The Mind of an Investor
Scaling Your Business to its Full Potential
by Sunil Chillar
My investment journey started 25 years ago in Jersey City, New Jersey. Back then, I made an average income as a realtor and had to borrow money from my family to purchase my first investment property. After making a substantial profit on that first investment, I was hooked in real estate investing.
Since then, I have flipped over 200 properties, and, like many other investors, I have become enamored with the challenge of the property hunt and the profits that follow. Early on, I realized that properties in foreclosure proceedings were the easiest to purchase.
Being involved with foreclosures, I had to engage with homeowners stressed about losing their property and reach a deal to purchase or sell their homes.
Through my work, I was able to help bring peace and stability to their lives. Many times, a home was saved, and I earned nothing. When people trust you to do the right thing and you know how to help, you must. This is something I live by.
Pivoting from Single-Family to Multi-Family
Despite having success in the single-family space, I realized I had not scaled my business to its potential. I was certainly working hard, but I was unsure if I was also “working smart.” Eventually, I pivoted to the multi-family space and recognized that I could purchase a 240-unit property worth $26 million in one transaction instead of many multiple-unit properties with many transactions.
The multifamily property space requires a different approach. We discuss the “Cap Rate” rather than conduct competitive market analyses, and we can get approval for a $30 million loan more easily than a $250,000 loan. With this knowledge and a proven concept for making these transactions happen throughout the acquisition cycle, we can continue to raise money with our investors to pursue bigger deals.
Asset acquisition requires due diligence, time, and a core team to manage the various moving pieces. You need someone on the team to work to obtain the loan, raise funds, and underwrite deals. Another team member is tasked to seek the next acquisition, build relationships with brokers, and serve as boots on the ground – getting inspections for each unit and completing financial audits on all tenants’ leases.
You need to know your markets and their cycles, from population migration to job growth trends. And you will need GP partners — is there a management company you can trust? Do you have an SEC syndication attorney you can rely on? And finally, what is the value added?
In purchasing these assets, you have fiduciary responsibilities to your investors and tenants. You must pay your investors the return you promised them. You also have a responsibility to your tenants to provide a better and safer living environment through upgrades to the property’s interior and exterior, including painting the unit, removing carpets and installing LVP floors, replacing appliances as needed, and upgrading the hardware.
As you increase the value of the property, you increase the Net Operating Income (NOI). Your team’s collective responsibility is to generate wealth for yourselves and your investors. Your Private Placement Memorandum (PPM) must describe the investment strategy, and you must be SEC compliant.
Additional Investment Opportunities
In addition to multifamily investments, there are other opportunities to consider that can help solve the housing shortage crisis and generate significant returns.
For example, New Jersey and other states have adapted local zoning regulations to facilitate the development of container homes, accessory dwelling units, and “tiny homes.”
Political leadership has expressed interest in using such domiciles to solve the housing shortage crisis. Further, municipalities could pay developers to provide shelter to unhoused individuals.
Given our knowledge of this opportunity and our expertise in real estate, we must ask: Are we helping? Can we work to resolve the housing crisis while realizing significant returns? Or are we just trying to find the next big thing? Sometimes, the increasing costs of property development, from labor to construction, can prevent us from thinking outside the box and seeing other opportunities. By leveraging these new zoning flexibilities, we can achieve two positive outcomes: increasing the affordable housing supply and generating passive income for life for you and your family.
Evolution in real estate investing is essential. Investors must be flexible, adaptable, and willing to pivot and even diversify when necessary. Investors find value in solving problems and they recognize that there are many ways to make money that are worth pursuing. The companies I own reflect this ethos — a real estate company, a lead-paint inspection company, a construction company, and an EV charging station company.
In closing, grit and tenacity are the keys to success. Each day is an opportunity to create something lasting for you and your family before you leave this earth. I hope my story has inspired you and sparked a fire within you. Do not forget to ask yourself, “How bad do I want this?”
One of my daily responsibilities is helping others make money — and lots of it. In the process, I make money too. I am committed to growing my businesses and collaborating with investors. Over the years, I have grown through trusting partnerships and relationships, and I welcome you to join me. I am happy to assist you in your endeavors.
