JF2659: How to Expand Your Network to Find Better Partners with Daisy Serrano and Luc D’Abreau
Daisy Serrano and Luc D’Abreau are a millennial husband/wife multifamily investing team that scaled their business through extensive networking. The wider their network grew, the easier it was to find the right people with the right competencies to secure good sponsors and partners. In this episode, Daisy and Luc share what it’s like to enter CREI as millennials and how they hustled to expand their circle.
Daisy Serrano & Luc D’Abreau Real Estate Background
- Current full-time career
- Daisy: Real Estate Professional
- Luc: FinTech Sales
- Company: Make it Rain Capital (Process: intro call, investor portal, invest opportunity offering, partner with us, make it rain!).
- Portfolio: 445 units as LP’s & 42 units as GP’s.
- 3 years of real estate investing experience
- Syndicators, both active and passive
- Based in Austin, TX
- Say hi to them at: www.makeitraincapital.com
- Best Ever Book:
Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guests, Daisy Serrano and Luc D’Abreau. They’re joining us from Austin, Texas. They are a husband-and-wife team whose portfolio consists of 445 units as LPs and 42 units as GPs. Daisy and Luc have been in real estate for four years now. Guys, thank you for joining us, and how are you today?
Daisy Serrano: Hey, Ash doing amazing. Thank you for having us. We’re excited to be on the show. We are definitely supporters and definitely excited to be on the other side now.
Ash Patel: It’s our pleasure to have you. Before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?
Luc D’Abreau: Yes. Like you alluded to, Ash, Daisy and I ended up starting our investment journey about four years ago where we started out as LPS in late 2017. And just with our goals and what we ended up having, we ended up deciding to not only do one deal but did another deal shortly thereafter. Then looking down the road at that time, we ended up thinking okay, we need to get active really, if we really want to accomplish what our financial goals are and what our life goals are. With that, we end up saying, “Okay, let’s get active.” We figured out what that would end up looking like. We ended up seeing that, a lot of times, if somebody is local to their target market, then that ends up helping out a bunch.
We had invested passively in San Antonio, so we were looking in Central Texas, hence the move to Austin about a year ago. We ended up being part of a GP group and got active with a deal earlier on this year. We just continued to look for properties here in Central Texas and be able to grow and continue on from there.
Ash Patel: What came first, setting the goals or investing as LPs?
Daisy Serrano: They kind of came hand in hand. We started investing first; we actually weren’t even married at the time, we weren’t even engaged, we were still dating, and started investing. Once we did really see the power of distributions and wealth creation, from that point — we already had certain goals in place in terms of our future and where we want it to be, but once we really got a taste of that distribution and saw the cash flow from the properties we had invested in, that really changed some of the long-term goals, and that focused right on wanting to be on the active side. I have to say one thing to add to what Luc shared, is that in that process of investing, being on the active side, we also saw a very big gap in the market, which was not seeing a lot of young people like us, millennials investing, so we really set out on a mission to help educate and create more access for millennials to know that this was something that was possible. Whether somebody invests with us or not, it’s really just about creating access and education for more millennials, more young people at any age group to be able to start investing as well.
Ash Patel: The mailbox money got you guys hooked. Alright, so how do two millennials come into real estate investing as LPs? How was the opportunity presented to you? How did you find out about it?
Luc D’Abreau: I guess it was mostly led by myself. I had been interested in real estate for a number of years and was looking for an opportunity to be able to get involved in some form or fashion. Right after I finished grad school. I started working when I was 23. I’ve read Rich Dad, Poor Dad like so many people do, and a lot of those thoughts, ideas, and those concepts, they really, really resonated with me. So I was looking, “Okay, how do I get involved? What do I do?” I explored a couple of different things, Ash, but ultimately ended up being connected to a GP through one of my old roommates who was also interested and involved in real estate.
Yeah, this was actually the GP group’s first deal in fact, so it was my first deal, it was their first deal, it was our first deal. That’s kind of how we ended up getting involved. It was just one degree of separation, an introduction, and then a ton of due diligence to figure out “Okay, am I going to throw five figures into this deal, or what’s going to go on here?”
Ash Patel: What was that due diligence? Because I remember my first passive deal, and – man, I just thought it’s too good to be true. You put money in and you just get returns every month. What a great idea. My mindset back then was “Alright, I’ll put the money in. If I lose it, lesson learned. But if I actually make what Joe Fairless says – what a win!” So what was your guys’ mindset and what was the due diligence that you performed?
Daisy Serrano: There was quite a bit. We had definitely listened to podcasts such as this one, read books, and really started going to meetups to meet people that were in the industry that were doing it. Once that opportunity came about for us to invest, to move forward, and take that leap of faith, it was really about knowing the team that we were working with. We ended up meeting with one of the sponsors that were based in California where we were at the time. We also flew out to the market, so we flew from California to Texas, and went to San Antonio to secret shop the property, secret shop some of the comps as well. People thought we were a little crazy, because we were investing this money before investing into the actual property. But for us, it was worth coming out, really touring, getting an understanding of those metrics that you see on paper or online, and getting an idea of if that’s really what’s happening on the ground.
Those were all really the different things that we did. It was over a month, starting with basic education, books, podcast, and then leading up to really meeting the sponsors, knowing who they were in person, that was really important for us. Then, of course, going out into the market, secret shopping it, and understanding what it was exactly that we were investing into.
Luc D’Abreau: To your point, Ash, also about not losing money – that was something I was very concerned about. I’m fairly risk-averse, so I figured, okay, at the very least, I don’t want to lose any money, so I ended up backing into ultimately – I didn’t know it at the time, but breakeven occupancy, ended up taking the underwriting that the sponsors had, and ended up just creating my own spreadsheet to tinker with, kiind of pull the levers, and be able to get a much more tangible understanding of what levers to push and pull. Because up to that point, I didn’t have any finance classes or done any accounting. So that was just a way for me to dig in, have more surety for myself, and then be able to provide more to Daisy as well.
Ash Patel: I love that. Good for you guys, you’re putting in all that legwork. Was this an experienced investor? This was their first deal…
Luc D’Abreau: Yeah, it was their first deal, but it’s funny, because they’re actually part of the Joe Fairless tribe. It was with Wild Horn Capital. There was a lot of experience behind the main lead GPs on it.
Ash Patel: What were the returns on that deal?
Luc D’Abreau: That was a percent pref and then two times equity multiple over five years. The IRR was in the mid to high teens. Actually, the first deal is exiting now. It should be exiting officially and closing on the 29th of December. So coming full cycle in just about four years instead of five.
Ash Patel: Awesome. Was that Western Station by any chance?
Luc D’Abreau: It wasn’t. It was Joseph [unintelligible [08:46].
Ash Patel: Okay, because I’ve got a deal with Joe that’s closing December 29th as well.
Luc D’Abreau: Oh, there you go.
Ash Patel: Awesome. Alright, so you guys now have your mailbox money coming in and this real estate thing is working, it’s cool. What’s the next step?
Daisy Serrano: For us, it’s really been a transition. I failed to mention, I was in international education prior to coming into the space and did that for about 10 years. So for me, it was a really big change coming into the commercial real estate space and learning everything that’s involved with being a sponsor and being an operator. What’s next for us in our journey is really…
Ash Patel: Sorry, can I cut you off? I meant what’s next after you did this first investment? So we’re still back in the day. So you’ve got your first one under your belt, you wrote the check, you’re getting the returns… It’s got to feel good, getting those monthly or quarterly distributions. So what’s your guys’ next step?
Daisy Serrano: After that first investment, it was really about creating the kind of life that we wanted to have and backing into how to make that happen. I think Luc alluded to this earlier, but I had been in international education for about 10 years prior to starting my investing journey in real estate. Within that space, unfortunately, there wasn’t the opportunity to help retire my parents and accomplish a lot of these big goals that I wanted to do…. So together we realized that the planning that you asked about earlier, once we started investing in getting those distributions, that cash flow, then it was how can we scale, how can we help provide more opportunities for other people to also take advantage of all of these different things that are available within real estate? And really, it came down to getting involved more to joining organizations locally and nationally, to corresponding and just meeting more sponsors that were doing what we wanted to do, and jumping onto the active side.
So that was really the next step for us, Ash, was looking at, okay, we’ve taken that leap of faith, and now there’s this creation of wealth that’s starting to happen. Now, how can we take that to the next level and help create that opportunity for more people? That’s really where Make It Rain came about for us. It was being able to be operators ourselves, to move into our target market, to leave California, to leave everything that we knew, and our whole lives behind, be able to be in Texas to be boots on the ground, and make progress in this dream that we had.
Ash Patel: Awesome. So how do you do that? How do you go from being an LP to being alongside the GPs or co-sponsor, co-sponsoring a deal?
Luc D’Abreau: I think looking back at what we did, we decided that that is something that we wanted to do. From there, it was a matter, like Daisy had mentioned, of attending more networking events so that way we could meet more sponsors, be able to understand what their either day to day, week to week, month, a month actually looks like, and kind of what that would look like once we’re in those shoes. From there, being able to meet more people we ended up helping of course, because then you just have a wider network, so that way you know whose competency is raising capital, whose competency is being able to asset-manage, and whose competency is boots on the ground, all those different things. Then I guess the next part in our journey, like Daisy mentioned, was deciding, “Okay, if we’re going to do this then we need to relocate.” That was just what worked for us and that’s kind of what our plan was.
Daisy Serrano: We joined a mastermind as well, which was really important just in terms of surrounding ourselves with people that had done it, that had the experience, the track record, and being able to learn from them. I think that’s a really big thing. What’s really important, was to seek mentorship and have people around us that could support us in that journey.
Ash Patel: Alright, a lot of syndicators out there right now have the typical 8% pref, high teens, mid-teens IRR. How do you differentiate all of these different sponsors or operators?
Luc D’Abreau: I think it boils down to who do you trust. Underwriting is underwriting like it’s numbers and sometimes it can be garbage in, garbage out. I think if somebody doesn’t have a level of understanding of what rent growth should be, or really what should taxes align to, or a myriad of other things in your underwriting that you’re getting from your sponsor, then it should be “Okay, do I actually trust this person to have a relationship with them? If I call them, are they going to pick up my phone call? Are they are willing to answer questions?” I think that’s ultimately a lot of it, of how to differentiate. Because at the end of the day, if it goes sour, then are you as a sponsor willing to look somebody in the eye and be able to have a conversation about what occurred, and be able to take responsibility, be able to move forward in a positive manner? That’s kind of what my thoughts are. I’d be interested to hear Daisy’s.
Daisy Serrano: Yeah, it’s similar for me. It’s really being able to have a personal relationship, understanding what somebody’s goals are, being able to help them get there, and making sure that it’s the right opportunity with the right investor. Because not every opportunity is going to be the right fit for every investor, depending on what they’re looking for.
But I would say on the other end also, for us, the big differentiator was moving here, was people seeing the seriousness of how we were operating and conducting our business. We were willing to move, to relocate to be boots on the ground, to get out there and tour, meet brokers, and really have that face-to-face presence. We have a local meetup here in Austin and just have found ways to add value to people on a regular basis… Not just with an investment opportunity, but connecting them with somebody that they’re looking to meet, or just looking at different ways to add value, depending on the investor.
Ash Patel: And Daisy, what is that value you bring to the sponsors?
Daisy Serrano: For us, it’s really now being boots on the ground. It’s being able to – now that I’m full time within the multifamily space, to get out into our property within a couple of days’ notice to really understand some of those submarket metrics, and really be very active here and in the local Austin MSA. So whether that’s with meetups, being able to help connect people, getting out, touring, meeting brokers, and all of that; being very active boots on the ground.
Ash Patel: Do you raise capital for these deals?
Daisy Serrano: We do.
Ash Patel: Is that primarily how you add value? Or are there other things you do as well?
Luc D’Abreau: We’ll end up raising capital, of course. Then the other piece is – with us being local, it’s “finding the deal” because we do have those broker relationships. So those are those main two pieces. There was just a deal yesterday, it came out Thursday or Friday. We’re like “Let’s take a look at it.” Yesterday was Sunday; underwriting it today or tomorrow, then if everything looks good, we’ll be able to tour pretty quickly in short order. It’s 10 minutes from where we live so we know the area very well, we know what the comps are, we can back check with the broker scene. A lot of that ends up helping as well, in addition to being able to raise capital and equity on deals.
Ash Patel: Luc, who would end up buying the deal. Would you give it to a different sponsor and just raise capital for the deal? Or would you guys buy it yourself?
Luc D’Abreau: It would end up being the latter. We would work to be the leads, then be able to bring in the appropriate people in the strategic fit that ends up making sense in order to be able to get the deal across the table, and have it be the right fit for a three, five, seven-year partnership that you have on that one specific deal.
Ash Patel: Got it. Okay, so you’re involved in all aspects of the lifecycle of a project.
Luc D’Abreau: 100%.
Ash Patel: You mentioned seven years – is that how long some of your deals anticipated are going?
Luc D’Abreau: We end up saying seven years because of just the environment that we’re in. Ideally, I guess, average, we would say is that five-year mark. If it happens in three or four, then that’s great. Not knowing what the future is like, if it gets pushed out to six or seven, then that’s something that we end up talking to investors about and say, “Hey, this is what we’re seeing.” That way, they’re not knocking on our door at [12:59] on year four like, “Hey, what’s going on here, guys? I thought this was a five-year deal?” Because things end up changing; no underwriting is perfect, and financials end up changing, so that’s why I ended up saying seven years in that instance.
Ash Patel: You guys look very young. Do you find that’s a hindrance with having brokers or investors take you guys seriously?
Daisy Serrano: I think it was more so at the beginning. I think now that we have a pretty solid team, and once we talk to investors or brokers, we’re able to show the team that’s behind us. Luc mentioned that the first GP group that we invested in, something that was really important for us is who was their entire team, who had the experience and the track record. For us, it’s really been about leveraging the people behind us as well, our team on the lending side, on the GP side, our property management of course, and making sure that we have that experience and track record. If we have a question about X, Y, and Z, we knew exactly who to go to. That’s definitely helped a lot. I think we can’t really control how people see us from the outside in, but we can definitely control the business plan and the team that we bring to the table.
Ash Patel: Daisy, somebody that wants to follow in your footsteps, what advice would you give them?
Daisy Serrano: The first piece of advice I always give is to, one, educate yourself. Start by understanding the foundations, the multifamily 101 basics. Number two is to start going to meetups and meeting people that are doing what you want to do… Because after a certain time of education, reading books, and listening to podcasts, I think it’s so important to surround yourself with like-minded people and build your tribe. Build that group of people around you who is going to support you, but also who is doing what you want to do, because that will push you to go a lot further than you ever thought you might be able to on your own.
Ash Patel: Awesome. I’m going to push you guys here for a second… What’s one thing that would make this husband-and-wife team work better together?
Daisy Serrano: Work better together? That’s a good question. I think time. Luc has a full time job. He’s still having his gig on that end. For me, I’ve been able to now transition full-time into the multifamily space. But I think like as with everything, there’s the marketing piece, there’s the acquisitions piece, there’s the operations piece, there’s so many different aspects of the business. I think for us, it’s time. Being able to have more time to dedicate to growing, scaling, meeting more people, partners and investors alike.
Ash Patel: What advice would you give husband and wife teams to minimize issues?
Luc D’Abreau: I would say open lines of communication, just like with any relationship. I know that for myself, whenever there’s a misunderstanding, either with Daisy or with somebody else that I end up having, it’s because there was some miscommunication that occurred. So I think having open, honest, candid lines of communication is extremely important. If a husband-and-wife team is looking to do this, I think to understand that there’s a solid foundation there already within the marriage, first and foremost, because it’s going to be very difficult to end up working together if that isn’t already there.
And just being open to change. I definitely learned what Daisy’s work style was, she learned what mine was, we learned what each other’s competencies were, and what that ended up looking like. I think just being open to the journey and how things end up looking as you continue to make progress.
Daisy Serrano: On the more practical side, having an operating system as well and knowing who’s doing what. There are certain things that Luc focuses on, and there’s certain things that I focus on. For our operating system, we use EOS, based on the book Traction. I think it’s pretty common in the industry. He has certain metrics that he’s responsible for, I do as well. We have a weekly meeting where we look at where we are in X, Y, and Z. Where am I? How can I support you? How can you support me? We separate the professional and the personal on that end, to where when we have that Make It Rain operator hat on, then it’s business. Of course, there’s overlap, there’s no clear delineation. But the more that you can stay in your lane and support each other within that lane, I think that makes things a lot easier going forward.
Ash Patel: What’s a hard lesson that you learned about dealing with investors?
Daisy Serrano: I can share on that. I think that not every investor is the right investor for you. We learned that on the last deal that we had. We had somebody that we were working with that was very difficult to work with. As a sponsor, of course, you want to provide the opportunity to as many people as you can. But it’s also about it being the right fit in terms of values, in terms of long-term goals, so we decided not to work with someone for that reason. We didn’t have similar values, the long-term expectation wasn’t clear on the investors… So working with the right people on all aspects, on the property management, your partners, your investors, everybody that you’re working with, I think was a hard one, because you’re then raising less money, raising less capital; but I think in the long-term, they’ll be happier with the right operator and we’ll be happier with the right investor.
Ash Patel: Daisy, what was it specifically about that investor that made you not see eye to eye?
Daisy Serrano: It was really the method of communication, to be quite honest. I have certain expectations in terms of how I was raised, and being spoken to respectfully. I think it’s just foundational for me in terms of an expectation. If that basic understanding is not there, and it’s not being respected, then it’s not going to be the right working relationship going forward.
Ash Patel: I agree. 100%. Good for you. What is your best real estate investing advice ever?
Luc D’Abreau: I would say figure out what you want to do. It’s not necessarily only applicable to real estate, but I think if you figure out what you want to do, then that informs everything else. It always goes back to what’s the goal; is this something that you truly want for yourself, for your family, and for everyone else in your life? Starting there, what does that goal look like? Then go into the why, what’s motivating you, and trying to understand that. That informs everything else, and I think that pushes you through when it becomes difficult, when there are hardships, and those long hours and early more mornings, late nights and weekends, and all of that.
Ash Patel: Alright. Are you guys ready for the Best Ever lightning round?
Daisy Serrano: We are.
Ash Patel: Alright. What’s the Best Ever book you’ve recently read?
Daisy Serrano: For me, it’s The Energy of Money. It’s really more of the spirituality of money; for any of your listeners that aren’t familiar with it, it really walks you through your own money journey growing up, why you make certain money decisions, and how to take control and be able to intentionally channel that money energy into different aspects of your life.
Luc D’Abreau: I would say Outwitting the Devil by Napoleon Hill. It was a book that came out a handful of years ago. It was actually written when he was younger, but it didn’t get released until, I think maybe three, four, or five years ago, something along those lines. It’s a great book built upon Think and Grow Rich. I think foundational for anybody who’s looking to accomplish really anything in their life.
Ash Patel: What’s the Best Ever way you guys like to give back?
Daisy Serrano: Mentoring and volunteering. That’s really been something foundational for me. I’ve always had very active mentors, and so with that, being able to give back to the community and to other people that are in a different place than I am. I’m volunteering right now. I’m part of two organizations. Seedling, which works with children of incarcerated people, and Girls Empowerment Network, working to empower girls that are younger to help them be who they can be growing up once they reach adulthood.
Ash Patel: How can the Best Ever listeners reach out to you?
Luc D’Abreau: The best place is to actually go to our website; it’s makeitraincapital.com. You’ll find all the info about us on there. You can schedule a call with us, you can email us, you can check out our social media, our podcasts that we have as well. Everything is there, all in one central place and you can connect with us. When I say schedule a call, literally feel free to schedule a call. We will make calls with anybody who’s looking to do anything within real estate. Even if you’re not looking to invest with us, as Daisy said, we’ll connect you with somebody else who is a better fit potentially for whatever your goals are. We’re more than happy to do that, so makeitraincapital.com.
Ash Patel: I love it. Daisy, Luc, thank you guys for joining us today and giving us your journey. Four years ago, you invested as LPs and now you guys are doing deals on your own. Thank you for your time.
Luc D’Abreau: Thank you, Ash.
Daisy Serrano: Thank you so much for having us on and just for providing this platform for so many of us.
Ash Patel: Best Ever listeners, thank you for joining us. Have a Best Ever day.
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