#182: Transitioning from Single-Family to Multifamily Properties with Matt Brawner

Welcome to the Accelerated Investor podcast with Josh Cantwell. If you’re looking to retire early with forever passive income, you’re in the right place. This podcast is the go-to destination for real estate investors, both active and passive. And multifamily apartment investors, both new, intermediate and advanced. Now sit back, listen, learn and accelerate your business, your life and your investing with the Accelerated Investor podcast.

Josh:So hey there, welcome back. Hey, it’s Josh, welcome back to the Accelerated Investor podcast today. Have another fantastic show for you today. I’m interviewing Matt Brawner. Matt is a multifamily investor from the Twin Cities, Minneapolis, Minnesota market. Matt currently owns over two thousand doors in multiple states and his company, Northwoods Servicing, manages over two hundred and fifty units that he owns in his backyard in the Twin Cities. Matt, in March of 2018, became the first of their six partners in his firm to quit his full-time day job in order to work in the company full time. Matt invests not only in the Twin Cities, but also in multiple markets across the country. And so in this interview, I’m excited that you’re going to hear number one about Matt and why he invests for impact and not for wealth. Number two, you’re also going to hear about Matt’s business plan that fulfills his passion for faith, family, finances, but again, primarily for impact, not for wealth building. 

Josh: Matt doesn’t care about how many units he owns. In this interview, you’re going to hear about, again, how Matt focuses on impact, not wealth, not units, but impact. And you’re also going to hear a number three about Matt’s plan for virtual team building and how he invests in other virtual markets and builds his team around the asset. And finally, number four, you’re going to hear why Matt invests in people and not necessarily in property data. Matt does not chase markets. He does not chase property data. What Matt does is he chases relationships that can take him into a new market. And from there, he builds the team, builds the foundation around the people that allows them to operate in multiple markets across the country. So I think you’re going to love this interview on the Accelerated Investor podcast with me and Matt Brawner. Check it out. 

Josh: So, Matt, listen, I’ve been looking forward to having you on Accelerated Investor any time I can talk to another investor, apartment owner, syndicator that’s got a couple of thousand doors, love to trade war stories. So thank you so much for joining me today on Accelerated Investor. 

Matt: Absolutely. Josh, thanks for the opportunity. 

Josh: Fantastic. So, Matt, let’s start with talk about some things you’re working on right now. Maybe a deal, a syndication array’s, property management, a horror story, whatever it is. Tell me something that you’re working on right now, like this week, today, this month that you’re really excited about doing in your business. 

Matt: Sure. When you’re in real estate, the tenant horror stories tend to become just like your day-to-day stories. So sometimes they bleed too far. And you have to give me a minute to remember some of the good ones. But really, coming out of an interesting time, covid has been obviously very traumatic and something that’s impacted people in different ways for our business. We came out of this past year when we were blessed to be able to grow significantly. And I think that’s because a lot of the latent strategies that we had in leads that we had been nurturing a couple of off market deals came to fruition. There was our largest acquisition. One hundred and twenty-two units in midtown Memphis was brought to us because it was part of a larger portfolio. Thirty-five-million-dollar deal that fell apart during the early stages of covid when we all thought the world was going to end. All the lenders were backing away. 

Matt:So it’s been kind of an interesting time for me to reflect back and think, oh, gosh, I really owe a lot of my business to taking advantage of when people are skittish and backing away. What’s the old Warren Buffett adage? When people get scared, that’s when I get greedy. When people get greedy, that’s when I get scared. And so we really bet on the fundamentals of multifamily and dove in. And it’s been actually because of that hundred and twenty-two units we’re actually under. We’ve got to know I accept it on another property just in the same area there. So it’s going to be another significant deal for us. One hundred units plus commercial and then I’ve got fifty-four units here in the Twin Cities that’s set to close before the end of April, working through the last pieces of our financing package. So staying busy. 

Josh: Nice, nice. So that one of the questions I get, which you guys probably get all the time as soon as we’re buying apartments, are aren’t people not paying their rent? Because all the popular news, all they talk about is the eviction moratoriums and the foreclosure moratoriums and all the stimulus money that’s coming out. Biden just signed this one point nine trillion-dollar stimulus. It’s unfortunate most of that is not going to the average American, but some of it is going to real estate operators to help pay rents for tenants and things like that. But how has your portfolio performed over the last year or so? You’re obviously in the trenches not listening to the popular news and you’re looking at your financials on how things have performed. Frankly, for us, our collections are way high, way higher than we thought, and we’ve stabilized pretty well. Talk a little bit about that. 

Matt: You know, it’s really interesting because there was a period of time in early March where I did have a fear of, hmmm, I wonder if we’re going to have 20 to 30 percent of tenants not pay right now. So I won’t pretend it’s say, oh, I always knew it would be great and we got really offensive. So we started educating our tenants on why you really need to pay rent trying to combat this idea that the landlord is getting rich off of this. So we found some great videos that talked about, hey, when you give one dollar in rent, what does that do? You use the money that goes to the property taxes to pay for your kid’s school, that pays for emergency services, that pays to take care of the property, reinforcing this idea that it is very, very important that you continue to pay rent. We, like you, have done fairly well. I would say that to our collections of probably about two percent off from where they were 200 basis points is what I would say. And as I describe that and I’m really grateful for my property management company here, because it’s giving me kind of in-depth insight into this. We don’t have a wider problem. We have a deeper problem. 

Matt:So in other words, the same people that were paying rent before covid are paying rent now, the same people who weren’t paying rent before covered, the same people who aren’t paying rent now. We’re seeing that move to bad debt on the books because right now we can’t move them. So a lot of the people who wouldn’t pay rent, you’d file on them, they’d move somewhere else, not pay rent there till they got filed on. And they were just kind of move around from spot to spot. Well, right now, they’re all in one place. So you are seeing that grow. But we’ve been very grateful that our tenants continue to prioritize paying the rent and we have continue to stay offensive in terms of, hey, here’s why. And we’ve worked with every single tenant who came to us and said, hey, I lost my job because of covid were waving late fees, doing payment plans, you know, yes, we’re running a business, but I don’t want people to lose their home. For a lot of tenants who maybe live in a C class building that rent bills the largest bill they pay every month. So you get behind on rent, man, it gets really hard to get. Back up and I want you to have a nice, stable home for you and your family, so let’s come up with a plan that we can stick to there. 

Matt: And then I would just encourage people, it seems to apply to all areas in the news. But if you really dig into the covid data and yes, please don’t get upset with me and send me nasty emails. I know that a majority of the population lives in California and New York. Yes. But there is a there’s forty-eight other states out there. And it’s just mind boggling if you set aside the unemployment in California, in New York, in the grand scheme of things, we’re at record low unemployment across the rest of the country. We are seeing tenants continue to pay rent. So history continues to repeat itself where we have news outlets that are focused on the extremes of the coastal markets. And yes, you are seeing San Francisco, Washington, D.C., Los Angeles, all those entry markets really struggle. But there are other markets. 

Matt: For example, one of the reasons that we’re in Memphis and we’ve been blessed to see our business case proved out here, we got really excited about Memphis because we said, hey, this is a distribution hub. FedEx is here. It’s the second largest port in the country. As e-commerce grows, that is going to be a need for that. And that means more people with jobs. And that’s what we do with apartments, right? I mean, people moving in that can pay rent. That means I people that pay jobs or excuse me, that are people that have jobs. And we’ve seen that Memphis point 5.2 percent rental lift last quarter. Right. Because people are home, they’re still ordering things online. That means FedEx is running even more planes through it. And our property manager jokes, you want a job in Memphis paying 20 bucks an hour, just raise your hand. 

Josh: You love it. And it’s easy to pay rent when you’re making twenty bucks an hour. That’s good stuff, man. So tell me a little bit more about your specific investment strategy, meaning you buy sea class. You mentioned that. And then tell me about the rest of it. You’re syndicating them out. What are kind of your type of splits? Are you doing some of the day-to-day operations, property management or capex yourself or like a lot of my friends, are, you kind of building the team and letting everybody kind of run their different pieces of it? Obviously, you guys are in the Twin Cities. You have deals in Memphis, not exactly your backyard. So you’ve got to have a team to be able to manage that virtually in a different location. A bit more about your business model and how it’s worked for you. 

Matt: Sure. And it’s all across the board. And the business model is really a tale of how we moved from single family with that mindset. Like, oh, the only thing you can do in real estate is just to buy more single-family homes. So then as we got into multifamily property, management was a way to pay ourselves. We don’t do a whole lot of fee management. There’sa few clients. We really only manage what we own here in the Twin Cities. And our strategies are specific to the market. Here in the Twin Cities, we’ve seen the population grow by 12 percent since 2010. The housing stock has only increased six percent. There’s just not enough places for people to live in. And then if you look back at periods of apartment construction, there actually just weren’t a whole lot of apartments built in the sixties and seventies. So you have a constrained amount of supply. But then when you look at the cost to build new in the Twin Cities, if you’re cutting every corner, you’re not doing it for under one hundred and seventy-five a door. Right. 

Matt: Well, that means then you have a pool of people who needs to live in C class, housing good, honest, hardworking people. And we want to provide them with a place to live. But that pool grows in the apartments that they need. You can’t build new C class housing and we really like that because you tend to stay below the ten-million-dollar level. You can get away from any RIETs or any of the professional folks out on Wall Street. And you find here a lot of mom-and-pop owners who maybe they don’t understand what they have. They’ve just owned it for fifteen to twenty years and they haven’t put the energy into it to increase rents. I don’t like to go older than nineteen sixty because then you get into some of the oh my God. Renovation scenarios with a whole lot of land and asbestos. So and you still can find some around there. But the construction was really intuitive. Like you see bathrooms that are stacked on top of another. Well that’s really good because that means if I have one bathroom leaking, it’s not leaking into somebody else’s living room. It’s leaking into another bathroom. Super easy to find that reduces my repair and maintenance budget. 

Matt: Down South, we are really focused on MSA’s of three hundred thousand or more. As we get into larger property types, we really are looking for one hundred units plus so that we can support on site management. There was some of the cost differences. We are pushing to get into more B class housing. I like B class because in good times tenants from C class properties can move up to B class and in bad times people can move in or step down from any class property there. And we’ve continued just to follow where we’ve had relationships. I would love to tell you that I’m so smart that I could tell you that the mid-South and Memphis was where you wanted to be. But that’s just not the case with there. Because of a relationship. We got to know the market. We found a source of truth in our property management. Come. And that’s enabled us to build a business. We do take on equity partners. 

Matt:We invest in all of our own deals here in the Twin Cities. For a large part of the portfolio will also manage that. Of course, that’s all disclosed the equity in terms of how that’s all structured. That’s always super dependent on a deal. Our most recent deal was a really large lift. So we structured in some preferred equity so that people could see some routine cash flow there. Now, of course, those investors are out once we complete Al-Rifai and you have different splits for those that wanted to participate more in the upside there. But we are looking to be able to offer a preferred return to attract more sophisticated investors there. So I think terms that people would be familiar with, but always dependent on the deal. 

Josh: Yeah, I love it. Matt, great, great description there. Appreciate that. What I’d like to know is, you know, everybody that’s gotten into multifamily, I don’t know really anybody that regrets it, but getting into it, they’re always like, I regret not doing it sooner. Right. They don’t regret getting into it. They just forgot how long it took to get in. Coming from I’m a former single-family investor to a thousand flips, ran a private equity fund funded about five hundred deals as a private lender, got into multifamily again. My only regret is that I didn’t get into multifamily and apartment sooner. Tell me about that for you. Coming from the single-family space, you got into multifamily more as a manager. What was that like when you made that transition, allowing yourself to earn some fees in order to get into multifamily and basically kind of earn as you’re learning and then your first purchase? So tell me about the transition for you. 

Matt: And we’ve always managed what we owned, right? So our first property that we manage in multifamily, we owned that property. The first time somebody brought us an apartment deal blew our minds because, again, we were so singularly focused, like all you can do on real estate is just buy more townhouse. Right. And we’re blessed. They’ve been great investments for us. We still have them. But as we started then to look in, there are a couple of deals that come through along the way. First is your ability to reposition an asset based on improving the business. Right. You can do a great job with your single-family homes, but if you’ve got foreclosures down the street from you, doesn’t matter how well you’re doing, collecting rent and keeping expenses down. And so it just totally transformed our thinking. We saw more options and like a lot of people, we didn’t spend a whole lot of time regretting like we did. Wish we’d done it sooner. But it’s hey, we want to pivot to this because it was seen the options, whether the first time we bought a 64 unit that was half vacant. 

Matt:Sadly it was owned by a widow. She was using half the units for storage, didn’t really understand what she had. We were able to barely get the thing closed. But then 18 months later, we did a full refinance, plus 30 percent, and we were able to put it on good ten-year fixed rate debt with Freddie. And it’s been a wonderful property for us ever since. But then one of the things that also sticks out in my mind, and it also comes into, I think, the risk mitigation and just the benefits, we don’t get excited about more units in multifamily just to be bigger for bigger sake. But what you do see is things tend to smooth out more. And there’s one example. I remember the first it was a 12-unit apartment that we had. The first turn, I only had one maintenance guy at the time and I was walking him through what I wanted him to do in the turn. And this was like a 750 square foot apartment. And the previous 10 had been really rough on it. 

Matt: And my whole background of single-family homes, right where it’s like, oh, man, this thing is going to be down like two to three weeks. I’m going to be eating two to three months of rent here to get it in. And I walk him through everything that we need to do. And he calls me the next week and he’s like, hey, I’m done. You can come check it out, you know? And it’s like, oh, wow. When I limit the damage that can be done here, it’s not the same as a two thousand square foot home where I could come out of this with a turn bill that’s going to approach five thousand dollars. You’re able to do so quickly. And you know what? That 12 unit. Yeah, it stunk to have the one down. But there were still eleven other tenants paying me rent the whole time. So that was really the first time it hit home. Just the efficiency of the operations within multifamily and how that plays into the risk mitigation part there. And then we’ve just been able to extrapolate off of that as we built our portfolio. 

Josh: And it sounds like based on some comments that you made, Matt, that now focusing on those hundred units and larger buildings is probably the result of lessons that you learned on some of the smaller buildings where maybe you didn’t have the economies of scale. They weren’t large enough to have an onsite property manager. They weren’t large enough to have a full-time maintenance guy. They weren’t large enough to have a full CapEx team. We built our model around two hundred units at a pop. So in any market that we enter, we got to be very certain that we’re going to be able to at least own two hundred units at some point. We might have fifty for a unit or one hundred and eight unit today. But we know that our economies of scale works, what, 200 units where we can. We have a budget of about eighty thousand dollars for property managers, which means about two or one and a half property managers. For those two hundred units, we can have two full time maintenance guys. We got about eighty-thousand-dollar budget for those two hundred pounds for maintenance guys. 

Josh:So it could be two, possibly two and a half or even three maintenance guys, depending on how much money they make. You know, you could have onsite our own internal or offsite property management. The deals big enough that a lot of the big boy property managers, once we stabilize that, we could turn over the property management to somebody else. So you’ve probably learned a lot a lot of those same lessons. It sounds like one hundred units is your minimum. So what was it for you about those smaller buildings that said my scales at one hundred units or my scales at a certain number and I really want to scale up and only by these larger buildings. 

Matt: Sure. And I would say it relates to another comment I made, which is the fact that you’re in more control of the value with multifamily than you are with single family homes, single family homes. I’m entirely dependent on the market. Multifamily, the higher the NOI, the higher the value. Right. And so you learn to truly operate it as a business. One of the things that people have to learn as they get into real estate, multifamily real estate. The only true value of the real estate is to value the dirt. Everything else is incumbent on how good your manager is because it’s a business there. Well, then that means good businesses need budgets. They need to be able to embrace forecasting. Right, so that I have a predictability here. Sophisticated investors are looking for that. And while I’ve certainly I started out buying the 10 units, 12 units and I have a part of my portfolio, we will still look at the 40 to 80 units there. But you just see so much noise on the PNL and there’s a lot of variability with the expenses. 

Matt:So you’ll see less of that as you scale up. You know, as you get into hundred units, two hundred units, I see more predictability in terms of, you know, a cost per unit per year that I can build a model and build a budget around. And that’s really important. You know, as you start syndicating deals, as you start using other people’s money, will they really care about how you’re using their money? They want to return for that. So being able to find a property manager then who can manage to a budget, you need an asset that can be managed to a budget as well. And that’s just been my own experience, is that you will see enough variability even below 40 units. It’s really hard because you can have three or four vacancies at one time and all of a sudden your 10 percent vacant at any one moment. And so then you have a hard time normalizing that. You have a hard time forecasting that. And then ultimately we talk about all that so that we can building good predictive returns for our investors. 

Josh: Yeah, I love it. You know, I found that sometimes in that 20-to-50-unit range is very it’s a lot more of a mom-and-pop industry. And you can find better deals where, like you said, the woman was older. She had half the units that she was using to rent out, and the other half were basically vacant. She was storing her own stuff there. That happens in those little deals that allows her to be larger spreads and bigger capex opportunities to create more value and a larger profit. But the downside is, is exactly like you describe is you can’t manage to a budget as much and you might not be able to have a full-time maintenance guy there because it’s too small or a full-time property management there because it’s too small. And then you’re like, well, who’s on site today? You know, it creates those problems so that but there’s the benefit of both. So when I work with my students or I’m working with my own team, we’ve got to just know what’s the benefit of that 20 to 50 unit deal is probably larger spread, more mom and pop. 

Josh: But, you know, 50, 100 units really for us, it’s two hundred units in a market. Doesn’t have to be in the same complex of the same deal? But in a market now we know again, we can work with forecasting, we can forecast how much is it going to cost us for maintenance? What’s the management fee going to be? And extrapolate that out to the employee that fills that seat. So each size of a building, I guess, has its own benefits, I guess, is what I’m trying to say. Then I’d love to hear your take on investing. You said you went to these southern markets because of relationships. We did the same thing where we have buildings in four or five, six different states only because of relationships, not because we were seeking a market. So I’d like to hear your take on. Once you had that relationship and you were able to find one deal, how were you able to round out the rest of the team? Because as we all know, multifamily apartments is really more of a team game, property manager, capex team, a sponsor, syndication, limited partners, you know, all these people. So a lot of times we’ll find one relationship that kind of starts the team. How did you work on building out the rest? 

Matt: Sure. So we went there just to delve into a little bit more of our story as a limited partner. And so we were going to invest in the deal and we wanted to do some of our own due diligence. And I tell my students and other people that I work with that I was a really active passive investor. And so I wanted to go and make sure that I was doing my own due diligence. But I was blessed to have partners along the way who opened up the opportunity for me in terms of letting me tag along, letting me sit in the meetings with them and their property manager, letting me go along with them and their due diligence. And I’ll be forever grateful to them for that because I learned so much about being able just to see how they handled themselves, the questions they ask, what facts did they dig in on? I wouldn’t know any of what I know today had I not been willing to make those trips down there. 

Matt: And that’s why a lot of times my first piece of advice to people is just to do and to go, right. You’re going to learn more by talking to a broker. You’re going to learn more by walking a complex then you will reading any book and you got to be informed, you got to speak the right language, but sometimes we tend to be so reticent and want to stay back there. And it was because of those trips and I really delve into it. I got to know a property manager. I got to know the brokers. I would continue to go back down there with those same operators sometimes to walk deals that I wasn’t even investing in. But I knew the other people that would be there. And it’s been amazing to me as we’ve been blessed to see our business grow. How much of the old adages prove true? Right. Like what is the phrase 60 percent of life is just showing up, like the fact that I was willing to get on a plane and come here. I’m not just, you know, paying you with emails, cold calling. You know, I’m here. I want to learn what you’re doing that put me in a different class and people’s mind. And then I just knew people I had other property managers who are willing to take my call. I remember. 

Matt: And please, if you’re from California, don’t get upset with me what I’m about to say here. But like the property manager I was working with at the time, it’s like I get five calls a week and people from California and it’s just noise to me. Right. Because, you know, yes, we have to be good financial stewards. Yes. It’s hard to raise money, but just having money doesn’t do anything for you in the multifamily. You have to prove yourself a credible buyer. Proving yourself a credible buyer means building a relationship with people. So it was just a really natural transition as I started to operate more because these are people that I’d met. I’d been out to dinner with them. I’ve been out to drinks with them. And it’s the same thing that you would prove in any other friendship, a relationship in your life, right? 

Josh: Yeah, I love it. That that sounds great. So. One of the things that you said was you invested as a limited partner in order to learn the business right. And just kind of go, a lot of people are still hesitant to do that. Right, because I don’t know anything. I’m just going to embarrass myself. I won’t have egg on my face. So one of the easy ways to get in is, yes, I’ve got 50 thousand or one hundred thousand dollars would be a limited partner because general partners are willing to completely pull back the onion on their business plan and how they do and why they do it in order to recruit capital. So that’s one way to get in the game, get started, another way to get in the game and get started just through the manual kind of work of calling owners and that more that mom and pop space, that 15 unit to 50 unit. We’ve done that. We’ve worked with wholesalers that gave us a 16 unit, a fifty-four unit. We went direct to seller on some of those. That’s a way to get started. Right. So a lot of people. Well, how do I how do I get started. 

Josh: And again, it’s a team game building a team also. Matt, maybe I’d like to hear your take on. I’m baffled by how many guys that don’t have a balance sheet. That are horrible at raising money somehow are able to get in with a broker who’s got a sweet deal and get that deal under contract because we’re about to posture up and talk the game. And then all of a sudden they’re like, oh, crap, I’ve got a deal. I got to find a loan sponsor. I’ve got to find limited partners. And then all of a sudden, because I’ve probably, like you, might have been brought in on deals or people try to bring me in when they’re on the two-yard line because they’ve got their final million dollars or two million dollars that they can’t raise or they don’t have a big enough balance sheet. They’re like, oh, my God, I need I need a loan sponsor. So but I’m baffled by how many people you know, this is a this is a big boy game, right? It’s a big boy industry. You don’t have to be a big boy out of the gate to just get your get your feet in, like, stick your nose in there. Right. So just talk about that and kind of remove some of the aura, the myth around. You have to do a bunch of big multifamily deals to be taken seriously. Sure. 

Matt: Well, I think what you’re saying is true and it’s true because there’s nothing in life that replaces hustle. So if you’re willing to burn up the phone lines, if you’re willing to go and network with brokers and network means pressing the flesh. I’m old school in that regard. It’s really hard, really, really hard to build credibility in a market if you’re just phone calling it in, sending emails. No, you got to go there. So as I talk to people about markets that they want to invest in, it’s really important to look at how easy is it to travel to that market? Right. I can be in Memphis in ninety minutes on a flight. There’s a direct flight there and that’s a big deal. I actually like going there. That’s another big deal because then I’m willing to go down and look at future deals there. So you need to ask yourself, you know, how easy is it to get where I’m going and how much what I enjoy going there. And I think you can find other success stories that shows that it’s possible you do not have to be a millionaire to be successful in this, but you still got to work hard and there’s going to be even more people running into apartments right now as we see the one point nine trillion dollars, it’s about to get introduced into the economy and even more monetary supply as the Fed continues to buy up. 

Matt: All that means that hard assets is a really good place to be as inflation inevitably takes hold. And so you can you just need to be willing to go develop relationships. You need to get educated but don’t get educated to a fault. I definitely want people to listen to the Accelerated Investor podcast, but I work with so many people who they’ve listened to every podcast, they’ve been to every event and they’ve read every book. But they can count on one hand the number of times they picked up the phone and talk to a broker. Yeah, right. Like you, you have to be willing to be to learn in the moment. I talk to folks and I’m actually born. This is an idea shared from other coaches that I’ve worked with who say they call it their fight club idea. I’ll tell students a lot of times if for those of you who haven’t the movie fight club, the protagonist, Tyler Durden, as they start Fight Club, he tells everyone, hey, I want you to go get in a fight that you’re going to lose. The key wants them to lose because the lesson he wants them to learn is that, you know what? I’m still OK. It wasn’t fatal. I can bounce back. 

Matt: So sometimes I’ll tell students if they’re really nervous about getting out there. I’m like, take a market that you’ll never do a deal in Albuquerque, New Mexico. I want you to go call brokers and make offers in Albuquerque, New Mexico in fall all over yourself. But you’re going to learn in the moment. And what’s the harm like? It’s like I want you to learn that you can bounce back from this. So those are just a few of the things that come to mind when you talk about like what’s it take if you’re willing to work hard and you’re willing to humble yourself in terms of like, this doesn’t have to be my deal. I’m going to do whatever I can to partner with people along the way, then I think you can be successful. 

Josh: Yeah, that’s awesome. Matt, last question. You know, most of the guys that I that I network with, that I’m friends with that are in the multifamily space, there’s kind of a moment where they realized that they could be completely financially independent. With multifamily, it was a certain number of doors or a certain amount of capital raised or a certain amount of properties that they needed to own a short amount of cash flow that needed to create, you probably had that same epiphany well before you actually had that many units you knew like, oh, my God, it’s just a formula. I just got to buy this many units make this many offers own this much is going to kick off this much cash flow. And I’m completely financially free. And ever since then, you’ve been working to get to that point or you’ve already hit that point and beyond. But what was that like for you when you started to kind of put the puzzle pieces together and he started thinking like, oh, my God, this could be way easier than I thought. That’s going to happen sooner than I thought. 

Matt: You know, it was interesting because it was about the time that I left my W2 job. And even though I was blessed to have the portfolio that my partners and I do, there’s still a fear there of leaving what certain or what society tells you should be doing. But I have come to appreciate the freedom that comes from being able to see what’s in front of you. You know, you can be doing an exemplary job in your W2 role, but you just happen to be sitting in the wrong seat when there’s a restructuring and then you lose your job. Yes, it’s clear now that if I don’t perform, if we don’t perform as operators, that they’re going to be financial consequences. But I like that. I think those consequences are there regardless. They’re just more salient now. I like the word that you use there for me. I want to be financially independent. But, you know, it really ties into who I am as a person. I don’t pursue wealth just for the sake of wealth. Right. 

Matt: I believe that money is neither good nor bad. Money’s just money. But if wealth is your pure motivation, then I think this is going to be a really hard business for you because one does not get rich quick to get rich slowly. But I’m doing this because ultimately it was how I wanted to to be a husband to my wife and to raise my children. I was in a job where we could have had a wonderful life, but I was traveling all the time. I was in an airport every single week and I just had to be planted. I had to work, worship and play all in the same place. And real estate was that gift to me. And it’s why I do what I do because and I want other people. I help other people. I coach other people because I want them to understand that same blessing of being planted and being able to take back their time. 

Josh: Yeah, love it. Matt, last question. I know I said this with the last question, but last question. What’s your favorite way to find deals? 

Matt: There’s nothing better than a good commercial broker, right? I’ve bought deals through direct mail. I’ve done wholesalers. I’ve networked with owners and bought them off market. But I’ve really come to appreciate in my career the value of a good broker. And so I tell people getting into this industry, you want to align yourself with brokers, brokers who really know what they’re going to do, make it their business to know all the owners in town and what they’re going to sell for. And they’re not there to market. They’re there to help deals closed. I remember the first time we really jumped. I was an eight-million-dollar deal and I was talking to my partners like, man, this is taking a long time to come together. I’m like, you know, eight-million-dollar deals don’t come off the shelf very easily. This isn’t like buying. You know, I think Oreo cookies like, oh, I want that. I’ll buy it. And so that’s a value of a broker who can then help you understand value, help you understand what your financing options are as they truly understand the property. So build relationships with brokers, be an asset to them. 

Josh: Fantastic stuff. Matt, listen, if our audience wanted to reach out to you, find your website, do a deal with you, or just learn more about you and your business, where can they find you? 

Matt: LinkedIn is what’s best there. Just search Matt Brawner or you can also send me an email. Matt at N as in Nancy and W as in World, S as in Sarah Properties all spelled out dot com. So Matt at NWS Properties dot com. 

Josh: There you go. Matt from Northwoods servicing Minneapolis, Twin Cities and Memphis. Matt, thanks so much for joining us today on Accelerated Investor. 

Matt: Appreciate the opportunity. Josh, thank you.

 

You were just listening to the Accelerated Investor podcast with Josh Cantwell. If you enjoyed this episode and learned something new, help us build the A.I. community by leaving a review and five-star rating on our iTunes podcast channel. Also, don’t forget to subscribe so you never miss another episode. To see passive investing opportunities, visit FreelandVentures.com/passive. To start your journey toward the lifestyle you’ve always dreamed of with multifamily apartments, apply for one-on-one coaching with Josh at www.JoshCantwellCoaching.com.

Based in Minneapolis, Minnesota, Matt Brawner’s company Northwoods Servicing owns over 2,000 doors, with 250 units located in the Twin Cities. Matt chases relationships into new markets that helps him build out a team that is foundational to the virtual market, and in today’s conversation, he talks about:

  • Why he invests for impact and not wealth
  • His business plan that fulfills his passion for faith, family & finances
  • His strategy for virtual team building
  • Why Matt invests in people and not property data

Matt prefers purchasing C class buildings, but the supply is constrained, especially in the Twin Cities. You can’t build new C class housing, and Matt prefers to stay away from the buildings that are older than the 1960s. This has pushed him out to B Class properties and virtual markets. B Class properties still offer him more flexibility than A Class, and help him achieve his community centered goals.

As Matt branches out, he’s discovering one of my favorite parts about multifamily units: the economy of scale. I like looking for 100+ units because they can support on-site management, which dramatically reduces how much I end up spending on maintenance. For Matt, fixing the damage in an apartment was so much cheaper than repairing the damage on a 2,000 square foot house, and that was a revelation for him.

Matt’s expanding in the Memphis market right now, but he’s looking for great local partners and brokers. If you’ve got a property that he might be interested in, you can connect with him on LinkedIn or send an email to: Matt@NWSProperties.com

What’s Inside:

  • Despite a constant drumbeat of warnings from media outlets, Matt is seeing similar patterns in rent collection both pre- and post-COVID.
  • The economy of scale for multifamily means that I aim for a minimum of 200 units in a market.
  • Moving from single-family to multifamily properties requires a completely different mindset, and Matt shares how that shift took place for him.
  • How the economy of scale pencils out in our strategy for maintenance and purchasing.

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