Why There Are No Great Markets, Only Great Timing | Neal Bawa
The MORE Show
Neal Bawa, known as the 'Mad Scientist of Multifamily,' challenges the conventional wisdom of staying in one real estate market forever. Drawing on his background as a
Key takeaways
- There are no permanently 'great' markets—only great timing based on data-driven analysis.
- Investor demand can be cultivated through consistent value-sharing, not just sales pitches.
Main topics
- Data-driven real estate investing
- Market timing vs. market mastery
Notable quotes
"There are no great markets in America. There are only great markets at certain points of time."
Conclusion
Neal Bawa's success stems from rejecting dogma in favor of data, automation, and
Transcript preview
Speaker 1 (0:00) For many of us, going further isn't a choice. It's a feeling we can't ignore. Because ambition has a way of outgrowing where it began. Turning dreams into direction. Every journey brings us closer to the life we imagine. So, where will your journey take you? Etihad. Beyond Borders. Speaker 3 (0:29) So for 10 years, from 2003 to 13, I invested in real estate by myself, no investors, nobody else, just me, personal money. And then in 2013, sold my company, had a massive taxable event. And my accountant said, you can't just go buy apartments with your own money. You need to do something called syndication. So you also get some of your limited partners depreciation. And that's the only way you're going to get your tax bill down. So I bought large numbers of apartment complexes. I'd been gathering real estate data since 2009 and publishing it. So there were thousands of people on my list. And I thought that maybe, you know, I can maybe get, you know, 80 % of my own money and 20 % of other people's money. As it happened, the list was very nurtured over the last four or five years because I'd never asked them for anything. And the entire 237 unit apartment syndication was sold out in four hours. Speaker 2 (1:25) What is up, The Moore Show family? As always, we're back with another guest talking about maximizing all of the opportunity in real estate. That's what we're here to do. Now, this guest is named the mad scientist of the multifamily. He has over 400 million doors under management, but really his passion is understanding market data. And that's where he can help me help you. And we need to be listening to Neil Bawa. How are you, friend? Speaker 3 (1:55) Well, great. Thanks for having me on the show. I'm really excited to be here. You know, we had a fun sort of early chat and I was like, this is going to be interesting. Speaker 2 (2:02) Yeah, I love this. So not to mention, I love apartments. You have 400 million under management. Talk to us about your portfolio. Where is it? Why that? You know, how did you get to build to that level? Speaker 3 (2:16) So I'll give you the portfolio size and then the story. The current portfolio is about. 4,000 units and units of all different kinds. They're in seven or eight different states. There's a big cluster in Utah and Southeast Idaho sort of together. And then there's two very large apartment complexes in Phoenix, a 240 unit and a 320 unit. And then we've got a bunch of them in Texas. So, you know, three sort of clusters. We have one in Atlanta as well. I do jump around a lot. So a lot of people say, you know, once you master a market, stay in it. I don't believe that at all. I think that that's wrong. That's lazy. My belief is that there are no great markets in America. There are only great markets at certain points of time and then they change. Right. So Austin has been both been the best. and the worst market in America in the last five years, for instance. So, you know, I tend to jump around quite a bit. You know, the second part of your question was, you know, how did I get to this point? So I'm a recovering technologist, so computer science degree, data science is my passion and my interest, and ran a tech and healthcare education company for 14 years, 99 to 2013. And while I was doing that, You know, I was earning the big fat tax salary and I live in Taxifornia. So, you know, 50 percent, you know, taxation. And so I quickly learned that real estate was a really awesome way to reduce my my taxes, built a lot of campuses for my company that also reduced my my taxes. So for 10 years, from 2003 to 13, I invested in real estate by myself. No investors, nobody else, just me, just, you know, personal money. And then in 2013, sold my company, had a massive taxable event. And my accountant said, you can't just go buy, you know, apartments with your own money. You need to do something called syndication. So you also get some of your limited partners, you know, depreciation. And that's the only way you're going to get your tax bill down. So I bought large numbers of apartment complexes. I'd been gathering real estate data since 2009 and publishing it. So there were thousands of people on my list. And I thought that maybe, you know, I can maybe get, you know, 80 % of my own money and 20 % of other people's money. As it happened, the list was very nurtured over the last four or five years because I'd never asked them for anything. And the entire 237 unit apartment syndication was sold out in four hours. Wow. So since then, you know, just been adding investors. A lot of them are Silicon Valley people. I'm very techie and geeky. So I have lots of followers in Silicon Valley, lots of doctors. 200 plus doctors. So very, very sort of geeky and nerdy sort of numbers driven audience that follows me. Currently about 1150 active investors, about 350 million of their equity has been invested. Speaker 2 (5:10) So how many investors? I love it. Nice. It's funny. I was just having a conversation with my team. So we walked three of our apartments in Dallas yesterday and it was phenomenal. When you bought into the investors, what I think is so cool is the investors think, okay, this is an investment, but then they see it and feel it. And they're like, oh, this is way better than having a stock. Like there's real. business behind it. Like every property we look as an independent business. Talk to us about that first property. How much, how much did you acquire it for? Speaker 3 (5:44) I think it was 12 and a half million and it was in Chicago and it wasn't a good experience. You know, it wasn't a very profitable property. So I had to basically sort of learn on the job and learn a lot of things about Chicago. Now, firstly, I learned never to invest in Chicago again. So This gets me in trouble a lot, but, you know, I'm an immigrant, so I guess I have more of a free pass than, you know, white Americans. But I find that there are parts of America that are less ethical than other parts. And again, not a popular thing to say. I found Chicago to be a very corrupt city. I mean, there were people stealing stuff, all kinds of bad stuff was going on. Whereas I find that Idaho and Utah have an extraordinary high level of ethics. far more than I've seen anywhere in India where I come from. So it's weird. It's uneven. And, you know, again, I get in trouble for saying this stuff, but I don't mind. I mean, you know, I'm a very blunt, straightforward person. And you can actually now with AI do an analysis and statistically rank each state by ethics, and you'll see remarkable differences. So, you know, I learned that Chicago may not be the best place. What I learned most of all was that I needed to get. a handle on where, what were the best markets in America to invest in. And I'd been working on that from a single family perspective since 2009. So, you know, 2009 happened, you know, I'm saving lots of money because of real estate. And so I have plenty of cash. And so I was curious about real estate. I wanted to invest, but, you know, data driven people, we like to gather data. Like we're not, you know, predisposed to just investing whatever we want. And so I go to my family parties and everyone's just bashing real estate and saying real estate is the worst thing ever. So I'm like, OK, well, you know, I'm a data scientist. Let's make sure that these people are correct. And so what I do is I use a statistical analysis software. It's called R, just the letter R. And what I do is I mine data from all over the United States that I can find all kinds of demographic data, all kinds of real estate data. Trulia, Zillow, Redfin, Bureau of Labor Statistics, you know, Census. Speaker 3 (7:50) the Federal Reserve of St. Louis. I grab the data. I stick it into this software. I have gigabytes of it. And basically, I start asking in 10 different versions of one question, right? Is this a good time to invest in real estate? The answer, which, you know, today with AI, probably take five minutes. But back then, it took me months to get to that point. The answer was, this is the best time in 50 years to invest in real estate. That's what the answer from the statistical analysis software was saying based on all the stuff that I put in. And I'm like, How is it that every time I go to a party or go to a water cooler conversation, everyone's just shitting on real estate? And my software is saying that this is the best time ever. So clearly what people think and do and what, you know, really matters are two different things. And I'm like, I'm going to go and tell my family. So I go to the next, you know, family event, very proudly show them all this stuff. They smile and then they ban me from all of their family parties for a year and a half because they think I'm going to infect. everyone else in the family, and we're all going to lose money. So for a year and a half, I'm not invited to family parties. And I get really pissed off about that. So I'm like, okay, I'm going to go find other data-driven people. So it's 2009. And this website called meetup.com has just started out. So I go and register a data science meetup group for real estate. And the first time I do it, Justin, four people show up, but three of them are actual data scientists. I'm an amateur data scientist. They're actual data scientists. One was from Apple, one was from Google, and one was from LinkedIn. You know, this is Silicon Valley, right? So the meetup lasts until one o'clock. We, you know, I show them all my stuff. They get really excited. They're like, this is incredible, but here's five different things that you're not doing and five different things that you're doing wrong. And so they start correcting all the stuff that I'm doing. But as they're correcting this stuff, the conclusion is getting ever more inevitable that this is the best time in 50 years to buy real estate. And so we get obsessed with this idea of ranking cities. We're like, OK, so maybe this is the greatest time to buy real estate. But what's the greatest city in America to buy real estate? Like, you know, and