With the variety of options to choose from to invest in the real estate market, people have a hard time deciding which one is the best. Matt Faircloth, the President of the DeRosa Group and a full-time real estate investor, sheds some light on the different real estate investment options, including passive investments. Offering advice on what to prioritize between passive investment, loan notes, and syndication, he also shares some tips on how to invest in loans as a private lender and how to know your clients before closing any deal. In this episode, learn from Matt how you can become a successful passive real estate investor, specifically around doing due diligence and meeting new sponsors.

Passive Real Estate From A Private Capital Expert with Matt Faircloth

I’m here with Matt Faircloth. He is a real estate investor. He’s the President of the DeRosa Group. He wrote an awesome book, which I’ve got a copy of, Raising Private Capital available from BiggerPockets Publishing, on Amazon and all over the place. It’s a fantastic book. Matt, thanks for joining us. 

Thank you so muchTaylor. It’s such an honor to be here. Thank you for having me. 

I’m excited to talk to you. You’re definitely a thought leader in the private capital world. We‘re normally talking to the active investor who’s raising money. We’re going to be talking to the passive investor who is looking at vetting those passive opportunities and getting into that and how they can get into it. As people get started, what are the first three to five things that come to mind vetting passive opportunities? For the sake of argument, let’s say vetting, syndications. What comes to mind for you? The top three to five things. 

Let’s back up even further when people are thinking about what they could get themselves into. Maybe somebody is thinking, “What else is out there? Maybe I should invest in this stock versus that stock.” What people are hopefully finding out more of in this country is there’s a whole other world out there with regards to investing. Because of the JOBS Act that President Obama put in place, more and more people are able to get into things that are miles away from Wall Street. Literally, it could be thousands of miles away from Wall Street by investing in direct real estate assets and not buying into a REIT. 

It’s a completely different vehicle that they can get into and real estate offers something that’s a very different vehicle with very different returns. It’s not subject to the same puppet strings that Wall Street is. I love syndications. Also, we’ve done a lot of private loan deals and those are just two options that people can get themselves into. I know you bring a lot of turnkey providers on the show as well. This was great. Real estate offers at least three vehicles, if not more because you can also invest in notes. You can also invest in debt. You can invest in tax liens. All kinds of stuff you can invest in that are thousands of miles away from Wall Street that aren’t affected by the same forces that affect Wall Street. Different angles are in place. It’s a great diversification tool, which is why I’m excited to talk to your audience. 

PWS Matt | Passive Real Estate Opportunities
Passive Real Estate Opportunities: You need to collect data first before you recommend which investment you should prioritize.

 

You mentioned a lot of things we’ve had on here. I interviewed Jorge Newbery, one of the big note investors. Notes are another great option, also with private lending and all that. You’re right, we should back it up from talking specifically about syndications. I’m getting little horse blinders here thinking about syndications because that’s what I invest in. When you’re deciding as a passive investor between syndications, loans, notes, all of them and narrowing that down, what are some priorities that folks should be looking at? 

In my book, I talk about a deal provider, which is what you and I do. We provide opportunities to those that want to put their money to work in real estate but not have to put their time and not have to go to work in real estate as you and I do. The deal provider provides opportunities through a cash provider. When I talk to a new cash provider about working with me and my business, I like to sit down and talk about what their goals are and most importantly above everything else, their goals are important, all that stuff’s important. A big factor that determines which direction they should go in investing in real estate is how liquid they need their funds to be and how soon they need them back and what the sources of funds are. 

Somebody investing with a self-directed IRA account with retirement funds, they might not even be aware of it, but the Tax Codes treat that differently than they would a cash investment in real estate. I collect all that data and then I make a recommendation. They say, “Matt, I’m dealing with some cash but I need it back in six months to a year because my daughter’s going to college,” or “I need it because I want to buy a house but I want to put it to work for a little while.” That is a great equation for a private loan because it should only be six months to nine months or something like that. Some of that might have gone a little bit longer, some might have been shorter. I borrowed money from somebody for a one-week transaction. 

I have also borrowed private money for several years. With private loans thoughthey are perceived to be in mostly are fairly liquid. Meaning they absolutely have to have their money back in a short period of time. You could likely get their money back in 90 days is a good timeframe because I could refinance the property, I could sell it or whatever to get that private lender their money back if they truly need it. Whereas the syndication, which is where somebody buys a small chunk of an apartment building or a larger asset like a strip center or a big shopping mall, whatever it is, these are all syndications. The Empire State Building is a syndication, anything in between. It’s buying a small share of something like that as if they would be buying shares of Microsoft. 

They’re buying a little taste of it in a bite-sized chunk. That’s in a nutshell what a syndication is. That is not perceived to be as liquid as a private loan could be, so that’s something to be considered. I collect all this data, then I recommend like, “You probably would do better with the syndication for the tax purposes or for your longevity in the deal where the money’s coming from.” I look at myself as an alternative financial advisor, even though I’m not a financial advisor. I’m an alternative version of such. 

They all have a diversity of advantages and relative disadvantages. Let’s talk about investing in loans, being a private lender. We haven’t discussed that on the show yet with anybody. You mentioned you have taken out loans from a week to months and it could potentially go up to years if the deal calls for it. 

I don’t do too many private loans anymore, but I’ve been doing this for fourteen years and so I tend to invest along with the market cycle. There was a time where there were new constructions and fix and flips and things like that were getting absorbed quickly. I got involved in a lot of those and did well with it. We funded most of those with private money and private loans. I’ve done a lot of it but I did it in 2011, 2012, 2013 and 2014. I only have three flips going on right now and I’m trying to get those done as quickly as possible, get it done and wrap it up. In circumstances like that, we need money quick to buy a property, renovate it and sell it or renovate it and refinance it. 

The private loan is a great vehicle for the deal provider and a great asset for the cash provider. Click To Tweet

The private loan is a great vehicle for the deal provider and it’s a great asset for the cash provider most importantly if they’re playing with a self-directed IRA, it is a perfect vehicle for a selfdirected IRA. I submit to you, it’s the best vehicle for a self-directed IRA. That’s because the interest is taxable. If you invested with cash and a private loan, if it was a shortterm private loan, there is an interest in it. You have to pay tax on the interest on the loan. Whereas with an IRA, if you invested $100,000 into a private loan and I pay you 10%, it’s a sixmonth loan. I give you $5,000 back. Half of that 10% in six months, so half a year, they give you half a year’s worth of interest or $5,000. You now have $105,000 and you don’t have to pay any tax on that $5,000 you made. You can then take $105,000 and invest it into another private loan and you can participate in compounding interest. You can double up that money very quickly by rolling it over and over again in private loans. The savvy investors I’ve talked to will do hard money with their IRAs, the ones that are willing to be active in growing their IRA accounts. Their IRA can skyrocket in value. 

The issues, concerns or opportunities I suppose that I have with investing in my IRA is when I invest in something that cashflows and sending me money back. My priority is to have those funds redeployed. If it’s interest on $100,000 loan, there are a few thousand bucks. It’s not enough to put in another real estate investment. What have you noticed that a lot of the savviest folks do? Do they maybe put that back in the market somewhere rather than having cash sitting? 

They could, but because I negotiate interest rates and I try and create a win-win, a win for me as a deal provider when I was doing a lot of these loans was that I didn’t have to pay monthly payments. That’s the thing, is I’ll pay you a little more interest if I don’t have to pay you monthly payments. If I wasn’t making them a monthly payment, I was paying them money at the end. The deal was sold off let’s say six months in or nine months in, I would give them all their money back and their interest and then they were out of the deal completely. They had their full principal and their interest back and then they can reinvest that capital all at once into my next deal or into something else or whatever it may be. If you’re making monthly payments, which I’ve done plenty of times, if you’ve got a savvy enough investor, they can find a shortterm vehicle to park that $1,000 a month or whatever it is they’re getting into something to generate 4%, 5% to 6% return on it in a liquid investment. When the principal comes back, they can roll it all up, but that’s a lot of work for them to find something like that. I like the no interests during the loan. 

Given that option, I would certainly go for that. 

I’ll pay more interest for that. We all would as a deal provider, but I’ll also pay more for it. In exchange for not having to pay interest during the loan, that enables me to grow my business more, to take on a few more projects, stretch my resources, and get involved in more deals and play an up market. When I was doing this, that’s what we were doing. It was a win-win at the time. 

You mentioned that you’re essentially getting out of the flipping business and getting into syndications. Why? 

We’ve been doing syndications for years. We’ve been a multiple-trick pony for a couple of years as a company. We’ve sold plenty of turnkeys, but we never become the turnkey company. The big guys at Memphis Invest and those guys, I’m sure you probably talked to them as well but we’ve never gotten into that level of turnkeying. We’ve always liked to have a few different things that we offer as a company. The syndication is what’s taken off in our business over the last four years is when we got into it. AlthoughI’ve done smaller versions of syndications by getting a few friends together and doing a deal and cutting up equity, we all were active. I’ve been doing syndication level projects for the last nine years, but doing SEC-registered stuff has been the last four. 

That’s grown exponentially. I need to honor that growth and put my energy into it. Additionally, I’ve used syndications in the right city, in the right asset class, with the right job base supporting that tenant base, supporting those tenants to be recession-proof. It’s what’s recession-proof truly because my crystal ball is broken. At the end of the day, who knows? The assets we invest in and the cities we invest in are going to do better if we were to have a recession. The syndications seem to have done better and I’m not interested in taking on loans in this marketplace because I’m not sure what property values were going to do in the next six months to a year. I don’t want to be pulled into a bunch of debt going into a potential downturn. 

PWS Matt | Passive Real Estate Opportunities
Passive Real Estate Opportunities: Honor a growth in any investment and put your energy into that.

 

On the flipping side, for the active person, there’s a huge downside to the income being taxable as regular income compared to you. 

I take a lot of write-offs in being a real estate investor with lots of depreciation and stuff. I’m not as worried about the capital gain. I’m willing to do it. If we were still in a confidently-rising market, I probably would be doing plenty of fix and flips. I enjoy them. They’re fun. You get to create transformation. You’re creating the home out of a piece of you know what. You should see some of the before and after pictures of some of the work that we did in that. There’s a lot of pride in that and there’s a lot of manifesting the vision that you have in those things. I’ve been doing that more on the apartment building level and turning apartments over and turning over common areas and putting in playgrounds and splash parks and stuff like that over flipping houses. It’s rewarding. I just am not interested in doing it in this marketplace. 

You mentioned apartment buildings, so it sounds like you’re getting into that. Are you looking at other commercial asset classes like selfstorage and mobile home parks? If so, why? If not, why not? 

I’ve been doing this for fourteen years. I have found that most of my success has come by focusing, even though I’ve been involved in a lot of different things. I’ve had my hands in a lot of different stuff. The biggest wins that I’ve had have been in my core and my core is always been rentals. I got started in residential rentals. I know residential rentals. I’ve been a residential landlord for fourteen years and I’ve done a lot of other stuff to play the market in that. I have grown up in it. It’s what I know the best. It’s what works, so it’s what we’re sticking to. I had somebody sent me a flex space. It was like a warehouse with an office bolted onto it. We looked at one of those deals and it was a phenomenal return and everything was there. I just couldn’t get my head around it.  

There’s another investor out there that specializes in this that is going to blow this out of the park, but it’s not going to be me because there’s something I’m going to miss. I’m going to not think of something. I’m going to not catch something where it’s rare that it’s a residential deal that I do that I don’t catch most of what needs to get caught. If something slips in under the radar that I miss, I will easily figure it out because I’ve been doing this for long enough. I’m better to stay in my lane. I’ve looked a lot of those things. They’re intriguing, but I’ll likely just invest in their syndication versus me being the operator of it. I’d rather go and passive in somebody else’s deal versus being an active investor or trying to figure out the mobile home space. It’s not that it’s a bad space. They’re good investment vehicles, but mobile homesselfstorage, commercial strip centers and all those things, at this point in my game, it’s not a learning curve I want to get on. I’d rather advance on the curve that I’m on now. 

All these things take a specialization and you can partner with people that have that specialization and have built it over time. 

If it’s somebody I trust and like, being in your audience’s shoes of having to vet out a potential syndicator or somebody offering up an asset, I would do my due diligence, do my homework on what they’ve got to offer and then pick the right horse. That’s it. 

From watching your passive investors, what have you found the most successful ones do in their due diligence process when they’re meeting a new sponsor? If you’re out there and you’ve got a couple of hundred thousand dollars to invest, you have quite a few opportunities out there. It’s your job to sort the good from the bad and the good teams from the bad teams. What have you seen the successful ones do? 

When you’re talking about vetting a syndicator, let’s start with the basics. I always say google people, because you never know. You might be investing in a syndicator that’s under investigation. This the Wild Wild West in the real estate world and everything like that. You’ve got to research who it was you’re getting yourself into, you’re getting in bed with or you might be investing in with someone who was a car salesman a year ago or something like that. It’s important to research the background of that person by Google and see if they’ve written some articles and see if they’ve got their voice in the world if they’re an influencer. Read up a bit on what they’ve written and what their philosophy is. The podcasts like yours are a great way to get to know people. Google them and see if they’ve been on your show or if they’d been on somebody else’s show if that’s in the media world. Listen to their interview because you’ll get inside their head a little bit.  

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Let’s see what they have to say, then get on the phone with them, with data in hand and what you have to say. Make sure that they do what I suggested, which is listen first. They don’t start vomiting on you about deals that they have and what returns you’re going to make and how great real estate is because that’s all flash in the pan, used car salesman stuff. Make sure they don’t do any of that. Make sure that they get to know you and they’re a relationship builder first and beyond everything else. The further vetting, ask for a track record. You can ask for references. Those are all good points. I’ve had investors, if they want to get serious, put themselves out of an airplane and go and visit one of my assets. I had one guy that was willing to show me how serious he was. He sent me a selfie in front of a building that we were buying.  

He was thinking about investing in it and he sent me a selfie in front of it saying, “Thought I’d do a little bit of due diligence.” I’m like, “I love that about you.” We had a great call after it because he was that serious that he wanted to see where his money was going to go, so he went down and looked at the asset. I thought that was really cool. I commended him for that. Not everybody has resources to do that or the time, but if you can, do as much vetting as you can in this syndication, but also understand that there is an unknown factor. I’ve had many investors get caught in paralysis by analysis that at some point you’ve just got to take the leap. Once you’ve done your analysis and it’s time to make a decision to have the courage to make it known that there’s still a 5% unknown out there and you’re not going to dissolve. 

You don’t know what’s going to happen once they get into the property and start working on it, there might be more. The repair budget might not be high enough or something might happen. You never know what’s going to happen. 

We fired a property manager in North Carolina. This is a well-vetted property manager that ran over 20,000 units in the southeast. It’s a strong team and they could just not get it going. We had to fire him. We ran our syndication up the flag with that PM as being who our partner was on the deal. We ended up having to fire him. These things happen and so everything flows back to me. It’s my fault, but at the end of the day, it’s not something I could have predicted. We jumped on it and fired them and that slowed us down a little bit. Again, that’s one of those unknowns that you don’t know about. 

We’re trying to catch up on occupancy now because we had to fire the PM. These things do happen and there are curveballs and lefts and rights. You’ve got to hire a syndicator that knows how to handle the regular changes that come up in this business. This is somebody who’s been around long enough. This isn’t their first, second, third or fourth deal. If it’s there for a second or third deal, make sure they’ve got a good mentorship team standing behind them that are going tell them what to do if they run into trouble. 

For your deals in particular, how do you think about and arrange your team, whether it comes to you, yourself, who handles asset management, construction management and all of those responsibilities? Once you have the property, how does that work delivering the deal for your team? 

Some syndicators are like, “I’m going to partner on this deal with Johnny. On the next deal, I’m going to do a deal with Susie. The next deal, I’m going to work with Sally.” They skip around and form these one-off partnerships and stuff like that. I see a lot of that in the syndication space of syndicators partnering up and doing a dealership together and then jumping off into it a deal with somebody else and everything like that. We don’t do too much of that. I’ve got different partners here and there, but at the end of the day, our core team is the same every time. That’s my construction manager, my asset manager. I’ve got an underwriter and a partner that runs the operation side. That’s a repeatable team. That one thing that we do differently is we try and have a corporate level feel when we approach a deal. There’s a CEO-CFO model, an org chart that we use for our deals. Even though we’re not at 7,000 or 8,000 units yet, we’re treating the company as if we are that big. We’re not looking to do one-off deals. We’re looking to use the team we have to do those roles that you listed and use those people over and over again. 

You said you’ve been investing in real estate for fourteen years. 

Yes, since 2005. 

You got into it a little bit before the big one. 

I’ll run up and then run down and then, “What would we do now?” Then run up again. 

In many ways, we’re above where we were at the peak before. 

If you look at the charts, we’re not too far above. Multifamily is, but if you look at the housing prices, we’re only a year or two ahead of where we were at the burst of the bubble. We’re standing on more solid ground now than we were back then. We’re still propped up on a lot of debt. Most Americans are in heavy debt and we’re a debt-ridden country right now. Unless you are a doomsday predictor in an absolute bottom fallout collapse of the whole thing, which if that’s going to happen, let’s all save up some bottled water and make sure we’ve got canned food. If that’s not going to happen, then if you’re not a doomsayer, then we’re looking at perhaps a bit of a slowdown and maybe bump into the ceiling a few times and then maybe lose 5%. That’s more of a conservative prediction of what’s going to happen over the next year or two. It’s not a crash, but just a slow down and a correction. Let’s all take a breath and let it breathe down a little bit. Maybe that’s what happens. 

PWS Matt | Passive Real Estate Opportunities
Passive Real Estate Opportunities: Know your investor first beyond everything else.

 

If you’re not in the Peter Schiff style of, “The sky is falling. Everything’s going to go bad and the dollar is going to collapse within the next three years.” 

Robert Kiyosaki is talking about that happening for the last 30 years and everything like that. Maybe he’s right. They’ve been talking about everything like that. It makes a lot of sense what they’re saying, but that’s a very hard thing to prepare for. In that sense, I’ve got to hope we make it through, but I would rather prepare for the more likely scenario, which is we hit a slow down in that, which means that lending is going to get less fluid. Rates will probably do something. You could argue where they’re on, they’re going to go up or argue that they’re going to go down. The stock market will probably take a breather and maybe slow down. Maybe some people will lose their jobs and so maybe occupancies go down. Everything pulls back a little bit. That‘s what I’m predicting. For those reasons, we’re invested in more blue-collar C-class real estate with job diversity. The markets we’re in, there’s no single industry that has any more than 20% control the market.  

Let’s say you’re in Dallas and I’m not poo-pooing people that are in Dallas because I’ve got a lot of friends that are invested in Dallas, but if the oil and gas industry took a hiccup or something like that, that’s a lot more than that. That town relies a lot on more than 20% in oil and gas, and so does Houston and stuff like that. Those are markets that maybe would take a dip if oil and gas took a slow down. What I described keeps me away from a lot of the hot, sexy markets that a lot of people are in because most markets have one to two big drivers that control those markets. You’re not going to see me in the Orlando’s, Miami’s, Jacksonville and Atlanta. You’re not going to see us in those markets. You’ll see us in markets that are a little more tertiary. We’re trying to get to Pittsburgh. If any of your audience have deals in Pittsburgh, let me know. 

In the last downturn, generally speaking, one of the biggest causes of the real estate market flying downward, and this might be debatable, was the lockup in the debt markets. The debt markets froze up and there were big problems. How will you prepare in your deals if that happens again? What are you doing to get ready for that? 

I don’t think it’s going to happen. It happened because the regulations had gotten so loose on what people could get approved for. I was refining properties, stated income and stated assets. If you saw the movie The Big Short, they talk about some of the crazy stuff that was going on back then. I do not see that, but let’s say debt did slow down a bit or debt became harder to get. I think that’s what you’re alluding to. If that was to go down, we’ve put some parameters that are underwriting. I’ve seen other syndicator deals that will say things like, “This day’s market has a 6% capitalization rate.” We can go into what that means, but they’ll project a 6% cap rate on resale five years from now. 

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Maybe things stay the way that they will now, but we typically show a 1.5% to 2% increase of interest rates and capitalization rates on the outsell of our properties. It definitely hurts our projections. In case, I underwrite to that when I go to refund my property or when we go to sell, their rates are going to be higher. That tends to create a bit of an acceptance level for the mortgage worldchanging. You’re right. Money might get harder to get, but at least my deal is able to receive a rate that’s 1% to 2% higher than what today’s rates are. I might have to chase a little harder. I might have to chase the debt a little harder to get that. It might require more parameters and lower LTVs. 

As far as some of the debt you’re getting now, you’re doing interest-only loans and amortization and balloon, terms and all that, what are you doing now to prevent that being an issue if it happens? 

We do interest only. On a lot of our deals, we do interest only because I’d rather pay investors cashflow now versus have them earn amortization points on the property and paying down the principal over time and giving them that money five years from now and the property sells. I find that an auto loan benefits our investors more in time value of money versus having them wait until the property sells. It could be viewed as being more conservative, let that mortgage pay off and everything like that because then you’re creating a delta between the market price and the debt so that you’re opening up that gap a bit. I do interest only for sometimes the first two to three years on a deal. We buy properties on a bridge because we do a lot of big value add properties. I buy C-class properties in bluecollar workforce housing areas. I do sensible renovations to them to where the bluecollar market is willing to pay a mild premium for it. Sometimes I’ll bring it up to folks that are a smidge above the bluecollar market but might also be willing to live there for a deal. Those are the rentals that we do on a bridge loan and then we refinance with Fannie or Freddie products, what’s their rentals done? 

What is the best investment you’ve ever made? 

We’ve owned a rental property for a long period of time and then sold it. In those times where we’ve caught the sale of a rental at the right time has been the best investment we’ve ever made. My wife and I assembled a portfolio of twenty units in New Jersey. We live in Pennsylvania, but we bought two four-families and then slowly assembled more four-families going on down the block and then sold them as a package of five of those buildings. We sold it as a twenty-unit package off to a larger investor. We were able to sell it on the cap rate. Selling a four-unit building on cap rate was not viable but selling a twenty-unit apartment building on cap rate was, so we’re able to trade it at a higher rate because it was viewed differently. That’s probably my best deal. I would say I walked away out of that deal with the largest profit I’ve ever made. It’s a sizeable six-figure check on that sale, which was great.  

The biggest thing on that one was we had amortized the debt for a while and we held those properties for seven or eight years. We had a big amortization on the debt. We had done a lot of the capital improvements over time. We slowly fixed them up and replaced heating units, replaced roofs and kept them up in good condition. When the buyer came along, he saw these are well-maintained assets. This guy cares about these things. It had a solid tenant base. The tenants are all paying market rents. I did a good job maintaining rents on the property. It was one of those stories where we had well executed the business plan on a longterm rental deal. I can think of examples of that same story on the sale of some smaller rental deals where we sold a two-family or a four-family or something like that. It always seems to play the same way that the well-cared-for slow and steady rental is good for cashflow. Also when you go to sell at the right time, it is a great profitable sale too. 

You ought to talk to some brokers here in Richmond if you want to learn about trying to sell a quad or a duplex on cap rate. 

I’ve seen it. I’m not knocking some of your guests specifically. I haven’t seen any of your guests do this, but I’ve seen turnkey providers try and sell a singlefamily home on cap rate. It’s like, “Are you kidding me?” That cap rate works until the tenant moves out and then you’re vacant. The cap rate only plays once you get into the larger real estate space.  

I was hunting for a personal residence the last time. I was looking at duplex after duplex and they’re saying, “It’s this cap rate.” It’s a duplex. 

Talk to me in dollars per doorLet’s have that conversation.  

What’s my lender going to think? The next question, what is the worst investment you ever made?  

There’s so many, Taylor. I’ll give you one that I made lemons out of lemonade with, but I made lemonade out of the lemons eventually. It’s still a bit of an albatross around my neck and it is what it is. That’s an office building that we bought. We had done some single-family deals and some small multi deals and those were starting to do well. We had generated some returns and we were starting to show a track record. Me being the impatient dude that I am, I wanted to leapfrog it and scale big and get into a lot bigger asset fast. I’ve found this 10,000 square foot building in a good part downtown Trenton. 

The well cared for slow-and-steady rental is good for cashflow. Click To Tweet

At the time the Corzine Administration, he’s the governor at the time, his administration was gobbling up office space left and right. I figured that the least they were paying for office space was about a third of what I could buy the building for, meaning if I bought it for $3, they are paying $1 a year in rent. That is a huge, awesome spread. They were willing to pay all your utilities and all your real estate taxes and all that on top of it. I was like, “I’ll do it.” I bought this building. I leased it shortterm to the local vo-tech high school while I was marketing to the administration. They rented it for a year. In that year, the Corzine Administration lost the election to Chris Christie who completely turned New Jersey upside down. They needed to have some of the fat cut and stuff like that. Chris Christie comes in and the market crashes in that time. I absolutely took a gutshot at that time. We ended up having to redo the building and make it a small business center and make it a Regus-type of a shared office. 

It does okay now, but for a long time it’s slowed me downI would’ve done better if I’d taken the money invested into that building, if I had gone out and bought three apartment buildings or gone out and bought a couple of more small multis and just keep doing what I had been doing. Keep buying the properties that I was buying that were working, that we were making money by, how about if I buy more of that? If I had done more of those kinds of deals, I probably would have been much further along. I don’t regret it because the building is a great asset of mine. I’m very proud of it now, but it slowed me down for a while during those times. I’d be glad to come on your show another time, Taylor and we’ll spend the whole half hour talking about mistakes I made and talk about worst deals. I’ll do more in the next one.  

The last question, what is the most important lesson you’ve learned in investing?  

This showed up during that office building is that don’t give up. The only thing that separates those that fail and those that succeed are people that quit. If you look at Abraham Lincoln’s track record, he lost a bunch of elections. He went bankrupt and had all these problems and then he got elected president. Winston Churchill said that success is going from failure to failure without losing enthusiasm. I’m paraphrasing a little bit, but not quitting and being hard-headed enough to try again and again until you make it work has been a success equation for me. Also, the folks that I admire are those that have been tenacious and not a quitter. 

PWS Matt | Passive Real Estate Opportunities
Passive Real Estate Opportunities: There is no single industry that has any more than 20% control of the market.

 

Where can folks get in touch with you? Where can they learn more? You’ve got a lot of content out there. Where can they get started? 

Everything’s at DeRosaGroup.comThey can buy a copy of my book. They can check out my YouTube page. They can check up my wife’s podcast, which is out there for investing for women called The Real Estate InvestHER Show. They can also check out some articles I’ve written on BiggerPockets. If they want to hear more about what we offer as an investment company, they can reach out to us and read up on some things that we’ve done in the past. 

I have a copy of the book. I have a physical and a digital copy. I’m tempted to give away my physical copy just so somebody else can enjoy it, but I won’t do that. I’ll send you another. 

Hold onto it, I want to sign that for you one day. 

I will, now. I‘m obligated. We’ll be sure to have you on again sometime to talk about that rough investment experience. Thank you for joining us. Once again, thanks for reading. I hope you are enjoying it. If you’re enjoying the show, please leave us a rating and review on iTunes. It’s an enormous help. If you know someone who could use a little bit more passive wealth in their lives, share the show with them, bring them into our tribe and let’s all get wealthy together. We’ll talk to you on the next one. 

 

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About Matt Faircloth

PWS Matt | Passive Real Estate OpportunitiesMatt, originally from Baltimore, Maryland, graduated from Virginia Tech with a degree in Engineering. After playing Robert Kiyosaki’s Cash Flow Game, Matt decided to quit his safe and secure job working as an engineer in a Fortune 500 company to become a full-time real estate investor. Under Matt’s leadership, DeRosa has completed over 30 million in real estate transactions involving private capital including fix and flips, single-family home rentals, mixed-use buildings, apartment buildings, office buildings, and tax lien investments.  Matt has extensive expertise in connecting passive investors to lucrative investment opportunities through syndications, private loans, and joint ventures.

Matt Faircloth is an active contributor to BiggerPockets.com through Facebook Live, teaching webinars, and blogging. He leads the Mentorship Mondays series on DeRosa’s YouTube channel where he answers weekly real estate investing questions!

On a personal side, he sits on the board of a local nonprofit, volunteers as a trainer for men’s leadership weekends, and enjoys making wine (especially red to please his Italian wife!)

 

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About the Host

Taylor on stage

Hi, I’m Taylor. I help busy professionals escape the Wall Street Casino and build wealth on Main Street by investing in real estate. I started the Passive Wealth Strategy Show because I realized that the typical “skip that $3 latte once a week” financial advice does not produce the life of abundance that so many Busy Professionals desire.

I help passive investors invest in multifamily and self storage real estate syndications through my company NT Capital.

Don’t forget to follow on Instagram @passive_wealth_strategies

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