10 Real Estate Deals in 18 Months After Losing 80% of His Income

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Completing ten real estate deals in only eighteen months might seem ambitious for a rookie investor, but today’s guest had no choice after experiencing a MAJOR loss of income.

In this episode of the Real Estate Rookie podcast, we’re chatting with fitness mentor, professional stuntman, and new investor Matt Ramirez. Between his thriving health business and steady television stunt work, Matt and his family were in a good place financially. Then 2020 hit. With stay-at-home orders and the film industry shutting down, Matt was suddenly making just twenty percent of his usual income. Providentially, he discovered BiggerPockets, caught the real estate bug, and was determined to make a career out of flipping houses. But, like many rookie investors, Matt still had some tough lessons to learn along the way!

If financial hardship has thrown a wrench in your real estate journey, draw inspiration from Matt’s story. Despite struggling to get approved for financing early on and losing money on his third flip, Matt never gave up on his real estate dream. In this episode, he’ll show you how to find the best real estate deals, get financing with inconsistent income, and hire dependable contractors for your rehab projects!

Ashley:
This is Real Estate Rookie episode 323.

Matt:
My system now is I have my contractor come in on every job and just walk through everything we want to do and then just bid a price. And then we set that price and then his, that’s kind of like his incentive because it’s like, okay, if this job is going to cost us 20, if I’m going to pay you 20 grand and you get it done in three weeks and you just made 20 grand in three weeks, if I’m going to pay you 20 grand, but you’re going to take eight weeks and you made 20 grand in eight weeks.

Ashley:
My name is Ashley Kehr and I am here with my co-host, Tony J. Robinson.

Tony:
And welcome to the Real Estate Rookie podcast, where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today we’re back with another guest, we got Matt Ramirez on the podcast. And Ashley’s going to talk a little bit more about Matt as an individual and why his story is so unique. But Matt’s going to share a couple of really important things for you. He’s going to share the worst way to pay a contractor. He’s going to share how a panic attack at work pretty much changed his whole life trajectory. And he’s going to talk about how to find off market deals. Lots of great content coming your way.

Ashley:
One thing that we learn about Matt in this episode, he’s going to tell us how he lost 80% of his income during COVID. Then he has these life events that happen and almost forces him to become a real estate investor to survive. He also ends up having to move cross country to live with his father-in-law and how that actually might’ve been a good thing for his real estate investing. Matt, welcome to the show. Thank you so much for joining us today. I want to have a little fun before we actually get into the full episode and play a game. Are you up for it?

Matt:
Always up for a game.

Ashley:
Okay. So we’re going to play two truths and a lie. I am going to read these and I want our audience to guess which is actually the lie. So if you’re listening right now, pay attention. And don’t reveal what are the truths before we’ve let Tony guess. Let Tony be our guesser. Okay?

Matt:
Perfect.

Ashley:
Okay, so here are the three things. Made six figures as an entrepreneur operator of a corporate focused fitness company for 10 years. Second one is trained sea animals and performed on stage weekly with a walrus named Gus for five years. And the third is you were a part-time stuntman on 50 different TV shows and movies. So Tony, what do you think is the lie?

Tony:
I feel like the most outrageous one is usually the truth. So I’m going to say the lie was a part-time stunt man on 50 TV shows and movies.

Ashley:
Okay.

Tony:
So you really were friends with the walrus named Gus is what I’m getting at here. Ash, what about you?

Ashley:
I’m going to say, I’m going to say the corporate focused fitness company for 10 years. I’ll say that. I’ll say the two more outrageous ones are correct. And I’ll say the fitness company for 10 years is a lie.

Matt:
So I wish I had experience working with walrus, but yeah, that one is a lie.

Ashley:
We should have known our producer’s imagination was that good.

Matt:
Yeah. So I did own a corporate fitness company for about 10 years, and I have been a stuntman since 2015, so almost getting into the 10-year mark.

Tony:
So Matt, I’m super curious, man. We’ve had over 300 guests on the Rookie podcast, and I think you might be the first professional stuntman that we’ve interviewed. How does one even get into that line of work? Is there a stuntman school? Do you have to get a certification? Just give me the quick 30 second background on how you became a stuntman.

Matt:
Yeah, so there is no school. I mean, there are schools that you could go to, but there are no requirements as far as becoming a stunt performer. Essentially it’s the same as becoming an actor. I mean, you just got to be in LA mostly, you could be in Atlanta now and a couple other places, but you just have to be in the scene and then you just have to kind of network with the right people and just find auditions and different things. And it’s really just a networking game. I mean, obviously you have to have the skillset and put in the reps to get there, but at the end of the day, it comes down to being in the right place, right time and going from there.

Tony:
Ashley, you face planted off the wake boat last weekend, I feel like you might have a future in-

Ashley:
And I took it like a champ.

Matt:
There you go.

Tony:
Took it like a champ. So Matt, I mean, I guess I’m super curious, man, how does one go from being a stuntman to then being a gym owner to then being a real estate investor? What was the kind of progression there for you?

Matt:
So as far as that goes, it was really the pandemic. So in 2020, business was doing pretty good. We were probably doing 12 to 15 grand a month with the corporate wellness. And then I was doing stunt work a little bit on the side as well. And then pandemic really just flipped our lives upside down. We had just had a baby and my wife and I were living in Santa Barbara at the time, and quickly within probably three months, lost 80% of my income just because all my contracts were with companies and everyone went to work from home. So I had no money coming in from that, and then the film industry shut down, so I had no money coming in from that. I did have a couple clients that I was seeing just via Zoom, so that kind of saved me a little bit. But that was kind of the start of it.

Matt:
And then I actually did have a backup plan already in place, not because of pandemic, but I wanted to step out of the corporate wellness realm, and I was trying to become a firefighter for LA Fire Department. And I had a couple friends that are already on the department, they’re like, “Oh yeah, you’re a shoo in. You already got a company, you’re well set up for that. You’re pretty fit, not as fit as Tony Robinson, but you’re up there.” And then I was going along in that process, and then I got to the last interview, and from that point it was going to be one interview and then go to the fire academy. So we had about three to six months before really anything started. So my wife and I decided to just take kind of a road trip and go to Tennessee just because we knew we had some downtime and I was just working remotely anyways.

Matt:
And on the way out there, I got a call, or I guess it was probably an email, and they’re like, “Oh, unfortunately you haven’t been chosen for the last interview. You’ve been cut from the process.” And it’s kind of one of those moments, just stomach dropped. And I was like, “Ah, but what do you mean? I just lost all my income. This is my next play. Where do I go from here?” And yeah, that was kind of the start for searching for something new. And during that process is when I came across originally the BiggerPockets, the OG podcast, and I started listening to it, but really listening to those episodes, I was like, “Oh man, this guy’s a neurosurgeon. I’m not smart enough to get into real estate, or this person’s got 100 houses. How am I ever going to get to that point?”

Matt:
And then luckily, I came across your guys’ podcast and there’s just people that I felt were relatable and I was like, “Wait a minute. I feel like I’m in the same walk of life as them. I can figure this out.” And that was kind of the beginning of my real estate journey.

Ashley:
So once you started doing all this research, was your wife on board as to you’re going to completely change what you’re doing and kind of start into this new business?

Matt:
Yeah. I mean, she was on board from the sense of at the time, really, I was like, well, I lost my business. Firefighting didn’t work out, at least at the moment. And then stunts was still shut down, so I was like, “I don’t know what else I’m going to do.” So she was on board just because she’s like, “Well, we got to do something to make money, so why not try something new?”

Tony:
So just one thing I want to just pause on really quickly, Matt, because you’re talking about this very, very calmly now, but I would assume in that moment there was maybe a level of stress that you were dealing with. Your business comes to do a fraction of what it was doing before, you’re side hustle, the whole industry gets shut down, and then this other kind of steady, stable job as a firefighter, you end up not being able to take that opportunity as well. So just in that moment, what was going through your mind? Where you were in survival mode? Were you going great? How does one kind of deal with that kind of setback?

Matt:
Yeah, I mean, to be honest, when we got to Tennessee, I was looking at jobs every single day and what can I do to make money? And at one point I just hit the panic button and I was like, “All right, I’m just going to get a sales job.” And it ended up being cold calling. And actually I guess to take a step back, first I was like, “All right, I can flip a house, I can figure it out.” My father-in-law who lives in Tennessee, who we were living with at the time in his guest house, used to be a contractor. And I was like, “I know I can use him to help me, I’ll find a house and I can renovate it with him and we’ll get the ball going.” But I went to get, because I didn’t know about hard money or anything like that, so I went to get pre-approved and the lender was like, “No, you were making good money, but you’re not now.”

Matt:
And I was like, “Well, but I have the stunt income and it’s starting to ramp back up.” And I don’t know, different lenders might’ve said different things, but he was like, “No, because we pretty much look at that like it’s a business. So since you had to decline last year, you need two more years of an incline in the stunt, in that world in order for us to lend to you.” So then I was like, “Oh, all right.” So then I hit the panic button there, went and got a 9:00 to 5:00, and ended up working there and just hating every day of it, just cold calling. And I was like, “This is not me. I’m not meant to be sitting in an office doing a job like this.” But fortunately through that job we were able to buy our first property, which when I got it under contract, my intention was to flip it.

Matt:
And then my wife just dropped the bomb and was like, “Well, we’re actually pregnant and having another baby, so we need to get out of my father’s house and live in this house ourselves.” So I was like, “Well, all right, here we go.” So we ended up, instead of, that one still need to be renovated, but instead of flipping that one, we just moved into it. And then I was probably about three weeks into the job and I had, I don’t know if you’d call it a panic attack or what happened, but just passed out essentially at my desk and my wife took me to urgent care and everything checked out luckily, but I ended up putting in my two weeks. I’m pretty sure I bought that house or closed on that house without even having his job. So I don’t know if there’s such a thing, but I think I might’ve job hacked myself into the house.

Ashley:
That’s what I wanted to ask is how long did you have to have your pay stubs for to get that financing lined up? Because they’re saying for a business you need two years of income for your business, but then for a job, I mean, it doesn’t seem like you worked there for two years and is it four weeks of paychecks you need or how was that for you?

Matt:
And it might be different in different areas, but I learned that from this show, and I don’t know if it was you, Ashley or you, Tony that said this, but one of you was talking about how somebody kind of did this and just got their first pay stub and then was able to go do it. So that’s literally what I did, yeah.

Ashley:
It was probably maybe my sister, because she didn’t even have her pay stub yet. She just had her offer letter that she was starting in a month or something like that, yeah.

Tony:
Same thing happened to me on my first deal. I had gotten a new job and they approved me based on that offer letter as well. So it is a common thing that some lenders will do.

Ashley:
But isn’t that crazy, that comparison of like, okay, you’re an entrepreneur, you need two years of your tax return to show income?

Tony:
Oh, you’re unemployed.

Ashley:
That’s way better.

Matt:
That was the crazy part about it too, because with the stunts, I mean, I wasn’t killing the stunt world, but I think in 2019 or 2020 even maybe, my tax return said I made like 80 K, and then this job, it was entry level. So I was starting out at 50 or 55 K, and I was like, “Wait, I made more than this last year, but you won’t approve me because it was a decline from the year before, but now you’re approving me based off this lower number.” And that was just one of those things that I was like, “All right,” just threw my hands up. I was like, “Whatever you say.”

Ashley:
How long did you actually work at the job for then?

Matt:
Honestly, I think it was right at a month I had that panic attack or whatever, took two, three days off, and then I went in, put in my two weeks. But they were like, “Well, we have sensitive information, so if you’re quitting, this is your last day.” And I was like, “All right.”

Ashley:
Like that’s a bad thing.

Matt:
Yeah, I was like, “Ah, if I must.”

Tony:
But Matt, can I ask what was the plan? Because your other sources of income, it’s still kind of been impacted. This was supposed to be the kind of thing that kind of got you over the hump, at least for a little while. You bought this house with the intention of flipping it, but it sounds like now this became your primary residence. What was the plan in that moment to I guess survive and put food on the table and kind of keep the income flowing in?

Matt:
Yeah. So fortunately at this time, so now we’re early 2021, so the film industry had opened back up and I was doing stunt work again, and just because of proximity, living in Tennessee, the cost of living was so much more affordable than California, I was at a point where I was able to make enough just based off of the stunt work. And it was tight, and it definitely wasn’t at all where I wanted to be financially, but I just knew, okay, I’m making enough that we can get by and then I’ll figure out what to do from here. And I was still interested in real estate, but that was still actually before I even did my first real flip.

Ashley:
So let’s talk about the first flip, because the first property you actually moved into and made it your primary, correct?

Matt:
Yes.

Ashley:
Okay. So then you’re going on and you’re buying the next property. How long after that first initial purchase did you find your actual first investment property?

Matt:
So it was probably about three to six months, somewhere in that window because I definitely had a lot of just analysis paralysis and just really scared to take the leap of faith. And then finally, it was actually one of my cousins that kind of pointed this out to me, and he’s like, “Well, you’ve already done a flip.” And I was like, “No, I haven’t.” And he was like, “Well,” he’s like, “You have this house that you live in, you renovated and added value.” And I was like, “Yeah, but I haven’t sold it.” And he’s like, “Well go out,” and I forgot what it’s called, but essentially when you have a realtor come and tell you what they think your house is worth, so he’s like, “Go out and have a realtor come over and just tell you how much they think the house is worth.”

Matt:
And we bought the house for 225, and then the realtor was like, “Yeah, you could probably sell it today for 280.” So he was like, “Well, there you go. You’ve already proven that you can make money doing this.”

Ashley:
Add value.

Matt:
Yeah, add value. So then I was like, “All right.” So then luckily at this point, I’m a year into listening to BiggerPockets, so I know about hard money, I know about wholesalers. Granted I didn’t have any in my pocket, but I just started doing my homework and connected with a wholesaler and then ended up using hard money to get myself into my first flip.

Ashley:
I think a really big common question is how do you get hard money as a rookie investor, especially with having no experience? And even though you did your primary residence, there wasn’t that actual appraisal or that sold comp to kind of show what you had done there. How did you find a hard moneylender that would lend to you?

Matt:
So for me, I found one that would lend to any rookie or really anyone, and they just had higher rates and higher points upfront. And then once you were vetted, I think once you had done four deals with them, then you got a veteran package or your rates got low. But in the beginning, yeah, I mean, because of that risk they’re taking on you, they just charge more upfront and you’re just paying for it in that sense.

Ashley:
But you factored into your numbers so that it all works out, so you’re still making a profit on it.

Matt:
And that was the thing too. At the time I didn’t really, because I didn’t have much income coming in, I had a little bit from the stunt world, I was like, “Well, if I make 10, 15 K, that’s a lot more money than I’m making not doing anything else.” So the margins were pretty tight on that first one. And honestly, the market, I won’t say necessarily saved me because I definitely, even if I was wrong, I would’ve made 10, 15,000. But because the market was so good in 2021, I made a lot more than I thought I was going to make.

Tony:
Matt, if I can ask, I think a lot of new investors feel like they have to kind of have all the answers before they get started. We actually just record another podcast episode earlier today, and that same guest kind of touched on that same idea about you have to push past that fear of not knowing kind of the finish line and just knowing the next step. But for you with this rehab, I mean, you came from a totally different world fitness, entertainment industry. How did you even educate yourself on, hey, what are the steps of rehabbing a home? Were you doing YouTube University? Was there some other resource you had? How did you even know what to do?

Matt:
Yeah, so that’s where I was super fortunate and blessed in the sense that my father-in-law, who lives out in Chattanooga, was a retired contractor. And I kind of brought him out of retirement and was like, “Hey, help your grandkids and your family by helping me and teaching me what you know.” And so he came alongside me on the first two flips I did, and just kind of taught me some basic drywalling and painting stuff. And I by no means picked it up quickly or am good at it, but I learned what I needed to learn to get through those first couple deals.

Tony:
So Matt, were you DIYing, it sounds like on a lot of those, or were you bringing in subs or how did you kind of manage the workload?

Matt:
Yeah, so the first two flips I did, it was 100% DIY. It was just me and my father-in-law, and we did everything from painting, installation, some basic plumbing. I mean, they were a little bit more cosmetic flips, the first two at least, but definitely it was all us.

Ashley:
And then have you progressed to using contractors? Actually, we haven’t even touched on how many flips you’ve done yet. Do you want to just give us that little breakdown first as to how many you’ve actually completed since that first one?

Matt:
I think I just sold one, closed on one yesterday that I sold, I think that was number 10. And then I’m working, I have two going on right now.

Ashley:
And what timeframe is this in? This is a little over a year?

Matt:
Yeah, about a year and a half.

Ashley:
Yeah, that’s awesome.

Tony:
Congratulations.

Ashley:
I think that’s something we really need to go into detail on here is how were you able to scale and take on that many flips at once? Because here you are, your first investment property, it’s you and your father-in-law in there doing the DIY. So how were you able to scale your business so you’re able to do that many flips within a year and a half?

Matt:
Yeah, so it was really, I mean, like you said, just go back to the question, scaling, I had no clue how to do it at first, and I still can’t say I really know how to do it. But the third one I took on was when I really, I tried to, because my father-in-law was kind of a little burnt out and the house that I purchased was a little further out, so he didn’t want to drive out there every day. So I was like, “No problem. I’ll hire a contractor, I’ll just kind of go out on my own.” And that one was by far the biggest learning lesson, that’s the only one to this day that I actually lost money on, just because there are so many lessons for me to learn along the way.

Matt:
And it was through that one that I kind of developed most of the relationships I have now. My contractor that I have now, I found through that job, but he was the third contractor I hired for that one house, which is how I ended up losing so much money is just because I kept hiring people and firing them and just kind of jumping from one to the next. But it was definitely a process to get to the point I’m at now.

Tony:
I just want to give a quick shout out, episode 311 with a guest by the name of Shaun Kelly. He breaks down how he DIYed, I think all of his rehabs, least the first several as well, similar to you, Matt. But if you guys are looking for kind of a masterclass breakdown on how to DIY your own rehab, episode 311 with Shaun Kelly would be a great resource. So Matt, just going back to you, so you said that you had to hire and fire a lot of people with that first one you kind of did on your own. I think that’s the fear for a lot of rookies who are thinking about flipping properties is that they’re going to get scammed by a contractor, they’re going to get bad work, that someone’s going to run off with their money. What were your steps for sourcing these different folks you were working with, the different subcontractors and contractors, and I guess what were some of the lessons you learned that you’ve applied to your future deals?

Matt:
Yeah. So as far as sourcing, really, and I still rely pretty heavily on this, I just went, there’s a local Facebook page here in Chattanooga where you can just ask for what you’re looking for as far as businesses go. And I mean, it’s not specific to real estate, but I just said I was looking for, I think originally I might’ve said I was looking for a contractor, but anyways, said I was looking for a contractor and I just hired this guy because I interviewed, I think, three of them, and I made the mistake of just hiring the one that I jived with best. I was like, “Oh, he’s young, he’s an entrepreneur. Yeah, you got the job.” And I didn’t realize at the time that he actually didn’t really have much construction knowledge, because a thing that I didn’t know in Tennessee at the time, but you can essentially get your contractor’s license in Tennessee without any work experience. It’s just a test that you have to pass and anyone can more or less hack the test.

Matt:
So he had a crew, but he himself had never really done construction. And his crew was, I won’t say they were awful, but they were learning, and I was not in a position where I could afford to pay someone to learn. So I ended up letting him go and then you would’ve thought I would’ve learned from the first time, but I went the exact same route, went on the Facebook group, hired another guy that then was charging me by hour, which was another mistake I learned, never hire a contractor, at least in my opinion, and paying by hour because he was just dragging his feet. And I think three weeks went by and they had put up some trim and that’s about it. And I was like, “What do you guys do all day?”

Matt:
They’re like, “Oh, well, we got to fix this and fix that.” And just blaming it on the other contractors, which some of that was probably true, but I think most of it was just them dragging their feet. And then through that process, the first crew that I hired, at one point one of their cousins came in and just was essentially showing them how to do drywall. And that was kind of one of the first red flags. I was like, “Wait, you guys don’t know how to do drywall?” Anyways, I got that cousin’s number just randomly, and he reached out to me a month later and was like, “Hey, if you ever have any other work.” I was like, “Ah, yeah, I need you yesterday.” He came in and just saved me towards the end. And that was flip number three, and we’re on 12 now, and I’m still with that same one.

Tony:
I just got to add really quick, what a nerve wracking thing to walk into as an investor to see the guy that you hired to hang your drywall, getting coached by someone else on how to hang drywall. It’s like the ultimate red flag. The only thing that might be worse is them, I don’t know, having a YouTube video up like hanging drywall 101 or something.

Matt:
Yeah, that was pretty much the extent of it though. I mean, yeah, those two go hand in hand.

Ashley:
Well, Matt, Tony and I have definitely had similar experiences where we’ve had to fire contractors during the middle of projects and go with someone else. What was the final decision of it is going to be more cost-effective in my mind to fire them than to just continue the project? Because for me, it was like I let it go on for a while because I just thought it’s going to be, we’re have to stall the project, we’re going to have to wait and find new contractors. We don’t know when they’ll start. Do we take the risk and fire these ones or is it worth the wait to find new contractors? So what kind of went through your mind during that process of I need to fire them now?

Matt:
Yeah. So with that first crew, it was really, I felt like I didn’t have a choice because it was just very obvious, after first week and a half, two weeks, they don’t know what they’re doing. So it was just like, I can’t afford to let this run to the very end and then find out, oh, I actually have to redo everything. So it was kind of just cutting my losses there and just letting them go. With the second crew, that, I just lucked out timing wise, I was scared of letting them go and not having someone else to come in. And that’s when my contractor I have now reached out to me and was like, “Hey, if you ever need any work done, here’s my number. I’m available, dah, dah, dah.” And I was like, “Yeah.” So I essentially the next day went to the existing contractor and just let him go. And then that guy started a couple days later. So I mean, if it wasn’t for him reaching out to me, honestly, I probably would’ve let it drag on for another couple weeks and who knows where that would’ve gone.

Ashley:
Yeah, Tony and I definitely struggled with that for a little bit on two of our projects, of having to make that switch to a different contractor.

Tony:
But you mentioned, Matt, about the paying by the hour. Just before we move on, I want to get your insights on that. What is the downside to paying by the hour and what is the better alternative?

Matt:
So I would say the downside to paying by the hour is just I feel like it just gives the contractor, whoever you’re paying, I guess, by the hour, just the opportunity to just kind of drag their feet and a job that might take them two hours, they’re going to do in four hours because you’re paying them by the hour so they have no incentive to work faster and work harder. So I would say that’s the biggest downside is just there’s more incentive for them to work slower than there is faster.

Matt:
And then as far as the alternative, my system now is even though I’m going to hire him no matter what, just we have a good thing going, I have my contractor come in on every job and just walk through everything we want to do and then just bid a price and then we set that price and then that’s kind of like his incentive because it’s like, okay, if this job is going to cost us 20, if I’m going to pay you 20 grand and you get it done in three weeks and you just made 20 grand in three weeks, if I’m going to pay you 20 grand, but you’re going to take eight weeks and you made 20 grand in eight weeks. So he’s got that incentive to just work a lot harder and work a lot faster.

Matt:
And I mean, I’ll show up to my jobs on Saturdays at 6:00 PM and they’re there just working. I mean, him and his crew, I’m just so blessed to have them because they’re just workhorses and they get it done. And I mean, if I had that last guy who was I was paying by the hour, I would probably be paying him twice as much as my current crew.

Tony:
Yeah. The right crew makes all the difference when you’re, honestly even taking a step back, the right team as a real estate investor is probably one of the most important things to get right, because if you can surround yourself with the right boots on the ground, with the right contractor, with right property manager, with the right whoever, it makes your job as the investor, which is really trying to find the deals and maximize the profitability, makes that job easier. But I guess on that note, finding the deals, Matt, what steps have you taken to find out of these, I guess 11 or 12 properties you’ve done or in the progress of completing, how are you finding these deals? Are they all MLS? Are you going direct to seller? Are you using a wholesaler? What methods have you used?

Matt:
So I’ve kind of used them all. I think out of the 12, I bought three on market, and then the other nine have been off market. I would say I had a good wholesaler that I was working with pretty consistently, and I probably bought six deals with them. And it was just like, I literally got to the point where I was like, “Am I doing something wrong? This seems like it’s almost too easy right now.” I had this person feeding me deals, I got a good crew, everything’s lining up. And then I didn’t hear from them for a while and I reached out to them and they just kind of ghosted me. And then finally one of their employees reached out to me and was like, “Oh, I’m so sorry. They let me go and they just shut down shop.” I don’t know what happened. But anyways, that was the beginning of this year, and at that point I was like, “Uh-oh, what do I do now?”

Tony:
Well, let me ask that question. I mean, how’d you find that first wholesaler? Because I think for a new flipper, the deal flow is oftentimes one of the biggest constraints, it’s like, how do I find these good off-market deals? So what steps did you take, Matt, to find that first wholesaler and then once that one kind of shut down shop, what steps did you take to find that next wholesaler?

Matt:
So that first one I found through our local real estate REA or meetup group or whatnot. I think I was on their Facebook group and somebody, another wholesaler was posting something, and then I just started scrubbing through the Facebook group and looking for all the wholesalers and just either emailed or called all of them just to get on their list. And then this one just seemed to be the most consistent as far as just putting out deals. And then I guess as far as the second part goes, just luckily from being in this area and doing the real estate for the last year and a half, I kind of knew even if I wasn’t working with them, I kind of knew of and about a few their wholesalers. So I just immediately started reaching out to them and was like, “Hey, I’m looking for deals if you have anything.” And then now the last couple deals have been through various different wholesalers. I haven’t really found one that feeds me my deals like the original one was.

Ashley:
Tony, I’m curious how you are sourcing deals right now.

Tony:
Yeah. So honestly, we haven’t been buying as much on the single family side right now. We’re looking more into the commercial space. So my team and I are really just trying to network with commercial brokers at the moment to find most of our deals. So we just got a purchase agreement, or at least an LOI that we agreed to over the weekend, for a hotel in Utah. And on that deal, it was just us networking with a broker that I met last summer that ended up having another deal in that same city. So that’s kind of been our approach on the commercial side, but on the single family space, a lot of our deals honestly have just kind of come from relationships. So we have relationships with realtors that send us off market deals, whether it’s a pocket listing or maybe a wholesale deal that they found. We do know some wholesalers in the markets where we flip. And really, yeah, it’s been a lot of relationships for us. What about you, Ash?

Ashley:
Yeah, relationship based is such a big, big way to get properties, but really a lot of it is referrals as far as word of mouth. So somebody saying like, “Oh, my aunt is selling a property.” Darryl was working on a property the other day and somebody stopped and was like, “I want to rent this because I am going to sell my house.” So right away when Darryl tells you this, I’m like, “You call him back right now and tell him we want to come and see his house and we could buy his house and he can rent this apartment. It’s a win-win.” But also we have a property under contract that’s on the MLSs. And then the other property that’s under contract right now was a word of mouth, one of my dad’s best friends, his mom’s house that we’re buying. So that’s really been the biggest deal source for us right now.

Tony:
Ash, have you cold called before? Have you done just straight cold calling owners?

Ashley:
I have before a couple times, but I actually had Nate Robbins here who is actually going to be a guest on our episode because of my experience with him. So he came to visit me and we’re just driving to get a chai tea and he sees this house with letters in the window, which usually can signal that somebody is not living there, or maybe they are, but there’s a third party company taking care of the property, doing the lawn maintenance or the bank has foreclosed on it or there’s a violation, whatever it is. So he found the owners and he cold called them and he didn’t get any response, but it was so nerve wracking for me because I do not like cold calling.

Ashley:
And then he actually found somebody who’s related to the person that owns the property and he’s like, “They live five minutes from you, I’m going to drive over there and go talk to them.” And that even more was like, “I’m not going to go, you guys just go, I’ll stay here.” And he was like, “The lady was so nice. You can’t be afraid of those things.” And so that’s why I have Darryl, he does all the direct mail, the cold calling, he’ll door knock, no problem. But for me, that’s out of my comfort zone and I’d rather have my partner do that.

Tony:
Someone else do it, yeah. And that’s always leaning into where your strengths are as a real estate investor, and each of us has to kind of know where we naturally thrive. Matt, just one other follow-up question for you on the wholesaler piece. So you said that you reached out to all these different wholesalers. What kind of information were you giving them about you as a buyer and how were you able to tell between who the good wholesalers were versus the not so good? Because I’ve shared my email address on Instagram before and said, “Hey, send me deals if you’re in this market.” And a lot of times I get just things that aren’t good deals. So how do you kind of suss out between the good and the bad, and then what information are you giving them about yourself?

Matt:
Yeah, so as far as information, I mean, I think I’m just essentially kind of telling them where I’m buying. For me personally, I’m mostly focused on flipping single family homes right now, so I kind of just share that, and then just the general area. And then I honestly haven’t figured out how to tell just by talking to them, the good and bad ones. That really just comes down to once I get on their radar and they start sending me deals, it’s like I’ll just start looking at the deals and use PropStream and comp them out. And with that I can kind of just tell like, okay, this guy just sent me five properties in a row that are all junk and you can’t really flip any of these. I would be in negative on all of them. Versus this guy, maybe he just sent me two in the last month, but both of them seem pretty profitable. So just kind of going down that path.

Ashley:
Matt, if you had to give three pieces of advice to somebody who’s starting out flipping a house, what are the three things they should focus on to maximize the value of that property?

Matt:
To maximize value? I would say the biggest things are kind of curb appeal because obviously when you come up to the house, that’s the first thing you’re going to see, and then even going just back, before you even get to the house, looking at Redfin or Zillow or whatever you use, the first photo you see is that the exterior of the house. So making sure that looks nice because I feel like a lot of people focus on the inside so much that they kind of forget about the outside and it’s like, oh, I just kept the old mailbox that’s fallen over and that’s right in the center of the frame of my photo. So that’s a big thing, and you don’t have to do anything fancy, but just some landscaping and just maybe a new mailbox and obviously fresh paint, whatnot.

Matt:
And then I’ll go from there to the kitchen because I feel like for a lot of people, that’s kind of the first area they walk into, even if it’s not, I mean, obviously usually it’s not the first room you walk into, but a lot of people kind of just walk straight through the living room or whatever, don’t really pay too much attention to that and just go to the kitchen. So if you can create that wow factor in the kitchen, which is one of the things that we go for. And then the third thing, which I think I actually stole this from AJ Osborne, is that his name? He’s like a-

Ashley:
Self storage guy?

Matt:
Oh no, not AJ. Who’s the one that’s …

Tony:
James Dainard?

Matt:
Yeah, one of them. And he was talking about just value add in the bathroom and just doing tile floors versus LVP. Just because he’s like, at the end of the day, it’s going to cost you pretty much the same price, maybe 50 bucks more or something. So just things like that, it’s like we always tile all the bathroom floors and put in tile in the background. Just little things where you can add a lot of value without adding a lot of price out of your pocket. So yeah, I guess just starting with outside the house, then moving to the kitchen and then the bathrooms, those are the biggest three areas, I feel like if you can control those three areas, then the rest you can kind of play with and you’ll definitely win or hopefully win.

Tony:
So Matt, one of the questions I always have for our friends and the guests that flip homes is the systems they’re using to make this whole operation run efficiently. So I’m going to hit you with some rapid fire questions and just let me know what system software, yeah, whatever, we can do that now, just what kind of systems are you using to manage that? So first, when it comes to budgeting, how do you keep track of the money coming in and out for your flips and kind of comparing that to your original budget versus what you actually spent?

Matt:
Yeah, so essentially I have two spreadsheets that I use and it’s, I mean, very basic Google spreadsheets. I don’t pay for software as far as that goes. But I have one of my initial budget that I create and then once I go live with a project, I have another, and then I just kind of plug and play all those numbers and then I’m able to compare of what I originally thought I was, to where I’m actually at. So that’s, I don’t know, it’s pretty basic to be honest, and I just enter everything myself. I don’t have anyone doing the accounting for me, but kind of helps me keep on track.

Tony:
And then in terms of scheduling, are your contractor, is your GC the one that’s kind scheduling all the subs at this point, or are you manually scheduling the subs yourself? And if so, do you have a tool for making sure that your countertop guy is going in before your guy doing the back splash?

Matt:
I don’t, and that’s something that I’m still kind of learning the process on. So I am the one that hires out all the subs and kind of sets the schedule for everyone. I kind of know just from trial and error of who needs to go in when, and I’ve made that mistake before of my hardwood floors one time I had done before we painted just because I didn’t know and I didn’t really think about it and he was like, “What are you doing?” But yeah, I don’t have a system for it, it’s just kind of in my head. And to be honest, that’s one of my goals for this year, is just to get better at systems and processes as far as that stuff goes.

Ashley:
Well, Matt, I want to take us to our rookie request line, and this is where a rookie investor sends in a question for a guest to answer on our show. And if you would like to leave us a question, you can go to biggerpockets.com/reply. Today’s question is from Tyson Masingo.

Ashley:
“Okay, I am having trouble with finding a market, as well as trying to determine what types of deals I will do in different situations. My plan is to find a very low cost area to invest in since I have very little money to get started, I want to flip a couple properties to build up capital and then begin to BRRRR as much as I can, continuing to flip some deals at the same time. Here are what my problems are. One, what metric should I use to find a market? If you can break it down step-by-step that would be amazing. Number two, how do you decide if a deal would be better suited to flip verse BRRRR? I intend to do both to continually build capital as well as cashflow, but I need to figure out how to decide which strategy I’ll use for each specific deal.” So Matt, the first question is how to find a market. So how did you decide on the market that you’re investing in?

Matt:
So I mean, I kind of just decide on the market that I was in because me personally, especially the approach that I was first taking is I was completely hands-on. So I wanted to work within a market that was 30 minutes to an hour of my house so I could realistically drive there every day and be the one swinging the hammer and hanging the drywall and doing the work. So I would say if that’s possible, I feel like that’s the easiest place to start, is just start in your own backyard, obviously, depending on where you are. I was in Santa Barbara prior to this and I wasn’t going to … I don’t see a way that I could have started with multimillion dollar homes, flipping those.

Matt:
So yeah, you kind of just have to hopefully start with where you are, but then if that doesn’t work, then I would say the next thing is just kind of looking around and starting with maybe where you have connections, because that’s going to be the next biggest thing, is who do you know in those areas that can help you out and be the boots on the ground for you.

Ashley:
Yeah, that’s great, as to where you have an opportunity or an advantage, maybe that’s knowing someone or maybe you grew up there and you know the streets, something to give you that little bit of edge and make you feel a little bit more confident. Okay, so the second part of this question was how do I decide if a deal would be better as a BRRRR property, to rehab it and rent it out or to flip the property?

Matt:
So I think that’s just up to each individual and their finances and what they have going on, because I mean, I guess if you have the money and you do a perfect BRRRR, then yeah, you can kind of just keep going with it. But I actually just finished my first BURRRR about, I don’t know, well, I’m actually waiting for the money to come through today, but just finished the project about a month or two ago and got some renters in it. And I mean, I’m not leaving a ton of money in, but I’m going to have to leave in, I found out, about 30 grand into it. And luckily because of the flips and I have that income coming in, I’m okay with not having that money and it’s not going to hurt me per se to not be able to recycle that money right away.

Matt:
But I think it really comes down to that, if you were to do the numbers and it turns out like, hey, I need that 30 K in order to keep the ball moving, then flip it because then you can take that 30 K, buy another house, and then once you build up a nest egg, then you can go back to the BRRRR method. But I think it’s just deal by deal and just what kind of resources you have under your belt.

Ashley:
And I think another thing to point out too, Matt, is you did a great job of becoming experienced and knowledgeable at flipping a house first before you went in and did this BRRRR. You focused on that one strategy before trying to navigate two or three different strategies at once. And that would be my advice to Tyson, is to pick one market and pick one strategy to start and kind of get a feel for that one strategy and become knowledgeable and confident in it, and then kind of branch off and do something. Because you’re going to have a lot more deals to vet, to analyze if you’re trying to go after more than one strategy. And you’re also going to be building systems and processes for two different types of strategies also, which is just going to weigh you down and you won’t be able to grow and scale as fast too.

Matt:
Yeah, I will say my third flip that I did, I actually went into it thinking it was going to be a BRRRR and something that I stole from one of those episodes was doing the rent by the room. So I took a four bedroom house, turned into a seven bedroom, four bath, and I was like, “Oh, this is going to be great. I’m going to just make so much money.” And just spent way too much money, went way over budget, realized I couldn’t BRRRR it and then had to flip it. And then it turns out that not that many people want a seven bedroom, four bath house that’s just only 2,200 square feet or something like that.

Tony:
Lessons learned though, and that’s the part of being an investor is each deal kind of teaches you something new, brother. So I’m happy to hear that you learned something at least. Cool, man. So last thing we’ll finish out with is our rookie exam. So Matt, these are the three most important questions you’ll ever be asked in your entire life. So are you ready for question number one?

Matt:
I’ll try.

Tony:
All right, man. What’s one actionable thing people should do after listening to your episode?

Matt:
I think just reaching out, if you’re interested in whether it’s flipping or any aspect of real estate, finding one person that you can reach out to. I think that was a game changer for me. I would listen to an episode and if it was somebody I jived with, I would literally just DM them on Instagram or just find a way to reach out, even if it’s just going to a local meetup. But I would say just starting by just networking and putting yourself out there.

Ashley:
The second question, what is one tool, software or app that you use in your business?

Matt:
PropStream is definitely probably the most important one that I use, because I probably comp out two, three houses a day and I’m constantly looking at things. And if it wasn’t for PropStream, I’m sure there’s other software, but I don’t know how people comp outside of that.

Tony:
All right. And then in question number three, where do you plan on being in five years, Matt?

Matt:
So five-year plan would be essentially to be financially free from the aspect of just having enough rentals and passive income that I can … I mean, I truly do love flipping and I don’t see myself stop doing it anytime soon, but I would just like to have that comfort level of knowing like, oh, if I want to take this year off and go travel in Europe with my family, I can do that, and I’m in a place where I can dictate what my life looks like on a day-to-day basis.

Tony:
Love that, man. Yeah, we’re excited to see you hit that five-year goal. Before we wrap things up today, I just want to give a quick shout out to this week’s Rookie Rockstar is Michael Mills. And Michael says, “Finally sold our first flip, eight months of work and then under contract to sell for four months. I was beginning to think it would never happen.” Michael, kudos to you for getting that first flip done, and we’re excited to see where your next one takes you.

Ashley:
Matt, can you let everyone know where they can reach out to you and find out some more information about you?

Matt:
Yeah, so I think the easiest way probably is Instagram. It’s very fancy, it’s Matts, M-A-T-T-S, double underscore because I was late to the game, adventure. And if you really just are bored and want something entertaining, you can just Google Matt Ramirez stunts and watch my stunt reel.

Ashley:
Well, thank you so much for joining us today and taking the time to educate our listeners on your real estate investing journey. I’m Ashley at Wealth From Rentals, and he’s Tony @tonyjrobinson on Instagram, and we will be back on Saturday with a Rookie Reply.

Ashley:
(singing)

 

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