Epic Real Estate Investing - 5 Things Matt Andrews Wishes He Knew Before He Started Holding Houses | HTH 004 | 462

Episode Date: September 5, 2018

On today's Way Back Wednesday episode featuring Hold That House, Matt Andrews speaks with Matt Theriault about the 5 things he wishes he knew before he started holding houses! Learn why you should evaluate your strengths and weaknesses, what to do when a problem arises, and why you should put your ego aside. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey Matt here, got a great episode for you today. Doug deep into the archives for this one for this episode of Way Back Wednesday. And, you know, it's been said here at least once that you can get rich flipping houses, but you get wealthy holding them. And Matt Andrews today is going to share with you the five things he wish he knew before he actually started holding property. So if you want to do deals, you want to build wealth, stay tuned right here each and every day. We're here six days a week. If you want to go fast, go to R-E-I-A-A-S dot com.

Enjoy the show. This is Terio Media. Don't wait for appreciation to buy real estate. Buy for cash flow and wait. In other words, Hold that house. Your host's Matt Andrews and Matt Terrio. Hello, welcome.

Flipping houses, it can make you rich. Holding them will make you wealthy. This is The Hold That House show. I am Matt Terrio and over there is Matt Andrews. What's going on, people? And before we begin, we've got a free gift for you. Go to Hold Thathouse.com and download the four-hour work month. Yes, the four-hour work month.

The Ten Commandments to Managing Property Managers. Really, it's the key ingredient to financial independence through real estate that they're not telling you about. And if you do it right, if you follow these Ten Commandments, you really can have the four-hour work month. And you can get that for free at Hold That Howe. All righty, Maddie, Maddie. We got a hot one today. We do, we do. We're going to get real honest today.

Okay. We're going to get real honest. Guys, today we're talking about the five things that I wish someone had told me before I became a real estate investor. I love it. All right. This is what I started investing in 2000. Okay, so I've been investing for 15 years now.

And, you know, if 2015 Matt Andrews could go back and talk to 2001 Matt Andrews, Andrews, well, let's just say 2001, Matt Andrews would have made a lot more money for the first, you know, six or seven years in the business. I would have avoided a lot of costly mistakes. And I know, you know, we're talking to a lot of people that are just getting started in investing and really just starting to build that buy and hold portfolio. But we're talking to a lot of veterans, too, and a lot of people that are seasoned veterans in investing. So some of this stuff, you know, may very well be lessons you guys learned, too. And it might be lessons that you learned the hard way like me. For those of you who are newer, my hope is that by me telling you this, you will not have to learn these lessons the same way I did. So I'm going to save you a lot of money if you're just getting started here.

But just giving you a few things that I wish I had known back then. So we'll just jump right into it. I mean, number one of the five things I wish I knew before, or five things I wish I'm going to told me before I became an investor, is to focus on my strengths. Okay? And this is different for everybody, right? Because every one of us have different strengths. I mean, Matt Andrews here, Matt Terrio here, you know, we're both bald, we're both extremely good-looking dudes.

But besides that, there's a lot of differences, a lot of strengths and weaknesses that we have, you know, that are different than each other. Everybody is different here. So we need to be honest about evaluating what our strengths are and what our weaknesses are. And as that relates to real estate, well, I mean, I'll tell you, here's, you know, here's what happened with me. I was kind of of of that school of, hey, just jump in head first and just try and make things happen and things will just work out. Mm-hmm. That's not really how it works in real estate investing, is it? It doesn't really work that way. Well, yeah. Well, there's a saying that in real estate, you're either making money or you're getting an education. Right.

So you got an education. I got an education, a very valuable education early on. Right. You think rich a dad is expensive. Right. Yeah, exactly. Exactly. And so I just didn't assess what I was really good at and what I wasn't good at. And I didn't take the time just to sit down and even just do a simple, you know, take a piece of paper and draw a line down. middle and here's what I'm good at, here's what I'm not good at. Because had I done that, I probably would have more quickly focused on what I was good at and hired out the things that I wasn't good at. Because the truth is that there's always going to be someone, you know, if there's something you're bad at, someone's good at it, right, Matt? Right. I mean, somebody

out there. Someone's actually good at it and actually enjoy doing it. And enjoy doing it. Absolutely. Yeah, which makes them even better at it, right? So, you know, one of my weaknesses is, you know, I can't fix up properties, like with my hands. I'm not a handy guy, right? I have a lot of of friends who can build amazing things, do weekend warrior projects, you know, build cars and stuff. I'm not that guy. You know, I was the kid who, you know, I really liked Legos, but I barely knew how to put them together when I was little, you know, like I was the guy who just kind of like, you know, I just play with them. I didn't build anything. I just kind of stacked them up, you know, whatever it was. I didn't have that strength, right? And so I wasn't honest with myself

in the beginning there and I thought, hey, I can do the fix-ups. I can do the painting. I can do this. I can do that. I can put up light fixtures and all these things I was not qualified to do at all. And it costs me a lot of money, you know, and that rolls into the second thing that I wish someone had told me, and that's do it right the first time. All right. Do it right the first time. And make sure it's a true fix, not a Band-Aid, right? When my first, when I did my first property, had no idea what I was doing, was doing all the rehab myself, just me and a couple of friends that weren't contractors either, right? You know, so three-hour lunches and, you know,

just stuff that didn't happen, you know, didn't work very well. I had a water heater, right? And it was the water heater that came with the house. I could have replaced it, you know, but I thought, no, this is going to be a place I can save some money because this thing works okay. There's only one thing wrong with it. It leaks on the top near the valve, right?

So two things should have happened. I should have either replaced it all together or I should have at least had a qualified professional come out and replace that valve. valve because I had no business doing that. But what did I do? Well, I came up with a third option. I went to Home Depot and got a random sealant and put the sealant on that leaky valve, right? Because that made sense to me. You seal up a leaky valve. It should be good, right? I don't see anything wrong with it. Right? I didn't either. So I did that. I left on a Friday.

The water was turned on over the weekend because that's when the utilities flipped it on. I I didn't sure which day it was going to be. I wasn't there. Got flipped on probably like late Friday or something like that. I got there Monday morning to a house full of water. I mean, full of water. Brand new carpet. Just put new carpet in.

Put that in at the wrong time, the wrong order. Brand new carpet. Brand new painted baseboards all ruined. Everything. I mean, the carbure was ruined. The basboards were ruined. Mildo would have started setting in. It was Florida super humid, right?

Would have started setting in right away. And that was all because I, I figured I could fix that myself. And that cost me, it probably ended up costing me about $3,000 to repair and replace the stuff that I didn't do right the first time. Had I done it right the first

time, it would have cost me, and I'll never forget this, $340. Yeah. So, do it right the first time for $340 or do it right the second time for over $3,000, right? That was a valuable lesson I learned. So guys, do it right the first time, especially if you're running

your own rehabs, no matter what you're doing, in real estate. You know, take the time to do it right the first time because shortcuts like that water heater are very, very expensive in the long run. So another thing, the third thing, I wish that I knew or wish someone had told me before I became a real estate investor is to consult with professionals before problems arise. And what I'm thinking of primarily here is, you know, people may be non-paying tenants that you have to evict. And for me, you know, again, approaching real estate the same way when I first started, just thought I would figure it out as I went along and thought, you know, hey, if that happens, I'll deal with it when I come to it.

I didn't know how to deal with it when it happened to me and when I started having to deal with these tenants, they started running me around. I didn't know what I was doing. So, you know, they're throwing all kinds of stuff at me. I didn't know what was right and what wasn't. It wasn't until I sat down with a professional. So when I got a referral for from an investor that knew what he was doing that said, if you need to do evictions, you need to go talk to this guy. I went and talked to him and you know what, 10 minutes later, I knew what the process was, I knew what to do, but not before I had run around and stressed out and been up every night for like two months,

you know, trying to figure it out myself, you know. So I look back on that time and I like, you know, I can't believe I did that. You know, I was like, you know, literally like sweating at night, you know, not able to go to sleep because these tenants were in my head and I was thinking, I'm going to have to evict this person and they're going to say that I didn't. do the right work and, you know, all the things that happen when, you know, an eviction happens. It gets very emotional. I wasn't ready to handle that.

If I knew and had consulted with that professional before that, I wouldn't have even thought about it past the first day. I just would have served that three-day notice that I needed to serve for Florida law. I would have let the process take, you know, take its turn, whatever, you know, whatever happened happened after that. And I would have gone and done a regular eviction. Would have cost me a little bit of money? Sure, but I wouldn't have lost two months of sleep over it. Right. You know, so I really, really recommend guys get with a professional that knows what they're doing

and do it before you need it. You know, by the time you need it, I'm sure you can relate, Matt. By the time you need that help, sometimes it's almost too late, right? Right, right. And that's the way it goes. Certainly has another zero on the invoice. Yeah, yeah, absolutely, absolutely. We'll be back with more right after this.

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I didn't understand early on in my real estate career that time is money. Now, I've heard that phrase a million times, right? Time is money, you know, and I, you know, just kind of like, hey, you know, okay, whatever, you know. But it truly is. And when you don't know what to do, like, you know, like the first three examples I gave you here, it costs you money, it costs you time, it stresses you out, you know, and that all comes from procrastination. You know, when we procrastinate, we're putting something off. You know, there's a roof problem and, you know, there's a leaky roof,

but you want to try and make it last for a little bit longer. Or you're not sure who to call for that roof problem because the last contractor really, you know, didn't do a good job for you or whatever. Well, you need to act quickly and decisively. You get three roofers out there and you get quotes and you make it happen. Right. Or you can sit and wait and then you've got a leaky roof and then you've got a bigger problem. Then you've got an unhappy tenant.

Now they're moving out. Now it's really cost you. balls for sure all because you didn't act quickly and decisively so you know procrastination is really fear you know that's what procrastination is we're afraid to make a decision so we don't do it so we procrastinate and then it costs us right and it always cost us whether it's you know you know finally like getting in shape and you procrastinated you know and now you're going to have a heart attack so now you got to start taking care of your body it's the same thing with houses you procrastinate out of fear because you don't know what to do and because you're not acting quickly and decisively and you

won't act quickly and decisively if you don't do what I did in the last example, consult a professional before you need it. So that was really big for me. Problems only grow when you wait. And the procrastination steals your confidence too. So as real estate investors, you do need to make decisions quickly. You need to deal with property managers effectively and quickly like we've talked about in the past.

And when you procrastinate, it steals your confidence. It makes it seem to your tenants like you don't know what you're doing. it makes it seem like to the property managers that you've hired that you don't know what you're doing. It makes it seem like to your wife and kids that you don't know what you're doing. You know, that's what it does. It steals your confidence. So if I could go back and tell myself, you know, one thing, that would be one of them. Act quickly and decisively.

Make decisions quickly. If you don't know the answer, go get the answer quickly. And then make it and then move on. Otherwise, you stay there paralyzed. And I didn't have near the growth I could have had in the beginning of my business because of that. So that's a really big one for me. And then, you know, lastly, if I could go back and tell myself, you know, tell my younger self something, I would say, you know, Matt, don't try to be everyone's best friend. All right.

Don't try to be everyone's buddy. And that was a huge one for me because, you know, I think, you know, deep down, all of us want to be liked, right? I mean, you like, you know, you meet somebody on the street. You have, you know, a quick exchange of them. You'd like to think, hey, that person liked me. And even if you don't ever see them again, we'd like to think that person liked us. core human needs. I forget the guy's name.

Yeah. His level of hierarchy. Maslow. Maslow. Abraham Maslow's hierarchy of needs. Exactly. Yeah. You've spoken like a true psychology student.

Thank you. Yes. And that's very true, though. We need acceptance. We need others to accept us. And sometimes as a landlord, or if you're managing your own properties, especially, that can really backfire on you trying to be someone's friend. And the reason is because it's a sad truth.

Not everyone has your honesty and integrity. You know? Yeah. And I hate to be in a, and I don't want to sound like a pessimist because I'm not a pessimistic person. Those of you that know me and, you know, those of you that know Matt Terrio, guys, we are optimistic people. You know, we're entrepreneurs that are always looking up, seeing the possibilities and everything. But when it comes to properties and property management and tenants, we're also realists. Okay.

We also understand the way things work. And so I don't say that you should assume that everything coming out of your tenant's about is a lie. Mm-hmm. But don't be naive. and assume that everything come out of their mouth is the truth either. Okay? Said that right. Yeah, don't, now don't look over your shoulder thinking everyone's out to get you,

but don't, you know, look straight ahead, never looking over your shoulder, thinking everyone's out to help you either, right? Because that's just not the way the world works. So if you try to be someone's friend and you try to be their best buddy, people, not everybody, but many people will take advantage of that. You need to understand, and I didn't understand this as a landlord early on, how you're viewed as a landlord. by tenants.

Many times, just by the nature of the fact that you are over them in some way, that you have some kind of authority over them, many tenants just have this automatic feeling of, well, this is the enemy. Right. This is the guy I have to pay. There's an adversarial relationship. An adversarial relationship. And it might have nothing to do with your relationship

or the way you guys have started your relationship. It might have nothing to do with the way you've treated them or anything. It's just the nature of the relationship in some ways. You know, it's just the way the world works sometimes. So you have to understand and you have to go above and beyond to, you know, not, you know, be firm and be fair. You know, go overboard to be fair. But at the same time, you have to be firm if they don't do what they're supposed to do. And that's in most tenant situations, that's they have to live up to their agreement and pay.

Right. And I think back to, you know, remember in grade school, remember, you know, when you had a teacher, like the good teachers, were always really hard for the first two or three weeks, right? I mean, you thought, man, this teacher is like really, I mean, a taskmaster. They're just, you know, they won't let me say one word. They're all over me on the discipline. They're given all this extra homework. And then that teacher could kind of let, you know, could kind of get a little bit looser as the year went by, right?

Right. If they had control of it. But going the other way was almost impossible. If that teacher lost control of that class in the first week or two, it was almost impossible for them to get that class back. It's the same thing with tenants and with your relationship there. If you start out the relationship, you know, laxed. You know, kind of, you know, not having a real process, not firm in your processes, that will come back to bite you because, again, they're going to sense that in you.

And the ones who don't have a high level of integrity will make that work to their advantage. And when they make the work to their advantage, that's taking money out of your pocket. Absolutely. You know, so that's something I would definitely tell my younger self is be fair, be firm with everybody. Of course, we always want to be fair with everybody. You know, we don't discriminate, nothing like that. But at the same time, we don't trust everything that's told to us. We look at things, you know, as a realist, not a pessimist, but as a realist, and you keep the end goal in mind.

And for all of us that are buying, hold investors, the end goal is making that property, you know, bringing that to its highest and best use. Pulling as much cash flow out of that while creating a nice, safe environment for the renter that's renting it. Right. Right. And, you know, doing these five things the way I did it, the way I did it back then, undermines all of that. Right. You know, so those are the things I wish, you know, somebody had told me when I first got started. And it's really just a lot of, really, probably more than anything else, just having somebody that I would have consulted with who was a real estate investor successful to just run this stuff by, even in two-minute conversations. Right.

Could have saved me thousands of dollars. But it was an ego thing. Totally. I acted like I knew what I was doing. I didn't know what I was doing, but I was either too proud to admit I didn't know what I was doing or, you know, too proud to go and find that person who could help me. And so that really hurt me. And now, in my business now, I'm like the king. I'm like the king now of, I'm sorry, I don't understand that.

Will you explain that to me? You know, like, I mean, I say, and I can't tell you how many times I say this to title companies, whatever. Okay. I want you to say that again, but I want you to assume that I'm a third grader. Right. And do not understand anything above a third grade reading level. Now, please explain it to me again. And I just check my ego at the table, you know, at the door.

And I say, hey, you know what? Like, I don't understand everything. And if I don't understand something, I still don't get it, then. Then I'm going to go to a pro who does understand it. Or I'm going to go to a mentor who does understand. I'm going to seek that advice because now I know every time, you know, every time I don't know something, that's an opportunity to learn. And you've got to check the ego, man.

Totally. You know, and that's what killed me, though, in the beginning there was, I knew what I was doing. You know, I was the man. You know, I'm this young property investor. My friends are still working a nine to five job, and I'm a full-time property investor, so I'm doing this thing. I have no idea what I was doing.

Right. You know? It's funny you just said that because I've thought about this recently, and I didn't really have it as a distinction, but it started to come to the surface for me as you were explaining it, that I am so comfortable saying, I don't know. Can you tell me? Yeah.

Or who do I got to go find out, you know? Because I just remember so many times in my life in so many different contexts where there are social, context or a professional context of somebody says something and I had no idea what they meant, but I didn't want to look stupid so I didn't ask the question. Right. You know, that costs you money in this business. Absolutely. And I'm glad you brought that up. It costs you money in any business, but it seems like it happens even faster in this business. It does. It does. And you're playing with real money here and you're playing with big amounts, you know? Yeah.

Absolutely. For sure. Good stuff. All righty. So let's do that again next episode. Yeah. Except I'm going to share my five things that I wish somebody would have told about. me. They're actually distinct, and I was making some notes as you were talking. I want to hear those, yeah. Yeah, for sure. All right, cool. So we'll do that. That's it for today. Flipping houses can make you rich. Holding them will make you wealthy. We'll be back next week. And until then, don't wait to buy real estate. Buy real estate and wait. Hold that house. Contrary to popular belief, a lack of funding is not the biggest barrier to starting a business. It's excuses. But don't let a lack of funding be your

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