GI98: From $400 to 277 Rental Units via Creative Financing with Sergio Pejoves

GI98: From $400 to 277 Rental Units via Creative Financing with Sergio Pejoves

Sergio Pejoves has been involved in many different facets of real estate investing in several markets throughout the US; from single-family rentals to 100-unit complexes.

Watch The Episode Here:

Listen To The Podcast Here:

Transcript:

Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Sergio Pejoves. Sergio has been involved in many different facets of real estate investing in several markets throughout the US; from single family rentals to 100-unit complexes. So thank you so much for being on the show.

Sergio:
Thank You. Great, great to be here.

Charles:
What was your background prior to starting to invest in real estate?

Sergio:
I wasn’t in the mortgage industry. They came to the us back in December of 99 and I was working I’m from, I’m originally from Peru and born and raised. And I came to the us at age 25. Before I came to the us, I was working for the family business and and I started when I moved here, I worked with my brother, my brother would kind of operations or motivation mortgage operations. And I was a junior loan officer and trying to learn the business. And that gave me kind of like light on what was all about real estate. So I worked with my brother for three years, close to three years in El Paso, Texas. So that was where my beginnings, you know, in, in exposed to real estate.

Charles:
So why did you choose real estate as your investment goal? Can when you started investing?

Sergio:
Well, you know, I was, I was, you know, after working with my brother and became a mortgage broker, you know, and as you’ll know, in 2007, 2008, the market turn. So I always thought, you know, I remember I met this gentleman and came to my office and, and just walk in and say, Hey, sir, do you want to talk to you and say, sure, we’ll have a seat. And he was, you know, he’s Aramaic facilities. And I said, you know, I want to refinance one of my properties. And I said, oh, how many, how many properties you have? And he’s got around 35, 37 properties. So I was very impressed by being sold, John and being able to acquire so many, so many properties. So I was very curious about, about his journey. And I said, Hey, you know, you know why you went to refinance, maybe I’ll buy it from you. I know what’s my first rental property, single family. So that was an inspiration for me that whenever, you know, as you know, everything’s cyclical, right. Everything turns. So I kind of knew that that at one point things would slow down and the motivation there will be an opportunity on the real estate side of it. So I always kind of in my mind that when things turn and slow down or there’s a, there’s a chief team in conditions that I will go into real estate.

Charles:
So your first couple investments where single family.

Sergio:
Yeah. Yeah. Single family rentals. And I started you know, when, when the market turned 2008, I I moved from El Paso to Houston and I decided to get full time into real estate. So I did fix and flip, you know, in the suburbs of Houston. And I did, I did quite a lot of properties, you know, they don’t, you know, spring area fixed in OKT area. None of the solvers, you know, feed approximately 15 to 20 properties a year. So it wasn’t a small operation, but I was very busy, you know, and I, at one point I, I thought, you know, why, instead of doing so many fix and flips, you know, why not just go to the big leaks down in the city, you know, and do three, four properties at a time, but build larger projects. And that’s when I, when I opened project bungalows, no, 2012, then I was doing fix and flips of bungalows. And I also started doing some new construction of craftsman homes in the Houston Heights area. It was a beautiful journey. You don’t really learn a lot about the business and all the profits or all the gains that it was, you know, getting from the fix and flips and the high-end remodels elevations on new construction. I started buying real estate. I started buying more rental properties. So, you know, that was kind of like my game, you know, I want to start having to lie, you’re saying, and they move all those gains into cashflow opportunities, you know, and, and that was, that was my goal. Not in my body, my daughter was born, you know, and I guess everybody gets that kind of like, you know, clique, you know, okay, what am I going to do if you don’t, what’s going to happen if I’m not here. So that’s when the ha the whole cash flow really opened up in my head and said, you know what? I wouldn’t really go aggressive into, into the cash flow business through real estate.

Charles:
Awesome. So what’s your current investment criteria and strategy

Sergio:
Mostly value add we just close our first large multi-family in December of 2020 here in Florida. And it’s, you know, full value add meaning, you know, we’re gonna, you know, find out what other deficiencies, you know, on the expenditure trying to improve the NOI, tried to push rents, trying to recover innovation on the asset. And, and that’s what we believe is, is, is it’s a more advantageous position to be.

Charles:
So with your background in sourcing deals, I imagine when you were sourcing deals in Houston and in Texas, you were sourcing deals off, off market, so you can get deals. How do you source deals now? Are you sourcing them direct from owners still, or mainly using brokers, or does it depend on the size of property?

Sergio:
I always deal with brokers, you know, since, you know, same experience with Houston, you know, I think some, you know, postcard campaigns trying to deal directly with owners, you know? Yeah. I mean, it’s a hit or miss situation and you have to be consistent. And, and, and I was, and I had some good leads, you know, that eventually became opportunities, but most of my great successes, you know, like angry to preclude his word through relationships with other brokers, you know, I believe, you know, you know, you have, you build those relationships with those brokers and you keep loyal to them, they’ll be loyal to you. So they are like your soldiers out in the market trying to, you know, they know what’s going on in particular neighborhoods and, and let them invest their marketing dollars, you know, let them go on the field, you know, pick up properties and, you know, you get those relationships you’ll become that preferred buyer. Yeah.

Charles:
So is that how your picking up deals and finding deals in such a competitive market ship marketplace?

Sergio:
Yeah. Yeah. Continue, continue build a relationship with brokers. And you know, that’s my main, my main activity, constantly talking to the coffees are going everything coming soon. And it is a team sport, as we all know about. Right. I mean, we’ll define it as a team sport. And you, you know, even though you may not have a deal today, you may have a deal in six, you know, 12 months, a year, two years, you have to think long-term so building those ratios are crucial. You know, keep communication, keep talking to your broker, build those relationships. And you don’t need that many, you know brokers either. It’s not like you have to meet every guy that is a broker in your market, but, you know, just pick the top three, four top brokers and say, Hey, you know, please give me the opportunity. I want to be on the top of the list whenever you have a deal and, you know, and, and be proactive, you know, when they send you the deal also, you know, being responsive, you, you know, engage with them and say, okay, let me send me what I need. I’ll analyze, give me 72 hours. I’ll, I’ll send you an, a literal NOI or I’ll say your name.

Charles:
Yeah. It’s amazing how many people do not respond to brokers when they finally get a deal from them. Exactly.

Sergio:
You know, you have to, you have to, you have to respond to your brokerage, you have to engage with them. You have to build that relationship. You have to build that trust. And you know, if you don’t seem that you engage back then when I go with whoever is when I engage with them at all times.

Charles:
Yeah. They want to have someone that can close the deal too, and it’s going to be responsive to them when they send out the deals. Correct? Correct. What when we met a couple of years ago, you had just purchased a portfolio of single family properties in Wisconsin. I believe it was. So what type of team do you have in place to handle your acquisitions and management? Since you’re in several markets throughout the U S

Sergio:
I think property management are our key, our key you know, that opportunity came in 2018 and it was brought by a broker. Again, relationships are important. And, and I was doing a transition there. I was finishing off my developments. I was making a decision to full, full time into real estate and cash flow and buying portfolios. And multi-family so you know, it’s not easy, you know, in different markets, you really have to have that management team. You may not have it at the right place at the right time when it, maybe you are co acquire and you have become like dance, dance, dance, that situation, you know, and I think for what I learned about, you know, that experience is don’t be afraid to make drastic moves will not need it. Sometimes, you know, they say, right, it’s better that they will let you know that they will, that you don’t know. But I think that when it comes to property management, it’s important to to make the right chief. Do you think that things are not going your way? And when I bought the Porter Ford, you, I kept the same team and there were some, you know challenges along the way. But I, I, you know, I didn’t want to make, make, make a change, you know, but eventually I did. And from, from challenges, things are starting to look way better and I’m exiting that market right now because I want to go full, full time into multi-family. So actually that portfolio that I bought in 2018, we are trying to reposition and after where we’re making great progress and there’s there’s a couple of buyers interested, so we’re gonna, you know, sell that portfolio and move those that capital into, into seven multi-family projects. And that’s my goal this year to 40 exit the single family market and go full-time into multi-family and continue to grow our portfolio. And then we’ll be fine. We’ll decide.

Charles:
Awesome. Yeah. That’s great to hear on the on how you’re doing that, when you’re, what is your role on your team when you’re raising? Are you raising money mainly? Are you doing acquisitions? I know you sponsor deals. What do you focus as yourself when you’re on your team?

Sergio:
Well, I’m, I’m I’m moving. If I said I enjoyed everything I enjoyed you know, I have an you know, director of operations that, you know, you see my team, you know, we, we, you know, we get all the information, we get all the data, you know, we, we, we had the right, a lot of deals, you know, and, you know, we’re super particular, you know, we’ll, we don’t have to close a deal every month. You know, we just find to find that, that, that deal, that fits our criteria. And it may happen once or twice a year, three times. We’re not trying to compete to the guy next door or the already sponsor that is closing deals. We’re just very, very big, very particular. And so once the deal is underrated, you know, I think look, you know, we discussed it back and forth within LOAs and you know, and then once the LOI in place, you know, there’s of course a strategy to not to, you know, to raise the carpet and everything. But I, I enjoy all aspects, you know for the last six months I’m being, you know, talking to people that I know, you know, my Rolodex, you know, say, Hey, you know, they know me from, you know, new construction development, you know, fix and flip. And now they realize I’m in the multi-family space. So I’m trying to be what, to those, those relationships into converting them into passive investors. And I think it’s, you know, it’s a lot of conversation. This is not a, you know, let’s get reached tomorrow kind of thing. So I’m, I’m being very, very happy with all the connections that I made. And a lot of people are, you know, and are like, you know, providing me with soft commitments or future opportunities. So I’m just like constantly trying to put together opportunities. And that’s my role, you know, overseeing everything.

Charles:
So as you trans transition out of a single family, what do you see for the next 12 to 24 months and multifamily? And are you looking at any other real estate classes

Sergio:
At this moment? I’m focused on multi-family you know, here and there, I see all the opportunities. And I, I was exploring the, you know, doing like there’s a lot of hotels as you know, because of COVID you know, there’s a lot of distress, you know, hoteliers, so distress hotel owners. And I think there’s some opportunity there to do a hotel conversion to a apartments. And I explored a couple opportunities didn’t pan out. So that’s kinda like when you asked me, you know, if I’m looking at all the things, you know, it will be something to convert to multi-family at the end of the day. I see, I see opportunity I think we’re gonna wait a little bit more how these stimulus plan that just came out, how it was going to pan out in the market. And I think that that’s one of the challenges along the way, but opportunities, same time.

Charles:
Are you, what are you worried about most, about going forward? Do you think it’s interest rates going up when you’re trying to refinance? Is it something else?

Sergio:
Well, I think that the feds just announced a few days ago that the rates are going to remain the same. So that gave us a little bit of our horizon for the next two, three years that I don’t think interest rates are gonna, I want to be, I’m going to increase. I see that there’s going to be, you know, that’s part of the stimulus, right. You know, to incentivize the market. So I think that we are, we, we, these that’s part of the 40 that we bought with multi-family. We are thinking of refinancing in a year, a year, a year and a half. And we’re concerned about that rates going up, but based on the latest news I feel confident that the rates are going to remain attractive.

Charles:
Okay. And with these different markets, I know you’re buying all throughout Florida and some other states as well. What, what are you looking for when you’re picking out a market? Is there anything specifically that you want to see or that you don’t want to see?

Sergio:
And at the end of the day, we all want growth, right? We want, we want to an increase in population, you know, an increase on jobs you know, your typical, you know, market highlights that are important, you know, just good trends, you know, not a perfect market, you know, but just a stable, you know, upward market, you know, here in Florida, we’re experiencing tremendous migration, you know, because COVID dynamics have changed where people come forward remotely. And I think there’s a little good in Florida. And I guess I’m, I’m happy that I make the, you know, the move here from Texas, you know, in 2018. So I see opportunities now down south for what I am like south of Palm beach, you know, just their rates are so low. And I think it’s a different kind of buyer, more and more, you know, foreign, foreign investors or institutional investors that they just want to park their money, but for a small operators like ours, you know, I think that priority things north of what I am in Florida are more attractive.

Charles:
Yeah, no, I totally a hundred percent agree with you because living in south Florida for so many years and appeal like, oh, would you, would you bond a bite on there? I’m like every time I see a deal, every time I reviewed it, I would love to buy in Southeast Florida, but it’s so expensive and you’re competing against people that don’t need really a return. So you’re competing against people that are coming from up north, you know, New York, Boston, and then tons of international money from south America, mainly that is not really requiring a return, which is very difficult,

Sergio:
Right. To compete impossible.

Charles:
Well, when do you need to pay returns to investors? So so yeah, I, I think the same thing it’s the growth in population growth in jobs. And then I want to see some kind of inverse trend with crime. You know, I want to see crime somewhat decreasing over the last 20 years while you’re having population jobs increase. And I think the slower, or the more steadily that line is I think the more consistent that market’s going to be, and because of a disruption happens, it’s not going to be major. Whereas in these hot markets that you hear everybody talking about this and value add, I think those are going to shake up a little bit more when jobs slow down or something happens because they’ve been just experiencing so much growth.

Sergio:
Correct? Correct. Correct. There’s still some risk also on that end. Right. As you said,

Charles:
So you work, I mean, you’ve, you’ve been a broker or a real estate, a single family wholesaler or flipper single family portfolio, owner, multifamily owner. What mistakes do you commonly see newer experience, real estate makers real estate investors make?

Sergio:
I think that most, I think that the mistake that they make is not taking action. I think that I see a lot of great patented investors, you know, are, are, you know, in this space, but they don’t submerge themselves fully. And I think that’s probably your biggest risk, just kinda like paralysis of analysis, you know, just to stay where you are. And again, you don’t have to close deals every month, you know, but just, you know, just be proactive, just be, you know, I think that’s probably the biggest mistake, you know, just not, not making that leap of faith. Don’t go being engaging, not, not, not taking action on, on what the opportunities had. And sometimes the portfolio is Friday on our eyes and we just, some people don’t see it. So I think broadly that, and also the notion that the deal, because it’s caught the money’s going to flow in and, and, and we all make that mistake, you know, while the deal is a strong, you know, yeah. I’ll get the money. And probably, you know, I think that it’s important to work your way around, you know, cut up conversation with people that, you know, you start with friends and family, right. You know you know, check on that relationship that you have in the past or that people that they know you, and it started having a conversation about what you’re doing. You know, everybody wants once, you know, invest in and get monitored return if they are full-time TULO activities. Right. So at one point everybody’s passive, right? You buy stocks. I mean, you’re passive. So how about conversation? We people that, that you already know and tell them what you’re doing. They may knowing that there’s with you and your first deal, but at least you already have built some sort of, you know, re you know, list of people that are going to believe when you own a baby with you on your next opportunity. So I would probably recommend for, you know, people that are starting to be proactive on engaging and talking, bringing the conversation and, and say, don’t be afraid. You know, of course, you know, you’re doing a piracy, see, right. They need to be fully accredited to make sure that you don’t do disclose that part, you know, and that they are fully accredited or your want to do arts indication. You know I guess there’s, there’s, you’re more flexible, right? You can also do joint ventures, you know, everything doesn’t need to be a segregation. My last deal, it wasn’t a syndication. And he wasn’t, you know you know, sending me a $6.5 million deal. You know, you can just bring people together and say, Hey, you know, let’s, let’s, let’s this work and build something interesting here. So just, just that, that would be my advice.

Charles:
Yeah. I think we, if you haven’t raised money before people ask me, I always tell them, raise 50% more than what you need. And the other thing too, is that you’re, you know, it’s you found a deal say you’re just, you know, getting a soft commitment. Isn’t just a urine, you’re in the bar with your buddy having a beer. And he tells you, Hey, you know, I’ll invest $50,000 into your next deal. And then six months later, you get it. That’s not really a soft commitment, soft commitment is what I’m saying about that is that they’ve reviewed the deal. They’re interested in the deal, and they’re going to give you some sort of a feedback on it. And that’s what you can consider as a soft commitment. Not just, I spoke to so many people in the last few months, and they’re interested in investing well, everybody wants to invest in real estate because I think person, no matter where you are know, someone that’s become wealthy or made money in real estate, it doesn’t matter what I think, level income class, you are, you know, someone that’s made money on a house, on a property, a whatever it might be. And then the other thing we say about the analysis paralysis, I think that people are always looking for a home run and they’re comparing what the market was a year or two ago, which is important to be aware of that. But it’s also, I stopped years ago trying to make a home run on every deal. And knowing that, you know, you have solid doubles and, you know, if you consistently are evaluating properties and consistently buying properties, you’re going to have the doubles and triples, the home runs, and eventually the grand slams, depending on where you are in the market cycle when you’re buying. Correct. I agree with you. Yeah. So now getting a little bit more personal, what are some couple mistakes that you’ve made previously when investing in real estate?

Sergio:
I say what I mentioned to you before, you know you know, when it comes to management companies, you know, just making that decision. And it’s a scary decision when you’re trying to switch a management company is very scary. You hear all these horror stories. So, you know, I guess you want to do it. You’re thinking of doing might as well do it. Don’t be waiting for that perfect timing, or don’t be waiting for things to change when they’re having changed. So I think on my personal experience, I, you know, which I, would’ve made a little bit more decisive on changing, you know management teams at the right time. And I just felt that, well, there’s no rock the boat. You know, let’s just be more concerned about if you don’t might as well, you know, not the person you will already know them. You know, let’s just try to navigate the waters and not look for a bitterness. So I would say my, you know, I wouldn’t say regrets, but, you know, challenges were those. And I was able to make those decisions and change it. And they were not easy decisions, but I ended up making it. And I’m very happy right now that I’m working with better teams than previous ones. And now I feel better about it, you know, and things are starting to look better. So don’t wait. I, do you feel, you know, that you have to do tomorrow, you know, just do it. Yeah.

Charles:
Yeah. It’s amazing how overlook property management is. Even though you’re, we’re talking about buying all these multi-million dollar assets here and there, the only their team is the only people that actually are going to be the ones talking to your tenants most likely, or, I mean, you show up at a property and you’re reviewing it. You have a tenant walk up to you and talk to you because they know that you’re, you know, you’re, you’re not the manager and you’re not looking they’re a rent. So they believe that you’re, you know, part of the ownership while at the thing is mostly, I mean, on a daily basis, the person that’s gonna have contact with your tenants, with your clients that are paying everything are going to be the people that are making 40, $45,000 a year hired by this property management company.

Charles:
And it’s extremely important to make sure that you’re on the same page. And then the other thing too, about the management with you is that I remember my first management company I owned or not owned. I I hired for properties I had. And it was like the first six months I was kind of Rocky. And I realized a lot of issues that I had a couple tenants that we had put in before handing over. And I was like, I got to give them like a fair shake of going through it. And about 12, 18 months into it, the property turned dramatically around because we had a couple, probably a few problems with tenants, you know, that kind of shake of boats, it’s thing too, is having, you know, it’s, if they just take over the keys, they didn’t hide. They didn’t do any underwriting on those tenants coming in. Right. That was most likely you or your other property management company. So blaming that on them is incorrect. You have to have them go the whole process and see what happens after a year or two when their tenants are in there. And the tenants from the previous company or from you are not there. And so what so Sergio, how can our listeners learn more about you and your company?

Sergio:
Well, you can just visit my website, worthaverei.com. You know, they can, you know, there’s my, my bio is there all the properties that we own, our portfolios, is there a, you know, a little bit of history about us and how we engage with our investors. So just that, you know, visit a web page, you know, or look me up on Facebook, search for hobbies or work, having a capital appealable.

Charles:
Okay. Yeah. I’ll put those links into the show notes. Thank you so much. Thanks so much for coming on and enjoy the rest of your day and a beautiful worth avenue there in Palm beach island.

Sergio:
Sounds Good. Look forward to having you here in the office.

Charles:
Talk to you soon.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

Announcer:
Thank you for listening to the Global Investors Podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit global investor podcast.com and don’t forget to join us next week for another episode.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar incorporated exclusively.

Links and Contact Information Mentioned In The Episode:

About Sergio Pejoves

Sergio Pejoves is the founder of Sp Real Estate Mgmt & Home Buyers LLC, a Texas Company that is dedicated to acquire deeply discounted properties with the purpose of buying, fixing/rehabilitating and selling, buying and wholesaling and buying and holding for cash flow and long-term appreciation.

Sergio is a graduate of the Business Administration and Marketing school of the Peruvian Institute of Administration. Following his time in school, Sergio successfully ran his family business in Peru for several years, before moving to the United States in 1999 where he got introduced to the Mortgage Industry in El Paso, Texas. Through hard work and dedication, he became a licensed real estate agent and a top producing Million-Dollar mortgage originator in the West Texas Region. In 2006 he moved to Houston where he focused on a career in real estate investments. With a passion and dedication to real estate, he applied his vision, knowledge, and experience to begin acquiring distressed real estate to renovate and resell. His unique eye for design and vision for what could be, ensured each project was a true success.

Since October 2018 he acquired a large Portfolio of SFR, Duplexes and 10 plex totaling 105 Units in the Milwaukee, WI Market. His intension is to stabilize and reposition the portfolio which will take 2-3 years as most of units require special attention. With the above in place, he has been exposed to several new opportunities.

In May of 2019 Mr Pejoves closed on a large package of 60 doors consisting of SFR and a few duplexes. In 2020 Mr. Pejoves opened operations in Florida markets. He founded Worth Avenue Real Estate Investments which primarily focuses on multi-family projects nationwide, he successfully closed on a 92 Units Apartment Portfolio in Daytona Beach, FL.

Mr. Pejoves has a long record of successful projects, ventures, satisfied clients and business partners.

Are You a Fan? Subscribe, Rate, Review & Share – Click Here To Learn How

What question do you always wish I would ask but I never do?

Connect with the Global Investors Show, Charles Carillo and Harborside Partners:

Scroll to top