The only way that you can grow in the real estate industry is by failing forward. Too many people are afraid of failure so they don’t invest or even try. As a broker, there’s no paycheck coming for you, you have to go out there and create it. Join your host Sam Wilson as he talks to Sunil Chillar on how to grow by learning from your mistakes. Sunil is a real estate broker of EXIT Realty Urban Living. Learn how to have no fear and not be complacent so you can get started on your first deal.
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Failing Forward So You Can Grow In The Real Estate Industry With Sunil Chillar
Sunil Chillar, welcome to the show.
Thank you so much for having me.
The pleasure is mine. Normally, I get a chance to do a bio on the guest that come on. If you don’t mind, give our readers a quick bio on who you are.
I came from Wall Street. I have a pretty decent background. I started as a VP and traded securities for a little while. I had my Series 7 license. At a young age, I saw the real estate side making money. I figured, “I’ll give that a try.” Believe it or not, in the first year, I made $5,000 with secs. I needed to wake up on a tip-off from the airport. I worked for a couple of different companies for a little while. I own my own company and I’ve been doing real estate for years.
For seventeen years, I’ve been buying, rehabbing and flipping. It’s been a challenge initially because I’m new to the game, but you’ll know what you’re doing as time goes on. I’ve grown and owned a lot of properties myself. I got into the multifamily space. I do own some multifamilies, looking to grow to retire young and enjoy life. Here I am.
What has been some of the key differences you could tell us between the experience you had as a VP on Wall Street and why real estate was even appealing?
At a very young age of 25 years old, I had 67 people working for me. I would go off, do my thing, delegate work and always get it done. It’s a funny thing that upper management paid no attention to me. I’m getting things done. I’m moving forward. I figured to myself, “If no one’s paying attention to me, it isn’t the right space for me.”
I had looked at real estate at that point in time as well. I figured, “I do want to make the transition.” I did meet up with Anthony Robbins. Believe it or not, that one weekend after I went to his event, Walk on Fire, day number one, I walked back into my company the following week and gave my two weeks resignation. I was done.
I love the courage to follow what it is that your heart is saying, “This is the right next step.” What advice can you give to some of our readers who may be struggling with that next move?
We always say, “Run the boat two feet in the game. You got to move forward. We always fail, but what is fail? Personally, I have not failed enough and I’ve grown tremendously. Failing forward is such a great concept and thing. For many years in my life, I have been very successful. In my life now, I need to fail forward faster.
I like that idea of failing forward. Tell us a story or an example of when you have failed forward. What did it cost you? What did you gain from it?
As with anything else, failing forward would mean the first 1 or 2 properties that you have bought. When things go wrong, you have no idea how to fix it, but you eventually make the corrections. It’s the fail of growing and taking multiple properties at the same time because you’re a newbie. As time goes along, that’s where you learn and grow. Growth is such a good thing. One of the things that you cannot be in this game to be successful is complacent. You cannot be comfortable where you are. You always got to push and be outside of your comfort zone to grow.
If no one is really paying attention to you in your job, then that isn’t the right space for you.
One of the things I tell all my realtors walking in the door is, “I’m going to make you uncomfortable. I’m going to push you out of your comfort zone.” I am so fearful of heights. Why? I don’t know but what I’m doing about it is I’m getting my pilot’s license. I’m flying. If I’m pushing you out of your comfort zone, I’ve got to push me out of mine.
One of the things we talk about quite a bit on this show is the advantages of discomfort or the success that is found in the realm of discomfort. I’ve not quite heard it said so succinctly where you said to be successful is to be complacent. Can you expound on that a little bit?
I’ve seen many realtors walk in my door and they’re happy making what they’re making. As a broker, looking at the individual or another person, let’s assume you’re happy making $200,000. To me, that’s not good enough. When you make $500,000 or $1 million, that’s where you want to be. You want to even grow from there as well. I’m not the type to sit back and say, “I’m making $200,000. Life’s great.” Good for you. I always want to push you. It kills me inside a lot of times to see I want more for you than you want for you. Either way, I’m certainly not going to look at someone and have them be complacent or comfortable because I’m always going to push you because I’m always pushing me.
How do you develop that culture within the brokerage firm? What are some strategies you use to encourage your brokers not to stay complacent continually?
One of the things I’ve done and I’ve done this successfully for years is I’m always out there on the street, knocking on doors. I’m not the guy who sits back and sends mailers to clients. You on the street confronting people, knowing what’s going on in the community as a realtor, that’s what you want to do. Transition that into multifamily. You’ll transition nothing to anything. You hit the pavement running. You can’t sit back in the ivory tower and expect things to get done. On the construction job sites, I’m there. I’m not sitting back, having a conversation and waiting for things to happen. I need to be present. If this is your business and this is what you do, you need to be present.
I love that because there’s a lot of promises in the world of real estate. “Send direct mail or buy Google ads and then wait for your phone to ring.” There’s no get rich quick scheme. I don’t think that works long-term. As you’re putting it, the grit and the grind that gets it done. What’s it been like running a brokerage firm and being a full-time landlord, flipping houses and things like that? How have you juggled all of those?
I work long hours. I work from early morning until [1:00] AM or [2:00] AM. One thing I’ve said to my kids, and I’ve said this to my realtors as well, “You got to be Superman or Superwoman.” That means get up early, go to sleep late, pointers and get it done. In this line of work, we create something out of nothing. You guys know paycheck come on Friday. You got to go and be creative. You need to be diligent about what you do.
Time-wise, you need to be very efficient. You’d hear this a lot of times from people or realtors. There is no accountability a lot of times on DSI when there’s no boss telling them, “You got to be at work at [9:00] AM. Take your breaks, lunch and leave.” With all of that again, the next day, that does not exist. You need to be diligent of your time. Be efficient, effective and get it done. With my guys, I formulate a schedule with them. I’m not their boss because they’re self-employed. I am a guidance of what you should be doing on a daily basis and blocking time. Time-blocking and time management are a must in this game.
You started to buy small multifamily and smaller commercial real estate at one point in your real estate career. Can you give us an idea of what those holdings look like and why you’re looking to scale into bigger assets?
From single-families, triplexes to 6 and 20 units, that’s what I started with, from two families. As you grow and see the profitability of these properties and asset classes, you’ll want more. You always wonder when you look at these apartment complexes, how do you buy them? If something’s worth $20 million, I don’t have $20 million, so how do you go about getting that? Believe it or not, it’s easy. It’s not hard one bit. It does take courage and knowledge to put it together.
The stuff that I’ve been working on is 200-plus units. Those are what I’m purchasing and working on actively with some of my partners as well. For instance, we were looking at a 650-unit down in Texas. Everything that I buy is out of state. It is professionally managed. I’m not going to self-manage. I do not want to take a phone call that says the toilet is blocked. My job is to manage my managers.
It’s incredible with the line that you say there, “It’s not hard one bit.” Why do you think people find it to be hard? What are the common stumbling blocks that you hear or objections that are put out there that you say that’s noise?
You cannot grow if you haven’t failed enough. Keep failing forward.
It’s not hard. People don’t have the knowledge. That’s number one. Number two, you were scared. People are afraid of failure. They don’t look at it like, “I could be successful here.” It’s like, “What if I fail?” That’s the noise around everything. What if you don’t fail and you get it done. I have a mastermind group and one of the things that I’m going to start doing is I’m going to start a training program on investing in these types of assets. One of my challenges initially is raising capital.
I’ll tell you a case in point. On one of my very first deals, I have a list of 238 investors. When I buy properties with investors, I always use their money. In many years, I have never used a dime of my own money. It’s OPM, Other People’s Money. Everyone makes a nice return and they throw money at me. I brought up the fact that I’m doing multifamilies to some different states and everyone knows what the returns are because you get in it.
The challenge in speaking with the same individuals that I’ve done this for years was, “This is not here in Jersey. This is not twenty minutes away. I don’t know Texas or Georgia.” The funny thing is that the majority of all my investors would assume. It’s being scared and not knowing what multifamilies are. It’s a totally different animal, so I needed to pivot and find investors who invest in multifamilies. It’s such a strange dynamic. A return is a return. We do have a common interest here.
You have given me money for years, which is fine. We still do business, but it’s that mindset and shift that was a little challenging that I did not expect. One of the places that I’ve turned to that is unique is family offices. I’ve been dealing with a lot of family offices and that’s how I’m conducting businesses. For instance, I have some projects that I’m working on, which are $78 million in assets. Through the family offices, that’s where we are raising equity from. Under the debt side of things, it’s not a problem for me. It’s the equity portion of it. I’m happy to say through family offices, that’s working out.
I don’t do anything personally with family offices yet, but I’ve heard, especially when you start working with institutional money, that would probably lump family offices into that to an extent, that the return profiles to you as the deal sponsor get tweaked. Maybe because if they’re writing a single equity check, then that means you’re not going to take as much on acquisition fees or maybe the splits change. How are you working around that in such a way that you, as the deal sponsor, still get compensated for putting the whole deal together?
Each office is different. You’re correct. They want the lion’s share. It wasn’t until a whole lot of conversation. One of the things that I could give to any of these offices in my wheelhouse is to use $50 million to $100 million equity at any given year. Based on that volume that I could produce, they’re a little bit more considerate and they’re working with me. It is a challenge with confluence and I get that.
I understand what you mean when you say that they can place in any given year if you can present $50 million to $100 million in equity. Can you explain that to our readers as to why that’s important?
Within my space, we have a lot of deal flow between myself and my various partners who are also sponsors. There’s a lot of deals throughout the country that we have. We are working on where anybody’s money is always a factor. You can only buy so much once you have the money. Me being presented with that opportunity and that space where I have deals, that’s where I could come to the family offices and let them know I have XYZ, 1, 2, 3, 4 deals presented to them. That’s how I’m doing it, through deal flow.
When they have $100 million in equity to place, oddly, that can be a challenge.
It’s always a challenge because they have someone else’s money that they need to put to work.
They don’t want to sit in cash but yet finding opportunity that makes sense to place that. When you start dealing with those denominations of money, protecting capital is probably your first priority. Finding safe sites that also generate a return is an interesting challenge. I’ve enjoyed this. We’ve learned a lot from you, from growing a brokerage firm, buying small commercial assets to hearing your strategy on how you’re taking down multifamily assets and dealing with family offices. You’ve given us even a lot of mindset stuff inside on this episode where we talked about comfort zones, getting outside of that and how you push yourself. Best of luck with your pilot’s license. How many hours do you have? How far are you away from getting your ticket?
I still have another twenty hours. I’m doing as much as I can, but there’s so much going on at the same token. That’s what’s preventing me from doing a lot more with my pilot’s license.
You can’t sit back in the ivory tower and expect things to get done.
At twenty hours, I’m assuming you have already soloed?
Not yet.
You’ll have to notify us on LinkedIn or something to that extent when you get your first solo under your belt. For those of you that are not pilots, I, too, have my pilot’s license. I will tell you that your first solo by yourself when you’re in the airplane all alone is terrifying. I sat there and talked to my instructor, who wasn’t there with white hands and white knuckles. I’m like, “Ted, where are you? It’s just me in an airplane.” It’s terrifying but also extraordinarily gratifying once you get it done. Get outside of your comfort zone. A few quick questions for you. If you could help our readers avoid one mistake in real estate, what would it be and how would you avoid it?
You would never avoid a mistake. That’s how you’ll learn. You want to maybe engage or partner with someone who knows what they’re doing or be around successful people who have done it before. The last thing you don’t want to do is step on a landmine because that’s a financial blunder. In your sphere of influence, have someone to be there to guide you. That’s the greatest thing that anyone could have.
Question number two for you, when it comes to investing in the world, what’s one thing you’re doing to make the world a better place?
One of the things that I’m doing with everything that I buy as far as all my tenants are we certainly upgrade their apartments, the community and property to make that living space a place that the tenants want to come home to. We love helping our tenants. We help our investors, but our tenants come first. That’s our driving force to make everything a reality as well.
Sunil, if readers want to get in touch with you, what is the best way to do that?
I’ll give you my cell number. It’s (201) 954-0292 or you can reach me at my company, Sunil@ExitRealtyUrbanLiving.com.
Sunil, thank you so much for your time. This was fabulous. I do appreciate it.
I appreciate you. Thank you.
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Thanks for reading How to Scale Commercial Real Estate. If you can do me a favor, subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcast, whatever platform it is you use. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. I appreciate you reading. Thanks so much. I hope to catch you on the next episode.
Important Links:
- Sunil Chillar – LinkedIn
- Company – Exit Realty Urban Living
- Sunil@ExitRealtyUrbanLiving.com
- Apple Podcasts – How to Scale Commercial Real Estate
- Spotify – How to Scale Commercial Real Estate
- Google Podcast – How to Scale Commercial Real Estate
About Sunil Chillar
Experienced Broker with a demonstrated history of working in the real estate industry. Skilled in Negotiation, Short Sales, Foreclosures, Condos, and Sellers. Strong finance professional with a Bachelor’s Degree focused in Economics and Finance from New Jersey City University.