Wisely Investing in Multifamily with Vinney Chopra

Real estate is responsible for creating a majority of the world’s wealth. Real estate investments can be lucrative when you have the right knowledge. Knowing how to apply that knowledge can mean the difference between a successful investor and an average one. Vinney Chopra, the CEO of Moneil Investment Group, Moneil Management Group, and Moneil Multifamily Fund, has acquired over $250,000,000 plus in transactions on over 3500 units throughout the United States. He’s been doing multifamily syndication for about fourteen years now and joins us today to share his wisdom and knowledge about how we can have the same success with multifamily syndication. Grow your wealth and live life on your own terms. Don’t miss this episode as Vinney teaches us how to invest wisely and in the right direction.

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Wisely Investing in Multifamily with Vinney Chopra

Our guest is Vinney Chopra. With a Bachelor's Degree in Mechanical Engineering, he entered the George Washington University to seek a Master of Business Administration degree in Marketing and Advertising. He sold Bibles and educational books door-to-door to support his studies, excelling both in the classroom and outside because of his work ethic and overwhelmingly positive attitude. There's a reason Vinney's nickname is Mr. Smiles, which is evident just through hearing and the demeanor and his voice. He has always believed in an individual's ability to shape the world around them through positive thought and selfless actions. He's always been a passionate motivational speaker and teacher for over three decades. After getting a taste of sales and marketing while pursuing his MBA, he decided to leave engineering altogether and become a motivational speaker and fundraiser. He worked tirelessly to build a clientele that would work with him annually to raise funds to meet their goals and dreams. Vinney, welcome to the show.

Thank you, Taylor. It's such a pleasure to be with you. It's my opportunity and good fortune.

I'm always happy to talk to you and your nickname is relevant or appropriate as you definitely are a smiling and happy guy. It always makes my day better. I didn't mention your awesome resume related to syndicated real estate. You're telling me about some of the purchases, acquisitions and sales you're going through. Just to give some of the readers out there an idea of your real estate experience, tell us what you're up to right now. What you're selling and what you're doing in the future.

We've been doing syndications of multifamily for many years. I'm happy that we have closed the cycle because as investors put their money in $50,000, $100,000 or $200,000, they want to know, “When am I going to get my money back?” That's the number one thing. We tell them anywhere from three to seven years. We even started to say a little bit longer in our new acquisitions saying that probably seven to ten years because of the market changes, the interest rate going up and down and things like that. We did close on four properties and one was about a few months back where we gave 39% IRR over six years and three months. The investors who gave us $100,000 to invest a number of years or so back, they got their $100,000 a few months back. Not only that, but they also got $39,000. They get the cashflow when we are operating the property. The gain of the property was so huge that the IRR increased when you put them back up per year. 39% was the total returns of the internal rate of return per year for the investors. They were very happy.

We sold another one in Seguin, Texas. That was a great one. We gave the money back to the investors after four and a half years. We sold another two, which was within about two years. We are selling two more so there will be six we are selling in four or five months. It takes about 75 to 90 days to close once you get a sales contract under the gun and everything. This one is cool. I would love to share that to your audience. That's South of Houston. We purchased it about a few years back, our assets and we are selling one in the NASA area, which is a pretty good gain. We bought for about $9 million and we are selling it for $12.5 million. The one which is my good feather in the cap is the one in Freeport, Texas, $3.55 million we bought it that and there were sixteen burnt units. We build them back up. We renovated the property, a new swimming pool, new resident center and all that. We put $1.5 million give or take into it. We had about $4.9 million base and we got a contract at $8.6 million.

That's where you are now. You're selling off a lot of properties. Moving forward, what are you looking for? A lot of people are saying it's harder to find opportunities out there. There are a lot of people looking to buy multifamily. As someone who has seen a couple of market cycles, where do you think we are now and what are you looking to do moving forward? Are you still doing multifamily deals? What can we learn from you?

I believe that multifamily is here to stay with the biggest heart. All the research says that other population of Millennials, which is increasing and the Baby Boomers like me and others who are retiring, but I'm not retiring for the next twenty years. It's good to have a purpose in life. I believe in 30/30/30 which is 30 years of the first life, we get our degrees, job, get ready and then we get married towards the late twenties. Then 30 to 60, we build our nest egg, kids have grown up and they leave. From 60 to 90, we need to focus on ourselves more, giving back to society, making a positive and significant difference in the lives of people.

That's where I am. I'm in the 60 to 90 phase but the thing is you've got to stimulate your mind every day. You've got to have a purpose in life, getting up, taking care of your body. The Miracle Morning, which a lot of your audience has heard, they should look into that. There are great videos for free on YouTube. That aligns us every morning for doing the yoga, paying gratitude and things like that. Get excited about that day and write down, “What are the three important things I must do now and three activities that are going to bring huge results.” I call it 80/20 rule or 70/30 rule or whatever we could say. That's very important.

The biggest thing is that at this time of the market where we are, it's a hot market in almost all the areas. If you go to Dallas, Fort Worth, Houston, San Antonio, Austin, Atlanta, Tennessee, Ohio, North Carolina, South Carolina, Florida and everywhere. I missed Provo and Salt Lake City, Utah. Then you go to the West Coast where I live near San Francisco, everything is untouchable, Los Angeles, Seattle and Portland. I believe one needs to stay in this market and be talking to brokers and try to establish even more relationship with brokers. As the market adjusts and it's going to adjust here coming up. Interest rates have gone a little bit higher now. We don't get 4.14% or 3.75% anymore. It's almost 5% or5.25%. It might even inch a little bit higher. That's going to increase the cap rates because the downward pressure is going to be on the sellers' expectations.

At this time, there are a lot of people who are trying to get these properties and there's a lot more euphoria that, “I want to get into a deal.” We should wait for a little bit of adjustment and have the money ready with your investors. For us syndicators, keep soft commitments with the investors. Send them some studies and some positive news about multifamily. Self-storage is another one we are looking into a little bit more. Some of the other things that I like. Mobile home parks, I've not been a big proponent of it but that's something our company is also looking into. The big thing is that with the Millennials, they are liking more portability. We need to stick to that. Multifamily will stay here. The demand is high and we don't have new units coming in. In each metro area, we should stay there and then branch out more like we were in Texas and we are into Georgia now. We are going to Florida, Tennessee, Indiana, Kentucky and all these areas. I like those side, not this side.

You’ve done quite a few deals in this current upmarket. It sounds like you're looking at a few other asset types and then branching out in terms of geographic location as long as you stay in multifamily. For the passive investors out there, we're still receiving deals from syndicators but we may or may not be expert at determining whether a particular deal is sound. If somebody is new out there that haven’t invested passively in syndications before or somebody that wants to learn from your experience syndicating, what are you seeing now in terms of less experienced syndicators making mistakes in either underwriting or whatever? Where are you seeing the mistakes being made by people who are newer in multifamily and then as passive investors? What are some potential ways we can protect ourselves from some of that downside?

Doing the background checks and the track record is so important because a lot of syndicators, the new ones, not to take away their training and everything, are so excited and they want to get into a property so badly. It's so difficult because when I look at the underwriting, you could change a small number in the underwriting template and it can make the numbers look great. Just one assumption of the cap rate for us to say, “We are buying it at a 7% cap rate.” By the time we sell it in three to seven years, it's 5.5% or even lower. That can make the numbers go haywire. If the investors don't look through that, that can be a big problem.

The other things are the assumptions of increasing rents. Some of the time, new syndicators are taught every time it's going to increase by 3% or they hear that last year the rent increased by 10% or the occupancy. Assumption of occupancy can make things haywire. Just by saying, it's not going to be 10% weakened but it's going to be only 5% or 3%. I've seen some across my desk of these assumptions even in the pro forma numbers, which we don't look into pro forma. We should see the actual numbers. Assumptions by brokers saying that, “It's going to be only 3% vacancy.” That's ridiculous. We need to be on the other side to make it a much higher or safety factor is the word.

To answer your question, first of all, look at their track record. How long they've been in it? Is it their first deal, second deal or third deal? How much returns they’ve got? What does their current portfolio look like? You could ask for anything because it's hard earned money. $50,000, $100,000, $200,000 is hard earned money. Once you fill out the paperwork, the private placement memorandum, it says all over the place. You can lose all your money. That's how the attorneys draft it. You’ve got to be doing your own due diligence for the passive investors to look at all the different things and make sure that you're not sucked into very high returns. At this time, there are no high returns. Many of the people I've seen, they're getting into cash-on-cash of 5% but they're giving 7% to the investors. How could that happen? Who's going to give that 2% extra?

Many times, I've seen some packets coming to me where they are saying, “We're going to give you 90% of the cashflow,” just to make the numbers work. How could they survive on 10%? I don't understand that. How could you get 10% for the next five years and be able to tackle the property operations and everything and get paid so little? The big thing is to sit on the sideline little bit, but be ready for some good investment. In my case, just to be very fair with you and with your audience, we purchased two assets and both have gone in value. One has gone in value by $3 million. I paid $12 million for it, I can sell it for $15 million or even $16 million, but I'm not going to sell it. The thing is that new people coming into the line say, “We want it. It's got 98% occupancy, good track record and etc.” The thing is we need to diversify. We need to go into more markets. We are going to Jacksonville, Orlando and Tampa. I love all three right there, Knoxville, Lexington and Louisville, Kentucky. We are looking into Cincinnati, Ohio because I'm more on that side. On the East Coast, we’re still looking in the Triangle and things like that in North Carolina.

I’ve seen a lot of that myself in looking at other people’s deals. You’re right, there are silly cap rate assumptions on the exit. They are assuming their rent growth rate after they stabilize the property is maybe 3% but the market rate itself in their particular area might be 2%. That's a huge difference when you look at it in terms of their return. We are at a point where it's getting a lot harder to find true value-add opportunities and a lot of the low hanging fruit has been picked. Once that PPM is signed and the money's wired, it's gone.

The main thing is to see the track record. That is the number one thing I will say to passive investors, “Don't give away your money until you're totally sure of the packet, backwards, frontwards and everything, to as many people you know to get their opinion. Your CPA, your attorneys, your confidant, your pastor and some people in your family who know what this is about and so forth before investing money.

These new markets that you're getting into, what do you like about them the most? Underlying that, what are you looking for in these particular markets or other markets you've invested in the past? What piques your interest in those markets rather than others?

The biggest thing about any emerging market or any MSAs, the path of progress is another word we call it. Within the MSA, we will see that the Southeast is growing better than the Northeast and so forth. What we find is that the jobs, as a syndicator for the last many years, that's what I've gone after. To see the prospects of where the unemployment rate is, what other businesses are moving into that area and what's driving the population? The more jobs opportunities are coming, more household will be needing to find rent space or home ownership. We look at lots of great factors about the demographics. We look at the products online with the building permit in the next five years. We look at what other big boxes are moving in, what restaurants, Starbucks and things like that.

It’s all dependent on not just one employer that should dominate the market. At least three employers should dominate and also see where the market comparison is with the rents. That's a huge part. Then of course everybody else is going to look for value plays. That's the other part we look for also if it fits in management value play if it's the curb appeal or we can do some minor renovations into the properties. Our company, Moneil Investment Group and Management Group, we are moving more into the B class to B+ assets with higher ticket items so that we can have less deferred maintenance and things like that. In one line, the quality of our research is even bigger now and we look for lots of great factors about the market, neighborhood, rent comparisons and lots of other things that we can look into. The biggest thing is to see how as a syndicator, you cannot face if the market goes down. It's very necessary that we spend a lot of time to come up with that segment, the ZIP codes where we want to purchase in a particular market. Then we start building relationships with the brokers in that ZIP code.

I’ve got three main questions for you. What is the best investment you've ever made?

That was my single-family home. Many years back, we put down $11,500 and we purchased a single-family home in the Central Valley here in California for $65,100. That one single-family home, three-bedroom home, went to $314,000. $314,000 minus my $11,000, look at the increase. We refinanced it many years back. We carried that loan for 25 years. We pulled out $270,000 at 3% or 3.25% for 25 years and we sold that property.

Have you been using it as a rental property?

Rental and it’s pretty neat. We got tax deductions and everything. The other one I can think of in multifamily if you would like to see my best investment, I would say the one that we gave 39% IRR. That was very much up there. I did another one in Odessa area, Buena Vista Garden. It’s 109 units. That was our first property too. The big property we bought, fourteen units was our first one. The second one was this 109 units and 101 storage units for $2.4 million. We sold it for $5 million and gave great cashflows. My investors made 43.3% IRR in that one. They were very happy because we gave them higher cashflow. We gave them 70/30 split rather than 65/35 because that was our very first one. I'd like to say to your audience, don't be greedy for your first one or second one. You want to take care of the investors. Give a higher percentage so that they can get great returns, especially in this market. We have to do that and keep a little bit for you. Not as little as 7%, but try to give only 70/30 or 75/25 so that you can make some money too. That way, your investors will love you. That's how we started from zero investors to 6 investors to 16 to 26 to 46 to 86 and we have 126 or so right now.

The single-family property sounded like that was the first rental property you purchased.

It was the very first one. It was a brand-new home that was in Central Valley. I also invested passively the same amount, $10,000 or $12,000, into an apartment complex, 165 units in Reno, Nevada. I was a limited partner but the general partners were crooks. They give us a little bit of cashflow in the first quarter. After that for two years, nothing was given to us. We thought we lost our money and at the end, after two and a half years or something, we got our money back, what we invested. That's all.

That was a good thing for me to understand, you've got to be the best caretaker of somebody else's money. We do appointments and all my investors come to the meetings every quarter. We do live Zoom meetings. We record them live and we give the recordings to the investors who couldn't make it and who were there also. That way, there is more transparency. Integrity, honesty, trustworthiness and transparency is so important. That's why Moneil Investment Group and Ideal Investment Group, the other two companies I've owned and President and then the CEO of these two and then my Academy. I have five companies in total.

The next question is what is the worst investment you've ever made?

I have not lost anybody's money yet for fourteen years. I think it's going to happen now in 2019. I apologized to my investors. I've been meeting with them but the market has taken a turn downward in one of the eight years we invested about a couple of years back. We are trying to get deals made so that we could lose only 5%, 9% to 10%. My investors have gotten about 9% or 10% in cashflow. Once we lose this 9%, 10%, or 12%, it's going to be a break-even thing. That would be my worst one so far. I hope I don't lose any more money because that's not a good thing for me or for my investors. We have a very stellar record so far, 18% to 26% IRR every year. That's not too bad. In the highest, we have gone to 69%, 43.3% and then 39% and so on. We haven't lost a dime yet, but it looks like I'm going to lose a little bit of money for my investors and ourselves also.

The underlying cause is the market turn and cap rates are higher than you planned on the exit.

No, not cap rate or anything at all. It was that when we met with the Chamber of Commerce and the Mayor and everybody. All the reports were going very strong about this area and when I went there, motels were being built, restaurants were opening up and we were told that all this is because of the pent-up demand for housing. That's why I took two to three months of my time. I don't like small markets to be truthful. I like to be near the bigger markets but this way there was not too much product near the bigger market. I ended up buying three properties I bought at one time. I'm in different properties. I sold one at a profit. I bought it for $4 million and sold for $5.225 million. That was a good thing. That is in the same LLC that owns these other two. My investors were saying, “Vinney, you sell out so quickly. We don't even get to get in your deal.” That's when I decided about a few years back to start doing Moneil Duo and Moneil Tri. In other words, I will buy two properties together under the same umbrella and then the PPM will be given by the top company, the Duo or Moneil Tri. Three properties under the umbrella, but the money will come into the top level, then a lot more people can own it.

What is the most important lesson you've learned about investing?

If I look back at it, having the right team partner is so important. A lot of things don't go your way. Many times, there are conflicts of interest, the maturity level or the handling of the things. I've seen in my case, I admire my old company. It is still in business and we are wrapping up fourteen properties we bought. We have sold everything but two, twelve are sold. I saw myself flying like an eagle when I started my Moneil Investment Group only a few years back. We’ve done extensive growth in just a few years in the new company, which took me six to seven years in the old company. It's good to have great partners with the like-minded people who are driven.

The other advice I would like to give is not to get too many people in the parent company. I would highly recommend that. A lot of my students ask me, “I want an underwriting expert. I want financial, I want researcher, I want this, I want that.” I say, “How are you going to pay for them?” It's good to have one or two people. One and one is not two, it's eleven. l would say that because then you can make decisions faster. You are having accountability. You can divide up your jobs. It's not that hard. Syndication business is not a gorilla. That's what I teach in my academy. A lot of people feel like it's a big gorilla. We can't conquer it. I feel like it's so simple.

The thing is that you've got to spin those plates. I talked about five plates in my eBook. I would love to send my eBook to your audience if they will reach out to me. I've written some blog articles and lots of different things in my academy and all that. If they text the word, Syndication to 474747, I love to get in their hands some great free stuff and lots of my eBooks. It’s all free. It will even give them a lot more insight into my academy, which is a reasonable academy. I teach so much stuff and I do many group sessions. They will also get all the templates I've designed for over twelve years. In my academy, I provide them with templates, PowerPoints, Word documents, PDF documents, everything that we have designed and we manage our assets also. That's the good part of our company. In twelve years, we always have bought every asset, acquired having the loan from start to finish and then we acquired the day of the closing and then we ran those assets. We have run 26 assets and now we are into 27, 28 and 29. They will get to learn everything in my mind and my skills.

Is that the best way for people to get in touch with you to pick up the eBook and then run from there?

They could text the word, Syndication to 474747 or they could go to www.MoneilInvest.com. Moneil is our kids’ name, Monica and Neil. We combined the two to leave a legacy when we go up, hopefully, into heaven. We would like to leave the Moneil name brand behind. You can go there. There are great articles there and they could learn a lot of things. Then also Vinney Chopra. That's my personal website, which has got a lot of my podcast interviews and lots of great stuff. There are links to go to my academy, which is MultifamilySyndicationAcademy.com or MultifamilyAcademy.com.

There are lots of ways to get in touch. We can all stand to learn a lot from you. That's very exciting. Vinney, thank you for joining us on the show. For everyone out there, thank you. If you're enjoying the show, please leave us a rating and a comment on iTunes. That's a very big help and we would appreciate it. If you know anyone that could stand to benefit from learning all of this advice related to syndication and real asset investing, all those great things, please invite them and bring them into the show. Tell them about it and send them a link and share with them so that we can help raise their boat as well. Thank you for tuning in.

Taylor, thank you for what you're doing. I want to give you that away. It’s fantastic that you are bringing value to your audiences and congratulations on that.

Vinney, that just made my day. I appreciate that. I hope you have a great rest of your week and I hope everyone out there too.

Thank you so much.

Important Links:

• Vinney Chopra
• Moneil Investment Group and Management Group
• MultifamilySyndicationAcademy.com
• MultifamilyAcademy.com
• iTunes - Passive Wealth Strategies for Busy Professionals
• VinneyChopra.com
• https://MoneilInvest.com/

About Vinney Chopra

When Vinod Chopra came to the United States from India more than 40 years ago, he had only $7 in his pockets. But he knew without a doubt that the opportunities offered by this country were within reach because he had a vision for his life plus the commitment to learn, work hard and sacrifice to achieve those goals.

With a bachelor’s degree in mechanical engineering, he entered The George Washington University to seek a master of business administration degree in marketing and advertising. He sold Bibles and educational books door-to-door to support his studies, excelling both in the classroom and outside because of his work ethic and overwhelmingly positive attitude.

There’s a reason Vinney’s nickname is “Mr. Smiles,” which is evident even through just hearing the demeanor in his voice! He has always believed in individuals’ ability to shape the world around them through positive thought and selfless actions, and he has been a passionate motivational speaker and teacher for over three decades. After getting a taste of sales and marketing while pursuing his MBA, Vinney decided to leave engineering altogether and become a motivational speaker and fundraiser. He worked tirelessly to build clientele that would work with him annually to raise the funds to meet their goals and dreams.

He became intrigued – like so many other people, perhaps even you – with the challenge and benefits of public speaking, fundraising for non-profit organizations and real estate investing. He earned his real estate broker’s license on the first attempt and has dedicated his career not only to mastering the field of fundraising and motivation through speaking engagements and the art of building wealth through real estate investing, but more importantly, to sharing that knowledge and expertise – and his passion for doing good – with others.

Vinney Chopra has achieved success in a number of areas: marketing, motivational speaking and real estate investment. He manages four successful companies that include Moneil Investment Group, Moneil Management Group, Multifamily Academy and Youth Academy.

His diverse experience has allowed him to gain sharp insight into acquisition, syndication and property management of multifamily properties. He has developed proven techniques and strategies for multifamily syndications that have earned impressive returns for his investors and his companies.

Vinney's diversity of experience in Multifamily arena makes him unique. He has successfully completed 26 syndications and has over $200 Million in his Multifamily Portfolio. He has his own Property Management company with 60+ personnel and has over 3100 units under management. He is the actual dealmaker who walks his talk.

• Here’s How »

• passivewealthstrategy.com