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November 23, 2021

Feeling Free And Finding A Better Path With Juan Vargas [EP076]

Do you feel stuck or trapped? Juan Vargas went to technical school and was a BMW technician. He was sitting in traffic one day and was thinking of a way of feeling free and finding a better path. Right then and there he decided to commit to investing in real estate. Fast forward to today and he's invested in over 2,300 units, with 1,300 as a General Partner (GP). He focuses on building a strong team around him. Listen and learn how Juan built his business from scratch.

Table of Contents:

From Feeling Trapped to Feeling Free

From Feeling Trapped to Feeling Free
Photographer: Omar Ram | Source: Unsplash

Darin: Juan Vargas lives in Texas with his wife and three children. He felt trapped. He wanted a way of feeling free. He wanted a better path for creating wealth for his family and he found it in multifamily real estate investing. He's the host of the Commit to Wealth podcast and an investor in over 2,300 multifamily units.

Juan, I appreciate you coming on the show.

Juan: It's my pleasure. I certainly appreciate it. Just excited to be here with you and share my story and hopefully add some value to your audience as well.

Darin: So we met being part of the same multifamily mentorship group. We run in the same crowds, go to the same conferences, and know the same people. Juan actually has a podcast himself. He's had it for several years. I want him to talk about that as well. Share with the listeners, how many properties and how many units you are currently invested in.

Juan: A little over 1,000 units on the LP side, so I'm a limited partner as well. It's solid to be able to do that. Then on the GP side, a little over 1,300. The deals that we directly oversee and lead is about 900 units out of those 1,300.

Darin: What were you doing before you got into real estate investing? What was your career path?

Juan: I worked for BMW. I was a technician for BMW for many years. Growing up, I skipped the traditional college route. I went straight to a technical school. That was because my dad told me to work hard with my hands and learn to work that route. Work hard with your hands and go that route. So I did.

Discover How To Save Taxes and Build Wealth

Trying Something Different

Juan: I went to technical school, and I ended up working for BMW. Then I went to college afterwards.

Darin: You were raised to go to school. Get a technical skill so that you can get a job and earn an income that way. You did that for many years. At what point did you, all of a sudden say, I'm going to try something different.

Juan: To this day, I remember driving home. The thing about a W2 job is you're driving to work, then you're driving back home. That can be just an hour each way, at the minimum. Sometimes I remember driving home and there's a ton of traffic. I also remember thinking, it's time for a new vehicle, time for a new truck. Then I was stuck in traffic at the light and thinking, you know what? If I'm going to get myself a new truck, then that means I'm going to be stuck at this job for much longer. That means I'm going to be stuck in this traffic for much longer as well. What's the end goal here? I thought to myself, there's got to be a better path, and I can't continue to do this.

And just not spending time with my family either, working really late hours. So then I was like, that path is going to have to be real estate for me. I started looking into real estate, and into single family. That’s how I got into real estate, it was through single family. I didn't look back from there.

Darin: What year was that when you purchased your first single family?

Juan: 2015.

Real Estate Gives You That Feeling Free Vibe

Darin: You said the answer was, you're at the light. You say, where's the end goal on this? What's the better path? Then you concluded real estate. I didn't hear anything that you said prior to that, that would even put that idea in your head. How did you come up with real estate?

5 Step Process Ad

Juan: My dad was actually in real estate. He's been in real estate since I was young. I remember him telling me one time, you should probably do this as well. But I was a younger kid, I didn't really think of doing that at that time. As I researched more, it just made more sense for me. It was already something that I was thinking about, and I had already tried even before. I tried it around '09, 2010. But I was trying to buy houses at that time, the traditional way, which is through a bank. You're getting approved, you're getting finance and all this good stuff.

During those days, those properties, and those deals were not ticking off like that, there were cash buyers, hard money lenders, that type of thing. I wasn't competitive enough during those days. That's why when I was looking at that light, I reverted back to that. I was like, you know what? I'm going to try it again. It wasn't my first time thinking of that. I'm going to try it again but this time, I'm going to make it happen for real. So that's how that came about.

Darin: What did you do for research?

Learn Your Way to Feeling Free

Juan: I was reading books as anybody who has any interest. You start to find the best path to put your research in all those books, internet as well. I ended up coming across BiggerPockets in 2014, which is a great resource for anybody out there looking to really learn. There's A through Z in that. A combination of all those helped and assisted me in my learning progress and path.

Darin: BiggerPockets is an online forum that basically goes over all kinds of different real estate investing. It has forums where people ask questions, and there are threads. You can see people who answer. It could be single family, all different types of real estate investing. You could focus in on the niche that you want to look at. There's also all kinds of webinars you can look at. Was there one or two books that stood out as critical in your thinking and motivation?

Juan: The very first book that I picked up, specifically real estate, was the Millionaire Real Estate Investor. Was it Gary Keller? I can't remember the author's name. That was a great book. I remember reading it, opening it up and I couldn't put it down. It just made a lot of sense and it added more fuel to the motivation that I already had at that time. I was excited to get going. Besides that book, there's several others, but that was my very first one.

Darin: You said that you were going down a bigger path, that your dad has done it. That's a consistent theme I see with a lot of successful real estate investors. They find other people who have already done it. Then they go and mimic their success.

The Light Bulb Moment

Darin: You saw your dad do it. I'm assuming your dad did single family, so that kick-started it. You bought single family and then, how did you think about transitioning to multifamily? You're now doing very large properties.

Juan: One of my single family properties was the reason why I decided to get into multifamily. I had this property that was a good single family rental. My tenant there was a great tenant, he was in the military. He ended up having to leave and get stationed somewhere else. So I went back to the market to get it rented again. It took a little longer than a month. What I realized at that point was that I had to pay for the expenses, I had to pay for the mortgage.

I had to pay for the utilities, I had to pay for the turn to really get the property back in ready condition. So I was setting aside some funds that I thought were more in cash flow. But then, it went back to the property and I was like, this is my fault. A light bulb went off, right there, it's my fault because I was relying on one person. I was 100% vacant because of that.

The light bulb went off. I thought to myself, if I had 10 units, 10 different residents paying and one of these residents left, then I still would have been 90% occupied. It was just a simple idea that came into my head. I was like, I'm done with single family, I'm going into multifamily. Not only that, but it was difficult to scale. I had a goal in mind.

Feeling Free to Pursue Multifamily

Feeling Free to Pursue Multifamily
Photographer: Dino Reichmuth | Source: Unsplash

Juan: It had to take me 60, 70 houses by the time I got to that point. I was going to be a really old man and I didn't want to wait that long. So multifamily just made a lot of sense. I was also researching and learning more about it. It wasn't something that just popped into my head, and, this is the last show for me. I'm doing multifamily because I already learned a little bit. That's how I jumped into multifamily and did no more single family from that point.

Darin: I've talked about this over and over again, you've got to get educated. Once you get educated, you have to take action. You wouldn't have gotten into multifamily, had you not purchased a few single family because that's where your mindset was at the time. Then once you did that, you had that experience.

That forced you or at least changed your mindset to go after multifamily. At some point, you have to get off the fence and actually get something done. Then all of a sudden, your goals change. Your goals may not be that big at first, but then your goals change after you get the experience.

I had a very similar experience to you. I’ve started with a new construction duplex, which took a year to build. Once we leased both units like nothing, it was very easy in the first year. It was like, I just got the money wired into my account, ACH’d into my account, and it was easy. But on the first renewal, one of the tenants ended up buying a house and moved out. It was the end of October. Now we are trying to find a new tenant for November.

Building a Vacancy

Darin: It went vacant in November, December, and January, so three months. I went from 100% occupied to 50% just like that. I'm older, I had capital. It didn't change my lifestyle at all. I had to pay out, cover the difference, but it wasn't a big deal for me.

But for some people, it's a huge deal to all of a sudden be expecting that cash flow. People underwrite single family differently when they first get in. They think of single family or even a duplex as, what's my total income for the year? What are all my expenses? That's my positive cash flow, but they don't build in vacancy. In multifamily deals, every deal, there's some vacancy that's built into it. So it's already in the numbers.

Juan: A lot of those single family, they can see your economic vacancy. Including your bad debt, or even concessions and all that good stuff. The difference, in my eyes, is that most single family will be run by a husband and wife. Maybe it's a side gig that they're doing.

But multifamily is a business. The lenders can be underwriting as a business, you have to treat it as a business. Therefore, you have to account for the economic vacancy proper and reasonable expenses. In single family, you tend to not do that. It's like, here's the rent. Here's my expenses. Let's say this is my net, but there's a lot more to it than that. That's why some people may get into trouble. You're not treating it as a business 100% from the beginning.

Opportunities Make You Feeling Free and Optimistic

Darin: Today's a very hot market. Interest rates have come down, cap rates have come down, you own a lot of different properties. You're both an LP, as a GP, and a JV GP. So, are you a buyer or seller in this market?

Juan: I'm still a buyer. We certainly are in a very hot environment. There's several reasons for that. We don't have to go into all the details. To summarize, so buyers, we're still bullish on the market. We're cautiously optimistic, I would say. Again, we are at the top with pricing, we are at historical, low cap rates. But we're still having consistent and strong rent growth, job growth, all those items that we're looking for. So, we're still looking for new opportunities.

Darin: You still think that it's a good market to be a buyer. There's some people who either haven't purchased before or maybe they've purchased or invested in one. But everybody knows that it's a hot hot market, both on the residential side and also on the multifamily side. There's different schools of thought, like, we're at the top, and I'm getting out. Or, I'm a buyer and a seller. Here's why I'm still buying. You said that you are still buying, what's your rationale?

Juan: There are several reasons why we are still buying, and these are in no particular order. Number one is the basic fundamentals of what we look for. For a market that has population growth, job growth, and therefore has the potential to have rent growth, we're still having that. Where we look for properties is mainly in Texas, and Texas, as you know, is a very strong and pro business state.

Almost Inflation Proof

Juan: Therefore, it makes it easier for us to proceed with looking for properties. Inflation is now five to 7%. Real estate is really an asset that's, I wouldn't say 100% inflation resistant or proof. But usually, when inflation increases, everything goes downhill. Which means that rents also go up.

If you are able to lock in a rate on your debt at a certain percentage, debt service, and your rents is going to go up, then that's another good sign for us to look at. We are looking mainly for newer quality assets at this point of the market cycle. For better quality and better sub markets and better locations like that.

If there’s a little bit of resistance or softening in the market, we have that in a profile. That has more of that residual income to be able to withstand any correction or any softening in the market. Versus they're going for full C class property with C Class residents that are living paycheck to paycheck.

It just makes it a lot more difficult. But yes, the other part of that is that we're still in a historical low-interest rate environment. You can argue, yes, your historical low-interest rate environment, but then your prices are very high. Some people may argue that they correlate or they do not correlate.

I've seen it that they do correlate in a way where prices were lower, but interest rates were a little higher. Since then, interest rates have gone down, but prices have increased. If you're able to lock in a strong, very favorable rate in this environment, you should be good for the foreseeable future there as well.

Why There’s a Big Increase in Pricing

Juan: But people also look at prices today versus maybe, you're looking at a price, 150,000 per unit on a deal that's called 123 Main Street. Maybe, that same deal seven years ago was 50,000 a door. So, you're trying to understand why there's such a big increase in pricing.

For one, the rents weren’t at 1,300, 1,400 back then. Maybe they were 500 or 600 bucks back then. Of course, pricing is going to increase, with the interest rate environment being very low. It just makes a lot of sense for me to continue to look.

Darin: Growth markets in general, like Texas, Florida, Tennessee, Georgia, and Phoenix, all those areas are seeing massive population growth. The big question mark is when there is a downturn in the market. I'm like, if I was living in a high-cost environment, on one of the coasts in New York or California, and jobs were hard to come by, where are you going to go?

You're going to someplace where it's more affordable, and there are more jobs. So even in a downturn, markets such as Texas and other growth markets have the opportunity to potentially see continued population growth.

Juan: You said downturn and if you think about it, this is another reason that I didn't bring up earlier. No, multifamily has proven to be extremely resilient. In '09, 2010 yes pricing went down. Yes, there was an increase in vacancy. But overall, multifamily did well and weathered the storm. Then it went through the 2020 pandemic. Again, it totally weathered the storm. At the very beginning of the pandemic, we're just buckling up and getting ready for what could have been.

Feeling Free Is a Necessity

Feeling Free Is a Necessity
Photographer: Vadim Sherbakov | Source: Unsplash

Juan: What most people thought that was going to be ugly, it ended up being where multifamily just paused for a little bit. Then it continued its strong wind behind it and just kept moving forward. That's another great reason, it's just very resilient. It's a necessity, shelter over your head.

Darin: In terms of inflation, if you can lock in your debt service, that's fixed over a certain time period. Then your rents, if your rents are going up with inflation and ends up being 5% or 7%, then you have that big Delta. The rents are going up, you've locked in your funding costs. Over time, your profitability continues to increase, which seems like you can't understand that. But once you hear the story, you can understand it.

That's why people are still buying, they're able to get low interest rates. A lot of people have the thought that this inflation is not going to be transitory. The Fed keeps saying it is. If it's not, and rents continue to go up, then that property valuation should continue to go up as well.

You said you're going towards more, newer quality assets. I'm hearing that from syndicators, people that were doing BC, it's like a consistent theme. People moving from BC to A, BC to new construction. You could understand it from a couple of different areas. In the pandemic, people that were in A properties could afford the rent.

People in the lower end C properties struggled more because they're more paycheck to paycheck. If they had their hours cut, or lost a job, they didn't have the savings to continue to pay. There’s another interesting data point that somebody brought up to me.

A Pandemic Proof Property

Darin: The C class, maybe B minus class, the typical approval area is like 1/3, 30% or so of your income goes towards rent. So make sure that the property management company will look for that. But in A properties, I'm being told that it's more like, one sixth. So the people in A properties have a much bigger cushion, to continue to make those payments.

Juan: In addition to that, it's extremely important for you to be able to collect the rent. Not only do you collect it, but you collect it on time, if possible minimize your bad debt. The other side of that is, for example, the pandemic that we had. The C class residents, which is more workforce, these are people that have to go to work. They physically have to go to work and perform their job.

Because of the pandemic many couldn't leave their home and go to work. They had to stay at home. Whereas, the A class, maybe B plus residents, a lot of these have jobs where they could still work. Get them all the news or internet or a computer, and they're good. They continue to work.

That’s the whole work-from-home process that we went through over the last year or so, and we're still going through. So they're still able to keep their jobs and still continue on as if nothing happened. That's another big point there on just keeping your job. Not only paying your rent but also keeping your jobs are very important.

Darin: Keeping your job and being able to work remotely is huge in today's environment.

Finding a Partner Who Complements Your Value

Darin: Talk about partners. In single family, you're pretty much doing it yourself. Then you get into multifamily and everybody in multifamily says, it's a team sport. A lot of people are involved. Talk about partners in a number of different ways. We've got listeners who want to break into multifamily, but they don't know how to find a good partner for their first deal.

They don't know the value they bring. Talk about partners on your first deal. Then go into, now you're partners with a lot of different people and a lot of different properties. How do you get in the mix? What's the complementary skill sets and responsibilities for each of the partners?

Juan: My very first deal was a 32-unit. I had one partner in that deal. He was a general contractor, he still is. So it really made a lot of sense for both of us. I ran a deal, managed it, oversaw operations and he took lead on the renovations and improvements. It made a lot of sense, it was complementary skill sets, but both had the same goal in mind.

On larger deals that I've done, for most of the deals that I've done, I've been the lead. I have been the person to put it together. Have the relationship with the broker, put it under contract, and then take it from there. Just build a team around myself and go from there. When you're starting out, you're wondering, how do I get into one of these deals? How do I make it happen where I can be a part of one of these deals? There’s not a clear-cut answer there.

Have the Capital to Be Feeling Free to Give Value

Juan: What it comes down to is understanding what you bring to the table. You hear this all the time, but everybody has some value that they can bring to the table. Everybody knows somebody, there's several different ways. Maybe you have some financial background where you can help with underwriting.  Or maybe you have relations with brokers, or you know somebody who wanted to sell a deal. Maybe you have a property management company or you're good at managing properties, you've done it before as a career.

There's so many different ways where you can bring value. You can still be working full-time and get into the game. As long as you have the team around you that bring the complementary skill sets, where they're going to be committed, and invest their time and effort into a deal. Or you can have capital, that's the other thing. You can have capital, you can have a balance sheet.

If somebody wants to get in, look at yourself and find out what value you have and what you need. Then find the other person that has those other values and bring it to the table. See if there's a way. Just because you have some value, doesn't mean that you can get into a deal either. The personalities have to match. It's sort of a marriage. In this business, there's no shortage of capital, everybody has capital out there. So you try to find something that you can bring that can be very helpful.

Feeling Free to Be Who You Really Are Gets You the Right Partner

Darin: It starts with mindset, you have to believe that you have value. If you don't believe that you have value, you won’t be able to convince anybody else to get into a first deal without having that experience. Once you believe in yourself and you're fully committed, then you stop taking it personally, that somebody doesn't want to partner with you.

Your skillset, your value may not link up with them, or your personality may not link up with them. But there's somebody else that you're well suited for. So you just gotta keep on going out and meeting people until you find the right fit.

Juan: If you are more of an introvert, it can be difficult to put yourself out there. But you have to be willing to put yourself out there. If you don't raise your hand, nobody's going to know that you even exist. Raise your hand and step up to the plate and talk to people. In my partnerships, I usually take the lead role. In some of my partnerships, I've had people who reached out to me in the past. We kept in touch and we built that relationship.

If they never reached out to me in the first place, then they would have never been in the deal or at least on my deal. Maybe somebody else's deal, but it's because they were willing to pick up the phone and call. Or maybe I was at an event, they were able to approach me. I'm not saying that I'm up here. But people are still willing to talk. Nothing is very important, if I want to, I have to be willing to talk.

Who Gets the Opportunity

Who Gets the Opportunity
Photographer: Towfiqu barbhuiya | Source: Unsplash

Juan: The squeaky wheel gets the grease, you heard the phrase all the time. If you're not the squeaky wheel, then you won't get that grease. You won't be able to have the opportunity to be able to jump into a deal. It's very important, just that simple action. You talked about mindset, but it's also the action part of it. People can't read your mind. You have to be willing to get out there and do it.

Darin: You're the lead on a lot of deals, you have a lot of choices on who they can partner with. It's not like, there's just two or three people, there's a lot of choices. You have to be front of mind, center to win that. Tell people what you do. That's both for partnerships and for attracting investors and possibly deals.

I had one guy on the show who was talking to his banker. He was the president of a small, community bank, and he said, I'm looking for these multifamily deals. A few weeks later, some broker called him and said, I've got this deal. He said, how'd you get ahold of me? Well, the President of this bank told me you were looking for a deal.

They never would have connected had he not told the president of the bank that he was looking for a deal. He ended up buying it and that got the ball rolling. So you have to tell people what you do? Talk about pre-empting deals. What does that mean? Then the difference between pre-empting before it is even marketed versus pre-empting when the deal is starting the marketing campaign.

Preempting How It’s Like to Be Feeling Free

Juan: Pre-empting basically means that you're getting an early look, an early shot at making an offer. If the seller agrees to your offer, then they'll take it off the table and maybe make a deal there. Why would a seller want to do that? Well, sometimes they're in a time crunch. They need to close by a certain time, they don't want to go through the whole entire marketing process. Or they don't want their staff to know the property that they're going to be selling. They don't want to deal with that right.

There could be multiple reasons and different motivations. Those are great opportunities for buyers to go in and eliminate as much competition as possible. It doesn't mean that you'll be the only one pre-empting the deal. Maybe two or three guys are taking a shot at the same deal, but it certainly does eliminate the masses. We haven't won a deal that way, but we certainly have made pre-emptive offers to try to win deals.

Ultimately, sellers still want their price as if they were going through the entire marketing process. But they're just trying to reduce the time that it goes out there. If they can get their price in a much shorter period of time, then they'll be happy to move forward.

But yes, if somebody could take advantage of that, then it's great. I'm actually going through that right now. It's a smaller new construction deal that reaches out to the broker as a, what do you have that's coming up? We just went from there. He was like, as a matter of fact, I have this one. He's willing to take a pre-emptive offer. Let me know what your thoughts are.

Prove Yourself

Juan: I'm actually going through a full underwriting right now. Maybe make an offer and see if we can get this thing under contract. It's a great opportunity. But for you to be able to put yourself in those positions, you have to be able to prove yourself to a point.

Prove yourself and build good relations with the brokers. Let's face it, they're not going to just send it to anybody. They're going to send it to people who they feel good about or who they have had previous working relationships with. That's a great opportunity to be able to lock something up.

Darin: It's a win-win, because as the buyer, it's extremely competitive out there. You're having a lot of offers on every marketed deal. Then you go into the best and final, and a lot of times, it's another best and final after that. So the price can really run up. Then each of the buying groups have invested a lot of time and effort. When it gets near the end, they don't want to lose the deal. A lot of times, everybody gets stretched pretty far.

Being able to preempt, takes away some of that competition, locks the deal up quicker. The benefit to the seller is that, if they have a certain price in mind, and they're able to achieve that price, and also have the confidence that they've got a strong buying group, then that's a win for them as well.

If they've gone through the entire marketing process, they may have gotten a higher price. But you don't know who that higher price is coming from. It may be coming from a buyer group that isn't as experienced. It's a risk going with a group like that because they may close or they may not close.

The Guarantee of Preemptive Choice

Juan: Why would a buyer proceed with a preemptive deal if you're going to be paying the same price? It’s the same price that they wanted anyway. Why don't I just go through the process, and maybe even get it lower? If they have a price in mind, and you go through the process, and the market tells you that you can get that price. If you could get it for lower, then why not just do that? The preemptive choice more or less guarantees you a strong opportunity to be able to buy the deal versus going through the competitor process.

Darin: You did win a deal from a preemptive offer, the South Dallas deal.

Juan: That’s off-market. You could call that a preemptive deal. You know the seller, he's been one of your partners. We were provided an opportunity. This is a couple of years back. It’s been almost three years now. We took a quick look and liked it, so we proceeded with the purchase on that one.

Darin: One of my business partners told me he had this other property. He’s potentially putting it up on the market at some point, and he asked me if I had interest. I said, I did have potential interest. Next thing you know, the deal is in contract. I didn't even know that it was available because this guy and his partners came through with a broker. He did a preemptive deal and locked it up.

I'm like, what happened? He's like, they gave me an awesome price and we're done. So it definitely can happen. You're in a number of deals, are there any challenges that came up? How did you guys figure out how to work through those challenges?

Feeling Free From Challenges

Juan: There have been a number of different challenges on different deals. The deal is different for various reasons. For one, COVID-19. That's across the board with different groups and different properties. COVID-19 brought these challenges in really trying to assist residents with rental assistance. Make sure that they're on track and not being evicted. Or we couldn't evict because of the eviction moratorium, one reason or another. That one definitely had its challenges.

We were going through one property that still continued to have some challenges. In Phoenix, our income has definitely gone through the roof, which is a great thing. But the challenge on that property has been more on the maintenance side. Plumbing issues have been the overwhelming majority of the issues that we've had.

These are things that you don't necessarily account for 100% as they are today. You underwrite to a certain point, but you don't expect these to continue on that way. That one has certainly brought us challenges and we've been taking punches and just moving forward. Overall, the property is doing well.

But it could have been doing a lot better, had we not had these different maintenance issues. It's just one of those things where you account for it as much as possible. You have to be willing to move forward and take care of these issues without letting them get any worse.

Darin: On the maintenance side, I got involved in real estate multifamily, three and a half years ago. That was one of my fears. I've been trading loan portfolios. I have another business, I trade loan portfolios, residential, multifamily, commercial. Multifamily has always been a very strong performer from banks' balance sheets. I like the asset class and understand it.

Hire an Expert Who Gets You Feeling Free From Trouble

Hire an Expert Who Gets You Feeling Free From Trouble
Photographer: Diana Polekhina | Source: Unsplash

Darin: But I was always like, if we buy a 10-million or $20 million property, I'm not an engineer. I don't want to buy and have all these issues that I can't see, that I don't understand. When I got involved in the multifamily mentorship group and started talking to other people that own these large properties, that was quickly dispelled. You just hire an expert. There are experts that go out and do inspections of these properties.

They'll come back to you with a report that shows you got 10 buildings, and one building has foundation issues. We scoped all the lines of the plumbing. Here are some issues, and I didn't realize that that happened. I was always worried that I'm going to buy an asset and have stuff that I didn't know about, but that didn't happen. Sometimes, things can happen where it's out of the scope. You don’t know what's going to happen. There's also a lot that can be uncovered during the due diligence process.

Juan: That's what those guys do for a living. You pay them for their services, and they're able to walk through all the units. They'll check out the roof, check out the plumbing, scope the plumbing lines, check out the electrical. They give you this big report that you can then further make a better decision on whether you want to move forward with the property or not. Or you can adjust your CAPEX budget moving forward.

Darin: You have a podcast called The Commit to Wealth Podcast. When did you start it and why did you start? Who are your listeners, who do you bring on as guests, and what is the value of doing that?

Commit to Wealth and Feeling Free

Juan: It's a podcast that I started in 2017, and it’s called the Commit to Wealth podcast. I had a big fear. That was really one of the main reasons why I started. I wanted to get out of my comfort zone. I’ve made it a goal to get out of my comfort zone. Hopefully, that would help me to be more comfortable when speaking to people, whether in person or via video call.

Darin: Was that the fear of public speaking, talking to people?

Juan: 100%. I felt that I was an introvert in a big way. In addition to that, I want to learn more about real estate. I want to learn more about multifamily, about how people are putting their deals together. Maybe take some ideas to get to the point where I was doing deals.

I would be able to take some of that advice to help out my audience with the interviews. Not from me, but from the guests that I was having on the show who are relaying their message and expertise. Companies and guests have been guys such as yourself, which, we need to get you on.

Just guys that are willing to share their stories, willing to share their time, because time is valuable. They're willing to take an hour out of their day to provide their message. Provide some insights into how they're doing their business. Some tips and tricks for other guys that are looking to be in their shoes one day, something similar.

We did it for a few years. Right now, we are in a gap to do a season two here coming up in the next year. We're excited to get that relaunched and get that going.

Building Relationships

Juan: It’s so exciting just to talk to many people. One exciting point for me personally, is building relationships with others. It’s a closer way that you wouldn't have been able to, had you not had some platform like a podcast. It's multiple reasons for me.

Darin: I wouldn't have thought that you had that fear. People who do a podcast whether they are on stages, or a band, you hear them say that they're afraid to talk to people. They are afraid to get out in front of people. Why would you do that? You said something like you're forcing yourself to get uncomfortable. So many people that I've interviewed, they continually achieve a goal, then they set a new goal that is uncomfortable.

Whatever facet it is, whether it's going bigger, or trying something new or whatever. I'm the most excited when I'm learning something new. When I'm pushing myself someplace that I haven't been before versus just doing the same thing over and over. But you have to force yourself to do it because it's hard.

Juan: It's very difficult just thinking about you bringing yourself out there, and these uncomfortable situations. But ever since I've done this and been out of my comfort zone, it has made everything so much easier. It's like this was my biggest fear, and I just did it. I've done it before. I know I could do it again. Nothing's going to happen.

You're thinking that maybe you're going to be embarrassed, maybe you're going to be hurt. Or somebody's going to say something to you or maybe you're not qualified enough. You're giving yourself all of these reasons why you shouldn't do it. But you're not really giving yourself a chance.

Feeling Free From Negativity

Darin: The negative talk.

Juan: You're not telling yourself, why should I do it? These are the reasons why I should do it. You're thinking more about the negative than you are the positive. You are doing yourself a disservice by doing that. If you're in a similar situation, think hard about the positives, and why you should do it. Those positives should be much bigger than those negatives. Negatives should be much smaller and just do it.

Nothing is going to happen, your fears are not going to happen. Things will be just fine. I really encourage everybody to get past those fears and get out of your comfort zone. Because really, growth does happen on the other side of fear and your comfort zone.

Darin: There'll be people who will listen to your podcasts, or my podcasts, a few episodes. One, we learn from every guest that you have to go past your fear. I learn a little snippet from every guest that comes on that I never would have learned had I not done it. Second, you mentioned just getting exposure to people. I've partnered with a number of people that ended up coming on as guests.

Like you are spending half an hour or an hour with somebody that you wouldn't have spent otherwise. You go to conferences, you meet people, and you see people. But you may spend five or 10 minutes, it may be much more surface talk. You don't really get to know them as well.

That's another huge benefit. The other thing is, everybody tells me multifamily syndication is all about finding deals and finding investors. It's an opportunity to educate new investors, to get involved. It is also an opportunity to find partners and grow from there.

There’s No Such Thing As Overnight Success

Darin: I started my podcast last summer sometime in 2020, you started in 2018. So two years before I did. You got this podcast and it gave me the impression that you totally knew what you were doing. It gave me credibility to you, and I want to learn from this guy. This guy, he's connected with a lot of people.

Now, I learned when you started, you were afraid. But you don’t think that. I've interviewed people with 3,000, 4,000 units. One guy was from India. I'm like, do you just have a ton of people in India that just wire money to US.

Juan: It seems that way.

Darin: You feel like it's overnight success. But he's like, no, the first deal was tough. But then we gave a good return to the investors. Then the second deal got a little easier, and you get a little easier from there. I'm sure you see the same thing in terms of asking your guests, finding partners, finding investors, all of that. It takes time to build that, but then, it gets easier.

Juan: It's repetition. It's performance and communication. If things don't go well, we communicate it. It's showing your face in those toughest times, and that builds a lot of trust. I'm a limited partner as well. I take a lot of the limited partnership side and put it to action on the GP side. Maybe you're thinking, what exactly do you put into action? The communication, the reporting, or the lack of reporting that we don't get.

What Builds Trust

What Builds Trust
Photographer: Coasteering | Source: Unsplash

Juan: I have to make sure that I do report for my investors. What does that do that builds trust? That tells you that you're not hiding away from the issues, you're confronting them. You're telling your investors, this is what happened, this is how we're going to address it. This is what's going to happen from there. You have to be willing to do that.

I've had my fair share of deals where the guys don't communicate and they go dark. I'd rather you just tell me if things are not going well. We're all adults here, just be honest and tell us about that process and what's going on. Let me feel more comfortable about it because you told me. It's very important that you do that. If you don't, then you're losing some credibility there.

Darin: You thought that being an LP helps you become a GP. That's important, I would recommend that to anybody. If you've got the capital to get into at least one deal, then you see the reporting that comes back. Most syndicators are going to send you an email on a monthly basis that outlines what's going on with the property. Then they're going to provide the financials.

You can actually review the financials as well. I'm like you, I like transparency. If something's going, I want to know the good, the bad, and the ugly. If it is bad, I want to know what action steps you're taking. That helps me know that this property has an opportunity to turn around. It’s also another learning lesson for me.

Getting Past the Fear Gets You Feeling Free

If they do something, and it works, then, I got that in the back of my head for one of my deals if I see that happen. So it's important to see that. Whether you're just doing a passive deal for the first time, or just getting your first deal or whatever.

Maybe you don't want to start a podcast, but you can start posting some stuff on Facebook or on Instagram. Tell people what you do. There's fear in doing that. There are people who will judge you, and that's the big fear. But you're not doing it for them. You're doing it for the people who have interest in it too, but they don't know how to do it.

A year or two down the road, when you get your first deal, they're going to, all of a sudden, come to you. They’ll be like, I was watching you. I admire that you did that. Can you help me? That's lost on a lot of people. They're so focused on how to get the first deal? It's all about them. They don't realize the ripple effect they can have once they get that first deal and help other people afterwards.

Juan: We're all in the same position, or close to the same position as another person out there.

You could be the person that's knocking on the door, thinking about leaving your W2 and jumping into an entrepreneurial endeavor. Maybe it's multifamily or something. But then there's somebody else out there who's thinking the same thing. So if you're able to take action steps or speak up, you're speaking on their behalf as well. People appreciate that, they admire that.

Rise Together

Juan: Maybe they didn't have the opportunity to speak of themselves, or ask those questions or put themselves out there. But you were. That also shows that you're able to do it. If you're able to do it, that gives me the optimism of being able to do it as well.

It's very important that we all rise together and go for our goals. It is right there in front of us. We live in the best country in the world, by far, hands down. People come here from all over the world, because of the opportunities. We have to be able to take advantage of these opportunities because they're right in front of us. But you have to get past the fear, get past your comfort zone, because they're right there.

That's why a lot of immigrants are so successful in this country. You came from a country where you went through a lot of struggle. You're not afraid to go through that struggle again. You have certain goals you set yourself for, and you work on them. Being raised here, you become a little complacent. It's like, I'm already here. You just go by your day-to-day without really pushing harder, and take things for granted to that point. It's important that we keep that fire going.

Darin: I had someone on the show who said that up until the late 1980s, it was illegal to be an entrepreneur in Russia. It was illegal. You could not buy a product, and then mark it up and sell it to somebody else for more. That to me is mind-boggling. Here in the US, you could be an entrepreneur for years. You could do whatever you want, build whatever business you want.

Feeling Free to Pursue What Matters Most to You

Darin: What's your next big stretch goal?

Juan: I love to be able to continue growing here in Texas, mainly. I love to be able to get into some nicer, newer quality assets here in Texas. To really be able to provide some very strong return for our investors. If I can change some of their lives, even in a small way, then that's exciting.

To be able to spend more time with family is very important, and to be able to give back. Do different charities, churches, and all that good stuff. If I can push hard on the business side, then that means I can help more people on the charity side. So it's something that I have to keep pushing towards.

Darin: What do you like to do outside of work?

Juan: I like to get outdoors, hunting, fishing. I’m a big gun person. I love shooting, I love sports. So, go Astros. Sports and spending time with family. This comes down to spending time with family whether it's just staying at home watching a movie, or going somewhere doing things with them. Go to water parks, to different recreational centers.

Darin: How old are your kids?

Juan: They just turned seven and 10, and 13. He'll be 14 in December. They're very young, young enough to spend a good time with them.

Get To Know Juan Better

Darin: How can somebody reach out to you if they want to get to know you better?

Juan: People can reach out to me via the website at genwealthcapital.com or they can send me an email, juan@genwealthcapital.com. A couple of other ways are through social media. So just Facebook, Twitter, Instagram, LinkedIn, look me up and I'm happy to connect.

Darin: I appreciate you coming on the show. Check out his podcast. He's been doing it for a lot longer than I have. He is a mover and shaker. He's partnered with a lot of people and he has a wealth of information. I hope that you enjoyed that one. Until next week. Signing off.

How to Reach Juan Vargas

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Darin Batchelder

Wealth creation through real estate provided me with a new passion to get the word out and let others know that they have an alternative to investing in the stock market.

If I can inspire and educate just one person to take action that results in life changing wealth creation then the work to launch and grow this podcast is well worth the effort.

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