How A Silicon Valley Software Engineer Found 4 Startups & Public Company with Tony Lin
Tony Lin, a software engineer in Silicon Valley for over 20 years is also a founder of 4 start-ups. 2 of the business have gone public. The conversation dives deep into understanding the real estate industry on apartment complexes, what the business model looks like, how favorable the market of the complexes will look in the future, and his entrepreneurial journey.
Tony Lin (Sillicon Valley Software Engineer & Entrepreneur)
Just like our founder, Tony Lin’s background is in tech. He is a software engineer for 20 years in Silicon Valley, doing a lot of small startups. He expressed his gratitude in being fortunate enough to be in 4 startups, 2 of which went public. That was how he get initial seed funding for some of his investments.
He has deep interest in personal finance and investment which brings him to invest in places like Beijing. Currently he wants to diversify his funds in addition to index funds investment. He first ventured into single-family homes and later got to know about the apartment business which was more like a company business. According to Tony, the business was valued more on one’s performance, more on one’s income, and what the market was doing in terms of neighboring housing. It is more predictable, on how to improve and execute the business plan and have a predictable outcome. Tony is rather conservative so he would prefer to invest in something safer, that will do well during the downturn.
Buying Single-Home VS Apartments
Single-family homes depend on the market, it could be crazy, everybody moves up. But when the market turns, for example, when interest rate goes up, all of a sudden prices would start to drop. In comparison, apartment business is more stable. The evaluation is based on how much profit the apartment can generate. So, in a startup for example, if the revenue is $10 million, there's usually a multiple to that.
Say your startup makes $10 million a year or a quarter, multiply by a multiplier of 20, then your company's worth about $200 million. The more revenue you're able to generate, the more valuable your startup is worth, the apartment is very similar to that. The more income the said apartment can generate half a million dollars of income a year, multiply that by 20, this apartment is worth $10 million.
If you're able to improve on that, if you're able to generate more income by renovating the units or providing new amenities. The more income you're able to generate. Let's say you go from high $500,000 of income to $800,000 of income. Now the apartment is worth $16 million because 800 times 20 is 16 million.
The cap rate is a way to measure how much are you paying for a certain amount of profitability, a cap means for every dollar, there's a 5% cap rate. So one divide by 5% results in a 20 multiplier.
Tony’s Entrepreneurial journey
Tony started with companies of 10-20 people, but over the years, he would grow the company, business, and people. However, by the time a company hits 700 to 800 people, politics are setting in.
Tony preferred having a small environment where he knows, these guys worked together as a team, there are no levels of management. Everybody just work together to hack things together and come out with it. He is a very hands-on kind of guy and prefers smaller numbers. This is just an engineering problem. This is why once he gets a company to go public, whether it has gotten large enough or acquired by another company, he would seek for the next adventure.
Through that, he has resisted chasing the big management ladder for a long time because he enjoyed getting his hands dirty and working on the code directly. Later on, he started to passively invest, and work on these apartments. He prefers getting out there, rather than being stuck on an office chair, but to go explore and travel.
Tony has a meetup group as well, where he discusses all these things he has learned and he finds it enjoyable and rewarding. Join his Silicon Valley Multifamily Investor Club.
Reach Out to Tony Lin Today
Email : tolin@linkmultifamily.com