Choosing The Right Real Estate Asset Class

Play This Episode

0 Votes

Ep 571 From Management Consulting to Commercial Real Estate Investing Matt Jones is a real estate investor based out of Minneapolis who specializes in investing in both small and large multifamily properties He has a master of science in mental health counseling which comes in handy for building positive relationships in real estate Let s hear him as he shares his thoughts about adding value to your clients and maintaining that relationship to achieve exponential growth Highlights 00 00 – 05 08 How to Add Value to Others and Get Ahead in Real Estate Matt Jones is the CEO of Hawkwing capital which raises capital from passive investors to own large apartment buildings He also wrote the book Book About Real Estate In 2019 he learned about real estate syndication and decided to switch to this model to speed up his progress He currently owns 244 beds of senior assisted living and is looking to raise capital for some other deals Opportunity for him right now is through broker relationships 05 08 – 10 19 Real Estate Investor Shares Tips for Success Matt s shares his experience in real estate including their time as a manager of group homes for adults with disabilities and their current focus on multifamily properties Success for the author is defined as achieving goals that expand one s horizons and making progress towards those goals Matt anticipates transitioning more from an active investor to a passive investor in the future 10 19 – 15 20 How to Raise Capital and Take Down Deals Matt suggests that you should raise capital from people who you trust and who understand the risks and rewards of the investment When raising capital you want to make sure that you re the people raising capital from and that they understand what they re getting into Matt s approach is to first ask somebody if they would be interested in investing in a deal and then to show them the investment and how it would benefit them If someone says yes Matt will ask them for their contact information so that he can contact them about the investment Matt had success raising capital by being patient and being prepared with possible outcomes as seen today s market 15 21-16 56 Closing Segment Reach out to Matt Links Below Final Words Tweetable Quotes You want to add value to other people and it doesn t even necessarily have to be real estate related Let s say you meet somebody who maybe they wanted to play the guitar and if you know how to play the guitar you can offer them some free lessons right there Then they re going to want to do business with you Or you never know where things go with this but by adding value to everybody around you at all times good things are gonna come back your way – Matt Jones —————————————————————————– Connect with Matt Jones by visiting their website at https www hawkwingcapital com Resources Mentioned Book About Real Estate Connect with me Facebook LinkedIn Like subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts or whatever platform you listen on Thank you for tuning in Email me sam brickeninvestmentgroup com Want to read the full show notes of the episode Check it out below 00 00 00 Matt Jones You wanna add value to other people and it doesn t even necessarily have to be real estate related yes it s great If you re able to raise money or you re able to find deals or you know some kind of real estate related value but let s say you meet somebody who Maybe they wanna play the guitar And if you know how to play the guitar you can offer them some free lessons right there in an instant value And then they re gonna like you and then they re gonna wanna do business with you You never know where things go with this but by adding value to everybody around you at all times good things are gonna come back your way 00 00 36 Sam Wilson Matt Jones is the CEO of Hawking capital which raises capital from passive investors to own large apartment buildings And he also wrote the book about real estate That literally is the name the book about real estate and co-host of pillars of wealth creation podcast He also owns 244 beds of senior assisted living 00 00 56 Sam Wilson Matt welcome to the show 00 00 57 Matt Jones Hey good to be here 00 00 59 Sam Wilson Hey man Thanks for coming on today There s three questions I ask every guest who comes in the show in 90 seconds or less Can you tell me where did you start Where are you now and how did you get there 00 01 05 Matt Jones So in 2015 I bought my first Plex I was living I house hacked it and I saved up money from my W2 It took me a few years before I was able to buy a second triplex and by a second Plex And I was just so frustrated at how slow my progress was going Like the idea was like eventually own like a large complex And I was like oh this is gonna take me Years before I can scale up at this pace And then I learned about real estate syndication in 2019 and thought like oh this is bananas Like like it solves all my problems with now I don t have to save up my own money I can use other people s money and I don t have to wait to scale up to bigger properties I can just jump in and start right now And so then I found a mentor to help me out who actually I co-host the podcast with now And Recently raised some capital with him for a 228 deal in Kentucky and then looking to raise capital for some other deals as 00 01 58 Sam Wilson well man That s that s really really cool I mean 2019 till now that s pretty fast progress I would say know you said you had a mentor but what are some other things you feel like you did right That other people should emulate 00 02 10 Matt Jones I think well the biggest hurdle that I had to get over was my own mindset So if you can change your mind of thinking like how can I do this rather than like oh I I couldn t buy a a hundred unit place 00 02 20 Matt Jones Like whether you say you can or you can t you re right think it was Henry Ford that said that And so Getting into the mindset Like I can do this I just need to figure out how or better yet who I can work with to get me to that level 00 02 33 Sam Wilson Right right That s that s really cool Tell me what are you guys doing I heard you say something about opportunity there in Louisville What are you guys doing right now to find opportunity You moved on from the Plex world cuz you said that was two slow growth You moved into mostly multifamily and I hear some also assisted living but what does opportunity look like for you right now 00 02 52 Matt Jones It s primarily through broker relationships So built to connections with brokers And so we re seeing a lot of on market deals but I think some people prefer off market or on market but with on market it s you get all the numbers like it s presented in a way that s they re the seller is ready to sell And you have the broker there to help make sure everything falls into place So plus through on market deals we get a lot of deal flow and right now you gotta look through a lot of stinkers before you find that one gem 00 03 19 Sam Wilson Yeah you do How are you underwriting those to where it makes sense That s what we re seeing a lot in across all asset classes is you re just I don t even know how the current buyer is making this pencil So what do you guys doing differently Feel 00 03 31 Matt Jones Well we just go through the numbers Yeah the I d say yeah 99 out of a hundred deals we just kind of shake our heads at like I don t know how this is gonna work at that price point but once in a while we find that one that actually does pencil in and then when we think oh what did we do wrong in the underwriting But we re still underwriting conservatively We re still stress testing the numbers to make sure like okay if If there s another recession and we get to like the record high they can see raids or record high concessions and things like that Is the property still gonna make money to ride through a potential recession If yes then that is a good deal But a lot of these properties are like you say they re going at these prices that if anything goes wrong for these operators they re gonna lose 00 04 10 Sam Wilson their pants Talk to us about positioning how are you positioning yourself in front of The sellers It s a it s almost an art I think of putting yourself in front of the sellers in a way that makes the seller wanna work with you which is kind of a weird place to be in the cycle where it s like Hey wait like why am I trying to court You Shouldn t you be courting me as the buyer but it s not the way it s working What are you guys doing on that front 00 04 32 Matt Jones Well it comes down to relationships as well relationships with our lenders property management the brokers when you can build a reputation or if you don t have one right now partner with people who already have a good reputation And so you can say like my team this is our experience and to show to the sellers that like Yes we can close we ve closed on X number of units and taken so many units to full cycle and such And we already have the professional property management that s local That s gonna do a good job that already does a great job with these other properties Just to show the seller like yes we can close Yes it s gonna go smoothly And we can make it happen 00 05 08 Sam Wilson right now I saw we read that there in your in your bio there in the in intro that you are also involved in assisted living So is that a core focus for you or is that just an opportunity that came your way and you participated in it Walk us through kind of being diversified across asset classes 00 05 23 Matt Jones Yeah That was an opportunity that came up my way And the numbers were really good It had an IRR of 21 plus so I couldn t say no to that And I come from a background of managing like group homes for adults who have disabilities it s really really similar the operation side which I m really well versed with And so And multifamily is where my focus is but it s on a different cycle than senior assisted living Like multifamily is high right now senior assisted living And a lot of times and we focus on rural areas actually that s cheap so we can buy these mom and pop shops for a song from operators who didn t do well during the Covid but we re hitting the silver tsunami here with the baby boomers that are getting to that age where they need are starting to need more intensive care from senior assisted living And so there s just a lot of opportunity right now The demand is gonna be much stronger than supply here shortly 00 06 15 Sam Wilson When you look at things like that is that a a potential core focus for you when you see opportunity 00 06 23 Matt Jones Yeah I think it there s the potential thought we might shift focus to that being our primary But multifamily is our bread and butter We understand that we ve done well with it and we know how it works 00 06 31 Sam Wilson Got it Got it That s that that is very very interesting Tell me what s a an excellent piece of advice that you were given Say like in 2019 when you said Hey I wanna switch I wanna go into something that can scale quickly 00 06 44 Sam Wilson What s something somebody told you you feel like that that everyone else should also hear 00 06 48 Matt Jones you have to add value to other people without expecting value in return And if you try to just take and take from other people take their knowledge take their time take their money without giving anything in return You re gonna it is really off putting like you you wanna add value to other people and it doesn t even necessarily have to be real estate related yes it s great If you re able to raise money or you re able to find deals or some kind of real estate related value but let s say you meet somebody who Maybe they wanna play the guitar And if you know how to play the guitar you can offer them some free lessons right there in an instant value Like and then they re gonna like you and then they re gonna wanna do business with you Or you never know where things go with this but by adding value to everybody around you at all times good things are gonna come back your way 00 07 30 Sam Wilson What are some surprises or potential pitfalls maybe that you learned or that you feel like other people should avoid 00 07 36 Matt Jones I think my biggest mistake starting out was trying to do it all on my own I consider myself a smart guy very capable And so I was trying to do everything on my own and I was just spinning my wheels for years before I realized I needed to take a nice big slice of humble pie And I I m very shy And so I had to force myself to network with other people and just get out there and find people to partner with to make things And once I did My my career propelled much faster than I I could ve on my own 00 08 06 Sam Wilson When do a lot of education in this space I think that s where your book about real estate really comes in What are some of the common questions or common things that people come to you and you say Hey we re gonna start at square one What s square one for you And then how do you kind of work em through the process 00 08 21 Matt Jones Square one is exploring the different types of asset classes and deciding which one two it the most but preferably one that you wanna focus on right away And because like there s a million different ways to Make money in real estate And if you try to do em all you re gonna do em all poorly So you re much more better being niche and focused And like my book it covers the whole spectrum of real estate investing So to help people explore like self storage units or mobile home parks or multifamily or all these different things And then you choose like okay this one makes the most sense to me This one I think I can do and then become specialized in that 00 08 57 Sam Wilson Got it Got it So yeah if I m hearing you re right you say pick two at the most asset classes and that goes back to the and I m even gonna contradict your statement there a little bit but it said he he would chases two rabbits cases He would chases two rabbits catches none Right If I could speak today And I like that idea of that You gotta really that there s a lot of ways in this business that you can make a lot of money Talk to us about success If you were to define success for you what is success and where do you look What does success look like for you in the future 00 09 26 Matt Jones you know success is just having goals that really expand you as a person and having a good plan to be able to achieve those So whatever it may be whether it s financial freedom so you can hang out with your family more or being able to travel which I enjoy just I guess living the kind of life that you want and taking the actions necessarily to make that happen And as for the future I anticipate I ll transition more from an active investor to a passive investor so that I ll just have my various investments and enjoy the free money that shows up at my bank 00 09 58 Sam Wilson I hear that man I m a passive investor in a lot of deals and I can t wait till that is all I am I love being an active investor but there s something really special about that ACH in your account once a month And you re like oh that was relatively easy I could do more of that So absolutely hear that Raising capital you went out and said Hey I ve figured out that this industry I don t have to have all the money myself I can go out and pool other people s capital and take down deals Talk to us about the capital Raise side for you Can you walk us through that journey Getting your first deal done Maybe some of the hiccups or the things that you would do differently on that front 00 10 32 Matt Jones Yeah Well I guess just in general when you re raising capital you wanna make sure you re the people that you re raising capital from understand what they re getting into So you don t wanna be like some scammer type of person You I m very upfront and honest so I make sure that I m not taking somebody s like last 50 000 for example I don t want that Like if you need that money to live off of this is not the right kind of thing for you So I first make sure that they understand that like the risks and potential rewards and what ll happen with their money And and then I show them like what that like I m myself Investing my own money into the deals that I m raising capital for I just increase their confidence that okay Like he s putting his money where his mouth is so that this must be a good deal 00 11 11 Sam Wilson Right right What were there strategies or I guess methods you employed on your first capital raise 00 11 18 Matt Jones Yeah you start out with friends and family and like work acquaintances and people like that But I would say my approach is I first ask somebody like Hey could I ask you a couple questions about your finances And if they say they re usually say yes if they say no that s fine But once they say yes then you say like would you be open to a 10 return on your Through an investment and which is conservative very conservative for a real estate investment or the kinds that I m looking at Sure And they ll generally say yes because that s better often than the stock market will provide them and with their 401k such but once they say yes then I say like if I found an investment that could provide you with at least that much a return would that make sense for me to contact you about that And just run it by you and then they re gonna say yeah sure Cuz that doesn t hurt for me to just like tell em about something And then okay If I found something like that how much money would you have available to be able to invest in that kind of deal And then they ll tell me like whatever amount it is And so now I ve got sort of a soft commitment and I can shut that down and like get their contact information What s the best way for me to contact you if I do find a deal like that cuz I I don t have anything right now but you know if I do So then you can contact them You ve got their soft commitment already and then you can show them like Hey there s a deal That s gonna give you a 15 IRR or what have you then they re gonna be like all right here s that original money that I said 00 12 34 Sam Wilson Are these conversations you re having like under what In what environment are you having these types of conversations 00 12 43 Matt Jones all environments Because if you don t tell people about what you re doing nobody s gonna know So you really have to be open and honest about yourself and authentic with that And plus I think of it as all there s all these people around me that are missing out on great opportunities if I don t tell them about it If and so I m doing them a disservice by not having this conversation with 00 13 05 Sam Wilson Yeah Yeah And that s there you re absolutely right there It s I think it s uncomfortable I ll be honest You re you re I think the questions you asked there are excellent but I was kind of envisioning myself asking those so directly and I m like oh man that makes me uncomfortable a little bit in like you said in all environments going Hey tell me about your finances Like well maybe no like okay But it sounds like you ve had great success with that 00 13 26 Matt Jones Yeah I would say the first time I did it I certainly felt awkward but it I got through it and I m like oh that wasn t so bad I can do that again Do you ever get any 00 13 35 Sam Wilson any any complete just like no We re not talking about that responses 00 13 38 Matt Jones I haven t yet because it s not like you say like hi my name is Matt Can I ask you a few questions about your finance build a little rapport first right 00 13 45 Sam Wilson Right I get it Okay No that s cool I like that And I think that s an encouragement to our audience And even to me to be more direct where it s just like Hey look we ve got we do have excellent assets We have excellent opportunities for investors And we re achieving amazing returns for em and it s kind of it s bad on me if I don t actually just go out and tell people about it 00 14 07 Matt Jones Yeah You re keeping people from achieving their financial goals from achieving their dreams by not talking about it 00 14 11 Sam Wilson Right Oh for sure For sure Yeah I had an investor call me she had received her first distribution in a passive deal and and maybe this is bad it was extended family So I don t hang me for maybe not doing my My know you re know you re customer as well as maybe I could have but they re like Hey on wait So I get this money Like you get a distribution And yet I still retain my equity in the deal I m like Uhhuh like you still have your a hundred grand in the deal and you re gonna still get a quarterly payout And they re like wow where s this been all my life I m like I m on I m onto something here So yeah I wish they d understood maybe the mechanics of the deal light slightly better but that s okay It all worked out So that is fun You re absolutely right Not sharing that stuff with your investors is yeah it s something we should all take certainly more seriously What are you guys working on right now that you were excited about 00 15 01 Matt Jones We re in between deals right now My Partner He just did a his fire step five six C offering which I wasn t involved with But before that did some that raising for that 228 unit deal So looking for the next deal being really patient being really cautious right now cuz we re potentially seeing some changes I guess in the market but being prepared for that 00 15 21 Sam Wilson Right Absolutely Absolutely Matt I ve enjoyed our time today Certainly appreciate you coming on telling us how to get out of the triplex rat race if you will and how to scale and grow quickly certainly look forward to sharing the links to your book hear the book about real estate Again that is the title of the book about real estate that I don t know how you got that title but that s awesome It couldn t have been absolutely more clear And then just some of the values that you add the day adding value to other people Without expectation is one of the ways to certainly grow You said one of the mistakes you made early on was trying to do it all on your own and the bigger deals we go certainly the more this becomes a team sport and then also about sticking to your niche and not going too wide 00 16 02 Sam Wilson So I appreciate that Thank you so much Is there any last piece of advice that you would like to share with our 00 16 07 Matt Jones listen It takes three things to get going in real estate educate yourself networking with other people And most importantly take action 00 16 15 Sam Wilson Love it Matt for listeners Wanna get in touch with you What is the best way to do that 00 16 17 Matt Jones You can go to my website Hawkwingcapital com and you can schedule a call with me through there and you can also even download a free chapter for my book as well 00 16 26 Sam Wilson Awesome Matt thanks so much your time today I do appreciate 00 16 29 Matt Jones it Yep You bet Click here to visit this podcast episode