Mastering Multifamily Operations: Key Strategies for a Smooth Transition

Brett McCollum (00:01.274)
All right guys, welcome back to the show. I am your host, Brett McCollum, and I’m here today with Jay Balekar. And today we’re gonna be talking about transitioning to multifamily operations. Before we do guys, at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs to 2 to 5X their businesses to allow them to build the businesses they’ve always wanted and live the lives they’ve always dreamed of. Without further ado, Jay, how are you, man?

Jay Balekar (00:27.66)
doing great Brett thanks for having me and now that I’m talking to you I’m doing even better

Brett McCollum (00:32.538)
That’s too kind, thanks man. Yeah, it was really cool catching up with you a little bit before we started the show here, got to know you a little bit. And I’m excited to talk about everything in the multifam space that you’ve been doing and working on. But before we do, can we do me a favor? Let’s rewind back a little bit, give some context, history and catch us up to speed. Who is Jay?

Jay Balekar (00:52.344)
Yeah, absolutely, thank you. And thank you for that question, because most people don’t ask me that question. We jump right into real estate and multifamily, so I appreciate that. My name’s Jay. I grew up in India, so I’m an immigrant. Grew up in India in a pretty smooth household. My parents are fairly well-educated. My dad’s an engineer. And growing up in our household, the focus was always about education.

My parents were always like, you got to get a good education because in a developing country like India, if you don’t have good education, your options are really, really limited, right? So at least if you have good education, you’ve got a good shot. So which is why you see kind of the, in general, when you see people coming from India, you’ll see that they’re either engineers or doctors. That’s because those two professions get you a good paycheck.

back in India. So all parents want their kids to be doctors, accountants or engineers, right? So that was kind of my background, pretty smooth upbringing. I was blessed to be born in a great family. I had all the support and encouragement growing up. So after high school, I moved to the US for undergrad, went to Texas A did my undergrad in computer engineering, and then moved to UC or University of Cincinnati, which is where I’m now.

for grad school. And that’s how I ended up in Cincinnati. I moved to the US in 2007 and got done with grad school by 2011. And right out of grad school, I got a job at a consulting company called Lloyd and I was doing cybersecurity consulting work for about 10 years before I transitioned into real estate. But that’s kind of my background, but the goal was always go to good school.

get good grades, get a good job, and that’s what life is gonna be about. know, once you have a good job, you have job security, which we all know is kind of a myth. It does not really exist. But that was my idea of a good life before I really dove into entrepreneurship and real estate.

Brett McCollum (03:08.526)
Wow, man, so that’s a lot. So rewind back a little bit, I apologize. When did you, from India, when did you move to the States?

Jay Balekar (03:18.606)
2007. So that’s when I moved to the States for undergrad. Correct. Yes.

Brett McCollum (03:20.85)
Okay, and you went to XA and M, is that right? Okay, very good, and then 2011 to, no, when did you go to Cincinnati? What year was that?

Jay Balekar (03:31.47)
Yeah, 2011 through 2013 actually, sorry. So I misspoke there. 2011 through 2013, I finished my grad school here in Cincinnati and 2013 started working for Corporate America.

Brett McCollum (03:40.494)
Got it. Okay.

Brett McCollum (03:44.718)
Yeah, okay. So let’s rewind back because moving to the States from another country, did you come alone? Did you come with family?

Jay Balekar (03:51.47)
Mm-hmm.

Jay Balekar (03:55.757)
No, all by myself, I was 17 years old and I was excited about the opportunities, but I still remember that day when I hopped on that flight, 24 hour long flight. And I was like, man, this is it. I’m on the other end of the world. There’s no going back. There’s no changing mind. So you’re in it for the long haul now and you got to finish your education. So it was an overwhelming at the same time exciting moment.

Brett McCollum (03:59.194)
Wow.

Brett McCollum (04:23.172)
Yeah, I was gonna ask, that’s what I was gonna ask is like, what was that like leading up to you making the decision to come to the States? Was it a, you always knew you wanted to do that or was it a, this was tough but you know, like walk through that a little bit, because I’m sure it wasn’t easy at the end of the day, because your family’s there, everything you’ve known is there, you know, all of that.

Jay Balekar (04:43.554)
Yeah, absolutely. I mean, the way it started was my dad used to work abroad for a few years. He’s an oil and gas engineer. So he was working wherever there’s oil and gas. So he has worked in Malaysia, in Singapore. I used to visit him. I was always in India doing my schooling, but I used to go visit him every summer. And I went and visited some of the universities in Malaysia and Singapore. And Singapore has some really good schools, world-class.

And I was pretty amazed. I was like, hey, if I get an opportunity to study at one of these world-class universities where the infrastructure is top-notch, I’m sure I’m gonna feel like committing and studying more than I did, right? So that planted the seed in my mind. And then I started speaking with a few education counselors and they said that, hey, don’t limit your horizon. Don’t limit yourself to just one country.

Why don’t you look at schools and universities in India, in Singapore, in Australia, even in the US? And that’s how I started thinking about it and I started exploring. I initially, thought, you everyone has limiting beliefs. So at the time, my limiting belief was there is no way in the world I can afford to pay tuition in the United States. But then once you start doing more research and if you’re able to do well on your SATs, there are scholarships.

going to a public school would be a little cheaper than private school. And then I came across other people who had gotten their education from good schools in the US. I got to speak with them. It’s all about mentorship and networking. It’s the same that’s true in real estate as well, right? And that’s how I got comfortable around that idea and then applied to a few schools here, got into a lot of those schools and then picked Texas A because, know, Texas, warmer weather coming from India. I was a little scared of the cold weather.

And it was great school, great program for computer engineering and had a great time there for four years.

Brett McCollum (06:44.11)
Yeah, I was gonna make at least a small joke anyway. You’re visiting these world-class schools in Singapore and all that, and then you find yourself in College Station. And I was like, that’s it. There’s nothing else. It’s the university, and that’s College Station, you know? Yeah.

Jay Balekar (06:48.692)
Yeah

Jay Balekar (06:54.312)
Yes. Yes. Yeah.

Jay Balekar (07:03.126)
Yes, yes, yeah, that was a little bit of a shocker, but it definitely helped me stay focused because there was nothing outside of the university. Yeah, exactly.

Brett McCollum (07:11.64)
There really isn’t. Yeah. And everything in Texas is hours of a drive away. You know, you don’t get to Houston or anything. It’s like you got to drive for a while. But yeah, very cool, man. So then you get to Cincinnati, a little bigger town, obviously, and colder again. So now you’re back in some of the cold stuff. But yeah. So what’s it been like? You worked at this corporate job, you said, in cybersecurity. Was it 10 years, you said, give or take?

Jay Balekar (07:28.238)
Mm-hmm.

Jay Balekar (07:38.382)
Yeah, yeah, I put in my notice on my 10th year anniversary, so exactly 10 years. Yes.

Brett McCollum (07:43.052)
No way. Okay. Wow, man. So this is your first real job at this point, right? You need to know what was that like?

Jay Balekar (07:51.182)
Correct.

Honestly, it was awesome. I mean, I loved my job. There was nothing about my job that I can pinpoint where, you know what, I didn’t like that aspect of the job. The job itself was extremely rewarding because I was in consulting. So I would serve different clients and different companies across different industries. I never had the same boss for more than six months because we would work on different projects. So my boss kept on changing, right? So you’re never really stuck with

a bad boss for too long, right? And so it was all exciting and it was a travel job. So was traveling throughout the US, sometimes even across the world to serve these clients. So it was a really good exposure. I learned a lot through that experience, you know, especially in terms of like just presenting yourself professionally, being articulate, you know, putting together high quality documentation and deliverables for clients. So it was a great learning experience. But then after I traveled,

for 10 years straight, every Monday through Thursday, the travel started to get on my nerve a little bit. And I think that was really the only thing that I can say, but other than that, the job, I absolutely loved it. Like if I have to ever go back to my job, I wouldn’t be sad about it. But of course, once the entrepreneurial bug bites you, it’s tough to go back. And during my travel,

Brett McCollum (08:56.302)
I’m I bet.

Brett McCollum (09:16.538)
stuff.

Jay Balekar (09:19.614)
I started reading a lot of real estate books and like Ken McElroy books and then Brandon Turner books, Bigger Pockets and stuff like that. And of course, I can’t forget Kiyosaki books and Robert Kiyosaki books, The Cashflow Quadrant and really the Rich Dad Poor Dad book. read that book in high school back in India. I remember that was the pivotal moment for me. And I was like, man,

You know what? Sure, getting a good college degree and getting a good job is great. But what Robert Kiyosaki had to say about assets versus liabilities and building assets and having assets pay for your lifestyle and liabilities, that really resonated with me. And when I was in a position where I had a little bit of money saved up and I could start investing, I started reading all this real estate stuff again and jumped in late 2019.

and it started as an investment vehicle for me. At that point, I had no idea that it would actually end up being my career path in a few years moving forward.

Brett McCollum (10:23.514)
Yeah, well, let’s talk about that. So it’s 2019. What was the first investment property? What did you do?

Jay Balekar (10:32.418)
Yeah, so I never got into single family investing or flipping. I started reading about that asset class, but then I also started reading about multi-family. And then I was able to compare and contrast just based on what I was reading through books, but also through people’s experiences at local meetups and online forums like BiggerPockets. And it was clear to me that multi-family gave better scale and economies of scale and

A little more, I guess, opportunities to make up for your mistakes. If something didn’t go right, you have eight doors, 10 doors, 20 doors instead of just one. So my first property was here in Cincinnati. It was eight units. It was in a great neighborhood, class A location, but a very distressed 1920s property, partial reconstruction, cast iron plumbing, knob and tube wiring, you name it, and it had it. So I had to basically tear down and rebuild that property.

So it was a huge learning experience, but at the tail end of it, we came out okay. It was just me and my wife in it and we still self-managed the property. And then we did a full cash out refi on that property twice. And that’s when I was like, wow, everything that I’m reading in these books, you know, it is actually true. You can actually make it happen if you put your mind and energy into it.

Brett McCollum (11:51.16)
It’s real. Yeah.

Brett McCollum (11:56.73)
Yeah, yeah, very cool. All right, so you’re doing that. And then eventually we bring it up to 2023 where you mentioned this is when you’re full time. How did you get from the period of 19 to 2023? What were you doing to work yourself into a spot where you go full time?

Jay Balekar (12:15.566)
Yeah, so after that eight units, that was a great experience. So after that cash out refi, I had access to capital again, invested in a 10 unit also here in Cincinnati. That was a full renovation project too, a full cash out refi. So I was basically just recycling my capital. And funny story, that capital that I used was actually, I had saved it up, me and my wife, to get an MBA. So we even took the GMAT, visited a few college campuses and sat through a few…

guest lectures and I was like, okay, I’m gonna get an MBA. But then I just kind of went back and thought about it a bit more and I was like, what are my options after MBA? And my options were to continue to stay in consulting or get into private equity or investment banking or something like that. And I was like, man, that means that sure, I could potentially make more money, but my life was gonna be even more stressful than it was before.

because I had seen the life of investment bankers closely, because some of my clients were investment banking companies and I would see the work style and the working culture. So I was like, man, I don’t know if I want to go down that path. And by that time, I had kind of already started learning about real estate. And I was like, you know what? I think it’s probably worthwhile to take a shot at real estate and see how it works out. Give it a shot for two years. If it doesn’t work out, we can always sell our assets.

and go back to MBA, right? So that’s kind of how it started. But then after I had a few assets of my own, about 30 units or so, I even sold my primary residence and did a house hack, FHA house hack and moved into one of my multifamily properties. Thankfully, my wife has been super supportive throughout this journey. So, and we don’t have any kids, so we didn’t have to worry about schools. So we were able to move quick, sell the house.

and just double down in building our portfolio. And after we had acquired about five assets in that eight to 12 unit range, I had built somewhat of a track record where I felt comfortable working with a few other partners and pool in capital to buy a slightly larger property in a joint venture structure. So that was kind of the next step after the first few deals that I did by myself.

Brett McCollum (14:35.534)
Yeah, so now we’re into 2023.

Announcement on my 10 year anniversary. We’re done. How did that like was it I mean, here’s the thing is I I’m thinking about you know younger Jay, you know in 2007 I’m going to do this and now fast forward. What is that math? know, whatever 15 years, I guess 16 years something like that. Yeah 16 years and you’re going I’m doing it again. I’m starting something else again.

Jay Balekar (14:43.884)
Ha ha ha.

Jay Balekar (15:01.026)
Mm-hmm. Yep.

Brett McCollum (15:08.468)
Same mindset, scary but exciting? what was that like?

Jay Balekar (15:12.854)
Yeah, same mindset. Scary, but exciting. I think you summed it perfectly. I think the biggest limiting belief is once you are in your job for that long, you get so used to seeing that bi-weekly paycheck. You’re relying on that paycheck to pay your bills. Thankfully, we have stayed pretty frugal and below our means. So we’ve always had decent level of savings and very low bad debt, like credit card debt or

any liabilities and stuff like that. So that helped me kind of fight that limiting belief and take a chance on myself. It was definitely scary. And the scariest part is not being able to see your bi-weekly paycheck. Like where’s the money gonna come from? And is it going to come from? But then after doing a few successful stabilization of these distressed properties, I kind of got a little more faith that, okay, this thing works.

Brett McCollum (15:57.028)
Right.

Jay Balekar (16:11.522)
maybe we’ll get one payday in a year instead of getting a bi-weekly paycheck. And as long as you’re good with your finances, you can kind of stash up that cash, invest it wisely, where you’re getting that recurring cashflow. And now you can start relying on that cashflow to pay your bills. And that’s kind of was the pivotal moment for me after I built a portfolio of about 40 units, my post-tax salary and my cashflow from real estate were about the same. And that’s when I was like, you know what?

Brett McCollum (16:19.748)
gonna be okay.

Jay Balekar (16:40.47)
I think it’s a good idea to leave the job and transition to real estate full time because by that time, by 2023, we had some investors and it came to a point where I could either do justice to my employer and be good at my job or I could do justice to my investors and I had to pick a side. And it was a no brainer. I had to pick investors because they had invested hundreds of thousands of dollars with us. So I had to make sure I had time for them and time for the properties that they had invested in.

Brett McCollum (16:57.71)
Yeah.

Brett McCollum (17:08.59)
Incredible. Yeah, and now like the last two years now almost give or take right? You’ve been full-time Exciting challenging both what it like what’s that been like for you? Because this is so so fun because it’s it’s now then it’s still newer, you know, you know, what’s that been like?

Jay Balekar (17:25.293)
Yeah.

Jay Balekar (17:28.846)
Yes, definitely more exciting than challenging, but both, you know, and especially as we all know in the last couple of years, the market cycle has turned from almost 2010 through 2022. It was a bull run for real estate in general, especially for multifamily, especially syndication as that vehicle was brought into existence by SEC. And, you know, things were

Brett McCollum (17:39.097)
Right.

Jay Balekar (17:57.313)
really going up up and up and during those times I think even if you were a mediocre operator you could still do fine because there was a lot of tailwind and some of the mistakes you were making the market was helping you overcome those mistakes in the last two years you have significant headwinds so you make one mistake and the market will 10x that mistake and it’s just going to blow up in your face so it’s definitely gotten a lot more challenging but I’m glad that I started when I did

Brett McCollum (18:10.776)
Right.

Jay Balekar (18:25.882)
because I was able to learn my lessons using my own capital on my own deals that way I was able to not repeat those mistakes. But every deal is different. There’s new challenges on every deal. But I would say once you have built your network, once you have good partners, once you have defined your risk tolerance levels, once you have good investors in your group, it starts to get a little easier because now you’ve built that momentum.

and there are people who trust you, there are people you trust, and now it’s kind of that synergy that you have developed. So I think from 2019 to 2023, that was really the focus to build that momentum. Although that was not, I guess, I intend it to be that way, but it just happened because I was just putting in the effort and I was meeting the right people through all the networking opportunities. And now, although it’s been challenging, it’s been fairly stable. And…

It’s been fairly stable also because of some of the key decisions that we made as a group. We never relied on bridge debt, so we have no exposure to floating interest rate loans. So it kept our stress levels under control and cash flows a little bit more predictable than some of the other people who had to deal with rising interest rates, insurance taxes, and there was multiple things hitting operators from all different directions.

Brett McCollum (19:48.28)
Yeah, I was going to ask you that a little bit. So a lot of people, I’m glad to hear it’s probably long-term fixed debt is probably what you have on those. And how are you guys navigating some of the taxes and insurance changes?

Jay Balekar (20:03.726)
Yes, taxes and insurance increases, they’re hitting everyone across the country. Thankfully for us in the Midwest, insurance price increases have not been crazy. So I was underwriting for insurance at maybe about $400 a unit. And now we are at about 600 to 650. If it’s a super distressed property, high risk, maybe we are paying about 700. And once the property is stabilized, we’ve done the value add renovations, it’s got new roofs and…

Brett McCollum (20:09.466)
Everybody.

Jay Balekar (20:33.496)
fire suppression systems and whatnot, the insurance drops below 600, about 550 a door. So it’s not crazy, unlike a lot of the coastal markets, even Texas, Alabama, where insurance has doubled, in some cases quadrupled, right? So that’s definitely a lot bigger of a challenge to navigate. And then we are also looking at portfolio-wide insurance policies where the insurance providers are able to give us better pricing if they are insuring our entire portfolio.

and their risk goes down because they are insuring multiple properties. So that’s some of the stuff that we have done. We have also been working with multiple different insurance brokers and some of them have been incredibly good. They are able to offer us advice that, okay, if you want to lower your premium, maybe look at ACV or actual cash value policy going in, but once you’ve added value and the property is worth more, now look into changing it to a replacement value.

policy, right? So stuff like that, a few strategies like that, that have helped us a lot. And we have started to look into things that we know have a negative impact on insurance, like aluminum wiring, knob and tube, gas tie and plumbing, older roofs, federal Pacific panels. And if the property has some of that, that is not easily addressable, then we probably just walk away from that property. So we are kind of not really looking to buy a property that has aluminum wiring anymore.

Brett McCollum (21:56.516)
right.

Jay Balekar (22:01.538)
because the insurance requirements around that keep on changing, right? So the remediation requirements keep on changing. So that’s kind of on the insurance side. On the tax side, again, it has not hit us heavily. We always underwrite for taxes at the purchase price when we do our underwriting. In some cases, they have gone up. And what we have done is we have just done a backdated appraisal based on NOI.

Brett McCollum (22:03.214)
You know what it’s going to Right.

Jay Balekar (22:29.17)
and use that appraisal to fight our taxes that, based on the NOI, this is what the property was worth as opposed to what it was assessed for by the county. And we were able to get our prices or taxes lowered a little bit. But in most cases, thankfully, the impact was minimal.

Brett McCollum (22:42.66)
Good for you.

Brett McCollum (22:46.158)
Incredible. Man, that’s incredible. Great stuff on that. All right, so we’re present now. As of this recording, it’s April of 2025. What’s the vision for the future? What are you guys looking to do?

Jay Balekar (22:59.468)
Yeah, the vision for future, I would say we have never been extremely aggressive in increasing our door count. The focus always has been on deal quality and really the neighborhood. So because if we even buy a deal at a fair market value, even if it’s not at a steep discount, but if it’s in a class A or B location where we see people moving, jobs moving, and we see the city is putting in dollars to develop the highways and stuff like that, the infrastructure.

we know that if we hold the deal long-term, five to 10 years, we’ll be okay. So we are definitely very laser focused on our buy box. Anything that falls outside of our buy box, we don’t even look at it, no matter how good the price is. So in terms of neighborhood, the vintage of the asset, and then our business plan based on that. So we definitely are very laser focused on that. Moving forward, we continue to focus on multifamily.

I know a lot of people have been looking at multiple different asset classes and chasing the cash flow, but we as a group firmly believe that getting good at one asset class and sticking to that area of focus is a better strategy long-term because you start to get better and better in terms of operations and you start getting more efficient. And now you’re able to perform a little better than your competition, even though

that asset class might get a little tricky to work in. You just start to get better yourself. So moving forward, the goal is to stick to our lane, do multifamily, stick to our buy box. And rather than having a 500 unit per year door count, our goal is to focus on the quality of deals. And if that means we don’t close a deal one year, that’s totally fine. Last year we closed four deals and we never saw that coming.

Brett McCollum (24:43.45)
quality.

Jay Balekar (24:52.032)
If you see good deals where the numbers work out and they cash flow day one, we will go for them. If we don’t see those deals, we will hang tight until we see them again.

Brett McCollum (25:01.562)
Yeah, smart, very, very smart. I love the fact that it’s intentionality. You’re not doing it with, know, hopes and dreams. You’re doing it with practical, you know, everyday, you know, advice and you’re doing it the right way, man. That’s really cool. It’s a lot more, I can hear it in your voice. There’s a lot, I talk to a lot of multifamily people that have, they’re getting punched really hard because maybe they have focus on other things and there’s not a lot of peace in their voice and I…

I sense that from you. hear the peace in your voice. That doesn’t mean it’s not difficult and you’ve had some things to figure out. But there’s peace in your voice like, hey, our properties are still good. We’re still cash flow. We’re still okay, you and you structured long term debt. It’s not short term bridge stuff. It’s a there’s a man, the people that are in the bridge stuff right now are it’s tough times, you know, and, you know, but you guys have done it the right way. So man, really good job, man. Like, it’s really good.

So, man, if people want to connect with you though and get to know you little bit better, follow along the journey with you, what’s the best way for that to happen?

Jay Balekar (26:00.078)
Thank you.

Jay Balekar (26:06.882)
Yeah, I’m very active on LinkedIn and Facebook. Jay Balekar, my real name is, Indian name is Jaydeep, that’s J-A-I-D-E-E-P. And I love to get on one-on-one calls with people because that’s where I feel like you can get to truly connect with people. Social media is great to have that initial intro over a DM, but I love to hang out with people over a Zoom call or even meet in person at some of these conferences.

So my Calendly link is calendly.com forward slash jbalekar. And I meet with new people all the time, people who are getting into real estate, active investors, passive investors, or people who just want to do a get to know each other call and have nothing to do with real estate. That’s totally cool too.

Brett McCollum (26:53.198)
Yeah, and you guys would be absolutely silly to not take Jay up on that and we’ll make sure we put that in the show notes for you guys as well. But man, Jay, this has been really special. I appreciate you taking the time with me, going deep into the business like that and talking honestly some of the strategies high level what you guys have done, because it’s practical wisdom that we can take with us today, right? And so I really appreciate you doing that, man.

Jay Balekar (27:18.05)
Thank you so much. really appreciate that compliment, Brett. And some of this has meant that we had to walk away from some of the opportunities, right? But I think we’ve always followed the mantra that it’s better to be conservative and lose on a few deals than do one bad deal that’s going to tarnish your reputation across the other 20 good deals that you have, right? So I appreciate that coming from you and I’m looking forward to stay connected.

Brett McCollum (27:40.922)
That’s right.

Jay Balekar (27:45.974)
Looking forward to connecting with your listeners as well.

Brett McCollum (27:49.334)
And that’s great. again, thanks for being here with us. I really appreciate you taking that time and I really appreciate you.

Jay Balekar (27:55.0)
Yeah. Thank you for having me, Brett. Appreciate it.

Brett McCollum (27:57.816)
Alright, yes sir, well guys, it’s been a great episode. I thank you for hanging out and spending time with us and we’ll see you guys on the next one. Take care everybody.