Matt Strong Shares How He’s Flipped 400+ Homes and Funded $125MM+ in Hard Money Loans

Steve Trang: Hey, everybody. Thank you for joining us for today's episode of Real Estate Disruptors. Today, we have my good buddy, Matt Strong, with Sierra West Funding, and he flew in from Salt Lake to share how he's flipped over 400 homes and funded over a 125,000,000 in hard money loans. It's a crazy amount. If this is your first time tuning in, I'm Steve Trang, and I help entrepreneurs create businesses that support their family, lifestyle, and goals through mentorship.

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That way, we can all grow together. And this is a live show, so please ask your questions for Matt to answer. You ready?

Matt Strong: Got it. Steve, thanks for having me.

Steve: Dude, it's my it's my pleasure. I I've been excited. I've been bugging you. I know. I wanna say probably about a year.

Matt: Since well, yeah. Probably about a year, but since May when we met. Right?

Steve: Yeah. So this is awesome. So first question, simple question is what got you into real estate?

Matt: I got it first, if it's okay. Yeah. You got a lot of swag. I don't have any swag. The only swag I have.

So I wanted to bring you a little gift. Right? Like, the only swag I have is my, you know, my team. Right? The youth.

So I got you a little University of Utah. I know you're not gonna like it, but maybe you can wear it when they're playing Arizona or Arizona State. You know? So anyway, it's the best I could offer.

Steve: So I appreciate it. Thank you very much.

Matt: Brought you some swag. So anyway,

Steve: so we're going back to it. What what got you into real estate?

Matt: So the what got me into it is when, my wife and I, we were looking for a first house. Right. And so we had just been married maybe a year and a half. And back then, like, I was in the mindset of, like, I don't wanna fix anything. So we were looking for new homes.

And, so we rolled into this What were you

Steve: doing at that time? What was your career?

Matt: So I was working and this maybe is part of the story. I was working for a guy and we were, I was working for him. The company was doing self funded health plans for like small to medium sized companies. And so I was just kind of like kind of a sales guy, right? And I just hit like where I was on salary making $36,000 a year.

It was like, it was like the greatest thing ever. I just graduated from college, you know, I was like salaried, you know. I was like, this is awesome. Let's go find a house. And so we ended up buying a new home with a local builder, Ivory Homes in in Salt Lake, right?

And so I decided to go new because I'm like, I don't want to buy a house that I need to fix up. I don't know anything about that. So walking into the model home, you know, I'm like, hey, can I get a discount? I don't have an agent. And they said, well, we don't do that.

But if you're an agent, you know, we'll, we'll pay you commission. I'm like, sweet. I'm an agent. Right? And so I went and got my license.

And that's how I got into real estate, kind of by default buying my first house. So Trying to

Steve: save a little bit of money.

Matt: So save a little bit of money. So my first deal really was a no money down deal, right? I ended up getting my real estate license, closing on the house, crediting my commission. They were doing the FHA. We'll pay your closing costs back in the day.

This was, I think, let's see, 1999 or 2,000. And so Yeah.

Steve: They would pay your closing costs and your down payment.

Matt: Remember that Nehemiah Neighborhood Gold stuff? It was back in the day. So like we got into our first house, no money down. So So then I started talking to the sales agent. You know, I'm like, how much money do you guys make?

You know, and you know, I don't know, dollars $150. I'm like, what? You just said the model? I want it. Yo, I'm in.

So I then started working for Ivory Homes and I already had my license. So I did four years kind of sitting in a model home.

Steve: You were just kind of floating by. It's like, oh, this sounds interesting.

Matt: Exactly. And so I, you know, we can talk about this later. But luckily, I maintain a really good relationship with my old boss at the time because he comes back where he's been one of my main investors, you know, over the years. And so but I kind of like bail on him to go like, you know, grass is greener. And so that's the quick story of how I got into real estate.

It was kind of by default buying my first house and then just kinda so then I sold houses out of the model home that was just right down the street from the house we lived in.

Steve: That's so fascinating. I just cannot picture you in a new home building community.

Matt: Oh, man. It was for me, anyway, it's a great for whoever loves doing it. But I just saw myself, like, dying a slow death. Right? Like, just, you know, you can imagine those days in the model.

You know, if you leave, someone comes in, you miss that lead. There's not too much you can control. I always felt like it was just selling a really expensive pair of jeans, you know, because people come in, I like the career model. Great, you know, sweet. Here you go.

You know, it's just order taking. Yeah. You know?

Steve: So four years, you said?

Matt: Yeah. For four years.

Steve: So what's fascinating is because you're a successful flipper or at least you used to flip a lot. I think it's I mean,

Matt: I believe it's still flipped. Yeah. Yeah.

Steve: But you bought a new home because you were against flipping. So did this working in a new build help you develop a taste for flipping?

Matt: Not necessarily. So this is where I definitely got a credit, you know, my partner that that we partnered with for like thirteen years. So, his name is Matt, Matt Stormheim. So he was we were friends from high school, right? And so he had kind of gotten into the arena of working with distressed or like with bank owned properties and helping other investors, you know, just as an agent, right?

And so I was kind of desperately looking for something that could replace the income that I was used to sitting in a model. And I'm thinking, I, you know, like I can't go get a W-two job. What am I gonna do? Right? Because, you know, along the way, start buying like a new house and

Steve: You get car serviced in a certain lifestyle.

Matt: Yeah. Right? And so by flipping, it was kind of through that relationship where, you know, I had a home equity line and he's like, You want to try one? So we did our first one together, the very end of 2004. And it went well.

You know, we made like $20 on the house. And I'm doing the math going, Okay, I got 10. You know, if we do 10, you know, it's like, Ah, this might work, right? So we did two or three more while I was still at Ivory at the new home builder. And then I kind of felt like, Okay, this might work.

And so, you know, kind of when you're selling new homes, at least with them, you could once someone had paid like a construction deposit

Steve: Mhmm.

Matt: You'd be entitled to take like 1%, kind of like an advance on your commission.

Steve: Yeah.

Matt: And so I all of a sudden pulled, like, I never had never done it before in four years. I pulled all my advances, you know, because I just wanted as big of a cushion just in case this didn't work out. Right. And I remember the sales manager, he's like, so you're quitting. Right?

And I'm like, no. No. No. I'm not.

Steve: You know?

Matt: And I made sure I got the checks, so they cashed it. I'm like, I'm gonna leave that. Because as soon as you tell them you're gone, it's like, great. See you later. Right.

So we had done two or three flips or at least one or two successfully and started the other ones before it quit. And then it was just like, you know, like anybody starting something new, especially with, you know, young kids and a new mortgage, like, you know, you're a little bit terrified of because you don't know what you don't know and it looks like it's going to work. And, you know, thankfully it, you know, we hit the ground running and, and it worked out there, you know.

Steve: So I heard you say 2,004. Yep. So you did pretty well probably during the run up.

Matt: Yeah. Yeah. Yeah.

Steve: On the downturn in Salt Lake, it probably wasn't as bad as it was here, but it probably wasn't easy either.

Matt: No. We got our clocks cleaned.

Steve: So, what happened? For sure.

Matt: So, it's kind of in a way for different reasons. You know, you have flashbacks, right? And so, sometimes it makes you a little bit more pessimistic or cautious, at least for me now. But, yeah, so we were flipping. And man, those were the good old days, right?

Like you could just jump on the MLS. I mean, that was my morning. You jump on the MLS, decide which ones you wanted to offer on. You knew if you offer on five or 10, you were gonna get pretty good deals and you could be done hunting for the week by like Monday afternoon, you know. And so looking back now, obviously, it's gotten easier because you have more reps under your belt.

Right? But, man, this is like the glory days. Right? Prices were so low. It was so easy.

There wasn't as much competition. So we flipped a bunch, and then it started getting tighter. Right? Like, the margins started getting tighter. You'd see tons more people down at the courthouse.

You know, there's different frenzies for different reasons. Right? Like, the lending was out of control. Anyone could go get a loan. So where we got where we got in trouble was we kind of abandoned the flip model because it felt like there was scarcity of product.

So we kinda thought overnight we were developers. Right? So we had some land deals. We were in the middle of doing some townhomes

Steve: Why not?

Matt: Some spec homes. And then, you know, it, kinda stopped us in our tracks. So those were dark days like it was for everybody back then, you know, 2007, 2008. We lost a ton of money. You know, I had a foreclosure.

I had short sales.

Steve: Mhmm.

Matt: I mean, it was like it was kinda like, you know, not super fun. Right?

Steve: Right. Everyone everyone got got cleaned out. Yeah. So at which point then did you start lending?

Matt: So the lending came came further down the road. So maybe to just kind of follow in sequence. Right? Like, so I still remember the day, you know, it was, July, I think, tenth two thousand seven. You know?

It's always awesome when you're at a courthouse

Steve: Mhmm.

Matt: And you're buying properties, but it's not so cool when you see your name No. On, you know, the list of trustee sales.

Steve: Yes, I can't imagine that.

Matt: So that was like, you know, that was kind of like It was a mental thing. And I kind of tell the story. It's super true. But this was what, for me, kind of changed my perspective on how things were going. Like, I was out interviewing at jobs.

Right? Like, I'm I I was like the opposite of abundance, mindset, and positivity. It was like doom and gloom, not sleeping, stressing about, you know, what's gonna happen, how much more money you're gonna lose. And, one day, you know, I was having a conversation with my wife. We had a brand new Tahoe, like, a new Honda Accord, like, you know.

And I'm like and the reality is is a lot further away than what stories I was telling in my head, you know. It's like we're we're gonna lose it all. Right? Like, you know, we're gonna move in with my parents. We're gonna go bankrupt.

Whatever. And I was kind of like, if we had to live in The Tahoe, you know, and at that time we had three kids. My 11 year old now was, like, just a baby. Mhmm. You know, I'm like, if we have to live in The Tahoe, would we be okay?

You know? And she's just kind of like, yeah, we'd be fine. You know, I love you. And I'm like it was like at that moment, it was like, like, oh, like the worst case scenario is we're gonna be fine and we're living in a Tahoe. I'm like, that's great.

Like Yeah. So it totally changed my perspective. And then it was like game on. Instead of looking for all the negatives and the it was kind of like looking

Steve: for positives.

Matt: Exactly. It was like, okay, where's the light? Let's chase it. You know, what opportunities are out there? And naturally, the market was at a prime spot.

That's where we just dove right back in and started buying bank owned houses. So if the glory days were before the crash, really, the glory days were, you know, 2009, twenty ten, twenty eleven. Because after that, after all that, you know, getting rid of the short sales, going through the foreclosure, we jumped back in and started buying. Luckily, along that way, we didn't burn any bridges with our private lenders and hard money lenders. So they believed in us.

And what we found really, really quick was first time homeowners, they didn't know what the stock market was. You know, I mean, they did, right? But they didn't know, like, that things were bad for people. They were just stoked that they were now making $13 an hour and prices were cheap, right? So they could qualify for houses that they couldn't before.

And so we couldn't buy and sell stuff quick enough. And so it was really kind of weird because we had just gone through this, like, doom and gloom, but there was still a ton of doom and gloom because the stock market was like it nothing, right? And we were doing really well flipping houses. And I, like, had my best year up to that point. So Like, the year year after or two after my foreclosure.

Steve: You were doing really well. Went down this dark Yeah. Abyss. And the only thing that changed was your outlook, and everything was good again.

Matt: 100 percent.

Steve: That's crazy.

Matt: And it was kind of accepting the reality of, like, what the worst case scenario was.

Steve: Mhmm.

Matt: Like, you hear I heard, Sam Sam Zell. Right? Total, you know, wealthy investor. He said once I was at a conference. He was at he says, like, if you can live with the worst case scenario, then, like, do the deal.

And so it's kind of that similar mindset. It's like Yeah. I like, once I realized worst case scenario is like we'd have nothing but a Tahoe and five of us living in it, my, it'd probably be okay, you know. Like, then it Yeah. Like you said, it just totally flipped the switch and then you started looking for, you know, the opportunities that

Steve: you weren't seeing before because you were just too busy worrying about all

Matt: the doom and gloom. The opportunities that you weren't seeing before because you were just too busy worrying about all the doom and gloom. Right.

Steve: So flipping flipping dies down. Uh-huh. And then flipping at a higher scale. Yeah. And then from there what?

Matt: So so then we flipped. Me and me and Matt, we flipped. And then we brought in, a third partner, Chris, Chris Ramos. And so in our heyday, when it was the three of us, we were doing for like four years in a row, 50 to 60 houses in a year we were flipping. And so, it was just and 95% of those were MLS purchases.

We were just 100% dedicated to the MLS. We had our licenses, so we'd get paid to buy them.

Steve: You

Matt: know, we'd list them ourselves. We had, like, at at the height there for a few years, we had, like, six crews. So each of us would kinda manage two of them. And they were just two man crews that would do, like, 60% of the work. We'd bring in roofers, you know, window guys, like things that they couldn't do.

And so then we flip, flip, flipped. And then then what had happened is like some of these relationships that we were using to fund our deals, you know, they had excess money, you know, and I also had money in a self directed IRA. And so, it was just kind of natural where some people came to us and they're like, Hey, well, where are you getting your money? Will you lend it to me? And it was kind of like, Oh, like I can't lend it to myself.

I think then maybe I had like $150 and I'm like, Yeah, we'll do a loan for you for my IRA. And so for the first, like, year or two, we broker our investors' money. And, really, it wasn't a business model. It was kinda more just kinda something new and fun. It's like, yeah.

Let's put this money together. Let's get these people loans. Right? And so for the first year or two, it's like really not a money making opportunity other than to deploy our own funds. And then it slowly started to get traction.

You know, our investors ended up having more and more excess money. More and more people kept talking about it. So if you look at kind of the growth from like I think we did our first loan in is either 2010 or 2011. It's just like totally, you know, because been more intentional about it Yeah. Over the years.

Made more of a push to raise more money, you know, to then deploy, got more involved in networking and kinda getting the word out and

Steve: stuff like that. Right. So right now, flipping, how much are you flipping right now?

Matt: So it's in an odd world, I'm actually flipping maybe more than as much or more more than ever, you know. So now I'm kinda

Steve: Really?

Matt: Kinda operating, you know, on my own. Mhmm. And so I have I have, eight flips going right now, plus two small two separate small developments and then, you know, doing as much hard money lending volume as ever before. So in a weird way,

Steve: I'm flipping more How are you going to listen to all this?

Matt: Well, some of it, you get more reps under your belt. So, like, each flip's not as hard. Right? And I've been lucky to have kind of the same crew, you know, that can handle one or two houses at a time. And they've done so many.

It's really kind of like, here's the next house. You already know what to do. Yeah. You know It's

Steve: an assembly line at this point.

Matt: Yeah. But I still like going by to check on them because, one, I love seeing the progress and the value creation. And they're great guys. Right? So you go high five them, whatever, you know, mess with them and see how they're doing.

And, you know, over the years, I've gotten smarter about how to leverage, you know, my time and, you know, the it's the who versus the how or, you you know, the who versus the how. Get the right person, you know. So I've been more strategic in the contractors that I'm using. So it really can be more of an initial, this deal is good. Let's do it.

This This is the direction we wanna head. You know, go with it So type of thing.

Steve: For 2019, how many houses would you say you flipped?

Matt: So that's a weird thing. Twenty nineteen, in a way, was a little bit of a transition here with the flips. Mhmm. Because, you know, like I said, my partner that I had for, like, thirteen years, awesome dude. There's no way I would have done even hardly any of it without him.

We kinda like, you know, kinda split ways a little bit. And so it was a little bit of a transition where the flips so the reality is I maybe only did, like, 10 I think I'll close, like, 10 or 11 flips, this year Yeah. In 2019. But I'll probably do two to three times that just based on the pace Man. For next year.

Steve: That's just crazy. So one thing that, you know, I I think is fascinating. So for you guys, I've been, you know, following the show for a while. There's, Matt, myself, and and Laith Levada, in Vegas. And we all we're we were all in the strategic coach program, which I can't recommend enough.

I love the program. It's been really beneficial. But we're all introducing ourselves. I remember you were on the far side. Al was in the middle, and Leith was on the other far side.

And you stand and Todd Swaggerty was there. Yes. And Todd stands up. He's like, I'm a printer. Yeah.

I just print for people. Yeah. You stand up. I was like, Yeah, I'm a I'm a broker in Salt Lake or something like that. Yeah.

I stand up. I'm a broker in Phoenix. And ladies stands out like, I'm a broker in Vegas. Yeah. And we're all in this world.

But for whatever reason, we introduce ourselves. I I don't know if it's some sort of, you know, wanna shy away from judgment. I don't know. Right? Because Todd's got yellow letter HQ.

He's crushing it. Right. You're doing really well in Salt Lake. I'm doing pretty good in Phoenix, and Lace is crushing in Vegas. Yeah.

But it's also kind of a crazy coincidence that we were all in the same room. Because you said you're still going into it, and you're not finding that necessarily.

Matt: Yeah. I mean, I've talked with other people as chief getting you know, I just think we we're lucky that we all kind of had a similar career path and and real estate, especially with distressed properties and we're all in different markets. So like, what are you doing, man? How do we, you know, like, share with me your secrets and

Steve: Right.

Matt: Back and forth, you know. So that was that was way cool.

Steve: So and then you're trying something else right now. We're not trying something. You're in something else right now. Genius Network.

Matt: Yeah. So that's You heard about that. That's here local in Phoenix or in Tempe.

Steve: Mhmm.

Matt: And, I just barely got involved with it, but I was introduced to it from Strategic Coach. So it's kinda like I've benefited so much from Coach, and I reenrolled in Coach for a second year. And it was kinda like you keep getting a little bit of overlap and cross marketing. Right? And they, you know, they openly admit that they're cross selling the program.

And so, you know, it's kinda like the gut instinct with, you know, my buddy in Salt Salt Lake, Matt Atkinson. He introduced me to Strategic Coach. And, you know, it's like, you know what? I'm feeling a vibe here with Genius Network, and, you know, I think it's gonna be beneficial. I haven't really gone to any meet other than I've joined, and I went to their annual event.

Mhmm. But I'm super stoked about it because one thing I haven't, and we'll talk about it, that I have not done well at all is any sort of marketing. And so Genius Network's really kind of, at at the core, I think it's kind of a marketing and sales and kind of organization, but it's also like a huge network. And, you know, we'll talk about this too. But over the years, I've really learned slowly, you know, later in life the value of networking.

Steve: Oh, relationships is everything.

Matt: And relationships. So, the more friends, the better, even if you

Steve: have to pay for them to start with. Yeah. For sure. For sure. So Salt Lake population, what what's the population there?

Oh, I

Matt: think the whole state's like three, but metropolitan, like, Salt Lake, Greater Salt Lake County is like, 1.5, I think, something like that.

Steve: Okay. So pretty big by

Matt: nine yards. It's large. Yeah. Sure.

Steve: So how many, you know, competitors, peers do you have in that space Oh. Through hard money loans in in Charlotte?

Matt: So hard money loans, I would say there's probably three or four that I would say are pretty consistently you hear them, you know, like, oh, you got your loan from there or you got your loan from there. Right? Like and there's always a bunch of little, you know, like, guys that are maybe just doing two or three on the side or something

Steve: like that.

Matt: But, you know and so one thing, once I got into more of the networking side of it, I'm like, I want to be friends with everybody. Right? So I really try and network hard with even my competitors.

Steve: Mhmm. You

Matt: know, which is totally normal for you guys here, you know, which is people that I talk to are like, don't you collaborate? Like, my buddy and Steve, like, it seems like they're all competitors yet. They're all on the same team. Mhmm. And it's really cool to see how it works.

Right? So it's benefit me a ton getting friendly with my competitors because there'll be a deal they can't do, and then they'll call me or I'll I'll have a deal that I'm a little short on funds, so I'll call them.

Steve: And Mhmm.

Matt: It doesn't work with everybody. Some personalities just maybe don't get along with great. But, yeah, I mean, I'd say there's, like, three or four, you know, other local guys that I would consider, you know, like, pretty solid competitors. There's always some out of state randomness that comes in that's, you know, entering the market every once in a while.

Steve: Right. So how do you separate yourself from your competition?

Matt: Well, I like to think so, first and foremost, you never want to jeopardize the, preservation of capital, right, and the risk of the investor, the money that you're leveraging to loan out. Right? Like, first and foremost, that is number one, protect that. But after that, I like to think, and I've heard the feedback, so I'm hoping it's true, is like I want to be the easiest guy to work with.

Steve: You

Matt: know, I want to want to be smart. Like I said, you know, protect the money. But after that, like, it's kind of common sense. Right? Like, let's look at it.

And this is where flipping first really benefited me. Right? Because I can put my shoes in the in the I can put myself in their shoes. Right? Because I borrowed money this whole time.

I mean, I still borrow money. So I get what it's like to have a deal kind of go sideways. I get that, you know, things don't go always well with the remodel. I get that you're sometimes way more optimistic on the front end, you know. So I I you know, you can sense the excitement in someone's voice.

Steve: Relying on the wholesaler's opinion, I recall.

Matt: Right. Yeah, exactly right. Yeah. It could go for up to. Yeah.

Yeah, right. Or it could go for as low as, you know. So I want to be as easy as possible to work with. Right? Like, I mean, we clearly need to know stuff about the borrower and the property.

But, you know, I don't need to make them feel all guilty or whatever for applying for a loan. And I like to be quick in my response back to them because a lot of times when they know that I tell them they're good to go, like, it shuts off in their brain that it's like, okay. Focus on doing the deal. Don't focus on trying to put it together. Right.

So I really do try to you know, and I'm always working on that, try to make everything a little bit more turnkey. So it's just kinda like, hey, Mac. Can we do this? It's like, yeah. Let's do it.

When? Next Friday? Great. Right? You know, I mean, there's a process to everything, but, you know, I think being responsive, being available, and being able to just shoot straight with them, you know, is maybe an advantage I have.

There's some things with the with the mechanics of doing the loan, like how we set up the loan and maybe if, you know, like, deferring payments or LTV, you know, we could talk about. But Yeah. Might also give us strategic advantage. But I think everybody in Utah anyway is pretty much the same price. So you're not competing on price.

I think you're more competing just on service

Steve: Mhmm.

Matt: And relationship.

Steve: So on that, you know, if you're not competing on price, you're on the you know, you're gonna show right now. You jumped on the plane this morning, flew out here, which I appreciate.

Matt: Yeah.

Steve: Someone's got to be handling your phone calls. Yeah. So what does your organization look like with you not being physically present?

Matt: So, yeah, I mean, I'm over at the Eggs USA next door, whatever it's called, you know, grabbing Wi Fi. USA or whatever it is, grabbing Wi Fi. You know? This is the thing I love about this business, but it also kinda drives you crazy, but you know it's coming. Like, this morning when I'm like, okay.

I think everything's out of control. Everything's put to bed. No.

Steve: You can't say that.

Matt: We got two or three loans closing this week. It's kind of the the week before Christmas, you know, and then it's like, I literally have three deals in the last two hours. They're like, we need to close Friday. It's like, oh, great. Thanks.

You know? Like, I'll get back to you at 03:00, what I've done with Steve. But the short answer is I do have an a full time assistant that is helping out a ton with the flips and a little bit of the brokerage and evaluating deals, following up on some of the existing loans. But, really, I'm the intake for any new leads, underwriting, putting it all together. So your answer is those phone calls I'm taking

Steve: So those three that need to close this Friday Yeah. Are new. Yeah. For this morning. These aren't like, hey, Matt.

I know we're talking about closing in in the twenty eighth. I need need you to pull those in. This is not that.

Matt: No. It's like, hey. I we're supposed to close Friday. It's like, sweet. So just a couple days.

No big deal. You know?

Steve: I mean New file.

Matt: New file. Yeah. So I do have this, like, kind of a strategic partnership, and I'm realizing over the years that this is so critical, you know, a local title company Mhmm. That, you know, my kind of setup is, you know, kind of face whatever, you know, customer relations, sourcing borrowers, also sourcing investor funds. But then, really, all the underwriting, putting the deal together, evaluating it, packaging it up, sending it off for investor approval, you know, that's all me.

And then I kind of hand it off and say, hey. This is the deal. This is when it needs to close. And then title company takes it from there, and they're phenomenal. I wouldn't even do any of this without without them.

They do the docs, the escrow, you know, coordinate to the trust account, investor funds, borrower funds. And, I mean, they do all the heavy lifting from that point. But, you know, you know, it's kinda like the thing you gotta be prepared for in this business because we don't have a fund. Right? Like, I'm you know, if you need a loan, I've got 13 different investors on this side.

So it's just all one off trust deed investing. So it's kind of a game of Tetris. Right? Like so at times, I have a little bit more money here where they're like, Matt, I need to get this money out. Like, one guy one of my investors, Tim, is like, I need to get another million bucks out by the end of the year.

Mhmm. I'm like, well, that's great. You know? Let's just wait till we have an you know? So I have that balance of, like, sometimes I have more money than I have deals, and sometimes I have more deals than I have money.

I don't just have a pot of money sitting here that I'm paying interest on with a with a hurdle rate. So I'm, you know so I gotta always kinda have a good relationship with my investors to know what their liquidity is like. So when, you know, Laith calls me we're fictional character Laith. Right? When Laith calls me and says, hey.

I need to close Friday. I already kind of know, like, great. Tim could do this. Let's look at the deal. Yeah.

Okay. We can do it Friday. Alright. You know?

Steve: And it's the same pricing regardless of the borrower or the investor. So one thing we I completely forgot. So the brokerage. Yeah. What's that about?

I mean, you you got these other two things going on. Talk about the brokerage.

Matt: So the brokerage is, it's super small. It's just just pretty much me, and I have, like, five or six agents.

Steve: Mhmm.

Matt: Some of those agents are active investors, and I'll provide them with the hard money loans. I started out always having my license, and we always had one of us along the way always had a broker's license. So we would always get paid to buy our own deal. So it was like, I'm not let's just create our own brokerage. Right?

Because, like, you know so I do have a brokerage now. I think I told you before. I like to think I have four buckets now. I have the hard money, the flips, long term rentals, and then a brokerage. Really, the brokerage just kinda facilitates all the transactions Mhmm.

For the, you know, for the flips, for the hard money, and for the long term rentals. So, you know, I I since kind of a little bit of a reorganization last year and a half, I just have my own brokerage now.

Steve: Mhmm.

Matt: I just completely made it up. It means nothing. It's called Conrad Cruz Real Estate Services. I bought a duplex Yeah. From a guy named Conrad.

Steve: Mhmm.

Matt: And I'm like, I love his name. You know? I'm like, my name's Matt. Right? I I want a cool name.

Steve: So You're saying Matt's Lending is not gonna go?

Matt: No. And so the brokerage side of it, I call Conrad Cruz because I'm like, Conrad kinda needs a last name, you know? So it's kind of like the Dos Equis guy. So I kind of running joke with the title company. I'm like, dude, Conrad needs his commission check, you know, and he doesn't exist.

It's just so my logo is a palm tree and and a house. I I like palm trees and houses. So Yeah. So the brokerage, that's kind of the function of the brokerage, really just to kinda help It's kinda fair. And it obviously brings in, you know, a little bit of money from the deals that, you know, the agents do, but it really kinda just just lunch money.

Kinda covers the nut of certain things.

Steve: So let's pretend. Yeah. And we've had this conversation before offline. Yeah. But let's pretend I was gonna start a hard money company Yep.

In Phoenix. K. There's a lot guys here. There's no shortage. I've actually had two of them on the show.

Matt: Yeah. Yeah. Yeah.

Steve: Right. So you're gonna counsel me. Right? Right. Matt, I wanna start a hard money private lending company.

Right. What do I do?

Matt: Well, I think you might wanna first just check with, like, what legalities there may or may not be involved. Right? So I don't know if you're gonna need a license here. I think there's, I think, seven states last time I looked that you need a, a lending license, a mortgage license to do private loans, hard money loans being business or commercial in nature. Right?

Consumer loans, obviously you're gonna need a mortgage license. But some states, most of the states actually do not require you to have, a mortgage license to originate business purpose or commercial loans on a single family residence.

Steve: Mhmm.

Matt: I can't I don't know in Arizona. I think you probably have to have a license. So if you have to have a license, then you're probably gonna have to have a license underneath the PLM. Right? So I would first and foremost check out that.

Right? Then you gotta make sure what you do, you understand how the game works. Right? Who is gonna be borrowing the money and what are they gonna be doing with it and how are you gonna get paid back?

Steve: So don't start off as a higher money lender before wholesaling a

Matt: fund. No. No. No. No.

No. You need to have some I mean, we could go on for hours of stories of guys that maybe lent in second or lent without reporting a note or a deed, you know.

Steve: Oh, man.

Matt: So you've gotta understand, obviously, real estate in general, like, what collateral looks like, what first lien position looks like, what second lien position looks like. Obviously, you got to have a great relationship with the title company that can help you navigate, you know, some of those issues. And then you got to have money, right? And then you got to get your message out. And then, you know, the hard money is what does your money look like?

I mean, there's so many different ways you can play the game, right? You know, do you have a fund or are you just sourcing money like I am from, you know, individual investors one at a time? But I I would say it's just like flipping. To be successful in doing hard money, you've gotta understand what ARVs look like, what maybe a rehab budget looks like, and then obviously have a model that you can follow to, you know, determine whether that guy you're lending to has a successful exit, which if he has a successful exit, you're probably gonna have a successful payback. Right?

So where things go wrong is somewhere along that process. And that's where it's helped to flip because you can understand where those, you know, things are going to go sideways.

Steve: Right.

Matt: And at least mitigate for them by the amount of money you lend or know when you got to own it and get involved and help them, you know, correct course.

Steve: So you find yourself hand holding a little bit with some of those?

Matt: Oh, 100%.

Steve: Yeah. Yeah.

Matt: It's kind of probably that eightytwenty rule. Like 80% you kind of forget about. It's like, oh, you paid this up. Congratulations. You know, like, that the 20% you're like,

Steve: oh, why

Matt: do we do this loan?

Steve: You

Matt: know? But as long as we have good values, we're gonna get out of it okay. Right? But, you know, on a couple right now, I've had to bring in a contractor to help them. You know, unfortunately, we're foreclosing on a couple of properties.

And then, you know, in the parking lot, I was having just like one of those super candid discussions with the borrower, you know, of like, listen, you got to tell people there's not money going to be left over. You've overpriced the home, you've over spent. It's a year on the market. You're gonna lose money. Mhmm.

And so sometimes people get investors, especially if they're new, they get lost in this world because they don't know what they don't know. They think it all looks good on paper from their coaching seminar or whatever. Right?

Steve: Yeah.

Matt: And they they think it all looks good. Like, oh, I know what an ARV is. I know what the budget is and blah blah blah. But once they get in the middle of it, you kinda lose your head. Some people just lose their minds, and they they're dealing in this alternate universe.

You know? I don't know. Like, where they want the reality to be different than what it really is.

Steve: Of course.

Matt: So in this one example, they have this house listed. I'm not lying. It's been listed at 700 between 700 and 10 and 730,000 for a year. And I'm like, guys, the market is telling you They're just waiting for the

Steve: market to catch up.

Matt: But that's what they say. So, well, we just switched for realtors, and it's gonna be better in the spring. I'm like, yeah. Okay. Maybe it is, but you're clipping at $5 a month.

Right? Like so sometimes people need help getting to reality because they can't get there themselves because they haven't been through it before. And, you know, you're so scared of losing money. I mean, everyone's scared of losing money, right? You're not doing the flip to lose money.

But sometimes the best thing you can do is just

Steve: cut your losses, cut

Matt: your losses and move on. Yeah. Which I've done plenty of times.

Steve: Oh, I have to.

Matt: I always tell people, you know, one of the my borrowers, he's a real success for flipper in Salt Lake, John Maxim. So if he's listening, he's a stud. But he texted me once. He's like, I'm doing a presentation at the local RIA. Have you ever lost money on a deal?

I start laughing. I'm like, which 35 do you want me to ship? You know, case study for you. You know? So I've lost plenty of money on deals.

Steve: Yeah. We've we've we've lost plenty, and they're they're ones that we commit to, and that's the problem. We're committing to deals that maybe we didn't quite do our due diligence on.

Matt: Oh, yeah. 100%. I still make the mistake. Yeah. Which is kinda like, oh, it was all well.

I'm just, you know, volume will help you or kill you. But usually, if you're smart, volume is gonna save you. Right. Because you're gonna get just as lucky on some as you are unlucky on some.

Steve: Yeah. Definitely. So you mentioned there's a few different sort of ways. Right? So there's, there's the fund.

Yeah. There's the catch in, you know, the investors one at a time. You got 13 of them. Yep. Was there another one or were those at two primary?

I mean,

Matt: that's pretty much it unless you have your own funds, which a lot of guys do and go small. Maybe they just have their own IRA or something like that. I know a bunch of guys like that that maybe have, like, 4 or 500,000, and they'll just lend that out till they're done, you know. And they won't try to grow beyond that. They'll just be totally content lending their own money.

Steve: And then let's just talk about that for an instant for for for a second. So if I have this fund Uh-huh. And I'm lending out of it, as long as the funds get in the points and the payments, that's all cool. Right? I just can't personally make money off of it.

Matt: Oh, if it's in your IRA?

Steve: Yeah.

Matt: Yeah. Yeah. Yeah. Right. Like, you can't personally benefit from anything other than just your direct investment.

Mhmm. You know, like, so you do gotta be careful with your IRA funds, but a lot of our investors are providing their IRA money to invest with us. Right? Right. But they're just getting a direct return.

Steve: Yeah. I'm talking about the guys we know that are using their their own money.

Matt: Right. Right. Right.

Steve: Yeah. Okay. So then what advice would you give someone again? You know, like, let's just say it's me.

Matt: Yeah. Yeah.

Steve: You know, and I wanna start my hard money lending. Right? You developed these 13 relationships. How did you go about creating these relationships?

Matt: Some of them were established. Right? So I go back to when I would work for this self, self funded, insurance agency. Right? So Dave, one, he's just an awesome dude.

So you can't replace that. Like, I lucked out that he's just an awesome dude that was successful. But then after I left, he became even more successful. And so I rerouted back to him and he's like, Dave, let me tell you what I'm doing now. And so, one, I think you gotta get a track record with him.

And so if you can get a track record with them with your own deals and get them comfortable to know, like, how it works, just like, you know, when you're flipping. Right? You're a lot more comfortable buying your tenth flip than you are your first flip.

Steve: Mhmm.

Matt: So you gotta get some reps under their belt. So whenever I bring someone new on, I really wanna try and get them, like, as a layup as possible for their first loan so that the experience will be as smooth as possible. Because then they get a little bit of

Steve: You're dating.

Matt: You're dating. Right? Right? And then they get a little bit of comfort. They see it come back.

That that's the one thing I like about our model is it's not just paper money. Right? Like, when the loan pays off, I'll say, Steve, your loan just paid off. Here's a reconciliation of what we owe you. Does this look good?

Yeah. It looks good. Okay. Great. Here's your 250 plus interest back.

Steve: Mhmm.

Matt: And you actually get it back. Right? And then but I may say in the same day, oh, hey, Steve. By the way, here's a new loan for 250,000.

Steve: Mhmm.

Matt: Send it back. So then there is some value and something real in, like it's like getting change back. Right? Instead of just paper money, like, just a statement showing that you have this like, they'll see a wire go back and forth. So that builds confidence is is ultimately what this does.

It It builds confidence in the machine, confidence in the process, confidence in our ability to do what we say we're gonna do with underwrite the deal correctly, manage the process, and get the loan paid back Right. And provide a good experience for the borrower. So and then you'll see every personality is different. Right? Just like, you know, everybody's blue, red, green, or whatever.

Right? Like so some investors I would send the same email to, say like, hey, Tim. Here's the deal. Would you like to fund 320,000? If he's at his desk, like, two minutes later, yeah, Matt.

Let's do it. You know, maybe a different guy would be like, well, tell me a little bit about the borrower. You know? Does he like green color green? What you know?

Like, some so you gotta be anticipating the hot buttons for your investors. Right? Some guys want a little bit of different details. Some guys don't care. Ultimately, they all wanna make sure their money's safe.

Right? But, so that's how I get them. It's just try to get them a layup, communicate with them, give them a realistic update of, like, when the money might be coming back, talk to them about their experience, or they're liking it. And then also, I don't ever wanna pry too much, but it's like, well, you just did 200. Do you like this?

Would you have other funds that you'd like to commit so I can know to put you in the rotation?

Steve: Yeah. So that's great for your first one Yeah. And potentially second one. Are you actively trying to add more to it? Yes.

Okay. So what are you doing to get more?

Matt: Sometimes I'll, sometimes I have just the benefit of, I guess, dumb luck where, like, I have a couple investors that they'll tell their brother to call me. Mhmm. They'll tell their business associate to call me. They'll tell their friend to call me. So I get referrals from my existing base of investors.

Because sometimes they'll see they're like, oh, I really like what Matt's doing.

Steve: Yeah.

Matt: You know, they're at lunch with their buddies and they're telling like, you know, everyone talks about, like, what are you doing to invest? Right? So sometimes the word just naturally gets spreads around. And then I've tried to, like, practice my, like, thirty minute elevator speed or thirty second, not thirty minute, like, thirty second. Yeah.

It's a long elevator. Right? You know? So I have gotten people on board just through that casual conversation of, like, hey. What do you do?

I do, you know, hard money lending. Well, what does that look like? And I don't maybe tell them. And then I'm not like the aggressive closer at all. It'd just be like, well, if you're ever interested in maybe getting involved, let me know.

And so then we kind of show them, you know, I'll show them how it works, what the return looks like. And, a lot of people jump on board that way.

Steve: And then, you know, you're saying, like, the rates are the rates in Salt Lake. And we've talked about it. Like, what do you guys charge in Salt Lake?

Matt: It's cheap. I know.

Steve: I would never fly in Phoenix. Right? Super affordable. So what what is your typical? So,

Matt: this is pretty typical for Salt Lake for a first position, deed of trust. Yeah. Your first position loan, leverage, you know, maybe 85%, maybe 90% of purchase price. Mhmm. We're at two points and 12% for six months.

Steve: Yeah.

Matt: Everyone does a little different. There's some guys in town that'll do a 100%, but they'll match it with a second. And that second's, like, at four and sixteen. If the value's there, even if we do end up going to a 100%, I'll still just do two and twelve. Right.

And the one thing we do a little bit different, part of it was because when we started, we didn't realize we're gonna be doing a lot of hard money loans, and we didn't wanna be a servicer. So if the value is there, which usually it is, I don't require payments because I don't wanna collect payments. Right? And so sometimes this can be a problem if it goes a little longer because obviously that balance is accruing up. Up.

But in general, we don't require payments. So that's one advantage we have.

Steve: Most other advantage.

Matt: But part of that is, like, how you pitch it to your investors. Like, I pitch it to them because, you know, I just say, hey. You'll get paid when the loan pays off. And they've never done this before. They're okay with that.

Steve: Yeah.

Matt: You know? So if I tell them we're gonna make we're gonna give you a payment on the fifth of every month, you know how many nightmares I'm gonna have on the sixth of every month when I don't send them the payment because then I'm gonna be harassing. You know? So one that's one thing we did to make life easy for ourselves, but it also ends up being a really cool strategic advantage.

Steve: Yeah. It is.

Matt: Because if we underwrite it right, then I mean, because I've been in their shoes. Right? Last thing you wanna worry about if you have four flips going on is stroking a check for interest payments for $15 every

Steve: Oh, yeah. Month. The cash flow is killer.

Matt: So I'd rather see the home I'd rather see that money ideally being plowed into the remodel. Mhmm. Right? So that they're establishing that ARV as quick as possible because then we all win.

Steve: Right.

Matt: You know, I'd much rather do that than have someone making me payments and not paying the cabinet guy.

Steve: Makes total sense.

Matt: You know?

Steve: What are you typically borrowing at?

Matt: So, we will our hurdle hurdle rate to our investors is anywhere between 910%.

Steve: Okay. And that's only when it's withdrawn?

Matt: Correct.

Steve: It's not all the time.

Matt: That's the other advantage to our model.

Steve: Mhmm.

Matt: Right? It's only being paid while it's being used. Right. We have every once in a while experimented with the model of, like, taking a million bucks from a guy and kind of committing, like, we're gonna pay you 9% or whatever it is for the year. Mhmm.

But there's a lot of pressure on that because I can't imagine a world where, let's say, I had, like, $30,000,000 sitting here. I'd make some really bad loans.

Steve: Yeah.

Matt: Because your interest is working against you. You gotta get it out. You might be saying yes to loans that you shouldn't be saying yes to just to get the money out.

Steve: Yeah. RJ was on a show last week, and he's flipping in, like, 10 different markets. Insanity. And he was saying, yeah, one of the reasons why he made so many bad decisions. Because he had all this money he had to use.

Matt: It's dangerous. Yeah. A lot of money is, like, I've you know, you go back and forth over, like, if I could just have like, I think it's super day like, it would be dangerous to have unlimited money. Well, it would be great if you had unlimited money that didn't have, a cost to it. Right?

But when like, if someone I would turn away. If someone said, here, here's $10,000,000. It's at 6%. I'd probably still say no. And if they said a million or 2,000,000, I'd probably be able to manipulate that because I know our deal deal flow is pretty good.

But, you know, it did make me a little nervous if we had a big pot of cash sitting there that we had to pay on.

Steve: Right. So we talked about on the hard money side, you're lending. Right? But now you're pretty busy flipping. Yep.

So how are you sourcing your deals flipping properties?

Matt: So flipping properties, I still hunt the MLS. Right? Because I started and I've always hunted the MLS. So there are still deals today on the MLS. I bought one last week on the MLS.

Wow. You know? So, you know, just the regular way. You know, I set up hot sheets, look for keywords, whatever. Mhmm.

The one I bought on the MLS recently was one where, you know, it just been under contract. It fell out of contract. It fell you know, and I just stuck to my price. And over the years too, just in general, I think we bought more properties by being in second or third place than we did being the first offer. So sometimes the best thing you can do is be in second place because that first person might not perform.

Steve: Mhmm. And

Matt: then if you you know, we definitely closed on houses that didn't make sense just to keep a relationship with the community that will close.

Steve: Right.

Matt: Because then we did get that other deal the next time. You know? And so, I buy stuff from wholesalers, guys like you in Salt Lake. You know? Guys like Cody that was on.

Mhmm. Clay and and Brian. I mean, there's a bunch of of, wholesalers in Utah that are great, that do a great job. So I'll buy stuff from wholesalers. And I've been in it long enough.

I have a couple bird dogs that are agents or just whoever that that, you know, I'll try and be super exclusive with them. When they find a deal. I'll pay them before it closes. Like, I don't want them taking it anywhere else

Steve: before it closes. Oh, yeah. How does that work?

Matt: I just like prepayment. I don't care. I'll just prepayment their commission. Is that paid? Let's say, Nick, here's your money, bro.

Steve: Every every little bit helps.

Matt: Every little every little advantage. So just all the traditional ways. One thing I I don't do is kind of the foundation for your business and most of your guests is I don't go direct to the seller.

Steve: Yeah.

Matt: I tried that for a little bit in the short sale frenzy of, like, sending out mailers and whatever. It's just like, dude, I just couldn't figure it out.

Steve: Ricky wants to know, is the traditional pay for an application when you apply for a hard money loan? For instance, would there's a company he mentioned that has a processing application fee for $2.97.

Matt: We don't. I could see how, like, a bigger institutional company would wanna do that for some reason, but, no, I don't I don't charge anything until the loan pays. I mean, I don't even collect a fee until the loan pays off.

Steve: Yeah. And that's pretty typical. I don't hear a lot of people charging application fees.

Matt: No. I think that's kind of a red flag maybe a little bit.

Steve: Yeah. I would be concerned by that. Sharice, I should be open to paying points if there was a monthly payment. Cash flow of cash flow upfront may make the extra point worth it. I I agree.

Matt: Well, what you do the math a little bit. Sometimes where it's like, well, that other guy will give me a little bit more, you know, loan to value. And I'm like, well, let's look at it. If you have a ten or or a six month process and let's say you're borrowing $300, you know, that's $1,820,000 bucks in

Steve: payments,

Matt: you know, like let's figure out a way to get that or a little bit of it upfront, you know, and then you don't have to worry about it.

Steve: Right.

Matt: And if you create enough value like that property that I was talking about is like 715,000 going on a year. Mhmm. Our loan balance, even after a year and a half with maybe an extension fee here and there, it's only at 400 and I think it was 458,000. So when I have those conversations with borrowers, they're like, what should we do? Yeah.

I'm, like, very clear, like, keep in mind, we're on, we're in the same game, but we're on totally different sides of the field. Right? Like, you could probably go another year with accruing interest, and I still have like $100 equity. Now, you you're already at negative equity. So, you know, so I guess my point is though, like, I still haven't required them to make one payment Mhmm.

In eighteen months. I mean, there's $120 of interest that's just accrued.

Steve: Mhmm. But I

Matt: don't care. I mean, my loan's at $4.50 and the house is easily worth all day long $6.50, $6.25.

Steve: So it's six months due in six.

Matt: Yep.

Steve: And you had a couple of extension fees in there.

Matt: Oh, yeah.

Steve: What at which point do you start the foreclosure process?

Matt: So that's funny. This is very relevant because I was talking to them. They're like, when would you foreclose? And I'm like, listen. I kind of explained the whole value thing.

Right? I'm like, I'm at $4.50. You have it listed at $7.15. Let's just say it sells at 6, which is a $100 plus what you have listed at now. I'm still getting, like, a $100 in equity above and beyond my full payout.

I said, so in some ways, don't pay me back. But I said, the reality is, is we just we all need this to move on. So I told them, I said, if you're not going to drop the price, then I'm going to foreclose. Right? Because this house needs to sell.

Yeah. But if they're gonna drop the price to $6.75, I'm gonna work with them.

Steve: It's like a community banker. Exactly.

Matt: Yeah. So that's where the key to is communication on both sides. If you're my borrower, just tell me what's going on. Like, you know what? If you screwed up, you blew your rehab budget in Vegas or whatever.

Just tell me, and then I'll work with you.

Steve: Right.

Matt: But don't avoid it. Don't give me That's false realities.

Steve: That's how I know for sure we're not doing business again when people are not returning calls

Matt: or Yeah. Yeah. Yeah.

Steve: Always someone's in the hospital. Yes. Alright. So Bernard Mac wants to know, will you continue lending in a, market downturn?

Matt: Yes. I look at it, like flipping. Right? Right? Like, so I benefited in flipping, I really I mean, I've lost money on houses.

Right? But some of that's just because maybe we were doing too many at a time. You know, I always look back, and I was like, I actually underwrote that right. We just blew our budget for some reason. But I like to think about it like sometimes, like, the stock market is like dollar cost

Steve: averaging.

Matt: Mhmm. You know, if you're always evaluating the deal relevant to, like, the most recent six comps, not getting over your skis and saying, well, the comps tell me it's worth 100, but I think it's gonna be worth $1.20. I mean, that's getting a little bit speculative. Mhmm. If you're always kind of staying within, you know, kind of your underwriting guidelines of then I think from a lender standpoint, yeah, there's still exposure.

But if I'm getting ten, fifteen, 20% down payment, they're putting in the rehab. Even if the market turns a little bit, like, again, we're on two different sides of the table, I think I'm still gonna be fine.

Steve: Right.

Matt: Our average loan amount like, so when I calculate what our payoff is, and not the estimated RV, the actual ARV, like, what it's recording on the MLS, we're averaging our about 65 to 70% of final loan to value. So that final even with the accrued interest. So we still are kind of ending up on average with a 30% cushion in the loan amount. So in theory, like, prices could drop 10% and, you know, we're gonna get paid back. Now the deal might not produce a profit.

Steve: But Yeah. The smart lenders I've heard always make sure they get paid back.

Matt: But going back to the dollar, just kind of finish that thought. Like, you don't know no one has a crystal ball. Right?

Steve: Mhmm.

Matt: When you're buying and buying and buying, it's going up. Yeah. You're gonna get hurt right here. Right? But you're gonna benefit because you don't know like, we benefited big time.

We didn't know when the bottom was, but we are just buying the whole time. And the cycle is quick enough that, you know, when you're projecting maybe a $20,000 profit, maybe you make 10. Who cares? Right? Because then when the bottom hits and you're thinking it's gonna be a 20, all of a sudden you're like, wow.

We just made 50. Woah. We just made we just doubled we just screwed up and paid twice in rehab, but we still made 40. Right? And so

Steve: Oh, I remember those times when that that shift I I mean, my next door neighbor's house, I still regret not buying it. Yeah. It just it it I don't know what happened, but, like, it felt like overnight, every house in Phoenix appreciated 40 k.

Matt: Yeah. Right. Right.

Steve: And just missed that just missed that little window. So Bernard also wants to know what's your criteria for your long term rentals versus flipping?

Matt: So I have and I don't know them all by myself. You know, I have partners on some of them. We have I have 46 different rentals right now. And so I've been super spoiled. So that's why I've had a hard time buying rentals this last year because whether I knew it or not, every rental I've got was basically doing the BRRRR Method.

At first, I didn't realize I was doing the BRRRR Method, but it just kinda worked out. And then I was more intentional about it. And now, like I kind of can't stomach leaving money in a rental because even the two apartments we have, we bought them with private money or cash, fixed them up, re rented them at higher rates, got commercial bank refinance loans. I I mean, I'm into my rentals. Legitimately, no money out of pocket.

Now for a year or two there, I was out of pocket money, but then we refinanced them. So my criteria, you know, you asked and maybe you'll get to it. But one of my favorite books is, The Millionaire Real Estate Investor by, Gary Keller. Investor by, Gary Keller. Gary Keller.

So I think you'll be money in the bank if you stick to that, like, 1% rule.

Steve: Mhmm.

Matt: You know, right now, it's not even possible.

Steve: It is.

Matt: It is. In other half

Steve: of the country.

Matt: Oh, sure. Yeah. Then that's a whole another debate about, like, how smart is it to have six different single family home rentals

Steve: Mhmm.

Matt: In Michigan. Right? Like Right. Anyway. But, that aren't appreciating, that are cash flowing, that who knows who's managing them.

But so if you can hit the 1% rule, I I you know, assuming you get a decent thirty year fixed, you're you're gonna be money in the bank. Right?

Steve: Oh, 100%. Yeah. And then, Triil REI wants to know how will you vet a private lender?

Matt: So I would ask for referrals. And I would all just in general with anything, if it's really complicated and it's not straightforward, there might be a red flag, right? Like I always tell people this is a complicated process, but at the end of the day, it's very, very simple. You have a house, you want to flip it, you have a plan. Let's verify that plan.

Let's do the deal. Mhmm. Right? Like, I mean, obviously, we need to understand terms, and then there's the nuance of, like, how are we gonna close it? Where are you gonna go?

But if we're talking, like, really complicated terms or structure and, I mean, there's probably a red flag. It's 2 and 12 for six months. You know what? Get the house done. Let's follow-up along the way.

If you need extension, talk to me.

Steve: We could

Matt: do an extension. If you get stuck, let me know. We don't have I don't have any, like, hidden appraisal fees or doc prep fees or it's just two and twelve. I mean, this is my other theory. One, be super easy to work with, but I'd rather do 20 loans with Steve Trang than one and destroy him on the one.

Right. Right? Like, when you're day 181, it's like, okay. Here's five point extension fee. You know?

Like, I'm not gonna do that because I'd rather do a lot of loans with you than just the one. And, and that that's proven to be pretty good because then you get, you know, people talk. It's like, hey. He's easy to work with. You know?

He's reasonable. So I get a lot of referrals, which I really, referrals, which I really, really appreciate.

Steve: Right. You know? Oh, that's that's the best way to know they're doing a good job. Kiki wants to know, why do you think it's so hard for first time flippers to get funding?

Matt: Maybe finding the deal. Let's say you have the deal, though. Let's say have a good deal. Like, you know, one quick aside, like, I track all of our borrowers, and our average borrower purchase price to ARV is about 70%.

Steve: Mhmm. Right?

Matt: So that 70% rule holds pretty true. Right? Like, 70% of ARV, you're kinda hunting the right neighborhood as a flipper flipper depending on the rehab that that's gonna be a deal that makes sense. Now I think where it makes a 100% sense is take ARV, times 80% minus the rehab. Right?

Like, that is probably gonna be a deal that you can make money on no matter what. So let's say you fit that criteria. You have the money. Where I see borrowers, first time homeowners getting stuck is really pretty much just maybe a down payment or rehab fund requirement. You know, you need three pieces.

Right? You need to have the house. You need to have money. And then you need to have a plan, which is usually a contractor. Like, if you have those three things, which I think the most important one is getting a good deal on the house, you're you're gonna find the money.

And if you're smart enough, resourceful enough, you're gonna figure out who's gonna help you rehab it.

Steve: Right.

Matt: So I always give people a really extreme example. Like, out of the gate, we're 85% of cost, not 70% of some subjective arguable ARV, but 85% of cost. But I mean, I'll fund 100% for people at times, you know. I mean, the extreme example is if you getting a house for 100 and needs 25 in repair and it's gonna ARV at $2.50, I'll give you 100% plus rehab money.

Steve: Right.

Matt: Right. Because it's no different than buying it at 180, putting 30 down and having the ARV. So a lot of it's depending on how good of a deal you're getting. If you're getting a crappy deal, we may be at 70% of cost.

Steve: Let's see. So Amar wants to know approximately how much of your average rent rental cost on your flips and average turnaround. So I guess your renovation on your flips, how much it was what's your typical?

Matt: Man, there's no such thing as like a cheap, you know, carpet paint anymore. You know, one, it's good for the, you know, for the the people buying it because the competition's increased the quality of the remodels for sure. And so it just depends. I haven't done a flip. Well, I did one true carpet and paint rehab that was going to be like 10, but I would bet my average budget is like 40 to 45.

Steve: Really?

Matt: Yeah.

Steve: Wow.

Matt: Is that a lot or not? It's a lot. Dude, I just spent here's, like, the fail story. I just did this flip freaking awesome house. I got sideways on it, though.

I should have just torn the thing down

Steve: Mhmm.

Matt: Because it had a huge, like, six car garage. So I was just like this was just last year. I was just in love with this garage. And so I'm like, the house will just the garage will sell the house.

Steve: But the

Matt: house was this old nineteen fifties, like, I needed to dig out the basement. I should have just torn the house down and build a new house, but I got into that. I was like the money trap. Right? So I spent a $135,000 on a 1,500 square foot house.

I dug a foot out of the basement, you know, like, I did the roof, the inspectors, like, you know, whole story with the city inspectors. Anyway, here's your successful flipping story. A $135 in rehab. I lost $2,000 on the deal. So that's a really good return.

Steve: You know? It's not too bad considering how much you probably went over budget.

Matt: Oh, yeah.

Steve: Matthew Apple wants to know what states do you fund in?

Matt: So 90 to 95% of everything's in Salt Lake. Kinda going back to your question of how would you set it up. Right? Like, you gotta be familiar with the state you're working in. So I'm a licensed, loan officer in Utah.

I'm licensed under a mortgage, entity, and 95% of our stuff's in Utah. So I do have done some random loans out of state, like, you know, for, guys that that I know from Utah that I can trust that are in other states. But I don't do a lot of that, you know, because I don't it's a little bit of a gray area for me because I'm not as comfortable with the laws or whatever there. So I'm maybe going a little bit rogue in some of those areas. So I I have done, you know, maybe 10 different states, but we're talking like one loan here or there.

Steve: Mhmm. But

Matt: the other reason to stick local, it's just like why you flip local. You can go see it, touch it, feel it. You know, your investors have confidence. You know it.

Steve: So running your operation, your organization, as far as, just the hard money side. Uh-huh. What's your monthly overhead in running that operation?

Matt: Like, not a lot.

Steve: Very little.

Matt: Nothing. I mean, I rent an office for $275 a month.

Steve: Really?

Matt: I sponsor the local Rias. I speak at the Rias. I network as much as I can. There's not a lot of I mean, if you count overhead as far as my cost of money, but we're talking like sticks and bricks.

Steve: Right. Yeah. There's a lot of keeping your business running. Wow. Okay.

My cell phone. Go to Verizon or whatever.

Matt: My texting plan.

Steve: What's your biggest struggle right now?

Matt: So my biggest struggle right now, I wrote that down. It's definitely balancing growth with risk. Right? So and scaling, right? How many bring on help, how to bring them on, you know, how to train them.

That I would say is my biggest struggle is is just deciding, you know, sometimes less is more, sometimes more is better, you know, And I where I've been deficient over the years is I have not been good. Like, I look at what you do, and I'm just like, you know, you've leveraged so well, like, your time

Steve: Mhmm.

Matt: And your relationships, and you delegate, and you're really good at the the who versus the how. Yeah. I've always been kind of more of like, oh, it'll take me five minutes. I'll just do it. Right?

Like, oh, I can do the spreadsheet. I can do this. I can do that. I can do that. And then all of a sudden you're doing everything.

And so coach has helped me a ton Mhmm. To learn and implement, not just learn, but actually do more of the who's gonna help me versus

Steve: how Are you on the Colby test?

Matt: You know, I can't remember my numbers. I'm pretty even though. I'm like sixes. Who's our coach? Adrian Duffy.

Steve: Yeah. She's gonna be pissed.

Matt: Yeah.

Steve: She's gonna be very disappointed. Well, I know.

Matt: I get that sticker every time.

Steve: I know.

Matt: Some things you remember really well. You know? You can give me a street and address in Salt Lake, and I can walk you through it, but Yeah. I don't remember some stuff very well.

Steve: So I'm just really fortunate. You know, we're talking about the delegation. Yeah. Like, it might look like, man, it's really good at delegating, but, really, I'm just really lazy. Right?

Like, you know, growing up, oldest of six boys. And I remember, like, the one of the quotes is, you know, if you wanna figure how to get it done easily, give it to the lazy guy. Right. Right. Right.

Matt: And he'll

Steve: figure how to get it done. Yeah. In a streamlined way. Right? And so it might look like, man, it's really cool what he's done, but I've been really lazy for a long time.

And I just forced myself Yeah. By starting all these different things. You know, it's kinda like I think like Dan Sullivan talks about is in my job is just to get the boulder going. Right. And once that boulder is going, it's like, alright.

You know, you two, you three, keep that boulder going. I'm gonna go start another boulder.

Matt: Well, in part over the years, maybe been a pride thing where, like, well, I wanna be the one that does it all. Right? That's, like, not real smart. Right? Because, you know, I I think, actually, I was listening reading a Dan Sullivan quote the other day that said something to the effect, and I know I'm gonna get it wrong, but, like, you know, the proof of your impact is, like, how many people can do everything else really well for you.

I'm saying that wrong, but you know what I'm saying?

Steve: Like, you

Matt: know what I mean? Like that's where you're, you know, you're successful is because really you've empowered a bunch of other people. And so, you know, naturally for me flipping, I still can't like hook up a toilet. So naturally I had no skills in that regard. So that was a natural, like, find the who, right?

Who's gonna do this? But with all the other like back end office stuff or whatever, I'm like, well, I'm, I probably figure that out, you know, and half the time it ends up being kind of broken and slow. And so growth, managing growth versus risk is probably, I would say the thing that keeps me up at night.

Steve: Yeah.

Matt: Because yeah, I want to go, go, go, go, go. One thing I love about hard money and flipping is like, it's like, like, even though it's maddening, like, it's kind of like crack, right? I love that. Like new call. Let's do this deal Friday.

Like, you know, I love the action. That's where I'm not real good at like a land developer patient waiting for the planning commission to get back to you. You know, like Steve, you want this? Let's do it friday. Let's go.

Let's go. You know, and then the next one, the next one, the next one.

Steve: Yeah. The driver, the driver in you. Yeah. What is your superpower?

Matt: So, as much as I say, I like going, going, going, I feel like I am pretty patient. I feel like I'm pretty consistent at what I do every day. Sometimes the consistency is not a positive thing. Right. But I'm at least fairly consistent.

Yeah, I think, you know, I'm fairly positive and optimistic. Right? So I think that keeps you moving in the right direction. I don't want to really say I have a major superpower other than just kind of keep it going every day.

Steve: Darren Hardy says that's the most important one. What is the greatest lesson you've learned?

Matt: Just to keep going. Right? So, like, going back to that story of, like, you know, having that thought of living it. Like, there's tomorrow's always a new day. Right?

The sun's always gonna come up. You know? Like, sometimes you have really never try to make a really important decision at night. Right? Because you usually have, like, darker thoughts and, like, you know, but the sun always comes up.

Steve: Mhmm.

Matt: It's always gonna come up. And if all ended tomorrow, like, you got to this point, you can just build it back up again.

Steve: Right.

Matt: Not that you wanna be reckless, but it's like and I didn't start from zero, but in a way it felt like I started from zero. It's like, hey. Not that you want to, but you just start all over again. If you were good enough to get to where you're at, why wouldn't you be good enough to start? Like so there is a fear, a natural fear of, like, oh, if I lost it all, what would happen?

It's like, I don't know. You just do it again.

Steve: Just do it again. Awesome. Is there a book that you've gifted more than any other?

Matt: I don't know if I've gifted, but I talked about, I've definitely gifted that millionaire real estate investor book. One book that I just absolutely loved was, Unbroken, the Louis Zamperini story. If anyone has not read that, you gotta read that. Talk about a dude that was just like I mean, he was awesome. Louis Zamperini, that is such a cool story.

And, Ray Dalio principles, it's a it's like a bible. It's like thick.

Steve: Really?

Matt: But that has some of the most the best common sense business advice. I'd listened to it on audio and then he has a great Instagram now that has kinda like Darren Daley has like a you know, he has like kind of a daily kinda snippet of his kinda rules and principles. He's the CEO of Bridgewater. So awesome book there. I mean, I go on for days about books, but I'd say kind of those two books.

Steve: Gotcha. Alright. So, I'm gonna let you think about what last thoughts you wanna leave listeners with while I make a couple of quick announcements.

Matt: You got it.

Steve: Guys, so it's the eighteenth. Next week is Christmas. And then as New Year's after that, so we're off for the rest of the year. We're gonna be doing a couple of replays, from those that we hadn't played yet. And then we're gonna be starting the year off strong with Corey Peterson, the big kahuna, talking about multifamily.

And, as you guys are well aware, Max and I are doing our workshop, on on January. If you guys wanna check it out, go to www.disruptors.com, disruptors, and see if the workshop makes sense for you. And with that, last thoughts.

Matt: Last thoughts is, keep networking, keep providing value, keep being honest and transparent with other and, you know, have a good attitude and just keep going for it.

Steve: Yeah. Awesome. If someone wants to get a hold of you, how will they do that?

Matt: Cell phone is the best one. (801) 244-3888.

Steve: That's crazy. That's suicide. Thank you. Thank you so much. Thank you, Steve.

Matt: Appreciate it, buddy.

Steve: Thank you, guys, for watching.