How I Net $175K Yearly From One Airbnb Property

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  0:00 - Introduction to Short-Term Rental Investing 1:34 - Kenny's Journey from Citibank Data Analyst to STR Investor 7:16 - Step 1: Finding Drivable Markets Near Major Cities 12:16 - Step 2: Budget Planning and Capital Allocation 16:12 - Step 3: Analyzing Revenue Data and Market Performance 20:02 - Step 4: Understanding Regulations and Community Sentiment 28:08 - Short-Term Rentals vs Boutique Hotels: Cashflow vs Appreciation 34:32 - Advice for Your Younger Self: Pick Up The Phone 38:33 - Best Metro Areas for STR Investing Right Now 41:01 - Biggest Mistakes: Regulation and Parking Nightmares 43:19 - The Deal That Changed Everything: $80K Net on $450K Investment  DISCOVER THE DATA-DRIVEN APPROACH TO SHORT-TERM RENTAL SUCCESS 🏡📊  Looking to break into short-term rental investing but overwhelmed by the 12,000+ potential markets across America? In this comprehensive episode, Kenny Bedwell from STR Insights reveals his proven five-step framework for finding profitable Airbnb and vacation rental properties that generate massive cash flow. Kenny shares how he went from house-hacking his first property in New York to building a portfolio spanning Kentucky, North Carolina, Texas, Arizona, and even operating a boutique hotel in New Orleans 🎺  Want to learn more about our guest? Connect here: kenneth.bedwell@strinsights.com Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen #ShortTermRental #AirbnbInvesting #RealEstateInvesting #VacationRental #STRInvesting

Transcript

00:00all right we are back with another episode of the real estate investing club i hope you guys are

00:14having a great day great week wherever you are and whatever day it is for you it is friday on

00:19the podcast we are back to our friday routine so we're bringing that good friday energy to you

00:24and uh it is almost thanksgiving may thanksgiving is next week we're talking to you on the 21st

00:30so thanksgiving is next thursday i believe so if we if you guys listen to this anytime around then

00:35have a good thanksgiving i hope you guys enjoy time with your families and forget about real

00:40estate for a week and just uh just relax but not right now because today we are talking with matt

00:46blair on the podcast from rei capital growth matt is a seasoned commercial real estate executive with

00:52over 15 years and experience he's underwritten underwritten more than five billion dollars in

00:57assets um he has a bunch of experience he has an mba from wharton so a lot to go into matt i'm excited

01:03to jump into it thanks for hopping on hey thanks for having me gabe absolutely uh i told you before

01:09we get on here we always like starting with stories we like to hear how people got to where they are so

01:14why don't you take us to the beginning of your story in real estate and uh tell us how you got here

01:18yeah absolutely so um real estate has kind of always been a family trade for me um my grandparents

01:26moved to new york in like the 40s and worked their way up to buying you know a couple of apartment

01:33buildings in new york um and then that kind of became the family portfolio um i personally ended up

01:40on the debt side of the business after college and um i was helping the fdic work through all of the

01:48um commercial real estate debt that uh that the banks made um when those banks failed so we were

01:56doing the foreclosure work for the fdic and going through just reams and reams and reams of debt

02:02um and valuing that debt to be sold in the secondary market so that's how i started my career and then i

02:10moved into kind of like a seasonal underwriting uh consulting position um with uh cushman and wakefield

02:16and um and just kind of been in real estate the whole career nice man that um you know that had

02:25to have been a unique experience 2000 during 2008 uh when that when the crash happened and there were

02:31so many distressed assets out there um i honestly i don't know a lot about the debt side i should know

02:37more than i do but i don't um so how do you know big banks how do they value debt on uh on the

02:43secondary market how is you know if you have a 10 million dollar loan that's at five percent interest

02:48how do you value it like what is the valuation process yeah so um the the primary thing that

02:56you're focused on is is uh you know how much you can sell the underlying asset for so as soon as the

03:04debt uh has gone bad all you're focused on is the asset so then you basically just go down into

03:09traditional real estate valuation so okay you know how much can we liquidate it for what are the

03:15foreclosure timelines what are the legal fees associated with it basically just do a long

03:20cash flow model that has a big lump sum at the end and you just have to build in all the all the

03:26factors between here and there and you're basically not getting any cash flow until it liquidates

03:30so um so that's basically the process is a lot more simple than you would think

03:36yeah so you're just you're just reevaluating the property just i mean how you would otherwise on a

03:41cap rate basis and then uh if if they're underwater that's just that's too bad yeah well i mean at that

03:49point they already are underwater so now you're just figuring out how much you can actually liquidate

03:54the property for and then putting a big fat discount rate on it back to today and you know that's

04:00how the that's how the the private equity markets that buy the distressed paper that's how they look at it

04:06interesting um yeah so i'm sure you've learned a lot during you know during that experience since

04:11then you guys have moved on you're also you're starting your fund now the rei um capital growth

04:17tell us a bit about that what brought you to start your own fund and what are you guys about

04:20yeah so rei capital growth is um it's really the culmination of my father's life's work you know

04:29we've been working together on this for several years and the idea behind it is we're trying to

04:35offer a passive growth investment to investors so so everybody in real estate is offering passive

04:42income passive income well we tried to flip that on its head um in the with the idea that one of the

04:50major benefits of investing in commercial real estate are the tax benefits but if you're receiving

04:55passive income you're leaving a lot of those tax benefits on the table um but if you're invested in

05:01a fund that's focused on delivering growth and reinvesting into more and more assets we can be

05:08incredibly tax efficient on the fund side as well as on the investor side um to deliver a lower risk

05:16compounding growth investment for for our investors makes sense um so what are you guys actually

05:24investing in so we like multi-tenant open-air retail so you know think grocery store with five or six

05:31other retail locations attached to it so these centers are located all across the country in every you know

05:40small town and there's uh you know over a hundred thousand of them and we like to invest in a certain

05:48value band so we like kind of the five to thirty million dollar price range and in that range you're

05:54going to be competing with less institutions because institutions like to write bigger checks

05:59and you're competing with less individuals because only so many people can write you know a check big

06:05enough to buy a 12 million dollar property so we think within that value band we can um earn a better

06:11risk adjusted rate of return um then you know lower or higher on that uh value band yeah yeah i um i've

06:20been noticing between like the the three to ten million dollar range there's just better deals because

06:26of just what you talked about like anybody can buy a one million dollar property and and if you're

06:32going for the 10 or the 15 20 million dollars then you're up against really big money um so in that

06:38that medium range is uh there's a lot more i mean it's the same amount of opportunity but it's uh

06:44there's just fewer people actually looking for those deals so um yeah that makes a lot of sense

06:49to me um so strip set you said multi-tenant open air retail that makes sense before the podcast you

06:55and i were talking and i was confused about the open air part but you're really you're talking about

06:59strip center retail with an anchor right right so open air just meaning you know the entrance to the

07:05retail location is exterior to the building yeah yeah that makes sense um i have always been

07:11interested in that type of real estate i've had a few of them sent to me um but i just don't i'm not

07:17confident enough to move forward in them i you know i've never never bought one never really

07:20considered buying one until they started being sent to me um so i am curious to know how you guys

07:26underwrite those uh just give us your your 10 000 foot view what do you guys look for what's a what's

07:32like a gold egg for you when you're looking at strip center retail yeah so uh strip center

07:39excuse me strip center retail is can be a very very reliable cash flow stream because you have

07:47credit rated tenants um you have potentially medium and longer term leases um and these credit rated

07:55tenants they pay their leases very consistently you know sometimes these companies go out of business

08:00or go bankrupt and they renegotiate their leases but that's kind of more rare um so you know ace

08:06hardware up here i don't know if you guys have that on the east but up here in the northwest there

08:10used to be such a big chain and they're just they're going down left and right home depot is just gobbling

08:15them up yeah but the the very interesting thing is you know i have an ace hardware in ann arbor where i live

08:23and it's store number 357 right and that ace hardware is never going anywhere right so there's

08:30there's nuance within you know within those calculations of understanding who your tenants

08:35are how long they've been there you know how um embedded they are within the community um but also

08:42within retail there are very simple things like if you're on the wrong side of the street it's a

08:48totally different valuation than if you're on the other side of the street because there's easier

08:52access to uh ingress or egress or terrible access because you just happen to be on the wrong side

08:59of the street so there's there's some nuance in it but but really um for what we're looking for which

09:05is stabilized properties we're not looking for large value add opportunities um it's really about the

09:11cash flow stream and the biggest thing you need to worry about is if you lose a tenant how easy is it

09:18going to be to release that space so that's why it's location location location yeah but it's funny

09:24you mentioned the wrong side of the street thing because they're um by where my parents live there is

09:30this this large uh retail you know strip center retail and there's this big anchor store and it's right

09:36on the there's an exit to a major freeway and it's just right on that corner and every time i go by

09:42it i'm like that is such an ideal location but it gets turned over i swear to god every single year

09:47there's a new tenant there and i i don't know if you would think it makes you know it's a good location

09:53but i guess because it's of where it's located it's kind of difficult to get to um yeah people just

09:59don't probably you know they don't go there yeah it's probably great for visibility because you drive by

10:04it all the time but it's it's actually kind of hard to cross when it when there's a lot of traffic

10:08because there's just too much flow and uh that that happens a lot that happens all the time

10:14interesting so so yeah it's it's important to to understand the dynamics and be there at different

10:21times of the day when we visit do site inspections we kind of hang out all day to kind of see how the

10:27traffic flows see where people come and go um and sometimes you know a strip center looks beautiful

10:33on paper and you go and you sit there and there's just nobody comes people everywhere

10:38yeah there's people everywhere else except right here so it's you know it's important to understand

10:43those things um but ultimately what you're focused on is just you know retail traffic are people coming

10:49are they interested in what these tenants are offering and can they get in and out you know

10:54relatively easily yeah yeah that's interesting there's a um there's a uh family here in seattle

11:01that owns a whole block of commercial real estate and i'm talking like downtown seattle in chinatown

11:06um yeah but for some reason the city of seattle they've been pushing homeless people there and so

11:11they're suing seattle because all of their major tenants like commercial tenants have left and they

11:16cannot they've tried to sell it to developers and developers will go there and be like we can't

11:20build here they don't want it and they can't get it leased up because nobody wants to start a

11:25business in a homeless encampment um and so yeah i mean even in good locations without knowing who

11:32are the people that are actually in that location um that would have a big impact on your actual

11:37valuation makes a lot of sense to me so let's go um a couple layers down into the underwriting i want

11:43to know specifically like what uh what do you look for in the metro um just give me all the details

11:51that you you consider when you're looking at strip center retail yeah so uh the primary thing that

11:57we're looking for is the demographics of the of the location that we're looking at right what are the

12:02traffic counts um what are the the um the the foot traffic counts there's a company called uh placer.io

12:10um and they track foot traffic oh wow i don't know how they do it but they track actual foot traffic

12:18into uh retail locations so you can see how many people are actually moving around around the center

12:24on any given day traffic counts are great but foot traffic is actually even more important um so

12:31demographics of the of the local area household income we look to be above 75 000 on average um we

12:39look for at the labor market you know how diversified is the labor market if there's a single employer that's

12:46over 50 percent of the employment market that's that's a little bit risky um because you know if

12:53they have layoffs it's going to affect such a large percentage of your of your base um uh we also look

13:00at the lease rollover you know if all of our leases are rolling over in year three maybe that's not the

13:07right you know the right lease mix that we're going for you know you like to have staggered lease rollovers

13:13um also the tenant mix if it's all mom and pops um you know that adds a little bit more risk than if

13:20you have a couple of larger uh national tenant rated tenants as the anchors that adds more value um so

13:29you know it there's a lot of different pieces and no single piece is really a deal breaker but these

13:36are kind of just general ideas of what we're looking for yeah do you um give me a rundown the the

13:42metros that you're actually looking to purchase in is it do you look for smaller tertiary markets or are you

13:46only looking for like dfw new york city like bigger bigger cities yeah so we stay away from primary and

13:54tertiary we like secondary markets so think suburban markets to major metros you know 45 minutes to an hour

14:03and a half away from major metros not too far out but not too close we find that there's even better

14:08yield in those locations they're a little bit sleepier towns um than a than a major metro because

14:15you know in a major metro number one there's going to be way more competition number two you deal with

14:21you know what's happening in seattle hey there's homeless encampments and and now you know we can't

14:27get anybody to lease our space like that's a it's kind of a newer phenomenon but it only happens in those

14:32you know downtown metro uh locations it's interesting um i don't mean to jump in here but i i bought a

14:39self-storage facility like downtown lubbock texas and i'm talking like downtown and when i was doing

14:44the underwriting i was like this you know the facility was very very vacant and i was like this

14:49is going to be a slam dunk um because there's no way that this can go wrong and when i bought it uh it

14:54we just battled the homeless left and right every single every single day and it was uh that was my big

15:01lesson that it you know location matters more obviously location matters a lot but it also

15:08matters like what is happening at the specific corner that you're that you're buying this i mean

15:14even if it's in even if the the population in a three five mile radius is huge and there's like

15:19thousands of people you know tens of thousands of people in that radius um if there is a ton of

15:25homeless or if there's issues in that specific location it's it's just not worth buying and it's uh

15:30it's not worth moving on yeah absolutely and and you know in the retail uh space you know the retail

15:38center can back up to you know a neighborhood that has a really high crime rate and you know that

15:45bleeds onto the property right so it might not be homeless but it might just be you know it might just

15:51be a scenario where it the location is impacted by external factors that have nothing to do with the

15:57quality of the tenants or the desire of the residents to visit the center right so there's there's a lot

16:03there's a lot to it and the only way to kind of identify those issues is physical site inspections

16:10and long site inspections you can't you can't just pop in and out for an hour you know you have to go

16:17and you have to hang around for a day and you have to talk to the to the um to the tenants the people

16:23that work at the you know local starbucks or the you know subway or the grocery store say hey how

16:29how do you guys like this space is it good you know what are the issues you guys run into and people

16:33love to talk people love to talk so you go in you just buy a coffee you start talking to people and

16:39and you learn a lot about the property more than you could ever learn from on an offering memorandum

16:44yeah absolutely do you guys have i mean so you talk to actual people that are that are frequently

16:51frequenting these these locations like if it's a grocery store you go in there you talk to the

16:56clerks you talk to the customers um do you guys is there any other uh people that you call like the

17:04police the police station um the local government do you uh who else do you call to kind of get a feel

17:11for the location yeah you know a lot of times if you're there all day you know you're going to see

17:16a police car and so you just kind of go and chat them up um you can also talk to uh the mailman there

17:22they have a lot of information for you mailman yeah then you also just kind of go down to city hall

17:28and you know go to the the planning board and kind of just chat up whoever's available down there and

17:34tell them hey i'm interested in this neighborhood what can you tell me and people are very interested

17:39in sharing their knowledge and their expertise um but you just you got to be on the ground if you call

17:46you'll you will not get a tenth of the information you'll get if you're down there so um so yeah you

17:53got to have boots on the ground that's a that's a key component nice um so let's talk about value add

17:58i mean we're not uh you're not buying these to uh to keep the keep the cash flow where it's at

18:03obviously you want to force appreciation just a little bit what are the general plans that you guys

18:08implement to uh to add value well so our strategy is actually a bit different um we are buying

18:15stabilized properties with maybe a little value add opportunity in that we're only 90 occupied so

18:23hey we can lease up a space and add some value that way but the way that we grow our investors

18:28capital is through our reinvestment strategy so we buy a property it's kicking off cash flow and we

18:35reinvest that into another property and that that allows us to diversify the portfolio holdings as

18:42well as um have additional depreciation to write down all of that new income and um and it creates

18:50a compounding effect so we reinvest and we reinvest and we reinvest and it grows and grows and grows

18:55over long periods of time it's basically kind of robert kiyosaki's rich dad poor dad model

19:01but on a commercial scale right yeah interesting so there must be what is the i mean what are retail

19:08centers trading for like what's the what's your cash on cash return for a three million dollar property

19:14that you guys are looking at yeah so um so all of these properties are stabilized so we're not doing

19:22any negative am you know we're always going to have a spread between the cap rate and the interest

19:27rates so interest rates are what six six and a quarter right now uh maybe a little less um and

19:35so we're looking at least at least a point to a point and a half spread over that so seven and a half

19:41maybe seven and three quarter cap rate um so our cash on cash return is coming in a little bit over

19:46eight eight and a half percent uh is what we target now there's times where we can do better than that

19:52there's times where we do a little bit worse than that but we think our cash on cash return which is

19:57what we're reinvesting and growing um is roughly between eight and nine percent on average over a

20:03long period of time interesting okay um and are these all are the leases gross or are they triple net

20:10triple net all triple net even for even for the smaller locations like the mom and pop you know

20:17your hairdresser your your tax accountant whatever yep yep we focus on triple net or double net or

20:23absolute uh uh yeah sometimes we do an absolute net but um but yeah we we focus on centers that are

20:31structured that way and if they aren't structured that way then we look to uh transition the leases

20:37into that but usually the anchor that we're targeting is always triple net and then maybe some of the

20:42smaller um smaller leases aren't structured in that same way and when they turn over we look to

20:48bring them up into uh the similar structure as the others all right makes sense um so we are running

20:57down the time we've already hit 20 minutes uh but i wanted to ask uh you know looking at your crystal

21:02crystal ball um for retail what do you guys see in the next three to five years

21:06hmm so i i personally i really don't think that the real estate market has experienced the price

21:18shock uh that the increase in interest rates should have created right so um my crystal ball is really

21:27bad i've predicted things my whole career and always been wrong um but i i tend to think that

21:33they're going to drive interest rates back down um which is going to cause prices to even balloon up

21:39a little bit because they never really came down and people were still transacting so as rates go down

21:44the prices will go up even more right so the the asset bubble could get worse um so so maybe we finally

21:51see that price correction when things just get too expensive or or people stop buying but uh you know

21:58for the next three to five years i kind of think things are moving in the in the up direction with the

22:03um you know with the the moves that the fed has done with the reduction of the rates i i don't see

22:09them stopping that um i think they should but i don't see them stopping and um and so i i think the

22:16the real estate market is going to continue to thrive for the next several years yeah yeah i was

22:21surprised with that too uh you know during since 2021 i just figured with the raise of interest rates

22:28people would be that would be calculated in the the prices that you saw on market and people still

22:36wanted the five six cap for their property and i'm just like i don't get it where we're uh yeah so i we

22:42uh we've been kind of confused about that one as well but um but hey it's uh it's all good it's real

22:48estate yeah yeah all right with that i'm gonna push us off to the quick question round are you ready

22:55sure all right starts with education it could be any form it could be a book you've read a

23:01conference you've gone to a mentorship program you've been a part of anything i just need two

23:06recommendations one for general life wisdom and then one for real estate um general life wisdom if

23:14you're going to be an entrepreneur i would say listen to david goggins when you're having a rough day

23:19he can pick you up and help you get through those rough days and just keep moving forward

23:24um and then real estate wisdom if you're really just starting out uh i do think rich dad poor dad

23:31is a good foundation of kind of how the mechanisms work um i i've read so many real estate books and i

23:37i don't have any that i i just love but rich dad poor dad was kind of how i was brought up like that's

23:44the core concept um so i i always recommend that to people who are just starting out yep yep that's

23:51a good one i like that you said david goggins too because he is uh he's he has a very unique

23:56personality but it's really good to get you up and uh get you going um that guy is he's just an animal

24:02the amount of running he does i'm just like how could you it's i could not handle it it doesn't make

24:08sense to me but you know when i'm when you know being an entrepreneur just in general is is really tough

24:13you know when i'm dealing with regulators or something that you know i just i'm really

24:17struggling with i i listen to him for about five minutes i'm like oh okay i can do this i got this

24:22he can run 300 miles exactly exactly all right next question is about nope nope next one is about

24:31yours for your younger self let's go back to the matt who was uh just getting started to back in

24:362000 what 2008 2009 um looking at that uh revaluing those uh the debt for those for those

24:43uh foreclosed properties go back to him look him in the eye give him one piece of advice moving

24:48forward i would i would say start buying for your own account immediately right you know hindsight's

24:562020 it's easy to see where the market's going gone over the past 15 years i had a very um pessimistic

25:03view of the view of the world at that point i guess maybe that was a makes sense you were kind of

25:09looking at all the failures yeah right right but you know just to stay optimistic and start buying

25:14as soon as possible um would be the one piece of advice yep and that uh that has been echoed so many

25:21times on this show um so we put it in the bucket of i wish i got started sooner and anytime somebody

25:27mentions that i always point it back to you the listener if you are listening to this episode and

25:31you haven't gotten started this is your kick in the pants go out there just get a deal done

25:35doesn't matter what it is it could be a single family a piece of piece of land anything just go

25:40out there get it done and get that ball rolling because uh 10 years down the road you're going to

25:44be thankful that you got started today rather than next week next month next year whatever it is

25:50absolutely all right next question is about the u.s it is a big place there is a lot of opportunity

25:56out there give me the single metro you're most excited about investing in today

26:01hmm that's a good that's a tough one there's so many great great places to invest for what we

26:10invest in is just there's you know the world is our oyster um so i we focus on places with growing

26:18population bases instead of contracting um we focus on places with really diverse uh labor markets

26:25maybe uh birmingham alabama i really like birmingham you know it's got a really strong uh diverse

26:35labor market um really strong demographics and household income it's kind of sleepy people don't

26:42really go down to invest in there but um but yeah that that might be my my uh my favorite spot that

26:50i've been looking at interesting yeah there have been a number of people who've come on here and

26:54mentioned birmingham um uh usually party well no i don't know i mean uh it i do feel like it's not

27:02it's an overlooked um location definitely i mean all most people want you know dfw um anywhere in

27:08florida you know the the bigger metros they're they're attracting a ton of people but um dfw does seem

27:14you know it's got its uh it's got its fans out there so that's uh it's good to hear yeah we tend to

27:19find those places a bit overvalued at this point especially florida florida's kind of gone a little

27:24crazy um but but yeah birmingham is a good one nashville tennessee is another great great place

27:30you know surrounded communities around there um maybe louisville kentucky that's a that's a good

27:35spot they've seen some good properties out of there um and then we've seen actually a lot of properties

27:40coming up uh in the midwest so you know uh wisconsin michigan um illinois so uh you know

27:48there's always that midwest contingent that's that where there's opportunity but kind of like that

27:53southern belt at the moment okay it's interesting you said illinois um i've always been curious people

27:59say illinois and illinois but you're in michigan so i feel like whatever you say is probably more

28:04accurate than uh than what i said i said it and immediately regretted it that's not how you say

28:11it it's illinois it's all good all right next question is about finding deals it all starts

28:18with getting in contact with the seller and pending that purchase agreement so what is your favorite way

28:22to generate leads and find new deals so uh because we're buying stabilized properties in that middle

28:29asset uh price valuation band we are basically buying publicly listed properties so uh we have

28:38very deep relationships with basically all the major retail brokers across the country and they're just

28:44constantly sending us deals like our deal flow just organically from from publicly listed properties

28:51is very robust so we basically feel like we just get to pick the you know the cream of the crop

28:58and it's it's a beautiful thing and then because we're reinvesting and constantly buying and buying

29:04and buying you know we're developing a a reputation in the market of being a great closer so we're going

29:11to start seeing some of those off-market deals coming in as uh as we build our portfolio and grow

29:16nice i love it yeah it's crazy once you um once you get known for buying any type of asset you know

29:24mobile home parks rv park self-storage facilities is what we buy um and as i've been buying more is

29:30you know brokers start to understand that and then you just get flooded with deals and it's really

29:35difficult the number of deals that i see is actually um i don't feel like it's a benefit to me

29:42because i have not figured out how to get through them underwrite them quickly um you know it's it's

29:49really difficult with the volume that comes in how do you handle that um if you get too many deals

29:54it's almost worse than getting no deals at all it's like there's just there's too much to look at

30:00well so uh the nice thing for us is that valuation band kind of cuts out a lot of the noise right so

30:10you know we're very focused on a specific uh target price so you know you never really get the target

30:17price but you get the the noi so if the noi is in the right band that falls into one bucket

30:22and then you get the surrounding demographics okay if it falls into these buckets then it goes

30:27into the next one so we have like some initial target benchmarks that thin the herd and then we're

30:34looking at i don't know instead of eight deals a week it's you know really digging into one or two

30:40or three deals a week to to kind of you know find that that uh

30:47what what's the expression in the haystack a pin in a haystack a needle in a haystack thank you so um

30:53so yeah it's it's a process of kind of just like whittling it down with some high level metrics

30:58and we probably frankly missed some great opportunities in doing that but you know we

31:04just kind of zoom down to our credit box as fast as possible and then we dig into those opportunities

31:10that that fit the high level metrics and then you know we find the find that needle yeah that

31:16that's actually a really good way to go about it because uh if you're looking at all the deals

31:19it's just it's too difficult um so if you just choose the criteria that you want specifically

31:27number of pads number of you know how big the metro is etc etc um right then you can cut out most of

31:33the noise and just look at those uh those gems that you know actually fit your buy box

31:37yeah and focus on the metrics that are always provided in the like that teaser doc because if

31:44you have to dig in to find the metrics that cancel it out you're already wasting time so you know

31:50like i said we're probably missing out on some great opportunities but um but you know it's a much

31:57more efficient way to find really what we want instead of having to stretch or having to buy a

32:01property that's smaller than we want um you know we just kind of weed those out right away and then

32:07really zoom in on the ones we're looking for yeah yeah um fomo i feel like would uh would get me hard

32:13though because uh the best deals that i found generally like i have to look deeper in order

32:18to find out why it's a deal like there's something in the pnl like they're i don't know their their

32:23electrical bill is super high or whatever it is that pops out in the pnl that i wouldn't have seen

32:29in the actual om that comes my way um so yes but i like what i mean in order to look at more deals

32:36that or look at look at the deals that you want that makes uh that makes a lot of sense yeah but

32:42i was gonna say there certainly is a little spidey sense that you start to develop and you know let me

32:48look at that one again you know you just take a quick look and and you throw it away and you say

32:52wait wait a minute wait a minute come back and that certainly happens you know where you know after

32:57you've looked at enough deals you you really start to get a sense that uh you know you can sometimes

33:02find those those opportunities that would initially get get uh kicked out just just after having some

33:09serious reps under your belt yep all right next question is about lessons learned um not every deal

33:17we get into goes the way we expect it in fact pretty much every time something is going to go wrong

33:22and uh that's when we get to learn a lesson so what was the deal that went a little bit sideways for

33:26you and then what was the lesson you pulled from it um so we bought a strip center in a tertiary

33:33location and for the first several years it crushed like over 10 cash on cash return like we were doing

33:42really really well with it um and we lost a major tenant in that property and we assumed the releasing

33:50uh our releasing assumptions were built off of our experience in secondary markets and tertiary markets

33:57are quite a bit different it is very hard to back lease space in the tertiary market um so we

34:04you know we had that space sit open for a very very long time and um after a certain point we just had

34:11to you know cut our losses and and vacate that that property for um it was ultimately a loss on you know

34:19what we bought it for and what we sold but those years of cash flow you know kind of made up for it but

34:24still it's it's just you know it's never good to to sell a property for less than you bought it for

34:29so that one hurt that one hurt really bad and that's kind of why we learn the lesson and you're not

34:34making that mistake again yeah yeah maybe one day in the future you know tertiary markets can entice us

34:42with high cap rates again but uh we're gonna do that extremely cautiously yeah yeah one thing i've

34:49found or one of the the reasons i have stopped really looking for the tertiary like really small

34:55markets for us specifically is it's hard to find good people to work to work in the area like if you

35:01lose you know a property manager for us or boots on the ground it is really difficult to replace them

35:07with somebody that is reliable and uh and that's why at least for us that we're just i'm i'm not a

35:13super huge fan even though there are great deals out there um if you live in that market sure go for

35:18it awesome but if you don't have those that network it's uh it's it's difficult to get a deal going the

35:25way that you want it to yeah that's that's a really good point um because we work with a

35:30a third party you know nationally recognized uh property management company um because we own

35:36properties kind of all over the country and um they don't necessarily work in every tertiary market

35:41they work in some of them but they work in almost every secondary market but once you start getting

35:46down into the tertiary they say yeah we don't cover that and that's a big problem for us so um so

35:52that's a really good point um and i i completely agree yeah all right so that was lessons learned um

35:59let's talk about the uh the other side of that sometimes things do go right and uh the deal

36:03kind of sticks out in your mind is one of your favorites take us to that deal what was it and

36:07what'd you like about it yeah so we bought a a shopping center in uh 2012 and um it just it

36:17crushed you know it was a it was a coming out of the financial crisis we bought it at a 10 cap

36:23um and it was pushing out well over that in uh you know cash on cash return on an annual basis

36:31the only regret i have with that property is that we sold it and we sold it for a huge gain

36:36but you know our whole methodology now is why would you sell anything that's crushing right keep it keep

36:44it keep it as long as you can um so the only regret i have is that we sold it for a huge gain

36:48and um and that that that's kind of the the the beginning of this whole strategy that came into

36:56creating our fund was that one that first property that just you know we knocked the cover off the

37:01ball with that one and uh and we've loved you know multi-tenant retail ever since yeah that's funny

37:07you say that because i'm actually i i just made that decision maybe it's a mistake just just recently

37:13the very first two self-storage facilities i bought um were in the dfw metro but they're they're really

37:19small they're like i think total it's like 16 000 net rentable um and so i just just listed them just

37:26recently they were absolutely i crushed the deal they they're they're doing fantastic um but i was

37:33realizing that my uh return on equity was really low and so i finally finally decided to sell them just

37:39just this month um maybe that was that was a mistake but uh hey whatever at least we still uh

37:45still did well yeah no it's it's a tough decision right and uh especially you know for us we had

37:52you know uh a syndication of family and friend investors right so we had to return capital to them

38:00we didn't have to do it so quickly but you know we we wanted to uh to really knock the cover off the

38:05ball in a very short period of time um but you know part of that experience is what led us to

38:10creating the fund which gives us a longer term horizon as opposed to having to close out individual

38:15properties one at a time so you know it's kind of part of the origin story of how we got to where we

38:20are now um but but every every individual property is a different decision so i i totally get it and it's

38:27hard so it's hard decision to make yeah yeah and i mean that's one of the benefits of the fund model

38:32is um you're not you're not stuck to that specific type of timeline you know a syndication you're doing

38:38three to seven years um you have to return that that money to the to the investors and so um makes

38:44a lot of sense why you guys are starting that yeah all right this is the second to last question um

38:50this one is a new question we've been uh asking it's about ai um ai is relatively new and i've been um

38:56trying to implement it in as many ways as i possibly can responsibly in my business so i like to ask

39:02people to come on um how are you implementing ai in your business today or are you um we are very

39:09carefully um so i i don't know if i mentioned but we're qualified with the sec under reggae plus

39:18so we can accept many small balance investors right and so our goal is to have hundreds or thousands of

39:26investors coming into our fund so we're using ai to um to help us manage that flow of potential

39:34investors in our crm um as well as we're you know contemplating a uh an ai seo strategy to help

39:44increase the visibility of our of our website to drive more traffic into into our fund but we're

39:51it's kind of on the outward facing you know um and a little bit on the crm to help manage just

39:57just kind of the volumes of people coming in what stage they're in what they need follow up with etc

40:03nice tell me a little bit more about the ai seo because i've been using ai to do seo on my stuff

40:09too and i'm curious what you guys are doing it's an interesting strategy that we haven't

40:15deployed yet um but but the idea that that we came about was um there's many people in individual

40:25locations around the country um searching for deals right properties to buy to rent near me

40:34you know type of thing and there isn't a great uh there isn't a great service that aggregates those

40:43deals and shows you them and gives you any type of valuation expertise around how to evaluate those

40:52deals so the concept is you know deals near me and you know our website will pop up and show you a list

41:00of deals that were scraped from all the listing networks and throw on a little calculator on top of

41:06it that says you know this is what the average rent is in this area and this is what you know

41:12cap rates are and this is what the valuation looks like and just like some very high level metrics you

41:18know back of the envelope math to help people evaluate transactions um but kind of capture that um

41:25that locational aspect of it because nobody else seems to be doing that at the moment we're working

41:32on it it's very complicated it's a lot more complicated than i thought um but you know if we

41:38get 50 or 60 people in each little you know city um looking at our website every month i mean that's

41:46a that's a big deal yeah well i uh that is one strategy that i've actually tried and it does work

41:51um so i tried it for uh i bought a bunch of domains um sell my house fast x you know city state and i did

42:00it was just i was trying things out trying to learn ai and kind of figure out how it worked

42:04so i bought i think it was 20 or 30 domains with that formula um and then i used lovable or was it

42:11bolt i can't remember maybe it was replit one of those you know the ai uh development softwares to

42:17create websites for them with the formula to rank for seo for those those specific um keywords and uh

42:23i launched them and they all started to rank and so you know we start to get leads through that way

42:28and then i tried it again with mobile homes um sell my mobile home fast or something like that

42:34so my mobile home today i can't remember but we got it to rank and we're getting people sending us

42:38their mobile homes and so that that specific strategy of just trying to uh rank for various

42:45tight locations i i can tell you it does work and uh people yeah you gotta you gotta hop on it while

42:52it's while it's available because it's definitely uh definitely effective yeah yeah that's uh that's

42:58great to hear it validates the the idea all right well that brings us to the very last question this

43:05is for the listeners you've given us a lot to think about i'm sure people want to reach out get in

43:09contact with you this is a two-parter where can they find you and then what can they expect when

43:13they reach out so uh number one they can find us on reicapitalgrowth.com it's our website um and

43:22what you can expect to reach uh when you reach out is conversation with the founders either me

43:26um my partner or one of my partners right so we are infinitely available and uh we love to talk to

43:34everybody about real estate we're also happy to be um a resource to people that are just starting out

43:40and want to learn so if you uh reach out to us you're going to actually talk to us you're not

43:45talking to an ai call center nice i like it um i will put that link in the show notes so if you guys

43:52want to reach out all you got to do is click the little more in the description it'll pull down that

43:56full description in there you can find his links all right matt that wraps it up man thank you very

44:02much for hopping on the show no thank you i really appreciate it absolutely and for everybody who's

44:08with us today first of all i apologize if you guys are on youtube and you're watching and you've seen

44:12my coughing i've been uh i've gotten a little sick and so from my daughter going to preschool and so

44:17i've been trying to trying to at least not cough into the mic um but if you guys are here we appreciate

44:22you and thank you very much for hopping on the show um if you guys want to support the show just uh just

44:27leave us a review a comment any of that stuff other than that i hope you guys have a great week

44:32keep rocking real estate and i look forward to seeing you on the next episode

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