AIPIS 212 - An Immigrants Journey to an Apartment Syndication Empire with Vinney Chopra

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If you want to hear a great immigrant story, this is it. It's my pleasure to welcome Vinny Chopra. He started out coming to the United States from India with, with $7 in his pocket and started investing in single family homes and now he is investing in larger apartment complexes and syndicating them and bringing in other investors. So let's welcome Vinny Chopra. How are you, Vinnie?

I'm fine, thank you. Jason.

Good to have you. You're coming to us from Danville, California, is that correct?

That's right. San Francisco.

Yeah, it's a beautiful place. I was just there. My cousin and his wife live there, so I was just out visit.

So $7 in your pocket. Tell us like the, you know, we hear these kind of stories and they're awesome stories. By the way, where did you land in America and how did you get here? Was it plane, ship? You know, just give us like the details of that. And what year was it?

It was a plane, Jason. Actually I am from India. I'm a mechanical engineer. I was working there, engineering, but I always wanted to do MBA in marketing and George Washington University back East in Washington D.C. they are the ones who had given me the visa. No, not the visa, but acceptance. But I had a lot of trouble getting the passport to come out here. I think back then in the 70s there were a lot of restrictions. So it took me about close to a year to get that passport accepted and so forth. So I came to Washington D.C. that's where my uncle lived and he was the one who sponsored me. But we could only bring $7 in the pocket at that time, just like most of the immigrants did.

Oh, you're saying was that the law, that you could only bring $7? No, that wasn't the law, was it?

Interesting, Very interesting. You know, I mean I could have brought maybe 100 or 200, but we could only enter as a student visa with 7,000.

And whose law was that, the US or India?

I would say US.

Okay, all right, that's interesting. I didn't know that okay, good. So what did you do first? So you had your $7. You landed in Washington, D.C. i guess, right?

Yes, I did. No, actually, New York, New York. Funny story, when I reach here, right, A guy from India didn't know much and my airline was on strike. I couldn't believe that. From New York to Washington D.C. and I said, oh, no, no, no, I gotta reach there, you know, and blah, blah, blah. So they flew me in a helicopter. I still have images of that.

Who is they?

In a helicopter by myself. And from LaGuardia Airport to Newark, New Jersey.

So who is they? The airline.

Airline. Airline.

So the airline flew you. Wow, that's amazing. That's a nice first visit to America. You get to go in a cool helicopter. Good stuff. Okay, and so. So you flew to Washington D.C. with your. You still have your $7. Hopefully you didn't stop and spend it all. What did you do next?

Well, of course, you know, my uncle is the one who paid for my tuition my first semester, which was at George Washington University, because I didn't have money. But that time, I always have been a hard worker. I said, oh my gosh, I need to earn money now to pay for my tuition and so forth. And lo, behold, one friend of mine at George Washington who became a friend, said, what are you doing for summer? I had just come from India, couldn't speak much. My accent, I still have accent. Back then, nobody could understand me. And they said, I have been selling encyclopedias with this company and in Nashville, Tennessee. Would you like to come with me?

Which one was it? World Book Britannica. Which one?

This one? Actually. No, it's a different one. It's the home religious libraries, Bible books and encyclopedias.

All right, great. So you started selling encyclopedias door to door?

Door to door outside Atlanta? Yeah.

Awesome. Okay.

And then, of course, I think I saved about $3,000 or something. Because you run your own business, by the way. In this company, you get going in the morning, 7 o', clock, you work until 9 o', clock. 80 hours a week. 80 hours. So double the time. And of course, a lot of rejection. Lot of, you know, all those things. So I became an engineer, came as an engineer, turned into a salesperson and marketing person in my degree. And with the experience then I came back with the same company. Two more summers. Because this was only a summer job, Jason. Right. You know, and then I'll go back to school. I remember buying a $700 car. Blue Maverick two door.

That's interesting. What year is it now?

This is now 1976.

Okay. So years later I bought my first car and it was exactly $700. I saved up 700 bucks and I paid cash and well, I guess you probably couldn't finance a car that cheap. No one would interested in such a small loan. So. Yeah, same, same thing. What kind of car did you get?

You know, it was a Maverick. Maverick, secondhand and of course blue color, Light blue color, two door.

Yep, good stuff. Okay, so what happened next? So you're selling encyclopedias, you bought your first car, you're still selling encyclopedias, right?

Exactly. I mean, in the summer months, you know, I'll go and work in the summer months and earn. I think next summer I went out and made 11,000 savings. And then you could also recruit your friends from the George Washington University, bring them along on the field. It was a direct sales, right. Door to door kind of thing. And then in the three months you sell and then the last month you deliver these books because you took a deposit during the summer. And it's still going on, by the way, very, very big business with this particular company that started in 1855 out of Nashville, Tennessee. And just a great company to work with, you know. And so that's what I did for three summers. Now I had to get a full time job because this is part time. You know, I kind of put my feelers out and everything. Then I found out that the sister company of the same company that I was doing summer job with, they were hiring full time consultants, promotional consultants. We were called at that time. And I talked to the president and so forth and told them my story that I can only work one year unless I got a more permanent visa, things like that. So that's what happened. They took me in and then I was a big, big failure. I really was, Jason, in that company. I was a failure for almost six to nine months. I said, oh my gosh, what's going on? Because in sales door to door, I was excelling pretty good. But when I shifted my thing into promotional consultant, this is kind of. Not too many people know about it. I was at the bottom of the pile. Really at the bottom of the pile. And I said, man, what's going on here? I got to take hold of my situation and learn this business. And that's what I did. So I increased my sales by 81% in just second year. And then my company moved me to California to open a whole region out in California 37 years back. We've been married 37 years and we've.

Been living here 37 so that was the California move. Now, when did you buy your first single family home? And was it a home to live in or an investment property?

Good point. We bought our first home for 99,000 on a Valentine's Day. That was 1981. Just the next year when we moved and then our son was born. 83. We bought our rental house, you know, first of the many, many rental home. 1983.

1983 was your first rental property?

Yeah, 1983.

Excellent, excellent. So in buying your first rental property, I mean, Vinnie, you know, with your awesome immigrant story and so forth, seems like you are the type of person who was really willing to delay gratification and plan for the future and sacrifice what you could have today. You know, a better car, you know, more luxuries, whatever, more vacations to invest. That strikes me, with our prior conversation, in this short conversation we've had here, as something that's sort of innate in you, the willingness to delay gratification. Can you speak to that a little bit?

Oh, sure, I would love to. You know, as a matter of fact, when I moved to usa, one of the big thing was I wanted to help my family back home also. So didn't keep much at all until I got married. And after that we started to save some money and so forth. You're right. My friend Circle also was in real estate. That was the other reason. You know, it's the kind of company you keep. You start listening, you start observing, you start thinking, what are they trying to do? And how you want to also get into real estate. So that's the reason I started with buying this first home. We paid only 11,500 down for $65,000 home or something. And Jason, it went to 315,000. Oh, my gosh.

Right.

First rental home, you know. Right.

But you couldn't bank on that. The appreciation is more lucky than anything else. I mean, it's great when it happens, but it's not reliable. Right. So you've got to invest for cash flow. Tell us about some of your thinking as it comes to investing. Delaying gratification and then having good metrics on the properties, having good cash flow. I mean, obviously you syndicate apartment buildings now, so just give us some insight into your thoughts there.

Oh, totally. Now, again, I was thinking that, you know, if I could do the lease options back when I remember after that first home, we bought three homes in Phoenix. We bought four homes, cluster on a big lot like in, you know, in the Central Valley in California. But all these were for me to kind of have them appreciate they were making some small cash flows. The other thing was I was thinking, okay, as we retire, we'll be able to cash in on the gains. Right? So that was my thinking was back then in the 80s. And by golly, to be truthful, since we moved into multifamily in about 2006, that's about 11 years back. We have now sold this year, by the way, sold all our last year and this year sold all our single family home.

Yeah, so you moved from single family homes to larger properties. And that's a story that a lot of people are interested in. You know, you build a single family home portfolio, I mean, that could certainly be good enough to just simply retire on. But you wanted to do something really big. Tell us about that transition and how you did that.

I think it kind of boils down to my getting a broker license in 2004. And I was able to then look at, okay, should we start like a brokerage house, you know, where we'll be able to have other salespeople working and so forth, or they'll be able to sell, you know, residential or commercial. I also looked into becoming a maybe more into the commercial side of leasing. Jason. So looking at all these different avenues now, I was more savvy in 2004 as compared to when I came, of course, but then I did not know noi the net operating income, cash flow, cash on cash, nothing. Everything was foreign to me because you don't really look at those things in single family home that much, you know. So that's when I got stumbled into multifamily. And the more, and the more, and the more I read about it, the, it just made sense to me, you know, having less vacancy percentage. Like if I have a 20 unit apartment building, it's almost like 20 homes under two roofs or something, you know.

Yeah, so let me, let me just address that for a minute. I think this is a common misperception. I'm actually going to disagree with you on that. You know, like I've heard so many people that are promoting, say, fourplexes, for example, and you know, the Math's easy on a 4 Plex, so we'll use that as an example and they'll say things like this. They'll say, well, if you buy a fourplex and one of them goes vacant, you only have 25% of your portfolio vacant. Yet if you buy a single family home and it goes vacant, a hundred percent is vacant. Well, that seems like really dumb logic to me because you could just have four Single family homes. And the same thing is true. I mean, I don't know, granted, the single family family homes cost more per door generally. I get that. But the tenant quality is definitely higher in single families. I mean, I think you'd agree with that. It's less transient.

Totally. No, you are 100% correct, Jason, on that one. I would say occupancy is just one of the many, many factors. We could look at it like.

Yeah, I know, but let's address the occupancy, then we'll move on. I know there are other factors and I agree. I mean, listen, I own apartment buildings, you know, I've had four. I've got. Got two now. They're just a different animal. I think they've both got their good and bad side. But, you know, that's. Let's address the occupancy thing. I mean, is that. Is what I said valid?

Yeah, totally valid. You know, in the sense that of course, you know, you'll have the turnover cost, you know, for the single family home, which you will have maybe a month or so vacant, right? Then you have to lease it back up. In the multifamily, of course, in the smaller 20 or 50 or 100 now we are buying 200, you know, so the percentage is lower if few people leave. And then you are constantly bringing more leases in with the leasing agent, you know, in the multifamily. But there are more, other, you know, reasons. Instead of buying like 100, I'm going to 100 now, you know, if you buy 100 single family homes, there are hundred transactions unless we are buying them in a portfolio as compared to one transaction for the multifamily. That could be another reason. The other thing would be depreciation also. I think in the multifamily you are able to depreciate accelerated depreciation. I don't think in single family you could do that. But in multifamily you can. Where the knobs and the carpets and the flooring.

You're not talking about actual accelerated depreciation as it applies to the old tax code. What you're talking about is cost segregation. That's a different thing. So. Yeah, no, I appreciate that. Now you can certainly cost segregate with single family homes. It's usually not worth it to pay for a cost segregation study, otherwise known as a cost seg study, you know, that you might hire a CPA to do because your single family homes, you know, it's just too little. I mean, you can depreciate the dishwasher and the air conditioning at a different rate than the entire house. So the same rules apply. But the question of is it worth the effort? You know, if you have a 400 unit apartment complex and you pay $40,000 to a CPA firm to do a big cost seg study, you know, that can be worth it because you can save a lot of money in taxes. I mean, we did one on one of my former apartment buildings and I can't remember what, what we paid, but we paid the CPA firm. I don't know, I want to say like $10,000 and we saved about 30,000. So it was worth it. You know, that's the only thing on that. That's.

No, I agree with you. I know. I think the costs have come down now. Like I just did four communities in Texas and I paid I think 4,200 50,250 because they were doing four of them, you know, separate ones in Georgia portfolio, I paid 6,000. You know, but there, the exciting part is you're right. Yeah. Cost seg is the right, you know.

Okay, so that rule is the same. There's just a difference in whether or not it's worth it to do the study. Now the study is cheaper if it's a little single family home, but it's all relative to effort and savings. What else do you like about the large multifamily deals?

The big thing also is the pent up demand as you know, with the millennials, you know, they are finding more portability. Is something in their mind that they will be able to, you know, live in one apartment building in one city and they can transport able to another part if their job requires or whatever, you know.

Right, right. And I agree with you about that, by the way. That's a really, I think there's a fundamental shift going on right under our feet that society views itself, especially the millennials, but really everybody views themselves as more, more portable, if you will. And I think a lot of that has to do with the sharing economy and the shrinking size of every technological gadget. Okay. And I know this might seem minor, but it's really not. For example, do we really even need a car anymore? You know, a lot of people don't even own cars and don't have any big desire to own one. I used to always want and then own, you know, big single family homes in places like Newport Coast California and Irvine, California. And I just don't have a big desire for that anymore. It's just kind of weird. I really like, I Like renting. Honestly, you know, I've been renting for six years now. I just love being able to live somewhere for a couple of years and you know, just move to a different city. Now I'm a single guy, okay. It's different for me than it is if you got kids in schools and so forth. But you know, it's just a nice freedom. I mean, I never had that freedom most of my adult life. I just owned houses and I was very entrenched. And it's just so nice to be able to go experience some different things and just kind of have this sort of convenient, I want to say portable life. I don't know a better word for it. But you know, I always say the best thing you can have on a resume is mobility, move to where the jobs are. And that's very important for the millennial generation. I don't think though that this applies to just apartment living. It applies to single family home people too. Although they may tend to be a. Well, I mean they're obviously less transient than apartment dwellers. That's one of the downfalls of apartments. You know, you're got a much more transient renter. But you know, I think that both segments grab that mentality, don't they, of portability.

Totally, totally. And also, you know, as the baby boomers, right, as they are retiring also, that's the other factor which is bringing now into the apartments where they are giving up their single family home or kind of, you know, going downsizing is the right word. And if they are also being more, you know, into the senior living apartments and things like that, with more amenities and so forth. So I think that's something also that I look for. Student housing, I've not gotten into that, Jason, but that's another place. You know, we had lots and lots of apartments.

Student housing can be good, but I tell you the price of it, I mean, you just can't. Any of these university towns and we've been active in a few of them, real estate is expensive and largely because the disgusting monopolistic university itself is rather than being in the education business, they're in the marketing and real estate investing business. I mean any university town you go to, they're just buying up all the land, building all the apartments. They'll put requirements like, you know, they'll say, well, the students, you know, their first two years at the school or whatever, they have to live in the dorms. Well, what. That's just totally self serving. Of course it's not for the students benefit. It's for the school's benefit, you know, because they want to be real estate barons and they are, you know, and so they've driven up the prices in all of these college towns. I mean the real estate's very expensive. But you know, I do agree that student housing can be pretty good deal. I mean you're gonna have a lot more wear and tear on your house, that's for sure. They like to party but you know, it can be good.

Yeah, for sure, for sure. And you know, again, I mean we could count more, more reasons. I think the other part which in multifamily, which I am really attracted to and I got attracted 10, 11 years back was the syndication part of it. Other words like there are a lot of friends, family, entrepreneurs and doctors, attorneys, lawyers. They are great in what they are doing but they don't have time to invest the money in their 401k IRA self directed into real estate. So that as a syndicator I am able to bring in all the money together and give them class A member returns, preferred returns of 8 to 9% per year. Which is a far cry from the money if it's in the bank or CDs and so forth like that. So that's a benefit of course to the investors I'm talking about now.

Then we are able to of course, because we manage all our assets. Jason. So we have the acquisition company which I started. We did 14 syndication in that one with a partner and then management company. And now with our kid's name, Monica and Neil, we combined the name to Moneel.

So we started that company three years back where my wife and I own Vinny.

What is your average deal size for your acquisitions?

We just closed on $23 million deal.

Oh, big ones, yeah.

I apologize. They were two together in Atlanta area which I've been trying to get there for about a year. Can you believe it? And about 92 deals came through my broker, you know, network and everything. We underwrote about 45 of them. I did best and final on four of them and lost them, didn't get them. Oh my gosh. Then lo behold I got another lead from my broker where the seller was from New York and he wanted to sell and I texted him back, how much? 40,000 a door. I said oh my gosh, that looks pretty good to me. 40,000 here. I was trying to pay 100, you know, in that market. But anyway, I got a pretty, pretty good deal there. And then we bought another B class, so 267 units and 191 units. I combined the two, did the syndication and raised like $8 million quickly with my investor base. So that's the deal size now. The last one before that, I did it in December, that was almost about 12 million or so. So I've been doing those kind of things now and we are probably in the 250 to 400 range in the unit.

Yeah, yeah, good stuff, good stuff. What else would you like people to know about just persisting in the face of difficult odds in real estate? I mean certainly like anybody you've encountered problems and bumps in the road and so forth, you know, throughout your career. What would you like people to know about that kind of thing?

Oh, for sure. I would say that, you know, it's very, very important that investors who are vying to be investing in apartment building to really get hold of the sharpest way to understand the underwriting, we call it, right. To make sure that the cash on cash is very strong. Because I really believe that we should be more. Unless you are a rehabber, you want to have the cash flow day one. So my mantra is really to have a good cash flow when I'm purchasing the building and then also the value add I call it, by increasing the rents, bringing the cafes into my communities, bringing the playgrounds or the media centers or the swimming pool, you know, make it a nice one, the pet stations. So we manage ourselves, all our communities, you know, that way. So what I was going to say to the audience, you know, you have a very diverse audience, which is wonderful. I would also say that, you know, if they would like to help other people, then syndication is a good way to do that because you just have so much money to buy so much apartments, you know, would like to scale it up in a good way where you are helping the investors, you're helping the community, the residents, you're helping the staff that you employ. If you're self managing like us and then also, you know, making good penny for yourself, you know, good stuff.

Well, thank you so much. Is there any website or Twitter link that you'd like to give out? Vinny?

I've been trying to kind of put together, I just turned 65 last two months in August actually. And my main passion right now is to kind of put together a university. It's called multifamily syndication academy.com or your audience can go to my website. You know, Vinny Chopra, that's V as in Victor I N N E Y C H O p r a.com and there also I'm writing a lot of blogs putting a youth university together to teach the young ones like in the high school and college level so that they can get the bug in their, you know, mind about real estate.

Oh, hopefully they do. I hope that spreads. Vinny, I appreciate it and thank you so much for joining us today.

Thank you so much Jason. I appreciate your time and what a great, you know, work you are doing. Congratulations to you.

Happy investing.

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