Real Estate Underground

Building Success One Deal at a Time

• Ed Mathews • Season 2 • Episode 163

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Episode Resources:

Website: apexinvestments.us
Email: Dangel@ apexinvestments.us
LinkedIn: www.linkedin.com/in/daniel-angel-mejia

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Ed Mathews:

Greetings and salutations, Real Estate Undergrounders. It is Ed Mathews, again with the Real Estate Underground. Thank you so much for making us a part of your day. I know how busy you all are and I'm grateful for the listen. Today is a really interesting show. I am joined by Daniel Angel Mejia and he is with Apex Development Group. So, Daniel, welcome to the show. I'm really excited to have this conversation because you happen to run a business very similar to mine and I want to ask you how you do it so I can get down to best practices.

Daniel Angel Mejia:

Awesome. Thank you so much, Ed, for having me. Pleasure to be here, pleasure to meet you, my pleasure.

Ed Mathews:

So, the folks who haven't discovered you on LinkedIn or elsewhere, why don't you tell us a little bit about you and your company?

Daniel Angel Mejia:

Yeah, of course, a little bit about Colombia.

Daniel Angel Mejia:

Originally from Colombia, south America, born and raised there, then I had the opportunity to go to school here.

Daniel Angel Mejia:

Then I went back to Colombia to go corporate life, initially in the finance world, and that's how it took me to the real estate world, initially there, and then about 10 years ago I got the opportunity to get back to the States and while I was working corporate job in a cement and ready mix company, I decided to take some steps on the side in the real estate world, specifically in the residential world, and that's how everything started, initially doing some flipping, some experience with side, trying to capture all the experience I had from some funds I used to work for back home, slowly but surely started getting into something bigger until I decided and found that was the path I really wanted to take leap of faith, decided to close the chapter of the corporate life and started Apex, fortunately enough to found who's my business partner, now also from Columbia, who used to live in Miami and decided to move to atlanta. And that's where we joined forces and started this amazing path that we're still driving and trying to bring okay, congratulations on your success.

Ed Mathews:

So let's talk about the business a little bit what niche do you tend to focus on? I know you do a lot of different things, but I'm curious where you've done most of your days?

Daniel Angel Mejia:

no, totally. We've stayed within the residential space and that initially covered more buying, existing distressed properties, renovating and selling or renting. That has evolved into the multifamily space also. So nowadays we cover single family and multifamily. In the single family space we did evolve into more roundup construction, both for sale and for rent, and in the multifamily space we only acquire to execute value-add programs. So we basically revolve around that residential world and those three were roundup for sale, for rent and then acquisitions in the multi-space or value-add or plus approach.

Ed Mathews:

That's a lot. Talk to me about your team. What does that look like In?

Daniel Angel Mejia:

2021, we saw the need of starting to build a team around us. Initially it was just the two of us and then another partner we used to have for the construction part of the business. Right after COVID we understood the idea of virtual approach and combined that with our roots and started building a team back home. Today our team is split into those two locations back in Colombia about 15, 17 people, with us covering different areas. We try to be as vertically integrated as possible. So we try to bring everything in-house, except for property management at this point, anything that has to do with acquisitions, underwriting, structuring, capital markets and stuff like that, even managing some of the projects from there parts of the process of project management from Columbia. So that's why we built that team there. And then the other part of the team is whoever needs to be on the ground, on the field, seeing and living the properties will be here, so it's about a seven people team in Atlanta at this point.

Ed Mathews:

We do a similar model here, except our people sit the Philippines, but similar concepts.

Daniel Angel Mejia:

Now are those folks in Columbia? Are they employees or are they virtual assistants or a combination thereof our employees and our team members? There's two advantages that we found there. One they're timezoner, so they work at the same time as we are. We're just sometimes of the year we're an hour off, but it works pretty well. They are our team, we know the culture, we are bilingual, we speak Spanish and English, which helps on the construction and renovation side tremendously. So basically, it ended up being a great advantage to our company and pretty much one of our differentiators at this point.

Ed Mathews:

Yeah, it's a competitive advantage, for sure, because, yeah, not everybody speaks. I speak enough Spanish to get to understand if somebody's having trouble, or to convey what I'm trying to get across, but I am by no means bilingual, so having the ability to speak natively is a huge advantage. Or to convey what I'm trying to get across, but I am by no means bilingual, so having the ability to speak natively is a huge advantage. So, with regard to the changing markets, right, you're based in Atlanta. Where are your properties?

Daniel Angel Mejia:

They are in Atlanta also, and that's another important decision we've made. With time, we've learned to make some of those decisions, which are important, sometimes Out of state, and looking at other states and other markets is interesting and can be kind of like shiny and attractive. For us, it's like focus. Being close to the acid boots on the ground is really important, something that we have decided to stay on, at least for now. That doesn't mean we won't go to other states eventually, but I think the knowledge of the market and I think to your point of like with changing markets and after the great run that the real estate world had from 2012 or 2011 to probably a couple of years ago, really didn't matter, so to speak, didn't really matter where you were, it was just a great run. At this point, in our opinion, it's really important for you to know what you're doing, know where you are and understand the specifics of the submarkets. In Atlanta specifically, it's a pocket-by-pocket market. In general, it's a great market and great fundamentals. You got to be calm.

Ed Mathews:

I was looking outside of Connecticut, down in the Carolinas and out in the Midwest a little bit and came to the conclusion that the physical proximity is an advantage. Right, being able to be on site within an hour or two is a huge advantage is a huge advantage and mainly from a customer service and project management perspective. If somebody picks up the phone and calls you and says, hey, I need you on site first thing tomorrow morning, we got something important to talk about. To be able to not have to get on a plane and go do that is really helpful for sure. The other part of it is just being able to go out and touch the property every once in a while and be present there is also valuable because, especially in the multifamily world, the folks that live in your buildings want to be heard, right, they want to be seen, and when the boss is there, they know stuff's going to get done. That's always a good thing from a retention perspective, right.

Daniel Angel Mejia:

That's exactly right. Yeah, To your point. Our mantra for now is two hours at the most from site. That's been key to us, and obviously there's folks that are in smaller markets and it's a little bit challenging to find opportunities there For us. Fortunately, we're surrounded by 13 counties. It's a pretty extent metro area, so it's good enough for that, and then we have other potential expansion routes in close states where you can't go at some point. Still keeping the two-hour radius, but yeah, for now Metro.

Ed Mathews:

Yeah, and the other thing you mentioned is really important is understanding the markets and the dynamics. Here in Connecticut there are, I would say, at a macro level, there's probably three major markets. Right, there's Fairfield County, which is an entirely different world, very much a growth market from a appreciation perspective. You got Central Connecticut, which is very much a cash flow play, and then you've got I'd say the same in Southeastern Connecticut. But Northeastern Connecticut is, again, is an appreciation because it tends to trend after Worcester and, indirectly, boston. But I live literally in the middle of the state and it's two hours, it's 120 miles to New York City and 125 miles to Boston. So there are investors who focus on Fairfield County and there are investors who focus on Central Connecticut and there's not a lot of overlap and because the market dynamic is so different, I think there's something interesting that you mentioned there regarding the different strategies dependent on the market or the sub market, when you think there's a lot that you guys are doing.

Daniel Angel Mejia:

one of the strategies is precisely that staying in multifamily, and it has been one avenue that we felt to keep transactions going regardless of the dynamic of the market. At some point we were trying to focus more on multifamily, but then 2022 and 2023 happened, where transactions just didn't make sense. We say it's a bit drastic here, but nobody kicked us out of single family. Why not go back? You can keep it going, keep churning. Why not go back? You can keep it going, keep churning. There's some sub market that will be suitable for sale product and then some that will be more cash flow place for rent, and that's when the whole fund came to be. Or we can co-manage all these strategies, take advantage of the fact that we have different particularities of the different sub markets within the market that we are, and then we can approach everything in a way at the same time and find opportunities suitable for each one of the strategies.

Ed Mathews:

So I ascribe to the exact same strategy. Take what the market's giving you right, and there's no reason to shoehorn a strategy into a market that isn't going to respond to that strategy. It's better to understand okay, the inventory is low in this particular market, so as we build rehab houses, it makes sense to sell those, and so on and so on. So I'm curious about the fund. What made you go down the path of building a debt fund versus private equity fund, or just working with private investors on an individual basis?

Daniel Angel Mejia:

Of course, that's a very interesting question. It has been a work where we compiled a lot of experiences, feedback and what we believe ended up being a good balance for passive investors right. So initially the way we raised equity and the way we went about our projects was typical 506B or LPGP structure, where we would raise equity from friends and family or an individual check writer and then go about each project. That meant at that time one multifamily project with one specific approach or a portfolio of single families with one thesis, whether it was for sale, for rent or a combination or whatnot. What we found with time and with the variations of the market is that sometimes singles, sometimes doubles, sometimes you foul and sometimes brand slam, but when you go one at a time, then your investors could be a single, a double once you put all that in a bag. Basically we found what we think most investors are looking for when they go the passive route is they want certainty, flexibility and know what they're getting. The IRR double digits, 20s, 30s, whatever that sounds great. Once they start realizing it's a target, not a certainty, then things can get a little bit iffy. Our approach with that was this is our business, this is our passion. This is what we're going to be doing for the rest of our lives, but for investors, it could be something for a minute or some years, could be potentially for the rest of their lives.

Daniel Angel Mejia:

So we came up with this idea of a fixed return debt fund and the reason why it's debt. It's not that we're originating debt for investors, they're creditors to the fund. It's not that we're originating debt for investors their creditors to the fund but they have a fixed return. We have various, I guess, like thresholds or trenches, depending on the amount they invest, but they know what they're getting. They can have a compounding effect which can get them to the double digits that usually investors are trying to reach. But they also have flexibility. So if something comes up in our case it's a lock-up period of 18 months if something comes up, for whatever reason, they can go out without having to liquidate a property or sell or wait for whatever time right.

Daniel Angel Mejia:

So when you start talking to and this applies for individuals, in our experience at least individuals, family offices, whoever is, you can have a long-term vision. Life happens, what happens if I don't know? I have a need, something, a kid graduated, someone is for school, or every kind of different particularity that can happen with a GP LP structure. The answer, nine times out of 10, is oh sorry, we need to wait until we can full cycle the deal. We can't cycle the deal, we can't sell the deal, or it's a lot more trouble to get somebody out just because you're sitting on the equity position. With this structure, we found what we believe is a great balance of good return, certainty, flexibility, cash distributions if they need it, or all compounding, cash distributions, if they need it, or full compounding. So it's a combination of various factors that we have compiled with time, based on our experiences and feedback from investors, and it's working pretty well, we find the same thing the whole concept of allowing somebody to be able to stay in the fund and compound their returns.

Ed Mathews:

At some point that turns into some pretty good money, and it's yeah, and I like I so personally that one of the things that I had done with our own debt fund is in the exact same thing. There's an 18 month lock up and but then there are periodic opportunities to pull your money out If you need it.

Daniel Angel Mejia:

Somebody's getting married, somebody's going to college, medical bill whatever, some investors at some point want to get a little bit more active and want to buy their own stock, and that's perfectly fine. We just feel that the flexibility adds a lot of value for investors and our point really is just trying to build a diversified portfolio that people can rely on and then for the time that they want to be, hopefully as long as they can, but sometimes there is needs in life we understand. So it's just serving investors at the end.

Ed Mathews:

To each their own, all right, daniel. Hey, I talked about what I mentioned before we started recording. I can talk about this stuff for days and you've built a tremendous business Congratulations. But I would like to get into the final five, our lightning round, if you'll indulge, all right. First one is always. First question is always about purpose, right? I'm curious what gets you out of bed on Monday morning? I know you've done very well and the mortgage is paid, the car payments are probably paid off and kids, colleges, are taken care of, and yet you still get up and go to work in the morning. So what drives you? What's your purpose?

Daniel Angel Mejia:

I would split that in two. There's the personal side, which really happened after I left corporate and started my own thing enjoying the ride that's how I call it and it's just making sure, regardless of what's happening good or bad or ugly just enjoying every minute. So to me it's like sometimes I don't even know if it's Monday or Sunday. We're on a timer at the end of the day and we're probably the end of that timer, so it's just make sure you enjoy every second. From a company perspective or let's call it Apex perspective is being able to build a professional and strong team. Something I feel very proud of is the people that we work with and the fact that we've been able to get back to our roots. We left our country. We can build something at home without having to be at home, working with great professional people and being able to build something around. That is something that I very close to my heart.

Ed Mathews:

I couldn't agree more. I think that there's a contribution that gets me out of bed in the morning is that you're helping people get where they want to go. Right, yeah, all right. So I'm always curious about your mentors and coaches along the way. Talk to me about the best advice you ever got, and I'm curious who gave it to you?

Daniel Angel Mejia:

Yeah, it's one of my mentors. It's someone I would have liked to work with while I was at corporate, but I didn't have the chance. I worked alongside in some ways but never liked him to be one of my mentors or bosses, and that never got to be that. But then liked him to be one of my measures or bosses, and that never got to be that. But then converted him in one of my mentors still there, great guy. The best advice that I got from him was when I was planning on going back or getting back to the states and I was kind of like hesitant at the time because I've been doing a great career there. But he said just try, but make sure you burn your ships. It's the meaning at the end of the day is just don't look back, and it was something I at the time. It generated some fear, but it was a great advice for anyone that's taking a leap in any moment of their lives that I think that's a great advice Always. Yeah.

Ed Mathews:

My reference to Cortez for those folks who are not history geeks like me is when Cortez reached the new world, he had his men burn their boats and he strangely found that they were highly motivated to make it work Right. I'm also interested, fundamentally believe that we learn way more from the mistakes we make than the successes that we have, and I'm curious about a decision or a mistake, something that you'd love to have back. And what was it and how'd you recover?

Daniel Angel Mejia:

One has to do a lot more with Apex. The other one's a little bit more like personal. The Apex one is not bringing construction in-house tuner and honestly find it amazing when I find groups that are able to work with outside construction. We were never able to make it work. There was always something until we brought it in. That's something that I would have done sooner and faster. Probably I would have applied a little bit more dedication to that earlier. Excellent. And the personal I should have left corporate sooner.

Ed Mathews:

Should have started sooner. Basically, I get that a lot, myself included. Never late, but Could have been faster. Yeah, I agree. All right, how do you take in information, like as a leader? I'm sure you're always reading and listening to podcasts and audio books and all that. So I'm curious what is the method that you sharpen the saw with? And also, importantly, who are you paying attention to these days?

Daniel Angel Mejia:

Obviously, podcasts and books are a good source that I rely on. I also follow a lot of LinkedIn. There's a lot of information on LinkedIn. Some doesn't, but I'm a LinkedIn believer A few folks there, jay Marcy, for example that offers great information, great feedback with real substance. For us that's important, just kind of like to follow trends, understand what's going on. There's a lot of variables and like too many sometimes to really get aligned, understand. But I think finding those kind of people that are offering interesting fundamental information in my opinion is always good. And then keeping a couple books around, I think is always good too. Yeah, what are you reading these days, right now? Fraction? Oh, my opinion is always good.

Ed Mathews:

And then keeping a couple books around. I think is always good too. What are you reading these days, right now? Fraction oh Gina.

Daniel Angel Mejia:

Wickman Okay, yeah, it's an annual read for me, is it? Wow, I'm doing it for the first time and we're definitely gearing towards that EOS approach. I've found it's interesting because it's just so simple, but it just makes sense. A couple of things that we've implemented are starting to look pretty interesting.

Ed Mathews:

Yeah, it's this way to make a very complex system fairly manageable, and we've had a lot of leaders on this show who are also EOS entrepreneurs and to a person they say it's really hard to implement in total right hard to implement in total right. So I find that a lot of people do what you and I do, which is read a chapter, understand a concept and then apply the concept of the business without having to go through the whole eis consulting not the exact.

Daniel Angel Mejia:

That's the approach we're taking, at least for now, like understanding section by section, trying to implement and apply and eventually, probably at some point, we reach out. In our opinion, it was like let's understand first before we get bombarded with too much information.

Ed Mathews:

Yeah, so talk to me about success, like, how do you define success in your life, in your professional life and even in your personal life, if you want to talk about that?

Daniel Angel Mejia:

Yeah, of course, for us, Apex evolving portfolio and our capabilities, a fully development capable tier where we get to a point where which community is multifamily and stuff like that'll take a few years probably until we have enough reps under our belt. Once that's going successfully, we'll follow. That's more like from a company perspective right At a personal level. To me, is combined with the purpose I mentioned earlier is just understanding that every situation in life, whether it's good or bad, it's temporary. So just making sure that you're enjoying what you're doing. To me, this is my passion, not only real estate, but just the fact being able to things together, building teams, working with people, working as a team and just making sure we can be or add value to everyone, even at a personal level. To me, that's success. Awesome, love that.

Ed Mathews:

All right, sir, when you're not talking about real estate with geeks like me, what do you like to do for fun?

Daniel Angel Mejia:

I like to ride my bike. I used to run until my knee decided not to Biking. I always enjoy a nice restaurant, also spending some time with my wife and friends, and I love traveling too.

Ed Mathews:

Fantastic, Daniel. I've really enjoyed this conversation. If folks want to learn more about you or Apex, what's the best?

Daniel Angel Mejia:

way to get in touch. I think our website is a pretty good route. apexinvestments. us Email is always a great route to us. Dangel@ apexinvestments. us and in LinkedIn. I'm pretty active there, Daniel Angel Mejia, which I think would be the best three ways to reach out, and happy to have many conversations this morning as possible. I really really love it.

Ed Mathews:

Daniel, thank you again for joining us and it's a pleasure to see you. And continued good success. Thank you so much.

Daniel Angel Mejia:

Pleasure to meet you, pleasure to be here.

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