You can start investing even with zero money on hand if you have perseverance and the right attitude. For successful real estate investing tips, Patrick Donohoe talks to Matt Atkinson who started in real estate as a mortgage professional and has been investing for fourteen years. Today, Matt shares his valuable perspective, thanks to his expertise on his investment niche, and emphasizes how perspectives impact the way you achieve things. Describing his own investing experiences, he tackles what successful and unsuccessful investors do, what attributes to failure, and the things you need to have for all kinds of investment opportunities.
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Successful Real Estate Investing With Matt Atkinson
Thank you for tuning in. It’s been a fun season so far. We’ve talked about a lot of different investment strategies. We’ve talked about business in a sense. We’ve talked about the startup world. A lot of what I learned at the Tony Robbins Finance event, it’s been fun. I hope you have been learning a lot. Head over to TheWealthStandard.com. We’ve updated it. There is a sign up for our email list. We’re going to be a lot more active there as well as our social media. Make sure you sign up for the email list as well as follow us on social media. My Instagram is @PatrickDonohoeCEO. Also, we have The Wealth Standard page on Facebook and LinkedIn as well. Follow us there and you can get all the updates.
In this episode, I wanted to bring on a good friend of mine. His name is Matt Atkinson and he is someone I’ve known for a long time. We met after I moved to Salt Lake City and he was in the mortgage space. I had a couple of years in the mortgage space before I moved to what I’m doing. He is someone that I’ve crossed paths with and over and over. Our relationship has gone onto another level because he is also a member of this Tony Robbins Platinum Partnership that I’m a part of. We have been able to hang out, talk and discuss everything, all topics personal, professional, investing business, it’s been amazing and he’s a good guy. He has a good heart and what’s most amazing is he finds fun and a way to be humorous in every circumstance. He’s an awesome guy to hang around with.
He also has a level of expertise in the residential investment space that is important for you to understand. The residential is typically how a real estate investor will first get exposed to real estate. He has been through some ups and downs and you’ll hear about that with some of his stories. His expertise hopefully helps you guys to understand if you are getting started in real estate or maybe heavily in real estate and have not gone through a market correction. Some of the points in which he is going to make clear will benefit you. Pay close attention. Let me give you a brief background on Matt to do his bio.
He started his career in real estate as a mortgage professional and he has been investing for several years. He purchased his first investment property in 2004, which is a single-family home through a short sale and he still owns that rental unit. He credits the experience going through the ups and downs of 2008, 2009 with getting him addicted to local real estate investing and owns over $14 million of rental properties personally. He has accumulated north of 25,000 hours of experience in this space, which is a few years round the clock. He invested almost $2 million in rehabbing and also an additional $4.5 million on flipping properties since 2008.
His focus is still mortgage in investing, but he’s consulting and he’s teaching what he has become an expert in. He teaches in the range of rentals, landlording, hard money lending, fix and flipping, assignments and building wealth as an investor overall. He served as the President of the Utah Valley Real Estate Investors Association for seven years and is a board member of the Salt Lake Real Estate Investor Association for nine years. He’s a member of the National Association of Hispanic Real Estate Professionals for five years and is a member of the Utah Association of Mortgage Professionals. He’s been with them for several years. Matt is an awesome guy. You are going to get a kick out of him. He is a great guy to listen to, intelligent. I hope you enjoy it as much as I did.
I’m here with a good friend. We’ve been in contact for a long time. We’ve hung out quite a bit. It’s been awesome. It’s been a highlight of my 2020 so far. We have high hopes for this show. Matt, we’ve known each other for a long time in 2005 maybe or 2006. You’ve continued in the mortgage industry right through the financial crisis. We saw each other in 2012, 2013, I went to Jason Hartman’s events and that’s where we connected. I’ve followed you on Facebook as well. We reconnected at some of the Tony Robbins events and you joined the Platinum Partnership and it’s been cool hanging out with you and your wife in some of the events. I’m excited about this interview. After all, you have a perspective that is valuable for the audience because you’ve seen a different side of investment and you’ve chosen to specialize in a niche and have become an expert there. I’m excited to hear your perspective on where you’re at, what you’ve learned from some of the events we’ve gone to, some of the Tony Robbins events. What does your future hold? Let’s start some of these rapid-fire questions to get your perspective of life and where you come from, that’s important. The first one is the pre-work, who was a role model to you, someone that either inspired you or you looked up to?
It’s common a lot of times people say their dad. My dad was a good role model, but I would say in addition to my dad, I looked up to both my parents. A family friend passed away that was influential in me growing up as a child, 12 to 19 years old. He was nonjudgmental. Let me be myself. I was a hothead, mouthy, high school guy. I looked up to him a lot. As I started working, I did some different development. I looked up to Tom Hopkins. I love Tom Hopkins. I met him in 2006.
I met Tom a couple of times. He’s such a good guy, the real estate guys. He’s such an amazing speaker. The second one, superhero. What superhero or icon in history do you most resonate with?
It’s Han Solo. I’m not sure if he’s a superhero, but Han Solo, he’s rebellious. He likes to takes chances. He always gets the girl, but he’s a hot head and he gets killed by his son. That is awful.
Third, what charitable causes do you support?
I like working being in mortgage lending. Since the end of 2001, we started focusing on veterans on a national basis. I’ve always wanted to help veterans especially once with different disabilities. I have a couple of friends that have come back from the service that has had some PTSD, emotional challenges. I have a Wounded Warrior thing. I also like to give back with people who’ve had the mental challenges because I’m fortunate I haven’t had those challenges. It’s hard for me to be empathetic because I don’t know what they’re going through, but I’ve seen people have that happen to them. I like to give back in that way.
Finally, legacy. If there was one attribute that you could impress upon your kids, grandkids, the world, or this audience, what would it be?
Don’t take life too seriously and enjoy the journey. A lot of times we’re young, we’re barely 40 and there are a lot of things in life that what can you learn from those experiences? If you can learn from it to get better and then also not do that mistake again, we can appreciate life a lot more.
This day happens to be when they were doing Kobe Bryant’s funeral. Michael Jordan spoke, his wife spoke as well. They talked about a tenacious guy and at the same time he enjoyed the journey. He loved the pressure. He loved the competition. At the same time, there was a level of enjoyment that most people miss when it comes to working hard, driving towards some achievement. They miss the beauty of it, the experience of it along the way.Successful investors model other people who have already done it. Click To Tweet
That’s interesting you brought that up. I finished the book, Relentless. Have you read that?
I haven’t. What’s that about?
Relentless is written by Tim Grover and he was Kobe Bryant’s trainer. He’s Michael Jordan’s trainer, Dwayne Wade. You’d like it. It talks about a cleaner who’s Kobe, Dwayne Wade. Michael Jordan was considered a cleaner, a closer, which is a lot of other people, and then a cooler that’s everyone else. You would love it.
It’s the different archetypes of basketball or pro sports.
It’s in life and he gives a lot of examples. I learned about the book at a real estate investing class that I went to. The speaker talked about it and I was like, “I want to read it.” I barely finished. He gives a lot of examples of Kobe Bryant and Michael Jordan.
It was touching. There were many people there, but it shows you how much of an impact one person can make. He was in a stage where he had the attention of a massive audience. At the same time, it was one individual touching many. Even Michael Jordan, you should go and check out that video. It was touching because Michael Jordan usually is an A-hole when he speaks, but there was another side of him. It was cool to hear those short stories to show you how that type of tenacity can inspire and touch people.
Especially as Jazz fans, we respected Kobe Bryant but hated it when he beat us.
I wasn’t a Jazz fan then, I wasn’t around.
In 1997, right after I graduated from high school, a friend of mine got tickets to go to the Playoffs game, the Jazz versus the Lakers. I was at the Jazz, Lakers game when Kobe Bryant shot the airballs in the Playoffs and missed. They talk about it in the book Relentless. That was pivotal like, “You’re a rookie, you missed some three-pointers and then he gets good and wins.” I remember Kobe for a long time.
That’s the thing. Those are the moments where you could say it was a failure, but it was probably a huge catalyst for him to do however many free throw shots until he had it done to perfection. Few people seek out those opportunities to face humiliation or face failure at that level.
He was chucking three-pointers, going out of style. I also watched the last game when he played the Jazz in LA of that tsunami eating sushi with a friend and scored 60 points. That was an amazing experience.
I remember they showed some highlights too when he was playing that last game and he knew he was retiring after the season. He showed a lot of affection toward coaches, owners, a classic guy. He learned a lot from his rookie season up until his last season. Let’s get into investment. A lot of what we’ve been talking about as far as a legacy is a concern and purpose. We’ll probably come out based on some of the experiences you and I have had with the Platinum Partnership event we went to, but I want to get into your investing experience. That’s the topic of this season, the theme that we’ve been revolving around because it’s an interesting time financially with where our country’s at. If you don’t understand some of the fundamentals in economics and have the experience of when things shift, they can catch you off guard. Oftentimes without that perspective, we are always looking for things that you may not be aware of that could impact what you’re trying to achieve. Those things are what catch you off-guard and there are two ways to learn. You can either experience it yourself and learn or you can learn from the experience of others.
I’d way rather learn from others.
Sometimes you take other’s perspectives. It depends on what level they’re at. That’s why I wanted to talk about your experience briefly so that the audience can realize where your expertise is, what you’ve gone through since you’ve been investing in real estate? Can you describe in a nutshell your investing experience?
A lot of times when you first start, you have no idea what you’re doing. I bought my first property in 2004. I bought a couple of properties in 2005 that were mortgaged clients that were able to refinance and notice a default filed they had a not a good situation. I ended up buying their houses and then in 2006 I bought thirteen homes. That’s when we met. We’re doing a lot of fulfillment for option ARMs with an amazing five-point agent loan. That helped me learn that a lot of people would be buying properties purely for the appreciation and they didn’t have the cashflow or make enough money to offset the mortgage payment or the less than interest-only mortgage payments that we were good at providing them.
There was a group that did real estate coaching or consulting here in Utah and they would pitch opportunities throughout the United States. We would do mortgages for them throughout the United States. I believe you did that also and I recognize that they’re normal people, postal carriers, a manager at Barnes & Noble. I did a mortgage once for a kitchen manager at McDonald’s and anything in between and they were not cashflowing. In 2006, other parts of the country hit their peak like Arizona, Nevada, California, Florida, wherein Utah, we were 18 to 24 months behind. The other investors nationally started buying in Utah because we are still going up and they would do a lot of new construction. They would flip the lots to other people.
It was 2006, 2007 that you could assign the new construction house to someone else and make $20,000, $30,000. It’s very common on condo developments. I started not buying as many properties because I didn’t have a lot of extra cashflows. I need to have some margin. In 2007 when the bank started going goodbye, I remember someone, you close on a purchase and you think you’re going to get your money and the bank’s out of business. During that time, it made me a lot more cautious about money. Always have six months of living expenses or savings, reserves are super important. During the downturn in 2008 to 2011 in Utah at least, it went down 10% to 15% values a year where other parts of the country were going down in value. I was not able to get any more regular mortgages with traditional financing. I started buying with seller financing and I would buy properties from good people who were behind on the payments that bring it and keep them as rentals.
When was all this going down where everyone was pessimistic about the real estate market, what gave you the confidence to continue doing it?
I was born that way of doing things that a lot of other people don’t do. It wasn’t a cool thing. None of my friends are like, “Let’s go buy this house in the Westside.” That’s not in the area that we’d want to live, but keep it as a rental or fix and flip that. I was not able to get any more loans, not because of my creditworthiness, but because frankly Fannie Mae and Freddie Mac would not allow you to get more than four mortgages. I had ten already, I’m like, “I’m stuck.” I knew that not everyone should short-sell because there were people that were behind that as long as they were current, they would sell you their house. I learned that from a couple of other people that I didn’t understand. I’m like, “That’s weird. Why could I buy their house from them? Me buying the house from them and it being current and keeping it for 5 or 10 years is better than them short-selling it.” I fell into it. I was aggressive that anytime someone was delinquent and I had the money to bring it current and there was some equity or I could at least cashflow, I’d buy as many houses as I could that way.
What are you up to?
Do you own them all?
I own them all. I do some partnership with my dad and some with my wife.
You also do hard money lending. That’s also an interesting story because you were doing that pre-2008. I recall a lot of people got caught holding a bag that they couldn’t find permanent financing to replace what they had borrowed at high-interest rates.
A couple of friends and I would buy income properties from each other, even in 2006. If you have maybe $150,000 and you’re like, “We’ll loan each other money because you couldn’t lend yourself the money.” We would lend each other money, notes, deeds of trust at 12%. We’d always charge each other 2 points. Two and twelve no problem and watch each other out. What’s interesting is during the market correction, Fannie Mae and Freddie Mac would still allow you to always refinance off the appraised value as long as you had a note in a deed of trust immediately, which was interesting. I was able to refinance other people still. The difference was in 2007 and 2008 when Lehman Brothers went out of business and a bunch of other lenders, you could get 100% financing on non-owner-occupied properties back then. That’s what the program will allow. As that program discontinued and then the values went down, that’s when a lot of investors did short-selling or sold their houses.
You kept going with hard money especially during the downturn. You can be maxed out with several loans you can have with 1 to 4-unit buildings and you continued to use hard money and lend hard money.
We started fixing and flipping homes because we would get the deal flow but we couldn’t get the rentals. We didn’t think about partnering with a bunch of people. I’m glad I didn’t. I could have partnered with 40 different people and you’d have all these K-1s and everyone’s in a different and financial spot and people get divorced or sick or whatever. We started doing fix and flip. From 2008 to now, we’d normally have done about 8 to 10 fix and flips a year. A couple of years we haven’t done as many because we’ve been working on improving our portfolio and selling them. To be honest with you, I’d rather lend a bunch of money than own the property or rehab a bunch. We still are remodeling houses and keeping a pulse on what construction costs are and then you look at it differently when you buy an asset, you got to make a bunch of improvements, and sell it versus those lending the money.
During this time, you were plugged in from what I assume to the investment market in general and have probably seen a lot of success summary similar to your own but also a failure. What do you attribute to the successful investor and then equally to the unsuccessful investor?
I would say three things that successful investors do is, one, they’re modeling other people who’ve already done it. They’re not trying to reinvent the wheel. They will follow what other successful people have done and then we can modify it on our own. The second thing is a lot of people who are more successful than I have noticed have been good about self-development like how to get better with systems from assignments to fix and flips to rentals to hard money lending. I’m going to an apartment syndication class in Dallas because I want to learn from other people. The third thing is they’ll cut their losses quickly versus sitting on it and hoping it comes back. During the downturn from 2008 to 2011, the second year when I was doing fix and flips, I noticed I had to change my prices before the market forced me to, where most people are the opposite. They would keep slashing but they always are 2% to 3% behind the market. As I liquidated, I would say 9 out of 10 we win, or 1 out of 10 we learn. As long as we make those modifications on price adjustments quickly, we were able to make a decent profit on at least fix and flips.It is ideal to focus on different insurance policies to complement what you already have. Click To Tweet
Do you have a rule of thumb as far as when you got out?
On fixing flips, our objective is to go in, remodel it in a timely fashion, but not the, “I’m doing the work myself or coordinating that.” Ideally, you’d buy a property, remodel it and have a sold within six months.
If you didn’t, what was the breaking point? Was it time? Was it the price?
It’s both. We would lower the price to take the loss. Accidental flips, I don’t want to keep as rentals because how you remodel them for a rental is not the same way as you do as a flip.
Talk about failure. What do you commonly see? There are probably a lot more attributes of failure.
The arrogance and I was arrogant too, depending on who you’re talking to. Newer investors think they are untouchable. Everyone has made money in investing because the market has gone up. You can be smart because you bought something but not smart because you bought something and you’re like, “I made money.” Number one is arrogance. Number two is they are not studying. They are not studying trends. They’re not keeping conscientious of national news. They’re doing it their way, where it’s easy if you mimic someone else who’s more successful and you run with that. The third thing is they’re unfocused. As real estate investors, I learned this from a guy named Pete Fortunato. He says, “The first ten years in real estate investing, you’re considered a starter.” You’re all over the place. Everything squirrely is what you want to do. Fix and flips, buying holds, assignments, apartment, land development, hard money lending, whatever. In years 11 through 30, as a real estate investor, you care about two ways of cashflow. Cashflow from notes, hard money lending, or cashflow from rentals, single-families, multifamily, commercial, storage.
Here’s where it’s amazing that correlates with Tony Robbins with what we learned. On your 31 through 40, if you think about it, if you’ve been investing in real estate for 30 years, you’ve gone through some cycles and you should be a lot smarter with what you’re doing. He says, “You have two concerns. Number one is you want to pay the least amount of tax as possible, tax-efficiency. The second thing is you don’t want to lose your principal.” That shifted me in 2016, my investing strategy, because I was like, “It’s not all about how many doors I have and other things like that. I want to be a lot more tax-efficient with controlling or owning real estate.”
At the beginning, that’s when you want the most bang for your buck. That’s when you want the most upside. It’s the whole rocket ship, tons of fuel expended on takeoff. Once you get into the atmosphere, then much less fuel that propels you forward because you already have that momentum, it’s similar. I would say maybe in a nutshell with other investments too that you can correlate this principle, is in the end when you’ve built up a mass, you’re looking more for principal preservation, for the highest amount of return for the least amount of risk. Let’s get into some of the Tony Robbins stuff. He’s used this term, “Winter is coming,” for several years. He talks about life being different seasons. You have spring when things are blooming, you have summer, but then you have fall, which is harvest and then after harvest comes winter. There are a lot of people reaping. A lot of people making a lot of money. There are capital flows that are still abundant. What does that statement mean to you? You’ve experienced multiple seasons. When he says that, what goes through your mind?
The correction from 2008 to 2011 sounds crazy. I remember talking to someone that I ended up buying his house, which is ironic. One of his houses and I’m like, “I can’t afford steak.” He’s like, “We’re going out to eat. You’d gotten chicken.” I was like, “Okay.” It’s a mindset with it. Winter is coming, I would say in real estate investing and then I’ll pick the overall market. In Utah, we’ve had a run. We hit our bottom in 2011 so we’ve been going up for nine years straight. That’s crazy. On average, I’ve been about 10% appreciation a year, which is not sustainable. It’s not affordable for people. With that being said, there are three things Utah has that are different than everywhere else. Number one is the LDS religion. Regardless if you like it or not, it’s super family-oriented and people feel safe here. They’re a great place to live.
The number two is Utah’s pro-business and there are a lot of smart entrepreneurial people here. A lot of people are coming here. The third thing is tech. It’s Silicon Slopes. It’s interesting how many people are coming here and are going to tech. It is influencing our culture in a good way but it’s also making it a little less affordable for a lot of other people that are not choosing to develop those skills. With winter coming, there are a lot of newer real estate investors who’ve been investing only five years and they have no idea what it’s like to have to make hard money lending. Many people are lending, they’ve reduced their rates, their fees and they don’t require interest.
When you have $1 million out of a hard money loan on multiple loans, let’s say you have three loans and you have $1 million out, you’ve got to write a check for $10,000 a month, you’re going to get more motivated to make your payments. Were other parts of the country you’re making that check every single month. I’m excited for the market to soften when it does. I’m going to kill it and buy a bunch of properties. The last three falls to winter to spring, I thought we would hit our peak and I’ve been wrong. Here’s why I’m glad I’m wrong. As I’ve bought in the fall though, I’ve made more profit in the spring. I’m going to go into each season as we’re going to stabilize and then have a little shift down because it will always keep me honest versus always banking on the spring’s a good time. From 2008 to 2011, what you bought in the fall and what you listed in the spring was worth 5% to 10% less than what it was in the fall even though the time of the year.
I look at winter because he always says winter is where all of the opportunities are. Where everyone is the most pessimistic and usually the unsuccessful investor is the one who has his emotions governing decisions. Whereas a seasoned investor understands the role of emotion, but also the role of logic. They have preset assumptions as far as what they should do given the environment. I look at winter coming, it’s a matter of the season. The timing of it, you don’t know. There could be a downturn starting after the election. Who knows? At the same time, it doesn’t mean that you should sit on the sidelines. It means that you need to be cautious, understand numbers, understand what those benchmarks are because there are always going to be opportunities. At the same time, it’s knowing that winter is coming. It’s recognizing that having some liquidity, having some reserves is going to prepare you not to weather the storm, but thrive during that storm.
Having the reserves, tons of people are like, “How do we buy real estate with no money?” The question is, “What can you do to earn more money so then you can buy more real estate to leverage your money?” I used to teach classes how to buy real estate with no money, but I’ve got to be honest, it’s way more fun to buy it with money because you’re a spender, saver and investor. There’s a transition of the three and we learned this from mortgages and other people. There’s a mental and psychological transition. You can be a spender all day long then you get a chunk of money. If you don’t know how to save it, it’s going to go regardless of what your income brackets are. We’ve met different people like that throughout our lives. You can transition, but there’s a lifestyle change to go from a spender to a saver and it probably takes a couple of years and you need to have money sitting in your bank account. You have to be disciplined saying, “I have $5,000 or $50,000 or $500,000 that I cannot touch.” As you have that self-discipline, then you can invest.
That’s what we learned, which is something I’ve instituted and often do a little bit too much of because of the experience of 2008, 2009, which is what the proper reserves are? What amount of money is the right to having a security or certainty bucket? If you have all of your money there, there’s not going to be much interest or much gain. Most of the gain is going to come from your earnings, not from your investments. It’s where do you draw the line between enough and too many reserves? That’s all an individual conversation yet when you’re asking the question of, “I don’t have any money, how do I buy real estate with no money down?” That’s the wrong question.
The question is, “What can I do to earn money so I have money that I can prepare to own real estate?”
It’s not hypocritical because when you started to run out of whether it’s mortgage available to you based on lending guidelines or even your cash, then it’s, “I’ve done that. I have my reserves. How can I leverage other people?” There are tiers as far as how you involve others in your investing.
Something I need to share is you reminded me of, if you have six months of living expenses always in checking or savings or whatever is a liquid account, you’re going to be in a good spot. If you take it a step further, if you’re self-employed and if you know your operating expenses as a business, if you think about it, if you have six months of living expenses in savings and six months operating expenses in your business account, you have tons of control because you know where your numbers are. After that, you invest as aggressively as you’d like to however you feel it is appropriate.
How often do you assess your scorecard? Where your cashflow is? Where are your finances? Is that something you do monthly?
My wife and I go over our spending plan every single month. We review it annually based on our previous years’ experiences, budgets on books for all business entities including flips, rentals, everything else. I review those quarterly and I’ll normally use a trailing six-month history. Three months is too short. Six months is good. You look at a year, but I met with a CFO of the mortgage company I work at to do forecasting, based on what we discussed and what we’ve done, we’re like, “We’re in a good spot that we can make modifications and change things.”
A few more questions, first off, let’s finish off the whole core four. One of the things that Tony teaches is when it comes to any type of investment opportunity, there is a minimum of four things to have. At least have an awareness of number, one, it’s making an investment where you’re not going to lose money. Having an asymmetric risk-reward, meaning you have little money in the deal, but massive upside. Tax efficiency being when the first two are in place, are you going to get tax at the highest rates or are you going to have some tax favorability to the investment? Also, diversification, which is if you specialize in some niche, there are all external factors whether it’s regulatory risk, economic risk, interest rate risk. There are things are outside of your control that is impossible to prepare for. Having diversification across asset classes will help as these economic winds take place, that one type of investment because it’s not correlated with another, balances out. Those are his four primary principles of investment. How do you interpret that? How have you used those principles, those ideas to manage your investment decisions?
No one likes losing money. With that being said, Keith Cunningham calls it a dumb tax. It’s like, “Don’t make that dumb tax again.” We’ll pick hard money during the free correction. There were a lot of real estate deals that were on new construction, land development. I’ve only shorted one mortgage at a 10% haircut since 2006. I’ve never had a foreclosure. That has a lot of confidence. Someone could say, “That doesn’t mean you’re risking enough.” That means I’m underwriting the person, the deal and making sure investors I work with are in a good spot. I also didn’t do any spec homes during the crash. Some of my friends made $100,000 chunks and I made my little $10,000, $15,000 chunks doing my little flips. I’m a single guy who may be a devil. Maybe you’re stretching out that devil every once in a while. Don’t lose money.
The asymmetrical risk versus return, that’s an interesting concept, which was new to me until I read MONEY Master the Game and then also Unshakeable, and went to Wealth Mastery and all those financial summits. Here’s how it works. You can buy real estate with less capital borrowing OPM, Other People’s Money. That’s me. That’s how I bought most of my properties. As I buy with seller financing and as I’ve thought about this, for $20,000 out of my pocket, I might be buying someone’s house for $200,000 which is only 10% down. That property is worth $350,000 and it’s paying down to $160,000 and that cash-on-cash return is good.
Understanding how to do that correctly, I know how to do that with real estate. I’m not familiar with how to do that in other businesses. Tax efficiency, I don’t love writing big checks to the IRS. I’m all about what can I do to reduce my tax liability and then also in the future? Using Roth IRAs, self-direct and 401(k)s are both in the market and then also in real estate investing. You’re super familiar with different insurance policies that help you with that type of coverage or also benefits. Tax efficiency, I’m more concerned about pivot and make little modifications as I grow my portfolio versus if I didn’t think about that, it’d keep rolling. I’d be like, “I have a good tax burden.” Diversifying, we learned something from Ray Dalio. We’re supposed to have fifteen uncorrelated investments that are a lot. I did exercise for my real estate consulting clients. It was challenging for me to write out fifteen, but I did it on the teaching and I was like, “It’s way easier for me to figure out fifteen ways to buy houses.” It helped me recalibrate. What I’m doing with that is reviewing more diversification in the stock market. I am going to buy some gold, even if it’s 1% of my portfolio or 0.5%. I’m also focusing on some different insurance policies to complement what I already have. It gives me some good recalibration with my long-term plans.
That’s where I look at diversification. You become an expert in this specific niche. I would say it’s hard once you’ve done much there and even have gone through tough times to diversify outside of it because there’s always that weight of opportunity costs. How do you characterize that dynamic?
One thing I’m doing is I decided because winter is coming to liquidate 10% of my portfolio. I’ll call my D-class properties, my 2 bedrooms, 1 bath, 1920s houses that are old but they are good what I bought. Everything that I own that’s 1950 or newer, it’s at least 3 bedrooms, 2 baths with a garage, I’m going to keep. If it’s an older than 1950, 3-bedroom, 1 bath, no covered parking, no garage, I’m liquidating because we’re at the peak of the market and it might go up into gear again and it might go up in another year. I might as well liquidate, take some money off the top of the table. We learned that a lot. Half of it I’m going to use my cash. I’ll lend hard money. I view hard money lending as having money in the bank. I can sell a note easily for face value within a week to a lot of different people. The other part of the money is I’ll do 1031 Exchanges and buy some expensive multi-units. If I take my gross revenue, let’s say I’m grossing $1,500 a month in rent and I can sell the property and take $150,000 and buy a $500,000 fourplex. My gross rent is $4,000. My cashflow is going to increase. That’s going to put me in a better financial position then I’ll let that $500,000 fourplex slowly appreciate it at 3% for 10 years. Let the principal pay down and then I’ll keep growing my portfolio.
You know how to underwrite, you know how to look for those opportunities and you have enough of a portfolio where you can find different opportunities in there to become more efficient with certain properties. I know you’re going to learn about multifamily too, which is I would say other opportunities because of the demographic shifts, especially here in Utah. The idea of taking something inefficient and making it more efficient. Let’s end with some of the stuff you’ve experienced over the last couple of years with the Tony Robbins’ organization around legacy. How has that impacted the perspective you have with your money, your investments and your business? Let’s start with what you’re excited about in life?
I went to eight events, which is a lot. I’ve seen you. We hung out every other weekend or every other month. I’ve seen you more than a lot of my good friends that live in Utah. I’m excited about being more self-aware of how much more we can do in life. Not just financially but mentally, socially, engagements with other people and being more impactful. Thanks for letting me participate in this show. I know that if I help one person, it’s worth it. What’s cool though is I can keep this and share this with my kids in the future. They’ll be like, “Dad was saying this when we were kids.” A lot of my friends are like, “You say the same thing over.” I’m like, “It means it works.” Tony Robbins has helped me think of being better-rounded or balance. Here’s an example of the wheel of life. Do you remember that exercise?
Most of the things, I’m 8 and 9 and 1 being I’m a 6 and here’s the cool thing, that gives me some metrics to measure up and improve. Number one is self-awareness. Number two is how much our psychology makes a difference in life. It’s huge. Influencing our significant other, our kids, our family, our amazing team that we work with, clients that we serve, the community, that’s been impactful of making your move, change your state, jump on a rebounder. It makes a difference in how we choose to do things.There is a psychological transition between spender, saver, and investor. Click To Tweet
Have did you redefine your understanding of wealth or has it been redefined?
I would say I was more monetarily-motivated. I’m more lifestyle-motivated. Lifestyle not necessarily means, “I can’t get the steak, I’m getting the chicken.” During the market crash, it’s being able to choose. I was meeting with my controller and had a phone call about 2019’s finances and where everything’s at. As we’re looking at it like, “What do we need to decrease?” It’s always good to trim the fat and reevaluate. As we’re reviewing what to trim and then I was like, “Here’s the opposite. How much more do I need to earn to keep doing with what we’re doing?” They’re like, “That’s a good question. We should come up with a number to go towards because I know that I get more inspired by going towards that number. As we cut the fat from other things, then we can be in a good spot too with that.” Where before I would’ve liked, “Let’s cut.” It’s been more like, “What do we want?” Tony teaches RPM. What do you want? Why do you want it? The three action items, that’s been reinforced.
It’s simple. At the same time, most people completely miss identifying the results first. If it’s not done, then going to the solution, going to the how is risky. That’s where I look at one of the exercises he does when he has us all write down the number we think it takes to be financially free. Everybody massively overshoots what it is because of a failure to be crystal clear with the results that you’re after. Understanding not the results, but the purpose, the why of those results. A big thing for him is if you’ve identified this, he doesn’t use asymmetric risk-reward with money, but he does it with what he wants out of life. It’s, “Here’s the result I want. How can I get it for the least amount?” I love that because ultimately, in the end, we don’t want money. We want experiences. The lifestyle is, as you put it, they bring us the most satisfaction, joy and then ultimately benefiting the lives of others. It’s getting in that contribution mode. Money is essentially a vehicle to make that type of difference, both in yourself and both in others.
That is huge because if you don’t recognize that going into any type of investment strategy, your emotions are going to overrule sometimes unless you’re able to appreciate and be grateful for what exists. If things happen, that’s great. If they don’t, then you still have and retain that state. Usually, that’s what I would say brings what results we want closer to us. As opposed to sometimes when we’re not satisfied and grateful, it prevents those things from being in our life. Anything else you want to add as a final thought?
It’s interesting how we worked together and at the time we were 26-ish. This young up and coming, you were married. I got married in 2007. I remember going to the Five Point Agent class that Garrett White taught. The cool thing is he’s made a big impression on my life. I met him. He was my college roommate. It’s cool to see how different people show up in our lives at different times and then it can be years later, but he encouraged me to take a Wake Up Warrior class, which I loved to help spur my reading. Reading, loving what is then a bunch of other books. He introduced me to Strategic Coach. It’s platformed, stacked positively. As we had Peter Diamandis, he’s speaking at Tony’s event, but he’s also a strategic coach, student. He’s given tons of credit to Dan Sullivan. The cool thing is all of this is available to anyone who chooses to take the time to study. I would never think I was going to Tony Robbins event running around at the Sun Valley but when I woke up, saw the market, I’m like, “I knew or I was aware of what this could impact the economy.” I’m like, “That was worth the money.” I am not freaking out, I’m like, “I’ll explain it.”
Everyone that’s reading this, here’s my suggestion and Patrick knows this. I wear shirts. I have my swag on the back. If you take three things you learned from the show and as you implement those three things and give yourself a date. I’ve learned this from Garrett White, Dan Sullivan, Tony Robbins, probably my Priest Quorum Advisor when I was a kid, whoever. When you write out action items and have it outcome-driven, you can do much in your life. Those who take the time to read this, it’s cool to read but take the time and people say massive action. Do something. You’ll get farther along by doing something versus being entertained because we have amazing voices.
What would you say are the primary reasons that prevent people from taking action?
It’s a lack of confidence in themselves. I’ve been a confident person to do stuff. What I have gotten from Tony and even Tom Hopkins. In 2006, I never see failure as a seller but only as an opportunity to practice my technique to perfect my performance. He has these little incantations or sayings that are ingrained in me still. As we’re more confident in life and then we have at-bats, the more at-bats we have and build that confidence, then we can take on a lot more things.
I love how Tony puts it where we have a 10,000-year-old brain that is still trying to protect us from the saber-toothed tiger. That fear is there, but it’s an irrational fear. If you know that, and when that fear comes up because people associate putting down something on paper saying, “This is what I want. This is what I want to achieve,” and then not achieving it as a huge fear of failure and the belief that they’re not enough. That prevents them from taking any action or putting any result down on paper. If you look at those instincts that are inside of us that are trying to protect us, that’s that feeling. We don’t have to be protected like that anymore. When it comes down to any type of fear, we live in a privileged country, in a privileged time in history where fear should not be there yet. It’s always going to be there.
Knowing that upfront and recognizing that, “Here are the results I want. Here’s why I want it. Here’s the massive action that I’m going to take to get it.” Even if you don’t get it, the massive action teaches you and brings you closer to what it is you want for. If you understand that, it’s one of those things, it’s programmed in our DNA and it takes a lot of repetition. It takes trying and being tenacious and not stopping similar to Kobe as we started the conversation with that. He missed those free throws as a rookie. He didn’t quit. It made him work harder. That’s the principle of failure. The bigger you can fail, the more likely the bigger your success.
At the end of the day, it’s how we will be remembered.
We’re all compelled to make a difference in somebody else’s life. Once you cross that line, life takes on a new meaning. I believe that as you have kids, as you have relationships and you have those that you make an impact on, it provides you with a sense of satisfaction, the fulfillment that you want to continue doing it. It’s identifying it first, it’s most important. This has been a good conversation.
Thank you. I did even feel like it’s natural. We should be at the beach.
You referenced something about the stock market crash. The stock market’s down because of the Coronavirus. I would say one of the overriding themes of the Financial Summit in Sun Valley was the impact that’s going to have because of how significant a role China plays in the supply chain side of things and how a slight disruption is going to have a ripple effect. It goes into many different industries, countries and economies. It’s interesting to see how that all plays out. We get to watch it.
We get to play and participate with a little more confidence than other people.
Thank you for reading. This has been awesome. Matt and I have some awesome conversations at dinner and different meals that we have but I’m grateful for you. I’m grateful for you how you’ve stepped up and you post a lot of stuff online and are trying to inspire people to be better continually. Do you want to mention maybe a few ways in which the audience can follow you or learn more from you?
I’m a big Facebook guy, because I’m over 40, I’m not on Instagram as much as where there’s this demographic they’re like, “We’re here, you’re on Facebook and you’re younger, you’re on Instagram,” and then there’s other stuff. Matt Atkinson, my real estate consulting company is called MJA REAL Consulting. I love helping people with real estate investing. I’m the President of the Utah Valley Real Estate Investors Association. We have meetings every month for those that are in Utah. It’s worth going to in Utah County to go and learn. If you need residential financing in Utah, I work at Intercap Lending. My email us MAtkinson@IntercapLending.com. If you put in the subject line, “I read Patrick’s show and he’s good looking,” I’ll probably talk to you a little extra, but you’ve got to put in the subject line, “He’s good looking,” for you to get some extra time.
Thanks for reading. Matt, thank you for your time. I appreciate it. I’d love to have you on again. Take care.
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About Matt Atkinson
Matt Atkinson started his career in real estate 18 years ago as a mortgage professional and has been investing for the last 15 years. He purchased his first investment property in 2004, a single-family home through a short sale, which is a rental unit he still owns today. However, he over-improved the property, spent too much money on the renovation, and mismanaged his tenants. Throughout this process he learned the struggle of having a full-time job and being a landlord, and how to effectively utilize other industry professionals to improve his investing.
Matt credits this experience with getting him addicted to local real estate investing and now owns over 16 million of rental properties personally and with partners. He has accumulated 25,500 hours experience – nearly 7 years round the clock – and has personally invested over $1.87 million dollars in rehabbing rental properties since 2004, and an additional $4.55 million on flip properties since 2008. After making only $500 on his first flip project, he reevaluated the strategies others were using and learned how to effectively buy the property, get the most bang for his buck during the remodel, and how to price the home for the quickest and most profitable return.
In 2012, Matt and his team added real estate consulting to their services. He has focused consulting on a local level with his expertise ranging from rentals, land lording, hard money lending, fix and flipping, assignments and building wealth as a investor. He currently serves on the board of UVREIA for the last 6 years, SLREIA since 2010, NAHREP for 1 year, and is member of UAMP.
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