Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
Thanks for listening to another episode of Making Billions with Ryan Miller: The Private Equity Podcast for Fund Managers, Startup Founders, and Venture Capital Investors. This show covers topics connecting you to some of the best investment funds that won in their industry—from making money and motivation to alternative investments, fund managers, entrepreneurs, investors, innovators, capital raisers, money mavericks, and industry titans. If you want to start a business, understand investment funds that won the game, and how the top 0.01% made it, then this show will give you the answers!
Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
Real Estate Playbook: $0-$300M in 5 Years
Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller, and today I have my dear friends, The Kitti Sisters, Nancy and Palmy Kitti.
The Kitti Sisters are real estate investors that built their real estate group from zero to $300 million in just five years.
They've done it by structuring effective deals, they've saved their investors over $90 million in taxes and so what this means is that The Kitti Sisters know how to structure deals that make you and your investors millions, and they're about to teach you, and I how to do the same.
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[THE GUEST]: The Kitti Sisters are real estate investors that built their
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My name is Ryan Miller and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.
Picture this five years from now, you're holding a check for $300 million that's exactly what happened with my next guest, who went from zero to 300 million in five years in the real estate portfolio. Join me and my next guest, The Kitti Sisters. How they talk about how they went from zero to 300 million in their real estate portfolio, how they leverage reputation, relationships and results, and they literally lay out the playbook on how to do the same. All this and more coming right now. Let's do this.
Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller, and today I have my dear friends, The Kitti Sisters, Nancy and Palmy Kitti. The Kitti Sisters are real estate investors that built their real estate group from zero to $300 million in just five years. They've done it by structuring effective deals, they've saved their investors over $90 million in taxes and so what this means is that The Kitti Sisters know how to structure deals that make you and your investors millions, and they're about to teach you, and I how to do the same. So Nancy, Palmy, welcome to the show.
Nancy Kitti
Hello.
Palmy Kitti
Hey, Ryan, I'm so excited to be on the show. Big fan, and I love that you guys are Making Billions, not millions. We're beyond on millions, go for go over the billions.
Nancy Kitti
We love you guys, Making Billions community.
Ya , that's right, thank you. I love your energy, and we've been so fortunate to have wonderful guests like both of you and many people who are out there just really making things happen. And the mission of the show is just to help people understand, like, hey, you can do this too. It's not simple, but it's not that complex either and you know, with your help and mine and many other people on the show, we're able to really help and be that lighthouse to the world on helping people to get their money right, all in private deals and in alternative investments. So I'm so excited to have you guys here, what you've built is truly impressive, and I can't wait to get into it. But before we do, let's talk to some of the beginners who are just starting out. You've been a beginner, I've been a beginner, and I don't know about you, but I've always wish to say, man, if I could go back, here's what I would do different. So with that being said, let's address the beginners on how do they win in the early days? What would you tell people? How can they get some early points on the board, doing what you do in real estate? What would you say?
Palmy Kitti
Yeah, so this is something that really, if we, if we 300 million in five years, is a nice number, but I feel like we we under indexed because we didn't get started earlier. So to say that, like people to people from a totally different field, coming into from fashion to multifamily, if we can do at that pace, like, um, what we're going to be able to share, I think it's gonna be very impactful. So in multifamily, what I, what we view is there's basically five base major categories that a general partner, like an active investor who's running the deal they fit into. So it's underwriting the deal, sourcing the deal, having relationships with the brokers, being the asset manager, capital raising, and then, like, being the balance sheet person. So I can go through each one, what it means in general, and then I can dive into it with, like, the order I think is important. So sourcing the deal, this is a person who loves a spreadsheet and, like, dives into Financials, rent rolls, and like, Ryan, you're probably one of those people probably have very
That's why I'm laughing, yeah, for those who are listening, I'm actually laughing. I was like, yep, that's me, for sure.
Palmy Kitti
Yeah, very complex formulas, all that stuff. It's like, someone who's, like, very, very comfortable, almost like The Matrix. You see these numbers are like, I can see the big picture. It's not, it's it's not like for us, we came from the fashion world, so it was a, not a normal thing. We had to learn it from, from scratch. We it wasn't taught in in school. So that one I feel like, is a have a very, very high learning curve. Not only have to learn just excel in general, but also you have to understand the there's an art and there's a science behind underwriting the the science is the raw data that they provide you here, here's the financials, here's our incomes, your expenses. But the art is, how do we finesse that so that it makes sense where we're not overly aggressive and we're not just banking on future valuation, but like, making sure that they want me by this deal, it's going to make sense.
Nancy Kitti
And in addition to that, like for people who don't live in landlord or investor business friendly state, like us, it's really hard to understand like or to have that market intelligence, to know like the numbers, like what kind of number to put in those spreadsheet. So if you don't live in that area, it's really hard to become that number person. It's not impossible. It's just that you have a learner like a learning curve, like a steeper learning curve.
So what have you done to counterbalance those that don't live in there, there's a strong there's a steeper learning curve. How, how would you recommend people overcome that?
Nancy Kitti
So multifamily is a team sport. So for us, we always recommend like, even for us ourselves, if we're to invest in any state, we want to have like people who live in that city, like or around or around that city to partner with. For example, we own in Houston. So one of our partner lives in Houston, so we are doing development deal in north of Dallas. So we have a partner in Dallas, and then we have a deal in Atlanta, right? So we have people who, like, can fly there within like, an hour, or could get there within an hour or 50 minutes of either flight or drive time.
Palmy Kitti
Yeah. So that's one way. So you have a partner who's basically boots on the ground, who actually understands the market nuance and in real estate, block by block, that can totally change the surroundings. And we kind of talk a little bit about like us living in Los Angeles, and like from Culver City to like south of Culver City. Very different dynamics. So even if you think that you're doing a one mile radius like this is a great area, income strong. Um, it's probably not a perfect circle. So, so someone local, the other way is this takes more work, and they've, like some people have done it where they live in Los Angeles. They'll, they'll drive to Phoenix, for example, I think it's a 10 hour drive, and they'll just live there for a while. You have to, for example, if you want to invest in Scottsdale, Arizona, you basically create a grid, and you map out all these apartment complexes that fits into your buy box. And you walk them, you tour them. They call them secret shopping. You go every single one, you jot down the amenities. You jot down what pricing they're offering, what are their vacancy, what are the things are like, are there sizzle features? And you map it out. We have, we use Google Spreadsheet, no Google Map to do that. So it's like layering, so we can see, like, okay, these are properties that were purchased. These are on market and this is a price. So we have like, a sort of, like a database of us. We can see like, okay, surrounding area. This is, this is a pricing. Once you do that, you have a map once, anytime a new property comes into the market that's available, you're you can see like, okay, I have like, five properties in the vicinity within three to five miles that I can compare it to.
Nancy Kitti
And the next one is, you actually have to have a great network, meaning that if you have friends who's buying in that area, like, for example, when we were buying our Houston property, like one of our partner actually bought a property, like,
Palmy Kitti
Across the street.
Nancy Kitti
Across the street, so we have all the data. So as he was reviewing our underwriting, he's like, oh my god, this is your projection, but we're already achieving it right now. So this is totally conservative. So our tip would be like, either you partner with someone, or you actually walk the whole tour of the area, or you actually have friends who's buying, who's buying in that area or owning it.
Palmy Kitti
Yeah.
Brilliant. So it sounds like, understand your Buy Box, build out a grid, really understand sourcing the deals, but those tactical strategies are phenomenal. So you know, it sounds like you said, we got friends in different areas, and all that you mentioned that this the second area of those five components of a good, winning start in real estate. Second one was relationships, I wonder if you could unpack that a little bit, because you're kind of dancing on it anyways. Let's really open this one up. How important has relationships been, and relationships with who?
Palmy Kitti
Yeah, so this is actually the relationship with a whole bunch of different players, like in multifamily, where not only we don't have just partners as general partners in our deal, but we work with a lot of vendors that we have to trust. It starts out with a broker. In multifamily, we have one broker on both the buy and sell side, so therefore that one person technically represents the seller, but also we're negotiating through mostly him. There's a free woman, but mostly him. So I'm just gonna say, like we negotiate through him, the other, the other, very important, is a property management company.
Nancy Kitti
Really important, because they're doing day to day operation, right? So while we're living hundreds of miles, 1000s miles away, they're the people who actually have to go to the property and report to us on a weekly basis, like, hey.
Palmy Kitti
Are we managing it, right?
Nancy Kitti
Yeah. Are we hitting our protection? Are we doing what we target to do our business plan?
Palmy Kitti
Yeah. So, SEC, attorney, real estate attorneys. SEC, like real estate attorney, as we're negotiating the purchase and sell agreement with the seller. It's not boilerplate, like single family homes. It's very complicated, and you need someone that you can trust. This is a this is a lesson. So one of the property renegotiated a purchase right, right during covid, at the beginning of covid, and we thought we were smart, and we had a clause in there that says, like, hey, if we get a we get, I don't remember the specific but basically, we thought we had an out at some point, and then our attorney reviewed it, and then that day came about, hey, do we still have an out because of covid? And then we learned, like, oh, we know it was not there, like, they gave us something that looked nice, but it turns out that attorney, like, totally outsmarted ours. So, like, that's that, that we don't use that SEC attorney anymore. Our real estate, it was a combined but basically we don't use that firm anymore. Um, so those kind of stuff happens on the SEC side, obviously, like, the um, our business is highly regulated, so we have to make sure that the paperwork, the operating agreement, the subscription, the subscription document, are really solid and keeps everyone safe.
Nancy Kitti
So in like, the insurance, the water conservation, like all of these are like partners that we work with to to put together a deal.
Palmy Kitti
But like, the most important one to circle back to your original point is the broker relationship. We say this all the time, multifamily, it's an unfair business. It's unfair because just because you have money, doesn't, and you're new to the area, they don't know who you are. The brokers aren't going to take your offer seriously, because if we came in, they know we've executed several times on substantial deals. They know that we don't. We don't ask for it's called retra, but we don't ask for credits. We don't extend deals, we don't make it difficult to close, they're going to be more likely to advise their seller, like, hey, go with them. And the story here is, like, we started out our first property that Nancy said in Houston, we didn't have the relationship with a broker. We have a good friend who's bought close to probably almost a billion dollars worth of property in Houston. He's very big down there. So I called him up and I said, hey, do you know this broker? And he said, yeah, we're really good friends. Is that, can you put in a good word for me? And he said, yep, I'm gonna give you street cred. I'm gonna give The Kitti Sisters street cred. And then, like, he called him up, and he's like, hey, they're serious buyers. And at that point that property, we bought it, we ended up buying for 68 million. Prior to that, our highest was 40.5 so the big jump, big jump in terms of raised big jumps turn dollar. But he gave us the transfer of authority and, like, the trust that, like, hey, we're gonna be able to do this. We close on that property. Then we went out and we bought another property, if I'm the same brokerage in Arkansas that became 77 million. So now the Houston broker gave a call to the broker in Arkansas, same thing, hey, they just closed on this deal.
Nancy Kitti
They just raised 34 million on this deal. And this is a $38 million raise. It's just 4 million more. They can do it. And we're like, yes, we can. And that was just like, three or four months prior to us closing down that deal.
Palmy Kitti
Yeah.
Brilliant. So it sounds like when you have reputation, relationships and results, the 3Rs that we follow on this thing, you've you were able to not only leverage your reputation and your relationship. So you had a reputation that was extended through your relationships to say, hey, the real players are not going to waste your time. They're great operators, which is code for great asset managers, which I know is the third thing that you mentioned for having a very good start, is to say, be a great asset manager, not only in the fact that your numbers line up and all the accounting stuff that happens. And, yeah, that's important, but I think more importantly, you mentioned the word street cred and so being a great asset manager is more than just managing the asset well, it's being known for managing assets. Well, that's important and so you were not only good at managing assets, but you were also known for it. And because you were known for it, that opened up more opportunities which took you from that one deal and allow you to jump from, I think you said 40, yeah, 40 to 64, something like that.
Nancy Kitti
68
Exactly. So you can see that, although the numbers were big, what most people and this is the part I don't want to skip, is that, for those of you who are listening to the sound of our voices, the thing that, from my perspective, you keep me honest, but the thing that allowed you to cross that bridge to the next level, because in this game, it's just nothing but infinite levels. There's just new levels to as far as you can go and so bridging each level and disagree or agree with me, but what I've found in my career, and I think you'll agree, is every time I've moved to the next level, it has been through at least one of the 3Rs, reputation, relationships or my results have allowed me to enter the next level. Have you found the same?
Nancy Kitti
Yes, definitely, Ryan, and for those of you who just start in this multifamily journey, don't be scared like and don't think it's impossible, because you don't have to be great at everything. And it goes back to ones that are, which is relationship, and you just have to learn how to add value to the team, right? There's five bucket that Palmy is going to go over with, or she, you kind of briefly mentioned. And then if you learn how to add value to the team, like with one of those value with those, you know, asset that they need, that's how you're going to jump start your journey. Like you, you don't even have to start with, like, a $1 million property you if you learn what the $40 million people want, and you can serve them and you can help them, then that's the way you can, you know, be on part of their team.
Palmy Kitti
I think, like, that's the right point. Like, as a beginner, you may think, oh, well, Palmy, Nancy has a reputation, they have the relationship. They have results. How can I be that? Day one? Well, day one, we had nothing, right? We came from the fashion world, but what we did was, because it's a real we're never the solo GP on any deal. We always have people who's who, who's in these deals with us. At the very beginning, they were like the senior partners, and we piggyback off of their relationship. We piggyback off of their reputation and their results, so that we borrowed those credibility and we were very honest with the people we're raising money from. We're new to multifamily, we're not new to business and so there's a lot of transferable skills. So people who are either like, you're an employee, you have skills, man, you're you have a lot of skills. Don't discredit that, bring that to the forefront. Let people but more importantly, hey, my partner has been doing this for 10 years. We have these kind of results. When I'm not doing this by myself, it'd be ludicrous, too. So know that, like the 3R's, and I love that when, when you mentioned that, and I told Nancy about it immediately, like those 3Rs carries over to any business. If you can do that, you'll be fine.
Yep, those are the, literally, the, this is what I teach. I have a course in fundraise capital.co, but many other things, of is, those of you followed, know, I've helped over 2000 people launch their own funds, we've done a lot of things. And this isn't me beating on my chest, I'm just saying a lot of you probably heard this before, which is those 3R's. And what we say is, although reputation, relationships and results are good and then rhyme and all this stuff, the important thing is, is you have to see them as an asset. And I remember in my early, early days, just learning about finance, before I even went to school for it, as I would read it from Robert Kiyosaki, right. Very, a lot of people know who this guy is, and I remember him just saying, very simply, an asset is something that puts money in your pocket. So if you see reputation, relationships and results as an asset, how are you managing those assets, if they are literally the most valuable assets in your possession, how are you leveraging those to put money in your pocket, in a safe, ethical and in a way that you can look at yourself in the mirror and maybe your spouse and your spouse and your children as well, but making sure that you manage reputation relationships and results, I would say, also might even tie, it might be a stretch, but it might tie into being a good asset manager. So that's number one, two and three, what about four and five?
Palmy Kitti
Yeah, capital raising, right?
Nancy Kitti
So that's exactly when we first got started. We quickly realized that the number one skill that experience team wanted was to the ability to bring money to them, right? But ability to help them close the deal. And that's why we feel like capital raising is kind of like an on is a quickest path to onboard to become part of the experience team.
Palmy Kitti
Yeah, like when we first started, we talked about it. We couldn't underwrite for anything like we try, and it was even if I can punch in the numbers. I don't know if they're correct. I don't I wouldn't trust myself with millions of dollars worth of deals. It's not like a little to $200,000 duplex or something, right? We're dealing with big money. So I none of those things like, I don't know how to asset manage. I don't have the relationship with anyone, no one.
Nancy Kitti
We don't live nearby.
Palmy Kitti
No one knew that, but what we knew was, and at least we felt, we live in California, we live in LA, we're like, we know we can get this right. So it wasn't easy. We didn't do it correctly at all, but we just, we did discover that it opened so many doors when you started telling people that, hey, I can, I can be the person that can raise money. People want tell me more. Because keep in mind, when we first started 2018 and then 19, we bought. The price of the properties kept escalating, like when I first started, we were buying we were hearing our peers buying things like 6, 7 8 million that was a lot. And to fast forward to today, where we're buying something that's like almost 100 million and it's leveraged at 50 something percent, that's almost buying like 100 plus million dollar property. So
Nancy Kitti
in a good time,
Palmy Kitti
In five years, has happened, so the need for capital is only going to escalate. Prices are coming down in the long term.
Nancy Kitti
And I think when, when people first get started, they want to do something that they can control, and they think that underwriting is something that, hey, I just, you know, have some deals to start underwriting and punching a number that's something I can control, versus, like them talking to other human and making that connection, because they're like, oh, no, I don't want to ask them for money, but for but we all know that raising capital is not about asking people for money, it's actually we're in a position to help them grow their wealth. So it's not like we're begging for their money.
Yeah, it's almost like, in some people might agree, they might disagree, but one, one perspective of this is it's almost like a job interview, but not exactly that much of a power difference in the thing. But what I mean by that is you're essentially, when you're pitching investors, a lot of the time, you're you're mentioning them to say, look, you've got a problem. I can make this problem very simple and solve it for you easily, so you don't even have to worry about and by the way, when I saw the problem, you're going to make a lot of money, and I might make some on the side as well. But the important thing is, is you have an issue, whether it's you don't have enough money, or you're having a hard time growing it, whatever that might be. So you're offering solutions that are not complex, I mean, they're at least how you present it, it's very simply explained. Now, I find that a lot of people when it comes to raising capital, this is something I'm known for, but when it comes to raising capital, I know a lot of people who are starting out are they always tell me that they asked me this question, Ryan, like this is literally my first deal. For those who are at that phase, when I talk to them, that's not many. I usually deal with people a little further along, like yourselves, but for people who are starting out, I see you out there, you're I know you're out there, you're listening to the show, but so I really want to address them, and we've all been there. They say, are people, are investors really gonna take me serious if I really don't have a big track record, if I had never done a deal before? And I was like, everybody that's a billionaire did their first deal, so yeah, you're gonna be okay, but I mean, that's just placating them. The real, what they're asking for is strategy. So I obviously have an answer to this, but I'm curious, from your perspective, what have you found that really helps you get credibility with investors when maybe you don't quite have it at the level you had hoped? What, like a beginner, what have you found that has helped to add credibility when in your early days, if you can remember that?
Nancy Kitti
Yeah, well, first of all, I think like when, when we're trying to solve people away from I take like, we're not leading them to a pleasure, but we're actually getting away from the pain.
Palmy Kitti
Helping them, move, remove, moving away from pain. So there's this book basically, it talks about, like, people, if you're leading them towards pleasure, they're going to want to see your credentials, all these things about, like, who you are, but when you're leading them away from pain, they don't hear how big your company is.
Nancy Kitti
And there's a story to this, like, if you're...
Palmy Kitti
so here's a story, okay, um, Ryan, you're, you're at Staples Center, right? You were like, excited the Lakers are playing. You're like, oh my gosh, we're ready go. So you're chatting on your phone, and you're just walking you see a guy in the corner, and he's like, I have some money. Like, I have $100 and you're like, who wants it? Who wants it, right? You're like, okay, so it's a couple thoughts come to your mind. You are like, first of all, why would you be giving you 100 Second, are you trying to kidnap me? Are you like, trying to, like, skim my credit card or something, like, something is iffy, right? Like, this guy, I'm not gonna be here and you're texting. You're like, hey buddy, where are you? You ran bam, into pole. Blood's not falling on your face. You can't see. You're like, oh, what's happening? Delirious. This dude runs over and says, here's my dirty snot rag. Let me use this off your bleeding. Are you gonna take it?
Of course.
Palmy Kitti
Most likely because you're like, he's like, I don't have a phone. Do you have a phone? Like, give me your phone. I'm gonna call 911 for you.
Nancy Kitti
So you, you give your phone, you give your password.
Palmy Kitti
You take it, and that's like, and that's the point when you're in pain. You don't care, you don't you don't stop to ask what the person like, what their credentials, who they are, as much because you're burning, you're burning up inside right now and like for us, because we realize that capital raising is a human relationship. It's, we love automation, we love CRMs, but it's a human business. So you have to understand that person's pain and obsess over their pain more than they know, more than they've thought about. And so if you can articulate their pain, they will be automatic. They will gain, you will gain automatic credibility with them. And so that's like the starting point.
I love that, that is so good, they will not check you on your cred, or they're they might, but they're not as concerned about it because you've pivoted away from, oh, we're gonna make his money, and you're gonna be billionaire driving Rolls Royces and all that. They're just saying, look, you got a serious problem, and unless you change, you might get wiped out. And they're like, wait what, tell me more.
Nancy Kitti
A lot of time. Like, when we raise capital, we don't go to them, we actually get them to raise their hand and said, I want to invest with you. How can I hear more? I want more information and that's why, like, they don't ask us for credential. They actually want to invest with us, because we have done a great job at helping them, being the person that they know, that they can trust that we can lead them away from their pain.
Palmy Kitti
So, like,
That's brilliant.
Palmy Kitti
we're not saying to be inauthentic. Like, the most important thing is day one, you have to be authentic. If you're new, you're new. You have to tell them, like, like, like we said, like when we first started, we're new, but you, then you leverage your partner's reputation and results, but you can all but you, but if you, but if you can articulate their pain ahead of time, have them raise their hand and say, Hey, can you tell me more what your doing? It's so much easier that conversation becomes now that the interview is, I'm, I'm hiring you. I'm not, you're not hiring me. And so when we go on a phone call, because we do 506 B, which is basically we have to have a pre existing relationship before we make an offer, we hop on a call and we tell them ahead of time. Look, the purpose of this call is to help you understand for potentially, like multifamily, if this is the right vehicle for you. If it's not, we'll let you know if it is. Listen, let's see if it makes sense for both of us, because we also are very selective of who we let in our deals. And we've told people like we don't have a like, a specific blacklist, but in our minds, we definitely have people who are not interested.
You're spot on. Often, you talked about maybe leaning on the credibility of your partners and so often, a strategy if you're not quite there yet, what a lot of people do who are effective. And we talked about moving to the next level, and they do it quickly, especially if your next level is literally the level 2, is you get a board of advisors, or, whether it's formal, or they're your partners, or board of advisors, is there some way affiliated with the fund. Because often, when you're pitching investors, what I found, and maybe found something different, since we're talking about raising capital. And often when they be like, oh, I don't know who this Ryan Miller guy is, I've never heard of him, but he's got Ray Dalio, Ken Griffin, Warren Buffett and Joe Rogan and I don't know Jocko Willink, I don't know anybody. I know who all those guys are, I mean, look at the eyeballs that are on this deal, like I'd be an idiot to pass on it. So, that's a very effective strategy, and some people do it for free because they're retired and they're just, they're at that phase where they're like, I don't need the money. I'm just happy to help the young, the next generation, but getting an advisory board is another way that you can lend or borrow, rent the credibility of somebody else, just to prime the pump to get you started, as you're also building your own reputation relationships. So that's number one, is the optics. But also number two, those people are going to guide you, and there's never a more important time to get some guidance than in the beginning, when you're raising capital. So anything else you can add to that before we move on.
Palmy Kitti
You, those are that's actually really great and I noticed that as well as we ourselves are scaling up, we're always people who are always wanting to learn more, and so therefore, just that already, I already embedded my head. Okay.
Nancy Kitti
I think like as entrepreneurs, we always like solve. Once we find a solution to one thing, we run into a next problem, and it was always continuous learning. And that's why we love this game so much because it keep us moving along. It's not like, you know? It's never like, about making money. It's about making impact for us, right? And income just follow impact.
Yeah, absolutely and I firmly believe you do not have to give up income to make an impact, or you don't have to give up your purpose to make a profit. Absolutely, those two can coexist, they do coexist, and more so now than ever, and I couldn't be more happy to show that this next wave I would consider us in that next wave of investors in the economy, is we're saying, like, hey, um, yeah, obviously, make money. We need profit, that's what keeps us around, that's allows us to hire people and create opportunities. But I'm more interested in doing it in the right way, where I'm like, I can, like, really, really feel good, not just about the money, sure, that feels good for bed. It's but can be fleeting, but really feel good about the impact that all of that work that went in to be, even if it's like the most beautiful property you've created, but you're saying, look at the difference before I came into this neighborhood, to after or before I helped the startup, to after or before I did this hedge fund, versus after. Look at the impact I'm making, look at the people that I'm affecting. It is literally the greatest feeling, and that is why I do what I do, and I'm sure it is for you as well. So that being said, I know we're saying how to get a winning start. What would be number five?
Palmy Kitti
Yeah. So when we buy these large properties, the biggest player in the capital stack is the lender. So right now, leverage is probably around 65% when we bought the $77 million deal, I think our leverage was like 50 something percent, almost 50 so the deal had a really pencil, right? If you're gonna do such a low leverage, so the raise is higher, but also the amount of money you're borrowing is still high. So the loan on that was 44 million. So the largest partner in the loan is the lender. The lender, depending on who they are, will require net worth and liquidity. So net worth is typically the amount of the loan, liquidity is 10% of the borrow amount when you're first starting a lot of time, obviously, that's not a small amount. Sometimes, like, if you're new, you may almost like the board of advisor thing, right? And so basically, you invite someone more seasoned, maybe they're semi retired and they're want to help the next gen. Hey, would you mind coming on board as a GP? We'll give you a split, but you don't have to really do anything. You may advise us from time to time you run an issue, but primarily we're borrowing your balance sheet, your balance sheet, meaning your personal net worth and liquidity. That when they're doing their due diligence, the lender is doing their due diligence, and we're like, okay, check they have enough.
Brilliant. So bringing on that, the balance sheet partner and and, in fact, there are, there are some lending products I had to show about that a couple months ago where that was one of the products if, if you don't have, he was a private lender, but there was a product where they were able to offer, basically had billionaires that they would lend their balance sheet to the deal, and they would just get cut in. I was like, oh my gosh. Like, when you say it, you're like, how is this not more obvious? But that is a big problem, and that's as entrepreneurs, that's what we do, is we solve problems. And so by providing that, that balance sheet, or some assets that you can lever against or lever with, is absolutely key in raising capital. You got to get that capital stack right like you said, if you don't, the deals are really you got to have a real sharp pencil to make some of these deals work. But if you got unlimited funding, both debt and equity, there's no limit to what you can do. I absolutely love that.
Nancy Kitti
A lot of these people, like the people who come with the balance sheet, they actually wants to be in multifamily or in the game. They just don't have the time, the energy, the know how. But they know that they want to put their money, they want to make money. They love the idea of making money, right? So for them, they're like, oh, I want to have someone who actually worked for me.
Palmy Kitti
It's almost like a passive, active investor.
Nancy Kitti
Yeah. And they're, you know, and they're on cause they're still participating, but they're more of a, like, more of like, advising, more than doing a day to day activities.
Brilliant. Just getting early points on the board, those top five categories are absolutely brilliant. Thank you for that. But you know, as well as I do, upside is just half of the game. The other part is, you got to cover your downside a little bit. And especially if you're a beginner, there's a lot of blind spots and you don't know about them. That's why we call them blind spots, because you can't see them. But we're all here to help you, help expose a little bit. So from your experience, what are some of those pitfalls that you can avoid in the early days. What would you say?
Palmy Kitti
Yeah, okay, so the first one is being overly optimistic about your, your income and your expenses, because sometimes you think like, I can keep raising rents, but you're not. You're not pulling data on the sub markets. What are rent growth numbers looking like? So we always get supporting third party data just to validate what we think rent growth can be. So it's either CoStar, Yardi, there's a couple of different providers. It costs, like $1,000 per month subscription or something. If you're new, you don't have to subscribe. You your broker, your mortgage broker, your or even your teammate, your lawyer or your teammate, someone typically has access to it. So don't feel the pressure to go subscribe to something that expensive, but definitely use those data to validate again, the when I talked at the beginning about scouting the area, doing the grid, part of that is punching in these financials from all these properties. So now not you may not be buying it, but you now know like property A, B and C, these are their financial, this is a rent growth. So you can compare against like, use historical data to compare it against what you think your performer can be. So that's the first one. So like, as far as underwriting, make sure you can validate.
Palmy Kitti
Also check with the property management company. If you're going to hire a property management company, they need to confirm that, hey, I feel like you're in line. You're not too aggressive and the property management company should be someone that is local to that sub market, not market so specific area of Scottsdale. So I'm not like, hey, Phoenix Metro. I want that specific locale, because I need them to be managing assets in that neighborhood, in that specific asset class. So if I'm buying a class 2000 or brown, brand new construction, I need to have a property management company that are experienced with that product. So check with them, make sure it's valid. On the under, the other part is, we always do sensitivity tests to check for downside against historical worst case scenarios. And this could be macro historic, like worst case scenario interest rates, or it could be property specific, if we have that data so things like, what is the worst economic vacancy that this property can support to break even for these type of products, the banks consider debt service, debt service covered ratio of 1.25, so $1 goes to the bank, we need to have 25 cents in our pocket. So that's like a safe number or higher. So you just run your data, you run your underwriting, and you push that number as high as possible to see how, how close you can get to 1%, 1.0 DSCR, so if economic and see on most of our property is like 50% meaning if 50 percent, meaning if 50% of the people stop paying rent, they live there, but they stop paying rent, will still break even, or if we stop raising rents, increase expenses to like, what extent are we are we still fine? So, like, we always run those data, and those are also part of the reason why people are comfortable investing in our deals, because they always tell us, like, Palmy I love that you have these worst case. What is the cap rate? Today's when we buy some probably, maybe the cap rate was 3% what if we are wrong, what if it expands? Like, what happens if cap rate is four, it's five, it's six. How? How are you preserving my wealth? And a lot of time, it will go from like, 2x return, it may go down to 1.4 and if I'm being, if I'm being, talking too much jargon, I know, you know, but like, I don't know.
I'm following you.
Palmy Kitti
Okay, so basically, like, if you're doing, like, a one, 1.4x multiple, in the worst case scenario, most people, because everyone, I think, like, fundamentally, yes, we want to make money, but fundamentally, we don't want to lose money. Wealth Preservation is key. So if I say, do you think, what's the chances of this property being a class going to jump to 7% cap rate in five years. Scenario is not likely, but even then, you'll still exit out of one/four, meaning you put in $100,000 you get out 140,000 you still feel safe. Nothing's guaranteed, and we always say that, but those are the scenarios that we always run with with our investors.
Nancy Kitti
Um, I think we're in the business of actually helping them, like, de risk their investments and I think that's really critical for us. When we present a deal, we don't talk about the features of benefit, like, oh, yeah, you're good. This is the projection you're going to make. Like, we've kind of mentioned it, but the key here is to mention, how can we help de risk your investment? Like, what are the ways that we're doing?
Palmy Kitti
Yeah, and that also goes to the asset management part, which is critically important. When we first started, the properties were just rents were just jumping 10, 15, 20% annualized, like Phoenix was 20 plus percent for several years in a row. That's not the case today operational excellence is so important. So if we can emphasize the the our ability to manage these assets, well, it can give them peace of mind, because people like maybe in Wall Street, maybe in commodities, things are the same. You can buy corn from, you buy corn, it's corn, right? It's a commodity. Multi family, it's not a commodity business. There's three risks, there's asset class risk, there's the property risk, and there's the operator's risk. So if you believe multi family is a safe asset, that checks one off, if you believe A class is a safer alternative than A & B or C & B, then that's a nice thing. But more importantly, it's a jockey who's going to manage this thing for you, right? So if you have, if you have those utmost trust in this person, you're gonna you're the other two things are things that are solvable. You can have two identical properties, and one person who pays attention, who actually knows how to manage this, knows when things are like, when things are going well, no, no problem. What about the problems every single day there's challenges that comes up. How do we solve for it? That's the that's the key.
Brilliant. Now, I know you mentioned about getting the right assets as part of your risk management, of covering your downside. Now, I know you guys, for the most part, do a class A, but it wasn't always that way. Maybe you can walk us through a little bit of, why did you make the switch and why is Class A the right asset, in your opinion? Maybe walk us through that whole evolution.
Nancy Kitti
I think when we first got started, Class A was really out of reach, because Class A means bigger dollars, bigger raise. So for us, we were kind of introduced to Class C because we're like, oh, this is,
Palmy Kitti
A $6 million purchase, verses 20. And also, like, at that time, cap rate wasn't as compressed, yes, so there's value to buy C versus a, but as cap rates are compressing, it's almost the same cost per unit. So why would you not go automatically to the better asset also? And this is no knock on gurus who teach apartment investing. I think they they're saying something that the new people want to hear. Go buy C Class assets, it's value add, you can see a simple picture. You think about transferring from single family flips all these the the dirtiest, the ugliest house on the property, and it's full you can you can imagine that, right? It's easy to teach, but it's not the truth. It is it is not like in my opinion, today, that is not the case. I just talked to my friend who's like, entrenched in C and he's basically trying to get out of the business. It's like, horrible when we got into our C property, the property we bought right after covid, right during covid, almost immediately, the property manager's car got burnt on site, like she emailed and she said, my car got burned. We actually had to buy her new car because he felt bad. Then she got threatened that people wanted to beat her up. So we had to, like, make like, we had to build box so people can drop checks without coming inside.
Nancy Kitti
Then we had to get her a security guard.
Palmy Kitti
Then we gotta get her armed security guard, because people were in Texas, so you're not allowed to have firearms on property, but people have guns, so we actually had an armed security guard walk with her when they needed, when they need it, when she'd need to serve, like, eviction notices and stuff like that. We had a higher of patrol. Like, our expenses went to, like patrol. I think it was like 4 or $5,000 per month just to have someone drive there at night, that time we were able to increase rents. Today with high inflation, with higher interest, with a lot more purchasing power, pressure on, like grocery, gas, credit card bills. Those people in the C class are workforce housing, they're like minimum wage worker. They work retail, they can't afford rent increases. So for us, if our business plan is so simple as increased income, reduce expense, inflation has increased expenses, we can't push up income.
Nancy Kitti
So they can't afford to pay us.
Palmy Kitti
What we need to make this property profitable for an exit, then that's worthless. On contrast with our A class property, which is, I feel like right now, our A class in Arkansas is our crown jewel. It's like a a plus class that one since 2021 since the seller built it. It was from the developer. They only had one eviction, including our time there as well. We have about 99% on time payment. It's in the right market that's growing substantially. We have, like, 180,000 median income in the neighborhood, billionaires literally live next door. The seller, who's a billionaire, she lives basically in the community, right behind our building. So, like, those are some of the things that help really so the asset itself is important in that case, like, you know,
Nancy Kitti
Yes.
Palmy Kitti
That's why we avoided C,
Nancy Kitti
Yes and as we move up from C to A, we realize, like we pump just mentioned, is that the tenant profile is totally different, the affordability is totally different, and then the ability for us to achieve our business plan is totally different. A lot of our investors who's like, what? How can I like, how can you help me make money in a class they don't understand. It's like, wait, it's brand new. There's nothing to value at it's actually because they they don't know.
Palmy Kitti
So there's a couple of things that are easy value add in in multiple a class. The first one is it could still be under market rent. So keep in mind, like, when we bought this property from the developer, their key was to get it occupied, right, and so they may have not pushed rents to the maximum because they just wanted to fill out the units and then refine to like like agency or sell to us, right? Because we want 90% want 90% plus occupancy. Or the other thing is, in our case, that market was growing organically at like, 13% when we're buying year over year, because of the market today, even when things are slowed down. I just, we just had the meeting with our our property management team. It's a 5% year over year organically. And on top of that, this specific scenario you look for value add where, like, we had 18 retail triple net leases that's on the bottom floor of our apartment complex. When we bought it, we had about four units occupied. So we had 14 that were vacant. Right now, we have all the units leased up, or have allies for them. We basically, Ryan increased our property's value by $20 million.
Wow, that's a good day.
Palmy Kitti
Just in a couple months, nine months from January till now, because we had to switch brokers, or eight months we had to switch brokers in between. But basically during that eight months, the value just increased by 20 million.
Wow. Good for you, I could see why you are The Kitti Sisters, the famous, uh, legendary investors, and why they come to. But in all seriousness, why investors even come to you is because it's you've got reputation relationships, and with 20 million in eight months, you got results. So you can see how you just start spilling this up, this is amazing. Thank you for talking about how to get some early points on the board, how to reduce risk. Now the other, the other area, which does tie into both upside and downside, is the ultimate market. So I'm just curious, maybe you can walk us through and our listeners around the world, what are you seeing in the market, and then maybe we'll jump into where you think the smart money's going. But what are you seeing out there?
Palmy Kitti
Yeah, originally I had expected more foreclosures to be honest, I thought there would be a whole bunch of like fire sale, and I was really looking for it. Okay, so I want to clarify, I'm not happy that the investor you know, on that, are existing on that deal? Lose money, of course, but if it's already foreclosed and someone needs to take over the property, I think, like it's an opportunity in the market. So two separate things, right? So I'm not like wishing people to lose money, but I had felt like he, it was we were the property value dropped about 20% from 2020s peak and it wasn't because of the fundamentals. It wasn't because of the property's operations was bad. It was because of the interest rate, primarily interest rate we saw when we bought one of our property it jumped from 3.2, 3.35% to about 8.6% in two years. So the debt service is skyrocketed, right? So it sucked away any cash flow on the property. That means that when we're trying to go out to sell, we can't sell for the price we expect, because our NOI, our net operating income is lower, and their interest rates higher, so the buyer, they can't buy.
Nancy Kitti
They can't afford it
Palmy Kitti
At price that we need to sell it for to make a profit, I don't think that's the case anymore. I think that it's a great opportunity to start buying multifamily right now, residential properties in the United States is still at a shortage of, like, millions of units. And because of the high interest rate, construction alone is actually paused or halt. And that means that in 2025, 26, 27 things that were in the pipeline to come online will not be online. And that means, like, for the stuff that are online, or the new things that we're building, like we have 118 town homes that will start coming online June of 2025 because we, because we didn't have debt on it, we just had equity to do the construction. That's going to be stuff that people are going to gravitate to, and the other stuff will come way later. So supply, demand and balance, there's a lot of affordability issue, home prices. Unfortunately, people think, hey, mortgage rate drops. When mortgage rate drops, I'm going to be able to, like, buy a home. It's not true, because there's a whole bunch of pent up demand for properties purchases. It's only gonna go up in price. And so unfortunately, the United States will become a nation of renters, and it's up to people like us to provide those affordable homes that are in good quality, not slumlords. And so to turn that, that scenario into like, hey, what's the best case for you? Then, okay, let's build these BTR build direct communities, these townhomes, so that you can have, like, a place that feels like your own home without having the burden of a massive mortgage.
Nancy Kitti
And the fact that we're building a community, we actually go out there and ask the third party property managing team, like, what do the tenant likes? Like, what kind of amenities do they want? So we actually built based on their desire, like, you know, for the most part, because we were building exactly what they want so they're willing to pay us premium to rent it.
Palmy Kitti
Stuff like pickleball courts, EV outlets in the garage, dog grooming stations, a massive pond, like this kind of stuff that you feel like is a community, kind of.
That's brilliant. And so what cities are you seeing right now that are some of the hottest cities right now?
Palmy Kitti
So right now, based on, like, basically, when we buy we're looking at cities that have a really diverse economic base. We see that cities have, like, a net migration into the area, have well paying job, like white collar jobs. So for instance, the city that we're building, the town home, it's north of Dallas. So it's like the highest growth area in North Texas right now and part of that is because the PGA Tour moved their headquarters there. Universal Studios is building there, Toyota has a plant there. There's a whole bunch of Cowboys, the Cowboys,
Nancy Kitti
Texas Instruments.
Palmy Kitti
Texas Instruments, there are the Cowboys have a practice facility there. So you have to see what is in the surrounding area and you we have to also forecast. So we're forecasting that this is a path of progress. And so like that kind of market, if you can research that, you will be you'll be fine. And, um, the real estate market doesn't move as fast as like the stock market, so what it takes time to build out, so you're gonna be safe with a lot of information that's out there. I would say Dallas, some North Dallas, north of Dallas would still be really good, Houston's really good, Atlanta is really good. The Carolinas very strong. Florida is amazing, except for insurance, and it's starting to come down. So if you can handle the Insurance piece, Florida is a phenomenal market, a lot of net migration to the area Orlando. Tampa was had the highest ranked world for like several years. Phoenix is a little bit overpriced, but it may come down. So if you were looking to Phoenix, I would say, look at Tucson, Arizona, which is a couple hours south of there. So those are some of the markets, I think, like in general, like MSAs, that are still phenomenal. Do not invest in non landlord friendly states. So this is California. Don't do that.
Nancy Kitti
Washington.
Palmy Kitti
Washington, Illinois, New York. Very, very blue states, are going to be really difficult, and we're pro we're pro tenants, but we're pro tenants who pay rent, because this is a we we are a small business, right? We're not the government. We can't subsidize people's housing, so we have to make sure, like, if you sign on a contract that you're going to rent something and you're you agree to the terms, you agree to pay us $1,000 a month for the next 12 months, unless there's a really justifiable reason, you better be paying that, and that means, like, we'll work with you, we'll find so, we'll find resources for you, but if you don't pay and you're playing games, we have to have a way to evict you.
Nancy Kitti
Yes, because we have our duty to our investors, right? Like we are managing their money, so we have to look out for the interest as well.
Right. Because that can harm your reputation and your relationships and obviously your results as well. So managing that you can see it always comes back to those three. And so you do have a duty to your investors who are trusting you, even even like, obviously there's legal and all that stuff, but just from a moral being a normal person, somebody gave you a lot of money, which was ultimately they gave you trust, right? You don't know how hard it was for them to earn that dollar, and just to hand that over is no small feat. And so we talked earlier about raising capital, but appreciating that is a lot of work to get it in your hands, and it was a lot of work for them to get it into theirs. And so when that trust is established, I know, and just talking to you, and I've gotten to know you girls for a while, you do take that as almost a sacred responsibility, that when investors trust you, it's trust. It's not just the capital, it's the trust that we're preserving. So good for you on doing that now, it's not enough just to know what's going on, but just this is not financial advice, folks, but just in your opinion, where do you think the market's going?
Palmy Kitti
I'm, we're in the buy mode, we just talked to our partner this morning, we're like, we're buying, and it's and it's not just multifamily. So we're, we're, what we're really, really bullish on is BTR, which is built to rent.
Nancy Kitti
Built to rent.
Palmy Kitti
If you, if you Google, anyone can Google right now, all the institutional investors are so bullish on it because they hadn't been in this is almost like today is like 2010 for multifamily. If anyone has been in multifamily for all, or have studied you saw the precipitous rise in prices, in valuation. We're we're right there with BTR, and the reasons are what we said, multi family itself, there's not as much community building. You're off on your own, but when you build a home for people, they're going to stay longer, you get better profile tenants, they're going to treat your property better. And that's where all the money is pouring in. If you go into any real estate conference right now, that's like the top of the town BTR. So if you can get into BTR, that's phenomenal. It does take more work because now you're stacking on development, which is a whole different level of skill sets. But again, you go raise capital, you go build your relationship with a team that already knows how to do development, you can, you can get into that as well. So that's the first one multifamily in the right area. The other thing that's kind of interesting is the triple net lease piece. I think in every portfolio, it's not sexy, but you get like, a 5 to 6% cash flow. That's pretty predictable. Imagine if you had a Starbucks as your tenant. Triple net lease means you don't pay property tax, you don't pay insurance, you don't pay for any maintenance, you pay for a little common area, but let's say almost all expenses are handled by the person who's leasing, the leasing so imagine it's Starbucks, every year they sign a 5%, a 10% increase in rent. So you close your eyes and your checks are coming in, right? It's five it's 5% it's not super sexy, but in any portfolio, in any healthy portfolio, you need a balance that you need stuff that are like,
Nancy Kitti
Cash flow.
Palmy Kitti
Cash flow,
Nancy Kitti
Wealth loading, tax saving.
Palmy Kitti
Yeah. So I would say, like, those are the three areas that are super, super amazing.
Nancy Kitti
Yes. And of course, as Tom said, our bread and butter is always multifamily apartments. We love buying something that is not built from scratch at the same time, because we like to buy into profit, right? Like, so part of our healthy portfolio, we want to have that.
Palmy Kitti
Yeah.
Brilliant. So we understand where the market's at, where it's going, how to get points on the board, how to avoid risk. Man, we've covered a lot of ground, but we're not done yet. The best part of the show, in my opinion, it's hard to pick a best. It's like picking your favorite kid. Not welcome to do it. We don't really do that, but it's hard to pick, but this one is very special to me. The last part of this show, I'd love to just ask you, you've you've clearly done a lot, and you've done a lot in five years. My goodness, just from your perspective, what are two or three unfair advantages that you can give to our listeners around the world? Now, not to put on any pressure, but we're in 100 countries around the world, 10s of 1000s of people every week tune into this show. What would you tell them to give them an unfair advantage so they know that you your time together was well spent? What would you say?
Palmy Kitti
Well, okay, first off, since it's 100 country, I'll say it in a couple countries, hello, ni hao ma, sawasdee kha, bonjour.
Yes.
Palmy Kitti
Yeah.
How's it going? Hey, that's how we say it in Canada.
Palmy Kitti
How's it going? So, okay, here's a, here's a, really, here's a key one. We think that leverage is the most important thing, because you can always make up and leverage what you lack in skills, right? You can always in your ability. So if you don't know something, if you need a right team member, go find that person, right? And we spoke about this even offline, about that helps so much more if you don't know if you can use some sort of tool. Can you some sort of CRM? Can you what tools can you use enhance your ability to not do one on one? Can we can become one to many, right? What are those tools? What are the time what are time saving tactics that we can use? What are the tax saving tactics that we can use here? Are there debt structures that we can leverage, like all these five levels of leverage? If you know how to leverage, if you know how to maximize all five levels, you can go really far, really fast, because you're not it's not dependent on your abilities.
Nancy Kitti
I think you mentioned it earlier, Ryan, the ability to find a deal and find capital you can reach those two you. It's like an infinite return for you, but at the same time, there's no ceiling, right? And a lot of people don't get into multifamily because they all, I need to have millions of dollars to buy these property myself, I don't have that, but that's actually not true. There's a lot of people who have millions of dollars that you don't have, and they're looking for people like you to put together deals, to operate the deal, because they want to live their life, right? So that's why it's so important to leverage, because you can leverage everything. And we think that the reason why we we came a little bit farther along the road is because we learned that leverage is the most important thing.
Okay? So leverage should figure out, just think in the terms of leverage, everything that you have, how do you leverage those great number one. Number two, what would be a second unfair advantage you can give to our listeners around the world?
Palmy Kitti
I think, like, clearly, like, pick, pick the okay, if your advantage in terms of profitability, right? So I would pick specifically the asset class that gives me the highest, highest reward, lowest risk profile. So basically, like for us, like what we the example we gave you, multifamily, the math is so amazing that NOI divided by cap rate is the value small, insignificant increases in NOI has a, like, a really massive impact. So if you want to grow up fast, you pick the asset class that you feel is one is safe. And I don't know enough about like NFTs or cryptos, who people can become like billionaires overnight. I'm not smart enough to do that, if you are good for you, but for me, I'm going to stick with the try and true that's been around for 1000s of years that people always need as long as there's humans on Earth will need shelter. So I would pick the asset class that can give you that unfair advantage that you know when you're raising money out there, you can ethically and confidently go and talk to people and know like, hey, this is a safe, tangible asset that you know is going to go up in value with inflation, or better than inflation. So some of those reasons, like, pick the right asset.
Nancy Kitti
And I think the third one is be in the room, because, like, you can only do so much if you're just on your own, and entrepreneurship is really a lonely journey if you are not in the right room. And then when you're in the right room, you get to there's so many doors open, right? Just through conversations, just through learning, and it's never ending education, right? You always like, like we mentioned earlier, like we are solving, like, once you get one solution, we always solving for the next one. So once you're within the right room, when your network with the people who are in the same journey, or just a little bit ahead of your journey, you will go so far. Because whatever you think that is, like, so small. But you see people are doing big things, like 10x 1000 time x, or whatever you're gonna see, like, oh my God, like they're just the four minute mile. Like, if they can do it, I can do it. And that is so important to be in the right room.
I love that. You know, it's often we say, I tell a lot of people again, if you ask for advice, sometimes I'm known for giving you advice you didn't ask for, but one of the things is about getting in the right room, that this is really good advice. But if I can just add it to that, add my candle to your bonfire, I would say that it's one thing to get in the room, but it's an entirely different thing to be remembered that you were even there. And so right, like I remember, and maybe you made these, I don't know if it's a mistake, but maybe you didn't appreciate that second piece of advice. And I know you know this, no one gets a 300 million AUM without some people remembering and knowing the name, but like, getting in that right room is sometimes it's a challenge, because if it's too easy, it's probably not the right room, right, they take anybody, but you want to be in the room where it's a little elite. And I was at a specific event in April in Cayman Islands, and met the Global Head of Blackrock. There was, like, heads of the SEC and just, you know, all great stuff and like, the country leader, I believe, was the prime minister or the president of Cayman Islands, was there. It was a lovely event, it was amazing, great. We got in, and it was hard to get in, but we really made sure as a team that people would be remembering that we were there. So one of our teammates just raised their hand, they're like, do you need a presenter? And they're like, actually, yeah, someone just canceled, so our whole team was represented. Yeah, exactly, so if you can get into those right rooms, but just make sure that that step number that's, that's the first half, the second half is like, oh, I, everybody took notice to The Kitti Sisters. Everybody took notice to Pentium Capital Partners or Invictus, or any fund or deal that you're doing, people really need to remember and be like, how was that there? Now I'm not saying turn it into a circus and do stupid gimmicks. That's not what any of us are saying. But what I'm saying is, don't just get in the room and take a few selfies and post it on Instagram. Really get there and manage your relationships, build your business, show people that you're someone who can unwind complexities and get results, anything you can add to that.
Palmy Kitti
No, that's, that's exactly what we did. So we bought a deal off market, so.
Nancy Kitti
That's what we're gonna say. It's about who, not how, right? And then, like, it's.
Palmy Kitti
It's more than that.
Nancy Kitti
It's actually, it's not like, who do you know? It's more important, who knows you right? And that's like, Palmy is gonna mention our off market deal.
Palmy Kitti
Yeah. So we bought an off market deal, not to bore you, but anyway, we're like, it's an off market deal. We didn't even know who the seller was at the time. Our broker called or texted me when we were in Kabul and said, hey, I need your resume. And I was like, what are you talking about? Okay? And he said, three hours ago, he's like, hey, we're making a blind offer. I mean, we don't know the we don't true the property, we don't see the financials, but we're just gonna guesstimate how much we're gonna buy. So we gave the blind offer, and then I found out who the seller or and then the seller were good friends, the same one that the Houston one, we didn't know it was him. And then, so basically, we got the deal done cheaper than his asking price by a bit, because we're like, hey, as The Kitti Sisters was like, we can't make it work. But then you keep it on this price. He's like, fine.
Nancy Kitti
It's a buddy system.
Palmy Kitti
It's like, 100k difference for him, it wasn't a big deal. And then,
Nancy Kitti
It was 100k.
Palmy Kitti
Was it 100k?
Nancy Kitti
Yeah?
Palmy Kitti
100k? Yeah, it was 100k so fast forward, a few weeks later, he was at a event. They other people, our colleagues, found out that we won the deal. They got a little bit jealous and said, how come, how can I win deals like that with you? How can I get that off market deals? And then he said, guys, this is a buddy's deal, and does this with The Kitti Sisters. And he literally said exactly what you said. This is a lesson, it's not about who you know, it's about who knows who. He knew us. He trusted us, and we exited that.
Nancy Kitti
We were in this we were in the room get yeah, literally in the same room, like exactly you said. We were in the room, and we were able to build relationship with him versus other people and then at the end he wants to make relationship with us.
Palmy Kitti
Yeah.
Nancy Kitti
And even till today, we're still talking. We're still, you know, he's one of my,
Palmy Kitti
He is our biggest mentor in multifamily today. You have any questions, any problems, you text him.
Nancy Kitti
Yes.
I love that. You know, it's, it's, I'll say a serious thing on that, in a funny way, horrible dad jokes, bear with me. But I remember there was, there's a good friend of mine, uh, originally a mentee, and she turned into a good friend, and she said we were all at the same event, and she was there with her husband, and he also became a good friend. And she was like, Ryan, I've never seen this, like these people are just flocking to you're surrounded. I was like, yeah, try going to the bathroom, gets a little weird at that moment. But in all seriousness, she's like Ryan and this is, this was always a saying that we always had is this was from her, not me. So she said, Ryan, you're like, the hot girl at the dance that everybody wants to dance with. So I was like, that could be a thing and so it's like, yeah, you should always try to be that, that hot girl at the dance that everyone's trying to get to. So when you achieve that, and you walk into a room, then you need no introduction. I'm not saying I'm anything special that way, but I'm just saying, in that moment, maybe I look cooler than I was. But the point is, is that you want to go in a room and people are like, oh, do you know who that is, yeah. And so you have that reputation because you've had, you spent a career that we talked about in the beginning of building an impact, you actually care about people. You care about your investors. You care about your reputation, their reputation is also safe with you. You care about your results and their results, and you care about the relationship, you do a lot of those things. And a lot of people are like, I can't wait to be with these people, I can't wait to do the deals, and that's why you have inbound deals. That's why I have inbound deals and investors coming to you. So before we wrap things up, final thoughts, anything else? Any ways people can connect with you or learn a little bit more about you? Anything at all?
Nancy Kitti
Yes. So if you're a business owner or a founder who's looking to turn your business profit into a lasting legacy through income producing asset like multifamily or new development, all you have to do is go to a1000xbetterinvestments.com, that's a1000xbetterinvestments.com or the other way is, if you're an experienced multifamily apartment investor, general partners who look who's looking to raise more money to fund your real estate deal, all you ought to do is go to jumpstartapartments.com, that's jumpstartapartments.com.
Awesome, I love that. So just to wrap up everything that we talked about, you know, just think how to leverage literally everything in your possession, that is how I started. I know we've shared Palmy you and I, we shared the battle, so all kings and queens have their scars and so I talked about the 08 time and how I literally had to hit the reset button. And I saw reputation, relationships and results, and I figured out how to leverage those so it's not just debt, it is that, but it's so much more than that. Is how can you use what you have, even if it's just a good name, how do you leverage that to get 10 times the result? That is the thinking that The Kitti Sisters have been encouraging you. So it definitely encourages on the Triple R. The second one was, pick the right assets, it does you no good trying to raise for offers nobody wants. So make sure that you understand your market, you understand your investors, and you mentioned structuring that offer, whether it's taxes and all that, we didn't even get into that, but saving 90 million in taxes, it's like, yeah, that's an offer people want. And so finally, get in the right room, but just make sure that you are remembered, that you are even there. You do these things, you too will be well in your way, in your pursuit of Making Billions.
Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better, and make sure to come back for our next episode where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.
