Insider Secrets Podcast Season 2, Episode 38

 Guest: Alice Chen

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Guest Bio:

Alice Chen is an experienced founder who has built, operated and exited multiple businesses in the past 15 years. Her portfolio of founded companies spans international trade, financial services, CPG, technology, and investment fund management.

She is a BIV Top 40 Under 40 alumnus and has been featured by The Globe and Mail, CBC, Wall Street Journal, Thomson Reuters, Canadian Business, LA Times, Success Magazine, Maxim, and Forbes.

After finding early success in her entrepreneurial journey, Alice began investing her own capital across asset classes including private equity, venture capital, tax strategies, and public equities. Because she doesn’t like dealing with tenants, toilets, and hammers, she has exclusively invested passively and achieved financial freedom in 3 years.

She is happy to share this private equity investing blueprint with those on their wealth-building journey. She is a partner at Pender Hastings Capital, a real estate private equity firm investing in niche strategies across the U.S. and Canada. In this current economic cycle, her firm is focused on the lesser-known but highly profitable land development strategies.

https://youtu.be/IHNlX381yUc

SHOWNOTES

Key Takeaways

Use forward-looking strategies when investing. Successful land deals are structured today based on projected market conditions two to three years ahead.

Partner with experienced developers to access opportunities like land entitlement and horizontal development that are typically closed to average investors.

Mitigate risk by reverse engineering deals. Secure exit contracts with homebuilders before initiating entitlement and development.

Focus on scalable solutions. Land development meets long-term housing demands, especially in high-growth Sunbelt markets.

Diversify your real estate portfolio by including high-growth, high-return assets like land development alongside cash-flowing multifamily.

Look for investments that multiply capital, not just preserve it. This is especially important during your prime wealth-building years.

Standout Quotes

“Our model eliminates guesswork—the builder signs a forward purchase contract before we break ground.” – Alice Chen

“You don’t need to be in construction to benefit from land development—you just need access.” – Alice Chen

“We’re in a 4.8-million-unit housing deficit—this is not going away anytime soon.” – Alice Chen

“Great businesses are built during challenging times, not when everything’s easy.” – Alice Chen

“Land ownership is a liability for public builders, so they outsource development to specialists like us.” – Alice Chen

“When you hear positive headlines, the opportunity has already passed—it’s about timing ahead of the curve.” – Alice Chen

“This isn’t land banking. It’s a data-driven strategy with exits locked in from day one.” – Alice Chen

“I believe we’re nearing the bottom of the cycle—and preparing to enter one of the best windows for wealth creation.” – Mike Morawski

Episode Timeline

[0:00 – 3:00] Opening reflections on intentionality, setting goals, and being in alignment.

[3:01 – 6:00] Alice’s background: from law to entrepreneurship to real estate investing.

[6:01 – 9:00] Career journey through international trade, M&A, and launching The Pender Hastings fund.

[9:01 – 12:00] Fund structure and investment focus in Canada vs. U.S. markets.

[12:01 – 16:00] The land entitlement and horizontal development model—why it works.

[16:01 – 20:00] Forward purchase contracts with homebuilders and how risk is minimized.

[20:01 – 24:00] Current market trends, housing deficits, and forward-looking investing.

[24:01 – 27:00] Investor profile: ideal fit, expected returns, and hold period.

[27:01 – 34:00] Raising capital through networking, investor mindset, and economic insights.

Contact

Company Website: Alice Chen Companies

TRANSCRIPT

Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality.
Mike coaches you to buy investment real estate, creating short term cash flow and long term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.
Mike Morawski: Hey, what’s up everybody? Welcome back. Glad that you are here. I’m super excited about our guest today. But before we get into that, let me ask you, are you being intentional this weekend? What are you doing for either your business or your personal life?
Are you spending time with family? [00:01:00] What’d you get up this morning? And what intentions did you set around today and around the weekend for yourself? I talk a lot about intention and I talk about taking action and setting those intentions that are gonna help you move the needle in your business and continue to help you grow personally.
And so I want you to think through where you’re at at this point in the year goal-wise, for your personal goals, for your business goals, and have you been intentional? On my group coaching this week, I just did a session on taking action and executing. Because what we do through planning is one step, but unless we’re executing properly, we don’t actually get things done.
So, we can execute and we can execute sloppily or we can execute properly. And you know what? You have a choice every day in what you do, and it comes back to your intentions. So just invite you to think through your intentions and what you’re working on and if we can [00:02:00] answer any questions or maybe help get you back on track. If you’re off track or help you get a little further down the track. If you’re on the track, let me know.
Hey, if you’re new to the show this morning, welcome. Thank the people that invited you. Like us, love us, subscribe to our channel. We are always bringing you relevant content and great guests.
This morning I am joined by Alice Chen. Alice and I were connected by a dear friend of both of us. Alice is a partner with Pender Hastings Capital. They’re a private fund and they’re located in the Bay Area. So let me bring Alice in and talk with her a bit this morning. Morning, Alice.
Alice Chen: Good morning, Mike. What a great opening.
Mike Morawski: Oh, thank you. Yeah. I try to always talk to people about intentions. I actually have another company that we call My Core Intentions, and I just think it’s really important because a lot of us can get up and we can have misdirection or no direction at all. We can set goals in January, but where [00:03:00] are you at in March and June, right?
Alice Chen: Yes. Exactly.
Mike Morawski: I think intentionality is so important in what we do. Hey, I’m super excited about getting into our conversation today. I know you and I have been trying to get together for a while and one thing or another at my travel, or you’re busy and we haven’t been able to connect, so I’m glad we finally get the chance.
As I start this podcast, every week I always ask my guests one question, and I do this because I’m gonna write a book and I wanna write a book called the one word. And, I wanna know in one word, what best describes you personally and professionally?
Alice Chen: What’s funny is that one word that I find people generally describe me is badass. So that’s the one word.
Mike Morawski: Well, I guess if it’s connected, it’s one word, right? So why do people describe you as a badass? I love that.
Alice Chen: I think it’s great that you talked about intentionality. So I’m a person that’s very intentional in all that I [00:04:00] put out in the world. So I apply that in my personal life, in business and investing.
And if there’s something that I want to kind of get accomplished, I just go and do it. So whether it’s something that other people have done or if it’s challenging, I’m often the trailblazer and I get it done. Like every single time. So I think that’s why people either refer badass, as me, or sometimes I get called a rockstar too. I’m very honored.
Mike Morawski: Yeah, you should be honored. Hey, so I have a couple questions around that. Is that a personal thing that you have that much drive or is it a cultural thing? Or is it just your personal determination?
Alice Chen: That’s a great question. I think looking back, I think it’s a little bit of both. So definitely growing up in my Asian heritage, upbringing, definitely we’re asked to strive academically and professionally. But I think I’ve gone past that. So my background is actually in corporate law. So as a well [00:05:00] performing Asian kid, I did well in school and went through high school, gifted classes, went to university.
I’m Canadian, so I went to University of Toronto for my undergrad, and then graduated with honors of science degree in Philosophy and Physics. And then from there I went to law school. So I went to law school at the University of Calgary, which is kind of like our Texas in Canada.
And then from there got a different perspective. And then from there went back to my hometown of Vancouver, BC and on the West coast. And then from there I practice at a very big law firm, McCarthy Tetro, it’s Canada’s number one law firm. I practiced in securities law, in mergers and acquisitions law.
And three years into my practice, I knew that my soul wanted to be entrepreneurial. So I knew there was a path for me to align, but I didn’t know what that meant. I knew business was calling me, but what kind of business? I had nothing to do with accounting, nothing to do with certain stereotypical professions in business.
So, I knew there was something, but I didn’t know what it was. But at that time, I had [00:06:00] gone to law school, checked off the box of becoming a lawyer. So I said, okay, thank you mom and dad. My responsibility, obligation towards you is done. You gotta return on your investment and now let me do my thing.
And so believe it or not, Mike, that was 16 years ago. So I’ve been a serial founder and investor for the last 16 years and it’s been a wild ride.
Mike Morawski: That’s an awesome story. I had no idea. You can read somebody’s bio and kind of skim over it, but, I really had no idea.
I always say, you gotta hang out with people smarter than you in order to grow. So I’m really honored that you took some time here today to be on my podcast.
Alice Chen: My pleasure.
Mike Morawski: So what brought you down to the Bay Area? ‘Cause it sounds like your roots are in tunnel. What brought you to the Bay Area?
Alice Chen: Yeah, in Vancouver actually. So I came down here to join my partner who’s based here in the Bay Area right before COVID. So we are one of those COVID relationships that actually made it through the pandemic.
Mike Morawski: Yeah. Good, good. [00:07:00] Now, is there any other gaps you wanna fill in your history? ‘Cause it sounds like you might have just kind of covered everything here. Is there anything else you’d like to cover in your history?
Alice Chen: Yeah. Just, very high level. So I mentioned that I became an entrepreneur about 16 years ago after three years of practice in law. And, I had a series of success.
My first business was international trade, and that was a hit. And, it took three years, but it became a hit. And, I was cemented a top 40 under 40. My business in Vancouver in 2013. And then from that point, I pivoted my business into different segments. So my second business was a mergers and acquisitions boutique and, in a very niche area.
And because of its very innovative and niche nature, that business was acquired by PricewaterhouseCoopers in Vancouver. So then, I went there in my early thirties as the youngest deal council, youngest like advisory person, at [00:08:00] PWC. So I was there for two years, was able to kind of look around and figure out what people are doing in accounting and finance was pretty fascinating.
And then from there I connected with people, they’re running the family office practice and, connected the next generation leaders. And then with a co-founder of mine, she and I then broke away from the mothership. And then we ran our own multi-family office for a couple years. And then from there that business parlayed into a FinTech business. So it’s a family office FinTech business that was named a Top Family Office software in 2023 by Forbes Magazine.
So I personally exited the operations of that business. My co-founder is still running that. She does event. Fantastic job. So then, I went on to do other things and throughout my 16 year entrepreneurial journey, I was very lucky to have encountered my now business partner in our fund. So James, so James is a 24 year CPA by background.
He has [00:09:00] run a very large private equity corporation. When I met him 12 years ago, I was an early investor in his first fund. Did really well, went on to learn everything under the sun about private equity from my mentor. And, fundraise for his fund and kind of learn the ropes.
And then later on in my investing journey, branched out into working with other fund managers. I ran a very highly esteemed fund of funds in Canada. Aggregating the best private equity funds over there. And then now, coming back into the industry, we’re just very excited to enter into United States and to be looking at real estate strategies where we can apply our skillset too.
Mike Morawski: Interesting. I just wanna make a quick comment. My youngest daughter is graduating high school in May and next year is gonna go to Marquette and she wants to study international law. So she wants to be a lawyer and do international law. So I just find it kind of interesting and trust me, I have no idea where she got that idea from. I don’t [00:10:00] know what sparked that. So, it’s kind of interesting though.
Hey, so in your capital raising, are you raising capital out of Canada or here domestically? Where’s your capital coming from and where are you deploying it?
Alice Chen: Yeah, great question. So we are actually a real estate private equity firm that’s both in Canada and the US. So because I’m physically in the US, I lead our US market initiatives. So in Canada we have six funds, in the fund family that focuses on multiplex development. So that’s a subset of multifamily.
We do that in Vancouver because if you think about it, Vancouver’s sandwich between the ocean and the mountains. So there’s very little buildable land. So when you need to increase density and increase supply of housing, you gotta go vertical. So that’s why we execute on this multiplex development strategy to turn single family lots, often with a smaller house because it’s built 50 years ago. We’re turning that [00:11:00] into a sixplex.
So that’s our typical business model. And so for those funds, we raise from our fellow Canadians. But in the US, real estate is hyper-local. So what makes sense for one geography does not necessarily translate. So for example, in the fund that I’m leading, it’s the land development thesis fund. We turn raw land into buildable lots for national home builders like the Dr. Horton, like the Lenoir, and mostly in the Sunbelt states.
So that’s a different situation where you have lots of land and so you’re going horizontal, you’re not going vertical. So that’s what we do. And so for our US thesis, we are raising money from Americans. And there’s a way in the future for us to raise from Canadians, but because of the cross-border tax, it’s a whole another layer of complexity and lots of lawyers and tax people involved and it’s just, for now I think it’s such a great thesis for us down here. And so it’s open to Americans that are accredited investors.
Mike Morawski: Yeah, [00:12:00] so it really does seem like it’s difficult to bring capital in from other countries. And there’s a lot of moving parts for sure.
Alice Chen: Yeah. And often has to do with the withholding tax. So a lot of the times you’re looking at 25% withholding tax. So unless the fund itself is structured in a way that minimizes the tax impact, like for Canadians wanting to invest in the US, just tax wise it doesn’t make sense. And kind of same thing, going the other direction as well.
Mike Morawski: Right, right. Yeah, that’s what we’ve been doing some research on. ‘Cause we had some people that were looking to bring some capital in. So let’s talk about this land fund that you and your thesis around that.
Over the last couple years, we know that we’ve been in a tough market cycle. And one thing I always say is there’s no geniuses in this business. There’s only market cycles and this part of the cycle that we’ve been in recently, how has that impacted your development and resale of your land that’s [00:13:00] entitled.
Alice Chen: Yeah, that’s a great question. And of course right now, because, every day we’re being hit by news headlines and, things are very much in flux. So of course there’s a lot of uncertainties in the investment world generally. But I’ll address that in a minute.
So just to go back to our business model, we’re a private equity fund that’s access a capital partner to best in class land developers in the country. So what’s land development? It’s really two parts. It’s land entitlement and then horizontal development. So we act as their capital partners to help them scale. And what they do is they turn raw land into finish lots for national home builders or otherwise, scaled home builders, like the Dr. Horton, Lennar, Toll Brothers, the top 50.
So a lot of these home builders are public companies and they’re very large in scale. So for example, Dr. Horton, has a $35 billion annual revenue. So you might ask, or someone might be thinking, well, why wouldn’t they just do that part [00:14:00] themselves?
Well, interestingly enough, because when you’re working on either land entitlement or horizontal development, you have to own the land. And ownership of the land actually shows up as a liability on the financial statements of these public companies. And so that’s not great for their financial ratios and therefore market dynamics and whatnot.
And so they prefer to actually outsource the two parts to land developers. So the way that things work in our business model is that we don’t blindly go in entitled or horizontally develop a piece of land, hoping that by the time that it’s done, it could be anywhere from two to five years, depending on the size of the master plan community.
We don’t blindly go do that on a piece of land hoping that at the end of it, someone’s going to buy it. No. Like we have zero guesswork in our process, so we do it in a reverse engineering type of matter. So these are relationships our line developers [00:15:00] have fostered in the last couple decades, so they often get calls from the home builders.
And, the home builder will say, well, based on our migration data or this and that different type of data sets, we are looking at building a master community of thousand homes here on this track of land. So it’s now been entitled. Can you take this, can you buy this entitled piece of line from us?
Let’s say, roughly $30,000 per lot and once you have horizontally developed that piece of land, then we’re gonna buy it back from you at $70,000 per lot. And they sign this forward purchase contract on day one. So what’s great about it is that our land development partners, they know how much profit they’re gonna take at the outset on day one. On day one, the exit is already built in and papered. I mean, tell me another business that has that feature. I haven’t seen any.
Mike Morawski: Yeah, it’s definitely an interesting model, that’s for sure. [00:16:00] And I can there’s a lot of security in that for the investor that hey, look, we’re buying it at this. We already have a contract to sell it at this. This is the timeframe. We just have to do this in between.
And so what you guys do is, let me just understand this. So you buy it already entitled from the builder, and then you put the infrastructure in, so the roads and the curbs and then you sell it back to the builder so that they can go in and, and go vertical with it.
Alice Chen: Correct. Yeah, a hundred percent.
Mike Morawski: That’s an awesome model. I’ve known some people over the years being involved in land, but I’ve never heard this model like this, so that’s that’s interesting.
Alice Chen: Yeah, it’s different than land banking. I mean, there’s other land investment models out there. And I have been surveying everyone and what they’re doing, but there’s nothing as secure as this one because the exit’s already built in and papered. And I’ll talk a little bit more about the entitlement process. So the example I gave previously, it’s [00:17:00] one where the developer’s actually buying an already entitled piece of land from the home builder, and then doing the work and having them buy it back.
But in the case of entitlement, it’s also pretty genius. So, again, driven by data, driven by demand, we get asked to participate in a bid or we get asked to do it. So the home builder could come to your entitlement partner and say, Hey, we want to build on this piece of land, so can you go and help us with the entitlement piece?
So then, our entitlement specialist will go and actually auction the land. So they don’t buy it outright. So they auction the land, tie it up for, call it two years. Typically it takes about two years. Sometimes it’s a little bit less, sometimes a little bit more, but roughly two years.
So then you do what you need to do, go to the municipality office, county office, you get it entitled. That’s all paperwork stuff. That costs about 500,000, like plus minus. And then, so at the end of the two year period, then you do a simultaneous closing. So the [00:18:00] same day that you buy it from the original landowner at a certain price and you added value because you’ve done the entitlement work.
So now the land is entitled. So on the same day you then do simultaneous closing. You sell it back to the home builder that wants to build on that. So you also mitigate risk by doing that simultaneous closing. And so really your equity outlay is really around 500,000 in the two year period.
And so for both components of land development, both have a great profit margin. So both are great businesses, but these are businesses that you don’t hear about every day. Like it’s hard to access. For whatever reason, it’s been kind of a close knit community of land developers.
So the only way for people like you and me we’re not from construction backgrounds. The only really viable path for us to get involved and participate in the profit of this exercise is to invest in the fund like ours. And I mean, as far as I know, we’re the only fund that offers [00:19:00] investor returns based on the thesis.
Mike Morawski: Got it. Yep. So that’s really interesting. But where’s your business at today? Again, back to the economic cycle that we’re in. Are there a lot of new developments that are being started? Are there new developments that are put on the shelf right now because of where the world’s at, what’s happening in the new construction world?
Alice Chen: Yeah, that’s a great question. So, of course, the headlines always make people feel a little bit worried. But the fact is that the home builders, they don’t sit on inventory like they have to move inventory. They’re in the business of building homes. And so they will adjust their margin if necessary.
And, or they will adapt the product type. So, for example, there’s an overall trend where people want to buy like maybe smaller homes. Less expensive homes. So instead of building homes that are at $400,000, priced at that range, maybe they knock it down to 250,000 in some [00:20:00] communities.
So we’re finding that home builders are actually adapting to the market demand. And again, this is all very data driven. These are all very data-driven companies, and so they know what their customers are looking for. And, in terms of questions like tariffs and this and that, of course there’s gonna be a long term effect on the building materials.
But a lot of these home builders, they already have a lot of supply for the next couple years. So for example, if someone’s investing in a fund, they’re not looking at the situation today, they’re not looking at is the home building inventory sitting today. They’re looking at what’s the world gonna look like in three years.
So just like the people that are in the public equities market, you’re buying in the dip and then you’re harvesting in recovery. Same thing for our industry. It’s a forward looking industry. So the decisions you’re making today has to do with how you project the world to be in about three years.
So [00:21:00] by the time that in three years, you’re now hearing headlines of oh, things are great, maybe the mortgage rate has dropped. People are in a frenzy buying homes again, kind of like during COVID, when we experience that, when you hear the headlines, you’re two, three years too late. So you have to do the prep work.
Mike Morawski: So do you have a personal prediction or does your company have a prediction right now of where we’re gonna be in three years?
Alice Chen: Yeah, so we expect business as usual. I mean, we’re not a group of economists, but from being interactive with the industry, we’re not seeing any slow down from the home builders actually. Like they are still looking to buy lots. They’re still asking us to go and do the land development on the loss. Did you know that there’s actually 4.8 million single family home deficit in the country.
Mike Morawski: Oh yeah. Oh yeah, I know that number.
Alice Chen: Yeah. And then a company like a DL Horton, $35 billion annual revenue, you think that they should be able to build a million or 2 million homes per year easily, right? No, they built 90,000 [00:22:00] homes last year. So that’s their maximum capacity. Lennar being the second largest one, they’re around 70,000. And then the third one kind of falls to 50,000. And then if you look at the top 50 chart, which is on our deck, you’d be shocked at how little homes are being produced.
And a lot of this pent up demand stemmed from the last financial crisis where everything slowed down and then they just stopped building, or they build very slowly. A lot of projects were halted. And so 10 years later we have this massive supply gap. And so this is not a problem that’s going away. It’s gonna stay and the number of household formations is still like way outstrips the supply.
And in the household formation maybe people are having less kids these days, but it doesn’t mean that they don’t need a home. And there’s also maybe elderly people are downsizing and so they’re changing households too, or perhaps there’s people splitting up. So they go from one household to multiple households. So the number of household formation is still [00:23:00] very robust and increasing. And the supply is not necessarily keeping up pace. So we’re very much in a problem that can be solved continuously for the next five, 10 years.
Mike Morawski: So what’s your investor avatar? So I want to really kind of dig in in the last few minutes here about raising capital. ‘Cause that’s something you and I do on a daily basis and what I do, what you do. And it’s kind of what makes our business drive. But who’s your avatar of investor coming into your fund and what’s your offer to that investor?
Alice Chen: Sure. So our fund is you can see it’s a three year fund. We invest in projects that are 24 month to 30 month in length. We distribute after project exits, so we’re raising up to 15 million for this fund that’s open right now. And outta 15 million, we can invest anywhere from four to six projects.
So we invest in the equity piece of the land development projects, very profitable. So the investors are [00:24:00] looking at a high twenties in IRR. So they’re looking at a high equity multiple when they exit within three years. So we’re looking at anywhere from 1.6 to 1.9 equity multiple. So we’re for investors that don’t need the passive income cash flow right now, but they want to accelerate the growth of their capital.
So maybe they’re 40 to 55, they’re in like prime kind of capital growth years. They have their profession or their job or their W2 or their active business. So they’re good in terms of cash flow, but what they wanna do is they wanna see their money work hard for them. They want the money to multiply. So we have the multiplier effect.
So it’s for someone that doesn’t need to see the money for three years. I mean, relative to this is a very short duration fund. And then they can effectively expect to see their capital 1.6, 1.9 times their initial invested. So it’s great for people looking for that.
Mike Morawski: So is your investor only a high net worth [00:25:00] investor, or I’m confident that you’re all accredited investors in your funds. Are they all high net worth or family office, or where does your investor come from?
Alice Chen: Yeah, so it’s a lot of high net worth individuals. So I would say probably someone, I mean anyone that’s an accredited investor can invest. But that so far, we have a lot of investors that are high net worth, so maybe they have a net worth of three to 5 million. They want to see an acceleration of their net worth. So you gotta do things that multiply your capital.
So they maybe are working towards I don’t know, going from five to 10. So this is one of the vehicles that can help them do that faster.
Mike Morawski: Sure, sure. Interesting. And your typical hold time is three years? No cash flow along the way. Do they get any tax advantages? Is there depreciation that’s involved at all that they get to participate in?
Alice Chen: Yeah, it’s all gains, so there’s no depreciation. So that’s one thing that it’s great [00:26:00] if they have K1s from other multi-family deals with the depreciation, they can couple them. So this is great for people that have unused depreciation. So it’s a great pairing with our product.
Mike Morawski: Yeah, so that’s interesting because, I always talk about diversification with my investors. And how do you get a little bit higher yield on your money. But sometimes when you get that higher yield, you don’t get the tax advantages and you don’t have the cash flow. So I talk to people a lot about diversifying going into a fund that offers this type of product or returns similar to what you’re talking about, and then put some over here.
Take the cash flow and the depreciation to kind of offset the time differential. And so it’s an interesting conversation. The whole diversification conversation used to be around stocks and bonds. Now even in the real estate pool, there’s different asset classes that you can diversify in that are going to give you those alternatives.
Alice Chen: Yes, exactly right. Yeah, and [00:27:00] I very much am a fan of that approach. You should not be concentrated in one asset class or one sub-asset class. You should always diversify and always look at the tax angle as well.
Mike Morawski: Yeah. Historically we’re multifamily investors and do a little bit of light industrial. But, I’ve always had blinders on. I’m kind of a one size fits all in this, because I’ve gotten really good at it. And when you get really good at something, I think it makes sense just to stay focused on it. There’s too many distractions in our world today.
So how do you find investors? Where do they come from for you? And I always say, there’s no magic answer to this. It’s just, what are other people doing?
Alice Chen: Yeah, I mean coming onto podcasts like this. So kind of getting our message out there. Getting exposure, talking to people. I speak at events in person as well, and networking. We host our own events in the Bay Area. I am part of several mastermind groups. I’m part of Entrepreneurs Organization, Silicon Valley chapter. I’ve been a long-term member over there at [00:28:00] EO, so it’s just a lot of networking. Like you said, there’s no magic. It’s just talking to a lot of people.
Mike Morawski: I think the magic is in the words you said, which is networking.
Alice Chen: Yes.
Mike Morawski: I think we have to be out there, and it’s kind of what I said in my introduction this morning is we have to execute, we have to take action. And you’ve got to go to networking events. You’ve gotta put yourself out there. It’s kind of interesting. I had a call yesterday, one of my coaching calls, and newer guy and talking to him about getting out, doing some networking, and he said, yeah, but I’m not gonna find any investors at a real estate meetup. I said, do you know how many other owner operators are invested in my deals that I met at meetups?
And it was like the light bulb went on, you could actually see the light bulb go on. And he was like, really? But I think that we’re involved in this space and people invest in other people’s deals ’cause they see opportunity and opportunity for value.
Alice Chen: Yes. Yeah, absolutely.
Mike Morawski: So, what are you guys working on right [00:29:00] now?
Alice Chen: Right now it’s just very focused on looking to raise and close our fund, and then deploy capital into the projects. We have a very rigorous due diligence process. In fact, we have like an eight page due diligence manual that we run through on a per project basis. So very excited to start deploying money and start earning that yield for our investors.
Mike Morawski: And, you mentioned tariffs a little bit ago, and really where we see the world in three years, but what do you think’s going on right now? Do you have any personal opinion about, over the next 12 months? And here’s why I ask specifically. Because from a point in time, and we timestamp this podcast, but from a point in time over the last week, the stock markets dipped pretty substantial. I think yesterday, again, it went down a thousand points.
China had some issues over the weekend and had a drop in their economics, their stock market. And on Monday the feds announced they’re [00:30:00] gonna reduce rates five times this year. So how does that equate for you in your mind of where we are, where we’re headed, where we’re gonna be in the next year?
Alice Chen: Yeah. So I think what’s happening is that capital markets are being restructured. So I think what the current American administration is doing is, they’re trying to find a way to lower the interest rates. So I believe that’s what’s really behind the recent movements of the government.
And, I think that when you’re looking at investing, you gotta be a little bit more grounded and, not be so reactive to the headlines. So I think look at the fundamentals, like look at the investment thesis. Ask yourself, is this a problem that’s going to be around and is it a problem that’s worth solving and by solving that problem, is there value to be created?
And if so, then it is a business to be invested. Or it’s an asset class to be invested. So we try to not be thrown off by the [00:31:00] headlines and by the market movements. And I mean, right now in this current climate, we never really experienced that. I think everyone should just kind of just stay grounded and continue to invest based on first principles, like what makes sense. And, we’ll see how it all plays out.
Mike Morawski: Yeah. And here here’s kind of just maybe an arbitrary question, but do you think that as investors, and as the American people, do you think that we got spoiled over that period of time with such low interest rates and such a cap rate compression that it spoiled people to the point of being fearful of taking action?
Alice Chen: Yes, I believe that we’ve all been spoiled, myself included. So I miss the days when the cost of capital is next to nothing. Of course, everyone misses that. But I think successful investors, successful businesses are typically built [00:32:00] during a recession. So I’m not saying we’re in a recession right now.
I mean, that’s for a lot of other people. They’re economists to call. So I’m not making prediction one way or the other way. But let’s say we’re in kind of a downturn environment, which we are. Can money still be made? Of course. Can investments still proper investment deals still be done? Yes, a hundred percent.
So I think it’s during the hard times that your own kind of skill sets and potency in business and in investing really gets revealed. And so, you want to welcome the challenging times and figure it out.
Mike Morawski: Yeah, I think a lot of people can be successful when the wind is at your back, but when the wind is against you, it separates the men from the boys. I’m not keeping you out of that, but you know what I mean?
Alice Chen: Yeah, a hundred percent. And trust me, this is not gonna be the last downturn either, there’s gonna be another one and probably the frequencies of these market cycles will increase.
So I think everyone just [00:33:00] needs to figure it out. Use the present opportunity to figure out how they’re gonna weather the storms in the coming cycles.
Mike Morawski: Yeah. And there’s absolutely no doubt that we’re heading into one of the best times in history to create wealth for yourself and to get in front of a bull run. ‘Cause it’s coming. And I believe that during the next 12 months, we’re gonna see significant changes, which is gonna take us out of this down dip. ‘Cause I think we’re pretty close, if not at the bottom right now. That’s gonna gonna be coming out.
So, I mean the indicators indicated and if you’ve listened to any of the economists for the last two years, they’ve all been saying, I think we’re there. I think we’re there. And you’re always gonna have your naysayers, but I’m a proponent of forward motion.
Alice Chen: Yes.
Mike Morawski: Hey, Alice, I appreciate you being here. Thank you. Your time has been a blessing for sure. How do people get ahold of you if they’re interested in connecting with you or investing in your fund?
Alice Chen: Thank you for having me, Mike. It’s been a [00:34:00] pleasure talking to you. For those of you that want to get in touch with me, you can come to my website. I’m at alicechencompanies.com.
Mike Morawski: Okay, perfect. Thanks Alice. And, I look forward to staying connected and talking to you again soon.
Alice Chen: Likewise. Thank you, Mike.
Kristen: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up to date real estate investing trends, visit mycoreintentions.com where you can get expert coaching on all things real estate investing and property management.
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