October 2, 2024 • 37 mins
ABOUT VANESSA ALFARO
Vanessa Alfaro is an entrepreneur, founder of six 7-8 figure companies in 3 countries, a real estate investor, innovator, and a multifamily syndicator who was recently profiled in the Real Estate book “10 Paths” as one of the ten most successful Real Estate Investor stories in 2022.
Vanessa is the Founder of Venus Capital Partners. With Vanessa’s extensive background in business, entrepreneurship, finance, capital raise, and team leadership, she led the company to $50 AUM in only 3 years.
Born in Venezuela, Vanessa founded Absot Marketing at 22, which quickly grew into a leading BTL firm. Expanding to Panama, she co-founded Octametro, hitting 7 figures in a year and earning the title “Woman of the Year.” Later, in Los Angeles, she co-established the top Hispanic content provider, Autoproyecto.
THIS TOPIC IN A NUTSHELL:
Vanessa’s entrepreneurship journey
Characteristics of an Entrepreneur
What's exciting about real estate
What got them into the Syndication game
Underwriting and Finding Deals
Leveraging Other People’s money
About the 96-unit Deal
What they like about the deal
Loan and refinance options
Ways to increase the income of the property
Dealing with cap rates and market shift
Executing the Business Plan
Challenges encountered for this project
A good metric that your company is doing well
Connect with Vanessa
KEY QUOTE:
“As an entrepreneur, what's exciting about real estate is that every property is like a new business. Each deal is a new business plan. You have to execute the marketing plan and bring it to success. “
SUMMARY OF BUSINESS:
Venus Capital is a women-owned Real Estate Investment firm focused on technology and innovation to provide investors with the best opportunities in Real Estate investing, and acquire assets in emerging markets in the US. Venus Capital delivers exceptional results by utilizing cutting-edge technology, leveraging deep industry knowledge, and constantly incorporating AI into all departments in the company to optimize operations, marketing, customer service, and asset management. This allows us to maximize profits and provide unparalleled value to our investors.
ABOUT THE WESTSIDE INVESTORS NETWORK
The Westside Investors Network is your community for investing knowledge for growth. For real estate professionals by real estate professionals. This show is focused on the next step in your career... investing, for those starting with nothing to multifamily syndication.
The Westside Investors Network strives to bring knowledge and education to real estate professionals that is seeking to gain more freedom in their life. The host AJ and Chris Shepard, are committed to sharing the wealth of knowledge that they have gained throughout the years to allow others the opportunity to learn and grow in their investing. They own Uptown Properties, a successful Property Management, and Brokerage Company. If you are interested in Property Management in the Portland Metro or Bend Metro Areas, please visit www.uptownpm.com. If you are interested in investing in multifamily syndication, please visit www.uptownsyndication.com.
#RealEstateInvesting #Tenants #Landlord #Entrepreneurs #Marketing #BusinessPlan #Syndication #RealEstate #Investors #Refinance #Construction #Rehab #SavvyI
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Intro speaker (00:04):
Welcome to the Westside Investors Network. Win,
your community of investingknowledge for growth. This is
the real estate professionalsinvesting podcast for real
estate professionals by realestate professionals. This show
is focused on the next step inyour career, investing. Thank
you for listening.
And please, if you like ourcontent, rate us on your podcast
(00:25):
provider. Just a quickdisclaimer, the views and
opinions expressed in thispodcast are for educational
purposes only and should not beconstrued as an offer to buy or
sell any shares or securities,make or consider any
investments, or take any otheraction.
Trent Werner (00:42):
Welcome back to another episode of the Deal Deep
Dive segment on the WestsideInvestors Network podcast. I'm
your host, Trent Werner. In thissegment, our featured guests
will share their unique storieson a specific deal they've
invested in. We will dive deepinto finding the deal, financing
the deal, writing an offer, andthe due diligence. Do us a solid
and smash that subscribe button,leave us a rating, and share
(01:04):
this episode.
And now, let's dive deep.Welcome back to the Westside
Investors Network podcast. I'myour host, Trent Werner. Today,
we are joined by Vanessa Alfaro,the founder of Venus Capital.
We're gonna hear about Vanessa'sentrepreneurial career in
marketing, where she startedthree different businesses in
three different countries beforefounding Venus Capital, a real
(01:25):
estate syndication company.
We're also gonna hear aboutVanessa's ninety six unit deal
in Missouri that's currentlystill active and going through
refinance as we speak. Now let'swelcome Vanessa Alfaro. Alright,
Vanessa Alfaro, welcome to theWestside Investors Network
podcast. I am super excited tohear about the Missouri deal
(01:45):
that is going to be talked abouta little bit later on. But
before we get into that, I'dlove to hear about your
entrepreneurship journey thatincludes multiple businesses
across multiple countries, andnot all of them are real estate,
which is fun to hear on thisreal estate specific podcast.
So, Vanessa, thanks for joiningus.
Vanessa Alfaro (02:03):
Thank you. I'm super happy to be here. We
rescheduled this a few times.Okay? I was sick back and forth.
So this is one of the podcaststhat I've been willing to and
excited to be on. So thank youso much, Trent.
Trent Werner (02:19):
Of course. And at anytime we get a very successful
entrepreneur on the show, I'mexcited to actually get this
conversation going. Like yousaid, we did have to reschedule
a couple of times, but it wasworth the wait. Vanessa, you
didn't start directly into realestate like a lot of the guests
on the show did. Where did youstart your entrepreneurship
(02:39):
journey and what industry wereyou in?
Vanessa Alfaro (02:42):
I was actually in the marketing industry. So I
started my first business when Iwas 22 years old, and I I
finished my career. I wasactually a single mom. My
daughter was two years old atthat time. I decided I just
didn't wanna work for anybodyelse.
Okay. And it was very riskybecause I didn't have didn't
(03:05):
have money or I didn't have,like, support for me to say,
well, I'm safe and I can raisemyself to start business with a
child. But I did it anyway. AndI think that that's one of the
characteristics of anentrepreneur. We are so willing
to put at risk our security.
(03:25):
Like, I I don't believe thatthere is one entrepreneur that
is really entrepreneur that isnot take that amount of risk.
Right? So I started that companyand that was marketing company
because even though I was inbusiness school, okay, before
business school, I was, inphysics. So I wanted to be in
(03:48):
astrophysics. Right?
That was my dream. I'm a nerdinside, very nerd. I like you
see my library books, like, Ihave physics books, quantum
physics, like, everything aboutthat. So and then I went to
business school because eventhough I'm a nerd and I love
(04:09):
physics, I love numbers, I alsohad this huge desire to do
something and be an entrepreneurand make my own business and
also make money because I didn'tcome from a family with money.
And I always was concerned inwhy we can't do this, why we
cannot buy this and blah, blah,blah.
(04:30):
So I wanted to do my ownbusiness. I went to business
school. And then, in order forme to pay for my college, okay,
I was working as a model. So Iwas doing wrong way or whatever
gig I could get, okay? I was afull failure as a model, okay,
full failure.
I was barely paying my billswith what I got, but that was
(04:55):
the industry that it was. So forme to start a business in
marketing, it was very naturalbecause that was the environment
that I knew. Right? So I startedmy first company in in
marketing, and then my secondwas in marketing as well in a
different country. I was born inVenezuela, so I speak Spanish.
That's my first language. Andafter that, I went to Panama. I
(05:19):
opened another marketing companyand a trade show company with
some other partners. Okay. Morethan a decade ago, I moved to
The U.
S. My husband and I have aproduction and a publishing
company that is focused on theautomotive industry, automotive
industry in The US for theHispanic market. So it's very,
(05:41):
very niche. And and then at onepoint, I decided to move to real
estate just because I believethat as an entrepreneur, you
have that risk, but you alsohave to have passion. And what
happened is that when you losepassion for what you're doing,
that's a sign that you need tomove to another company.
(06:04):
You need to scale anothercompany. You need to start
something because at the end,that passion is that drives you
as an entrepreneur.
Trent Werner (06:13):
Yeah. I love, I love that. Because I mean, if
you're not passionate about it,it's just like any job, right?
Whether you're a W2 or anentrepreneur, if you're not
passionate about it, it's reallyhard to be successful in. Right?
And, you know, obviously you hadpassion in the marketing realm
and niche and, you know,eventually that maybe burned out
a little bit, or you kind offelt like you reached your
(06:34):
plateau and all of a sudden youwanted a new challenge, a new
endeavor that you can learn andgrow yourself in. Right?
Vanessa Alfaro (06:40):
Yes. And can I tell you what is exciting about
real estate? Mhmm. Is that everyproperty is like a new business.
Yep.
Each deal is a new businessplan. It's like you're starting
a new business, and it's thewhole process of completing a
business plan. So you find thedeal, which is the product, and
then you create a business plan.What are the projections,
(07:03):
numbers for the people that isgonna work there? What's the
marketing plan to bring that tosuccess?
Then you bring the investorsinto that property. It could be
with a phone or just asyndication. And then you
execute the business plan forfive to seven years, and then
you exit. Yeah. You go and go toanother one.
So it is as an entrepreneur,it's very exciting because for
(07:25):
me, it's like each deal isanother business. So I literally
have 15 deals. I have 15business on my plate right now.
Trent Werner (07:34):
Exactly. Well, and with your with your marketing
experience and creatingbusinesses in the marketing
industry, you already had thatexperience of starting from the
ground up, executing a businessplan, and going full cycle, you
know, with those companies. Andso to your point, you're just
doing that more frequently in insyndications and real estate.
(07:55):
Right?
Vanessa Alfaro (07:56):
Right. Yeah.
Trent Werner (07:57):
That's that's that's awesome. So what aside
from, you know, real estateintriguing you, was there any
one thing or a few things that,you know, all of a sudden you
said, you know what? I want togo take some risk in real
estate. What really got you intosyndications?
Vanessa Alfaro (08:14):
Right. So what everybody that is listening
here, if if you are an if you'rein real estate, okay, usually
you got into real estate becauseyou want generational wealth,
you want passive income, okay?You don't want to just have a
job to yourself. You wantsomething that is creating
(08:35):
income for you, your kids, oreverybody has their own what.
Right?
And when I decided that I didn'twant to be in the marketing or
in the business that I have withmy husband anymore, okay, I
mean, I didn't want to be in thebusiness, okay, then we were
(08:55):
thinking about we always thoughtabout real estate. We always
thought about, hey, there isthere is wealth in real estate.
We should go and buy realestate. And my husband's family
always had real estate in, inPanama. He's from Panama.
And they had they created theirwealth with real estate. So we
(09:17):
were always talking about that.What if we go into real estate?
And and my answer was, like, weneed to learn really how to do
this because I'm sure that thereis a formula, and and we just
just don't go and buy. And I dobelieve a lot in, you know,
these personality assessmentsand understanding how everybody
(09:41):
looks, their model of the world.
And my husband has a verysimilar way not similar. A very,
very not similar way to me tolook at the world. Okay? I think
that's why we complement eachother. He is the kind of person
that he likes to feel people.
(10:01):
He likes to feel the property.He wants to see the place. So he
will be one of those personsthat go to the place and if he
like it and he feels like he geta feeling that he's going to
make money, he goes and he buys.Okay. I am completely the
opposite.
I am very analytical. I don'teven wanna look at that place.
Okay? Don't even take me thereuntil I see the numbers and see
(10:25):
what is really happening in thatplace. If I see that there is
potential, then probably I willgo and drive.
Okay? I will probably do thatfirst online, so I won't spend
my time. So I am not attached tothat feeling, okay, or
connection that he made me. So,we decided, okay, let me study
(10:47):
and learn, you know, how we'regonna do this. So I went to one
of the one event, and, it makessense to me.
And as you know, I am a Koreannerd. I love numbers. So when
they started talking aboutunderwritings and numbers and
accounting, I was, like, inlove. And that's how I started.
(11:09):
And I decided I was going to goto that route and I was gonna
develop that part for us.
Okay? And he was still makingmanaging the other company, and
I always joke with him that I amjust his tax law. That's what I
am. I'm just your tax law. Soyou make money, and I just make
(11:29):
sure that we make it
Trent Werner (11:32):
Yeah.
Vanessa Alfaro (11:32):
Tax deductible.
Trent Werner (11:34):
So with your husband's experience in real
estate, you had that, your teamhad that background. Obviously,
you have the the business side.No?
Vanessa Alfaro (11:43):
Not really. He didn't have experience. His
family make money. Hisgrandfather makes money. He had
no experience at all in realestate.
And that's what scared me alittle bit, even though I'm a
very risky person. Okay? But, Iam risky, but I know that they
there is something that we needto learn. It's just, just don't
(12:04):
go and buy a property. So I knewthat I was like, this is what I
want to do, but I want to learn.
I want to make sure that I knowwhat I'm doing because at that
point I was learning aboutsyndication. That doesn't exist
in Latin America. At least Ididn't know that exists. So we
were learning about syndication,and it's it's, I mean, when
(12:26):
you're playing with your money,it's one thing. But when you are
taking other people money,right, that's a whole level of
responsibility.
And I want to make sure that Iknew as much as I could. So I
went, I learned, I paid for acoach. I still have coach after
five years. I keep learning allthe time. But, and I partnered
(12:47):
with people that had moreexperience than me.
So for my first three years, Ijust partnered with people that
had twenty years of experience.They are still my friends. So I
still keep asking the question.I think that we never stop
learning on this business aswell.
Trent Werner (13:05):
Well, yeah. And to that point, that's, you know,
that's why I enjoy real estateis because every deal is
different. Every deal has newchallenges and it's it's
exciting to be to be blunt aboutit. It's it's just I love
solving puzzles, and each dealis a puzzle that we get to
solve.
Vanessa Alfaro (13:22):
Great entrepreneurs are the ones that
solve problems. And I do believethat the only problems that
cannot be solved are the onesthat are guided by the laws of
physics.
Trent Werner (13:38):
Mhmm.
Vanessa Alfaro (13:38):
So but everything else can be solved.
So I'm sure that you're a greatentrepreneur.
Trent Werner (13:46):
So now we we've we've heard about, you know,
your career leading up tosyndications. We're gonna talk
about a 96 unit deal in Missouritoday. We we were chatting
before we started recording and,you know, you asked, do you
wanna do you wanna, a deal witha lot of hair on it, a lot of
troubles, or do you want asuccess deal? This one is one
that you're still working onfrom what I understand, and it
(14:09):
it has been a success to thispoint. So let's let's talk about
when you bought this deal, this96 unit in Missouri, why you
guys wanted to buy it, and whatthe the plan was for this
project.
Vanessa Alfaro (14:20):
So we bought this deal about almost three
years ago, and we found it froma a good friend of mine, a small
broker in San Luis area. And thereason we like this deal is
because it had a lot of value.The rents in the area were very,
very low. We're talking about$500, 5 hundred and 50 when the
(14:45):
area it was 815 $850, at least.So it was a lot of value add,
and the deal was late seventies.
Okay? Something that we usuallydon't buy. We like eighties,
nineties product, but there wassuch value add, and and the
(15:08):
price was right with whatever,probably 45,000 per unit. We, of
course, had some issues with thedeal because the deal had
aluminum wiring, so we have toremediate that. We have to deal
with insurance that, of course,when you buy a property with
aluminum wiring, you have a veryhigh cost on the insurance, and
(15:31):
then we have to reinsure theproperty in order to lower the
cost of insurance.
But we we had a great price. Wewere in a very good area. I
remember, we, of course, drovethe property before we purchased
the deal, and the area wasreally good. I was really
(15:52):
surprised that that deal was inthe middle of a really a b area.
Okay.
It was a c deal in a b area. Andthe seller was really not
sophisticated. So he was hedidn't have a property
management. He had a very goodguy working there. So, it had
all the checkbox, mark for us toto get a really good return for
(16:16):
our investors.
And my partner, he came at thebeginning. We wanted to buy that
deal in an agency loan. So theplan was just let's buy this
deal. It was almost $5,000,000.And then the whole renovation
was going to be a million dollarjust to renovate the deal.
(16:38):
Let's buy this deal and let'skeep it for five, seven years,
and then we sell it. But then heis also a mortgage broker, my
partner. So he's the one that doall my my most of my lending.
And he came and he said, listen.This deal qualifies the perfect
example for a bridge loan.
(17:00):
So we're talking about two and ahalf years ago when everybody
was buying an bridge loan. Yeah.And and he is a very
conservative guy. He's veryconservative. He would never
tell you to buy something abridge loan if he doesn't really
feel it's a bridge loan.
And, and I and I asked him,listen, Everybody's buying a
bridge loan. I think that's veryrisky. And he told me this is
(17:23):
the reason why this is actuallythe deal to buy in a bridge
loan. Like, this is the amountof renovation that you need.
You're actually flipping this.
The value add is really high.You can prove that you can
increase these rents, and in twoyears, the value is is is going
to be to the roof. We canrefinance this deal. Now two and
(17:47):
a half years ago, a lot ofsyndicators were buying deals in
a bridge loan just because theywanted to buy in a bridge loan,
because they wanted to gethigher leverage on the deal, but
not for the real reasons thatyou buy a deal in a bridge loan.
Does that make sense?
Trent Werner (18:04):
Yeah. They were I mean, from my understanding of
it is a lot of people weretrying to use bridge loans to
juice returns when, to yourpoint, it probably didn't make
sense to do that.
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Vanessa Alfaro (19:15):
It didn't make sense. Everybody just tried to
get more LTV from the deal. Sothey get more money. They raise
less money. But the the realbasis of really buying using a
bridge, they were not there forthe deals.
Okay? They were just expectingthat in two years, the cap rate
(19:37):
was going to be more compressed,and they were gonna be able to
refinance. So they were betting,let's get let's raise less
money, let's get more leverage,and where the cap rates are
gonna keep going down, and thenwe're going to refinance. So
they were bidding that in thefuture, the cap rate was going
to be lower than what we'rethey're buying. And that way,
(20:01):
they were gonna make money.
But the basis, really, they werenot there in the deal. Mhmm. In
my case, the basis of getting abridge loan were there. We had
all the boxes checked. So wewent into a bridge loan.
We purchased the cap. So by thetime the interest rate went to
the roof, we had an insurancethat was able to to cap our
(20:25):
mortgage. And it was a very,difficult transition for the
tenants because we're talkingabout 3 and $400 in rent
increase. And it was I mean,we're talking about people that
probably lived there for tenyears. You know?
So there is an also a human sidethere of how you're going to
(20:46):
communicate this, how can youhelp the people that is there,
how can you help them to go tosomeone to to another place.
There is also it it is importantto understand that we are
talking about the homes ofpeople that has been living in
those places for so many year.Right? So we managed for two
(21:08):
years, okay, to to most of thetransition. I will say that
probably 80% of the people wasmoved from this ran to probably,
they moved to another place.
They used section a to move toanother place. Some people
applied for section a and stayin our deal. Right? But the
(21:30):
result of that is that in twoand a half years, we were able
to increase our income for whatwe projected, we will increase
more than five years than ourbusiness plan.
Trent Werner (21:45):
In two years?
Vanessa Alfaro (21:47):
In two years.
Trent Werner (21:48):
Yeah. Okay.
Vanessa Alfaro (21:49):
So I remember in the business plan, I know this
deal very well because we'reright now in the middle of the
refinancing. So in our businessplan, by year five, we're going
to have $842,000 in income. Andby the end of second year, we
(22:11):
were in 875,000, for example. Sowe went all above and beyond of
our increase on income in theyear five in year two. Mhmm.
Now this is when the use iscoming. What happened okay? So
(22:31):
what happened, even if weincrease our income more than
what we expected in five years,What happened when we're trying
to sell or refinance the deal ifthe cap rates are not compressed
anymore, but the cap ratesexpand in some way that in some
(22:53):
places, the the the cap ratesare probably from six to seven,
one hundred points more,probably more. We're talking
about interest rates areprobably six right now. They
were 6.5, okay, a few monthsago.
So we're talking that the caprate in that city went from a
(23:15):
six to a seven and a half. Sonow when you analyze the deal at
this point, and we do have abridge loan that is is three
years. So our business plan wasalways refinance the deal and
actually keep the deal untilyear five. That was our original
business plan. Now at thispoint, we have a higher income.
(23:37):
We have a higher NOI, but we dohave a higher cap rate. And even
though with a high with theincome of five years, with the
situation that we are in theeconomy, the value of the deal
is not enough for us to sell thedeal. So if we wanna sell the
(23:58):
deal and we were in a differentsituation, we will be we will be
making two x of the moneybecause our the cap rate will be
probably 6%. But now we can'tsell the deal at six. We have to
sell probably at seven or atseven and a half, because of the
area.
And that means that thevaluation is lower. So even for
(24:21):
for good syndicators that hasbeen managing their deals
correctly, and they have theyhave been doing everything
right. Like, what's happening inthe environment is affecting the
way that we are executing ourbusiness plan. So in a in a
separate time, I will sell thedeal. Now we can't sell the deal
(24:41):
right now because the cap ratesare too high, and then the price
is not there.
Now we're trying to refinancethe deal. And now we're we're in
a very good position torefinance the deal because we
increased the NOI at that level.
Trent Werner (25:00):
Right.
Vanessa Alfaro (25:01):
So it's a it's a very interesting it's a very
interesting deal that I wantedto talk about because, we still
haven't finished. Okay? But thatanalysis of what's happening
right now is affecting so manydeals that it's important to to
bring the attention. And and myinvestors are extremely happy.
(25:22):
They know what is happening.
And and and now if if we keepdoing what we're doing, now in
five years, probably things aregonna change, and we're gonna
keep increasing our NOI, andwe're gonna be able, even even
if the cap raise does notcompress, we're gonna be able to
access successfully. We justhave to wait. Mhmm. Does that
(25:45):
make sense?
Trent Werner (25:46):
Yeah. Of course. And so in those first two years,
I know you said you had a amillion dollar CapEx budget. In
those first two years, obviouslyyou talked about turning over
tenants and all that stuff. Whatwere you doing in terms of CapEx
in those first two years?
Obviously increasing rents ispart of the business plan, but
in terms of construction orremodel, were you guys doing
(26:09):
anything in those first twoyears to the units, the
exteriors, anything like that?
Vanessa Alfaro (26:13):
Sure. We did a lot of exterior work, stairs,
some parking lot. It was mostlyexterior. And for the interior,
we had a plan of renovating, 80%of the units. And with those
units, we're gonna do very basicrenovations based on what our
(26:34):
comps actually shows.
Right?
Trent Werner (26:36):
Right.
Vanessa Alfaro (26:37):
So when you're doing this business plan, you
you always bring what ishappening around you in order
for you to bring that that rentto that level. And it was
actually not really a lot ofthings that we needed to do to
the units. We needed to paintthe cabinets. We wanted to put
the flooring. We wanted to dothe resurface.
(27:01):
And some we will have to changesome of the appliances that were
very old. But the comps were notshowing that we needed to do
more than that. So we needed togo we we didn't have to go and
buy black appliances or likehigh end appliances or go and
put a lot of technology in thebuilding in order to achieve
(27:26):
those rents. Okay? And everysyndicator and and and if you're
managing deals that you have alarge, a a long, term business
plan, you always have to reviewyour business plan.
Yep. So you always have to goevery six months and see what's
happening around. That's how wewere able to increase the rents
(27:46):
to year five because we'realways checking. Okay. How are
the other, properties doing?
Are the other propertiesincreasing? And we saw that the
market was increasing 9% yearover year. 9%. That was really
high, really high. Where Austinis going negative, this market
(28:07):
is still increasing 9% rightnow.
Yeah. So, so you always have toreview what's other properties
doing, whether they adjust youryour rents accordingly to the
market. And we realized that wedidn't have to over renovate or
overspend in order to get tothose rents in that area.
Trent Werner (28:30):
And then you mentioned aluminum wiring. What
did you what did the insurancerequire you to do, or what did
you decide to do in terms of thealuminum wiring throughout the
complex?
Vanessa Alfaro (28:42):
Well, we always work towards the plan of
refinance the deal with anagency loan. So we wanna make
sure that whatever, remediationwe're going to do in a aluminum
wiring, that was according tothe that was according to Fannie
and Freddie stipulation. Sothat's what we did.
Trent Werner (29:02):
Okay. So you didn't have to go in and rewire
the entire complex?
Vanessa Alfaro (29:06):
No. No. No. No. No.
No. Actually, they don't requireyou to rewire the whole complex.
They require you to use aspecific way to remediate the
the aluminum wiring.
Trent Werner (29:20):
Got it. Okay. And so you you've talked about the
the value add component of thisproject. When you were analyzing
and underwriting this deal tobegin with, I'm sure you had a
projected value at five years,you know, based on your NOI at
that time. Obviously, you hitthe the NOI target way before
five years.
(29:40):
What's your plan after the refi?And did you hit that projected
obviously, cap rates went up alittle bit, so maybe the the
value isn't what it wasprojected to be at. But where do
you go after the refi, and howlong do you anticipate holding
this project now that you'regoing through the refi in
Intro speaker (29:58):
year three?
Vanessa Alfaro (30:00):
Yes. We usually increase our cap rate for 1%.
One point. So we bought a six.We wanted to sell us probably
6.75.
Okay. We we go in between 50 toone full point in the on the
writing depending of the area.And as of right now, the cap
(30:23):
rates does not allow us to sellat the price that we want, okay,
in year five, but allow us torefinance and get a very
healthy, you know, refinance andcash cash in for our investors.
So our investors are gonna getsome money in their pockets, you
know, so we can cash out someinvestors. And then we're just
(30:44):
gonna keep it.
We're just gonna keep it forthree more years. Okay? Our
business plan was five to seven.So we still have time, and
that's why we are veryconservative when we're putting
together a business plan. Wealways allow us enough time for
us to implement the businessplan because at the end, you
don't know what's gonna happen.
You don't have a crystal ball.Yeah. Right? So you have to be
(31:05):
as conservative as you can. Andit was very hard for us to raise
money three years ago, and I'mgonna tell you why.
Because we were competing withpeople that had crazy
projections.
Trent Werner (31:21):
Mhmm.
Vanessa Alfaro (31:22):
Like, crazy. Just come here. I'm buying this.
Stay for two years, and I willpay you three times your money,
something like that. And and wewere talking to people like,
hey.
We have this deal. This is a 22%annualized return. You stay
between five to seven years, andyou get a 7% return return. And
(31:46):
they were like, but how is thatpossible if I can invest with x
indicator and I can get threetimes my money, and then I will
be there just for two years, andthen I'm out? It's like, how can
we compete with that?
So we we are very lucky to haveinvestors that are very savvy,
(32:07):
okay, and and they understandhow we look at things. And but
three years ago, it was reallyhard for us to compete and raise
money and put in front of ourinvestor a plan where they will
make the same amount of money infive, seven years that with
another one in two years. Nowwhat's happening with other two
(32:27):
year those two year plans?That's another story that I
don't know.
Trent Werner (32:32):
Yeah.
Vanessa Alfaro (32:32):
But you can see you can see in the news how many
of those, properties has beentaken back to the bank. I do
have one deal that is actuallyin a lot of trouble with, with
with the with the managementteam and with the bank, and
(32:53):
we're now negotiating the dealwith the bank so we can sell the
deal. But except for that, allmy other deals were five to
seven years. So we're very luckyto get our investors, okay, that
trust us and, belief in the waythat we do things.
Trent Werner (33:12):
Well, and one thing, like, how we operate is
we're we're very conservativewhen it comes to our
projections, our underwriting,the whole nine. And I think
that's why we have a lot ofrepeat investors is because, you
know, yeah, they could go find a25% IRR in two years, three x
multiple, multiple, you know,whatever it may be, but that's a
(33:33):
lot more risky than, you know,what we're doing, what we're
offering. And I think a lot ofinvestors, especially the ones
that are, you know, wanna justget exposure to real estate and
not, you know, not dodevelopment opportunities or
whatever it may be, they feelmore comfortable with something
that's already standing, alreadygenerating revenue because it's
not, you know, a developmentproject that's already in place.
(33:55):
And they feel more comfortablewith that conservative
investment versus, you know,some of these developers or
heavy value add with highleverage type deals.
Vanessa Alfaro (34:06):
A %. And I will agree with you that a very good
metric of how your company isdoing is how many repetitive
investors you have.
Trent Werner (34:17):
Yep.
Vanessa Alfaro (34:18):
So if if you have 80% of your business are
always new investors, I thinkthat's a problem because your
investors are not sticking withyou. But on the opposite side,
if you have 80% of yourinvestors either coming back or
through a referral system, thattakes a lot about your company
(34:40):
and how you do things and howyou manage things.
Trent Werner (34:43):
Absolutely. Well, Vanessa, I appreciate you
sharing about your Missourideal. Is there a way that people
can hear more from you, readmore about you, connect with you
on all the different socials orwebsites?
Vanessa Alfaro (34:57):
Sure. In my website, if you go to my
website, it's venuspartners.comvenus partners Com. I do have a
lot of resources. I have asection with an ebook that, we
have created. We we're very intotechnology, very into artificial
intelligence and ways to usetechnology to optimize our our
(35:22):
processes and, actually, tooptimize the the deal itself in
order to create more return toour investors.
So you will find in in mywebsite a lot of resources and
ebooks about how you can use AI,how you can use it as an
entrepreneur. I have five toolsthat you can use right now for
(35:43):
you to save time in yourbusiness. And, also, if you are
a real estate investor, I dohave another that have a little
bit more of tools that you canuse for your business as well.
So I invite you to go and checkthe website and download one of
those ebooks and and see if thatcreates value for your business.
Trent Werner (36:03):
Love it. We'll make sure we link
VenusPartners.com in the shownotes and in the description
here. Vanessa, again, thank youso much for joining us today and
telling us about yourentrepreneurial career as well
as your real estate syndicationlife.
Vanessa Alfaro (36:17):
Thank you so much. Really a pleasure to be
here.
Intro speaker (36:21):
Thank you for listening to this episode of the
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(36:41):
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Thank you again and enjoy yourday.
Welcome to the Westside Investors Network. Win,
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And please, if you like ourcontent, rate us on your podcast
(00:25):
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purposes only and should not beconstrued as an offer to buy or
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investments, or take any otheraction.
Trent Werner (00:42):
Welcome back to another episode of the Deal Deep
Dive segment on the WestsideInvestors Network podcast. I'm
your host, Trent Werner. In thissegment, our featured guests
will share their unique storieson a specific deal they've
invested in. We will dive deepinto finding the deal, financing
the deal, writing an offer, andthe due diligence. Do us a solid
and smash that subscribe button,leave us a rating, and share
(01:04):
this episode.
And now, let's dive deep.Welcome back to the Westside
Investors Network podcast. I'myour host, Trent Werner. Today,
we are joined by Vanessa Alfaro,the founder of Venus Capital.
We're gonna hear about Vanessa'sentrepreneurial career in
marketing, where she startedthree different businesses in
three different countries beforefounding Venus Capital, a real
(01:25):
estate syndication company.
We're also gonna hear aboutVanessa's ninety six unit deal
in Missouri that's currentlystill active and going through
refinance as we speak. Now let'swelcome Vanessa Alfaro. Alright,
Vanessa Alfaro, welcome to theWestside Investors Network
podcast. I am super excited tohear about the Missouri deal
(01:45):
that is going to be talked abouta little bit later on. But
before we get into that, I'dlove to hear about your
entrepreneurship journey thatincludes multiple businesses
across multiple countries, andnot all of them are real estate,
which is fun to hear on thisreal estate specific podcast.
So, Vanessa, thanks for joiningus.
Vanessa Alfaro (02:03):
Thank you. I'm super happy to be here. We
rescheduled this a few times.Okay? I was sick back and forth.
So this is one of the podcaststhat I've been willing to and
excited to be on. So thank youso much, Trent.
Trent Werner (02:19):
Of course. And at anytime we get a very successful
entrepreneur on the show, I'mexcited to actually get this
conversation going. Like yousaid, we did have to reschedule
a couple of times, but it wasworth the wait. Vanessa, you
didn't start directly into realestate like a lot of the guests
on the show did. Where did youstart your entrepreneurship
(02:39):
journey and what industry wereyou in?
Vanessa Alfaro (02:42):
I was actually in the marketing industry. So I
started my first business when Iwas 22 years old, and I I
finished my career. I wasactually a single mom. My
daughter was two years old atthat time. I decided I just
didn't wanna work for anybodyelse.
Okay. And it was very riskybecause I didn't have didn't
(03:05):
have money or I didn't have,like, support for me to say,
well, I'm safe and I can raisemyself to start business with a
child. But I did it anyway. AndI think that that's one of the
characteristics of anentrepreneur. We are so willing
to put at risk our security.
(03:25):
Like, I I don't believe thatthere is one entrepreneur that
is really entrepreneur that isnot take that amount of risk.
Right? So I started that companyand that was marketing company
because even though I was inbusiness school, okay, before
business school, I was, inphysics. So I wanted to be in
(03:48):
astrophysics. Right?
That was my dream. I'm a nerdinside, very nerd. I like you
see my library books, like, Ihave physics books, quantum
physics, like, everything aboutthat. So and then I went to
business school because eventhough I'm a nerd and I love
(04:09):
physics, I love numbers, I alsohad this huge desire to do
something and be an entrepreneurand make my own business and
also make money because I didn'tcome from a family with money.
And I always was concerned inwhy we can't do this, why we
cannot buy this and blah, blah,blah.
(04:30):
So I wanted to do my ownbusiness. I went to business
school. And then, in order forme to pay for my college, okay,
I was working as a model. So Iwas doing wrong way or whatever
gig I could get, okay? I was afull failure as a model, okay,
full failure.
I was barely paying my billswith what I got, but that was
(04:55):
the industry that it was. So forme to start a business in
marketing, it was very naturalbecause that was the environment
that I knew. Right? So I startedmy first company in in
marketing, and then my secondwas in marketing as well in a
different country. I was born inVenezuela, so I speak Spanish.
That's my first language. Andafter that, I went to Panama. I
(05:19):
opened another marketing companyand a trade show company with
some other partners. Okay. Morethan a decade ago, I moved to
The U.
S. My husband and I have aproduction and a publishing
company that is focused on theautomotive industry, automotive
industry in The US for theHispanic market. So it's very,
(05:41):
very niche. And and then at onepoint, I decided to move to real
estate just because I believethat as an entrepreneur, you
have that risk, but you alsohave to have passion. And what
happened is that when you losepassion for what you're doing,
that's a sign that you need tomove to another company.
(06:04):
You need to scale anothercompany. You need to start
something because at the end,that passion is that drives you
as an entrepreneur.
Trent Werner (06:13):
Yeah. I love, I love that. Because I mean, if
you're not passionate about it,it's just like any job, right?
Whether you're a W2 or anentrepreneur, if you're not
passionate about it, it's reallyhard to be successful in. Right?
And, you know, obviously you hadpassion in the marketing realm
and niche and, you know,eventually that maybe burned out
a little bit, or you kind offelt like you reached your
(06:34):
plateau and all of a sudden youwanted a new challenge, a new
endeavor that you can learn andgrow yourself in. Right?
Vanessa Alfaro (06:40):
Yes. And can I tell you what is exciting about
real estate? Mhmm. Is that everyproperty is like a new business.
Yep.
Each deal is a new businessplan. It's like you're starting
a new business, and it's thewhole process of completing a
business plan. So you find thedeal, which is the product, and
then you create a business plan.What are the projections,
(07:03):
numbers for the people that isgonna work there? What's the
marketing plan to bring that tosuccess?
Then you bring the investorsinto that property. It could be
with a phone or just asyndication. And then you
execute the business plan forfive to seven years, and then
you exit. Yeah. You go and go toanother one.
So it is as an entrepreneur,it's very exciting because for
(07:25):
me, it's like each deal isanother business. So I literally
have 15 deals. I have 15business on my plate right now.
Trent Werner (07:34):
Exactly. Well, and with your with your marketing
experience and creatingbusinesses in the marketing
industry, you already had thatexperience of starting from the
ground up, executing a businessplan, and going full cycle, you
know, with those companies. Andso to your point, you're just
doing that more frequently in insyndications and real estate.
(07:55):
Right?
Vanessa Alfaro (07:56):
Right. Yeah.
Trent Werner (07:57):
That's that's that's awesome. So what aside
from, you know, real estateintriguing you, was there any
one thing or a few things that,you know, all of a sudden you
said, you know what? I want togo take some risk in real
estate. What really got you intosyndications?
Vanessa Alfaro (08:14):
Right. So what everybody that is listening
here, if if you are an if you'rein real estate, okay, usually
you got into real estate becauseyou want generational wealth,
you want passive income, okay?You don't want to just have a
job to yourself. You wantsomething that is creating
(08:35):
income for you, your kids, oreverybody has their own what.
Right?
And when I decided that I didn'twant to be in the marketing or
in the business that I have withmy husband anymore, okay, I
mean, I didn't want to be in thebusiness, okay, then we were
(08:55):
thinking about we always thoughtabout real estate. We always
thought about, hey, there isthere is wealth in real estate.
We should go and buy realestate. And my husband's family
always had real estate in, inPanama. He's from Panama.
And they had they created theirwealth with real estate. So we
(09:17):
were always talking about that.What if we go into real estate?
And and my answer was, like, weneed to learn really how to do
this because I'm sure that thereis a formula, and and we just
just don't go and buy. And I dobelieve a lot in, you know,
these personality assessmentsand understanding how everybody
(09:41):
looks, their model of the world.
And my husband has a verysimilar way not similar. A very,
very not similar way to me tolook at the world. Okay? I think
that's why we complement eachother. He is the kind of person
that he likes to feel people.
(10:01):
He likes to feel the property.He wants to see the place. So he
will be one of those personsthat go to the place and if he
like it and he feels like he geta feeling that he's going to
make money, he goes and he buys.Okay. I am completely the
opposite.
I am very analytical. I don'teven wanna look at that place.
Okay? Don't even take me thereuntil I see the numbers and see
(10:25):
what is really happening in thatplace. If I see that there is
potential, then probably I willgo and drive.
Okay? I will probably do thatfirst online, so I won't spend
my time. So I am not attached tothat feeling, okay, or
connection that he made me. So,we decided, okay, let me study
(10:47):
and learn, you know, how we'regonna do this. So I went to one
of the one event, and, it makessense to me.
And as you know, I am a Koreannerd. I love numbers. So when
they started talking aboutunderwritings and numbers and
accounting, I was, like, inlove. And that's how I started.
(11:09):
And I decided I was going to goto that route and I was gonna
develop that part for us.
Okay? And he was still makingmanaging the other company, and
I always joke with him that I amjust his tax law. That's what I
am. I'm just your tax law. Soyou make money, and I just make
(11:29):
sure that we make it
Trent Werner (11:32):
Yeah.
Vanessa Alfaro (11:32):
Tax deductible.
Trent Werner (11:34):
So with your husband's experience in real
estate, you had that, your teamhad that background. Obviously,
you have the the business side.No?
Vanessa Alfaro (11:43):
Not really. He didn't have experience. His
family make money. Hisgrandfather makes money. He had
no experience at all in realestate.
And that's what scared me alittle bit, even though I'm a
very risky person. Okay? But, Iam risky, but I know that they
there is something that we needto learn. It's just, just don't
(12:04):
go and buy a property. So I knewthat I was like, this is what I
want to do, but I want to learn.
I want to make sure that I knowwhat I'm doing because at that
point I was learning aboutsyndication. That doesn't exist
in Latin America. At least Ididn't know that exists. So we
were learning about syndication,and it's it's, I mean, when
(12:26):
you're playing with your money,it's one thing. But when you are
taking other people money,right, that's a whole level of
responsibility.
And I want to make sure that Iknew as much as I could. So I
went, I learned, I paid for acoach. I still have coach after
five years. I keep learning allthe time. But, and I partnered
(12:47):
with people that had moreexperience than me.
So for my first three years, Ijust partnered with people that
had twenty years of experience.They are still my friends. So I
still keep asking the question.I think that we never stop
learning on this business aswell.
Trent Werner (13:05):
Well, yeah. And to that point, that's, you know,
that's why I enjoy real estateis because every deal is
different. Every deal has newchallenges and it's it's
exciting to be to be blunt aboutit. It's it's just I love
solving puzzles, and each dealis a puzzle that we get to
solve.
Vanessa Alfaro (13:22):
Great entrepreneurs are the ones that
solve problems. And I do believethat the only problems that
cannot be solved are the onesthat are guided by the laws of
physics.
Trent Werner (13:38):
Mhmm.
Vanessa Alfaro (13:38):
So but everything else can be solved.
So I'm sure that you're a greatentrepreneur.
Trent Werner (13:46):
So now we we've we've heard about, you know,
your career leading up tosyndications. We're gonna talk
about a 96 unit deal in Missouritoday. We we were chatting
before we started recording and,you know, you asked, do you
wanna do you wanna, a deal witha lot of hair on it, a lot of
troubles, or do you want asuccess deal? This one is one
that you're still working onfrom what I understand, and it
(14:09):
it has been a success to thispoint. So let's let's talk about
when you bought this deal, this96 unit in Missouri, why you
guys wanted to buy it, and whatthe the plan was for this
project.
Vanessa Alfaro (14:20):
So we bought this deal about almost three
years ago, and we found it froma a good friend of mine, a small
broker in San Luis area. And thereason we like this deal is
because it had a lot of value.The rents in the area were very,
very low. We're talking about$500, 5 hundred and 50 when the
(14:45):
area it was 815 $850, at least.So it was a lot of value add,
and the deal was late seventies.
Okay? Something that we usuallydon't buy. We like eighties,
nineties product, but there wassuch value add, and and the
(15:08):
price was right with whatever,probably 45,000 per unit. We, of
course, had some issues with thedeal because the deal had
aluminum wiring, so we have toremediate that. We have to deal
with insurance that, of course,when you buy a property with
aluminum wiring, you have a veryhigh cost on the insurance, and
(15:31):
then we have to reinsure theproperty in order to lower the
cost of insurance.
But we we had a great price. Wewere in a very good area. I
remember, we, of course, drovethe property before we purchased
the deal, and the area wasreally good. I was really
(15:52):
surprised that that deal was inthe middle of a really a b area.
Okay.
It was a c deal in a b area. Andthe seller was really not
sophisticated. So he was hedidn't have a property
management. He had a very goodguy working there. So, it had
all the checkbox, mark for us toto get a really good return for
(16:16):
our investors.
And my partner, he came at thebeginning. We wanted to buy that
deal in an agency loan. So theplan was just let's buy this
deal. It was almost $5,000,000.And then the whole renovation
was going to be a million dollarjust to renovate the deal.
(16:38):
Let's buy this deal and let'skeep it for five, seven years,
and then we sell it. But then heis also a mortgage broker, my
partner. So he's the one that doall my my most of my lending.
And he came and he said, listen.This deal qualifies the perfect
example for a bridge loan.
(17:00):
So we're talking about two and ahalf years ago when everybody
was buying an bridge loan. Yeah.And and he is a very
conservative guy. He's veryconservative. He would never
tell you to buy something abridge loan if he doesn't really
feel it's a bridge loan.
And, and I and I asked him,listen, Everybody's buying a
bridge loan. I think that's veryrisky. And he told me this is
(17:23):
the reason why this is actuallythe deal to buy in a bridge
loan. Like, this is the amountof renovation that you need.
You're actually flipping this.
The value add is really high.You can prove that you can
increase these rents, and in twoyears, the value is is is going
to be to the roof. We canrefinance this deal. Now two and
(17:47):
a half years ago, a lot ofsyndicators were buying deals in
a bridge loan just because theywanted to buy in a bridge loan,
because they wanted to gethigher leverage on the deal, but
not for the real reasons thatyou buy a deal in a bridge loan.
Does that make sense?
Trent Werner (18:04):
Yeah. They were I mean, from my understanding of
it is a lot of people weretrying to use bridge loans to
juice returns when, to yourpoint, it probably didn't make
sense to do that.
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Vanessa Alfaro (19:15):
It didn't make sense. Everybody just tried to
get more LTV from the deal. Sothey get more money. They raise
less money. But the the realbasis of really buying using a
bridge, they were not there forthe deals.
Okay? They were just expectingthat in two years, the cap rate
(19:37):
was going to be more compressed,and they were gonna be able to
refinance. So they were betting,let's get let's raise less
money, let's get more leverage,and where the cap rates are
gonna keep going down, and thenwe're going to refinance. So
they were bidding that in thefuture, the cap rate was going
to be lower than what we'rethey're buying. And that way,
(20:01):
they were gonna make money.
But the basis, really, they werenot there in the deal. Mhmm. In
my case, the basis of getting abridge loan were there. We had
all the boxes checked. So wewent into a bridge loan.
We purchased the cap. So by thetime the interest rate went to
the roof, we had an insurancethat was able to to cap our
(20:25):
mortgage. And it was a very,difficult transition for the
tenants because we're talkingabout 3 and $400 in rent
increase. And it was I mean,we're talking about people that
probably lived there for tenyears. You know?
So there is an also a human sidethere of how you're going to
(20:46):
communicate this, how can youhelp the people that is there,
how can you help them to go tosomeone to to another place.
There is also it it is importantto understand that we are
talking about the homes ofpeople that has been living in
those places for so many year.Right? So we managed for two
(21:08):
years, okay, to to most of thetransition. I will say that
probably 80% of the people wasmoved from this ran to probably,
they moved to another place.
They used section a to move toanother place. Some people
applied for section a and stayin our deal. Right? But the
(21:30):
result of that is that in twoand a half years, we were able
to increase our income for whatwe projected, we will increase
more than five years than ourbusiness plan.
Trent Werner (21:45):
In two years?
Vanessa Alfaro (21:47):
In two years.
Trent Werner (21:48):
Yeah. Okay.
Vanessa Alfaro (21:49):
So I remember in the business plan, I know this
deal very well because we'reright now in the middle of the
refinancing. So in our businessplan, by year five, we're going
to have $842,000 in income. Andby the end of second year, we
(22:11):
were in 875,000, for example. Sowe went all above and beyond of
our increase on income in theyear five in year two. Mhmm.
Now this is when the use iscoming. What happened okay? So
(22:31):
what happened, even if weincrease our income more than
what we expected in five years,What happened when we're trying
to sell or refinance the deal ifthe cap rates are not compressed
anymore, but the cap ratesexpand in some way that in some
(22:53):
places, the the the cap ratesare probably from six to seven,
one hundred points more,probably more. We're talking
about interest rates areprobably six right now. They
were 6.5, okay, a few monthsago.
So we're talking that the caprate in that city went from a
(23:15):
six to a seven and a half. Sonow when you analyze the deal at
this point, and we do have abridge loan that is is three
years. So our business plan wasalways refinance the deal and
actually keep the deal untilyear five. That was our original
business plan. Now at thispoint, we have a higher income.
(23:37):
We have a higher NOI, but we dohave a higher cap rate. And even
though with a high with theincome of five years, with the
situation that we are in theeconomy, the value of the deal
is not enough for us to sell thedeal. So if we wanna sell the
(23:58):
deal and we were in a differentsituation, we will be we will be
making two x of the moneybecause our the cap rate will be
probably 6%. But now we can'tsell the deal at six. We have to
sell probably at seven or atseven and a half, because of the
area.
And that means that thevaluation is lower. So even for
(24:21):
for good syndicators that hasbeen managing their deals
correctly, and they have theyhave been doing everything
right. Like, what's happening inthe environment is affecting the
way that we are executing ourbusiness plan. So in a in a
separate time, I will sell thedeal. Now we can't sell the deal
(24:41):
right now because the cap ratesare too high, and then the price
is not there.
Now we're trying to refinancethe deal. And now we're we're in
a very good position torefinance the deal because we
increased the NOI at that level.
Trent Werner (25:00):
Right.
Vanessa Alfaro (25:01):
So it's a it's a very interesting it's a very
interesting deal that I wantedto talk about because, we still
haven't finished. Okay? But thatanalysis of what's happening
right now is affecting so manydeals that it's important to to
bring the attention. And and myinvestors are extremely happy.
(25:22):
They know what is happening.
And and and now if if we keepdoing what we're doing, now in
five years, probably things aregonna change, and we're gonna
keep increasing our NOI, andwe're gonna be able, even even
if the cap raise does notcompress, we're gonna be able to
access successfully. We justhave to wait. Mhmm. Does that
(25:45):
make sense?
Trent Werner (25:46):
Yeah. Of course. And so in those first two years,
I know you said you had a amillion dollar CapEx budget. In
those first two years, obviouslyyou talked about turning over
tenants and all that stuff. Whatwere you doing in terms of CapEx
in those first two years?
Obviously increasing rents ispart of the business plan, but
in terms of construction orremodel, were you guys doing
(26:09):
anything in those first twoyears to the units, the
exteriors, anything like that?
Vanessa Alfaro (26:13):
Sure. We did a lot of exterior work, stairs,
some parking lot. It was mostlyexterior. And for the interior,
we had a plan of renovating, 80%of the units. And with those
units, we're gonna do very basicrenovations based on what our
(26:34):
comps actually shows.
Right?
Trent Werner (26:36):
Right.
Vanessa Alfaro (26:37):
So when you're doing this business plan, you
you always bring what ishappening around you in order
for you to bring that that rentto that level. And it was
actually not really a lot ofthings that we needed to do to
the units. We needed to paintthe cabinets. We wanted to put
the flooring. We wanted to dothe resurface.
(27:01):
And some we will have to changesome of the appliances that were
very old. But the comps were notshowing that we needed to do
more than that. So we needed togo we we didn't have to go and
buy black appliances or likehigh end appliances or go and
put a lot of technology in thebuilding in order to achieve
(27:26):
those rents. Okay? And everysyndicator and and and if you're
managing deals that you have alarge, a a long, term business
plan, you always have to reviewyour business plan.
Yep. So you always have to goevery six months and see what's
happening around. That's how wewere able to increase the rents
(27:46):
to year five because we'realways checking. Okay. How are
the other, properties doing?
Are the other propertiesincreasing? And we saw that the
market was increasing 9% yearover year. 9%. That was really
high, really high. Where Austinis going negative, this market
(28:07):
is still increasing 9% rightnow.
Yeah. So, so you always have toreview what's other properties
doing, whether they adjust youryour rents accordingly to the
market. And we realized that wedidn't have to over renovate or
overspend in order to get tothose rents in that area.
Trent Werner (28:30):
And then you mentioned aluminum wiring. What
did you what did the insurancerequire you to do, or what did
you decide to do in terms of thealuminum wiring throughout the
complex?
Vanessa Alfaro (28:42):
Well, we always work towards the plan of
refinance the deal with anagency loan. So we wanna make
sure that whatever, remediationwe're going to do in a aluminum
wiring, that was according tothe that was according to Fannie
and Freddie stipulation. Sothat's what we did.
Trent Werner (29:02):
Okay. So you didn't have to go in and rewire
the entire complex?
Vanessa Alfaro (29:06):
No. No. No. No. No.
No. Actually, they don't requireyou to rewire the whole complex.
They require you to use aspecific way to remediate the
the aluminum wiring.
Trent Werner (29:20):
Got it. Okay. And so you you've talked about the
the value add component of thisproject. When you were analyzing
and underwriting this deal tobegin with, I'm sure you had a
projected value at five years,you know, based on your NOI at
that time. Obviously, you hitthe the NOI target way before
five years.
(29:40):
What's your plan after the refi?And did you hit that projected
obviously, cap rates went up alittle bit, so maybe the the
value isn't what it wasprojected to be at. But where do
you go after the refi, and howlong do you anticipate holding
this project now that you'regoing through the refi in
Intro speaker (29:58):
year three?
Vanessa Alfaro (30:00):
Yes. We usually increase our cap rate for 1%.
One point. So we bought a six.We wanted to sell us probably
6.75.
Okay. We we go in between 50 toone full point in the on the
writing depending of the area.And as of right now, the cap
(30:23):
rates does not allow us to sellat the price that we want, okay,
in year five, but allow us torefinance and get a very
healthy, you know, refinance andcash cash in for our investors.
So our investors are gonna getsome money in their pockets, you
know, so we can cash out someinvestors. And then we're just
(30:44):
gonna keep it.
We're just gonna keep it forthree more years. Okay? Our
business plan was five to seven.So we still have time, and
that's why we are veryconservative when we're putting
together a business plan. Wealways allow us enough time for
us to implement the businessplan because at the end, you
don't know what's gonna happen.
You don't have a crystal ball.Yeah. Right? So you have to be
(31:05):
as conservative as you can. Andit was very hard for us to raise
money three years ago, and I'mgonna tell you why.
Because we were competing withpeople that had crazy
projections.
Trent Werner (31:21):
Mhmm.
Vanessa Alfaro (31:22):
Like, crazy. Just come here. I'm buying this.
Stay for two years, and I willpay you three times your money,
something like that. And and wewere talking to people like,
hey.
We have this deal. This is a 22%annualized return. You stay
between five to seven years, andyou get a 7% return return. And
(31:46):
they were like, but how is thatpossible if I can invest with x
indicator and I can get threetimes my money, and then I will
be there just for two years, andthen I'm out? It's like, how can
we compete with that?
So we we are very lucky to haveinvestors that are very savvy,
(32:07):
okay, and and they understandhow we look at things. And but
three years ago, it was reallyhard for us to compete and raise
money and put in front of ourinvestor a plan where they will
make the same amount of money infive, seven years that with
another one in two years. Nowwhat's happening with other two
(32:27):
year those two year plans?That's another story that I
don't know.
Trent Werner (32:32):
Yeah.
Vanessa Alfaro (32:32):
But you can see you can see in the news how many
of those, properties has beentaken back to the bank. I do
have one deal that is actuallyin a lot of trouble with, with
with the with the managementteam and with the bank, and
(32:53):
we're now negotiating the dealwith the bank so we can sell the
deal. But except for that, allmy other deals were five to
seven years. So we're very luckyto get our investors, okay, that
trust us and, belief in the waythat we do things.
Trent Werner (33:12):
Well, and one thing, like, how we operate is
we're we're very conservativewhen it comes to our
projections, our underwriting,the whole nine. And I think
that's why we have a lot ofrepeat investors is because, you
know, yeah, they could go find a25% IRR in two years, three x
multiple, multiple, you know,whatever it may be, but that's a
(33:33):
lot more risky than, you know,what we're doing, what we're
offering. And I think a lot ofinvestors, especially the ones
that are, you know, wanna justget exposure to real estate and
not, you know, not dodevelopment opportunities or
whatever it may be, they feelmore comfortable with something
that's already standing, alreadygenerating revenue because it's
not, you know, a developmentproject that's already in place.
(33:55):
And they feel more comfortablewith that conservative
investment versus, you know,some of these developers or
heavy value add with highleverage type deals.
Vanessa Alfaro (34:06):
A %. And I will agree with you that a very good
metric of how your company isdoing is how many repetitive
investors you have.
Trent Werner (34:17):
Yep.
Vanessa Alfaro (34:18):
So if if you have 80% of your business are
always new investors, I thinkthat's a problem because your
investors are not sticking withyou. But on the opposite side,
if you have 80% of yourinvestors either coming back or
through a referral system, thattakes a lot about your company
(34:40):
and how you do things and howyou manage things.
Trent Werner (34:43):
Absolutely. Well, Vanessa, I appreciate you
sharing about your Missourideal. Is there a way that people
can hear more from you, readmore about you, connect with you
on all the different socials orwebsites?
Vanessa Alfaro (34:57):
Sure. In my website, if you go to my
website, it's venuspartners.comvenus partners Com. I do have a
lot of resources. I have asection with an ebook that, we
have created. We we're very intotechnology, very into artificial
intelligence and ways to usetechnology to optimize our our
(35:22):
processes and, actually, tooptimize the the deal itself in
order to create more return toour investors.
So you will find in in mywebsite a lot of resources and
ebooks about how you can use AI,how you can use it as an
entrepreneur. I have five toolsthat you can use right now for
(35:43):
you to save time in yourbusiness. And, also, if you are
a real estate investor, I dohave another that have a little
bit more of tools that you canuse for your business as well.
So I invite you to go and checkthe website and download one of
those ebooks and and see if thatcreates value for your business.
Trent Werner (36:03):
Love it. We'll make sure we link
VenusPartners.com in the shownotes and in the description
here. Vanessa, again, thank youso much for joining us today and
telling us about yourentrepreneurial career as well
as your real estate syndicationlife.
Vanessa Alfaro (36:17):
Thank you so much. Really a pleasure to be
here.
Intro speaker (36:21):
Thank you for listening to this episode of the
Real Estate ProfessionalsInvesting podcast on Wynn, your
community of investing knowledgefor growth. We hope that this
episode has increased yourknowledge and added value to
your path to freedom. If youwould, please take a second to
rate us so that we can get moregreat investors to interview. If
you or someone that you knowwants to be on, please visit
(36:41):
westsideinvestors.com and fillout our form to be on the show.
Thank you again and enjoy yourday.
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