Making Money in Multifamily Real Estate Show

166 | Juggling Multiple Deal Closings and Data Driven Decisions with Juan Vargas

December 08, 2021 Dave Morgia Season 1
Making Money in Multifamily Real Estate Show
166 | Juggling Multiple Deal Closings and Data Driven Decisions with Juan Vargas
Show Notes Transcript Chapter Markers

Juan's Background:

  • Founder of Gen Wealth Capital Group
  • Has over 900 units AUM totaling $83MM in Texas and Arizona
  • Host of the Commit to Wealth Podcast

In this episode we cover:

  •  02:06 - How Juan has been managing all of the deal transactions of late
  •  05:54 - Getting to the top of a broker's investor list
  •  08:13 - Building relationships is a marathon
  •  10:49 - Responsiveness can win a deal
  •  14:16 - Juan's underwriting workflow/criteria
  •  18:51 - Tracking deals and their data using AirTable
  •  21:11 - Keeping KPIs on track with systems
  •  23:34 - Finding and addressing bottlenecks
  •  28:22 - The risk of losing a deal by being too conservative
  •  30:26 - 5KQ1 - If you could only pick one trait that explains your success, what is that trait and why?
  •  30:54 - 5KQ2 - What is the most uncharacteristic thing you've done in your business and why did you do it?
  •  32:21 - 5KQ3 - Can you name any time where you felt like you were not going to end up successful? How did you overcome that fear?
  •  33:51 - 5KQ4 - Can you name a time where something in your business went perfectly and what did you do to make that a reality?
  •  35:30 - 5KQ5 - What have you been focusing on lately to improve yourself or your business?

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Intro:

Welcome to the Making Money in Multifamily Show, where we discuss everything to do with multifamily real estate investing. We believe it's the best way to gain financial freedom and build lasting wealth. This is where you'll find it the best information and practices to help you succeed in your real estate business, whether you're already experienced or just starting out. Here's your host, Dave Morgia.

Dave Morgia:

Hello, listener and welcome to the show. I am your host, Dave Morgia. And with me today is Juan Vargas one.

Juan Vargas:

Hey, I'll take you for a proud beyond. It's really

Dave Morgia:

appreciate it. Yeah. I really looking forward to digging in today one and before we get there, just wanting to fill listener and a little bit more about you, Juan, as the founder of the gen wealth capital group, that team has over 900 units under management totalling over $80 million. They focused primarily in Houston and Austin, Texas with one deal in Arizona. And. Really want to just been crushing the game the last couple months, last quarter, a lot of transactions, both on the buy and sell side. So really wanted to get him on the podcast and just kind of go over what it is he's been up to and kind of just see how he's been managing all of these kinds of balls in the air, if you will. So again, welcome onto the show. And if you would just kind of tell the listener who you are and what you focus on.

Juan Vargas:

Yeah, no, certainly I certainly appreciate you having me on the show and, uh, it's a pleasure. So, yeah. Uh, Juan Vargas, uh, based out of Houston, Texas, um, you know, we're focused on, on add multi-family, uh, throughout Texas, um, with the major focus on Houston and Austin. Um, you know, as you mentioned, we do have a deal there in Phoenix as well. Uh, Phoenix has been a great market. Um, and so, yeah, you know, we're, you know, B and T you know, seventies, eighties, nineties construction deals. Uh, we have, uh, made a little bit of a shift of a focus, uh, for newer deals. I knew what construction deals, uh, here lately, um, have been, uh, you know, make it run at a few of these, but, you know, I fall a short little short, uh, here lately, but yeah, that's a little bit.

Dave Morgia:

Yeah. So like I mentioned, kind of a lot happened in lately, you know, in the best way possible for you guys. I think a couple of deals are either closing about two. And then I think you mentioned you are about to sell one too. Um, so I guess I just wanted to kind of to get into transactions, what it takes to close them, how you're managing the repetitions, it takes to get these deals either open or closed. So how, how are you kind of managing, um, you know, week to week, month to month? What is your kind of workflow?

Juan Vargas:

Yeah. Yeah. So, so we, the week, I mean, I guess is, is, uh, you, you mentioned closing transactions and closing your deals. I mean, I think we have to maybe start at the very beginning. Right. And that's, you know, getting one under contract. Right. And really that starts with, you know, brokers re. Um, you know, just making sure that we're able to get in front of brokers, you know, building a reputation with them, uh, building a solid relationship with them. Right. And, um, you know, whenever they, they bite you somewhere, you know, you say yes, and you figure it out later, right. That type of situation. Right. Um, so I've been to the different golf events. I've been to different like hunting events, uh, you know, barbecues, um, you know, all kinds of different, um, situations and, and, and, you know, it's, it's fun for me anyway. Um, so why not make it happen and talk shop and get it out there and touch up with the guys. Right. Um, and so, you know, that's really where, you know, you're able to really build a, you know, a good relationship with these guys. I mean, they're just like me. You are, they have. Uh, and, and they want to enjoy themselves and, you know, they want to work with people that they know like and trust. Right. Um, so, but yeah, you know, we, um, you know, we try to focus on, you know, staying in front of them on a, on a weekly, you know, if we can on a daily, uh, but certainly on a weekly, um, you know, we use a different, uh, different programs, uh, to, to be able to make sure that we keep track of who we're talking to. When we talk to them, what the conversation was like, Um, and then whatever we have dealers, you know, we've got to make sure that we're able to provide, uh, info as soon as possible. Right. Um, you know, time is very important to them is important to us as well. And, uh, we started to want to waste their time on a deal that we're not going to pursue. Um, and at the same time, if, if it is a deal, whether it's a deal or not, they want to pursue, we want to make sure that we're able to get back to them. Um, you know, within 48 hours with the feedback and say, Hey, look, we're not going to pursue this deal because of XYZ. Or, Hey, it looks like a deal that we like, um, you know, give us a little more time to get back to you and maybe we could throw something on and put something on the table. Right. So, uh, you know, I think that's very, very important to get that point. Um, and then once you, once you're able to really, um, have a deal, you know, that you made an offer on, you know, what you perceived the next step, which is negotiate the. Um, you know, go through that process, you know, hopefully it's, it's, uh, it's not know Olympic process. Um, I've gone through deals where it's taken us three weeks, three weeks, almost four weeks, uh, just to negotiate back and forth. Right. And then a couple of different reasons for that. I mean, one is, you know, just, uh, you know, it could be a little bit of a silence on negotiation from VRBO to buyer or seller. Um, but the other is, is legal, right? And sometimes they go, you have to. Uh, keep knocking on the door and keep following up because legal could take forever. Um, you know, they have so many different transactions and so many different situations and things that are going on. And so you're dealing just another one of the deals, right. It's not the deal. Right. So you got to make sure that you stay in front of them then, um, you know, once you have it under contract and you know, you don't capitalize. Um, you know, given what the investors, I mean, um, yeah, we can go on and on, but, um, but yeah, certainly, uh, you know, th the acquisition process can take a while and, um, you've got to make sure that you, you have, um, a good structure in place internally, but that you're able to keep track of what what's next. And, um, um, you know, not that you're, you're not able to miss anything that's important, you know,

Dave Morgia:

Yeah. So I got a few questions I'd like to hit. Uh, I'll maybe go in order here. So you mentioned there was a lot of work priming the pump getting kind of on a shortlist with these brokers. Sounds like you're doing well because you're getting invited to these kind of extracurricular events, the golf, the hunting, um, I guess first, like, is there any fun event that you can remember that like, kind of stuck out to you that you got invited to just kind of to keep it light? Was there any kind of thing interesting that, what was that.

Juan Vargas:

Yeah, I, I would say that, uh, one comes to mind and, um, and so I was in, uh, in, in best, in no, I submitted my offer and we were in that gap between the offer and best and final rate. And so I just got invited to. Um, and so I was like, okay, great. And offers were due maybe the next couple of days. Right. So, um, got invited to a little hunting, um, event and, um, it was actually one of the brokers, um, uh, families bland. Right. Uh, so went out there and had a good time. There's actually a dumpster. Uh, we're not there yet at the time. And then, um, you know, just have some beers and, you know, just, uh, you know, barbecue and all that good stuff. Right. And, and, um, you know, the conversation always goes back to multi-family real estate. Um, it just naturally happens, right. Because we're all real estate guys. Right. We're going to bring that up. And yeah, this deal kind of came up and, and, um, you know, w I think, you know, me being there and really building a more of a closer relationship, um, helped us solidify us, uh, really, you know, getting that deal. Right. So we, we went to deal with this a final and, um, and we were able to close on it. That was already where this year we've closed on it in April. And so. You know, those, those little, uh, events. And I remember, you know, it has something on the schedule for that, that they, um, that evening and not scratch that, you know, whatever activity that was. I was like, you know what, I'm going to this. And my wife even told me, you're like, you'd better get out there and go, just go out there and hang out with them. Right. So it's really, it's really cool when you have the support of your. Um, to kind of push you as well, right on she doesn't ever, um, you know, say, no, you shouldn't go or, you know, um, give you a degree for foregoing. Right. So she's very supportive and I think it's very important, but, but yeah, I think that was the latest, the latest event that happened in, you know, it turned out to be a good.

Dave Morgia:

Yeah. And, uh, awesome to have a partner like that that's supportive. That helps a ton, um, this broker reaching out, I'm sure, you know, not an overnight thing where you're having the relationship kind of at a kind of flip the table where they're asking you out versus the other way around. So how long did it take you to prime these relationships to continue to be on emails, on calls, on, you know, one-to-one to get to that spot. How long did it take you to grow these relationships?

Juan Vargas:

You know, that's a great question. I don't know how, how long, I mean, I didn't really measure that. Um, I know, I know it was a lot of input from the very beginning and by no means, am I trying to, I'm not just here and say, Hey, look, I'm the guy, you know, the only guy that talked to and they talked to a bunch of guys, I mean, that's, that's our job, right. Is just to get in front of, you know, owners or potential buyers and, and try to gain some interest for their dealers. Right. And, and so by no means, am I saying I'm special, right. Uh, I think, um, certainly at the very beginning, um, I remember thinking like, Hey man, like, are these guys that I'm thinking seriously or not? Right. Um, you know, uh, you know, I, it's easy to get on the other list, you know, you can just sign up, you know, go to their website, um, you know, Newmark, um, you know, I mean, CVRE Walker, Dunlop, um, north mark, I mean, there's so many different brokers, right? You can get on there. And then you'll be able to see what deals come out, but that's just step one. Right? Step two is really getting their attention. And I think that comes with time, right. That comes with it, you know, constant meetings and, and, and, um, and the offers that you submit, I think the offers, if you submitted an offer or not, I think it goes a long way. So I would say all in all, it took me, you know, a year, year and a half, uh, to really get to that point. Right. Pick a couple of years.

Dave Morgia:

And so I guess, Where did you go? Was it the face to face that was the most value for you since you're already in your market? How did you kind of really accelerate the relationships or were you just really good at responding to deals? Like where do you think you kind of shown to be able to kind of push the needle a little bit quicker?

Juan Vargas:

Yeah, I think it's a combination of both, right. I think, um, being that I'm looking at the. Um, you know, there's a very, a lot of very solid brokers here. Um, and you know, I think it's, it's something that we have to get out there and meet face to face. And so my, my goal every time is to be face to face with them on a weekly. Um, and so every single week, like I just sort of deal yesterday. Right. Um, and then I, uh, I'm torn another one tomorrow. Right. So I think it's very important that we get in front of them and, um, you know, show who you are. And, and, uh, if you're going to submit an offer, then submit it on time. Um, you know, giving feedback, you know, so I think, uh, to answer your question, it's a little bit of a combination of both.

Dave Morgia:

Well, that's even into my next thing. So you mentioned way back and you mentioned again, the 48 hours for a response on a deal. Um, I wholeheartedly agree. You have to reply. You have to basically show that you're engaged, right? Because if you're not engaged, they're going to stop interacting with you. So my question is maybe more interesting, but what is the smallest amount of feedback you would give or what's like the least amount of effort you try to put in as a minimum into these replies? I'm sure. I mean, at least on our team, we try to do some level of homework before we get replied, but some weeks are not as fun as others. And you just don't always have the time to do as much DD on a deal or what have you. So, so where do you guys kind of fall on, you know, timeliness or response versus really gathering all the information you have in front of you?

Juan Vargas:

Yeah, that's a really good question. Right? Cause you want to make sure that you're balancing and both right. Um, you know, 48 hours. I mean, you know, that's just our internal rule of thumb. Right. Um, you know, Whenever we responded within 48 hours. Uh, how much information did we give them? Um, you know, it could be as little as, Hey, you know, we haven't had the time over, over, over yesterday or today, you know, they're busy with this or that. Um, you know, we're still reviewing and, and, and so that, and just that alone, it tells the broker, okay, they're looking at it. They haven't, they haven't got a chance to just yet a hundred percent, but they're not. Ghosting to either, right. Uh, they know that, um, that, you know, these guys are looking at it. And so I think just, just doing that is very important and it shows a character as well. Um, and if it's a deal that, you know, you're, you need more questions on, uh, say, Hey, you look, I've already looked at this and that I'd be sending questions. And, and even if you ha you don't have all the questions that you want to ask them, you know, obviously you want to limit the number of emails. Cause they're, they're. But, you know, as long as you, you send them back, an email was what, some of the questions, right. To keep the conversation going. And then if there's other questions that you need to gather, then you can follow up with those. Right. Um, but yeah, it's important that one way shape or form that you're able to do. Uh, get back with him or a simple call say, Hey, look, I, you know, I'm sorry, Bob. I haven't been able to get to it. I'll get you a response tomorrow. We'll look at it tonight and we'll get you a response tomorrow. So something to that nature, right. Um, as frequent frequently as possible. And, um, but that you're not on their, on their, uh, their list of guys that they're probably not gonna win a deal, you know? So you gotta, you gotta make sure you do that. And it takes an effort, man. It just, it really does. And that's part of the, part of the.

Dave Morgia:

Yeah, no, you're exactly right. There's some level of, you have to put an effort forward, so they know you're not just sleeping, right. You're not just a subscriber on the mailing list. You're actually looking at the deals that come across the desk or especially if they get, especially if they give you one kind of ahead of time, you know, off market, even if it's just kind of a preview of an off market deal, you definitely need to be jumping on those even, even more so. But yeah, I wanted to kind of just gauge where you stood on that, because like you say, I think the response is more important than. Necessarily the data every single time. Now I don't think you can go every single deal and say, Hey, thanks for giving me the info. We haven't looked at it yet. I'll let you know in a week. Like that's not gonna work every time, but if it's like a week or maybe you just have some more questions, you can always just at least prime the deal conversation, like you said, and send out like the teaser email, like, Hey, we're looking, I'll get back to you in a couple of days with some more questions. Here's what we have for now. You don't have to have the whole picture, at least in my opinion, just like yours. You don't have to have the whole thing spread out right away. So. Nice to hear that from you. And as far as the, um, just getting into the underwriting, um, you mentioned. Kind of before the show that you have a little workflow to it. So at what point do you kind of bless a deal and kick-started into this whole progression of underwriting versus, um, keeping it kind of more at the broker owner, uh, kind of transactional, you know, talking through the deal, kind of sniffing it out phase. So like where does it become serious where you actually start looking at it? Like for real.

Juan Vargas:

Yeah. That's a great, that's a very good question. I mean, You know, I think like, like everyone, we, um, we have a certain criteria that we go off of. Right. Um, if it doesn't meet the criteria, then we, we're not gonna look at it. Right. Um, now there are exceptions to that, you know, we're, we're broker brings us something that doesn't really meet the quality criteria, but there's a certain, um, uh, situation or story behind it that is intriguing. And then we'll, we'll say, okay. Um, you know, we'll, we'll take a further look, right. But I think, uh, for the most part on a regular deal, if it'd be some criteria. Um, which for us, I mean, it's, you know, what that went too much into detail. Um, you know, the, the market, uh, the median income, you know, not in a flood zone, you know, that Houston has no pockets raid on none, a flood zone, um, and, and value add, you know, for the most part, then, then, you know, we'll, we'll proceed further. Um, we have a little process. Uh, we have an on an underwriter, uh who's who basically is, it's like, you know, we asked as a VA, a very solid guy. He does underwriting. He does that first round of underwriting for us. So we'll send them the info. Uh, he's able to get us back, um, on our spreadsheet that we put together, um, the details. And then, um, you know, it's, it's sort of a round one. It's like, okay, That means the returns criteria at this stage right now for, you know, you want to go further from that and say, okay, what other opportunities can we go from here? Like, are there any other opportunities for me to produce? You know, um, how is that going to look? Uh, but we just haven't like, you know, a placeholders for certain things. Um, uh, and then, and at that point, that's when we're looking further. Right. Um, and, and, uh, you know, we take it to the next level right. Of underwriting, which is where we're actually digging deeper into it. And, and, and seeing if it's a deal that we're actually going to go after, um, at the end or not, you know? So, so, yeah, it's a couple of, couple of different stages. Um, you know, we have our VA, but, you know, we communicate via, via. Um, Microsoft teams and then we have all of our deals, um, and uh, on air table. And so, um, you know, we have different statuses on air table that, uh, you can pretty much label as, you know, um, you know, underwriting and then you can put on there, uh, you know, LOI submitted and then, you know, raising capital or just whatever, whatever stage you're at. Right. Um, but, but what's neat about that is that you're also able to keep track of. You know, the, um, the deals that you've looked at in a certain market and sort of see what the, the cap rates were on a T 12 on a T3 basis, you know, sort of look at, you know, what, what the expenses were, uh, what the ratio was a percentage. Um, and, and, you know, it helps you with your underwriting on the current deals, right. If you're able to look back, you know, so I think it's, uh, as good, good information, go to KPIs, track. Um, and then, um, you know, then if it checks the boxes, then, um, you know, we want to go the next step, which is, you know, getting, uh, Dick quotes, getting insurance quotes, um, you know, talking to the property manager, looking at their performance, how they would manage it. Um, we don't compare it to that. And, you know, if we're still in that ballpark, then, then yeah. We're, we're doing the next step, which is, uh, an actual offer, you know? Um, so yeah, that's a little bit of high level of the process that we do, you know?

Dave Morgia:

Yeah. That's, uh, that's awesome. That air table setup sounds really interesting. And you mentioned the VA does kind of just the more copy and paste underwriting set up. Um, My question is since that's probably a relatively cheap set up between that VA doing the work and the air table is a great data set. So you kind of lean more towards underwriting, more deals than you probably would otherwise, like maybe, maybe it's like a. You know, you're not sure if it's going to, if it's going to pencil out. So you just decide to do it anyways, because a lot of deals you can kind of next just with some napkin math, but having that data set in air table, it seems like a pretty great kind of a complete story of the market as a whole, for the last, you know, however many years you've been on or anything. So it seems like even if maybe the deal won't pencil, it still might be worth it to get the interesting deals in there just to have the history.

Juan Vargas:

Yeah, no, certainly I think, you know, uh, to answer the first part, um, yes. You know, having the VA has certainly helped us to go through the deals a lot quicker. Right. Because it's a lot of time consuming, uh, you know, it, and, you know, just inputting the financials in a rent roll in going through all that. Right. And really dissecting it. Right. It's, it's, it's a, it takes some time right now for, and so, uh, being able to delegate that part and that piece, I mean, I think it's, it's very helpful and we're able to look at a lot more deals. Um, and to your second part of the question, or, or, um, which you mentioned was, um, yeah, Eric table has been, um, and this is actually, uh, my partner's idea using air table. Um, I wasn't going about it using another platform, but irritable has, has, has been the one that I, you know, at first I was like, man, how do you even use this thing? You know, like, it was just all over the place, but

Dave Morgia:

now every other tool,

Juan Vargas:

like every other tool. Right. Um, and I think it's, you know, it's important that you, you, you have. Support that you're, that you stay open to the different sources and technologies and platforms, right. Um, you know, just because you use one doesn't mean that that's the one that you should use, you know, moving forward, um, be open to that. And you know, for me, I was Google everything, right. Google sheets would go just for everything and, um, You know, um, using this, it just, it makes things a lot simpler. And as you mentioned, don't worry about to sort of, um, you know, we have a deal, you know, even if it, if it doesn't take a hundred percent of the criteria, uh, we want to underwrite it, put it into the system, um, and see kind of how it compared to other dealers in the market, in that pocket of town. Um, cause we're also like, you know, how. Um, as, as one of the filters. So, you know, you're able to kind of see things right. And we had to buy it by zip code by, by year construction, by unit count, uh, by, uh, romper per square foot by, by, uh, rent per unit. So just, uh, a lot of different categories in it. And, um, yeah, that's all, you know, could have, so to my partner,

Dave Morgia:

Yeah, it just seems like that's a great set of data to not necessarily, um, underwrite a deal just for the sake of having the data. But if it's even close to something that might be useful down the line to maybe underwriter. So you have that extra layer of just the transactional data of the deal, instead of just having the purchase price and the unit count, you can have all the rent rolls and everything kind of stored for later for reference, just like you said. So it sounds, it sounds like you can really filter down, which is.

Juan Vargas:

Right. And then in addition to that, you're able to also keep track of your target, um, you know, number of deals that you you've underwritten right. For a certain week, for a certain month, for, for a year. And so it's, it's hopeful, you know, like if you have a certain goal in mind, like, do you want to close four deals in a year? That's one a quarter. Well, how many deals does it take to get. You know, it's a hundred years, we have to underwrite to get that one. And then, you know, how many offers we have to make it. And so it just kinda, you back filter that way and you're able to, um, be able to, um, you know, keep track and, and, you know, strategize a lot easier. You know, uh, for the teacher, right. Moving forward, right. Based on what you did wrong, what you did. Right. You know, so I think that's another thing to, that's why it's beneficial.

Dave Morgia:

Yeah. That's a, that's a super popular method of backing out your goals for the year, right? Is you got to underwrite X, many deals per quarter, per year, whatever. Um, and with that, like you said, it's, it's becomes how many you underwrote, how many, you submit an LOI on how many you get to best, you know, best and final, et cetera, et cetera. So. What is your number, I guess, maybe break down a couple of them. And then what is your probably, if you had one biggest bottleneck to continue that pipeline, to make sure that you're staying on track of those KPIs.

Juan Vargas:

Yeah. Yeah. So, I mean, I think, uh, for us, I mean, we try to target, um, you know, at least, you know, uh, At least a couple of offers in a week. Right. Sometimes it's less, sometimes it can be more, um, and you know, but we have to go through a bunch of deals, right. I mean, just. Um, you know, probably go through, you know, a couple hundred know dealers on the, on the low side. Right. Um, so it definitely is, uh, doing, going through a lot of deals, a lot of info, uh, to be able to, you know, try to try to put something out there. Right. Uh, w w you know, for example, we have a deal tomorrow, uh, that's that's due, right. And then another one is doing that the next day, and then just, you know, somebody that offers them that an offer. And it does just the way it is. Right. But, but these aren't just, we're not just, you know, Yeah, darts out to the wall and just see something sticks. These are deals we actually went through, um, and you know, strategically, right. And with the purpose and therefore moving forward within an ally. Right. So I think it's, um, yeah, we just try to target as many as possible. Right. But, but at the minimum, you know, um, you know, one or two a week, you know,

Dave Morgia:

and then is the bottleneck. Underwriting the deal is would it be on finding good ones? Like, I mean, cause you can underwrite a bunch of them, but you know, you might not be finding value. So do you have to like recalibrate in that part of it? Is there anything that's really kind of you're actively working on right now? I'm not saying there's any weakness necessarily, but usually there's gotta be some sticking points somewhere, right?

Juan Vargas:

Th that's you're you're right there. There is. I mean, I don't think the, I mean, at first the bottleneck was, was sort of on underwriting. Right. Um, you know, I think we we've added to that. We've improved that, but I think the bottleneck right now is, is finding the deals and underwriting. Well, right. You know, you can underwrite a hundred deals, but like, you know, getting, if we went back to the numbers that I, that I mentioned, right. Uh, you know, very few are going to underwrite or are going to be in the range and, you know, as competitive as it is right now, you know, w you, you think that your, uh, You know, you're, you're trying to be conservative. Uh, same time. There's a balance, you know, you don't want to be too conservative. You, you want to be a little, you know, a little bit more in the middle to be able to try to win a deal. But, but, you know, we, we found, you know, with all of our offers is, is guys are coming in and in a much, much stronger terms, much stronger, um, you know, uh, offers. And so, you know, they're ultimately gonna win the deal, right? Uh, And so, you know, I think it's, it's a little bit of a balance of the deal making sense, and then your, um, uh, aggressiveness or lack of aggressiveness, you know, to, to be able to try to win a deal. And really, you know, it just depends on, on the actual deal, the sub market and how much you, you want the deal. Right. And that's gonna come down to, but, um, I think those, those couple of things, right. Having deals that make sense. And then, um, And then in the next year it went and done, right? I mean, I mean, the deal is that we like are the deals that everybody else likes as well, and there's going to be a bunch of offers on them. Right. And, um, you know, a lot of times we're competing with, uh, more solutional guys. Um, and you know, sometimes there's, there's not much competition there, right. Because they're, the cost of capital is much lower than ours. Right. So they can offer more for the deal rate. So, um, but yeah, I would say those.

Dave Morgia:

And I think you kind of hinted at something interesting too. Um, you mentioned kind of finger out the ones really worth going for, and like you say, you're not putting out offers on bad deals necessarily, but at a certain point sometimes there's that, that maybe that one deal where you just know. Um, it underwrites well, but also there's so much upside and you can't underwrite to the upside, but you know, if you can figure out a way to kind of save your downside and this deal and make it pencil a little bit better, you just feel really excited about it. There's just, you know, there's just a lot of boxes getting checked off on these types of deals and you just want to figure out a way even more on this one particular deal to kind of figure out a way to get it closed. Um, so how do you kind of balance that? By still staying conservative, but also really trying to win those even. I mean, they're all diamond in the rough now, but the even kind of tougher diamonds in the rough.

Juan Vargas:

Yeah, that's a great question. I think, I think, uh, for us to be more, more aggressive on deals, it's, it's a. You know, I, I, you mentioned at the very beginning, you know, we're, we're, we're looking sort of at the newer product deals. Right. And, uh, you know, the next couple of dealers that I mentioned that are due this week are newer, newer construction deals. Right. Um, I think, you know, being where we are right now, um, you know, we are trying to focus on those a little bit more. Um, but those are the deals that where I can feel a little bit more confident on being more aggressive than. Um, you know, you have a 50 year old building, right. You know, 1970s build, uh, that's selling at a three and a half cap, you know? Um, yeah, sure. You can do all this value add for, from next year, at that point from. What about the plumbing? You know, what about that roast? What about, you know, the, the foundation? What about the electrical? You know, you're still going to have issues with those, right? I mean, they're still there, right? You didn't change those. Right. Uh, the previous owner didn't change those. So I feel less confident, um, you know, offering and being, being as aggressive on those types of deals versus a new deal in an up and coming part of town or. Or, you know, an area that has higher, higher median income, where there's more residual income, right. Where residents are able to pay better and on time and they have more flexibility. And so I just, I feel that, um, you know, for us, uh, the strategy has shifted towards a new construction deals. Um, and those are the ones that were, where were we. Uh, I want to say happy to be more aggressive on, cause you're never happy to be focusing on and pay more. Right. But, uh, those are the ones where we would, uh, be open more, um, to, uh, to be more aggressive on, you know, so that's our, you know, um, I guess, uh, internal process and, and how we think about that. Right. So, you know, you've got to choose.

Dave Morgia:

Yeah. And that's the thing, I mean, once you're as into an its market, like you are in Houston say, um, you, you kind of get that feel of, of these areas that are up and coming and you can understand what might be happening in the next year or two, and you can underwrite it. Like I said, you can't underwrite those rents, but if, you know, you can kind of protect the downside and you have like a say, yeah, like a new development deal where there's not going to be a lot of downside risk to it. You really kind of want that deal because you just know what, you know, what could be. Look three years later and that deal is doubled in, in valuation. You're just kicking yourself because you offered a couple of hundred thousand dollars less or something like that. It's, it's a balancing act constantly, but yeah, I just like to hear people's take on that cause it's, it's very tough to do. Yeah,

Juan Vargas:

yeah, yeah. For me, I I'd hate to lose a deal for a couple hundred thousand dollars right now, if it's a couple million, then yeah, you can, you can have it maybe. Right. Um, I, you know, I said maybe because it's just the principle, the deal, right. Uh, but if it's a couple hundred thousand. It's like, Ben just offered it. Right. You'll you'll do well. You'll do well in the deal. Um, especially if it's in a good pocket of town. Right. And, um, yeah, but we look at that and, uh, you know, I guess another point on, on deals that we're, we're more aggressive on is, um, our deal is where. Uh, you know, the, the, the cost of single family homes are much higher rate and say, you know, two to three times more. Right. So, um, it kind of priced out a lot of the, the potential residents, uh, from buying homes. Um, and so it kind of pushes them towards a renting rate. And so it just, it brings you more of a, of a renter pool, uh, which makes that property even more valuable in my opinion. Right. So, um, a few, a few things that I write, so.

Dave Morgia:

Yeah. And again, that's like, once you get into your neighborhoods, you, you can kind of really plant your flag on, okay, this is the type of deal. Or I really got all the good feelings about it. I can, I can't necessarily say it's going to underwrite like this, but I can have a good feeling that there's a lot of potential for this thing to just pop off in a couple of years. So, yeah, really interesting. Yeah. And Juan, as long as you're ready, I'd love to get into these five key questions to wrap up the.

Juan Vargas:

Sure. Yeah, let's do it.

Dave Morgia:

Yeah. So first one here, if you could only pick one trait that explains your success, what is that trait in Y

Juan Vargas:

um, yeah, I would definitely have to say perseverance. Right. Um, you know, I think that, uh, you know, you go through a lot of challenges, you know, through, through your life and through your career. Um, and if you don't have that, that trait, um, if you give up too easily for any little thing, um, then it'd be hard to be successful. I think perseverance by far is, is, is one thing that I would.

Dave Morgia:

And then what is the most uncharacteristic thing you've done in your business and why did you do,

Juan Vargas:

um, I would say, um, believe it or not, it is, uh, you know, doing podcasts, uh, you know, getting out to conferences and conferences and being on, on the, on the panel. Um, you know, uh, you know, I'm more of an introvert naturally, so, you know, doing these things, you know, it's, uh, you know, you can be a little bit out of your car. Um, so I would say that that's, you know, both personally and for the business has been like a big improvement and, uh, it really benefited from it because, you know, Hey, you got to get out there right on for any, any kind of line of business. Um, you know, you had to get yourself out there and put yourself out there. You

Dave Morgia:

know, I have to flex those muscles, man. Yeah. I mean, I'm similar to you. Everyone likes to call themselves. They used to be an introvert. I think it's a little bit of that, but it's more of just, you never practiced those muscles. It's like, you didn't learn how to walk, you know? So you got to put some steps in and figure it out. So you gotta, yeah. Just get out there and start talking. And eventually you don't really care what you say anymore in public or in person or whatever. You just, you just kind of get over it. Eventually go listen to my old episodes. Yeah. There are no good, but eventually you just get over it and yeah, you just kind of keep moving

Juan Vargas:

forward. That's exactly what it is. You have to just keep moving forward. And at the end of the day you realize that it's not that big of a deal, right? No, nobody cares what you think or how you're thinking about yourself. It just, just be you,

Dave:

right.

Dave Morgia:

That's what it is. Exactly. And then kind of eking into this next question, but can you name a time where you felt like you were not going to be successful and how did you overcome that?

Juan Vargas:

Um, yeah, I would say. At the very beginning, uh, when I first started, um, you know, I, you know, I felt I was so pumped up to get into the business and, you know, just, you know, hadn't had the entity set up and add, you know, this going in all these different teams and, you know, just, just starting out. Right. Um, And I remember thinking that like men, I'm not really getting any, any calls. I'm not like nothing's going on. Like, what's going on? Like, how do I get, I like, I want to be busy and, and, um, you know, it kind of, those kind of ideas kind of creep into your mind a little bit, but you know, you have to tell yourself, Hey, Don't even, don't even try to think about it. Right. You know, get out of here, I'm going to be successful, uh, because you know, I want this, but I would say at the very beginning, and then, you know, uh, I guess, uh, first, uh, first deal that we had to raise capital for. I mean, I think it's, it's, it's definitely, uh, nerve wracking, you know, and you know, you're, you know, you don't know if you're going to close, you don't know if you're going to have all the money raised, you know, those little things, but, but it comes, becomes easier over time. It becomes easier as a game and track record is built. Um, and so I would say those couple things, right. Um, or times where I didn't feel so good at that very moment, you know, but you just got to overcome it, you know?

Dave Morgia:

Yeah. Yeah. And kind of, one of the things is just keep staying busy if you can, and you don't give yourself time to think sometimes, you know, if you stay busy enough, maybe you just power through it because you were preoccupied there. There you go. There you go. And then flipping that one, one, can you name a time where something in your business went perfectly and what did you do to make that a real.

Juan Vargas:

You know, I, um, that's a good question. Um, and I would say, you know, there's, there's some really smaller things that have gone well. Right. Um, but I wouldn't say that there's anything has gone perfectly, man. You know, I, I thought about, you know, thinking about this question right now, um, it's, it's. It's hard for me to say that things have gone perfectly in every single situation which they have, like for every situation that we've been in, there's always been some sort of a little challenge, big or small. There's been some sort of challenge that we've had to face and, and, you know, as entrepreneurs, as, as problem solvers and whatever you want to call us, you know, it's. Uh, um, not panic and, uh, you know, look at it from, from a, from a good, um, good sense and put everything on the table and, and really try to figure things out. So I would say, um, you know, there's been a lot of times where we've had some things go well, but, but not like. Um, it just, it's just the nature of the business, you know, it was just, just off, you know?

Dave Morgia:

Yeah. You can have the best business plan, the best people on your team and all your ducks in a row. And somebody is going to throw some curve ball, I guess

Juan Vargas:

Mike Tyson's cold, man. That's, that's one of my favorites. Everybody's got a plan until, until they get punched in the face. Right. Um, then that's, that's exactly what happens. You're like, yeah, this is gonna happen. We're gonna do this. We're gonna do that. Nope. You know, life has a way of, of, uh, you know, putting you back in your place. Right. If you could look at it, And so, um, so yeah, I would say, you know, uh, not this perfectly I've gone well, but, uh, close to perfect is what I would say, uh, several times.

Dave Morgia:

Yeah. Yeah. That's great. And then what have you been focusing on lately to improve yourself or your business?

Juan Vargas:

Um, yeah, that's, that's another great question. I mean, I think it's a, it sort of goes back to, uh, to, to your second question was, uh, you know, being what was the most uncorrect characteristic thing, right. Um, You know, the, what I try to do it and hear what I've been doing more lately is networking. Uh, you know, I find myself really enjoying networking, um, you know, paying for these conferences, you know, um, you know, there's one that, uh, I I'm thinking about going to, um, that's in Miami, that's upcoming, um, and you know, it's, you know, it's probably the most, uh, paid for. But I'm thinking about just going in and just networking with what's odd people there, um, you know, masterminds, those are always good and, and wrapping, wrapping those up here lately as well. Um, and then reading, you know, I'd been trying to focus on, on reading as much as possible, you know, and, um, you know, blown by my 2020, uh, um, target or goal that I hit, um, you know, doing better in 2021 then than it was in 2021. You know, in the middle of the pandemic. Right. So, um, so yeah, you know, just continue to improve, um, and trying to be a, you know, a better person, better husband, a better father, um, you know, better, um, you know, um, uh, partner, uh, business and, and all, all of the above, right? Just a better follower of, uh, of, uh, of Christ, you know, at the end of the day. Right. That's what I, you know, believe in. And, um, that's what, uh, is most important. Right? So just a little combination of all.

Dave Morgia:

Yeah. And that's, uh, something I am working on a lot too. Uh, there's so many different corners of your life and the real estate and the business side of things is amazing, but you gotta make sure you're keeping up on the other stuff in your life, the family and the friends and the fitness, all, all these things. Right. So it's important to make sure you're not too imbalanced. And it sounds like you're, you're making sure you're being honest with yourself. So that's amazing.

Juan Vargas:

Yeah. Yeah. I mean, ultimately that's what we'll do is, you know, well is your time your, your family, your. Um, your, your spiritual beliefs, like all that right. Money is just a tool. A Walt is, is, is, is life, you know, uh, all those pieces in it. And, um, you know, that's, you know, that's, I think everybody's goal is to, to have that freedom, to, to be able to have those be in those situations, right. Where you're in good health and you have a family and all that, right. Yeah.

Dave Morgia:

Yeah. So while we're all striving for good, uh, can appreciate your time more today. One, I really enjoyed this conversation. I think we went in with not, not a super set topic and I love these episodes when I don't have a super set topic because we just kind of float around and we get to really kind of dig at some fun stuff. Um, getting into little things like even just air table or, you know, how you look at deals or even just talking about what it takes. Get connected with a broker and actually make an impression to go out hunting. Just, just enjoy those kinds of pieces that you wouldn't normally get. If you kind of stick to like a strict little, little path here on a conversation, so appreciate your time today. And just before we hop off, do you want to let the listener know how they could reach you today?

Juan Vargas:

Yeah, no, certainly appreciate your time as well. Um, you know, it was, it was very fun. I, I really think. Um, yeah. You know, thank you. Uh, you know, people can reach out to me, Adequan at gen wealth, capital.com, one at gen wealth, capital.com. Um, you know, it should be an email and love to connect with anybody there. And, uh, you can find me on, on, um, on social media as well. Um, the one Vargas, um, so it's usually Instagram and Twitter or Facebook. Yeah.

Dave Morgia:

Thanks again so much for the time.

Juan Vargas:

Thank you so much. Appreciate it.

Thank you for listening to the show. I don't take your time and attention for granted and appreciate that you would spend it with me. If you enjoyed this show or any of my previous shows, it would be a huge help if you would rate and review the show on Apple Podcasts or your favorite podcasting service, or even just share the episode with a friend. And if you'd like help from me or would like to talk about real estate investing further, feel free to visit the show notes for more information, or you can visit davidtravis.com.

How Juan has been managing all of the deal transactions of late
Getting to the top of a broker's investor list
Building relationships is a marathon
Responsiveness can win a deal
Juan's underwriting workflow/criteria
Tracking deals and their data using AirTable
Keeping KPIs on track with systems
Finding and addressing bottlenecks
The risk of losing a deal by being too conservative
5KQ1 - If you could only pick one trait that explains your success, what is that trait and why?
5KQ2 - What is the most uncharacteristic thing you've done in your business and why did you do it?
5KQ3 - Can you name any time where you felt like you were not going to end up successful? How did you overcome that fear?
5KQ4 - Can you name a time where something in your business went perfectly and what did you do to make that a reality?
5KQ5 - What have you been focusing on lately to improve yourself or your business?