From limited partner to general partner.
Sandhya Seshadri has invested
as a Limited Partner, Key Principal
or General Partner in 3000+
doors totaling $200M in assets
throughout
the United States.
Sandhya has been a leader in the equities markets for over 20 years, and had moved into commercial real estate due to the tax advantages and the ability to uniquely “force appreciate” each asset. It’s become her mission to help other people capitalize on all of the benefits of real estate investing.
What made you start investing in real estate?
I wanted to spend more time with my family. My family needs were becoming greater, so I quit my W2 and started investing in the stock market. I realized I was paying too much in taxes and wanted to diversify. A friend told me about multifamily investing, so I decided to learn more. I attended a weekend seminar to learn about different mentoring programs and chose one that was dominant in the market that I was interested in. That was important because I immediately had access to all the local connections with brokers and service providers. I chose to skip the single-family route because I didn't want to deal with tenants and self-manage them myself, the margins didn’t justify the time spent dealing with single family investments. I used my retirement money from my W2 to passively invest in about 15 deals. That helped me build relationships with the sponsors and still save my money to syndicate my own deal because investors can't use their retirement money in their own deal so that was a perfect way to use my retirement money.
How did you go from a LP to a GP?
After joining a mentoring program, I started passively investing with people who were more experienced than me. With me living in Dallas and investing in Dallas, I could offer sweat equity and offer to help with the asset management portion of the deal. If I was told in an investor report that the roof was going to be replaced, I would ask if I could join to check on the progress. It took a few times of me asking but the persistence helped me grow as in investor. As I was growing and learning, I would offer more of my time and help. A benefit of a mentoring program is that it is like joining a country club, if you understand how to use it. I had access to people with similar passions. Everyone is wanting to do the same thing, syndicate deals. We underwrite deals the same way, so the numbers analysis and conservative underwriting is all the same. We share spreadsheets and can have those quick conversations and understand each other’s numbers easily. I could learn more about the people in the program and vet potential partners.
How was being a passive investor helpful to becoming an active investor?
I learned the business, I learned how a good operator operates. I had the opportunity to learn what business plan works and learn what people want from the investor relations operator. With every deal that I invested passively, I was able to pick and choose the things I like from those deals, I took notes and remembered what I liked so I could implement those same things when I run my own property. Those small details are things that are important to me and that was a great way to learn the business hands-on. All the training programs give you videos to watch and books to read but investing passively is where the practical knowledge starts. When you start syndicating a deal and you're getting other people’s money it's not a good idea to play around. You have to really be careful and know what you're doing, and this is a great way to learn and experience how syndicating works.
“If you don’t find a way to make money while you sleep you will work until you die.”
How did you get into your first deal as a GP?
Both partners were wanting to invest in Dallas, but they lived out of state. With me being local to the deal I told them that they needed me and explained how I could be useful to them in the first few months. I explained how they wouldn’t need to travel as often here because I could supervise so much of the asset. I could keep an eye on the vendors and check in on them, whether it was an update to LED lights or a water conversation survey, I could be there on short notice. I had school age kids at that time and once I sent them off to school, I had the next five to six hours available to be on site and that's how I added value. When you want to convince someone to partner with you figure out how you will add value to them. That would be my biggest piece of advice, “What do they need and how can you complement their skills in some way by adding value to them.”
Most important thing to do before joining a GP team.
Joining a GP team is like getting married. You don’t just go out, sign up, and get married after their first date. You get to know the person, start to like the person, and eventually trust the person. You go on several “dates” first with the person and get to know their business style. Ask yourself if they could they be your friend or hang out outside of work. You are together for a very long time and together for millions of dollars. You take that relationship to a higher level. Get to know them because you will be spending a lot of time with these people. You have to be able to have the uncomfortable conversations. You need to be comfortable with asking and answering the uncomfortable questions. Know them really well in a financial sense, what is their experience with money? Know their previous job experience so that between the team, everyone has complimentary skills. The real work starts after the team closes the deal. Make sure you all have the same commercial real estate values and make sure you analyze deals the same way so that everyone is on the same page. The weaknesses that you have in yourself needs to be covered by someone else. Every weakness needs to be covered as someone else’s strength.
Most important questions to ask when investing with a new sponsorship team?
Get to know your sponsorship team, do you know, like, and trust them? An example is that you can listen to a podcast and see what type of person they are. Do you agree with the way the person or team thinks? Another thing I would ask for is a track record. If the sponsorship team has three team members, is this the first time they're coming together and doing a deal, or have they done deals before in the past? How have they performed in the past? If they did not perform as promised, did they have a solid explanation for it? If this is their first time, then do you have someone with experience to assist you in the process? Ask if the team has clear, delineated roles. You need to make sure the team can work together and know who the decision maker for each role of the process is. Do the team members have complimentary skills? This is important to prevent the clashing of team members and to make sure that every area of the GP team is covered by someone. I like connecting with at least one person in the sponsorship team so they can be my go-to person when I have questions. I need to like the person so I can trust them with my hard-earned money that could have taken me a year to make after taxes.
What would you spend your time doing if you became financially free and became a passive investor? Comment below and let us know.
Explore more. Adventure awaits.
