Many people struggle with buying their first rental property. Sunitha Roa bought 7 units in 2 years and even used seller financing for some of them. Successful Women Real Estate Investors #1
On today’s show, we have a fantastic investor, Sunitha Roa. She is going to tell us all about her journey of buying seven units in two years. Sunitha currently invests in Indianapolis, which is where she lives.
The seven rental units she purchased are long-term investment properties. She recently moved into the short-term rental space with one of those units.
Sunitha grew up on the east coast and started investing two years ago, when she lived in Boston. She was working, and still is working, as a financial analyst for a bio pharma company. Before she was a women real estate investor, she wanted to climb the corporate ladder, and she was working late on nights and weekends.
This work ethic has paid dividends, but it was very constricting. The two biggest constraints are time and money, and we make most of our decisions based on these two things. Sunitha knew she needed to do something different.
Sunitha Started Looking at Different Aspects of Personal Finance and Found Real Estate
She became enamored with real estate investing and spent two years studying it and saving money.
In 2018, she made the jump and she has been growing her portfolio ever since. She ended up leaving Boston, so she could design and build her dream life.
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It was a lot of work, but what Sunitha loves about real estate is that you can front load a lot of that work.
It was a lot of work in the first two or three months, but not as much after that. It was the same way with every property after that.
One of the biggest constraints in real estate investing is financing. Educating yourself on how to get more properties is so important, especially if you are starting out while you are saving W-2 income. This can take a lot of time.
Seller Financing to Invest In Real Estate
You need to learn about seller financing, how to work with other investors and their needs, and other mechanisms in whatever field you choose and pull those levers with whatever risk tolerance you have.
Sunitha’s goal now is not to climb the corporate ladder for the next 40 years. She wants to do well, but then transition out and spend time on things that create the most value for her.
She would love to be in the non-profit world. Staying where she was would not get her to that end goal quickly.
What will your life look like when you are successfully unemployed and how do you get there more quickly?
As a Women Real Estate Investor Sunitha Had to Make Sacrifices to Build the Life She Wanted
Building that life took time and she had to understand what that looked like for her. Once you have that vision in mind, it is much easier to make sacrifices for it.
It is easier when you have the end goal in mind. Sunitha was on a race to get to that end goal.
When people ask her about her favorite or best investment, she always says it is her first property. Sunitha bought it sight unseen. She did a video walkthrough, being completely new to real estate investing, from 1,000 miles away.
It is 100% doable.
All five units she bought while she was living in Boston have been doing very well. People stay there and take care of the units.
It is not necessary to move to the location you invest. If you can stay where you are, make a higher income, and put that into a lower cost location, Sunitha advocates that.
You need to look at your whole picture and take your quality of life into account. If you have a family, it is harder to move.
What do the locals have over you that is advantageous and how can you remedy that?
When Sunitha was away, she made sure to make very good relationships with any contractors who were coming onto her property.
She tried to network to find them other business, if they were good contractors. You need to figure out how to add value to others, because it comes back to you.
There is nothing better than that. The more people you help, the better you do financially and the better it makes you feel.
You Need to Take Your Risk Tolerance Into Account
Sunitha’s background is Indian and her family is very financially conservative. Her mother doesn’t know what she is doing.
There is definitely risk when buying real estate, and it is important to learn how to mitigate where you fall back in terms of what you need to take on that risk.
It has taken Sunitha two years to get to the point where she is comfortable taking on an investor’s money.
She knows what it is like to struggle monetarily, and she doesn’t want to cause that struggle for someone else.
Others have been able to grow quicker, because they are able to syndicate, draw funds, and do whatever they need to do to raise the funds, but that was not the path for Sunitha.
How to Mitigate Risk When Buying a Property
You need to figure out for yourself what risk is. Some people think risk is not getting a high enough cash return and some think of risk as not having appreciation.
It depends what kind of a life you are trying to build. For Sunitha, risk involves not having stable cash flows, even if she was getting higher cash flows.
Sunitha’s end goal is to build a life where she is able to leave her job, support her family, and not worry about how many evictions she has a month or worry about how she will pay her bills.
A lot people will buy lower class assets, because they have higher projected cash returns, but Sunitha knows that is not the life she wanted to build in ten years.
She isn’t thinking about now, she is thinking about her life in ten years.
In order to do this, Sunitha bought assets that would cash flow, but they are also in higher class areas. Women real estate investors like Sunitha focus on the business model that she created for herself.
It was a hard thing to swallow, when she knew her friends were getting $400 a side on a $50,000 duplex, when she was getting $150 a month for her property.
Her assets fit her risk exposure and will allow her to live that life.
When you talk about mitigating risk, Sunitha thinks about her specific type of risk of wanting a good asset in a good location, and she wants something visual.
Trulia crime map really works. Her assets are in areas that have no crime.
Weigh the Risk of Crime and the Benefits of a Good School District
Prior to purchasing in Indianapolis, she visited a quad plex in Kansas City. It seemed like it was in a good area.
The sun was shining and the numbers were great, with a 2.5% price to rent ratio, and she couldn’t figure out what she was missing.
As she walked around the backyards, she found casings for bullets. Someone she knew mentioned the crime map and she went back to her hotel to look it up. That place lit up like a Christmas tree.
In addition to crime, equally important are school districts. Sunitha’s first five properties were all purchased in an area that had the best school district in the greater Indianapolis area.
She got more stable tenants, people didn’t leave, and places filled up really early.
Sunitha bought her units to rent to families. Last year, she had a property that went off market and needed to be fixed up and wasn’t ready for a renter until a week before school started.
She figured everyone was set for the school year and ended up getting a renter in place within two days at market price.
PRO TIP: Listen to Your Property Manager
If your property manager will not manage a property because of a high crime area, don’t buy that property!
When you invest for cash flow, you don’t get crushed when there is an economic correction. You are thinking long-term and what this means for your future. Getting extra money is great, but it is for the long haul.
Sunitha Had a Slightly Different Tactic When She Bought Each of Her Seven Properties
This was really great for her growth and it worked out, but it was stressful figuring it out.
The first property was conventionally financed and she put down 25%. The second one was three doors, two properties, and one seller who wanted to get rid of them.
He didn’t realize what he had on his hands. The first one was conventionally financed with 25% down and the money the seller got from the bank from the purchase acted as a second down payment.
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Sunitha was very upfront with the seller that she didn’t have any money to put down, but she wanted to keep investing.
For the second one, they did seller financing, so it didn’t cost her any money up front. This brought her up to five doors. Sunitha refinanced him after six months.
Once she moved to Indianapolis, she started to house hack and got a house for seven percent down.
For Sunitha’s last door, she got an investor. Her deals were a combination of conventional mortgages, seller financing, and having an investor.
The First Step to Invest in Indianapolis
You need to do your research. It helps a lot to have a visual depiction of the area you are looking at. Sunitha got a map of Indianapolis that she put in an Excel document.
She has two screens at work and she had the map on one screen and she would do research on the other screen.
Doing research by looking at where the schools were, the grocery stores were, and other important resources and put pins in them to see if a pattern emerged.
She did the same for the bad areas to see if she could figure out a cluster.
Once she saw that, she would figure out what it told her. In Indianapolis, it is called a circle city, because there is a highway in the center.
All of the good school districts are outside of the circle or loop. She could go into it and corroborate it with her property manager.
When you go on the Bigger Pockets website, people will say things, but you have to verify everything, because everyone is speaking from a different personal bias.
Never take what someone says at full value. It doesn’t mean they don’t know what they are talking about, it just means they have their own tolerance that is covering their vision and that might not be your path.
There are many different ways people invest in real estate. Go with the one that works best for you based on your risk tolerance, where you are financially, and where your goals are.
Next, You Need to Find Your People
Your people will make or break your entire investment career.
There are property managers who have engaged in fraudulent activities and have taken thousands and thousands of dollars from investors.
You can do all of the research, make all of your maps, and do everything “right”, but if you are working with someone who is not trustworthy, you can lose all of it.
Make sure to verify, network, and listen to your gut. You need to have people who will tell you no and who will be honest with you.
They are worth their weight in gold. Sunitha loves her property manager. Her PM is another women real estate investor who knows the business very well.
She may not say no, but she may say that a property needs a higher return. That usually means it is a higher risk and Sunitha needs more cash flow to make up for that, or it may not fit her model.
It is all about learning what you want to invest in, getting the people around you, and then training them to further tease out exactly what you are looking for to set up that life.
It’s not about the success of the investment right now. It is about building the portfolio that will allow you to live the life you want to live.
You need to have people who are on top of things. If your property manager is newer, they need to understand how the money moves, or you will not get your money.
Sunitha learned this the hard way.
One of her properties shifted to someone she did not choose and it was really hard for her to get her money, because he didn’t understand the full dynamic.
Don’t take a chance on someone new, because you will end up paying for that.
After Your People are in Place, You Need to Have the Money Ready
If you find the property and don’t have the funding, what use is the property? Have the money ready, depending on what it is.
When Sunitha started looking at working with investors, there was someone she wanted to work with last year.
The investor pulled out at the last minute with the refi for the seller financed property. She will not be working with him again, because that is not a risk she can take.
Make sure whoever you are working with, or your own funding, is solid and ready to go. This not only affects your ability to execute but also how others perceive you.
You want to be a closer every time you get to the table.
You want your agent and your property manager to know that when you say you are going to do something you follow through.
Tips for Finding Good Properties
Finding good properties depend on your market. In Indianapolis, there is a Facebook group for out of state investors that Sunitha is still a part of.
They have local vendors included on this page, and this is how she found her last deal.
Figure out who the people are that bring in the most volume. Unfortunately, sometimes you need to measure this with how big their buyer’s list is.
For some of the biggest guys, she can’t compete with people on their buyer’s list.
They will have people from California that come in with hundreds of thousands of dollars in cash, and she cannot compete with that.
Sunitha is still working around the clock with her W-2 finance job.
Don’t Make Mistakes as A Real Estate Investor
Sunitha can’t throw $3,000 on a property for a deposit and then find out there is a big electrical issue. She cannot afford that kind of mistake with the size of her portfolio right now.
If she works with the smaller guys, she can build that relationship with them and it may buy her some time to get financing so she can get the inspection.
Two years ago, when Sunitha was in Boston, Chinese investors were buying everything in sight. She knew she couldn’t invest in Boston, because properties were going for $10,000 to $100,000 over asking price, depending on property size.
A lot of these properties were older and had high maintenance issues and these buyers were purchasing them sight unseen.
They had the currency risk they were hedging against and it didn’t matter if they lost actual cash.
There were other reasons they were investing. You need to understand why other people are investing and how you can compete with that.
Sunitha’s Thoughts About Making Offers
It is harder now to find good deals. If you find one, put an offer in. If you are in a predicament where you need to find the financing for one, do everything you can to figure that out.
Try to find some help or maybe take on a partner. This market is so competitive that it is hard to find good deals, but you shouldn’t stop yourself.
You have to keep throwing good darts at a good board until something sticks. You will not get 100% of the deals you don’t offer.
What is your definition of a good property? It is like peeling layers off an onion. It might work in the numbers, but what are the economics?
What are the other aspects of it and why is the seller selling it?
You need to keep asking these questions to determine if it is a good deal. There are so many aspects and you need to do your work or you will lose money.
How Often to Look for Properties
Sunitha looked at hundreds of properties before buying her first one. It wasn’t because she was afraid of buying, it was because she didn’t know what a good deal looked like.
It is comparative to what else is going on. You need to be able to compare to other properties and compare that to your needs.
You need to have your pulse on the market and consistently analyze, especially in this market.
If you look every six weeks, you won’t be able to keep up. Our lives have flipped upside down since January.
What you know no longer holds. You need to be on top of it, because that is the only way you can stay sharp.
Sunitha bought the first five properties and then closed on the last door in September or October.
She didn’t buy the next property until the next July, when she moved to Indianapolis, and she was rusty. She struggled with her analysis, because so much time had past.
Executing is hard for new investors, but if you keep putting yourself out there, it becomes easier and easier.
Always Have More than One Exit Strategy with a Short-Term Rental
Sunitha converted her smallest property into a short-term rental last October. Something she fought back then, and the Coronavirus has supported this, is you need more than one exit strategy.
If it is just a short-term rental, and you can only make it work as a short-term rental, don’t do it.
Sunitha is not a fan of rental arbitrage, she is a fan of building wealth. Build for the long term and have an exit strategy. What kind of bar do you have for this to be successful?
This property was one bedroom, one bathroom, split level, carriage house, and 400 square feet. If you look at the mechanics of that tenant, it is hard to make that profitable.
The property isn’t located downtown, and it is geared more toward a transient tenant.
In general, it is great to rent to families, because it is hard for them to leave. They need to pack up their kids and all of their stuff. If you have one person who is a professional with a couch and a TV, it is easier for them to move.
If you have a property manager, you need to pay a new leasing fee, and you have vacancy and turnover costs.
These are the biggest costs of rental properties. This property is set up to make a little money, not a ton.
Every decision Sunitha made was through the lens of a correction coming and how to mitigate against that risk.
This is why she bought in higher class areas. She knew that if she went to the C areas, those would have more troubles once the manufacturing plants were shut down, like they are now.
With the smaller unit, in a recession, there is one bedroom and one bathroom. If you look at a three bedroom, two bathroom Airbnb rental that goes for $500 a month, that is great during a boom time.
But that doesn’t last, and Sunitha just started last year. She only needs to make $450 to $500 a month to be more successful than a long-term rental.
If she is renting every night and looks at every other rental, it is $50 a night and average occupancy is 60%.
Sunitha’s Advice for People Who Want to Get Started
There are a few things you need to do.
- The first is to educate yourself, so you know what you are doing.
- The second is to be ready for the worst case scenario.
- What does that look like?
- Can you handle that?
- Third, build your network.
- This isn’t just your property manager and agent.
These are other investors you can call when things are hitting the fan and you can’t figure it out. Build a network of other like-minded people.
The Advice Sunitha Would Give Her Younger Self
Start investing earlier! Sunitha grew up in Florida and she moved to Boston for undergrad in 2010.
At the time, the market in Florida was not great. Before moving to Boston, she was living in a townhouse, and townhouses in that area were selling for $40,000.
Only four years before they were selling for $100,000 and they were nice. She had $20,000 saved up, but she didn’t take the time to understand the mechanics of it.
She wishes she had taken the time to get a little more grit in her spine and see the opportunity.
Educate yourself now. If Sunitha waited for a market crash, she wouldn’t have the network or the reputation she has now.
Outside of a crash, she may not have the cash, but she can find it.
We don’t know what the market will look like and you don’t want to look back in 2026 and realize your life is not that much different and you missed an opportunity.
The Non-Fiction Book Sunitha Recommends
Find Sunitha Online
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