On this episode of the Passive Income Attorney podcast, Seth is joined by best selling Bigger Pockets author and real estate mogul, Matt Faircloth. You’ll learn how investing in real estate can not only change you and your financial future, but also how it transforms the lives of the residents who live in the communities.. Matt stresses the importance of building quality homes for families, all while helping you achieve financial freedom through passive real estate investing. Enjoy!
“It’s always a good time to look at alternative investing. Don’t sit on your hands and wait for the market to crash. It’s always a good time to consider well-vetted investments.”
HIGHLIGHTS:
Here’s a breakdown of what to expect in this episode:
- How to leave a great engineering career behind to invest full time in real estate
- Getting started in real estate investing through househacking
- The pros and cons of active and passive real estate investing
- What you need to know as a passive investor when looking for in a sponsor
- How to maintain transparency with your real estate partners
- How value-add real estate investing transforms the lives of your tenants
- And so much more!
ABOUT | MATT FAIRCLOTH:
Matt Faircloth, originally from Baltimore, Maryland, graduated from Virginia Tech with a degree in Engineering. After playing Robert Kiyosaki’s Cash Flow Game, Matt decided to quit his safe and secure job working as an engineer in a Fortune 500 company to become a full-time real estate investor. Under Matt’s leadership, DeRosa has completed over 30 million in real estate transactions involving private capital, including fix and flips, single-family home rentals, mixed-use buildings, apartment buildings, office buildings, and tax lien investments. Matt has extensive expertise in connecting passive investors to lucrative investment opportunities through syndications, private loans, and joint ventures.
Matt Faircloth is an active contributor to BiggerPockets.com through Facebook Live, teaching webinars, and blogging. He leads the Mentorship Mondays series on DeRosa’s YouTube channel, where he answers weekly real estate investing questions!
On a personal side, he sits on the board of a local nonprofit, volunteers as a trainer for men’s leadership weekends, and enjoys making wine (especially red to please his Italian wife!)
FIND | MATT FAIRCLOTH:
Website: https://www.derosagroup.com/
Bigger Pockets: https://www.biggerpockets.com/users/mfaircloth
YouTube: https://www.youtube.com/channel/UCh1ZdYzX6vKfoAgBypdVo_w
Book: https://www.amazon.com/Raising-Private-Capital-Building-Peoples/dp/1947200984
LinkedIn: https://www.linkedin.com/in/mdfaircloth/
CONNECT | SETH BRADLEY:
Snag | The Freedom Blueprint: http://www.attorneybydesign.com
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FULL TRANSCRIPT:
Seth: [00:00:00] What is up law nation. You’re now tuning into the Passive Income Attorney podcast as always. I hope you’re having a great week when you have a moment and be sure to go to intelligentpassiveinvestor.com and get the cashflow calculator for free while you still can. It will show you how to start buying back your time piece by piece.
Okay, so you decided to take the leap of faith. I’ve finally convinced you to invest in real estate. Where do you start? HGTV flip Airbnb passively, actively. Where does this all begin today? You’ll find out how to make that big decision. And we’ll also show you how investing in real estate will not only change your life for the better, but also the lives of the residents of those properties.
Our guest of honor today is none other than Matt Faircloth, a friend and business partner of mine and the president and founder of DeRosa Capital. And he’s the bestselling author of the book, raising private capital published by BiggerPockets. All right guys, let’s go.
Matt Faircloth. Welcome to the show brother.
Matt: [00:01:14] Thank you. Thank you, Seth. It’s such an honor to be here.I appreciate that.
Seth: [00:01:16] Yeah, man, I’m really happy to have you on, you know, we’ve crossed paths quite a few times and working on some deals together. Um, so I’m really excited to have you on today.
Matt: [00:01:23] Absolutely. Thank you. Good to be here.
Seth: [00:01:27] Yeah. All right, man. Well, let’s just jump right in. So, you know, what’s your story? Feel free to brag a little bit. Take it back as far as you want to.
Matt: [00:01:33] I’m pretty modest. Uh, so, uh, we’re a full-time real estate operator. We’ve been in operations for eight, 15 years. Um, I’m going to say at 18 aging myself, no, we’ve been, we’ve been full-time real estate investors for 15 years.
I’ve seen a lot of seeing market cycles up and down, um, and, uh, you know, kind of rode the tiger for a while there and got into multifamily. Um, about nine years ago, before that we were into a lot of single families and a lot of rentals, like we have, we own an office complex that we bought about 12 years ago.
Um, we’ve been, um, you know, just really into residential housing. Aside from the office complex has really been what we’ve done, whether that’s through fix and flip models or single family homes, we’ve done some lease to own with tenants. Um, we own some mixed use buildings. I still view that to be residential really.
Um, and that, so that’s a that’s really us. I quit my job in 2005 to invest. Full-time. And, uh, that’s been, uh, you know, the direction that that’s kinda been the, the full steam ahead direction we’ve been. And I also, I will say that my wife is my partner as well. So I’ve done a lot in investing, uh, with my spouse, which is a, you know, I think a lot of real estate investors, either their spouse ends up being your partner or ends up being their best cheerleader.
And those that I find are successful in real estate, um, you know, have spouses that are full supportive of what they’re doing, you know, fully enrolled in what they’re doing too.
Seth: [00:02:59] Yeah, that’s really cool, man. I mean, how how’s that gone? Is that been a smooth process?
Matt: [00:03:09] Was that the thing from the beginning was I want to work with my wife on these projects, into the business.
I mean, not as it can, it’s not, I mean, my wife and I fight like badgers sometimes, you know, but I mean, we’re a, we’re we, we love each other and, but we that’s just our personalities. We just kind of like, you know, knock it out and drag it out and then hug it out kind of thing, you know? Um, so we, uh, we had all, we, we read rich dad, poor dad together.
We played cashflow together in like the early two thousands before I quit my job. And before we got married, um, and that, so we’ve always been business partners and that’s okay. Because that means that we kind of went to go. We wanted to go in the same direction. As a married couple, right? Like we wanted financial freedom.
We wanted the time freedom that real estate investing can provide. Um, we wanted to lead a big life. Right. And so we both wanted the results that real estate investing could yield. And so, um, intentionally, yeah, in the beginning we did a lot of the same, a lot of the work together because it’s what we wanted now.
She’s now gone off into her own direction with the real estate, invest her community and the real estate investor podcast. Um, That’s been her own vehicle and her own journey, um, which has been incredible and inspiring to witness her do that. So we’re actually working less and less together, um, because she’s got her own road that she’s walking and everything like that, but we still meet weekly and we still talk about deals.
Um, so run stuff by each other and all that, but we were kinda more. Support and board members for each other than we are directly working with each other. But we did that for years.
Seth: [00:04:36] Yeah. Yeah. That’s a really interesting dynamic. I mean, I think if you can run a business together and you’re going to stay together, right.
I mean, I have a gym that I run with my wife. Um, she’s kind of the main operator, but you know, opening through COVID and trying to stay open during COVID and all that was a pretty, uh, daunting task. So, you know, you butt heads a little bit, but you work it out and then you’re better for it in the end.
Matt: [00:04:57] Yeah, absolutely.
Absolutely. But I mean, it’s okay. First of all, it’s okay to butt heads. You know, if you, if somebody is listening and you and your spouse get along all the time, you know, like you just not being authentic enough with each other, you know, like you’re hiding out. Um, and so I also find that having a business with your spouse really like.
It links you at the hip man. I mean, you’re like partners at that point, right? And you, you’re not going to become that spouse that just comes home and just sits over dinner where it’s like, how was your day?
And you just become distant and you really become just roommates more than anything else. I mean, like having a partner with your spouse is like, fricking you become Starsky and Hutch, man. You just like become attached at the hip and you’re like gonna tackle life together and it creates a bond. Uh, in, in working with your, in your marriage, that it becomes unbreakable and yet it’s bumpy yet sucks sometimes.
Yeah. Like you fight, but so what man, your support, your, you know, you’re at the end of the day, you’re really engaged in life together and like committed to your financial freedom together.
Seth: [00:06:01] Yeah. It’s almost like you had another baby and that baby’s the business.
Matt: [00:06:04] It is. We have two, we have two kids too, but for the longest time the business was our baby.
We used to say that like the business of the baby. Right. You know? Um, and now, now I three. Kids, you know, I got two kids and a business, you know?
Seth: [00:06:16] Yeah. Yeah. So you were an engineer at some point, right? That was the W2.
Matt: [00:06:21] That’s awesome. Yeah. I worked for Ingersoll Rand, uh, which went to Virginia tech. I, it’s funny.
I find that a lot of real estate investors are recovering engineers. You know, I’ve seen that too. Yeah. I can name probably seven or eight of them off the top of my head that have a degree in engineering. That got into real estate investing. I don’t know why that is. I can’t put a pin on that. It’s probably got to do with personality styles or whatever, but, um, I was an engineer for work for Ingersoll Rand selling their compressed air machinery.
Um, when a traveling sales route for about seven years, it did well with it, but it wasn’t my passion. And I kind of felt like I was hitting the glass ceiling. Um, in my, in my early twenties, my mid twenties, I was already starting to feel. The, the top of the frame for where I was going. And, and, and I knew that if I kept going down that road, I would get less and less ownership of my time.
Um, and maybe a little more money, but less and less of my time. Um, and, and more and more, you know, working for the man. So, yeah, for sure.
Seth: [00:07:21] And on the show, we always like to talk about that. Particular inflection point. I mean, you know, at what point in your life and in your career, did you have that aha moment?
And you were like, okay, I’ve got to figure out what else I can do. And then obviously you found real estate. I don’t know if that was the first step in that journey or what, but maybe walk us through that.
Matt: [00:07:38] No, I’ll give you the a hum moment. I mean, it was not reading rich dad, poor dad, reading rich dad, poor dad just opened me up to another vehicle, um, and go to local RIAs and playing cashflow and stuff like that.
That all like, okay, cool. This is good. This is good. Um, the aha moment was, um, at one point my, I, uh, I, I had a few dollars put together and then in your mid-twenties, it wasn’t a ton, it was like five grand, but in your twenties, that’s like a mountain of money. Right. Um, and so. Uh, I had enough to limp in, to buy and the lease was ending in the house that I was in.
So I had five grand set aside. And so I’m like, um, you know, I’m gonna do, I’m gonna buy a house and live in this house. And so I bought a, I limped into a deal like, like literally went all in on a 3% down. FHA bought a house for 150 K um, little town home, a three bedroom, one and a half bath. And, uh, I’d been mortgage payment was 940 bucks a month.
And my two roommates in the house that I used to live in that I was leasing will like, where were we? Where are we going to go? I think we, you should come with me. So they moved into my house and just, we just stumbled into this thing and they decided, okay, well, we’re paying 600 bucks a month at the other two.
The other landlord will pay you $500 a month. And I said, great. So they pay me each baby 500 bucks a month, but my mortgage was nine 40. Right. So I was making 60 bucks a month and living there for free making. Like a S you know, like a high five figure, almost six figure salary in my mid twenties. Um, and I was like, Hey, I am making all this money now on my salary.
And I don’t have any living expenses anymore. This is pretty cool. You know? And so two years. I paid off like 30 grand worth of student loan debt back credit cards. Um, completely got myself bad debt free, uh, in about two years. Um, just, just through adjusting my living situation. That was my aha moment. And it was like, Holy crap, man.
This is. Pretty cool. It, it was a house hack as they call ’em, you know, as we call it a bigger pockets, but we didn’t call it that back then we just called it having roommates, you know? Um, right. So, uh, it was fun. And I had lived with my buddies, you know, and we’d go out for beers on the weekends and stuff like that.
But these guys that was going out for beers with were now helping me, you know, they were paying my living expenses, which was amazing. Um, so that was the aha. And I recommend that to anybody that’s listening to this that’s in there. Early to mid twenties or doesn’t own any real estate yet that wants to get into investing.
How’s heck do that first, because that will get you a long ways towards being financially free a lot sooner than you think it will.
Seth: [00:10:17] So, yeah, I did the same thing. My first house was a house hack. I bought a duplex. I lived in half and rented out the other half. I mean, it’s so easy to get in on that because you just have to pay that three or 5% down.
You get in cheap and eventually it turns into a great rental. I still have that property.
Matt: [00:10:33] Yeah, that’s great. That’s the only regret I have is that my wife and I, when we got married, I kept that house and put somebody in my bedroom, you know, when I moved out and I held it for a couple of years, um, myself, and then when my wife and I got married moved, the only regret I have is that we didn’t move into a duplex.
Uh, or a triplex or quad, you know, and just do it again. We wanted to have our own home and our own, this, and own that and everything like that. So, um, we, we should have kept it going cause she was on, she was a gamer, but. Um, we just couldn’t find any small multis. We should just look harder. You know, we didn’t find any small Maltese that met our criteria in that, but that’s, that’s kind of a cop out.
We probably should have kept looking.
Seth: [00:11:12] As long as you can keep doing that and moving into a new place, I mean, it’s just a, such a cheap way, an easy way to get into properties. It’s pretty spectacular. I mean, it’s probably the best way to get into get started. That’s huge. And you also mentioned you got out of bed debt.
That’s a key too. I mean, you know, a lot of our listeners are attorneys and they’re in a lot of bad debt too, because they keep buying, you know, the new five series or the next big house. And they’ve got all these big bills and it’s, we call it the golden handcuffs. I mean, you just, you know, you’re strapped to your job because you keep buying more and more of these material things and you have to have the newest of everything.
And then eventually it’s like, well, I can’t even step away from my job, even though I make a ton of money because I’m spending a ton of money.
Matt: [00:11:51] Yeah, I call it broken another level, you know? Um, and I’ve met people in my, in my paths of life that, you know, they’re not like they’re, they’re, you know, expense, nut to make is 30 grand a month.
You know, um, and that that’s what the house mortgage payment. And, you know, th th the kid that they have is taken horseback riding lessons 3000 a month. And they’re, they got this kid in private school, um, in the father’s taking pilot’s lessons. Get it. That’s all great. God bless you for, you know, living life big and everything like that.
And it’s not that you shouldn’t be spending 30 K a month. But you also got to watch it, like, are you saving how much, how much your income is passive that’s supplementing. I mean, what if you could invest some money and your kid gets the horseback riding lessons on passive income. That’s a conversation.
Seth: [00:12:40] Right. Exactly. Yeah. It’s backwards. Right? They need to do the passive investing first and then use that income to do that, to spend that $30,000 a month on the horseback riding and all that kind of stuff we got to get by in the right order.
Matt: [00:12:52] ight. Lease that five series and go and go take the, you know, 50 grand that you’re going to lay down to, to buy it or a hundred grand you’re going to buy it with or whatever.
Um, And, uh, and, and take that invest. It how’d that produce cashflow and that cashflow may cover the lease payment on the five series. Exactly. Um, you got to start thinking, I got that from playing re from playing cashflow, right? Uh, um, about because when you play cashflow, it talks about your income, your expenses, and in your assets, your liabilities.
And I started doing the math on. What if I pay off this car note, you know, no that’s going to return me 18%. You do the math, you know, like, okay. If I write a check in the board game for 30 grand to pay off my car note, um, it’s going to produce an 18% cash on cash return. Interesting. You know, uh, well, I guess it’d be hard to find a rental that would produce that some while I think I’ll just start paying off bad debt.
Um, whatever we start thinking about everything you do as an ROI, um, there’s a lot of power in that and paying down debt there’s ROI to that too. You know, so it’s not just the interest rate on the debt. It’s making that monthly payment go away. You know, um, when, if you can start dropping monthly payments off of your balance sheet, You know, that’s all cash that’s residual back in your pocket, the eight, the $800 a month, you were paying on.
The five series is now gone. If you, if you pay it off or if you invest in a property to pay the pay that pays you a hundred bucks a month. Yeah, exactly.
Seth: [00:14:16] I guess, yeah, we can kind of just roll back into that. So like let’s compare and contrast active investing versus passive investing. I mean, a lot of, a lot of our listeners are kind of on the fence.
They’re like, Oh, I want to invest in real estate. You know, I don’t know if I want to watch HGTV and follow the footsteps of the house flipping, or I’ve heard about passive investing in the syndication, you know, where do they start? Like what do they start thinking about to decide how to get started?
Matt: [00:14:42] Stop watching HDTV.
So right there, you know, cause that’s all that that’s fantasy land, right? Like none of that, none of those shows are actually real, right. That those are all made up numbers. And, and uh, and I know several people, friends of mine in the real estate world that have been on those shows and those producers are regularly changing production numbers and changing profits and stuff like that.
Um, those and a lot of people that are regular stars on those shows are just actors. Right. And th that are just putting falsified numbers out there that lying. They’re just like. This is entertainment, right? It’s not like, look on YouTube. If you want to watch real stuff about, out about, uh, active, real estate stuff.
Um, going back to passive and active. Um, there are a lot of folks out there that will run the numbers and say, Hey Matt, or, Hey, Seth, I want to invest in your deal. Um, but I see that the deal’s gonna make 18%. And you’re only paying me 14, so I’m just going to go and do it myself and make the full 18, you know, and they’re, they’re, de-valuing the, the operation side of the business.
And unless if you want to keep your law practice or your dental practice or your chiropractic practice or your whatever, your, your day to day gig, if you love what you do for a living, you should keep doing that. Because I can tell you, you’re probably going to hate real estate investing if you love, which if you love what you do over here, you know, real estate investing can kick your teeth in really fast, you know?
Um, and I know many people that tried to keep doing what they loved and the left hand and tried to real estate invest in the right hand. It doesn’t work. You know, real estate investing can, I’m demanding until you build up a big enough portfolio that it can, you can automate it even. And people are like, Oh, I’ll just hire a property manager BS.
No that you can, but you’re still gonna manage them. And they will not care about that property as much as you do. And there’s nobody I know of that is zero active in the real estate business. With by just hiring a property manager, you know, the only way to go zero active, not even zero, like five, 10% active is to invest in a truly passive asset, a REIT syndication, um, you know, and not even a turnkey Turkey doesn’t count.
Nope. You still got a property manager. You should go talk to them. You know, everything like that. There, there is. There is time you will have to put in, and if you’re not willing to invest with someone that’s willing to put their time in. Hear me, you will have to put time in, right. And those that are telling you that you will not have to put any time in, into your.
Investment. If you’re not investing passively suit through someone else, putting their time in for you, they’re there. It’s just not, I’ve just never seen it. You know, of, of, of I’ve bought properties off of many people that thought that there would be zero time involved, uh, that, that ended up, you know, realizing that this thing is taking away more and more of their time that they wanted it to.
Um, but I’ve never seen anybody that’s a full-time lawyer or a full-time anything. And has active investments without a passive op without an active operator stepping in for them.
Seth: [00:17:42] Right, so, yeah, I mean, a lot of it just comes down to how much time do you have and how much do you actually want to do? I mean, you might think you want to do it and then you get into it and you’re like, Oh, like you said, Oh, maybe I want to do, I want to practice law.
I want to be a doctor, a dentist. This is not really for me.
Matt: [00:17:55] Oh, did you mind love? Yeah, I wanna, I wanna, I wanna work into my passion, you know, w whatever that is, and there’s something to life about doing what you love or doing, what you feel obligated to do or not for nothing as a doctor. Yeah. You know, doing what you went to school for so long to do, um, what you’ve made your life commitments to do?
Like why would a doctor that went to school for like 10 extra years after college to be a dentist or a, uh, uh, uh, you know, oral surgeon or whatever that makes good money, why would they step away from that so that they could deal with the clogged toilet, right? Or deal with a tenant that hasn’t paid their rent, or they browbeat their property manager to get the unit leased in time.
You know, uh, or, or to find out why the tenant just wrecked their unit and cost them four grand in rental costs. The property manager is not going to answer all that for you. You still have to talk to them and have those conversations and those conversations a lot of time happen Monday through Monday through Friday nine to five, you know?
Um, yeah. Yeah.
Seth: [00:18:50] And a lot of the issues though, is, you know, a lot of these folks aren’t necessarily happy in their jobs. So they’re kind of on the fence. They’re like, well, what do I do? I don’t love what I do. I don’t hate it. But I think if you’re in one of these high paying, W2’s the best way to look at it is, you know, start buying back your time, piece by piece, right.
Until you’re, you know, it takes a little bit of time, but eventually you’re going to be able to buy back. Big chunks of your time and you can start practicing when you want to, and not because you have to. Um, and I think that’s a key because if you’ve already gotten yourself into these awesome W2 positions and you’re making a lot of money, it doesn’t make sense to just dive into something.
Matt: [00:19:25] I get that real estate investing is not a solution for those that hate their job. If you hate your job, just go get a new job. Right. Um, cause real estate investing in the beginning is a job right there. There is nobody that in the first year of real estate investing is going to end up sipping my ties and hiking the Himalayas.
Right. It doesn’t work like that in the beginning. It does eventually you get more and more ownership of your time after you hustle, but hustle comes first. Right? And so if you like. The real estate investing business. You’ve, you’ve researched it and talked to people like Seth and I that are active in the business.
Um, and, and it makes sense to you that you were willing to grind and put in the 10,000 hours. Right then. Yeah, go for it. Do it. It’s a beautiful, wonderful business that has very rewarding. Um, but don’t discount the hustle. Don’t see the people that are on the victory lap and think, and think that that’s what it looks like when you first got, when you first start.
Right.
Seth: [00:20:21] So, yeah. And if you’re, and if you’re eyeing, you know, big commercial deals or big apartment buildings or anything like that, I’m in a good way. I always say is invest passively. And people told me that as well. I mean, invest passively to start, maybe find someone that might give you a peek behind the curtain a little bit more than the next person, and then see if you like it and you may end up just liking it passively.
So you just keep investing past that. Cause you’re like, Oh, these fundings are awesome.
Matt: [00:20:42] People that have invested with us. There’s many people that have invested with us that either. Initially came in thinking that they would learn how to do what we do to do with themselves, which is totally fine. And I have people that started investing with us and have spurred off and done their own thing, which is totally fine too.
Right. Um, but I, people, many more people that invest with us passively thinking that they will learn the game so they could do it themselves and then realize how good of a gig it is to passively invest and, and not have to put in the hours or not have to get the, not have to get the 10,000 hours. To get to, you know, expert level to where they could spin off on their own.
Right. Um, and so there’s two passive investing in leveraging other people’s time, you know.
Seth: [00:21:22] Yeah, for sure. So, so when these folks are looking for, you know, one of those deals, I obviously the sponsor to me is the most important thing. And you as a really good sponsor, you know, what are some of the things that the passive investors should look for in a sponsor?
Matt: [00:21:37] Uh, if a sponsor’s telling you, they’ve never made a mistake and that they are a hundred percent infallible and that they’ve always. You know, nailed investor returns or preserve returned above or something like that. They’re selling you something. Um, this is identic dynamic business that has ups and downs.
It has swings, nobody had COVID in their underwriting. Right. Um, and so things like COVID show up and not just COVID things like COVID show up regularly for us, like real estate downturns, um, up markets, down markets. So those syndicators that are out there. Uh, you know, claiming 110% success all the time, I would stay away because it’s likely not telling you about the time that they screwed it up.
Right. Ask me about the time that I screwed up and then I fixed it, right? That’s a better conversation. Not like, Hey, are you a schlep? And you continue to wrap your business around trees and stuff like that. That’s not the conversation. It’s. When did you have an unexpected matter? Come up like COVID and what did you do about it?
Right. Um, that’s where true syndicator integrity comes up. When did something unexpected happen? And what was your reaction to it? Right. I could bring you to tears with stories, right. Um, and also tell you what we did to make it right. Cause we’ve always, we’ve always righted the ship. Took us more time. You know, um, and, uh, and projections were projections.
We made investors what they were, what we could, you know, um, and that, that’s a real, a way more honest response. And I look for transparency. I would look for transparency and honesty, um, with syndicators versus flash and sizzle and, you know, um, uh, there’s a lot of flash and sizzle on our business. Right.
So, you know yeah, for sure. Yeah. Um, I would, I would get away from that, but so I also would look for track record. Um, I would be prepared as an investor to do your own due diligence. So if a syndicator tells you, I’m investing in Albuquerque, make sure Albuquerque is a market. That makes sense to you. You know, um, don’t just trust the research of the syndicator research, the market to do your own, you know, let your fingers do the walking, do some Googling.
You probably got a brother-in-law that used to live in Albuquerque or something like that. Call them. You know, um, we all know people, so, uh, redo your own homework on the markets. Do not blindly go in and trust all the data. The syndicator gives you as a passive investor or as Robert Kiyosaki calls it in cashflow quadrant.
The I quadrant right. Is a great book. You guys should all read that. Um, as an I quadrant investor, you really become a detective. You know, like your job is to do a ton of research, um, and, and do all your due diligence and your work upfront on this indicator, but also in markets and on their investment strategy and make sure it all makes sense to you.
Yeah.
Seth: [00:24:22] I mean, yeah, ultimately it’s, it’s your investment into our money. You’ve got to do your due diligence on the sponsor to the market and the deal. Um, and you’ve got to educate yourself to how to do that. I mean, you don’t have to go in depth for hours and hours and hours and hours on end, but eventually, you know, you’ll get good at good at it.
And you can make a pretty decent, a pretty decent decision on, on, on what to do. Yeah.
Matt: [00:24:43] I quadrant investors still have to put some time in it’s mostly upfront. It’s mostly front end on the deal and then follow up during the deal. Um, but the dollars per hour that an eye quadrant investor makes is great.
It’s great. It’s really good dollars per hour. You know, I I’d be willing to challenge some of our doctors and lawyer friends that they’re making that much per hour in their practices. If you really extrapolated out on the amount of money they can make and investing in a good deal for the amount of time that they put into it, the Dallas per hour is off the charts.
Yeah. And what you get, but you got to put it just the time goes in first, that’s it? You know? Yeah, for sure.
Seth: [00:25:16] I mean, it’s not completely 100% passive. There’s definitely a little bit of work that goes up front, but after that’s done, then it really is passive.
Matt: [00:25:23] Yeah. Yeah. But then it gets passive. Once you, once you do the R and D you know, So,
Seth: [00:25:29] yeah.
So for our listeners who haven’t invested passively yet, and I know you do a great job at this, but you know, what can they expect after they wire that 50,000, a hundred thousand dollars check? I mean, after they’re holding their breath and they’re like, Oh, did I just screw that? You know, what, what can they expect after that?
Cause that’s kind of, if you’ve haven’t done it, then it’s kind of a nerve wracking.
Matt: [00:25:51] Well the first time I can only speak to what we did as syndicators are what I would expect as an investor. Um, I would expect regular communications from the syndicators. So we send out monthly emails. Um, we also have a private Facebook group that all of our investors get access to.
Um, and we’re constantly doing live sessions and videos, you know, we’re, we’re dorks with the online video stuff. So we do a lot of videos and Facebook lives and stuff like that from the sites. Um, I’m going to diamond original next week, by the way. Um, and that, so we’ll go in video sessions from there. So I would expect regular communications from the syndicator.
Um, we send out quarterly financial statements. So I would say, you know, some syndicators send them monthly, some sumps indicators don’t send them at all, you know? Oh, um, that’s a flag, right. And that’s a way to vet a syndicator is, is to ask a syndicator to not just tell you what they send to their investors.
Fine. Say, send me some Kuna medications you’ve sent to your investors in the past. Right. And, you know, and read that to see if it’s like a one bullet point email. That’s a conversation. I don’t know, but we send like an eight bullet point email with the financial statement attached with a video with some pictures that Justin shot when he was down there, he’s our asset manager.
So, uh, then we do an annual update call too. Um, and so I would expect. Regular communications went in from the deal. And, um, and obviously leading up to closing, once you put your 50 K in, it should be getting regular communications from the syndicator as, uh, as closing new year’s. And that’s just, that’s just good protocol.
Yeah. Yeah.
Seth: [00:27:26] And one thing that you do that goes above and beyond that I’ve seen is you, you invite your investors to come see the property with you.
Matt: [00:27:31] I’m the only one that I know that’s done that, and I’m not talking my tooting, my horn, um, some, some syndicators aren’t interested in the transparency that we do, right?
Like, are you out of your mind? Like you gotta, you let them walk out. Like, you know, it’s interesting. Cause it’s like, there is a balance and we go to the sites, not just because we want to go take selfies. Just fricking work to do, man. I got to go put the property manager in a headlock and find out why that tenant trashed their unit and, you know, meet with my vendors and stuff like that.
So there’s balance and with a big enough team, like we have. I can run investor relations and, you know, talk to investors and teach them and educate them while Justin and his construction team, you know, they run around and put the contractor in the headlock and stuff like that. Um, but we are open door.
I’ve worked when I go to North Carolina next week, two of our investors are meeting us there. Right. Um, and so. Oh, it it’s, it’s a, uh, it’s a, we choose to do as a transparent move company. That’s just that, that, but that is something that we, uh, consciously thought about as a company.
Seth: [00:28:35] Yeah. Yeah. I love that, man.
Um, I want to give you an opportunity here to kind of explain to the audience, some of the things you do, uh, to make the tenant’s life better. I know that, you know, on our deal together, that really stood out to me, all the things that you go above and beyond to really focus on the tenants and the people that call these places home.
It’s not just, uh, you know, it’s not just our business that’s somebody’s home.
Matt: [00:28:57] Right. Yeah. So they get some real estate investors lose sight of that. You start talking about tenants and statistics and what we’ve got to, you know, we’ve got some, these tenants aren’t paying, we’ve got to move some people out.
We’ve got to do this. We’ve got our shift it. Yeah. The funny, a nice way to say it is we have to shift the demographic at this property. You know, that means strong people out of their homes, man. That’s what you’re saying. You’re doing, you know, we. Got away from that as a company. And that’s the mantra for my company is to transform lives through real estate.
That’s what we do. Right. Um, and that comes back to acknowledging these are people’s homes. Now that doesn’t mean it’s a charity. That doesn’t mean that cause the other lot that there’s the tenants lives that are getting transformation. If they abide by our rules. And then there’s the investors that are getting transformation to they’re meeting their financial wealth goals outside of wall street, while tenants are getting a home.
That has a community garden and has a playground, um, and has better security systems and, and has pride of ownership from the owner. And if there’s safety hazards, we take them away. If they, you know, if the, if the tenant, you know, is willing to pay their rent on time and may pay, maybe pay a modest rent increase, they get new appliances or something like that.
Right. Um, On top of that, we are all about building community because as humans we want community. Right. So, um, we integrated this program called apartment life. Um, that’s like in the, explain it simple, Seth it’s like, it’s like, it’s like having, it’s like get a dorm again, when you live in an apartment building and then there’s an RA, right.
And the RA is there. That’s like running community member, like the dorky RA you had in college and they’d be like, Hey guys, we’re going to go down and play some. You know, ping pong together in the rec room. Right. But they were like, what they did, even though they were kind of like, Ron, why are you so excited, man?
You know, like calm down. Um, but at the end of the day, what you’re really trying to do it is simple as an RA was to create safety and facilitate community. Right. Um, that’s what apartment life’s all about. So yeah, there may be kids on sites. The apartment life person is going to go and bring in a jumpy house.
That the owner pays for. And so this is all like pre or post COVID. Right. You know? And so, but I’ve seen apartment life. Folks have zoom parties for their tenants, um, or have like a social distance coffee hour, whatever it is you want to do. Um, apartment life helps you create community among your apartment complex and help folks.
Get to know their neighbors and stuff. And from a selfish standpoint, as an owner, what that does is, is if my tenant that lives in unit, you know, uh, 10 a knows all her neighbors and is in like a Mahjong club with a woman that lives across the hall from her and, and her husband plays Texas hold ’em with all the guys that are, that live in the building next door.
They’re not moving right. They’re not moving. They’re going to raise their kids in that community and their kids are going to trick or treat among the apartment complex. And if your tenants are trick or treating in your apartment complexes, because your apartments isn’t safe or because you haven’t created a community and shame on you, if your tenants are not decorating their units for Halloween and going around and going trick or treating in your apartment complex, something’s not right.
You know that they should be there. They’re going to move eventually, as soon as they can afford to, they’re going to move. Right? Yeah. Speaking of moving, the other thing that we do. Is we use Ramsey plus, um, which is, you know, Dave Ramsey. Right. And I don’t agree that was philosophies, philosophies as an investor, but as someone who’s, you know, foundationally trying to make it to the next level of finances of life, um, a lot of Dave Ramsey’s things make sense.
You know about like paying off your bad debt, um, and just keeping control of your finances or whatever. And Ramsey plus is a software that we give to our tenants to help them build their budgets. Now you can lead a horse to water. You can’t make them drink. And I can’t say, you know, show me your financial statement, Mr.
Mr. and Mrs. Tenant. Right. We give them that tool that they can go and put their stuff in there and, and that, and, um, It helps them achieve so much a sense of financial stability, which also selfishly, um, statistically it’s been proven AIDS them and being able to pay their rent on time. Um, because it’s in their budget that they are thinking about, Oh, maybe I shouldn’t go.
And. You know, take my kids to the splash park and buy a brand new Delilah Denali pickup truck, you know, because now if I do that, dramsey plus says I can’t pay my rent anymore. That’s not good. You know, maybe I shouldn’t go by the Denali or go buy, I use Denali, whatever. Yeah. Um, so, uh, we use, uh, apartment life and Ramsey plus for two different things we use, but it all goes back to transforming lives through real estate.
Seth: [00:33:34] Yeah, very cool. Very cool man. And that Ramsey plus program just reminds me of just, you know, we don’t have any financial education in school. I mean, we don’t get it growing up. So anytime you can provide that to people, you know, it’s a powerful tool for them to just see like, Oh, this is actually how I should be spending my money.
Maybe I should think about it this way. And it kind of changes your mindset and it probably changes their lives forever.
Matt: [00:33:52] I hope so. It’s it is. Um, and people look at me like I’m nuts when I say this. It is, it would make me over the moon, goosebumps happy. If one of my tenants through Ramsey pro Ramsey plus was able to move out of the apartment complex one day and buy a home, or was able to eventually scroll up enough money and get some advances in their career that they could invest with us.
You know, they’re not, that’s not another class of people. That’s just people at a different that a different financial level right now, but we want to help them work their way up to the point where they can achieve next level of financial freedom themselves to, you know, For sure.
Seth: [00:34:30] Yeah, for sure. All right, man.
Before we wrap it up with the freedom for one last golden nugget for our listeners.
Matt: [00:34:37] It’s always, yeah, a good time to look at alternative investing. Don’t sit on your hands and wait for COVID to blow over. Don’t sit on your hands and wait for the market to crash. Um, it’s always a good time with, to consider well vetted investments.
Um, You know, passive or active, whatever it is you choose to do. Um, the worst thing you can do is wait for things to change because my crystal ball is broken. I don’t know if the market’s going to drop off the map. Um, and, and nobody else does either. Uh, so I think that a lot of the last couple of years have gotten lost by people that are waiting for a crash or waiting for things to change.
Or now it’s waiting for COVID to stop. Um, Yeah, you’re going to lose a lot of growth that she could have time waits for. No man. Yeah. Or a woman.
Seth: [00:35:26] So great. Great. All right, man, let’s jump into the Freedom Four.
Seth: [00:35:34] What’s the best thing you do to keep your mind and body healthy.
Matt: [00:35:36] I run on the, I exercise every day.
Um, I’ve been doing that 40 days has, so I can’t say it’s something I’ve been doing for years, but I started at mantra, uh, to active run on a treadmill or do yoga or lift weights every day, one of the three. Um, and when I’m not doing yoga because you can’t really listen to podcasts, are you doing yoga and stuff like that?
Like get in trouble in the yoga class for doing that. Um, But when I’m on the treadmill lifting weights, I got into listening to Blinkist. You heard of that? Yeah. Yeah, yeah, man. It’s the best. So, um, it’s, I’m on like a Blinkist kick right now. I’ll probably get back into podcast soon, um, in that, but right now I’m on a Blinkist hair and Blinkist summarizes books for you.
So I’m able to feed my brain while I’m working my body. And so I used to listen to music and stuff like that, but now I just work on feeding my brain when I’m, uh, Work in my body. And so Blinkist is like an 18 to 20 minute book summary and catch this it’s today’s February 11th. I’ve listened to over 50 books since the beginning of the year and then nuts.
Yeah, right? Yeah. That’s a 20 minute summary, some kind of cheating, but I get the just, you know, I get the gist of it.
Seth: [00:36:48] It’s a good tool listened to, and then if you really into it, then you get the whole audio book.
Matt: [00:36:52] And Blinkist to let you do that. Cause you can like, if you like the, like just say, I listened to the one thing, phenomenal book, I got the, I got the gist of it.
And if I want to, um, you know, buy the one thing or listen to the audio book or whatever, I can do that through blanket strategy to go to audible or whatever. Um, so it’s a good way to try to book, cause I’ve listened to a few stinkers on audio, like, Oh man, this book. Yeah. And before, but you don’t really realize this stinks until you’re like an hour or two in I’m like, all right.
Yeah. Blinkist gives you an 18 minutes. Summary, you go like, okay, that was awful. Let me just get onto the next one, you know? Um, but I’ve just trudged my way through the books. I wasn’t happy with and found ones that I was, and I can research them and put my notes in Evernote and stuff like that. So yeah, like just an exercise daily.
Nice, nice.
Seth: [00:37:39] In an alternative universe where you weren’t involved in your current businesses, what would you be doing?
Matt: [00:37:44] I was almost a teacher. Um, I, and you could see that, right? Cause I love explaining stuff and be a mom probably overly excited and everything like that. Yeah. Um, I I’ll I’ll I’ll make a list.
Uh, it was almost a teacher. I was almost a jet pilot, right. Like, uh, I almost joined the air force Academy to fly jets. Um, you know, just through the grace of God or whatever. I ended up not doing that. Um, you know, symptoms of whatever my life would’ve gone had I done it cause I loved, you know, what? I was very passionate about that as a kid, um, I also think that I would be, I think that I’d be a motivator somehow.
Cause I just have it in my soul to challenge myself and try and drag a lot of people alongside me as I’m doing it, you know? Um, yeah. I probably I’m in a mountain and never bet. Come on. Let’s go. Let’s climb. This is something to whatever it is. So, yeah.
Seth: [00:38:35] Cool. I love that, man. So, uh, where were you at five years ago?
And where do you see yourself five years from now?
Matt: [00:38:42] Um, five years ago, I was, um, Just getting into bigger multi, uh, we were about that. We were buying a 49 unit apartment complex. Um, we were getting into in, it just did deeper systemization of apartment buildings, finding a true passion there, honing up how we could take our business to the next level.
Um, And I think that we’re on that five years from now is I’d like to be one of the major motivators or thought leaders. That’s moving more and more people to build their wealth with alternatives outside of wall street. So I want to be a mouthpiece for, Hey wall. Street’s great. But you should also diversify with this other stuff over here too.
And there’s a lot of people doing that are already, but I’d like to elevate myself to the point where I’m one of the viewed as one of the top people that are, that are viewed as a resource, as a motivator to drive. You know, a lot of America, not just the, not just the 1%, but the drive a lot of America, a way towards alternative assets.
Yeah. Yeah.
Seth: [00:39:46] That’s awesome. Well, you’re well on your way, man. Your YouTube channels is crazy.
Matt: [00:39:50] Thank you brother. I appreciate that.
Seth: [00:39:52] Thanks. Last question. How has passive income made your life better?
Matt: [00:39:57] Um, I’ll get real men. Um, I’ll get real on you. Uh, my dad died in 2010, um, and, uh, it was, it was, you know, it was rough, but because of passive income, because of real estate, uh, I was allowed to spend a lot of my time with him.
And cause, and it was, you know, he had cancer and cancer is awful. You know, it just, you just watch people slowly degrade and, and just, you know, watch them try and fight it and it doesn’t work out and just watch it slowly, take them over. Right. So it, it, it took him over a year, um, to pass. And so when he got diagnosed with terminal cancer, so because of passive income, I was with him almost every weekend.
Um, and on his final days, I was at his bedside for two weeks straight. Right. No way I’m doing that. Working as an engineer or what I, you know, I mean, I get maybe companies give you leave, um, but you’d get clipped on your income, but I was able to be in the hospital with my dad and then step out in the hallway and make a phone call, um, to deal with whatever I had to deal with.
I mean, um, at that point in my life, I wasn’t at the level to completely unplug. So I had to do what I did do some doing still, but passive income gave me my time to do what really matters in life. You know, um, and I’m eternally grateful that I got to be there with him in his final moments, um, because of, uh, because of passive income.
Seth: [00:41:24] Yeah. That’s beautiful, man. Thanks for, thanks for sharing that. Yeah, those are moments. You’re just, you’re never going to get back. And if you’re working in a full-time W2 where you have to be in the office all the time, you know, you might be able to step away for a few days, but certainly not in and out of there for a year.
Matt: [00:41:37] No. No, certainly not that I’ve and I’m grateful that I was able to do that, so, yeah. Yeah,
Seth: [00:41:43] I really appreciate you coming on today. Where can our listeners find out more about you?
Matt: [00:41:50] All they need to know is the DeRosagroup.com brother, they, the, the link to buy my book, the link to my book, Raising Private Capital for BiggerPockets, Amazon bestseller.
Thank you very much. Um, uh, re uh, raising private capital. Uh, you can also, um, join our YouTube community through our website. You can check out my wife’s podcast to real estate, invest her show. Um, and if you want to learn more about passive investing with us, that’s all there on the website to DeRosa, derosagroup.com.
Seth: [00:42:23] Awesome. Thanks again, Matt.
Matt: You’re welcome. Thank you Seth, for having me.
Seth: Wow. Matt always brings the energy and the enthusiasm people like Matt are the people you really want to do business with. Right? Genuine, transparent, smart, and fun. If this story, doesn’t move you to start looking for your own pathway to produce passive income through alternative investments.
I’m really not sure what will, but I’m going to keep on keeping on and keep pushing. So to learn more, I’d love for you guys to go and join our Esquire investor club. By going to passiveincomeattorney.com and clicking on join the club. Also check out all the other great content and freebies on the site until next time.
Enjoy the journey.
