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July 14, 2020

From A Small Town In India To Syndicating $300 Million In Real Estate Assets [Ep. 005]

From a small town in India to syndicating $300 million in real estate assets. Listen to hear how Ramana Korada took action on his childhood dream to leave his hometown in India and travel overseas to the United States. After obtaining his Masters and working in consulting, he started to invest which ultimately lead him to sponsoring multifamily syndications. He and his partner with Raven Multifamily have closed on 12 syndications for approximately 3,000 units, $300 million in assets and raised over $80 million in equity. Ramana is a leader in the multifamily syndication business and a true example of the American dream.

Table of Contents:

From $300 Million to $3 Billion Real Estate Assets

From $300 Million to $3 Billion Real Estate Assets
Photographer: Dan Gold | Source: Unsplash

Darin: A little background on Ramana Korada before we start. Ramana grew up in a small town in India and obtained his master's degree in the US. He’s now a full-time real estate syndicator with 12 syndications and 3,000 units under his belt.

He and his partner, have grown their real estate assets to over $300 million and have raised over $80 million in equity. Ramana is looking to continue to scale up to over $3 billion in real estate assets over the next five to six years. Let's listen in on his story of becoming a leader in the multifamily syndication space.

We met in a mutual multifamily investor group. I came in and you were probably in the group for a couple of years before I got there. It was very evident early on that you and your partner, you guys formed a company called Raven MultiFamily.

You guys were basically rock stars in the group. I know that you're very humble and modest in your demeanor, but you guys really crushed it. So, tell the listeners just high level, how many syndications have you done for how many units?

Ramana: Venkat is my partner in Raven MultiFamily. We built it together which is close to 3,000 units with 12 syndications so far. We exited out from three of them. And we still have nine properties that we are actively working with our investors in DFW market.

Darin: What time period does that span?

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A Humble Beginning

Ramana: We met each other in December 2015 in one of the events. Then we started talking, working together in early 2016. We closed our first deal in June 30th of 2016. We are in the month of June 2020, it's been four years.

Darin: Four years. That's what, a deal a quarter?

Ramana: You can count it that.

Darin: That's crazy. People are happy to get one or two deals a year, and you guys were doing one every three months. One of the things that I really appreciated was that you guys set the model for doing multiple deals. There were a number of people in the group that had done one or two deals. But you guys figured out a way to scale.

In addition to that, when you guys started, you guys were both still working full-time jobs. You were in the IT space, what was your career and what was Venkat's career when you guys started?

Ramana: Let me start back with my journey to United States of America. This is where, when I was growing up, I was always dreaming about starting in a different country. Much more sophisticated place than where I had been born and brought up from.

I was born and brought up in a small village. My father was a high school teacher, so with his job, we were roaming around different towns and places.

I finished my 12th grade, then went to a bachelor's in Kapinara University in India. A place called Kapinara. Different students come from different backgrounds. That is where I was learning about America for the first time in my life.

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Pursuing the Greener Pasture

Darin: I'm sorry to jump in here Ramana, but you mentioned a small village in India. I've been to India. The population is pretty huge. What was the size of that small village?

Ramana: I would say it's around 2,000 people. My extended family itself is around 500 people out of those 2,000.

Darin: Wow. That's crazy. I've heard about the weddings in India. It's like the whole town.

Ramana: Absolutely. I'm not too proud to say that, but I'm the first engineering graduate out of my family. Matter of fact, my father, he wanted to do his engineering, but his dad, my grandfather, he was a farmer. He wanted to help him raise as a farmer than an engineering graduate. So he had to convince my grandfather to become a teacher.

Obviously he didn't send him to college to become an engineer, so he ended up his career as a high school teacher.

Darin: But then he was good with you becoming an engineer and actually leaving after getting your bachelor's in India. Leaving and coming to the US. Your parents were good with that?

Ramana: When we are in the fourth year in college, we get these campus sections with different companies. I got selected for a company in India, wanted a printer company. But I had this desire to come here for the higher studies. I joined in the company, and I quit on my third day.

Darin: Really? That's great.

The Journey of a Thousand Miles

The Journey of a Thousand Miles
Photographer: Martin Adams | Source: Unsplash

Ramana: I couldn't convince myself to continue that job and get prepared to come to finish my master's. I went to my boss's boss and said no, I'm not working anymore.

They asked for the story. I explained I wanted to go for my masters. They agreed, they asked me to come back. “If you can't do whatever you want to do, come back in a year. We'll keep this job for you.” So they did not accept my resignation letter. They kept it on hold, thinking that I'd come back in a week or so.

Darin: What did your parents feel when you quit and you wanted to go to the US? Did they support you? Or did they think you were crazy?

Ramana: Definitely they thought I am crazy. But I didn't have a choice. I asked them, "Hey, I need this one-time choice. I'm going to prove it." Within the next year, I worked hard, I tried and tried and I finally came to my masters in University of Texas, El Paso.

That was 2001. I finished my master's in electrical/computer engineering in 2003. At the time, the market was not so great to get a job in the study area in which I did my masters. So I had to get a job. I had to learn some new skill. That happened to be SAP, it's a software program. It's a software that big companies use for their internal operations. I learned it, and I started my first job in LA in 2004.

Darin: As a consultant implementing SAP applications?

Ramana: That's exactly right, yes.

Don’t Settle Until You Find the One

Darin: SAP is one of the largest ERP systems available across the world. Consultants are highly sought after for those implementations. It wasn't like it was a nothing job. They look for very highly qualified people to fill those spots.

Ramana: I used to work with CFOs, C-level executives, with the reports that I used to build for them to make better decisions in their daily operations. I worked for different companies, like Bank of America, Westinghouse, ADP, Dr. Pepper Snapple Group. Actually, Dr. Pepper Snapple Group brought me to Dallas actually.

I worked for many companies across the country. My journey started in LA with my first job, then I went to Portland, Oregon. I worked in a utility company. From there I went to Atlanta. Stayed there for three years in Atlanta. I went back to LA, then back to Atlanta. Then a manager from my Atlanta job moved to a position in Dr. Pepper Snapple Group.

I worked with him for three years. He fortunately asked me to come over to join his team in Plano. That's how I ended up coming into Dallas market in 2009.

Darin: Before we keep going down that path, let me just go back again to your childhood. When you were in India, you're in this small village of 2,000 people, 500 of which are your extended family. At some point during your childhood, you brought it up multiple times, you had this desire to leave India.

Go overseas someplace and go on an adventure and go see the world and learn outside of your space. What age do you think that you started having those feelings?

Ramana: I would say 15 to 16.

The Desire to Do Something

Darin: So in your high school years. Were you afraid to go? Or were you excited to go? Was it a mix of all of the above? Did you just know in your gut feel that you were going to be successful?

Ramana: It's a tough question to answer, but I always have this dream. There are lots of people going out of country for their jobs and stuff like that. Definitely I used to get motivated. But one thing I used to run in my mind if I recall, how do these guys manage missing their family?

That was one question. It was running until I came here, then for a couple of years, I guess. Then I got used to it.

Darin: Do you go back once a year or once every other year to visit family?

Ramana: Very first time I went in 2001 and went back in 2006. Since then, I've been going at least every two years to once a year. My parents are getting older and I have a sibling in India. Definitely that is a place that I have to go.

Darin: Absolutely. One of the reasons why I ask you about your childhood and ask you some questions in terms of if you can go back and think to yourself what you were feeling back then? Just in my own personal gut feel and from reading books and what not is that most successful people at some point in their life, it doesn't have to be in childhood, have this desire to go do something.

The Difference Between the Dreamer and the Doer

Darin: The difference between them and other people that have that feeling is that they actually took action and did it. I've met a lot of people that have some great ideas and some dreams. But they're afraid to take that step. You took a pretty darn big step by leaving India and coming to the US.

You had a challenge finding a job after you got your master's. But you ended up finding out what skills were needed. You ended up getting those skills and got into the SAP world. Then you started traveling all over the country. Here's a guy from a small town just bopping around major cities in the US.

Ramana: I think I have this entrepreneurial mindset from childhood. My father has been a teacher, and my uncles and aunts on my mom's side, they're all into small businesses. That entrepreneurial mindset came from that side. Whatever I think through, whatever I see, sometimes my mind ultimately goes to that side.

I started my job in 2004. We all meet a lot of people, a lot of business people, a lot of colleagues and all. Many of them are into some sort of business of some investments while they do their job. In 2007, a friend of mine introduced me to one of his friends who was planning to start a start-up in India.

I met that guy before a couple of times. The presentation he did with the projections and all, it mesmerized me. I was making decent money with my SAP consulting job. I was saving a little bit while the rest of the folks are investing in different places.

The Transition from Retail Strip Assets to Real Estate Assets

The Transition from Retail Strip Assets to Real Estate Assets
Photographer: Lance Anderson | Source: Unsplash

Ramana: I decided to place some of my money into that start-up. It's like Priceline kind of company.

Darin: You didn't end up going to work with them. But you ended up putting some of your money into that company as some seed capital.

Ramana: I put in a lot of money, in fact.

Darin: How did it turn out?

Ramana: Me and I think four or five other investors pumped in a lot of money. We all worked for that company almost for a year or a couple of years by helping. But that product for Indian market came a little early, we didn't capture the right market potential for that. We still have that company floating around, but definitely we needed more capital to make it successful.

That guy who's leading that effort, he's still planning and we are in contact. But I have to see if somebody will come and write a big check to buy us out. Let's see. I think we still have some time for that.

Darin: You didn't say this, but it sounds like you put a lot of money, you did say that piece. You’ve put a lot of time and effort for a few years. It doesn't sound like it turned into a home run. It's still out there. Then you decide, for some reason, to get into real estate.

We've had conversations outside of this conversation, I know that you started out in retail strip centers. Help me understand how you made that transition. How did you still put money out there after having your first big investment not turn into a home run?

You Have to Work With Sophisticated Investors

Ramana: What happened is after seeing the ups and downs with the investment that I made, that taught me what kind of businesses I have to avoid. That's just where I should put my focus into. Then I started analyzing different businesses, local businesses. I started with restaurants, gas stations, medical offices, retail centers. The list was going on and on. I had to make a call whether to be in the business or on the business.

With my day job, most of these businesses where you have to be there doesn't work. So I took a good two to three years transitioning from that software investment to a real estate investment. Finally I made a call to partner with a few other friends and bought a retail center in Houston market. That happened in late 2014.

Immediately, right after we purchased, there was another opportunity that came in. We purchased another property in early 2015. Those two investments gave me enough boost to make a move into commercial real estate. I looked at some of the retail centers in Plano market. Very interesting opportunities, but I couldn't convince people. "Hey, I have this opportunity, these are the projections, do you want to partner with me?"

I used to get a very good response, but until the time are you guys starting to send the money? People used to back out. It happened a couple of times. That gave me a lesson. You have to work with sophisticated investors. The people who know ins and out of these businesses. You can explain to your friends and colleagues, your family members. Do they really buy your story of buying a real estate? No. There are a lot of unknowns for them.

A Way to Meet Like Minded People

Ramana: I found this mentoring group by Brad Sumrok. That's where we met. I immediately joined, I didn't hesitate to join in this program. That's a paid program. But I think I should say all the credit goes to Brad Sumrok for my success. I'm still a baby in this game. Definitely what all the credit that I get, that goes to him.

Darin: I'm glad that we met through the group. I met so many fantastic people. It's a way to meet a lot of like-minded people. But one thing that's interesting, hearing your story in more detail, is so many people, including myself. I came in, you had already been in the group for a couple years. You guys were in the midst of scaling. I came in the group at the end of 2018. If you guys are doing a deal a quarter, you already have five or six deals under your belt.

The talk in the group is like, "Holy cow, Ramana and Venkat, they just keep getting deal after deal after deal." It's easy to think these guys are just overnight success. But hearing your story, it's like, no. Here's a guy who was in a small town in India, had a desire to come to the US. He fought, kicked, and scratched to learn what job he should get. He starts traveling around the country with SAP.

Then he saves up a bunch of his money and puts it into a company. It doesn't necessarily completely work out. But it didn't scare you off from taking your next chance, your next chance was with the retail centers.

The Question That Triggered the Decision for a Career Change

The Question That Triggered the Decision for a Career Change
Photographer: Rohit Farmer | Source: Unsplash

Darin: Then you ended up investing in getting into multifamily and a mentorship group. You didn't stop taking action, you kept learning along the way.

So many people just think when they win the Super Bowl, oh, they're just an overnight success. But there's so much hard work and learning that happens to get you there.

Ramana: Absolutely. I think some of the credit goes to my son, especially I guess.

Darin: How old is your son?

Ramana: My son is 10, but I think he was four years old, my daughter a newly born and I was traveling for my SAP work, I was traveling to Oklahoma City at the time. My schedule used to be weekends attending these meetups or trainings of different groups or meetings and all. I think that was late 2015.

Weekdays, from Monday to Thursday, I used to be in Oklahoma City. Fridays, wake up, work until 5:00 pm, then go for a drink with fellow investors, and all. Saturday, Sunday used to be tough schedule too. My daughter just born, and mommy was taking care of the daughter. Honestly, she's in there. My son was not getting enough attention from me, not from mommy.

One fine day, he came to my office room. He said, "Daddy, I will not disturb you. Why are you going out of home from Monday to Thursday?" That put me on the spot. Am I doing the right thing? I'm spending all of my seven days outside of the home. Even though I am home, I'm literally not spending any time with him.

Darin: Wow, four years old.

Ramana: Four years old. I wasn't expecting from him at that age, you know?

Joining the Multifamily Group Is an Eye Opener

Darin: But again, the other thing that happened was when he said that, you reflected upon it. You reflected on it. Then it sounds like you made a career change based off of that. A lot of people would just say, "Hey son, because I have to make money to pay for the bills." But you actually reflected on it and you made a change. Now you're in strip centers, you get that from your son. You join this group. Why did you switch from strip centers to multifamily?

Ramana: I was looking for some sophisticated investors to put some capital into strip centers or any other commercial real estate assets. After joining in this multifamily group, it's an eye-opener for me. They have different categories of commercial real estate assets, it could be storage, retail, land, or medical offices. So many segments. Mobile home parks, you can categorize it into 100 different categories.

But then what are the basic needs of human beings? We need to have proper food, clothing, and then a place to live. Housing is a basic need of everybody. You can have a million dollar home or a $500 rent paying apartment. I understand everybody has to sleep under a roof. If you invest in real estate assets, you definitely are in a much better class of real estate than any other.

Like storage, when people need to store something, you can rent a space in storage. Hospitality, it can be a business travel or vacation travel. Those are all on need basis. It's not an everyday thing that somebody pays to rent for or something like that.

In Search for the Best Means to Move Forward

Ramana: This mentor made my life a lot easier by showing me a different class that I never thought of before, the multifamily to be investing in. Also, if you look at some of the stats, affordability gap is growing between renting and owning. Definitely that helps with a lot more traction into apartment industry. If you want to further extend it, household formations, millennials, all this stuff aggregating to make multifamily investments, I won't say more successful.

Darin: It's a good story that there are all these other factors that are pointing to additional resiliency compared to other options. I completely agree with that. It's still interesting to me because I thought of you guys as being overnight successes. You think these guys just came in, joined the group, didn't know anything. Then all of a sudden, they're doing a deal a quarter. But it wasn't that. You guys had one, you had solid business experience, you had experience dealing with C-level executives.

When you started to talk to investors, you already knew how to talk to people that were pretty savvy in the financial space. But you were in search of what's the best means to proceed forward. You wanted to do something that was going to be a benefit to your family. That would give you the flexibility of your time so that you could be around for your family, which is extremely admirable.

Ramana: This is how the journey started. We both are underwriting, me and my partner, so many deals every single day, every single week, every single month. We did not have a resume to show that we bought some properties. None of the Dallas brokers were giving an opportunity to win their property.

Building an Extremely Solid Reputation

Darin: It's so funny to hear you say that because now, it's like you guys are known by every broker group. You have an extremely solid reputation, but you had to build that reputation. It didn't come overnight. So new people that are trying to break into this space, they think you just had it. But you had to work for it.

Ramana: It started with a 100 unit deal in a corporate in Oklahoma City. By that time we bought that, I made some relations in Phoenix market for 120 unit property. By showing those two properties, one of the top broker in Dallas market, gave an opportunity to win a 300 unit property.

Since then, we were not needing to go outside of DFW. Next 10 properties are from DFW.

Darin: That's fantastic. You guys have built a reputation for being guys that do what they say they're going to do. If I could use the word, that you guys are closers. That brokers know if you guys put in an offer that you guys are going to close on it. This is very much a relationship business. How do you think you got that reputation?

Ramana: Basically, we worked so hard to win our first few deals. Those first few transactions taught us how to make this happen in a streamlined fashion. You anticipate what would be the need in the closing process so that you bring your resources even before your lender, or your attorney who is running your transaction closing. So we built all the resources to do it. Commercial real estate assets are not a one man show. It's a team sport.

Develop Million Dollar Real Estate Assets

Develop Million Dollar Real Estate Assets
Photographer: Joshua Hoehne | Source: Unsplash

Ramana: A lot more resources need to work together. It starts with identifying your property. Once you identify, you have to underwrite it. Make sure it produces the result that investors look for. Now you make an offer, and you compete with 10 different buyers. You win the deal. Now, the fun starts. You need to have the right loan lined up for the property, you need to work with the right lender.

And you need to work with equity. It could be either private equity or own equity or syndication. You have to present your opportunity to all different sources to see who will be interested in that deal. The location, the opportunity, the detail, so many factors come into picture. Once you identify it, you have to spend your time on due diligence. Because these transactions are millions of dollars.

You make sure that you're buying the right product. If I am a seller, it's not that I would do it, but rather you have to present to a bunch of investors. So you make sure you have your engineering reports ready, your rental projections. Your management company has to be in place.

Each individual resource has to be coming to the table for the closing. Once you close the property, the actual real fun starts. Now you have to keep up your investment projections to make sure you can buy more properties with the same investor group.

Darin: Let me go back just a couple of steps. Most deals in the DFW market and other major markets, it's very competitive on every deal. It could be 10, 15 offers and five or six go onto best and final. Maybe there's three that stand out as being pretty close that are competitive.

Why Should They Pick You

Darin: The seller and the broker get together and have a conversation. Who should we go with? You guys have figured out, somehow, a way to have those guys pick you guys more often than not. When I talk to people, I say think about that conversation at the beginning of the process. Because if you get into the finals, that's what's going to happen.

It's going to be you and two other buying groups. Why should they pick you? You guys have figured out, somehow, a means for them to say, "You know what? We should go with Venkat and Ramana." What's the key there?

Ramana: Before we identify a property, we want to make sure there are I think 7,000 apartment complexes available in DFW market. At least 10% of those properties would be in transaction, one way or another, in a given year. Maybe 10% is much higher. Maybe 5%.

Once brokers sends a notification after they're listing a deal, we spend many hours to understand the property before we call the broker that we want to set up a tour. We underwrite the property. We look at the demographics, we look at the location. All the nine yards, some people do it afterwards. We want to make sure that we know about the property before even we make our first phone call.

If you get educated about the property with all of the details, then you push for a tour, broker believes that these guys spend enough time to understand. Now they really want to pursue this deal. Because there could be hundreds of buyers in the market for the sake of touring the property. They tour the property. Not every buyer is a real, serious buyer.

Who Is the Real Buyer and Who Is Not

Ramana: Brokers will not have enough time to entertain 100 groups. Out of 100 calls they get, they know who is the real buyer and who is not. They guess based on our questions and our mindset. Because they do a lot of business, so they can figure out if it's a real buyer or not.

Darin: From your perspective, you've built credibility with the broker right away. They know if Venkat and Ramana are calling me on this property, they've already done their homework on it.

So I've talked to different syndicators. Different syndicators have different approaches. Some syndicators have a shotgun approach. They're going to put an offer out on a lot of deals. They know that it's a numbers game. They're going to put a lot of offers out then when they get in the best and final, then they'll start digging in. That is one approach.

Your approach sounds like you spend a lot more time on the underwriting. When you do get to the point where you want to do a property tour, you've already done a lot of homework. The broker knows that right away.

Ramana: With the investment base I have and the lending connections we have, they should definitely feel comfortable with the offer that I'm making. Over this period, we've never retraded for nothing. That speaks for yourself, that reputation speaks for yourself.

That retrading, if it's an absolute thing, then why not? But not for every single thing that you go back to seller and request for a retrade, no. We don't have that reputation, which is good.

Darin: Now, you talked about your investors, you've got strong investor database.

Bust Your Tail and Build Relationships

Darin: When I came into the group, you guys were killing it. I was like, are these guys just calling back to their hometown in India? They have all these family members that are sending money across overseas?

How are they raising all this capital? Through all the deals that you've put together, I believe you've raised somewhere between 60 and 70 million in equity. Is that correct?

Ramana: I think with the new construction deals and the 12 multifamily, I think it's around 80 million dollars.

Darin: 80 million dollars you guys have raised. Is it just one phone call to India and your family just helps? Or did you have to bust your tail and build relationships here in the US?

Ramana: It's not from India for sure. It's only from US, most of this money out of this 80 million, 80-90% I would say from sophisticated investors. It's not from somebody who's walking on the street and I made a phone call and they invested. So, these investors, with proper judgment, they invested this money into these deals.

Darin: That's so encouraging for people that haven't gotten into this space. They think to themselves, this space is for other people. This space is for people that were born into it. But no, you came over from India, you made your way, you figured it out, you got in this space and you were able to build trust with people here in the US that provided 80 million dollars of equity to invest in these deals. Because they got to the point where they know, like, and trust you.

Ramana: See, what an investor has to look for, it's like what I really see, I invest in other deals too.

Laying All the Numbers and Data on the Table

Laying All the Numbers and Data on the Table
Photographer: Mika Baumeister | Source: Unsplash

Ramana: I want to make sure that these investors have enough track record to see what they're saying is true. At first, I asked an investor to work these answers multiple times as needed. More than now than before, these types of passive investors are to look at the numbers.

It’s all about numbers game. They have to go through each and every detail of their underwriting. So that they don't need to go back to investors after they send their money. Why are the deals forming in a different way than expected?

There's a lot of information available with meetups or online or mentoring groups. Everybody can get educated. For example, there are a lot of stock investors, stocks and bonds or options and what not in the marketplace. They read about different companies before they buy these shares.

Similarly, if they're investing $50,000 to $100,000 definitely they have to make sure they develop this process. Check some personal references if need to. That way you feel more comfortable. Most of the times what happens is these investors invest in only one deal. Expecting that their money will get double or what not, whatever the projection.

It may not happen in the way that they would expect. I would request to invest in multiple properties so that they can take advantage of these tax benefits. They can learn more about the industry, which will help them invest more.

Darin: That's one of the things that's got me charged up, being in the industry. There's still a lot of people that don't know that this is an option. I was always one that put my money in ETFs and stocks.

Choosing Real Estate Assets Among Other Asset Classes

Darin: Until a couple of years ago, when I got involved, I didn't realize I can invest in these larger multifamily deals. Like you said, there's other asset classes as well, we're just focused on the multifamily space. I wanted to applaud you also, and thank you.

You and Venkat are no longer in the same group as us, but when you were, you actually were one of the coaches. I had a number of deals that I had come close on, as a first-time guy. And I was like, well, I want to switch up my coach. I want to be with somebody that is still winning deals in this very competitive market.

I ended up asking you to be a coach for me on a deal. It just so happened that that was my first deal. I remember it wasn't like you went through everything with a fine-toothed comb. You gave me just a couple of pointers that I really felt like helped me win the deal. One was part of my business plan was to implement RUBs for water, where the property was paying for the water.

When I received the budget back from the property management company, it was a one year budget. I was like, Ramana, a lot of the additional savings comes in year two. You were like, just ask them for a two year budget. I was like, that was simple. I didn't think of it.

When I did that, it improved the projections significantly. That was one big factor. Two was at the very end of the buying process when they were about to make selections, we have a buyer's broker within the group.

Successful Pointers From a Seasoned Guy

Darin: You were like, "Darin, man, you need to be on top of the broker. The broker is the one that's going to make that recommendation. He needs to know that you really want this deal." That shifted my focus to spend more time with the broker.

Just those two little pointers, coming from a seasoned guy that was successful, was huge and helped us win the deal. I thank you for that.

Ramana: I was so happy that you got that deal. We spent a whole lot of time, definitely decent time. I was hoping you'd get it, and you got it. How is that deal running now?

Darin: It's doing fantastic. We had a little hiccup with being under COVID. We had slow pay, but I think April we came in at 90%. Then everybody said May was going to be worse than April, but actually May ended up being better than April. So I think we're good. Actually, we just ended up hitting 100% occupancy for the first time in the year and a half we've owned it. Crazy in the middle of this crisis that we hit 100%.

Ramana: Wow, congratulations, man. So happy for you and your investors.

Darin: Yeah. Thank you very much. But I appreciate your guidance through it all. Talking about COVID, how's that impacting your business? You're still managing nine properties. I know there's a lot of steps that each syndicator has gone through to manage that.

We're about halfway through it right now in terms of the 120 days. What's your take on it? It's been not as bad as we thought in general for the multifamily space, it's been pretty resilient. What's your viewpoint going forward?

Side Bar Conversations With People

Ramana: I see out of nine properties, one or two properties, I still have 10-15% drop in collections in April and continue with May. The rest of the properties are within that 1-10%. So the impact to the whole, I think that 10% is acceptable for the C product that I have.

If economy is still strong, the white collar job loss is not going to be as much as everybody’s thinking. The impact will be okay. We'll be recovering very soon. If the white collar job loss goes up super high, that's when we'll have that ripple effect going into C product in the next two to three months.

Darin: When the stimulus ends, the end of July, maybe going into August, it may get more difficult. Is that what you're saying?

Ramana: That's exactly right.

Darin: You were in the technology space, so you probably still have a lot of people that are in that consulting space. I have a lot of friends, whether it be golfing buddies or just other contacts that I've met through the years that work for multi-nationals. I asked them, "What's your take on what's going on?"

I'm pretty much getting a consistent theme that of all the employees that have been furloughed, they're not going to take 100% back. This is just side bar conversations that I have with people. It's not written in stone, by any means. But a lot of these companies are saying the bottom 20% we're probably not going to invite back.

That makes me a little nervous when you think about 30-40 million unemployed, even if it's 10-20%. 20% of 30 million is six million people unemployed. I don't know if that comes to fruition or not.

How Things Are Changing Because of COVID

How Things Are Changing Because of COVID
Photographer: Anastasiia Chepinska | Source: Unsplash

Darin: Driving around here in Texas, it looks like things are jumping back to speed pretty quick, but time will tell.

Ramana: Definitely, I'm so thankful to be part of Texas. Things are getting back. People are going to beaches and restaurants. I'll say something, if you drive on these highways in Dallas, I see that roads are packed. I don't see this COVID effect as we would think. Of course still, schools if they're going to open or not is unknown. But things are getting better for sure.

Darin: Another factor that I didn't think about when it first came about, but it came to my mind as we were in it for a month, four to six weeks. Texas has been a population growth state. More jobs have been created here than any other state in the last number of years. When this happened, I thought everything was going to slow down everywhere.

One of the things that may happen is that people in New York, in California and Chicago and big metropolitan areas where it's very costly may decide to move to states like Texas, to Florida and Arizona and the Carolinas. Before they felt like they had to go to the office. Now, things may be changing where companies let people work from home more.

If that's the case, why not live in an area that is much more affordable?

Ramana: Absolutely. That's like you said. Within Texas, Houston has a little bit of oil impact. I think that oil will make Austin and Dallas make a more desirable place for these folks who like to come from either coast. That will give me enough boost to maybe get into a new construction place.

Construction of Real Estate Assets May Be a Strong Play

Darin: You think the new construction may be a strong play?

Ramana: That's what I'm thinking. From my business point of view, our properties are being taxed as A class properties, especially Dallas coming in for 2020. Because of the storms and all, insurance is going up. But the rents are not going up as much as you would expect. Payroll is going up. If you buy these C product, plumbing and all other issues, your expenses are getting more uncontrollable.

Which makes me think, you can set the right expectation of your return projections to investors that there's a better class of the product. Call it B class or A, or build new product. As the population continues to grow, for the reasons that you mentioned, I think that should be a place. Should be a path of progress.

Darin: That's an interesting play. We've been so focused on the value play, the B-C properties. When we go into an economic downturn, the thought process was, okay, people are going to be unable to afford the A properties, the brand new construction. The bottom 20% are going to flow down to the B properties. The bottom 20% of the B property tenants are going to flow down to C properties.

A properties may suffer during in an economic downturn. But in this downturn, it seems like it's the B-C properties that are more impacted. The white-collar employees haven't been as impacted as hospitality and restaurant and that sort of thing.

That's very interesting. I would be interested to hear about your next new construction deal. Keep me posted on that. Ramana, outside of work, what do you enjoy to do?

The Next Big Goal

Ramana: I want to do many things, but time is limited. Definitely travel is one thing that me and my wife do.

Darin: Travel? Where do you like to travel to?

Ramana: We want to travel the entire world. But so far, I was able to visit forty two states in the US. I haven't made any trips to Europe, but I've taken cruise ships to South America, up into Alaska. Those were fun. My kids are still young. I want them to grow a little bigger so we all can enjoy international travel more than now. I'm just waiting for them, maybe two-three years older from now. I like to read, but my time is not permitting.

Darin: Going back to your son. Has he ever come to you and said that he appreciated that you changed career paths and you're around more?

Ramana: He might have a feeling in him, but he never expressed that.

Darin: He's a boy. To get him to say something other than yes or no or talk sports or something or school, whatever he's into sometimes is difficult. You guys have just accomplished so much by 3,000 units, 12 syndications, 80 million dollar equity raise. Now looking at potential new construction deals. What's next for Ramana? What's the big stretch goal?

Ramana: I'd say there are a lot of successful syndicators in the marketplace. Every day, I wake up and look up to these folks. Like Swapnil Agarwal. This guy is from Houston, he make his $300k investment into three billion dollars.

Darin: Wow. $300,000 into three billion!

Ramana: That's his initial investment, but he's really successful at what he does. Similarly, Scott Everett from S2, John Griggs from Presidium, David Moore from Knightvest, Michael Becker from SPI.

Taking Real Estate Assets to the Next Level

Taking Real Estate Assets to the Next Level
Photographer: Justin Main | Source: Unsplash

Ramana: When these people come to my mind, I get more on fire. I want to take my $300 million portfolio to three billion dollars sooner than later.

Darin: So is that your next goal? You've got $300 million in assets under management now, you'd like to grow that to three billion?

Ramana: I'm not shooting for stars, but definitely slowly but steadily I want to take it up to that level.

Darin: Do you have a timeline when you'd ideally like to be there?

Ramana: It took four years to make this $300 million, it should progress much faster. If it happens the next five to six years, I think that would be fantastic.

Darin: It's crazy to think about how you started out. It's just getting that first deal, then all of a sudden, it's like now we're 12, 13 deals in. Now we're looking at these other guys. You just keep on looking for the people above you, and how can you get there? That's awesome.

Ramana, there's a lot of people out there, I was one of them two years ago. There may be somebody listening today that has interest in passively investing in real estate, but they don't really know how to do it. Could you explain how do you get involved in a passive multifamily investment?

Ramana: I think earlier I was making some comments, like passive investor has to be sophisticated, which means an educated investor. If you vet the deal and the sponsor upfront, you will have less headaches on the backend. Then we as sponsors, when we buy these properties, we go with market standard assumption.

Understanding Your Investment Gives You Better Sleep

Ramana: We are dealing with COVID right now, nobody expected it. COVID will hit the market, and how these properties will perform. If you have an understanding in what you're investing in, I think you have better sleep than blindly investing.

It could be hospitality, it could be retail, it could be multi-family, anything. You need to be a little bit educated in the area before investing. I highly recommend that.

Darin: In order to get educated, some of these people may be doctors and lawyers and software sales guys that have excess cash. They'd like to diversify out of the stock market. The stock market got pummeled, now it's come back 60-70%. It's still nerve-racking. Maybe they don't want all of their assets there.

They have time to invest some time in understanding it. But maybe not as much as somebody that's going to be a syndicator. Where do they educated? Books? Podcasts? Meetup groups? Mentorship groups?

Ramana: I think all of the above are right. Depends on each individual. See, nothing comes for free in this world. If you are getting a service for something, you have to pay for it. I highly recommend these mentoring groups to get educated formally. You don't have to go to a college and get a degree on it, but rather you need to know the process.

A lot of mentors, a lot of educational groups are available either online or in person. Like you said, meetups. Meetups have been very famous in the last few years. You'll meet different folks and you can get to hear a lot of folks talking. One way or another, each investor has to get educated.

Education Is Very Crucial

Ramana: Education is very crucial, if you ask me. Let's say I have a deal that I want to raise $10 million, for example. It’s just a numbers game, I can present any number to attract the capital.

But if I want to do this as a full-time job, this is my bread and butter. I have to make sure I present the right numbers so that I can keep up my projections in line with actuals. If I don't do that in multiple ways, then nobody is going to invest with me.

Darin: Absolutely. You don't have to join a mentorship group. But one of the big advantages of doing that, is you surround yourself with like-minded people. Then you get to meet the syndicators. But then you also get to talk to a lot of passive investors. People talk.

People will share their experiences of hey look, I've invested in five deals. I really enjoy the communication, I really enjoy working with these sponsors. This one or two, they set the expectations here and it just hasn't come to fruition.

Either their assumptions were off or the communication was off or whatever the case may be. But in one conversation, it may steer you to give you a good frame of reference on some good qualities to look for in a leadership team and a sponsorship team.

Ramana, that's about all we have for today. I really appreciate you coming on the show, I very much appreciate your guidance and hand holding to help me get my first deal. You're a class act. You don't come across as being this hugely flamboyant in your face guy. But you reflect on things, then you give solid wisdom and guidance. I appreciate that.

How to Reach Ramana

Darin: I think that's probably why your investors keep coming back to you over and over and invest in multiple deals with you. I appreciate you coming on the show, I look forward to working with you going forward. Looking forward to hearing all the great things that you and Venkat and Raven MultiFamily are up to.

With that said, if somebody on the line wants to reach out to you and get to know you better, what's the best way for them to contact you?

Ramana: Thank you so much for having me on your show, Darin, it's my pleasure. Folks can contact via my email. I'm going to give you my phone number, they can text me or call me. I am available very much anytime, any day of the week. Not at 5:00 am.

My phone number is 214-799-9127. My email is ramana@ravenmultifamily.com. I'll be very prompt with either my text messages or emails or phone calls. By 10:00 I'll let you know. You guys can reach out any time.

Darin: Fantastic. I will also include that information on the show notes when this comes out. Again, really appreciate you coming on the line, you guys have killed it. You guys are a model for other people that want to learn how to scale multifamily. Thank you very much. Listeners, I hope that you guys enjoyed that one.

That's the American spirit. I love entrepreneurial stories. He came into the country with nothing. Then he's built it up to $300 million, now he wants to grow it to be a three billion dollar asset management business. That's fantastic. Until next week, signing off.

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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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