JF2454: Finding Stability And Security With Real Estate With Eng Taing
Eng Taing was born in Thailand in a refugee camp. Growing up, his background gave him a strong push to seek more and hustle in order to achieve success.
When Eng grew up, he started looking for ways to invest his money. He disliked the stock market for its volatility, and the crash of 2007 proved him right. So Eng put his money into a triplex which gave him a predictable and stable income. He scaled his business by becoming a limited partner in syndicates, and now he helps other investors do the same.
Eng Taing Real Estate Background:
- CEO and Founder of Touzi (Toe-Zee) Capital
- Born in a refugee camp in Thailand
- 12 years of investing experience
- Touzi Capital portfolio consist of 625 units with $85M under management
- Based in San Francisco, CA
- Say hi to him at: www.touzicapital.com
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Best Ever Tweet:
“I gravitate towards those who are open to sharing and educating ” – Eng Taing.
Theo Hicks: Hello Best Ever Listeners and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Eng Taing. Eng how are you doing today?
Eng Taing: Good. Thanks for having me Theo, I appreciate it.
Theo Hicks: Thank you for joining us. I’m looking forward to our conversation and diving into your background and what you’re up to today. Eng is the CEO and founder of Touzi Capital. He was born in a refugee camp in Thailand. He has 12 years of investing experience. His company, Touzi Capital, has a portfolio of 625 units which is over 65 million dollars’ worth of property under management. He is based in San Francisco and his website is touzicapital.com. Eng, do you mind telling us some more about your background and what you’re focused on today?
Eng Taing: Yeah, I appreciate the introduction. Since I provided that bio, I actually did close on another 171 units and we’re almost at 85 million of AUM now. So pretty exciting what we’ve been able to accomplish the last few months.
My background – to talk about how I was born in a refugee camp in Thailand… My parents are Cambodian Americans. During this time of the early ’80s, there was the Pol Pot Regime and that awful war and genocide. I wasn’t really very cognizant back then, but I have pictures of myself chasing chickens in a refugee camp. It was a pretty formative time in my life, just struggling, growing up pretty poor, coming to the States when I was young, growing up in LA, and seeing my parents hustle like they did. It was pretty formative on how I grew up, what I thought about money, what goals I needed to achieve, and why I needed to achieve them. That’s sort of a little bit of my background. I can go a little further if you want.
Theo Hicks: Yeah, sure. You got to the States and you grew up in Los Angeles; maybe talk to us a little bit about how you got into real estate investing initially.
Eng Taing: So I went to Wharton. After I went to Wharton, I got into investment banking. I saw all the capital markets and how much people were making in stocks. By that time I was day trading as well. I really didn’t like the volatility. When the stock market crashed in 2007, I didn’t like it even more, and I gravitated towards predictable cash flow. So around 2009, when I first started to have some amount of savings, I bought my first triplex. This was right before I went to the Peace Corps, and this is when the prices of these triplexes were 1/3 the price they were two years ago. I thought they were a good deal and they were making 13% to 14% cash on cash. I was like, “This is great. I can just buy this, collect some rent, add some paint, maybe refinance in a few years when things go up again or things work better.” But I really liked that predictability. That stems from my background in finance, and more unpredictable markets like stocks. I just really gravitated towards predictable cash flow. That was my first deal, around the age of 23.
Theo Hicks: How did you find out about real estate? Did you know about it while you were doing the day trading and the banking? Or was it once you realized that you didn’t like the unpredictability of what you’re doing, you started searching out other things?
Eng Taing: I knew real estate existed from a real estate finance perspective. I took a bunch of classes on it. What really opened my eyes was my parents started to buy real estate a few years before that. We grew up pretty poor, and they all of a sudden became rather okay; not rich, upper-middle-class, but just having a little bit of safety and security. I was seeing that they were doing it, they were hustling, and that really spoke to me. I really enjoyed seeing them achieve that. They’ve been my role models and I wanted to see if I could do the same thing.
Theo Hicks: Perfect. So you bought your first property at 23, you said. Did you continue to follow the same business plan of buying triplexes or these kinds of small multi-families for a while? Because I am imagining right now, your 625+ units, and you said you had another deal you did – those aren’t all triplexes, right?
Eng Taing: No.
Theo Hicks: Yeah, so maybe walk us through your journey from the triplex to now you’ve got $85 million under management. How did you get there?
Eng Taing: So with most people, I’m sure what they try to do is go and find properties that are familiar and accessible. So for me, that was buying in my home market of LA. I was actually living in DC at a time, and then went to the Peace Corps. So investing out of state… I kept buying in LA, SoCal, until 2015. I bought a triplex first, a quadplex, another triplex, a quadplex; I bought one every year as I could get capital savings and refinances. I’m a pretty prodigious saver. I remember when I was in Peace Corps I was making $200 a month, and that included money for housing. I got out of the Peace Corps with around $700 in savings. That’s just how much I don’t spend on myself.
So I’ve always been a prodigious saver, and when I could find a good deal, I would just keep buying it. That’s what I knew at the time; I didn’t know what the BRRRR method was or that you could actually buy large-scale commercial properties. That’s ultimately what I ended up doing. But it was a good learning experience to see and buy these properties and create value through a little bit of facelift, a little bit of interior design, and just some market rent corrections.
Theo Hicks: So you said you were investing out of state until 2015, triplex and quadplex, one a year. Once you stopped doing that, what was the next thing you did? Did you immediately go to these large multi-families or was there an intermediate stage?
Eng Taing: Yeah, there was an intermediate stage. I got really busy with getting married, working at Apple, having a kid… I’ve just had another baby, he’s one month old today. I’m not sure when this podcast is being released, but… Life happens, and the market before in California just didn’t make sense to me anymore. I don’t like to compromise my cash flow or my return, so I ultimately looked at passive syndications and I looked at investing as an LP in other people’s deals, because they were getting some similar cash flows that I was probably more used to. I started just investing in that and seeing how that worked. I learned a lot. Everything I tried to do, I tried to ask a lot of questions and learn, even though I was just an LP. But that helped me just continue to wet my appetite around cash flow and multifamily.
Theo Hicks: Perfect. Is that what you focus on now, is passively investing?
Eng Taing: No. I did that for a few years and then I started to buy some of my own smaller multifamily. 20 units, 26 units, and then I bought some retail shopping centers, which are actually performing very well because their dollar [unintelligible [00:09:54].13]. I started going to bigger and bigger, 5, 7 million, and it kept snowballing. When I was at Apple, I helped lead the Apple Real Estate Investment Club. I was just talking about all these things I was doing, because I love talking about real estate, I love talking about real estate investing. I love helping people and showing that, “Hey, this is an alternative to investing in stocks. You can get cash flow.” It felt very good to just see that coming into the bank. It doesn’t matter if you’re working or not, you’re just getting that, because that’s an asset that generates cash flow. Then people started to ask me, “Can I join? Can I co-invest with you?” I wasn’t comfortable accepting people’s money until I was very good at making money myself. I felt that way more recently, and so that’s how I launched Touzi Capital. Since then, we’ve done 7 deals, closing on the 8th this month. We should be close to 100 million on the management by February.
Theo Hicks: Interesting. One thing that we talk about on this show, I do a series called Apartment Syndication School, we talk about different ways of raising money for deals. One of them, which I haven’t been able to talk to a lot with you about is — obviously, you were doing some deals on your own, first a smaller deal, but then you essentially got the education and the comfort from passive investing in large deals before you bought your own deals. Maybe walk us through a little bit some of the benefits from your perspective of being an LP before being a GP.
Eng Taing: I think being an LP, you’re changing your mindset from doing the active work to thinking how is my money going to make money? How is it relatively safe and in good hands? You have to do all the probably similar underwriting, you’re taking assumptions from people, and you’re potentially validating those assumptions. So you do get, hopefully, a lot of information, and get to essentially ride along the acquisition and underwriting. But you also see best practices of what they’ve done, what happens when you encounter an issue, what does GP do, and if the GP and the syndicator invites open and honest communications and transparency, which is what I try to do with our investors now… Then you’re learning, and I really enjoy that. That wasn’t available at every deal I invested in. I gravitated towards those who were open to sharing and educating, and I was pretty open about it. I told them, “Hey, I’m looking to hopefully do this one day myself. I’m looking to learn, invest with you, and grow with you.”
So that’s what I do now. I try to reciprocate to our investors the same favor, that hopefully everybody can do exactly what they want to do… Whether they want to just be a passive investor, and they love their jobs, or they want to quit their job and learn to be a GP themselves, and be in the business of running real estate investments.
Theo Hicks: Something else you said that I thought was fascinating was how you got investors from that real estate investment club. Are those most of your investors? People that you met through that real estate investment club?
Eng Taing: It started out that way. I believe one of the strongest things that I did initially – and this comes from my time at Apple and the other big companies I worked for – is if you focus on the consumer, in this case, the investor, and you provide them transparency, honesty and open communication, and you provide them solid returns pretty quickly, people start to trust you. It’s a leap of faith to invest with anybody, and they constitute a core group of my current investors. But they have referred people, I have expanded beyond that base, and it’s been really rewarding to help people and provide people opportunities to them that they’d never seen or haven’t had access to. They share that opportunity with their friends, and it’s a really helpful community that I hopefully have created.
Theo Hicks: So you started off with the Apple Investment Club people and then they referred their friends to you?
Eng Taing: Yeah. So now I have a lot of investors all across Silicon Valley, somebody who used to be in tech for a long time, I have a lot of investors from Apple, Google, Zoom, and Tesla, and those companies have done well this past year.
Theo Hicks: Yeah, that’s awesome. Thanks for sharing that. Okay, what is your best real estate investing advice ever?
Eng Taing: Partner as much as possible. Have an abundance mindset. What I mean by that is, if you think this deal is going to make or break you, you’re going to put too much pressure on yourself, you’re going to try to do too much yourself, and you’re not going to be generous with partnering. I say generous because you want to give as much as you receive, if not more, and then hopefully that comes around. But if you think that this is the only deal you ever do, then you probably won’t feel that way, and that’s natural. But if you think that this is first of many, then you’ll be generous and partner with people and you’ll grow faster, you’ll learn more, and you’ll find great people to work with.
Theo Hicks: Perfect. Are you ready for the Best Ever lightning round?
Eng Taing: Yes, sir.
Theo Hicks: Alright. First, a quick word from our sponsor.
Theo Hicks: Okay Eng, what is the Best Ever book you’ve recently read?
Eng Taing: I’m actually not a big book reader. Now that I don’t commute, I don’t have much time to listen to audiobooks. The best resource I use to stay up to date within my area of expertise is just talking to people, talking to people around myself. I have probably 12 Zoom calls a day, six days a week. Sometimes they’re investors, sometimes they’re new people I’m connected with. I love this industry because of that. I find that they’re best books and resources to learn from.
Theo Hicks: It’s a different approach to the answer. I’ve never heard that one before. I really like that though. Okay, if your business were to collapse today, what would you do next?
Eng Taing: I invest in high cash flow assets with high DSCR, debt service coverage ratios –I’m sure your audience knows that– and I underwrite with conservatism. I believe we have resilient products with assets that can 20 to 30% higher vacancies. But obviously, macroeconomic disruptions could occur. I still have my family and I wouldn’t mind spending more time with them.
Theo Hicks: What is the Best Ever deal you’ve done?
Eng Taing: The next deal.
Theo Hicks: Is there a time that you’ve lost money on a deal? If so, how much did you lose and what lessons did you learn?
Eng Taing: The deal I lost the most money on was my first deal. When I say lost money, I really mean time. Because ultimately, you could spend a ton of time and try to fix things that you’re essentially putting your own sweat equity into. But then if you value time at all, more than $15 an hour, hopefully $500 an hour, or something that really helps you understand the value of your time… I lost a lot of money because I spent a lot of time doing things that, now looking back on it, I don’t know why I was doing that, or I could just outsource it. I wasn’t creating scalable solutions, I didn’t create a team, I didn’t partner with people… That’s why I believe in strong partnerships, because losing money and losing time, it’s the same for me.
Theo Hicks: What is the Best Ever way you like to give back?
Eng Taing: I love to mentor new partners that are just starting out in real estate. I wish I had this knowledge when I first started out. I hope to impart to them and help them in their real estate investing journey. I think this is a truly valuable thing, and not just because it creates generational wealth, but it gives you options that hopefully people are excited about providing people communities to live, but also providing yourself financial security and freedom to do what you want. Hopefully, that’s giving back yourself.
Theo Hicks: What’s the Best Ever place to reach you and get on one of these Zoom calls with you, too?
Eng Taing: Get on one of these Zoom calls… I love talking to people. Theo introduced my website, touzicapital.com. But I’m also launching another site, Financial Freedom Decoded. It is a free site, just check out the site. I want to help people reach their own financial freedom. I believe everybody can do it. It depends on your timelines and your goals, but just with disciplined investing, cash-flowing assets, and tax advantages, you can achieve it as well.
Theo Hicks: Alright Eng, thank you so much for joining us today and providing us with your Best Ever advice. Lots of good takeaways. You basically told us about your journey, very inspirational, from being born in a refugee camp in Thailand to now having a business with $85 million under management and kind of how you got from A to Z. We talked about how you started off in finance banking and day trading and why you decided to transition into real estate. We talked about your first phase which was buying the quadplexes and the triplexes out of state, and at one point out of the country, and then ultimately transitioning into passively investing. Then we kind of went into details on some of the benefits of being a passive investor before you are an active GP raising capital. You said about how you then went and started using that information to buy real estate on your own. Some medium-sized multifamily, retail shopping centers, how u got bigger and bigger and bigger.
One of the things you said that I really liked was how you were able to grow into raising capital by essentially just telling everyone what you were doing and attempting to educate people on this new investment class that you loved, and that you thought was a lot better than the stock market, and other types of investments. And how you decided to hold off and not instantly jump into raising capital, even though it sounds like you had a lot of interest, you waited until you had that confidence that came from that proven track record, and doing it yourself and knowing that you are good at it, so you can make those people money… And how it started off with people in that group, and then by focusing on your consumer, your investor, by providing that honest communication, and by obviously, providing returns, those investors trusted you, and then they in turn referred their friends to you. It sounds like it was kind of a snowball effect from there. Maybe not a lot of proactive effort required to raise capital if you follow that approach.
Then your Best Ever advice, which was about having that abundance mindset that allows you to partner with people as much as you possibly can. Thank you again so much for joining us. Everyone, make sure you take advantage of his offering to speak with you on Zoom. Check out his website and touzicapital.com. So Eng, thank you again for joining us. Best Ever listeners, as always, thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.
Eng Taing: Thanks.
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