If I have a tenant that wants to leave a property and I think it’s a good time, I’ll probably be inclined to do a 1031 into a different market. I hate to say it, but I think if you kind of hold people accountable and make sure they know that you’re going to follow up, make sure they know that you’re going to keep them accountable. Usually with property managers, there’s some kind of agreement to use their services for a certain amount of time, maybe six months to a year. But if you’re in an arrangement like that and you’re not happy at the end of the six months of the year, don’t be afraid to cut and run. Trying to dial in your rehab is kind of everybody’s first go- to and then overestimating ARV is really kind of the first easy thing to get messing

Up. Welcome to the Real Estate Masters Podcast where we bring you the top real estate investors in the country. If you also want to be in the top 1%, you are in the right place. Listening to podcasts like this is exactly what helped me to scale my real estate investing business to seven figures, flip over a thousand houses and more importantly, step out of the operations of my business over a decade ago so I could start and grow other businesses. So get ready to learn from the best and start building a business that works for you and not the other way around. Enjoy.

What’s going on guys? Matt, thank you so much for taking the time today. I really just want to get into it here. I know you mentioned a lot about AI. I know AI is the new buzzword nowadays. Everyone wants to know what’s going on with it. I know you have a ton of cool stuff. What would you say your most exciting thing that you’re doing right now with AI? The

Thing I’m kind of super interested in right now is basically having AI create all my plans and drawings for my properties. I’ve got things in the works where essentially I’m going to have AI create the design, create the drawings. There’ll be high enough detail to plan everything off of. You order windows, you could order cabinets, everything, not even go back to the site and drop a tape measure ever again. Submit your plans to the local municipality. And then I also want to take a little step further and try and like, I don’t know what I want to say, go the local municipality into moving a little faster by having my AI kind of, I don’t know what you want to say. Bug them a bit, go them a little bit into moving faster. That seems to always be a slow point for probably every investor. Denver Metro is where I’m at and Denver Metro. Denver could take six months to get a permit out to you. Boulder could take, not as long as six months, but easily six weeks, maybe three months. That always seems to be the slowdown in my business. So maybe I can help others with that too.

Yeah. I know you’ve been in the business for going on 15 plus years, but how did you get in the business in the first place?

Yeah, I mean, that’s kind of an interesting story. 2008 was the market downturn. We bought our first property in 2009. When I say we, I’m talking about my wife and I, because she was super supportive and everything. She actually let me stop with my W-2 job, just take on real estate full on in 2009, 10. So that’s been super advantageous. Really, we just saw the opportunity. I mean, in 2008, 2010, you could buy a house that was foreclosed on and get a mortgage on it and the mortgage rates and the amounts at that point in time were such that you could usually rent it for twice what you were paying in mortgage. To me, it just seemed like a super apparent entry point. A lot of people were running scared, but I saw the opportunity and jumped in. I mean, hindsight’s 2020. Yeah, that was a great time to get in, but back then people were thinking I was crazy. They didn’t know how far things were going to go down, but I was like, “Well, if I can buy it and people are going to need places to live, if I can buy it and rent it out for more than my mortgage, I’m cash flowing.” Other thing too, I tend to mention is if I was to call myself a contractor, which I guess I do, I’ve got multiple licenses. I would be third or fourth generation in the trades. So I still remember working on houses with great-grandpa, building a deck, fixing a roof, stuff like that. When he was 90 plus years old, we had to convince him not to climb on the ladder or really watch him so he didn’t fall off or something like that at 90, 95. I still remember him trying to get up on the ladder on a roof I was fixing for him and he just scared the hell out of me that he was going to fall off.

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Fair enough. That’s awesome. And then for the people listening, just to kind of get a snapshot, what does the business look like today?

Yeah, we’ve got probably around 30 units in the Denver Metro. We started expanding into different areas probably in the last three years, let’s say. Denver Metro’s got a ton of regulations now in place. It was pretty easy to be a landlord when I started back in 2008, 2010, but it’s gotten so much more complicated. We could have a three-hour podcast on all the laws and stuff that have been implemented that makes everything harder. But even just renewing a lease now, we have to start renewing a lease about 60 days in advance because the tenant has a right to almost has a right to renew regardless of the situation up until lease expires. It’s just gotten super complicated. I used to manage all my own rentals and I want to say it was probably like 2015- ish we turned it all over to a property manager because just keeping up on the new laws that Colorado implements every year is probably a full-time job. So he does that. He keeps everything up to date. I’m not running from Denver, but if I have a tenant that wants to leave a property and I think it’s a good time, I’ll probably be inclined to do a 1031 into a different market. So three years ago probably we started expanding into other markets. I’ve been pretty keen on Northern Alabama lately, pretty solid job market, pretty solid growth. And then again, the regulatory environment is just so much easier for landlords. You’ve got some people coming in for jobs for government and stuff. FBI has got headquarters there, CIA, all those lettered government agencies have headquarters in Northern Alabama. I still do fix and flips in Denver Metro. So we’re still doing, I don’t know, probably six to 10 a year, just fix and flip, raising LP capital for the deals outside of the Denver Metro. Inside the Denver Metro, we’re still doing short-term rentals and a couple years ago we started kind of finding a couple of midterm rentals here and there. I find mid-term rentals kind of need to be in a more convenient location in Denver. A lot of people will do them for six months or whatnot and they live work, but they also want to be closer to the mountains. The west side of Denver seems to be a bit better for midterm rentals.

Yeah. And I’m sure Alabama’s price points are much lower than your Denver price points for sure.

Oh yeah. I mean, we 1031 out of a duplex in Denver and bought two buildings in Northern Alabama. I want to say off the top of my head that it was 14 units.

Yeah, I don’t doubt it.

And had a little cash left and I had to pay taxes or something on a little bit of cash.

That’s awesome. Why do you think so many investors overlook the buying another markets piece? I mean, I know a lot of people do, but most people, I would say most investors, especially local ones in markets like yourself, they don’t kind of split time. Why do you think that is?

I mean, I can tell you my biggest frustration is the boots on the ground. Denver Metro, maybe we’re spoiled, maybe we’re blessed, maybe it’s a combination of all, but we’ve had the best property manager that I could even imagine probably in the Denver Metro for the last five years, maybe slightly longer, eight years. I’m constantly having to manage my Alabama property manager. They’re just not quite as effective as my Denver property manager. So the other markets, it’s really about managing the people that you have there. And if that’s not your skillset, then you’re probably going to struggle.

Finding the

Right

People there

Is tough.

Yeah. How do you get around that? How are you navigating through that issue?

The Alabama property manager, we have a weekly meeting with him. Like I said, when I say we, it’s usually my wife and I. Sometimes she takes that call by herself. Sometimes I’m in on it. She’s usually always on it. So I think accountability is a big thing. I’m constantly following up on emails with him and then we have the weekly check- usually just like an hour, maybe only 30 minutes if nothing much is going on. But that’s the big thing is accountability. We just had a rehab with him for a tenant to turn over and it wasn’t a bad shaped property, but we bought the property. They were all kind of dated and it was a legacy tenant that moved out so we wanted to update flooring. And then there was some weird things going on with the ceiling texture. It was peeling off. It never had gotten applied right or something when they built the property. I set the expectation that he needed to have the rehab done, let’s say on the 18th of March and just kind of kept following up. I’m probably a bit aggressive, but I also wanted to make sure that he was staying after it. I probably followed up every day and was like, “Are your guys on site? Are they getting stuff done? Can you send us pictures?” Stuff like that. I mean, I hate to say it, but I think if you kind of hold people accountable and make sure they know that you’re going to follow up, make sure they know that you’re going to keep them accountable. It makes it a little easier because they kind of try and rise to the occasion, I hope. And if they don’t try and rise to the occasion, then maybe it’s time to move on. Usually with property managers, there’s some kind of agreement to use their services for a certain amount of time, maybe six months to a year. But if you’re in an arrangement like that and you’re not happy at the end of the six months of the year, don’t be afraid to cut and run. I mean, I think that’s always what people say, right? Regardless of what business you’re in, take your time and hire slow and then fire fast.

Matt, I’m curious talking about marketing, how are you finding most of your properties in the Denver area and then how are you finding most of your properties in the Alabama area?

Anything that’s outside of my local area is usually I’m relying on local agents to send me deals. Hopefully they find them before they get on the open market, but if they don’t, I don’t have a problem picking things up on the open market. The last two that we did in Alabama, I think were both on the open market. One I think came through a bit of a three or four hands on a wholesale type thing. I think two or three people got a cut of the sale, but I don’t really care as long as the number works for me. And then the other one, the local agent just found it on the market. In Denver, I’m probably let’s say fifty fifty on off market and on market. I actually find a lot of decent deals on market. I know a lot of people think that it’s all off market, but I don’t know if I agree. A lot of times the things that I find on market though, I think I bring a different spin to. Maybe I see something that other buyers don’t. We did a project just wrapped up just maybe a month ago, even kind of central to North Denver. It was right outside of Cherry Creek, super popular shopping area. I don’t know if you could walk to Cherry Creek from this house, but you could definitely bike down there and bike around Cherry Creek, check out all the shops. But this property had an old attic that had never been finished And the attic probably added maybe not quite a thousand square feet, 800 square feet and full ceilings except for like right along the edges of the walls. We had to camp for the edges of the walls a little bit, but full eight foot ceilings added probably 800 square feet. So we added a primary suite up there, kind of a sitting area, primary bedroom, primary bathroom, closet. And then it already had three bedrooms on the main floor and the basement was kind of finished, kind of not finished, but we made it nice and there’s a bedroom down there now. I think that one’s currently on market. I think when you see something on market, you have to find something that’s maybe not a straight pitch down the center of the plate and you kind of got to do a little curveball action or something and make it work that way.

Yeah. What mistakes do you often see investors make that you think could be really easily avoided?

Trying to dial in your rehab is kind of everybody’s first go- to and then overestimating ARV is really kind of the first easy thing to get messed up. I think everybody gets a little too hopeful, gets a higher ARV than they can or puts in a higher ARV than they can really get out of it. So maybe trust your local agents, trust other people around there. I mean, at this point you can just about get your AIs to pull comps and estimate your ARV based on your scope of work. So maybe try that first. Simple way to get an ARV right. That’s probably the easiest thing to get right, to get your ARV right. The biggest hurdle I think usually is probably managing contractors and subcontractors.

In this business, there’s a lot of different ways to make money. There’s a lot of different avenues and there’s a lot of people that are in it full-time. There’s a lot of people that are in it on the weekends. What do you think separates the top operators from everyone else in your opinion?

Probably hustle. People who are out there getting it done on a daily basis, whether they’re working a nine to five and then working on their own thing a couple hours before, a couple hours after, and then maybe on the weekends too. I mean, we started out and my wife was working, I was working and we would do rehab stuff on properties after the nine to five, before the nine to five on the weekends. We still hustle pretty hard. Every once in a while we’ll sign up and tell our short term property manager not to do cleaning because we’ll do the cleaning. Do we need to do the cleaning? No, not really, but we feel like it gives us a chance to get in there and make sure that things are being done right. We can see if these cleaners have cleaned the oven lately or if they’ve forgotten to do this or forgotten to do that or if they’re maintaining supplies or et cetera. All those things are things that are pretty easy to do. I mean, if you can clean your own house, you can probably clean somebody else’s house so you can keep an eye on your investment that way.

Yeah. The word success is a very intriguing word to me. I feel like everyone kind of defines it differently, measures it differently and strives for it differently. How would you say that you define the word success, measure it, and then strive for it?

That’s a super loaded question. I mean, lately as I’ve gotten older and now I have a nine-year-old daughter, I’d say success is probably more about spending time with my wife and my daughter. I guess I’d probably say figuring out what you want and going after it is probably success. People will come to me and they’ll say, “Well, how would you do this? Or how would you handle this? ” Or, “What would you do about this? ” And it’s more about really what you want. I know people who live off of one rental and they own it outright and they don’t care to do anything else. I know people who love their W2 job and want to stick with it, but also know that they kind of need to build some passive income, residual wealth, whatever you want to call it on the side and they figure out how to do that. I guess success is figuring out what you want and going after it. But then also I think you have to kind of decide if you’re actually happy or not go back and reevaluate and say, “Okay, I wanted to buy three rentals this year so I can pad my retirement, pad my income, whatever. I did that. Do I need to buy three more next year or can I rest a little bit?” And I don’t think there’s anything wrong with resting a little bit. I’ve gone through times in my life where I’ve backed way off. We had our daughter and I was basically the primary caretaker for, I don’t know, two years, three years and just basically maintained my portfolio. Had property managers that I kept an eye on, made sure maintenance got done, but didn’t really build and I was fine. Two, three years with new baby and get to take advantage of life and take advantage of what you’ve already built.

That’s awesome. That’s awesome. If you were going to start from scratch today, you get to keep all the knowledge that you’ve learned over the years, but the whole business goes away, the portfolio goes away, what would you focus on first to rebuild?

I kind of mentioned I’ve been really deep into AI for the last year, year and a half. If I didn’t have any real estate holdings, I might not go back into it. I might just Keep going down the AI path. I would probably definitely go down the AI path, but I’d also probably maybe just do some other big W2 earners and just invest passively as an LP, maybe buy a rental here and there. I’ve never really been one to do it, but I know people who really love buying a new house every, what is it, two years gets you the tax breaks. I think it is off the top of my head. So I know a lot of people who have just kind of done that. Every two to five years they’re buying a new house. Maybe they’re keeping the old one, maybe they’re selling it. I knew a couple who did that in Boulder for 10 years, 15 years. My wife and I were always like, “Wow, you’re moving again. Didn’t you just get settled?” “Oh yeah, we got settled. We rehabbed the whole property and now we’re on our way to do another one. “And it’s like, ” Wow, I don’t think I could move that way. “Of course, now they’ve got a kid a little younger than ours and now they’re settled into one property. So maybe once you reach a certain point in your life, you just settle into a property and not move on.

Yeah, 100%. If someone’s interested in learning more about what you’re doing with the AI stuff or more interested in the real estate stuff, where can people find you? Where can people reach out to you?

LinkedIn’s pretty good. Just Matt Shepherd on LinkedIn. I’m on social medias. Facebook is Matt Shepherd real estate investor. LinkedIn’s the same or sorry, Instagram’s the same. And then, I mean, email’s always pretty easy for me and that’s Mattmat@amscapitalc.com.

Awesome. Cool. Any final advice for investors that are looking to grow, scale, or maybe even simplify their business?

I think I’d probably go back to finding out what you’re passionate about, finding out where you want to be, finding out who you want to be. If you’re passionate about short-term rentals, do short-term rentals. If you’re passionate about fixing, flipping, do fix and flipping. I don’t think there’s a bad way or a bad idea right now. I think you can make money doing just about anything as long as you’re in there working hard on it and passionate about it. If you’re passionate about it, you’re probably more inclined to work hard on it. I love

It. I love it. Well, Matt, thank you so much for taking the time and sharing your wealth of knowledge with us and we’ll see you guys next time.

Yeah. Always appreciate the time.