Real Estate Lifestyle Design

Mike: Welcome to the FlipNerd Podcast, this is your host Mike Hambright, and on this show I will introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week which are available in the iTunes store, or by visiting FlipNerd.com. So, without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com welcome back for another exciting flip show. Today I have with me Matt Bowles, who is with Maverick Investor Group. It’s a fascinating company in terms of being a turnkey rental provider, but what we’re going to start talking about first is how he used The Four Hour Work Week to basically define his business, and the lifestyle’s of all the people that run his business, to the fact that where the all operate virtually. In fact, we’re talking with Matt today, and he is actually in Egypt. So, before we get started though with this interview, let’s take a second to recognize our featured sponsors.
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Hey Matt, how are you?

Matt: Hey Mike, good. How are you?

Mike: Good. So, I don’t even know where to get started, I’m excited. You know, my wife and I aspire to travel more. We actually travel quite a bit already, but we don’t . . . We’re not continuous travelers. So, talk to us a little bit about your company, and I know we were taking before the show about how when you started your company that was right around when, when Tim Ferriss’ “Four Hour Work Week” was coming out, and you decided to design your company, and how you operate, around living a virtual lifestyle, and not being necessarily tied down to any one location. So, fascinating, so tell us a little bit more about that.

Matt: Yeah, absolutely. So, when we founded Maverick Investor Group . . . back in 2007 the entire premise for our company is that wanted to be able to have the freedom of mobility, where we would not be geographically restricted to a particular area, we would not be confined to a traditional office, and the same philosophy extends out to all of our real estate investing clients, right? Because, real estate has a vehicle, whether you’re talking about as an investment, or you’re taking about the entrepreneurial business side of real estate.
Real estate is a vehicle for facilitating your ability to design your lifestyle, and so our entire company infrastructure, from day one, was set up to be able to do that, so that we would have control over our own lives, and the mobility, and to be able to work from where we want, and so my business partners and I have all lived in different states, or different cities, from the very inception of our company all the way through.
All of our staff, whether you’re talking about our Social Media Community Manager, our CPA, our Contract and Closing Coordinator they all live in different cities, and we’ve been able to build a company infrastructure to facilitate that, and that allows people to live where they want, it allows them to move whenever they want, and it allows them to travel when, and wherever they want.

Mike: Yeah, the cool thing about that is, you know, by definition a turnkey rental property business is . . . The reason people are attracted to that is to not necessarily have to live where there properties are, and to really truly be virtual, and you guys, unlike anybody else I’ve seen, are actually practicing what you preach, so and in a big way.
I mean, it’s one thing, there’s a lot of real estate investors that talk about lifestyle design, and kind of building a business around your life, and allowing some freedom, but for me, and I’m probably doing it better than a lot of people, but certainly not the best, not as good as you, but is more around “hey I can take off for a week, or sometimes two weeks here and there, and the wheels aren’t going to fall of the bus,” but it’s never been “I’m just not going to be tied down to an office, and do whatever I want.”
So, what’s really intriguing to me though, tell us a little bit about the fact that by definition your business is very customer centric, and relationship driven, and so talk a little bit about how as a virtual company you’re able to maintain those relationships with people that are certainly not most likely in Egypt. So, talk a little bit about that.

Matt: Sure, yeah you know our, as you said I mean the premise, right, of the value proposition that our company offers is that we help individual real estate investors by performing residential investment property in the best markets regardless of where they live, okay? So, with that premise of our client’s come from everywhere, they come from all over the United States, and they come from all over the world, right?
And then on the flipside of that, the real estate markets that we deal with vary over time, okay? Because, real estate cycles are very local, and so the markets that were the most advantageous for investors to buy back in 2010 are no longer advantageous to buy in today. So, the way that we built our value proposition is to put the individual real estate investor first, instead of putting a product first, right?
A lot of people that are selling properties, right? They’re based in a particular market, and they’re going to try and tell you why their market is the best and it’s all they have to sell so no matter how good their market actually is, or what point in their product cycle it is, they’re going to retro-fit their marketing material to convince you that’s what you should buy.
We do the opposite, and in the conception of our company was to put the investor first, and to focus on your needs, and your criteria as an investor, and then to give you highly substantive information about these different real estate markets, how they’re moving, what the economic indicators are, what the price to rent ratios are, why particular markets are advantageous for real estate investors to buy, and at what point in the property cycle to buy.
All right, and so what we do is we are able to help those individuals buy at the right point in the right market, and then to continue buying over time, but to diversify across markets over time. And so since we’re dealing in different markets, and since we’re dealing with clients that live all over the country, and all over the world, it doesn’t matter where we’re based. It’s a very virtual relationship. We do get together with our clients, sometimes we’ll have events, or things like that, you know fun things, but for the most part it’s a very virtual business, and it needs to be, because we’re not based in one particular market.

Mike: Yeah, and for you personally, talk a little bit about your . . . you said some interesting things before we started the show today, and it’s a way that I’ve looked at it, but you have real estate investors that start to get some, I don’t know what to call it, some ego that they are a real estate . . . Those people that kind of define themselves as a real estate investor, this is what I do, and they’re proud of it, and that’s all fine. I’ve always viewed it very similar to what you said before we started recording was it’s a tool; it’s a means to some other end.

Matt: Yeah.

Mike: I happen to use real estate as a tool, and I enjoy it, so don’t get me wrong, but I view myself much more as an entrepreneur that real estate happens to be the tool that I’m using right now. So, talk a little bit about, because I know your background, like me, wasn’t even in real estate, and you got to a point where you saw that as a vehicle to get you where you wanted to go. So, from an entrepreneur’s standpoint to facilitate what you want to do with your life, and design your lifestyle, talk a little bit about how you chose real estate as a path?

Matt: Sure, I think it’s single most advantageous [inaudible 00:08:43] vehicle for facilitating lifestyle design there is on the planet, and what I mean by that is if you’re looking to, and I should also preface this by saying that if you start really understanding wealth building, and you start to look at the more advanced end of the wealth building continuum what you will find is that money, and wealth, is not the most valuable asset, right?
You’ll find that, first of all, that streams of passive residual income that flow to you every month are much more advantageous than a big pile of money that is going to gradually deplete itself, right? Sort of the nest egg discourse that had been propagated by the financial industry, right, that basically says, “Work your entire life, build this massive sum of money, then retire, and pray that you die before the money runs out.”

Mike: Right.

Matt: Right, so that’s kind of like the philosophy. So, the first thing that real estate does is it produces if you’re buying and holding residential investment property, that’s very, very important. We’re talking about buying and holding residential investment property that produces a stream of cash flow to you every month that starts covering more, and more, and more of your monthly expenses so that you have to work fewer, and fewer hours than acquiring streams of passive income is what you do with it, right? And so the most valuable assets of all are time, because you only have 24 hours in a day, right?

Mike: Unfortunately, yeah.

Matt: It’s time, and your mobility, right? And so what you want to do, and the tenants of lifestyle design, if you haven’t read “The Four Hour Work Week” by Tim Ferriss, I strongly suggest you pick that book up, because he really goes into this in detail. But and we found real estate to be a perfect [inaudible 00:10:28] this is very applicable the streams of passive income your time, increase your mobility, and increase your financial freedom to then go and design a lifestyle that you want, whether that’s jet setting around the world, or whether that just spending more time with your family, and coaching your kids’ soccer team, and having the time to do all those things that you want. That’s up to you design your dream lifestyle is, but real estate is the vehicle to do it.
I mean, I’ll just say a couple more points about it as an asset class, and why I think it’s very different, you know you’re talking about, you’re talking about a built in hedge against inflation, you’re talking about the single most tax advantaged asset class in the United States, you know? And on, and on, they are a number of very unique things about this, and so you can become educated enough in this space, which is what we help our clients do to be able to build a portfolio of assets that produce passive income for you, then you can gradually move down that path to reclaiming your time, increasing your mobility, and designing your lifestyle to do whatever it is that you want to do.

Mike: Yeah, and what I think is really kind of fascinating about turn- key model, and about what you’re preaching here, is very different from what I’ve been doing. I mentor folks all over the country, but I focus myself on one market, and it limits you in a lot of ways.
I know, there’s someone else I had on the show a while back, Jean Norton, who focused on rehabbing remotely, and her whole model was when it got competitive in my market I had two choices. I had to find some way to be different, or I had to go somewhere else, and it was like, “Okay, I never really thought about it that way.” Because, I’ve been so hands on myself, but I think it’s fascinating, you know certainly with technology, and things that we have these days, you truly can you know run your business from just about anywhere.
So, I think it’s very intriguing to . . . Now, I’ll tell you this all my rental properties, for example, are in the Dallas market where I’m at, but I’d go out of my way to not drive past them. I may be like two streets over from one, and I’m intrigued, but I never drive past. I don’t want to know, I don’t want to see it, I do have a property manager so I don’t have to deal with it, but . . . So, if that’s my mentality, it’s almost like who cares where I’m at? As long as I have competent property management I mean that’s obviously a big part of it.

Matt: And that’s one of the things that’s really important when we use the term investor, and investing, right? Is you know, when you’re investing in pretty much any other standard asset class that people would think about stocks, or whatever, you don’t care if the corporate headquarters of the company [inaudible 00:13:05] you’re buying stock in is based in your hometown. You’re going to buy stock in the company that you think is going to perform the best, right?
And so, what we want to do, and what our company does for individual real estate investors is to help you be able to buy property in the best markets, regardless of whether or not you live there, regardless of whether or not you’re ever going to visit there, you know, you should be able to buy that home there.
You know, it’s interesting that, I don’t know if you saw it, Warren Buffett’s 2014 letter to the shareholder of Berkshire Hathaway, but in it he talked about his own personal real estate investing experiences, and he talked about him buying, how he bought an investment property in 1993, and how it has performed very well for him over the years, and all this kind of stuff. And he talks about how today, 20 years later, he’s still never seen the property. He’s just never been there, never gone there, never seen it, and has absolutely no need to do that.
Which by the way I also recommend you read Warren Buffett’s what he has to say about real estate. We just did a blog post on our site about, sort of summarizing some of his real estate investing lessons that he talked about in that letter, but that’s definitely one of them that you take away.

Mike: Yeah, yeah, so why don’t you talk a little bit about just how technology, is obviously, enabling you to run your business the way you run it, and how it’s enabling more of the turn-key model, and just kind of tearing down a lot of walls with geography, and things like that. Talk a little bit about technology, and really in the real estate space how you see that getting even better over the next few years.

Matt: Sure, yeah, I mean, in general, and just to kind of give folks a little context I mean I mentioned that my business partners and I all lived in different states in the U.S., which is one level of you know sort of virtual operation, but I should also contextualize this, is that you mentioned I’m right now in Egypt, last week . . . If you had done this last month I was in Spain, I was in Barcelona. Before that, the previous month I was in Dubai. Earlier I’ve lived in London, and Paris. Earlier this year, I mean I’ve only been in the U.S. for probably three, maybe four week, in all of 2014, right, and so that’s entirely by choice. I’m not here on any work mission, or you know whatever.

Mike: You’re still welcome in the U.S. though, right?

Matt: Absolutely, and I’ll be back there probably, I’ll probably be swinging through Texas to see you as well at some point. So, but yeah so, that’s just to give people a context of that, and I think in terms of technology, from an entrepreneurial perspective, right? You know, the basic core of running a virtual business is being able to build systems, and hire people to run systems, and whether they’re sitting in an office cubicle, you know, performing their work and delivering it to you, or whether they’re you know in some city, or some country away, it’s pretty much the same thing.
It’s really kind of actually pushes you to refine your business systems, which all business owners should be doing, but if it’s virtual you’re pretty much forced to do that, and so it actually I think it increases efficiency, because you cut out on commutes, and you cut out on all this other standard stuff, you know the water cooler banter, and all this stuff that takes you away from work, and productivity.

Mike: Right.

Matt: On the investing side, I think that for individual real estate investors this is becoming much, much, much, much, much more easier, right? Because, you’re starting to have property management companies that are able to put your property management reports online, you can get 24/7 access to your portal to see how your property is doing, and you know all this kind of stuff. It’s very easy to communicate with people I mean by phone, and by email.
Like you said, I mean, you have a property management company. Your properties are a few blocks down the road, but you probably still get your property management statement online, and you know you’re calling, or calling your property manager if there’s an issue, and yet if you need to know about something, and so whether that person’s three block away, or whether they’re a few states away, you know, really you’re just going to be emailing, talking on the phone, and getting your statement online, and getting your check deposited in your account.
So that’s really what it’s about for us, and I think also, again, the distance there also kind of pushes people to really think about themselves as investors, right? That you’re buying not something that you’re going to go do work on, you’re not going to be a landlord, you’re not going to fix toilets, you’re not going to do this, you know, stuff. You’re an investor; you’re buying an appreciating asset. You’re buying a stream of income that’s going to be managed by somebody else, because your top priorities are your own time, that’s your most valuable asset.
So, you’re going to get passive income, and you’re going to maximize much of your time, and spend as little of your time doing low paying jobs, like being a landlord, and so. It’s very, very, very simple to do that, and if anybody is hesitant about that, just think what would be different that it’s out of state, that it’s in state, other than you can’t walk over and touch the property, which is what you said you don’t even do that anyways.

Mike: I think the biggest factor probably is competent property management. I speak from a place of having some that were not very competent. That makes it challenging, and the fact that if you buy them in different states, or different markets that you, there’s not, and I’d love to hear your opinion on this I know this is changing, the ability to roll those up, like you could on E*TRADE for examples. I buy a bunch of different companies, but I have one statement that show’s me performance, and what’s going on.
So, I know there’s a ton of national franchise type property management companies that are enabling that with their systems now, and I’m sure that you all have a role given the fact that you’re directing people to different parts of the country to kind of roll that up. But can you talk about, that probably in my opinion is the weakest link, is having a competent property manager that you can count on, and possibly if you’re buying all over the country, having many different competent property managers that you can count on?

Matt: Yeah, well so, and I can answer that question on a couple levels, right? One of them is that in a lot of cases the properties, and the buying opportunities, that we’re introducing our clients to have a vertically integrated property management component to them, okay?
So, when we have a team on the ground in a particular market that is, it’s an independent company, so it’s separate from Maverick, right? We have a relationship with them, but they’re using their own capital to acquire properties, to their own in house construction teams to renovate the properties, and they often times usually have a vertically integrated property management component to lease, and manage the property.
And so one of the things that we find that’s advantageous about that structure, and that differentiates that from a traditional property management company, and all the problems that you, and pretty much anybody who’s owned rental property has likely experienced, is that the economic incentive structure is different.
Because if you’re talking about a property management company, you are talking about if all they do is property management, you’re talking about one of the least financially lucrative parts of the real estate industry, right? You make a thousand dollars a month in rent, and they’re collecting a hundred bucks a month from that for themselves. Is that going to light a fire for someone to get out there, and go deliver amazing service, and maximize your net operating income? Probably not.

Mike: Right.

Matt: So I think one of the challenges that we have in the property management space, which I think is epidemic, is a very non- financially lucrative sector, and then unfortunately what happens is the least talented, or laziest people tend to fall into that sector, because if they were more talented, and they were more motivated they would likely position themselves into different sectors of the real estate space, and so this I think is a systemic industry wide problem.
And so one of the things, in terms of revising that incentive structure, is that when the property management is vertically integrated to the company that selling you the property. Well, guess what? Now it’s a whole different ball game, because when they sell you a property, they’re not going to make, they’re not just going to make a hundred buck a month maximum, they’re going to make whatever, $10,000, or so, on each property they sell, right? So, that’s their profit center; the management is just the service that they provide, because they know that if they provide it very well certainly you’re going to buy more, and more, and more properties, which is going to give them that $10,000 profit center.
And now all of a sudden you buy three properties, stem from them, in a year, they made $30,000, whereas the property manager who just manages the property made a grand, or something, you know, with their collection fees. So, I think one of the things that we do is we always think about the economic incentive structures, and how all this stuff works, and so we’re able to get people into situations like that where . . . You know, and listen there’s never a guarantee. There’s never a perfect situation that works perfectly all the time.
Obviously, the buyer does their own due diligence, and if anything goes wrong, they’re welcome to change property managers, and that kind of thing. But we try to get people into these situations where they’re most likely to have a positive experience, because the incentive structure is oriented as much as possible towards the individual real estate investor.

Mike: So, are you saying you try to position it where they’re buying properties from wholesalers that also have property management business, or . . . ?

Matt: So, they’re not wholesalers, and we should clarify that. So, all of the properties that are available through Maverick, all the buying opportunities we introduce our clients to are fully performing residential investment properties. We’re talking about a single family home, in some cases a two to four unit property, it’s either new, or it’s already been completely renovated, and it has a tenant in place paying rent, and it [inaudible 00:23:04] has local property management in place managing that property.
So, what I’m saying is that the same company that you’re going to be buying it from, that actually owns it, right? Is the same company that is managing it, and I’m saying that they have a unique incentive to manage that property properly, and to manage it well, and to make it perform for you, the investor, because if they do that, and it performs as well or better than you expected, you’re very likely to buy from them again, and that incentive structure is very, very different from a standard property manager who only has the 80, 90, a 100 bucks a month that they collect as their portion of the rent.

Mike: Yeah, okay awesome, awesome. Well, if folks wanted to learn more, talk a little bit about why Maverick Investor Group is different? I know you have, you know, we’ve talked about some of it, obviously, just the philosophical difference of what a turn-key property could mean to you, but talk a little bit about how you’re different, and how folks can learn more.

Matt: Sure yeah, and when we say different it depends what we mean different from.

Mike: Right.

Matt: I think in real estate, right? One of the things that we do is we provide, by providing performing properties we are number one. We’re taking, you know, that takes most of the risk out of trying to do it yourself, right? Trying to buy a distressed property, and maybe the repair expenses are way higher than you anticipated, and maybe you couldn’t get into the property before you closed signed, you didn’t notice such and such, or maybe it’s vacant way longer than you expected, and you endure all these holding costs, all of that high risk stuff, or trying to do it yourself is wiped out when you buy a property that’s already performing.
So, you’re going to go in, send your inspector in, inspect it of course make sure it’s been renovated properly, make sure the tenant is qualified that’s in there, but provided that’s the case you’re just evaluating it, and then you’re buying it, and it starts cash flowing from day one. So, the first thing, in terms of why that value proposition is important is it takes out most of the risk of trying to do that, so you’re buying performing properties.
So, that I think is really, really key, and then Maverick’s entire focus is on long-term relationships. So, we are interested in working with clients that want to build portfolios, of turn-key properties around over time, and it’s totally fine if you can only buy one right now. It’s totally fine if you’re young, if you’re new, if you’re you know whatever, and you don’t have that much money, and you want to get one, that’s fine, but we want to be very clear that we’re not a transactional type company.
We’re a long-term relationship’s, and instead of trying to sell, and push a particular market, or particular product, we put the investor first. So, we’re going to do a phone consultation with you, we’re going to understand your personal needs, your criteria, things that you’re comfortable with, your investment goals, you know the financial future that you want to have for yourself, and your family, the lifestyle that you want to design for yourself, the things that are important to you, and then we’re going to help you to develop a real estate investing strategy, and a path, to get there, and to help you to do that over time.
So, that I think is very different from what most people in the industry try to do, which is to sell their own market, or their own product, or whatever it is they have, and retro-fit their marketing materials to promote that as the best opportunity, whether or not it really is. Whereas what we do is we put the investor first, we focus on you, the client, and then we help you to get into the market, to get into the product that’s best for you, and can help you to diversify over time as you move down your path towards your goals.

Mike: Great and I know one of the biggest challenges that everybody always has in real estate is . . . That the biggest challenge is finding enough deals, usually. So, do you work with folks that are deal providers, like maybe wholesalers or other things to kind of facilitate an ultimate transaction, or if folks have properties that they might be interested in markets where you work in, and working with you, is that something that you consider?

Matt: Well, what’s important to us is that we only put in front of our clients performing turn-key properties, right? So, the teams, providers on the ground that we’re going to work with are going to be people who are able to acquire the best properties, they’re able to renovate the best properties, and they’re able to then put qualified tenants into those properties, and once they have the performing property, and they have a stream of them they’re going to market them through Maverick as a private buying channel, okay?
So, all of our stuff is private, it’s not on the MLS, you can’t get through regular real estate agents, or that kind of stuff. So, all unlisted properties that is not available to the public. I think if someone is not able to provide a stream of performing properties, they just do one piece of that, they’re a wholesaler, or you know a rehabber, that kind of thing, you know that might be of interest to some other people that we know in those markets that are looking to buy from wholesalers, they’re looking to do this kind of stuff, but in terms of Maverick the only thing we’re putting in front of our individual investor clients is completely performing properties with very well capitalized companies behind them that have very strong track records, of both delivering quality properties as well as managing those quality properties.

Mike: Okay, okay. So, for those that are interested in learning more, where do they go Matt?

Matt: Sure, MaverickInvestorGroup.com is the website, you can go there and you can connect with us. So, you can opt in, you can grab one of our free reports. You can also check us out on social media facebook.com/MaverickInvestorGroup, you can go there. We’re on a number of other social sites that you can see on our website as well, so wherever you are in social media hit us up, we’ve got a lot of buttons on top of our website, but MaverickInvestorGroup.com, and then just opt in for something on our website, and we will connect with you there, or you can even just give us a phone call. We have our number right on top of the site, and reach out to us; we’d love to hear from you.

Mike: Awesome Matt. Hey, thanks for your time, and congrats on living what appears to be a truly virtual lifestyle, it’s very fascinating.

Matt: Well thanks, Mike, and we help all of our clients to get to that lifestyle point, in terms of whatever they desire as well. So, that’s a big part of what we do, it’s part of our culture, it’s part of our ethos, and we’ve been attracting a lot of people that want to get into that, so we’d love to hear from anybody that’s looking to do that.

Mike: Awesome, awesome. Well hey, thanks so much for your time today, and for sharing a little bit of information about you, and your company. It’s very fascinating stuff, so thanks again.

Matt: Thanks, Mike.

Mike: All right, Matt, I look forward to talking to you soon.

Matt: All right, take care.

Mike: All right, bye-bye.
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