From Prison to Real Estate Investor Making $71K/Year from ONE Rental

Ashley:
This is Real Estate Rookie, episode 353. My name is Ashley Kehr and I’m here with my co-host, Tony J. Robinson.

Tony:
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 you’re going to get, I think, a very healthy dose of the inspiration along with some tangible things. But our guest today, Matt McDermott, as you’ll hear, has a very interesting start to his story. And I’m telling you guys, if Matt can get to where he’s at, given where he started, you literally have no excuse for launching your own real estate business today.

Ashley:
He talks about his dilemma that him and his wife had. They’re standing in their kitchen having one of their very few arguments where should they take their savings and invest it or should they keep their savings because COVID has happened, his wife is taking a pay cut? Listen to the story and some of you may find yourself in similar circumstances where this is applicable, and Matt is going to go through his journey of what they decided on and how one of his properties is even bringing in $71,000 a year from being a short-term rental.

Tony:
Overall Matt’s story is just super inspiring. You’ll hear how he overcame challenges getting his first loan, how he bootstrapped in DIY, his first rehab. You’ll hear stories about how he scaled and his most recent purchase was pretty much a big commercial deal. But you’ll hear all the ins and outs when we get into Matt’s story. But before we kick it over, I want to give a shout-out to someone that left his a five star review on Apple Podcasts. And the title of the review is Real Answers to Real Questions. And the review goes on to say, “I got so much knowledge from this podcast. Ashley and Tony are by far the very best BP to help educate rookies on what to do. You actually explain things in a way we can understand. You guys are truly just great. Your willingness to give answers others were charged for is a real golden ticket I’ve been searching for.”
So we appreciate that, that review. And for all of our rookies that are listening, if you haven’t yet, please take 60 seconds, leave that rating and review because the more reviews we get, the more folks we can help. And ultimately the more folks that can start their own real estate investing journey.

Ashley:
And if you aren’t already, join the Real Estate Rookie Facebook group. The community continues to grow every single day, and we would love to have you a part of it.

Tony:
Matt. So every real estate investing journey starts somewhere and yours is a bit of a unique story because it starts inside of a jail sale. So just walk us through what was the backstory there and how did that experience lead you to the entrepreneur and real estate investor you are today?

Matt:
During and little after college, I definitely partied hard. I got in trouble. I ended up spending some time in and out of jails and institutions, and that was the fork in the road for my life. I remember I called my dad one time and he spoke about, “You have to aspire to be something. Are you going to aspire to be the baddest person in the room or the greatest person in the room?” I knew that I wasn’t going to be the greatest. I also was around the baddest, and I knew I wasn’t going to be the baddest. But which one are you going to aspire to be?
I remember that kind of hitting home. The feeling of hopelessness. That was kind of the bottom of the barrel for me and that feeling of hopelessness, I can still remember today and it’s definitely still one of the driving factors for me today.

Tony:
And you had a bit of a unique upbringing too, Matt, because your parents were real estate investors, right? Yeah. So you already got a taste growing up of what it was like to be a real estate investor. So just for context of the story, Matt, you had this really solid launching pad as a young adult. What were the decisions that led you to that point of ending up behind bars?

Matt:
Yeah. My parents got into it in the early ’90s before it was a trending topic. I definitely grew up in the short-term rental market and really the foundation. And like you said, Tony, the path was there. I just didn’t choose to take it for a while. Honestly, I hated it growing up. I disappeared every weekend because I went and worked with my parents and it was a four-hour drive from New York to Cape Cod. I didn’t like it because I didn’t hang out. I couldn’t hang out with my friends.
Now, I couldn’t be more grateful for it. I think that it instilled great lessons and even family values, everything. But I did my own thing. And honestly, I’ve been sober now for a long time. I think it was in my cards no matter what was going to happen or what kind of opportunities I had or what my path looked like beforehand. I am an alcoholic and I still go to Alcoholics Anonymous today and it’s a big part of my life. So I think it was going to happen no matter what. The trouble, that could have been… Maybe the trouble could have been avoided.

Ashley:
Well, a lot of people like to say that made you who you are today.

Matt:
Absolutely. I don’t regret it.

Ashley:
We are going to get back to Matt’s story and learn more about his real estate investing after a short break. Matt, I want to dive into just an overall view of what your portfolio looks like today to set the table.

Matt:
So I took the trailblaze path and I am also… Majority of my investments are on Cape Cod in Massachusetts. So I have two single families in a town called South Yarmouth on Cape Cod and we just sold a house in East Falmouth, which is a town in Cape Cod. And then my wife and I, just three weeks ago closed on a five dwelling cottage community in Brewster, Massachusetts.

Ashley:
Oh, that sounds cool. And are they all short-term rentals?

Matt:
They are, yep. We have one midterm rental in Naples, Florida.

Ashley:
So let’s get back to the beginning then. You have this conversation with your dad, you decide that you want to go to rehab, and then what is the actual step to getting your first deal?

Matt:
So there’s a bit of time in between there. I wish I could say I was completely done after that conversation. I wasn’t. It was a process for me to really find out how to live life on life’s terms. It was all new to me because I had been screwing up for a little while. I met my wife early on in my recovery journey and that was amazing. That really changed things for me in a lot of ways.
She’s always been a huge support and we wouldn’t be where we are today without her. Fast forward to our first deal was a lot of ups and downs. COVID hit. I knew that I wanted real estate, but I didn’t know how to get there. I knew that it was possible because I had seen it with my parents. But Micaran, my wife was a tough sell because she didn’t grow up with any kind of investing or real estate investing. So it was completely new to her. I’ve read about in the blogs and in the different threads about how do I convince my spouse to get on board? I’ve seen that so many times. Slow and steady.
I always planted the seeds even though I knew we weren’t really ready for it. There is a funny story that early on, we were at my parents’ house and they had the Rich Dad, Poor Dad board game. I don’t know.

Ashley:
CASHFLOW something like that.

Matt:
Yeah, CASHFLOW something. I think I have it now at my house, but my parents had it at the time and they were like, “Oh, let’s play this.” And Micaran, she was not investing in anything and just keeping the money. This was in the game. Anytime I was like, “Oh, let’s buy this property,” she’d be like, “Absolutely not. We’re going to be broke.” And my parents, we all still joke about that today because it’s all about mindset and perspective. Right?

Tony:
Wait, I just got to add just a quick funny story. So I have a super old iPad, the second iPad. So it was like the really fat charger at the bottom. And the only reason I keep it is because there used to be an iPad version of the Cashflow Game. If you get a new iPad, you can’t download it. So the only reason this thing is sitting in my house right now is because every once in a while I’ll break it out so we can play the CASHFLOW game.

Matt:
That’s awesome.

Tony:
Yeah, I love that.

Matt:
Tell me you love real estate without telling me you love real estate. So planting the seeds, we would talk about it. She definitely started coming around to the concept. I had started a painting business. One other story to talk about when I had first gotten out of the institution that I was in, Micaran was there for me and I got a first job with a painting company. I had to have my own transportation and my own equipment. I had no money, and I scraped just enough together to get a paint pole, which is like a pole extender that you can paint the walls with and a roller, rolling handle.
I was supposed to have all the equipment, but that’s all I had. Micaran dropped me off for the job and I knew I just needed a few minutes there even though I was ill prepared that if I could just get on the job and start working that they would see that I knew how to paint, I knew what I was doing. I did keep that job. The silver lining about that terrible job was that my boss was terrible and it led me to believe I could do this on my own. So now today my partner and I, Brian, he’s an awesome guy. He’s also involved in short-term rentals that we got involved in later in our careers. But now we have a multimillion dollar paint company and it’s been like a lot of hard work, but it came from humble beginnings.

Tony:
Matt, I just want to pause you with look quick before you go into the real estate side of things, man, because you just glossed over a pretty incredible achievement. Most people, regardless of where they started, will never build a multimillion dollar business. And you, coming out of a situation that a lot of people never recover from. The rate of people who leave jail only to go back at some later date is incredibly high, right? So the fact that you were able to come out scraped together the few dollars that you have to buy a paintbrush and use that as a launching point to build a multimillion dollar business, you got to smile about that, man. That’s a big deal.
We interviewed our friend, Nick Cooley on the episode, and I can’t remember which episode it was, if you guys just searched for Nick Cooley and he shared a story where he was a salesman on the road. I can’t remember what he was doing, but he was so broke at the time that all he could afford on the road was a $2 ice cream sandwich and that was his dinner for the day. It’s like we all have these moments where we find ourselves at what we think is the rock bottom of our lives, but there’s so many lessons that you learn about who you are, about what you’re capable of, about the limitless potential you really have when you can bounce back from those moments.
Matt, you are a shining example of what that is, man. So regardless of where the story goes from here, there are so many people who are listening who their starting points are 100 steps ahead of yours. So there’s literally zero excuse for anyone listening right now to not go out and get that first deal. And you, Matt, are an example of that brother. So we appreciate that, man.

Matt:
Oh, thanks. Thanks, guys. Appreciate that.

Ashley:
And that was episode 109 with Nick Cooley, if you want to go back and check it out. So, Matt, let’s dive into your first investment. So you get your wife on board and take us from there.

Matt:
So that also was a little bit of a process because since I was self-employed, the way that we filed taxes didn’t show an incredible amount of income. So the first time that we tried to apply for a mortgage, they were pretty much like, “We can’t lend you a cardboard box. You’re not showing us anything really to work with. Come back in a year.”

Ashley:
Can you give us an insight into what your actual financial situation was maybe from once you got out of jail and you said you could only get the paintbrush and now to this point, what was that financial progression? Was that just from the business and that was from that paintbrush story to two years later? What was the timeframe in there?

Matt:
So this is maybe four years later.

Ashley:
So you’ve built up your business a little bit by then?

Matt:
Yep. Built up the business a little bit. My wife was working as well and we started saving money a little bit differently because we knew that we wanted to eventually get into this. So there was some discipline that got added to our spending habits. Once we started applying, and then I got the whole, “You come back in a year thing.” We got a list of where the credit had to be, what we would need. At that time, I think we were trying to look at deals around 250 to 300,000 and then COVID hit. That shook all of us up and it changed a lot of industries.
My wife worked in student loan industry, so she took a 70% pay cut, got sent to work remote. Looking back on it, we doubled down when she took that hit with work is when I started getting more antsy about real estate. This was pre wave before the market really spiked up, and there was a pivotal moment where my wife and I were in the kitchen, and we don’t fight often, but we got into a pretty big argument about which way we were going to go. She was thinking, “You’re going to spend all our money.” And I was thinking this is going to replace her income.
Especially in short-term rental, it’s more work. And because of that, you have the potential for more reward, right? It follows the normal rules of life because it is a lot more work. However, you can see more cashflow than your typical few hundred dollars LTR kind of cashflow. We did all the things we were supposed to do during that year. We went back to that same bank, which was a local bank on Cape Cod and they denied us again. And that was a moment of like, “Am I going to stop here or am I going to keep going?”
I’ve always been determined and I’ve gone through some hard times. So really anything that I go through now, and sometimes I have to remind myself this, but there are luxury problems. I know what a real problem is. I know what real hopelessness is. So one bank telling me that we’re not going to lend to you is not enough for me. I must have cold called 20 to 25 lenders and brokers and finally got one that was… I used to joke, I’d be like, “Micaran, I found one dumb enough to lend to us.” But we found one, he was not dumb. He was great. And that’s how we were able to get into financing our first deal. And then I could tell you a little bit about that first deal if you’d like.

Ashley:
Well, first, can you tell us what that conversation was like with each lender? What did you say to them? Was it, “This is my situation, this is what I’m looking for”? Can you give us some insight in case there’s somebody in a similar position that has to go and cold call 25 different lenders?

Matt:
Yeah. I was not aware. I had been listening to some of the BiggerPockets podcasts. I’ve been reading. I had joined online. My parents were a huge support. They already owned houses on Cape Cod. They still do today, and they were our eyes on the ground because we were… I don’t know if that phrase is right, is it feet on the ground?

Ashley:
I think it’s boots on the ground, but-

Matt:
Boots on the ground.

Ashley:
I’ll take eyes on the ground. They’re laying down looking under the house through you.

Matt:
They were, they were. We couldn’t have done it without it. We were in New York. I’m running a business here. We had two young kids and we would find something. I’d send it to my mom. She would shoot out to the house, set it up with the realtor, say, “Nope, this one is no good, or this one is good.” They’ve been a huge part of where we’re at today. When I started calling, I think I didn’t know about any of the creative stuff yet. It was all conventional and I wanted to do 10% down and that was kind of the kicker. That’s what I kept getting pushback on was doing a…

Tony:
Vacation home loan?

Matt:
Yeah, vacation home loan with where my credit score was, my income was. It was a tight squeeze for the price point that we were searching for. However, we did end up doing 20% down because during that time too, we had some time to save and know that, okay, we’re going to need 20% for this first deal.

Tony:
I just want to get some clarity for folks that maybe are also self-employed, Matt. What changes would you maybe have made in how you were running the books for your business to make you more bankable in that first go round?

Matt:
Yeah. So really it’s pretty cut and dry. You have to show income. That makes you bankable if you can show income. The Section 179 on a business return or your return, self-employed, you do get that back. So there are ways to structure it so that your tax liability can come down, but your buying power can come up based on that Section 179. So if you bought a car for the business that you can bonus depreciate that and it goes into your Section 179 and then the lender will give that back to you because that’s kind of like a volunteered expense.
Your burden will come down because you will pay after that car. Right? However, from a lending standpoint, they give that back. So that’s something that we use today in any of the deals that I’m doing now. But for the new person that’s self-employed coming in because I know you call the broker, the lender, and they’re like, “What do you do for work? What’s your W2 look like?” And you’re like, “Oh, I’m self-employed.” They’re like, “Ah, all right.” It’s never met with open arms.

Tony:
Yeah. There’s definitely more hoops to jump through when you’re self-employed.

Matt:
For sure.

Tony:
Matt, you highlighted something that’s the beauty of real estate investing. And obviously neither Ashley nor myself are CPA, so still go talk to a CPA that can give you all the nitty-gritty. But one of the beauties of real estate investing is that, A, the income is passive if you’re doing rentals. And then B, you do have the ability to leverage bonus depreciation or you can buy a property, do a cost segregation study and on paper show a loss. But a good lender will still be able to go back and say, “Well, hey, you didn’t actually lose money. This was just a loss you showed on paper. So we can add that one back in.”
So as you start to build that real estate portfolio, you get the positive tax treatment, but then you also get the ability to potentially go out and get more loan products.

Ashley:
We actually did that with our farm when we built our house and got a construction loan, all the depreciation, because every time we’d buy new farm equipment, we would do the Section 179 and write it off in that full year. So the bank went ahead and added that all back in to actually find us a new income number with taking that depreciation off the table.

Tony:
Sorry, Matt, continue. I just wanted to jump in and share that.

Matt:
Yeah. No, that’s great. And also I just want to clarify, I’m not a CPA and I’m very ignorant. I’m literally word vomiting stuff from my accountant coming down the line.

Ashley:
Well, your accountant will be very proud of you. You did a very good job explaining it.

Tony:
Great description.

Matt:
That was by the skin of my teeth, but…

Ashley:
So jump back into the loan. You found a lender, that was one of the reasons you were able to become bankable with putting that 20% down because they added back in the depreciation. So you had more income in their terms as to what they look for. So you want to talk about how you found the property and maybe in any negotiation or anything like that.

Matt:
Yeah. So we found the property on the MLS. I don’t quite remember if I sent it to my parents or if my parents sent it to me. There was a lot of back and forth at that time of looking through different deals. We had already put a couple offers in on a couple other properties that fell through. So the cool thing about this property was that it wasn’t listed well. And I think that that’s an undervalued thing to look for when you’re just shopping MLS because everyone’s shopping MLS.
But there is a huge variation between the skill sets of realtors. There are excellent realtors that know how to list a house. They know that we live in a social media type world and the pictures are clickbait, and they have professional photography, and they highlight every single good feature about that home. And then you have the exact opposite where the pictures are grainy.

Ashley:
It’s the corner of the wall.

Matt:
Yeah, it’s the corner of the wall. It’s a realtor that does this on the side. There is something to be said about that. My business partner here is actually picking up. He’s set for a January closing on Cape Cod on a home. For that exact reason, it was listed really poorly. Not a single picture of the backyard that was beautiful, had a huge deck, so on and so on. A lot of things weren’t talked about. So this house was 0.5 from the ocean, which historically 0.5, if you can walk to the ocean and you’re under half a mile, that’s your sweet spot.
You will see that translate to your nightly rate. This was right at 0.5, and it was only 0.5 because of a cut through at the end of the road that it was on. None of this was listed. My dad actually Google Earthed it like he likes to do to any property, and he was like, “Hey, looks like there’s a path at the end of this road.” He secretly went down there and checked it out and saw that there was, without letting the seller’s agent know. But that was kind of a ball drop on their end because it really does raise the value of these coastal homes.
So I think the ask was 315 and we negotiated a little bit back and forth. We ended up settling on 305. I did get an inspection on that. I think that might be the first and only inspection I got because from then on everything was getting waived and you had to really sweeten the pot with your offer. Luckily in the construction industry, my father was as well. So we do our own just another visit and it’s our own inspection.
So 305, 20% down. No huge hiccups except for sending documents. Every deal gets a little stressful during the, “I need this document, I need this document.” Some advice that I’ve learned with that is that I opened folders just as simply as right on here, right on my phone, and I started saving files that are just for lending. So when something comes up, I try to keep it up to date and put new tax returns in there and put new for the business.
I got to always have relevant profit and loss statements and balance sheets. So now I keep that kind of streamlined, but at the time it was like, “Oh my god, this is 50 things that they need.”

Ashley:
You paid real estate taxes, proof of insurance of every property. Oh my god. It gets overwhelming.

Matt:
And then the broker that I was using, he was not the most organized. So I would send things and he’d be like, “Hey, I’m waiting on these. I’m waiting on your P&Ls from 2019.” And I’d be like, “I sent you those twice already.”

Tony:
With the whole AI boom. We just interviewed someone earlier today that was talking about different AI tools. I swear I’ve toyed with this idea of building some kind of machine learning tool that makes the mortgage process easier because imagine if you could just add your mortgage broker to your QuickBooks account and then automatically all the information they needed could just get fed into their thing or if you could add them to your bank as a user or something, and all that information just gets pulled in.
Anyway, if you’re good with that and you’re listening, please reach out to me so we can build this. This is like a billion dollar idea. I just don’t have the skillset to do it.

Ashley:
Yeah. They’re already building it without you, Tony. You give away the idea. You just lost your leverage to be part owner of that company.

Matt:
Yup. And it’s gone.

Ashley:
Maybe they’ll name it after you.

Matt:
Well, one thing I will say, and I’m not trying to plug Rocket. They have done a good job with streamlining the application process. I’ve used them a few times now between refinances and new notes, and they have done an excellent job at streamlining. You can link your bank account. You can link it to them and they’ll pull all your information, at least bank wise from there. I think it would be a great idea to introduce the QuickBooks thing because that would be sweet for guys like us that have QuickBooks. But this first deal, I did not use Rocket and it was not very streamlined.
However, we were pretty dedicated to get this thing done. And the excitement, the fire that was burning that was terrifying and invigorating at the same time.

Tony:
So you picked this one up on a 20% down, so a little over 60 grand to get into the property. Is it turnkey ready when you purchase it or do you have to put some cash in to get it guest ready?

Matt:
So it was 1960s, hadn’t been touched at all. Zero pink tile, the whole nine yards.

Ashley:
But probably built it very well because it hadn’t been remodeled since then.

Matt:
Yeah, it was built well and we got to it right away. So we’re out in New York like I said. So it’s about four to four and a half hour drive and dedication was an understatement. We would pack up the car with little kids Friday after work, drive out there Friday night, crash at my parents, work there until Sunday afternoon and drive home. We did that months and months straight. And then I’d go back to work on Monday and Micaran would go back to work as well. And with the deal with the kids and my parents were a huge help, especially during that first project.
I think they really wanted to see us succeed in this. We didn’t have any financial help from them, but we did have a lot of knowledge that we got from them. My father did a tremendous job helping me out. My Uncle Vito helped a ton every weekend. Every weekend we would just plug away at things. My brother came up and he would help. I don’t want to paint a picture like we just did this completely alone. We were very fortunate to have help with it and have help with the remodel and Micaran and I are always very appreciative of that.

Ashley:
Matt, I want to ask about your kids because you painted a picture kind of in the beginning of the episode that maybe at some point in your life there was a little resentment that you had to go every single weekend with your parents away from your friends. Is there anything that you are doing different to instill the skills and the values that you appreciate and are grateful for now and into your children so that they don’t grow up and feel like they missed out on weekends with their friends and things like that? So they appreciate that education and what they’re learning now and being able to be grateful.
And the reason I asked this question is because my kids, every other Saturday, they’re in charge of emptying the coin-operated washer and dryer machines. It will either go, “Woohoo, we get our $10 this week or whatever. Or it’ll just be like, “We don’t want to go.” So I am just curious if you have given that some thought.

Matt:
Nope. We do it exactly the same as it was for me. I mean there are definitely more similarities than not. Some of it is like unavoidable. I guess I’m so grateful for it today that I’m like, it’s one of those lessons to the kids where it’s like, “Okay. Hate me now for it. One day you’re going to thank me for it.”

Ashley:
You can be patient.

Matt:
Yes, I can be patient. I guess one thing that is important to me is once in a while we’ll leave the kids home with grandparents and just my wife and I will go, or I’ll take a quick trip myself. But I think what’s really important that they don’t even realize right now is that we’re doing it together as a family. And I think that that has a ton of value instead of caving to the fact that, “Oh, we want to stay home and play video games and do this with our friends.”
Of course there’s importance to that. They’re both into sports, they both are into baseball, and we sign them up for fall and spring seasons. We still stay very involved in all that. It definitely has its place where it’s really important. And so does this. When I was growing up, it taught me how to work hard and it gave me a sense of work ethic that I carry with me today. And because of that, I don’t regret it at all. Sure, I missed out on a few things growing up like parties. Well, obviously I still got to party.

Ashley:
You made up.

Matt:
I still got to party, so maybe I didn’t miss that much of that. But anyway, I think it is important to keep them involved in it and then also realize that their kids and they’re going to need some fun tied to it. So if they help out like last weekend we ended up having an estate sale at the new property because we bought it furnished. So some of the stuff was cool and we kept, and a lot of it had to go. But both kids helped out there.
So Bentley is 11 and Trey is eight. So Bentley is getting to the age of, “I’m going to call on you for a few hours a weekend now.” Trey, I could call on him, but I get half an hour.

Ashley:
The attention span, yeah.

Matt:
Then it’s a squirrel.

Ashley:
I have a 7-year-old, so yeah.

Matt:
Okay. So you understand. Half of the laundry machine is emptied and then it’s gone.

Ashley:
It’s like 6-year-old that picks up the slack on that one.

Matt:
Yeah. But we told them that they’ll get a cut of the sale, which is very similar to the incentives that were given to me when I was around that age. It was a cut of the sale. I got cut into deals with my parents. At the end in high school, I was getting one and a half percent of sale on some of the flips that they did. I worked there after school in high school. I worked on the weekends and you got paid for it. You started to learn about what a dollar meant.
So this last weekend, Bentley got $10 from the sale and Trey got five. And Trey was like, “Why does Bentley have a whole nother $5 bill?” And we’re like, “Because, Trey, you barely did anything. We’re giving you the five bucks because we feel bad. You really didn’t do much.” But Bentley was like, I had to tell him to chill out because he was putting numbers on things. He was like, “Yeah, give me 35 bucks for that. That’ll work.” And I’m like, “No, dude. Where you getting these numbers from?” He’s like, “Oh, it looks like it’s worth 35 bucks.” So that was a long answer to the question.

Ashley:
That’s great. I think that’s a very important insightful thing to talk about though is because real estate, a lot of people go into it for that financial and time freedom and their why is to spend more time with their family. I think incorporating your family on that journey is a great conversation to be had because a lot of real estate investors, that is true. Your kids are involved in some way of your journey, especially when you’re first starting out.

Tony:
Matt, let’s circle back to the numbers here. So you bought it for 305, put 20% down. How much ballpark do you think you spent on the renovation and the new furnishings?

Matt:
We spent about 80,000 to renovate and furnish.

Tony:
How did you fund that? Was it just out of pocket from additional savings you had? Was it wrapped into the loan that you had?

Matt:
So we pretty much went, once we closed on it, I’m going to say we had maybe 35,000 to our name at that point, and we rolled the dice because we knew it was going to be a number of months to get through the renovation. Everything I was making, I was funneling it to material.

Tony:
Got you.

Matt:
All the work was self-performed, so that was a big help between myself and my family. We self-performed all the work and we really had to. Cut to today, it’s not quite like now. It’s a lot of contractors just because this new project is much bigger, being that it’s like five dwellings. So it’s been a learning process to go from totally self-performed to now more of the management role or GC role of the projects.

Ashley:
Who doesn’t love managing contractors?

Tony:
Here’s another billion dollar business idea. If you were a contractor and you just pick up your phone, billion dollars right there. Every single real estate investor across the country is going to want to hire you if you just pick up the phone.

Matt:
That’s it. Call us at Ryder painting. We always pick up the phone. There

Ashley:
You go. Matt, what is the timeframe of that rehab?

Matt:
So we closed in September and then we had it live on the rental platforms for April 1.

Tony:
Did you guys do a refinance afterwards or did you just leave the cash in the deal? What did that look like?

Matt:
Yep. So we refied afterwards. We were past the season mark. What was really cool was we put so much of our time and energy into this and then Micaran was making the listing. She manages all the short-term listings and she does all the design in the homes. She does a really great job with all that stuff. But this was the first one and she makes the listing we’re on the way home and it had gone live. It takes 24 hours, whatever. It went live. We were driving home from the Cape and it was just like bing, bing, bing, bing, bing, going off, getting all these bookings, which I know doesn’t always happen and some of the future deals, it didn’t happen like that.
Our higher power was saying like, “Hang in there.” Because we were dead broke and it started binging off and we were just doing the happy dance in the car because the next summer was already starting to book up. But yeah, after it seasoned, we refied the ARV. At that time of refi was 535,000. Now this wasn’t all just from elbow grease. During this time, we bought right before it spiked, could not have been a better time to buy. So we rode the wave and we renovated. So it was kind of, we made ourselves a perfect storm there.

Tony:
Double whammy. Yep. How much cash were you able to pull out of the refi, Matt?

Matt:
132,000.

Tony:
So let me do that math really quickly. You put in about 60 to buy it, another 80, so 140. Pulled out 132. So you really only left about less than 10,000 bucks in this deal after the refi?

Matt:
Yeah. And by that point of pulling it out, we were already in the positive from the rentals.

Ashley:
Wow.

Tony:
Dude, so amazing. So it is a strategy that works really well is like the BRRRR STR where you’re BRRRR’ing but you’re short-term renting instead of long-term renting. But where a lot of folks who caught up is on that backend refinance. What kind of loan products did you use? Was it a loan product specific to Airbnb’s or short-term rentals? Was it just a traditional rental loan product? What loan product was it?

Matt:
So we refied with Rocket Mortgage. So those short-term loan programs are great if you don’t qualify for something conventional. You’re always going to jump your rate with those products and it’s great that they’re out. And on this last deal, I was having a little trouble with the financing because of the Fannie and Freddie rule of only four units and I was at five dwellings.
So I did explore some of those and actually almost went with one of the short-term financing options. But you do pay somewhere for it and it’s usually in rate. So we went with Rocket. Like I had mentioned earlier, it was very streamlined. The rate was a little higher than what we could have found if we had kept searching.

Tony:
What is the rate so I can hear everyone groan because I’m sure it’s less than what they’re getting today.

Matt:
Yeah, I think it is 3.2.

Tony:
Man.

Matt:
Oh God, I don’t even want to say that out loud.

Tony:
Ashley, what’s your lowest interest rate right now in your portfolio? Do you know?

Ashley:
I think a 3.5 Maybe.

Tony:
Yeah. Mine is up 2.675.

Ashley:
Oh my God.

Matt:
Tony got us beat.

Ashley:
Definitely not that low.

Matt:
Tony got us beat.

Tony:
That’s my best rate right now. That was January 2021, I think we close them.

Matt:
That was a soft flex, Tony.

Tony:
Yeah.

Matt:
What’s everyone’s lowest? Mine is a 2.6.

Tony:
Well, Matt, it looks like you crushed this rehab, you crushed the BRRRR. You guys were able to really get back pretty much all the money you put in. So did you guys then redeploy that same capital into the next deal? Is that how you got the five cottages?

Matt:
No. So we actually put that into another deal in South Yarmouth for 382, which was a small 3.1 That was a five-minute walk down the road and that one’s been also an SCR and also a rehab renovation inside. Same kind of story. So I won’t hit you with all the details because they’re very similar to the first one. And that one has been performing very well as well.

Ashley:
There is one thing that I want you to mention because I think your mom is probably going to listen to this episode and I did see in the show notes that she said something and I called it out right away. I was like, “That is really great.” So I want to make sure that you give your mom a shout-out and mentioned that line that she told you.

Matt:
Yeah, so my mom has been a huge part of our process and she’s always been big. Ever since we were little, she was always big on mantras and sayings. I’m embarrassed to say, but she used to make us recite this mantra every day on the way to school, us and my siblings.

Ashley:
It’s like an affirmation. Everybody does it today.

Matt:
Yep. I won’t repeat because it was cringey. She’s always been great with sayings and mantras and she’s had a few, but one of them that’s always stuck with me is to don’t quit, rest. I think I had mentioned a few of them in my notes with you guys and I’m not sure if-

Ashley:
That was the one.

Matt:
That was the one?

Ashley:
[inaudible 00:45:09]

Matt:
Because she’s good for a bunch of them. But the don’t quit, rest is so applicable to all of our lives. Right? We are constantly hit with these obstacles and these hurdles that we have to get over and we’re always pushing to better ourselves in some way or some direction and sometimes it feels like we’re on a hamster wheel and we’re not getting anywhere. The biggest disservice you can do to yourself is to just quit after working hard to meet a goal when most of the time all you need to do is rest, reset, take a breath, take a weekend away, go for us.
New York City is really close. Go to the city and see a show for a weekend. My wife and I have done it many times in just mayhem, in chaos, and we’re like, “This weekend we’re going to go away.” Or this night we’re going to put off some of the laundry list of stuff that we need to do because our lives are so busy like so many of us. And you need that break so that you can refocus and hit it with a fresh mind. And then so many times you’re much more successful looking at it through different eyes like that.

Ashley:
What a way to wrap it up there. That was great. Thank you so much for sharing. I want to take us into our rookie exam. So our first question is, what is one actionable thing rookies should do after listening to this episode?

Matt:
I would say to just spend some time learning. I was so nervous in the beginning about how to get involved. I think listening to this podcast is learning. The rookie podcast in particular. I remember in the beginning I used to listen to the original and it was great. Don’t get me wrong, I love it. But in the beginning it was like… And the guy is like, “And then for my 98th deal, I got this 500 unit.” And I was like, “What? I’m just trying to figure out how to get into the first deal.” And knowledge is power.
So to anybody just coming in, if you’re listening to this podcast, you’ve already taken a major step in the journey of knowledge because I am still learning so much every day and I continue to learn because it is powerful to have knowledge on these subjects so that you can make informed decisions. So I think that’s what I would recommend. Keep listening to this podcast.

Tony:
I couldn’t have said it better myself, Matt. That’s a great tip. All right. So question number two, man. What’s one tool, software, app or system that you use in your business.

Matt:
For real estate, I have PropStream. I’ve never acquired a deal through it, but it is an awesome program that I do use to find out some information. It gives some more information about deals that you’re not going to find on the MLS or just on a Google search.

Ashley:
Matt, where do you plan on being in five years?

Matt:
So five years, my wife is going to kill me for saying this, but I would love to have-

Ashley:
Is this another billion dollar idea you’re about to give out?

Matt:
No. I mean five years, I would love to be involved in the boutique motel. And so there’s a lot of those on Cape Cod that are run down and I would love to acquire one within five years and brand it the way that Micaran designs and how we operate.

Ashley:
Well, I feel like you’re on your way there with the five cottages for sure. I mean, that’s definitely a start to a boutique hotel for sure. So, Matt, we’re into the new year. What are you doing to actually set yourself up for some of those five-year goals?

Matt:
Yeah. So Ryan and I are actually in the process of buying a new commercial building for our business and we are planning to close on January 12th.

Ashley:
Oh, awesome. Congratulations.

Matt:
So that’s a cool kickoff to the new year. We have some changes and some different things that we’re going to be doing over there, so we’re excited to tackle that for ’24.

Ashley:
Well, Matt, thank you so much for joining us. We are going to link Matt’s information into the show description. So whether you’re on your favorite podcast platform or you’re on YouTube, you can scroll down, look in the description and we’ll link everything there. Also, some of the things that Matt mentioned or Tony or I did, will also be linked down in there. And of course, as always, our social so you guys can give us a follow. Thank you so much and we will see you guys on the next episode.