How Palmy Kitti Went From Losing 95% of Her Income to Building a $500M Multifamily Portfolio

Palmy Kitti (00:00)
everything, every single day, it’s a cost to us. It’s either a cost that gives us a better future, a 10x future, or it’s a cost that’s going to take away from us. Because five years from now, it’s going to happen with or without you taking action. And so I feel like, I felt like we were in a position where we had no choice. It was our backs were against the wall.

Cody Crabb (01:52)
Hello and welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. Today I’m joined by Palmy Kitti, a multifamily apartment investor and developer who buys existing assets, builds new communities and brings investors into larger projects through syndications. She has a really awesome story, which I’m excited to hear because I only have a little taster, so this will be interesting. Palmy, thanks so much for joining us today.

Palmy Kitti (02:14)
Thanks so much for having on, Cody.

Cody Crabb (02:15)
Yeah, so ⁓ let’s dive right in with this story. I’m very anxious to hear this. How do you go from, well, I’ll just let you tell it, because I feel like the spoilers are gonna make it not as good, so you go for it.

Palmy Kitti (02:28)
So again, my name is Pomi. My sister and I, we have a multifamily apartment syndication business. But this wasn’t always our business. And we didn’t grow up in a family that loved real estate or had any background in real estate at all. We were actually in the fashion business. And we were doing quite well in fashion until overnight, seems like. So we were manufacturing clothing in fashion.

Cody Crabb (02:49)
Doing what in fashion? Sorry to interrupt. Just what was it that you were doing?

Palmy Kitti (02:55)
taking really awesome designs for a lot of the brands that are known in the United States, and we produce them for the brands. And we were doing really, really well, to the point where we were getting emails from the designers saying, hey, we’re going to double your order, your stuff’s killing in the stores. And then all of a sudden, was cooking. I remember very, very clearly, I was cooking dinner. I grabbed my phone, and I saw a message that said the client was closing down all their stores.

And everything just was like bright, skies. All of a sudden just went like, shut down. It was a complete darkness. I was, we were panicking because we have about a million dollars worth of merchandise that we were producing that’s in the pipeline that we’ve paid the factory for. And now first we had to figure out what is happening. Is this real? And then what do we do after that? So we found out, yes, it is true.

Cody Crabb (03:28)
Wow.

Yeah.

Palmy Kitti (03:47)
And if you go back, can Google who it could have been. Someone could guess what that brand would have been. And overnight, 95 % of our income just evaporated. And the sense of powerless, you did everything right. And I know a lot of your audience may feel this way. And maybe that was the impetus for them getting into real estate. It’s like, when you did everything you thought you did correctly, and yet everything you built can be taken away, it’s just

It just leaves you really devastated. it took us, it, it, we lost our balance and our footing for a little bit. And then, my sister, Nancy, we had to re we have to figure out, what do we do? And then she, she came across this Facebook ad about real estate and I was wholly against it. Cause I was like, again, family never liked real estate. They were like, this is a scam. Having what heard what happened through 2008. It was like, no, that’s going to happen again. Like, why are you going to do that?

Cody Crabb (04:38)
Yeah,

Palmy Kitti (04:38)
So everyone was disgusted.

Cody Crabb (04:39)
well, and I imagine no expertise like you. is you coming in here from with from zero expertise, right?

Palmy Kitti (04:43)
Zero, zero

expertise, no financial backing now because we lost our income. Yeah, and so she took me and then we bought in. It made sense because they weren’t explaining things that were impossible. They were giving very logical explanations for every single thing that I had questions about, like what if the home prices drop? What if interest rate increases? All those basic questions were answered and I felt like.

genuinely answered in a way that wasn’t scammy. So anyway, so we decided it was like $55,000 for that course. And we’re like, we don’t have $55,000 at that time. And we were like, OK, how many credit cards do we have amongst us? So committing to something, and this is a lesson I think a lot of people, this is a barrier a lot of people have, is like that commitment to

to value the thing that you’re gonna have to spend money on, not as a cost, but as an investment. And that’s what we felt. We were like, this was one industry that can’t be outsourced. It’s an industry that doesn’t go against inflation. It doesn’t go against all the macroeconomic things that had screwed us previously. You can’t outsource real estate. That was my biggest lesson. then, so anyway, so we got into that. We started flipping houses in Los Angeles.

Very, very at the beginning, was like, don’t, we were making good income, but I don’t like this business. I don’t like to deal with the brokers. I don’t like dealing with the building department. were the contractor, all those things were just like not fun for me. Then we heard the same group, they were teaching us like, hey, you can come invest in multifamily with us. And that totally opened a completely new world for us. I grew up in like a Roche infested apartment in Los Angeles as a kid. And I never knew

that regular people like us would have the opportunity to buy an apartment. And that changed everything.

Cody Crabb (07:14)
wow, that is, I love that story. And I think that really goes to show like a lot of people on this podcast are kind of checking this out. They’re kind of feeling out real estate for the first time. And I feel like one of the things that I always hear is, you gotta have capital, you gotta start out from.

and you gotta have some money to start out with and it’s a barrier for a lot of people. I mean, that just goes to show that sometimes it’s not just about what you have, it’s about kind of how you use it and how you strategically decide to get into it. I think that’s an awesome story.

Palmy Kitti (07:46)
Thanks for that. Yeah, think like, it’s not about, most people are not willing to spend because they don’t have that certainty. And I was talking to my sister Nancy the other day, if Jensen Huang in media comes to you and say, hey, do you want, you need to put in a million dollars and you get to be in my project. You don’t have a million dollars. You’re gonna figure out legally how to get that million dollar because you know with certainty, you’re gonna make that back 10 folds and if not more. And that’s the same thing with

Cody Crabb (08:06)
Yeah.

Palmy Kitti (08:12)
with us, think first we’re lucky because there are programs that aren’t amazing, but we’re lucky that that specific one that no longer exists, but they were legitimate people who actually cared. So of course, like there’s concerns there, but I felt like we had to take that chance. And so when you’re getting started, have that, some people want like, hey, age of AI, I can just learn everything online. You can learn almost any information. The problem is you don’t know the sequencing.

Cody Crabb (08:35)
Mm.

Palmy Kitti (08:35)
So if you don’t know the sequence of how to do things, especially in multifamily when it’s really large dollars, you can really screw up not just yourself, but more importantly, the people that invested with you.

Cody Crabb (08:45)
I think that that’s a really good call out too because I often see people say stuff like You know, you can learn things with AI you can learn anything on YouTube you learn anything on Google I think there’s a point where that is true I think that you either have to be very very new like you don’t know anything or you have to be really really Experienced and you know when it’s starting to spout stuff. That’s just definitely not true So I think there’s this kind of middle bit

where you kind of have to be extra careful. I think that’s why kind of mentorship is so important. You kind of did a little of both with this kind of program that you found. I would just be curious to ask, I mean, you don’t have to name them or anything, but I just want to know kind of like, what was it that helped you about what they did? Like, what should people look for when they are looking for something like this?

Palmy Kitti (09:29)
So it may be different for everyone. For me, it was mostly mindset. When we were in the fashion business, we were making really good income, but we never understood that when we stop working, that income also stops. And in our case, when our customers stop working, their business shut down, we are directly impacted. What they taught us, was a really big revelation. So we were sitting in this auditorium and he said,

I like buying expensive things, but I have my, my, I earn money and I put my money into these buildings and these buildings spit out income. And that’s what I use to buy stuff. We just bought like probably several months before a Tesla model S and it was just like, my head was like, oops, we did that in the wrong sequence. So that was more of the things that helped me understanding that that

Cody Crabb (10:11)
Okay.

Palmy Kitti (10:15)
It’s not about how large the dollar amounts are. It’s really about the fundamentals and not to be scared of how many zeros are behind the commas. think like it’s a lot of the mental things because anyone can teach you, real estate is a very simple business. You buy low, you sell high. In multifamily, you increase income, you reduce expenses. Again, you still buy low, sell high. So people get scared.

For instance, one of our, last apartment that we purchased was for $77 million. Now I’m not telling any new person to go out and buy that kind of size, but we did that within seven and a half years. So it’s definitely possible, but a lot of people wouldn’t even look at a 10 million or a 20 million or a 30 million because that intimidates them. But I, I felt like if I understood what I’m doing, I feel very comfortable buying things that are, ⁓ are larger. So it’s all really mindset at that point.

Cody Crabb (11:41)
So I just kind of want to explore just a little bit more this kind of, you came into this with no knowledge at all. mean, give me the, well, first of I’d love to hear about that very first deal that you did that was kind of the springboard, but I’d also like to know kind of the education journey. what was it that you, mean, besides this program, what other things did you do to kind of get that knowledge where it needed to be?

Palmy Kitti (11:52)
Okay.

Mm. Mm.

So first project was a $6.9 million purchase in Phoenix, Arizona. It was 76 unit apartment. So today, it’s very small for me, but that time it was like the biggest Mount Everest. Like, my god, what am I doing? The thing that’s very, very important, and I stand by this 100%, is you cannot learn from a book. You cannot learn from courses. You learn from taking action. And the only way to take action

Cody Crabb (12:09)
project.

Yeah.

Palmy Kitti (12:29)
correctly, at least in my space, is to partner with the right people. I was fortunate enough to have identified the people I wanted to grow with and learn from because they’ve been in the journey before us. the person I ended up partnering with, I met her probably within one month of getting into multifamily. And I told her, hey, I can raise a lot of money. I live in Los Angeles. I don’t even know how to raise money when I met her.

Cody Crabb (12:33)
Hmm.

Palmy Kitti (12:54)
I had no idea. I, it was almost like fake it till you make it, but, ⁓ we figured it out, but no, no, like when we, you have to have like some sort of level of conviction because you have to sell yourself, right? Like the thing that when people get started, they always like, what’s in it for me, you have to ask these partners or people who’ve already done things. What are, what are their gaps? What are the things they need in their business? And you find out how you fit in. I found out what she needed and I made sure I was available.

Cody Crabb (12:57)
Not it doesn’t sound like almost it sounds like that’s exactly what you’re doing. Yeah.

Palmy Kitti (13:20)
So anyway, so it was a 76 unit multifamily apartment that we bought and we sold in like 24 months. It was just like a quick flip, three X return, amazing. That was the kind of thing that like, because we took action, we took imperfect action, but we weren’t reckless because we partnered with people who were able to help guide us in things that we didn’t understand. Like, hey, how do we even conduct a…

meeting a weekly meeting with the property management team. What are the KPIs that we have to track? What are the things? How do we track if we’re performing well? What are the maintenance team doing? All those things like I didn’t know and I can’t learn that from a book. I can only learn that when I’m in the deal.

Cody Crabb (13:58)
All right, so fast forward to now. Tell us about what you’re doing today and kind of what your day to day looks like.

Palmy Kitti (14:00)
Yeah.

So today we have nearly $500 million asset under management. we still buy multifamily assets, existing ones. We’ve now gotten into development. So we are building 118 built-in rent community right now. ⁓ It’s also in lease up. it’s in partial part of it’s in construction, but the first phase is in lease up. So that’s a lot of new cool experience that we’re getting to do. We’re also doing a bill to sell single family homes. It’s 105 units.

We have a private credit fund that lends money to multifamily properties and we’re looking to start another fund very soon as well. from zero experience to this, all of which I feel like was because we were in the game, we were doing the things and also continuously partnered with people who can help up level us.

Cody Crabb (14:47)
Yeah, and I think a big thing that sticks out to me is you are willing to take a chance when it was maybe not the smartest thing. Not that it was not smart to do what you did, but the safe move would not be putting a $50,000 course on the credit cards. You wanted to make this work. It sounds like it was, like you said, the conviction, the mindset. It sounds like the reason that this worked is because…

of you, not necessarily because you had an amazing strategy or it sounded like you were the reason that was able to work and your conviction and your mindset. give yourself a little credit there because I don’t think that was just the, that wasn’t just the, but that’s what I mean. Like I think that it really, sometimes all it takes is a mindset shift of this actually is possible for

Palmy Kitti (15:19)
What?

I

think like when we were reflecting on this, even just yesterday, everything, every single day, it’s a cost to us. It’s either a cost that gives us a better future, a 10x future, or it’s a cost that’s going to take away from us. Because five years from now, it’s going to happen with or without you taking action. And so I feel like, I felt like we were in a position where we had no choice. It was our backs were against the wall.

And when people are comfortable, they can’t take

they don’t have that clarity. They don’t have the simplicity of like, you just have to do it. Because when you have, I have a cushy job, I can relax on the weekend, or I’m gonna go do this thing, which is scary, daunting, you’re pushing yourself to limits you didn’t know you were able to go to. But because we really didn’t have a fallback plan, we had to do it.

Cody Crabb (16:56)
I love that. think there’s something to be said for the, you know, I read someone sometime that entrepreneurship is like jumping out of a, it’s like jumping out of a plane and building a plane on building another plane on the way down or something like that. Like, and so.

Palmy Kitti (17:09)
Yeah, so I always

tell people that we jump and then we figure out how to fly on the way down. exactly the same thing. If you wait for the perfect moment, if you wait for everything to be ready, the world is moving so fast, you’ll already be behind.

Cody Crabb (17:25)
⁓ So for people that are kind of comfortable but stuck, like they haven’t really figured out how to do a hard pivot or take the big risk, what would you say to them directly if they were asking you?

Palmy Kitti (17:36)
I would ask them if this is important for you. And not as like a, a someday thing, but like, is this critically important to your life? Because I believe anything that’s critically important, if it’s important enough, you’re gonna do, you’re gonna take action. And I’m not like a rah-rah person, but I do believe if this is something you really want to do because it’s gonna have meaningful impact for your family or for the impact that you wanna leave in this world, then you do it.

You do it today. You don’t wait for another interest rate to drop. You don’t wait for anything. You take that action. Like what we talked about earlier, it’s really massive imperfect action is what you need.

Cody Crabb (18:12)
Massive and perfect action. I love that. I’m gonna totally steal that. is, that’s, cause it’s true. You learn from, you either learn from your own mistakes, your mentors mistakes, the mistakes that you learn about when you’re reading and absorbing information. Like it’s just experiences that people have had and what they are saying that you should or shouldn’t do. So why not get some of those yourself and then get some from mentors and get some from all sources. But also the, like you said, the ones that really stick are the ones that.

you have a stake in, maybe you lose some money because you made a mistake and then you’re never gonna make that mistake again. But yeah, that is fantastic advice. Palmy, this has been really awesome. If someone is hearing this and they wanna kind of get in touch with you or work with you, kind of who should they be and who should reach out to you and how do they do that?

Palmy Kitti (18:56)
Yeah, actually, so we’re on social media, Instagram, YouTube, Facebook, TikTok. So it’s all under the Kitty Sisters. So T-H-E-K-I-T-T-I-S-I-S-T-E-R-S, the Kitty Sisters. The interesting thing is that we’re actually opening up some slots to actually not have mentorship, not have courses, but allow…

for people to ask us more direct questions on specific topics. So that’s to come. We just decided this morning, but yeah, follow us on any of those channels.

Cody Crabb (19:25)
wow,

that’s awesome. Yeah, think ⁓ once that’s available, I think our audience would love to take advantage of that, because people that are kind of going through the experience for real, like I always say, you know, the guy that says a million, that sells ⁓ a million dollar a month course, like you can make a million dollars in a month. I’m always like, why aren’t you doing that then instead of selling this dumb course on Facebook, right? And so I love the idea that you’re just kind of saying,

You know, here’s, can, we can give some information and we know what we’re doing. So, uh, Palmy me, thanks so much for, joining us today. Um, and, and thank you listeners for joining us as well. If you like what you heard today, go ahead and give us a like, subscribe, comment, all the things and make sure to follow us so that you don’t miss more awesome conversations like this one. Palmy me, it’s been a real pleasure. Thank you so much for telling your story and getting, getting to know us today.

Palmy Kitti (20:11)
That was really fun, thanks for having me. Alright.

Cody Crabb (20:13)
Yeah, have a good one.