Transcription
Mark:
Today’s guests knew from a young age that he wanted to be in the real estate business. He earned his real estate license at age 18 bought his first investment property while in college, negotiating 10% down and he’s since done residential buying and selling, commercial leasing, private lending and operates his own property management company and he’s not even 30. I’d like to welcome Matt Teifke
Matt:
Hey man, thanks for having me on.
Mark:
Of course. Thanks for joining. So you have a very diverse real estate resume. I’m interested to hear all about it, but why don’t we start with just giving us a little background on you.
Matt:
Yes. So I got my real estate license when I was 18 years old. I’m 29 now and really real estate has been the only thing that I’ve been super passionate about and super committed to during that time period. So my goal was always to find ways to own property and to have that constant rent coming in, a steady income to free me up to do other things in life. And I’m not there yet, but that’s the goal. And I’ve spent the last 10 years trying to get in different spots and different roles and learn as much as I possibly could about real estate. And so I’ve done everything from residential buying and selling, residential leasing, commercial retail leasing, apartment leasing. I got my appraisal license done a little bit of lending, private lending and it was just always like jump in, work hard, learn, build a lot of good relationships.
And I’m in the middle of the journey now, but that’s a quick background. And I grew up in Austin. I went to school in Corpus Christi and then got my Master’s Degree in real estate from Texas A and M. And it’s been a wild ride and up until the last couple of weeks it’s been a really hot market. So it’s been good for me. But at the same time, I’ve never really worked through a downturn. And so in a lot of ways I have experienced, but in a lot of ways I’m still a rookie and have a lot to learn. And that’s how I kind of look at things as I’m always just trying to soak things up and try new things and learn.
Mark:
Yes. You’re about to go through one of the best learning experiences you could ever have. You’ve got a front row seat to a recession and a pretty strange one at that. As an investor if you’re going to do this for your whole life, you’ve got to embrace that first downturn you go through because you’re going to learn so much from it. But going back, so you’ve seen almost every aspect of the real estate business. What was your first investment?
Matt:
My first deal was a condo in College Station. I moved to go to that real estate program and I found a condo. I bought it for 61,000 and I put 10% down and my wife and I lived there for two years and whenever I left I found somebody that I owner financed it to and they paid 75,000 they gave me a 20% down payment and now they pay me every month on that condo. And cool thing for them is they paid 75 and the condo is worth close to a hundred thousand now. So it’s all around win-win and owner finances are obviously a little bit creative and unique. So that was cool to see how you can do things, not the traditional or conventional way and still be able to make money.
Mark:
How does that work? What kind of interest rate do you get from your renter?
Matt:
So he’s paying eight and a half percent interest and it’s a 20 year mortgage. So it comes around, I think he’s paying like $650 every month. Then just kind of clockwork man. It just shows up in the mailbox and I’m really happy with how that worked out. And that was the first deal.
Mark:
That’s amazing. Whenever I’ve considered seller financing, owner financing, I’ve always thought that with a chunk of money you could pull it out and reinvest and keep stepping up in the size and scale of what you’re doing. But that’s a good interest rate that you got. And so you were in college when you did that. That’s good. You’ve got an early jump.
Matt:
Yes. Thanks
Mark:
I was clowning around through my twenties so it took me a while to jump in. What happened after that? Did you keep buying? Were you continuing to invest?
Matt:
Yes. So that was one aspect of how I was trying to make money and real estate was the ownership side and then the other way to generate capital to go buy more properties. I was focused on being a broker and we moved back to Austin after that and we started a property management company and we started with 16 doors and we slowly just started building that. And so my wife was running the company and I was actually working at a retail brokerage called Edge. And I did that for three years while my wife was building our property management firm. And all along the way I’ve just been super entrepreneurial and handling what I needed to do at the commercial job at the same time growing the property management company, buying a couple of properties every year. And then we started also hiring on real estate agents to hang their license with me.
And so we built it pretty fast and we’re still trying to grow. But at the moment we’re at 600 doors on single family property management and we’ve got 27 real estate agents that hang their license. And then we really made a lot of sacrifices on the ownership side. We would basically buy a house and then immediately start looking for the next opportunity. And in Austin it’s a challenge because it’s a really hot market so it’s hard to find properties that are below value. And that’s how I started the process of making money is buying them right. And then being able to refinance them. But we actually have lived in eight houses in the last two years and I think we’re done moving now. But it really helped us by being willing to sacrifice to get good interest rates on these houses that we were buying to move into them and to have time to find a tenant and to minimize the vacancy.
Mark:
So you were buying about four houses a year and living in all of them?
Matt:
Yes. We don’t have a lot of stuff and in every move we get more efficient and yes, we’d buy and start looking immediately and as soon as we found something we’d put our house up for lease and we move in.
Mark:
So the advantage of moving four times, did that qualify you for like an FHA loan or better terms?
Matt:
The real advantage was just being able to take it down and get in there and go in and we would fix them up a lot of times. So they probably weren’t ready to rent. But we were doing hard money loans. I’ve started out at 10% interest, three points and then every single deal I’ve done I’ve gotten it a little bit better and better. And at this point I’m getting hard money at one point and 8% interest. And so it’s almost not really hard money and I’m able to get 10% down payment, have a pretty low payment with the goal of refinancing it in six months and pulling all our cash out.
Mark:
Nice. That’s great. I’ve done a couple hard money loans lately and if you can get to that, that’s about as good as I’ve seen. And I recently had one that was I think like eight and a half percent and one point. But otherwise those hard money loans, it has to be a great deal because those can eat up a lot of your cash. So how are you dealing with right now the conditions that we’re experiencing with Coronavirus and the shutdowns and all that? How is that impacting your real estate?
Matt:
I’m taking it in stride. Like I said, I’ve been lucky that it’s been a hot market since I started my career really. And ultimately I’ve been very aggressive on my buys. I get pretty good equity when I acquire something and I’ve always known like this is a long game and so I’m not trying to stretch and pay top dollar and hope it works out. So that’s put me in a good position where I’m not really forced to sell all my properties or anything like that. And now that the market’s turning, it’s really getting to be more what I feel like I’ll thrive in. And that’s buying properties because I think there’s going to be more opportunities because people are scared or people may need to sell and I’m going to try and be ready to acquire as many as I can. Really.
I’m pretty ambitious and I work super hard. Like today, I’ve already sent out 60 offers and I tell people I’m collecting, no’s. Every no’s getting closer to yes, most of these people say no way, you’re crazy. But every once in a while they say yes or if I’m doing it enough and consistent enough, things start coming back. Like three months from now, six months from now, they email me and say, hey, are you still interested? And that’s the point where I get really excited because I know I kind of got them at that point.
Mark:
That sounds really good. Hey, back it up. So what gave you the confidence to start a management company?
Matt:
Well, just to back up a little bit. My mom was a single mom and the reason I got in the business was I saw what she did. And so she ended up having the 16 houses that I started off managing and I didn’t really even want to get into property management, but her properties weren’t being run very well. Somebody else was managing them. So we had to jump in. And then on top of that, the brokerages that I had always worked at had a property management component to them. And so going back to thinking, 30, 40, 50 years down the line and wanting to have a real estate company, I didn’t want to be solely focused on brokerage commissions.
Mark:
And you happen to be in a very good market. You’re in a market that I like a lot. Austin, do you ever invest beyond Austin?
Matt:
I do want to branch out and that’s on my radar. I looked at San Antonio hard. Literally last night I was thinking about other countries and just early on brainstorming, but I’ve bought all around Austin, not all of them are in Austin proper. And I definitely see the value of diversifying, but I haven’t gotten there yet. I’ve kind of stuck to buying properties that I’ve been able to manage at this point.
Mark:
Right. And I don’t blame you if I was in Austin, if you’re in a great market, there’s really no reason. It just dilutes you if you start spreading out chasing other markets or deals in other markets that aren’t necessarily better than the one that is right in front of you. So yes, I think you know where you are, you happen to be in one of the best markets. So I think you’re smart to just master that. There’ll be a lot of opportunity there.
Matt:
Yes. That’s a good point. And I feel very blessed and fortunate about that. So yes, you’re right. When you’re in a great market, you don’t always have to look outside of it. So that’s a huge blessing. And it seems to me all signs are positive in Austin for the next 20, 30 years. There’s just the biggest thing that everyone knows is it’s all about jobs. Where are the jobs coming from and they’re coming to Austin.
Mark:
No question. I’ve invested in LA for 20 years now and there’s something, it gives you a deeper level of mastery when you know a market street to street, like I’ve been sent listings and some broker is promoting a building on a specific street and it’s near a good area and they’re claiming it’s in one of the hottest areas. But just based on my knowledge I could say, Oh no, it’s like two blocks away from the good pocket. And you could make those subtle distinctions that can make a difference in your investing.
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Mark:
So how has your investing strategy changed or evolved?
Matt:
Well, I’m pretty spread out and it’s something that I really like to convey to other people because I really believe in it and I don’t like to preach and say, this is what you have to do. I just like to say what works for me. And because Austin’s competitive, it’s forced me to get really creative and flexible. And so I just hustle man, and I love it all. I really like the real estate business in general and I never really thought that I was trying to make money on every aspect of real estate until I stepped back and I realized maybe that’s what I am doing and maybe that’s what I’m trying to do. So it’s just like arts with finding opportunities and finding something below value. And at that point I analyze it and I’m like, what’s the best play here? Could I buy it, hold it? Can I buy and flip it, could I put it under contract and assign it to somebody else? Could I put it under contract and go find a buyer that wants it and then I’ll get the commission. And it’s just fun. It’s just always something new, always creative. And depending on what’s going on, I just shift. I’m very flexible.
I can only handle so many buyers or sellers at one time. So I might have three or four buyers looking for property. And then if someone comes to me and wants to buy a house, maybe I can’t work with them because I don’t have time to do that because I don’t want to go all in on just being an agent. So maybe I’ll refer that, but I need to leave time to be able to buy properties or whatever it may be. So it’s really not anything specialized. And sometimes I hate how it comes across because I can see how it would seem that, what did they say? Master of none or whatever that quote is how I could be perceived in that light. But that’s not really like who I am. I just creative and flexible. So I like to be entrepreneurial. There are other things that I’m interested outside of real estate that I invest in and I just go with the opportunities as they come.
Mark:
Yes. I get that. I’m guilty of that a little bit myself. I started out, I’m on a television show, I do movies, and I develop shows. But also I love all that. I love real estate. I love multi-family. I’m now doing a podcast for some reason, but the variety it’s fun. It’s refreshing to shift gears and do different things, but my concern is always like, am I being that Jack of all trades, master of none.
Matt:
And I think that’s just what has worked for me here in Austin and hearing story was really cool. I listened to your episode about your first deal and making 800,000. I mean, that’s amazing. I actually had a little side note, but I had a question on that. You were talking about how the price was going up every day on that first duplex that you bought. What was making it was it just there were other buyers and they were just asking for higher and higher offers or what made it go up like that?
Mark:
Yes. I think there were 15 buyers when I put in my offer. I have no idea what I was doing. I was with a broker and I trusted this woman and she turned out to be awesome. Her name was June Onn. But yes she and I looked at this property and came away and I was like, this looks good to me. What do you think? And she’s like; I think you should go for it. I think this is a good deal and it’s under-priced. And I said, let’s do it. And yes, I found out the next day that there were 15 buyers who had put offers in, and then I think it was just going up. It was going up $15,000 a day. And I was terrified. And I think I probably said it on the podcast, but I think I started at 350,000 and I won the bidding war at $435,000 and I was like, oh crap, I just made a huge mistake. But it was good worked out.
Matt:
No, that’s amazing. That doesn’t ever really happen in Austin as far as you’re buying it at the top value and then it increases that much. So back to the markets, I know that’s a California thing where they just skyrocketed like crazy.
Mark:
Honestly, I think there’s something that happened in a couple of markets in the US probably back maybe like 20 years ago and it could be way earlier than that. That’s just when things were on my radar and I think it was the rest of the world was beginning to develop and become more affluent. And you had these countries like China, India, and the rest of the world salivated over United States assets because the dollar was the most stable and we had the most stable political system. And the most easiest to understand asset class was real estate. So I think you had all this money pouring into New York and LA and South America invested in Miami. So that created the circumstances where there was a lot of bidding wars and a lot of offers on every deal.
Matt:
That’s very interesting. I never heard that, but that makes a lot of sense.
Mark:
I’ve heard that like Europe invests in New York, Asia invests in Los Angeles and San Francisco and then South America invests in Miami. I think I saw that there was about $450 billion of foreign money buying real estate in the US last year and 90% of that went to those four markets.
Matt:
Wow, that’s amazing. I guess it’d be interesting to see how that changes over time and I wonder if that ever spills over to Texas and hopefully Austin,
Mark:
It could, I mean that phenomena has pretty much eliminated the cash flow in markets like California and New York and Miami because there are so many buyers competing for them. But anybody for cash flow chases cash flow into the middle of the country. And some of them go to Texas, but you get cash flow in those other markets. But you get appreciation in these coastal markets just as a function of the number of buyers competing for them. So do you have any failures or a mistake that you made that seemed like a disaster at the time, but looking back you are grateful for it because of what you learned?
Matt:
I haven’t had any major losses, knock on wood. I think maybe the biggest learning point was in picking partners. I was very quick to do partnerships, kind of just like, oh, you know what seems like a good person. I trust him, let’s do this. And it worked out for the most part. I think I have six or seven properties that I own with 50/50 partners. But I had one that went pretty bad. And I guess the biggest learning point from that was just a more of a handshake type guy. And I failed to do the right paperwork upfront on this other partnership. And I basically had a deal where I said, Hey, I’ll put up all the money you find the deal. And whenever we sell or refinance, I get paid my money back. And then we split the profit 50/50 I ended up putting probably, 30, 40, 50 grand over time. And my partner was trying to not give me credit for that. So we got it worked out.
Mark:
Sure.
Matt:
But it was not good and it’s just not fun. I mean really, I think people want to be in real estate because the time and it’s fun and it’s exciting. And when it’s not that, when it’s the opposite of that, it’s horrible.
Mark:
When the going gets rough, you see people’s true character.
Matt:
I’m not saying that I’m perfect and that partner was wrong. It just should have been on paper.
Mark:
But you make a great point about partnerships. There’s like a honeymoon phase when you meet your partner, you and your partner have tremendous enthusiasm for the project for each other. And then you know when that fades, when you’re two years into the deal and maybe hitting some rocky points. They can get challenging the partnership.
Matt:
You have to have people that are going to have your back and you heard the term foxhole guys, you want someone who would be in your foxhole if there’s a war. And if you have, that can be amazing. I’ve done a really good job of networking and building relationships. And when you have 10, 20, 30 people that feel that way about you, you can do a lot.
Mark:
Yes, absolutely. So how has being an investor changed your property management approach?
Matt:
One of the big things that we focus on is tenant retention. We see the value in that as investors because if we have to move our tenant out every year, we’re going to have to pay for make ready costs, leasing costs, vacancy costs. So we’re just big on treating people the way that we would want to be treated. And in doing so, it really increases the rate that people renew their leases. The big thing is how you treat them. Because people call us all the time, very upset about things, and we don’t fight them or say that they’re wrong. We let them get that off their chest. We let them know that they’ve been heard and then we say, hey, let’s fix this versus no, no, no, no, you’re wrong. I was this way. It was this way. That’s what creates the animosity and it creates fights and it’s a very, very hard business because it’s a thankless job. There’s a lot of negativity, there’s a lot of moving parts and so we just have to make sure they’re heard and work towards a solution and like the question you asked, that comes from being an owner and understanding what we would want our tenants to hear.
Mark:
Yes. That’s great. That’s a great approach to it. If you were to give advice to like a 20 year old, 21 year old just getting into the business that wants to follow your path, what advice would you give on where to focus your energies and where not to?
Matt:
I would probably say two things. One would be to learn every day as much as possible and then two, I think you’ve got to build a name for yourself and let people know who you are and just get out there. The more people that know who you are and what you’re trying to do the better and build really, really good relationships and everyone knows this, but you add value for other people. How can I help you? You’re not trying to take, you’re trying to give and really give and be consistent and don’t just have names in the phone book, but have people that you know and you talk to because this is the long game and the more I’ve been in it, the more I realized that relationships seem to be 80% of the equation to me.
Mark:
I agree. It’s interesting. I think if you’re working with partners in raising funds, yes, it’s definitely a relationship business and I’ve enjoyed the relationships in my strong sort of team that I work with, but I also know a lot of hermit multi-family investors that are extremely successful that they just do the lone wolf thing. But yes, I agree. It’s more fun when you have partners. I had the unique weird experience is I was in writers’ rooms 60 hours a week when I was building my real estate portfolio. And I loved real estate, but I didn’t know anybody in real estate. I was just picking up a four plex or a 10 Plex or a 16 unit whenever I could, whenever I had the funds. But I was working all the time and that’s part of the reason I did this podcast is it’s a way to get out and get to talk to people like you get to network, build some of those relationships.
Matt:
I agree. We have a podcast as well and that’s the exact same reason why I did it.
Mark:
Yes. It’s a great way to reach out and have these kinds of conversations with people that you respect and admire. So I’m going to jump to a thing I call multi-family psychotherapy. Which trait do you possess that has served you best? Both in real estate and in life?
Matt:
Man. Just persistence. Hard core persistence.
Mark:
That’s a good one. You can’t argue with that. How about, is there a trait that you feel that holds you back?
Matt:
That’s a good question. Well, I would say that sometimes I need to slow down. I’ve seen that from the Coronaviruses. It doesn’t always have to be grow, grow, grow, grow, go, go, go.
Mark:
That’s good. So what book have you recommended the most over the past year?
Matt:
The book that I really like is Trammell Crow, Master Builder.
Mark:
Awesome. I haven’t heard of that one. What’s master builders is it about building, construction?
Matt:
Yes. He’s a developer. I don’t know, I think he’s probably one of the greatest or biggest developers ever started in Dallas and just branch out all over the world. His name’s everywhere now. You’ve got buildings all over. He’s got a real estate company called Trammell Crow. Super successful.
Mark:
Oh, nice. Okay. Do you have a favorite quote?
Matt:
Yes. My favorite quote is “The humble cannot be discouraged.”
Mark:
Yes. That’s great. There’s like a Ralph Waldo Emerson quote that’s kind of close to that. It’s a great man, is willing to be small. Something kind of along those lines.
Matt:
Yes. I like that.
Mark:
What’s your favorite movie of all time?
Matt:
Oh man. Oh man, that’s a great question. It’s either the Big Lebowski or Shawshank Redemption. Probably the Big Lebowski.
Mark:
I just showed my 15 year old daughter the Shawshank Redemption. It was good. It’s a great one.
Matt:
Yes.
Mark:
What’s the furthest thing from real estate that you do?
Matt:
Cannabis investing.
Mark:
Alright, good. If you found a good provider, I’ve thought of that obviously it’s an exploding market as an investment.
Matt:
I’m a huge believer in the market for the long-term and I’m trying to figure out more ways to get involved.
Mark:
I think you’re right. Let me know if you got any good tips. Well, this was great, Matt. I really appreciate it and thanks for sharing your wisdom to everybody.
Matt:
Thank you for having me on and I appreciate what you’re doing, trying to get value out there and obviously you got a cool story and would love to have you on ours one time and ask you all these same questions.
Mark:
That would be fun. I’d love to. How can people get a hold of you?
Matt:
I’m easy to find them on Facebook, my name is Matt Teifke. I’m happy to give my cell phone number (512) 914-4806. Email is just mattteifke@gmail. Our website is trehomes.com. Reach out at any time.
Mark:
Awesome. Awesome. Well thank you so much.
Matt:
Thanks for having me, Mark. Really appreciate it, man.
Mark:
Here are some key takeaways. Property management can give you a leg up as an investor. It creates cost efficiencies, but it’s not easy. You basically serve two masters owners on the one hand; tenants on the other and conflicts come from this. You’ve got to prioritize, listen and work towards a solution instead of shifting blame. Ultimately how you treat your residents will determine your success.
Number two, Matt has a willingness to be creative and try new and different approaches if that’s what it takes to get a deal done. He doesn’t specialize in one thing and that has allowed him to have lots of tools in his real estate toolbox, which broadens the opportunities he can look at and challenges him to always be learning.
Number three, partnerships last for a long time. They’re like a marriage so choose your partners carefully. They all have a honeymoon phase. Make sure you’re protected. Once that is over, which means outline what responsibilities and what roles you’ll take on and be responsible for and have it in writing.
Number four, getting started as an investor isn’t easy, but a willingness to take an unconventional approach along with some massive action can get you there. Matt and his wife moved eight times in two years living in construction sites. That’s how they built the momentum and equity to get into the investing game.
Finally, number five real estate is relationship driven, especially if you don’t have any money, treat people with respect and work to build strong, long lasting relationships. That’s about it. Thank you and if you like the show, please support us by subscribing and giving us a five star review so that we can continue doing this and reaching more listeners. See you all next time on the Wild West Real Estate Show.
Thank you for joining us for the Wild West Real Estate Show. If you like what we’re attempting to do here, please subscribe so we can continue sharing these with you. And if you want to check out our website, it’s quantumcapitalinc.com. You’ll find podcast episodes as well as multi-family properties we’re looking at and how you could potentially participate. Look forward to seeing you guys soon on the Wild West Real Estate Show.
