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Show Summary
Venkat Avasarala shares his journey from single-family homes to multifamily real estate development, emphasizing the importance of tenant profiles, market timing, and strategic partnerships. Starting in IT, he invested in single-family foreclosures, grew a portfolio generating $10k/month in cash flow, then moved to multifamily after recognizing limits in acquisitions. He pivoted from B/C properties to Class A development in affluent areas to attract stable tenants and institutional investors. Venkat highlights the role of mentorship, relationships, and understanding macroeconomic trends, like money supply and inflation, in making smarter investment decisions. His current focus is high-end multifamily projects in Texas with institutional-level strategy and scale.
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Venkat Avasarala (00:00)
It’s very, very important.to earn your stripes. approach. Don’t wait until you have your own deal. Get on somebody else’s deal as a KP, sign with them, and then go with resume, with something on your resume when you have your own deal is what I would say.
Micah Johnson (00:07)
Right.Venkat Avasarala (00:15)
All my single family loans are Fannie Mae loans, but they don’t care because you’re not asking for a single family loan. You’re asking for a multi-family loan. Totally different ball game. So luckily I went there with a couple of properties on my resume for my very first property. It was so easy getting. And I was like, man, they gave me $3.5 million loan? Me? Right? So it is very important.Micah Johnson (00:33)
Right?Hello, everyone. Welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Venkat who’s made some serious moves in real estate investing now for almost a little over two decades. Venkat , welcome in, man. Glad to have you.
Venkat Avasarala (02:28)
Hey, thanks for having me Micah.Micah Johnson (02:31)
I’m excited, man. I’m excited for our talk today. Glad that you’re here because I think we’re getting ready to have a real conversation about the multifamily world. What really happened, how you survive in it, what you do. And you have enough experience that you’re not just seeing this through one lens. You’re seeing this through a long lens of real estate. And if you’ve been in this game long enough, everyone knows it’s a cycle. We’re living out cycles. Different things trigger it.but it’s kind of the same one and it happens in different areas of different assets. It’s just like who’s getting hit by what at any different time. So, Multi-Family is one that, you know, for our listeners or viewers out there, if you’re not familiar with it, they’ve taken a real good beating since 2022. So I’m excited to dig into this conversation because like we were talking about pre-recording, this is what brings the best to the top. This is what really gets you sorted out. And if you’re good now, you’re fixing me.
Venkat Avasarala (03:07)
There you go.Micah Johnson (03:29)
That’s what it sets you up to be. So let’s dig in, man. I’ve been caught. Tell us some more about yourself. For those that don’t know about you yet, what’s your main focus? What’s your business look like today?Venkat Avasarala (03:40)
So I’m based out on Plano, Texas, just north of Dallas, suburb here, and been here since 2004, so like over two decades. And what I do right now is multifamily ground up development in core markets and in very ⁓ high income areas, right? So that is where the tenant, that is the tenant I’m targeting. Somebody who makes about the medianmedian income of the country. So about something like 80 to $120,000. That’s the tenant profile that I’m seeking. ⁓ And I’m building properties accordingly. ⁓ In the past, I used to do B and C class properties, work for housing and all that. ⁓ Don’t want to do that no more. I just want to graduate to something like this. And I did try to buy existing properties because I used to do a lot of ⁓ acquisitions and operations. ⁓
but you cannot buy desirable properties at a decent cap rate where you can make a buck after that and for your investors. So that’s why I became a developer so that I can build myself so that I have the margin for me and my investors. Yeah.
Micah Johnson (04:54)
Right. Right. Youget in there earlier, man. The earlier position that you have in the deal, it only gets better and better. That’s the goal of real estate.
Venkat Avasarala (05:00)
Absolutely.Micah Johnson (05:52)
So, okay. A couple things I want to dig into real quick. One, I loved your word there, you graduated, because that’s something I like to dig in with folks on this show is you may not end up where you started in real estate. And that’s completely fine. It’s a huge umbrella.I’m not where I started. It’s completely normal. Just flow with it. let it bring it out of you. So I love that term that you brought up. And then a tenant profile. We’re going to dig into that here soon because that goes along with graduating is understanding everyone’s not your customer. doesn’t matter which one yours is, but just know which one it is because you have to know if you want that. I don’t want to say it.
in a weird way, but lower end rent customer that that class you’re talking about luxury rent, like there’s all these different ways to target people as you graduate that gets important. But take us back for a second, man. How’d all this get started? What led you to where you are today?
Venkat Avasarala (06:42)
ThankSo I left, I’m originally from India, South India. And I came here to do my master’s in electrical engineering back in 2001, right after 9-11 December. ⁓ So was a little tense at the time. So I came and yeah, went to University of Alabama in Huntsville. ⁓ So they have a very good electrical engineering program. did my master’s in. ⁓
Micah Johnson (07:07)
Wow.Yeah, say the least.
Venkat Avasarala (07:22)
with specialization in chip design, VLSA chip design and all that. And after that, quickly realized that all the entry-level jobs are in India, China, Taiwan and all that. We lost our chip industry. So I got the degree but no entry-level job. So looked for a job for six months, couldn’t find anything and ended up in IT. Totally different from what I have done. And spent about 14 years in my IT career, 2004 all the way to 2018.Micah Johnson (07:35)
Right.OK.
Venkat Avasarala (07:51)
But in 2007, I started buying single family homes. ⁓ I can’t sit still, I need to do something. So I wasn’t doing it to solve, I mean, we were getting six figures back in 2004, right, me and my wife. So we were not hurting for money or anything, right? So ⁓ yeah, it’s just that I wanted to do something. I got a dog, okay.Micah Johnson (08:11)
Or right.Venkat Avasarala (08:17)
And then I said, well, I need to do something more. And that is how accidentally I entered single families. And that is the time they were selling these foreclosures. So I picked up three foreclosures quickly in 2007 and started operating. And then work got busy. And then the bearish, my god, anything to do with a single family home or a mortgage or a real estate in general was bad news for 2008, 9, 10, 11, four golden years.Micah Johnson (08:44)
Right.Right.
Venkat Avasarala (08:46)
And I mean, there’s nothing, no good news, right? I mean, 2011, we had a double-day precession under Obama. And I mean, I just sat out of it. But I still hanged on to my three properties, but didn’t acquire anything. And they were practically giving away homes. You can buy them for credit card kind of prizes, right? But I missed that. But in 2012, I clearly saw that the tide has turned. And the way I knew it is,Micah Johnson (09:07)
Right?Venkat Avasarala (09:16)
you know the People who sell these homes like Off-market and all that they start bothering me. They stop calling me texting me and all that. It’s like something happening You’re right. Why are they not calling me anymore? Because they don’t have to write things turn so I quickly picked up And then I bought about 20 homes after that 2012 13 14 the 15 a couple of themSo it’s all with my money using Fanny Freddie. And by 2015, I was generating about $10,000 per month cash flow. After taking out mortgage PITI, well, PITI, and $0.15 on a dollar collected rent set towards maintenance. And there was plenty back
Now I don’t think so, but back then it was enough. So I was bringing $10,000. I felt really accomplished. $10,000 was a lot of money. And money is side income.
Micah Johnson (10:42)
Right, man.Venkat Avasarala (10:45)
And by 2015, I was like, you know what, if I ever get laid off or my wife or either both of them get laid off, that’s fine. I we can live on this $10,000 per month. But then again, I just can’t stop. I mean, they said that no more loans for you. 20 loans is cut off. Fannie, Ferey de loans. Before 2008, there was no limit. But after 2008, they limited it. Then I said, well, I can’t scale no more. I mean, that is when I entered multifamily.Micah Johnson (11:06)
Yeah. ⁓Venkat Avasarala (11:13)
So in 2016, I started buying. I quickly find out that I don’t have enough money to buy 100 unit. So I started educating. My very first raise was $1.2 million. It was a $3.5 million project, a million dollar property, 100 unit property in Norman, Oklahoma. That was my very first one. I tried my best, but nobody would trust me and award me a deal. Brokers, have you ever done a deal? Now it’s like, OK, then well.Micah Johnson (11:21)
right?Venkat Avasarala (11:43)
move along, right? So I needed to prove myself by stepping outside Dallas, go to a less hot market like Oklahoma, and prove myself. And then my second deal was 120 units in Phoenix, three months apart. And then that gave me the permission to come back into my own market, Dallas. And people say, OK, you close a couple of deals. And they gave me 300 units. OK, go close it now. So my third deal was $15 million. So it’s a $3.5 million.Roughly six million dollar deal and 15 million all in one year ⁓ So quickly quickly. Yeah, and I was able to raise money arrange debt Fannie debt ⁓ You know, I did all that so One thing led to another and I had about what? 3,500 units in four years about three hundred fifty million dollar portfolio that I have set together I said, you know what I slapped it while we are
Micah Johnson (12:19)
how that works.Venkat Avasarala (12:40)
Fanny Freddie loan on it, lot of IO period and all that. You know what? I’m gonna just put my feet up and smell the roses kind of thing. Yeah, not, it didn’t work out that way. And then the COVID rolling in. And the COVID rolling in. These are all 60s, 70s, 80s built properties. Their income levels range from about 40 to $60,000 range, right? That’s my tenant profile. And things were fine. I was sending checks to investors. I mean, everybody’s happy. And then the COVID rolled in.Micah Johnson (12:49)
No, no, none of that fits this story.Venkat Avasarala (13:10)
Right. And 2019, they started increasing the interest rates. So we quickly felt pinch in the economy, but we were OK. Right. We were making things work. But in 2020, when COVID rolled in and federal government has said that you cannot evict people and all that, all hell breaks loose. 20 % of the people stopped paying rent. And that dawn on me is like, these folks, they’re hand to mouth. They’re paycheck to paycheck. Right. On a good day.⁓ And something like this happens. mean, I’m on my own. I still have to pay my employees, payroll, utilities and everything. And I have to pay for his water, but I’m not allowed to collect rent from him or I’m allowed, but I cannot have it. Right. So that quickly dawned upon me and said that, look, this is not the tenant profile that I would want to stick with. And that is when I decided, you know what, I have to sell everything. The first opportunity I get and then
Micah Johnson (13:38)
Right.Venkat Avasarala (14:07)
Restart with you know class a properties is what I thought and I had a lot of experience because even single-family homes I was writing leases. I used to do inspections and I used to arrange ⁓ You know like ⁓ service calls and all that I used to do it myself I mean there plenty of property managers, but what dawned upon me is they won’t give the same day service I used to have tenants for like 10 years ⁓ Because I take care of the me personally nobody else meMicah Johnson (14:35)
Right.Venkat Avasarala (14:37)
They text me with the issue and the picture of the problem. I forward it to a corresponding service provider. And that person talks to the tenant, set up a time, provide, email me an invoice. I write a check and put it in the mail in the week. And nobody talks to anybody, but I provide same day service. And I did for 20 properties. So I kind of got a view into people’s lives, right? mean,they live. mean, how is their life.
Income, know how it’s when it’s not stable or what will happen people can get laid off and all that So then I saw much more closer these BNC properties how they live and they see what happened was like in 2012 onwards They really started this quantitative easing where they print a lot of money People like you and me know exactly how to get our hands on that money We go to the bank and you know, we get money and we invest we build assets We do well, but an average Joe all they have is debt
Right? And their dollar is losing purchasing power because we are printing just way too much, too many dollars. And that’s why assets appreciated quite a bit since 2012 because at the federal governor at the time, Bernanke, he figured that’s the right thing to do to get us out of the doldrums of the 2008 to 2011 recession. So that actually worsened the wealth inequality. It became really worse for them.
And then COVID, the money printing which came after COVID, it really sealed the deal for them. So the bottom 60 % of America, all they have, I mean, even recently ⁓ Scott Bass and our treasurer secretary saying the same thing, like, look, the bottom 60 % of the people, all they have is debt. They don’t own stocks, they don’t have assets, they don’t have Bitcoin. All they have is debt. So we want to lower interest rates for them to give them some relief. That is what they’re saying.
Micah Johnson (16:50)
Right.Venkat Avasarala (17:12)
⁓ So that’s that’s that used to be my my tenant if they’re not doing well, how will I do? Well, how will my investors do that? Don’t upon me and say, you know what scram and then ⁓ in 2021 February ⁓ The snowstorm rolled it. my god. I have about a 350 unit property in Irving, Texas near airport You should see and you know, our properties are not built with that kind of installation not especially in back in 70sMicah Johnson (17:19)
Right. Right.Venkat Avasarala (17:42)
So I don’t know what happened, but the sewer collapsed and then pipe breaks like, like there’s no tomorrow. It took like six months to put it all together. Million and half dollar for one property and the insurance fight you try not to pay because they got slammed with everybody. They’re trying to sell. And I say, know what? I was right. I mean, it’s not just the tenant, even, even these assets, right? I mean, they’re tired and, it’s so costly to fix.Micah Johnson (17:51)
Wow.Right, right.
Venkat Avasarala (18:10)
⁓ Anything these days right the labor and all that because that older generation with good work ethic and all that they left The workforce the young guns came in. It’s not the same way to play with them, So I put it all together. I just decide, know, I don’t want to oversteam my welcome here So thank God interest rates were super low and then I rolled them all up and just sell them as portfolio ⁓ Still sold them separately, but to the one buyer basicallyIn an hour on a 350 million dollar transaction September 2021 it was done And then I started looking for you know, where can I find class a properties? They’re everywhere But it’s the problem is they were selling believe it or not two three four cap rate I just don’t want a new property. I want a new newer property in rich locations, let me Not ambiguous about it. I need to be in the rich areas where housing is so expensive
Micah Johnson (18:39)
Gotcha.Venkat Avasarala (19:08)
that they would live with me even though they make $1800,000, which once upon a time was good money, but not anymore. You cannot buy a home. mean, because people stop building these 150k, 200k homes completely. Like in Dallas, if you want to buy something, they all started right. If it’s like north of Dallas, nicer property, 400k and up. I mean, there’s no 150k property anymore. So I want that tenant who makes good money to pay my rent.Micah Johnson (19:12)
Exactly.Right.
Venkat Avasarala (19:38)
But I don’t have to chase them down. Probably they’ll put me on ACH draft. So that’s the kind of tenant I was looking for. But in those areas, if you want these class A properties built after, let’s say roughly 2015 or after, they were trading at 3, 4 cap. How can you make money at 3, 4 cap? basically, the mantra was flight to safety, flight to quality. Flight to quality was the word. Everybody wants quality now.Micah Johnson (19:57)
All right, let’s go.Venkat Avasarala (20:07)
Because whatever I described, maybe they couldn’t articulate the way I did, but that is what’s happening. So everybody’s running away from that older product and that weaker tenant class, financially weaker tenant class. So that’s why everything is trading at 2, 3, 4 cap. And I say, you know what? I need to build myself. Well, I never built anything back in 2020, by 2020. So that is when I partnered with somebody who had been there, done that for decades.because I need that experience, mean, and I need it now. So I did my first.
Micah Johnson (20:39)
Yeah.Less
than one taught you that pause right there. Like you were, you were going through the fact that when you’re, when you start to do those bigger deals, what you went through with those folks, that’s not abnormal. Like, nope, not many people want to be your first one, especially in a, in a market that’s popular. That’s not, they’re actually trying to close. Right. And it’s when you take that step into the bigger world where you’re talking about when a million doesn’t sound like a lot anymore.
Venkat Avasarala (20:59)
Okay.Micah Johnson (21:11)
Right? Like when you start to get into that world, that it’s different. It’s, like the game changes a little bit. The conversation changes. You’re not just talking to mom and pop no more. You’re talking to professional companies. They understand what they’re doing. Everybody’s a professional in the transaction, or at least they should be caveat that that’s where it’s way more business like.Venkat Avasarala (21:11)
Youthe voice.
So literally.
Micah Johnson (21:34)
You had to go do that. Go find it outside in a different market. I have a friend with the same thing. He had to go get like piggybacked onto a deal so that his name was attached to a deal. But the fact his name was attached to it, let him go to the bank and borrow money for his own deal. Well, what’s your proof? Here, this is my proof. those are two good investors. You’re on there. Perfect. Here we go. Now you’re running. And that’s not something you normally deal with, especially in the single family world. That’s a unique problem.Venkat Avasarala (21:49)
Yeah.Micah Johnson (22:03)
For someone that might be in that right now, how would you help them get through that mind space? What do they need to focus on?Venkat Avasarala (22:09)
That is exactly what I did. I skipped that part in 2015. I got approached by a couple of people for investment. And that is what led me my mindset transition from single family to multi-family. But I was their key principal. So Fannie Mae, let’s say if you want $10 million of loan, they expect the GP to have, general partner, to have a $10 million network. And 10 % of the loan amount as liquid.Like people usually have net worth, but liquidity is where people have an issue. So on that particular issue, it was about $18 million loan. So they needed 18 million net worth and some liquidity, 1.8 million liquidity. And the GP didn’t have all of it. So I signed for that on a Fannie Mae loan. And that is how I earned my stripes. Now next time in 2016, when I went to Fannie Mae, I’m not no stranger to them. They know me. From that view.
Micah Johnson (22:39)
Gotcha.Exactly.
Venkat Avasarala (23:06)
Right? So they were the GP. I was an LP slash KP kind of thing. You know, I guaranteed the loan. You wouldn’t do it really nearly for anybody, right? I know the person. You know, I did my due diligence, I trusted their capabilities and all that. And then that I did two of those deals like that. One for Fanny, one for Freddie. So when I put that as a resume, because the worst thing that you can do by approaching an agency is like with an empty resume. A single founder doesn’t count.It’s very, very important.
to earn your stripes. approach. Don’t wait until you have your own deal. Get on somebody else’s deal as a KP, sign with them, and then go with resume, with something on your resume when you have your own deal is what I would say.
Micah Johnson (23:41)
Right.And it may be like, may have to swallow a little bit of a pill there, but that’s literally how you do it faster. If you, it’s the, say this a lot, the process is a shortcut in real estate. Like if you fight the process, it’s going to take you way longer. If someone will show it to you and you understand it, follow it, you get wherever you want to go. And it’s just the way it is. This is a team sport, especially when you’re getting in. Nobody got anywhere alone. Nobody.
Venkat Avasarala (24:01)
Now.Micah Johnson (24:15)
Everybody gets there with other people. And like you’re talking about, it’s not just random. You didn’t sign random paperwork. This wasn’t, this isn’t gambling. This is investing. It’s done with as much data as possible. So I, one of my favorite quotes is a Deming’s quote and I always butcher it, but you know, if you don’t have data, you’re just someone else with an opinion. I don’t care. Like what’s, what are the numbers? What’s it actually say how you move forward? So now you,Venkat Avasarala (24:37)
As simple asMicah Johnson (24:45)
I kind of cut you off in a little bit, but now you’re moving towards new development, right? Like you wanted that higher class product. I want to talk about that a little bit where it makes sense to shift to an area, especially in a market like we’re in where. I don’t want to say this negatively, but, rent’s a priority. It doesn’t get tossed out. Like when, when things get quote unquote, hard paying for your rent, isn’t the thing that goes away. And.Venkat Avasarala (24:49)
That’s right.somebody who cares about
their credit, somebody who have plans for their life, you know, that kind of thing.
Micah Johnson (25:15)
Exactly.it’s
Venkat Avasarala (25:20)
HmmMicah Johnson (25:21)
Man, you mentioned it like market timing is interesting. What we go through, like we’re just, we just happen to be alive for right now for what it’s doing right now. That’s literally it. Like there’s the, it’s not luck. It’s not karma. It’s not anything. This is just when you’re alive and this is what’s going on. And we watch and go through it. And like you were talking about, I mean, there’s been a wealth divide happening for a little while, but it got exacerbated in time periods where folks thatknew what to do with money, did what they did with money. And folks that didn’t understand how it works, they just took on a bunch of quote unquote cheap debt. And it was the opposite. that like the actions they took themselves are what separated. And it’s, it’s, I mean, it’s as rich data, as poor data as it gets, honestly, when it comes to the book that led most folks to real estate. But that’s, it’s none of our fault.
I didn’t, no one made anybody make their choices. And when it comes to living in a market, like we’re living in, you got to make smart business choices. The point is to survive the market. What gets you through? What takes you to that next step? And that’s the shift that you had to make. And that was one of the things I wanted to nail on here was multifamily had to pivot. You had to, it did not let you just stay the same. And your pivot was towards I want.
Really good properties with really good tenants and the best way to afford them is to build them. That leads us kind of in this next part. So what has been the biggest shift for you there? What have you had to learn? What have you had to adjust? What’s that step look like?
Venkat Avasarala (26:52)
That’s it.Yes, so, you know, around 2018-2019 is the time when I really started to understand the money, right? I had no idea how money gets printed. I mean, like, can you print any amount, however much you want? I mean, I have no idea. So that is when I started to understand the M2 money supply, how our regular banks actually print money into existence by issuance of debt. Federal Reserve prints some money, like…
coins and things like that and currency notes like that, but that’s like 5 % of the money. And then how we used to have $15 trillion of money supply. It took 250 years to get to $15 trillion. And then suddenly COVID happened and we printed another 50%. Just imagine that we jumped from 15 to 22 in two years.
That and it’s even worse. Like if you see before 2008, we used to have like four, four and four and a half trillion dollars. Let’s call it five. Five trillion dollar money supply before before 2008. And then by by the time it gets we got tripled, tripled, five to 15. So that is why cost of living crisis is happening now. Right. Because it’s just so much expensive. Everything because we are printing way too much money. And an average Joe.
cannot double and triple their salary in line with the money supply. If you are not able to double and triple your income in the 10, 15 year period, you cannot keep up with it. You have to make do with less. Instead of eating four eggs a day, now you eat three, then maybe two, then maybe one, then after that maybe none. So that is the course we are in. And this is all started in 2001 with the 9-11 wars.
Micah Johnson (28:28)
Right?Venkat Avasarala (28:54)
Until then, Clinton gave a balanced budget and the debt was so small. Our M2 was very low. And we started printing money because it was war, right? 9-11 hours, we got to go deal with it. Inflation will deal with it. National security is more important. They came and knocked out a of our towers here. Come on, right? So then they were expecting inflation and inflation didn’t And they were like, what? So economics books are wrong? So they printed some more. Nothing happened.Micah Johnson (29:06)
Right?Right?
Venkat Avasarala (29:24)
2008 rolled in they printed a lot more nothing happened. you know what we can print how much or money we want and there’s no inflation something changed you an economist didn’t understand why that happened in the retrospect we know why because NAFTA because China Outsourcing internet productivity all these things are productivity boosters right makes things cheaper So our printing money and things getting cheaper balanced out and we were able to print our way out of all our problemsAnd then COVID is when we bought the farm. We printed way too much, like 50 % of it, right? So when I understood all this thing, I quickly understood that, we got to hold hard assets, right? That is how I went to apartments and all that. And so when I approached development, right? So I see what is happening here, right? So you can, let’s say it cost you $200,000 to build an apartment.
Micah Johnson (29:57)
Right.Venkat Avasarala (30:22)
In about 10 years from now, it’s going to cost a whole lot lot lot more. And the reason is they’re going to print way too much money. How do I know I can watch it? I mean, you just type f or Ed Fred M2 money supply in Google. Just pull up the first. That’s the Federal Reserve’s M2 money supply. You can see it like a hockey stick, right? It’s going like that and it’s going to get worse and worse. mean, everybody’s doing it right. Europe is doing it. India is doing it. China is doing it. I that’s the way people wants to.uphold their standard of living but even when you are not making enough money but printing away right and nobody wants to pay taxes right that’s another thing we want all these good stuff you know we expect a lot of things from government but nobody wants to pay taxes well how are you going to do it right so all these things so that is that is the thought process behind you know what this is a hard asset right this is a hard asset it’s going to cost you more to build this newer property
in good location because once the land is gone, mean, where are you going to get from there, right? There you go. So that is why I chose Frisco, ⁓ north of Dallas. ⁓ And then Frisco is where the Cowboys headquarters is. There is something called Five Billion Dollar Mile, high paying jobs. It’s luxury and all that. And then Salina, which is just north of Frisco.
Micah Johnson (31:24)
No man, ain’t no more earth being made.Venkat Avasarala (31:48)
And then I have a couple of properties in Round Rock, Austin, and then a property in Kyle, Texas. All incomes, the median incomes in that area is about 140,000. So that is where I focused. This is where I’m going to get my tenants. So my very first project was in a suburb called Princeton. Again, this is all not Dallas. And 156 units, we broke ground just after COVID broke out. Nobody stopped us. kept.working. So we exited that in two years and two months from groundbreaking to closing the sale. It was only 35 % occupied, but the buyer said, we’ll pay you four cap as if the property is already 95 % occupied. Well, what’s the urgency? Well, they started jacking up the rates in March of 22. So this guy said, you know what? I’m not going to wait and find out. I mean, you proved enough. A third of the property is already occupied. I want to close it right now. So take it.
Micah Johnson (32:36)
Right?Venkat Avasarala (32:45)
⁓ So that was the vision at that time, And then I did a 338 unit property in Kyle, Texas. So I already built it, suffered through inflation, but still delivered it on time, on budget. And I’m waiting for the better market conditions to sell. There’s nothing much to do on the property. And then I did a 25,000 square feet retail project in very, very affluent area in Houston. And then now I just broke ground on a hundred million dollar project in Frisco downtown.Micah Johnson (32:46)
Deal!Venkat Avasarala (33:15)
And I have three more projects, is 80 million to 100 million range. And again, if you think about it, these are not ETBT units, properties, right? I’m targeting institutions, pension funds, insurance companies, right? In good olden days, 10 year treasury used to pay 10, 11, 12 % because that is what they used to pay. And all these insurance companies, have flowed.Lot of float like Warren Buffett, right? I mean they have a lot of float with premiums coming in They need to invest it somewhere so that they can generate a yield so that they can pay benefits and make profit for themselves, right? So they can buy these 10 year treasuries in about again 10 year treasuries at 4 % again, right recently it went up to 5 but now it’s 4 again, right so Insurance companies mostly and the pension funds and all that they got smart and they say you know what?
I’m going to buy these apartment complex in the nicest areas. And it has to be big enough. 300 units is the magic number. If it’s not 300, you get even filtered out. That is the problem. And these are the people who are not very cost-conscious. What they want is a nice asset. They think like these rental car companies, herds or somebody. They need a sealed vehicle, brand new one.
Micah Johnson (34:10)
Right.Venkat Avasarala (34:32)
And before it runs out of the warranty, they’ll get rid of it. Because they can’t get into repairing and now in liability and all that, right? So that is how these big institutions think. And I want to build institution kind of product. Because they’re always in the market and they are liquid. And that is the strategy. And that’s why it has to be 300 units. It should be in one of the wealthiest areas of any given town, right? And there should be some kind of scarcity.That is what drove me into the development thesis. And I always had an old timer as my partner. And I love these old timers who lived through 60s, 70s, 80s when things were super rough, because right now everything is more or less manageable, right? Back then, I mean, it was bad. So I need somebody to floor my feet tight to the ground so that I don’t inflate my.
Micah Johnson (35:17)
Right.That’s it, man.
Venkat Avasarala (35:28)
expectations and all that. So I always take somebody who have like that. I make them a partner and I need that experience and they will sign on the loan. I will actually treat them as my partner, but I keep them. It just makes me feel comfortable and secure that somebody with that kind of experience. So that is how I got myself and they know people, right? Like for suppose the Frisco downtown, I shouldn’t be building that because they don’t put these kinds ofMicah Johnson (35:44)
Same dude. Same dude.Venkat Avasarala (35:58)
land on MLS. This is like shakehand kind of a deal. And our Kyle deal, wouldn’t believe. My partner actually found the deal, this old timer. And he saw it somewhere or heard through somebody. And he said, you know what? We actually worked together back in 70s. Can we have a lunch together? He called up. And he said, OK. They went to lunch. And then they made a shakehand deal. And for three months, he wouldn’t put it under contract. And this is 2021 when things were super hard.And I was like, Mark, you got to put it on. He’s like, no, we can. It’s like, mean, like, someone’s been saying something. Yeah, for three months he didn’t put it he didn’t increase the rate or anything like that. That is how they used to work. And those are the kind of people who can help you to land these nice sites, which you can find on MLS. Because remember, it has to be a little special, with like screws.
Micah Johnson (36:32)
He’s right, it is under contract, man.Venkat Avasarala (36:54)
So those are the kind of projects are worth building for me. So that is what I strive.Micah Johnson (37:00)
I love that, man, I love that. And these are the kind of conversations I can go on and on with, because you’re tapping in on all the main stuff. Real estate’s a relationship business. It’s not a mystery how to do this. People have been doing what we’re doing for a long time. Go find people that have been doing it a long time. Ask them. There’s a reason my mentor’s in his late 60s, because I want to see what’s around the bend.Venkat Avasarala (37:15)
Absolutely.Micah Johnson (37:23)
I want to understand what’s up there. What’s it look like? How’d you deal with stuff? It may be a new scenario that we deal with it in, but it’s the same problems in essence. It’s, it’s interest, it’s business. It’s, all the same stuff, just a new environment. And their, their opinion matters, man. And like what you just nailed down, especially as we’re in this transitionary period, there’s a lot of wealth transitioning to a new generation where more alive andVenkat Avasarala (37:37)
youMicah Johnson (37:51)
Having connections into it, like you’re talking about, what gets you into deals that properties that’ll never ever, ever see the market. You’re never going to see them. They’re always going to trade behind the scenes because that’s just how real estate works at high levels. It’s a relationship game. No one cares that you’re going to pay more. They care if you’re going to close the actual deal and you need to prove you can do it. Right. SoVenkat Avasarala (38:14)
Exactly.Yep.
Micah Johnson (38:19)
Venkat man, you got a history of that. You’re doing it. You’re building it. love it, man. I appreciate you being here on, on here with us today. So for folks that are listening in and watching and they’re interested in learning about a project, learning more from you, what’s the best way for them to find you?Venkat Avasarala (38:33)
So they can go to my website stryker strykerprop.com or they can email me at Venkat [email protected]Micah Johnson (38:50)
Perfect, man. And if you’re listening or watching, check our show notes. We’ll have all of Venkat’s links there so that you can reach out to him. Like I say all the time, when you meet a professional that we bring on and they want to talk, if this is what you’re into, reach out to them, touch base with them, learn from folks who are actively doing it because that’s how you actually get good at real estate. So Venkat, again, thanks for being with us today, man. I loved your conversation. I think we need more folks out there like yourself doing it. Just building something real in the industry. So thanks again.everybody watching along and listening. Thanks for being with us today. If you got value out of today’s episode, please like this episode, share it with someone else you think can get value out of it. And if you aren’t a subscriber yet, click that button. We appreciate every single one of you that follows along out there with us. We got more conversations coming up with operators just like Venkat out there building again, a real business in the industry. Thanks for being with us. We’ll see y’all next episode.
