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Once you open your eyes and see the ability to make wealth in other ways, you can’t go back. Vanessa Peters, the founder of VMD Investing, shares how she helps to teach other colleagues and professionals raise capital, connect with experienced operators, and build passive income through syndication. She gives us a glimpse at the time when she was trading time for money. When her bank account wasn’t growing, Vanessa shares that’s when she started looking into real estate and dive deep into syndication, which, according to her, gives us tremendous opportunities and options to create passive income.
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Raising Capital In Syndication with Vanessa Peters
Our guest is Vanessa Peters. Thanks for being on the show, Vanessa.
Thanks for having me, Whitney.
I’m honored to have you on the show. Vanessa is the Founder of VMD Investing and has been investing in real estate for several years in single-family homes, commercial retail, apartment communities, self-storage and manufactured home parks. She has invested in over 2,500 units across seven properties in three funds. She’s passionate about helping busy professionals build wealth through passive income-producing real estate that provides attractive returns and a proven roadmap to financial freedom. She earned her medical degree at the University of Calgary, Alberta, Canada, has a thriving full-time practice in Escondido, California and is Chief Physician Officer for her medical group. Vanessa, thanks again for being on the show. I’m honored to have you as a guest. Give the audience a little more about who you are and what your focus is in real estate.
Thanks, Whitney. I’m honored to be a guest here. I became involved in real estate accidentally in early 2007. Unfortunately, I was going through a divorce at that time. It seemed like a good idea that I would give my ex-husband my 401(k) and I would get the house. This was in Southern California as well. Our house was worth quite a bit as everybody’s was. There was a lot of appreciation in the market at the time. I was fairly highly leveraged as well. Unfortunately, by the time we made that switch, it was in October of 2007 and the market had already started to slide. It was a little too late for me to do anything about it. Within six months, the house was completely underwater. I had to move out for other reasons. I rented the home out. It was worth about $250,000. I had $420,000 on the mortgage.
I became an accidental landlord. I couldn’t sell it at that point. I had to basically feed it. I thought it would turn around. Unfortunately, it got worse and worse. In 2012, after having to pay $1,000 a month into this because the rent wouldn’t cover the mortgage. I did have to let it go on a short sale. That was humiliating and hard on my credit. That was my first foray into being a landlord. Fortunately during that time, a realtor friend of mine had suggested that I buy a property. In Riverside County, north of San Diego, I did buy a single-family home in 2008. I wish I had done ten of them, but hindsight is 2020. I didn’t know what was going on with the market because it kept going down. I purchased fairly early in the downturn. Also, I started having kids and got busy. I wasn’t thinking about real estate. I did want to spend lots of time with my family and not work as hard.
I was thinking about when I would retire. I was talking to my financial advisor. When I was probably 35 or 36, I asked him, “When can I retire and how much do I need? I make pretty good money and I’m saving.” The number he told me blew me away. He said, “You’ll need $4 million or $5 million to retire.” Looking at what I had already saved and where I was at, especially having to start over at 33, I was pretty disappointed. I realized I could max all my tax-deferred vehicles. I could save as much as I could. Doing the numbers, I was like, “I’m not sure how this is going to work.” I still did it. I was very frugal, even maybe a little bit too frugal if you ask my family. Seven years later, I looked at the balance of my bank accounts and I thought, “This is never going to work. I’m now in my 40s. I don’t see how I’ll be reaching those numbers in the next fifteen years.” I felt I was on a hamster wheel, paying lots in taxes.
Even though I wasn’t spending much, the saving wasn’t working. It was almost I was just saving linearly. The magic of compound interest wasn’t working for me. I was out with my family on vacation. It was this beautiful idyllic setting. I realized how much fun I was having with them. It made me come to a little bit of an epiphany that I was working way too hard. I need to spend more time with my family while my son was young. While my husband had told me I worked too much, I was like, “Everybody works as much. This is normal. This is how it is. I’m not working 80-hour weeks.” I realized that I need to do something. I realized that I’m trading my time for money. That isn’t the way to do it. There has to be a better way. It was almost like I remembered, “Real estate.” I started looking into it again and dove deep into real estate. I joined BiggerPockets. That’s where I started and learned. I went to some meet-ups. I went down the rabbit hole basically of RE investing.
I chose the red pill like from The Matrix. Once you open your eyes to what’s out there and the ability to make wealth in other ways, you can’t go back. I knew that there was a way that I could turn things around and start driving the bus instead of being on the hamster wheel. That’s what led me to syndication. I did look at buying other single-family homes. In California, that’s not going to work. I looked at buying out estate homes. I realized that I didn’t want the risk of owning a single-family home out of state. I don’t have time to be managing it and flying out there. Understanding that a single-family home or small multifamily, the risk of losing money when there weren’t tenants was too high.
When I was on BiggerPockets, I saw this word syndication. I was like, “What is that?” I did some research. I started doing some reading. I contacted a few people that I met. It was like, “This is the perfect investment for me.” I started investing as much as I could in it. After doing this for about six months, I was invited to join a team of people who were raising capital. I felt like that was a way I could be involved in real estate, which I love. I don’t have the time to dedicate to find deals and things like that. What I can do is I can vet operators in deals and invest my own money, as well as teach my colleagues, other professionals another way that they can also break the time-money equation and start building up their passive income. That’s my niche of helping other accredited investors connect to the experienced operators.
I feel like your story resonates with probably a lot of readers. I know it does with me as well. We’re almost brainwashed the way you’re raised. You think, “We get this career.” You get a good job and your retirement is set. It’s going to happen one day. Thankfully, you talk to somebody. He helped open your eyes to, “Wait a minute.” Unless you make some big changes, it’s not going to happen the way you think it’s going to happen. Thankfully, you took action. You did something. Your eyes were opened to this reality. You made some things happen. You’re talking about your own vacation, you realized you want to spend more time with family and how valuable that is. The fact that “Wait a minute, maybe everyone doesn’t work this many hours.” That’s a struggle I work with as well. It’s balancing that and having a time block, time with family because I get too consumed with trying to get everything done. You realize you were trading the time for money. What made you settle on the syndication business and pursuing that as opposed to many other tops of investing that you could have done?
[bctt tweet=”A comfort zone is a beautiful place, but nothing ever grows there.” username=””]
In terms of that choice within real estate, I found that I love the idea of leveraging other people’s efforts. I don’t want to be an expert in flipping a home or underwriting a home. The idea of renovating something and having a list of all the capital improvements that need to be done overwhelms me. I don’t know how to work to excel. It’s not my niche. I don’t know how to do that. I could learn. I’m a big fan of the highest and best use of your time. What am I good at? I’ll stick with that. I love real estate, but I understand my limitations. Trained as a doctor, I should be focused on doing what I do best, which is I educate patients a lot. I naturally transition to educating other people about this.
I’m leveraging other people’s efforts. The tax benefits are the same. You get all the benefits of cost, segregation and depreciation. You’re doing a lot of the benefits of real estate without having to do all the work. You don’t have control. Some people don’t like that. In my experience, a lot of the professionals don’t want a lot of control. You’re trading some control for less risk because when you’re a limited partner in syndication, you’re not putting yourself out there. You’re not at risk for your assets. I feel it’s the path to financial freedom, the definition of which is knowing that you can live without working. You may continue to work, but you might work less. It’s almost that you enjoy your work more because you don’t have to be there.
You said so many things there that are so good, the highest and best use of your time, understanding your limitations. You use the skills that you already had and transitions that into this real estate business. That’s the part of the business that you can focus on, educating and helping other people that are in your shoes that you are going to relate to very well, these busy professionals. You talk about them not having that control. They’re focused on their day jobs. If you’re a doctor, you’ve got to be on top of your game. You’re managing so many people in that practice or other busy professionals that you’re educating about real estate. They don’t have time to try to pick a market and try to learn about multifamily real estate.
All the details of underwriting and trying to make sure that they can operate the syndication business over here. The amazing thing is that you can educate them. They can invest and own real estate. Enjoy those benefits like you were talking about. Let’s move into how you specifically got started in raising capital and some of those conversations. How did you get over that fear of talking to investors? Everybody getting started in this business, they’re worried about those first conversations with investors.
I got involved because I have a passion for real estate. I even enjoy talking to all my patients about where they live. I’ve always enjoyed real estate. When I was a kid on vacation, I would always be checking out the local office, window-shopping the real estate listings in that particular city. I was happy to get involved in a way that would allow me to talk to other people. It’s true though that in terms of speaking with other investors and educating them, it’s hard because, in medicine, we don’t sell anything, but we do. We don’t sell anything monetarily, but we’re selling things all day long. We are selling a treatment plan. We’re selling a lifestyle change. We’re selling people on getting a preventive thing done like a colonoscopy. I sell colonoscopies all day long because nobody wants to do them. I have to convince people to do those things that they don’t want to do. Tell them why. It’s good for them. It’s a transition to try and almost sell people an investment because, in truth, there’s a benefit for me. That was hard for me to get over. I did not want to feel I was selling people something. The change that I found was helpful is that I realized that I’m not selling people something. I’m helping them come to the opportunity to have something that will help them. Whether they do or don’t join me, at least I can tell them about the options because if I hadn’t found out about it, I would be in a completely different place.
You’re providing an opportunity for them. You’re not asking for money. Everybody says, “I don’t want to ask for money.” It’s a mindset change. You have this opportunity and work. They go and invest in something stable as multifamily real estate. I keep going through that process. How did that happen? How did you grow in the capital raising side from the end to where you are now?
I started by speaking with people that were close to me like most people do, my friends and family. I started working on a website and a blog and getting coaching. You have to have a mentor. This space is smaller than you’d think. Going to a couple of conferences, seeing the same people and talking to people who are in your shoes is the best thing. That’s what I’ve enjoyed the most about becoming involved in syndication is meeting all these great people. I realized that I was living in a little bubble in my world. My bubble was my family, my friends and my work. There’s so much more out there. The people in the multifamily space and other commercial spaces have been so welcoming and friendly. It wasn’t what I expected at all. That’s been one of the greatest benefits is knowing that this isn’t a solo adventure. It’s a team sport. You need to have friends in the business. It’s a relationship business. Everybody has heard that before. You have to be working with people that you trust, that have a good experience and have a good track record.
There are so many mentors in this space. There are so many people that offer coaching. How did you choose your mentor? I get that question a lot. People will call and they will ask if I know this person or know of these numerous mentors. You don’t have to say who they are. Out of all these people that are in the space that offers coaching, how did you choose yours? What was the key factor?
I wasn’t looking for a mentor or a coach. What happened was I was investing passively with him. He suggested that I speak with someone else who was on a team because he knew that I did love real estate. After our initial meeting, I had explained to him how I was trying to invest in single-families and condos. Since I had already invested with him, I had done my due diligence on him, including a full-on criminal background check and checking for SEC violations and things like that. I knew that I could trust him. After speaking to another doctor on the team, I realized that this would be a good fit for me. Being that I didn’t have a lot of time, it was a much more relaxed coaching plan than others I’ve heard of where it’s pretty intense. You’re expected to perform at a certain level. I didn’t want that pressure if it was for me.
You already knew him. You already had a relationship there. You did a background check which if you’re going to invest with somebody, possibly you should do. You already had some inside information before you decided to use him as a mentor as well. Talk about how you educate investors now. You have a niche of the doctors and other people that you work with every day. How do you educate them and what does that look like?
[bctt tweet=”Unless you make some significant changes, it’s not going to happen the way you think it’s going to happen.” username=””]
It usually starts out as a conversation. They might ask what I’ve been up to. I’ll mention that I’m doing some real estate investing. If they’re interested in learning more, I can explain the process of what I went through to get to where I’m at in terms of syndication. They are usually like, “What is that? That sounds risky.” I do a lot of explaining the benefits of multifamily and how it did well in the last downturn. Most people want to know, is their money safe? I’ve noticed it’s curious that if you mentioned the returns early in the conversation, it almost makes them more suspicious. If they’re not familiar with the benefits of real estate, if you say something like 8% preferred return and an IRR that’s over 15%, they think that maybe there’s something sketchy going on. You have to be careful how you approach the subject with all of the benefits, the tax that the paper losses and the lack of active involvement. If they’re interested, we can look at a closed deal the next time, that I talk to them.
That’s such a crucial thing you talked about there. I haven’t had many people talk about those returns too fast, how it can make them more suspicious. I appreciate that. Going over some of the benefits, you briefly put it out there. If they’re interested, they’re going to bring it back up. What happens then? What are some common or maybe not so common questions or things that you help educate them about? How much detail do you have to go in before these people invest with you?
Everybody’s different. Some people will just get a brief overview. They’re like, “This is great. I’m in.” Other people do require you to sit down. I’ve created a blog post. It has 27 FAQs. I prefer that they read that before we sit down. That saves a lot of time because of the very basic questions of, “What is an operator? What is the limited partner? What’s the general partner? What are my risks? What are the tax benefits?” There are so many questions. For someone new to real estate investing in this way, you need to go through everything. It can be quite a time-consuming process. I enjoy it. Since I’m fairly new to this space, I enjoy that one-on-one time with the investors, hope that they enjoy that, and will recommend their friends. Once you have one step of credibility, “My friend did this,” you’re more likely to get more investors that way.
I like the blog post idea as well. Sending that to this potential investor before you all have the big discussion or answering their questions, helping educate them before you get into that conversation. Vanessa, what’s been the hardest part of the syndication process for you so far?
As a passive investor, it’s been phenomenal. I’m putting my money on every deal so far. I expect that to continue. Especially as I get more and more passive returns, I can sleep at night. That’s the biggest thing. I feel that I’ve chosen good operators and I’m comfortable with my choices. In terms of the business side of things, what I found the most difficult is getting on social media. I was a little bit of a social media hermit. I didn’t post. I didn’t have a LinkedIn profile or I did but it wasn’t active. I thought you only went on LinkedIn if you were looking for a job. I have a job, so I didn’t think I needed to be there in that space. I feel like a bit of a dinosaur learning LinkedIn and Facebook. I don’t even have the other stuff, Twitter and Instagram and things like that. That has been a little bit of a time stuck for me to learn those things. I’m not good about posting. I don’t have access to them at work so I can’t even do it when I’m there, which is probably a good thing. That’s why they don’t have you on Facebook at work. You should be focusing on your work. That’s been tricky. I feel like the menial tasks of operating a website, emails and social media are something difficult for me. I’m hoping to get a virtual assistant in the near future to help me with those things so that I can “highest and best use of my own time.”
I highly recommend getting a virtual assistant. What’s the way that you’ve improved your business that we could all apply to ours?
It’s still in the ramping up phase. I find that posting regularly for a blog post has been very helpful. It’s good to get your voice out there. Instead of posting on your own website, get posted on someone else’s website that has more readership than you. For example, I was able to write a post that was put on a prominent medical website and got hundreds of shares. That’s a good way to improve your visibility because your little website probably wasn’t getting a whole lot of traffic when you first get started.
Get your blog on other people’s websites, it’s like being interviewed on other people’s podcasts. What’s the number one thing that’s contributed to your success?
It’s a couple of things. Partnering with experienced people, operators, coaches, important, and getting out of your comfort zone. A quote I like is, “A comfort zone is a beautiful place but nothing ever grows there.” For me, my comfort zone is that I am a bit of an introvert. I’m great one-on-one with patients all day. In a crowd at networking events, things like that, it’s not in my comfort zone to be going out proactively to people. In doing so, I have opened up a new world. Getting out there in public and putting myself on social media has also been uncomfortable. I feel it’s a good step. I feel it’s making me more successful.
Vanessa, how did you give back?
[bctt tweet=”Financial freedom is living without working.” username=””]
I have been working with a charity locally here in Escondido called Interfaith Community Services for many years. They focus primarily on helping homelessness in our community. That involves a range of services. I have been donating for years. I’m actually interviewing to be a board member at Interfaith here. I’m hoping to be able to help them reduce homelessness in San Diego County. I’m also hoping to have a setup whereby per investment, there will be something tangible provided back to Interfaith, whether that’s a door for someone for so many months or a year or something like that.
Thank you for doing that. Tell the audience how they can learn more about you and possibly read your blog or see your website or get in touch with you in some way.
My website is VMDInvesting.com. My email is [email protected]. You can also find me on LinkedIn and Facebook.
Vanessa, thank you so much for your time. I appreciate you being on the show. I appreciate the value you’ve provided to the audience. Also, I appreciate the audience being with us. I hope you will go to Life Bridge Capital and connect with me. Go to our Facebook group, The Real Estate Syndication Show, so we can all learn from experts like Vanessa and grow our business together. I hope you’re sharing the show. We will talk to you soon.
Important Links:
- VMD Investing
- BiggerPockets
- 27 FAQs – blog post
- Interfaith Community Services
- VMDInvesting.com
- [email protected]
- VMD Investing on LinkedIn
- VMD Investing on Facebook
About Vanessa Peters
Vanessa Peters, founder of VMD Investing has been investing in real estate for 10 years in single family homes, commercial retail, apartment communities, self-storage and manufactured home parks. She has invested in over 2500 units across 7 properties and 3 funds.
She is passionate about helping busy professionals build wealth through passive, income-producing real estate that provides attractive returns and a proven roadmap to financial freedom.
She earned her medical degree at the University of Calgary, Alberta, Canada. She also has a thriving full-time family practice in Escondido, California and is Chief Physician Officer for her medical group.
