Ep #463 – Matt Rose – Multifamily Deals During a Pandemic
With crisis comes opportunity
- Greed and Fear
- Three steps to success
- Investing in yourself
- The time freedom of multifamily
- The importance of mentorship
- Who to turn to when you have questions
- How to get out of your own way
- Things that can prevent us from succeeding
Full Transcript Below
Ep #463 – Matthew Rose – Multifamily deals during Pandemic
Rod: Welcome to another edition of How to Build Lifetime Cashflow through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. And I’m super excited to interview the gentleman we’re interviewing today because he’s a friend. He’s actually a student. He’s in my warrior program and excited to talk about his success in the program. And just you know the whole gig on how he got started and everything else. His name is Matthew Rose and super excited to have you on the show my friend
Matt: Thanks for having me Rod
Rod: Absolutely. So take a minute and let’s just you know talk about how you got started in the business, maybe a little bit about your background and we’ll take it from there yeah
Matt: So oddly enough I’ve done a little bit of uh real estate outside of multi-family before I got in multifamily. I did some commercial and I started, at the beginning I did actually building automation for a carrier and then I transferred from that and I started doing maintenance at buildings and then I you know started to you know do a little bit of commercial investing and then I flipped into multifamily and I’ve just taken off from there
Rod: So carrier, the HVAC carrier? Is that what we’re talking about?
Rod: Okay so and you did, you did installation work? I mean you’re analytical
Matt: I did building automation programming for them
Rod: Oh cool okay okay all right. And so, I know that you’re I think over 130 doors and I want to talk about I think I want to talk about the fact that you just closed one and you know with Covid and everything else. Talk about what you had to go through and maybe give some pointers for people that are doing deals right now with all the craziness going on
Matt: Sure absolutely. So you know it was a little funny because the deal we sourced the deal and it was right before Covid and then Covid happened. And then basically we were closing right in the middle of it. And it kind of kind of messed our numbers up a little bit so we had to we had to be creative. The owners didn’t really want to budge and we basically came back to him and said, hey look, we project it might be this and this and this. And we ended up getting them to come down on their price a little bit and we’ve done great since then. But I feel like there’s just a little bit more research that you have to do and you know I go around and talk to the you know the businesses that I can talk to and see what they’re going to do and I’ve actually found some interesting things out about certain businesses like for instance, Best Buy, I found out is now cutting their workforce and they don’t plan to bring them back. I talked to a manager and he said new company policy is that they are going to be doing a lot of, kind of like the apple store where you go in and you set a time up if you want to have full service. And so they’re cutting it and he said that they found, they’re saying that they found that people like that. So I think we have to reassess some of our traditional businesses that we can rely on and maybe go around and check on those places a little bit make sure they’re bringing people back. They cut their workforce by 40 percent and he said they don’t plan on bringing these people back
Rod: Wow wow, well you know I mean I’ve been harping this. Robert and I disagree on all this. My partner’s name’s Robert and we disagree on this and he thinks things aren’t going to be as bad but I’m here to tell you, we’re headed for some serious pain in this country. And so you know well of course with crisis comes opportunity it’s not something to fear. It’s something to be ready for, something to start raising money for and pre-framing your investors for so that they’re not fearful when you know the “blood” is running in the streets like I always mess up Warren Buffett’s quote like, be greedy when people are fearful and be fearful when people are greedy. I think that’s it anyway something like that but that’s gonna happen in the next eight months to a year I think because you know I know there’s going to be another stimulus package we’re recording this on July 22nd not sure when it will go live. But there’s another stimulus package coming and but after that, all bets are off in my opinion uh you know after the election and everything else. So we’ll have to wait and see what happens. So was there anything besides getting a discount on your Covid property, was there any other thing any other hurdles that you had to jump through, any issues with inspections things of that nature? Delays?
Matt: It did make it a little bit harder for the inspection because not as many people wanted to come around during inspection. The residents obviously were not as thrilled to have us in their units and we were trying you know we tried to be very cognizant of that and aware. And I will say that the owners were very very very hesitant to even basically acknowledge it. They kind of felt like it was a hoax. Basically, they were an older couple. They kind of felt like it was a hoax and I had a lot of back and forth with the um with the broker. And basically I kind of knew where the broker was going to go and I think this is a good thing for people to do especially during this time when you have a lot of people that are not, they’re not in touch with reality and you kind of have to kind of have to have your ducks lined up so when I came back to him and wanted to talk about changing something with the price you know I looked up the all the positive articles I could find. So I knew he was going to point out this positive article and this positive article and this positive article. So before I ever talk to him, I had a rebuttal for every one of those and he just came to the point where I just had to say, hey look, you know I know your job is to do the best thing for your client. Do you want to leave them hanging out here when they could just drop this price a little bit and get this deal done? or do you want to roll the dice for them? So they ended up making it work for us
Rod: No, I love it, love it. Now I know that before we were recording you talked about three steps that you take to you know that you try to subscribe to so that you can be successful in any endeavor that you take. Can you expand on that a little bit?
Matt: Yeah so my wife and I run a law firm and this is you know along with the other investing we’ve done in the law firm. This is the same process I use for to get good at anything, to do well at anything. And step one is I research. I’m kind of maniacal when I’m interested in something. I mean you know when I got interested in multi-family and started switching from you know the other stuff to multifamily I basically you know my music in the car was replaced with listening to podcasts you know my free time that I was doing other things was replaced with books. I even have some of those bose sunglasses that have, you know that you can hear the music
Rod: Got mine right here man, right here baby yeah. Tiffy bought these for me. I love these damn things. When I ride my bike, I can listen to podcasts.
Matt: Yeah that’s exactly what I do if I’m out doing something else. If I’m outside walking around, I’ve got the bose shades on and I’m listening to my podcast. So step number one is you know take some of that free time or time that you can have and just buckle down and try to learn as much as you can that way, Youtube, podcasts, books. Step two, find a mentor. I always say you should find somebody that knows whatever you’re doing more than you know it. Somebody that you can you know trust, somebody that you can go back to like for me, I you know I joined up with you. And it’s nice to have somebody that knows more about it than you and somebody that you can go back to and say, hey I’ve got a question about this or that or the other. Along with step two, I say build a team. I count that in the same step. So find other people you know in multifamily, it’s your team is going to be a lot of people you know it’s going to be everybody from your attorneys to you know potential partners and find people that have opposite strengths of you for partners. And step three is execute. You know go out don’t be afraid just do whatever it is that you’re that you’re going to do. Fall back on your you know your partners and ask them you know the people that you have asked them questions if you need to know things and your mentors. And use these resources that you’ve built up. You’ve already built your knowledge base up now you build your you know build your team up in your safety net you know if you want to call it that and then you just go out and execute you know without fear because once you know what you’re doing you know what you’re doing. You just do it
Rod: Right right right and but you know there will be things that come up that give you discomfort because you may be doing them for the first time but you push through in spite of those things. And I want to circle back to a couple things that you said yeah as far as mentors, I’ve had mentors my whole life. I have one right now and a different part of my life. And I’ve had them for years. I mean from anywhere from self-actualization to Tony Robbins to you know real estate mentors to you know everything in between. And then the other thing I want to hammer home that you said is, the importance of playing to your strengths. And that you know don’t try to build your weaknesses. I mean yes you can you can do that on the side if you have time but you’re going to get much further much faster when you play to your strengths and if you partner with someone that compliments your weaknesses, those are those are matches made in heaven. And you know like Robert and I complement each other really well. And you guys have heard me talk about it ad nauseam how you’ll get an analytical person with you know more outgoing person and those are really good matches. But you know even if you’re both both, there are things you’re better at than others. And they’re typically the things you love because you know they’re going to be things you’re passionate about. And when you’re doing that, then not only are you are you enjoying yourself but you’re gonna execute much more effectively and move forward. And then the last thing you said is execute and you know it’s all about massive action. You just got to do it and not fear failure, fear regret. Fear being in the same place a year from now that you are right now. That’s what you want to fear. But so, tell people what are some roadblocks to look out for you know you’re you know you’re fairly new at this journey I mean relatively speaking and you know what are some roadblocks that you encountered?
Matt: Well one is, I hate to say it by myself because you know once I say execute and then there’s been a few deals that I probably could have taken on but just because I had a little bit of you know a little bit of hesitancy to pull the trigger, I probably could be in a thousand doors by now. But I would say that’s one. I would say two is you know and this is where having your
Rod: Let me circle back for a second. So what do you think caused that to happen? Is this analysis paralysis? Was it fear? Let’s just be completely you know honest about it. Why do you think you didn’t? Were they skinny deals? They could have been skinny deals I mean you know or do you think like you really you could have missed out on some opportunity? And if you missed out on some opportunity drill down a little bit. Why do you think it happened because it’ll help my listeners
Matt: Yeah I think I may have possibly missed out a little bit on some opportunity. I think maybe, I’m not normally a pessimistic person. I’m pretty optimistic. I was probably being a little bit more conservative than I would normally be which I would still tell people you know to make sure you know to make sure you know you know don’t be reckless because they’re you know everybody’s gonna tell you, oh my deal is underwritten conservatively but you know don’t be reckless. But don’t be so conservative that you lose it, you lose out on a deal that you’re you know over one little thing or something that’s probably a hypothetical that’s probably never going to happen you know
Rod: Okay okay and so besides that if you know not taking action on a prospective deal, any other roadblocks come to mind? Any other things that that that kind of dropped in front of you like oh crap now I’ve got to deal with that anything like, I mean I know I’m throwing you off because I didn’t prepare you for any of these questions
Matt: No no, that’s fine. I would say probably maybe just you know probably a little bit of just a little bit of lack of faith in my own ability at the time or maybe just you know telling myself, oh well yeah you know I know I know this stuff but it was just maybe a sense of okay well you know can I really do this or that or the other? And now I know that I can and I probably should have but you know it is what it is you know you learn, as you call them seminars, you learn from mistakes and that’s just part of it
Rod: Yeah okay. Why do you think, what do you think is the number one reason most people, I mean when people fail to succeed at multifamily, what do you think is the number one reason for that to happen?
Matt: To me, I would say probably they just don’t put the effort in. I mean I feel like if you’re putting, if you’re taking action and you’re putting the effort in and you’re consistently trying, you may have a you know you may have a failure here or there but your successes are far going to outweigh that generally speaking if you’re conservative, nine times out of ten you’re probably going to far exceed like you just, I’ll give example the last deal that we did you know once we did the re-analysis like right now, we’re sitting in about 20 percent cash on cash return and we’ve not even raised a single rent, we’ve not done anything. It’s just fantastic. That’s just what we’re doing
Rod: Fantastic, was that a joint venture deal or a syndication?
Matt: JV yeah it’s a JV
Rod: Okay fantastic. So did you did you put your own money in or did you just bring in the money?
Matt: I put my own money in this
Rod: You did as well okay okay good. What did you have to sacrifice or give up to get where you are today?
Matt: In multifamily you mean I guess?
Rod: Yeah multifamily unless you think something else from other things would you know
Matt: I guess I would just say mostly for me it’s just time you know it’s time you know but I just you know I shifted time from one thing to another thing so
Rod: You’ve got a baby girl right?
Matt: But I think it’s gonna, the goal is obviously to that it pays off over time that becomes the inverse you know you give up a lot of time while you’re getting going and then once you start getting a bunch there that’s what I love about multifamily is the freedom, the time freedom that you can get out of it. I’m already making, I was already making good money in my current business. So it’s not a matter of money, it’s a matter of buying time
Rod: Yeah love it love it. Do you think there’s a particular type of person that’s best suited for this business?
Matt: I don’t think, that’s a complicated question but I’ll answer it as simple as I can. I would say that I don’t think there’s any particular type of person. I’d say so long as you are motivated enough to do this. You know I know people that are super analytical to do this. I know people like me that are people persons that that are great at this. I don’t think multifamily is limited to one type of person. I would say that you know if you are the type of person that can get passionate about it, I think that’s what’s more than anything going to drive. If you’re passionate about it and you like it which why wouldn’t you right, if you like it then you’re gonna succeed if you put the time in and you like it and you are making the a real genuine effort I don’t think you have to be a you know any particular type of person
Rod: Yeah and I would add to that, in that you know if you’re going to influence anyone you need to have that passion. And to have that passion you have to be personally inspired. And to be personally inspired you have to like it. And so I would tell you that you know and you guys heard me say it before if you don’t love this business yet associate pleasure with it you know and one example I use is pretending you’re hunting for buried treasure which you are. And then associate pleasure with it so you learn to like it or love it is better because if you can’t learn to love it, then for God’s sakes you should do something else for sure
Rod: Did you have any aha moments as you were learning and growing in this business? Anything I mean, again, I know I’m hitting you on left field
Matt: Oh no honestly I would say you know coming from doing commercial, it’s a lot different from doing you know commercial stuff. But I would say the aha for me more than anything was it’s not as hard as I made it out in my head to be. If that makes sense, it’s like once you learn it and once you know it and you buckle down and do it, and you can get the pieces in place the other people to fill in your gaps, it’s not nearly as difficult as I think I had made it out to be sure you know. And I’m not going to sit here and say that I’m so talented that that I’m just the sole factor and that I think that’s just the case
Rod: Yeah, no, I agree completely. What do you think is the most challenging part of the business for you? And then I’m gonna have you tell me what’s your most favorite part of the business because I’d like to answer both questions for you
Matt: Most challenging part, that’s a good question, I would say the most challenging part for me right now is just giving up some of my family time and making that extra effort but you know that’s, I’m very family oriented but you know
Rod: How old are you? You just have a daughter right?
Matt: I have a daughter she’s three
Rod: Okay yeah yeah yeah
Matt: So that’s the thing for me but you know because I’m running another business and doing this at the same time so it takes a little extra time. For me that’s the challenging part the rest of it just kind of falls in place
Rod: Love it okay you know what words of wisdom would you share with someone that’s where you were when you first came into our program. I mean one aspiring wants to do this, know they want to do it, know their family deserves more, what words of wisdom would you share with them?
Matt: Yeah I would tell them to just you know start with those steps that I mentioned. Start with those three steps and buckle down and don’t be fearful you know don’t be fearful you know just do it and if you’re doing things the right way, things will fall in place you know just you know put in the work, you know you’ve got to put in the work though you can’t you know you can’t fake work
Matt: But you put in the time and you put in the effort and you do things the right way and it’s gonna work out all right
Rod: Yeah. What do you think comes first, the deal or the money?
Matt: I would say the smart way to do it is get the money first not the deal. I mean once you have the money, then you have you open your options up. I mean God knows I don’t want to be sitting here and I’ve got a deal that somebody’s like, I got to get this closed quick and I’m like well, I don’t have all this money lined up. So for me making those connections and you know meeting people, getting your name out there, getting yourself out there, and getting the money lined up, that’s the most important thing to me
Rod: Yeah I agree I agree. Now can you be looking for deals while you’re doing that? Sure. But you should definitely be working on getting the money lined up. So any funny stories from your from you know managing maybe landlord tenant maybe just funny stories from the business anything come to mind?
Matt: Not as much from multifamily. I’ll tell you a funny commercial in landlording with a commercial tenant but
Rod: Sure love it
Matt: It’s just amusing. So once I had a tenant on the 52nd floor of a building that I was working at, and made a call and he was an attorney, God help us, but he’s an attorney but they were very particular called us up, and said that he needed he had a major problem and the major problem is you know building you know imagine it’s all glass right, all glass, no windows that open and he points out the window and there’s a praying mantis on the window and he has he has blinds right he has a praying mantis on the window. We’re on the 52nd floor and I’m like okay well you know he, this is a problem for me. And what do you want me to do? And he’s like, I want you to get, hey you need to get rid of him. And so I just reach up and you know you know I have a sense of humor. I grabbed the blind. I pulled a blind and the blind drops down and I said he’s gone. And he’s like, no, I want him out of here. I said, what do you want me to do? climb over the side of the building and thump him off and he was like can you do that? I feel like I probably gave him a look but I said no.
Rod: All right well listen brother. I appreciate you being on the show buddy and taking time away from your baby girl and business and all that but it’s been a real treat to have you here. Is there any question I should have asked you that I didn’t?
Matt: No, I don’t think so.
Matt: I don’t think so I think
Rod: I’m excited to see where you’re at a year from now and then two years from now and you know be a fly on the wall for this journey of yours but anyway Matthew, thank you brother. It’s good to see you
Matt: Thanks Rod. I appreciate it
Rod: Take care
Matt: Thank you