Matt Owens on The Hannah Hammond Show

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I think we're good to go.

All right. Welcome back to the Hannah Hammond Show. I'm here today with my friend Matthew Owners, the founder of OCG Properties out of California. And he is just an absolute powerhouse. CPA turned real estate mogul Red rich dad, poor dad back in 2006, similar to my story and everyone else is out there in real estate, right? And ended up quitting his CPA job and got into fix and flipping with his brothers and he's now flipped over a thousand homes. He has over 1500 doors of multifamily and single family in his portfolio. He has a private lending fund. He's lent over 500 million to real estate investors across the US and now they buy notes, they do accounts receivables, lending, they're even in law firm litigation financing and cannabis farm financing, all the different things. And so you're just a total beast, total entrepreneur. You've learned the tax code, you've learned the investing we world and really mastered the game. So excited to have you here on the show today.

Thank you very much. It's really funny you say all those things, but all I hear is, oh, I had a pain on that instance and a pain on that instance and how did I get through that piece to get to be able to do that much right. When you deal with 500 million lent out to flippers, you've seen a lot of problems, you know, and a lot of headaches that you've had to deal with. So. And that's what I think makes you strong in, in business and that kind of thing is going through that adversity and stuff. And I know you've had your fair share and we all have in real estate, so.

Yeah, no, it's, it's so true. It's like the amount of success you will have in your life is purely a reflection of the amount of pain you can handle. Because it is like day in and day out and you just start to become delusional to the point where you just enjoy it. You're like, it's not even painful anymore, just numb to it, right?

You start, you start laughing it off after a while. You're like, I just had 12 problems on since, you know, from noon on a Monday, you know, and. But then you realize that, hey, you're growing through all that and it's making you crazy strong. And you know, I think when, when you have certain things happen in your life, they're eye opening moments that are really your catalyst to become completely financially Free and be able to do more and have the mindset to know that hey, I just got through that. Why did I beat myself up so much? You know, like it was, wasn't there was. Wasn't that much that changed during that process. Right. So like as far as a day to day. Right. So, so it's really.

No, it's so true. And it truly makes you stronger. And even, you know, a lot of people are feeling the difficult markets the past few years of just a little stale, a little stagnant. Some people are feeling a lot of pain, some people not so much. But it's, it's just a good reminder of the amount of strength that you develop when you get to go through hard times. Like that's what gives you the real confidence to be able to be the best and understand that you can get through any market. Right. Because just like you experienced and we'll dive into your story. You. You thought you were genius that you said I thought I was a Genius back in 2006, 2007, 2005, that area before the great financial crisis. And then all of a sudden you lost everything and then you had to rebuild everything from that. But when you're in that moment where you're just kind of like getting lucky and riding a big wave, you're not actually building the skills and you're built on a house of cards. And so it almost is preferred to me to be able to build. That's why I launched a national debt and equity capital advisory firm. And in the middle of a very challenging market. Cause I'm like, I know if I build a good solid foundation now, I would rather know that I can get through a hard market and ride that back up versus build in the middle of a peak. And then I don't actually have the foundation to be able to sustain and weather the storm and really be able to sleep at night because I never know what's coming around the corner. So walk us through what that was like for you. Like when you, you know, you obviously came from educated parents. They were engineers and attorneys, I believe, you know, that type of background. And then you were a CP. Yeah. Engineer and CPAs. And you became a CPA and then you decided to quit your job, which is the whole thing like rich dad, poor dad. Right. And a lot of people want to do something like that. They want to become an investor, get on the, you know, the, the bi side of the, the cash quadrant chart instead of the. Not the cash flow chart, but the SBI chart instead of the, the E and the S. The employee or self. Self employed. Right. So what did that journey look like for you? What was that epiphany moment where you're like, I'm gonna quit? Like, did you start investing first or did you just save up some nest egg? Like, what was that journey like?

So I think, I think the first thing that a lot of people need to realize is that, you know, you don't know what you really want to do in life until you start experiencing different businesses and different strategies and, you know, understanding, you know, life a little bit more, you know, like in your college. I became a CPA because they didn't have architecture school there. My dad was a cpa and I wasn't going to leave the school because it was girls in squirt gun fights all over the place. That's how stupid I was when I was 18 years old or 17, like, I'm just going to do the accounting and economics, right? And I had no idea other than it was familiar from my dad, right? And. And I actually graduated with a degree in economics and accounting from UC Santa Barbara, went to work at a CPA firm and was doing government audit and you know, tax and audit for different companies. And it was the most boring thing on the planet, right? It's. You're just not your personality or just not fun to do. Even though it was great education and honestly looking back, it's the backbone to business. The accounting aspect of this and understanding, you know, what actually the numbers mean and how to, you know, break things down. That's why I'm so good at financial modeling now is because of that back back practice and seeing the internal controls on the audit side of things for companies doing taxes on big multifamily. And seeing that aspect, I didn't realize what I was really learning. I just was like, this is boring. I don't want to look at this anymore, you know, And I was in so much pain that I'm like, should I start, should I do a bar or like start a bar or a restaurant or something? I had no idea what else to do. And I ended up reading Rich Dad, Poor dad and thinking grow rich. And it just kind of started changing my mindset. And then I went to a networking event on real estate and I knew immediately that's the direction I wanted to take. I was super interested in everything that they were saying and really trying to take everything in. Immediately went and bought books and went through and bought. Went to other networking events out there and started getting involved and ended up quitting My CPA firm job after I got my first flip under contract that I was expecting to make 30,000 on and I made 20,000, it was in Memphis, Tennessee. And you know, I realized we did analysis on the market and determine, hey, there's high cash flow there as a backstop if the flip doesn't work and things like that and didn't know anything about the real estate in general. Learning lessons like contractors and property managers and people will steal from you. Oh my goodness, really? You know, hey, don't go buy in the hood because the house is $15,000 and you can put 20 into it. Back then you could do a rehab for 20 grand. Now it's like 80 or 100 at least. But you know, don't do those low end houses that the neighborhood's going to steal from you and rip everything off before it's even finished with the renovation. And you know, the tenant base is very difficult and you know, defaults on you and they're judgment proof and you know, all these little things that you're like oh God, how did I not know any of that? Right? But you just learn, right? And you push and push and we, I quit my CPA firm job and then my two step brothers quit their jobs and they were electricians or they were electrical engineers and computer programmers. So none of us had personalities because I was the CPA trying to be, I'm supposed to sell everybody, right? And, and, and we got an office at the World Trade center in Long Beach, California, like the 23rd floor for like five grand a month. We started flipping like five houses a month and thought we were dope. And we're like, oh yeah, it's like 2006, the best time ever to be flipping. And you know, the lending was easy. We would sell or finance them. They'd immediately rate in term, refinance and pay us off because appraiser, appraisal of course was 20% higher than you know, what they just bought it for, right? And, and then we would do that over and over again and we were moving a lot of properties really quick. And you know, I thought I was a dope business owner because my bookkeeping was done and you know, of course it was ready to go. And that was my, my, my, my ego at the time telling me that, oh, you're doing great, you know, and, and then you learn the hard way where all of a sudden the lending market stopped. And when the lending market stopped, we, we went to like, we had already sold these properties off. We had like 35 of them that we had under contract or had under our name that we were financing, we had raised some money from some private investors as well for that purpose and realized we couldn't get any of them refinanced, none of them at all was going to be refinanced. And none of the brokers, we took them like 10 different brokers, none of them actually were able to get that deal done, you know, and we ended up having to take them back, resell them as a fire sale and lost all of our equity. And we were about to lose about a couple hundred grand of our private investors capital as well. And so I took it out at a 790 credit score. I took it out of my credit cards, paid them back and tried to float with that ship with that debt. And but what was interesting about that, even though the massive amount of pain, losing the office, like breaking apart from my stepbrothers that were my partners at the time as well, because we just had to float on our own. Hunkering down and trying to make it work just out of my own house, right? And living there, doing that, you realize, hey, taking the hits for those investors, even though I was just like, these are my friends and family and people that I know, I can't let them lose money. And that was my mindset at the time. It catapulted me to another level where they started telling all their friends what they did because they found out the real estate market, you know, took a hit six months earlier or six months later, you know, after everything really happened and what I did and that, that, you know, catapulted me to a ton of additional investors. And we opened a nonprofit that taught financial education and real estate education and just other people and experts that we would bring in to teach. And through those methods, it catapulted us to what we've been able to accompl now and really taught me that hey, you can stand back up after getting punched in the face. And that's really probably the biggest lesson to learn other than, hey, protect your investors capital at all costs because that capital is going to be there for you long term and it follows your reputation for the rest of your life. So do everything you can to protect your investors. So, and it was a life changing thing. It was probably this second to or third to getting married and having my kids, you know. So yeah, my wife is going to hear this, so I have to make sure.

So yeah, no, I think it's, it's so important. Those are the moments that really build us and shape us into a better version of us. Right? And. And they're. They're so horrible to get to those rock bottom moments. I. I bet you that was a. Was that a rock bottom moment for you in your life when you were going through that?

You know, honestly, my ego was built on the fact that we were flipping houses. My. I had a, you know, amazing credit score. You know, I've never missed a payment of my life. I'm a cpa. You know, I'm great with the money and math and things like that. And so, like, after realizing that, my ego was just punched in the face right there. I just, you know, my ego was just destroyed, which was probably the best thing that ever happened to me. Because then you're looking to the side all the time saying, hey, don't be stupid. You might do great on a deal, but you might also be stupid on a deal later too. So, you know, make sure you're. You're backstopping yourself from a financial standpoint. Make sure that you realize that you can always take another lesson and always take another hit and be looking for that risk. Mitigating factors that you can put in place to, you know, help the deal succeed. Right. And help it not take a major loss or something along those lines. Right. So that is really, I think, the biggest benefit of. Of learning these lessons the hard way, you know?

Yeah. And that's always been one of my biggest fears to get over is like, I never want to let anybody down. I've been.

Yeah.

Historic people pleaser throughout my life. And that's always the biggest fear because it's like sometimes when you do everything right and you're doing everything, you know, you're not. You're not frauding anybody, you're not scamming anybody, you're working your tail off. Your. Your investors get the majority of the returns, and you're putting in all the work and all, you know, you're grinding and you're putting your money on the line, too. And then sometimes it still goes wrong. Like, it. Everybody lost in 2008. Everybody who owned property pretty much lost everything. Right. And so it's just tough when you get in those situations is like, to have to look your investors in the eye and be like, fortunately for you, you were. You didn't have so much money that you were not able to pay it back. And you did, you did put yourself in that position to actually honor your word and continue to build that reputation, because as you said, it takes decades to build and one second to lose. And you just can't really get it back after you lose it. So it's awesome that you did that and it catapulted you to continue to grow.

What's, what's interesting was the fact that, you know, I thought I knew economics at the time, but, and I've had friends now that have told me that they saw that coming. They looked at the data and that's what they were reviewing by that aspect, by, by looking at the data, they knew that everything was overpriced. And I was just too new to realize that at the time and probably too excited and gullible that things couldn't change in the market, that things stay consistent, not knowing business yet. And so it really became an economist at that time and realized, hey, you should be paying attention to that data. You should be always looking at that consistently to be able to help you mitigate that risk. There's always black swans and liquidity issues and there's more volatility now than ever. So it's even more important to be really focused on the data with all the hype out there all over the place and, you know, things that one article could paint something in one picture while the same data is showing completely different article and a different picture and a different opinion. And so making your own opinion based on that data, I think is really important. And listening to a bunch of different people that you can gain knowledge from, I think is really important. Analyzing the markets that you're in and really seeing what's happening in that particular market versus even nationwide is key across the board. Right.

So yeah. And yeah, data can be so manipulated and a lot of data is just lagging indicators. Right. So it's hard to really get a good understanding of where we're really at, but you can feel where we're at more than what the data says where we're at, in my perception. Right.

It's like you can watch, you really can. I mean, consumer sentiment is out there. Just talking to investors, talking to people, see how they're feeling, see how the lenders are reacting on your side as well, and seeing how your personal business relationships are acting and what their requirements are across the board, I think is really key. And learning from all these people is so important, it's insane. And, and that's, that's just seeing what's happening in the market, let alone if you make a boneheaded mistake yourself, you know, for your own project or do something wrong. I, I had a 12 unit deal one time that I lost 50 grand on, on the deal and I thought I was going to make like $250,000 in profit on as a small like 12 unit type of deal is in the Memphis market. When I where I first started and underestimated the rehab and sold it for a fifty thousand dollar loss and I remember telling my wife, hey, put your hand on my chest, I can't breathe right now. I just lost a salary today. Like that's you know, back then. And, and then I remember getting up the next morning and I had just done a bunch of work trying to sell multifamily and I got another multifamily under contract that I was going to be able to wholesale and I wholesale that made all that 50 grand back within a couple of weeks. And, and it was really just a mentality switch at the time saying hey, don't feel like crap and keep your head down. When something happens, look up and look for that opportunity because it's out there and you can't find it. If you're negatively impacted by something that happens and now you know, you have a $5,000 loss or something hits you on the construction side of a project or something doesn't happen, you're able to emotionally wipe it off your shoulder and be able to focus on the solution. And you realize you have to train yourself to do that because it's going, you're going to take that hit. How do you train your mind to be able to say no solution? Here's 10 things, let me just write them down. So I stopped stressing about it, let me go meditate for a minute, you know, and, and then be able to focus on that solution. And writing them down really helps to train your mind to do that, which is really I think the key to long term success because you're just not going to give up, right? You're going to say no, there's a solution, I will work towards these things until something hits, you know, so it's really interesting.

No, I was just speaking on a panel about the, the personal side of investing and how investing is so personal, you know, and I think to sustain as an investor, I mean in anything. But we're talking about investing, right? Building wealth, investing in real estate, investing in alternatives, all these different modalities to, to be able to sustain, you have to be able to handle the pain and you have to be able to handle the pressure and not get emotional about these losses. And I remember my investing journey started right at 18 years old. I was opened up a stock account, started, bought my first property, you know, sold my first real estate. Used the commission to buy my first property. I was just like, gung ho, let's do this. We gotta hurry up and become a millionaire and have freedom and happiness. I was like, what? I thought everything was going to turn out to be like. And I remember I was 18 years old. I, I was day trading stocks while I was in engineering school, college. This was the, I think the summer before I started college, I was day trading stocks and I lost $3,000. Mind you, I came from like nothing. Came from nothing. $3,000 was a lot of money to me. And I remember crying in front of the screen. My brother was there in like three minutes, my stock goes down $3,000. Because he was like, Hannah, I just made three grand on the stock. And then I was like, I'm gonna get in. But I had already missed it, you know, and just this emotional roller coaster and I'm screaming and crying in front of the screen and I'm like, oh my God, like that feeling you said when you just like lost the salary, you're like this, my life is gonna end and how can I screw that up? And I never want to feel this way again. And that type of reaction is never going to allow you to sustain in, in this journey, right? So now I'm like, I don't even want to, I don't even want to share how much money I've lost at this point. But now it's like it doesn't even phase me. It literally doesn't even emotionally phase me. Like, yeah, it doesn't feel good to lose money, but I know that being in a negative energetic state is not going to create any better outcomes. And so I either win or I learn. And so what do I learn through the situation? So like when I started private lending back in 2020, I, I, I made some bad loans. I pretty much lent my, my personal money, you know, anybody with a heartbeat and an APN number. And I was like, hard money lender, here's the money right away. Very high interest rate, extremely high short term loans, small balance. And I still have hundreds of thousands of dollars out there that I'm never getting back for sure. And, and though those ones though didn't even phase me, I was like, okay, well I was an idiot. Now then I learned through that how to underwrite, like the importance of underwriting a borrow, the importance of underwriting an asset, like all the things not to do wrong. And now it's just a learning lesson. And then that ended up leading me to launching a national, you know, Lending company. And that company ended up making a lot of money very, very quickly and it repay for that. So I think part of it is you have to lose tens of thousands to make hundreds. You have to lose hundreds to make millions. You have to lose millions to make billions. And that's just the way it works. And it's just part of the lesson and part of the journey. And the key is doing everything you can to learn from the mistakes and not continue to make the same mistakes over and over. Because that's where you, you know, you fail. You actually fail.

Right, right. It's, it's really amazing. Exactly what you said. You don't, you don't realize that though that you're going to have to take those hits. And I think if people realize that up front, they can gear themselves towards that. Right. When I was taking hits in the past, I had a contractor steal $500,000 from us. And you know that that hurts. You know, half a million dollar hit when you know that you're lucky if you're going to get anything back at all on any of this stuff. And especially when you lend money too. Like you realize you can't trust people. You got to make sure that there's checks and balances and things like that in place when you start being a lender. I've taken the same hits on the wrong people, the wrong properties, you know, and stuff like that and, and people don't do what they say they're gonna do. Right. So. But yeah, I mean at the end of the day you realize that these, these hits are what make you. And if you can gear your swords yourself towards that, it's towards changing your mindset. The sooner the better. You're gonna have those emotional breakdowns and stuff like that and you know, and still have pain from the past that's going to come up and mess with you mentally is just a matter of how do you change your mindset to be more positive? I utilize a lot of breathing techniques and meditation. I follow Wim Hof and stuff like that. And it really helps just every morning to do breathing exercises for the first like 30 minutes of the day. It's massively stress reducing. Especially when you wake up in the middle of the night and you're stressed out about it. You're like, no, just start your breathing then because you're not going to be able to get this out of your head unless you like meditate or something first and get it out of your head and realize that hey, you're just beating yourself up for no reason, because most of the time there, it does no good and actually harms you because it stops you from taking action in other ways. You know, and that's what I realized is, you know, I beat myself up for a week recently, a couple months ago, and I was like looking back, going, why? Why did I do that to myself? You know? And you realize that, how do you dial yourself back and dial yourself back? And it's through practice and meditation and you train your mind to do that after too many hits and you're like, dang it, I don't have to have another hit to learn this, right?

I know it's rough. And when you're in those periods of time where you just feel like everything's fighting you and the whole world is out to get you and you're working so hard and money's going down the drain and you don't know how you're going to get to the other side. And it's, it's, it's exhausting and defeating. But that's what I always work on that energy stuff too. And I preach about it to my audience and to everyone every day and to myself. I have to keep drinking my own Kool Aid, right? But because the storm is here no matter what, right? Like, we got to get. The only way out is through.

So that success, though, is right on the other side of that too, which is really cool. And you know, we've now raised over $200 million for different projects and have, you know, we've just finished a 38 million dollar raise on an accounts receivable financing fund that we're going to be making a ton of capital on ourselves and huge win after our investors get paid, of course. And. But there's strategies like that where you're like, wow, I went through pain and then now is the time that I get to flourish. Because everything's all cyclical, right? It's all energy one way or another. And so when you realize that and you push through and you get to that success, you're like, I needed to go through that. That's super, super important. And there's so much opportunity out there right now, it's insane. And what are you seeing out there as far as opportunity goes in your space? Because I'm, I'm seeing a lot on my side of the multifamily is coming back and a lot of people really much more interested in these value add plays now. The interest rates are softening a little bit or a little bit down from where they're At. But it's really cool to see the opportunity out there and kind of gets me a little bit excited to see, you know, things starting to come back and open up a little bit compared to the last few years of the interest rate adjustment jolt, you know?

Right. No, it's. There's so much opportunity in there. And I feel like all of the. What my. One of my mentors tells me this too, is all of the greatest wealth is made in the greatest fear, you know. And so when there's markets of volatility, markets of change, we have lots of change happening. We have AI happening, We have global, you know, all the things happening, we have just change, change, change, change, change. You know, people, some people losing properties, properties are people, some people are in distress, but interest rates are softening, like, all these different things happening. And in those periods of change and volatility and fear of the unknown is where the greatest opportunity lies to actually create massive wealth. Because there's nothing worse than a stale market. And we've kind of been in, like, a stale market the past couple years where it's like, not a ton is happening. You know, it's not dropping really. It's not rising really. It's not like, not a lot of people have a lot of money just sitting on the sidelines. A lot of people just kind of like, I'm just waiting it out. And that's the worst kind of market. We need change. Whether it's going down or whether it's going up, I don't really care. Like, we'll. We'll navigate it. Obviously, we always want it going up, but we know everything in life is cyclical. Cyclical. And so I'm, you know, I'm excited for the opportunity now. It's never good to see people in pain, and it's never. It never feels good to see people lose and to see people in stress and to see people lose money and to have markets reset and certain buckets get wiped out, it's always not fun. But unfortunately, it's just the nature of the beast. And that's where we have to develop as humans and as companies and, you know, individuals, teams, and try to mitigate that as much as possible and try to be able to position ourselves in a way where we don't get wiped out. You know, we may. We may lose some money, we may go through some tight times, but hopefully we have enough on the sidelines and we've developed good enough teams, good enough relationships, good enough processes and reputation to be able to seize those opportunities and Take advantage of those dropping prices and in different asset classes or being able to pivot like you did, you added different verticals to beyond just real estate equities or just real estate lending. You added some different verticals and you were able to pivot and take advantage of those opportunities in the markets. And I think that's so important is so many people. I don't know if you've read, have you read the book who Moved the Cheese?

No, I haven't yet, but I have it in my, in my room right now, ready to read.

It's like, yeah, it's a little, little tiny book. It's like a 10 minute read. But basically it's like, it's a story about rats and they keep going to, to the same place that the cheese was always put and somebody moved the cheese to a different location. So but the rats just keep going to the same location trying to eat and there's no more cheese there. Right? And so our ability to be able to pivot and see, okay, the cheese has moved like the opportunity has moved. Just because this is the thing that we've been doing, like for you, you were a CPA just because that's what you were trained in and what you studied and what you spent all your time doing. You realized the opportunity had moved into real estate and you took advantage of that opportunity. And then real estate market crashed and then you immediately, you pivoted again and said, okay, where's the opportunity here? How do I rebuild? How do I teach people how to manage their capital? How do I teach people to rebuild in this, this environment? And so that, that is just such a gift and such a strength. And right now more than ever, the cheese is moving fast and we have to keep moving with the cheese and not just do things because it's all we know or all we've done.

It's, it's really, really interesting. You know, we, we, you talked about the, the change in the multifamily market and stuff like that and the interest rates and you know, there's this lull period where a lot of the people you're talking about were, they're operators that are just fixing problems so they're not buying anything new. There's like a stagnant market in that time. And then there's, you know, of course investors that took a hit that didn't want to redeploy capital into those types of assets for a period of time because they were hurt, you know, because of that change in rates and stuff. And, but because of that you're seeing a lot more alternatives open up. You're seeing a lot more people maneuver in the market in different real estate asset classes and outside asset classes and things like that. You know, we even did that on the, on the real estate side where we pivoted a lot into higher end short term rentals where we started basically doing turnkey short term rentals where we do the financing and have it already in these high end super properties that produce like a 10% cash on cash return. Because how are you going to incentivize investors to come into the market, you know, if, if they're not happy with the, you know, the current, you know, risk profiles on the, the multifamily deals that, you know, may come with a 6, 7%, 8% preferred return or cash flow and then a 15% IRR or something like that on the back end if they think that is too risky. How do you as an operator change to be able to hit the right market based on the investor's new risk profile? So you start focusing on assets types that can then position yourself to have a higher return. And that's what we had done on, you know, the short term rental side of things as well as on the financing side, the litigation financing, the cannabis business that I mentioned, where, you know, we're doing a vertical on that, it's a different income stream that we focus on and I'm a cpa, so the math was like too good to pass up on the cannabis business. It was just, it wasn't my cup of tea, but it was definitely, the numbers were incredible. So, so we're excited about that piece. But you know, going into these verticals that can produce a higher return at the same time as, and adding those to your portfolio at the same time while you're waiting on multifamily to come back, which I think it's really starting to pick back up again. I'm seeing some different value adds in certain markets that I think are really quality. I know Phoenix, for example, has a lot of, you know, population growth and stuff like that coming to the market that, you know, people are excited about. So, but you know, shifting and sticking and moving as part of the process, even your investing journey as an individual person, as an investor, you know, we went from a lot of single family flips and direct lending into no more flips, just some bigger development projects and no more direct lending. We're just buying debt because I understand how hard it is to do what you guys do on that side and the origination aspect and the setting up with all these different lenders involved, it's a ton of work and you know, I have a 7 year old and a 10 year old now and I just want to spend time with my kids and go on vacations and things like that. We just went to Vietnam. I went with my son for three weeks out there with just me and my son to go take a trip and you know, bond together and you know, that's what we're supposed to be doing as real estate investors and being able to have that extra time and that, that freedom to be able to travel anywhere in the world and live wherever you want, which it's kind of hard not to. In Da Nang it was 67 a night for a two bedroom suite on the beach with wow, free breakfast. I was like, yeah, I think I could live here for a few months a year, you know.

That's awesome. You probably saved some money. Yeah, it is incredible.

So but you know, being able to have that free freedom, remember to build the life we want out of this business and you know, that's what we all strive for as business owners. Even though we can fall into the self employed trap a lot of times and keep doing instead of. But I think now with AI and things like that happening, we're going to see a lot more speed of freedom and time freedom from entrepreneurs and business owners and you know, it is going to go at that next level speed out there with utilizing AI now where I, it's, I'm a little afraid we won't be able to keep up, you know, with that aspect.

So how are you implementing AI in your businesses?

So some of the things we're doing right now is we're using it a lot for marketing. So we have different, different videos we're creating on every single one of our investments. I'm translating some of my videos into multiple languages also because right now we have primarily English speaking clients. We've done a lot of business with people in Japan and China where we have translators set up and things like that. But being able to customize content, customize deck page decks and things like that for our investments and being able to streamline that process for educating multiple languages really opens up the door to a ton of additional clients for ourselves and investors for our own deals and that we are consist consistently raising for. So implementing that on the marketing side and being able to do explainer videos and that type of stuff has been really key. We're also utilizing forms in a lot of ways and technology from, from a communication Standpoint and auto emails going out, email sequences that are going out and customizing a lot of our content. With utilizing AI, we still have to go through it and add some personality, but that's even getting better to say write it in. My personality and AI will go through a ton of my emails and I realize I'm using way too many LOLs and emojis in my emails. But you know, it's like cut that out now. But, but you know, some of those different methods as well as we're actually putting together different hooks using AI there, we're implementing a strategy right now from an investor standpoint that will target exact specific avatars that we can find out there that might be accredited investors that are attorneys for our litigation fund that we're doing for an example. And it will deep dive about everything about that particular client and find out all their, their personal info that's out there online on their LinkedIn, on their pages and things like that that they're showing about their life and customize content to go to that person specifically including customized hooks that can be done, utilized for that person to kind of get to know you and develop the relationship at a 10x speed where you're actually focused on that particular person. Of course doing research on who the person is utilizing AI, of course before you talk with a client is, can be done much more effective. Data and news and information on economics can be at your fingertips. Now for a morning read every time to keep yourself up to date on those quarterly reports from an investor standpoint are getting automated as well to be able to take updates and put them into the right formatting and just streamlining different pieces of the operations across the board on asset management is a massive win for us because it cuts down labor significantly across the board. So you know that, that those are the types of things that we're really focused on. And I'm trying to, you know, right now convince my brother, which I call him a money Nazi, to go to another AI mastermind at the moment. So just to dive deeper into these things. So he gives me crap for spending a couple grand on a credit card on a monthly basis. So, you know, well, he handles all the bank accounts for the company, so.

Well, you know what I mean, if you're not on top of AI, you're going to be in big trouble. So I, I'm doing the same thing. I have an AI mastermind, Joe Stulte, my friend is coming up in Dallas in March. So I'm excited for that. But yeah, I, I have I. I'm in AI every single day, researching everything that I possibly can and figuring out how we can continue to let it optimize everything that we're doing. And that's the hardest thing is just trying to keep up while running your business, you know, and still trying to keep everything together and optimize for new things and test new things. And then, you know, it might not be quite there yet, or you don't know how to use it properly, right? And then you're like, oh, this is stupid, or this isn't there, and. And then the. A week later it's completely advanced and then you have to like, go back and try to try it again. So it's. It's super exciting though. I'm. It's amazing, honestly. I'm like, I asked one of my employees to do something and I think it took her like 20 hours. And I was like, hey, I just had Claude do this for me in three minutes. So next time, like, let's do it this way so we can, you know, have you be even more efficient, more productive, and you don't have to do all this boring stuff that AI can do in three minutes. And then you just manage it, right? So it's super exciting.

If you think about, if you think about the time savings, I have a. A friend of mine that's one of my business partners that he actually had AI Chachi BT analyze how much he's saving on an hourly rate over the last month and did it for like the last few months. And it basically, from a marketing person to attorneys writing contracts for an admin person, all these different job responsibilities, it broke it down. And he literally saved $35,000 for the month of actual labor hours using this already when. And he uses it consistently even more than I do. And you realize, wow, when you put the numbers to that, that's really an interesting motivation to really get your stuff together and focus on AI, you know, so.

Oh, yeah, it is. Yeah, it's exciting. So you have said that your biggest mistake was selling a thousand properties that you have flipped. So explain that and what, what you do differently now.

I tell myself that it's like Bruce Lee's Thousand Kicks to become a specialist. And that makes me feel better. But I did the math and based on what they would be worth right now, I. It would have. It would have made me over $50 million more money by holding them than it would, you know, instead of. Instead of flipping them. And so of course, when I do the math on that, I'm like, oh, why did I not just know the skill set of raising capital to hold versus thinking that I had to flip to make the money now to live off of, you know, even though that's crazy inefficient from the tax standpoint and everything else, you know, and realizing that, you know, on some of these properties I made nothing, I just did all this work for nothing and I didn't make anything on them. Right on, on, you know, whenever you take a hit, you know, maybe it's 1 out of 10 or 1 out of 20 or something that you don't make money on or something like that after you have a good system going. And we were doing 10amonth and it was a massive beast and I gave away a lot of my life to that system, you know, when you're learning that business. But you know, it takes a lot to do that many deals on a monthly basis. And looking back, there was so much labor that I could have just held on to, especially with inflation going long term. And when you look at the decimation of that debt over a period of time, the raise of the rents and the cash flow over a period of time, that the efficiency of just holding long term and you know, front loading, the cost segment tax benefits to not pay tax now, and the long term inflation hedge that they create for you, it really is one of the biggest long term wealth building tools that, you know, I could have ever done and I held a bunch of properties but you know, holding the thousand or plus of those would have been ideal. Looking back now and I don't see any way that that's going to be different in the long term future with the amount of money they're printing long term, you know, unless they make it illegal to own property, you know, which that could happen too, right?

Let's hope not.

Yeah. I know democracy doesn't die. Universal basic income with AI may be coming, but there's still going to be entrepreneurs out there finding a way to make money.

Right. Elon says, you know, work will be like a hobby, but entrepreneurs are still going to pick up that hobby.

I just want to farm in the middle of nowhere and have robots doing the farming for me so I can, you know, just relax.

So I'm actually very excited to get a robot. I cannot wait. Oh yeah, I love people, but some people I could definitely just do without. So yeah. So selective choice would be awesome.

Yes.

Yeah, I'm like. Anyway, I'm not going to go down that tangent, but. So when did you shift to capital raising? And for Someone out, like, you've raised now $200 million of capital, but when you are just going to get started raising that first check, like, nobody wants to be the first person to bet on you, right? So, like, how did you get into raising capital and how did that escalate over. Over time and. And how do you continue to raise capital? So bring us back to the beginning for someone that's out there just like you, like, hey, I don't want to have to flip and fund all of my own deals, and I want to be able to raise capital and win for the investors. What did that journey look like for you?

So I think, you know, losing everything in the beginning was probably the biggest catalyst to this because I realized I don't want to rely on the lenders and the banks anymore, because I don't. I. They're not reliable, right. They're not going to be there for me if something changes. And so I just started really focusing on developing relationships constantly. Where I was going to five networking events a week, throwing two educational events every single month, including a live Q and A, or like brunch and learn on Saturdays, which is like once a month as well. So like three live events that I'd be throwing myself, plus going to like four to five networking events every single week with regard to the, you know, relationship development out there. And then I started a nonprofit called for investors by investors with a couple of friends of mine or partners of mine that, you know, had it running at a small meeting. And we expanded it from there where we were running two events a month, doing this educational aspect where there's no sales pitch allowed at our events. And we would just teach and we'd get, you know, 30 to 50 to 100 people there consistently every single month since 2008 is when we started that, that, that event. And so I started being able to raise consistent amounts of money from the people that would go there. Because I'm in front of the room, just teaching them consistently and then getting them into my database over the long run and being able to nurture and teach them and get to know them, being in front of them over and over again for 12 months at a time, a lot of people start to develop those relationships and then they start to refer you other clients and friends that they know and that type of thing. And that's how I really started developing. And I was only doing it for my own deals initially. And then I started being able to say, well, I have more capital now than I have deal flow, and I don't really want to add more deal flow. Let me start lending that capital out to flippers in different markets. And you know, I ended up taking the hits on those and paid my investors anyways and took them over and re flipped them myself when deals went bad in the beginning, learning lessons the hard way and kept paying them anyways because they are going to be there for me. And, and then we learned from that. Then we started going and, and creating more of a, a structure where I wanted to pivot away from direct lending, away from the direct flipping because it's so much work and I wanted to spend the time with the kids and everything and I was in pain again, you know. So it pushed me into finding strategies that could be more passive where I could just buy the debt and not have to do the origination or the servicing on that aspect and buy giant pools of that debt. And then on the other side of things being able to raise for different projects that are, you know, I'll say less workload for me where I'm lending to one company that is collateralized by tons of accounts receivables at 25% of the value of those receivables when there's an 85% collection ratio, right. And I'm able to make, you know, give my investors a 20 return and make a spread myself on those deals which hit all those metrics and those boxes. It was short term in nature, easy to raise for. You know, we also raising for our. Currently we did our first round for our cannabis farm. We're doing our expansion now round for that. We raised for tons of our promissory notes and really built that business up consistently as well. And then we have raised for mobile home parks in the past that we're actually operators of all of the deals that we raise for. We are primarily the main operators. I have teams that work with us, but I'm usually the manager involved in those projects and making sure that, you know, I have a CEO that's responsible for each one of those individual projects so that I can expand correctly and have the right team set up for every individual project that we do. But I like to be able to have that control as best I can when I'm raising millions of dollars for a project so that I can step in and solve a problem or have a ridiculous amount of collateral involved to be able to be comfortable to say I can take over or have some level of safety protection there when I'm doing these types of deals. So that way I can protect my investors and step in When I need to, if there's a problem, you know, we, we've had to put in an extra million dollars of our own capital into projects that, to get them over extra rehab or extra expansions that we're doing and stuff like that in the past. And being able to, you feel a lot more comfortable doing that when you have the control over the deal to be able to make those moves. And we know we have extra liquidity to be able to handle those types of problems. Not, not all operators do. So doing the homework on operators, I like to invest smaller amounts of money with outside operators so I can get a diversified portfolio of our capital. But then at the same time, if I'm raising millions for a deal, I need to make sure that I'm able to protect my investors in that, in that range and don't normally raise for outside people's projects unless it's a smaller amount or I can have some level of control over that, you know. So.

Okay, yeah, because I was going to ask because that's what's so difficult, right, Is the who, not how. So like how are you identifying the who's that you can really trust and have that level of control in while being in all these different things? Because we all have the same 24 hours in a day. And you, you know as well as I do how hard it is to build and scale amazing quality teams in multiple different verticals. And so I guess how are you identifying those. Who's those CEO? It's like, are you principal in all of these different companies? Are you, you know, JV in these deals and have this level of control? Are they already established and you're kind of coming in and you built that relationship with them or like how are you structuring this? Asking for a friend?

No, no worries. And, and that's, that's the key, right? You can actually structure yourself profit with not having, you know, any. You might not be the direct operator on deals, right. And, and there's a lot of LPs that go in and they raise a fund to fund structures and go in. You know, they've invest with us quite a bit, but they understand our operating expertise as an operator as a whole on multiple asset classes. So they trust us to be able to do that. So that's one way to bring capital in for your individual deals. But on when you're dealing with multiple operators, I'm doing six months of due diligence on these people that I. And, and testing them first. When we first started off with the accounts receivable fund. I first put in $250,000 of our capital with them and saw their communication, saw their process and everything that they went through and learned everything about the paperwork involved and all that stuff and the entire process, step by step. Then we went out and we did a fund two or a fund one where we did raise $2 million and then raised up to 5 million total after we saw that first tranche, you know, fully working and everything, and the operating capital. And so that took a few years to get through that process. Before we went really big with them on that process. It was usually starting off small, seeing how they communicate and how they solve problems and how, how they react to different situations before going bigger with them and then putting my internal team in place and even bringing in new team members that can help from a CFO standpoint, a COO standpoint, managing the spreadsheets and the tracking of these things and the major quality control pieces of each deal. And you set that up and then get reporting back to you over and over again. And even sometimes that doesn't work or the operator that you put involved doesn't work and you have to get rid of them and solve a problem and move someone else into that position that is going to solve that problem or step in on that angle to be able to put the right SOPs in place for that particular piece to work. Right. And you're dealing with problems. But that's why I have the COO to help with that and be the implementer while I can help direct and, and, and kind of look at it from a higher level to be able to implement those things. So I'm not having to be the doer at all times. I still do quite a bit. Trust me, you should step in and solve a problem. But not that I want to, but you have those people in place that, that do that for you. But it just takes six months of due diligence at least, and getting to know them before you start to want to work with them on those projects and make sure that, okay, well, what collateral is involved and what do I do if something goes wrong? Right. How can I take over and protect my investors if something is to go wrong on those projects? And it takes a lot of time and sometimes even with your own people that are working with you, you have to stick and move and change those relationships. It's a matter of what can you do in your legal structure. Sometimes it's a joint venture that you're talking about, but the direct access to the collateral as part of that joint venture, you know, other, other aspects. It's, you know, hey, if I'm going to raise X amount of money, I want to have this level of ability to step in and help from an operations standpoint and say so in your operating agreement already as part of the manager, you know, and having an agreement in place like that to make sure that you are not just relying on them fully and have no rights. Right. So that's the key is how, how can you solve the problem? If they're willing to be on board and I'm comfortable with them, then great, I will work with them. But I still want to be able to make sure we're on the same page of saying, hey, I have a lot of resources, I can help. I want to solve a problem and protect my investors. If some at all costs and most if they're not willing to talk with me about that and make me feel comfortable with that, then cool, no problem. I'll just go somewhere else.

Right.

So that's part of the process is seeing how willing they are to, you know, be flexible and make everybody comfortable, you know, so.

So are you still running your events or live events in your communities and education and all that stuff?

Yeah, we, we do. I handed one of the chapters off and I still run one of the other ones. I have a team that helps me with it. So we do that consistently. We have about 25000 members in Southern California with about six different chapters that run. Each chapter is run by a professional full time real estate investor that has, you know, 10 plus 20 plus years experience that is in the same mindset of no sales pitch. We actually just opened one, a women's one in the Phoenix area. So it's, it's brand new. So it's exciting to have some new people on, on board too. We had a women's chapter out here, but it closed and we're trying to expand a little bit just to get, you know, more relationships and pay it forward for people. And it's all a matter of the relationships in the room and it's, it's hugely valuable. We do that consistently. We put them all on meetup.com and just run them through that platform.

Is it OCG under that brand?

It's, it's under F I, B I or for investors. By investors.

Oh, four. But okay. Fibi. Okay, cool.

So yeah, it has all of our.

Chapters, but yeah, that's it. And did you ever go the institutional or family office route or you've just stuck to the retail channel? You know, regular retail investors.

So primarily the retail side of things, we are talking with some different family offices and some different investment banks and things like that. It's just a different structure to go through for them. But you know, being a cpa, I know how to, I'll say, come correct to them. It's like going to the lending side. Right. Like you have to make sure you're backed up, you have all your, your bells and whistles put together and all your eyes dotted T's crossed before you bring your package to the lender. Same thing if you would bring a package to the, you know, a fund of funds or a, a higher level type investor versus an individual investor. You know, individual investor is doing it a lot more based on trust. But of course some of them want to see the docs and things like that. It's kind of shocking. I think 90% of them probably don't read the, the documents and I'm like you should we try to push them to do this at all times? But there's a lot of, you know, people just invest on trust and you know, that's how bad things happen. You should be reading all these documents across the board when you're investing with people. Right, so, right. But yeah, yeah.

So for, we have a few minutes left here. But for those who maybe are a little bit more novice or beginner, you know, you're in all these different verticals and you're a cpa. So what is, why is real estate the holy grail when it comes to tax strategies? So can you talk about some of the best tax strategies in real estate that investors, whether they're real estate professional or they're not, how they can benefit from real estate or you know, and, and notes like private lending. Right. Because private lending is amazing to have some upside but different tax advantages on that front.

Absolutely. And there's, there's so many, it's insane. And I'm a big taxation is theft guy. So like I, I'm like, I don't believe in paying taxes if you don't have to. And there's some really cool strategies out there. You'll see me light up when I talk about this.

I know, me too.

So, but it really, there's a, there's a couple of key things, key, key strategies that you, you, a lot of people already, already know about, but some they may not know about, you might, might want to understand. So the first thing is a lot of times when you're buying multi families or you're buying real estate in general, you can do what's called a cost segregation study. You can basically break apart the property into a bunch of little pieces with little individual costs like the flooring, the lighting, the, the, the cabinets, the appliances, all these things get broken apart and then you front load them and you make them five year property, seven year property or 15 year property instead of 27 and a half year property. And you actually can front log all those and do a bonus depreciation on a lot of that property upfront in year one to get a massive bonus depreciation deduction in year one. You can also front load it into the first five years and just take it over that five years or just leave it alone and get, get it long term. But a lot of people really like offsetting their income from doing that each year. The trick is though is you can only do that against other passive income, right? Like rental income, maybe some royalties income. Anything that if you are in a invested in a business and you're a passive LP investor, then a limited partner, then you can actually take that active income and it's classified as passive for you as an LP that you can take these cost segregation deductions against. So finding ways to classify your income as, you know, a passive LP investor on the ordinary income side or rental income can be key to offsetting your taxes. And I buy property every year for the cost seg strategies, they should definitely make sense on their own, not just with the tax benefits. Whenever you're investing from a cash flow standpoint, IRR standpoint, risk standpoint, but when you're front loading these benefits, it can really be massive where you can get 30% of your money back in tax benefits in year one. Now sometimes people don't have any passive income. They have very little and they can't take advantage of that. And so there's some other things that they could be doing. Some debt funds like one of ours that we work with, we actually classify our income as not interest income because interest income is considered portfolio income. It's not passive. So we classify that as ordinary business income. Because we are in the business of lending, we're constantly lending out. And so therefore our investors are passive LP investors get passive income now they can buy property on one side and wipe out that type of income. So picking and choosing your investment strategies based on the type of income it creates can be really valuable. And you can get creative if you're an operator of a fund to be able to do some of these rotation of some of these strategies to really, you know, balance that out and be able to take advantage as best you can. Now there's some other loopholes like the short term rental loophole, which was really cool, where you can, you have to operate the business and work 100 hours a year and have more hours than anybody else on the team. So you can have an outside property manager in place and have those individual employees doing an hour a month of time, for example, but you might be spending 10 hours or nine hours a month of time doing the management aspect of it, doing the accounting, communicating with the property manager and that type of thing. Right. So if you create a checklist of all those active operations and you hit that threshold, you can now front load your tax benefits on a short term rental into year one, which includes a lot more costs because you have a bunch of furniture and fixtures and stuff like that you just furnish it with and actually take it as a business loss against your W2 income. So you could, you know, some of our stuff, you're talking about a $600,000 asset. Tax deduction that you can now take against a $250,000 salary. That's incredible. And you don't actually, as long as you document it and you do that workload, you're in the. Doing that anymore. I'm having an asset manager come in and do this for me after the first year and then not have to qualify as that being an active business for year two, even if it was for year one when you're trying to do all those cost segs so really cool stuff that you can do there. And a lot of people don't like, you know, they'll do 1031 exchanges or I really like installment sales because I like selling property on paper and then taking a. Weekly basis or the initial down payment so it spreads apart that gain over a period of time. And then I can also go through and do the cost sigs at the same time that I'm doing that and be able to take that income separately. So there's really cool things from a structuring standpoint, even within your own operating agreement where you can siphon money to an escort, siphon passive money over here to your trust. Definitely talk to your CPA about these things because you're probably paying more taxes than you should be just by not having the right legal structure, let alone the states that you do business in. And I live in California and it's horrible here. I'm trying to find a way out, you know. Yeah, I, I get asked that question non stop. And you know, I love California I just say I promise I'm not like them. I promise, you know. So.

Yeah. Well well awesome. Well this has been been so fun so I know we could keep going on and on and on and we, we both light up over taxes or the lack of taxes rather the tax loopholes. So but anyway how can people get a hold of you if they want to reach out and follow you they.

Can go to my website@matthewowens.com so and that's one T and Matthew so Matthew Owens.com we also have a 200 point due diligence checklist that you guys can use that we use for all of our stuff that when we're analyzing deals and things like that that goes over operator due diligence, the market, the deal, the the financial assumptions, all that kind of stuff that you should be focused on when you're analyzing a deal.

Perfect. Well thanks so much Matthew. It's been great having you on the show and look forward to financing some of your deals.

Awesome. Thank you so much. Absolutely.

Thanks.