Epic Real Estate Investing - Your Boss Doesn't Want You to See This (3 Rentals Is All You Need) | 1500

Episode Date: July 1, 2025

In this episode, Matt reveals how a desperate school teacher in St. Louis offered an investment property worth $135,000 for just $350 monthly payments, highlighting the stress often faced by property owners. This scenario exemplifies the hidden opportunities in real estate, as desperate sellers will trade properties for pain relief. Matt argues that owning just three rental properties can make jobs optional by generating enough cash flow to cover basic expenses. He shares insights on identifying motivated sellers, structuring deals, and leveraging rental properties to achieve financial independence. Accompanied by real-life success stories, the episode encourages viewers to take the first step in real estate investment to reclaim their financial freedom. BUT BEFORE THAT, hear why Matt regrets his first 10 rental properties! Useful links: https://www.notion.so/The-3-Property-Escape-Plan-220315cb4ef9809e9febe64c81d51f71 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-i-a's.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. 17 years ago, I was staring at my bank account at 2 a.m., surrounded by 10 rental properties, and I was completely broke. Not just cash poor. I mean, checking account in the red, credit cards max, and a tenant calling about their AC blowing hot air that I couldn't afford to fix. I had done everything the gurus told me to do. I was the successful real estate investor everyone looked up to, and I was about to lose everything. Here's what they don't tell you. I had over $1 million in assets on paper, but my liquidity ratio was catastrophic. I was leveraged at 85% LTV across the board with zero contingency planning for market shifts.

If you think more properties equal more money, you're making the same mistake that almost destroyed me. And I'm about to show you the five hidden traps that are probably bleeding you dry right now. Even if you don't know it yet, every day you don't fix these problems, you're not just losing money. You're building a financial time bomb. Look at what happened to rent collections during COVID or Sunbelt market corrections. If you weren't prepared, you lost millions seemingly overnight.

The first trap that almost killed me, chasing more doors instead of real profit. I like to refer to it as going wide before going deep. I was obsessed with hitting 10, then 20, then 50 rentals. I thought the more properties I own, the richer I'll get. According to NMHC and institutional investor surveys, most multifamily operators plateau at 30 to 50 units unless they professionalize their management. Anything above that becomes a full business, not a side hustle. I learned this firsthand, the hard way. I ended up equity rich, cash poor,

working more hours than my day job ever demanded. And I was lucky to get four hours of sleep a night. But here's the question I should have been asking. What's my true cash on cash return after factoring in my time investment? Most investors never calculate their effective hourly wage. The paradox most investors miss. More often means less freedom. Decision fatigue kicks in. You become a prisoner of your own success. You know that sick feeling when your phone rings at 11 p.m. I mean, your heart drops because you know it's another emergency that you can't afford. I mean, face it, rarely does good news call at 11 p.m. And here's what most investors miss. They underwrite only for appreciation, ignoring true cash on cash returns. They believe passive means

hands off when pros know it just means system-based. Your spouse stops talking about vacation because every extra dollar goes to repairs. Your friends think you're rich because you own real estate, but you're eating ramen while your tenants live better than you do. And the way, worst part, you can't tell anyone because you're supposed to be the successful one. The reality is scaling without infrastructure almost always leads to operational bottlenecks. You hit what I call the complexity wall, where more units actually decrease your per door profitability. If you're thinking this doesn't apply to me, you're exactly who needs to hear this most. I've talked to over 200 investors in the past year and 73% of them admitted they're making less per hour than they did at their

day job, but they're too embarrassed to admit it publicly. The Truth is, most small investors are running what I call accidental businesses. They have all the complexity of commercial real estate with none of the systems or capital structure to support it. Just last week, an investor told me, Matt, I own 25 properties and I'm working 60 hours a week just to break even. I can't even afford to take my kids to Disney World. And here's what I asked him, what's your underlying leverage ratio? How are you adjusting your cash flow analysis for interest rate volatility? And most importantly, what's your exit strategy if the market turns?

He couldn't answer a single question. That's the difference between owning real estate and being a real estate professional. And here's the curveball that almost destroyed me, underestimating true costs and cash flow killers. The conventional wisdom says keep three to six months of reserves. The truth is, that's just the starting point. Top operator stress tests for 12 plus months and scenario plan for Black Swan events. I now use what I call the core satellite strategy, core properties for stable cash flow, satellite properties for appreciation upside.

This balances your risk profile across market cycles. Before I continue, though, ask yourself, how fast can you exit in a bad market? What's your liquidity risk exposure? If you can't answer immediately, you're flying blind. Here's what I wish I would have done from day one. First, underwrite every deal at 20% haircut to market rents, assuming that I'm going to hit at least two black swan events in a decade.

Second, stress test for 12 plus months of expenses, not three to six, and then build multiple exit strategies before I buy, and then create what I call optionality buffers. cash reserves that let you pivot when opportunities arise. And there's one hidden metric, even most pros overlook, and I'll reveal that in a minute. But picture this, it's five years from now. Scenario A, you ignored what I'm telling you today. You're managing 20 plus properties, working 60-hour weeks, your marriage is strained, and you're making less than minimum wage per hour. Worse, you're trapped because you can't liquidate fast enough to escape. Or scenario B,

you designed for optionality. You own fewer properties, but make more money. Sleep through the night and have multiple exit strategies for any market condition. True pros see real estate as a capital allocation business, not just rentals. They're constantly asking, where can I deploy capital for the highest risk-adjusted returns? What about local political risks? Rent control expansions. Insurance market changes. I've seen entire markets become uninvestable overnight due to regulatory shifts.

The window for fixing this, it's closing. Every month you wait, costs you thousands. I almost quit many times. I was literally drafting emails to sell everything when I discovered something that changed everything. It wasn't another property. It wasn't more money. It was shifting from thinking like a landlord to thinking like an institutional asset manager. I had to choose, run an institutional model with professional systems and scalable processes,

or an entrepreneurial model where I stay small but highly profitable per door. Here's what saved me, professionalizing my operation before scaling further. Most investors think they can self-manage indefinitely. The reality, without systems, you hit an operational ceiling around 10 to 15 units. This is where complexity explodes exponentially. So here's the professional framework that I implemented. Document every process like you're franchising the business. Screen tenants using institutional grade criteria.

The 3x income rule, credit score minimums, and employment verifications. Then interview property managers like you're hiring a CFO, review their P&Ls, not just references, and monthly financial reviews with variance analysis. Treat it like running a public company. And ask yourself, if I had to sell this portfolio tomorrow, would a sophisticated buyers see professional management or amateur hour? More properties just multiplies your problems if your systems aren't institutional grade. My 10 commandments for managing property managers, it's in the document link below. Okay, this next insight, it separates the top 1% from everyone else. Let's talk

contracts and leases, but at a professional level. Here's what most people screw up. They're playing checkers while the market is playing chess. Institutional operators use two to three-year leases as standard with built-in rent escalation clauses tied to CPI. Most small investors, month-to-month chaos. And what about cap rate compression? How does that impact your expansion plans? If you bought at a six-cap and the market's now trading at four caps, your exit strategy just changed dramatically. The professional approach, lease terms that protect against inflation and regulatory changes, documentation standards that would pass institutional due diligence, and payment systems that eliminate float risk, ACH only, no exceptions, and fee structures that actually get enforced consistently.

You know, I just reviewed a portfolio where the owner was losing $47,000 annually just from inconsistent late fee enforcement. That's institutional negligence. And here's a story that changed my entire approach. On my fourth property, I thought I was set. I rented it fast, nice tenants, easy money. Then the roof started leaking, but here's the real problem. I had no contingency planning, no vendor relationships, no emergency protocols. A professional would have had pre-negotiated contractor

relationships, a capital expenditure reserve schedule, and multiple financing options ready to deploy. My wife had asked me, is this really worth it? And that's when I realized I was running a business like a hobby. I implemented what I call the institutional mindset shift. Every decision gets evaluated like I'm managing someone else's $100 million portfolio. That one shift, it transformed everything and revealed the hidden metric that I mentioned earlier. Return on attention, R-O-A. How much profit per hour of mental bandwidth

does each property generate? Most investors optimize for cash flow or appreciation. Pros optimize for R-O-A because your attention is your scarcest resource. Don't blindly follow the gurus. They're selling you the dream of passive income when what you really need is systems-based income. Before you buy another property, ask,

am I building a scalable business or just collecting more problems? And here's the thing that'll keep you up tonight. If you're smart but still not seeing results, if you know more than most but still feel like you're standing still, there's a brutal reason. And it's not your fault. You're about to see why some of the brightest people stay broke, while others, with half the smarts,

lapped them on the wealth track. It's not about IQ, hustle, or credentials. It's a rarely known trap that quietly keeps 90% of intelligent people from ever building real wealth, and it's probably working against you right now. Hope is not a financial strategy. Let's get back to work. I'm about to show you something that happened live on Zoom while dozens of my students watched, and it's going to change how you think about real estate forever.

A schoolteacher in St. Louis called me, desperate. He had bought an investment property worth 75, thousand bucks owed only fifty three thousand dollars on it and the after repair value was 135,000 but he was so stressed and overwhelmed that he had said these exact words Matt if you just take over my three hundred and fifty dollar monthly payments the property is yours my students jaws they hit the floor this teacher was literally giving away twenty two thousand dollars in instant equity because he couldn't handle the stress but here's the thing this happens more than you think people will give away their

properties if it alleviates their pain. And your boss doesn't want you to know this, because once you understand how to find these situations, your job becomes completely optional. I'm going to show you why just three rental properties, not 10, not 100, just three is all you need to escape the 9 to 5 trap forever. But first, let me tell you what happened to that teacher. The city had rejected his initial repairs. They wouldn't issue his permit. It was his first flip, but they didn't care. No mercy. They made him start over from scratch. He was a teacher, and he didn't have another $25,000 lying around. Every day that property sat empty, he was bleeding money. The stress was eating him alive. His wife was furious, and he couldn't sleep. So he did what desperate people do. He gave it away

just to make the pain stop. My students watched me walk through that deal live. The property worth $135,000, mortgage $53,000, monthly payments of $350. One of my private clients took that deal and made $22,000 the day they signed the papers. And here's what's crazy. I see deals like this every single month, not because I'm special, but because I know where to look. And once you have three properties like this, everything changes. But let's be honest about where you are right now.

You're probably stuck in a job you don't love, trading time for money, watching your life tick by while someone else gets rich off your efforts. Maybe you think real estate is just for wealthy people, or you're overwhelmed by all the conflicting advice. You know, Airbnb, the Burr method, wholesaling, flipping, self-storage, apartments, commercial. I mean, there's a lot of stuff out there vying for your attention. You've probably even been burned by some guru promising that you'll get rich quick with no money down. I know this because just about every new client that we take on, this isn't their first rodeo. And deep down, you're terrified you're going to screw up. Buy the wrong property. Get a nightmare tenant. Lose everything. So you do nothing. Here's why your boss

really doesn't want you to see this. I mean, think about it. What happens to companies when employees have options, when people aren't desperate for their paychecks? You become harder to control. You negotiate better. You might even leave. The entire system depends on you believing you need that job. That real estate is too complicated, too risky, too expensive for regular people. They don't want you to know that desperate sellers will literally give you properties just to solve their problems. Your boss benefits from your financial stress. It keeps you compliant, grateful, stuck. Meanwhile, opportunities like that St. Louis teacher are happening every single day. Stressed property owners, desperate for relief, willing to make deals that seem impossible. But

you'll never find them scrolling through Zillow or waiting for the perfect moment. Here's what the real estate industry doesn't want you to know. You don't need perfect credit, massive cash, or decades of experience. You need to understand human psychology. That teacher didn't care about maximum profit. He cared about maximum pain relief. And there are thousands of property owners just like him, overwhelmed, stressed, ready to make deals that don't make sense on paper, but make perfect sense emotionally. The magic number isn't 10 properties or 100. It's 3. Three rental properties can set you free. Why 3? Because three properties are where everything shifts. Your cash flow covers your basic expenses. Banks start taking you seriously. You have options that your

boss doesn't want you to have. I've watched hundreds of my students hit this three property milestone. own. Teachers, pharmaceutical sales reps, corporate cubicle goers, single moms, IT guys, nurses. Lots of IT guys and nurses for some reason, but regular people who figured out this simple truth. I remember Benny's first property. He was terrified, scraped together every penny, lost sleep for months, second guessed everything. His second came easier. He had some confidence, understood the process. But his third property, that's when he walked into his boss's office and realized something that had fundamentally changed. He wasn't there because he had to be. He was there because he chose to be. That feeling, it's addictive. Picture this. Three years from now,

you're sitting across from your boss. They're stressed out about budgets, layoffs, and office politics. You, though, are calm because you know that if they fired you tomorrow, you'd be fine. Your three properties generate enough to cover your mortgage, groceries, car payment. You have what most people never get true financial security. But Matt, what if I don't have money for a down payment? Remember that teacher? Someone got a $135,000 property for taking over $350 payments. No down payment required. But what if I don't know how to find these deals? Well, I'm going to show you exactly where to look. It's not complicated, but it is specific. But what if I mess up? Well, here's the truth. Your biggest risk isn't making a mistake. Your biggest risk today is avoiding the risks. The world is moving

fast. And if you stay exactly where you are, it's going to pass you up. Because while you're hesitating, someone else is taking that call from that next desperate property owner. And right about now, you might be wondering, does three rentals really change everything? I mean, is it that actually going to be enough? Listen, I'll keep it real. A few people might hit total financial freedom with just three properties. There are a lot of factors to consider. But for most of us, three isn't the finish line. It's the launch pad. And here's why. Getting to that first income property is the hardest thing most people will ever do. Not so much for why people think, though, like you have to save like crazy, you have to work extra hours, or you got to

cut back on everything just to scrape together a down payment. The learning curve can be steep, and you'll probably second guess every step. It can take years. Seriously, some people spend three to five years getting that first deal done, but it has more to do with the six inches of real estate between your ears than anything else. And once you own your first, everything shifts. That first rental starts sending you passive cash flow. Saving for the next one, it gets easier. You get smarter, faster, and less scared. The second deal always feels a little easier because you're stacking cash flow from property one. When you hit your second property, the monthly cash flow might double, and so does your confidence. And here's the magic. Most people see the biggest change

after property two. Suddenly, you're not just saving from your day job, you're saving and stacking rental income. You start analyzing deals better, knowing what to look for, and how to spot the right numbers and opportunities. People in your network start bringing you deals. You start thinking creatively about Airbnb, short-term rentals, or finding partners who have money but no time. You might refinance, pull out equity, and roll that into your next deal, using the bank's money, just your own. This is compounding real estate, just like compounding interest. Every property adds another stream of income, new leverage, and wiser decisions. And here's what's wild. That third deal doesn't just happen faster and makes the fourth and fit even easier.

For a lot of investors, after number three, the momentum is so strong you can't help but keep going. This is rarely the finish line. It's the tipping point where things start to snowball. You'll look up one day and realize you're not just working for your money, your money, your properties, and even your tenants are now working for you. That's why I say three rentals make your job optional. You're armed with so much knowledge and confidence. It truly is. But don't be surprised if you end up with more, because once the momentum hits, you won't want to stop. And if you're still stuck at zero or one, don't get discouraged. The hardest part is just getting started or restarted. I mean, every investor who ever scaled up was sitting right where you are right now, thinking it was

impossible. Once you break through that second deal, you'll see how possible and how powerful this all really is. Here's how this actually works. Step one. Learn to identify motivated sellers. And I'll show you the exact signs in the free document below. Step two, position yourself as the solution to their problem, not just another investor. Step three, structure deals that give them what they need,

relief while building your wealth. And this works in every market, expensive cities, house hacking, creative financing, Midwest, traditional rentals with strong cash flow, growth markets, appreciation plays with decent cash flow. The strategy adapts. The principle stays the same. Three well-chosen properties, that's your freedom number. Shannon, a nurse in Ohio, found a burned-out landlord with four properties. He was so tired of tenant calls, he sold her all four at 20% below market value. Micah, a construction worker in Texas, helped an elderly woman who inherited rental properties.

She couldn't manage. She practically gave him two duplexes just to have the headache gone. And then Jennifer, a teacher like that St. Louis guy, found three different motivated sellers in six months. She's now making more from her rentals than her teaching salary. These aren't unicorn stories. This is happening right now in every city, every month. But here's what you need to understand.

every day you wait, someone else is building the life you want. That St. Louis teacher, he's not the only one. Right now, there's probably a stressed property owner in your area making the same desperate phone calls. The question is, will you be ready when they call? Or will you still be thinking about it while someone else gets over the hump and grabs their first? If you're serious about proving to your boss that you don't need them, you don't need their job, you don't need their paycheck, you do need to know this journey, it's not all Sunday. and rainbows. I made some very expensive mistakes early on. If you know what they are, they're easy to avoid. I even give you the exact things that I would do if I had to do it all

over again. I'll see you soon. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Okay, only 10 more presents to wrap.

You're almost at the finish line. But first, there, the last one. Enjoy a Coca-Cola for a pause that refreshes. This podcast is a part of the C-suite Radio Network. business podcasts, visit c-sweetradio.com.