Quitting His 6-Figure Job with Just 4 Rental Properties!?

this is real estate rookie episode 347 my name is Ashley care and I am here with my co-host Tony J Robinson and welcome to the real estate Ricky podcast where every week twice a week we bring you the inspiration motivation and stories you need to hear to Kickstart your investing journey and today we've got an amazing guest uh Matt marcelis and uh Matt is a a funny guy great at telling stories and uh you'll hear the UPS the Downs the ins the outs the left rights of his journey building out his portfolio and we talk a little bit about the end uh of whether or not Matt should quit his day job and do this real estate thing fulltime we actually found Matt and met him in the real estate rookie Facebook group so if you are not a member please join and this is where Matt had asked for advice on whether he should quit his job or not and you there's you know hundreds of comments of people giving their advice on there and ultimately we decided to drag Matt onto the show to talk about his story and where he's at now with 11 units and making that decision so he gives us um we read the Facebook post we kind of go into background of why he's thinking he should make that decision and then we go into his story and what has brought him to that point today uh but Matt is very captivating when telling his stories and you won't believe some of the stuff that has happened to him while he has a full-time W2 job and managing these properties that he has done um so definitely take a listen and don't don't forget if you also want to be a guest on the show and you want to Captivate our audience with your real estate stories successes and failures you can apply at biggerpockets.com Guest and last thing if you guys are a part of the Ricky audience and you haven't yet left us an honest rating review on Apple podcast please do again the more reviews we get the more folks we able to reach and when we can reach folks we tend to have a pretty positive impact like Matt um so I just want to give a shout out to someone by the username of K dim 79 uh K dimski left us a fstar review saying I love this podcast because it gives me the inspiration to pursue my real estate investing dreams good spread of expert guests and rookies telling their stories so again guys uh leave that rating review on whatever platform it is you listen to the real estate rooky podcast and before we get into the show just a little side note when we are recording this this is Halloween so I do make a couple references to Halloween uh in this story even though this is uh December that this airing but um just wanted to make that little note for you guys well Matthew so we found you in the real estate rookie Facebook group I'm going to share your post with everyone right now if that's okay for sure okay so I was scrolling scrolling scrolling you know as most of us do but it was in the real estate rookie Facebook post or group and I came across this post and it said I need some guidance BP fam since I bought my first 4lex in 2021 I've scaled to four properties and 11 Doors I'm at a point in my real estate investing career where I'm considering stepping away from my W2 job I'm a consultant and it takes a lot of my time by the end of the day and the week I'm exhausted and don't have time to be proactive in real estate like I should be I only have energy to work in the business not on the business below are examples of task I just don't have time to do networking securing private money from friends family mailers other marketing deal analysis portfolio design while I am grateful for the paycheck the opportunity cost is high and I'm not sure how I can grow my real estate investing business I think if I had the capacity to put as much work into my real estate business as I do my W2 I could not it out of the park did you all have a similar decision in your career if so how did you navigate it first of all Matthew how did I do um impersonating your voice was that that that was SP on spot on exactly the same good job so Matthew tell us a little bit about why you decided to put this post in the real estate rookie Facebook group oh man so I I had been toying with this idea for quite a while and it was actually on my to-do list for two whole weeks which is a very long time for something to stay on my to-do list and it was to reach out to the BP family and see if anyone has been in a SAR position which I know that other people have and I'll know I'll get into the backstory in a little bit but um during the second half of this year I really felt myself being really stretched thin so I was converting an LTR to an Str Str no one really talks about the boxes on the podcast and the mess that it creates and how long it takes to really set one up um you know make the post on Airbnb and get the tenants in there um I was doing you know property manag management for my fourplex and my other Triplex my I have a a long-term uh farway Str Str in in Central Texas and with my day job um while trying to run this budding real estate profile I just found myself without time so I would work during the day very intensive I would be so brain dead at the end of the day that I couldn't even put two sentences together I would just turn off my zoom go make dinner go to the gym and that was it um during the weekend I couldn't hang out with any friends cuz I'm you know setting up the Str strs working in my business um to where I'm constantly exhausted um ran out of friend time I actually had to start integrating my social time with the gym and running so I'm like hey friend if you want to see me let's go for a walk together instead of you know let's go out and grab some drinks so that actually sounds like a healthy friendship relationship going for run instead of going for drinks no and I actually love it and my friends love it it and it's a really great time but but I I just feel that I I I need help I'm at this Crux and that's why I reached out well we're definitely glad that you did because I think this is something very important to talk about as to when is the time to leave your job to go full-time real estate investing and so Tony and I have different experiences even today I still get a W2 paycheck I get $1 deposited each week into my bank account but I get my health insurance paid for I still do minimum work for another investor to get health insurance covered um so that's always been a big thing for me is if I completely go full-time real estate investing and don't do work for anybody else it's just for me getting my health insurance paid for and right now this has worked really well it doesn't take a lot of my time but there's so many components so let's kind of break down first as to why haven't you just quit what are some of your hold backs oh why I have it's the security right it's the you know I went to college I was trained to go out and get a W2 and work for someone else and and grow that career and so we get we get used to that security especially if we have one that is on the higher end of the pay scale um if we can be defensive with our with our spending and we can save those funds to buy more real estate it's it's really worked well for me as I transitioned from living paycheck to paycheck six years ago to being able to be Pro Ive and put myself on a budget and and save money it's just kind of that that security blanket um but as the progression happens in real estate it is that need to being like okay it's time to go it's time to fly when is that time let's talk a little bit about that progression can you let's go back to the beginning of that time frame where how did you start into real estate and why has that kind of path brought you to this decision that you have to make perfect so I would say that my journey began back in 2017 and and back at that time I was like super cool fun mat um I was making six figures but I was living paycheck to paycheck and that was completely by life design that I chose no one else chose it for me so I chose the $2,000 a month luxury apartment in the best part of Houston um since I'm a car guy I chose the competition package M3 that I love and I drove and made all the fun noises and sounds with um I would go out to happy hours I would go to on the weekend I would go shopping I would have a credit card bill of like five grand a month with nothing to show for it and I really didn't think anything of it because I was able to sustain that I was like you know I could actually you know pay that entire credit card bill with one paycheck it's not a problem I don't have to carry a balance there's nothing to see here and then that all changed um when I was at work one day and I received notice that the company that Iowa was working for was being bought and because I'm an HR I've designed layoffs and I know that when companies merge they look at the redundancies I just knew in my heart of hearts I was like you know what Matt you are not going to have an HR job on the other side of this so I sat there and it's kind of like when everything just goes blurry and you're sitting with yourself and everything pauses and I looked at my bank account and I looked at my spending I had fewer than two months um of reserves for Maddie Inc at that time and it completely freaked me out and I was like what am I doing why don't I have savings why aren't you being more proactive so after work that day I got in my beloved M3 drove to the dealership walked in and I said get me out of this car and so 5 hours later uh I I got in a car that was a little different um and I cut my payment in half I mean that takes a lot to be able to take that step backwards you know you work so hard you have these dreams of you know the car you want the house you want to actually take that action of walking into the dealership and trading it in and getting into something that's a I'm assuming if it's half your payment it's a lesser model Madam I'm I'm curious man like um I think there there's a lot of people who are living paycheck to paycheck or or even with big with with big incomes per se right but they're still liveing pay paycheck to paycheck what like and you drill down this a little bit but like I don't know man I I guess there's so many people who have that same experience but never actually pull the trigger on making that lifestyle change so how did you make that fear real enough to you to actually facilitate that action and like what would your advice be to someone that's in that same situation that's maybe struggling with pulling back that lifestyle creep I I would say like don't let yourself be fooled into thinking that you work hard and you deserve deserve it and and yes we all have to live and and we want nice things but there's a time and place to buy something that makes you happy and so instead of you know spending your active income on something that's going to depreciate so badly um why don't you wait until so you can buy an asset and have that asset pay for it instead and you can do that later and so another example I have of that is at the same time hurricane Harvey came through Houston and my luxury apartment flooded and I used that opportunity needed to go to the leasing office and I said hey what's the cheapest thing you have in here all your amenities don't work so I really need it cheap and so they let me sign a lease for 1,200 so like within the first week I was able to start saving you know more than $1,000 of giving myself an in pay increase right but it wasn't going to fix that inherent spending habit that I had and I was you know swiping at everything but I wasn't connecting the dots that I had to pay for it at the end of the day so me knowing myself I created myself an accountability spending spreadsheet where every day at the end of the day I would have to go and record the vendor how much and why I bought it and so it really made me pause at the register like hey when I record this later today am I going to feel good about the expense or am I going to feel bad and that's what really helped me keep the credit card around two grand which was much better than the five and Matt you know the reason I wanted to highlight this is because I I think for so many rookies that are listening it's easy to get caught up in the hype of oh man he's got four properties 11 Doors and you know he's thinking about quitting his day job but they gloss over all of the the the sacrifice that went into putting you in this position giving up the luxury apartment giving up the luxury car getting yourself on a budget saving month after month like those are the things that people often times miss when they see the success at the end and they're comparing themselves to the final version of Matt and not the version of Matt that went on this journey um so after you after you trade in the car you you bummed down your your living expenses what's the path that kind of gets you towards real estate right so I had always had an interest in real estate and after I graduated college I actually got my salesperson's license in Texas so I went and got that reactivated um that's also when I found Bigger Pockets I just started consuming content as often as I could um at the gym on my walks I would listen to five podcasts A Day writing down everything I remember the first time I heard arv and I was like oh I stopped running and wrote that down really didn't know what it meant at the time but I was going to go back and research it and once I learned about all these different concepts I settled on flipping and I settled on Flipping because I wanted to make sure I had that cash at the end of the day because I I felt like I wasn't in and enough to do other you know things like wholesaling or things like having a Buy and Hold at the time and so not really knowing anything about flipping um I looked up how to analyze a deal um I built my own deal analyzer in Excel and I really believe I don't learn well from other people's products so I knew that if I built the Excel analyzer myself I would know what you know that formula was behind that cell so when I went through it I really knew what the numbers meant and then I also set up an auto search on the MLS you can Google like you know what are the 50 terms that you can look through the private remarks that signal a distressed buyer and those were things like estate sale you know foreclosure fixer upper and every day those would come in my box I would analyze them and then on the weekends back in 2017 when you could do this wait until the weekend to go view them and and then because I really didn't know what success looked like um with a finished flip I would not only look at the really bad houses but I would actually go look at the flipped product and I would walk through there and go this looks cool why or I think this is going to sit a while cuz this is horrible and so I could kind of get a knack of what flipping kind of looked like when it was finished properly and then I could track the days on market and see if it's sold so that's kind of how I got into the groove and then during this time I had to really practice mindset as well because I was brand new into this game I was seeing all these flipped properties and I really had to overcome the scarcity versus abundance because I would go visit a flip and I'd be like everyone's flipping the game is over there's no properties to buy and then I would have to say you know Matt calm down cool your jets you know investors can't be everywhere there are 10,000 properties that close on MLS every month in Houston calm down there's properties for everyone um so through this process we're getting into the fall of 17 um I'm starting to save money my hunch was right there will be no job at the other side of this which is scheduled to close in the spring um of 18 but I continue to save money um by the spring um I have 30k saved up I feel comfortable making offers and then I just start letting the offers fly and I write really embarrassing offers like the ones that made me cringe when I pressed send and then I would call for a follow-up and of course they wouldn't want to counter but I just knew eventually um that I was really going to be able to land one so I did land um an estate sale um in that summer which was fantastic because during this time um we were scheduled to close uh in April but the company came to me and they said hey Matt you know even though we don't have a job for you can you stay behind and and help us close down the Houston office and I said you know absolutely I'm never one to turn down a good time for a couple of reasons one I wanted the paycheck for a little longer um and two I was going to collect experiences doing something I hadn't done in HR that I could take with me to my next company so I just thought it was a win all around um so as we're going through by close down the office does that mean you have to fire everyone a lot like so many um and and one of the things that has helped me transition into being a real really good landlord is that I've had those difficult conversations I can set those expectations oh my gosh what an little learning experience yeah so over 300 individuals um during the course of the summer you got to let go of 300 people yes no way that is insane man so like in in my in my W2 job I was in I was in people management but I was I was like on the the management side on the HR side and I've definitely had to like fire people in my role but dude never it would be like you know one or two people maybe at like at a time but 300 that's insane but Mt before we keep going man because you you you said something incredibly important that I I want to make sure we don't uh that we don't like gloss over here but you gave like a like a mini master class on how to get good at analyzing properties uh as a flip you said the first thing you did was you set up like searches on Zillow redin wherever for all all of these different phrases that people should be looking for foreclosure Fix and Flip you know damage needs repair TLC like there's all these phrases you see for properties that can be flipped then you said you analyze all those properties right so you you got really good at knowing what uh what kind of uh again repairs might go into it and what the the potential profits might be and then you walked some of the properties that had already been flipped to give you a good sense of what you might need to do for your property and then you watch those properties that you walked to see what they actually sold for so you were able to put together a really clear picture on the condition of those properties before they start what the final condition it needed to be and then what those houses were actually selling for and the fact you that you knew that there's like 10,000 houses being sold per month in your city it's it's crazy I don't know that for my markets right but it proves that you took the time to really drill down and know your market and again I think those are the steps that people don't take that separate those who are successful from those that that aren't exactly and I'm super risk adverse so I knew that if I could qualify for a conventional 5% down house that I could live in after I flipped it that was safer than you know getting a hard money loan for my first time and you know having rent plus a hard money loan so to me it it seems less risky um also too like I love grandma specials and this trust sale was a grandma special and and I just call those they're the houses right that are probably foundationally okay in terms of their big systems they've been maintained with their HVAC and their roof and their other systems they're just really sad on the inside and all I wanted to do was take that sadness and make it amazing so I could sell and I found you could put your money um towards the Cosmetics instead of the big bucket items that we always don't like to pay for that's cool I just bought my first property that was an estate sale too and it was a older gentleman never married never had kids and um you know you go through the house and all the stuff is in there before they actually have the estate sale and it is like so sad and stuff but then it was really sweet his uh sister was the the trustee of the estate and she was the one that handled the sale of the property to me and on the day that we closed when I went into the property there was a beautiful bouquet of sunflowers and a little note and just saying like her brother had such this vision for the house and she'd love to see it when I'm all done with it and everything like that and it's just like God I was just going to turn into this simple rental property but God maybe now I need to actually do something amazing like no no no focus focus focus but um focus yeah but um yeah it is a you know the way you buy different property it's just like that experience of you know dealing with the seller and you know things like that it is crazy how every experience can be so different doing those transactions so since that that property what has kind of happened since then and kind of bring us to date oh yeah so so so much has happened and it's it's dramatic so I'll try to make it as least tramatic as possible but you know while while this was happening Halloween bring the drama bring the drama so as as this was happen happening on on the work front I I guess I was doing a really good job because what I wanted to do with these you know these individuals who are losing their job was treat them with dignity and respect and make sure that they felt like the new company respected them as they went to their next chapter of their lives and apparently I did a really good job at this because the company actually found me a job they didn't lay me off so they said hey Matt we have we found you a job but it's in Dallas so again I don't want to say no who knows what's going to happen happen I accept the job in Dallas um the flip is goes through without a problem except it takes a little longer to sell um I end up moving to Dallas while the flip is still on on the market in Houston um we're getting in December I used all of my savings I had a Lending Tree loan to pay for the repairs so I was just sitting there just waiting for it to sell um and it finally sold and so I was super excited with that and so once I had the proof of concept of yes I nailed my first flip not nailed but but I was pretty successful U I wanted to do it again in Dallas but I had no idea what the market looked like since I had my license I joined the the Dallas MLS and then I just started analyzing different neighborhoods and I would look at the cheapest price per square foot and the like highest price per square foot and see if there was enough space between me improving it and making a profit and I would even double check the school districts because in Texas they get their funding from the tax base from the houses so even like being zoned to a different school could throw off your numbers being on the wrong side of the street so I really wanted to confirm that so in the in May of 2019 I actually went under a contract on my second flip and I was too slow and it went pending and I was really upset so I called the agent and I said hey agent do you have a backup contract and she said no and I was like well let's work out one and so I was super excited and I always recommend to anyone to always ask if there's a backup contract and if not negotiate that contract contract because one of the great things about it is if that first contract terminates for any reason you've already negotiated that contract with the seller and yours comes into play like that and that's how I got two of my four properties yeah it's kind of explained that that process so you talked about you're just notifying the agent saying do you have a a backup contract maybe just explain exactly what that is and you know how are you making yourself competitive that you think that they're going to actually take your backup offer and instead of going back out onto the market perfect so um in Texas you can negotiate a backup offer just um like you would the very first active offer so you're negotiating the price and the terms and the option period earnest money any sort of concessions so you have to be as enticing or aggressive as you would be if this were just that regular first offer um the great thing about it is that you sign it it goes to the title company you send your earnest and your option money money um and then if that contract comes into play by termination of the first one um then you've already negotiated everything and sellers uh like to do this as well because they like to have the power during that first contract that hey if they ask for too many things during the option period we have this guy Matt in the back Wing over here waiting to buy it so it gives them a leg up as well that's CRA I've actually never done it that way like I I've I've like talked to to agents like hey if things fall out like let me be your first guy and like my second property that's how happened where where I was second in line but I didn't sign a purchase agreement I didn't send any money into into escrow so that's that's like a totally different way of solidifying that offer behind them and and if your offer is better it almost like incentivizes the seller in a way to like find reasons to to pull coals and and what the the buyer's asking for it it did and it was and I I made sure of it just because I wanted I kind of had a feeling where I needed to be from the agent cuz I went to the open house I built that Rapport I called her I was checking in and she was like Matt you know they're getting cold feet they haven't done their inspection yet and I'm like fantastic let's let's hope they don't um so it just it really helps if you build that rapport with the agent just so then they may keep you top of mind when if you do need to negotiate a backup offer so Matt once you close on this property uh in late 2019 does it go as smoothly as the first one like are you are you replicating that same success or walk us through how this this next next flip turned out for you Tony you're foreshadowing because it absolutely did not this was probably the hardest time in real estate that I've ever had so you know it starts off smoothly it's okay I'm I'm in my apartment in Dallas you know checking on the flip and then I get a call or email while I'm at work everything dramatic happens at work for some reason and it's from my contractor and he said Matt after much thought um I've decided to walk away from your flip um it's too much work for me I'll make sure you get back your money uh and my heart sank because I knew I had paid him $20,000 in advance and I just knew in my heart of hearts that I was not going to see that money again and so it was a huge lesson for me that we preach all the time about not getting it ahead of your contractors and and the reason why I felt comfortable doing it is I went with a really reputable company in Houston that only works with investors only fixes flips right they don't work with any residential people so that was my state of mind when hiring this guy and so I looked at the bank account and I said I don't have enough money to hire another GC I barely have enough money to order all the things that need to be done to finish the flip I would say it was about 80% done so I take a mattress but Matt sorry did you did you get the money back from the did you get the 20K pack or did did he keep no I didn't he did a lot of song and dance um and he kind of just disappeared um and I and I actually right before before uh statute limitations ran out I was able to serve him but then you know something else happened and it never went forward and I just kind of used that as a huge Learning lesson of it it's tough man I I just want to you know and Ash I'm curious what your feedback is on this as well but for me when I work with the contractor for the first time I usually try and backload that last payment um so I'll do like I don't know I think like my my last contract with new contractors it was like I'll give you 10% upfront you know 15% after you finish demo another 15% after you finish like I don't know rough plumbing or electrical or whatever it is and then the last like 20% is once you know the the the job is actually completed um is your schedule something similar to that ask when you're working with a new contractor right now all I'm doing is I'm being invoiced based on what is completed so no money upfront and then I just like right now my contractors doing every two weeks he'll invoice me um he's a GC but he does some of the work himself but like he'll like the painter just finished so I just got the invoice for the painter and things like that but um we just do it that way and that's kind of easiest for us and I've been working with just one contractor recently and it's easier I think once you've like built a relationship like my guy nacho and Joshua Tree like we don't even sign any contract with him like nacho is like a like a like a second father to to me and Sarah at this point so we we trust him with our lives but um if it's a new contract we typically typically set it up that way so Matt sorry to hear that he he runs off with your 20K but yeah I guess like from that moment like how do you get this job finished there's really only one option I took one of my mattresses and moved it into the bedroom of my unfinished flip and I youtubed my way through the finishing uh of that second flip and so I would order the materials I had to reorder the doors even though I already gave the contractor money for the doors ordering the baseboards the cabinets the countertops you know the big stuff I did have to contract out like I can install more marble countertops but you know the carpentry work I was like how do I install baseboards okay got it so you know you get a nail gun and I just remember like going to the baseboard being like boom and then wiping a tear away and then boom and then wiping I was just like I just thought my world was over and I thought I was really dumb for trying to be super cool and I did one flip and I was awesome and I apparently wasn't and so that took me until December of of 2019 is when I finally finished the flip and I was super proud of it and it was gorgeous and I was just like man I'm going to live in this house now cuz I earned it it was insane um and then so as we know Co happened in March of 2020 things started to slow down there was a lot of uncertainty and I had a lot of PTSD I really didn't listen to a podcast for a while I was happy being in my house but then I got bored and I I got inspired so I picked up um set for life by Scott trench and we talk about you know living beneath your means and I'm like oh yeah I remember that and talking about how you know you regular people can build wealth by house hacking and I'm like ooh tell me more let's learn about this house hacking thing so I remember I was sunbathing in my backyard minding my own Co business and I read this and I was like I'm selling my house why am I living in this house it costs one paycheck to run yes it's gorgeous yes I love living in it I feel super cool cuz I did all the work myself but this is not going to help me get to where I need to go so I ordered a for sale sign from my broker I ordered the photographer um I put it online by the weekend I had 15 showings three full price offers um and I sold the house dude I I love hearing uh you know one folks DIY I you know I I'm a real estate investor but I'm not the DIY guy like I'll I'll hang a light fixture you know I'll uh I'll swap out some light switches but like base boards carpentry all that stuff I'm not all that good at but kudos to you man for buckling down and doing the work that needed to be done to be able to get that deal across the finish line so the the the second flip eventually has a happy ending which is good um and and I'm assuming Matt were you able to sell that one for a profit I was so what was so crazy about this story too is you know after I sold it I was like through the option period I'm like I think they're actually not going to terminate the contract and I was like oh no I need somewhere to live so and also I need somewhere to store my stuff because I have 2,000 feet of furniture now that I've collected and so I put my stuff in storage I found a a corporate unit in Dallas cuz I didn't know when I was going to have to go back to the office and so the profit the profit on that one was 55 grand even with the 20K hit um from the contractor and I remember going to the corporate apartment I'm around all of these weird objects cuz none of them are mine um and I'm sitting at my laptop and I'm pressing pressing refresh um on my bank account waiting for the wire to hit I know don't laugh it's kind of silly but to me it it represented you know my hard work on on that flip but it also had my cash from my first flip in there as well so my bank account was super super tiny and I was like oh my gosh what's going on and then when I refreshed that afternoon and it was there I felt this like proudness and happiness and I was like man I went from having less than fewer than two months of reserves to like 50 months of living reserves and in two years and it was just a really cool experience that I was very proud about yeah that is such a Monumental moment there's definitely 100% something to be proud about for sure yeah it was sure and then that kicked off my my summer of couch surfing as I like to call it so um I got sick of living in the corporate you know U airb so to speak and I knew we weren't going back to the office anytime soon so I just start hey friend I'm coming to Austin I'm going to stay with you for a while I went to go live with my mom um she loved it she cooked for me we'd like binge on Netflix it was like a really cool summer stay with friends in Houston and I had it in my mind that I really needed a fourplex FHA and the reason why I wanted it is I wanted to lever as many units I can while still getting a regular loan I wanted FHA CU I wanted the 3.5% down not the 25% down and then so that was my new mission in life I went and go looked I looked at all the fourplexes in Houston um I didn't even care if it was an hour away because you know Houston is an hour away from Houston because it's so large um and so I I I found one right by the airport and so I got out of the car and I was like well I'm not scared to get out of the car that's a good first step um and then and then I look up and I see the planes passing overhead they're I'm not kidding 700 feet it's on the Final Approach the flaps are out like you can see like the quantis and the Emirates and the Lanza and spirit and then you hope the spirit doesn't land on your house because you know your spirit but like it was that it was that close and so I was like you know what I'm going to go ahead and make an offer on this thing so I made an offer it was listed for 450 I went in at 405 with I I love to do my 5K you know kicker at closing just because it's fun to bring less cash um they counted at 410 um and then we were under contract and I was like man this is super exciting this is super easy all of my real estate stuff that's hard is over and it's going to be smooth sailing well because this is the Halloween episode um and we're bringing the drama this is where stuff starts to get a little bit crazy so I scheduled the inspection I haven't been in these units yet because you know you really don't get to view them till you're under a contract um so we start with the first unit A1 I go in perfectly fine two-story townhouse they Side by each looks great go into the second one um more of the same there's nothing really wrong with it going to the third one there's there's no floor so there's no carpet there's no doors on the cabinets uh there's no air vent covers and I'm like okay well we're going to have to get this fixed if it's going to go FHA but no big deal so then we go into the fourth one and so I knock on the door um from the information that I have I'm expecting like a 30-s something female and it's um an old lady and she's like hello and I'm like yes I'm here to inspect the property and she's like okay I'm expecting you I walk in I get hit with this smell that smells of Decay it's 90° they're not using the AC this is June in Houston 20 2 want um I take a look around I notice these pots and pans I'm like this is bizarre Decor until I realized that they're full of water cuz water is dripping from the ceiling um we go into the kitchen there's little baby cockroaches running everywhere and the old lady is like well you know you can't go upstairs yet because my daughter's getting ready and I was like okay ma'am you know we'll just inspect the downstairs so then after a while she calls me over and she's like you know you're going to do a really good job with this real estate thing is it okay if I I bless you and bless the house and again I'm not going to say no it could be fun so she blesses me she blesses the house and then at this point I'm thinking you know there may be something going on to the lady I said do you mind if I go upstairs and and you know just take a look around and if your daughter's up there I'll just knock before I go in so we go upstairs we confirm there's no one up there um the doors are all wilted because it was so humid in the place there there's no one up there as in the the daughter wasn't even upstairs okay she was not there um so we go to the bathroom the toilet doesn't flush the shower doesn't work it's the only shower in the place I'm like pretty concerned um smart Matt decides to flush the toilet that doesn't work all I hear is screaming from downstairs from the lady oh my God there's water coming through the ceiling I'm like okay well that's broken too and so I have I have this moment of like Matt what are you doing this is really dumb you need to run and then my inspector as if he read my mind goes Matt do you want me to continue with the inspection and I'm like yes let's do it what's the so he finishes I get back in the car I exhale and I call the agent and I'm like hey good news bad news good news I want to continue bad news we have a lot of work to do and the sellers need to get on board if this is going to qualify for an FHA so we fix the things that we think need to be fixed for an FHA loan um the how did you negotiate that with the sellers did they pay for it did you come off the purchas price how did that that work out they did so my amendment was actually pretty aggressive um I increased my concession to like 10K I asked for all of the stuff to be fixed on their dime during escrow I even put in there because I didn't know who the old lady was yet I had a feeling it was the tenant's mom um I said that that unit needed to be they needed to deliver a notice of non-renewal um within 30 days of us going under contract because she was on month-to-month tency so I I knew that I wasn't stuck with that tenant but I didn't know if they were going to leave and then if they weren't going to leave I asked for three months of rent from them just in case they didn't leave um which they agreed to which was fantastic so they agreed to that which what was probably held in escrow it actually wasn't so I was listening to the latest podcast that just came out and you talked about holding those funds in escrow um and I just added them to the amendment so I was getting those funds regardless which was probably yeah great idea a little better for me on the end yeah so then we order the appraisal so if we go back to Summer of 21 everyone and their cat was refy I was locked in at 2.6 everyone else was like yes which like those days were gone so sad but I was l no one would take the job because the appraiser would rather get the house in the suburbs that looked like the other houses and they could get the appraisal done within 2 seconds so the lender was like Matt we have to up the offering to 2K and I'm like 2K for an appraisal I guess that's what we got to do and so we finally got the appraisal they did it came back I'm looking for the value I'm like please come back at 410 it comes back as cannot be determined um tear down status so then my my lend my lender calls me and he's like Matt what kind of property do you have me typed up it like tear down status this is unbelievable and I'm like hey there's something wrong with this um I sent him all of the pictures from the repairs and from my inspection and he's like yeah there's something wrong so we get in touch with his the lender's boss the appraisal management company they convince the appraiser to come back out reinspect the property he gives it a value of the magical 410 that we need but we needed to fix a couple more things so we go ahead I just I just want to pause for a second because I've actually never I've never heard of an appraiser saying that a property needs to be torn down I didn't even know that that was like an option it was it was it was wild I was just reading the thing the lender had never heard of it the lender's boss hadn't um the appraisal management company thought it was odd too uh so we send the apprais and he was still going to charge you 2,000 bucks for telling you just to tear the thing down I was like come on now like you okay you know break my heart and charge me 2K at the same time that's crazy yeah it was insane so we got the appraiser back out there it comes back at 410 we do and was it the same one or someone else from the company it was so every one of my experiences with an appraiser is they send the same one back out um I had a similar experience I was mentoring a friend through his first FHA 4plex and it didn't meet the self-sufficiency Clause so I had to write a whole thing about that so they sent the appraiser back out to fix that but yeah it's always been the same in my experience um and so we finally do the fixes uh we send it to underwriting and then underwriting comes back after we made the fixes and says you know what we actually found more you need to fix uh the report the initial report says that they couldn't get the heater to work in one of the units so you need to send the inspector back out there after you can show us that you've certified the HVAC for the heat to work and I was like okay fine so we do that goes back through underwriting we've blown through two different close dates so far so found the property in May under contract in June or in July um goes through underwriting again comes back out but wait they found more to fix the heater's fixed but now they don't like the fact that there's cutouts behind the valves and the tubs for the access panels from prior leaks and all four units had this and so they said they could not fund the property because of the holes in the bathrooms and at this point the listing agent and the sellers they're on me they're like Matt we've been really patient with you and I felt bad because they were so nice and they were helping me through the process and they were fixing things for me and I wasn't holding up my end of the bargain by bringing the cash and getting this thing closed so what do I do is I look up the CEO of my lender I found his name um I guessed what his email is and I put everyone on an email chain saying you know hey Mr CEO my name is Matt this is my loan number these are the issues that we are having here's the timeline I would really love this loan to close what do we need to do I'd also like my appraisal fee refunded and so I actually get an email back from him the next day they work on it and we were closed and funded within a couple days which is crazy I mean but it's it's so crazy because I and just to clarify like when when Matt using the the the the term underwriting he's talking about underwriting with the lender right so the the lender has to like underwrite the file to make sure that it's like a loanable um like product or whatever it is but uh that person is different than your loan officer it's someone separate yeah like your loan officer is your Advocate really and then there's the person in underwriting yeah and was it was it the same actually I don't know this is was it the same underwriter looking at the file each time or was it just going back to like the underwriting Department because I would find it really interesting if it was the same underwriter and they just kept looking at the same file trying to find something different but if it was going back to a different person that might make a little bit more sense but either way Matt I think your your step of um you know ringing the alarm and and trying to get all the the the troops uh aligned here it's it's a step that a lot of folks can take and and obviously when you're working with the bank or or a loan um like a a lending company is a little bit smaller that's probably easier to do harder to email the CEO of like Bank of America you know but if you're if you're going to like a local local lender it's a little bit easier I uh manage a property for another investor and yesterday we had an incident where the there was some water leaking in one of the roofs and we just had it replaced last year and the roofing company we called the guy that had the project manager for who had done the roof for us and been our point of contact and he's like well I'm not in the office you have to call somebody else and so we called like the office phone nobody's answer try again nobody answerers so I send a text message to the property owner and I and he has a very wellestablished um name in the town and I said can you just uh reach out to him real quick I we can't get a hold of anyone at his at his company or anything and um so I think he just forwarded my text which I knew he would do it that way and within 2 minutes Daryl's cell phone rang and the guy called and he was just like starts the conversation off I don't know why Ashley had to call and blah and say like stuff but I you know it worked it worked what happened the problem I don't care if you don't like me now because I did that but that's what I had to do is and it's you know kind of like the book like who not how you know it's who you know EXA I was just going to say like okay let's kind of bring it to date as to what your financial position is right now what your portfolio looks like what's your cash flow what's your W2 income and then we can kind of wrap this whole thing up and maybe by the end of the day you're you're quitting your job but oh that that would be great okay let's let's get us there so so now with the four units the fourplex is doing its thing I'm in my current house hack you know another Triplex Etc um so I always like to look at my net so everyone loves to spend on gross but we're taxed so heavily as W2 I've always just accounted it as what am I taking home at the end of the day so as a nice round number we're going to call that 10 grand and so I still have taught myself to live on half so five is for spending five is for my buy more real estate um and then my passive or my real estate income is sitting at 4,000 a month and so that is kind of of the spending money that I have now so with a portfolio um that is around 2.2 with 700 in equity I have my Ono fund or my buy real estate fund however you want to look at it at around 75k my business bank accounts at at 20 um you know I feel like yes I would take a hit and and yes I would have to really watch my spending and that opportunity cost of letting my passive cash flow build in my bank business bank account is that work worth being able to tackle all those things that I don't have time to do with uh designing my portfolio to be able to network and meet with the credit unions get the business line of credit being able to go to more real estate events um and then also start my coaching which I'm really passionate about is when I went to the real estate event in Houston this past weekend I love being able to talk to the newbies and kind of get them to find out why they haven't taken that first step and kind of coach them so spending time coaching would also be a passion of mine um and then also improving me a really sad social media so if we go look at my videos of my progress of week over week it's just me holding a camera going okay this is what I've done so it's just having that that I don't have time for now Matt I I just want to share a little bit about my story uh and and hopes that it might give you some some insight so for me very similar kind of Journey I climbed the corporate ladder had a very healthy sixf figure job um and I losing my job um right at the end of 2020 and I had this decision to make of do I do I try and go back out into the workforce or do I double down on this real estate side hustle that I've been kind of cultivating over the last last couple of years and I you know sitting down with my wife we we came to the agreement that we would give ourselves 12 months and we we had enough money saved up to last us a while um longer than 12 months so I was like you know worst case scenario we burned through some of our savings 12 months later I go back and I get another job and I'm I'm fairly confident I could go out and get another you know High six figure paying job that I had before um so we buckle down for 12 months and do like that the amount of the amount of energy that we were able to put into our business during those 12 months it was insane the the amount of growth we were able to achieve and it it never would have happened had I had that that day job now this isn't me uh encouraging you necessarily to to quit your job but just but but just at least asking the at least asking the question of like how much runway do I have and if the worst case scenario is that I give myself 12 months to really build this thing out and at at the end of that 12 months I just have to go out and get another job like the one that I already have is that really a is that really a bad thing right at least I had 12 months to prove to myself that now's not the right time or prove to myself that now is the right time so that that was my experience man and you know I'm I'm incredibly grateful that that I had those 12 months because it it showed me that I could be an entrepreneur no I love it it's I love the fact that you gave yourself the 12 Monon Runway and it's not a decision that's forever and so when we initially look at this jump especially because there's so many people telling us not to do it it seems like it's a it's a one-time thing and you have to do it forever but if it doesn't work out after that allowed time then you can always go back and and get another job so I really love that perspective I was just going to say sorry last thing I'm we're in 2023 so I'm 3 years into like leaving my job and dude even today like if if my business is completely crumbled today I could I I'm still confident I could go out today and probably still get a job that's going to pay me six figures so there there's there's really no downside because once you've built those skills in the workplace you're always going to have them right and you just go back out into the workforce and find that next job but on the flip side most people never have the courage to test out can I do this by myself can I can I stand on my own two feet can I build value in the marketplace on my own and let my value be tied to what I can do and not what it come thinks thinks that I'm worth Matthew so I have a couple questions for you I guess and the first one is based off of your and Tony's conversation is would you easily be able to get another job or even get your same job back if you did decide to quit yes I I'm fairly confident that I could find another sixf figure job if I decided to quit yeah okay and then in your position would you be able to find part-time work so you're a consultant um would you be able to work for another you know employer who it's only part-time or would you be able to kind of create maybe your own agency where you even post it on upwork or Fiverr and people could just hire you on demand if need be yep I'm pretty sure I could do that too yeah so I think that you have those options definitely could ease the pain or the you know the stress and anxiety and the risk of you know fully quitting is that you have those other options to actually bring in that income um one thing that I would definitely do before you do quit your job is to get another bank loan got it like go and purchase another property while you have that W2 income um one thing that I would like in if you were still going to work a little bit as a consultant um if you could get a part-time job because that W2 income is going to be way more valuable for loans than going out on your own and creating your own little business where yes you're bringing in income but a lot of times banks will want to see two years of tax returns for that that business that you have created on your own so you know but if you're going out and you're getting hard money and you're going to do flips and you have private money and you're not even worried about doing Bank financing anymore then that kind of rules that out for you no that makes sense I do I do like the idea of the one more bank loan um while I'm easily bankable before going Rog right yeah the next thing I would look at as to what you make per an hour okay and then I would make a list of tasks that you could easily Outsource okay okay so right now I have for my property management company I have two vas working for me completing tasks and I pay each of them $10 per an hour so are there things that they could do let's say for example you make $30 per an hour are there things that they could do that would take things off of your plate that you could train them to do and the training will take time so this is where you take your 2 weeks vacation to train some vas and you work your hour while they're working their hour and you still net $20 because your time is more valuable doing your Consulting work than doing tasks where a VA could do it so we had a guest on and I I can't remember her name or what episode it was it was probably a year or two ago where while she was at work she had a VA that just found deals for her did deal sourcing all day long and it was just she you know it's was probably around the same $10 an hour she paid her and she went to you know her W2 job and made more money and that easily covered paying the the VA to do all that and then at home at night she would do the little pieces of stuff that a virtual assistant couldn't do yeah the episode you're talking about Ash I produced it in the chat I think it was Maria Costa and actually no Maria yeah she's she's a she's a stud when it comes to using her team um every Carl uh you know she's well known the Bigger Pockets uh ecosystem as well like she she's got a really dialed in uh virtual assistant team and I actually just read a book and it kind of ties into what you were talking about actually about like what is that pay rate that you should look for the book is called buyback your time by Dan Martell buyb your time by Dan Martell really Incredible Book um he's a a super successful like Tech entrepreneur uh but in that book he talks about your buyback rate and um I think he sets it to like one like if you can Outsource something for 1/4th of what you your own hourly rate is you should always Outsource that like it's a no-brainer if it's one4 anything above that maybe there's a little bit more flexibility but like if you make you know 30 bucks an hour or call it 40 bucks an hour and you can Outsource something for 10 do it every single time because the value you can go and create at that 40 bucks per hour is going to you know far far exceed that and your VA might actually do something better than you do too mine fine things like little things that I wouldn't even think of is like you know a a third party someone looking you know from the outside and when I give them you know here's you know the scope of work of what I want you to do for this process the SOP and those'll they they'll actually poke holes in it well you know when I did this you know it goes to this and they like a God okay let me work rework it here or whatever but they follow it to a te and it's it's done way better and way more efficient than if I was actually going and doing any of these tasks myself anyways too I I think one thing to add on to what you said as I love the idea of like the part-time work I guess like a like a a an ancillary piece of that is are there additional services that you can provide to other Real Estate Investors like if you're doing property management for yourself right now can you take on maybe a few Property Management clients for other owners so now you've got an additional source of of Revenue there if you flipped houses can you I don't know like so you're really good at finding deals can you wholesale maybe one or two deals uh every quarter to other Real Estate Investors um Olivia tati who is on uh one of our recent episodes she quit her job as a as an engineer Chevron she had a really you know healthy six figure salary but she didn't just rely on her her rental income she started a design business that helps other Real Estate Investors design their airbnbs and that's a good portion of her her rental income so just the question of like are there other services that you can provide that build on the skill set you already have to help other Real Estate Investors so it's still related to the core of what you're trying to do right no that makes that makes great sense so my vote is no don't compl completely quit your W2 job that's my vote I say go down to parttime yeah I'm a I'm a bit of a risk taker um so so if I'm you m like dude like if if you if you've got the runway like again I feel like that that value that I got from being able to go full-time it was it was it was really uh impactful for me man but obviously at the end of the day you know you got to make the choices right for you I would ha for you to quit your job and come back and say Tony I quit my job my life has falling apart so um I should have advice no I I I think it I think this is awesome that you are considering it and um hopefully you're able to take you know some of our advice and find a plan that works for you and the best thing is even though you have this decision weighing over you there are so many millions of people that wish they were in this position where they could make this decision so I mean Matt congratulations on how far you have come and to be able to be at this point in your life it's truly remarkable no thank you so much and yeah the decision is is not lost on me that it's it's a privilege to be here to be able to say you know what I don't need this anymore I'm going to go follow my passion and I know that not everyone has that so I'm very excited to be here at this point in my life and be at this Crossroads and you know I'm very much like okay I'm like Tony but no wa maybe I'm more like Ashley and if you go and read the comments from the post it is like what do you think you need to keep your job like this economy is crazy and then the other Camp is just like do it follow your heart so it's just there's just two different camps and there's not exactly one right answer so it's it's very exciting and I definitely gained some insights by talking to you guys about it yeah I I I think you're in a really great position where no matter what path you take that there are a lot of safety nets either way for you yeah yeah so Matt before we wrap this up do you have any other questions for us uh no you guys answer really what I wanted to know I wanted to know was on your mind about have you been in this before how would you address it if you were me what would you do so I feel like this is a very good discussion for me to have at this point um and I will be making my decision I think over the next couple of months um once I get that one more Loan in my name per Ashley's advice um no and then you know hopefully I'll be able to continue to share my story and help others and and we'll see where this journey takes me yeah it would be awesome to have you back just to do like you know in part of our intro to another episode or on a rookie reply or something just have you back and you know leave us a voicemail of like what has happened and what you decided and what you did and keeps updated yeah awesome Matt thank you so much for joining us can you let everyone know where they can find out more information about you and watch you revamp your Instagram for sure so my Instagram is my last name so first you have to learn how to spell it and then I'm easy to find it's m a r c e l i s s n that is my Instagram and I'm most active there okay awesome well thank you so much for joining us I'm Ashley at wealth from rentals and he's Tony at Tony J Robinson and we will be back with another episode we'll see you guys [Music] theny so hard cover up your games nobody see all this time ain't nothing change

Channel: Real Estate Rookie

Views: 26,789

Keywords: quit your job, invest in real estate, real estate, rental properties, real estate investing, quit my job, w2 job, how to invest in real estate, real estate business, real estate portfolio, real estate investor, full time real estate investor, rental property, how to buy your first rental property, should i quit my job, income property, flipping houses, home renovation, financial freedom, financial independence, biggerpockets, real estate rookie, real estate rookie podcast

Id: H873To8DA7o

Length: 59min 30sec (3570 seconds)

Published: Tue Dec 12 2023