[00:00:00] Kristen: Welcome to this week’s edition of Insider Secrets. The show that turns multifamily investing into reality. Each show we interview guests who are seasoned professionals, actively closing and managing real estate deals. Your host Mike Morawski has more than 30 years of multifamily, real estate investing and property management expense.

Mike is the founder of My Core Intentions. And he’s been involved in over $285 million of transactions. Focuses on helping you create short term cashflow and long-term wealth. Here’s your host, Mike.

Mike: Good afternoon. Hi, I’m Mike I’m with your host of Insider Secrets. That’s brought to you by My Core Intentions. Hope you’re all doing well today. You don’t. Let me ask you a question. Have you been thinking lately about what your intentions are, what [00:01:00] your why is and what really matters to you in your own life, your own investing career?

Are you starting to live maybe a bill, a little bit more balanced life? If you’re stuck and looking for some direction, my core intentions wants to help with exactly. Help you deliver some proven real estate strategies through some personalized coaching. I’d like to hear from you. I’d like to hear about your practical experiences and your plan for growth and what your intentions are, how you sell, set those daily, how you set those weekly and how you work through them.

So if you’re considering a coach to help with your real estate business, to grow it, to plan, to be prepared for the future. And what your intentions are. Give us a call, let us discuss with you your why and how to give you some direction and how to help you with your business and your family. All right, let me introduce our guest for you today.

I’m joined by my friend and real estate investor here from Chicago, Matt Musick. [00:02:00] Matt’s a seasoned real estate investor with a little bit different twist today for us. Normally we’re on the multifamily path or a property management. Today, Matt’s going to talk to us about real estate investing in the single family market, but you know what?

He gives us a really great perspective on investing. Man. It’s been investing for about six years now and he’s completed over 80 transactions, but what’s really impressive about that is 55 of those transactions have been completed in the last 19 months. I’m sorry, 13 months in 19 different states. So maybe.

Matt strategy and his focus is a little bit different. We’re going to talk about marketing market conditions and where the real estate space is at today. Matt, what I’d like you to do is say hi to our listeners and describe for us in one word, your real estate investing strategy.

Matt: Yeah. Hi everybody.

Again, thanks. Thanks Mike, for having me. I really appreciate it. In my real estate investing strategy just a [00:03:00] couple more. So quick flips. It’s hard to find it

Mike: quick flips. That’s great. I think I think some people are going to really get a lot out of what we have to say today and what we’re going to talk about today.

So may Matt sounds like there was a little bit of a ramp up period, in, in my introduction and we talk about you’ve done 80 transactions, however, 50, 55 of those have been in the last 13 months. It sounds like there was a bit of a ramp up period to get there. Why don’t you share some of that with us and tell us what it took you to get from zero to 80 transactions?

Matt: Yeah. So the reason for that what I really did is I changed I switched business models. So when I started out in Chicago we have a lot more bungalows and older houses and require a lot of gut rehabs. So I was doing really big projects with 200 or 250,000. Rehab budgets that were basically like second floor additions, full gut rehab, in your, from 3000 to [00:04:00] 4,500 square feet.

And I was doing around maybe five of those a year. And then, the timeline for that, it was just taking so long. It’s not a management. You have to manage the contractors, the project. The timeline always gets inflated. The rehab budgets always get inflated and it just went. Getting to where I want it to be in it.

I wasn’t enjoying it. Yeah, about 13 months ago I switched business models joined with a new business partner and did the opposite. So instead of those projects where maybe 500 to 800,000 AOVs which is also on the selling side, it’s going to, they’re going to sit on the market for a while because there’s a smaller pool of buyers.

So I did the, a complete 180 started buying houses that anywhere from 30,000 to a hundred thousand with RVs of anywhere from a hundred thousand to two 50, which is right where the the 80% of the buyer pool is where other properties sell right away. But I really focused on also beforehand I was purchasing from the MLS and from wholesalers.[00:05:00]

Which I refer to as you’re buying retail at the highest price after everybody in the supply chain in the middle have already taken out, profit and there’s less meat on the bone towards the end. What I’ve been doing over the last 13 months is in buying directly at they’re all bank owned.

RTOs tend to buy from auction houses working with asset managers and buying Pre auction. And I’m just buying those more in bulk. And so buying as is and selling as is the majority of those. And then the ones that I did rehab at very low, like rehab budgets, like 8,000, 12,000, maybe 20,000 at most.

So ones that were really quite like they were livable really close to retail, but they just needed, new pain or new countertops. Landscaping, small things to, put it out in the market and sell to a retail buyer and that’s been my strategy. And those are more predictable.

They’re quicker turnaround times they sell faster. And that’s totally changed it to focus [00:06:00] more on volume smaller profits and big, long projects.

Mike: Interesting. Matt what I’d like you to do is tell us a little bit about your backstory. I don’t think you woke up one day and just were a real estate investor, right?

That you did something before that. Why don’t you tell us how you got involved in real estate and what really attracted you to the business where you came from prior to that?

Matt: Yeah, so I had I went to DePaul university. I got up. A degree in accounting. And then I was working in downtown Chicago as an accountant.

And then one day I happened to read the book, rich dad, poor dad, that kind of really changed my entire perspective on life and business and what I wanted to do in life. So from that, after I read that, I fell in love with real estate investing. I decided that’s what I want to do with my life.

And then I started a small doing wholesale deals part-time while still working full time. And after doing that for a couple of years

I leave a job and go for that for the past six years.

Mike: Interesting. So what’s your passion about around real [00:07:00] estate? What really excites you?

Matt: Just kind of everything about it that, it’s a business model that can be, it’s not like reinventing the wheel and starting something from scratch.

We’ll say it’s been around for forever and you can. Really there’s so many different niches and strategies and kinda learning about each one and doing each one it’s not really attractive. And then y’all, they say 90% of people build their wealth through real estate.

And then also what I’m looking for in the future, as well as start building for a passive income. Yeah. Okay.

Mike: One of the things I always like to teach people is that in real estate you can create short-term cashflow, but long-term wealth. And, I think that you need to have both of them along the way.

So that that your future is secure, but that you can live day to day today. And I think that, that sounds like what your strategy around it is as well.

Matt: Yeah.

Mike: How’d you choose the one thing I just want to comment on the book, rich dad, poor dad. I think that a lot of people have different books that have spurred them [00:08:00] on.

That was always a good one though, because it talked about the four quadrants and where you could spend your time either as an employee or as an entrepreneur or somewhere in between. And I think books are so relevant in people’s lives. I always talk to my coaching clients about, Hey, you know what?

The more you educate yourself, the more you learn it opens your mind. It expands you to think and do things differently. So I think that was a great book. Is there anything else that, that inspired you beyond that? Or was there anything specific in that book that, that really made

Matt: it better? No, that’s exactly what it is.

The cashflow quadrant, Reno, you on the left side of the quadrant, it can be the employee or the I’m a small business owner, but on the right side, you can build a bigger business that’s automated and then, be an investor and have your money work for you. So for me, that was like seeing the matrix where there’s two pills to take.

And there’s this other one that even though it existed and it was a totally different world of what I grew up in, what I knew existed. So that was a really [00:09:00] eye-opener for me. Like a pivotal moment in my life where I started to make a change. Excellent.

Mike: So why single family over other asset classes?

Matt: So it’s just where I got started. It’s a, the most plentiful people are with the most familiar with it. And yeah, that’s just where I’m at now.

Mike: Okay. That’s, what’s most attractive to you and what you’ve built your business. So may I, so you said that you took on a new business partner and your model changed.

Can you be a little bit more specific how that, what it was before and to where it’s at today? What that model looks like?

Matt: Yeah, so it was a hundred percent just doing we call them pop tops bungalows bigger rehabs in Chicago that were local. And then what kind of, what spurred it, if you’re familiar with virtual wholesaling, that was something that I was looking to get into.

And then I met somebody that was, had just started doing that on a small scale. With wholesaling, you just get [00:10:00] properties under contract, and then you got to find a buyer and usually have 30 days. And everything’s gotta work out perfect for that to happen. So what we were actually doing, so I have a lot of prior experience in raising capital.

For deals. So I’ve raised almost about $15 million now in total for all the real suit transactions I’ve done. So we met this other business partner and I like what he had gotten started. And I was like if you actually bought these houses, bought these deals first, then you can list them on that molasses and get top dollar and you’d have longer than 30 days to market them and find somebody.

So we joined that sort of happened and I started raising capital. For that business. And then they went from basically wholesale on every deal to actually buying every deal cash and closing on it, and then listen to it for, market value to local investors. And the other thing on top of that too, is like you said earlier we closed in 19 different states.

So it’s not where it was just focused on one area and. It looks like 60% of the, how Chicago housing [00:11:00] stock is multifamily, like two know three or four units. And then also like everything has been built in 18, 19 or 1890s to like the 1920s. So you can’t really buy something and do like a small rehab because everything needs to be all the mechanicals usually need to be up.

And that was really cool, what I learned and, getting familiar with different parts of the country. We could buy houses that were built in the 1970s, only do cosmetics updates and not have to touch the mechanicals. So the rehabs a lot quicker, this all out faster.

And then, I’ve also started getting, familiar with different, septic tanks and walls and whatnot, which I wasn’t before. Really having kinda like a fun time with that because, learning all the different nuances from different parts of the country on different types of houses, we’ve actually lived a few mobile homes as well.

And then a condo here there, so I really liked the variety and the volume. I feel like I’m learning a lot more yeah. Than just being stuck in kind of one niche with less volume.

Mike: Interesting. So being in all the different states that you’re in, and I [00:12:00] think that number is like 19. Can you, is there anywhere that you really like specifically or over another area in, for

Matt: investing?

Not in particular with, would I really focus on always is the numbers, so I’m really good at analyzing for HRVs. Cause you know, I use a couple of different online websites and what I really do is I try to stick to No, maybe plus, or minus 200 square footage. And then really, even if you do like a whole zip code, I try not to go too far from where the actual houses.

So I really look like, maybe the five to eight closest houses from the very specific part of that neighborhood. And I can usually nail it down pretty well. And then I make sure that I buy at what’s really good is a, by a 30% of ARV or lower. And then sometimes up to 40%. Cause as an investor, when I know when I’ve bought and Now speaking to other investors, either investors buy it, maybe like 50% of ARV.

So now if I can buy it below that, then I usually sell for around there. But yeah, to answer your question, moved on a lot in we’re having to do a lot in [00:13:00] Florida and New Jersey, New York and then Tennessee as well. Was

Mike: that because you knew somebody specific in those markets or was it just through your own research and due diligence that you said, Hey, here’s a good market.

Let’s see what we can

Matt: find. Yeah. So it wasn’t really, even the markets specific, we would get a list of properties that were for sale. And then I would just analyze every single property regardless of where the market was at. And just put offers in and then, so we literally get them all over the place.

And Yeah.

Mike: So one of the things I find amazing is that, you were an accountant and you were just working a nine to five job, just like most people out there. And you have gone from in, in the last few years, you have gone from getting paid by the hour. To now being an entrepreneur and to raising $15 million and having that other people’s money work for you.

And was that something that you built up to, or did you just wake up one morning and say, Hey, I’m going [00:14:00] to go race.

Matt: Yeah, so it was I’ll tell you the story, like the very first story we had. I mean I had two business partners and we’re going to go buy a house and, really it’s on the south side of Chicago, pretty cheap, I think around like 50,000, we got an, a hard money loan set up and all we needed to close was 10,000, which is almost kinda like the minimum to get.

And so my partner had, had it raised from a friend of his, and then he had backed out like two days before closing. So it was like really an opinion. And we needed. So what I did and what kind of I’d recommend anybody looking to raise money? It sounds simple, but people want to do it.

So it’s okay, we need money in 48 hours. We’re going to lose this deal. I was too early on in my career to just know Hey, can we push close in a week? And then raise the money to us. It was like, make or break. So we literally let’s just write down every single person that we think might have money in our network.

And also anybody that we think might know somebody who has money in name. And we’re like, okay, let’s all come up with 10 names. Then we did that. And we kept going and going, and by the end of it, like the list was almost like a hundred people. [00:15:00] And then we just started reaching out to anybody and everybody saying, Hey, I have this deal.

That’s closing in a couple of days, we’re looking for $10,000 we needed, or we’re going to lose the deal. And eventually, at some point down the list we had somebody that’s oh yeah, I’m interested. Send me more details. And then I can make a quick decision. Like not so much as like strategy off the bat, it was more like a sense of urgency where it’s a lot of people think, oh, you’re asking people for money.

What you’re really doing is you’re offering an investment opportunity for them. And that person who did lend to us on that first deal did he get really good terms? They were able to set the price. So we offer this and they’re like if you need it so quickly, I’d rather, I want this.

It’s okay yeah, We paid that amount of interest or we get no deal. So we did that. And after that, I was like, that was actually really simple. There’s just had to ask for it, which is like the number one rule raising capital. So then after that it was just every deal I’m like, okay so then we did that and the next deal and the next deal.

And yeah, a hundred percent of all my deals have been I’ve raised capital for a hundred percent, 100% of the deals that I’ve done. One, one

Mike: thing that I always try to teach people is [00:16:00] that if you have a good deal, the money will. Exactly. You just have to ask. So do you do, and I just want to cover this piece real quick and I don’t want to get too hung up on I’m raising money because that’s really not what our focus is today but what I want to know is, are you doing that on a handshake or do you have specific documents drawn up?

How are you doing that from a legality standpoint? So that everybody’s protected? Yeah.

Matt: Specifically. Yeah. Promissory notes and mortgages. So the funds are secure.

Mike: Okay. Great. So your investors are getting security in the real estate. Okay. Excellent. Matt, what was the biggest shaping moment for you in the last few years of your career?

What do you think is the most that’s been most impacted for you?

Matt: So I’ve had a lot of different partners and different business models and it’s just really focusing on the right people instead of focusing so much on it. No, the opportunity focused on who you’re going to go after the opportunity with to make sure they have integrity.

[00:17:00] And that, because, everyone’s having a good time when things are going well and people are making money, but then when things don’t go well people show their true colors. So I want to make sure that you have somebody that has integrity, that is going to go through you, through everything with you all the way in the good times in the bed, and then always make sure that you have agreements and the proper contracts.

Mike: Yeah. Yeah. That’s very true. You want to make sure that you have somebody with integrity and that’s going to go through the good times and the bad times with you, that goes in all kinds of relationships, whether we’re married or business partners, whatever. Yeah. So what makes, what do you think makes your investment strategy different than the other guys?

Matt: So when I like, how do I like to explain it is say like a supply chain, right? If you’re buying at from the MLS, you’re buying at the very bottom at retail, you have the MLS and then you have wholesalers and then you have banks for Folgers Oreos. So I used to buy at the bottom where there’s very little profit labs or everything has to go right, to make sure the profit happens.

And now I’m buying two notches [00:18:00] above that. So what I’m doing now, which is great is I buy, if I, I can sell as. Or, a decent markup or if I want to do the rehab I can get a big markup. And then even if that didn’t go out, I couldn’t sell to a retail buyer, then I could rent it out because it’s really hard to rent out a $600,000 property and have a cashflow when you’re buying a property.

That’s, maybe we’re at 150,000 afterwards. That’s going to, Ren cashflow. So before it’s I really backed myself into a corner where it’s everything has to go Ryan. There’s only one exit strategy and where I’m at now and the way that I’m purchasing property, I really have three different options and three different exit strategies.

So just about focus, keeping the end in mind and, making sure whatever you’re focusing on that there’s multiple options and that there’s, you’re really mitigating it. Oh, that’s kinda what I learned along the way. Yeah.

Mike: Awesome. What’s interesting is you brought up a topic that’s very near and dear to me and that’s exit strategy.

I, what I tell people is I’ve spent [00:19:00] hundreds of thousands of dollars over a 20 year period seminars, coaching books, personal coaching, one-on-one coaching on a monthly basis that nobody ever teaches you the exit. And I just actually finished writing a book it’s being edited right now. It’s called exit plan, which will be out for release in the fall.

But I talk in that book about planning from the moment that you set your sights on that piece of real estate, even in the back of a cocktail napkin, figure out what your plan is, know what your profit’s going to be, know how long you have to hold it, because if you don’t know those things. We’re told that, that you make money in real estate on the purchase, but what they don’t, what people fail to tell you is that you don’t realize that profit until you sell it at the end or create something I’m an exit, selling it’s only one way, right?

There’s other forms of exiting. One of the things you’ve talked about a lot that [00:20:00] it has been sourcing deals. And I think a lot of times people get hung up on, where can I find a property? How can I find a property? Is there any one technique that you really feel is your best technique for source and property?

Matt: Yeah, what I’m doing right now is I’m working with asset managers and auction houses and buying higher up in the food chain instead of straight off the MLS or from wholesalers or so know when I’d really like to do for the future is I’m looking to do a bulk REO deals where I can buy packages of 10, 20, or more houses at once for a lower discount.

And then, look at each one and it’s all them off one by one either as is, or it makes sense to do the rehab or even, start keeping some of them as rentals. So sourcing is, it’s more about the connections you have and the. The higher up in the supply chain that you can get is really what I’ve started to focus on.

What I realized is that much more profitable.

Mike: I want to say, it’s not what you know, it’s who, hey [00:21:00] so we’re here in the midst of coming to the end of this COVID 19 piece in the season that we’re all going through. They’re starting to open the world up around. From a real estate perspective.

Do you think that we’re going to see more deals come out? Do you think that there’s going to be less deals, where do you think the real estate market is headed?

Matt: So there’s going to be a lot more deals for sure. I know that the housing market right now is exploding realtor wise and buyers and sellers, but for us as investors, a lot of people lost their jobs.

A lot of people are starting get their jobs back, but there’s a lot right. Not a lot of people that aren’t going to get their jobs back. A lot of businesses that close that aren’t going to reopen. And there’s like whatever, this three or four month period where, no evictions have been happening and no foreclosures and there’s forbearance and all that, but it’s going to trail along.

And either towards the end of this year or the beginning of next, there’s gonna be a lot more foreclosures and Oreos and[00:22:00] No, I don’t think it’s going to be as big of a crash or whatnot as 2008 was, but as far as inventory for investors, that’s going to grow for the next one to three years.

For sure, in my opinion, just from, just what logically makes sense from everything at school. Yeah.

Mike: I think there, I don’t think there’s any hard numbers out yet, but there’s a lot of speculation. I think that there’s going to be, a glutton of properties on the market.

Again. We had unemployment rate went up so high, but only a certain percentage of those people are going back to work. And everybody’s withholding on those projections and not really saying, Hey, this is how many people we think are going to go back to work, but there’s still going to be a lot of people that are going to be without income.

And that’s going to, that’s going to be a trickle down effect when we look at. Mortgages, not being paid and rent, not being paid and things like that. So I think you’re right. There’s going to be a lot of deals out there. How about for you in your own investing? Has the have the rules of the game changed at all for you in the [00:23:00] last, 90 days?

Matt: We’ve slowed down a little bit, cause we’re seeing where the market’s headed. Our properties have still been selling. But yeah, when I relate to seeing where I’m really going to put the, the metal under the pedals, And when we do start seeing that more inventory and they’re lower prices, and I think, the banks are going to be overwhelmed because there’s gonna be more foreclosures and whatnot.

And then when that kind of happens, I feel like that’ll display prices. Cause it’d be so many, so much inventory. So we started to slow down a little bit now to make sure that we’re not, we don’t get too far into it. But then, later on this year and next year is to ramp it up a little bit.

Mike: So some of the big things I’m hearing from you on this call are, that sourcing deals that, some of that’s about relationships and that people should be out building a team around themselves and you building good solid relationships so that they can source those deals. The other thing that I heard you talk a lot about that as a recap here for some of our listeners, is that 30% AR.

That’s that after repair value [00:24:00] that we get people, if they use a strategy 30% ARB, then they’re in the deal where they’re really going to be able to make a profit. What do you see moving forward for your business, for your investing career, with your partner over the next three to five years?

Matt: Yeah, so I want to start doing a lot more volume. So we’ve been buying bank on properties and there’s will be a lot more of those. And I think they’re going to even better prices because right now it’s the lowest amount of inventory it’s been in like 10 years with the banks. And now I feel it’s gonna flood the market and the next one to five years and strategies working really well for me.

And we’ve been ramping that up and doing volume. And so I just want to continue to do that. And do a lot more volume.

Mike: So one of the things is keep building those relationships. So what advice would you give a new real estate investor or somebody just coming into the business or even somebody who’s been in the business for awhile?

What kind of advice would you [00:25:00] give

Matt: somebody today? Are the advice I would give someone that’s brand new. First of all, a lot of people don’t want to do things on their own. They want to partner up. And I said, that’s a great idea, partner up with someone, find a mentor and partner up with them.

Find someone who’s done a lot and then ask them, Hey, how can I help? I’ll work for you for free, just, to teach me along the way, because what a lot of people do. And what I did is you’re like, okay, I want to get into this. Or I went to a seminar and then you partner. I’m with a family member or a friend.

And, I partnered up with, two other people who also had no experience. And then when you’re doing that, it’s like the blind leading the blind. And it’s okay, cause two heads are better than one, but then you both don’t know anything. So if I were to start over again from scratch, what I would do is find somebody who’s done, it was been successful then real estate, full time, five years, 10 years had done.

Phillips owns a lot of rentals. And I would just say, Hey, let me, what do you need help with? No, let me work for free because when you’re starting off, you’re working for free anyways, until you start selling properties, making profit.[00:26:00] And if you don’t have any experience in the people you’re working with, don’t have experience that could be, take some time.

So go work with someone and they can teach everything they can, they’re going to like the free work and that you’re really passionate about it and, do whatever they need help with. And you’re gonna. A lot on the way to definitely find a mentor is the biggest takeaway. Yeah, I

Mike: think that’s great advice.

One of the things when I first got in the real estate business and my entry into the real estate business was home sales. So I was a residential realtor and sold residential homes. But one of the first things I did was I sought out the most successful agent in my marketplace. And I went to him and I said, Hey, what makes you so successful?

And he let me shadow him for a few days. But better yet. He made me a tape, a cassette tape. That’s how long ago this was, but he made me a cassette tape that I listened to all the time and it just, I knew what to do. So my first year in the business, I went out, I sold 78 properties, didn’t know a soul. So it’s a matter of what you want to do [00:27:00] to grow your yourself.

So Matt, any last thoughts or comments that you want to make to our list?

Matt: Yeah. The biggest thing is if this is really you’re passionate about and you want to do, and even if you’re the biggest thing is like never give up and, just keep going no matter what. Cause there’s ebbs and flows and there’s good times and bad times.

And the only way that you’re going to fail is if you give up and if you stick with it, you’re gonna, learn more and learn from your past mistakes and things are going to get better. And You’re going to ultimately get success no matter what. And every single thing that you do is a learning experience.

It’s going to help you to get better and better.

Mike: That’s great. That’s great advice. Yeah. I think it moves us forward, it helps us to get better at what we do. So listen, if any of our listeners want to give you a call or reach out to you to, talk with you or see what your business, how they can work into your business model at all, how did they get ahold of you?

Matt: Yeah. So you can call or email me. My email is Matt. I may [00:28:00] TT Messick, M E S I C K a G. My number is 3 1 2 8 7 1 9 3 6 3.

Mike: Great, thanks, Matt. And I appreciate your time today. Very much. You’ve been very helpful and thorough, which is great. We’ll make sure that your information is on the website and if anybody needs anything you could call Matt, or you can call us at my corn tensions.

Thanks a lot and have a great day expired.

Kristen: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Join us on social media and visit mycoreintentions.com where you can get expert coaching on all things, multifamily investing in property management.

We’re looking forward to having you back again next week for more Insider Secrets.