Having lost everything he had saved throughout his early twenties, his only option was to rebuild. But with what? He needed something that could help him offset his living expenses today and propel him toward retirement.
Dave:
Imagine waking up to discover that the wealth you spent years building is gone. That’s exactly what happened to Matt. Well, the dot-com crash wiped out his 100% stock portfolio overnight. He was left asking, “What now? How do you rebuild from zero?” For Matt, the answer was real estate. But to keep his dream of early retirement alive, he’d have to make up for lost time. And he did. One property snowballed into a few. A few turned into dozens. And today, Matt, known as the lumberjack landlord, is retired in his forties with more than 150 rental units. Many investors spend a lifetime getting to where Matt is. So what’s his big secret? In this episode, he’s going to share his exact playbook for scaling with small multifamily, including the systems and processes he uses to self-manage his really large rental portfolio. And he does it in just eight hours a week.
So whether you’re starting small, starting late, or starting over, Matt is proof that financial freedom is never too far out of reach. And if you mimic what he did, it’s probably much closer than you think. Hey, everyone. I’m Dave Meyer, joined as always by my co-host, Henry Washington. Our guest on the show today is Matt, the lumberjack landlord who self-manages a rental property portfolio in New Hampshire. Let’s bring him on. Matt, welcome back to the BiggerPockets Podcast. It’s great to have you here again.
Matt:
Super excited to be back and now we brought friends.
Henry:
What’s up, buddy?
Dave:
Yeah, this is going to be great. I’m glad we’re all here together. Matt, you had a very fun first episode here on BiggerPockets Podcast, but for people who didn’t catch that one, maybe just give us a little bit of your background, who you are, how you got into real estate.
Matt:
I’d lost my money in the dot-com bomb in the early 2000s. For a 20-year-old, I’d saved up a lot of money. I’d saved up like $27,000 at 20.
Dave:
Damn.
Matt:
Wow. That was a lot of money. And it was because I lived on almost nothing and all I did was tuck it away and put the money away. And so I did that. And I was rewarded with two companies that got hush numbers and then one was found for fraud and I watched my $27,000 largely evaporate. Man. Then started a search for what’s the next thing I’m going to do? And where can you get an asset that you can also live in? It also pays you to live in it. And by the way, it also appreciates over time as well. I can’t think of anything else like that. I did nine house hacks in 13 years. Then my wife finally said, no more.
Dave:
So you weren’t doing real estate. You were just like house hacking, but you were working –
Matt:
Yeah, I worked a W-2 job until two years ago when I retired.
Dave:
That’s awesome.
Matt:
I could have retired 10 years ago, but it was how big did I want to make this? And so I said, I’m in the prime earning years of my career. I was in my late 30s, early 40s. I’d gotten to the executive level. And so I said, you know what? Let’s just keep on rolling. And so that’s what I did. But now fast-forward, we range between kind of 52 and 55 buildings. What I like to say is over the last three years we’ve been a net ad investor, meaning that we always are trading out of assets, but we always add more.
Dave:
Why haven’t you bought bigger commercial or anything like that?
Matt:
I think we all see how commercial’s going for all the big boys. It’s really tough to re-steer a battleship of 180 units versus a building that’s no longer working anymore that might be three, four, six, 10 or two, four, six, 10. If I don’t like an asset, how hard is it for me to sell that? I can sell it like that. I can wholesale it off if I want to, or I can call a broker, I can get it on. And it’s something that most likely with Fannie Freddie, it’s easier now than it’s ever been for people to do owner oc deals. You can get 5% money on a three unit or 5% money on a four unit. I was not that lucky. I was having to put 20% down moving into those things.
Henry:
One of the cool parts about real estate is you can invest to your level of risk tolerance. Of course. And everybody’s risk tolerance is different. I have a very similar risk tolerance to you it sounds like. I play in the single and small multifamily space. There are some warm, fuzzy reasons why I play in that space, but there’s really a managing risk factor about why I play in that space because A, I don’t want to raise a bunch of people’s capital because I would lose sleep. Thinking about that gives me stress. And so I can use my own money or maybe one private lender to do a deal. I’ll have multiple exit strategies on a deal because I’m going to buy a really good deal and being able to pivot is important. But I think people talk about investing to your risk tolerance when you’re researching and getting started, but then once you get in, that kind of goes away and everybody’s like, more, do more, buy more, do the bigger.
It’s the same level of effort for bigger than it is for smaller. You should do bigger. The voice of the investor changes than when you got started. And I kind of got caught up in that and we’ve made some pivots since then and I’ve sold some assets and I’m in a much happier place with a more manageable sized portfolio that has options instead of large scale multifamily. You got one exit, buddy. You got to get that thing to perform or you’re in trouble.
Matt:
The cool thing is that with small multifamily, and Henry, you know especially a duplex, I can put that on a market. It can be an investor. It can be a house hacker. It can be like a mother-in-law. It can be multi-generational. It can be all of these things. And so when you look at the grand scheme of things, people say, oh, well, real estate isn’t liquid. Oh yeah. Put a duplex on the market well priced and see how fast it lasts.
Dave:
Even now, even in a sell market. No problem.
Matt:
We’re going to do a 1031 and I’ve been shopping and there have been in the last 40 days, there have been 40 buildings go on market and 37 are under contract. Guess what the other three are? Overpriced.
Dave:
I just put a duplex on the market. I got six offers first weekend.
Matt:
Yeah. I think that small multifamily, and that doesn’t mean buying in bad areas. My focus is still buying in B and C class areas and making A and B class product. That’s the goal.
Dave:
The other thing that residential doesn’t have when we’re talking about risk is, and I think what most syndicators who are losing their shirts right now, I think what a lot of people got wrong is they misunderstood supply risk. Everyone’s like, “Oh, the debt’s better.” But with small, multifamily, with residential, the idea that a builder’s going to come in and totally change how much supplies in your market, it’s just not a risk. It’s not going to happen. In multifamily, if builders all of a sudden get excited about your market, you have no control over what other people are doing. They could all start building right next to you and totally diminish the value of your product.
Matt:
You’re dead on. I mean, in my market, there are 700 new apartments coming online in the next two years and this is an area of about 70,000 people. That is a lot of supply. And so the cool thing is we’re going to leave it to all those guys to fight it out and fight over the nice shiny quarters and the people that are 800 credit scores. I’m just taking the people that need a place to live that are working for a living that I can rent out for les than what they can rent out because my debt is much different than theirs. So people should be excited. Yeah, the first five years is awful. The next five years, it gets a little bit better. The next five years, you really start to get to enjoy the fruits of your labor over a 10-year period. You really start to see significant returns in a normal market.
Dave:
All right. Well, clearly Matt has proven that you can scale successfully with just using residential, small multifamily, single family homes. Clearly Henry has too, that you can absolutely do this. But I want to learn exactly how you’re doing this, Matt, because that’s a lot of units that you’re managing and I’m sure audience would love to learn how you’re doing it. Stick with us. We’ll be right back. Welcome back to the BiggerPockets Podcast. I’m here with Henry and the lumber jack landlord talking about how he has scaled up very successfully just using residential real estate. Matt, how do you do it? You self-manage, right? All 150-ish units you got?
Matt:
Yep. Yeah, we self-manage. So the first 120 I managed while I had a career in tech.
Dave:
And when you say we –
Matt:
My wife and I.
Dave:
Okay. Yeah, just the two of you. Wow. How on earth did you do that?
Matt:
Systems and processes. They can completely change the complexion of your business. So for us, everything was very templatized. Our kitchens, our colors, our management process, our application process, our go – to-market process on a unit, how we draft our ads, how we screen tenants, everything became very templatized, which meant for us, it was very, very easy to scale because now it just wasn’t about acquiring another asset or another building and then saying, “We better figure all this out. ” No, it was acquiring the asset and acquiring the building. And I use asset and building interchangeably, but it was about acquiring it and then saying, “All right, we just snap it in. Here’s our processes. Here’s all the things that we do when we buy something. Here’s all the things that we do when we’re getting something to bring to market.” And now that’s something that we can do in 15 to 30 days after acquisition if, for example, we’re buying something that’s vacant.
Henry:
Right. For the person that’s listening who wants to manage their properties on their own and start to build some of these systems and processes, but they have no idea where to start, how do you figure out where to start and what’s the difference between a system and a process?
Matt:
So this is what I spend my time teaching. What I spend my time teaching is essentially how we’ve automated our business and here’s how we’ve done it. Something silly, we actually print magnets and put them on two or three different places in the apartment. And we just say, “Hey, if you ever have an issue, just reach out to that number.” And then anytime that there’s a problem, they can send a text message to that or they can call that. Transcription, we actually have it go into an email where there’s a group of three of us that see it and somebody gets to it and forwards it onto the contractor or I say, “Hey, this one’s yours, you take it. ” That’s it. So we all have phones. I run my entire company from this. I am an elite email forwarder. And that’s the thing is it’s all there.
People might need to be taken through that. And that’s what I spend my time teaching people is here’s exactly how you do what I’ve done. But it’s building those systems and building those processes and taking all of those steps. And it puts people on the right path to imagine having that framework. That framework didn’t exist 24 years ago when I started.
Henry:
What I like about what you just said is A, you were using tools that didn’t cost any money and B, it wasn’t over automation. I think when people start implementing systems and processes, they want to make it as overly automated as they can. But what I’ve learned is that if the system/process is too overbearing, I will avoid it and do it the manual way. Yes. And so I need a system up and to a point. I like that it just transcribes it and then I get an email and then I have to forward it. And so what I want people to hear from this is design the system that you would use, not the most perfect automated system. Design the system up until the point that you’re comfortable with it. You’re not trying to eliminate everything in everybody. You’re just trying to eliminate the parts that you suck at or that you hate.
Matt:
I’m trying to bridge the gap for where my skills, talents, and abilities drop off.
Henry:
Perfect.
Matt:
That’s what I’m trying to do.
Dave:
I have to say though, Matt, you must be good at time management too because I worked full-time and was self-managing, I don’t know, 10 units at a time and I felt busy as hell. I don’t know. I just was constantly doing stuff. So how do you do it? Because that’s one example, right? That’s maintenance. But then you’re leasing, you’re managing rehab. So your skill must be somewhat in time management because that’s a lot of stuff to do in one day.
Matt:
Yeah, it is. I mean, I think I won’t take credit for it. It’s really something that Steve Jobs and Elon Musk do really well. They have the top three things on their list that have to get done every day. And then the rest of them can potentially be done tomorrow. So I make sure that every single day I get the three things done that I need to get done that have to get done. And then the next day, hopefully I don’t have three brand new things. There’s some stuff that might be on the list that can bubble up that I can get and rip through. But the other thing too is that recognizing that my other option is working 10 hours in some soulless job while I’m making some other man’s dream come true. I don’t really like that. That doesn’t sound wonderful to me.
What sounds wonderful to me is that I get all the fruits of my labor and that my family gets that and that we then get to help others accomplish that same task. So time management I certainly think is a piece of it. But again, if you can deduce running this entire business essentially down to having great contractors that listen that you pay on time.
Dave:
That’s like 90% of it in my opinion.
Matt:
Knowing what they’re going to do. Right. Well, here’s the thing. How many people, and I would be willing to bet, I’d love to see this in the chat because I will go back and review the chat. How many people don’t inspect when the job’s done? They just pay the bill. A lot of people do.
Dave:
But see, this is what I mean about time management. You’re running around at 50 properties inspecting properties.
Matt:
On all of these amazing devices is a high def camera.
Dave:
Oh, okay. So you’re virtual inspecting.
Matt:
Yep. And I’m either doing it live on a video or I’m saying, “Hey, just send me 10 pictures.” Because what happens with that email or that video? I can get to that at nine, 10, 11 o’clock at night. I can get there. And so how much time am I spending every single day? Not hours. The only time I’m spending that kind of time is when we’re doing a multimillion dollar big, big project down to studs and we’re basically going through nine contractors to do something big project.
Dave:
How many hours a week do you think you work? On
Matt:
The actual management of existing assets, probably six to eight hours a week I would say.
Dave:
Total?
Matt:
Yeah.
Dave:
Dude.Man.
Matt:
Had to become elite at something. I’m that good. So I think the key for it, again, I think the big thing that people miss out is they feel like they can’t ever see that result coming for them because they see what they’re going through at 10 units.
Dave:
I
Matt:
Promise you there’s not that much big of a difference between 10 and 50. There just isn’t.
Dave:
I mean, honestly, the reason 10 was a lot or whatever it was is just because I was trying to fix things myself. I think I wasn’t forwarding stuff. I should have just been forwarding emails.
Matt:
Listen, the first 50 I did all of that on and I get that. That’s an expanding problem, right? Yeah. You can’t accelerate through growth when you have one set of hands for throughput.
Henry:
One thing I’ve learned across all levels of property, so A class, B class, C clas, whether you’re paying $500 a month rent or $3,500 a month rent, there are bad tenants in both classes. So do you have some golden rules for tenant selection or some systems or processes in tenant selection that help you stay on top of being very good at selecting good tenants?
Matt:
So I hired an agent. I hired her for not a high amount of money in the $30 range. I said, “This is how I want my unit shown.” But I provided copy, which is the actual ad. I provided the pictures. I paid for those. She was no money out of pocket. Her job was to follow my three criteria for bringing in great tenants. And that is this. We do not have an application fee.
Dave:
I like that. Even though it does cost you money to run their background check, you eat that.
Matt:
At the end it does, but I don’t do it in the beginning because in the beginning I say, “I want three things from you in the beginning. I want a pay stub. Just need proof of payment of your last three payments to your landlord. If they pay on the 6th, the 9th, and the 15th, they’re probably not somebody I want when it’s due on the first. And then I just want a screenshot of their credit score with their name on it. Who am I to say which credit scoring model’s correct? Vantage three, Vantage 10, Experian four. It doesn’t matter to me. Just show me a picture of the credit score with your name on it. And that’s all I need to get you a spot in the arena to get a chance to actually rent this apartment from me. And that helps us drive significant traffic to our units.
I probably get two to three X. In fact, we’ve done studies in Zillow and we get on average 250 to 300% more traffic to our properties than other properties because of our process.
Dave:
I love this idea. I did the same thing where it’s basically like I’m only going to charge you when I get charged essentially, which is like they charge you whatever it is, 40 bucks to go run a background check in anything. It’s like until then, I’m going to evaluate everything else about your application. That way, if you’re not a good fit, you’re not incurring any costs. I’m not incurring any costs. But at the point where I need to pay 40 bucks, you pay 40 bucks. I’m not making any money off of this. That’s the fair way to do it.
Matt:
Absolutely.
Dave:
I have friends who rent and they just apply for all these apartments and get rejected. It sucks. It’s b*llsh*t, honestly, to have to go out and get rejected 10 times. You’re out 400 bucks because even if you’re a good candidate, maybe you just got in too late. It’s nonsense. The people I really, really hate when landlords try and make money off rental applications fee, it drives.
Matt:
Well, you see it. In a lot of the cities, they’re the ones that are most guilty in where they do that churn. And it’s disgusting how much money they make on the churn. They’re like, “Well, hey, I can afford to do a lower priced unit because I’m getting 5,000 bucks in fees when all these people were applying.” It’s disgusting. It is. It totally is. We don’t do it that way. I agree. We legitimately want somebody to find a house with us. That’s legitimately what we want to do.
Dave:
That is the only sentiment to have if you’re getting into this industry.
Matt:
Yes.
Dave:
The idea to just profit off churn is ridiculous. You should earn money by providing a service. That is the industry, right?
Matt:
That’s it.
Dave:
If you are just making money off application fees, you are providing nothing. You are just leaching money from other people. It’s messed up.
Matt:
Absolutely right.
Dave:
All right. So much good stuff here from Matt, but we got to take one more quick break. We’ll be right back.
Henry:
All right, we are back on the BiggerPockets podcast with the Lumber Jack landlord. I wanted to ask about some tenant red flags. So as you’re evaluating some of these tenants, are there some red flags that you’re like, “This is an absolute no?” And are there some green flags potentially where you’re like, “This is the kind of tenant that I’m looking for? ” And I’m not looking for the… Obviously there’s some very obvious red flags that people should look out for, but maybe what are some things that maybe some other landlords might overlook because they weed these people out? Example, for me, one of my best tenants is a convicted felon and most landlords rule out convicted felons.
Matt:
I do not.
Henry:
I do not either.
Matt:
Listen, they paid their debt. Who am I? I’m not special. They paid their debt to society. Everyone does the wrong thing eventually in their life. Some get caught, some don’t, and the ones that do and they pay their debt so long as they’re not a future risk to others, then we can have that conversation.
Henry:
Absolutely.
Matt:
And I think that’s the human side of it. So for all those people that call people slumlords, hey, listen, at the end of the day, there’s a lot of people that need that hand up. And I like to be one of those landlords that provides that even if it burns me every once in a while. Amen. You still got to do the role and be the salt, right? I love that.
Dave:
Yeah.
Matt:
I think that the red flags for me are when they come in and they’re already complaining about their old landlord, there certainly is you send me nine messages in six hours.
Dave:
Yeah, urgency.
Matt:
You need to spend some quiet time with yourself
Henry:
Because
Matt:
You’re not that important. If you’re that way trying to get the place, imagine what you’re like once you’re in there.
Henry:
Yeah.
Dave:
Well, it’s like you’re either a little bit crazy or there’s some reason why you need to be out quickly, which isn’t always a red flag, but it’s worth asking some more questions about
Matt:
That. Yep. There’s that piece. Asking for a discount on the rent? Oh
Dave:
Yeah. No.
Matt:
Already. My favorite is we have as many issues, so we’ll make some exceptions with people in 500 credit scores. Dical debt.
Henry:
Oh yeah, medical debt doesn’t bother me at all.
Matt:
Yeah. So there’s some exceptions that we’ll make, but they’re consistent exceptions if that makes sense.
Henry:
Yes. Medical debt, divorces don’t bother me.
Matt:
Yes. Yep. So what we’re looking for in those particular cases, honestly, we’re looking for much more of a, you got the opportunity to walk the place based on your credentials. If you get the place is based on how you treat my people when you’re in there.
Henry:
Amen.
Dave:
I like that.
Henry:
Or how you treat me. Oh, boy.
Matt:
Yeah. So we had somebody that said, “Yep, absolutely love the place. I want it. ” We’re like, “Okay, this is great.” And we’re like, “Okay.” We told her exactly what it is. “Pay the deposit right now when you sign the lease. We’ll send that over to you in the next few hours. “Sent it over in the next few hours. She didn’t sign it for a day, didn’t sign it for two days.
Dave:
Now that’s
Matt:
Bad. The third day we sent back and said,” Hey, just wanted to double check, see if anything has changed. “She wrote back, she goes,” Nope, I still plan on signing it. “And I’m like, ” Well, we talked about the fact that we have other showings that we canceled because you said you were good to go. We want to call those people back and have them come look at it. She just went vacant again. That was one of the lessons that taught us we don’t take assets off the market unless you’ve signed a lease and paid the deposit.
Dave:
Yes.
Matt:
So it was just silly things like that. If you want to expect performance from us, we can certainly expect performance from you.
Dave:
That’s total fair. It’s a mutual exchange of benefits.That’s what this is and every business.
Henry:
The amount of people who, when I let them in to look at the unit, just assumed I was a helper or a worker or a property manager and treated me poorly. And then at the end asked me when the owner would be in touch. It’s flabbergasting to me.
Dave:
All right, Matt, well, this has been a lot of fun. This is great advice for everyone listening. Before we get out of here though, I remember last time you were on the show, you were telling me you were converting an old prison, I think, right?
Matt:
Yeah.
Dave:
Remind us what it is and give us an update because I remember it sounding very cool.
Matt:
Yeah. So one of the strategies that we’ve started spending a lot of time on is there are very often are buildings that municipalities, cities, towns, counties that they want to get away from, that they want to abandon or they have been abandoned and they turn into plight or they turn into things being in disrepair. So we had actually found specifically a building that had been vacant for about 15 years. We had talked to the city about selling it. They had a formal process. They had to put it out there for sale. And I was like, “This is a building I want because I can make an impact in the local community with it. ” And so it was a police station and a jail. So it actually has a functioning jail in it, multiple cells. I think it was six jail cells. So the cool thing was is we then just got in the building and we did four luxury apartments.
We did two for disabled vets. We love the patriots that fight for our country, whether you’re active military or you are retired. We love you and we appreciate you and we want to be a part of the solution. So we look for buildings that we can turn into units that will get people the next step in their life and give them their life back because so often disabled vets can’t get access to something that gives them all the amenities that they need. And so that’s one of our focuses. That’s
Dave:
Awesome.
Matt:
We’ll be live in probably the next 60 days. Nice. We’re waiting for our final set of inspections. But yeah, very, very exciting. We’ll have an indoor kids playground along with a cold kitchen. The idea behind that is we want to deliver for the community that doesn’t really have anything like this. Something for less than 20 bucks where kids can go play for the day and they can eat food too.
Dave:
Wow. Dude, this is so cool. I love your aproach to all this.
Matt:
Unperfect. Thank you.
Dave:
Thinking about mutual benefit, how to benefit tenants, yourself, the community at large. Everyone can win. Henry and I talk about this in the show all the time. It’s not a zero sum game. No one has to lose for you to win. You can actually improve people’s lives through this industry. Matt, you’re a great example of that. I love hearing what you’re up to.
Henry:
Appreciate
Dave:
It. Well, thanks for being here, Mat. I loved catching up with you and hopefully we’ll have you back on again soon and hear what you’re up to because your story is super inspiring and relatable. And not that it’s not impressive, but I love that it’s just things that normal people can do. These are things that everyone in our audience can mimic if you want to build the kind of portfolio Matt has built. There is nothing really from stopping you. Matt showed us that you can really start from anywhere and achieve this. So thanks for being here, man.
Matt:
Always a pleasure. Henry, great meeting you on the podcast like this. It was great to meet you again. And Dave, always a blast. Hey, look forward to the next one, boys. We’ll give you an update soon.
Dave:
Awesome. Looking forward to it, Mat. Thank you all so much for watching this episode of the BiggerPockets Podcast for Henry Washington. I am Dave Meyer. We’ll see you next time. Thank
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