Jun 23, 2022
Ep. 571 From Management Consulting to Commercial Real Estate Investing’
Matt Jones is a real estate investor based out of Minneapolis who specializes in investing in both small and large multifamily properties. He has a master of science in mental health counseling which comes in handy for building positive relationships in real estate. Let’s hear him as he shares his thoughts about adding value to your clients and maintaining that relationship to achieve exponential growth.
[00:00 - 05:08] How to Add Value to Others and Get Ahead in Real Estate
[05:08 - 10:19] Real Estate Investor Shares Tips for Success
[10:19 - 15:20] How to Raise Capital and Take Down Deals
[15:21-16:56] Closing Segment
Reach out to Matt
“You want to add value to other people and it doesn't even necessarily have to be real estate related. Let's say you meet somebody who maybe they wanted to play the guitar and if you know how to play the guitar, you can offer them some free lessons right there. Then they're going to want to do business with you. Or you never know where things go with this, but by adding value to everybody around you at all times, good things are gonna come back your way ” - Matt Jones
Connect with Matt Jones by visiting their website at: https://www.hawkwingcapital.com/
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[00:00:00] Matt Jones: You wanna add value to other people and it doesn't even necessarily have to be real estate related, yes, it's great. If you're able to raise money or you're able to find deals or, you know, some kind of real estate related value, but let's say you meet somebody who.Maybe they wanna play the guitar. And if you know how to play the guitar, you can offer them some free lessons right there in an instant value. And then they're gonna like you, and then they're gonna wanna do business with you. You never know where things go with this, but, by adding value to everybody around you at all times, good things are gonna come back your way.
[00:00:36] Sam Wilson: Matt Jones is the CEO of Hawking capital, which raises capital from passive investors to own large apartment buildings. And he also wrote the book about real estate. That literally is the name, the book about real estate and co-host of pillars of wealth creation podcast. He also owns 244 beds of senior assisted living.
[00:00:56] Sam Wilson: Matt, welcome to the show.
[00:00:57] Matt Jones:Hey, good to be here.
[00:00:59] Sam Wilson: Hey man. Thanks for coming on today. There's three questions. I ask every guest who comes in the show in 90 seconds or less. Can you tell me, where did you start? Where are you now and how did you get there?
[00:01:05] Matt Jones: So in 2015, I bought my first Plex. I was living I house hacked it and I saved up money from my W2. It took me a few years before I was able to buy a second triplex and by a second Plex. And I was just so frustrated at how slow my progress was going. Like the idea was like eventually own like a large complex. And I was like, oh, this is gonna take me. Years before I can scale up at this pace.And then I learned about real estate syndication in 2019 and thought like, oh, this is bananas. Like, like it solves all my problems with now. I don't have to save up my own money. I can use other people's money and I don't have to wait to scale up to bigger properties. I can just jump in and start right now.And so then I found a mentor to help me out who actually I co-host the podcast with now. And Recently raised some capital with him for a 228 deal in Kentucky and then looking to raise capital for some other deals as
[00:01:58] Sam Wilson: well, man. That's that's really, really cool. I mean, 2019 till now that's pretty fast progress.I would say. , know you said , you had a mentor, but what are some other things you feel like you did right. That other people should emulate
[00:02:10] Matt Jones: I think, well, the biggest hurdle that I had to get over was my own mindset. So if you can, change your mind of thinking, like, how can I do this rather than like, oh, I, I couldn't buy a a hundred unit place.
[00:02:20] Matt Jones: Like, whether you say you can, or you can't you're right. think it was Henry Ford that said that. And so, Getting into the mindset. Like I can do this. I just need to figure out how or better yet who I can work with to get me to that level.
[00:02:33] Sam Wilson: Right, right. That's that's really cool. Tell me what are you guys doing? I heard you say something about opportunity there in Louisville. What are you guys doing right now to find opportunity? You moved on from the Plex world, cuz you said that was two slow growth. You moved into mostly multifamily and I hear some also assisted living, but what does opportunity look like for you right now?
[00:02:52] Matt Jones: It's primarily through broker relationships. So, built to connections with brokers. And so we're seeing a lot of on market deals, but I think some people prefer off market or on market, but with, on market it's you get all the numbers like it's presented in a way that's they're the seller is ready to sell.And you have the broker there to help make sure everything falls into place. So, plus through, on market deals, we get a lot of deal flow and right now you gotta look through a lot of stinkers before you find that one gem .
[00:03:19] Sam Wilson: Yeah, you do. How are you underwriting those to where it makes sense.That's what we're seeing a lot in across all asset classes is you're just. I don't even know how the current buyer is making this pencil. So what do you guys doing differently? Feel?
[00:03:31] Matt Jones: Well, we just go through the numbers. Yeah, the I'd say yeah, 99 out of a hundred deals, we just kind of shake our heads at like , I don't know how this is gonna work at that price point, but once in a while we find that one that actually does pencil in and then when we think oh what did we do wrong in the underwriting?But we're still underwriting conservatively. We're still, stress testing the numbers to make sure like, okay, if. If there's another recession and we get to like the record high, they can see raids or record high concessions and things like that. Is the property still gonna make money to ride through a potential recession?If yes, then that is a good deal. But a lot of these properties are like you say, they're going at these prices that if anything goes wrong for these operators they're gonna lose
[00:04:10] Sam Wilson: their pants. Talk to us about positioning, how are you positioning yourself in front of. The sellers. It's a, it's almost an art.I think of putting yourself in front of the sellers in a way that makes the seller wanna work with you, which is kind of a weird place to be in the cycle where it's like, Hey wait, like, why am I trying to court? You? Shouldn't you be courting me as the buyer, but it's not the way it's working. What are you guys doing on that front?
[00:04:32] Matt Jones:Well, it comes down to relationships as well, relationships with our lenders, property management, the brokers, when you can build a reputation, or if you don't have one right now, partner with people who already have a good reputation. And so you can say like, my team, this is our experience and to show to the sellers that like, Yes, we can close we've closed on, X number of units and, taken so many units to, full cycle and such. And we already have the professional property management, that's local. That's gonna do a good job that already does a great job with these other properties. Just to show the seller like, yes, we can close. Yes, it's gonna go smoothly. And we can make it happen
[00:05:08] Sam Wilson: right now. I saw, we read that there in your in your bio there in the, in intro that you are also involved in assisted living. So, is that a core focus for you or is that just an opportunity that came your way and you participated in it? Walk us through. kind of being diversified across asset classes
[00:05:23] Matt Jones:. Yeah. That was an opportunity that came up my way. And the numbers were really good. It had an IRR of 21 plus, so I couldn't say no to that.And I come from a background of managing like group homes for adults who have disabilities it's really, really similar the operation side, which I'm really well versed with. And so. And multifamily is where my focus is, but it's on a different cycle than senior assisted living. Like multifamily is high right now, senior assisted living.And a lot of times, and we focus on rural areas actually that's cheap so we can buy these mom and pop shops for a song from operators who didn't do well during the Covid but we're hitting the silver tsunami here with the baby boomers that are getting to that age where they need are starting to need more intensive care from senior assisted living.And so there's just a lot of opportunity right now. The, demand is gonna be much stronger than supply here shortly.
[00:06:15] Sam Wilson: When you look at things like that, is that a a potential core focus for you when you see opportunity?
[00:06:23] Matt Jones:Yeah, I think it there's the potential thought we might shift focus to that being our primary. But multifamily is our bread and butter. We understand that we've done well with it and we know how it works.
[00:06:31] Sam Wilson: Got it. Got it. That's that, that is very, very interesting. Tell me what's a an excellent piece of advice that you were given. Say like in 2019, when you said, Hey, I wanna switch, I wanna go into something that can scale quickly.
[00:06:44] Sam Wilson: What's something somebody told you, you feel like that, that everyone else should also hear.
[00:06:48] Matt Jones: you have to add value to other people without expecting value in return. And, if you try to just take and take from other people, take their knowledge, take their time, take their money without giving anything in return.You're gonna, it is really off putting like you you wanna add value to other people and it doesn't even necessarily have to be real estate related, yes, it's great. If you're able to raise money or you're able to find deals or, some kind of real estate related value, but let's say you meet somebody who.Maybe they wanna play the guitar. And if you know how to play the guitar, you can offer them some free lessons right there in an instant value. Like, and then they're gonna like you, and then they're gonna wanna do business with you. Or you never know where things go with this, but by adding value to everybody around you at all times, good things are gonna come back your way.
[00:07:30] Sam Wilson:What are some surprises or potential pitfalls maybe that you learned or that you feel like other people should avoid?
[00:07:36] Matt Jones: I think my biggest mistake starting out was trying to do it all on my own. I consider myself a smart guy, very capable. And so I was trying to do everything on my own and I was just spinning my wheels for years before I realized I needed to take a nice big slice of humble pie.And, I, I'm very shy. And so I had to force myself to network with other people and just get out there and find people to partner with to make things. And once I did. My, my career propelled much faster than I, I could've on my own.
[00:08:06] Sam Wilson: When do a lot of education in this space.I think that's where your book about real estate really comes in. What are some of the common questions or common things that people come to you and you say, Hey, we're gonna start at square one. What's square one for you. And then how do you kind of work 'em through the process?
[00:08:21] Matt Jones: Square one is exploring the different types of asset classes and deciding which one two it the most, but preferably one that you wanna focus on right away. And because like there's a million different ways to. Make money in real estate. And if you try to do 'em all you're gonna do, 'em all poorly. So you're much more better being niche and focused. And like my book, it covers the whole spectrum of real estate investing. So to help people explore, like self storage units or mobile home parks or multifamily, or, all these different things.And then you choose like, okay, this one makes the most sense to me. This one, I think I can do, and then become specialized in that
[00:08:57] Sam Wilson: Got it. Got it. So yeah, if I'm hearing you're right, you say, pick two at the most asset classes, and that goes back to the, and I'm even gonna contradict your statement there a little bit, but it said, he, he would chases two rabbits cases.He would chases two rabbits catches none. Right. If I could speak today. And I like that idea of that. You gotta really, that there's a lot of ways in this business that you can make a lot of money. Talk to us about success. If you were to define success for you, what is success and where do you look? What does success look like for you in the future. ,
[00:09:26] Matt Jones: you know, success is just, having goals that really expand you as a person and having a good plan to be able to achieve those. So whatever it may be, whether it's financial freedom, so you can hang out with your family more or being able to travel which I enjoy just, I guess living the kind of life that you want and taking the actions necessarily to make that happen. And as for the future I anticipate I'll transition more from an active investor, to a passive investor, so that I'll just have my various investments and enjoy the free money that shows up at my bank.
[00:09:58] Sam Wilson: I hear that, man, I'm a passive investor in a lot of deals and I can't wait till that is all I am. I love being an active investor, but there's something really special about that ACH in your account once a month. And you're like, oh, that was relatively easy. I could do more of that. So absolutely hear that. Raising capital, you went out and said, Hey, I've figured out that this industry, I don't have to have all the money myself. I can go out and pool other people's capital and take down deals. Talk to us about the capital. Raise side for you. Can you walk us through that journey? Getting your first deal done. Maybe some of the hiccups or the things that you would do differently on that front.
[00:10:32] Matt Jones: Yeah. Well, I guess just in general, when you're raising capital, you wanna make sure you're the people that you're raising capital from, understand what they're getting into. So, you don't wanna be like some scammer type of person. You I'm very upfront and honest, so. I make sure that I'm not taking, somebody's like last $50,000, for example, I don't want that. Like, if you need that money to live off of this is not the right kind of thing for you. So I, first make sure that they understand that like the risks and potential rewards and what'll happen with their money. And and then I, show them like what that, like, I'm myself. Investing my own money into the deals that I'm raising capital for. I just increase their confidence that okay. Like he's putting his money where his mouth is so that this must be a good deal.
[00:11:11] Sam Wilson: Right, right. What were there strategies or I guess, methods you employed on your first capital raise.
[00:11:18] Matt Jones: Yeah, you start out with friends and family and like work acquaintances and, people like that. But I would say my approach is, I first ask somebody like, Hey, could I ask you a couple questions about your finances? And if they say they're, usually say yes, if they say no, that's fine. But once they say yes, then you say like, would you be open to a 10% return on your. Through an investment and which, is conservative very conservative for a real estate investment or the kinds that I'm looking at. Sure. And, they'll generally say yes because that's better often than the stock market will provide them and with their 401k such, but once they say yes, then I say, like, if I found an investment that could provide you with at least that much a return would that make sense for me to contact you about that? And just run it by you, and then they're gonna say, yeah, sure. Cuz that doesn't hurt for me to just like tell 'em about something. And then okay. If I found something like that, how much money would you have available to be able to invest in that kind of deal? And then they'll tell me like, whatever amount it is. And so now I've got, sort of a soft commitment and I can shut that down and like, get their contact information. What's the best way for me to contact you if I do find a deal like that, cuz I, I don't have anything right now, but you know, if I do. So then you can contact them. You've got their soft commitment already, and then you can show them like, Hey, there's a deal. That's gonna give you a 15% IRR or what have you then they're gonna be like, all right, here's that original money that I said.
[00:12:34] Sam Wilson: Are these conversations you're having, like, under what? In what environment are you having these types of conversations?
[00:12:43] Matt Jones: all environments. Because if you don't tell people about what you're doing, nobody's gonna know. So you really have to be, open and honest about yourself and authentic with that. And plus I think of it as all, there's all these people around me that are missing out on great opportunities if I don't tell them about it. If and so I'm doing them a disservice by not having this conversation with.
[00:13:05] Sam Wilson: Yeah. Yeah. And that's there you're absolutely right there. It's, I think it's uncomfortable. I'll be honest. You're you're I think the questions you asked there are excellent, but I was kind of envisioning myself asking those so directly and I'm like, oh man, that makes me uncomfortable a little bit, in, like you said, in all environments going. Hey, tell me about your finances. Like, well, maybe no, like okay. But it sounds like you've had great success with that.
[00:13:26] Matt Jones: Yeah. I would say the first time I did it, I certainly felt awkward, but it I got through it and I'm like, oh, that wasn't so bad. I can do that again. Do you ever get any,
[00:13:35] Sam Wilson: any any complete, just like, no. We're not talking about that responses.
[00:13:38] Matt Jones: I haven't yet because it's not, like you say, like, hi, my name is Matt. Can I ask you a few questions about your finance? build a little rapport first, right?
[00:13:45] Sam Wilson: Right. I get it. Okay. No, that's cool. I like that. And I think that's an encouragement to our audience. And even to me to be more direct where it's just like, Hey look, we've got we do have excellent assets. We have excellent opportunities for investors. And, we're achieving amazing returns for 'em and it's kind of, it's bad on me if I don't actually just go out and tell people about it.
[00:14:07] Matt Jones:Yeah. You're keeping people from achieving their financial goals from achieving their dreams by not talking about it.
[00:14:11] Sam Wilson: Right. Oh, for sure. For sure. Yeah. I had an investor call me she had received her first distribution in a passive deal and and maybe this is bad, it was extended family. So I, don't hang me for maybe not doing my My know, you're know you're customer as well as maybe I could have, but they're like, Hey on, wait. So I get this money. Like you get a distribution. And yet I still retain my equity in the deal. I'm like Uhhuh, like you still have your a hundred grand in the deal and you're gonna still get a quarterly payout. And they're like, wow, where's this been all my life. I'm like, , I'm on, I'm onto something here. So yeah, I wish they'd understood maybe the mechanics of the deal light slightly better, but that's okay. It all worked out. So that is fun. You're absolutely right. Not sharing that stuff with your investors is yeah, it's something we should all take certainly more seriously. What are you guys working on right now that you were excited about?
[00:15:01] Matt Jones: We're in between deals right now? My. Partner. He just did a his fire step five, six C offering, which I wasn't involved with. But before that did some that raising for that 228 unit deal. So looking for the next deal being really patient, being really cautious right now, cuz we're, potentially seeing some changes I guess in the market, but being prepared for that.
[00:15:21] Sam Wilson: Right. Absolutely. Absolutely. Matt I've enjoyed our time today. Certainly appreciate you coming on, telling us how to get out of the triplex rat race, if you will, and how to scale and grow quickly, certainly look forward to sharing the links to your book, hear the book about real estate. Again, that is the title of the book about real estate that I don't know how you got that title, but that's awesome. It couldn't have been absolutely more clear. And then, just some of the values that you add the day, adding value to other people. Without expectation is one of the ways to certainly grow. You said, one of the mistakes you made early on was trying to do it all on your own and the bigger deals we go, certainly the more, this becomes a team sport and then also about sticking to your niche and not going too wide.
[00:16:02] Sam Wilson: So I appreciate that. Thank you so much. Is there any last piece of advice that you would like to share with our
[00:16:07] Matt Jones: listen? It takes three things to get going in real estate, educate yourself, networking with other people. And most importantly, take action.
[00:16:15] Sam Wilson: Love it, Matt, for listeners. Wanna get in touch with you? What is the best way to do that?
[00:16:17] Matt Jones: You can go to my website, Hawkwingcapital.com and you can schedule a call with me through there, and you can also even download a free chapter for my book as well.
[00:16:26] Sam Wilson: Awesome. Matt, thanks so much your time today. I do appreciate
[00:16:29] Matt Jones: it. Yep. You bet.