The Science of Flipping - Adapting to Real Estate Market Shifts and Leveraging Virtual Assistants| Matt Larson

Starting point is 00:00:00 Yo, yo, what is up, everybody? Welcome back to the Science of Flipping podcast. If you are watching this on YouTube, then you will see I'm with a very special guest who I'll introduce shortly. If you're listening to this on iTunes or Spotify or any of the other platforms, this is gonna be a very special episode.

Starting point is 00:00:16 You're wanting to stick around this whole entire time because I have a true baller on hand here. And so before we get started, as always, our key sponsor, MinutePages.com. For all of you looking for a professional website in the investor or agent space, go to MinutePages.com for affordable and incredibly professional websites that are SEO'd for you. MinutePages.com for that credibility, influence, and authority online. All right. I've said my piece. Now I get to introduce the man. Mr. Matt Larson is with us. What's up, brother? Hey, good to be here.

Starting point is 00:00:50 Good. Well, so if you guys don't know Matt, he has an incredible story. He has done, God, how many deals have you done now over this period? I stopped counting after like 4,000. And I like to brag about like 2,300 and counting and you're just like, ah, four grand, I'm done counting. So very happy. He's a new friend of mine just recently introduced. But I'll tell you, we just spent the better part of this morning already chopping it up. And I know we're going to be really, really close moving forward. And so you guys won't want to miss this episode. Stay with us. We are just going to chop it up in a way that you know, kind of the OG professional real estate investors do. We just were talking about what you're doing in the real estate space right now and your thoughts of what's going to happen and your actions of what you're doing. Let's dive in a little bit about the economy and how you're taking action right now, kind of being contrarian to some extent to how most people are thinking. Talk to me about what you're up to. Well, so I've been in real estate now since 2005. So I got to experience the last real big bull rush and then saw the massive downfall in 08, 09, 10. And that's where I really, I made a lot of money. My portfolio, from 2005 to 2008, I had about 30 houses in my portfolio. I did a lot

Starting point is 00:02:05 of fix and flip and wholesale in between there. But in 08, my portfolio went from 30 houses to 450 by 2013. So I made a ton of money during the last downturn. And, and then, you know, we, you know, obviously I kept doing deals. I'm still doing deals very, very active all the way through to now. But in 2021, well, let me back up because in 2019 ish, I started, I had this great big portfolio. When I say 450 houses, properties, I'm not talking doors. I'm talking, I had apartment buildings. I had duplexes four plexes triplexes all that doors would you say right because so the way i distinguish when i tell my students i say roofs versus doors right yeah so because you can't say it's the same thing so you had four yeah i would say it was probably around 520 doors total yeah because most of them were single family homes that's kind of my specialty so what happened So what happened was I built this great big portfolio. The market started to recover in 2016, 17, 18. And I started thinking, okay, we've had a hell of a run here. It's went from 08 to 2018. We've had 10 years of increase. Let's start thinking about unwinding this thing, the old buy low, sell high. So I started selling off my portfolio. The problem is when you have 450 properties located in one

Starting point is 00:03:33 main geographical area, you can crash the market yourself personally if you list them all at the same time. So my strategy was very simple. Just, you know, as tenants, as leases expire, you know, we have 20 something, 15 to 20 leases expiring a month or so. As those expire, just, you know, clean those houses up, list them for sale and then sell them. And so we did that between for the last four years, I sold off a lot of my portfolio. I sold off about 350 houses, which is great when it comes to- Banking out. Yeah, yeah. It's a lot of cash coming in, lots of closings. And on the other side of things, during 15, 16, 17, in those years, I was buying 25, 30, and up to 40 houses a month, I'd always have 80 to 90 to 100

Starting point is 00:04:27 rehabs going. So all of a sudden, I got I didn't have as much you know how it you know how it goes, Justin, when you're doing that many rehabs, you got a lot of outflow of cash to do the new products, projects that you have coming in, well, all of a sudden, now I don't have the new projects to the same scale, because I started backing down my buy and hold side. I still did wholesaling. I still did fix and flip. But my buy and hold, basically, I turned off. So we started selling off all my rental properties.

Starting point is 00:04:56 And then all of a sudden, I'm getting close to the end. I've got 100 and something houses left. And then I'm like, I'm going to make it. I'm going to sell these things at the absolute peak of the market and capitalize on my profit. But then the interest rates hit and that crashed the market momentarily. We didn't know how long it would crash the market. None of us really knew. We, a lot of us thought maybe it was the beginning of the end again, but it wasn't. Um, the, the inventory was, was low enough that it didn't, it, it, it definitely corrected, but it didn't correct to the level we thought.

Starting point is 00:05:27 So I switched my strategy quickly, went back to just buying, fixing, flipping wholesale. This is in 2021-22. Still limited my buy and hold, but we corrected again, went back. Yeah, we really didn't crash, right? Like, I don't know if you ever used that for what happened, right? I mean, the reality is, especially Miami, we just talked about it. We're still appreciating. We are appreciating in Miami.

Starting point is 00:05:52 I understand markets can be very specific. But you think, so did COVID impact your rental portfolio? And we did pretty good through COVID, but we still had the typical, you know, in the beginning we were collecting all the rent, you know, but as, as, as COVID wore on more and more tenants were like, Hey, I've got an opportunity here. He can't evict me. Let's stop paying. So we had, you know, 15% of our portfolio stopped paying rent and we had to evict those people. And some of those people got a year's free rent. All that stuff happened. But for the most part, it helped because after it... So when COVID hit, and I was telling everybody I was going to do this, when COVID hit and the market crashed hard, I bought about 80 homes in about 90 days there. Because the market crashed and you could pick them up for pennies on the dollar. So then all of a sudden it dipped back up. So we took those same homes that we just bought three months ago for half of what they were worth. And then we just fixed those up and resold those.

Starting point is 00:06:56 So we did capitalize on that too. But like I was saying, so now, like you said, the market is still going up. So I'm still taking my portfolio. And as tenants move out, we're cleaning them up and relist them, sell them and sell them for a high price. And they're selling fast. Now, what is that cash injection? What does that do for where you're at in your business right now? Now, listen, for most of my listeners, Matt, we? Like we're talking to a lot of newbies, right? More than not. Now, for those that are not newbies in your experience, you're going to love this episode, right? We're talking, me and Matt have been around a long time.

Starting point is 00:07:32 I've done it 15 years, Matt, you're 20 something, right? No, going in 18 years. 18, right. So we have a lot of stuff we could talk about. So just bear with us. If you're new, you're going to want to be a part of these conversations. This is where you're going to want to get, but where does, where does Matt go with this cash injection? What's going to go on for Matt moving forward? So first of all, you, you do have a tax penalty, right? When you're selling as many properties as what, what I, what I have been and what I always, I've always paid a lot in taxes. You, you will meet people that, that pay no money in taxes. They have massive portfolios. They don't sell a lot. They refinance. That is a great tax strategy. And

Starting point is 00:08:10 that's awesome. You want to keep your tax bill as low as you possibly can. When you're doing what I'm doing, you will write a big check to the IRS. So you've got to plan for that. But then from there, it's just a stockpile play. So my play is this. So just so everybody's like, Matt's getting out of the real estate. That's not true. I'm just trying to time the market, sell everything for the highest price because I got to experience that in 05 through 08. And then I saw what happened to prices from 08 through 2010, and they just chopped in half. So what I want to do is I want to reproduce what I did in 2008 to 2013. I want to do it again. Now, will the market crash that hard again? Who knows?

Starting point is 00:08:54 It might not, and I might mess up a little bit and not capitalize as much as I could. Maybe the market doesn't fall at all for the next 10 years. It's a gamble. There's a little bit of a risk there. But like I always tell people is is listen, how much of a risk are you taking if you buy a house for 50 grand and sell it for 150,000, right? You've got, you're making money. So I, obviously I wouldn't be writing the check to the IRS if I wasn't making money. So that's a big boy check, buddy. So yeah, those are big checks. Those are Lamborghini. You know, I could have a fleet of Lamborghinis with the, I was just going to say, you're probably north in the seven figures when, when you're selling 400, 300 and something rentals. I mean,

Starting point is 00:09:32 you're up there. Yes. So, so, um, so my plan, my play next is right now, I listen, I just follow what the market's doing. I give the market what it wants. Right now, the market wants single-family homes that are ready to move into because the market doesn't have inventory. So if the market doesn't have inventory, give the market what it wants. Give it inventory. So I'm giving the market inventory. I'm going to run that through as long as I can until the market shifts. If it crashes, then I'm just going to repeat process that I did put from 2008 to 2013. And I'm, but I'm going to do it bigger this time. I want to go 10 X, you know? So we're just, what is, let's just say, so I've been

Starting point is 00:10:18 fortunate enough is the word I'll use to be able to be, we just talked about a mastermind. I mean, I'm sitting around and obviously encourage you to, to be with me on the next one, but I'm, I've had the blessing to sit in some closed rooms with some really like hedge fund managers, right? Some really high level. I'm not talking about good investors. I'm talking about people who, you know, have a B in their bank account. Right. And they are hell bent. Like they are ready. They have a lot of dry powder. If the market even dips a little, they are coming in full steam ahead, right? And so in my, they don't believe we, they, well, let me put it this way. They believe we are at the bottom. They said, this is it. We are done. Like even if interest rates go up another point

Starting point is 00:11:04 or even two, we're not going to have this catastrophic fall off because we are sitting here. We are ready. It will not happen. 2008 is not going to happen again. We have billions to spend specifically in the single family space, which is a little more unique now, right? A lot of the REITs and the hedge funds and whatever have gone after the multifamily. They're like, no, no, no. We're going heavily into the single family. So I tend to trust them. I tend to fall for money, especially these individuals. And I'm seeing it myself in the properties we're buying.

Starting point is 00:11:35 There is a lot of upside coming already. And so let's just say your assessment isn't right. And I'm not saying it is or isn't, right? I'm just saying, what's your move there, right? Where you have multiple seven figures in the bank. Do you say, ah, I missed that one. I'm going to jump back in. Do you go after a different asset class?

Starting point is 00:11:55 How would you pivot? I would, let's say I'm wrong and it wouldn't be the first time, but I would capitalize one on wholesaling as many properties to these big institutional buyers as I possibly could. I've already done that play before. I'm pretty good at the wholesaling side because I'm good at marketing. And so we would just crush that game. And then we'd start looking around to see what other asset classes are getting beat up.

Starting point is 00:12:22 Right now, the retail space is getting beat up a little bit if you look at the office space and a little bit of retail it's getting beat up and they're they are calling the big the big money is calling for a big fall there i've i've done a little bit of of that i've never i've never went all in on it but i i flipped a buffalo wild wings once for a 700 000 profit i bought a lot of, in 2013, I bought $20 million worth of commercial property. That year I bought $20 million worth of residential and $20 million worth of commercial. So I made a lot of money in commercial before during the bottom when it went down and I was wholesaling those buildings too. So I would, I'll jump back.

Starting point is 00:13:03 I'll start looking around. If I'm wrong and the single family home thing goes up, then I'm just going to pay attention and see what else is getting beat up a little bit. Cause if something's going up, they usually, yeah, no. And listen, here's the highlight of why I asked that question. I hope you're, well, I don't know how I feel about your projection, right? Cause if I'm right, which I think the market is going to continue to appreciate, then I really win. But if I'm wrong and you're right and it does tank, well, I'm just going to buy more. So I'm kind of even different. I think we both could be right and win. Yeah, for sure.

Starting point is 00:13:32 Where I want to highlight this is a lot of the people that are in our space, they need to understand what you're talking about, which, you know, speculation of what can be happening, no one thought that we would rebound as fast as we did from COVID. No one even understood what the hell was going to happen, right? Agreed. No one thought we would already be rebounding from the interest rate hikes. So the reason why Matt does as well as Matt does is the reason why I do as well as I do is because we're able to adapt on a dime. We're able to try to look around that corner, take a look the best we can to see what is to come

Starting point is 00:14:08 and then make changes, adapt, change the little things, whether it's marketing, whether it's asset class, whether it's, you know, how we're acquiring, maybe we get heavier into seller finance. Maybe we go into, you know, 200 door plus units. The point is being able to adapt allows matt to do this for 18 years and make the amount of money he's made it allows me to do it for 15 years do what i've been able to do that is the thing that i want to impress upon all you listeners if you're watching here on youtube make sure that's a like button you're smashing right now because that's what creates the longevity right i just did did a interview where someone asked like retirement question or whatever. I'm like, I'm never retiring from real estate, like ever.

Starting point is 00:14:49 Like it's just not going to happen. It'll change shape for Matt and me. But dude, you're not retiring. You might start buying, you know, commercial buildings in downtown New York at some point. You know what I mean? Like, but that's- I get bored. Say what?

Starting point is 00:15:02 I get bored. Oh yeah. I get bored if we're sitting around. You got to like, I don't know about you. I got to have this thing working all the time. And if this thing's not working, then I'm not happy. I'm just, you look at, why doesn't Elon Musk retire? Why doesn't Jeff Bezos retire?

Starting point is 00:15:15 Why doesn't, you know, all of these guys, why don't they retire? Because they love what they're doing. They don't need the money. It becomes a, you know, they want the game, you know, they want this working. And the best way you said it, the game, right? They love the game. How do we perfect it? How do I grow it? I mean, look at Elon. I mean, he has two of the largest companies between SpaceX and Tesla in general, right? You have Bezos with Amazon and people, I think a lot of people still think Amazon is about selling

Starting point is 00:15:43 products. It's all about AWS. It's all about their internet component. That's where they make a vast majority. So those are the people that I would tell you, they all subscribe to the same thing Matt and I are saying, which is, you know, stay in the game long enough to win the game, right? I think the thing that does as a coach, I get discouraged when people get into our space and then like they quit after 30 days or 60 days. That's not the game. No. Right.

Starting point is 00:16:07 This is the long game. Right. This is what can create you a lot of income, but can create you a lot of wealth. And that is what's for sure. Now, before we get too much into it, I want to give a little brief background. I think you've hung out and done business with some rather cool people, in my opinion. A mutual friend, Dean Graciosi, you know much better than I do. You've been with Dean and worked with Dean for years and years and years on the real estate and

Starting point is 00:16:29 education space. And then I just recently found out you also did some coaching to Tony Robbins, which I think is pretty cool, right? So I think you guys, listen, I try to give you the best of the best on my podcast. And Matt, I can tell you right now, is one of those guys. So where can people find you, Matt? So I have, you know, there's a million social media platforms now. The easiest thing to do is just go to my website, and I have them posted right there on my website, which is just realestatematt.com. If they go there, they can find me on, they'll find my Facebook link and Instagram and all that. I used to give out my Instagram link, then it got hacked and I lost everything. So now I just give

Starting point is 00:17:09 my website and, uh, and, and that's the easiest way to find me. And if you message me, I just want everybody to know, like, I'm one of those guys that if, if you find me on social media and you message me, I do have a lot of VAs that work for me, but if a VA ever jumps in and message, they'll let you know that they're not me. They'll say, Hey, this is Sean for Matt's team. If it's me, it's me. And I'm, I do answer most of my DMS. If somebody ever hits me up, let's talk about VAs. I know you and I briefly talked about it, um, earlier today, just about how your business really runs on a VA business model, which I think is incredible. I I'm actually one up until recently, I've really been opposed to VAs. I really believe there one up until recently, I've really been opposed to

Starting point is 00:17:45 VAs. I really believe there's a lot of personal connection that happens in the real estate space that doesn't really connect. Talk to me about how you utilize VAs and then are they all like, you know, the traditional Philippines VAs or are you sourcing them from different sources? Yeah. So I hired my first VA in 2015, that VA still works for me today. Um, but my whole team is VAs. Now, um, I had an 18,000 square foot office, uh, located in Davenport, Iowa, where I had, um, 5,000 square feet of it was office space and 50 employees in that office. And the rest of it was my mini lows. We were just buying so many products that we started buying them direct to manufacturer and then we got a better deal. But in 2017,

Starting point is 00:18:33 I sold 504 houses that year, 33 million in sales and only netted 1.8 million. And that woke me up a little bit because I was like, man, I just did a lot of deals and I only put $1.8 million in my pocket. And by the way, for you listeners that think that that's a lot of money, not compared to $33 million, it's not. That's a bad margin. And so I made a decision. I had a couple of VAs working for me. I made a decision like I'm paying well in high seven figures in labor in my office and these 50 employees. So I made a decision to, you know, organically as if people quit or got fired,

Starting point is 00:19:14 I'm going to replace them with a VA. Took me about three years, three and a half years to do. But now my whole team is is nowAs. And we are Filipino-based. I have my own VA company. We source our own. We go direct to source. We do our own interviewing, our own in-house training, all that stuff. But everything from the typical cold-collar texting lead gen side, acquisitions is all VA. So when we get a lead, a VA lead manager takes that lead and determines if it's a good lead,

Starting point is 00:19:46 bad lead. If it's a good lead, it hands off to an acquisitions VA. Acquisitions VA calls the seller, negotiates the deal. Lead manager gives a max offer price for what we can offer. So then the acquisitions VA negotiates that deal. Once it's under contract, it goes to a dispo VA. And we do the whole process, start to finish, zero of my... There's two things I'm involved with my wholesaling business. I do two meetings a week, one on Monday, one on Thursday. They're scheduled for 30 minutes. Typically, we're done in 20 to 25. From there, Matt's not determining if it's, hey, this is a good lead. Matt's not determining. Here's what we offer on this house. Matt's not determining.

Starting point is 00:20:28 Here's what we sell it for. I'm just there to lead the team. So the whole operation is run without me. So, which brings me to the kind of like circling back to the original, why don't you retire? Why would I, I'm, I don't have that much time invested every week into my wholesaling business. Are you still buying that many properties rapidly with VAs still? Yeah. I don't have that much time invested every week into my wholesaling business. Are you still buying that many properties rapidly with VAs still? Mm-hmm. Yeah. We're in multiple markets.

Starting point is 00:20:51 So we're in the Quad Cities. That's my main market. We're in Indianapolis. So Quad Cities, Indianapolis, Detroit, Michigan. We're in Kansas City and a little bit into St. Louis. What are the Quad Cities? Davenport, Iowa. Moline, Illinois. So like John Deere's world headquarters is Moline, Illinois.

Starting point is 00:21:13 So in your main marketing strategy to find them, right? Because everyone wants to know what's the best way to find motivated sellers. What are you currently doing? Mostly cold calling? So if I had to pick one strategy only, this is like a good takeaway for, for everybody. If I had only one strategy to pick, it'd be cold calling. Okay. Um, but we do cold calling, we do texting, we do, um, direct mail. Um, and then I'm doing some TV too. Um, we just started TV in October of last year, but it's, it's worked out pretty good. I still think cold calling is better, um, for the cost per lead in the clock cost per closed contract. But, um, but yeah, those are the

Starting point is 00:21:50 main methods that we use. Yeah. So one of the things that I preach as, as an educator is being dynamic. And so Matt, you're really highlighting this meaning. I don't, I hate when people say, Oh, I'm just a wholesaler. I want to get into wholesaling. I get that. But you're really saying I want to be a real estate investor. You don't want to just wholesale. You want to fix and flip. You want to buy long-term rentals. You want to be able to do short-term loans or notes, et cetera. And that's being dynamic. Simultaneously, what I'm talking about when I say it is be dynamic in how you find them. Don't just be a one-trick pony. Don't just do cold calling. Do text messaging also. Do direct mail. Also do no door knocking, do bandit signs, do agent reach out. Don't just be a one trick pony on how you

Starting point is 00:22:30 acquire either. And don't be a one trick pony on how you exit it. And you know, listen, I'm so happy you're saying these things, uh, because this is what I find to be the drawback in our space is everyone talks about getting into the business and wholesale and you don't need money and you don't need, you don't need money for fix and flips. How much money, how much private money have you raised Matt in general? So I don't do a lot of private money, but what I do do is I, so, so I've always focused on my financials, right? My, my financials are strong. So I, I borrow a hundred percent of the deal. When I do a deal,

Starting point is 00:23:04 I get a hundred percent of the financing from the bank. So it borrow 100% of the deal. When I do a deal, I get 100% of the financing from the bank. So I've exchanged private money for bank money, but they basically do what's called a guidance line of credit for me. And this, again, guys, if you're brand new and you don't have any financials and you don't have cash in the bank and high net worth, this might not work for you. But it's just what I, I wholesaled so much that I built up my income on my tax return to the point where in fix and flips to the point where the banks started saying, Hey, if you want to borrow money, we'll, we'll do a hundred percent loans. And I was doing that all as far back as 2010, 11, when the market was crashed. And it's always about this. You're saying the same thing. I am, whether it's private money or the bank relationship is the relationship. So most people getting into this business, even myself, 15 years later, I still use private individuals, um, to

Starting point is 00:23:56 grow the business. Right. Um, and so, but your relationship with the bank started so early that now the relationship is cemented and it gives you the ability to borrow all the money. You may or may not come out with the rehab funds out of your own pocket. Maybe you borrow that as well, whatever. My hard money lender, they will fund my rehab budget because of the history I have in the business. Essentially, I'm into this project for 10% of the ARV number. That's ultimately where I end up. Yep. So if I'm going to sell it for 300,000, I only have 30 grand in this entire deal. And I might've done an $80,000

Starting point is 00:24:31 rehab, right? So I say that all to say, I want people to understand you don't need your own money to do this. No, you may need to borrow money from people, not banks in the way Matt does, but Matt's doing the same thing. I'm to you guys is get into the space of real estate investing because the money is out there when you have the deals. As you grow your portfolio, you grow your income, you become financially stable, if you will, then yeah, you're going to have bank relationships that are similar to Matt. Yeah. And the other thing too, I've done strategies before where I partnered with people that had money. That's right. So I might not have done done strategies before where I partnered with people that had money. That's right.

Starting point is 00:25:06 So I might not have done private money, but I partnered up with them. They had cash. We split the deal 50-50. They put up the money. I found the deal and put the rehab teams together, and we split the deal 50-50. You can do that forever and not put a penny of your own money into the deal. That's a good strategy too if you can't find – a lot of times people – there's a lot of private money out there. There's more private money out there right. That's a good strategy too. A lot of times people, there's a lot of private money out there. There's more private money out there right now than it's

Starting point is 00:25:28 probably ever have been. But there's a lot of partnership strategies that you can't use the excuse that there's no money. You don't have money to not do real. You can't use it. It's just, there's too much other money out there. If you can locate the deal, you don't ever have to have the 50, 100, 200, 300,000 to buy the house. Yep. That's it. I have a great point because I have a student that was going to do this flip himself. He's terrified. It's his first deal. I said, listen, the numbers make sense. I'll come into this deal with you. It will be my money. You don't have to bring a dollar. You don't have to be scared. I'll find the contractors. You'll be my partner. You'll see the whole thing. And that way you don't have to take on this massive risk because it was going

Starting point is 00:26:11 to be, you know, this one I think is an 80,000 or so rehab, but like, he's going to have to get a lot of money for this. But now he's able to do this deal with none of his own money, my expertise, and we can share in the revenue. Right. So there's always money out there. So it is a great example of that because he found the deal. I coached him how to find the deal. He did what I told him and coached him to do. And then now he's able to do a bigger flip because of what you just said. Right. Yeah. The other thing too, Justin, when you get to guys that are doing the kind of volume we're doing, you know, 10 million in cash, you can burn that in fast. You could burn that in six months to a year if you're moving quick. Yeah, you know, 10 million in cash, you can burn that in fast. You could burn that in, in, in six months to a year if you're moving quick, you know, it doesn't take long.

Starting point is 00:26:50 Not at all. Well, Matt, listen, for the sake of time, um, I just want to say thank you. Uh, again, go to, is it realestatematt.com? Yep. Realestatematt.com. Make sure to reach out to him. He's the real deal. Uh, you know, I know that we're going to get closer and closer here in months to come here dude i really appreciate you spending some time with us hopefully guys you guys got a lot out of this this is the high level conversation i want all of you listeners to be getting towards right with some people that have done this for quite some time and done thousands and thousands of deals so if you like this one you're watching on youtube make sure to like and subscribe if you're listening to iTunes, make sure you give a five-star review, Matt.

Starting point is 00:27:27 I appreciate you baller. Thanks so much. Thank you. Thank you. Have me later.

The Science of Flipping - Adapting to Real Estate Market Shifts and Leveraging Virtual Assistants| Matt Larson

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