The deal evaluation playbook — with Juan Vargas, Founder and Principle at GenWealth Capital 

In episode 8 of The Dealmakers Podcast — where top real estate experts share their insights and expertise — we hosted Juan Vargas, Founder and Principle at GenWealth Capital.

Juan shared his approach to evaluating deals and his experience on how he was able to grow through focused resource allocation.

Juan maintains that it’s essential not to be distracted by every opportunity, and there must be a filtering process in place. So he has developed a set of criteria to pare down his possibilities and give his attention and focus to only the best deal candidates.

Juan Vargas’ criteria when evaluating deals

Vargas and his team at GenWealth Capital determined that a possible deal must meet a number of minimum requirements to move on to the next round of further evaluation.

He states, “We have a spreadsheet. We call it the deal board. On that, we prioritize different deals.”

Here’s what his team looks for:

1. Off-market properties

“If a deal is marketed, we give it a little bit lower priority — unless it’s a deal we can preempt, or take off the market as long as we hit a certain number,” Vargas explains. He and his team want to prioritize deals that don’t need to go through the entire marketing process, so there is less competition, no bidding war, and a faster process.

2. A minimum of 100 units

Vargas and his team focus on larger deals, so he sets his minimum at 100 units. For GPs, these larger deals create more profit possibilities and are also more attractive to a wider range of investors.

3. A “B” area or above in primary markets

Vargas and his Texas-based team prioritize deals in growing markets.

“We like to find opportunities in primary markets and growing pockets of the primary markets – specifically in Houston and Austin,” he explains. And he doesn’t want to spend his time on properties in undesirable neighborhoods. He focuses on properties in “B” areas or above. “If it’s in a “D” area, it doesn’t even hit the deal board.”

4. Value-add properties

While Vargas focuses on good areas, he also wants to find properties where he and his team can add value. Properties that have an out-of-state owner or deferred maintenance provide opportunities for his team to physically improve the property, make it more desirable, and increase its value.

Defining the criteria for desirable deals helps ensure that Vargas and his team place the lion’s share of their focus on evaluating the deals with the greatest probability of strong ROI.

Juan Vargas’ 4 Keys to Growth

On top of breaking through fear-based barriers, Vargas mentions four actions that have helped his firm grow.

1. Tracking metrics

Juan tracks important metrics per zip code on his deal board. That way, he has a history of those deals and sees how they developed. And when another opportunity emerges in that area, he has accurate comparisons for better predictions.

2. Conducting weekly team calls

Vargas uses these calls to review company business and keep his team aligned on goals and priorities for the upcoming week.

3. Marketing continuously

Vargas knows that he can’t stop marketing if he wants to maintain deal flow. He stays active with his regular marketing channels and holds a regular meetup.

4. Staying consistent

He knows real estate professionals will see ups and downs with deal flow, but his team must keep working. He states, “We’ve just got to stay active and stay at it. And things will happen eventually.”

5. Managing your fear

As a GP, building relationships, marketing, and strengthening deal flow are essential.

Unfortunately, many people let fear stop them from showcasing their expertise. Vargas had to overcome that fear to start being recognized as a leader in the real estate industry.

He explains:

“Sure, there’s going to be a little fear every single time you’re speaking on a panel — live, in front of a crowd — or hosting a meetup or attending a conference, or even doing a podcast. But getting past those fears … it really helps you get your name out there.”

Vargas even used his own podcast to interview some of the people he looks up to most in business, like Grant Cardone and Robert Kiyosaki.

Final words of advice

Vargas closes the interview by explaining what advice he’d give to his younger self.

“I think the number one reason why most people don’t get started is the fear of failure. And I was no different. So if I could tell myself just one thing, I would say – ‘Get started. You’re going to fail, but just know that it’s part of the process.'”

Modified Date & Time : 02 Oct 2023, 01:13 pm

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Author

Asaf Raz

Asaf is Agora’s Head of Marketing and a growth expert providing consulting services to tech startups and VCs. Asaf is also the host of The Deal Makers Podcast, where he hosts top CRE talents for conversations where they share their success stories and industry insights.

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