Making smarter real estate choice in silicon valley
Co-Authored and Reviewed by Gagan Sandhu, MBA - The University of Chicago Booth School of Business, CEO of Xillion
Posted on . 8 min read
Welcome to "Real Estate IQ: Wisdom for Smart Moves." In this episode, we delve into the insider secrets tailored exclusively for Silicon Valley home buyers, sellers, and investors. Our goal is to arm you with the necessary tools to conquer the unique real estate landscape of this region.
Today, we are excited to have Gagan Sandhu, co-founder and CEO of Xillion, join us. Gagan's mission is to empower individuals with financial tools and knowledge, enabling them to make informed decisions and achieve financial freedom in the complex real estate market.
Navigating the real estate market is a challenging task. Over three-quarters of potential investors feel overwhelmed by its financial complexities, which include confusing mortgage options and complex tax benefits. Furthermore, 60% attempt to navigate these waters without expert guidance, often leading to suboptimal decisions. The recent notable changes in U.S. tax laws, especially concerning estate and capital gains taxes, add another layer of complexity.
Please note, the content provided here is for informational purposes only. We recommend consulting a licensed professional for specific legal or tax advice tailored to your situation.
Gagan, welcome to the show, and thank you for joining us. Could you give us a brief introduction to Xillion's inception into real estate and how it all began?
When we started conceptualizing Xillion, we aimed to offer our customers a holistic view of their finances and a comprehensive approach to solving their financial problems. We recognized that real estate is a crucial component of the average American's financial portfolio. After achieving certain life milestones, like graduating college, accumulating savings, or starting a family, the next natural step for many is home ownership. This is often the largest financial decision in their lives to that point. Therefore, we wanted to provide tools and guidance to help people make this decision more holistically, rather than relying solely on advice from friends and family, or information from the radio and other media. That's how our journey began.
Could you also share your personal passion behind running the organization?
As an engineer by trade, my journey to the U.S. about 22 years ago for my masters began with humble beginnings. Known as the 'poor Indian grad student,' I started at the bottom of the economic totem pole. Earning minimum wage and managing finances meticulously was crucial to avoid financial mishaps. This personal experience fueled my desire to create a platform like Xillion, to help others navigate their financial journeys more effectively.
In our conversation with Gagan Sandhu, co-founder and CEO of Xillion, he shared his journey and the pivotal role that financial diligence played in it. Post-graduation, Gagan landed a job, got married, and soon welcomed his first child. With growing family expenses, he remained diligent in tracking his finances. As his career progressed, the need to buy a house became evident, especially after the birth of his second child and the realization that their family required more space.
In 2006-2007, when the real estate market was similar to its current state, Gagan found the math of buying a home daunting. He tackled this challenge by creating a detailed spreadsheet. This spreadsheet included information about interest rates, home prices in various neighborhoods, down payment options, and different loan types. It became a crucial tool for him and his wife, helping them analyze the costs and benefits of potential homes compared to their current rent.
This spreadsheet evolved over time, guiding them in purchasing their first home. A few years later, Gagan and a friend, a realtor and fellow college alum, decided to invest in a property together. The spreadsheet proved invaluable once again, helping them analyze various properties and make informed decisions. This led to their first investment property.
Gagan began to share his spreadsheet with friends, assisting them in making decisions about buying homes or investment properties. As tax laws and real estate dynamics changed, he updated his spreadsheet to reflect these changes. He viewed real estate investing as an engineering problem, seeking the most efficient solution, which the spreadsheet provided.
When Gagan started Xillion two years ago, he incorporated the logic of his spreadsheet into an algorithm. Now, thousands of people use this tool daily.
Gagan emphasized the importance of mentors in real estate investing. His first investment property was made possible through collaboration with a friend who was a real estate broker and investor. He believes everyone has a unique superpower; for realtors, it’s their deep understanding of the market. While Gagan's expertise lies in data and AI, he recognizes that real estate is not his forte, unlike for professionals who live and breathe the industry.
Xillion’s philosophy is to connect customers with mentors who have the expertise and experience in real estate. Rather than attempting to navigate the market alone, Xillion advocates leveraging the knowledge of these "giants" in the field. This approach, Gagan believes, is a "match made in heaven," ensuring clients are guided effectively, whether they're purchasing a home, an investment property, or exploring commercial real estate.
Xillion tackles specific challenges for clients in real estate, primarily addressing two main types:
Simplifying Financial Complexity: Finance in real estate can be overwhelming, with numerous factors to consider, such as comparing different banks, closing costs, and interest rates. Xillion reduces this anxiety by providing tools that clarify the financial aspects. The platform aims to make buying a property – particularly a home – an emotionally driven decision rather than a mathematically daunting one. It simplifies the process by allowing clients to input numbers for different properties, comparing options, and presenting clear financial implications of each choice. This approach demystifies the financial complexity, making it manageable for the average customer.
Exploring Beyond Conventional Wisdom: Xillion helps clients explore options they might not have considered. For instance, they provide analyses comparing the potential growth of investing in real estate versus putting the same money into the S&P 500. This comprehensive approach ensures clients make informed decisions without the need to seek information elsewhere.
Pairing Clients with Experienced Mentors: The platform also focuses on reducing effort and anxiety by connecting clients with mentors. These mentors have extensive experience and can guide clients through the process, from finding the right neighborhood to considering various factors like schools or specific house features. Xillion believes in leveraging the expertise of these mentors, or "giants" in the field, to streamline the decision-making process.
Additionally, Xillion addresses a common dilemma homeowners face: deciding whether to sell their current home before buying a new one. To alleviate this, TrademMyHome.com, powered by Your Home Sold Guaranteed Realty, offers an upfront guaranteed cash offer on the current home. This service is particularly beneficial for those planning to move within the next 3 to 6 months.
Regarding empowering real estate investors, Xillion helps clients understand that real estate investment can be either a good or bad decision, depending on their circumstances. One case involved high-earning clients with a low debt-to-income ratio. Xillion's platform provided insights on optimizing this ratio for maximum financial returns, highlighting the benefits of leveraging bank loans for real estate investments. This comprehensive approach led these clients to consider purchasing another property for rental purposes.
Finally, Xillion distinguishes itself from other real estate platforms by offering personalized, data-driven insights and mentorship, helping clients see beyond the obvious and unlock value in their real estate ventures.
Gagan, shared insights about the uniqueness of their platform and how it addresses the challenges in real estate:
Personalization and Detail-Oriented Approach: Xillion stands out for its detail-oriented approach, different from most platforms that offer generalized calculators and analyses. They delve into finer details like maintenance costs, PMI, and debt-to-income ratios. The platform personalizes the experience by considering the user's income, marginal tax rate, and other specific financial factors to provide a tailored analysis of whether it makes more financial sense to buy a house, invest in stocks, or even rent.
Investment Growth Projection: Xillion offers a unique window into the long-term growth of clients' investments. They utilize comprehensive data to project how clients' assets, including real estate, stocks, and retirement savings, will evolve over time. This insight helps clients understand and plan their financial future more effectively.
Equity Management Tools: The platform is developing tools to advise clients on managing their home equity. For instance, they might suggest leveraging accumulated equity to invest in the market or purchase additional investment properties, providing a strategic approach to wealth management.
Staying Informed and Adaptable: To remain current with real estate trends, Xillion uses tools like the Xillion Terminal, which analyzes economic indicators and their impact on real estate. They adapt to changes in tax legislation, interest rates, and other economic factors, ensuring their clients have the most up-to-date information for decision-making.
Gagan's advice for those venturing into real estate is to "invest in what you know." He advocates for investing in local neighborhoods or towns, as familiarity with the area provides valuable insights. For investments outside one's familiar territory, he recommends partnering with a mentor knowledgeable about that specific market.
Gagan extends an invitation to listeners interested in Xillion's services and mentorship to visit their website, Xillionapp.com, for more information.
As we conclude this episode of the podcast, we thank our sponsor, trademmyhome.com, for their commitment to clients and for making this discussion possible. For those considering buying or selling a home, visit trademmyhome.com. Remember to subscribe, leave a review, and share this episode with a friend. Stay ahead in the real estate game with Real Estate IQ. Thank you for listening.
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