Insider Secrets Podcast Season 2, Episode 5
Guest: Siraj Ahmed
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Experienced professional with a demonstrated history of working in the consulting industry. Skilled in Organizational design, Organizational Effectiveness, Business Process Design/Efficiency, Value Creation, Cost Reduction, Change Management, Accounting, and Project Management.
Strong business development professional with a CPA (Certified Public Accountant) certification; Bachelor of Science (B.S.) focused in Accounting, Management, and Management Information Systems (MIS) from DePaul University.
I need to focus on building my sales pipeline and getting more leads to underwrite more deals.
I recognize the value of networking and am intentionally focused on it this year.
Growing up in a humble background and facing challenges can instill an ambitious and persevering mindset.
Achieving success often requires working harder than those who already have advantages.
Building a solid foundation is key for gradual growth and success, rather than taking big risks for quick gains.
Retail and office properties may offer good investment opportunities, especially if there is a value-add component.
Being patient and avoiding overvalued assets can be a wise move, even if it means not meeting aggressive goals.
When approaching brokers, it’s important to have a clear seller avatar in mind.
Focusing on older owners who have owned a property for at least 5 years and have taken care of the exterior but not the interior can lead to good opportunities.
“I do have quite a bit of an aggressive goal this year of getting to 150 units, which means basically tripling my portfolio.” – Siraj
“Understanding underwriting is crucial for talking to potential LPs.” – Mike
“The ambitious and the perseverance comes from years because you had to work so hard in order to get ahead of the people who kind of already had it easy here.” – Siraj
“I’m a very foundational person, Mike, I’m not like the shiny object and run to it and just buy that big thing.” – Siraj
“The BRRRR model, being able to park the money, buy a good value deal, value add deal, and then being able to refinance it for a higher amount and take the capital out and reinvest it into the next.” – Siraj
“Keeping notes on conversations with brokers can help establish a personal connection and make future calls more productive.” – Siraj
“Sorting the database by the number of transactions can help prioritize which brokers to reach out to first.” – Siraj
[00:40] Intro to Podcast
[01:53] Intro to episode guest
[03:53] One word that describes Siraj personally and professionally.
[04:47] What is something you are working in your life that you are laser focused on?
[16:02] How are you structuring your time having a full time W2?
[18:30] Siraj talks about where he gets his deal flow from.
[25:40] Do you just want to stay in Chicago or are you looking to be in other markets?
[28:26] There is not a big appreciation plate. Are you seeing that starting to change or is it the same?
[31:26] What’s the best book you ever read?
[31:46] Best restaurant?
Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality.
Mike coaches you to buy investment real estate, creating short-term cash flow and long-term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.
Mike Morawski: Hey, what’s up everybody? Good morning. Hey, glad that you’re here. If you are joining us for the first time, I am super glad you’re here. Make sure that if you’re on YouTube watching us, that you hit that subscribe button and stay connected cuz we are always bringing out fresh content every day. Good tips, good pointers on how [00:01:00] to build your multi-family business, how to grow your entrepreneur skills, your leadership skills, how to just help you get better.
One thing I always talk about is none of us grow professionally unless we’re growing personally. And to grow personally, we have to get some information, we have to get knowledge from other people. And I’m not saying that I have it all, but I’m saying that I bring some guests on that are a heck of a lot smarter than me, know a lot more than me, and can deliver a lot more content than I can. If you’re on Instagram or Facebook, love us, help us out and continue to follow us. And by all means, please tell somebody about us.
So I always talk about intentionality. What are you intentional about today? What are you doing this weekend? Spending time with family? Are you working out a little more, maybe catching up on some work? What do you do and how intentional are you being about your life? We’re gonna talk about intentionality this morning on the show a little bit because my guest Siraj Ahmed with [00:02:00] Advantage Capital is here with us today. And I’m excited to talk about small multi-family and how to get started in this business. I think that what we talk about today will really be interesting for the new investor, the newer investor.
Hey, I’m not saying if you’re a seasoned investor, you’re not gonna get something from this. Because I always believe spending time in coaching, mentoring, listening to seminars and speakers, podcasts, you’re going to pick something up, some little nugget that’s gonna change something that you’re doing. So let’s bring Ahmed in right, or Siraj in right now. Hey, good morning Siraj.
Siraj Ahmed: Hey, Mike, how’s it going? Good to see you.
Mike Morawski: Good, good to be seen, man.
Siraj Ahmed: It’s a great morning here in Chicago. I know we’re both located here, so I’m glad to be here. Looking forward to our chat here, man.
Mike Morawski: Yeah. Hey, you know, one thing I say is Chicago’s a great city, right? I actually just did a post this week. I took a picture of the weather and I [00:03:00] said, where the heck is spring? It’s like, no sun, rain, snow in the forecast. And it’s just kind of been gloomy and chilly. And being in Chicago, it’s damn but where’s it at already this year?
Siraj Ahmed: Yeah, definitely. I’m anxious for spring to come. Although, we’ve had a decently mild winter. It hasn’t been that bad. And I don’t know if I heard correctly, but was it last Friday or maybe a few days ago that it was the first official day of spring?
Mike Morawski: Yeah, the 21st I think it is that first official day of spring and that was last week?
Siraj Ahmed: Okay. Nice. Yeah, so we’re right out the corner, I hope.
Mike Morawski: Yeah, right. Just about to turn the corner. Yeah, that’s good. Hey, so listen, thanks for being here. I appreciate it. And one thing I always ask my guests at the beginning of my shows is in one word, what best describes you personally and professionally?
Siraj Ahmed: Okay. Very good question. If I just kinda had to pick right from right the top of my head, I would say that I’m known to be very [00:04:00] ambitious. And if you want me to go into a little bit detail on that? Why?
Mike Morawski: Yeah, absolutely. Where’s that come from? Why are you ambitious?
Siraj Ahmed: I’ve always been a very foundational type of person. Like, once I get to a certain goal, I am always kind of thinking what’s next? I always have set kind of higher goals for myself, and once I get there I’m like, okay, what’s next? I get kind of bored of being stagnant. And so while doing that being ambitious requires a lot of perseverance, and that’s probably the next best thing that describes me. Once I set my mind to doing something, I’m lazy focused and I’m like, I gotta get there no matter what. So I think those are the two words that best describe me.
Mike Morawski: So listen, here’s what I wanna know right now what are you working on in your life that you are laser focused like that on?
Siraj Ahmed: Yeah, it’s honestly deal flow. We are about to close on a property in just about two weeks and directly after that, the pipeline’s looking very, very thin. So the sales pipeline and getting more leads into the door. So [00:05:00] that we can underwrite more deals and just look to close our next acquisition. Cause we do have quite a bit of an aggressive goal this year of getting to 150 units, which means basically tripling our portfolio. So we’re currently at right about at 50 mark.
So the goal is to get to 150 and in order to do that, I gotta be buying about 25 a quarter. So we’re closing about nine in the next two weeks. Which means that in Q2 we gotta pick up the slack of the remaining 14 and also an additional 25. So very, very laser focused on that. And then actually is growing my online presence so that one of the reasons why we’re doing this is I mean, it’s about growing the portfolio, which will improve the business.
But I think that the best way, one of the things that you mentioned earlier, kind of starting off is, you met so many people and I think it might have helped you catapult your growth much faster when you just know the right person. So I’m intentionally focused on that this year.
I don’t even have a website yet. I haven’t updated my LinkedIn yet. So Instagram was just made a few months ago. So it’s about actively [00:06:00] posting content, actively talking about what I’m doing on my daily basis. Cuz a lot of my people in my network, my LinkedIn professional network doesn’t even know that I’m doing this.
I used to be a t Deloitte, Touche. They don’t even know that I’m doing this, which is one of the best networks to be in, right? I mean, I was around such high paying consultants and partners and such, if they knew what I was doing, they might be more inclined to be like, Hey, Siraj, tell me more about it. Tell me about what you’re doing. Maybe I got some money to park with you.
Mike Morawski: Yeah. That’s awesome. Two things I always tell people is I think two of the most important things that we can do in the multi-family space, whether you’re on the small side or the big scale side, like we tend to do is build relationships. Let people know what you’re doing. And there’s multiple kinds of relationships. And the other piece is the underwriting. Right? Even if you’re not the underwriter, you need to know the numbers and be able to talk to those numbers with your potential LPs and that.
Listen, why don’t you talk about your background a little bit. Tell us a little bit of history about you. I know you’re [00:07:00] at Deloitte right now doing multi-family on the side. How’d you get here and what’s your goal?
Siraj Ahmed: Yeah, absolutely. So I’m going way far back. I come from very humble beginnings, man. Very, very humble beginnings. I come from a family of seven, so including my parents, seven of us. We grew up in a small town home in Skokie area. And so, sharing a room with three brothers was fun, right? I mean, you could imagine that. So did that for quite a bit of time and my brothers and I are super close and thankfully because of that. But seeing kind of the household struggle growing up and stuff, it was tough.
I just moved here just about in 2001, so I was 12 years old when I moved. And coming from a third world country to the US it’s a big change. Of course we were coming here for a better opportunity, but in order to get to the better opportunity, this is where, kind of you asked me earlier, like, what word describes me?
The ambitious and the perseverance comes from years because you had to work so hard in order to get ahead of the people who kind of [00:08:00] already had it easy here. And so growing up in that and seeing kind of the struggles and getting to that goal which you had to work five times harder for than the person.
Imagine, me coming here to be able to speak English. English was not my first language at that point. So to be able to just have a fluent conversation and to get to that point, you gotta work much harder. So that kind of set the foundation for it all. And then it was just, getting to an immigrant mindset is come here, go to school, get a job, retire at 65, save up in that time, buy a house, buy a car, all those steps, ladders.
So I did that. I started off after high school went to DePaul. Majored in finance and accounting in MIS. Did my CPA directly after, and I set a goal that I wanted to get to Deloitte in Touche. It was one of the most prestigious firms to work at, and I set that goal. As soon as I kind of started over there, I started buy up real estate on the side.
And I’m a very foundational person, Mike, I’m not like the shiny object and run to it and just buy that big thing. It’s always like, I wanna have a solid foundation so [00:09:00] that everything that grows on top is strong and we have a solid, knowledge base around it, and then it grows in a gradual manner rather than just a blow up.
So I started buying condos, actually my first condo that I ever bought in Elma Park in 2014. Get this, it was $40,000, or sorry, $38,000. And as soon as I bought it, it was a really nice condo building, pool, all that kind of stuff. A garage parking indoor. And I got rented out for like, what’s it like 750 at that time? And I was just like, I mean this was like magic. The tenant was great. So you had to go through the whole process of, obviously in the beginning you’re managing it yourself, right?
So got it rented out and I was just kind of addicted. I’m like, holy crap, this $750 just a month, this keeps coming in. It had already been like three or four months in. So it’d been three or four months in and I’m like, I’m just addicted to this thing. So just kind of started buying up and at that time I was buying everything up in cash, no leveraging nothing.
It was just save up money, buy the next property. And so I did that for about three or four [00:10:00] months and realized like, holy crap, I’m out of cash. So it was just about a year in and I brought on my first investor. And I was super excited and super nervous at the same time. Having that first pitch, I mean, imagining going doing anything for the first time and let alone talking to an investor.
So it was a Starbucks conversation. Luckily it was a warm introduction by my CPA and actually that guy still invested with me. So that was back in 2016 ish I wanna say. And now we’re in 2023, so whatever six, seven years later, eight years later, he still invested with me and we are going on on new deals.
So again, kind of the foundational base, brought on the first investor, then brought on the second investor. And at this time we were buying in cash. Then we started buying some smaller 2, 3, 4 unit buildings and just kept growing the portfolio very, very, very slowly. Cause, I had to wait to save up the cash so that I could deploy it.
Then there came a point and I’m like, this is just way, way too slow. And then realized the power of leveraging and the whole BRRRR model. And that really stuck with me. The BRRRR model, being able to park the money, buy a good value deal, value add deal, and then being able to refinance it for a [00:11:00] higher amount and take the capital out and reinvest it into the next.
So really like that model. And it’s just kind of this how I’ve been growing and just about two years ago right around after Covid, I went full-time actually into real estate. So now I am a hundred percent in for about two years. And the reason why I quit was because I wanted to buy commercial assets at this point.
So, I was getting tired of this whole, if I buy a two unit building, it’s worth the same as the next one. And I was noticing that all my deals are value add and in order for me to get the true benefit out of the increase in net income was commercial assets. And so that’s why I went full-time into it just about a couple years ago. And the model was proven in 2021, what I’m doing works because we bought quite a bit of deals. 2022 was slower. And honestly, looking in that 2022 year, I had set aggressive goal for myself and couldn’t even achieve it anywhere near it.
But I’m kind of glad I didn’t because deals were super over value. And kind of now looking back, I’m like, I kind of think I made the right move of not buying an overvalued asset, especially with current rates. And one of the things that another operator and I were talking [00:12:00] about last week was a lot of syndicators in 2021 and 2022 had built in a refinance component the next two years, right?
So imagine you had a three and a half percent rate locked in. And a year and a half later you are looking to refinance, or two years later you’re looking to refinance. And all of a sudden rates have now jumped up to 6% or more. And how that affects your financials. So I’m kind of glad that I hadn’t done that and haven’t done a lot of deals with that type of underwriting.
So I think that that’s where my journey is and kind of where I’m headed in the future is one of the things this year is looking at more retail and office. That’s the other thing that I’m starting to look at as well, and more opportunistically. Just because, office obviously is not doing well, so you can find deals for less than a hundred dollars a square foot for a nice brick solid building in Elmhurst for example. Seems like a decent thing to go into when there’s a good value add component there.
Mike Morawski: Well just real quick, something that’s really interesting. We just bought a deal in Tulsa. And there’s a couple of old office buildings that some multi-family developers have [00:13:00] bought and retrofit. So start looking at maybe some of that abandoned office through a different lens and saying, Hey, could I retrofit this? Could I make this something other than what it currently is? And maybe multi-family, maybe senior housing. Especially in Elmhurst, maybe senior housing. Who knows, right?
But just for whatever that’s worth. Hey, you really kind of focus on the small multi-family side, though. Don’t you?
Siraj Ahmed: Yeah. Yeah. So now we’re buying or my buy box is gonna be anything between, on the commercial side, anything between eight units all the way up to about 50. And the reason why that goal is there is because I have about a million dollars of capital available from an investors that can be ready to deploy. So, I try to buy something around a hundred thousand dollars unit. So that gets me to about $5 million of value and putting down at 25% you’re at about one to 1.5, 1.25 million.
Mike Morawski: Alright. I want listeners to key into this, cuz you just said something very important, right? Is you have a buy box. I think a lot of times investors go into [00:14:00] this world. Like throwing darts and arrows at anything. And I learned my first deal that I needed to have a buy box.
I want people to understand that. And if you don’t know what that is, call Siraj and find out from him how he put that together. Call me, we’ll walk you through, but I believe that you need to have a buy box so that when you pull up in front of a place or pull in a parking lot, you know exactly, this is it. Right?
Siraj Ahmed: Yeah. And not only, I mean for me, it’s not just a buy box of the building. Whenever I call up and we’ll kind of go in more into that too, of my strategy on how I connect with other brokers. But one of the things that the brokers know, and one of the things I explained to them is my seller avatar.
What kind of seller I wanna buy from. What I like to focus on is specific sellers that have owned a property for at a minimum of five years, ideally 15 years. So it’s gonna be more of the older owners that are kind of looking to retire or are moving on to Arizona and Texas and such that have taken care of the exterior of the building, the big CapEx stuff.
And they just haven’t touched the [00:15:00] interior because they haven’t had a need to. Like, If someone’s owned the building for the last 30 years, their cost basis is so low on it that really don’t need to raise rents at all. And they’re typically self-managing, so they don’t wanna disrupt the operations and hurt their pocket at all.
So they’ll keep it as is. And that’s, for me, are the perfect opportunities because I can go in, I’m at a point where I can disrupt the tenants and improve the value. And that’s what we’re doing on the building that we’re closing on in a couple weeks too.
Mike Morawski: Yeah. When we talk about small multi-family, how many units, from what to what?
Siraj Ahmed: For me it’s from eight all the way to 50 units.
Mike Morawski: Okay.
Siraj Ahmed: Again, kinda going back to the buy box, I also buy 2, 3, 4 flats specifically, but only in three specific suburbs because I already have a portfolio set up over there. So it’s just kind of like adding onto the machine, especially if I can buy like the bird type of deal. So if I can buy ’em at x price, do my value add, whether it’s through renovation or whether it’s through better efficient management, et cetera. And then go to my commercial bank and refinance that property and move the money over into the next deal.
Mike Morawski: So here’s one thing I want you to talk about a little bit. You’re doing a [00:16:00] lot, right? And you’re looking at a lot of things. How are you structuring your time, having a full-time W2.
Siraj Ahmed: Oh, I left I’m sorry, lemme interrupt. Two years ago left a corporate job completely, so now I’m full-time. My LinkedIn is not completely updated and I think that’s why there’s a mix up there.
Mike Morawski: Okay. Got it. Got it. All right. So you did leave your w2.
Siraj Ahmed: Yeah.
Mike Morawski: But even going back when you were working how’d you structure your time? Because you’ve got a lot of units under your belt at this point. For a part-time investor. How do you structure your time?
Siraj Ahmed: Man, that was the biggest thing and that was one of the reasons why I kind of left cuz I realized my time was getting very tight. So at Deloitte, we were traveling quite a bit, traveling almost every week, maybe every other week or sometimes weekly. So leaving Monday morning, Tuesday morning, coming back Thursday night. So it was like this, going to the client meeting, flying in. Go to the client meetings, go to the dinner directly after, be back around seven-ish, six from seven-ish to like, probably around 11:30 to 12:00, [00:17:00] have dinner in between and have and look at deals all day.
Siraj Ahmed: You couldn’t talk to the brokers because at that point it was already seven o’clock too late. And depending on time zone when I was in, it might have been even farther later in Chicago. So my weekends were spent on the deals that I’d [00:18:00] kind of looked underwrote and looked at, or at least initial underwriting done. I would look at on the weekends and definitely connect with brokers on Fridays and Saturdays.
That’s what I was doing heavy. So it was a lot of time spent. But, all of it was time management. I mean, my calendar was like booked out in very, very small increments of, which broker I’m calling at what time and prescheduled appointments. So time management was key.
Mike Morawski: So let me ask you this. Do you get all your deal flow from brokers and are they commercial brokers, residential brokers?
Siraj Ahmed: Yeah, no, good question. So when I look back at all the deals that I’ve done or even gotten under contract on, probably 15% of them have been through commercial brokers. Everything else has been either off market or residential brokers, and that’s where I focus my effort now.
So one of the things that I’m doing today after we get off here and I do this on a probably every one month or every for sure, two months, 100%. I have a list of about 35 brokers, and I’m growing that list even more [00:19:00] of all 35 residential brokers only.
Mike Morawski: So here’s a key point, right? I tell people all the time, have multiple relationships with different brokerages at different brokerage firms because the more you have, the more deals you’re gonna see. So go on. Great point.
Siraj Ahmed: Yeah. Yeah. And I’ll walk you through on kind of how I even set up this database, right. So about 30 ish brokers now, and I’m calling them every single month. Or at least once every two months. And what I’m calling them for is like I don’t start off with like, Hey, Joe, you got a deal for me? It’s not that. It’s more so, Hey Joe, how’s it going man? And it’s more of a relational thing. I’m building a relationship here. So the next time Joe remembers, Siraj does this and Siraj does that, and you know what, maybe I can give this deal to Siraj and he just kind of pops up in his head.
So I’m talking about Ramadan started, I might talk to them about that today. I’m like, man, I’m hungry today. Or, how are your kids doing? How’s your family doing? How is your weekend? Hey, I remember last year you were telling me about your vacation that you went on.
So this is making this [00:20:00] relationship with them so that they remember me the next time when the deals have come up. And honestly, that’s worked multiple, multiple times. And in fact, I even do that with sellers too. Sellers that I have transacted with before that I know that have multiple apartments, two flats and three flats.
I’ll even do the same with them. Just two days ago I messaged one of the guys I was under contract with at a property in Downers Grove that didn’t work out. He lives in California, but he told me that in the summertime he’s planning on coming. And so I was driving past this building the other day and I remembered, and I emailed him like, Hey John, let me know when you’re back in town.
Next time, I’d love to take you off for coffee or something. So going to this broker thing, right? So residential brokers for me are key because what happens is typically the residential brokers will just end up putting something on the MLS without even realizing that the gold mine that they might be holding, because they don’t deal in this type of space at all.
So sometimes they might not even know that the net income is what’s gonna determine the value of this building, and the current rents are this, and they should get to this and all of a sudden the building’s worth that much. They’re just simply in a single [00:21:00] family home space. So they know comp to a comp, like, Hey, this building sold for a million dollars, so this should sell for a million dollars.
And that’s where I’ve been able to find value. Like I’ll give you an example. The last deal that I bought in Lyle, the broker who gave me this lead, it was at 11:45 PM at night on a random Thursday night or something I remember it was. At 11:45 PM I read that, and all he did is he just wrote down rent gross, this number, expenses this number, and this is the net income. And that’s all he gave me. And he gave me that and he wrote the purchase price in.
And I said, Abdul, make the LOI in right now and submit this in. Because I knew the deal that he was holding was very, very good. And that deal today is, I bought it for 700,000 and that thing today is worth about 1.3. And that was just about a year and a half ago.
Mike Morawski: One unit?
Siraj Ahmed: That one’s a 10 unit. And this is in downtown Lyle, by the way. So great market since you’re familiar in Chicago.
Mike Morawski: Yeah.
Siraj Ahmed: So where was I going with it? So the brokers, right? And this came from a relationship from broker kind of keeping in touch with him and he had not fed me an apartment building deal in probably two years, two years, Mike. [00:22:00] So that’s how long it took me to finally find this. And I don’t know, for some brokers it might never work out, but for others it might just work out in two months or the other one might work out in a year. I don’t know.
So let me go over on how I built this database too, right? I think your viewers might find value in this. So what I did is I went on redfin.com. I’m not a broker, I don’t have MLS access, so I just went on @redfin.com and I looked at all the sold coms in the last two years.
So whatever time that you run it from today, March 23rd, look at last two years, you can go on redfin.com, go under instead of for sale press sold, and then you select last two years, and you press that button and then you put the type, select the type, you select multi-family.
So I wanted to see which brokers have dealt in the small multi-family section in the last two years, and who’s sold more than one property in that area that I’m focused in. So I did number of beds, all that kind of stuff. And now I have this spits out all these things. And then on the bottom it says, [00:23:00] download, export.
So I press a download, export in an Excel file, and it spits out the broker’s name, phone number, the address of the property, number of beds, and then the link to the property too. So you can press that button and see the link. So I downloaded this list and then from there I kind of sorted it.
I have an Excel background cause, being a CPA and all that. So I kind of sorted by the number of transactions that broker’s done. So first I called up the top brokers in that area. Like, one of my markets, one of the brokers has eight transactions and I’m like, okay, this is definitely a guy I gotta call and connect with because he’s spitting out deals in the last two years.
And next to that, I’ll make a notes column and I’ll say like what day I call them and what we talked about as well. So that way I can remember the next time I call them, I can kind of look through those notes. Like, Hey, this guy has one daughter, this guy has one dog, whatever it is.
Like we have something to kind of talk about the next time we call. So that’s how this database was built and it just keeps growing and growing. And now I’m doing the same exact thing today and just adding on more brokers to that list.
Mike Morawski: Yeah. So I really want people [00:24:00] right now to understand the power of relationships, right? If you’re in the commercial, larger multi-family space like I am, I have relationships in the markets that I wanna be in with Marcus and Millichap Brokers, CBRE, Colliers, Arcadia, right? JLL, I wanna be getting every deal. On the residential side, those brokers have the MLS. So they’re all sharing anyhow, but on the commercial side, there is no MLS.
Each broker has their own listing. Make sure as a buyer that you’re getting plenty of inventory to look at, because the more you underwrite, the better you get at it. And so when somebody hands you a cocktail napkin and says, here’s the NOI, here’s the purchase price, here’s your gross rent income. Make me an offer right now.
You knew because you knew the market, right? Because you knew the market so well. Normally I [00:25:00] would’ve told you, I would’ve said, Hey, if somebody gives me numbers on a cocktail napkin, just run. But I got that. You know what you said there was a big difference in there. So good for you though. That’s great.
Siraj Ahmed: But it goes back to what you said is knowing your buy box. If you know your buy box and you’re constantly underwriting deals in that market, and if you see the normal price per unit in that market is 125,000, and now all of a sudden you’re getting pitched a deal that’s at a hundred or less, you’re like, something is here. I need to look into it further. So that’s kind of where I’m doing.
Mike Morawski: So let’s flip gears here for a minute. And obviously you’re kind of focused on this space. You wanna get to 150 units. Any aspirations of doing bigger deals? A hundred, 200 unit deals? And do you just wanna stay in Chicago or are you looking to be in other markets?
Siraj Ahmed: Yeah, no good questions again. Currently where I stand, I haven’t looked out 10 years ahead, but looking within the next five years, I think I’m gonna continue staying in Chicago. And there’s a couple reasons for it. Even my mastermind groups, I’ve discussed this because everyone’s like, Siraj, why Chicago Man, get out. [00:26:00] As an investor, majority of my mastermind is focused on probably the Sunbelt states. Parts of Midwest, not in Illinois. Indiana is probably better, all that kind of stuff.
But I focused on Chicago because one, it’s home base. I know it well, like most other investors won’t. And the other thing is that the outside investors are not bringing their capital to Chicago. Which compared to like go to Atlanta or Florida, you have a ton of competition, ton of outside competition coming over there, which I don’t. So here I just gotta worry about guys like Begavich and guys like cast management that are probably buying up properties that are local to the Chicago market.
Mike Morawski: You knew who Pangea was, right? They sold this year, right? They sold their entire portfolio and got out. So I thought that was an interesting move, but go ahead. I didn’t mean to cut.
Siraj Ahmed: Yeah, I don’t know where they went. Or where they ended up actually investing. Do you know where they ended up buying them?
Mike Morawski: I don’t know. My understanding is they just got out.
Siraj Ahmed: That might have been a different move. So going back to this, so I think it’s more so just competitive nature. I’m not a very aggressive guy. I’m not that I’m gonna make the terms like very, [00:27:00] very favor, all that kind of stuff. I like to think real of real estate as like a game for me, because I’m not the smartest guy in the room.
So I wanna have like a level playing field. So for me Chicago gives me that. And Chicago’s very stable. I mean in the last two years you heard of Idaho, like blow up Boise. But at the same time in the last few months, you’ve also heard it kind of go down too.
Chicago’s not that way. It’s gonna stay at this gradual rate and probably even increase a bit, every single year. So that’s one of the things that I like about staying here. Rents are strong. Rents have increased not at 30%, but they have increased 12 to 15% in the last few years.
And that gives you enough to work off of. So that’s the reason why I’m staying here. And the other question was about buying bigger deals. Absolutely. Definitely wanna get there. But again, remember I kind of told you I’m foundational. So I like to grow my portfolio gradually so that the operations could be set in.
So for me, I have an in-house property management. I don’t outsource it, so property management’s in-house. So we do have a team set up for it, but in order for me, I can’t take on a hundred unit and add it on. All of a sudden the machine’s gonna get broken. So I need to build it up more so [00:28:00] that we can buy a larger apartment.
Mike Morawski: Okay, awesome. So you have vertically integrated your management.
Siraj Ahmed: Yeah. And slowly I gotta bring on construction. That’s something that we’re kind of lacking on. Or not lacking, but we’re gonna get there eventually, is bringing construction in-house.
Mike Morawski: So two things I always talk about are cash flow and long-term wealth, right? We gotta create short-term cash flow and long-term wealth. My experience in Chicago has always been that there’s cash flow. But we don’t get that long-term wealth. There’s not a big appreciation plate. Are you seeing that starting to change or is it the same? What are you seeing in that?
Siraj Ahmed: Yeah, so for me, what I see is, look, I’m buying value add deals. I just kind of gave you an example of that Lyle building where there was more than 50% increase in the value or almost 50% increase in value. So we bought it for 700,000. I think the building’s worth about 1.3 ish. The deal that we’re buying in about two weeks, we’re buying it for 540.
The appraisal came in at 1.1. And even the lender and I agreed that I was super conservative and I think that it’s worth about 1.2 to 1.3. So [00:29:00] my point is like, if we’re buying a value add deal, I’m not super concerned about that because we’re already getting a huge pop in value kind of right away.
Mike Morawski: Got it.
Siraj Ahmed: Now unless something crazy happens in the Chicago in the next couple years with, there’s a merit change happening, all that kind of stuff, but actually that merit change really won’t affect me cuz my stuff is in the suburbs of Chicago. But my point is like, if something absurd happens where we have a heavy migration going out is different .
Right now, we’re seeing one percent-ish outflow every single year enter the migration, and we are so dense as it is. I mean, it hasn’t affected my number of days on the market in terms when we’re leasing out our apartments. And the rents are consistently increasing, we have not had to bring our rents down or even stay stagnant. We’re increasing by 25 $50 on renewals.
Mike Morawski: Yeah. Interesting. So you don’t do anything in the city proper. Everything is in the suburbs and is it any suburb or specific suburbs?
Siraj Ahmed: Yeah, very, very specific suburbs. City I completely stay away from because it has that when you look at Chicago versus kind of Illinois[00:30:00] Chicago is very, very tenant friendly. Illinois as a whole, if you take on Chicago outta the equation, not as tenant friendly. Although, being around the suburbs, you still get that influence from Chicago.
And then, no I don’t buy in every single suburb. There is a specific, like I don’t go to south suburbs like, Orland Park and such. Unless it’s a big enough building. Like if I’m buying maybe like a 30 unit, 24 unit or something like that, I’d probably expand operations. Cause I don’t have any operations set up over there. My primary portfolio has been set up in north side of Chicago, like around Skokie and Niles area.
And then the other parts of it’s are in Elmwood Park, forest Park, Berlin. And then the other portfolio that I’m really trying to grow on is DuPage. DuPage county I love right now. Really trying to grow over there.
Mike Morawski: If you’re in Elmwood Park, you go to Stone Park and so just Elmwood Park. Okay.
Siraj Ahmed: Elmwood Park, forest Park. And Millbrook.
Mike Morawski: Two different demographics, right?
Siraj Ahmed: That’s right. And that’s what it is. I am focusing on a specific type of tenant clientele. And so stone Park wouldn’t get me there.
Mike Morawski: Yeah. Melrose Park. Franklin Park, all those are different demographic than what you get in Elmwood Park. [00:31:00] It’s just like Wilkes a different demographic than you’re gonna get in Skokie or Niles.
Siraj Ahmed: Absolutely. Absolutely.
Mike Morawski: Good for you. Hey, listen, I could probably talk to you for hours. So I think when we end the call, we need to book a lunch.
Siraj Ahmed: Absolutely.
Mike Morawski: And I need to get together.
Siraj Ahmed: Definitely.
Mike Morawski: As we start to wind this thing down, I really like to ask three bonus questions, seen as how you’re from Chicago. Let’s keep it all Chicago focused. Okay. What’s the best book you ever read?
Siraj Ahmed: I’m forgetting the name of Chris Voss’ negotiations one.
Mike Morawski: Yeah. The FBI Negotiator?
Siraj Ahmed: Yeah. Yeah. Love that book. Absolutely. That book has taught me so many things and probably as I’m reading it, I’m like, man, I’m dealing with that situation right now. I should use this and it works. So definitely a great book. I can look up the name, but yeah, go ahead.
Mike Morawski: Awesome. And then best restaurant?
Siraj Ahmed: Maple and Ash currently.
Mike Morawski: Oh, okay. Big time. Nice place. And then best tourist attraction?
Siraj Ahmed: Man, I really like the Maggie Daley Park right now. Not as heavy populated [00:32:00] and this is in the summertime. Remember that, Mike. I mean, we’re approaching it, so that’s why I’m kind of thinking of it. But for biking and for the ambience divide, just really enjoy it over there.
Mike Morawski: Yeah, it is a great place and great tennis courts there.
Siraj Ahmed: The book is called “Never Split The Difference”.
Mike Morawski: Oh, okay. Right, right. By Chris Voss.
Siraj Ahmed: Yep.
Mike Morawski: So listen, it’s been great. If people wanna connect with you, how do they reach out to you?
Siraj Ahmed: Yeah. My email address email@example.com. And also on my Instagram Siraj88. Connect with me anytime. Happy to answer any questions. Let me know that you’re coming from Mike’s reference and happy to chat with you.
Mike Morawski: Okay. Awesome. Good for you. Hey, listen I’m gonna move you to the back room. I’m gonna say goodbye and then hang out with me for a minute. Would you?
Siraj Ahmed: Yeah, absolutely.
Mike Morawski: Okay. Thanks. Thanks for being here. I really appreciate it.
Siraj Ahmed: I appreciate you having me. I appreciate it. I hope you enjoyed it. I hope the viewers enjoyed it and got some value out of it.
Mike Morawski: Yeah, lots of great stuff today. Thank you. Hang on. Standby.
Hey everybody, that was a great interview and my encouragement for you right now is to [00:33:00] go back and listen to that a couple of times cuz there are some golden nuggets that Siraj and I talked about that you will really pick up from.
Buy box, relationship building, especially with brokers. How to source good deals for yourself. There’s a lot in the last 25 minutes that you’re gonna be able to pick up and like anything else, repetition builds reinforcement. Go back and listen to this podcast a couple of times. Share it with somebody, share it with a business partner, your spouse, somebody who maybe needs to hear some of this information.
You could tell from his passion and his excitement how much the business matters to him and how much you can get from the business.
So, hey, listen, thanks for being here today. Follow us on YouTube and get tons of great content like this and, and other stuff. If you are looking to passively invest, if you’re looking to actively [00:34:00] invest, reach out. If I can help you in any way, answer any questions, I certainly will do that. Siraj the same thing. Look forward to seeing you next week. Everybody have a great weekend.
Kristen: Thank you Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up to date real estate investing trends.
Visit mycoreintentions.com where you can get expert coaching on all things real estate investing and property management. If you are looking to become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.