Real Estate Investing For Passive Cash Flow with Matt Theriault

How do you make business problems disappear? Wrap em in bacon for business owners, marketing execs and anyone trying to grow your business. Pump your profits and make more while doing less. Welcome to Bacon Wrapped Business with Brad Costanzo. Sizzling hot business advice guaranteed to make you fat profits. Every week our chefs will serve you proven recipes for ramping up your revenue. Now here's your host, Brad Costanzo.

All right, welcome back to the show. This is Brad. And today we are not going to talk about how to make a bunch of money online or in a service business or we're not going to talk about any traffic or conversion and we're not going to talk about a lot of the things that we typically touch on. And instead we're going to talk about acquiring, holding onto real world cash flow assets. And it's one of the things in my business as an entrepreneur, as somebody who's I've got my fingers in offline businesses, online businesses, different types of investments and really over the past, I'd say five or 10 years, I've shifted my focus from looking at just purely active cash flow to how can I create more passive cash flow and more passive assets that can make money, you know, while I sleep. That's what we all say we want. And I've also noticed that those of us entrepreneurs who say we're looking for passive income in an active business, a lot of times we're fooling ourselves because that, it's really hard to find that. But we are going to talk about one of the oldest, most tried and true ways to build real to build and acquire real assets that can be for the most part passive and for the long term. And that's real estate. You've heard me talk about real estate investing with some prior guests in the past. And whether or not you know a lot about this or not, that's okay. There's going to be something in there for you because I've brought on just a tremendous guest to the show today named Matt Theriault. Now, Matt is a, he is a Marine Corps Desert Storm veteran and he's enjoyed 15 successful years in the music business prior to even becoming an accomplished real estate investor and mentor. So by the way, if you don't think that you've got a history for investing in real estate, I'm sure Matt probably didn't think so either. But since then, he's built a cash flowing portfolio of 100 plus units over the past decade. And his approach to investing is conservative. It's simple and it's efficient. Three things I really love and I'm dying to talk to him more about the way he's doing it and and how to make acquiring cash flow real estate painless and lucrative. Matt, welcome to the show.

Thanks Brad. Thanks for having me.

Yeah, that's good to have you here. So tell me a little bit more about, you know, your journey. You started off as a musician and what was like. I remember when I first got into real estate, I remember my very first deal. I remember when I got literally got on the web, the Google machine back in, maybe it was Yahoo, I don't know back in like 2002 or 3 and I typed in how to invest real estate and there was a guy named Dave Wisnand and I came across him and he had a home study course and I bought this course and I was like, I'm going to be a, you know, super rich real estate investor. And I stumbled across my first few deals and I took them down and I made a bunch of money and it was amazing. And I was kind of hooked then. But I remember what that moment was. What was your. How did you transition from musician to investor?

Yeah, that's a good question. I went from breakdancer to marine to music producer to.

Real estate investor. So I've had quite the experience or quite the background. Yeah, when I was in the music I was doing really well for myself. I had made my millions by the time I was 30 in music. Yeah, nice. So I really enjoying life and just living the dream. I was really determined to be the next Puff Daddy. That was my goal. And when that digital download came along, it just turned the whole industry upside down. I remember that year that I think Sony laid off 10,000 people and Universal Music laid off 10,000 people two separate times in the same year. I mean it just wrecked havoc over the whole industry. But it really got to us first before anyone else because we were an independent hip hop label and any music that was of that independent nature, whether it was rock, dance, country, whatever, it doesn't matter. That audience, that independent fan base, they really embraced that digital download before mainstream knew what a digital download was. And yeah, people just stopped buying CDs and all of a sudden the CD started getting returned and within six months, I mean we were essentially out of business. I filed bankruptcy shortly after that. I was divorced after that and had to start life all over at the age of 34. And you know, when it was happening, I mean in hindsight it's crystal clear, but when it was happening, like everyone was scratching their head like, what in the world is going on? And, yeah, I ended up, after a few months of job searching, found out there wasn't a whole lot of demand in the marketplace for unemployed music entrepreneur. And so I ended up bagging groceries. So I was bagging groceries for about six months, and it was probably the most humbling six months of my life. And. And I was very angry. I was very bitter. I blamed everyone and everything on my situation. And at one moment, I just, like, you know what? Nobody's coming to my rescue. Like, if I don't do something, this is where I'm gonna be. And there was one day. It was. One day was particularly harder than most. And the grocery store manager, who, coincidentally was 34 years old, also, he'd been there pushing grocery carts since he was 16, and he was actually only two years away from receiving, I think, like, 80% of his pension. He'd be there 20 years, and he's gonna be, like, 36 years old and been there 20 years. And he pulled me aside. He says, matt, if, you know, if you really want your money back, that's what I wanted. I missed my life. I missed the glamour and the fun nights out and not having to read from the right side of the menu.

He pulled me in and he said, you know, if you want your life back, real estate. And he said these words, and I've said these words, I don't know, probably a thousand times since. He said, real estate is the final frontier where. Where the average person has a legitimate shot at creating real wealth. And at that moment, I mean, I didn't know if it was true or not, but it was the best advice and best thing I had heard in a very long time. And so I went home that night and Googled everything, real estate, and found an aunt that was a real estate agent. She'd been the number one agent in a market just two cities over for me. She'd been there, like, 27 years. I hadn't talked to her in, like, 15 years. Fired off an email, and within 24 hours, I was in real estate school. So that's how I made that transition from music to real estate.

You there?

I lose you. Brad.

I think I had a little audio problem. I think I'm back.

Right, There you go.

I hit mute. There was a truck going by, and I hit the mute on Skype, and I think I forgot to hit unmute. So that's great, though. No, that's an amazing. That's an amazing story. I love stories of journeys like that, and it really Is it is one of the places where, you know, real estate is not that hard to understand. I mean, we've all, we all live in real estate, we all live in some kind of a shelter. So we've got some degree of familiarity with it. Unlike, you know, making money online or doing a million other things that require more technical proficiency. People understand real estate to a degree. And the more you understand it, the more ways that you realize that you can make money with this, whether you're an agent, whether you're an investor, like a flipper house rehabber, a landlord. And when we were talking offline a little bit more, you said that a lot of the stuff you do is buy, hold portfolio accumulation of houses and run free cash flow. So I could get into all the basics of real estate investing, but I don't care about that. I want to know what you're doing right now and some of the stuff that you think is really working, some of the, maybe any of the trends you're seeing as well as some of the ways that people can get started investing in real estate and acquiring properties if they don't have a tremendous amount of time or experience to go in to do this full time.

Sure. You know, you said you start off the show with what you're going to talk about of creating passive income and how most of the time it's not so passive and it's not passive income. But if you were to give someone, like I kind of said, the average person has a legitimate shot at creating any sort of wealth and we can just replace wealth with residual income. I mean, more people have done it with real estate than anything else. And you're right, because I think it's just, it's so simple at its core. You purchase a property and then you rent the space out to somebody to live in that, in that house. And so that.

That'S being a landlord is your primary. Yeah, I did it.

I forgot which one I went off on.

Well, so so is, is your primary mode right now in your personal portfolio the things that you're doing? Because I think we talked offline and you said, you know, you're not just really doing a lot of rehabbing or wholesaling houses and flipping contracts. Are you more right now buying properties, holding on to them and cash flowing them? Is that your primary model?

Yes. So I've got about 50 properties, 50 single family residents in my portfolio. I've got about 50 seller finance notes in my portfolio. So both of those create residual income for me and then we leverage our teams and resources. And we have a turnkey operation as well where we will go ahead and sell cash flowing assets to people that are too busy to do it themselves or just don't want to do the work themselves. Got a lot of very much your professional clientele. We got doctors and lawyers and CPAs, small business owners. Very cliche. But those are people that are very cash rich and get dinged on taxes every year and need something to do with it. And it's real estate's still probably one of the best tax shelters available to the average person.

Absolutely. So how do you, how do you go about finding your deals right now? Are you working with wholesalers? Are you working with getting plucking stuff off the mls? You doing direct mail? Are you doing active marketing?

When I got started, I mean when I got started I had nothing. I mean I came from the grocery store so I did not have like this giant marketing budget and able to do massively generation. And the Internet wasn't nearly what it is right now. So that wasn't a real option. And I didn't even know people responded to direct mail still at the time. So I kind of did this the old fashioned way. I went out and just started hustling and earning it and creating relationships and creating very much of a referral type business. And those relationships have lasted me today. So that was about 12 years ago. And when I need a new property, I essentially can just pick up the phone and just call two or three people and see what they got. So that's how I do my deals now. So I don't do anything off the retail. We are working a little bit in Orlando. Direct to seller. We're doing some stuff in Colorado area as well. Direct to seller. But mostly it's through my relationships.

Oh fantastic. So then when you're working with. Because you, you actually do teach this stuff, you've got a great podcast, Epic Real Estate. And.

The side of your business that's mentoring people.

Are you showing them how to go and kind of repeat what you're doing and find those properties to kind of hold on to what to look for, etc. And how to finance them?

And at the same time are you also allowing people to kind of come to you and buy some of the properties that you're able to find and do some of the heavy lifting on that side for them? If they're looking for just to deploy cash and they're not really looking for business opportunity to just go be a full real estate investor?

Yes and yes. Cool. So the people that come to us to learn how to do what we do. We teach them how to buy and hold. One of our big fortes are creative acquisition strategies. Getting financing from the seller themselves and then buying and holding as much as we possibly can. And then like flipping or wholesaling, that's kind of the afterthought. That's when the buy and hold strategy won't work. Yeah, but there's still an opportunity to make some money off of that deal. So we kind of read through reversal of what I think most people are out there teaching and what you see on tv like it's, it's not very exciting, tell you the truth. But good investing is boring, actually.

Yeah, that's true. Well, let's talk about something that's not boring on that, which is, I love the topic of creative acquisitions. And you know, one of the easy methods there is just seller financing. Right. Will the seller take, will the seller take a note back? Are there other creative ways, whether they're like really advanced or, you know, whatever that you've done that you really like to do that have kind of worked well and have given you options when simple cash deal or regular financing doesn't work?

Right? Yeah, there's a lot of ways that we approach it. I mean, our general idea when we go and we're talking to a seller is that we're going to purchase this property in one of two ways. It's either going to be by our price and their terms or their price in our terms. And as long as we can control one of those, we can always create a deal for ourselves. And so that just starting that with your big kind of like 50,000 foot view, you can start getting really creative as you whittle your way down. And yeah, seller financing is, is, I mean, that's kind of my preferred method. I'd rather do that than the bank. And you can really, you can really help out a lot of sellers in a way that they didn't know that they could be helped also. So there's a lot of education that goes along when you're talking to a seller and they're, wow, I didn't know I could do that. Oh, that's going to make my situation better.

Exactly.

And so, you know, you can really turn it around and to where they say, oh no, I don't want to, I don't want the cash, I want you to sell it. I want to carry the note because I like what you just said type thing. And we do that and then we can, we also do a Lot of reselling with seller financing, where you can really make so much more money that way than you can by just flipping the property and getting cash for it also. So explain that once you start doing that, you start to really see why banks are in the money business and not the real estate business.

Absolutely. That's one of the, that's one of the big realizations I had. And actually a lot of the real estate investing that I end up doing right now ends up being more hard money lending than it does actually, you know, buying those properties because, you know, ultimately it's paper is easier to deal with in toilets.

This is true. You know, they just text differently.

Absolutely it is. So if.

If somebody like.

Well, let me ask you this, like, are you typically, you talked about a couple of the markets you're buying in. Are you typically looking more for properties that are in, you know, like more blue collar, you know, really affordable, you know, lower priced houses? Are you looking for, you know, where you might have a distressed seller issue or are you trying to, you know, invest in like appreciating areas, nicer properties, etc. Is it a combination or what have you kind of done with your.

Yeah, it's evolved over the years because, you know, the lower income. Well, you can do a lot of transactions, build up a large portfolio pretty darn quickly and pretty darn affordably without a whole lot of strain on your financial resources. And if I were to start over again, I'd probably do it the same way. Because once you are controlling a lot of assets, whether those are A grade or D grade, if you're controlling a lot of assets, it's much easier to manage the finances and your opportunities that way because you just have more working parts and more tools available to you. But they do come with extra effort on the management side of things and on the repair side of things. So that's how I started to build. And I mean, I got up to almost 300 units at one time a couple years ago. And what we started to do was, okay, let's do this. We did this 80, 20 analysis on the whole portfolio. What's the 20% of the best properties that we have that's providing 80% of the income? And so we kind of put those over to the side. Okay, we're going to keep these. And then we looked at the other 80, like which ones are just total disasters and pains in the butt. So we went ahead and just flipped a bunch of those and then what we had left, we went and did seller financing and turned all of those into notes. So it removed all the management headaches from us that way. And now we had some extra cash, we've got kind of a surplus of cash flow and now we're going a little bit more into the nicer properties just because. A little less management headache and a little bit more likely to preserve their value. Yep. So it's evolved. So what we do now is not how we started, but I think if I had to start from scratching it, I'd probably do it the same way, just because of the speed of which you could move.

But ultimately the markets that we choose, and this is what I think surprises a lot of people, I don't look for so much all the economic factors that most people would look for, I mean, we take them into consideration, they're still important to us. But after doing this for 12 years and just holding property and doing very little flipping, you find that your property manager is probably just as important as the property itself. And so we really choose our markets to where we have the best management, where we have the best relationships. Because that good property management can take a mediocre market and make it a good market for you and vice versa. I mean, go into the best market. I mean go Wall Street Journal says go to Baltimore, Maryland because that's where it's going to happen next. And you go and you there. And if you don't have property management there, that's going to be a disaster for you. So we really focus on the relationships first, the economic second.

Absolutely. Now when you're working with people who are just getting started and they've got capital, they've got capital to invest or, you know, they want to start building their portfolio, Are you telling them to, where are you telling them to start looking for the, for the real estate or the, or the deals? Like are you.

Well, I think that the biggest opportunity is really the Midwest and in the South.

Well, I don't even mean geographically, I mean more so, I mean more so like how to find the deals. Right. So this is like really basic one on one stuff. But, and especially if, let's say they're a doctor or lawyer, they've got cash and you know, cash flow, but they don't have a whole lot of time to go out there and.

Be just really actively pursuing deals, sending out direct mail campaigns, doing all that other stuff.

Right.

How are you, how are you telling them to kind of get started and find those first deals?

We, we've, we're able to leverage our teams that we have on the ground and actually do stuff for them. So it's become commonly known as turnkey real estate investing. When we started doing it, I don't even know if turnkey was a word. But yeah, I mean you can go out and you can pay someone to go find the property to fix it up, to put the tenant in place, to coordinate the property management and just hand it over to you as a cash flowing asset. And, and that's very, I mean we even do that sometimes. Like we're even buying stuff from turnkey providers just because I know what it takes and I don't know if I necessarily want to get that dirty to, to purchase the amount of property that I want to purchase. I'd rather just pay the premium and have someone else do it for me in many cases.

Don't blame you. Don't blame you. I'm a lot like that. So how else do you provide education? You've got your, you've got your, your podcast Epic. They just find that epicrealestate.com Is that correct?

Yep, that'll go, that'll get you there.

Nice. So what other, what other resources do you have there that you can provide? People who are kind of wanting to, you know, they've seen other people making money with real estate. They, they know that it's not so complicated that if they spend a little bit of time figuring out what they want, why they want it, kind of how to get it, that it's possible for them. Do you know what else do you provide as far as resources for them?

Well, there's kind of two things we have the learn at your own pace. Go. Here's the SOPs and the checklist. Go do it and build it yourself. And then we have our premium, I guess you'd call it our premium service. We essentially just copy and paste our business into theirs.

Beautiful.

And they'll come to our office and sit with us for 48 hours and we'll put their whole business together, teach them how to teach them how to use it, run them through some boot camp style role playing and getting them used to talking to sellers, understand how to negotiate contracts. And by the time they leave our office, within seven to ten days of them leaving our office, their phone is ringing and they're into real estate.

That's great.

Like they are doing real estate. They're not spending time setting up their website, they're not setting up the phone system, they're not designing their logo, they're not doing all this stuff that it takes a lot of time and effort. And by the Time. Everybody gets that done and they're ready to real estate. Like they're already frustrated and exhausted of the whole experience and they never actually get to do the real estate itself.

Yeah, that's one of the reasons I actually got out of it. I stumbled into some really good deals and then I turned around. This is years ago, trying to actually build a business and I realized I was doing all this other little crappy work and I wasn't focusing on revenue generating activities.

Exactly, exactly. And that's exactly what we do, is we push them in the place or put them in the place of where their time is the highest and best use of their time. Where they're paid the most for.

I love it. I love it. Well, Matt, this has been really enlightening. I like a lot of the things that you've been sharing here. Are there any other. Are there any other things that people should know, whether it's opportunities, whether it's strategies in order to really take that either that first step or for those people who have, you know, real estate? You know, you mentioned investing in notes.

Elaborate on that a little bit more. For some, for some folks. When. Because a lot of people, like I'm. I take it for granted. It's like the curse of knowledge. Right. I take it for granted because I understand note investing. But some people out there probably don't. They probably just think of, oh, you just buy a house or not. But give us the overview of investing in notes.

Sure. So how I kind of got into it, because I know there's like a whole whole other niche of people that buy and sell and trade notes and they build a note and then they go to sell it for cash. They're flipping paper, really. And that never had much interest to me. But where it really kicked in and made a whole lot of sense was when we were kind of consolidating and upgrading our portfolio. Like, we had a lot of properties that we didn't really want anymore. And you know, in many cases there weren't people that wanted them either. So we were kind of stuck with them in some regards. But what we started doing was selling them. Rather than renting them to tenants for, say $700 a month, we would empower those tenants to become owners at say, $500 a month. So with them, if they could come up with a small down payment, we could lower their monthly payment and they could actually become homeowners and they would remove us from all of the obligations of owning property. And so that's, that's how I got Introduced to notes. So we essentially became the bank. So instead of taking $50,000 cash for a property, we had seller finance it, say for 60,000, make sure that it was easier life for them with a small down payment and they're actually paying less per month versus the rent. And it just turned out to be a really good formula. And we've probably done that 50 times now to where we still get the passive income. Right. We might get a little bit less per month, but we don't have the headaches on that half of the properties that were responsible for all the headaches. And certainly there's people that come through and aren't able to fulfill their obligation and we have to take a house back every now and then. But this is the part I was saying earlier when you start to see why banks are into the money and not the real estate is because every time something kind of traditionally that the layman would determine that's a bad thing in real estate. It's actually the banks make money when that bad stuff happens.

That's true.

And you know, when something gets foreclosed on or someone stops making payments, you have to take the property back and sell it all over again. You get to start everything all over again to take a new down payment. You can adjust the rates and you can make more money and maybe you've got some appreciation, you can sell it for more. Yeah, just anytime something bad happens or the house burns down, the insurance pays you first. You're really protected and hedged against all the things that kind of hurt landlords sometimes.

Yeah, you're absolutely right. And I think that's a great one for especially, for especially people who are active real estate investors or getting there and been studying this is to really kind of go down that, that road of understanding investing in paper and notes and whatnot. It can be a lot less complex, you know, tremendous return. I find it even more fascinating personally. So I think that's great that you're kind of doing both of those things.

Is there anything else you'd like to share that I think that maybe I haven't any questions I haven't asked that you're like, well, man, I'd love to share this because this is like really working.

Well.

I would just. I guess the one thing that always comes to mind is, you know, where I kind of fell into this whole buy and hold thing when it seems the, the rest of the population, or at least the. In our industry is very much into flipping is in the beginning, you know, when I got out of the music business. I kind of did everything my way. I was really shut off to any sort of recommendations or coaching or suggestions. And, and I look in hindsight and I just see how many times people told me to do this, told me to do that, I ignored it. And if I would have done what they told me to do, things would have been that much different.

Oh yeah.

And is kind of starting my new life over again in real estate. I was like, okay, this time I'm going to listen to what other people that have been there, what they have to say and I'm really going to take their. If I go and ask for advice, I think I'm actually going to follow it this time rather than just do it my way anyway. And I remember going to in the beginning going to different networking groups like real estate networking groups, the real estate investing clubs and there'd always be like, you know, every other meeting or so there'd be some old salty guy on stage, you know, the veteran that's been doing real estate forever and sharing his story and maybe he was selling his stuff and, or he was just testifying to what real estate has done for him. And you know, invariably the question will always come from the audience, like if you were to start all over, what would you do differently? And it's almost always the exact same answer, it comes in different shapes and forms. But it's always, I would have bought more and sold less. And you look in Hindsight, you know, 20 years ago, what if you flipped 20 houses 20 years ago, how would that impact you today, 20 years later? Probably wouldn't. It all probably have no impact on you. But if you bought 20 houses 20 years ago and you still own them today, how would that impact you? You can kind of, you can say that at any time in history and over a 20 year period, you're going to be far better off by holding them than you would have been if you flipped them.

Yeah.

And I just kept on hearing that over and over again. I was like, alright, that's what these guys all think. This is where they're, all their biggest regrets lie. I'm not going to make those mistakes. I'm going to learn from their mistakes and I'm applying them to my future. And that strategy right there, that philosophy has served me very well.

Yeah, I think it's a fantastic one and I think it's something that we can all kind of take to heart and you know, explore. Like how can we create more assets in our life? Because time flies, right? That active cash flow and Those, those quick hits are great, but there comes a point where you just don't have the energy, the time, the inclination to work as hard as you used to. And it's kind of nice, as you can probably attest, to have that, that mailbox money coming in every single month.

Amen.

Right. Well, I encourage, I mean, I really appreciate you taking the time to be on the show today, Matt, and kind of enlightening my listeners on this. And if you guys want to listen and hear more and learn more from Matt and kind of understand his methodology, it's epicrealestate.com is that correct? That's where the people can find more about you.

That's the website. If you go to EpicRealEstate investing, that'll open up the itunes app automatically right there.

Right. Because you've got a podcast as well as just a normal website. And so my podcast listeners may want to listen to another great podcast and I encourage you to go do that. EpicRealEstateInvesting.com and EpicRealEstate.com this is Matt Theriault. And Matt, thanks again for stopping by on the show and.

Sharing your insights with everybody.

You bet. Thanks for having me, Brad.

Thank you. And for all you guys listening, if you have any questions at any time, you can always shoot me an email to ask bradakenwrapped business.com and let me know about any topics you'd like to see me cover or. Or if you have a business that is plateaued, if you're stuck. If you're looking to sell your business, I am actually looking to acquire some companies and primarily in the E Commerce authority site space. I recently bought a couple and looking to do some more expansion. And I'm happy if you email me to give you some of the criteria that I'm looking for once more. That's askbradakenratbusiness.com and I will see you guys on the next episode.