How Steve Raj Turned $300 Into $3 Million in Real Estate

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Show Summary

In this conversation, Steve Raj shares his inspiring journey from humble beginnings in Malaysia to becoming a successful real estate investor and general contractor in the United States. He discusses his initial struggles, the transition to real estate, and the strategies he employs for acquiring properties, particularly focusing on multifamily investments. Steve emphasizes the importance of raising capital and how his unique skill set as a contractor and realtor gives him an edge in the market. He also offers insights into the current real estate landscape in North Carolina and his commitment to helping others succeed in real estate.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Steve Home Deals Website
    • Steve Raj on LinkedIn
    • Steve Raj’s Phone number: (919) 656-9776

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Steve Raj (00:00)
  by 2008, we had successfully opened the Avis Car Rentals Agency as well as own a dry cleaning business while still you know doing our work at the church.

  And then of course, 2008 came by, the recession happened. We lost our businesses and not only we lost our business, we even lost our primary home that we had bought. So it was one of the most painful moments of our lives at that time. But it was during that time that I told myself, I got, there’s got to be something better in real estate.

  Dylan Silver (02:02)
  Hey, folks, welcome back to the show. Today’s guest, Steve Raj is a speaker, general contractor and investor. He’s a founder in the construction design and real estate education spaces. Steve, welcome to the show.

  Steve Raj (02:16)
  Thank you, so excited to be here.

  Dylan Silver (02:19)
  great to have you on here, Steve. And I always like to start off at the top of the show by asking guests how they got into real estate.

  Steve Raj (02:27)
  Absolutely. Yeah, so I want to give a very quick short version of the whole thing how it started. So my wife and I, We are Malaysians. We arrived in the United States in 2001, 24 years ago. And when we came, we really came for the American dream. You know, when I came, I always like to tell the story that we came with $300 in our pockets and three bags of clothes. That’s all we had. So we had to literally start from the scratch.

  And I started off as a graphic designer in my church for only $500 a month. And my wife was volunteering as the receptionist. And then from there it progressed, I became one of the associate pastors and I’ve been in ministry for over 40 years now. So ministry has always been you know my major platform and calling, but I’ve always loved business. So I’ve always been in business. So we got involved in a while.

  doing the work in the church because you know the church income wasn’t really that much, as I just mentioned. So we had to find other ways to keep it going. So my wife and I worked two jobs each. She had two jobs. I had two jobs just to make the ends meet. And then

  by 2008, we had successfully opened the Avis Car Rentals Agency as well as own a dry cleaning business while still you know doing our work at the church.

  And then of course, 2008 came by, the recession happened. We lost our businesses and not only we lost our business, we even lost our primary home that we had bought. So it was one of the most painful moments of our lives at that time. But it was during that time that I told myself, I got, there’s got to be something better in real estate.

  So because I lost my home and I was like, there has to be a way how this thing works. So I went to real estate school, became a realtor, I’m a licensed realtor as well.

  But then I realized being a realtor doesn’t really help me understand the nuances of mortgages and how the system works. So I found the real estate investment group and started going to that in 2010. And that’s where I really learned all the secrets of investing and how to raise capital and all that kind of stuff. We got so excited. So from 2010 onwards, for the last 15 years, my wife and I have been involved in real estate and within the

  first five years, my wife was able to retire from her two jobs. I just maintained my pastoral ministry only and I didn’t have to do any other job. And today, by the grace of God, we have acquired over $3 million in portfolio just in the last 15 years. And in the next two years, we’ll be acquiring another $3 million in portfolio in a shorter time because of the scalability of the business, how we have scaled it.

  So we’re very excited and we are very, grateful for real estate. I think it’s one of the most powerful essence of creating this dual income and revenue.

  Dylan Silver (06:08)
  which segment of real estate are you primarily looking at deals at? it single family? Are you looking at distressed homes? You’re looking at on market off market walk me through acquisitions.

  Steve Raj (06:17)
  So in the beginning, we started with single families and we purely just did flips, right? We flipped it because we needed to acquire the capital. So we did a lot of flips. We have done more than 30 some projects in the last 15 years. And then the first couple of years, we did flips so that we can raise the capital to a single families distress homes, off market capital, off market properties that we got through the wholesalers. And then in the last 10 years, we changed our approach.

  Instead of doing flipping, we started keeping holding them because I realized that the capital gains was hitting really hard. So I was like, why should I do flip and then pay the capital gains when I could actually flip the property but not sell it, keep it, refinance it, still get cash and not pay tax. So that was a great approach. And that’s how we started you know building up our portfolio. Now we have our rental properties and so forth.

  Dylan Silver (07:08)
  although the rental properties long-term year-to-year leases.

  Steve Raj (07:11)
  Yes, so we always start with one year. The good thing is all our properties start with the one year and then every year we start increasing the rentals between five to 10 % based on market value.

  Dylan Silver (07:21)
  Where are you based at? Where are you making these acquisitions?

  Steve Raj (07:24)
  So I’m in North Carolina, I live in Morrisville. Most of my properties are in North Carolina. I like to usually do, you know, own properties no more than an hour drive at the most, because I like to be hands on. Next year, we are probably thinking of moving all our properties to a property management. At this point, I’m handling them myself, because by next year, we will have about another 20 units added.

  So it’s very hard to add the existing portfolio and that and manage all of them. So we’re going to give it to a property manager to handle that. But still, I would like to keep it at within an hour at this point, because if I need to check something, it’s always easy.

  Dylan Silver (08:02)
  I’ve heard great things about the Carolinas for real estate investing. I haven’t looked at deals over there, but I’ve heard so many great things.

  Steve Raj (08:10)
  Absolutely. Yeah, it’s a booming market. Raleigh Durham area is one of the top five cities in the United States that’s growing the fastest. So it’s a great space.

  Dylan Silver (08:22)
  like to talk on a granular level about acquisitions for you. When you’re looking at these single family homes to hold. Are you looking for properties that are more turnkey? Are you looking for properties that are on market? What’s the scope of the deals that you’re reviewing or looking at?

  Steve Raj (08:41)
  Sure, one of the greatest advantages that I have is that I’m a licensed general contractor, right? So while I was working at the church, my second job was a handyman job. I started as a handyman. And that’s when I realized if I can be a handyman, then I can also become a contractor. So I became a licensed contractor. ⁓ And because of that, I’m able to renovate all the properties myself. And because of that one particular facet,

  I don’t look for properties in the market. look for off-market properties that are dispressed, that needs repairs. So when people look at a home that is completely broken down and damaged and everything, they’re like, oh my God, that’s going to cost a lot. For me, I’m looking at the diamond in the rough. I’m like, that’s exactly what I want because I know how I can turn that completely into something else. So for one example, we bought a house that it’s in Smithsville that was built in 1850, 1850, right? That’s 170 some years old.

  The house was completely run down. It was bad. But when I looked at it, it was right in the downtown, know, you heart of Smithfield. I saw an opportunity. So we bought it and then we spent about $180,000 on renovation, just to redo the whole thing, completely redid it. And now the property is worth close to half a million dollars, right? And I still have it and I’ve turned that into Airbnb and it’s doing fantastic. So I look at opportunities because of my skill set. But again,

  Those who want to get into real estate, you don’t have to be a contractor or handyman. As long as you know the right process, anybody can make this work. Now, having said that, to answer your earlier question, now I don’t acquire single families anymore. I only do multi-families because with multi-families, your scalability is huge. Your income range is bigger. And I just feel like it’s better. So the property is now because I’m a contractor, I’m actually building multi-families. We started just one with four plaques.

  And then we just got another property in the contract where we’re to start next month with 15 units condo. So we do figure, I think the scalability is better and the revenue is higher.

  Dylan Silver (11:18)
  Now, when we’re talking about the, I would say interweaving of these businesses, right, so general contractor investor, right, realtor, are you still involved in in all of these different segments? Or do you focus strictly on the investing or strictly more so on the contract? And is it a mix of everything?

  Steve Raj (11:40)
  ⁓ It’s a mix of everything. However, the majority of it is really my contract. And I’m still, I still do speaking, you know, for churches, I do speaking for corporate events as well, because as an entrepreneur, I bring some level of, you know, expertise in the in the area of business. So I do speak to business owners, I do speak in real estate arenas, and so forth. So that’s something that’s ongoing. On the business side, real estate side, I focus more mainly on

  You know my my buying holes. I focus on new constructions Not so much of the realtor part now because I’ve been a realtor for 15 years I do have a a group of people that you know, I’ve helped over the years that always come back These are my repeat clients. I do not advertise my real estate services as a realtor Because I don’t really have too much time to go and show properties to people. I prefer to be a selling agent

  Dylan Silver (12:27)
  Thank

  Steve Raj (12:32)
  Because as a selling agent, go in, my wife is an interior designer. She’s certified interior designer. So she comes in and she completely stages the house. And then I put it in the market and I’m done. It is the buyer’s agent that actually shows the house. And then whoever have an offer, if the seller accepts the offer, then we close the deal. So I prefer to be a seller’s agent than to be a buyer’s agent. Buyer’s agents just take too much time because we are constantly showing houses. And I’ve had situations where I’ve shown like 30, 50 houses, end of the day they decide not to buy. You know

  so all that time you spend is just gone. So I prefer to be a seller’s agent. But again, I don’t advertise that much. My real focus is really real estate, private capital raising. Over the last 15 years, I think we have raised more than $5 million in private capital to make our businesses going. So that’s something that I specialize in as well. And that’s why I really focus.

  Dylan Silver (13:19)
  When we’re talking about raising capital, there’s so many ways that people have gone about capital raising syndication, looking for you know, limited partners. I’ve heard find the deal and the investors will come right? What’s been your approach to raising capital?

  Steve Raj (14:18)
  So I have realized that, you I always used to say, if there is a cause, the provision will always come. You know, private funders are looking for deals that is going to definitely work. They want to make sure that this is going to work. So one of the challenges with private funding is that when people want to, they hear about capital raising, they hear about private funding, they get excited and they want to start doing it. But then they don’t have the right platform to do it, number one, and they don’t have the right understanding of how to raise the capital.

  And then they don’t understand that they need to really set that project in a very clear crystal way so that the funders who look at it, they can see it one go and understand that this is a project that’s gonna work. So when I say that, I’m talking about the lending package. You have to be able to create a lending package that is absolutely solid so that when a funder look at it. So if I’m a funder, I always think myself as a funder before submitting.

  I want to see if I were to submit this package to me, will I fund it? Right? So in order to do that, we have to be able to give all the details about the project. What is the scope of the work? How much are you buying it for? What is the cost of that acquisition? How much renovation is it going to cost? And then end of the day, what is it going to sell for or what will it be valued for after the renovation? And now for me, one of the key advantages that I have is that because I’m the one doing the contract work myself,

  I know the cost and number two, my cost is limited compared to others, right? So if I have my friend John, who’s gonna do the same renovation that I’m gonna do, he is gonna pay a general contractor with all the added fees the general contractor is gonna add to the cost, obviously because he got to make his money, right? So the cost for him, for example, can be $100,000, but the same project for me, exactly verbatim, it will only cost me like maybe 60,000.

  right? Because there is no added cost. It’s my cost. So I am able to give more specific numbers to this, number one. And then the second thing is, I’m also a realtor. So I’m able to pull up the ARVs very quickly. I can tell exactly what is the market going to give the value for this property when I’m finished with the renovations. So when I’m in my funding package, I give all of that details. I give all the comps of that property and so forth.

  So when I give it to the lender and I say, look, this is what we’re looking at, how much we are acquiring for, this is the renovation cost, this is the scope of work, this is where the property is located, these are all the highlights, attractions of the area, this is what the ARV is gonna be, and this is how much I want and exactly what is the percentage of the ARV that I’m asking for. So I will specify I’m only looking for 60 % of the ARV, I’m only looking for 59 % or whatever it is, right? So when I give specifics like that, when the funders look at it,

  They are like, wow, first of all, this guy know what he’s doing. Secondly, he’s credible because he is a contractor himself and he’s a realtor himself and his background and his experience over the last 15 years speaks for itself. So funding is very easy for me. I don’t struggle with funding anymore. It’s an easy thing that comes.

  Dylan Silver (17:25)
  The vertical integration of your business is certainly a tremendous asset, right? Because you’re able like you mentioned, you’re a realtor, so you know exactly what the exit is going to be. Or you have a very good idea of what the exit is going to be your general contractor, so you know exactly what the rehab is going to be. And then as an experienced investor, you know the deal cycle. So it’s not like there’s going to be really any any surprises and

  you don’t really need a second opinion, right? Because you you have all this experience. I do want to pivot a little bit here, Steve and ask you about the the multifamily segment specifically, you mentioned going from single family into multi and pretty much looking at multifamily exclusively right now. I’ve noticed just from speaking with folks like yourself on the show that there does seem to be increased interest right now in multifamily and then also a lot of folks

  who have seen, you it’s a little bit harder to fix and flip properties in certain markets. I’m licensed in Texas. I’m a Texas realtor. So like Texas, there’s so much new construction that it’s harder to make money on flips. Are you seeing that as well that there’s more movement, ⁓ more momentum in multifamily, right now?

  Steve Raj (18:40)
  Absolutely. Now particularly I can only speak of my market, right? Where I am, this is where I really operate. So in North Carolina, as I said, this is one of the five cities that are fastest growing in the United States right now. with that, having said that, are becoming, prices are going up. In 2001, as we know, we had the worst, not worst in the negative sense, worse in the positive sense of the highest market prices.

  properties people were bidding like crazy, right? I remember some of my properties that I listed sold within an hour and it sold for like, you know, 10,000, 20,000, 50,000 more. My brother-in-law’s property that we sold, it sold for $70,000 more just within one day. 70,000 more than the asking price. So it’s ridiculous. That time the market was crazy. Now, obviously because of interest rates and everything, the prices have gone down now and market is at a halt at this point, but it’s kind of beginning to pick up again.

  But to answer your question in terms of single family or multi-family, multi-family here is doing very well because of the rapid growth that’s happening. There’s not enough homes. So obviously if I were to choose between, you know, do I want to build single families or do I want to build multi-family? I’d rather go with multi-family because I know for sure I’m going to sell quickly. Obviously we rent properties. We don’t sell them anymore. So I know I will rent it out very quickly because the need is that the demand is there. So number one is the demand of the property itself.

  Second thing is, now again, this is subject to each market, I think, but I think in general, going multifamily is always far more profitable than just single families because if I have, let’s say, you know, one single family and if the tenant goes out, that property is gonna, I have to pay for that property if I don’t have a tenant for the next two months, right? It’s coming out of my pocket. But the beauty of a multifamily is, let’s just say, a duplex. If I have a duplex, majority of the time,

  one unit will pay for the mortgage, the other unit most of the time will be pure profit or at least majority of that will be pure profit. So what happens is that now the outlay of your pocket in the event of you know vacancy, it reduces a lot because now you don’t really have to pay. That is still paying. But in the days when the properties are fully you know occupied, you are making cash flow every month. You don’t have to worry about that because you know for sure there is enough money coming in.

  So when I asked myself, do I want to have just one rental property and make $500 out of that every month? Or would I like to have a multifamily, whether it’s a duplex, triplex, quadplex, whatever it is, and have multiple income coming and I’m still paying one loan.

  Dylan Silver (21:10)
  Yeah, I mean, that’s the reason why my multifamilies and and and on the the operator side, there is some level of distress in some of these syndications in the operators themselves, right? So then you’re having an opportunity for some different types of offers, creative offers that, you know, maybe five years ago, they would have been less receptive to but it’s a different market now.

  Steve Raj (21:11)
  Yeah.

  Dylan Silver (21:34)
  We are coming up on time here though, Steve. Where can folks go? Where can our audience go if they’re interested in reaching out to you? Maybe they have a deal they’d like you to take a look at. Maybe they’re in North Carolina and would like some feedback on a project they’re working on. How can folks reach out to you?

  Steve Raj (21:48)
  Absolutely. So what you know two things that I do here is that I build locally so I am a licensed contractor So if they are an investor in the local area and they need help with building I’ll be glad to help them as you know investors for investors I’ll be glad to help them also the other thing I Would love to help them with is understanding real estate a lot of people are new They don’t know where to go and obviously there are a lot of group gurus out there, right? There’s a lot of gurus that teachers of real estate investing and they’re great I’ve been part of many of them and that’s good but if they are looking for somebody that is

  that is local, that is somebody they can reach out to, they can meet, they can talk, they can have access to, you know, on any given time, then I will be glad to help them that way. And, you know, feel free to put up my number there, 919-656-9776. They can visit my website. I have my website, JirehTech Inc. J-I-R-E-H-T-E-C-H-I-N-C.com or stevehomedeals.com.

  both the same website SteveHomeDeals.com. When they go there, they will have all my information. They can see the projects we have done. Most of it is there. And then, you know, I’ll be glad to help them. I just want to help them become successful. I can help them raise capital, show them how to do it. It’s not as difficult as people think, but there is some platform of things that they have to do it before getting there, but I can help them with that.

  Dylan Silver (23:09)
  Steve, thank you so much for coming on the show here today.

  Steve Raj (23:12)
  Absolutely. Thank you so much for the opportunity and I’m excited. Really excited. Thank you so much.