Investor Interview: Cary Huang
Real Estate investing from a tech veteran
The Kirkland Capital Group investor community has many different types of investors — each with their own story. In this interview I talk with Cary Huang. We discuss his background in computer science and math, and how this has influenced his investing, as well as the importance of advisors. We also consider the affect the Coronavirus Pandemic is having on remote work and its long term affect on secondary and tertiary markets for multifamily.
“…try to find trusted advisors. They could be professionals that specialize in whatever it is you’re trying to understand, or it could be people that you trust that have done well, and listen to what they have to say. Definitely it’s a lot more about listening and learning than talking.”
“I think having opportunities to get engaged on the debt side is a really good way to diversify, it reduces your risk.”
Full Interview
Brock Freeman: Cary, it’s great to have you on for this investor interview. I looked forward to this and glad that we could get this together and get a time that worked for you.
Cary Huang: Glad to be here, Brock.
Brock Freeman: So let’s start off and talk a little bit about your career. Where did you go to school?
Cary Huang: I went to school at University of Washington and then took some executive programs at UCLA.
Brock Freeman: How did you choose UW?
Cary Huang: My parents opened a restaurant in the University District, and I wanted to stay close to home where I could help out when needed. The school was just down the street.
Brock Freeman: I imagine then most of the customers you had were students then? A lot of student lunchtime specials.
Cary Huang: Yeah. It was a lot of college students and my dad who owned other restaurants had come to the realization that a sit down cloth napkin restaurant would not fit a college profile. So he very quickly pivoted to a buffet and it did really well. It was all you can eat broccoli beef and you know, the standard things.
Brock Freeman: Yeah. I’m remembering those student days, I’m sure that all-you-can-eat was a huge hit.
Cary Huang: Yeah. It was all about volume.
Brock Freeman: So tell me more about your time at UW. What were some interesting classes that you took?
Cary Huang: UW was an interesting time. I goofed around quite a lot and even at one point took about six months off and went around and traveled. It took me awhile to get my footing in place in terms of what I wanted to study and major in.
I bounced around all over the place from business to computer science and math. And at one point I was a philosophy major. That didn’t last very long; as soon as my folks found out, I ended up studying computer science and math.
Brock Freeman: Where did you go on your travels?
Cary Huang: I met this very interesting girl, and her and I traveled all over the country. We took her car and we drove up and down the West Coast, and went inland and went to the Grand Canyon, and stuff like that. So it’s kind of interesting. Right? You’re 19 years old and just really for the first time getting out there alone.
Brock Freeman: Sounds like a lot of fun.
Cary Huang: Yeah.
Brock Freeman: Computer science and math. It seems like a hardcore science area.
Cary Huang: Yeah, that’s always been my background. Even in high school I spent a lot of time studying programming and computers, and so it was actually very comfortable for me. My student advisor had said, look, you got to figure something out and graduate. Then she looked at my grades and she said, you know, you do really well in these two areas and you’re pretty close, so why don’t you just pick that, and under pressure from the university, I made a decision.
Brock Freeman: Interesting. So now, where do you work? And tell us about your company.
Cary Huang: Right now I work at Capital Group Companies. Capital Group Companies is a large financial services company. They provide asset management, wealth management, and mutual funds.
You may have heard of the American Funds mutual funds. That’s one of the companies that’s owned by Capital Group. They’re pretty large and probably a little over $2 trillion in assets. I work at the company in the business management group, and lead the team that provides strategic sourcing services for technology.
Brock Freeman: How big is the team?
Cary Huang: It’s a team of 10 people. We help with negotiations and help the company spend their money wisely when it comes to technology.
Brock Freeman: That could be a tough job these days. I imagine with technology pulling ever more and more dollars spend for companies. There’s just so many things to spend your money on when it comes to tech.
Cary Huang: Yeah, it’s something that really has become very strategic to the company because we spend upwards of $1 billion a year on technology. It’s not about whether or not we’re going to spend it. It’s more about how we’re going to spend it and what’s strategic about it, and helping the company understand the strategy behind how we will spend the money. So that we’re being responsible to our shareholders and our customers in terms of the amount of returns they get.
Brock Freeman: You live in Southern California. Work is in Southern California, right?
Cary Huang: Yeah, I’m in a place called Foothill Ranch, California, just a little bit south of Irvine, California. Up on the hills here it’s pretty nice away from the traffic.
Brock Freeman: Did you end up moving there because of the job or you moved there and then found the job?
Cary Huang: I was actually in a different field before. I used to be in IT and technical operations, and managed technical teams. At one point I had my own company and as a result of that company being sold, I moved down to California to help with the transition. A year into the transition, I realized how much I enjoy the weather down here from where I lived previously, which was Seattle, and decided to stay down here.
Brock Freeman: So you like that sunny Southern California weather, right?
Cary Huang: Yeah, it’s nice. I still miss the rain and the greenery in Seattle. Everything down here tends to be a little bit on the brown side during the summer. But, I still go back to Seattle a lot and visit my friends and family.
Brock Freeman: Not a long flight.
Cary Huang: Yeah. Two and a half hours to three hours depending on Alaska airlines, how they’re doing that day.
Brock Freeman: So tell us about your investment portfolio.
Cary Huang: I work in financial services and the company makes sure that all of our employees are very well educated in terms of the different types of investments we could have access to. For me, a lot of it is around a long term focus, so I’m not as interested in short term gains. I’m not right now in my life looking at generating cashflow. It’s more about long term retirement, long term returns. I try to keep my portfolio very diversified among equities and other types of investments such as real estate.
Brock Freeman: Looking back over the past few years, what are the top two or three investment challenges you’ve faced?
Cary Huang: For me the technology has always been a challenge. As technology has gotten better, whether it’s automation, or artificial intelligence, or just access to data; whether it’s through your mobile device, or through a laptop, there’s just more data, more information out there. So one of the challenges is as technology has made data more available as an investor, as a consumer of that data, how am I going to interpret it? how should I be thinking about it?
I’m right now taking a series of courses at Cornell on data analytics and data science. It’s very interesting learning how to think about all that data consumers have access to. If you think back, maybe even a decade ago, we consumers and investors didn’t have access to that. That was very specialized. Nowadays there’s so much data. How do we react to it? How do we think about it?
You look at what’s going on in the market today, every day you go into your apps tracking stocks and portfolios. It’s flashing red lights and green lights, and trending up, trending down. How do you interpret all that. I think technology has enabled us in a lot of ways but, in some ways it’s also made things hard for people who don’t understand what that data really means.
Brock Freeman: You’re lucky that you’ve this very unique background with both math and computer science. Even if you didn’t necessarily study those things in school because there wasn’t big data at the time, there wasn’t that kind of analytics at the time, you still have that foundation in order to then learn and be able to start digging into that. How do people who don’t necessarily have that background dive in and start analyzing or figuring out what’s important out there? Especially with their limited time?
Cary Huang: I heard Warren Buffett said something before about really only looking at things that he knows about. So for me, I started looking at areas of my portfolio that were technology because that’s my background, that’s where I came from. I know the terminology, I know the companies. I started digging into those things and really learning, challenging all the information that I read, whether it’s on the internet or what people tell me, and verifying that information myself.
The other part of it is to try to find trusted advisors. They could be professionals that specialize in whatever it is you’re trying to understand, or it could be people that you trust that have done well, and listen to what they have to say. Definitely it’s a lot more about listening and learning than talking.
Brock Freeman: I think back to all the stuff I’ve learned from certain advisors I’ve had around me, and I certainly wouldn’t be where I am today without that. What would you look for in someone who is a good advisor, and that doesn’t necessarily need to be a paid person? What should someone be considering when they talk to other people about getting advice that you feel is important?
Cary Huang: You have to have some level of trust with that individual or that group. Think about all the components that would build trust, the relationship, transparency.
Brock Freeman: You want to talk about someone that is a trusted advisor that you talk with a lot about investment?
Cary Huang: I’ve got a group of friends down here in Southern California that have a chat group. We’re always on there talking to each other, talking about what are you doing, what’s happening, what are you seeing? None of us are paying each other but, we’re friends, we know each other, we see each other all the time. It’s a good way to bounce your ideas off people. It’s important that the group trust each other and the group realizes that no one’s going to take responsibility for what somebody else does based on the actions or discussions that you’re having with them.
Brock Freeman: Is everybody in your group in tech or you have a pretty wide range of people from other industries?
Cary Huang: It’s diverse and we deliberately keep it that way. We’ve folks that are in the medical field , in biotech, technology, and oil and gas. There’s a few folks that have law degrees. It’s an interesting group and it’s slowly growing. It’s the idea of a brain trust. Everybody knows a little bit about something and together if we share our knowledge, then the collective becomes more knowledgeable.
Brock Freeman: Earlier you mentioned real estate investing. When you started to think about real estate, what you were looking to accomplish by investing, particularly in commercial real estate debt?
Cary Huang: On the asset side I’ve looked at single family homes, I’ve looked at flipping homes, I’ve looked at income properties. After spending a number of years really thinking about it, and really diving into what the cost and benefits of those are, I settled on looking at multifamily. I feel like that’s where my best bang for my buck will be. And given that my interest is more longer term, that sits well with that strategy.
From a debt side, this is something I’m very interested in from a portfolio diversification perspective.
Brock Freeman: What is something that you found different from what you expected when you first were introduced to this idea of being able to invest in commercial real estate versus at the end when you invested? What was your thought process?
Cary Huang: From a commercial real estate perspective, and I suppose some of this could extend to residential as well, the areas that I thought would be good investments turned out, actually, that was a terrible idea. There’s always a bias to want to get engaged in properties that are physically close. Distance bias. I always thought I need to have it close to me. I need to be able to drive out there and see it. The problem is, given where I live, that narrows my field of options significantly. I needed to think of it not as an emotional attachment in terms of an investment in a property, but rather I need to think of it more like a business.
I need to look at the various attributes of what makes a property attractive to want to invest in. Once I started deliberately eliminating those types of biases from my head in terms of thinking about what I want to get engaged in, it really opened it up and I began to see far more other opportunities that previously I would have just skimmed right by.
Brock Freeman: That makes sense. here in Seattle and down where you live you’re really limited on cashflow and ROI on a lot of real estate investments. I think we’re both faced, in both our state and your state, or different cities like Seattle, that are very tenant friendly. Some of these things aren’t necessarily a bad thing, but they are something that you have to consider when you’re investing in real estate.
Cary Huang: Absolutely. The laws that exist in different States could make life very difficult for landlords. In California it’s very tenant friendly as well. We have to be very careful what types of properties you’re investing in because some of those laws could impact you. Not to say that there are no opportunities, right? I’ve looked in Washington state and I would probably stay away from western Washington, but in eastern Washington, Tri-Cities area, there’s some good opportunities out there.
Brock Freeman: A lot of growth in Eastern and central Washington with all the tech workers that have fled Seattle, but can still work remote or drive over. Very interesting to see how much those communities have changed in the last 10 or 15 years.
Cary Huang: Yeah. What’s happening right now with the COVID-19 epidemic, we’re being forced to transform how we think and look at working remotely. Companies that previously would never have thought of it are being forced to make this work. What we’re going to find, I think, in the industry is that there’s going to be a transformation in how companies look at working remotely. What that means is if you think about the population center where all the industries are, which are generally on the coast, what’s going to happen is that maybe that will allow them to entertain workers working remotely in less populated areas where it maybe cost living is lower. That could be beneficial to people that have investments in those less populated areas of the country.
Brock Freeman: I think what you’re saying is these secondary and even tertiary markets, if we use Washington as an example, these places like Tri-Cities, Yakima, and Spokane, are going to be the net beneficiaries from people who end up being able to move away from the larger gateway cities because of cost of living. This Coronavirus has accelerated the ability for companies to allow for remote work.
Cary Huang: Yeah, and the technology is there to do it. It’s a shift in culture, in thinking, that needs to happen. So whether people like it or not, a lot of companies being forced to do that.
Personally, if I could move to Yakima and work there remotely, I totally would. The Yakima river, that’s awesome. I’d go fishing on that river every day.
Brock Freeman: Yakima has certainly changed incredibly over the last 15 years. It’s just not the same place, and some darn good wines and excellent Mexican food. It’s really a great place.
Cary Huang: That’s right.
Brock Freeman: Do you own any other investment real estate?
Cary Huang: No, not right now. I’ve got a couple of opportunities that are pretty close for commercial real estate. That’s all I’m looking at right now. We’ll see how those play out. Things have kind of slowed down a little bit in terms of people’s willingness to move at the pace we want. That’s primarily because of the lenders that we deal with. And then also some of the third parties that you rely on in these types of deals, whether it’s independent inspectors or the various trades that you need to help with your due diligence. It just all slowed down for obvious reasons.
Brock Freeman: Are you taking a more active part in finding and sourcing these deals and putting them together, or are you still more on the passive side on these?
Cary Huang: I’m definitely more on the active side. I have a group that I partner with and we each have different roles in terms of what we do. My role is to help with more of the finding of the deals and identifying various investors.
Brock Freeman: How does that compare for you with your experience in investing in commercial real estate debt?
Cary Huang: I think having opportunities to get engaged on the debt side is a really good way to diversify, it reduces your risk.
On the equity side if for some reason the economy goes a certain direction and people started renting apartments that could be a great opportunity to either liquidate the property when the value is high, or make cashflow from rent.
On the other hand from a debt side, it’s collateralized, depending on how the deals are structured, so it lowers your risk and you can probably get a decent return. Certainly more than keeping your money in a bond, in your savings account, or money market account. I look at it as a way of diversifying my risk and shifting things around, that’s important.
Brock Freeman: That’s a good way to look at it. One of the things we think about here is how it’s even in some sense better than holding a piece of property without any debt. If the value of that property drops a bit, then you’ve lost that. Whereas, if you’re just holding the debt, there’s a lot of room for movement on the top end value that could be depressed, and yet you haven’t seen any reduction whatsoever in your principle or your value of that debt.
Cary Huang: Yup. It’s all about diversification for me, and that’s why that’s something very interesting for me.
Brock Freeman: Let’s talk about a few things a little more fun.
Cary Huang: Sure.
Brock Freeman: What things would you really want to do more of, but don’t necessarily always have time?
Cary Huang: Well, I hinted on that earlier. It’s fishing. When I came down to California, the only fishing they do down here that’s real is either you fish off of the piers at the ocean, or you go ocean fishing. Based on where I live, there’s just not too many opportunities to do fly fishing, which is my passion. I love fishing. If I could do more fishing, I would.
Brock Freeman: What new belief, behaviors, or habits with in the last five years have most positively impacted you.
Cary Huang: Having a family has really changed my thinking about life and everything tied to it in general. Whether it’s a career, whether it’s long term thinking, everything. Having kids, you start thinking differently. It’s no longer about what do I want, what’s the next thing I want to get to? It’s more about what’s good for the family, what’s good for the kids. You start thinking about the future.
Brock Freeman: What books have you gifted the most?
Cary Huang: There’s this author called Robert Fulghum, and he’s actually from the Seattle Northwest area. He wrote this book called, “Everything I Need to Know I Learned in Kindergarten”. It’s a very interesting book. It talks about things that we learned in kindergarten, like washing your hands, be nice to people, don’t swear, don’t push, always say you’re sorry. It’s basically a series of stories about him. It’s a very short read. I think that as an adult, sometimes you forget about some of those things you learn in kindergarten, right? It’s enlightening and it’s good to be reminded of how people should be treating each other.
Brock Freeman: Sounds like a good book to read during this coronavirus pandemic.
Cary Huang: There’s another book I recently bought for our entire department. it’s called, “Fish!” It’s written by Stephen Lundin. it’s basically a story about a person trying to work on their company’s morale. Her company happened to be across the street from the Pike Place fish market. Every day she goes to the fish market and watches how all those fishmongers interact with each other, and how excited and how much energy they have, and eventually starts interacting with them. She writes about some of the lessons she learned from interacting with those fishmongers, and how she brought that back to her company to really transform the culture in the company. It’s also a short read.
Brock Freeman: Nice. Well, Cary, really appreciate your time.
Cary Huang: Yes, thank you. Good to be on the call. Thanks Brock.
