I'm gonna give the, I'm gonna be giving the wheel the Hoan in a
second here, because home's gonna be doing a chat with me about it.
So just some things that I've done and things that have come up for me over,
over scaling, controlling thousands of units in, in an effort to give you guys
the tools that you guys need so you guys can scale up your businesses as well.
How, how long have you been investing in real estate now?
17.
17 years and in the 17 years as the ad said, uh, you have acquired
1800 units, which is, think about, that's bananas because that
Yeah, that's a lot of bananas.
Some people try to go from zero to one and then other people are trying
to go from like 10 units to 30 units.
Some people wanna go to a hundred.
A hundred.
Seems to be a big milestone for a lot of people.
It was for me, yeah.
Of, of course.
But I scaled to a hundred and stopped.
I scaled to a hundred and got stuck with, with 1800.
We were talking a little earlier and I was like, dude, let's get
into a little bit of the numbers.
I was like, how much does that actually bring in?
No, I mean, like as a company and we bring in just in rent our, our assets
bring in just over 1.5 million a month in rent, over 1.5 million per month.
I wish I could say we got to keep all that, but yeah, we got those to
pay with that money, but we, we bring in top line revenue of about 1.5.
Yeah, but that, that, that's just the rent that, I mean,
there's other streams, right?
So let's bringing fees and every time we close the deals, you bring in
additional revenue and, and that, so yeah, let's go into the first three
because I, I, I believe that really allowed you to scale way up, right?
So your first one, your second one, your third one, how many units were those?
Like, uh, my wife Liz, and I were doing everything in our business.
Like I was showing the apartments I was collecting rent.
I was doing all the doing in the business, and Liz and I had scaled with
a few investors and a lot of our own money up to around 115 units, and we
owned the property management company.
We managed it ourselves.
We were primarily focused in Trenton, New Jersey.
You know, we did some fixing flips.
We had some other successes and whatnot.
That was, our cap was about 115 doors and, and we got stuck there for a while.
Right.
And, and like you said, you were doing it all, including collecting rent.
Where we can start is you don't actually have to do all those things.
No, and, and most likely I used to, our, our growth was
stunted cuz doing it all myself.
But then the light bulb went off as you said, that I started to realize,
yeah, I don't have to, if I don't do some of these things and find people
that are better at these things than I am, I can start to scale and get to
territory that I'd not been to yet and, and end up making more and doing less.
Why did you think that, and then what made the change for you to
realize that you don't have to.
Liz and I bought a 49 unit out in Lancaster, Pennsylvania.
I was like, oh, we're gonna have to start our own property management
company out here in Lancaster.
She says, you know, why don't you try a third party property management company
and if it doesn't work, you can always fire 'em and you know, you, we can
parachute darosa management from there.
So you were, you were ingrained.
I was the guy.
Yeah. I was like, great articles.
Well, this is the way to do it.
Do it all yourself.
And then we hired a third party property management company and they did a good.
I was like, how about that?
Probably when the first light bulb went off that I didn't either have
to control the entire pro, own the entire process for the business to
go, well, I could outsource parts of the process and then hold that company
or that person accountable instead of me doing it myself, you know?
But then I kept telling myself, I think I'd run that better,
but then I was like, I can't.
They're actually running, they're doing a good job.
But what came up for me, hon, is what I could put myself into
with them doing that, what it would take for me to scale up.
And that's when new markets started to come up and that's when
expansions started to come up.
And that's when, uh, I was able to put my money on really my money,
my time into investor relations and focused on attracting more money
to the company because I raised a million dollars for that deal.
Hone the next deal we did.
I raised 3.2 because I was able to focus on investor relations, investor
attraction, and investor management.
We raised 3.2 on the next deal because of that 8% PM fee, I
was paying those guys out in Lancaster, Pennsylvania cuz of that.
That enabled me to three x my raise capacity.
I was good at talking to investors and making complex things like real
estate investing, uh, seems simple enough that they're willing to do it.
I'm, I'm kind of giving you the origin story of how, where the concept of
the hunter brain, the money and the hammer came from, cuz those are all
other things that I was not good at.
Right.
If you guys noticed my shirt, it says, what's your multi-family superpower?
Yeah, we have this concept at Thero group called Your Multifamily
Superpower, and there's four of 'em.
Your money, your hunter, your brain, and your hammer.
And those are four different roles within a multifamily team.
Well, the, the money to get into the superpowers home,
the money is the networker.
So running a meetup is a great task for the money run.
You'll find you'll be great at it.
Like, man, I'm like networking, collecting cards.
You're the center of the room.
You're just in the mix.
And I loved it.
And I became friends with a lot of these people and they became referral
partners and they came to me looking for help for things and I'd help 'em out.
And before you know it, they're like, Hey, I got like a hundred
thousand dollars sitting in my I R a, just sitting there doing nothing.
Can I do something with it?
And yes, you may.
You can give it to me and I'll put it in my next apartment building deal.
Yeah. So this $3.2 million raise.
Yeah. What size was that?
How many units was this one?
That was the big fish.
There was 198 units in North Carolina.
So, so.
Were able to scale up and go to North Carolina?
Yes.
Because you no longer had the belief that you needed to be local.
So I guess one of the lessons is to be flexible in what you're, how
you picture your business, right?
Because you had, by all means, you were successful, right?
You had 115 units that you had already managed.
I was making a living, but I wanted more.
More investors were showing up.
When we buy properties, Matt, a lot of times we're buying properties
where they're under market.
The question is, why is it under market rents?
Well, it's because the person who's managing the asset isn't
doing the raises that they're supposed to every single year.
And so allow that to happen one year and it's not so bad.
Allow that to happen year after year after year, and now you're
200, $300 below market rent.
You're like, okay, I, I have to raise rents now.
But then how do you hit the tenant with like, oh, hey, I'm gonna
raise your rent $450, uh, for.
You can't.
Right.
If you've not raised rents, then you're not making enough money
likely to keep the property up.
And so the property likely become dilapidated because
it's economically challenged.
It's also becomes physically dilapidated.
Those two are hand in hand.
Right.
And you're also not upgrading units.
So all those things are all in tandem.
That just a sign of a sick piece of p, a sick piece of real estate for, for
me personally, by having a property manager, it allowed me to run the business
the way a business is supposed to be run with increases every single year.
Yeah. When I ran things by.
I didn't increase the rents.
Why?
Because I let my feelings get in the way.
Mm-hmm.
I feel bad.
And then the last person to feel bad was me at the end when I
wasn't collecting market rents.
Okay.
So let's talk about, so you went from 49 units to 198 units.
Yeah. What's that transition like?
Because that's huge, right?
That's four times bigger.
They're maybe making the same kind of jump, right?
Maybe they're trying to just get to 50 units like this one, this 49 unit, right?
Yeah.
Maybe they have 10 units and they're trying to jump to 49
units or something like that.
And you jump from here to here.
Yeah, because I had managed, because that 49 unit was a good step up for me
in working with third party pm it was a lighter lift in the management side in,
in leading the people and designing the business plan and everything like that.
The implementation and the renovation and construction
management is where I fell on my.
On the, on that 198 unit until the Captain Justin Frazier showed up.
I own three units.
Right?
And I wanna jump to, you know, 48 units or 49 units.
How, how would you say.
For someone like him to do that scale up slowly, right?
So double your portfolio every time you do a deal.
If you own three units, you can probably get somebody in your network
to invest with you a little bit to buy a 7 89 unit somewhere in there.
Then you stabilize that, then you go buy a 30 unit.
Then you scale from there and up and up and up.
How did you pick the markets that you're in now?
Cuz you're not.
You're not invested in Trenton anymore.
You went off and you found greener pasture somewhere else in the world.
Some days it's green.
Yeah.
What that has allowed you to do, how did you decide on, on choosing those
locations and, and what did you do to build within those locations?
First deal, the 190 we bought North Carolina was a, because
I found it on LoopNet.
I was surfing North Carolina in general because I, I knew that a
lot of my friends were successful.
Real estate investing there.
I mean, they'd be straight.
Man, I wish I could tell you, oh, who I.
Hours worth of market research and turned over Fayetteville as the float to the top?
No, it's just my instincts told me to look at North Carolina.
That goes well.
And as we started scaling, we started really doing more
market-centric investing.
Give a quick shout out if you guys know Irve Francois.
He is my market hunter man, and he got us into new markets such
as, uh, Lexington, Kentucky, and, uh, Winston-Salem, North Carolina.
You just like said, listen guys, this is where we need to go.
That's, that was Ivey's division of the company as the market hunter, which is one
of the other superpowers we talk about.
A person that you brought onto the team, vey or Francois, that you
brought onto the team that actually led the company to this new market.
And he did the research.
Here's a, here's the reasons why.
Winston-Salem, you know, all, all these reasons, and I said, roll
his sleeves up and find us deals.
Then all I could, then I can just focus on raising money and money, you know, and
again, If Justin's running the assets.
Once we close on 'em, Ivey's finding the deals, and we have an underwriting
team that are analyzing the properties and creating business plans, all I gotta
do is focus on raising my hands in the air, getting the company attention.
And when we have a deal raising money and not just our role, a rollout was good at
my, like, given talents, my superpower is that, and I'm gonna do just that.
And the more, and I found out the more of that I did only and only
that the more we grow in 2020.
Which was a crazy time, as you can all remember.
That's when we bought our 336 unit apartment building.
Listen, Salem, this was an 18 million purchase.
Mm-hmm.
336 unit complex since buying it for $18 million and putting $2
million into the rehab so far.
The building is now worth almost 40 million.
You, that's cuz Justin kicked it snot outta that place.
My light bulb went off in, in other fashions on the 198 unit, cuz I, I have
my background in engineering, right?
The 49 unit that we bought, believe it or not, a home was a converted factory.
That property, a lot of the units were similar like.
But not developer decided to make 'em unique and, you know,
artsy and stuff like that.
And they're really cool, but it was very hard to figure that you, you
can't really figure that apartment complex out unless you walk All of 'em.
The hundred 98 unit was just like every other, most of the other apartment
buildings out there where if you've seen one apartment, you've seen 'em all.
Okay, I can figure out how I can spend $6,000 to make this apartment amazing
and I can make it really cool for six grand time's 198, that's 1.2 million.
That means I can turn this property completely around and make
everything in this apartment complex off the charts for 1.2 million.
So I get, I saw how figuring out how to optimize a 1000 square foot
apartment was the key to the kingdom.
You know, change that light fixture, don't change those
cabinets, change this, not that.
And it's repeatable.
It's a repeatable process.
If I can just apply that principle with minor tweaks across the board,
and so going bigger, it sounds like.
Almost easier than going smaller, going scattered side in some ways.
Yeah. In some ways, yes.
In many ways it's way more complex.
The part we haven't talked about is the, uh, the underwriter, the
brain, and the brain's job becomes a mile and a half more complex.
Underwriting, a bigger multi-family property required a skillset that I
could review it, but building that business plan, financial plan was
beyond my, beyond what Matt Fair, Kloss punny brain was capable of.
So, so what's really cool, These are the four.
These are the four superpowers.
Yeah.
That you really need to learn, number one, what you are, and then number two,
hyper-focus on that so that you can let other people do what they do best.
What I'm hearing is one of the best ways to get to a thousand plus units,
which is the theme of today's call, is really build up your team so that
you are doing what you are best at.
Yeah.
So the other thing that I think is really cool about this is when you
are not everyth, And you allow other people to do what they do best.
It frees you up to not have to do everything so that
you're not working 24 7, 365.
Do you want a real estate to provide your living?
And there's phenomenal benefits that real estate gives you if you
allow it to provide you a living.
I've got way more control of my time because real estate people
really get the power of what real estate allows you to do.
And it's not about the money, it's about time.
It's, it's.
Yeah.
Those of you guys that want to buy, drive a Lamborghini or whatever,
just finance, just so you can get a Lamborghini pretty easily.
You know, don't, but it's not about that.
It's not about the as.
It's not about the toys, it's about time.
My dad died in 2010.
He was sick with cancer and everything like that for a year, and
so I spent a lot of time with him.
But when, but when he took a major turn and was in the hospital and
was pretty clear, this was it.
Because of real estate, I was able to put my business on hold and run
it from, you know, my cell phone.
Um, in, uh, in, in 2010, I was able to run my business from a laptop in
my cell phone, uh, for two weeks.
And I sat in the hospital next to my dad, sat next to him at
his deathbed, um, and spent.
Two weeks straight with him, and then once he died, I spent another week with
my mom helping her deal with the fallout that happens when your loved one dies
after you've been with him for 45 years.
You know, I did all the stuff that I needed to do to help her clean
up her financial house and met with her financial planner and helped her
plan the funeral and all that stuff.
Did all those things because of real estate.
Now I get it.
If you get a job, maybe your employer's gonna be kind enough to like you to take
that much time off, but you're gonna come back to a mountain of, of stuff.
Because I had a small team at the time.
They were able to keep things running and said, Matt, we got this.
Call us.
You know?
And they just stepped into my roles and helped me out.
And I ran a few things from my cell phone.
Yeah, I did a few things on my cell and, and everything like that, but real.
It doesn't require you to be there 24 7 all the time.
There are people that can help you do some of the doings that needed to happen.
And so because of that, I was able to physically be there when I wanted to.
I was able to pull myself up and go somewhere else when I needed
to be there for something, that story hits me because I'm thinking
like, what's that worth, right?
Mm-hmm.
What was, there's no dollar amount on that.
There's nothing.
Nothing.
Yeah. Like your boss is like, oh, I'll give you.
It's like, choose, raise or choose time with your, choose My dad, when he's on
his deathbed, there's no, you can't even, it's, it's like apples and car tires.
You can't even compare the two.
That was probably the biggest gift that real estate gave me,
uh, from a time perspective.
And it's given me a ton of other things that I, I'm able to run my business
and keep my business running while I'm maybe not working in it all the time.
So, for anybody listening who's looking to either.
Scale up because they just have more bills to pay.
Just realize that when you do scale up and you build the team, like we're
showing you guys here that you get to free yourself so that you can
do the things that actually matter.
Yeah, the Lambo does not matter.
Spending time the last couple of days with your dad, that's everything.
Yeah. That is everything.
Right?
Matt, right above your head says, transforming lives through real estate.
That's probably a big thing because one, it transformed your own life
to be able to spend with your, yeah.
With your parents.
But it's not just mine.
It's a lot of people's.
Right, right.
Yeah.
So there was a story that you actually never told before,
but you told me recently.
Yeah.
About a property, and I'm like, It's the one we talked about it, it's the 198 unit.
Yeah, I didn't mention that.
But because it was run by a pharmacist and a farmer, they
weren't running it very well.
Right, right.
And so they allowed, they had allowed a lot of folks that were looking to
do bad choices live in their property.
So we were touring the property with the property manager and
with the real estate broker.
This is before you bought it, right?
Yeah. Before you bought it.
You were just walking around and checking it out.
And this, uh, gentleman about my age, clearly a dad.
Hey, I was out taking my daughter around this field over here, and I found this,
and he pulls out a, in Ziploc bag.
He had time to like get a Ziploc bag to go pick this thing up.
Yeah, it was a syringe.
Like I found this in that field over here.
And you could tell he was livid about it, but I also could tell
he was helpless that he couldn't.
You know, if, if I could afford to move outta here, I would.
He said that, um, he's like, but I found this in that field.
I know you guys can do better than that.
I got a kid, you know, I can't have my kid around this.
And then a year later, uh, after I bought the co the apartment complex,
he was out, he was pointed to this field and it was a, it was a field in
between these two apartment buildings.
And that just so happens to be the field.
And we built a playground, right?
And I was out there a year later and I saw the dad out there with his kid
in the playground, and I'm like, I gave that man a, I, I I had a moment.
I never talked to him because I don't, I didn't want to put him
on the spot like that or whatever.
I just, I got to celebrate myself a personal win.
That in some ways, because the business plan that we created
for that property, I transferred.
I gave that man a better life, a safer place for his kid and a place
that he was happy to live in, and a place that he'd call home and not a
place that he doesn't have to live, but a place he chooses to live.
He wants to live.
Yeah.
That got me.