Do you want to achieve financial freedom? Ajai Sharma is a prime example of what's possible in America, the land of opportunity. He started with nothing, but through the value of hard work and determination, he was able to amass a great fortune. If you're looking for inspiration, or just want to hear an amazing success story, then this is the episode for you. Ajai doesn't stop working because he's achieved financial freedom – he does it because he enjoys it!  He says "it's fun!"  You can be successful too – all you need is the desire and understanding of the value of hard work. Listen and learn!

Table of Contents:

• Where To Listen To The Podcast
• A Successful Investor Who Knows the Value of Hard Work
• The Right Mindset
• Rat Race to Retirement
• An Opportunity to Learn the Value of Hard Work
• A Proven Market
• A Data Geek Who Knows the Value of Hard Work
• How to Reach Ajai Sharma

A Successful Investor Who Knows the Value of Hard Work

Darin: Ajai Sharma lives in the DFW area with his family. He came to the US from a small town in India and built tremendous success in multifamily real estate. He’s done it by hiring a mentor and leveraging relationships he built with other successful entrepreneurs.

Ajai and myself are both part of the same mentorship group out of Dallas. We met several years ago and I've been watching this guy and he is crushing it. I’m interested to hear what he's been doing that he's been able to get all these deals under his belt. With that, how many properties and how many units are you up to right now?

Ajai: We have 12 properties and a little over 2,200 units as a GP. Our properties are here in Texas, in Dallas, in Houston. We have two properties in Arizona, six properties in Georgia, and we recently bought one property in Birmingham, Alabama.

Darin: Where do you live?

Ajai: I live here in Dallas, Texas.

Darin: It's crazy that you're able to purchase all these deals in these different markets.

Ajai: It's easy and I would be more than happy to share about it. Once you have those processes, it's not difficult at all. It's so easy to manage all these things. Let me talk about the LP side also. On the LP side, it's very hard. My partners Tom and Mike always make fun of me. You have no idea where you have invested.

A Small Dream That Turned to Reality

Ajai: Sometimes I get a K-1 and I say, "Oh man, did I invest in that deal?" I must be maybe around 35 deals right now at the LP, almost pressing 10,000 units there. It's really fun.

Darin: Before we get started on all the real estate things, obviously you have an accent, you came from India. Share with the audience when you come over from India and why. You shared a little about what your goal was and I think that was hilarious. Could you share that with the audience also?

Ajai: I come from the north India side. From the north side, at that time in '95, it was not very common for people to go out. It is a big trend in the south side. So for me, I was fortunate enough to go to one of the best colleges in India in IIT. So I did my masters, two masters basically, one in computer science and math, and in '95 I graduated.

At that time, there was a very hot motorbike. People who know that time in India will be able to relate to me. It was a Yamaha RX100. That was 17,000 rupees. At that time, the Indian rupee was 35 rupees per dollar, so it was around $500. When I got out of college, I got my first job in New Delhi, in India. My goal to come to the US was to earn enough money so that I can buy that bike.

Darin: A $500 motorcycle, that was your goal for coming to the US.

Ajai: Yes, that was my goal. So I came in '96 of March and I got an opportunity to come on a consultant basis here.

Bigger Goals Can Teach the Value of Hard Work

Ajai: I was in Irvine, California, near LA for three months. Somehow I was not feeling well, so I went back. I had my $500. That's how much I was able to save. Think about it, you're coming from India and you have to pay a lot of other things. So, I was able to save $500, at least I've seen my goal. I can go back and get my bike.

When I went back, I got engaged with my wife. Then we both were thinking, what should we do and all those things. The same company who brought me to the US called me back. They said, "If you want to go back, we have a long-term assignment for you." I came back in November '96 and I never left after that.

Darin: I have to imagine that your goals have gotten a little bigger than the $500.

Ajai: Yes. See, I know people always have oh, I have this million-dollar goal, billion-dollar goal. I never had those goals in my life. As long as I can live, I can feed my family and I can support my family back home, it’s enough. I come from a very humble background. My father was a teacher and my mother, she can write her name, that's it. That's the only thing. She never had any education at all.

I have five sisters, so I'm the middle child. Coming from an Indian background, as the only son, I have a responsibility to support my family, not just here, but back home, too. I tried to do all those things, whatever I could do for the family. So I supported them and my parents are still there.

You Learn the Value of Hard Work from Humble Beginnings

Ajai: It was a humble beginning. I was born in a very remote area of India on the north side. My village has around 1,500 people or something like that. It must have grown by now.

Darin: Your family was probably a big piece of that. The families could be pretty big in India I was told.

Ajai: Oh, yes. My uncle, my father's brother, his family and our grandparents used to live with us. My uncle had five kids. At one point, there were 17 people in the same house. That's how I started. It was fun. To be honest with you, I never thought that we had anything. Everybody had food, everybody was having fun. Fortunately, I was very good on the education side. So I studied because there was only one school in the entire town. You go there. My first introduction to English was in sixth grade where I learned writing ABCD. That's it.

Darin: So you come over, would you say that the US is the land of opportunity?

Ajai: I will scream at the top of my lungs that this is the country of opportunities. Think about a person like me, who started with that, who came into this country with a goal of $500 now sitting on an eight-digit net worth.

Darin: Did you guys hear that? He just said his goal was $500 and now he's sitting on a net worth of eight digits. I've heard it over and over again from different people that have come over here from other countries. A lot of them from India, with very little to nothing and then have made their way.

How People Realize the Value of Hard Work Early in Life

Darin: Then I see it with young people today in the US who feel like they don't have opportunity. I don't know what the difference is. Maybe it's because they've grown up with stuff and they don't cherish it like you did coming from a village of 1,500 people. So you must see it where you live, like other people. Why do you think there's such a big difference?

Ajai: You mean the mindset?

Darin: Yes. The mindset in terms of somebody that's just coming over from out of the country. They're like, anybody can achieve if they put their head down and work at it. The people that grow up here may not believe the same thing. They may believe "The economy is tough and this is tough. How am I going to do better than my parents?" This and that, and other thing.

Ajai: It’s all about mindset and your effort, like how much effort you are willing to do. When I was in college, if I remember correctly, my father’s paycheck was 5,000 rupees per month. That's right. If you count, let's say 35 rupees per dollar, so it was $150, something like that. We were six kids, and all the expenses, but it was fun. So think about it.

Right from the beginning, I learned the value of hard work and getting associated with the right people because I had a chance to go to one of the top institutes in the world, IIT. I don't remember what the percentage of acceptance there is. It must be 0.001, something like that because it's hard.

The Right Mindset

Ajai: When I was in college, I used to go and teach my own classmates, so that I could earn something from them. I did that and I still do it. If people want to see from the numbers perspective, I don't have to work, but still I work 15, 16 hours a day. It's fun. I enjoy it.

So the right mindset, willing to do hard work, and associating yourself with the right people. Those three things will definitely help you. I have been very lucky to learn throughout my life. Somehow, I don't know what I do, but somehow I've been associated with the right people right from the beginning.

Darin: Why do you think that is? Why do you think that you connect with the right people? It's a big thing. Proximity is power, and being associated with the right people. Why do you think that other people are attracted to working with you?

Ajai: I can give an example. Go with the least expectation from someone you are trying to work with. Try to see what value you can add to that person, and then start from there. What will happen, slowly, those guys will see value in you. It's almost impossible to partner with Tom Lafferty and Mike Hardage, you know that. The big guns in the group. I have been with them since day one when I started with the group. My first deal was given by Michael Becker. Let me start over how I came into this real estate side because that will be so funny, you will laugh at that.

Hooking Up With the Right People

Ajai: So I moved to Dallas in 2003. It was an IT job. I was working with Deloitte Consulting at the time. Then I moved to a startup company and worked with them. In 2008, I started buying single family homes. I'm sure you know 2008 was a time when everybody wanted to run away from those things. If you remember, there was a bank called Countrywide Bank and basically, it had a huge portfolio of single family home, foreclosed properties. Bank of America bought Countrywide Bank. So I bought my eight single family home in the heart of McKinney, it's on Virginia and Custer.

Darin: I'm in Prosper, and I know that area very well.

Ajai: I even have a property in Prosper, too. So in 2008, 2009, I bought eight single family homes right after one or one after them. Somehow, I hook up with the right people. I got a real estate agent. His name is Israel Flores, one of the best friends I ever have. He introduced me to the single family home business.

At that time, I didn't have a lot of savings. So, in order to buy a home around $155,000, you have to bring around $40,000. So whatever I had in my savings, I put it in those eight homes. I know a lot of people say that, oh, I don't like a single family, it's hard to manage, and all those things. I've been managing that for about 13 years now.

Darin: You still have those eight homes?

Ajai: I just sold one home. I bought it for 165K. I put $40,000 in that one. That home was never vacant for 13 years. I refinanced it two times. The same home, I sold for $470,000, just three, four months back.

A Good Time to Take Some Risks

Ajai: So those single family homes have been 13 years. Some of my tenants have been with me almost the entire time because they pay on time. I take care of the home, just a simple business model. If you take care of your clients, they will take care of you. They will pay you rent. If you don't take care of them, they'll definitely give you a hard time. I bought that. At that time, I had a cash flow of around $3,000 from those eight homes. My wife was working on the IT side. So we thought, this may be a good time that I can take some risk here.

So I started my own company. We built a software, an online tutoring software. Specifically, it was focused on the India side. 95% of my family are teachers in India, and I really wanted to do something on that side, so I built this product. A student can go online, take some classes, they can take some tests and this software will evaluate them from 1 to 10 where they are, on all kinds of things. I spent almost one and a half years working so hard on that thing. People who build softwares will understand, they will be able to relate. It's tough. I failed miserably.

Darin: Did you really?

Ajai: I didn't even have a single client who's willing to buy my software. There was a time where I said, okay, give me 100 rupees per month and have it. 100 rupees per month, like you think about it, nothing. Nobody came. That was a big lesson learned for me, a big lesson learned.

Knowing the Value of Hard Work Makes Failure Easier

Darin: So you failed on that. Is that when you made the decision to try to go bigger? How did that happen?

Ajai: No. I had to go back to the workforce.

Darin: So you went back and got a W2 job.

Ajai: Yes. At that time, I was also saving in real estate and stocks. If you remember 2008, '09, '10, in those three or four years, if you do it right, you can make tons of money. I made my first million from four stocks during that time.

It was Las Vegas Sand. I can tell you they have a sticker symbol also right now. So Citibank, Las Vegas Sand, Bank of America, Apple, and Microsoft, these five. For me, that was a good thing. At least, I was not broke. A lot of people, what happens when they go through this whole cycle where they fail miserably, the first thing they think about is how they will say to their family. For me, that was the case. So I have this single family home. My wife was working and I went back to the workforce again.

Here is what happened. In 2014, if you Google REI Expo 2014, mobile home investing. So, there was an REI expo here in Gaylord, not too far from where I live. I live in Irving, right? My same friend, Israel Flores, who was my realtor, called me on a Friday evening. He asked me, "Ajai, what are you doing this weekend?" I said, "Nothing." He said, "Oh, I bought two tickets for this REI Expo. One of my friends wanted to come with me, but he couldn't. Can you come?" I said, "Why not? Let's go."

From Mobile Home Investing to Multifamily

Ajai: So me and Israel, there was one more guy, we all went to this REI Expo in Gaylord. Our goal was to meet that guy who was teaching us how to invest in mobile homes. I would really appreciate it if you can Google it. You will see the photos of that guy. I still saw that online. So we went there. The process was you go to that entrance, and then you need to tell where you want to go and talk to someone. This guy was busy like hell.

That guy who wanted to teach mobile home investing, his room was full all the time. There were only 50 people who could go at a time and he was busy for the whole day. So me and Israel, we were standing outside the room of the mobile home guy. Next, we saw a lady standing outside and she was trying to say, "Can you come to our seminar here?" You know who that lady was?

Darin: Who?

Ajai: Jen Sumrok. That's in 2014 January, so January 25th or 26th, if I remember the date correctly. Brad was teaching there, and there were only 15 or 20 people where 50 guys could sit. So at that time, we sat with him, but our goal, our mind was, oh, we wanted to learn about the mobile home industry.

Darin: Instead, you're learning about apartments and then you pivoted from there.

Ajai: Oh, yes. Then Brad said, "Okay, I have a R2R." It was in March in 2014. I have R2R in Las Colinas and it's free. It used to be free. Free hot food, everything. "Why don't you come to that?"

Rat Race to Retirement

Ajai: So I went there in March. I had a chance to meet Michael Becker, Tom Lafferty, and Mike Hardage, and I did nothing after that. Then he had another R2R in November. I was in their database now. So I was getting emails. I went in November also. Again, I did nothing. In 2014, I did nothing at all on the apartment side. Now comes 2015. I went again, the third time to the R2R. At that time, I joined Brad Sumrok's Foundation membership. That's how I started. Then Mike Hardage was doing a deal in Port Arthur. You might have heard about that deal from so many people.

Darin: Let me share something with the listeners here, because some lessons were learned. The thing that I applaud you on is that you actually went. You ended up going into this other room, you learned about apartments and it piqued your interest. Then you went to this R2R. What does R2R stand for?

Ajai: Rat Race 2 Retirement.

Darin: So Brad Sumrok has three times a year, weekend events. It's a mindset shift in terms of looking at single family homes to doing large-scale deals. You went and attended two of those. I applaud you for doing that. Looking back, I'm sure you're like, "I should have taken action after the first one." You know, and that's what I would tell the listeners.

The first action step is actually getting out there and going to a conference, or going to a meetup. It’s reading a book or listening to a podcast, like educating yourself first. Then at some point, you have to make a decision like, I'm going to actually do this.

Knowing the Value of Hard Work Makes You Unstoppable

Darin: For Ajai here, it sounds like that decision wasn't made until the third time going to the conference. But you made that decision. Once that decision is made in your head, it's like there's no stopping you.

Ajai: Definitely. During that time, even though I didn't join Brad Sumrok officially, I was in touch with all these guys like Becker and Hardage. So every time, at least they knew me, oh, there was this Ajai guy. In 2015, Mike Hardage did this deal in Port Arthur, Arthur Square. I invested with him. He was looking for another deal in Beaumont. I requested him, "Can I become a KP in that deal?" So I became KP with him.

In 2016, Michael Becker called me and he said, "Hey, I have a hundred unit deal in Mesquite, and if you are interested in that." Because I used to call him, "I need to have a deal," and you know that. So he called me and said that he has a deal, it's off the market. There was no concept of on market, off-market at that time. So you know the broker. This was a seller. He was definitely not in the United States. He was somewhere out. We had to communicate through his son-in-law. He was in LA. So we bought this deal for 5 million.

Darin: Michael was acting as a broker in that instance?

Ajai: Oh, he was doing everything. He was acting like a broker, he helped us to do the lending part, and he even helped us to get the management company, everything. I owe him big time.

The Hardest Deal to Have

Ajai: I said, hundreds of times to Becker, "Man, I owe you so much because of that first deal." You know that. That is the hardest deal you have. Then Hardage joined me on that one. We worked together. So we bought that deal for $5 million. It's 100 unit. In 2018, after 22 months, we sold it for $10 million. If I remember correctly, that was the very first deal, which crossed 100K per door mark.

A lot of deals were not being sold at that time. One of our fellow Brad Sumrok guys, he bought that from us. So for that $5 million deal, we raised 1.25 million. The rest, we got on loan. It was a Fannie Mae loan and fundraising was not the issue at all there and I'm surprised. One time, I always think about it. What happened there? Why didn't we have an issue? So 10 of my very close friends, somehow they trusted. Then they put a 100K and Mike got a couple of guys there.

Fundraising was so easy. Even in my first deal, and that was still like we have done $325 million worth of real estate right now. We never had any issue with the fundraising. I'm not saying it is easy. Sometimes it’s depending on how you go from there, but we raised $1.25 million. If I remember the number correctly, after 22 months, there was a prepayment penalty because we sold it earlier. We were able to give 178% return to the investors. If somebody has invested 100K, they got 278K from us. That was my, I would say, first home run deal.

The Worst-Case Scenario

Ajai: Then in 2017, we bought two deals. One was here in Fort Worth. I definitely want to touch base on that, because that is the worst-case scenario for me. People know that something can go wrong here. In the same 2017, I bought with my another partner, another deal in Morrow, Georgia. I will tell you why we bought that and then what was the process. So let me touch base on the Fort Worth deal first.

Darin: Before you do that, let me just share with the listeners some things that I think you did very well. One is, even back when you were doing this, when you got into the single family side, you had a realtor friend that already knew how to do it and you leveraged his experience. So he knew how to do it, and you didn't know everything, but you jumped on board with somebody that had experience. That's very important.

Secondly, it was a weird way that you got there in terms of the multifamily side. You were going for mobile home parks, but when you decided to go multifamily. So, you went to a mentorship group where there were a lot of people, like-minded people that were looking to invest. There were a lot of people that were successful.

You mentioned his name a number of times, Michael Becker. Some people know him. If you're in the Dallas area, you know Michael Becker. He's head of a company called SPI Advisory and he's done incredibly well in the multifamily space. He was an experienced guy. You, being new to the industry, had somehow developed a relationship with him.

Learning the Value of Hard Work and How to Build People’s Trust

Darin: He actually called you and said, "I have a deal." That doesn't happen to everybody. You must do something very right to build people's trust. To get people on your side pretty quickly that they think of you in that type of circumstance.

Ajai: Becker and Hardage knew me very well. Michael Becker knew that I'm going to work with Hardage on that one. That relationship with Hardage worked out very well. That's how this deal was given to us. Then going back to this Forth Worth deal, so we bought this 108 unit deal. I forgot the name that he used to call it. We bought this deal from a guy who was self-managing this deal. There was no third-party management company. There's a big lesson learned that I'm going to share with your listeners here.

When we got the financials, this deal was 95% occupied and everybody was paying rent on paper. We got a Fannie Mae loan and everything from it. When we really acquired the property, we failed based on that. Like, this is a perfect thing and all kinds of things. When we got the deal, we saw the collection drop almost 40%. We had to go through the entire re-tenanting process for this deal, and we had two fires.

It was whatever you can think about that can go wrong in a deal, it went into that deal. But one thing we never did, we never had a cash call with that deal. That was the one deal where I used to go every week, personally, even though I live here in Irving. The deal was in Fort Worth. When you go there, you will always find some surprises. It was tough.

An Opportunity to Learn the Value of Hard Work

Ajai: We came to know that somehow, the seller who sold this deal to us was not collecting money. So the rent, the T12 and rent roll he gave to us may not be real. You cannot have a 40% drop in income next month after getting them. Something he did, which we never understood, but it gave us an opportunity to learn about the business. If something goes wrong, how to stand up. We have to go through the whole thing, re-tenanting process.

One suggestion I can give to your listeners is, if you are buying a deal from a guy who is self-managing it, please ask the bank statement from the guy. Please make sure that whatever you do, never buy a deal if you don't have the bank statement. That will give you the reality, whether the deposits are being made to the account or not.

Darin: What Ajai is saying here is you get a T12 and you get a rent roll and the balance sheet. Then you're reviewing that data and you are using that for your analysis. But in your due diligence, ask for the bank statements. If they're saying that they're collecting $100,000 a month in rent, and you're seeing deposits for $40,000 a month, something's not right. Have the due diligence to check on that before the sale goes through.

Ajai: Specifically when somebody is self-managing the deal. If there's a third-party management company who is well known, they won't do those things. But if someone is saying that it is a self-managed deal, please ask that and you will be surprised. You will be surprised to see something.

How the Market Saved Us

Darin: So you bought that deal. What ended up happening with that deal? Do you still own it?

Ajai: We sold that deal in 2020, after three years. At that time, when we bought it, it was a hundred percent return in five years. We were able to maintain 20% per year's return. So we made money.

Darin: You still return after three years, 60%, even though the deal was really tough.

Ajai: It was tough. Market saved us, that's what I will say. There is the buyer, I'm not sure whether he was part of a group anywhere. He bought it, and so we sold it. At least one had it for me. That was my second deal which grew full cycle. Now, let's come to the third deal, which we bought in 2017 at the same time. This one is 230 units in Morrow, Georgia. Morrow is just 10 miles southeast of Atlanta Airport.

During that time, my partner and I built a relationship with this management company called SMP. They're very big in the Georgia site. So I had a chance to go and meet the owner, Cindy and Angie Smith, and we like them. So, that relationship keeps building. Then we built a relationship with a broker, he's with the Brown family, Barden Brown and Chandler Brown. His father, Bo Brown, started that company. Relationship building was continuing because that's what it is. It's one piece of advice I can give to anyone. The relationship in this business is the key.

Darin: Why is that? I have a lot of people on the show who talk about the multifamily business, being a relationship-driven business.

Why Relationship Matters in the Real Estate Business

Darin: The people that are in it understand it. But people on the outside that are just starting out and they're looking at it, whether they're trying to be passive or whether they're looking to get active, they hear that. But what is it? Give us some examples on why that matters.

Ajai: If I didn't have a relationship with Michael Becker, I would never have my first deal. If we didn't have a relationship with Barden Brown, that deal was not on the market if I remember correctly. He came to us. If we didn't have a relationship with Cindy and Angie Smith or in SMP, we didn't even know who to contact for the management side.

Darin: That's huge with brokers, with lenders, and everybody else. These deals, it's not like you close them in two weeks. Between going on, looking at the data, putting in an LOI, getting in on the contract, to actually closing on it, that could be a three to four-month process. Nobody wants to waste their time with people that aren't going to follow through like they said they're going to.

Ajai: One more example, we bought a deal called the Oaks in Athens, Georgia. You know who got that deal to us? It was our lender. That deal was under contract with someone else and something happened with their loan. This guy, Vincent Roger, he's with Walker & Dunlop in Georgia. He called me or Mike Hardage and he said, "Oh, there's a deal. If you guys can put your act together, the deal can be yours." And we got it. That deal is a cash cow.

The Nightmare Deal

Ajai: I'm going to give an example to you that we have returned 80% of equity back to our investors within two years. We are keeping our cash flow at 35% annualized basis.

Darin: 35%?

Ajai: Yes, of their remaining equity. We never missed a single quarter of where we didn't give 10%, we just held it for some time during the COVID time. Right from the beginning, we have been giving that. So going back to this Morrow deal, that deal was a nightmare. It was a very rough area. When we bought that deal, we had 10 down units because there was a water break in. We’ve built those 10 units back to improve our income.

We had fires, we had shootings, we had everything. So we built our entire office where we had the office, the laundry facility, the clubhouse, everything. It was one stand alone building. We were so happy. My partner and I went there. We took the photos, and we posted on that. Two weeks back, I got a call from our management company, and she sent me a video. There was something burning, on fire. It's hard. Sometimes we get worried. I said, "Why is she sending that?"

Our brand new office, everything was burned to the ground after two weeks of building that. Think about it. Because we have gone through it, we are out of money now. We’ve spent the whole thing there and we had the money just to do our unit upgrade. We had to go through the whole claim process and we added four brand new units around that office. So our collection, if I remember correctly, used to be below 100K per month, there was a point.

Burning a Building Will Only Fuel a Person Who Knows the Value of Hard Work

Ajai: When we sold this property to Tauheed and his group, it happened two months back. So the collection was almost touching 200, maybe more than that. Let me give you the numbers so that you will know what is possible in this business. We bought that deal for $12.4 million, we raised 3.25 million for that deal, and Tauheed will laugh at that.

We sell that deal to those guys who are sophisticated, who know what they are doing. We’ve sold it for 29.4, so $17 million difference. Our investors are here, and we're still going to distribute a good chunk of money. We have already distributed 275% back to the investor. Somebody who had invested 100K with us, they have already got 375K from us. We are still sitting on money because we are waiting for all these.

Darin: They got their original 100K plus another 275K before it even sold?

Ajai: No, after we sold it. We haven't closed our books yet, but we are still sitting on almost 15% more equity, which we'll return back to them. So it will be almost 300% back to our investors and three or four years, whatever you want to count it.

Darin: I just got involved in the multifamily world about four years ago and I started investing passively and got involved as a GP also.

A Proven Market

Darin: I didn't know if it was real, but like what Ajai is saying, I've seen it in the deals that I'm in and talking to other syndicators, it's real. People have been doubling their money or more in three years. It's the same philosophy if you are in a single family. I was never a single family investor, but it's the same philosophy as a single family investor. You're taking something and you're improving it and then you're selling it for higher value.

You know, just in the multifamily space, you're doing it by either repainting the outside of the property. Or putting in a dog park and a playground area and/or you're fixing up the interior units to market. You can see other properties that are close by that have already done it. It's almost like a proven market where you can see that they're getting $100 or $200 more per rent down the road. If you just buy this other property and then fix it up, you should be able to do the same.

Ajai: Two more examples quickly before we go to the next segment here. We bought two deals in 2018 in Arizona. It's a city called Mesa in nearby Phoenix. So we paid 95 per door and somebody just contacted me for those deals for 275 per door.

Darin: Describe the difference in the markets. Arizona, Dallas, Georgia, those are three different markets. How would you describe, just briefly at a high level, the differences between those markets?

Ajai: Let me tell you what the similarities are. These are the landlord-friendly states. I will be the last person to buy anything in California because it's not landlord-friendly.

People Who Don’t Know the Value of Hard Work Complain

Ajai: It's very hard to evict, plus look at the employment growth there. In Arizona, our one-bedroom used to be $750. We have one and a half bathrooms there. Last time I saw, it is going for 1550 because these people are paying for their rents. These people are making money out of there. It's not something that if you don't have a clientele, you don't have any tenants over there. You cannot do that.

Darin: I'm in the north Dallas market and just single family real estate is crazy. People are complaining. But there's a lot of people that are moving in from California and Chicago and New York. They're like, even though these prices are high comparatively to what it was three or four years ago, they think it's cheap. So somebody that is paying 1550 for one bedroom in Arizona, they may have moved from California and they were paying substantially higher than that.

Ajai: Very much possible. So, that was one deal. It's not like you can just start asking 1550, you have to improve the property. In these two properties, which we have in Arizona, we took care of all the exterior. In every unit, we even have a washer-dryer. Now, in one of the deals, we have a huge maintenance shop.

Three Opposites Attract

Ajai: For a hundred unit deal, you don't need that much, and there is a small area. So we are going to build a unit there. In order to build the unit, if I remember correctly, the total would be 150, something around that. If you put the NOI, that day when we built it, it is more than 300K.

Darin: That's massive. Let me shift gears on you a little bit from talking to the deals. Just from talking to a lot of other people in the business, I know you guys have killed it deal after deal. That's why I was excited to have this conversation. So you're partners with a couple of folks. Tom Lafferty, he was on the show. You're also partners with Mike Hardage. How do you guys divide up your responsibilities between the three partners?

Ajai: Let me tell you the funny way. We are three guys, literally, you can see when we are on Zoom. A lot of people think it's easy to underwrite, and all those things, but we take it so seriously. When we underwrite a deal, before we even submit any offer, we spend hours and hours together on Zoom discussing each and every single detail about the deal. I'm not saying that we know everything, but we try to go to the minute level of what we can do.

So when we are on the Zoom, most of the time, Mike Hardage is presenting. Tom is trying to go lower. I try to go high. So think about it, we are all three. One is a driver, one is a brake, and one other is a gas pedal. This is how we do it, and you can see it in every meeting, and anything.

Knowing the Value of Hard Work Can Be Humbling

Ajai: Seriously, to answer your question, me and Mike have been doing deals together.

Darin: So, Tom is the one that he slows down and you're the gas pedal?

Ajai: Oh yes because I have data to prove. I'd say, "Come on, let's look at this." Tom is, "Man, it's too high." I said, "No, data supports it."

Darin: I'm on Tom’s email distribution for investors. I was actually in one of his deals as a KP, and we more than doubled our money.

Ajai: I know that deal.

Darin: When I get an email from Tom, I told him, "It's almost like you're selling against the deal." Like here, the email, you read it, and it's like, "Well, I was going to send it to a few people. I might send it to more, but if it works, it works. If it doesn't, it doesn't." It fills up like that. He has a very humble way of getting in with people.

Ajai: Sometimes when you read his email, he's trying to tell you, "Don't invest in this deal."

Darin: It almost sounds like that. And then people are like, "No, I want in."

Ajai: Going back to your question here, Hardage and I started working together right from 2016. We did several deals together, five, six deals, we worked together. So the Oaks deal in Athens, Georgia, it’s what I was talking about, where we refinanced the whole thing. Tom joined us there. After that, we did four deals together. We all three complement each other. I come from an IT background, so I bring a lot of processes.

There’s Nothing Wrong With Learning the Value of Hard Work

Ajai: For me, the asset management side is very easy. We all have to do fundraising and deal sourcing. As an example, the last four deals that we did. The Houston deal came through Mike because he's there.

Then the Birmingham deal, this broker in Birmingham, Alabama called Tom. Tom knew this guy, and that's how we got that deal. There was an off-market deal, which we did here in Weatherford. Purely, Tom got it.

The Georgia deal in Augusta, I got that deal. Basically, I worked with these Cushman guys, and had a very close relationship with the group there. Nelson Evans called me and said that I did the deal. He bought that Oaks deal. They were the broker in that one. He called me and said, "There's an off-market deal, this guy does not want to go through the whole process." You know, some sellers are like that. There's nothing right or wrong here.

Darin: As long as they get their number, they're happy with moving on.

Ajai: He gave me a number. "If you guys can meet this number, the deal is yours." We were thinking maybe we can offer something less. So we offered something less, and the deal was awarded to someone else. We were a little bit sad because it was a $46 million deal. So I forgot the deal and said, "Let's move on." I got a call from Nelson again, "The buyer could not raise equity. He has issues with some family, too. If you guys can come wherever you are, the deal is yours." We got the deal.

Transparency

Darin: Again, relationship. You don't burn bridges and you keep that relationship open. All of a sudden you get that call back. I wanted to get a couple more topics discussed. One, you mentioned you started with 10 investors and now you have over 800 individual investors. Talk about that process. How does that happen? That's important for the listeners to understand that you do one deal and then it can compound and grow from there.

Ajai: If you look at our history, we never market anything here. All these 800 investors came through as a reference from someone, an individual person. How did this thing happen?

For me, relations with the investors, that's like a family member. All our investors, I know them by name. I call them personally. Transparency is one thing.

I don't know whether you are in any of our deals. When you read my email, like most of our emails, let's say, monthly update.

Darin: I'm not, but I want to be. Definitely I'll be looking out for you guys.

Ajai: We’ll be honored to have you in our database. Every single minute detail we try to bring to the investors, it's full of transparency. We even send a full package coming from our management company as an attachment. You have the general ledger, the bank statements, your T12, your variance reports, you have every single thing in that. I and whoever is writing the report, we try to summarize it in the report so that you have all the data.

A Data Investor Who Knows the Value of Hard Work

Ajai: See, these are the $50, $60 million projects. Sometimes, things do not go the way you want it. The last thing you want to do in this case is hide something from your investors and then later become a problem. That transparency and that honesty, it should be part of your core values.

Darin: Also, as an investor, I want the good, the bad, and the ugly. When I see the sponsor, when they do things, when they are transparent. They highlight something that's not going right, but they don't just highlight it, but they actually have an action plan put together. You know, this is what we're going to do.

It may or may not work and then you may have to pivot again. But as an investor, I wouldn't want to hear, "Oh, this is going bad" and not say that you're doing anything about it. That leaves you feeling helpless as an LP.

Ajai: Yes. I come from an IT background, so you can call me a data geek. One day, I will show you the dashboards we have built over the period. We can go up to the day, up to a week's collection where you can see how things are going. If you remember, because you have been part of the Brad group here. So during the corona time. Everybody was having what you call the stress test something. A lot of people may not be using that anymore. We’ve built our dashboards on top of that, where we want to track each and every minute detail about that. We have weekly calls with the management company, we have CAPEX, and all those calls. Everybody's on the call.

When You Understand the Value of Hard Work, You Gain Financial Freedom

Ajai: We call our general partners. We’re on the calls with our manager, regional manager, everybody joining us. Those processes are there to make sure that deals are on track. Sometimes things cannot go the way you want to, but there has to be a reason. There has to be a plan in place so that you can explain to your investor, okay, this thing happened, but what are you trying to do to mitigate that one?

Darin: I completely agree with that. The last piece, if you could talk about, is financial freedom. You came over, you were looking for 500 bucks to buy yourself a motorcycle. Now, you said that you got a massive net worth and you still do this. You could hear from your voice that you're still excited about doing it. One, what does financial freedom mean to you? Two, why do you still do it?

Ajai: Financial freedom can mean differently to many different people. Let's say your expense is $10,000 per month. As long as you have some way to make that $10,000 per month without doing any work and nothing can impact you outside things, then you have financial freedom. For me, money is definitely one part. I crossed that bridge a long time back where I don't need to worry about that.

Now I need to see what I can do for my tenants, for my investors. I get so many calls and emails and I'm in the meetings. A lot of our investors told me in person that because of all the deals which we have done together with you guys, we were able to send our kids to the private college or on our retirement.

Helping People Grow by Teaching the Value of Hard Work

Ajai: One guy, he's a very close friend of mine, said, "If something happened to me in my old age, I know where I can go and get money from." I said, "Come on, we have given so much money to you."

I know we can make fun of all those things, but it means a lot if you can help people to get the similar freedom, similar opportunities. Not a lot of people have the opportunity to invest in these kinds of apartments, in this kind of business. Helping those people to still do it and keep making money for them where they don't have to worry about those small things, that gives me a drive to keep going.

Darin: You're basically saying that what drives you is that you like to help others. There's a lot of different ways to help other people. One way is to help grow their wealth, financially. Doing that through the avenue of apartment investing, not everybody knows how to do it. You guys have built processes and procedures and relationships. Now, it's not just about building your own wealth and Mike's wealth and Tom's wealth. It's all the investors, and every investor has different needs for that money, and that's important.

Ajai: Let me tell you one more thing here. If you look at all our 12 deals, which I have done in every deal, you will see a newbie in our deal. A newbie whom we have given a chance to become a GP in every deal. I know it is very, very hard to get the first break.

Paying It Forward

Ajai: You know most of those guys, how they use this opportunity and what they do with that. That's definitely up to them. But every single deal, we had a new person who we made a GP and a KP.

Because Mike Hardage and Becker gave me a chance, I was lucky enough that I got it very quickly. But you meet so many people that after many years, they don't have their first break. That is another thing that basically gives some satisfaction.

Darin: You're paying it forward. Look, in this business, I've seen that over and over again. People are very collaborative and helpful to the next guy. If you get into this business, ask people for help and people are there willing to help you.

Some other industries aren't as kind to share and to help lift you up. Then you guys are at 325 million. You want to be at 500 million in assets at the end of the year. Those are huge numbers, but then there's another guy that is at a billion or two billion.

You guys will seek counsel and that person most likely will share their knowledge with you. Then you'll share your knowledge with people that are trying to get their first deal or get their first 50 million or whatever it is. That's what's fantastic about this business. There's a lot of sharing with each other and helping each other.

Ajai: Definitely. One day I would like to see a billion in our portfolio, too. Who knows? That is possible, too.

Darin: Absolutely. What do you like to do outside of work?

The Whole COVID Thing

Ajai: I try to go biking. I'm very good on that side. I do my half marathons every year and also I would like to travel a lot. The COVID can affect us, hit us, but me and my family, we work at home sometimes 15 hours a day. So you're just burned out. You just want to go and sleep somewhere. That's usually what I do.

Darin: Do you want to do domestic or international travel?

Ajai: Both. When I go to India, typically we plan to stop somewhere, let's say in the Middle East or in Europe and somewhere. Then we spend some time and then go back to India, and then come back here. That has been our trend for a long time. But last year, we could not do it because of this whole COVID thing.

I hope this year, we can do something and travel. But I go biking because I live here in Irving and there's a lot of bike trails here. Sometimes, in the middle of the day, when my mind is boiling, I go and take my bike.

What Can Happen When You Take Action

Darin: If somebody's listening and they want to reach out to you, what's the best way for them to do that?

Ajai: They can go to my website at AimNextRealty.com. There's a contact form there that they can fill out. My number should be there also and my email address is my first name, ajai@aimnextrealty.com.

Darin: Ajai, I really appreciate you coming on. You have a ton of experience and it just shows. It really does show that if you get out there, that you actually go to a meetup group or a conference and then you take action, look what can happen? Ajai did not think that it was going to be at this stage when he was going into that mobile home conference. But because he went, one thing led to another and now he sits here. So you need to take action. I hope that you enjoyed that one. Until next week, signing off.

How to Reach Ajai Sharma

• Website