GI291: Creating Financial Freedom Through Real Estate with Mathew Owens

GI291: Creating Financial Freedom Through Real Estate with Mathew Owens

Mathew Owens began his career in real estate as a flipper and a licensed CPA. In 2006, he quit his job as a CPA and went into real estate full-time. Over the past fifteen years, he has successfully flipped over 1,000 single-family properties while lending over $35 million to flippers across the US. His firm OCG Properties has raised over $150 million in private investors’ capital, and they currently own over 1,500 units across the country. Their company’s investments include syndicated investments, performing and non-performing notes, single-family and multifamily properties for both flipping and holding and private lending.

Watch The Episode Here:

Listen To The Podcast Here:

Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Mathew Owens. He began his career in real estate as a flipper and a licensed CPA. In 2006, he quit his job as a CPA and went into real estate full-time. Over the past fifteen years, he has successfully flipped over 1,000 single-family properties while lending over $35 million to flippers across the US. His firm OCG Properties has raised over $150 million in private investors’ capital, and they currently own over 1,500 units across the country. Their company’s investments include syndicated investments, performing and non-performing notes, single-family and multifamily properties for both flipping and holding and private lending. Thank you so much for being on the show!

Mathew:
Thanks, Man. Appreciate it. I look forward to adding some value here. So

Charles:
You started off as a CPA. Can you give us a little bit about yourself, both personally and professionally prior to going in real estate full time?

Mathew:
Yeah, no problem. I just to give you a little background, I’m, you know, I, I grew up in Torrance, California went to uc, Santa Barbara, which is a major party school of course. And I actually wanted to become an architect at first. And my dad was like, Hey, what do you wanna do? And he was a CPA and, and I said, well, they don’t have architecture school here, so I’m just gonna do accounting and become a CPA. And he is like, well, why don’t you just go to another school? And I was like, there’s too many girls here. I can’t, I can’t actually leave this school. And he is like, you’re gonna make your professional you know, your profession after you wanting to stay at a school for girls. I’m like, 18 years old, 19 years old. Like, yeah, of course.

Mathew:
You know, like, and, and so from that point forward, I actually started, started studying accounting, graduated, got my CPA license, worked at multiple accounting firms doing audit and tax, and really working on a lot of multifamily asset assets that were getting government subsidy and needed audits done on those multifamilies. And so I got to see a lot of the inner workings of the property management function, the operations on the back end of multifamily as well as seeing the real numbers on how this was playing out in the profitability. I probably knew a lot less about what I was really looking at then, but it, it kind of stuck with me on that side, on the math side of this. And I worked for some smaller firms, getting to see the inner workings of intern internal controls of different companies and stuff like that, and the accounting side and realizing that’s kind of the backbone to business.

Mathew:
At the same time, I was bored outta my mind going, I can’t do this anymore. It’s just so painful. I wanted to cry on the way to work, going, I cannot do this auditing stuff anymore. It’s like the worst thing on the planet, right? And and so I was looking for something else. I didn’t know what to do. I was like, should I just, should I start a bar? Should I start another business? What the heck? I don’t know how to make money other than get a job, go to school. And I ended up like every other real estate investor, read Rich Dad, port Dad, and was like, oh my God, I’m making the wrong type of money. Like this is insane. And started, I ended up taking some real estate classes and ended up quitting my job when I got my first flip under contract that I thought I was gonna make 30 grand, I ended up making 20 grand.

Mathew:
Thank God I didn’t lose money. ’cause Most people in the beginning do lose money. And that’s when it all started. And that was in 2006. And then of course we started flipping houses really fast. We got an office at the World Trade Center on Long Beach on the 23rd floor, myself and my two stepbrothers that were computer programmers that an electrical engineers both quit their jobs to go into real estate too at the same time. So it was a fun journey until, you know, and I thought I was a real estate genius until, of course, the market, you know, in 2007, eight happened. And so I realized I was only a genius for about a year and a half, right? And, and then realized I don’t know crap about actual investing and running a business and things like that. And hunkered down took out 200 grand on my credit cards to pay some investors back.

Mathew:
And then I lost everything at that time. Just kept grinding and finding ways of joint venturing with investors and partnering with them after I took that hit for them. They all reinvested with me on different flips and things like that. Now that the market had kind of taken a dump and, you know, really just a major head dive ’cause of a lack of liquidity in that market. Of course that occurred for at least the first six to eight months of that market cycle when everything hit the hit the fan, right? So seeing that aspect of things really taught me a lot about standing back up after taking a punch in the face and pushing forward and grinding. And that grit is really what makes you successful in this business, right? So, and you can imagine the headaches I have gone through after flipping over a thousand houses now, and the brain damage that comes with that kind of a business. Of course, <laugh>. So that’s the back. Yeah, no,

Charles:
I appreciate that. Sorry to cut you off there when you were doing that, what, tell us a little bit about your team. I mean, a thousand houses doing that. It’s one of the things that I always like with people that have done some scale with a business, kind of how you had that structure to be able to do that.

Mathew:
So at, at first it was a small, small outfit. We’re doing, you know, a couple of months, you know, type of thing where we were buying them and renovating ’em and tending them. We had, you know, contractors on deck, we had property managers on deck, we had, you know, the system and the team set up from that perspective with realtors. And we would buy them, we would renovate them, and we would tenant them. And I lived in southern California. We did an analysis on all these different markets around the country, and we did all these different flips out in Memphis, Tennessee Indianapolis, Indiana, Atlanta, Georgia areas, and, you know, really with a hub out in the, the Tennessee markets. And it really started small and it started escalating from there to where we needed our own rehab management team on the ground consistently, you know, full-time versus paying somebody outside to manage these different projects, right?

Mathew:
And then of course we brought in property management in-house also onto that, which is a whole nother business. I highly recommend against doing something like that. You’re just like, here, here’s 1000 problems to deal with right now every day, right? So it’s, it’s not a fun business. Property management, of course. And we sold that company because it was just, I was, I could make the same amount of money or off, off of the business by selling it that I could just, you know, running it myself and getting rid of all those problems to focus on more income generating items, right? So, right. You have to kind of internalize and have, you know, full-time team members on the property management side, on the construction side, on the real, the realtor side, the analysis side. And then you have a big marketing system that goes with that too, where you’re doing pay by click marketing, you’re doing direct mail marketing, you’re doing relationship marketing with wholesalers, you’re driving for dollars, you’re doing every marketing strategy and spending probably 150 grand a year, at least on marketing costs to be able to do five to 10 of these a month every month, you know consistently.

Mathew:
And so, which it, it’s very profitable, but I really wish I wouldn’t have sold all those houses. ’cause It, at the end of the day, if I look back at the valuations of those things versus now, if I would’ve just understood how to raise capital and hold those things, I’d have an extra $50 million right now in the bank instead of selling all those houses, right? So in thinking that I had to, I had to go through and, and sell them to keep the lights on somehow. And there’s totally different structures to do. All of you want all that you wanna do in this space.

Charles:
<Laugh>. Yeah. The property management is something, when I hear groups that have brought the property management house, it is a very low margin thinkless business, and it’s very difficult. I self-managed properties, my small portfolio for years when I started like oh six to 2012. And when I handed that off, it was like a sigh of relief. And it allows you to really grow your portfolio, grow your real estate investment business, and for people taking a house, I understand you get a little bit more of control, but it’s also just because you’re good at acquiring properties doesn’t mean you’re good at property management. I mean, they’re two separate, two separate, you know, things. We,

Mathew:
We the, the management company we sold to they could get, get their costs down by 30% on our, on our renovation cost. ’cause They were much bigger. Had in-house systems, in-house trucks, you know, in-house team members, all that kind of stuff from the property management side versus going outside subs and things like that, right? And then, you know, if, if something happens where you mess up as a company from a property management side and you’re managing an investor’s property, then a lot of times the manager’s gonna take the hit. People don’t talk about those types of things that can occur, right? If you make a mistake as a company or as a whole, right? And so it’s not all profitability, you know, in that way, right? And, and, and, and one, one side, the owners don’t like you. And the other side, the, the tenants don’t like you. You’re kind of right in the middle of this war between the two. I told my team that was on the ground, Hey, just blame the California office and every time you have to deal with something so that, that way they’re not, they’re not taking the brunt of the hate from tenants that are getting evicted or owners that are mad about a repair or something like that. You know what I mean?

Charles:
Yeah, yeah. That makes perfect sense. I also found it, it’s, you’re taking away the emotional element of it. So if you’re self-managing properties usually happens with like mom and pops, they want to fill up that vacancy and, you know what I mean? And they’re going to bend the rules a little bit than they should be, right? And they know they should be, shouldn’t be doing that. And it’s something that that’s one part of it. And the other thing too is you’re paying for the experience of the property manager. So I had, my first property manager probably was in a market for 25 years before I hired him, maybe 25 or 30 years. So I’m tapping into 30 years of his connections, his know-how, everything like that to be able to manage my own properties, right? And that’s an added benefit that’s not put on like a line items of what they’re gonna be offering to you. You know what I mean? And so there’s a lot of pros. I mean, I understand about if you have a small portfolio that’s really close to each other, you know what I mean? Yeah. And you have good contacts stuff, it’s easier. But when you get into bigger ones, if you’re really in that acquisition mode, I think it’s, it’s really smart to bring on a third party manager and take that off your plate. But

Mathew:
I, I think it’s, I think it’s good to maybe manage a house or manage a couple houses or something like that to learn what makes a good or bad property manager to ask those right questions of the outside team member. But the goal as a real estate investor is to be a pa own things passively, get cash flow coming in every single month and not have to do the workload involved. And a lot of different real estate investors out there, they think in their head, you know, or people that are just new to real estate think, I gotta flip a house, or I gotta buy a rental on my own, or I gotta do this all by myself. And really, there’s so many other ways of investing. You should be investing just like you would with a good property management company and learning off of them.

Mathew:
You can invest with multifamily operators, short term rental operators, single family operators, promissory node operators. There’s so many different aspects of this, and rely on their experience to do all that work and get you through that learning curve way faster. Where you don’t even have to qualify for the financing yourself. They do all that stuff. There’s no extra risk on the board and like a syndication deal. That doesn’t mean that at the same time they shouldn’t go do their own homework as well and, and do a deal on their own to learn how to renovate a house or how to do a short-term rental or, you know, those different aspects of things because you gain so much knowledge on what makes a good or bad operator too, when you’re investing with someone else on those deals. So all these things are kind of full circle. You should do a little bit of active, but you know, the goal is that passive side, right? So yeah,

Charles:
Well, you under, you understand exactly what’s happening, like you said, and then it’s, it’s gonna make you a much more well-informed, active and past investor in the future. And you really get that mastery. Matthew,

Charles:
Can you give us like an overview of your company’s investment strategy? I mean, you guys have different asset classes that you focus on. Can you give us like an overview of what you guys are working on and kind of what your role within that is?

Mathew:
Yeah, no problem. So I’m, I am the visionary as they say in the, the book traction, right? So I, I also still do a lot of operational work and things like that. I’m still a smaller company as well, and still learning to delegate of course to every aspect of my team. It’s hard for me. I love financial analysis. That’s my like superpower. I have 2 47 inch wide monitors behind me that for financial analysis, that’s like what every CPA loves, right? But what we typically do, what we’ve done as far as for years, as far as our bread and butter goes for like 18 plus years, is we buy a lot of single family homes in multiple markets. Renovate them, tenant them, and either hold them via joint ventures or our, with our own capital. And then, and then a lot of times we’ll sell them in packages to 10 31 exchange investors to people’s IRAs and 4 0 1 ks.

Mathew:
We’ve sold over 400 houses to international investors in Japan and China and have raised over $50 million from that market as well. And so we have translators set up and things like that, and so we understand the international tax side of this. And so we have that business that we continually do or we’re slowing down on it because single family home investing is just from the bank for your buck for larger deals. It makes a lot more sense doing the other projects. You know, the individual renovation management on that kind of project is significant. We also set up and do short term rentals on that side with very big houses where we’re putting shipping container pools in, we’re putting murals in, we’re putting full gyms and saunas and and, and ice baths and stuff like that in these things. So we have that, that business, we’re actually starting a fund right now for our short-term rental business as well.

Mathew:
We’re raising about five and a half million for that project. I also couple that with a lot of mobile home investing and debt investing where we invest in a lot of mobile home parks. ’cause The value add aspect of that is significant, where you can add new homes to parks as well as you can renovate down units and significantly, you know, increase that value, especially if you’re doing utility reimbursement programs and stuff like that in place. There’s a little bit more value add than in a multifamily type asset. And, and it depends on the asset. Of course, there’s some great value add projects that I invest in on the multifamily side too. And so that’s the real estate side that we focus on. And then we have the debt side of things that we do. I I lend money to flippers in different markets around the country.

Mathew:
And then we also go through and do different projects like debt invalidation where we’re helping people and invalidate their credit card debt. And we have discount programs put together for for active active duty military and, and military vets and other first responders to where they can invalidate their credit card debt and get it off their books. And we invest into those opportunities and we’re basically doing accounts receivable financing on these giant pools of receivables. So it’s a different strategy than the hard money lending, but it’s also debt. And we’re looking at our collateral to value in those types of investments. So we do a number of things. We do mobile home park lending as well. And so our mobile home mobile homes lending to specific park owners and operators that we know and, and trust as well. So a number of strategies, and I like the debt side along with the equity side of these deals, because when you’re investing in real estate, you get the tax benefits, you get, get to go through and get wealth building aspects of this where you’re doing value add.

Mathew:
You can get cash flow along with that equity build too. There’s a lot of other benefits associated with that, right? And on the lending side, you’re getting consistent cash flow streams coming in, you know, every quarter, every month on that lending side to cover your monthly expenses that are, you know, more of a cash flow play than necessarily real estate in the very beginning. When you’re doing a major value add, usually the cash flow is a little lower. So it depends on what your interest is. We have investors that are traveling the world on their promissory note debt right now and could care less about investing in real estate, you know, so but it, these strategies I think are important to utilize, to be able to take control of your financial future and be able to make make enough money to keep up with inflation and cover all your expenses, right? So that’s the strategy, right? Yeah,

Charles:
That’s great. You guys you guys are involved with a number of different asset classes. How does that work with the team that you have? I mean, what kind of team have you put together to manage? I mean, there’s almost a dozen different asset classes there and strategies.

Mathew:
Absolutely. And, and, and it’s not easy, right? So we have technology we’re utilizing, we have we have systems in place. A lot of my guys that work for me, guys and girls that work for me are, are financial minds, right? They, they deal with the backend side of things where they’re engineers and and you know, other finance professionals and stuff like that that have, that have graduated in finance and have that kind of mindset where they’re looking at the back end of this from the technology side. How can we leverage technology to automate things? How can we leverage different team members? Like we have a marketing marketing team member, for example, that we have a couple of people that help us consistently on that with our content distribution strategies because we’re consistently raising capital for projects. So you have to consistently go out on the marketing side and do that.

Mathew:
We have multiple sales team members and investment managers that help with coordination with our investors consistently and help bring in the, you know, close the deals and get the funds in the door and close with all the backup paperwork that goes into that, right? This is just on the investor capital raise side, you know, the marketing piece, the sales piece associated with that. And then you have quarterly reporting that has to be done on those types of deals too. And so having the backend admin infrastructure is key. And then we also have operational teams. So we utilize monday.com for example, for a lot of our different, you know, operations where we’re looking at, you know every single asset that we own has checklists with it has systems and processes with it, with rehab management aspects of it. And the primary asset management strategies that we have to use and metrics and KPIs we have to hit for that particular project.

Mathew:
A lot of ’em are duplicatable, especially if you’re dealing with single families. And so you have a lot of tech that you manage along with different team members. So we have probably about 10 team members that are internal team members that we utilize and the rest are in external team members on the grounds in these markets or partners that we’re working with where we manage the CFO function, manage the capital aspect of this and make sure that all the, everything is getting done on the asset management side of this from an operation standpoint while we leverage the teams on the grounds to do the actual, the hard work, you know, swinging the hammers and, you know, construction management teams and stuff like that on the grounds in these different markets. Makes sense.

Charles:
Yeah, makes perfect sense. What would be for new investors starting out, and maybe they’re starting off with a few properties and it’s that time to start taking things off their plate. What advice would you give business owners and investors who are looking at hiring a team and, you know, starting from the ground up there?

Mathew:
So first you have to know what questions to ask, right? What makes a good property manager? What makes a good contractor? What makes a good realtor? And what makes a good construction manager that’s gonna manage multiple projects, right? And so you’re looking for the key attributes associated with those different positions, right? Like a construction manager that’s managing multiple pieces of construction needs to understand construction, understand spreadsheets and understand how to manage a budget correctly, which is not very common in the construction space, you know, so, and we can all laugh about this, but we’ve all been stolen from, from contractors in the past, right? And so whether that’s labor or problems or just downright theft, right? And so looking at from that aspect, you have to understand, hey, what are the key things that that, that person is gonna have to do for me?

Mathew:
So outlining every piece of the construction management process and saying, do they need to know? What do they need to know? They need to be able to create these bids. Know the cost, both labor and material, negotiate with contractors or if you have an in-house having the right people that they’re managing, right? So there’s each position comes with that aspect. If they’re a brand new investor, get referrals from other people to be able to do this. Ask them why they think they’re good team members, because not every referral should be weighted equally. You know, some investors don’t have the right experience to know if they have a good property manager or not, for example, right? So finding the people that do have that experience, that have referrals and recommendations in those areas is the best way to go to start building your team. And then knowing, hey, how does the property manager make money?

Mathew:
Do they, are there, how many ways are they making money? Is it repairs markups? Is it leasing fees? Is it, you know, acquisition fees? Is lease renewal fees all? What are all the ways and are they, are they aligned with your interests? Right? Do they get paid whether it’s rented or not, right? So these are the questions you wanna be asking these different team members to understand. We have some of these checklists in one of the classes I teach that can give away to the audience that they want it. They can reach us at matthew owens.com if they have that interest. But, you know, that’s, that’s the, I think the piece of it that most people don’t understand is that they can, and when building the team, you have to know what those skill sets are to make a good team member.

Mathew:
And if you don’t, you gotta find somebody who knows that already they can give you a referral, right? So that’s the, the key to the whole thing. And most people don’t have the accounting side dialed in. Which being A-C-P-A-I understand most and more than most, and it’s a very hard thing. I remember about five years ago I was working with a flipper that he just wanted me to review his financials with him, right? To help him understand them better. And this guy was flipping like five, 10 houses a month and he sits, sits down with me and he is like, what, you know, I don’t understand why these things are still on my balance sheet here, these properties. He’s like, they, I sold ’em last year. I’m like, well, you just paid a lot more money in taxes than you should have. ’cause You didn’t write those items off, off of your return, right?

Mathew:
Having the right, the right accounting, understanding as well as processes and procedures for good accounting and good budgeting, payment control you know, controlling, reviewing process on deals and things like that. And, and those, those quality control procedures are key for your success as a real estate investor. And if you don’t know that side, get that dialed in on your first deal. Like, work really hard to get that budget in place and how are you gonna track this and, and not pay all the, the contractor too much money up front, for example. And how do you have those proper protection things put in place? That’s

Charles:
A lot of great information. I remember years back when I hired our first bookkeeper for another business that we use for everything there. And it’s a game changer. I mean, it’s just makes it so much easier. And then you’re just going back and asking questions about a balance sheet, about something that’s already been put together and you can, you know, that’s how it’s now, hey, well why is this, what is this? And they explain to you or they make a change or whatever it might be. But it allows you to really know your numbers. But as you, since you brought it up, I mean, what are some suggestions for real estate investors as they set up their bookkeeping? Is it get a bookkeeper as soon as possible part-time? You know, maybe someone like a, a virtual bookkeeper you know, hiring an accountant. I always feel that anybody, especially anybody within entrepreneurship or real estate, should have an accountant. But what, what else would you say? I mean, what are some easy ways for people to bring on a bookkeeper initially?

Mathew:
So, so there is a ton of good, good people overseas that you can get work from in, you know, VAs in the Philippines and things like that. I would highly recommend if you’re gonna go that route, that you should find a company that’s already vetted these people and work through a company. You’re gonna pay a little more, but they have controls in place where you do three interviews with people and understand their, their expertise. Now, if you don’t know bookkeeping and understand that yet, then you should have somebody else doing that interview to understand those things. And you should test them always where they do a month’s worth of books as a test and, and have them explain to you the transactions that occurred and have somebody else that understands that reviewing their work. Because if you don’t have the knowledge, how are you gonna know what their workload, if their workload is right or wrong?

Mathew:
And that’s the biggest challenge, right? A lot of people have no idea that their bookkeeper sucks. You might be spending a ton of money and they’re horrible and they’re, they’re just destroying your books, right? And especially in complex transactions, if you start getting the seller financing or wraparound mortgages or syndication investing where you have multiple investors involved in distributions, you have to have a bookkeeper that understands that type of stuff. And, and if they don’t, then you have to have a higher level person like a CPA setting it up, right? So then that way that bookkeeper has, you know, can do the actual data entry aspect of this and then having a review process in place with a higher level person that’s reviewing it to make sure it’s right where they’re, you know, maybe you pay them 500 bucks a month or 250 bucks a month to do that review.

Mathew:
On top of that, my wife is a QuickBooks Pro advisor. She’s been doing our own art stuff for years. And we basically utilize her quite a bit from their higher level review process over bookkeepers, other bookkeepers that we have in place for this specific purpose. You know, and she helping a lot with like mobile home parks where you have lot rent, you have home rent, you have utility reimbursements, you have all different types of income and expenses that go along with that. And that’s major renovations that you don’t wanna show as part of normal operations and things like that. So there’s some unique details that go into understanding these books in the first place. So you want to have a higher level person that understands that investment type, which is a rarity in a lot of cases. And so getting referrals can be really, really important in that arena. Yeah,

Charles:
No, that’s a great idea for as you grow to have a kind of a bookkeeper for your bookkeeper as I would say. And that’s something great, that’s something that I’ve heard people have before. And usually working with an accountant, I remember I had a, we had a bookkeeper years back and our accountant used to charge us more ’cause they had to fix the books. And after a one of time was like, oh my, you know, you have to change it. It’s just so you have to really, there’s no way of me knowing that until, you know what I mean? You’re going through your, speaking into your accounting, going through everything. So, and then

Mathew:
Fixing the books, fixing the books is not an easy feat at all. Like, so it’s, it can be really, especially if they don’t understand the business or all the things that are happening or there’s missing information about invoices and things like that. It’s really hard to recreate if you don’t understand or have the right people in place to, to do that. And this is what I love about my wife. We met at my old CPA firm and she was doing the accounting work for the CPA firm. We got trained by the CPAs on the right way to do that stuff. And so then I quit and went to, went into real estate and told everybody we were dating and they’re like, what’s wrong with you? You’re dating Matt. You know, now we have, you know, now we have two kids and you know, I have a 6-year-old and a 9-year-old and I’m teaching them they love math already, of course. So I got the little entrepreneurs going here, so <laugh>

Charles:
No, that’s great to hear. So after raising over $150 million from private investors, I mean, what have you found to be some of the most effective methods for reaching new investors and then also educating them, you know, preparing them to invest into some of your deals?

Mathew:
Gotcha. So this is a, a very big loaded question, right? Bring in investors to the table. There’s so many strategies to utilize I’ll just pick a few of ’em that I think are really valuable and important to the capital raise process. And you want to be able to look at this as a process, as a, a big picture and saying, okay, what’s the best way I can be a, you know, a resource and, and helpful and educate my clients in all these different ways about the different investments that I do to attract more, you know, one referrals, right? Actually reaching out for referrals to other people is a, a huge way to do that. Two, going to live events. In the very beginning of my career, I was going to four to five networking events every single week for two to three years every week getting people’s information, going through and trying to add a value to them in different ways and finding ways of helping everybody else, right?

Mathew:
Without asking for anything in return. And what happens is it starts snowballing towards you. People start to trust you because you’re helping them in these ways. And sometimes it’s six years later they refer you someone because you helped somebody and had no idea that you helped them in that way, right? So going out to these live events, you know, go, it actually pushes the relationship forward at a exponential pace comparatively to online events or online meeting somebody or over a zoom meeting or something along those lines. You actually get to that point of trust way faster. ’cause No one will invest with you without building the trust. And so you have to add value. And many times realize that a new lead that comes into your database that might be a interested investor in working with you, they may take six months to two years to invest with you.

Mathew:
It is a long nurturing process, right? And so you, and they’re gonna forget about you if you’re not consistently coming out with content, you’re not consistently emailing them. And so we have a system where we do an email marketing system where every new lead that comes into the database, they get on a welcome series of emails. Here’s four emails about who we are and what we do as a company. And then we also send out weekly newsletters. I do a weekly email from me personally about my personal life because people wanna get to know you. If they’re don’t, don’t know you and like you and trust you, they’re not going to invest with you, period. Right? And so doing those things about showing who you are as a person is super important to be vulnerable because people have already gone through the pain you’ve gone through for sure.

Mathew:
So people are gonna relate to you as well in that, in that arena. So having a good email marketing system and database capture system where every single person you meet goes into your database, gets into the system that you can continually nurture long term. And then what we do is we do an email launch to a live deal where it’s, here’s three emails on education about that type of deal. Here’s three more emails or four emails on a launch to a live webinar about that deal. Here’s three more emails about a follow up to that webinar. And then here’s a final call email series as well saying, Hey, you guys are gonna miss out. You guys are gonna, you, you wanna, you wanna get involved? You better do it right now. It’s gonna be full soon, et cetera, right? And so having that sequence go out along with your, your weekly emails along with your welcome series is kind of the key there.

Mathew:
And then you have to make sure you’re doing the follow up and the sales piece. None of this crap matters at all if you’re not following up with people and having them in a system where you’re dragging and dropping ’em into different categories and following up consistently with them on, on. And if you don’t respond right away to people’s emails, they’re, they’re building the trust through those emails. If you wait a week before you get back to them on something, which is hard sometimes, if you’re super busy and o an operator then you, you should be able to go through and get back to them right away. ’cause They’re looking at every instance of communication as trust building. If you respond same day, same hour, they’re like, wow, they’re just getting back to me. They really care, you know, type of thing, right? And so you also have to not need the money.

Mathew:
Investors can smell it on you when you’re desperate for the money. And so you have to honestly not care whether that particular individual invests or not in your deal. Yes, you want them to, but you will have to do what’s right for them at all times no matter what. And so that’s really, really key in being able to raise capital. So I talked about the marketing aspect, the sales aspect, and you know, there’s a ton of other aspects. Nurturing your current investors that have already invested with you is a huge, huge one. Having consistent content that you’re coming out with to teach the audiences and different people that wanna follow you is very, very important. ’cause They get to know who you are. So these, all these things are part of that process on raising capital and how we’ve able to raise over 150 million now over the last 18 years and really just getting started in this space massively. ’cause I stopped raising for a while when I didn’t need to need the capital anymore through my own means. So now we’re focused on it as a business strategy as well, which is huge.

Charles:
Yeah, that’s a lot of great information, Matthew. Thank you. As we’re kind of wrapping up here, you’re a, you’re a CPA, you’re a real estate investor on the, both the equity and the debt side on many different asset classes. You also, you know, speak to new investors and, and help educate them. What are common mistakes you see real estate investors make, whether they’re new or maybe experienced investors make as well? So

Mathew:
First, understanding all the moving parts of operations and understanding what due diligence to do in the first place. Many investors skip the due diligence process and they base it purely off of trust, and that’s investors and other operators that are raising capital for other people and things like that, right? And so they, they don’t do all that homework that they should be doing on the operator. The, the deal in itself and the financial model, the legal documents, the, the legalities of them raising capital or being able to invest in the first place and what their rights are, you know, the market that they invest in. So we, we have a 200 point due diligence checklist that we utilize. It, again, it’s on our website, matthew owens.com. We have it free for people, and you can download that as a starting point. And that is super important just to ask these questions.

Mathew:
That’s one of the biggest things people don’t do is understand that it’s hard enough to make a normal a good deal, work with a good operator, that someone’s honest, because there’s so many changes in the market that occur, right? Think deals could go bad sometimes, right? Versus someone that’s a criminal or something like that, where obviously the, it’s, it’s stacked against you, but the operator is the key to the whole thing. And so focusing on that operator on what trials and tribulations and experience they’ve had in the past is the most important piece to that puzzle. So that homework on that operator is probably the biggest mistake. IPI see people make on, on doing this and you know, if they’re doing, being active on that side, I’d say it’s really not having enough capital or understanding the math on their deal and pushing numbers to make things work because they really want that deal to work.

Mathew:
Don’t push your numbers, have extra reserves, be extra conservative and just wait for the right deal and get out there and find more deals and get in front of more deals. So until you find the right ones, don’t fudge the numbers and make something work. Guaranteed your renovation’s gonna be more guaranteed. Your market value’s probably gonna be wrong. If it’s wrong by 10%, you better build that into your scenario. If you’re rehab, I would al always put in 25% plus more on the rehab bid budgets and things like that to make sure you have extra reserves as an operator. So hope that helps.

Charles:
No, that’s a lot of great information there. Yeah. I guess the, when I look back as you’re speaking on deals that I pass the invested in, because there’s always like, people are like, oh, you make sure that the operator is not not a criminal, right. You know what I mean? Because that’s a whole different ballgame like you were saying, right? Right. But the thing is that you have people that get a, you know, get over their skis with what they’re doing or they don’t understand what they’re working on or they, like you said, they may be sharpen that pencil a little bit too much. So it’s important that, you know, make sure they’re not, you know, a criminal, but then also review each deal that comes out and know that okay, this person has integrity, but also if the deal goes south, I mean that makes everything much more difficult.

Charles:
So I have to do my deal specific, you know what I mean, kind of due diligence as well. And that’s one of the, that’s one of the things I really focus on when I’m passively investing. ’cause You’re like, you know, these, you know, these are the sponsors that I’m interested in working with or and then when I’m reviewing deals, I’m doing what I would do if this was a project that I was going to maybe partner on as a general partner, right. That we’re gonna bring to the, to our investors. It’s really like, you know, everything from where it’s located rents the whole nine yards and you kinda re-underwrite it yourself and go that route. But obviously knowing that underwriter, I mean, knowing that sponsor and operator first is number one because that’s, like you said, that’s just like a property manager that’s gonna make or break the deal before it even begins. Yeah. And

Mathew:
Looking at that from, do they have extra liquidity if something goes wrong where they can contribute more capital, how long have they been in that space? And you know, how many other deals are they doing right as simultaneously and stuff like that that they, they might need, you know, more liquidity for what if they can’t raise all the money on the deal? Does it go bad then, right? And same thing with is there preferred returns in the deal? Do they, do the investors get paid first before the operators get paid? And you know, what is the load on that deal? How much are they really making upfront? Is it a couple percent or something like that upfront on those deals and acquisition type fees or due diligence fees and things like that. Or and most of it’s on the back end or they’re making so much upfront that they don’t really care about the back end and they’re just gonna walk. Right? So looking at the incentives for performance in those deal structures is super important. I, I personally won’t invest in something that’s not, does not have like a preferred return involved or something like that where there’s a incentive for performance. I don’t want my operators to make a a, a a bunch of money. What if I’m making a 2% return on my money? You know? So

Charles:
Yeah. You don’t want them to re retire in a deal that hasn’t gone full cycle yet. I understand that. Totally. I mean that’s, there’s, there’s all these different ways of manipulating these passive investing deals where it can be put in. It can really be put in favor for the syndicator. And obviously you want them to cover their expenses. You, you know, they’re looking at hundreds of deals before they’re buying. I mean, we know we’re on both sides of it, but it’s also something that you know, after you get compensated for that we want, you know, we should all the money, you know, the majority of that upside should be, like you said, should be in the carry, should be at the end once we’ve brought that deal full circle. And once our investors have been paid you’ll pay their return and their preferred and then we get the share in that. Right?

Mathew:
Absolutely. Super important,

Charles:
Matthew. So thank you so much for coming on today. How can our listeners learn more about you and your businesses? So

Mathew:
I have a YouTube channel at o CG Masters of Real Estate, and then I also have my website@matthewowens.com with one T in Matthew. ’cause My parents couldn’t spell, so I, you know, sell. I say that all the time ’cause that should have been two T’s, but it’s one T in Matthew. So <laugh>.

Charles:
Well, thank you so much for being on the show today. We will put all those links into the show notes and looking forward to connecting with you here in the near future.

Mathew:
Awesome. Thank you so much for having me.

Links and Contact Information Mentioned In The Episode:

About Mathew Owens

Mathew began his career in real estate as a flipper and a licensed CPA. In 2006, he quit his job as a CPA and went into real estate full-time. Over the past fifteen years, he has successfully flipped over 1,000 single-family properties while lending over $35 million to flippers across the US. His firm OCG Properties has raised over $150 million in private investors’ capital, and they currently own over 1,500 units across the U.S. Their company’s investments include syndicated investments, performing and non-performing notes, single-family and multifamily properties, both flipping and holding, along with private lending.

Are You a Fan? Subscribe, Rate, Review & Share – Click Here To Learn How

What question do you always wish I would ask but I never do?

Connect with the Global Investors Show, Charles Carillo and Harborside Partners:

Scroll to top