The Simple Systems Behind a 150-Unit Rental Portfolio (8-Hour Workweeks!)

When the dot-com bubble burst, Matt (the “Lumberjack Landlord”) watched his 100% stock portfolio go to dust. Having lost everything he had saved throughout his early twenties, his only option was to rebuild. But with what? He needed something that could help him offset his living expenses today and propel him toward retirement. That “something” was rentals. But Matt didn’t just buy a couple of rental properties and sit back. He did what many investors won’t: he house hacked. And again. And again. Nine times in 13 years. This, combined with the income from his nine-to-five job, allowed him to stack small multifamily properties quickly, and today, he owns a rental portfolio of over 150 units! Real estate investing has completely changed Matt’s life—not just the cash flow or the appreciation, but the freedom he’s already enjoying in early retirement. Despite self-managing all of their rentals, he and his wife spend just eight hours per week on their portfolio. In this episode, he’s giving you the simple framework you need to scale sustainably, whether you dream of owning a handful of rental units or a few hundred. In This Episode We Cover How Matt self-manages his 150-unit rental portfolio in just eight hours per week Matt’s journey from losing everything in the dot-com crash to retiring with millions The simple, scalable systems and processes every investor needs The biggest red (and green) flags to watch out for when screening tenants Why scaling with small multifamily properties is better than commercial real estate What most investors get wrong about house hacking (that can make you very wealthy) And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠h⁠⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1301⁠. Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  Imagine waking up to discover that the wealth you spent years building is gone. That's exactly what happened to Matt. Well, the dot com crash wiped out his 100% stock portfolio overnight. He was left asking, what now? How do you rebuild from zero? For Matt, the answer was real estate. But to keep his dream of early retirement alive, he'd have to make up for lost time. And he did. One property snowballed into a few, a few turned into dozens. And today, Matt, known as the lumberjack landlord, is retired in his 40s with more than 150 rental units. Many investors spend a lifetime getting to where Matt is.

• 0:44Dave Meyer?

  So what's his big secret? In this episode, he's going to share his exact playbook for scaling with small multifamily, including the systems and processes he uses to self-manage his really large rental portfolio. And he does it in just eight hours a week. So whether you're starting small, starting late, or starting over, Matt is proof that financial freedom is never too far out of reach. And if you mimic what heated, it's probably much closer than you think.

• 1:19Dave Meyer?

  Hey, everyone, I'm Dave Meyer, joined as always by my co-host, Henry Washington. Our guest on the show today is Matt, the lumberjack landlord, who self-manages a rental property portfolio in New Hampshire. Let's bring him on. Matt, welcome back to the BiggerPockets Podcast. It's great to have you here again.

• 1:38Speaker 01

  Super excited to be back, and now we brought friends.

• 1:40Dave Meyer?

  What's up, buddy? Yeah, this is going to be great. I'm glad we're all here together. Matt, you had a very fun first episode here on BiggerPockets Podcast. But for people who didn't catch that one, maybe just give us a little bit of your background, who you are, how you got into real estate.

• 1:56Speaker 01

  You know, I had lost, I'd lost my money in the dot com bomb in the early 2000s. For a 20 year old, I'd saved up a lot of money. I'd saved up like $27,000 at 20.

• 2:05Dave Meyer?

  Damn.

• 2:05Speaker 01

  You know, that was a lot of money and it was because I lived on almost nothing and all I did was tuck it away and put the money away. And so I did that and, and, and I was rewarded with a, uh, two companies that got hush numbers. And I watched the, then one was found for fraud and I watched my $27,000 largely evaporate.

• 2:23Dave Meyer?

  Man.

• 2:23Speaker 01

  You know, then started the search for what's the next thing I'm going to do and you know, where can you get an asset that you can also live in? It also pays you to live in it. And by the way, it also appreciates over time as well. I can't think of anything else like that. I did nine house hacks in 13 years. Then my wife finally said, no more.

• 2:44Dave Meyer?

  So you weren't doing real estate. You were just like house hacking, but you were working.

• 2:47Speaker 01

  Yeah, I worked a W2 job until, uh, two years ago when I retired.

• 2:51Dave Meyer?

  That's awesome.

• 2:52Speaker 01

  I could have retired 10 years ago, but it was, how big did I want to make this? And so I said, you know, I'm in the prime earning years of my career. I was in my late 30s, early 40s. I'd gotten to the executive level. And so I said, you know what? Let's just keep on rolling. And so that's what I did. But now fast forward, we ranged between kind of 52 and 55 buildings. What I like to say is over the last three years, we've been a net add investor. Meaning that we always are trading out of assets, but we always add more.

• 3:25Dave Meyer?

  Why haven't you bought bigger commercial or anything like that?

• 3:28Speaker 01

  Uh, I think we all see how commercials going for all the big boys. It's really tough to re-steer a battleship of 180 units versus a building that's no longer working anymore. That might be three, four, six, 10 or two, four, six, 10.

• 3:44Dave Meyer?

  Yeah.

• 3:44Speaker 01

  If I don't like an asset, how hard is it for me to sell that? I can sell it like that. I can wholesale it off if I want to, or I can call a broker. I can get it on. And it's something that most likely with Fanny Freddie, it's easier now than it's ever been for people to do owner rock deals. You can get 5% money on a three unit or 5% money on a four unit. I was not that lucky. I was having to put 20%. Down, moving into those things.

• 4:07Henry Washington?

  One of the cool parts about real estate is you can invest to your level of risk tolerance.

• 4:12Speaker 01

  Yes.

• 4:13Henry Washington?

  And everybody's risk tolerance is different. I have a very similar risk tolerance to you. It sounds like I play in the single and small multifamily space. There are some warm fuzzy reasons why I play in that space, but there's really a managing risk factor about why I play in that space because A, I don't want to raise a bunch of people's capital because I that just, I would lose sleep. That's just not, I just can't. Thinking about that gives me stress. And so I can use my own money or maybe one private lender, you know, to do a deal. I'll have multiple exit strategies on a deal because I'm going to buy a really good deal and being able to pivot is important. But I think people talk about, you know, investing to your risk tolerance.

• 4:57Henry Washington?

  Uh, when you're like researching and getting started, but then once you get in, that kind of goes away and everybody's like more, do more, buy more, do the bigger. It's the same level of effort for bigger than it is for smaller. You should do bigger. Right? Like the voice of the investor changes than when you got started. And I kind of got caught up in that and we've made some pivots since then and I've sold some assets and I'm, I'm, I'm in a much happier place with a, a more manageable sized portfolio that has options instead of, you know, large scale multifamily. You got, you got one, you got one exit buddy. Right? Like you gotta get that thing to perform or you're in trouble.

• 5:37Speaker 01

  The cool thing is, is that with small multifamily and Henry, you know, especially a duplex, I can put that on a market. It can be an investor. It can be a house hacker. It can be like a mother-in-law. It can be multi-generational. It can be, it can be all of these things, right? And so when you look at the grand scheme of things, people say, oh, real estate isn't liquid. Oh yeah? Put a duplex on the market well priced and see how fast it lasts.

• 5:59Henry Washington?

  Right.

• 5:59Dave Meyer?

  Even now, even in the sell market.

• 6:01Speaker 01

  Yeah.

• 6:01Dave Meyer?

  No problem.

• 6:02Speaker 01

  We're going to do a 1031 and I've been shopping and there have been in the last 40 days, there have been 40 buildings go on market and 37 are under contract. Guess what the other three are? Overpriced.

• 6:13Dave Meyer?

  I just put a duplex on the market. I got six offers.

• 6:16Speaker 01

  Yeah.

• 6:17Dave Meyer?

  First weekend.

• 6:18Speaker 01

  Yeah, I think that small multifamily and that doesn't mean buying in bad areas. You know, my focus is still, you know, buying in B and C class areas and making A and B class product. That's the goal.

• 6:29Dave Meyer?

  The other thing that residential doesn't have when we're talking about risk is, and I think what most syndicators who are losing their shirts right now, I think what a lot of people got wrong is they misunderstood supply risk. Like everyone's like, oh, the debt's better. But with small multifamily, with residential, the idea that a builder is going to come in and totally change how much supply is in your market, it's just not a risk. Like it's not going to happen. In multifamily, if builders all of a sudden get excited about your market, you have no control over what other people are doing. They could all start building right next to you and totally diminish the value of your product.

• 7:07Speaker 01

  You're dead on. I mean, in my market, there are 700 new apartments coming online in the next two years, and this is an area of about 70,000 people. That is a lot of supply. And so the cool thing is, is we're going to leave it to all those guys to fight it out and find, fight over the nice shiny quarters and the people that are 800 credit scores. I'm just taking the people that need a place to live that are working for a living, that I can rent out for less than what they can rent out because my debt is much different than theirs.

• 7:36Dave Meyer?

  Yep.

• 7:36Speaker 01

  So people should be excited. Yeah, the first five years is awful. The next five years, it gets a little bit better. The next five years, you really start to getting to enjoy the fruits of your labor over a 10-year period. You really start to see significant returns in a normal market.

• 7:53Dave Meyer?

  All right. Well, clearly Matt has proven that you can scale successfully with just using residential, small multifamily, single-family homes. Clearly, Henry has too, that you can absolutely do this. But I want to learn exactly how you're doing this, Matt, because that's a lot of units that you're managing. And I'm sure our audience would love to learn how you're doing it. Stick with us. We'll be right back. Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental activity. That's why investors use Steadily. They offer landlord insurance built for real estate investors, including short-term rentals.

• 8:37Dave Meyer?

  And if you're a BiggerPockets Pro member, you'll also get 5% off your landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to learn more.

• 8:46Henry Washington?

  Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties. You set up an Airbnb listing and self-manage it for the remainder of the year. Rent to Retirement then rents the home as a short-term rental to establish it as an STR for the year. No furnishing required, making this the easy button to save five or six figures in taxes this year.

• 9:28Henry Washington?

  And because you're the sole manager, there's no hourly minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentive, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.

• 10:10Dave Meyer?

  I just booked a backpacking trip through Olympic National Park. Two nights out on the trail, no cell service, nothing to do but eat trail mix and stare at mountains I'll never get tired of. That's the whole appeal. But while I'm off grid, my place doesn't need to sit empty. I can list my space on Airbnb and make a little extra income while I'm away. And with Airbnb's co-host network, I could partner with a vetted local co-host to help take care of the details, from guest communications to onsite support, so I can fully unplug and enjoy my time out in the backcountry. If you've got upcoming travel plans, you can find a co-host at Airbnb.com/host.

• 10:52Speaker 03

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• 11:25Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with Henry and the lumberjack landlord, talking about how he has scaled up very successfully just using residential real estate. Matt, how do you do it? You self-manage, right? All 150-ish units you got?

• 11:41Speaker 01

  Yep. Yeah, we self-manage. We, um, so the first 120, I managed while I had a career in tech.

• 11:50Dave Meyer?

  And when you say "we..."

• 11:51Speaker 01

  My wife and I.

• 11:52Dave Meyer?

  Okay. Yeah, just the two of you. Wow. How on earth did you do that?

• 11:56Speaker 01

  Systems and processes. They can completely change the complexion of your business. So for us, everything was very templatized. Our kitchens, our colors, our management process, our application process, our go-to-market process on a unit, how we draft our ads, you know, how we screen tenants. Everything became very templatized, which meant for us, it was very, very easy. To scale because now it was just wasn't about acquiring another asset or another building and then saying, we better figure all this out. No, it was acquiring the asset requiring and acquiring the building. And I use asset and building interchangeably, but it was about acquiring it and then saying, all right, we just snap it in. Here's our processes. Here's all the things that we do when we buy something.

• 12:40Speaker 01

  Here's all the things that we do. We're getting something to bring to market. And now that's something that we can do in, you know, 15 to 30 days after acquisition. If, for example, we're buying something that's vacant.

• 12:51Dave Meyer?

  Right.

• 12:52Henry Washington?

  For the person that's listening, who wants to manage their properties on their own and start to build some of these systems and processes, but they have no idea where to start.

• 13:03Speaker 01

  Yeah.

• 13:04Henry Washington?

  How do you figure out where to start? And what's the difference between a system and a process?

• 13:08Speaker 01

  So this is what I spend my time teaching. What I spend my time teaching is essentially how we've automated our business. And here's how we've done it. Something silly, we actually print magnets and put them on two or three different places in the apartment. And we just say, hey, if you ever have an issue, just reach out to that number. And then anytime that there's a problem, they can send a text message to that or they can call that. Transcription, we actually have it go into an email where there's a group of three of us that see it and somebody gets to it and forwards it onto the contractor or says, or I say, hey, this, you know, this one's yours. You take it. That's it. So we all have phones. I run my entire company from this. I am an elite email forwarder. Elite. And that's the thing is it's all there.

• 13:52Speaker 01

  People might need to be taken through that. And that's what I kind of, that's what I spend my time teaching people is here's the, here's exactly how you do what I've done.

• 13:59Henry Washington?

  Yeah.

• 14:00Speaker 01

  But it's building those systems and building those processes and taking all of those steps. And it puts people on the right path to imagine having that framework. That framework didn't exist 24 years ago when I started.

• 14:11Henry Washington?

  What I like about what you just said is A, you were using tools that didn't cost any money.

• 14:17Speaker 01

  Yep.

• 14:17Henry Washington?

  And B, it wasn't over automation.

• 14:20Speaker 01

  Right.

• 14:20Henry Washington?

  I think when people start implementing systems and processes, they want to make it as like overly automated as they can. But what I've learned is that if the system slash process is too overbearing, I will avoid it and do it the manual way.

• 14:40Speaker 01

  Yes.

• 14:40Henry Washington?

  And so like, I need a system up until a point like, like I like that you, it just transcribes it. And then I get an email and then I have to forward it. And so what I want people to hear from this is like, design the system that you would use, not this, not the most perfect automated system. Design the system up until the point that you're comfortable with it. You're not trying to eliminate everything and everybody. You're just trying to eliminate the parts that you suck at or that you hate.

• 15:10Speaker 01

  I'm trying to bridge the gap for where my skills, talents and abilities drop off.

• 15:14Henry Washington?

  Perfect.

• 15:15Speaker 01

  That's what I'm trying to do.

• 15:16Dave Meyer?

  I have to say though, Matt, you, you must be good at time management too. Because like I worked full time and was self-managing, I don't know, 10 units at a time. And I felt busy as hell. Like, I don't know, I just was constantly doing stuff. So like, how do you do it? Because that's one example, right? That's maintenance. But then you're leasing, you're managing rehab. So you, your skill must be somewhat in time management because that's a lot of stuff to do in one day.

• 15:45Speaker 01

  Yeah, it is. I mean, I think it's, you know, I, I won't take credit for it. It's really something that Steve Jobs and Elon Musk do really well. They have the top three things on their list that have to get done every day. And then the rest of them can potentially be done tomorrow. So I make sure that every single day I get the three things done that I needed to get done, that have to get done. And then the next day, hopefully I don't have three brand new things. There's some stuff that might be on the list that can bubble up that I can get and rip through. But the other thing too is, is that recognizing that my other option is working 10 hours in some soulless job while I'm making some other man's dream come true. I'm not, I don't really like that. That doesn't sound wonderful to me. What sounds wonderful to me is that I get all the fruits of my labor and that my family gets that.

• 16:26Speaker 01

  And that we then get to help others accomplish that same task. So time management, I certainly think is a piece of it. But again, if you can deduce running this entire business essentially down to having great contractors that listen that you pay on time.

• 16:42Dave Meyer?

  That's like 90% of it in my.

• 16:45Speaker 01

  Right. Well, here's the thing. How many people, and I would be willing to bet, I'd love to see this in the chat because I will go back and review the chat. How many people don't inspect when the job's done? They just pay the bill. A lot of people do.

• 16:57Dave Meyer?

  But see, this, this is what I mean about time management. You're running around a 50 properties, inspecting, inspecting properties.

• 17:04Speaker 01

  On all of these amazing devices is a high def camera.

• 17:07Dave Meyer?

  Oh, yeah. Okay. So you're, you're virtual inspecting.

• 17:11Speaker 01

  Yep. And I'm either doing it live on a video or I'm saying, hey, just send me 10 pictures. Cause what happens with that email or that video, I can get to that at nine, 10, 11 o'clock at night, I can get there. And so how much time am I spending every single day? Not hours. The only time I'm spending that kind of time is when we're doing a multimillion dollar, big, big project down to studs. And we've, we're, you know, when we're basically going through, yeah, nine contractors to do something big project.

• 17:40Dave Meyer?

  How many hours a week do you think you work?

• 17:42Speaker 01

  On the actual management of existing assets, probably six to eight hours a week, I would say.

• 17:50Dave Meyer?

  Total?

• 17:51Speaker 01

  Yeah.

• 17:51Dave Meyer?

  Dude.

• 17:52Speaker 01

  Yeah.

• 17:52Dave Meyer?

  Man.

• 17:53Speaker 01

  Had to become elite at something. I'm, I'm that good. So I think the, the key for it, again, I think the big thing that people miss out is they feel like they can't ever see that result coming for them because they see what they're going through at 10 units. I promise you, there's not that much big of a difference, but between 10 and 50, there just isn't.

• 18:13Dave Meyer?

  I mean, honestly, the reason 10 was a lot or whatever it was, just because I was trying to fix things myself. Like I think I wasn't, I wasn't forwarding stuff. I should have just been forwarding emails.

• 18:23Speaker 01

  Listen, the first, the first 50, I did all of that on and I get that. Yeah. That's an expanding problem, right?

• 18:29Dave Meyer?

  Yeah.

• 18:30Speaker 01

  You can't, you can't accelerate through growth when you have one hand, set of hands for throughput.

• 18:35Henry Washington?

  One thing I've learned across all levels of property, so A class, B class, C class, whether you're paying $500 a month rent or $3,500 a month rent, there are bad tenants in both classes. So do you have some golden rules for tenant selection or some systems or processes in tenant selection that help you stay on top of being very good at selecting good tenants?

• 19:01Speaker 01

  So I hired an agent. I hired her for not a high amount of money, like in the $30 range. I said, this is how I want my unit shown, but I provided copy, which is the actual ad. I provided the pictures. I paid for those. She was no money out of pocket. Her job was to follow my three criteria for bringing in great tenants, and that is this, we do not have an application fee.

• 19:24Dave Meyer?

  I like that. Even though it does cost you money to run their background check, you eat that.

• 19:28Speaker 01

  At the end it does, but I don't do it in the beginning because in the beginning, I say, I want three things from you in the beginning. I want a pay stub, just need proof of payment of your last three payments to your landlord. If they pay on the sixth, the ninth, and the 15th, they're probably not somebody I want when it's due on the first. And then I just want a screenshot of their credit score with their name on it. Who am I to say which credit scoring model is correct? Vantage three, Vantage 10, Experian four? Like, it doesn't matter to me. Just show me a picture of the credit score with your name on it. And that's all I need to get you a spot in the arena to get a chance to actually rent this apartment from me. And that helps us drive significant traffic to our units.

• 20:07Speaker 01

  I probably get two to three X. In fact, we've done studies in Zillow and we get on average 250 to 300% more traffic to our properties than other properties because of our process.

• 20:22Dave Meyer?

  I love this idea. I did the same thing where it's basically like, I'm only going to charge you when I get charged, essentially, which is like, they charge you whatever it is, 40 bucks to go run a background check and anything. It's like, until then, I'm going to evaluate everything else about your application. That way, if you're not a good fit, you're not incurring any costs. I'm not incurring any costs. But at the point where Need to pay 40 bucks. You pay 40 bucks. I'm not making any money off of this. Like, that's the fair way to do it.

• 20:51Speaker 01

  Absolutely.

• 20:51Dave Meyer?

  I have friends who rent and they just apply for all these apartments and get rejected. It sucks. It's it's bullshit, honestly, to like have to go out and get rejected 10 times. You're out 400 bucks because you just like, even if you're a good candidate, maybe you just got in too late. Like, it's just, it's nonsense. The people I really, really hate when landlords try and make money off rental applications fee. It drives me crazy.

• 21:14Speaker 01

  Well, you see it, like in a lot of the cities, they're the ones that are most guilty and where they do that churn. And it's disgusting how much money they make on the churn.

• 21:22Dave Meyer?

  Yeah.

• 21:22Speaker 01

  It's, you know, they're like, well, hey, I can afford to do a lower priced unit because I'm getting 5,000 bucks in fees when all these people were applying. It's disgusting. So.

• 21:32Dave Meyer?

  It is. It totally is. I agree.

• 21:33Speaker 01

  We we legitimately want somebody to find a house with us. That's legitimately what we want to do.

• 21:39Dave Meyer?

  That is their only sentiment to have if you're getting into this industry.

• 21:43Speaker 01

  Yes.

• 21:43Dave Meyer?

  Like, the idea to just profit off churn is ridiculous. You should earn money by providing a service. That is the industry, right? Like,

• 21:52Speaker 01

  That's it.

• 21:52Dave Meyer?

  If you are just making money off application fees, you're providing nothing. You are just leeching money from other people. It's messed up.

• 21:59Speaker 01

  Absolutely right.

• 22:00Dave Meyer?

  All right. So much good stuff here from Matt, but we got to take one more quick break. We'll be right back. For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple. I asked Hostinger's AI to build a clean site for her business and it had a working version up in minutes. No coding or designer needed. Plus, its AI agent helps with SEO, website copy, and email marketing after launch.

• 22:40Dave Meyer?

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• 23:06Henry Washington?

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• 23:50Henry Washington?

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• 24:06Dave Meyer?

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• 24:50Dave Meyer?

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• 26:45Henry Washington?

  All right, we are back on the BiggerPockets Podcast with the lumberjack landlord. I wanted to ask about some tenant red flags. So as you're evaluating some of these tenants, are there some red flags that you're like, this is an absolute no? And are there some green flags potentially where you're like, this is the kind of tenant that I'm looking for? And I'm not looking for the, you know, obviously, there's some very obvious red flags that that people should look out for. But maybe what are some things that maybe some other landlords might overlook because they weed these people out? Like example for me, one of my best tenants is a convicted felon, and most landlords rule out convicted felons.

• 27:24Speaker 01

  I do not.

• 27:26Henry Washington?

  Not either.

• 27:26Speaker 01

  Listen, they paid their debt. Who am I? I'm not special.

• 27:29Henry Washington?

  Right.

• 27:30Speaker 01

  They paid their debt to society. Everyone does the wrong thing eventually in their life. Some get caught, some don't, and the ones that do, and they pay their debt. So long as they're not a future risk to others, then we can have that conversation.

• 27:42Henry Washington?

  Absolutely.

• 27:43Speaker 01

  And I think that that's just, that's the human side of it. So for all those people that call people slum lords, hey, listen, at the end of the day, there's a lot of people that need that hand up. And I like to be one of those landlords that provides that, even if it burns me every once in a while.

• 27:57Henry Washington?

  Amen.

• 27:58Speaker 01

  Um, you still gotta, you still gotta do the, do the role and be the salt, right?

• 28:01Dave Meyer?

  Love that. Yeah.

• 28:02Speaker 01

  I think that, um, you know, the red flags for me are when they come in and they're already complaining about their old landlord. There certainly is, you send me nine messages in like six hours.

• 28:16Dave Meyer?

  Yeah, urgency.

• 28:17Speaker 01

  You need to spend some quiet time with yourself.

• 28:19Henry Washington?

  Yeah.

• 28:20Speaker 01

  You're not that important. If you're that way trying to get the place, imagine what you're like once you're in there.

• 28:24Henry Washington?

  Yeah.

• 28:25Dave Meyer?

  Well, it's like you're either a little bit crazy or there's some reason why you like need to be out quickly, which isn't always a red flag, but it's worth asking some more questions about that.

• 28:35Speaker 01

  Yep, there's that, there's that piece. Um, asking for a discount on the rent.

• 28:39Dave Meyer?

  Oh, yeah, no.

• 28:40Speaker 01

  Already. My favorite is we have as many issues, so we'll make some exceptions with people in 500 credit scores. You know, medical debt.

• 28:50Henry Washington?

  Oh, yeah. Medical debt doesn't bother me at all.

• 28:52Speaker 01

  Yeah. So, um, there's some exceptions that we'll make, but they're consistent exceptions, if that makes sense.

• 28:59Henry Washington?

  Yes. Medical debt divorces don't bother me.

• 29:01Speaker 01

  Yes. Yep. So what we're looking for in those particular cases, honestly, we're looking for much more of a, you got the opportunity to walk the place based on your credentials. If you get the place is based on how you treat my people when you're in there.

• 29:15Henry Washington?

  Amen.

• 29:16Dave Meyer?

  I like that.

• 29:17Henry Washington?

  Or how you treat me. Oh, boy.

• 29:19Speaker 01

  Yeah, we, we actually, so we had somebody that said, yep, absolutely love the place. I want it. We're like, okay, this is great. And we're like, okay, we told her exactly what it is. Pay the deposit right now. When you sign the lease, we'll send that over to you in the next few hours. Sent it over in the next few hours.

• 29:36Speaker 01

  She didn't sign it for a day, didn't sign it for two days.

• 29:39Dave Meyer?

  Now that's bad.

• 29:40Speaker 01

  The third day we sent back and said, hey, just wanted to double check, see if anything has changed. Um, she wrote back, she goes, nope, I still plan on signing it. And I'm like, um, well, we talked about the fact that, you know, we have other showings that we canceled because you said you were good to go. Um, we, we want to call those people back and have them come look at it. She just went, you know, went vacant again. That was one of the lessons that taught us, we don't take assets off the market unless you've signed a lease and paid the deposit.

• 30:06Dave Meyer?

  That's, yeah.

• 30:07Speaker 01

  So it was just silly things like that. Like we expect, if you want to expect performance from us, we can certainly expect performance from you.

• 30:17Dave Meyer?

  That's total fair. It's a mutual exchange of benefits, right? Like that's what this is and every business.

• 30:23Henry Washington?

  The amount of people who, when I let them in to look at the unit, just assumed I was a helper or a worker or a property manager and treated me poorly. And then at the end asked me, uh, when the owner would be in touch.

• 30:39Henry Washington?

  Flabbergasting to me.

• 30:42Dave Meyer?

  All right, Matt. Well, this has been a lot of fun. This is great advice for everyone listening. Before we get out of here though, I remember last time you were on the show, you were telling me you were converting an old prison, I think, right?

• 30:54Speaker 01

  Yeah.

• 30:55Dave Meyer?

  Remind us what it is and give us an update because I remember it sounding very cool.

• 30:59Speaker 01

  Yeah. So one of the strategies that we've started spending a lot of time on is there are very often are buildings that municipalities, cities, towns, counties, that they want to get away from, that they want to abandon. Uh, or they have been abandoned and they are just, uh, they turn into plight and or they turn into, uh, things being in disrepair. So, uh, we had actually found specifically a building that had been vacant for about 15 years. We had talked to the city about selling it. They had a formal process that I had to put it out there for sale. And I was like, this is a building I want because I can make a impact in the local community with it. And so, uh, it was a police station and a jail. So it actually has a functioning jail in it, uh, multiple cells. I think it was six jail cells.

• 31:42Speaker 01

  So the cool thing was, is we then just got in the building and, uh, We did four luxury apartments. We did two for disabled vets. We love the the patriots that fight for our country, whether you're active military or you are retired. We love you and we appreciate you and we want to be a part of the solution. So we look for buildings that we can turn into units that will get people the next step in their life and give them their life back. Because so often disabled vets can't get access to something that gives them all the amenities that they need. And so that's where that's one of our focuses. And so that's awesome. We'll be live in probably the next 60 days. We're waiting

• 32:23Speaker 01

  for our final set of inspections. But yeah, very, very exciting. We'll have an indoor kids playground along with a cold kitchen. The idea behind that is we want to deliver for the community that doesn't really have anything like this. Something for less than 20 bucks where kids can go play for the day and they can eat food, too.

• 32:39Dave Meyer?

  Wow, dude, this is so cool. I love your approach to all of this. Just thinking about mutual benefit, how to benefit tenants, yourself, the community at large. Everyone can win. And Henry and I talk about this in the show all the time. Like, it's not a zero sum game. As you know, one has to lose for you to win. You can actually improve people's lives through this industry. Matt, you're a great example of that. I love hearing what you're up to.

• 33:05Speaker 01

  Appreciate it.

• 33:05Dave Meyer?

  Well, thanks for being here, Matt. I loved catching up with you and hopefully we'll have you back on again soon and hear what you're up to. Because this your story is super inspiring and relatable. And not that it's not impressive, but I love that it's just things that normal people can do. Like, these are things that everyone in our audience can mimic. If you want to build the kind of portfolio Matt has built, there is nothing really from stopping you. Matt showed us that you can really start from anywhere and achieve this. So thanks for being here, man.

• 33:36Speaker 01

  Always a pleasure. Henry, great meeting you on the podcast like this. It was great to meet you again. And Dave, always a blast. Hey, look forward to the next one, boys. We'll give you an update soon.

• 33:46Dave Meyer?

  Awesome. Looking forward to it, Matt. Thank you all so much for watching this episode of the BiggerPockets Podcast. For Henry Washington, I am Dave Meyer. We'll see you next time.