Prasanna, let's talk about this opportunity. I know a large firm that wants to work with you. Should we have a call with them?" When you present to them, you've got to present like you're presenting to Bill Gates or Warren Buffet. You've got to be that level of play. You cannot be talking at a lower level. They will not even entertain you. You have to up the game, you have to play at a different level.
Darin: I've heard a lot of syndicators that have transitioned over the last year or two, moving from B, C to A properties. Some are even moving to ground-up new construction. When I think of the large deals and institutional money, I think it’s about getting involved in those A properties. What's your focus? Are you staying in the B, C area or are you trading up? What are they looking for?
Prasanna: We go back to our fundamental philosophy. We got a 63-point checklist. It has to cross all that. Fundamental criteria is not the class of asset, it is the location. We really look at location. It has to be a substantially strong demographic where the tenants can afford to pay rents to support your business plan. Locations supported by strong job growth, by good schools, by solid infrastructure accessibility. We are very particular on that.
I'll give you a small example. There was a portfolio that was on sale and there were 10 properties. It was all over the country. There was one property in LA in that portfolio, 1929 built. Among the 10 properties in the portfolio, that 1929 built had the highest rent per square foot, $3.25. Then, in the same portfolio, there was 2020 built with $1.50 per square foot.
A Deal That Has Great Impact on Society and Economy
Prasanna: We’re very much driven by data. We are engineers and we look at data and do a lot of analysis. That's one of the key differentiation that we have. Our team in India supports that. Suresh is one of our key guys who does this slicing and dicing the data. So to your point, a deal that makes economic sense, has a good return, strong return for our investors. We go to A, B, C, all the three categories. But we did an amazing thing, a very creative thing.
This year, we started a fund with a solid diversification of asset class, solid diversification of geography. In this fund, we have five properties. This is a very unique fund in Dallas alone. We have A, B, and C classes of properties in that fund. Then all the properties are geographically distributed in Dallas, Houston, Austin, and then the secondary market.
When we presented this fund to investors, we said, "You write one check to invest in this fund. You have a superiorly diversified investment choice with these five properties in the nation's top markets. They're all mixed with A and B and C. Your risk is amazingly distributed, and you don't have to worry. If one property fails, the other one will fire, and you're good." So we are closing that fund in December. We bought five properties under that fund. It's extremely well received.
Darin: Will you do everything as a fund moving forward?
Prasanna: Not really. We have a lot of other equity partners who want to join us. They say, "I want to buy a property, but I can’t. I have equity, please help me." They say, "I just want to buy one property to start with."
Funds Are a Way to Go
Prasanna: We might do that, but funds are a way to go, in my opinion. It brings a lot of efficiency, it brings risk adjustments. A lot of benefits in the fund.
Darin: You can also be raising capital for a longer period of time. With the syndication, it's like you get the deal under contract. You've got six weeks to get everything presented to the investors, get the doc signed, and get all the money in. Then they're waiting for the next deal. It could be next month or six months down the road. They don't know and you don't know.
If you have a fund, you purchased your first asset, and they have more capital, they could end up investing the following month or recommendations. Talk about recommendations or referrals. I've heard that from syndicator after syndicator. How did you grow your investor base? Well, we performed on our first property. After that, they told their brothers, sisters, friends, and colleagues. Have you seen that same experience?
Prasanna: No, we did not take that approach. Our whole idea was to learn and build knowledge. We believe in building knowledge, working hard, implementing those business strategies, and then show results. The result will speak and then people will come to us. We never did direct marketing. Our syndication just started with known friends and family, and then they spread the word. "Here is the Orion team. This is what they do."
We’re very transparent about our business plan and what we do. We, three, have written a credo that says investors come first. Even if we don't make money, that's okay. We’ll make sure our investors are treated first. Anything left is for us.
Unique Syndication Process
Prasanna: That's how we three believe. You are seeing a lot of syndicators go and meet in conferences and make a team. They make some deals that exit. You've seen a lot of them doing that. They don't stick along for a long time.
Darin: Together, you mean.
Prasanna: Yes. You've seen that. We don't do five or six, you don't see us soliciting or advertising our deals until we close it. You're seeing people, even when they go under an LOI contract. They're showing off saying, "We are under contract with this property," just to solicit. It's another way of soliciting. We don't do that. It has been completely organic, natural growth for us, just based on word of mouth. We’re being very transparent and conservsative even in our underwriting. Therefore, the world is spreading north, east, south, west, and to large institutional investors.
That has been our syndication process. It is very different from what you see in others. There are people who are just there to raise money and then they start becoming like a co-GP or something. They will take the deal and then go blast it everywhere on Facebook. We don't believe in that, we believe in a structural way of growing. And we want to build as an organization, not as some deal makers. We are not deal makers.
Darin: There's not a lot of people out there that want to build a big organization. You're definitely different in that capacity. From my personal perspective, I don't know that one way is right and the other way is wrong. Because there may be somebody on Facebook or Instagram that didn’t know how to do it and they may invest with a syndicator that gets them to a good deal. That makes them good money and exposes them to an industry they weren’t exposed to before.
You’ve talked about your background. You said it was more marketing strategies. What did you do before you got into real estate investing?
An Amazing Career With Huge Impact on Society
Prasanna: Before I started real estate, I was working for biomedical firms. I don't know if people know these companies. Definitely, they know Abbott. Abbott is the first one that came with COVID testing. I remember Trump inaugurated this product last year in front of white house. Abbot has this small box that it'll test for COVID. But Abbott is a very large medical devices company. I worked for Abbott, Medtronic, Boston Scientific. It was an amazing career. I worked on a product that saves lives for cardiac patients, pacemakers that go inside the body. I’ve worked on those technologies.
Darin: In what capacity?
Prasanna: I started in research and development. After I did my MBA from Michigan Ross School of Business, I moved into marketing and business strategy in these firms. I have launched brand new products all over the world. Commercialization of these products across the globe comes with a lot of responsibility, knowledge, and experience. That's when I mentioned about P&L. I can dissect any P&L, any business. That's the strength I bring to the table, having hands-on experience, building a marketing team, launching global products. To me, multifamily is another product.
Darin: It's important to understand people's background because you're bringing all of that experience to the table. I've met people in different walks of life that are in real estate. Some started out as single family real estate investors, and then just scaled up. Others came from the corporate world in C-level type positions. All of that experience really lends itself to be leveraged if you use it in the right way in the multifamily world.
How Can We Have Impact on Society
Prasanna: One of the lessons learned in my corporate career is how you think of building a team and impacting society. Those two aspects, I'm bringing here to this new business. How do I build a team and impact society? Whether it is realistic, anything I would've done. I could have done something else too, but I chose to do this because I love what I'm doing. It has a direct impact on society. We continue to build this.
Darin: I had a guest who, whenever he's out looking at a property to buy, he goes and meets with the town. "We're planning on purchasing this property. How can we benefit the community?" Do you guys get involved with anything like that where you actually try helping the community from a public standpoint?
Prasanna: We have different programs we’re launching including donating blood and school tuition for kids who are part of our tenants. There are many programs we're working on. That's why our goal is to increase and expand that part of the business, not really expanding the number of units. We are more motivated from that perspective. Every property we buy, there’s a percentage of tenants we allocate to help them.
Darin: How does that work? Partly, when you build the business plan, if you're maximizing cash flow and push as many returns to the investors as possible. But if you're going to do these programs, some of these programs are going to eat into that. You could do that in one or two ways. One is that part of the cash flow or profitability of the property. You need to tell your investors, "We're going to allocate a certain percentage to these programs."
Implementing Strict Rules Around Your Impact on Society
Darin: Or you actually fund a third-party charity that you've set up, then that charity reimburses. Let's use the example where you mentioned the student housing program in Austin. Say you have a student that applied. You guys approve of him, you're going to give him free rent. Does the property just eat that? Or does a third-party charity that you've set up fund his lease then somehow you just replenish the charitable fund?
Prasanna: We are very strict with that. We are not going to touch the property's cash flow to feed for the charity. That's not the case. It is the third-party charity organization, Nanban, and other organizations we have. We, ourselves, donate. That's the one we’re funding because we’re very particular of how we manage investors' investment. So to answer your question, it's the latter.
Darin: So it's coming from the charity. You guys fund these third-party charities. Then when you have a program, you give somebody free rent, they end up paying the property, the rent. Then, as needed, you guys replenish that charity.
Prasanna: It should never be the other way. We cannot take money from properties, operations, and then feed it to the charity.
Darin: You could do that if all the investors understood it and agreed to it. I don't think there's a law against it, but I think it makes it more clean, like the way you're doing it.
Prasanna: We have a large investors' platform. They donate for many programs we have, and this is one of the programs. We have a not-for-profit registered. They allocate the fund to our real estate-related charity programs and even bigger ones. It's very clean, very nicely done.
Why Don’t You Start a Fund
Darin: I want to go back to the fund question. You guys were partners with Raj, so you may not have been fearful of raising the capital. But a lot of syndicators, during their first syndication deal, that's one of their big fears. It's like, "Am I going to be able to raise the capital?" Syndicators, all of a sudden, do one, two, three, five deals. Now, they're completely confident that they're going to raise the capital. So then I asked them, "Why don't you start a fund?" It gets quiet. I can tell.
There's another fear factor of knowing how to do a syndicated deal, but what happens? They have this great reputation. What happens if they create a fund and they don't raise enough capital for the fund because they don't have the properties identified yet? Will investors invest before seeing the properties? Did you guys have that fear and how'd you get over it if you did?
Prasanna: That is how you start. You always have to fear. The fear will drive you. Anything for that matter. We have been used to traditional syndication. You bring the property and present it to the investors, and then show the business model. There are a certain set of investors, they know how the fund works. They're used to that. You got to target them.
If you want to target your existing investors who are used to the old traditional way of syndication, they want to see the property before they invest. Now you have the job to condition them, educate them. If you do that well, then they know what you're trying to do. They will invest.
Learn How to Build
Prasanna: If you don't know how to condition your investors, they say, "No, until a property is sure, I'm not going to write a check." Then you need to target other investors and you have to go from there. It’s a transition. It doesn't happen overnight. You have to know how to build that or you should work for some institution as a fund manager.
Darin: See how they do it.
Prasanna: Also remember, if it is a fund, it is offered by some institution as a brand name. They've created awareness. Investors investing in, for example, Goldman Sachs, they know what Goldman Sachs is. They know that credibility, they invest. And they don't care which property you are buying. Are you buying in Irving or Austin? They don't care, they just invest. So how do you get there? These are all very powerful things. You don't create that overnight. It takes years.
Darin: You said something that was right on the money, fear, you've got to go after the next fear. That's something that so many people, once they have that fear, they're like a deer in headlights. They can't take action in the midst of that fear. Other successful people have that fear, but they still go out and do it.
Prasanna: You have to be brave. You have to take some bets on and experiment sometimes. But before that, learn. Educate yourself or be with the right people. You can't have all the chips in your pocket, you have to share and grow. And you have to have a solid team. If you really want to grow big, you have to have a big team. Otherwise, you alone cannot go.
Challenging Human Dynamics
Prasanna: I've seen a lot of syndicators, they want to just do everything on their own. They keep changing their teams. It doesn't work.
Human dynamics is very challenging. Building a team and holding on to it is very important. Every day, they make deals with new partners, it doesn't take long. That's why we are different. We want to stay with our core people, core partners.
Darin: You said be with the right people. There are listeners that may be first timers. They haven't invested in real estate, in multifamily before. Then there are other investors that are syndicators. They're people who are looking, they’ve done one deal and want to scale. If you're looking to get around the right people and learn this industry and learn who to invest with, what approach would you take?
Prasanna: This is all personal. My way of looking at things is, I want to work with people who have a true passion and a lot of integrity. Those two things, I look at it and I really don't care whether he has real estate experience or not. I bet somebody who wants to work in real estate multifamily for a couple of years, they'll pick it up. But if that person doesn't have integrity, doesn't have commitment, comes to make money, I don't want to work with people who make money.
I want to work with people who have that strong vision, who want to help each other. That's very important. Money will automatically come to your pocket if you really have that passion, commitment, and helping each other. Money's a byproduct. You've got to have a quality approach.
Focus On Making an Impact on Society
Darin: I understand what you're saying and I know that you guys have seen it in reality. But there are people that are reading books, that are listening to podcasts. They've heard that, and they can't believe it. But you and I are here to tell them, "It's true. Focus on the other stuff, focus on the people, focus on delivering value to others, and then the money comes."
Prasanna: See how long it took for you and me to know each other and then have that understanding? Okay, this is Darin. This is his integrity. I'll tell you some science because I come from a strong science background.
Building trust and knowing each other is a function of time and commitment. It doesn't happen overnight. Everybody looks good when you meet in conferences. They all look good, they all talk well. But when you continue the journey for a couple of years, it takes a couple of years to know a person.
That person to share your dream, you should share his dream together, then it'll happen. If their vision is different, your vision is different, it doesn't go. You've got to have a common mission, common purpose. You should be nice to work with, otherwise team dynamics will break. It doesn't work. But how do you know a person is the best to work with?
You cannot make the decision in just the first meeting. Even when a couple gets married, they date for a couple of years then they decide, "Okay, here's the boy, here's the girl I should hang out with." A lot of these investor syndicators meet in some conferences.
Trust Takes Time to Build
Prasanna: They talk about some cool stuff and say, "Let's make a partnership and then let's do some deals." No, it is a function of time and it takes some time to build trust.
Darin: You're right with time. Think about some of your strongest relationships in your lifetime. Some of them can date back to growing up years, middle school or high school, some of college. Why is that? It's because of time. You've spent so much time with those people and shared so many experiences with them. That builds that level of trust.
Prasanna: There is no substitute for experiential knowledge, you have to experience. You read a book, listen to a podcast or go to some conference. That will get you some level of experience. But experiencing and building that knowledge is a different thing. For that, it takes time because that's how we are all built, humans. It takes nine months to make a baby. Same thing, it takes a year, probably two years to build a team.
Darin: If somebody meets you for the first time now or in December, when you guys close on another deal and you are CEO of Orion, you are perceived as this highly successful business owner that owns 500 million in multifamily assets. If somebody met you three years ago when you were chasing your first deal, they see you differently. You're a hustler. Not a hustler, but you're a go-getter.
People think that it's an overnight success, but there's a lot of hard work in any kind of industry. You're an athlete. You think about the touchdown catch, but really there was tons of hours of practice and working out in the gym to get there.
Everybody Goes Through Struggles
Darin: Where did you grow up? Brothers, sisters, rich, poor, and did you know you were going to be the success you are right now?
Prasanna: I grew up in India. I was born in Bangalore, which is called the Silicon Valley of Asia. You name any company in California, in Europe, all those technology companies started in Bangalore.
Darin: I went to Bangalore. I was with PepsiCo and it was probably 30 plus years ago.
Prasanna: That was the best Bangalore.
Darin: I had a great time in India and I bounced around different cities and I was in Bangalore.
Prasanna: I was born and brought up in Bangalore, I went to school there. I was the eldest of the three children from my parents. Everybody goes through some challenges and struggles. I went through some significant challenges financially. Somehow, I felt I had the drive to always do better in sports or in academics, anything for that matter.
Being disciplined and being the eldest, I had the responsibility of the whole family. I worked hard and came to the US in '98 to do my masters. Did my masters in Chicago, then worked for Fortune 500 companies. I talked about life-saving products. Then I did my master's in business administration, MBA from Michigan Ross School of Business.
You see behind me the picture where our roster is posted in the Wall Street Journal. I got a double masters in the US. Then I had an engineering background from India. To me, the most motivating thing is to work hard and work smart and be with the right people.
There Is No Substitute for Hardwork
Prasanna: My son plays varsity tennis in Frisco High School. I remember a poster right in front of his desk, I bought it at a store. It’s Roger Federer's poster. I got motivated by reading that and wanted him to be. It says there is no substitute for hard work, period. Nothing comes for free, nothing comes easy. You gotta work hard. That has been a success for me.
Even today, all three of us work very hard. When you're talking about building this half a billion-dollar portfolio, it was not at all easy. But we never feel stressed. We love what we are doing. That is why it has been successful. You gotta work hard. There is no substitute.
Darin: When you were talking about being a kid, you said you had some financial struggles. Then you said you always wanted to be better or always thought you would be better. What did you mean by that?
Prasanna: It could be my birth skills or the traits you have. I wanted to be number one in studies, number one in sports. And I was a good cricketer, the British sport, cricket. It almost resembles the baseball sport. I used to play it so well. But I always wanted to be a good player, a good student in academics. I always had it in me, doing well. Financially, yes, it was. I don't want to share all that, but it was extremely difficult. Today I remember to provide a shelter for our tenants who are in need. I had that situation when I was growing up.
Darin: Good for you. You took that and you didn't forget.
Prasanna: It was a very tough journey. I never envisioned I would be coming to America and doing all this. Even with all that, I am proud to say I got two patents in my name. Those products that I worked on, I have two patents in those pacemakers which is an amazing thing. That is success to myself. That's all I wanted. I'm good with that. I don't need billions of dollars. I'm happy with what I have achieved.
Darin: Typically, I ask what's the next big stretch goal, but I already know your answer is like, "I just want to impact society more."
Prasanna: Yes. We want to have 1,000 jobs created. We're very passionate about that.
Darin: What do you like to do outside of work?
Prasanna: I love to ski out in Minnesota. I’ve snow skied in Colorado and in Minnesota. I love to play tennis and I play cricket quite a bit. Just touring around the world.
Darin: I'm a little naive. Can you play cricket in a few hours? I hear that cricket games could go on for days.
Prasanna: There is a World Cup going on as we speak. They're the shortest version. You can wrap up the game in four hours. It’s a much shorter version than the baseball game right now. It is also a big sport after soccer, a highly followed sport around the world.
Darin: You say people come to you, you don't go out and market. If somebody wants to get to know you and your team better, what's the best way for them to do that?
Prasanna: First of all, I appreciate you having me. It's a big pleasure. I'm so happy you found your passion. You're doing this amazing job.
Darin: It's been a lot of fun. I've met a lot of great people and I've learned a ton. Everybody I talk to, I learn. I've known you for a long time and I didn't know everything that we just talked about. So it's exciting to learn.
Prasanna: They can reach out to us on www.orion-re.com. There is a contact link they could always reach us.
Darin: Well, Prasanna, thank you for coming on. Listeners, I hope that you enjoyed that one. This guy's a rockstar, I can't believe that he's put 500 million of assets on in the last like two years. I can't wait to see what he does in the next year or two. Until next week, sign off.