Today we have Deepika Sharma on the show! Do you want to be a successful real estate investor? Deepika Sharma is the perfect example of the saying 'winners never quit and quitters never win'. She has an amazing story of how she overcame all odds to become a successful real estate investor.
In this episode, you will learn how to develop relationships with brokers, solve problems on properties, renegotiate interest rate cap escrows, and how to leave your W2 job to become a full-time real estate investor. This information is invaluable for anyone wanting to achieve success in real estate investing. Listen and learn!
Table of Contents:
- Where To Listen To The Podcast
- The Epitome of Winners Never Quit and Quitters Never Win
- There Is No Second Option, Winners Never Quit and Quitters Never Win
- When COVID Hit, Winners Never Quit, and Quitters Never Win
- How Multifamily Will Adapt to the Big Recession
- The Power of Surrounding Yourself With People Who Believe Winners Never Quit and Quitters Never Win
- Winners Never Quit and Quitters Never Win, They Go For Bigger Deals
- How to Reach Deepika Sharma
The Epitome of Winners Never Quit and Quitters Never Win
Darin: A little background on Deepika Sharma before we start the show. Deepika and her family live in the DFW area. She was licensed as a realtor in 2016, and her focus was mainly on residential. She and her husband later decided to focus on multifamily. And she was awarded her first deal in 2020. She was best in final in many deals and kept coming up short. But she was determined to win her first deal, and she did not quit. Now, she's in six deals in over 1,400 units. This girl is the epitome of determined.
Deepika: Hi, Darin. Thank you. I'm honored to be here. I'm excited to talk to you.
Darin: Absolutely. It's going to be a lot of fun. So, just a little bit about how we know each other and then we'll jump into it. So, Deepika and myself are both members of the same multifamily mentorship group. The Brad Sumrok group in Dallas. And we actually were competing for the same property. Maybe we'll talk about that property a little bit later. But it’s the property called Kenwood Heights in Corsicana, Texas.
About an hour south of Dallas. And we were head-to-head. And they won, and I lost. That's what prompted me to start the podcast. So, partly I'm disappointed I lost that deal. Partly I'm happy that it ended up causing me to start the podcast. So with that, I typically ask how many properties and how many units you're invested in.
Discovering Multifamily Through a Podcast
Deepika: So, properties count, I think it's six properties. One of them went full cycle. And units, I think around 1,400. That's what we own and operate.
Darin: So, you said six properties, and a lot of them went full cycle?
Deepika: Just one of them.
Darin: Oh, one of them went full cycle. I'm like, "A lot of them?" I'm like, "You started pretty recently." I'm like, "How did you get that many?"
Darin: Fantastic. So, why did you get involved? And what was your background and why did you even get involved in multifamily?
Deepika: It's basically how we got multifamily. Because me and my husband, Satish, he works with me in this as well. We were looking for kind of an asset or somewhere where we can create a passive cash flow for us. Where there's some cash flow coming, and we are not just to retire from 9:00 to 5:00 kind of a situation. Satish was exploring. He is a big podcast guy. He listens to a lot of stuff, lot of educational videos and books and whatnot. So, he was exploring options, and he came across Brad Sumrok group.
Darin: You didn't go with him? He went on his own the first time?
How Conference Can Change Your Mindset and Believe That Winners Never Quit And Quitters Never Win
Deepika: No, not the first time. The first time, he's the one who went. And he was so impressed, and he's like, "This is our way forward." I'm like, "Oh." Something, I was surprised because he was so convinced the first time he went. And he was like, "Well, I think this is what we need to do, and this is something I'm convinced with."
Then later on, I went to an R2R, and we were like all in. I was already in real estate. So, I started this full-time. He still has his W2 job, but he was working on the side as much as he can. Spare some time, yes.
Darin: You said you were in real estate. In what capacity?
Deepika: I'm also a licensed realtor. I got my license in 2016. And since then I was more involved in single family. Basically helping others purchase and sell properties.
Darin: And then Satish, what's his W2? What kind of background?
Deepika: He's a software engineer.
Darin: So, it is pretty crazy to think that one conference can really change your mindset and your direction and your focus that much. But it's true. It can, right?
Deepika: Yes. Because Darin, I mean, we were already in that process of trying to figure out, okay, what are some ways that we can create some cash flow for us? Maybe have a supplemental income or something like that? And then when we went there, we saw so many success stories.
Commitment and Going All In
Deepika: And it is just your mindset. If you change your mindset, and you think that, okay, if everybody else can do it, why cannot I? So, that's how we think. And we thought, okay. We started fully sure that this is what we want to do. And we went all in. Whatever we could grab education-wise, we took that and moved forward with it.
Darin: That's fantastic. I was at a friend's house yesterday, and there were a few other real estate investors that were there. Not related to the Sumrok group. But one of them I was talking to for a while, and he's more in the Airbnb space. And he learned that space, and then he's comfortable with that space.
But I think that the important thing that you said was, you were looking for some passive cash flow. You were looking for another income source that could potentially replace your W2 income. And for you guys, multifamily investing was the way to go. There are a lot of different avenues that you can choose. But we kind of focus in on multifamily because that's our world. So, once you got involved, you made that decision, because I think that's a big deal. It's a big deal to say in your mind, "I'm going all in."
"I'm going to spend the time to do this. And I believe if other people can do it, I can do it." You said that. I think you have to have those two things first, right? You have to make that decision, and you have to believe that you can do it, right?
Deepika: Yes. Commitment.
Winners Never Quit and Quitters Never Win Is the Mantra to Success
Darin: Commitment, yes. So, then what'd you do next?
Deepika: Basically, I think when we started, it was a little bit of learning curve. We kind of educated ourselves, how it works. The underwriting and stuff like that. And then we started building relationships, and that's what we did. In 2019, we were full on putting LOIs, submitting LOIs for different properties. Visiting multifamily properties around Dallas, meeting brokers, building relationships with them.
And they knew, because we visited a lot of properties during that period. We submitted LOIs in the serious ones, and we were in best and finals in a lot of them. But back then, the underwriting was a little different. And so, we could not get to the final. We did not get awarded, but people, brokers were aware that we are serious buyers. We are seriously into this. And they trusted us.
And a lot of times they called us to see properties that were even off-market. So, that's the time that's spent basically putting the seed in the ground. Then would reap the results later. And 2020 is when we entered our first deal, beginning of 2020. And then after that, it's 2022. We are six properties under our belt. I think it was the footwork that we did in 2019 and build relationships. It is a continuous process. You just keep doing that. But that's what we did in the beginning.
Darin: That's fantastic. I guess speak to, provide encouragement to some listeners that are going after their first deal. They've put in offers.
There Is No Second Option, Winners Never Quit and Quitters Never Win
Darin: They're not getting the deal. But what I heard from you was, because you were close, you gained credibility with the brokers. That you didn't give up. I think that if brokers see people come in and maybe put in an offer or two and then they go away, they just work with the people that they feel are committed. So, you guys wouldn't go away.
Deepika: No. We would not. We were like, "We have no other choice. There's no second option. The only thing that we have is way forward. We cannot go back."
So me and Satish, we believe in never give up attitude. We think that it will happen maybe sooner, later, it is going to happen. The only thing is we have to keep doing our work. There will be days that you feel, "Oh my God, nothing is happening, and things are not going the way we want it to." But I think those are the days you just push yourself, "No, you have to keep going. It is going to happen." So, we never kept second option. There was only one option, to move forward with this.
Darin: That's huge. A lot of people will say it'll take a year. But some people, they may come out in the first three, six months, and land one. And others it may take two or three years. So, knowing that each time you go out on a property tour, each time that you meet with the broker, that you're getting that much further.
The Perks of Being Determined and Committed
Darin: And look, I've been runner-up on a number of different deals. There's a piece that feels like, "Oh man, that's wasted work." But then you think about it, and you learned about the property. You learned about the area. And you learned what the broker likes. You learn. And you can take that to other deals. So, it's not a complete waste, but it does feel that way when you don't get the call.
Deepika: Exactly. But also another thing that I want to add to that is even from broker's perspective, that's what I feel like when they see somebody who is constantly coming out there, putting offers. Walking the properties with them. They know how serious we are. It builds your reputation with the brokers because they know that you are not in this just for fun. Or just to try something.
It is something that you seriously want to pursue, and they build that trust in you. That, okay, if given this, they're awarded the deal, they will make sure that it's closed because we are committed. And we are there, out there, and we are behind them, "Okay, is that another deal?" We are always underwriting, putting offers. So, I think that builds your reputation with brokers as well.
Darin: So, talk about the balance of showing the brokers that you're committed and serious. Yet you could be a pain in the butt too, right? I mean, that balance of gaining credibility but being somebody that they want to work with.
How to Gain Credibility in Multifamily
Deepika: So I mean, what I feel is we have been in touch with them. I think there is always a property or something that they send along to us, which we think does not work. I think it's important that you let them know right away and not waste their time. "Okay, I'm underwriting," or, "I'm doing this," or something like that. I think it's important if you are unsure, that this is something you are not going after. Or this is something that does not make sense for you. Make it clear to them and they know, okay, this is something they don't want to go after. Then they can move forward but work with other people.
But if something that is, you really think works, try to keep them posted but not too many questions. I mean, definitely you have to ask whatever you need to for the deal, to underwrite the deal. Then you work your resources, and I think it's important that you don't drag it. So long that they feel, "Okay, they're just wasting my time." I think that is something important from broker's perspective.
Darin: Absolutely. That's a great point. Building that relationship with brokers. That you want to have them understand quickly whether you're engaged in that deal or not. Because they're going to mentally think, "Okay, I've got these 10 or 15 buyers that are serious. And I think that we're going to get a good offer out of this group." But if they feel like you're saying you're in every deal, but you're really only focused on a handful of those, you could lose credibility that way potentially.
Deepika: Yes. Exactly.
The Difference Between a Lead Sponsor and a Co-sponsor
Darin: So, that's great. Was Kenwood Heights your first deal?
Deepika: As an elite sponsor, yes, but I had another deal. I think just before Kenwood Heights, I was a co-sponsor in another deal that was in Houston. That's the one which went full cycle in May of this year.
Darin: Let's talk about that. Before you became a lead sponsor, you were a co-sponsor?
Darin: For the listener's benefit, what's the difference between a lead sponsor and a co-sponsor? And then how did you show value to the lead sponsor to get part of that deal?
Deepika: Let's talk a little bit about co-sponsor here. So, we were working with those partners for a while. Because at the time we were very new to the industry. As you know, it's something you always need an experienced partner on your side, on your team, that you go and put your first LOI with or get your first property with.
We were working with them for quite a while. Like I told you, in 2019 we were putting LOIs. Obviously, you have to have people who you work with, and put an LOI. Because the broker does need to see that there is somebody experienced on the team as well, who knows how this works. And so, we were working with them for a long time, and they also trusted us. We were working, we knew the market, but that property was in Houston, and we wanted to be a co-sponsor on a deal so that we can build our CV as well.
Why You Need Someone Experienced on Your Team
Deepika: And it was a curve, kind of. We bring value by doing, looking at the numbers and whatever, however we can help. Raising funds and stuff like that. So, that's what we did. And they gave us an opportunity to partner with them on that property.
Darin: That's fantastic. For the listeners benefit, if you are new to the industry, what she said is spot on. I mean, if you're looking to get your first deal, and we're talking larger multifamily, 60 units, 80 units, 100 units, 200 units. You really are not going to have a really good chance of winning that. I say you can't win it, but maybe there is a way to win it if you way overpay. But to put your best foot forward, you really do need to partner with somebody who has experience.
Deepika: Exactly. I think, I also believe, especially in the beginning when you're very new. Even as a seller, for seller, most of the people who are putting, they do see who they are partnering. If they have any previous experience. Even if with broker, we do have a good reputation and that's how we got all our deals. But for seller, everybody's the same.
They need to know, okay, this is the team who has experience and who has been doing this for a while. So they build that trust on the go when they are looking at the offers. And I think that is why it's important to have a good team and somebody experienced on your team as well. So, that is definitely an important piece.
Where Deepika Sharma’s Portfolio Started
Darin: If you're looking to achieve something, start with the goal in mind and then work backwards. And if you think about the conversation that happens right before the broker makes the phone calls, it's the seller and the broker talking behind closed doors. The seller is saying, "Who should I go with? We've got three offers that are pretty close, who should I go with?"
And the broker most likely is going to recommend somebody that they've done business with or they know from the industry. So, if you're an unknown, and you're a first-timer, it's very difficult to break in. So, you got that experience with that experienced person, and then what happened next? How did you go about your business?
Deepika: So, next was the Kenwood. And Kenwood I think is what would start off our portfolio. As I told you, from the beginning, me and my husband, we always thought we are all in. Our focus was mainly to become a lead sponsor. That was the need. But then when you go through this journey and you feel, okay, there are certain steps that you need to follow, and that's what we did.
And then Kenwood came along. We underwrote the property. We liked the area, and as you have underwritten it to yourself, so you know how great the property was. Given the basis that we got it at and the price point we got it at.
When COVID Hit, Winners Never Quit, and Quitters Never Win
Deepika: And especially that market, it's a smaller power market, but the inventory is pretty low in that market. That makes it even greater because that means that you will be full most of the time.
We went to see that property and underwrote it. Then we were even at that time, I told you that deal was going at the same time, the one that we were, the partners that we were working with. So, we were not looking to partner with them because they were already doing another team. And we were looking for an experienced partner or somebody to bring on board. And that's how we reached Dustin, to talk about Kenwood. We showed him underwriting, he liked it too. And he said, "Okay, yes, let's do it."
That's how we went after this. I think we had a relationship with a broker as well, Al Silva, who was selling that deal at the time. That also helped us. Then of course, and Kenwood was definite, and as soon as we went under contract in Kenwood, COVID started. Just right that time.
Darin: I'm sure it was stressful.
Deepika: I know, yes. When we started marketing that deal, people were really excited. Because it was how low basis, and it was working so well and everything. And then COVID hit. Then stock market crashed, and people got started getting cold feet, "I don't know if I should put my money." Because that was the very beginning of it. So, it was like, everything was unknown at the time. And people were confused what to do.
Three Feet from Gold
Deepika: And that made our life a little bit difficult. But fortunately it all went well. We were able to close on time. And we did not even take any extension on that deal. We were able to close in 60 days timeframe. Today all our investors are really happy with that deal. And they're like, "Never sell it. Never sell it." So, yes, we are distributing great cash on that deal. We are I think almost three years in April of '23. It will be three years. We are very proud of that deal.
Darin: Fantastic. Yes, I mean, you underwrite, you put offers, and you don't know when it's going to hit. There's a gentleman that I went to one of his conferences in California, Greg Reid. He had a book called Three Feet from Gold. And it's all about that. You're so close but you can't see it.
There are some people that I know that get into this business, and they put offers, and then they give up. They go someplace else and they may have gotten the next one. It is perseverance and determination. And the other thing is I think surrounding yourself with other people that have done it gives you the confidence. At least it did for me. When I saw a lot of success stories, I had the same thought as you, "These people are smart, but if they can do it, I can do it." Right?
Winners Never Quit and Quitters Never Win Mindset During COVID
Darin: So when you see that, all those success stories, and you really believe that you can do it, then anyone can really get into this game. But you have to understand that there's going to be some hard knocks along the way.
Deepika: Yes, definitely. And you will not believe, when we started in 2020, since then a lot of things have changed. I mean, sometimes me and Satish, we laugh.
Darin: Tell us about some of those. Like what?
Deepika: So, I'll tell you. In these three years, COVID came, right? Then after that the eviction moratorium. I think property management was very different before COVID hit and after it hit, after it started. The property management game completely changed. There was a lot more additional work, and then the problems will come. And the problem was that people were not able to pay rents, and we were not able to evict. But we still have to make money to pay our bills and mortgage and stuff.
So, we worked with the property management hand-in-hand to make sure that we are able to help our residents apply for rent relief programs. Because that was out there. And so, we worked on that. I mean, it was a little bit of work for managers as well. But we were constantly working with them. Taking updates, what's going on, and working on that. So, that is one thing.
The Struggle During COVID
Deepika: And then later on, it's 2022, 2021, we were still struggling with some delinquency and stuff like that. Dealing with trying to get some rent relief and stuff. Then later on the problem was getting people evicted. Because the people were not paying, and they had a long stack of what they had to pay.
But then again, we kind of worked with property management company and figured what is the best move forward. So again, rent relief helped a lot, and we were constantly trying to help residents to get some rental relief.
Then another thing, and 2022 comes, and here comes the interest rate hikes. That's the time we were closing our deal this year. It was in May of 2022, that’s when we closed our 418 units in Fort Worth. And then, now we are dealing with this. We are kind of learning a lot during this process with the different situations, the market situations that's changing drastically in these last two or three years.
Darin: Yes, that's a lot. You're right. I mean, that's a lot of change. And it definitely taught me a lot of different things. One of which was, holy cow, you own a property, and you're in a state that you think is landlord-friendly. Then all of a sudden the government says you cannot evict for nonpayment.
Deepika: Yes. Exactly.
Darin: As owners of properties, I remember everybody was scared, "Okay, nobody's going to pay their rent, and how are we going to pay the mortgage?" But what I saw was people pay for food, and then they pay for rent.
Multifamily Is a Resilient Asset
Darin: Now, there was still a good chunk that were slow pay or no pay, and had to go through rent relief and all that. But we were cash flow positive on every month where that was, I was like, "Holy cow." I've heard that multifamily was resilient in good times and in bad, but nobody could have predicted, right? Where the government says you cannot evict for non-payment. And you still are making more cash to pay the mortgage.
Darin: That's incredible.
Deepika: And that's what makes it a great asset class. As you just said, right? We heard the stories that this is the most resilient asset, but we have not experienced it. And during this time we have experienced it. You see, I think this is probably the only asset class government was supporting with rental reliefs. At the time, they were supporting residents to pay to be able to pay their rent. Because this is the most important thing. This is a basic necessity.
So, people have to live, and government was supporting it. I think it was very less in other asset classes. And I don't think there that much relief. I think there were some programs, definitely.
Darin: All right. So, I know you're not an economist, but you are a business owner, and you're an owner of cash flowing properties. Look, there's a lot of talk about 2023, big recession that's coming. And interest rates are higher, inflation's higher, we're going to have a big recession. So, what do you think happens with multifamily in that circumstance?
How Multifamily Will Adapt to the Big Recession
Deepika: What I feel is there will be a lot of good opportunities. As you said, I'm not an economist. I cannot say for it all, but what I feel is multifamily is still a great asset class to purchase. Because I think there will be a lot of opportunities. There will be owners who will be forced to sell in 2023.
But yes, we will definitely have to pivot and adjust our underwriting, ways of underwriting. How we look at the leverage and other stuff. So, definitely we will have to make some adjustments. But I think there is still an opportunity.
Of course we will have to look at this a little bit differently, but there will be a lot of opportunities, I still feel. Because the cap rates have expanded quite a bit, and I think that will continue. So, it is a good time to buy, I would say.
Darin: So, what about from, and I don't know if you've had this experience. But I've seen passive investors, I feel are getting more nervous to invest into deals. They're more cautious with all of the talk about a big recession coming. Do you see the same thing in your world?
Deepika: I do. Investors are definitely a little bit cautious. I feel people who have been investing in multifamily, for them cash flow was a big thing.
The Best Way to Solve Problems
Deepika: It is something that they really like about investing in multifamily. And I think this is something that has been impacted a lot, given the interest rate hikes. I think that is why the investors are more cautious, and they're looking at the deal.
But I think it is with time, as I told you, right? In 2020, when COVID hit, nobody knew anything, right? So, people were not sure what to do. But eventually they learned a different way of looking at the things and what to evaluate and how can we benefit out of it. What will happen with this, I think as well. Eventually, people will figure out the ways to make a more informed decision and see what works best for them.
Darin: That's a great point. No matter what asset you own, there's challenges that come your way. And if you know that there's certain challenges are going to come your way, you're trying to mitigate all those risks as much as you can on the front end. But when those things happen, going searching for other people in your space that have implemented best practices and have solved those problems is key. Because typically it's not like every single person in that space is doomed. But if you just sit on your hands and hope.
Deepika: The things will be that won't. No, it won't.
Darin: Most likely you're not going to benefit from that. But if you pivot and focus on solving whatever the problem is at hand, you're probably going to come out the other side.
Deepika: Exactly. And I have a great example for that. I'll tell you.
A Great Example of Success During COVID
Deepika: So, the deals that we own currently, a couple of deals, they were on bridge loans. We bought the cap for both of them. And we had to buy another cap, because it was expiring soon. One of the properties that we have a cap on, the cap was expiring next year. But what happens is the lender, they calculate every six months, and they escrow the amount, whatever they need to buy. Purchase the next cap, they escrow that amount. Right? So, our escrow was going to go up by a lot in December of this year because they start escrowing one year before the cap expires.
Darin: So, explain what a lot is, because I'm in a lot of deals, and I've seen some of these increases.
Deepika: So 90,000 was escrow.
Darin: And what was the payment before that?
Deepika: So, I think it was much lower. I don't remember the exact number.
Darin: I mean, I'm seeing deals where it's multiples. It's not like it's going up by 10% or 20%.
Deepika: I think it was 25 to 30,000. That's what I remember, but I'm not sure exactly.
Darin: Yes, but whether it was that 20 or 30, I mean, it was three times all of a sudden. Your cash flow has to go from 30,000 to 90,000 all of a sudden. It's like, "Holy cow." You better have the cash flow to do that.
You Can’t Just Want Things to Happen, Winners Never Quit and Quitters Never Win
Deepika: Exactly. So that's what I was coming to. That's what I told you. You were saying we cannot sit on your hands and just wait for things to happen on its own. Because our cap rate that we bought, it was two years back in 2020, and it had inherent value of its own. Which was a lot because at that time the cap rates were not as expensive as they are today. And our cap rate was at 0.75. So, what we did is we used the inherent value of that cap and took another. We amended our cap to a little bit more extended period, and increased the rate cap, just tad bit. That reduced our escrow to half. So now the escrow has gone down to 45,000, whereas it was at 90.
Darin: Explain that again because, look, there's passives on here, but there's also a lot of other syndicators. And they're dealing with this on a lot of different properties. Some may have taken advantage of doing something like this, and some may not have. So, explain again what you did. You went back to the lender that you currently had?
Deepika: Yes, so basically we were getting these emails because our rate cap has this value. They sent a valuation letter to you. Actually it was my husband Satish who actually became proactive and innovative with it. He's like, "I think we can do something like that." And he'd reached out to the lender. He'd figured out, okay, what is the way?
How to Gain a Massive Win to Your Cashflow
Deepika: They said, "Okay, if you amend the cap rate currently," we have to increase our rate cap was at 0.75. We had increased to 2.09, which was acceptable to lender. And that way, because it has inherent value, we use that money to buy another rate cap. Because we have an extended value, so now our escrow has went down. Because our rate cap was supposed to expire next year. Now we have bought it until '24, so the escrow will start, it has reduced. Because they will start smaller amount, and then eventually they will again recalculate later. So, that's how it helped us.
Darin: So, is part of it that you're escrowing for a longer period of time?
Darin: You're escrowing for a longer period of time. So instead of it going up 60,000, you can do it for two years, extend it. And then you're doing the escrow for a longer period of time so you could cut it in half? That's a massive win for the cashflow.
Deepika: It is. So that's why I told you I had the example like you were talking about. We have to find ways to solve the problem. We cannot just sit on our hand. And there is a way. There's always a solution for a problem. You just have to look in detail or deep enough and dig deep enough to figure out what is the way to move forward with this and still have our investors protected.
The Power of Surrounding Yourself With People Who Believe Winners Never Quit and Quitters Never Win
Darin: That's huge. And that goes to networking also. I think that in this space, people think of networking all about meeting passives. People that are going to invest in your deal. And that is important, for sure. You need to be able to build a group of investors that want to invest in the deal so that you have enough capital to purchase the property.
But there's also a ton of value in building relationships with other syndicators, other property owners. So that if you run across a situation, and you're like, "Oh, you know what? I know that this person had a similar situation." You can call that person and in a matter of five minutes, find out how they handled it, and you could end up saying, "You know what? That's a great idea. I'm going to do that same thing." Versus if you just were a property owner on an island by yourself, don't talk to anybody, it's much more difficult to find that solution.
Deepika: Yes, I agree. I think a lot of times, I mean, that we go to Brad's mastermind events, and I meet other syndicators quite a bit and we discuss stuff. We definitely learn a lot from each other. And I think networking has that power. You surround yourself with similar-minded people. And there are a lot of things that are a pointer or two that you can give them. I mean, this is something I discussed in the last event. I met somebody and they were surprised, "My God, this is a way to do it."
Multifamily Is a Community of Sharing
Deepika: I'm like, "Yes." And that is something we can share our knowledge, and that helps others. Then they can tell us something that they have been doing that kind of helps us with probably something. Or maybe the issue that we are facing at that time.
And so, a good example is we share contacts. We were looking for some vendors. I get a lot of those contacts from my network of syndicators who have worked and have previous experience. Because if somebody has already worked with them, they know how good or bad and if this is something you should want to go with or not.
Because it's a time-consuming process, because me and Satish are mostly in our deals, we do the rehab. The CapEx projects and business plan and implementation. That is what we mostly focus on. And so, we have to find the good vendors to do stuff for us and negotiate with them and stuff. So, definitely those things, if you have a vetted source, that helps a lot. Saves our time, basically.
Darin: Yes, that's huge. And I would say this. I don't know why, I guess because people partner a lot because the deals are big. But I've never seen any industry like this one in terms of, you said share knowledge. That people are just willing to share.
You share with the next guy and help him up, and then the guy above you helps you up. And it really is an incredible industry in terms of everybody sharing. And everybody benefits.
How Multifamily Helped Deepika and Satish
Darin: It goes to mindset too, I think. Some people think, "If I share, well, I'm giving away my secrets." Yes, but you know what? You do something good for somebody today. Then it may be the person that you helped or it may be somebody completely different, and it comes back around. So, that's huge.
Talk about the impact, wealth-building impact that this has had on your life in such a short period of time, three, four years. Six properties. I know the valuations and how they can go up and how that can impact you. So, talk about that a little bit.
Deepika: Well, I would start with my husband, Satish, has joined us full-time.
Darin: So, he's no longer W2 employee. For how long is that?
Deepika: I think he had been in IT industry for almost 20 years. And now, his last day was last Monday. He is doing this, although he was always involved. But again with W2 job, you cannot focus on this as much as you want to. Because you have your other W2 job to take care of. So it takes a lot of hours of your day. But now, since, and that speaks for itself, how this helped us. This multifamily investing helped us grow. We are financially independent enough that, okay, he can come into this.
Winners Never Quit and Quitters Never Win: The Impressive Rewards of Multifamily Investing
Deepika: And I think this is something we want to expand further. Because I think this industry has bigger rewards than any W2 job can provide you. And we were able to 10 X our net worth, and that is another thing that we are proud of.
Darin: Hey, keep smiling. I mean, hey, those two things just combined, 10 X your net worth, and your husband was able to leave his job of 20 years. That says a ton. And you know what? You're smiling, and you like what you do. That's the other thing is I see people that are in this space, and they get to a certain point, that you could just go off to the side. But people just keep giving.
People keep getting in the game and keep buying more properties, helping communities. Helping other people get in the industry. And helping grow the wealth of all the passive investors that invest in your deals. I mean, there's so many different impacts. That's awesome. I love seeing you smile about it.
Deepika: Yes, and I would like to tell. It was a difficult decision, because he was at a very good position currently. It was a huge income that he left behind because we know how much this industry can reward us if given the option to 100% focus on this. And we said, "Okay, well, our time is better spent here than there." So, we decided to take the step.
Persistence Is the Key to Succeed in Multifamily
Deepika: And I think I would say if somebody is on the edge of, if this is something they want to go, I think you should. It is a great industry to be in. And yes, persistence is definitely a key. You have to stay focused.
Darin: Persistence is definitely key. And the other thing is, I know some people, and your husband is included in this, that they stayed in their W2 jobs and did this in addition to before they gave up their W2 job. If you just give up your W2 job, and you go full speed, you just don't know if you're going to be the person to get the first deal in three months or three years.
Darin: So, you won't be able to support yourself. You have to be able to give yourself that running room. And it was a perfect situation for you guys. Where in a couple, maybe one person can afford to spend all the time, and the other person is waiting it out and trying to build up that cashflow so that the spouse can leave as well.
Deepika: That's what we did, yes.
Darin: Talk about fear. I mean, were you nervous at all? Especially in the beginning?
Deepika: Yes, I would say yes. In the beginning, yes. Because you're very new to the industry. I mean, I was not new in the sense I did not know real estate. I knew real estate because I was already in real estate for three years.
Winners Never Quit and Quitters Never Win, They Go For Bigger Deals
Deepika: But then again, multifamily is a different ballgame. And then getting to know, building your reputation, definitely. And then getting into a deal, initially. I mean, as you know, it is always as you get into a new deal, there is little bit of fear somewhere.
But if you are confident that we are going to resolve anything that comes on the way, so we were confident enough that, okay, whatever comes, we will figure it out. So although it is little scary in the beginning, but we were like, "No, we have to go with it."
And me and Satish, we believe going bigger is the way to go. Because even if it's a bigger size, and that's how we focused finding bigger size deals is the amount of work and efforts that goes into this deal is same. Even if you're doing smaller sized deal or a bigger sized deal. So, we decided, okay, let's just do big focus on a little bigger as compared to smaller ones because we are going to do the same effort. And if there is a problem, we'll resolve it, and we'll keep going.
Darin: I had somebody on the podcast recently that said, that also goes for larger deals. He said thinking about going to maybe a slowdown. He just gave this one example, it wasn't the only reason for going for larger. But this was one was, "Hey, if maybe we have four people on the inside leasing, and four people on the outside. But if the economy slows down, we could potentially run it with three and three, and save that payroll."
Deepika Sharma’s Next Big Stretch Goal
Darin: That's a potential. Where if you're in a property that has one leasing person and one maintenance person, you really can't do that. I mean, I guess you could have a temporary person. But it's very difficult to save that payroll cost as compared to a larger property.
Deepika: Right, that's true.
Darin: So, where do you go from here? I mean, you've done so much. What's the next big stretch goal for you?
Deepika: Well, I think we continue going after deals. Now that we are a bigger team with me and my husband both full-time in this, and so the idea is to basically expand. Try to hire people to help us with things. Because it's a lot of work, and there are things that we can get done. So, maybe hire people to get some stuff done and not waste our efforts on those things.
Instead we are focused more on finding good deals and how, resolving issues that needs more of our attention and not work on the certain things. Like marketing and stuff that we can outsource, we would like to hire people for that. So basically, expanding our business, and we are definitely setting our goals for 2023 and working on that. But yes, this is the idea, is to expand our company and hire more people, make a team. Eventually see how we can bring more efficiencies to what we have.
Darin: It's funny, because I think when you start the journey, it's pretty similar for most people, "Look, I'm trying to get financial independence. I'm trying to build wealth for my family."
The Multifamily Investing Journey: Winners Never Quit and Quitters Never Win
Darin: And then later as you get more and more experience, then you realize you have other people that are coming to you. They’re saying, "Hey, how'd you do it?" And you start helping other people, and then you actually have a business. And instead of just, "How do I get the next deal," it's, "Okay, well, how do I build the infrastructure of my business to handle this?"
Darin: And where do I want to focus? And how do I offload certain tasks to other people? So, some of the challenges and the problem-solving changes a little bit. Well, good for you. I look forward to watching that. I think that, going back to what could happen with the economy and multifamily being a really strong asset class, I wish I had a crystal ball also. We don't know if rates are hitting the ceiling now or if they're going to keep on rolling higher and higher. We don't know if inflation is going to keep going or whether it's going to turn around and go the other way.
But we do know that certain markets, population, people are moving in. And people are moving out of certain markets, high-cost markets. I think to myself, all right, if we go into a recession, and I live in a high-cost market, and I lose my job, what am I going to do? I'm most likely going to move into one of these lower-cost, high-growth markets.
People Need a House to Live In
Darin: So, even in a recession, certain areas could still see population migration coming in. So, there could still be growth of people, and that provides competition for apartments. In addition, residential real estate prices have gone crazy since COVID.
Deepika: Yes, for sure.
Darin: If people lose their jobs in a recession, well, they're going to have to sell. And then those are additional renters. For those reasons, I think that even in a downtime, multifamily could still fare well. I mean, only time will tell to see what happens. But yes, those are some factors that I think could play into it.
Deepika: Definitely. I think I agree with you. I mean, definitely people need place to live. And I think we have seen that in the past as well. Even in 2007, '08 time period, I think this asset class did really well, especially apartments. Because this is something that people would need. They need a place to stay. Not everybody can afford a house. And given the current interest rate, I think residential market has slowed down quite a bit. Because people don't want to be buying at such high interest rate.
Darin: People can't afford it.
Deepika: They cannot, yes. Even if there are people who can, they're like, "No, let's wait it out. It's not the urgency to buy it right now." And because whether you want to pay that high interest rate, so yes, people are holding back. That makes apartment more attractive place, attractive asset class because people have to live somewhere. So, they will definitely, that is the second choice. If you don't have a house, you live in an apartment.
Create Memories While There Is Time
Darin: Absolutely. And some people are choosing that too. I mean, the millennials and baby boomers, a lot of them are choosing to do that, so they don't have the maintenance, and they're not locked down and they can travel. They can move from one location to another location, so all those advantages. So, what do you like to do outside of work for fun?
Deepika: We like to travel and we have been planning some traveling this year. We did quite a bit. And that's the plan for 2023 as well.
Darin: You went international, didn't you?
Deepika: We went international. One of the trips was to India, and then another one was Costa Rica. So, we are trying to plan more and more travel now that we have more time in hand. And especially, I have a son. He's 14 now.
We just have four years that before he goes to college and becomes really busy with his schedule. So we want to make sure that in these four years we travel with him and make some good memories. Because after kids go to college and they start their career, they become so busy. They have only so much time to spend with us. So, we want to make sure that we make most of these four years.
So, traveling is one thing I love. And another thing, believe it or not, but we do real estate for hobby. We drive around looking at, "Okay, maybe." What else we can do and how, so we do that for fun too.
Common Sense Ventures
Darin: It is funny, but look, at least you're picking an industry that you enjoy, right? I mean, there's so many people in this world that are living and working, and they're not happy with what they're doing. But they kind of have to do it. They feel like they have to do it. So, I applaud you for doing that. Hey, if somebody wants to get ahold of you, how do they reach out and get to know more about you?
Deepika: We have a website, it's called commonsense.ventures. They can reach out to me for any further questions or anything I can help them with. It's Deepika@commonsense.ventures.
Darin: So, how'd you come up with a name?
Deepika: Well, I think the reason we chose this name, it's easy to remember. I think that is something, if you hear it once, you'll remember it. It's not a complicated one. And so, that's how we decided to move forward with this name.
Darin: Fantastic. So, it's commonsense.ventures. Look, this girl came on to the scene. She's a proven case study of if you believe, and you decide, you can do it. You really, really can. And so, thank you for coming on. Thank you for sharing with the listeners. Listeners, until next week, signing off.