In this episode, Sujata Shyam shares her journey in real estate, from overcoming limiting beliefs to building a successful real estate investment firm. She discusses her experience with Airbnb, diversifying her skillset, and the importance of vetting sponsors. Sujata also explains her approach to finding new investors and the significance of diversification in alternative investments.

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What’s Covered In This Episode

  • In this episode we’ll cover:
    • Overcoming limiting beliefs is crucial for pursuing real estate investment opportunities.
    • Vetting sponsors and operators is essential for making informed investment decisions.
    • Diversification in alternative investments is important for building a robust investment portfolio.

Connect with Sujata: 

https://www.linkedin.com/in/sujatashyam-entrepreneur

Resources 

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Read The Transcript Here

Trevor Oldham (00:01.614)
Hey everyone, welcome back to the REI Marketing Secrets podcast. Today on the show we have Shuja Shum and Shuja for our audience out there that just learning about yourself for the very first time. Do you mind just going into a little bit about your real estate background and how you got started?

Suja Shyam (00:17.788)
Yeah, absolutely. So a brief background to get started. I knew I wanted to be in real estate in 2008, right as I was heading into business school. And as you all know, the great recession, the great financial collapse happened right in September 2008. I had just started working as an intern for a developer, a real estate developer in the Pittsburgh area. And everything just stopped in its tracks. All of our projects completely just stopped and

There wasn’t a lot happening for the next two years while in the development space as I was in business school. After that I ended up taking a job as an underwriter of multifamily acquisition, so buying apartment buildings for institutional buyers, specifically in the light tech space. I had dabbled by that point in flipping houses. I’d actually flipped a house or renovated a house. I didn’t have any money at the time during business school.

I used my student loans to do my first investment deal and that was really exciting. But then I got into underwriting and I kind of shelved the sort of entrepreneurial aspect of real estate for a couple years until I realized that the corporate environment just really wasn’t the right fit for me. I had kind of a major life reset and took the opportunity to travel for 18 months internationally.

During that time, I decided I needed to be an entrepreneur. I didn’t know at the time that I had these limiting beliefs that were preventing me from wanting to pursue real estate. So I was pursuing everything else under the sun to develop passive income. Eventually, I kind of came back around to real estate and realized that I had these limiting beliefs and decided to go all in on real estate, partially because I became what I call an accidental Airbnb host. So it was kind of my side hustle.

doing Airbnb, I just started at my house, Airbnb being my basement unit, or my basement, I had kind of cordoned off a space where people could enter on their own and have their own kind of mini apartment in our basement. And that was such steady income that I wanted more Airbnb units. So I just slowly built up my portfolio. I really bootstrapped it till I got to seven.

Suja Shyam (02:38.652)
And that, you know, we can talk about that later. But at that point, the income, the cash flow from the Airbnb portfolio actually replaced my corporate income and whatever I would have made, you know, topping out in my role anyways. So at that point I decided, okay, you know.

I’d already left corporate at that point. And then at that point I decided, well, I want to do more in real estate. What do I want to do? And I realized that I wanted to diversify my skillset and not just instead of building my Airbnb portfolio, I wanted to take the next step in real estate. And what I decided to do is build a private real estate investment firm, a private equity firm where I could help investors invest in other types of real estate that they weren’t already involved in, like multi -family.

self -storage, short -term rentals. We have a whole host of industrial. We are interested in mostly real estate, although we’re getting into other types of business investing. And that’s what I’m doing now with Lux. And I also have some development projects of my own on the side that I’m getting going. And I also work on affordable housing here in Portland, Oregon. So it’s been a wonderful ride and that’s an overview.

Trevor Oldham (04:00.142)
Yeah, thank you for that. That’s done quite a bit in the real estate space. But yeah, I mean, right now must be pretty easy for you compared to, you know, getting to the real estate space in a way I know now it’s, you know, it’s just a little bit more difficult, you’re just given interest rates in the environment, but I can imagine spying over near as difficult as it was looking back in a way and, and everything that was going on. But I’m curious. I mean, there’s a lot of areas. I’ll go ahead.

Suja Shyam (04:20.988)
Well, it’s so interesting that you say that, right? Because I think in 08, in some ways, there’s a sentiment, the investor sentiment kind of feels a little similar where people are really nervous because, you know, running up to 08, there was some macroeconomic things. There was an oversupply of single -family housing and a lot of people did lose their shirt. And so investor sentiment was really low.

There were a lot of people that made it through the O8 recession quite well. And right now I think, you know, it’s an interesting time because in some ways it’s an ideal time to get into real estate, but you have to have confidence in your training and your analysis in order to be able to move past that fear and move forward.

Trevor Oldham (05:07.662)
Yeah, I couldn’t agree more with that. And I know just for me just being an LP, like when I was going out there and talking to sponsors and, and vetting deals, I figured I had to go out and figure out how to underwrite myself just so I had the basic knowledge of like, you talk to so many different sponsors and they tell you they underwrite conservatively, but what does that actually mean? So I had to take that knowledge. And I remember I was on like Marcus and Milchapp website, just downloading.

the offerings all the time, just trying to underwrite the deals just so I could be like, okay, that price point makes sense. That price point doesn’t make sense. So you definitely want to have that knowledge when you’re going out there. But I’m curious with like the Airbnb process. And I know I want to dive into your other investments, but before we touch on that, just how that’s been, I know you mentioned you’ve grown to seven units, you still have the seven units, have you gone, you know, added more units onto your portfolio, and then are they in like your local area? Or are you going, I know you mentioned earlier, when you’re talking off,

off the interview, you’re in Portland, Oregon, are they in say in like Texas, Florida, or they just in your, you know, your local geographical area.

Suja Shyam (06:06.564)
Yeah, great question. So, and you know, there’s a lot of different ways to skin a cat and the same thing that can be said about being an Airbnb host. There’s a lot of different ways to run that business. And I, the way that I’ve chosen to build it is to just focus on units that are, well, all of my units are within a mile of where I live, which is good and bad, right? Like the good part is, is that I can go look myself at like maintenance issues and,

which do, you know, there are maintenance issues over time, even if you have newer buildings. And so the bad part about that or the downside is that I’m the one doing that, right? So if you are investing long term or long distance, then you can have, you’ve got to hire a team that you trust to handle those on the ground issues. The key is it can be pretty hard to build that team. And so I have just…

I’ve chosen to kind of keep my current Airbnb business, which is seven units to just where it is at and focus elsewhere in terms of growing my business opportunities. And so there’s still plenty I can do at my units, but so I still have my seven units. I own them all myself and, and I’m just growing in other ways. So yeah, we can get more into that if you like.

Trevor Oldham (07:28.174)
you know, and I could definitely see that. I mean, it’s like the further you grow in the Airbnb business, the more that it takes away potentially from the other areas of real estate that you want to do. I mean, there’s only so much time. It would be nice to have, you know, a hundred Airbnb units and then like, you know, billing and assets under management and raising the capital and then doing the affordable housing, you know, but like you mentioned, there’s, there’s not as much time for that, but I want to talk about your company now specifically. And I know you mentioned early on,

some of the different asset classes that you guys partake in, like multifamily and say like yourself, storage, ATMs. When it comes to say investing through your company in when you’re pulling investor capital together and let’s just say like you have your like your potential investor out there and someone wants more of an equity play. So that would probably be more multifamily versus someone that comes on and wants more cashflow, which would be more of an ATM play. Is it more like you’re pulling all the assets together? Like,

I want to mean by that is like someone, if they invest with you, they’re getting a piece of a ATM ATM deal on a piece of a multifamily deal. Or how does it sort of look when someone or is on more on a deal by deal basis that someone could participate in?

Suja Shyam (08:36.284)
Yeah, so we are currently doing deal by deal. And so an opportunity is going to be open for a period of time, and then it’s going to close. Although there are certain opportunities that are going to be more evergreen. We have different types of offerings. So as probably some of your listeners are aware, some investors are more interested in income streams, like building up passive income streams to live their life.

And others are more interested in equity growth because they’re younger and they want to really build that nest egg so that they can turn that nest egg into cashflow streams later on, retire early, et cetera. Usually younger investors are interested in growth and older investors are interested in income. Although, you know, some like both at different stages in their life and you just have to decide as an investor, what are your investment goals? What is your investment plan and trajectory? And how do you have the right allocation in your portfolio?

So with certain of our deals, they’re more focused on equity. Like some of our storage deals, for example, are usually focused on equity growth because there’s usually a development component to them. And whenever you’re developing, there’s going to be restricted cashflow or there’s going to be less cashflow than if you buy a stabilized asset or if you buy an asset that’s already fully occupied and collecting rents. There’s going to be more consistent cashflow.

But then if you get a consistent cash flow asset, it’s harder to create that larger annual average return because you’re not adding as much value. And the other thing about the Lux thesis is that we want to be in multiple asset classes because we want to, we realize that different asset classes are going to face different challenges at different points in the market cycle.

and we want to be able to invest for the right moment in the market cycle, as well as just continually invest. You know, not every deal is going to perform to perfect projections. Some are going to vastly outperform projections. Some are going to, you know, get in the ballpark of it, but some are not going to, right? So it’s important to diversify across different asset classes so that you can overall have a robust portfolio of alternative assets.

Trevor Oldham (10:54.734)
I definitely grew through there and I know for me that’s how I like to have it. I like to, I like to split it up like 50 50 between cashflow and equity because it is nice getting the equity or it is nice getting the cashflow. You know, just, just the aspect of it where like you mentioned, I’m going to sell storage development deal and it’ll be about two years before I receive any distributions, but it’s going to make probably double what I’ll get on the cashflow deal. So it’s, it’s finding that balance between the two of them. But I’m curious when you’re going out there and

Suja Shyam (10:55.708)
Thank you.

Suja Shyam (11:03.196)
and I’ll see you later.

Suja Shyam (11:10.46)
Thank you.

Suja Shyam (11:14.652)
Right.

Trevor Oldham (11:22.478)
talking to these different sponsors that are out there. How do you sort of vet those sponsors? I know for me, there’s like certain things that I look out for, certain red flags, but I’m curious if there’s certain things that you look out for when you’re talking to these individuals.

Suja Shyam (11:35.708)
For sure. Well, you know, one thing that I want to say is that I don’t invest with a lot of operators. I’m very, very selective with who I work with. Usually I have to have known them for multiple years before I’m ready to go into an investment with them. And there’s a very, pretty significant vetting process that I’ll go through, including meeting other, including, you know, obviously doing background checks and.

doing extensive interviews with them, looking at their financials and looking at their financial capacity and understanding is this someone that I really want to invest in. Ultimately, we are making a bet on the jockey when we pick a sponsor to invest with. And I want, that’s kind of my job is to make sure that we’re betting on the right jockey. And again, I like to invest with people who have a long.

track record or a significant track record that they can build on. You know, every operator is going to continue to learn and evolve. So it’s also interesting because once they get really established, then it’s easier for them to access institutional capital. And so as private investors, there’s really a window in which we can we’re really valuable to them as they’re growing. And so you want to make sure they have some of the something of a track record that and as well.

It’s all about the relationship, right? So I want to know that I can call them and get my questions answered immediately. And I want to know that we have that a trusting relationship. And that’s really important as well as doing all the checking all the boxes when it comes to performing due diligence.

Trevor Oldham (13:20.238)
Yeah, and I can and that’s how I definitely feel as well, especially when it comes to betting on the jockey where I know like, like you mentioned earlier, sometimes the deals something may just come out of the deal and something unforeseen that we couldn’t have seen. But I want to make sure that I have trust in the operator to go out there and do a good job on this deal. Because if I’m investing with them, typically that money is going to be locked up for, you know, minimum, maybe three years, you know, most maybe 10, but probably five to seven years.

within that timeframe, I want to make sure that they’re going to be taking good care of my money. And again, in the event that something goes on where do I have the trust in this person as well? And then I like where you mentioned the communication aspect of it. I know when I’m talking to potential sponsors, I’ll always follow up with them and ask them a question or two and just see how quickly they get back to me. Like, do they get back to me in a day or do they get back to me in two weeks? And then I know like, Hey, if you take two weeks to get back to me and I haven’t even given you my money yet, odds are it’s

the communication is probably not going to be good once I do invest that capital with you. So I, I really like that emphasis on the communication style aspect of it. But when it comes to your investor club and that you have out there, how does that sort of look like? Is it the, I guess twofold one, like a minimum aspect of it is it, you know, if the deal’s like 50 K, then we have to get in the, you guys put in each individual person would depend 50 K and you say, let’s say you get 10 people come in and.

you put in 500 ,000 or you get 20 people, you put in a million. And then on that, is there any, I don’t want to say preferential terms, or is there ever a way that you can bump up the terms just because you’re bringing, if I’m investing 25 K into a deal, I can’t go and be like, Hey, can I get my prep bump from eight to nine? But maybe if I’m bringing two, $3 million to the deal, it holds a lot more weight. So I’m just curious if there’s any of that aspect of it and play there as well.

Suja Shyam (15:10.812)
Yeah, definitely. So whenever we invest as a group and we pool our funds, we do negotiate preferential treatment with the operator. And usually what that means for the LP for our My Investment Club is that they are getting approximately the same returns as they would if they went directly to the sponsor, but it can be higher sometimes. It just depends on the deal and what the sponsor is offering. And…

So sometimes we can get higher, but usually I would say we’re in the ballpark because, you know, of course, like that extra layer is also how I get compensated, right? Like I’m getting some compensation, not too much. Most of it comes at the end, but some compensation for vetting the deal, vetting the sponsor, managing the communications, making sure everything’s running smoothly so that, you know, investors know that, that their money is in good hands. And by the way, I also always co -invest in the deals.

that’s really important to me to always have my skin in the game as well. And these are the deals that I want to invest in anyways. So what I would say is that there is a possibility for a higher split than what you would get going directly to the operator, but typically it’s going to be about in the same neighborhood.

Trevor Oldham (16:29.678)
Perfect and I’d say for me when we’re talking to individuals similar to yourself I find it’s similar to that It’s pretty much getting the same size the minimum might be lower where it’s not like a 50k It might be down to like 25k, but they know we’re bringing a ton of you know, they’re bringing it I don’t know how much capital they’re bringing but they’re bringing a lot more than than just 25k that I would be putting in the deal So I really like that but for you and your

Suja Shyam (16:52.348)
And that is something just to, we do usually offer lower minimums. And the reason we offer lower minimums is because a lot of people who are younger, I also want people to be able to diversify their alternative investment portfolio, right? Like if they have $50 ,000 to invest, I’d rather than be able to put that in two deals than one, because I want them to be able to have that same diversification that I see. And eventually,

Trevor Oldham (16:56.846)
perfect.

Suja Shyam (17:19.836)
over time they’re going to be able to bump that up as long as obviously they want to continue to invest with us. So for me, I view this my relationship with my investors as a lifelong relationship that I want to continue to work with them for years to come.

Trevor Oldham (17:35.758)
And I definitely agree with that on the key of diversification. I know for me, I never wanted to put like 50 % of the capital that I have invested into one specific sponsor, just in case again, something goes wrong with the deal. Maybe there’s a capital call. Maybe there’s just a pause in distributions till something has to catch up. And then if that’s your first experience, I would imagine you probably wouldn’t want to invest again, where at least if you can spread it around to two or three different sponsors early on, you can get the experience of, you know, how their other communication styles are, whether you know, not.

you’d want to invest with them again. So I really like that aspect of it as well. But for you and yourself and your company, just curious how you’re, how are you going out there and finding new and finding new investors to invest with your company? Are you going out there on podcasts? Are you hosting your own podcast? Is it through your LinkedIn content? Just curious how you’re going out there and really growing your company, you know, from a marketing aspect of it.

Suja Shyam (18:29.852)
Yeah, well, you know, building an investor community really is about what we call like a 360 degree approach. So there are certain avenues that I like to focus on. The first one is just nurturing and cultivating my own investor base, right? Like we have already, you know, several hundred investors in the Lux community. And so making sure that I’m in communication with them, that I know what’s happening in their life and what’s top of mind for them in terms of just their overall life and investing. And then.

So of course, like there will be referrals that come from those relationships. And then on top of that, I definitely like to post educational content on LinkedIn. That’s my favorite place to do social media because people are coming to LinkedIn for professional content and for, that’s a place that’s natural to want to learn about investing. Whereas some of the other ones that I’m on for my personal life, like Facebook and Instagram, I just prefer not to talk about investing too much on those.

because it just doesn’t feel right to me. So I feel good posting on LinkedIn and about business. I love to go to networking events and meet people through that. That does take more time because you’ve got to carve out the time to go to the networking events and then you’ve got to make sure that you’re meeting with people afterwards. One thing that I found is I have some networking groups that I meet with regularly. So there’s that built -in regular seeing them and then on top of that doing one -to -ones with folks.

so that they understand what we do, because what we do is very niche. The vast majority of the world does not have any clue what real estate syndications are or that it’s a way to invest and how to invest in alternative assets. It’s just not something that they’re interested in, that they encounter very much, right? And so most of the time they’re working, if they are interested in that, they’re working with a financial advisor and financial advisors are not able to offer these types of alternative investments that we offer.

And so then I also, I do have my own podcast. It’s called Passive Income Unlocked, where, you know, people find me through that as well. And then I like to make sure that I’m educating my investor base and anybody that comes onto my list so that they really understand our investing philosophy and how it is that we’re approaching changes in the macroeconomic environment, because investing is something that, you know,

Suja Shyam (20:50.716)
While it’s important to continue to invest throughout all phases of the market cycle, in my opinion, you also really want to understand where the headwinds and tailwinds are in any given asset class or sector or geography, geographical location, et cetera. So I like to be really put a strong focus on macroeconomics when I’m educating my investor base and choosing deals for us to focus on. So for right now, for example, we are actually.

We’re still going to invest in a couple of multifamily deals, but very strategically. Mostly this is mid 2024. We’re mostly going to be investing in affordable housing deals because as a lot of people know, there’s been a large amount of apartments, brand new apartment supply coming online. And that means that there’s downward pressure on rents in a lot of different major markets. And, you know, we foresee that to be the case for the next year, at least.

that there’s going to be this downward pressure on rents. Rents have peaked in many places. And so because of that, we’re focusing on affordable housing because most of those benefits are coming from government incentives and the deal doesn’t usually need to, it doesn’t need to increase rents in order to perform to our projections. And so we’re doing affordable deals and we’re also doing, we’re looking at.

into I know this is a real estate show and I love real estate and I always will. I love we’re doing a short -term rental deal and we also are doing some different kind of business investing opportunities.

Trevor Oldham (22:25.966)
Yeah, that’s awesome. Yeah, it’s really crazy out there, all the different, I think of like your alternative investments that are out there, just your standard real estate. And then you start to go beyond that, which I think is interesting, not even including like your private equity where you could go into and invest in specific businesses. But I’m thinking like, I’ve come across like companies where you can invest in like barrels of whiskey, you can invest in like car washes and laundry mats and different things like that where, yeah, they have, maybe not the whiskey company, but these other ones.

they have a little bit of a real estate play. Obviously a car wash has a location and a laundry mat as well. But yeah, it’s, it’s really crazy to me. All these different alternative asset classes that are out there. Cause I think the standard person just thinks like multifamily just cause that one seems to make the most sense. People have either no apartments or I’ve lived in apartments at one point in their life. It just makes sense. But I’m

Suja Shyam (23:15.068)
Yeah, and it is really like, just to your point, like it is really about comfort. A lot of people say multifamily and apartment investing is kind of the gateway to alternative investments. And I think that has really proven true for me. At first, that was what I wanted to invest in because I understood it better. I had lived in an apartment, you see a lot more apartments around, and so it just makes more sense. And if you already have invested in a rental property, then, which a lot more people have done that, then it makes more sense.

And, but as you kind of get more comfort, you also start getting more exposure to other types of investing opportunities and gaining comfort and confidence in investing with those. And I think that’s, you know, that’s really exciting and fun. And it’s, it’s amazing because there’s so many businesses that you don’t really think about, but there’s huge markets for them. They’re just not as visible as apartments. And so,

And of course, you know, that being said, I still love real estate because it’s a hard asset, right? And it’s, there’s a certain built in value that comes from buying something that costs more and more to build every year, every year it costs construction costs are going up. And so I still love real estate, but it also, you have to, as you grow as an investor, you want to think about, well, what is the right allocation for my portfolio today and how.

what should the portion of my real estate be in multifamily? What should it be in self storage? What should it be in maybe something that’s a little bit more out of the box that I’m just learning about and how do I gain comfort with that and then expand from there over time and adjust from there.

Trevor Oldham (24:52.238)
Yeah, I think that’s that’s spot on. And if there is someone listening in our audience and they want to start passively investing, they have the capital ready. What’s the best piece of advice that you would want to give to them?

Suja Shyam (25:05.436)
I would take your time with investing, number one. And number two, I would talk to as many people as possible, right? I think when the very first deal I invested in, I just invested with the first person that I found that, you know, it kind of felt comfortable reaching out to. And if I were to go, I mean, and that deal is going great. It’s going fine. And it all went well. But we’re going to exit this year.

But if I was to do it over again, I would try to meet more people, more operators, and just really get to know people. I mean, that’s really their duty to you is to get to know you and win your trust. And so don’t be afraid to reach out to operators and see like, who’s a good fit for me? Do I like what they’re saying? And then also, you do want to try to do your due diligence. You don’t want to get overwhelmed and paralyzed, but you do want to do…

your own due diligence as well. And then invest an amount of money that you’re okay to, I mean, not that I, that you’re okay to invest. So if $50 ,000 feels like too much money to you to invest and it feels really scary, I mean, it might be the right time to do that, but you might want to see, well, are there opportunities for me to invest $25 ,000?

Trevor Oldham (26:26.19)
Yeah, I think that’s, that’s, that’s all spot on. That’s everything that I remember I went through when early on was one, you know, having to take the time and do the due diligence on the deals and then just investing amount that I felt comfortable with, especially early on in that first deal. But if there’s someone in our audience that wants to learn more about you, where can they find out more about you?

Suja Shyam (26:48.188)
Well, you can always reach me on the website. It’s l -u -x -e -c -a -p as in Peter .com. So lux -cap .com. I’m also on LinkedIn. Would love to receive a message from you on LinkedIn. And, you know, we can set up a time to talk. If you want to send me a text message, I always leave my phone number on podcast. It’s 650.

804 -8043, just send me a text and we’ll find a time to connect. I’d love to learn more about you and your goals and see how I can help you in this space, whether it’s investing with me or investing somewhere else.

Trevor Oldham (27:27.246)
I’ll make sure to include that in today’s show notes. But again, thank you so much for coming on to the show today.

Suja Shyam (27:32.668)
Great to see you Trevor, thank you so much. And we’ll see you next time.