Sonny Kalsi Offers Tips for Entering the Real Estate Business

Real estate is an incredibly varied field that can often seem overwhelming for new entrepreneurs who are getting their foot in the door. But like with any business, starting out in real estate is much like beginning any new career.

Sonny Kalsi, the founder and partner of New York City’s GreenOak Real Estate firm, has spent several years leveraging the company’s $6.8 billion in assets and a further $5.1 billion of equity. Understanding the fundamentals of real estate’s inner workings, while holding a keen interest in extending educational opportunities for underprivileged youths and budding entrepreneurs, Sonny offers tips on ways to enter the real estate business.

Kalsi explains that approaching the industry with foundational knowledge is the first step to build a strong business foundation. As you educate yourself on the industry, it’s important to assess your own goals to determine what you can contribute concerning time and skill.

Kalsi provides advice on the multiple approaches to real estate investments, what to look for, and how to earn money the smart way.

The Gig Economy Business Strategy

According to Sonny Kalsi, one way to gain insight into real estate investing, especially if you’re unsure whether to enter the field or not, is to learn and take advantage of two approaches available to emerging real estate entrepreneurs in the gig economy. The first approach is to rent out your home on rental sharing sites like Airbnb. Each state has restrictions, but in places like New York, for example, it’s ok to rent a room for less than thirty days, as long as it’s not an entire home. Secondly, sublets are another option. While legalities apply, it’s a necessary step to gain experience with the roles and responsibilities real estate demands before you deal with tenants.

It’s important to assess the challenges and maintenance issues that come along with the role. Sonny Kalsi explains that for cautious investors who select this investment option to increase their income, it’s beneficial to think of one’s first venture into real estate as a gig over a full-scale career.

The OPM Business Strategy

Many people can’t afford the cost of a fixer-upper or multi-unit property needed for rental income. Sonny recommends that a smart business strategy for real estate newcomers is to invest in the OPM business route or “other people’s money.” In return, you offer the time it takes to maintain a property so that it can be sold or renovated into a rental unit. If you benefit from an OPM, you must have skills like construction or project management areas in which many people don’t have experience. In the case that you don’t acquire these skills, you can still educate yourself on these principles and the needs of the property as you make the right connections.

Kalsi goes on to explain that when it comes to acquiring the money you need for properties in need of repairs, the general rule is that you will pay 70% of the After Repair Value (ARV) of the property, minus the cost of repairs. It’s crucial to assess how much time and repairs each property needs and it’s essential to clearly define the details with your ORM partner beforehand.

Sonny Kalsi also advises that for multi-unit properties, it’s important that you make enough income in rents to cover the debts, including your mortgage or expenses like repairs, plus a minimum of 15 percent. As you rent out, it’s essential to fill as many rentals units as possible so you can make a solid ROI.

The Hands-Off Approach

If an investment is ideal for you, but you don’t want to buy, manage, or repair a property, then consider a Real estate investment trusts (REIT), Kalsi advises. Similar to mutual funds, REITs are companies that own commercial real estate like retail spaces and apartments where a regular sum is paid to investors or reinvested. Kalsi explains that there are many types of REITs but new investors may consider going with a publicly traded option, purchased through a broker. When purchased in-person or online, you can determine which option is best for you.

While getting into the real estate business can be daunting at first, these strategic approaches can help you determine your level of commitment and passion for gaining more income through real estate. Sonny Kalsi knows that one thing is for certain; the process will help connect you with your community, people, and a strong sense of self which are truly lucrative investments in their own right.