In a world where financial freedom is the ultimate goal for many, Bala Krishnan’s story offers a refreshing perspective on how to achieve it through disciplined real estate investing. From his humble beginnings as a tech entrepreneur in Silicon Valley to his current focus on ground-up build-to-rent communities, Bala’s journey is a testament to the power of strategic thinking and unwavering commitment. Grab the key points from his interview with Chad Ackerman on the Passive Investing from Left Field podcast.
The Tech Entrepreneur’s Awakening
Bala’s entrepreneurial spirit was ignited in 2008 when he founded Peel Technologies, a pioneering company that aimed to revolutionize the way we interact with entertainment devices. With initial seed funding secured on the fateful day of September 15th – the same day Lehman Brothers collapsed – Bala and his team navigated through turbulent times, eventually raising an impressive $96 million from top-tier Silicon Valley investors.
Despite the company’s remarkable success, Bala’s foray into real estate investing would prove to be a game-changer. After acquiring a multifamily property in Dallas in 2013, he quickly realized that the passive income generated from the investment, while consistent, was not enough to achieve financial independence at a satisfactory pace.
The Birth of the 10Y Model
Dissatisfied with the limitations of traditional real estate investing, Bala and his mathematician wife embarked on a journey to create a model that would accelerate their path to financial freedom. They recognized that the true wealth lay in the value appreciation phase of a property, where returns could reach 100% or more, rather than the modest 3-5% annual returns generated by holding properties for cash flow.
Thus, the 10Y model was born – a strategic approach that maximizes exposure to the high-return value appreciation phase while minimizing exposure to the lower-return cash flow phase. By selling properties after the initial value appreciation and reinvesting the proceeds into larger projects, Bala and his wife were able to compound their wealth exponentially.
The remarkable success of this approach was evident when Bala’s first real estate investment in Dallas yielded a staggering 2.35x return on his initial investment in just 22 months. This pivotal moment solidified his belief in the power of the 10Y model and set him on a path to financial independence far sooner than anticipated – in just 8.5 years, instead of the projected 10 years.
The Wealth Multiplication Mindset
At the core of Bala’s philosophy is the belief that wealth multiplication, rather than cash flow or tax advantages, holds the key to life-changing financial outcomes. He challenges the conventional wisdom of investing solely for cash flow, arguing that small cash flows are insufficient to achieve significant wealth accumulation.
“If your goal is simply to get 5% cash-on-cash every year, then you should do that,” Bala says. “But in my own personal journey, I discovered that the 5% cash-on-cash is not enough to get to retirement. It’s like investing without a strategy or investing without a destination.”
Instead, Bala advocates for a laser-focused approach on wealth creation, which he believes can lead to transformative financial events much faster than either cash flow or tax mitigation strategies.
The Ground-Up Build-to-Rent Approach
One of the pillars of Bala’s 10Y model is the emphasis on ground-up build-to-rent developments. This strategic choice is not driven by market trends but rather by the inherent advantages it offers in executing the mathematical precision required by the 10Y system.
By building from the ground up, Bala can precisely control the number of units and the scale of each project, ensuring a seamless transition from one investment cycle to the next. This level of control is essential for maintaining the exponential growth trajectory envisioned by the 10Y model.
“If I have to only look at properties that are already existing, then it becomes pretty challenging because with the capital I have, I need to deploy all the capital,” Bala explains. “If I’m doing ground-up, I can dial the knob perfectly for the math. I know exactly how much I’m going to exit with, and I can then plan ahead for exactly how many units I need to be building.”
The Discipline of Sticking to the Plan
While the 10Y model is undoubtedly compelling, its success hinges on unwavering discipline and a willingness to walk away from deals that fail to meet the stringent criteria. Bala firmly believes that making money begins with buying the right property, and he is uncompromising in his approach to underwriting and deal evaluation.
“We are always updating our underwriting model,” Bala says. “We tweak it to current market conditions, and then all the deal flow that is coming in gets thrown into that. If it can stand the test of our underwriting, then we’ll do those deals. If not, we will simply pass on those.”
This steadfast commitment to the model, even in challenging market conditions, is what separates the 10Y approach from more conventional real estate investing strategies. By remaining true to his principles and refusing to deviate from the proven path, Bala has created a replicable system for achieving exponential wealth growth.
The Road Ahead
With the sale of his tech company behind him and a newfound focus on real estate, Bala’s journey has come full circle. He now resides in Paradise Valley, Arizona, where he pursues his passion for ground-up build-to-rent communities and land development in the Phoenix metropolitan area.
Through 10Y, Bala has packaged his experiences and insights into a product that invites other investors to participate in the wealth-building potential of his model. His unwavering commitment to discipline, mathematical precision, and strategic thinking has not only paved the way for his own financial independence but also serves as an inspiration for those seeking to break free from the constraints of traditional investment approaches.
As Bala’s story illustrates, the path to exponential wealth is not about chasing the latest trends or succumbing to the allure of quick fixes. It is a journey that demands patience, perseverance, and an unwavering adherence to a well-crafted plan – a mindset that has guided Bala’s remarkable transition from tech titan to real estate visionary
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