“I just find deals and I close deals. That’s what I do.” Six months ago, Matthew decided to be his own boss and leave behind the nine to five work schedule. Armed with his previous real estate agent experience, Matthew joined real estate investor clubs and began to foster business relationships with other investors and went on the lookout for Houston investment properties.
Now Matthew has SIX rental properties and is looking to add more investment properties to his portfolio. He quickly realized the importance of delegation when juggling multiple rehabs and properties. He determined where his time is best spent and what tasks should be delegated.
We recently sat down with Matthew to find out his approach to investing, tips for completing a successful rehab, and his future plans.
Listen to our conversation with Matthew in which he discusses his investing strategy plus…
- How to price your properties to create high demand
- Four areas of the house you should ALWAYS check during the inspection
- How to streamline the process of finding tenants
NOTE: Since Matthew is a Premium Elite member, he received a FULL refund of his up-front membership fee for simply doing a deal! Find out more about our Premium Elite Membership here.
Tell Me About Yourself…
How did you get into real estate investing?
I joined a local real estate club and started learning how to do things according to their model. Right now, I’m focusing on single family homes. I have six homes currently for rent or are rented.
What made you want to become a real estate investor?
I was just looking for some stable income and financial freedom. I wanted to make some money, have some fun, and get away from the 9 to 5 schedule.
How did you transition to being an investor full time?
I was a realtor for a while and I saved up money from that. I also have a small share of a family business that I receive passive income from, which helps a lot. I was able to secure some pretty nice loans from friends and family to help me get started. I pay them dividends every month and I buy property with that money.
What advice do you have for people starting out in real estate investing?
Read a lot of books and look for mentors. There’s a lot to learn and a lot to get wrong. Mistakes can be quite costly. You need to try minimizing those as much as possible, but at the same time, try not to let that weigh you down from making your first purchase.
Does having a real estate license help you in investing?
Yes, having a license gave me a lot of options. I think if you’re starting out, you can save money by buying properties and representing yourself. You can also sell your own properties and save some money on the backend. When you’re starting out, it can help quite a bit. A couple of thousand dollars here and there and after ten deals, that can probably help you buy another house.
How long ago did you start investing?
It’s been about six months now.
In six months you have bought six rental properties. What is your next step?
Yes. I’m trying to buy more Houston investment properties. I’m trying to lock down three a month starting now. I just closed on a property yesterday. I was supposed to close on one today, but things got a little bit delayed because it was a short sale.
After that, I’ll probably start working on two more buy and holds and a couple of flips to try to get about two, three, maybe even four deals a month. I’m trying to ramp up the business a bit.
How do you manage the construction and finding tenants?
I don’t do everything. I just find deals and I close deals. That’s what I do. I have two crews right now and I am looking for more because I’m going to try to keep them busy all the time. That’s pretty much the plan.
I do have a cousin who is a realtor in case I need to start giving him my property listings to sell because I imagine I can get pretty busy doing the things that I do. I just need help. Once you get to that certain point, you need as much help as you can get or you need to build a team.
Having six properties is not a whole lot of work. Once I start getting up to ten, maybe 20 or 30 units I’ll probably have to start looking into hiring an assistant or using a property management company, but I’m not quite there yet. That could be quite expensive.
How much repair do you do on your own?
I mean, if it’s easy stuff and I’m in the area, I’ll just knock it out myself. I have changed fences and replaced faucets and have done other things on my own. At this point, I don’t really want to do those tasks. Yeah, everyone has to start somewhere. It just depends on how much money you have.
Having $25,000 is not the same thing as having a quarter of a million. If you’ve got $25,000 to start, you might be more willing to do a lot more of the work yourself in order to save money and that makes sense. If you have a quarter of a million dollars to invest with, you should be doing a lot more sophisticated things with your time.
How did you find MyHouseDeals?
I was looking for leads online. I was also looking for leads by going through my investors club. Within the club, the deals go so fast. Because of that, I needed other sources. MyHouseDeals is a good one. I’ve met quite a lot of decent people.
Tell Me About The Deal…
What kind of Houston investment properties were you looking for?
Initially, I was looking for buy and holds between $100,000 to $150,000. Right now, I’m looking for something with a bigger spread between the purchase price and an after repair value between $250,000 and $350,000.
Are there any parameters you look at when picking a Houston investment property?
No. I’m not at the point where I can pick and choose my properties like that. Right now, I’m just trying to get a hold of good numbers. Greater Houston usually has good numbers. I go as far as Woodlands and Katy, but not beyond that.
How do you verify your estimates?
It’s not an exact science. Everybody who looks at these houses, they might have a different idea of what it’s worth. The way I sell my houses, I try to list them just below what their comps are selling for. Potential buyers say, “Wow! This is a nice looking house. Oh, wow! That’s a pretty good price.”
I can generate some competition and move things a little faster that way as opposed to just putting it out there for 10% above the usual rate and just hope someone bites. I don’t want to sit around and wait for people to trickle in. I want people to be walking all over each other trying to get a hold of this deal. I try to create that sense of urgency.
How much repair did the property need?
This particular house didn’t really need a whole lot of rehab. I think I actually put a lot more money than I needed to into the house, but it looks great. When I bought it, it was really dirty. I got the inside painted, changed out some of the carpets with a renter’s grade carpet, fixed up a couple of patches here and there on the outside, and put in a silver screen.
I spent about $10,000. I think I spent about maybe $4,000 or $5,000 above what I should have spent, but it’s okay. The numbers still worked out. It’s rented right now. I’m pulling close to 35% cash-on-cash every month with a little bit of equity put aside on top of the purchase. It’s not a bad deal. In fact, it’s probably one of my better deals still.
Is your strategy for getting a tenant similar to your selling strategy?
Yes. It was the lull of the year, like around November/December, when I rented it out. It was a little bit of a process, but I was finally able to find someone. It took about a month and a half, which is a little longer than I’m used to, but it wasn’t surprising considering the time of the year.
Plus, I only used one method because I was so busy at the time that I did not have the time to list it on the MLS. I used Greensheet. I got a ton of calls off of that, but out of maybe every 20 callers, there’s one person that might actually qualify. Then one out of five of those who qualify are interested enough to put the paperwork through and have everything check out.
It was a lot more calls than I wanted. I’m exploring new options when it comes to marketing my rentals. I think I was just trying to go cheap and not list on the MLS. Listing on the MLS means that I would have to pay other people a commission.
I think it would be worth it to just list it on the MLS from now on. I think you get more qualified tenants. It’s less work. The people who call using the MLS tend to have more real estate knowledge. They might have better credentials to actually get into your property.
Tell Me More About The Investing Process…
What advice do you have for putting crews together?
Honestly, I met the crews that I work with through word of mouth and through the vendor program at my real estate investors group. Most of the guys I use right now have very competitive rates. The only way to really get those guys is word of mouth.
When putting together a crew, you have to find your deals first and if you’re going through a realtor, ask the realtor, “Hey, do you know anything about investing?” If they do, then they usually have a couple of people who do stuff for them already. You have to talk to people and ask around. Ask,“Hey, do you know anybody?” Everybody’s got some kind of handyman to help out around their house.
Have you had any surprises so far in your six months of investing?
Yes. For example, sometimes when you open up a wall you’ll see some water damage that you didn’t know was there. I feel as if those things aren’t really deal breakers since they’re not that expensive to fix most of the time. My guys are good because they’re not going to nickel-and-dime me on everything.
My crew is currently doing the drywall and there happens to be a leaky pipe.They fix it by unscrewing the pipe and putting teflon tape on it. After that they tighten everything. That’s pretty much it. They don’t even charge me for that stuff.
Plumbing is a big part of the deal. If you’re going into a house with old plumbing, you really need to get that checked out and get bids on that because it can cost an extra $5,000 to $10,000 depending on what needs to be done. Plumbing is one of three things you need to look at when going into a deal.
The other two things you need to look at are the HVAC and the foundation. Let me add in one more thing. Don’t forget to check the roof!
What are some financial mistakes that investors make?
If you’re working with private lenders and using hard money, it can be a tricky process because you’re over-evaluating the house by $10,000 or $20,000. Then when you do the appraisal, that can come back $10,000 or $20,000 short and that comes out of your pocket.
This has happened to me before. It actually happened to me on this current property. The appraisal came back about $10,000 less than I expected. Luckily, the deal was still good enough to where even though it was more out of pocket, the numbers still worked for me. The tenants I have right now pay a really good rate, so it actually still turned out to be a home run.
Honestly, you really shouldn’t let things scare you too much because you have to do it. Even if you take a small loss at first, you learn the game. You get that experience. You won’t make the same mistakes twice, hopefully. Investing can be a lot of fun.
What final words of advice do you have for new investors?
Read books. Read the Millionaire Real Estate Investor by Gary Keller. He has a series of these books that I recommend. He also has another book that people should read called Flip: How to Find, Fix and Sell Houses for Profit.
Make sure to look for a mentor. For example, if you’re starting out, you don’t have much money or experience. However, there is always someone out there who has been investing for a while and is willing to help you. These investors will offer to pay for the deal. They will say, “Hey, you know what? I’ll buy the house. I’ll split it 50/50 with you. Just help me run it and put it together and sell it.” They have pretty much no money down. You pay for the whole deal, but you’re profiting and you’re getting that knowledge and experience.
On the next deal, you might be comfortable enough to do it on your own and make the 100% profit. Don’t be afraid of paying people to help you. That would be my advice.