BiggerPockets Podcast 416: 29-Year Old Making Nearly $1M in Passive Real Estate Income (3 Years In!) with Matt Onofrio
Many investors look at commercial real estate as a high-risk, confusing, and sometimes scary way to invest. Our guest today shows us why this isn’t the case. In fact, he did a multi-million dollar deal in his first year in real estate!
Minnesota-based health care professional Matt Onofrio helps us break down the stigma behind big commercial deals. From financing, taxes, mentorships, and more, Matt shows how someone from a completely different field can thrive in real estate … even with no prior knowledge of the space.
You may want to bring a notepad and pen, as Matt walks us through advanced strategies such as reverse 1031 exchanges , seller carrying, cost segregations , and triple net leases. Whether you’re looking into commercial or residential real estate , this is a can’t-miss episode.
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Listen to the Podcast Here
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Read the Transcript Here
Brandon: This is the BiggerPockets podcast show 416.
Matt: Yeah. It’s about 250,000 square feet of commercial space. I’m negotiating on. I close this deal by the end of the year I’ll own, my portfolio size will be about 50 million and I’m approaching a million a year. Passive income.
David: You’re listening to BiggerPockets radio,
Matt: simplifying real estate for investors, large
Brandon: and small.
Matt: If you’re here looking to learn about
David: real estate investing without all the hype
Matt: you’re in the right
David: place, stay tuned. That’d be sure to join the millions of others who have benefited from
Brandon: biggerpockets.com.
David: Your home for real estate and investing
Matt: online.
Brandon: Hey, what’s going on? Everyone. It’s Brandon Turner host of the BiggerPockets podcast here with my cohost, mr.
David Green, David, you ever do one of those recordings of a show where you’re just like you talked for like an hour and you feel like you can talk for like nine hours.
David: Yes. And today was one of those shows. If that’s what you’re getting at, this is one of my favorite podcasts that we’ve ever done.
Today’s guest is absolutely. Mind-blowingly smart. Yeah.
Brandon: So good. So our guest today is a gentlemen. I’m gonna tell you guys I’m gonna butcher his last name, even though he helped me work on it like 10 times, uh, Matt, uh, no Frio. I think that’s right. I’m so mad for you. That was pretty good. Right. Okay, good.
Thanks. So Matt is so. I just cool is the best word. I can use it to say that if you think of a cool real estate investor, like he just, he hasn’t been in a very long, a few years already owns he’s coming up on $50 million of real estate that he owns. And that’s not like an, a fund. Like he just buys real estate.
His first deal did it with basically no money down. Most of his deals he does with almost no money down makes you just come up on a million dollars a year in passive income. It’s just. It’s crazy. You’re going to hear how he does it through commercial real estate. And if that scares you, don’t let it, he keeps it very simple, easy to understand, and this show might just change the entire direction of your investing.
Cause I know it’s making David and I have some much needed conversations about where we’re headed in the future, which is kind of cool. So yeah. Good stuff. Good stuff today that said. Let’s get today’s tip today’s quick because brought to you by David Green. What do you got David?
David: I knew this was Kevin.
Thank you, Brandon. Today’s quick tip is don’t just focus on what is right in front of you work on having a vivid vision to help you see where you’re going to go. So we talk about this a little bit in today’s show. Brandon’s very big on this. It’s one of the things that I’ve learned when it comes to being more successful is to know where you’re going.
Work backwards from there, as opposed to just staring at what’s right in front of you. And you keep working on that. So oftentimes when you have very clear direction of where you want your life to look like what you want your investment to look like the right steps to take, just sort of materialize, and you can understand where you’re going.
And we put off putting the vision together until after we are already moving forward. That can be a mistake. So it takes some time. To find yourself, get away, find a quiet place, really ask yourself what I want my life to look like. How do I want investing to support that? Come up with that plan, then start lining up the practical steps that you need to take to get.
Brandon: Wow. That was good, man. Good job for, for winging it. Ah, that’s good then now I think we just got to jump into the interview cause y’all are going to love it. You’re gonna love Matt. So without further ado, Let’s bring in Matt. I know for you, Matt, welcome to the show, man. It’s awesome to have you here.
Matt: Thanks, Brandon. Great to be here.
Brandon: Yeah. So you came on my radar because you along like, you know, we both work with Jason Dureza as a performance coach, where Jason, back on the show a few, a few months ago. And he consistently raves about you as somebody who takes massive action and is getting a lot of success in real estate.
And so I thought it’d be fun to kind of unpack how you got into that, how you went from, I think you are a doctor, right. And anesthesiologist, is that right?
Matt: Nursing.
Brandon: Okay. I don’t even know what that means, but whatever that is. And you went from that into now, you’re no longer that is that right?
Matt: Correct.
Yeah. I’m uh, I’m still peer in at the hospital, but, um, most of my hours are spent in real estate now. Yeah. It’s kind of started from nothing, but parents did admission works or lived overseas and, uh, came back, tried a couple of different things in school. I worked as a paramedic, firefighter and nurse prior to getting into Mayo clinic.
Where I went to a school there for five years. And, uh, then I started working in the operating rooms and I just realized that I didn’t want to do that for the rest of my life.
Brandon: Yeah. So you, I’m assuming you had quite a bit of student loan debt, is that that’s your, as you work your way through it?
Matt: I worked my way all the way through actually.
So I funded probably 250,000, uh, through scholarships. Uh, I would work 24 hour shifts on the weekends as a. Firefighter paramedic. And then I worked a year and a ICU as a nurse prior to going to get my doctorate. That’s cool.
Brandon: All right. So then walk us through your journey. What, like you decided at some point you’re like, I don’t want to do this for the rest of my life.
You’re probably making good income at the time. So you had to figure out how to get from making good income to not working 40, 50, 60 hours a week. So how did that start? Where did you even idea of I’m going to go into real estate, where that come from?
Matt: Actually I was at Mayo clinic and I went over to a resident’s house friend of mine, a surgeon.
And he was, I went into the house and there were like four other people in the kitchen. And I said, Randy, who are all these people? I said, well, I rent out rooms to him and he’d bought a house for about 150,000. And he was bringing in probably, uh, 3000 or something a month in rent on the house. I thought this is really interesting.
And he was also at a 12 unit apartment building that he was rehabbing at the time during general surgery residency while having two kids. And I’m like, if he can do it, surely I can. Cool.
Brandon: That’s cool. Yeah. There’s this, there’s these moments in everyone’s life where like something triggers them to be like, Oh, I could do that.
You know, like, uh, I’m curious, David I’m I’m, you know, it’s a show about Matt map. I’m curious, David. I don’t remember what’s. What was your like, Real estate. Aha moment.
David: When I hired a property manager, I had bought my first property. I sh short changed every single form of due diligence. I didn’t run a credit check.
I got one application. I said, okay, let’s give it a try. I’ll be good to him. And he’ll be good to me. And this’ll be a nice harmonious relationship. Totally didn’t happen. That way. I got played by someone who knew how to be a tenant way better than I knew how to be a landlord. And I just thought I was, I never sit, had done this.
I had all these thoughts go through my head like everyone else does. You’re an idiot. Why would you even think you could buy a house it’s so hard? Why would you think you could do that? And then I hired a property manager and in one decision and they weren’t even that good. Every single one of those thoughts went away and it became, this is the easiest thing ever.
All I have to do is save the money and pick the house, make sure it cashflows and it all works out good. And I, when I realized that I just thought this is so simple. If I just work hard and save money and buy houses and wait, I will eventually build a lot of wealth. And that’s kind of when I got addicted to it.
So I’d like to ask you the same question. Matt. When did you buy your first deal and what sort of mindset shift happened from man? This seems so hard and so scary to, Oh, this is really just kind of boring.
Matt: Yeah. So my first deal actually was a 14 unit apartment building with a partner during anesthesia school.
I didn’t really get any of the textbooks. I just sat in the back of class. And during that time I was mailed or called every single apartment building owner in the city. And I was really into it. And I found a deal that I didn’t have any money at the time. And I wouldn’t qualify for a loan since I was in school.
And so I went to the partner and I said, Hey, if you’ll give me 20% equity in this deal, I’ll run it for you. And I think I can double your money. And it was a 14 unit apartment building that had a couple units that were really low on rent because it was an older building. They were looking at tearing it down.
So I took it over, ran it for the guy we bought it for, I believe 850,000. And after I took some of the rents up point coin laundry in the basement started charging for parking. We had a very different NOI than when we started. And we were able to sell that four months later and he made quite a bit of money.
And I walked away with a check for about 61,000 after tax. That was my first deal
Brandon: dude. And dude
David: died. He was this
Matt: probably three years ago.
David: We should unpack the strategy. That sounds really good.
Brandon: This is so cool. This is what I teach all the time people, but when they say they have no money and then the natural assumption is when people think I have no money.
They go, well, I guess they can’t get into real estate. And the funny thing is like, when I say you really gotta have three things, you gotta have knowledge of what you’re doing, which you had, because you were learning, you were reading, you were like trying to figure this stuff out. You had hustle, you didn’t have knowledge if, to have hustle somebody to make the phone calls the call, the properties, to do all that work.
Right. And then you have to have money to put together a deal, but you don’t have to have all three of those things. You really only have to have two of them. Uh, so if you don’t have the money, bring the knowledge, bring the hustle. And like you, you only asked for 20% equity in that deal. Like, you know, why did you not ask for 50 50?
Why? Like, why didn’t you ask for more than that? I’m just curious.
Matt: Well, I just think that I knew that I had to get started and I wanted the first one to be successful for him. And I knew that if I did a good job for him, he, you know, he would continue to bring me on and other deals. But yeah, I think just a lot of the first deal.
Brandon: Ever, like, I know I said it’s a lot, but this like everybody who’s new right now, struggling with trying to put together a deal needs to rewind the last three minutes and listened to that story of your first deal again, because like, this is a perfect illustration of what we’re talking about. The short time.
It, your wealth is not built from that first property. Now you made really good money on that first deal, which is awesome. And I love that you didn’t start with like a, you know, a single family house to duplex. You like to start it like. You know, with some guts there. That’s awesome. But like you, you started without putting money in, like they, they brought the capital and who cares if you would’ve made $0, how would you feel today, Matt, if you would, on the end of that deal, if he doubled his money and at the end of the year, you, you did a 99.9% compared to 0.1% and you, you made like $12 at the end.
How would you feel today?
Matt: I wouldn’t make any difference. I’d be at the same position and still be financially free. That’s it
Brandon: because the first deal doesn’t build your wealth. The first deal gives you the momentum gives you. Confidence gives you. Excitement, gives you. Contacts, gives you like that reputation.
That’s what it’s all
Matt: about. Hmm,
Brandon: so good. Okay. So you, you did that first deal with this guy now, why did you, why did you start with the bigger deal? Why didn’t you sell it? Like everyone else does buy a house, rent out the bedrooms, or like, I didn’t, I bought a duplex, the rented out, you know, after my house, I then bought a duplex, the rent.
Why didn’t, why didn’t you just step up and start at such a higher level?
Matt: Well, I think it was in a unique situation. I was living in like my grandparents’ garage during school. It was like this art display room in the back. And so, you know, I was at. I was just at a point where I didn’t really have any money.
And so it was just like, well, I don’t even have enough money to put down on a regular house. And after I did the 14 year apartment building, I got two, whether they’re called physician loans that are similar to VA loans. So it’s no money down, no mortgage insurance. And I was able to house hack both of those and then quickly realized I didn’t want to be in single family or in apartments, period.
Why,
Brandon: why is that? Let’s take it. Why not? Single family? Why not apartments then?
Matt: Well, I think the single single-family as renting out to nurses. So I’d rented out by the room and I was making good money, but you just were dealing with people not getting along sometimes or just, I just realized the scalability wasn’t there.
I was like, long-term this, isn’t where I want to go. And I started doing more reading and came across the book vivid vision, which you did as well. And that’s kind of where I decided to step away and do. And it’s also, you do deals like the people that are around you. And I started putting myself around people who were doing different kinds of deals and it’s like, wow, we do triple that deal.
So I guess that’s what I’m doing, you know?
Brandon: Dude. That’s so good. And this is again, another point I want to stress. I remember back in the day, uh, Kevin Carroll, actually, he was on our podcast. I am, I can’t remember what episode it was, but Kevin was a buddy of mine. He’s actually was the way I got connected with Jason juries back in the day.
Cause Kevin had used him. So Kevin had said this great line on the podcast. When we interviewed him, he said, yeah, my first year I just did a hundred deals because I didn’t know. That’s wasn’t normal. He didn’t realize that wasn’t what you do. And so like, he approached it. With like, well, of course, that’s just, that’s just what you do.
You just do a a hundred deals because he was surrounding himself with people who did a hundred deals and that’s just what you did. And so he didn’t approach it. Like when you surround yourself with people who do single family, nothing wrong with single family, but you’re going to likely do that. So you will surround yourself with people that were at a whole new level.
I would also argue that, and this is a point we could talk an entire show just on this topic. And I talked to Jason juries a lot about this, and that is there’s this like, Mindset that I feel like because you were making such good income at your career. You were naturally at a mindset that was very different than somebody that was maybe making $12 an hour at their career.
And it has nothing to do with how much money you were making, but it has everything to do with how much money you were making. And what I mean by that is this like a confidence thing. Like, like today, if I lost everything today, everything I didn’t start, I had $0. And I had zero. Any that even if I had zero context, I had nobody in the district, nothing.
And I start over and if you are the exact same, but if you lost everything today and David, if you lost everything today, we would not start back over trying to buy a single-family house and rent out the bedroom was probably, we would probably start at a whole new level because we are. W our mindset. It has nothing to do with our resources, but it’s our mindset.
It’s like, I wouldn’t even be thinking, how do I buy a single-family house? I would be thinking, how do I buy a a hundred unit apartment building or a hundred unit mobile home park? Because that’s where my mindset is that David you’d probably be thinking, how do I, how do I hire 12 agents right now underneath me and build a real estate agent empire, because that’s where your mindset’s at.
Like you could just do that and it has nothing to do with money. It has everything to do with mindset. Uh, what, what do you think on that, Matt? I mean, I know you’re in that, that mindset world as well.
Matt: A hundred percent. I hired Jason, uh, actually, because I heard of him about him through you back in March and yeah, I mean, since then I’ve changed.
My, and the funny thing is he doesn’t talk about strategy, but, you know, he influences your strategy. And so for me, you know, I was struggling finding deals and he said, well, why don’t we go to some different towns? Why don’t we go to different States? Why don’t we try different brokers? Why don’t we try some different strategies and just kind of continue to.
To, to shake it up until you find something that works. And so I would say it absolutely has changed. I, it was a huge roadblock for me to stop spending as many hours at the hospital and trading my time for money to be able to, to move on and realize, wow, I, you know, there’s a whole different life out there.
David: That’s so cool. I, I must feel like we do a disservice to a lot of the people who are new, particularly who are saying, what do I do to get started? And we tell them, well, here’s what you do. Here’s how it works. And you hear it. And even though you have the information, you don’t actually go put it into practice.
This is really why we started the mindset podcast was to help with this fact, because those who are successful that are doing it, understand the inherent value in momentum. What you said, Brandon, I think it doesn’t get talked about enough as saying here’s what you go do. Isn’t actually, for most people going to be enough to get them to do it.
It’s the momentum that comes from what you said, Brandon already being successful at something there’s something that clicks in your mind. When, like, let’s take Matt, for example, you’re working in a hospital, you’re seeing the role of doctor plays. You’re seeing the role you play. You’re seeing a role in nurse plays.
You’re picking up the rhythm of how this whole thing is structured. You’re seeing who makes more money in this transaction and who doesn’t. You’re seeing that the fact insurances. Uh, part of it allows for wealth to be distributed amongst people you’re picking up on a lot of detail and nuance that someone who just shows up at a hospital that basically just is experiencing fear or worry.
They’re in such an emotional state because they’re in the hospital. They don’t see how all the moving pieces are fitting together. And there’s an inherent understanding that comes from that, that when you go apply it into your real estate ventures, you knew right off the bat, I need to find people to do these parts.
You knew what it looked like to be with someone who was good at what they did, because you had seen doctors operating on people. And that that’s a piece that. Like one of the things I always tell people is if you want to be better at real estate investing, start being good at what you do right now.
Start getting promoted, start taking more responsibility, start getting out of your own head and looking at what’s your boss going through. And what’s your coworkers going through what is makes their job hard? What could they do better? Because that momentum absolutely carries over into the other world.
And it’s a better approach than saying I’m not happy where I am. Real estate is my magic pill to get out of it. Like Matt, you knew real estate was what was going to build you wealth. But you approach real estate with a mindset that made you successful with what you’re doing. And I just want to commend you for that and really highlight it to the people that are frustrated that their real estate investing is not taking off.
Like they thought it might be that you’re going at it without any momentum and that you need to build that momentum first and then crash into this new endeavor. So what came next? You decided that you didn’t want to be where you were, you wanted some more freedom you wanted to, I’m guessing you were deciding I wanted to grow your wealth instead of just making more money.
Is that pretty much like what was motivating you.
Matt: Absolutely. Yeah. I was trying to think, well, what actually replaces my income, right. I kind of made this goal to myself. I can replace the money that I was making. I would be able to step away at that point. So May 16th of 2019, I ended up buying a strip off.
That was my next purchase and, uh, was able to get creative on the financing on that. And that was kind of the first large deal that I did was 16 or 17 months ago.
Brandon: Wow. So you, you haven’t even been in this for, for decades. Uh, this is, you know, this is all pretty recent stuff. So I wanna, I wanna talk about the strip mall.
Want to unpack that, but first, can I just ask, where are you at today? I mean, like you said, I said earlier, you’re not full-time anymore at work, right. You’re not full-time at the hospital. So like, what’s your, what’s your, whatever you can share portfolio wealth cashflow. What’s that like today, and then we’re gonna unpack the last year and a half.
Matt: Yeah. It’s about 250,000 square feet of commercial space. I’m negotiating on. I close this deal by the end of the year I’ll own, my portfolio size will be about 50 million and I’m approaching a million a year. Passive income.
Brandon: That’s crazy. That’s crazy. And this is all in commercial real estate at this point.
Matt: Yes, dude, I’m in
Brandon: the wrong, I’m in the wrong industry. That’s amazing. No, this is awesome. Let’s go back to the strip mall. So you, here you are. You’re basically brand new to real estate. You’ve done that first deal. You took a little piece of it. You’ve done some house hacking stuff, and then you’re like, I’m going to go buy a strip mall.
Like, first of all, how does that get in? You’re like, I’m going to, how did that happen? How’d you find the property, walk us through that journey of that entire property and what you did.
Matt: Yeah. So the time I was calling brokers, I was trying to develop relationships. And I was actually a vice president of a bank who came to me, who was also a broker.
And he said, Hey, I’ve got a developer who tended to property. His play was to build the buildings, put the tenants and sell them, move on to the next building. And he said, you know, we’ve had the strip mall. I think he would, you know, help you with some of the financing. Are you interested? And I said, sure, how do we do it?
And so it ended up, uh, being 80% bank loan, 15% seller carry. And then 5%. I actually raised his private money and I held the property for about ended up being five or six months before I had an offer. I couldn’t resist a sell. Wait, how long did
Brandon: you hold it for
Matt: about five months. That’s crazy.
Brandon: So you’re almost like flipped, basically flipped, uh, a strip mall for your first deal.
Your first solo deal. Okay. That’s that’s awesome. Unpack this for those who are new, maybe doesn’t understand why some of these terms are so out of a hundred percent of the property, the price of it, uh, how much was it by the way,
Matt: 2.2, 5 million.
Brandon: Okay. So attitudes 0.2, 5 million, roughly 80% of that came from a bank that financed it.
That leaves 20% left that you had to come up with. But out of that 20% out of that 20%. Uh, 15 of that 20, the seller carry, which means you paid the seller every month, you know, instead like he basically acted as a bank, is that right?
Matt: Correct.
Brandon: All right. And then the final 5%, which normally then people would be like, well, I got that.
I got to come out of pocket with that one, but I don’t know if 5% of 2.2, 5 million, you raise that through private money, which is awesome. This is how like, this is creative, real estate investing. To a T I mean, I talk about this a lot in the book, on investing in real estate with no money down is that it’s rarely one thing it’s, I’m using, I’m pulling in some private money here.
I got this bank loan here. I got the seller financing here. I wrapped it all in together and made it work. So that’s cool. So then you held it for a few months. You sold it. How did that deal? End up turning out. I’m going to what you said offer you couldn’t refuse. So,
Matt: yeah, I mean, it’s like 540,000. And then I did the 10 31 exchange into a large office deal.
So I went, the deal was like 7.9 million.
Brandon: Wow. A million. Okay. So let’s talk through the 10 31 exchange for those who don’t know what that is. Can you, and that may change in the future. Let’s let’s make sure that if it depends on how the election yeah.
Matt: We’ll see. Yeah. So it’s a tax, it’s a tax deferred exchange and there’s somewhat of a time component to it also, but also an intent piece.
And so, you know, most of what I do is all off market on solicited kind of a thing. And so that’s where an attorney can get more comfortable with maybe with it being a shorter amount of time, but. Yeah. So we just swap out the two rules of the property, or it has to be the same amount of debt or greater in the same amount of price or greater.
Brandon: I sold. The one took all the profit dumped into the next one. How did you find the $7.9 million office deal?
Matt: That one was actually listed, but we were able to negotiate that one down some as well, but yeah, it was actually the original office building at the Mayo brothers. Okay.
Brandon: Crazy. All right. So does office worry you at all right now that worries me a little bit, knowing that this whole COVID thing made a lot of people start working from home.
Matt: Yeah. You know, I think that it depends on the location. It depends on the tenant. Depends on what their rent is per square foot. It depends on the building. I do think there’s some uncertainty in the market and it’ll either be less, there’ll be less need for office space or more, depending on if you know how you repurpose the space.
But obviously our leases are out several years and so, you know, COVID will blow over the election will blow over and then we’ll see what it’s going to be after that. Yeah. Makes sense.
David: Let me get some overall advice from you, Matt. What are some in the commercial space? What are some, what’s the word I’m trying, maybe niches that you are bullish on and what are some that you’re thinking you should probably avoid buying someone with this form of a tenant base.
Matt: Well, industrial is the number one class that I’m going after right now. Thank you for, you know, we’re working on a lot of industrial property and specifically what I target is five to $15 million industrial property, eight plus percent cap rate with five or more years left on the lease. And my love national credit tenants that are publicly traded.
So I think apartments are probably number one, recession resistant, but right after that, if you don’t want to deal with the headache of it is industrial. I think that retail, it depends on the retail center and it depends on the tenant. I think that retail is bouncing back. I mean, obviously when they were shut down and had to be shut down, I think that.
You know, that was concerning, but, and an office tenants, I think it depends on our day is an essential business or not, you know, that’s really the indicator.
David: Yeah. That’s really good. What are some examples of essential business that you’d say I feel more comfortable here and then if you can, can you share any business types that you’d be much more nervous or leery about getting into.
Matt: Yeah. Well, I think the bars and restaurants are the worst right now. I mean, especially a sit-down restaurant, some counties, depending on where you are actually locked down, where they can’t even be open. So while maybe they got help with PPP loans or SBA loans, you know, for a period of time, that’s burnt off by now and now they’re hurting and they’re going to potentially shut down.
When you look at other times, like in my buildings, I have RSM McGladrey, which is an accounting firm. You know, they’re going to keep running the IRS in one of my buildings. I have Wells Fargo, uh, Mayo foundation. I’ve got a FedEx warehouse, you know, that’s huge. And so they’re doing better now. So I think it’s just being able to adjust with the time.
Brandon: So when you say industrial, that what you’re talking about is things like a FedEx warehouse. Is that what that is?
Matt: Right. So industrial would be lower rents per square foot, and it would be a more warehousey type feel. I’m also working on a flex property right now, which will be kind of a, have a little bit of office in the front and then industrial behind.
I own like a carpet, one warehouse, which, you know, in the front you’d come in and you can see the different they’ll sell you the carpet, but they’re got the warehouse piece in the back. And what I love about that is the rent is low per square foot. If you had to repurpose the building more likely than not, you could find a tenant for that during these times.
Hmm.
David: Okay. So you’re looking at, when you’re renting warehouse style space, you get less rent per square foot, but you get more safety and they’re getting less amenities. You don’t have to run nearly as much cubicles and carpet and cabling and all this stuff in there. And then office space, they’re going to pay more, but that’s because you had to spend more to, to basically convert that property be more useful.
Right?
Matt: Right. So I’m an industrial, maybe three to five bucks, a foot and office, maybe 12 to 15.
David: I love your idea of combining it though. Especially if you find a company that needs each, because nobody is gonna, uh, like you can work from home. Sure. But you’re not going to store huge rolls of carpet or granite slabs in your backyard.
You have to have a space for that. And you’re thinking this is something that can’t be zoomed, zoom meetings, taking this over. And then combining the two together is really smart. I was thinking about some of like the tile warehouses, where you go there to pick out what you want for your construction project, but they still need like a showroom where there’s, there’s more expensive office space where they’re going to meet with the clients and then they store their stuff in the back.
So I think that’s a brilliant idea. What does property management look like for these type of spaces and buildings?
Matt: Right. So these are all triple net leases and what a triple net lease for those who don’t know what that is. So taxes, insurance, property management, they’re all paid by the tenant. And what I love about that is it’s very easy to do the math because we’re just running off a multiple of the net operating income or NOI, and we use a cap rate to come up with value.
So it’s easier to budget what your expenses are going to be. If that makes sense. All right.
David: Now, when you’re doing a triple net lease, what are some things that. That someone who’s going to buy a building like this needs to be aware of that is in their benefit. And what are some of the downsides to doing it that way?
Well,
Matt: triple net lease is almost always good. So I know like say if you’re buying an apartment building, if you’re going to pay a lot more for the building and the taxes are gonna go up, you’re going to keep that. And you’re in a Y, right. Whereas if I go on buy an industrial property for more, that’s not going to affect me at all.
I think the most important piece, rather than focusing on the building is the underlying tenant and saying, what is their solvency during COVID? What are the tenant financials? And so if you have a really strong tenant, You’re not really worried if they have to pay a little bit more or whatever, but I’m just also understanding their history, how long they’ve been in the space.
Going forward, but triple net leases are almost always good. And what I love about it is the property management that you’ll get like two emails a month, you know, rent roll in a P and L and that’s really it. And that they’re going to deal with all the other calls. So that’s why it’s so passive and it becomes scalable.
And you can think about owning a hundred, 200, $500 million in real estate, where it’s very difficult to do that in homes.
David: Yeah. You know, one thing I’ve noticed about single family investing is it tends to be a little more offensive minded. You are looking for ways to add value to that property through the rehab, through repurposing, buying an area where rents are going to go up, adding equity to your property, getting it at a better price when you buy it.
And what I noticed about commercial investing is it’s a much more of a defensive perspective you’re taking, like you’re mentioning, you’re making sure that tenant can pay their rent. You’re not looking for how you’re going to add value to the building per se, because over time that’s just going to naturally happen.
Is that something that you’ve noticed as well?
Matt: Well, yeah, I mean, I’d rather have FedEx pay my rent than a section eight type tenant, you know, or somebody who could potentially hurt my space, you know? And also if I need to, if rent needs to go up, it’s, uh, you know, it’s a different kind of conversation for sure.
David: And the leases are a lot longer. So factoring in rent bumps, isn’t going to happen because they may be on a five, 10 year lease. Which is why you have a triple net protection basically cause your taxes and your expenses can go up during the period of time where their lease is already set. And if you have a 10 year lease with somebody, but your taxes are going up significantly during that time or maintenance, then it can really hurt you.
And they don’t want to have to negotiate a lease based on what the expenses are going to be eight years from now. Nobody would want to do that. So I think that’s why it’s structured that way. One thing about your story, I found fascinating was your ability to use real estate, to earn income in a way that offset the taxes you’re paying, not just for that real estate, but for other parts of your wealth building journey.
Can you explain a little bit about what you did to decrease the amount of taxes that you were paying? So you can reinvest that money into more real estate.
Matt: Right, right. It’s classic rich dad, poor dad. Right? It’s like the, the two things are, you know, if you’re doing real estate and you’re paying taxes, you’re probably doing something wrong.
And then the second, you know, is just income producing debt. Right. I grew up kind of like no debt, Dave Ramsey. And then now I’m tens of millions of dollars in debt, but it makes me money. And it’s really secure. So what I came across was real estate professional status, and I think there’s a lot, a lot of people don’t know about it, but if one of the spouses let’s say, if a couple’s married, if a wife doesn’t work and she can get 750 hours back actively involved in real estate.
They can file as a real estate professional. And then you can take losses that are in your passive side and knock out active income. And that’s where the magic happens. And you can take your tax liability to zero. Now, granted, this is a tax deferral or eventually that you’ll have to make up for that. But if there’s a time value of money piece, where you can become a, you know, especially if you’re making six figures, you can become a millionaire quite quickly, just off of that, invest it well, and kind of drop the mic a little.
Brandon: So can we, can we unpack that a little bit, because this is such a valuable point. That is it’s, it’s pretty high level, but it’s one of those things that if you’re listening to this right now and you’re like, well, I, you know, that sounds kind of complicated. I don’t really need to learn this right now. I’m gonna go shut this off and go play some, I don’t know, go watch dancing with the stars.
Like this is so important to us, for us to understand whether you make 12,000 a year or $250,000 a year, and anything in between or a million a year. I want to unpack this idea of like, uh, how people save money. Uh, by owning real estate. Cause you know, like you and I talked about earlier, before we started recording this about how there’s some friends of ours that are, you know, in GoBundance that are.
Buying these large properties and offsetting huge incomes. Now I make, I make a pretty darn good income from active stuff, like book writing and other things like that. And so this is near and dear to my heart, but even if you’re making, you know, an average salary, uh, this might be important. So can we, can we kind of go through that again a little bit more?
Like, I don’t want to say deeper, but maybe simpler. So somebody can understand exactly what do we mean by this saving money by owning real estate?
Matt: Right. So I think one of the key things to highlight is control, right? The reason why we, I got into real estate was control. And so if you can control when you buy and sell a property, a lot of people that are high-income professionals will Fest in syndications and they don’t really get to decide when they’re going to buy or sell the property and how that affects them for that tax year.
They’re kind of a limited partner. That’s passive. And so what I encourage is, is how can they potentially buy a larger property where they can pull levers and it it’s in their best interest. And that’s where things really took off for me. But basically what you do is you buy a large property and then you do a cost segregation study with a structural engineer and of the building value.
And usually you can take 20 to 30% of the building value. I like my cost segregation studies came in about 28%. Uh, for last year. And so I think my, uh, adjusted gross income was like negative. If 1.1 million for last year, while I made a lot of money. And it’s a loss that you take all in year one and it carries forward.
So in a property there’s a. Five and 15 year properties. So if you buy a hotel, call it the is going to wear out before 39 years, you know, which is the straight line depreciation number. And so we’re just X or accelerating and all that and taking it in year one. And you know, if Trump gets reelected, that will continue and.
Uh, it’s not, the rules might change.
Brandon: Yeah. They may change after the election. It’s not all people are smiling right now because they know what happened. Uh, we don’t, we don’t know what happened yet. It happens tomorrow. So we’re recording this the day before election day. So we’ll see. But yeah, things change all the time.
And that’s why the important thing for real estate investors is to continually be monitoring what the government’s doing, what the tax policies are. I mean, taxes are designed to encourage certain types of behavior. So when we get into that type of behavior, Like do certain things like do more rehabs. We can then offset more of the money.
Uh, so th to kind of like summarize. So if, if you had a million dollar property, uh, I’m sorry, if you had a property where the building is worth a million bucks, you buy something for a million dollars. The cost segregation study potentially can help you in that case. It’s a 20 to 30%. So you said 28%. So you may able to deduct $280,000.
In that first year, just off buying that property, even if you didn’t spend any money, I mean, you could do a no money down deal if you did it right. You could still take 200, $8,000 in depreciation to offset the $280,000 you made from your job. Is that how that essentially works?
Matt: Exactly. Yeah. I would call it a deferral.
Um, and then at the end you have to decide, well, do I tend 31 or do I just sell it, realize the gain and then do it again on the next building and then offset it that way. But it’s some, some proactive things. And I think that’s the biggest thing is getting an accountant. I mean, they’re like specialists in medicine.
Right. And so get an account if you’re having a heart problem, get the, get the cardiologist. And so my tax guy was an IRS auditor for seven years and he literally knows all the rules. And he’s like, maybe you don’t take a home office exemption. Cause that’s like raising your hand for an audit. Cause those are the projects we ran while we were at the IRS.
And so we can help you step around that kind of stuff. So I would say, just get the right team around you. Like my attorney, my broker, my banker, they’re all in their seventies. And so combined experience, it allows me to go a lot further.
David: So you bring up a really good point here. One of the things that’s.
Let’s maybe say frustrating about dealing with lawyers. CPAs is it’s very easy to tell you. No, don’t do it. You can get in trouble. It’s very hard to find the one that says yes, and you have to do it like this. Do you have any advice or questions you can share with what you talk to someone when you’re first meeting them to figure out if there’s someone with the experience that can guide you, how to reduce taxes versus just tell you?
No, because that’s always the safest answer.
Matt: Well, I think, you know, sharing with what your vision is with them. If you have a vivid vision say, Hey, I’m trying to buy X amount of real estate, and this is how I want to run things. And I’m wanting you to help me proactively plan this. I don’t want you to just, I don’t want to just give you my papers and you file them at tax time.
I’m wanting you to help me think through how we go to this income or this bracket. And I think when you help them believe in your vision, then you’ll see if they’re the right fit or not.
Brandon: You mentioned vision. Let’s talk about that. Cause we kind of glossed over it earlier. You mentioned you found that book just like I did that book, the vivid vision or vivid vision by Cameron, Harold.
Right? Can you walk us through, like what, what was that like for you when you found that and what is your vision look like? I mean, you don’t have to read the whole thing, but like, like w what did your vision say? How has that been an impact on your business?
Matt: Yeah, so December, 2019 was when I wrote my vivid vision.
Can honestly, I didn’t really even know what to write. So I kind of pattern mine after yours. I was like 50 million. That sounds like a good
David: number.
Matt: So I just wrote that down in there. Um, you know, I had some other goals, like, Hey, I wanted to have a couple of hires, key people that worked around me. I didn’t want to be a super big team, but I wanted time, freedom.
There were some other elements like that. And, uh, yeah, it was December, 2019. The goal was for December 20, 22, and I have a chance to hit it here in one year, which is super exciting. And then obviously got to reset those. Um, but yeah, vision is everything and it’s attracting and it’s a frequency and it’s an energy.
And I didn’t believe in any of that stuff until I started coaching and being around, uh, people that are on that same frequency. Yeah,
Brandon: it really is. There’s, there’s a thing about when you, when you put out there and like, I’m not even trying to get like weird or spiritual, anything when you, but when you put that out in the world and you write like this, like you have a vision, you, you project out from you, right?
Like, like the world is attracted to that thing. Like, that’s what we call, like the vibration or that energy. Like they there’s this thing. People are like, Oh man, I feel that like, I vibrate with that. Like, that’s my thing. And then you attract other people around you you’re able to better get in flow or like yeah, that’s my thing.
Like this just feels right. Uh, is that, I mean, obviously a vision is super important. Uh, but then another piece of your story is you, you do a lot of that. One-on-one coaching like performance coaching, David Green here. David does as well. I do performance coaching and a lot of the top, top people I’m friends with whether in anywhere real estate or otherwise.
They rely on performance coaching. Again, this is different than the, you know, the pay $50,000 to agree to teach you how to invest in real estate. That’s not what we’re talking about. We’re talking about like somebody to like, you know, well, what is it like, what is, what is performance coaching and Ben for you?
Like how has that been helpful?
Matt: I think it’s been a mirror more than anything, and him saying, what do you want, how are you going to get it? What’s possible. It doesn’t feel lighter, heavy. I’m more of an analytical person. And so I didn’t really check in with my feelings. And I think that in other areas of life, that’s really important, you know, not just in real estate, but to me, what I’m doing feel super exciting.
And I think I’m going to be successful at it just because. To me, it feels light too, to go towards commercial property. Whereas it would feel heavy to go towards homes or it would feel other things could feel happy to me. And so I think that it’s simpler than you think it is, but it’s also accountability.
I think the accountability piece of him holding your feet to the fire is huge. And I think it’s also just having to pay something for it is a good thing because it kind of is commitment and buy-in of like, shoot, if I’m paying. How 10 grand or whatever the number is like, I better show up and I better fill out the call for him.
And I better be thinking about what my goals are.
Brandon: Yeah, yeah. And that, that price tag, I mean, like, you know, you paying thousands of thousands of dollars a year potentially, potentially for coaching, but it’s one of those things I always ask people. If you were meeting with somebody a couple times a month, maybe two or three times a month, and they were holding you accountable to your goals.
And you were, you know, you were taking time to work on your life rather than in your life. And you were focusing on, somebody was like, really like asking you those tough questions and helping you like steer. If, if you had that, could you increase your income by 10%, by 5% by 20%. And I think the resounding answer everybody gives is.
Well, yeah, of course, like duh, like who couldn’t. And so when you think about it now, way you realize like, and this is something that David David, you had coaches long before I had ever hired a performance coach. And I was, I would look at the cost of having a performance coach rather than looking at it as an investment that I would make significantly more.
Have you found that the in your life as well, Matt?
Matt: Absolutely. Well, I hired Jason and the funny thing is now my first employee came from his mastermind. Then I joined GoBundance and, you know, sold two to three buildings already through that group. And I’m improving their lives mindset improved. And there’s a, it’s just a group of people you want to be around and you want to be like,
David: yeah, that’s so cool.
Yeah. I got Brandon and tickle buttons and really that’s when his career took off, he wasn’t doing so great.
Matt: Right.
David: Brought him in. So you guys are all welcome that you get to enjoy Brandon’s brilliance. I’d take full credit for that.
Brandon: This goes deeper. Right? So, so David did bring me in to go to London. So technically Diego was the first one to ever mention it to me.
But
David: you.
Brandon: Yeah, David close me. Uh, and then I met Kevin Carroll through GoBundance who then Kevin introduced me to Jason. Drees my performance coach. Jason now is one that introduced me to you, Matt. And. All of this is here because of David.
David: This is all, Oh, let me go even further. This is all here because of GoBundance because Howe L rod who I met through, GoBundance introduced me to Brandon, uh, several circles within circles.
Brandon: We did house. So how came on our podcast? How do we get how all around on the podcast?
David: I don’t remember. I don’t know if we can go that far back.
Brandon: The point is I want to give him the gun. It really, all of this is because of how L rod. That’s who we should get back on the show. You know, why are you even co-host David?
We can friggin hell the vehicle hose.
David: That’s a great point. Let’s not, but if I, if Howard stepped into the shoes of you guys would never hear me again. Let’s hope that that doesn’t ever happen. That’d be like, we bring him back though. The first time that Aaron Rogers stepped in for Brett Farve in there.
Oh yeah. We’re never going back. But the point is it’s not, GoBundance, it’s a group of people that are committed to being excellent. And that are sharing the journey together that just does wonders for your own success and the mindset you’re in. And when you think about what it costs is that of what you get.
It’s so easy to not do it. But when I look at my business, it wouldn’t have never scaled to where I’m one of the top in the country without being surrounded by people. And GoBundance, that were the top in the country at what they did and learning how they think and seeing how they do things and having them fix one small problem that boom.
Opens up all these doors, everybody here is going to say, I’m scared to do what Matt’s doing. Of course they are. But Matt was surrounded by other people who were doing it and he was less scared and he had momentum that came from being good at one job that made this less scary. Matt, you took steps to avoid being scared that made you way more successful.
And that’s really what we’re trying to get at. And that’s where your foundation comes from. Just the knowledge itself. Isn’t necessarily gonna get you anywhere.
Brandon: Man, this is good. This is a good topic. We got to move on though and get to our deal deep
Matt: down.
Brandon: All right. Time for the deal. Deep dive. This is the part of the show where we dive deep into one deal you’ve recently done. So Matt got a property in mind that we can dig into.
Matt: Absolutely one that I really like is a FedEx distribution facility that I bought and some creative finance on that. And it’s probably will be a long-term buy and hold for me.
Brandon: All right. Cool. Well, let’s go through it. I got eight questions here, total. We’re going to alternate and throw them back. And the first one you’ve just answered it. So what kind of, well, no, you didn’t really, so we know it’s a FedEx, but what kind of property is this?
Matt: Um, so it’d be industrial property. It’s a distribution facility.
It touches the runway at the airport. It’s where the FedEx planes come in and out of every unit of blood that comes in and out of the Mayo clinic goes through my building.
David: Beautiful. I love the analogies that you just used from your previous medical profession to describe. This, uh,
Brandon: I don’t think it was in real life.
It wasn’t it.
David: No. He said you need a blood or was that good?
Matt: Real blood?
Brandon: That’s what I thought
David: that it was like an artery for FedEx that you were describing, so, wow. But you were drawn to something in the medical industry from your previous profession,
Brandon: you know why? Because he wasn’t building a brand new bridge.
He was borrowing materials from another bridge. Into, uh, into this new bridge though
David: tomorrow. Great advice.
Brandon: Our other analogies, if only
David: we knew anybody who had come up with something that clever to give credit to, for that question,
Brandon: you’re talking about. So what is this like a giant warehouse then? And where’s it located?
Matt: Uh, it’s in Minnesota, Rochester, Minnesota, and, um, yeah, the 52 trucks that go that’s right. 52 trucks that go in and out of the building every day. And yeah, they, the planes come in on load everything and then they distribute it. So it’s a great tenant during COVID with all the drop shipping. And
David: I love that you knew your numbers that well, and you were clearly the analytical person that you claimed you were.
Okay. How did you find this property?
Matt: This one held in a trust and like the guy had died. And so it was actually through a banking relationship that I found it. Ooh,
Brandon: relationship.
David: Tell us how you found that relationship then
Matt: that was just through, I mean, I have several, several banks that have good working relationships right now.
And that’s one of the things I would say is a lot of times it’s not the deal or the money, but you have to find that lender that’s willing to come along and be okay with some creativity. And believes in you and maybe looks at you sometimes from a global cash flow perspective and those kinds of things.
David: And don’t be afraid to tell those people that you’re already doing business with what you are looking for. Like, for me, if I’m looking for listings, I tell every single home inspector, every appraiser, everyone, I know, Hey, who’s the agent that you refer people to in this case, if you’re an investor, Hey, I’m looking for these kinds of properties.
Keep me in mind because that lender knows if he brings you the deal and you let him finance it, he just created his own income. He’s not dependent on you bringing something to them. So that was brilliant.
Brandon: Cool. All right. Next question then. How much was the property what’d you
Matt: pay for it? 12.2
Brandon: 5000012.25.
David: How did you negotiate that number?
Matt: They wanted 14 and it’s usually off of a cap rate perspective. So I ended up paying a 6.4% cap rate for it, but it had a large rent bump coming in four years. Uh, which will make it a seven cap. And it was, uh, it was a nine year lease. So I was comfortable with those kinds of caps.
And the funny thing is after closing, I started looking at comps, these trademark five to five and a half cap. So for those who don’t know, it’s an inverse relationship, a lower cap rate is a higher price. Meaning I bought the building a higher cap rate, which is good.
David: Yes. And I also want to highlight something you mentioned.
That’s very smart. Don’t look at year one numbers. Every single time you buy a property, you mentioned there’s a rent bump coming in four years. I can’t tell you how many times the best deals I bought were because over a five-year or 10-year period, they were, the numbers were so much better than they were in year one.
And sometimes when you just run that, that one little spreadsheets or that one calculator, and you see the year when ROI is 6% or 7%, you say, Oh, I can do better move on. And so you go to a place where you get a 10 or 12% and the rents never go up for the next 30 years. It’s really tough. That’s the smart way to do it is to see, okay, I can buy it at this number, but in four years, my ROI is going to be here.
My IRR is going to be here and make a decisions like that. So again, Very very wise. I think it’s your turn, Brandon.
Brandon: Yeah. Uh, how’d you fund it?
Matt: So I put 10% down and then I got a 10% seller carry at 4% interest only and 80% from the bank.
Brandon: Ah, another creative financing. Okay.
David: Yes. A buddy of mine are looking at a video, very similar to this.
Can you mention what a seller carry is? And then expand on how common that is in these types of deals?
Matt: I think that it’s more common when you have a preexisting relationship with the people or, you know, you’re. You’re trustworthy. Cause a lot of times they’re, you know, you’re signing a personal guarantee.
So they’re looking at you that you’re going to give your PFS and your three years of taxes and everything to the bank, but you’re also going to give them to the seller, which in this case was, uh, you know, three board members have a trust and they look over and they say, well, do we think that Matt can pay us back?
So seller carry means that it’s, you know, a lot of people think of seller financing and that’s contract for deed, usually where it’s the whole purchase price, or basically there’s no bank involved. My preferred strategy is getting the bank involved where the seller gets the lion’s share of their money.
The brokers can be paid out everything, but you’re getting that extra, that extra boost also bank money’s usually cheaper and especially in this environment. So I love having the bank. I mean, I got a quote today from a bank at 2.905. For and that they’re, we’re talking to them, but maybe give me a 30 year amortization and partial property.
Wow. Yeah, it’s crazy. Wow. Crazy. You’re
David: borrowing the, lion’s share of the money from a bank at a lower rate, the down payment, which were the portion you have to come up with. You’re taking a big chunk of that and having the seller basically loan you the money for your down payment and you are making a separate agreement with them to pay that money back.
And that’s what we call a seller carry. And the interest rate is higher on that portion. But that’s okay. Cause you’re borrowing less from them and it’s less coming out of pocket for you. So you have more in reserves, which I’m sure the bank isn’t mad about and the seller’s not mad about it. And you’re not mad about your partners.
Aren’t mad about as well as more money to potentially buy the next deal. Does that
Matt: sum it up? Exactly and it’s subordinated debt to the bank. So just so you understand, sometimes you have a second mortgage on the property. So bank gets paid out first. If something happens, then the seller and then you’re you’re at the end.
David: So we would say that the banks in a first position lien and the sellers. Second position lien. So in the case of a foreclosure, you would sell it, the bank would get their note paid off first. Anything left would go towards paying back the seller, which is why you’re saying you want to have a good relationship with the person that you’re buying the property from.
So they feel comfortable that they’re going to get paid back.
Matt: Exactly. Beautiful.
David: Okay. This sounds very smart with how you did this. Can you tell me what the outcome
Matt: was? Well, it’s a buy and hold at cashflows 127,000 a year for me right now. So. That’s awesome. You know, you’re sitting on my bank loan, I think was 9.8, roughly.
Um, so I’m paying off a huge loan. I mean I’m 29. So at 59, that’s paid off in your net worth. I mean the rents keep going up. So the bill, you know, you get the loan, pay down, you get the cash flow, you get the appreciation. Oh, by the way, I’m probably won’t pay taxes for years just because I took a bunch of bonuses and accelerated depreciation against the building.
And, you know, if the tenant ever leaves, Amazon’s probably going to take over and then you sell it at a five cap or something. So the funny thing is we were walking into clothes and the guy leans over to me and he says, just want to make sure you don’t want to sell this for 15 million. Right. Because we had an offer before closing, you know, so these properties are highly desirable.
I’d opted to wait if I ever want to sell it and do a reverse 10 31, rather than having a gun to my head, having all this money sitting where, you know, I got to decide what to do with it, but right now it’s just, uh, you, you want some anchors to your portfolio? Um, that’ll hold you through.
David: Can you spell out what a reverse 10 31?
Matt: Yes. Right. So reverse 10 31 means identify the property I’m going to buy before I sell mine. And therefore I’m probably going to make a better decision. And, uh, you know, it’ll be better than selling it than having 45 days to identify and potentially. Making a bad decision.
David: So if the upside to reverse 10 31 is that you’re not under the gun on the timeline.
Once you sell the downside is you don’t have the money coming from the purchase of the first one. You have to have the capital from somewhere else. Is that fair?
Matt: Come from the purchase of the first one. So you’d have contracts, you’d have a contract to sell your property, but in there there’s a contingency saying.
You know, I have three to six months or whatever amount of time to find the other property. So you just wait and the guy has to wait to buy it until you find the property that you want to buy. And therefore you’re in control of the process rather than having it be where they control it. And all your money is sitting at the law office and you have to buy something.
David: So the downside would be finding the seller. Who’s willing to go through that process because it’s worse for them because it’s better for you.
Matt: Right? Finding the, I mean, if I own the building and be finding a buyer that would be willing to sit and wait for me to sell the property, but it’s actually pretty, it’s actually pretty common in larger deals like this.
When you’re working with trusts or you’re working with, you know, a lot of deals once you get into to eight figure deals, usually you’re working with siblings who own a property or multiple partners or trusts, and it can, commercial property is slower for sure than residential.
David: And that’s what I wanted to highlight is for people who are listening that are used to going up against seven of other offers on this property, that strategy does not work well because the seller of that property is going to say, no, those six other people, aren’t going to make me do that.
But in this space, because there’s less people that are chasing it and the process takes so much longer, you do have more flexibility with how you structure that deal. That makes sense for yourself. Awesome. Okay. Have we asked what the outcome was? Yeah, that was
Brandon: kind of outcome, right. You’re going to hold it.
Long-term so I think we’re on,
Matt: on a five-year hold. If you looked at selling after five years, it would be about a hundred percent IRR per year for the money that was put in. So, I mean, that’s, if you usually, our commercial loans are set up on balloons or five-year balloons. And so I like to run every deal at five years and I’m back into that of, okay.
What’s my cash on cash going to be. What’s my IRR. Those components, but likely this will be a long-term, uh, you know, never sell kind of a situation, but you always want to run those numbers and know what your return is going to be.
Brandon: That’s awesome, man. All right. What lessons did you learn from this deal?
What can you share that maybe that you came up, that you, that either illustrates a good lesson or that you learned specifically in this deal?
Matt: Yeah, I think it’s a, it’s got to remember it’s a relationship business. That’s how I found the deal. That’s how I financed it. That’s everything is relationships. I think the other thing is patients too, like I think being patient and finding the right deal, but also just not being willing to thought of going in 15 months and buying a deal.
That’s 12 million and now I’m probably going to close one at 16 by the end of the year. Now I’m looking at it. Uh, property that I submitted a $30 million L a Y you know, last week. So I think not being scared of it. I think that, you know, you can live in fear and abundance and it’s your choice. And I want to live in a world that’s abundant, and I want to give back to people.
I want to come on podcasts like this. I want to come on things and be able to share with other people how to become free. That’s so
Brandon: cool, man, man, I want to end up there, but I do have one more question for you before we get to the famous four, where are you headed in the future? And I’m it’s two-part question.
Where are you headed and how can our audience assist you in that? What are you looking for? What do you need? What would help you?
Matt: Yeah, I think that there’s personal goals of. You know, wanting to start a family, wanting to travel, more, wanting to give back those kinds of things. But you know, I’m going to reset that vivid vision and probably be doing a minimum of a hundred million next year.
I can help people get into properties that maybe they couldn’t have gotten into. Otherwise I can pay people a referral fee if they want to bring me deals. And I’m also looking at setting up a fund to go out and buy more property and help people make smart investments. So they can go to my website and get connected and we’ll figure out how to plug them in.
Very cool.
David: That’s awesome. I would say that getting joined up with Matt here would be a very smart decision for anybody who’s trying to get started. This is really, really good work that you’re doing from what we’re hearing. And you have a very, what I would say is a crystal clear idea of where you want to go, which is very valuable if you want to be successful.
Brandon: Yeah. Legit. All right, dude, this is amazing. But now we’ve got to get onto the end of our show. It’s time for our
Matt: famous fall.
Brandon: All right time for the famous four. This is the part of the show where we ask the same four questions every week to every guest. And now we’re going to throw them at you. So what you gotta say, Matt, what is your current favorite real estate related?
Matt: You know, I don’t know that it’s directly related to real estate, but I would say everybody should, should read vivid vision. I think that it’s huge and. It’ll change your change your life. And I think that mindset is so much more important than strategy. So I think getting in the right mindset will just lead you to the right strategies and the right people around you.
David: So good. Yeah. That book was very impactful for you. Wasn’t it?
Brandon: It was, yeah, it was huge. It kind of led me to the $50 million surfers, uh, you know, vivid vision. That’s hanging on my wall right now. We’ve
David: talked about that. That is what led to Opendoor capital and how rapidly you’ve scaled that into a successful company that people like me can invest in to get a return on our money without having to work.
So I’m never going to be mad about that.
Brandon: We didn’t get Cameron, Harold Cameron Hill was the author of that. We’ve been talking to him about getting on the show. He went,
David: we
Brandon: just haven’t coordinated scheduled, but we will get him on this show. And we will talk about vivid vision to everybody here in the next few months.
That is my, that is my commitment to you all.
Matt: He’s awesome.
David: Yeah. Next question. You kind of already fired off a business book, but do you have another business book that you want to recommend
Matt: really like cashflow quadrant? Um, you know, I think I use that analogy all the time. When I’m talking to physicians, I just had a radiologist that bought a 112,000 square foot warehouse from me.
And, you know, he’s working on moving from that. We all start that E quadrant he’s in that S quadrant being a small business owner. And it makes 600,000 a year or whatever, but he’s paying a third of that in taxes. And so you move over to the I quadrant and you can pay zero taxes. And so I think that the clarity of how cashflow works as will always stick with me from that book.
Beautiful.
David: Okay. What about some of your hobbies?
Matt: I like to bike, I play guitar, but it was family and friends church. And so just realizing that this is about giving us a life, not, I don’t want it to become my life, you know, so yeah. I, uh, have excited to start a family as well, someday.
Brandon: Awesome. All right.
Last question from me. What do you think sets apart successful real estate investors from those who give up they fail or they never get started.
Matt: I think persistence, but also, uh, not having the right people around you. It’s it’s hard to fail. If you have a good mentor, you have a good coach and you ha you have the right drive.
David: So good. Really good. All right. That for people who want to learn a little bit more about you, maybe follow your journey, what is the best way for them to do so?
Matt: My website is wild moose ventures.com, my spirit, animals, and most. Um, so that’s where that came from. But yeah, wild, most ventures.com. You can send me a note there and we’ll follow up with you and how we’d love to love to connect and help you along your real estate journey and see how we could work together.
David: Brendan. What’s your spirit animal.
Brandon: Super chicken.
David: Well, that’s really good. I thought you were going to maybe say an ENT from Lord of the rings. Would that count as a spirit animal, perhaps a huge tree?
Brandon: No, there’s a Ted talk about, this is the backstory to this real quick. There’s a Ted talk about. There’s the chickens and a company, everyone’s a chicken.
And then there was these super chickens, which were people who do really good. And the Ted talk is a very negative about super chickens. It’s like, you shouldn’t have people that stand out. You should have everybody the same. So everyone feels taken care of and loved and cherished and connected with. And I was like, Well, this is the worst pet duck ever.
Uh, a former HR manager. It’s a goal of mine called me a super chicken in a negative way. She said you’re a super chicken and it makes other people in the organization feel bad. And so now I identify as a super chicken. So I would rather have a company full of super chickens rather than normal chickens.
And I know David Green, you are a super chicken and Matt, you are also a super chicken. What’s your spirit animal though? David,
David: that’s the nicest thing you’ve ever said to me, Matt, you need to cherish that compliment. That means a lot coming from this guy. I don’t know. I would need someone else to tell me what my spirit animal is.
I have no idea.
Matt: I could see you being on bear.
David: Does that mean, I looked like a bear. Like what does it mean to have
Matt: strong or something? I don’t know.
Brandon: Boone. He’s he’s he’s a good big, no, David. I, I would give David the bowl because David you’d you, I, more than anyone else I’ve ever known, even though it’s a myth bulls, don’t actually go after red they’re colorblind, but like, You are more than anyone I’ve ever known as when you get something on your agenda where you’re like, I’m going to do that.
You go after it, like a bowl, gorgeous, a Matador or something like you just go after it. So I’m going to give you a bowl for your spirit on them.
David: That’s really cool. Thank you. I also think I do have a bull in a China shop mentality too. I can ruffle feathers totally. Without meaning to just from the way that I act.
So there might be something to that. That’s what I’ll be for Halloween next year. All right. Well, thank you guys, Matt, you have an amazing story. Thank you. You very much for sharing it here. I’m sure we could have done this for hours and you have more to share. Very smart guy. Wish you the best. Continue to be successful.
I can’t wait to have you back on and hear about how much progress you’ve made.
Matt: This is
David: David Greene for Brandon. My favorite super chicken Turner. Signing up, you’re listening to BiggerPockets radio, simplifying
Matt: real estate
David: for investors, large and small. If you’re here looking to learn about real estate investing without all the hype you’re in the right place, be sure to join the millions of others who have benefited from biggerpockets.com.
Your home for real estate investing
Matt: online.
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In This Episode We Cover:
- Locking up your first deal with $0
- How commercial real estate can not only be profitable, but safer than residential
- The importance of your inner investor/mentor circle
- Whether residential or commercial real estate works for your mindset
- Offensive vs. Defensive real estate strategies
- Creating income producing debt
- Building your “ vivid vision ”
- How coaching can take you from good to great
- What spirit animal David, Brandon, and Matt are
- And SO much more!
Links from the Show
- BiggerPockets Forums
- BiggerPockets Podcast 403: Developing a Millionaire’s Mindset and Overcoming Limiting Beliefs with Performance Coach Jason Drees
- BiggerPockets Podcast 209: Flipping 83 Homes in the Last 18 Months with Kevin Carroll
- GoBundance
- BiggerPockets Podcast 352: No Driver’s License, No Money, No Excuses: How Diego Corzo Blazed a Trail to 18 Doors
- BiggerPockets Podcast 157: A Simple Morning Ritual to Help You Dominate Every Area of Your Life with Hal Elrod
Books Mentioned in this Show:
- by Cameron Herold
- by Robert Kiyosaki
- by Robert Kiyosaki