Start Now Before It’s Too Late
- Ahmed Seirafi is a real estate investor with over 20 years of experience and a 178-unit portfolio.
- Seirafi believes that the next six months offer more opportunities than ever for investors.
- He shared his 4 best pieces of advice for beginning investors to maximize profits in the long run.
Ahmed Seirafi is all about going against the grain — in fact, that’s one of the cardinal rules of real estate investing that have helped him find success.
An industry veteran, Seirafi has accumulated these rules over his 20 years of real estate experience, starting from his first job out of college as a junior broker at CBRE specializing in industrial and office spaces in southern California. In 2007, Seirafi and his father sold the family business — a gas station — and bought their first multifamily development in Arizona. Shortly thereafter, he began to pursue real estate investing full time.
Today, the 48-year-old Seirafi has amassed a real estate portfolio that sprawls from his home state of California to Texas, consisting of over 178 units across three properties — a multifamily apartment complex and two retail office buildings worth over $50 million combined, according to documents viewed by Insider.
He also has several projects in his pipeline to develop properties on land he owns, which he estimates could be worth between $400 million to $450 million once completed. These projects include a proposed 300-unit development in Anna, Texas, which Seirafi will own 60% equity in.
Now’s the time to begin investing in real estate
For those interested in real estate investing, Seirafi believes that it’s crucial to start sooner rather than later. “People can definitely get in on investing, especially in the next six months,” he told Insider in a recent interview.
Seirafi says that there’s more opportunities available right now than there have been in the past 10 years. He believes that sellers are still clinging to the sky-high prices they were getting six months ago — but as bids dry up, those prices should soon fall.
“They’re going to have to let go of that sale price and lower the price on whatever they’re selling because as interest rates go up, the price has to go down in order to get the kind of return to justify the higher interest rate,” he explained. “So people are holding on to the high price, but they’re going to have to loosen that grip very soon.”
For investors looking for long-term success, Seirafi is the first to acknowledge that it’s taken him a long time to lock in a winning strategy. For instance, he’s actively trying to sell the two retail office buildings in southern California that he owns, since they no longer fit his approach to real estate.
“As we were beginning the business — starting to grow and develop properties — we weren’t really focused on a certain niche, we were focused on opportunities,” Seirafi explained. “Now that things have grown and scaled, it’s time for me to focus on something that either I’m good at or I’m passionate about, and those are the multifamily and the industrial buildings.”
But with more opportunities for real estate investors comes more potential pitfalls. After two decades of investing in real estate, Seirafi has pulled from his own experiences and compiled 4 important pieces of advice for any new real estate investor that should help them not only capitalize on near-term opportunities, but stay successful over the long run.
Chase the steak, not the sizzle
Seirafi’s first piece of advice for beginning investors is to pick a specific real estate product and stick with it — a particularly important message these days.
Investors hopped on the real estate bandwagon in 2020, when a combination of pandemic stimulus and low interest rates whipped up a housing market frenzy. But Seirafi says new investors shouldn’t just blindly chase the latest trend, whether it’s a specific region or type of property, since these trends often don’t have any staying power.
“You get a lot of people with money right now who aren’t traditional real estate investors and spending too much for their properties, getting in over their heads,” he said. “They don’t truly understand the fundamentals of real estate itself.”
“Don’t chase the sizzle, because most people do — they want the cool thing, the hot thing, and that’s what gets people in trouble,” Seirafi continued. “They chase the sizzle and not the steak.”
On the other hand, because real estate is so broad, Seirafi believes that everyone has the chance to be successful, as long as they figure out their niche and stick to it.
“There’s a million different ways of making money in real estate — there really is, and everybody makes money in real estate when they focus and stick to a lane,” he said, explaining that this is the reason he’s offloading his office retail buildings in favor of more multifamily and industrial developments.
Don’t buy into the narrative
Seirafi also believes that investors must learn to not simply accept the narrative if they want to squeeze out every bit of value in a property.
It’s normal for investors to believe that they must build a development to make money in order to maximize profits, Seirafi said. But when he approaches an investment, he asks himself how he can go above and beyond the best use case — although this often requires extra time and money.
Seirafi is able to extract the most value from his acquisitions by thinking outside the box — whether that means changing a property’s zone from low-density to high-density resident multifamily, or turning an industrial building into individual condos, like he’s currently doing in southern California.
“Instead of just renting or leasing it as a building, I’m chopping it up into four pieces and I’m going to sell them as condos, which increases my price per square foot,” he explained.
Invest with a fund or syndication
Anyone just getting started in real estate can find it especially helpful to partner with experienced investors. Seirafi believes that one of the best ways to learn the ropes of the business is by investing with a syndication or fund, particularly one that has a long track record of success and transparency.
If an investor chooses to work with another individual investor, then their pool of knowledge will be limited to one person’s experiences. But by investing with a syndication, an investor can instantly broaden their scope and expertise.
“Syndications are very strategic in what they do, whether it’s in the location or the product type — meaning they stick with exactly what has been working for them and they don’t deviate from it,” Seirafi said. “And by following them and investing with them, you’re going to learn exactly what they do, how they do, and why they do it — and you’ll become an expert yourself.”
Don’t overleverage your portfolio
Finally, Seirafi emphasized the importance of keeping track of your leverage and making sure it doesn’t get too out of hand.
He sticks with a very low debt-to-equity ratio, estimating that he’s currently leveraged around 30% at maximum, since some of his properties haven’t been refinanced in quite some time. This multiple, which he considers low, has risen recently thanks to the pandemic-induced economic slowdown. But going forward, Seirafi plans to keep his leverage as low as possible, and he advises other investors to do the same.
“If you’re 80% or 90% leveraged and if there’s the smallest sneeze in the economy, you lose everything because you have no margin,” he said.
Seirafi finds it interesting that some of the bigger syndicates, such as Cardone Capital, are still buying properties like crazy and paying top-of-the-market prices for their acquisitions — especially since the economy is due for a downturn soon.
“Where are you going to make those adjustments to maintain your profitability? Because if you’re buying something with no meat on the bone and the economy changes, there’s still not going to be any meat on the bone to work with,” he said.