Distressed Real Estate Deal Gone Wrong: How One Investor Saved the Project

Apurva Sanghavi (00:00)
was like, it’s raining inside, like this building. It’s insane. And this is a testament to somebody who’s an older gentleman, had a lot of experience in just kind of the ups and downs of running businesses, right? And I’m freaking out, panic attack, like, my God, everything’s ruined, like all this stuff. And he just kind of like heard the story and he just laughed and said, well, it sounds like they cleaned it for us.

Michelle Tack (00:02)
you

Welcome to Real Estate Pros podcast. I’m Michelle Tack. am the podcast leader. have a great operator here today with us. Apurva Sanghavi. Go ahead and say hi to the audience, please.

Apurva Sanghavi (02:08)
See you.

Hi everyone, excited to talk to you today.

Michelle Tack (02:14)
⁓ when we were preparing for the podcast, we spoke about his business clearly. And I was really impressed by a couple of things. One is the fact that, ⁓ he spent 20 plus years, ⁓ in the mortgage business, you know, and has developed, ⁓ a strong business, ⁓ in, ⁓ that regard. He also has, ⁓ bought properties, ⁓ and through the course of that.

⁓ took those properties that he bought and morphed into the business of storage. So we’ve got a really sort of confluence of interesting things there, Apurva, which is awesome. You’ve got a lot of experience. Can you tell the audience for those that don’t come from your world, may not know about storage, may not know about, you you’re doing some hard lending as well, as well as your normal lending, ⁓ about your business and the markets that you operate in?

Apurva Sanghavi (03:10)
Absolutely. So thank you again for the time. I’m based in Houston, Texas, born and raised here. So pretty much a Texas lifer. But yes, so I, in fact, during college got into the mortgage business kind of serendipitously and learned about real estate finance as kind of my first interaction. Growing up, my family owned some rental properties, so I had some exposure to it, but like really kind of dip my toe from the finance standpoint. So just kind of learn how lenders

Michelle Tack (03:13)
Absolutely.

Apurva Sanghavi (03:40)
think about properties, what are what their lenses, understanding debt and kind of those nuances, mostly in the consumer mortgage space. So your traditional vanilla 30 year mortgages that most people look for, but then kind of learning about real estate investing kind of adjacent to it. ⁓ You know, I did ⁓ fairly decent for myself and started buying single family homes kind of early in my career ⁓ and amassed a decent portfolio for kind of a small operator, got to about a dozen properties, did a little bit of kind of non traditional property, like a commercial small

out commercial assets, some retail strip centers, some land, some office space, things like that along the way. And just kind of got my feet wet into owning property and being a landlord. ⁓ As that kind of went on, ⁓ continued to build in the mortgage space, built our own mortgage company back in 2019 called Matador Lending. ⁓ I was mentioning a little bit about where we started ⁓ doing some hard money lending when COVID hit. There was some kind of really challenging times from a finance standpoint. So we built ⁓

a business within our business to do hard money lending and matured that over time. And that’s now a thriving debt fund, which we now operate. And then when from back to real estate assets, when COVID hit, the market had changed and there was a lot of kind of opportunity to sell what I felt like was a peak. Seems like I timed that well.

Michelle Tack (04:59)
No.

Apurva Sanghavi (05:47)
So I kind of unloaded all my single family assets and with a great partner started acquiring self storage facilities. We liked just the model. We liked the asset.

class and found some decent opportunities. So we currently own three self-storage facilities in Texas now. ⁓

We run my partner runs the day to day there, but we kind of do a lot of like ⁓ software based operation ⁓ and really kind of remote management, which is kind of some playbooks that we learned about online and followed. And yeah, so we we still own and operate those now. We’re always looking for more, but it’s been a challenging time to find good deals. ⁓ But then, you know, I personally have shifted my focus into growing the debt fund ⁓ and just placing more hard money loans. I like that as an asset class. So we’ve kind of got our

Michelle Tack (06:07)
Mm-hmm.

Absolutely.

Mm-hmm.

Mm-hmm.

Apurva Sanghavi (06:34)
getting our reps in there. But that’s kind of the nuts and bolts of our business.

Michelle Tack (06:39)
That’s

great. You know, as we talked about before, you’ve got a lot of businesses, right? And they sort of feed off each other and some, some don’t. ⁓ but how are you, what are you employing? Whether it’s strategy, whether it’s people or infrastructure, or maybe it’s all three of those and to keep the business running smoothly.

Apurva Sanghavi (06:58)
Yeah, you know.

I’m all about, ⁓ I think surround myself with smart people, number one, right? And A players, right? And so for example, our mortgage company actually has about 45 team members now, right? So matter of lending based in Texas. So it’s a healthy operation. It’s a high sales organization, but we’ve got some really strong ⁓ operators for the day-to-day side of it, right? And so ⁓ without that component, I don’t think we grow as fast as we did.

Michelle Tack (07:16)
That’s great.

Apurva Sanghavi (07:30)
as well as we have. So that’s a big piece of the puzzle, right? And so, you know, I think that’s honestly one of my strengths is being able to identify people that are smarter, better than I am in certain ways and align with them, right? And partner with them. And so that’s been a big piece of kind of our growth.

Michelle Tack (07:45)
Absolutely.

When, because you have so many different businesses, everyone that I’ve talked to that’s an operator has had a moment in time where a deal or a structure or whatever it was started to go south and they had a pivot really quickly, but they were still able to salvage it. and, or if they weren’t, they learned a very pivotal lesson.

Can you explain if you’ve had something like that within the last year or anything that’s fairly recent that you can talk to?

Apurva Sanghavi (08:25)
Yeah, absolutely. ⁓ You know, I got a couple examples that come to mind. I’ll start with the mortgage business just to stay on that space for a second. ⁓ So we had grown in COVID. You know, I built the company in 2019 right before COVID hit, ⁓ you know, like much like everybody, you know, the first couple of months were very dicey, terrifying. ⁓ And then it ended up being one of the greatest mortgage markets we’d seen in history. Right. Lowest rates ever. We, you know, for us, we were a young puppy company, but we started growing really fast.

Michelle Tack (08:49)
Thank you.

Apurva Sanghavi (08:55)
right so I built we went from eight of us to 35 of us in

honestly like 10 months and it was all on zoom, right? All on digitally, right? Cause we were still quarantined and all the crazy things, right? If you think about it, seems like a long time ago, now, but basically we did all that. And so what happened though is, you know, admittedly we kind of grew all the wrong facets of our business. We became high overhead. We became like a lot of personnel that we hadn’t really even met in person. hadn’t vetted or onboarded effectively. And so those cracks started to show when the market turn, turn, turn.

Michelle Tack (09:04)
Wow, it’s big.

Apurva Sanghavi (09:32)
right in kind of end of 22. Interest rates started creeping up, demand started slowing. And so, you know, we learned really quickly, we had bloated the company strategically, we’d grown operations and not sales. And so that was not good when things slowed down. And so, you know, how to make some tough decisions, restructure the business, we pivoted around to a high sales organization. Now we’re a 90 % sales organization and a 10 % operations.

Michelle Tack (09:33)
Thank

Thank you.

Wow,

that’s huge. That’s interesting.

Apurva Sanghavi (10:02)
⁓ business. ⁓

I’m in the mantra, sales solve everything. And so like, you gotta have revenue coming in, you have to do that. And so ⁓ we’ve kind of redefined ourselves as one of the best places in our market for salespeople to run and operate. And we’ve kind of structured ourselves that way. And so that emphasizes the prioritization of revenue, ultimately kind of business fundamentals. ⁓ And then we just run a disciplined business behind that so we don’t grow our overhead ⁓ irresponsibly anymore, because we’ve just learned some lessons.

Michelle Tack (10:54)
That’s great. That’s awesome.

Absolutely.

Apurva Sanghavi (11:10)
That’s one of it. I have a real estate specific example if you like to hear it. ⁓ So we had, I had a great ⁓ high net worth partner on a deal that we had bought. was an office building, very distressed office building in Houston market, right? ⁓ And it was in a market, it was a part of town that you don’t really see a lot of distressed property. So it kind of had some weird, like what happened here? It doesn’t make any sense because it’s in a nice suburb.

Michelle Tack (11:13)
Sure, absolutely.

Mm-hmm.

Yeah, some red flags, mean,

maybe it’s like,

Apurva Sanghavi (11:38)
Yeah, yes. Yeah,

it was like something weird happened. So kind of the the cliff notes of it was it was a property that was built by a family. It was a medical office building at its core and its peak. then unfortunately, the the main ⁓

partner or person had passed away and it got handed down to the family, got stuck in probate for almost a decade. And basically all the tenants left the maintenance of the property and so it just kind of became just this dilapidated property. So anyways, it came on my desk and I talked to my partner at the time and I said, hey, this seems like a good opportunity. Let’s go ahead and acquire it. we, long story short, we did. And then as we’re going through this, was to the studs rehab, right?

Michelle Tack (12:02)
my god.

Apurva Sanghavi (12:24)
multi-million dollar property so big big scale everything’s big scale nothing is cheap right and so one day I go to the property because a neighbor called me and said hey ⁓

there’s water coming out of the second story windows and you like you need to go. So yeah. So like, you know, number one, I’m like, what are you talking about? And then sure enough, I get there and there’s water like seeping from the second story windows, which is even crazier. The hardest for me to understand was there was no water service. So we didn’t know what was going on. Right. So what ended up happening is, unfortunately, because it was so

Michelle Tack (12:40)
Wow

Wow.

Apurva Sanghavi (13:06)
you know, dilapidated and just we had some vagrant stuff going on. Some what we understand is some kids basically connected a fire hose to the fire hydrant and decided to make it rain inside. And so the whole building on the second story had been flooded because they just turn on the water and let it rain. ⁓ So I’m naturally freaking out and I’m like, my God, what is happening? And so immediately get on the phone and call my partner who had capitalized a lot of this project freaking out.

Michelle Tack (13:24)
My goodness.

Apurva Sanghavi (13:36)
was like, it’s raining inside, like this building. It’s insane. And this is a testament to somebody who’s an older gentleman, had a lot of experience in just kind of the ups and downs of running businesses, right? And I’m freaking out, panic attack, like, my God, everything’s ruined, like all this stuff. And he just kind of like heard the story and he just laughed and said, well, it sounds like they cleaned it for us.

Michelle Tack (13:38)
you

Apurva Sanghavi (14:01)
And it was like…

Michelle Tack (14:03)
It’s awesome.

Apurva Sanghavi (14:05)
And he’s like, okay, well, what do we got to do? Like turn off the water. Like, let’s figure out what’s next. Right. And so, you know, that was kind of.

I could have gone 50 different ways, you know, and stressed out and all the things, but I, you know, I’d aligned with a great partner that had kind of already had some history in having some challenging ups and downs in his tenure and said, all right, just another thing we had to deal with. Let’s go. Right. And that now, ⁓ you know, it’s been a great journey on that project. He actually ended up buying me at my stake out over, over our time. It’s an fantastic property. It’s high occupied. We finished the project, all the things, right? So it was, was a great story.

Michelle Tack (14:28)
I love that.

Awesome.

Apurva Sanghavi (14:43)
Right, great journey, I guess.

Michelle Tack (14:43)
That is a story. love

that. ⁓ relates to, have two more questions for you before we conclude, is about your network. I mean, obviously in that case, you had a partner that was seasoned, that had probably been through that and a hundred other things, you know, through his career, right? Where he freaked out probably originally. But now it’s like, hey, it’s just the cost of doing business. But can you tell me about how your, what your network is and how it delivers?

Apurva Sanghavi (14:59)
Absolutely.

Michelle Tack (15:12)
some opportunities for you in revenue or leads or whatever.

Apurva Sanghavi (15:15)
Yeah.

Absolutely. You know, I think, ⁓ you know, for me, my network is heavily culturally driven, right? I’m Indian descent. ⁓ know, Houston, the market that I’m in, has a growing, you know, ⁓ Indian and South Asian population. I kind of grew up around, you know, just culturally my community. And so ⁓ it’s been exciting to see so many people, you know, education and higher education is a big emphasis in my culture. And so ⁓ I’m around it. In fact, I went against the grain becoming a mortgage guy.

when everybody was becoming doctors, engineers, lawyers. And so, ⁓ you know, what’s been interesting for me is one, they’re, you know, obviously high earning and high professional and high IQ people. And many of them are starting to pivot into real estate investing in different ways, right? You’ve got doctors that are buying their own properties, people that are developing, et cetera, et cetera. So one, that’s become a lot of my ecosystem. A lot of people that now have capacity to do interesting things from a real estate standpoint. Many of them are investors in our fund.

which is awesome. ⁓ Some of them are collaborators and partners in many different ways on different projects. And so what’s nice to me is I guess I was early into the real estate world and now they’re kind of catching up. ⁓ And so I’ve been blessed to be able to be an expert in the space for them. And some of the first phone calls that I get is people that are now pivoting into real estate investing and like, hey.

Michelle Tack (17:20)
strike.

Apurva Sanghavi (17:21)
what can we get into or what do you know about,

right? And then I guess just not intentionally, but my experience in all the different asset classes and again, being a lender, having that lens has been allowed me to be a value add component to my community and my network. Yeah, so it works.

Michelle Tack (17:34)
That’s a, yeah, absolutely. That’s a huge advantage. Before we go

and wrap up, what’s next for you in terms of opportunities that you’re thinking of? know that we talked a little bit about the lending portion, taking that in a direction. Can you talk to that a little bit?

Apurva Sanghavi (17:48)
Yeah,

absolutely. You know, having owned quite a bit of different properties and again, really laser focusing on self storage and asset class we want to buy, know.

Lending is an asset class of its own, right? And I believe, at least me, ⁓ for me, and based on my skills, ⁓ it’s one more scalable, we can find more deal flow because we’re now supporting and partnering with other operators that are out there finding good opportunities that need financing, right? And so we get exposure to the same asset without having to be the operator, right? Because we usually, got most of the money in the deal anyways as the lender.

And so I like that because I just get to partner with great operators that have got their nose to the ground and fun hunting for deals. And we get to collaborate on the underwriting, right? We get to like sniff test is it a positive deal for you or not? And then ultimately, you know, we get a healthy return, but we can scale that like I can get to $100 million in loans way easier than it would take me to get to $100 million in self storage facilities, right? ⁓

Michelle Tack (18:55)
Understood. Yeah, makes sense.

Apurva Sanghavi (18:57)
And so I

Michelle Tack (18:57)
Yeah.

Apurva Sanghavi (18:57)
think for me, I’m leaning into that moving forward and we’re going to continue to grow that.

Michelle Tack (19:01)
That’s great.

You’ve been a wonderful guest. You’ve got a lot of experience. And I love how you grew it and put it together for us. So I appreciate that. A poor boy, can you provide, before we go, for those that want to contact you, they may want to invest, they may want to, who knows what they want to do, but how they could contact you and if you would spell out your email contact as well.

Apurva Sanghavi (19:21)
Absolutely.

Absolutely. So easiest way to get in touch with me is my email address. It’s Apurva A P U R V A at matador M A T A D O R like the bullfighter matadorlending.com. ⁓ all one word, ⁓ easiest way to find me. I’m on all the social media things. So the LinkedIn’s and whatnot. So feel free to hunt me down just by name fairly easy. Cause it’s, know, not, not too many of me out there.

Michelle Tack (19:48)
Yeah, it is. I love the fact it’s very

pronounced, right, on your shirt and it’s something to easily remember. Well done on that. For those that are listening to our podcast, if you found value out of this content today, please continue to subscribe. And for those that have not subscribed yet, please join us in adopting a subscription. Thanks a lot, Apurva. Continued success.