HEATHER EWING: The CRE RUNdown

Ep. 34 Sandhya Seshadri - Engineering Success in Multifamily Real Estate

• Heather Ewing, CCIM • Season 1 • Episode 34

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Unlock the secrets of successful multifamily real estate investing with our distinguished guest, Sandhya from Engineered Capital. Discover how she transitioned from engineering and stock trading to mastering large multifamily real estate syndications. Sandhya provides an insider’s look into managing larger properties, the role of professional onsite staff, and the nuances of third-party management. You'll gain invaluable insights on high-value acquisitions and the importance of efficient asset management, alongside the creation of her mastermind group, ACE Operators, which stands as a beacon for navigating the complexities of multifamily operations in today's fluctuating interest rate environment.

We delve deeply into the mindset and strategies essential for thriving in commercial real estate. Learn why thorough due diligence is non-negotiable—covering aspects such as vetting management teams, market analysis, and comprehensive physical, financial, and environmental assessments. Sandhya shares her wisdom on securing sustainable financing and the critical importance of focusing on controllable factors to successfully manage investments, especially when dealing with other people’s money. You'll come away with a newfound appreciation for persistence, thoroughness, and maintaining a realistic yet positive outlook in the competitive real estate landscape.

Finally, we explore the true essence of living fully through real estate. Sandhya discusses the balance of self-care, time freedom, location freedom, and financial freedom, underpinned by continuous learning and personal growth. Influential mentors like Jim Rohn and Tony Robbins, and transformative books such as "The Go-Giver," have profoundly shaped her journey. Listen as we highlight the fulfillment that comes from giving back to the community and staying connected through various platforms. Prepare to be inspired and equipped with actionable steps to enrich your life and maximize your real estate investment potential.

Heather Ewing, CCIM:

Welcome to Heather Ewing, the CRE Rundown. I am, of course, your host, heather Ewing, and today I have the lovely Sandhya of Engineered Capital with me. Sandhya welcome.

Sandhya Seshadri:

Thank you so much for having me, heather. I've been following you a lot on LinkedIn and admiring your commitment to fitness and real estate, so it's such a pleasure to have this conversation.

Heather Ewing, CCIM:

Oh, thank you, and likewise, it's such a pleasure to have this conversation. Oh, thank you, and likewise, it's so nice being able to connect with our group on LinkedIn, and you're just an inspiration. I really love the heartfelt business investor approach that you exhibit. There's a lot of talk in different areas, but it's really nice to see someone that is leading through example, and you do a great job of that, thank you. So, as we get in, I've known you for. Is it a year? Maybe Is it closer to two even? Yeah, time flies by. Yeah, yeah, yeah.

Sandhya Seshadri:

Share with my audience, please, a little bit more about yourself so they can get to know you, I'm a Dallas based apartment investor, focused on just large multifamily through syndications, because these properties cost a lot of money that you know we as individuals don't typically have.

Sandhya Seshadri:

So the acquisitions are in the range of, you know, 15 million to $30 million. So we raise money from high net worth investors for whom this investment is going to be a small piece of the pie of their entire investment portfolio. So it's just like buying shares of stock. We are the managers who run the business, just like the CEOs of your you know Amazon, apple, etc. And then the investors are all the passive investors. They don't make decisions, but they help us acquire something bigger than we could do on our own. And so we all pull our money and we buy these properties and then, a few years later, we sell it, hopefully at a higher price, and during the old period, we get some cash flow as well. And that's how we make money, because we believe in real estate as one source of alternative investment. And so I'm focusing the Dallas area, where I have lived for over 33 years.

Heather Ewing, CCIM:

That's great. Well, it's like you've been there for a long time and, as we know, I've been in the Madison area for over 40. So it's really nice to have our feet rooted, if you want to say, in our respective areas. But what got you into it? Right, like, what was the inspiration, what was the experience that brought you to this point?

Sandhya Seshadri:

So I, like a lot of Indians, have a strong math background, went into engineering college and I also got a part time MBA thanks to my company who paid for it.

Sandhya Seshadri:

So that's where I got my financial and business knowledge, and I was actually trading stock.

Sandhya Seshadri:

But I always wanted to have a piece of real estate, and whenever I looked at the single family rentals, the origins and the appreciation wasn't quite there in the early 2000s, especially in the Dallas area, and so it was never appealing to take care of the four T's, as we call it tenants, bullets, termites and trash.

Sandhya Seshadri:

So I attended a weekend event where they talked about large scale multifamily where the property itself generates enough cash to where you could afford to pay onsite staff to be there to take care of the day-to-day leasing, to take care of the maintenance requests and to have a third-party property management company run it for me. And so then I became more of an asset manager overseeing all of it, which is very similar to what I did in engineering management in my company role. So it seemed like a really good fit, because you have to look at project management at a high level so that you always keep the big picture in mind, but you also need to be able to dive into the details when needed to remove the roadblocks, and it was a perfect match for my skills and that's why I got into it. I got into this about five and a half years ago and it's been a great ride.

Heather Ewing, CCIM:

That's terrific, and you've really come a long way too, and that's where it's so fun watching you and others grow and continue to shine, and I think you recently started a mastermind. Was that a year ago or so?

Sandhya Seshadri:

Yes, it was over a year ago because there was a need. The interest rates, as we all know, have been rising quite suddenly since 2022, I would say right About April, May 2022, it started going up and a lot of people had floating rate bridge loans and they ended up having to pay double the mortgage and so operations became a greater focus Because until that time, interest rates were going down and were really low. So just from that cap rate compression, you could make money on deals without operating them efficiently. But when the interest rates went up, a lot of these floating rate deals lost their cash flow and they had to learn to operate them to come out of it, and that's why we saw a bunch of foreclosures pop up. So there was a need.

Sandhya Seshadri:

I was at a big conference. A lot of people were asking me the same questions. Friends, a lot of people were asking me the same questions, and that was the birth of this mastermind. It's focused strictly on asset management of large multifamily and its buy application. So it's aceoperatorscom if anyone wants to learn more, to see if they're a good fit. A lot of people came and applied to that mastermind wanting to learn how to buy multifamily. So this is not about the acquisitions. It's more about the operations and asset management. It's like how do you finish the story to get to that happy ending that your investors want to execute the business plan? And that's what this is about.

Heather Ewing, CCIM:

Definitely, because I think sometimes people lose sight of that right, and both are very important Because if you overlook one, you're not going to have a good investment or it's going to be very short term and then it's going to head south. So for longevity, you really need to do that. What would you say? There's been a lot of talk about due diligence and things online as well. What are your thoughts on due diligence?

Sandhya Seshadri:

So there's due diligence on the team that's going to run and manage your deal. You definitely want to do that. And there's due diligence on the team that's going to run and manage your deal. You definitely want to do that. And there's due diligence of the market itself. Is it a good market? Are you paying a reasonable price because you have to buy right? And then there's physical due diligence, financial due diligence, environmental due diligence, et cetera. Once you're in the acquisition phase, as the team buying the property, you have to do all of that. But if you're a potential passive investor, what you want to do is your diligence on the team as well as the market.

Heather Ewing, CCIM:

Yeah, definitely. And so, with all the changes in the market, where do you see commercial real estate multifamily? And you know, if you had a crystal ball right, what would you anticipate in the next couple of years?

Sandhya Seshadri:

on cash flowing deals which you can operate efficiently will be the formula right. Buy it right. Don't overpay. Buy it based on today's market conditions. Don't base it on oh, in four years interest rates will be a lot lower. So I'll just base my entire underwriting on a lower exit cap, meaning cap rates and interest rates will be a lot lower in five years. So that's how I'm going to make money and interest rates will be a lot lower in five years. So that's how I'm going to make money.

Sandhya Seshadri:

Now you should base it on your operations being better, your purchase price being fair or reasonable and your financing being something you can sustain for a longer time than just three or four years. And don't factor a refinance into your underwriting. Have it as an ace up your sleeve if you will, but don't count on it happening, because if you hadn't counted on it happening in the last 12 months, well, it probably didn't happen, right? Because the interest rates were too high. So those would be the fundamentals Buy for a longer term, hold. Buy with cashflow in mind, not necessarily an exit cap that's gonna save you. Buy with financing terms that are long enough that you can hold on for a longer time period without a bridge loan expiring in three years, as an example, having to buy another rate cap. So then it's independent of what the Fed does with interest rates.

Heather Ewing, CCIM:

Yeah right, it's more of what you can control Correct.

Sandhya Seshadri:

Focus on what you can control right In any business. That's how you should do it. You shouldn't base it on things way beyond your control, like interest rates. What do you know?

Heather Ewing, CCIM:

Right, no, but not even the beginning of 2024.

Sandhya Seshadri:

They said we were going to have three, four or five rate cuts. Now it appears that we may not even have one in 2024 at all. Five rate cuts Now it appears that we may not even have one in 2024 at all. So no one knows. So base your entire investment pieces on what you know and what you can control, which is today's pricing, lending terms, a good market that you've already vetted, like you have vetted your Wisconsin area, madison, and I know my Dallas area, so I know my high prime areas. I'm not waiting on. Oh, the city is going to area. So I know my high prime areas, I'm not waiting on. Oh, the city is going to make this place much better in a few years. Well, what?

Heather Ewing, CCIM:

is it?

Sandhya Seshadri:

today, Would I want to live there today? Well then, I'll buy there today, right? So I pick suburbs. I love to live in Irving, Carrollton, Garland. These are all places near my house that I know very well and so that's where I pick my property. So go with as much of the known and the sure things that you have today and you'll be advice right.

Heather Ewing, CCIM:

Real estate is definitely no, it is not a spin. It's about making calculated risks not just throwing it all out, Exactly yeah definitely. Along those lines. How would you say that mindset plays into commercial real estate investing and or the multifamily asset category?

Sandhya Seshadri:

Mindset is huge. You've got to keep your optimism up but at the same time, with reality checks from experts in the field. So a listing broker tells me what the market trends are today. What are properties actually getting sold for right now? Same with another expert would be in the lending world. What are my interest rates looking like? Okay, they have a little more of a pulse on what's happening today with SOFR and all that kind of thing.

Sandhya Seshadri:

But what do you do as far as your mindset? Always look for solutions. If one method didn't work for somebody else, it doesn't mean it won't work for you. So you keep persisting. You make sure you pursue all possible avenues and when you have a deal in distress, don't hesitate to ask for help, especially when it involves other people's money, if there's a way you could save the deal. I mean, ultimately, do you want to be known as the person whose deal foreclosed or who returned less than the invested capital to an investor, or do you want to be known as the person? Yeah, we struggled, but we came out of it because we looked for every possible solution and at the end of the day, when you go to bed, you say I did everything I possibly could for my deal and for my investors. And when you do that with that optimism, something good will happen. So manifest positive things happening. There's always a solution out there.

Heather Ewing, CCIM:

It's a matter of how hard are you willing to search to find it Exactly, and I think what you focus on does grow, and I think timing is a really crucial factor in deals, whether it's brokering a deal or also the investment opportunity. And, if there is anything early on, addressing it right away, not letting it gain momentum, become bigger and then be a real issue down the road. And and I think you know myself, you all of my guests, our referrals, our recommendations, our deals, anything tied in with our name is our brand, it's, it's our everything, and we've worked really hard to create what we have and to maintain the high integrity. So that's, you know, something important that people need to know as well.

Sandhya Seshadri:

Yeah, definitely. All it takes is one bad deal to ruin your reputation. So don't do it. Don't take chances, especially with other people's money.

Heather Ewing, CCIM:

Yep, exactly. So, as you think back to the earlier days or even now, who's one or two people that really have influenced your journey thus far, whether it's in commercial real estate, or or two people that really have influenced your journey thus far, whether it's in commercial real estate or maybe even earlier, that really shaped maybe how you see things, how you operate, etc.

Sandhya Seshadri:

I'm big on Jim Rohn and therefore also some of his followers. Like Tony Robbins. I really like the philosophies of how you have to evolve and become a new revision of yourself to achieve bigger and greater things in life, and that always speaks to me. And as well as the positive attitude, there's always a solution. I also like this book, the Go-Giver. It's a lovely book. It's about the more you go out and help other people, somehow good things will start happening to you. You'll get the help you need as well. I love those two philosophies. But in terms of actual tactics, I think the Best Ever Syndication book was a good start, and then the Raising Capital book by Hunter Thompson was another start to realize that well, if you want to go buy a $20 million building, most of us can go buy a $200,000 building, but not to a $20 million capital. So where do you find it? So I think those two have definitely have been some of my, shall we say, unofficial mentors as well as official mentors, and through podcasts, books, etc.

Heather Ewing, CCIM:

Well, and that's the thing I always say, if you have a desire to learn or to grow, there's really no reason that you can't. Because I too it's funny I listen to Jim Rohn when I'm getting ready, or sometimes Brian Tracy. It's like the two OGs right, yes, and thinking Grow Rich. I had a mentor years ago that planted that seed and I had never heard of it. But I think at the time I was in my mid 40s. And that's the thing too is, I think, so many times people focus that if they got to start later in a certain area or profession, that it's. You know, it's too late for them, but it's one of those, no matter where you are, where you are at, it's so important to start, and I think, instead of beating yourself up for past decisions that you can't change, dig in with 200% and make the most of it. And so it's really the mindset. I agree completely with you and there's factors behind and also the deal experience of the mindset too. So it's a fascinating area.

Sandhya Seshadri:

Absolutely, and people forget that life expectancy has gone so much higher now like people live well into their 80s quite easily. So if you're in your 50s or 40s and starting out, you still just like you're starting out in your 20s. You know, you imagine the next two or three decades of your career. It's just like that now because people live longer, there's more medication that takes care of a lot of common ailments and so people are like fit and you know, just like you, as a great example of fitness, like you inspire me.

Heather Ewing, CCIM:

You told me that you're in your 40s or even older, I'm like, wow, you look amazing, right?

Sandhya Seshadri:

So I think that there is no end to that. So don't ever worry about that. You started late. Just get started today. Don't postpone that. Just take one step. Say I'm going to make one informed decision. I'm going to listen to a podcast today about a topic I want to learn more about, instead of watching that TV show. And that's your first step.

Heather Ewing, CCIM:

Right. It's asking empowering questions right, because the question you ask is going to shape the answer you receive. And you know, I think, of my own mental, emotional growth over the years, right from the early days to present, and it's really, I think asking much better questions has really helped me. And it's also ties into the mindset too. But it's like what would it take to be able to get this to do this, to merge you know merge numbers on a deal or this and that, and it's it's really putting you in that mindset. So you're really focusing on opportunities versus fears or doubts or you know past things that didn't go well and I think you know whether someone's new to brokerage, new to investing or seasoned, it's really practicing those real basics of mindset and also skill.

Sandhya Seshadri:

You know viewing each deal through new eyes, in the sense of what is there to learn, what is there to additionally provide, so that you don't get stale and stagnate Absolutely. And whatever your fears are, list them openly. Like I was afraid to invest a large sum of money in my first deal, so I invested passively in someone else's deal with my retirement money from my prior corporate world, so that was money.

Sandhya Seshadri:

I wasn't counting on for another decade at least. So it didn't matter if the deal cash flowed too well or didn't do as well. It was something that I had kind of put it out of my mind. It wasn't going to change my lifestyle in the next few years with that one investment.

Heather Ewing, CCIM:

So whatever is your fear, I would say voice it, make a list and then say how do I mitigate all of these risks and am I ready to jump in, Right, you have to shine a light on it, trying to push it down and not acknowledge it, right, not going to give you the result that you want. Yeah, definitely. So here's the here's. The top question of the podcast is what does living fully mean to you?

Sandhya Seshadri:

Living fully means that I am able to balance all aspects of my life, which starts with actually self-care and time, time freedom, location freedom and financial freedom. Location freedom and financial freedom. And having time for the family, your own self-care, which is health, which you're a great example of, but also some levels for me of having something intellectual, like I would be bored if I didn't do real estate or if I didn't trade stocks and I didn't do something of intellectual value. And then there's the piece where I feel like I'm giving something back. So you always have to give something back, that you're helping someone every day by doing what you do, and that fulfillment brings it all together. So for me, that's what makes an enriching life.

Heather Ewing, CCIM:

Couldn't agree. More Beautifully said and with that, sandhya share with our audience. How can they connect with you after this podcast If they have questions, or maybe they want to invest with you or take your mastermind?

Sandhya Seshadri:

They can connect with me, of course, through lovely Heather, but my company for passive investors is engineered-capitalcom. That's my website. You can find me on LinkedIn and my LinkedIn profile also has a link to that website. And if you are a general partner in multifamily interested in improving operations, then aceoperatorscom is my mastermind website to apply and learn more. Thank you perfect.

Heather Ewing, CCIM:

well, sonia, thank you so much for joining me and I look forward to connecting with you more on LinkedIn and beyond.

Sandhya Seshadri:

Me too. Thank you, heather, this has been a lovely conversation, definitely.

Heather Ewing, CCIM:

Thank you.