Engineer to Entrepreneur: Buy Real Estate To Quit Your Job with Mathew Pezon

If you ever thought about quitting your job to build your own business and attain financial freedom then make sure to check this out. In this episode Mathew Pezon of Pezon Properties maps out his journey from the structured world of chemical engineering to the dynamic realm of real estate investing. Through disciplined strategies and pivotal moments, Mathew built an impressive $25 million portfolio, all the while maintaining his nine-to-five. This episode breaks down the myths about needing to leave your job to succeed in real estate, stressing the foundational trio of credit, savings, and budgeting to unlock true bankability. Pull up a chair and get ready for an insightful exploration into the nuanced lessons Matthew gleaned from his corporate career, which ingeniously informed his investment approaches. Listen as we wade through the challenges of juggling full-time work with property deals, the indispensable role of support networks, and the entrepreneurial spirit that catalyzed Matthew's growth.  Whether you're a novice or a veteran in the investment game, you’ll find valuable insights and inspiration to fuel your own journey toward financial autonomy.


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🎯Connect with Mathew Pezon:  @pezonproperties on Instagram and visit his website pezonproperties.com

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Transcript

Speaker 1: 0:24

Welcome back to the money focus podcast. I'm your host, moses the Mentor, and in this episode, I'm joined by Matthew Pizon from Pizon Properties. We're talking about a guy who owns over 200 rental units, with a rental property portfolio that's worth over $25 million, and what's cool about it is that up until recently, he did this over a span of 10 years by working a nine to five, so I think that's very relatable for you and my audience, and for me personally, so looking forward to hear his story on how he actually accomplished this. So I hope you are too. So sit back, learn, grow and pay it forward. Let's go All right, matt. Thank you so much for joining the Money Focus podcast. The first thing I always ask my guests to do is to break down your career journey and, ultimately, how you ended up starting your business. So the floor is yours, absolutely.

Speaker 2: 1:23

And thanks so much for having me I'm excited to share with your listeners. So I come from a long line of engineers. So my dad, my grandfather, his parents were engineers, and even on both sides. So I wanted to go to engineering school, which I did. I graduated with a chemical engineering degree and so in 2010, I went to work and I was always motivated to do well and I thought that engineering school was how I could succeed, and it is. There's nothing wrong with that path. I did it for many years and one moment stood out for me, which was that when I started in 2010,.

Speaker 2: 2:03

It was the great financial crisis and at that time, jobs were hard to get. I was lucky to get a job and I was put in an IT role. There was no process systems. It was sink or swim and I sank and my boss told me I was the worst employee he ever had and the company should fire me. And I was crushed. I had $50,000 worth of debt. I didn't know I was going to make ends meet and I thought I was going to get fired and how I was going to pay back my student loans. So that was the pivotal moment for me, when I knew that I didn't want to rely on a boss anymore for my financial health. I didn't want one person's opinion of me to control my destiny, and that's when I decided to look into other investments to try to replace my job income.

Speaker 1: 2:50

I got it, so that was the only job you ever had.

Speaker 2: 2:54

That was not so. Yeah, so I was the rest of your jobs, yeah. So ironically that was a career development development program, and so I was supposed to be rotating positions. And I actually stayed in chemical engineering for 12 years while I was buying rental properties on the side. So it was not my only gig in the industry, and I made my side hustle my full-time hustle only recently actually, so I side hustled for about 10 years, so that's pretty cool.

Speaker 1: 3:31

Right now, I still have a corporate job, but I also have rental properties. I live in Atlanta and my rental properties are in Cleveland, so I definitely want to know more about how you actually made that side hustle your full-time job. So what strategies did you implement to build your you know, your empire and real estate investing to replace your income?

Speaker 2: 3:54

So I did the thing which a lot of people don't do or think isn't exciting, which is I kept my job. So a lot of people, if you're on social media, you know burn the bridge, you know burn the boats, just go all in. And I'm a more careful person, I'm risk averse, and so I really started with the fundamentals of that job and my own financial security. I focused on my credit score. I focused on increasing my savings and budgeting. Budgeting is a. It can have a. It's like a dirty word, you know. It's like people don't want to do it or they don't want to have the discipline, or it means I can't have fun or I can't. It's kind of associated with lack, right. But I really tightened my belt and budgeted so I could build up that cash. So I really started with myself. Before I went into investing and providing housing for others, I started with me and I said how can I, how can I build my credit, grow my savings and and prepare myself to be bankable before I started buying real estate?

Speaker 1: 5:06

Spend on that a little bit, because you know the power of a credit score. Talk about how important that is when you're investing. You know a lot of people think about credit as oh you know, I go to buy a car or something like that. Like when you're actually an active investor, how important is it to have a great credit score?

Speaker 2: 5:27

Extremely. Folks want to jump into the real estate and they get excited about renovations, they watch HGTV or whatever, and they think I'm just going to go jump in and and flip this house right. And it's not that way, and there's a lot of fundamentals that need to be in place first. So credit score is huge, and the reason why it is is because real estate unless if you have $200,000, $100,000 laying around, which most people don't you need a loan. So you have to prove to the bank that you are going to pay them back. Why would anyone give anyone else money unless if they thought they would get paid back with interest right? And so credit score is just one component of that. It's also well, how much? How many reserves do you have? Or are you putting all of your down payment and then, if, if a water heater goes out, you can't fix it right?

Speaker 2: 6:26

So how much cash do you have in the bank as reserves? What's your job situation like? What's your career trajectory? What is it? What is it Ben? What are your other assets? Do you have a retirement savings or other properties? Because the more that you can show to the bank that you will pay them back with, the more money they're likely to give you. So, job, credit, savings, it's, it's, it's those three things, and you have to start there, otherwise no one will lend right, so no one will give you money to borrow.

Speaker 1: 7:01

What I've uncovered is, you know pretty much is the access to the money and then the cost of the money. So those are two big factors as you're growing your real estate and buying, you need to get money and then you want to pay it back at the lowest amount. So if you have constraints on how much you can actually borrow, then that limits your ability to scale, and then if your interest rates are just absurd, then that eats into your profit. So I credit is wildly underappreciated, because you're right that you watch these shows and hard money loans fixed and flip in and out. That's those are, you know, best case scenarios that you see. You know most of those. You know transactions either break even or sometimes lose money.

Speaker 1: 7:53

So you have to be prepared that every, every dollar counts and when you have a good credit score, you get the most favorable rates and the favorable access to capital, which is key. So that's right. Thank you for breaking that down, because I really appreciate that. So 100%, great, great. And obviously you scaled up. So if I'm reading this right, it looks like you have about 200 rental units. How did you get to that level?

Speaker 2: 8:20

So one thing that I'll add is I teach all about this in the real estate lab in Allentown, where, basically, we provide knowledge networks in capital. So this is something I'm super passionate about, and the students that come through the real estate lab are from historically disadvantaged demographics and we help them attain rental properties on their own and up until now, they've purchased over $4 million of real estate in the last three years. So it's something I'm super and I do the credit counseling aspect. So teaching how to scale up and grow a real estate business is education that I love providing. So I'm glad you asked that question.

Speaker 2: 9:00

What I teach at the real estate lab is we start with the mentality. So do you think like an investor and are you managing your own budget? Because if you're overspending with your personal expenses, you'll do the same with the house. It's no different. So we teach how to think about money, wealth, we identify limiting beliefs and we identify the students' motivations, why they want to invest.

Speaker 2: 9:20

Once you have those things and you have your investment philosophy, some people want to do commercial, other single family homes, others multi-family residential, others Airbnb. So what do you want to do? So, once you've set yourself up for success, banking-wise, with credit, income-wise, you're bankable and you know why you're investing in real estate and in what sector or space you want to invest in real estate. After that, it's all about finding it. So you need a team. So once you have a team, then you need to be in the right market with that team, where you want to invest, and then, only after you do that, you start looking at the property. So everyone wants to jump to the property, but it's like the 10th thing that you need to do to invest in this business. Everyone loves looking at houses on Zillow, but that's your folks that do that. You're looking at things backwards.

Speaker 1: 10:15

So for most of the people in your program, are they local investors or do you work with folks that are out of state as well?

Speaker 2: 10:23

It's local to the Lehigh Valley Pennsylvania area. Now, if the program grows more, maybe there's something online we could do, but right now it's physically located.

Speaker 1: 10:34

And I want to go back to one question, because it's one that I get a lot about, like how do you actually leave your corporate job and retire? So you said that you were more risk adverse and you worked the full-time job as you scaled up to the 200 units right, and that's going to be my second question what's the makeup of those units? Because I definitely want to know that. How did you come to that decision and did it make working your job easier? Because you knew you had this business growing alongside it? It was a gentleman I seen online that said, hey, his job was like his first business partner. Did you view it like that? Like, hey, this is the money that fuels my business? Talk to me about that journey of working, but knowing you had this great empire growing at the same time.

Speaker 2: 11:35

Yeah, I mean, there's so much there, so I hope I can impart a little bit of that journey. I love that saying I had never heard it said like that before that my job was my first business partner. But it's true. I worked in a multinational company in. I was running basically a large management company, but instead of houses it was industrial tanks, right. So they use very sophisticated software, lots of data and other things to, and there were HR processes, there were vacation policies, maintenance policies.

Speaker 2: 12:15

So I learned the value of like show me the policy, show me the procedure because if, and there's so many other things that I learned just about the financial aspects, people, management aspects. So I looked at my. I worked to learn not to earn and I think that's a good way for folks who are getting started that they can think about it. I really learned how businesses operate at a high level in multiple countries in a complex industry like chemicals, and it set me up for success in real estate. So I guess work to learn not to earn. Now what the process was like is the financing was a lot easier because I had that W2. But in order to find the deals I needed to have the time to find the deals, but I was at work, so it was this constant catch 22. So I would go find properties on weekends, I would meet with sellers at night and if they could only meet during the day, if the deal was good enough, I would take vacation time. And my vacation time for many years was going to see sellers because I would do off-market letters, I would send letters.

Speaker 2: 13:33

So there's a certain level of hunger and tenacity that's required. It is not possible, in my opinion, to work a full-time job and try to scale a real estate business and say that you only want to work 40 hours a week. Thankfully, my wife yeah, my wife, girlfriend at the time we've been together 10 years, married for five, three children under the age of three. So we're doing. You know we built something together as well, but in those early years she was very understanding Go build the business. So I think the family and friends and people you surround yourself with are very important. They should lift you up, support your goals, and you also have to have that hunger and drive, because I got home at six o'clock and we ate dinner and I went back to work, right, like that's just how it was for a long time, and so it's just going to be hard, like I wish I could say here's the magic magic. You know, magic pill, right, but it's just going to be a grind.

Speaker 1: 14:38

Very true, yeah yeah, it's something I do agree Having a spouse that is supportive or a part of the process. My wife and I started our rental property business together and then at some point we were like, okay, well, we also have other passions. And that's where Moses the mentor evolved from for me, because I wanted to teach people about financial education, rental property, investing and also start a podcast. And then my wife she's a PhD in learning and development, so she has a company that teaches leadership skills across all income levels, titles and restrictions, like anyone could be a leader. It's called Learning Leader Lab. So we actually get up three, four in the morning every day and that's awesome. That's what we do, and we sit beside each other and literally work on our businesses before we start our nine to five, and we know that it's a process before you actually make that transition.

Speaker 1: 15:41

So it's good to hear someone like yourself that's given a realistic view, because a lot of people say just drop everything and just go. You know, but I think you have to be, you have to take calculated risks and you have a family, you have young children. You just have to make sure your job is in place to help fuel your true passions. You do a great job. I never tell people, just show up and collect the paycheck. Like you know, do a good job, having integrity.

Speaker 1: 16:09

I love your learn versus earn mentality as well, because it gives you transferable skills that will do great things in your business, you know, to help you become a better leader, a better entrepreneur, a better teacher. So, to sum it up, it's not easy. If it was easy, everyone would be doing it Right. And when people run into that wall and they see how hard it is, most people will fall and crumble. That's why you have to really find ways to get through those grinds because at the end of the day, when you get beyond it, it's going to be so few that stand in that you'll win. You just got to keep going, for sure.

Speaker 2: 16:53

Yeah, that's well said, that's very well said.

Speaker 1: 16:57

So you're 200 units. Tell me how to. What's the makeup? You know is this is a bunch of single family homes, corporate apartments, what is it?

Speaker 2: 17:08

It's around 50%, maybe 40% now, single family homes. I've been selling them because it just makes sense to, and then small multifamily makes up the rest, so two to six units. I have a couple of 10 units properties, but most it's small multifamily homes, the 80% of which are under six units.

Speaker 1: 18:04

Or, since we're on it, because you know small multifamily, you say two to six right, but from a banking standpoint the traditional lending is two to four right. So when you go above the four units and you're getting the five plexus, six plex, how does that work? Can you kind of give like a high level understanding for the audience on how commercial deals work versus traditional?

Speaker 2: 18:31

Right. So the biggest difference is how the property is valued. For two to four families it's valued based off of comparable sales. They'll consider the income, the appraiser, but the market controls the value to a degree because, well, if this one over here sold for X, and this is similar, mine's worth X as well. And for above four. So for five units and above, the property is valued based on the income that it produces.

Speaker 2: 19:03

So now different markets have different like like a multiplier, in a way like okay, well, down, you know downtown, yeah right, yeah right, a cap rate, exactly where you know, downtown New York City would have a lower cap rate than, say, allentown, pennsylvania or Scranton or Wilkes-Barre or something like that. So but the reason why that's interesting and a niche that I found quite enticing, is if you can add bedrooms, you can get more rent. If you can separate the heat, if you can separate water, sewer now you just have, you've reduced your expenses, which means the value of the property goes up. So that's why I like that space. It's the properties are valued based on the income, the net income that they generate, and it's a lot. You can force equity a lot easier versus one single family home compared to the next. So you could argue oh, you know, has granted, or has this, this and this. It's not going to make a difference for the appraisal.

Speaker 1: 20:04

Yeah, I learned. My wife and I we signed up for a program to learn a lot About commercial real estate. We just haven't found a bill yet. We definitely want to do that, so probably tap into you at some point.

Speaker 1: 20:17

The reason why I like it is because it really rewards your ability to operate effect. Yes, you know, versus, like you mentioned, like I can have the nicest house on the block, they're still going to look at the comps that were recently sold in that area and that's that's kind of deflating, because you're like, oh man, look at you know I've got these new windows, I put new HVAC and all this other stuff, but you're still measured up again, measured up against comps recently sold. But if you have the commercial property, you truly have all your tenants paying market rent, like you said, forcing appreciation by adding bedrooms. I've known people to put laundry in there Any, so I appear for parking. You know things like that. Those are things that can say, hey, my house Moses's house can be across the street, 101 Main Street and Matt's house could be 102 Main Street, literally next to each other, but I can have my house work be worth property worth significantly more than Matt's because I operate it more efficiently. I maximize the value through the income that I produce.

Speaker 1: 21:31

It's pretty much like it's a business. That's the biggest difference. Don't look at it as just somewhere where you rent an apartment or rent a home. It's really is used as a business. That's what the commercial lending process is. So that's right. Well said, appreciate that, appreciate that. So let's talk about at this point. Let's talk about how you actually find deals off market. What is your strategies to do that?

Speaker 2: 22:00

So in the beginning it was, I hand wrote 600 letters and I sent them to property owners in Allentown, Pennsylvania, and that took a long time to hand write them. It was hey, my name is Matt P's, on I'd like to buy your house at 123 Main Street, please call me right. And people called, and, but that wasn't sustainable. So then I started writing letter, I started printing letters and hand addressing the envelope. So it was. It was a step by step, so anyone can get started just going on a county website looking up properties that they want to buy and sending letters to the owners. It's very simple, it's it's not not rocket science, right? So that's that's how I started Then I, so I still rely heavily on direct mail.

Speaker 2: 22:48

But today, after 10 years in the business and now that I left my corporate job, I can build a brand. I can have a website where I wasn't doing anything. I wasn't doing that before, so I didn't want. I would have never started a podcast like like you're doing, for example yeah, yeah, yeah, oh, 100%. So I I hid it from my boss because I didn't. I had a solid like six figure income and I didn't want my boss to know because I didn't want. I don't want to get cut and then the banks wouldn't finance me, so I kept it under, I kept it hidden for a long time. So now though, I do SEO, I do Google ads, facebook ads, geo fencing, we do for certain lists. I do like digital ads, where if someone visits our website, we track them around the internet and show them our ads and then they call us. So we do all these different like techniques now, but they're all new within the last year. But letters, that's how I got started.

Speaker 1: 23:52

Let letters I always hear is like you know, still, you know starting point, but it's still a part of you know folks process, like it hasn't gone away. So I wanted to ask you a little bit about your fear to let your, your boss, know about your job. I'm literally in that situation today, but I have zero fear. I'm like the opposite of you Zero fear, let me let in, and it kind of goes back to, goes back to the transferable skills part. You know. So I look at it like you know, as long as I do my job and I'm in a leadership position as well, so I have a team, so I give 100%. What I do in my off time shouldn't impact my ability to be employed. You know, that's just how I look at it. And if you feel like it does, then your performance standards I wouldn't be meeting those right. So if I'm consistently meeting performance expectations, I have zero fear.

Speaker 1: 24:59

And then, secondly, if you really have the skills and the confidence that you know this company doesn't make, you know I can take this and I can go work at state farm, I can work at Best Buy, whatever right, whatever company you can think of. That's the reason why, personally, I've never had fear behind it because I feel like you know my skill set is in-demand anywhere but my company treats me well. But I'm very open. I they know I have a YouTube channel. They know I have rental properties. They know I have a most money focused podcast. What really drove that? Was it just the culture at your company that you weren't? Or was it just you Like? You know like what drove your fear to not disclose?

Speaker 2: 25:44

Yeah. So I wish that I would have seen things like you do back then. So for the listeners, I think that I wouldn't agree with my approach. I would definitely agree with Moses' approach.

Speaker 2: 25:58

Now, what drove it was that at the prior company that I worked for before moving to the new company to get promoted and stuff like that Everyone knew that I was investing in real estate and I felt that I was limited in my growth at that company because people saw me as well. He's not going to be here long term. So I got passed over for some opportunities and so I took one outside of the company. But then I thought, well, I'd really like to grow, I want to grow income at the company and that's going to allow me to do more alone. So I didn't want to make.

Speaker 2: 26:36

It wasn't a mistake at the prior company, but I was talking about it and folks knew about it, but I wasn't really implementing the things that I should have done, like a website, like SEO, like the things that you're doing to grow the business it's. People knew, but I wasn't really getting the value from them knowing. So that's what drove the fear that I didn't want to get cut off, but I also wasn't doing the things that I should have been doing if I was going to be open about it, like a website and other things. So, going back, I would have done things the way you're doing them.

Speaker 1: 27:11

Got it. I mean and again, I guess there's no right or wrong ways I just I like to get different perspectives because you know some people are very open about it. I, I like to be open because you never know, it could be one person you meet that say, oh wow, it can change your life. You know that's so right. I know everyone about my experience of what I'm doing. The first question people always ask is wow, how do you find the time? And that's when I really love to break it down. Like, hey, I'm up for 3 4 in the morning. I'm up late.

Speaker 1: 27:43

I Use this example as well. I used to love watching football. Right, and Sundays will just be, you know, completely gone because I'm watching for pregame to Sunday night football. Like when you really look at that, that's like it's from 10 am To 10 pm or later. Those are some of the sacrifices. I had to step in and say I can't do those things. If I really want to make sure that I'm, you know, leading with integrity at my job and knocking out the part, but growing businesses, how does it make sense that I give up a day a week to just sit on the couch? It just wasn't possible anymore. So I think people know the answer is just really about hey, how can I implement that? Because it just sounds too hard, but my why is strong enough that allows me to push through and do it. So I Love that.

Speaker 2: 28:39

Yeah, that's a great example. Yeah, tv and social media scrolling, I guess all the, all, the all the distractions, right yeah?

Speaker 1: 28:49

cool. So I appreciate that. Now, cash out, refinances, that's you. That's a strategy that you've used to Help scale your business. Can you talk a little bit about that, like, how did you uncover that strategy and then, at the same time, kind of give the audience a high level of what it is?

Speaker 2: 29:11

Absolutely so. The concept is I Solved problems, for there was either a property problem or a people problem, and so what I mean by that is I would. If a house was worth, let's say, a hundred thousand dollars and there was a resident who had destroyed the house, they were still in there and they weren't paying. That's a problem and I would take on that problem, both the condition of the house and the non-payment situation, and I would fix them and so. But I can't do that for free, and so I would get a steep discount on these properties and I would buy let's say I would buy that property for fifty thousand dollars, but I know that it's worth 100. Let's say that it needs twenty five thousand dollars of work and it might take three months to get the resident out for non-payment. Well, let's say I'm all into the property for eighty thousand dollars. At that point let's say it takes it was fifty thousand dollars I paid twenty five thousand of work, five thousand of lost rent and and costs, right, just a Taxes, insurance, other things. So all of my costs are eighty thousand dollars. The house is worth 100, and let's say a hundred thousand, and let's say it rents for $1,100 a month. So in that case I would be able to get a loan from a bank. Now, race were lower at the time, so I know it's a challenge compared to today, but at the time I that would be enough to get me an eighty thousand dollar loan. So I would Buy the property with like a short-term loan, do renovations with short-term money and then, once everything was done, I Would get a permanent bank to pay off everyone else and then I would have a house basically for nothing.

Speaker 2: 30:59

Down it's a. It's it's called the birth strategy. If you look it up, it's by by rehab, rent, refinance and repeat. And the hardest part of it well, there's a lot of hard parts, but the hardest part is finding the deal to begin with, especially today. So and that's where the hard work comes in going back to like, oh, but I work a nine to five, like you got to go find the deal. You have to be hungry enough to find the deal, but then you have to. You have to renovate it right, manage it right, get the right resident in place, and then you can refinance and you have to be bankable. So that's what that's what the birth strategy is, and I did that over a hundred times.

Speaker 1: 32:28

Over a hundred times in that ten-year period, or that's right short of period.

Speaker 2: 32:32

Wow, somewhere, two units, some you know I bought a, I bought a six unit like that. I mean it's just it's. It was over a hundred transactions like that and and I would just find deal after deal after deal, and I built a machine to find deals.

Speaker 1: 32:48

And so, and this was just you and your wife, that's right.

Speaker 2: 32:53

So it was me and my wife, a printer and a calendar to remember, to call people back, like all my phone. So it was. I had no sophisticated CRM. I had nothing but a printer, a computer, my brain and a Google Calendar and and a Google voice number. That's it Right. So it wasn't. This isn't something that's and all the education is out on the internet from shows like this, and so it's it's. It's really piecing it together and having the desire and the drive to push through adversity.

Speaker 1: 33:35

And you know what was your. What was your driving force? Like, did you want to be rich? Did you, were you already rich? I mean, like what? What did you want? The freedom? Like what? What drove you to this? So yeah, so when do 100?

Speaker 2: 33:51

units on your own Right. So what drove me was I wanted freedom, I wanted to travel. I've been to 35 countries. I wanted to continue and I was getting limited by vacation time. Now we have three under three, so it's different, but you know, the freedom was a huge. I wanted to travel I still do and but behind that as well was just growing up and stuff like that.

Speaker 2: 34:19

I mean, we moved, no fault of my parents or of anything like that, but there was a divorce and I moved all over the place and was in multiple different schools and you know broken family situations. So I never wanted to struggle financially and I knew what that looked like and so I never wanted to relive that and I wanted to be in control of my destiny because I had no control. So I wanted control and I wanted to be free and I wanted to have options because I didn't have that growing up. So that was the, the motivator for me and I that first boss out of college. Out of college, I just I didn't want one person to have so much power over me that they could control me or manipulate me like it happened before. So that was the drive for me. I wanted to own my destiny.

Speaker 1: 35:14

And you know, are you at a point where you're because you you noted that you're selling some of your homes now. So are you at a point where you're, you've topped out, or it's just more of a strategic stance to sell now. But do you, I mean, do you want to continue to grow your business?

Speaker 2: 35:31

Oh, absolutely. I mean, the properties that I'm selling now are the, the greenhouses on the monopoly board, so I can buy the red hotels, right, like, so it's. It's I'm trading in the, I'm trading in this, the smaller homes to buy larger assets, and also just operationally, there's instead of six roofs, there's one. Instead of six heating systems, there's one. So there's just less to maintain, but the income is comparable. And instead of one rent on the same equity, now I can get four rents, like if I trade from a single family and if I sell one house to buy a four unit, well, the equity didn't change, I just moved it from a single family to a four unit, but now they're four rents, so I'm able to get a better return on equity. So I don't see myself slowing down, I don't see myself stopping. I just, for whatever reason, I just have this drive inside, this fire that I can't really put out. So I just I'm addicted to buying houses, I can't stop. Well, that's.

Speaker 1: 36:34

That's a good addiction, you know, and you're you know you're providing quality housing for people, so that's a great thing. We there's a shortage of housing, so kudos to you for that. So thank you. How do you, how do you manage your properties? I'm assuming you're not self managing with that many units, but it's all.

Speaker 2: 36:55

Right. So while I was working a full time job, I was, and still am, working through third party management, and the reason for that is once I only had so much time that I could only focus on sales. I just needed to focus on finding the deal, find the deal, find the deal. If I found the deal and I could buy it right, everything else could be paid for. So I outsourced management and so I worked with like four bad management companies in a row and finally found one that I mean there's. I could. I could go on about all the bad experiences, but they will happen.

Speaker 2: 37:32

So I think the fifth or sixth management company I'm still working with them and maybe a seventh or eighth that I found just to kind of diversify a little bit. And so it's all third party management. They pay the tax bills, the insurance bills, they handle all the tenant communications, they do quarterly inspections. Any maintenance that comes in they'll do on my behalf up to a certain limit. They handle all the bookkeeping. I pay 10 percent, but they handle everything, and that allowed me to just focus on finding more deals. I underwrote that cost as a cost of doing business and if I, if I had to choose between well, is the deal going to work? If I can't do the deal, unless if I self manage because I'm paying too much, I'm not doing the deal. I'm just not doing the deal. So it had to make sense where the manager could be paid when I went into the deal. So that's the long answer. The short answer is third party management.

Speaker 1: 38:34

Yeah, I've heard so many horror stories about property managers. So I actually self manage. I know you probably say this dude is crazy. I mean he's a senior manager, he's a podcast, he has all this stuff going on. But I actually self manage my properties.

Speaker 1: 38:54

I'm in Atlanta and they're in Cleveland and part of the reason was it was like you know, you said something at the beginning just having your right team at play. So you know, I have my landscape guy, my snow plow guy, my handyman, my contractor. So what I use is software. I use this software called Himley H-E-M-L-A-N-E. I don't know if you've ever heard of them I haven't, but it's. It's really easy. You know I can do everything on the communications through there. They do repair coordination. They pretty much just tap into my network when something comes up and it's much cheaper than the 10%.

Speaker 1: 39:31

The problem I've heard and like you said, it took you five, six tries before you got there is that you know being a property manager is not easy. You know it's not an easy business to be in and the margins get tapped. So I've heard them. You know just poor accounting practices, markups on repairs, oh yeah, you know, if you don't bring, you know, a large portfolio to the table. Your properties are getting neglected, so I ultimately decided for now to self manage, but as a scale up or get the right relationship. Who knows, you know I might tap into that way, but you know you have something that works for you, so great for you.

Speaker 2: 40:19

Yeah, I guess what I could say looking back is I was limited in my understanding of what was possible. I had limiting beliefs and one of them was either I need to do it or I need to hire a third party manager. There was this third option I never realized called I can hire a virtual assistant in the Philippines to do a lot of the back end stuff and tenant communications. And now I still control and own my destiny and have employees because, let's face it, the management company or hiring, has to do all those same tasks too. Same thing yeah, right, you're just hiring, so you're paying for the convenience of someone else doing the hiring and onboarding and training and setting up all the systems.

Speaker 2: 41:07

So if I could go back and tell my 26 year old self that truth, I would, and you may be in an advantageous position where you can continue to self manage but not do the work, because you could hire someone else to do the work and maybe you could pay them $1,500 a month, right, and that's a great wage in the Philippines. So there's, there are options like that where you don't necessarily have to be interacting with the tenants yourself. You can, you can own the company, but and you don't give up control, but you don't have to do the work either, and then you can focus on doing more deals. So I wish I knew about that third option, but I know now. So I mean, who knows where things go, but it's, it's definitely something I wish that I knew, related to management.

Speaker 1: 41:57

Go ahead If you haven't read the four, what is it? The four hour work week I have? Yeah, tim Ferriss, yeah, I mean, that's all he talks about. The V is this V? Is that? So? That's cool? Definitely listeners. Read that book. You can become the happiest, laziest person of all time.

Speaker 2: 42:18

Yeah, and like, for those that maybe, maybe they're similar, more similar to us, because I know you're a hard worker as well You're probably never going to turn off that switch, like, if it's in you, it's in you. Dan Martell's buyback your time is a similar idea, but it's written for, like, the hard charging type A type person where like, look instead of yet Dan's book changed everything for me. I read it last year and so, buyback your time and it's all about OK, well, if I'm talking with tenants and coordinating for the snowstorm, I'm not doing the next deal. So I'm not saying that that task isn't important, but does it need to be done by me? Like, what's my highest and best use in the company that I've started? Because founders will often end up doing all the tasks and they get stuck there and so, anyway, it's not the idea of the four hour work week.

Speaker 2: 43:14

Dan's idea is not just the four hour work week. To just like be on the beach or whatever and not do any work, it's OK. Well, what's the four hours per week? Like, what are the small hinges that swing the big doors and make the big impact in my business? Do that for four hours, right, and then it's not like take off and take, go on vacation, but what's the high value? Only do that, and then that way you can grow the company faster. So I see it more Dan's way than than Tim Ferriss's way, but yeah, yeah, yeah.

Speaker 1: 43:48

No, I'm going to check it out. I haven't heard of it, but, yeah, that does sound like that fits more me, you know, because I enjoy what I do in my business. I wouldn't have started it, you know, so I want to be a part of it. I just, you know, want to use my time wisely, so that's really key.

Speaker 2: 44:05

Well the way, like I didn't really understand the concept of an opportunity cost. So what I mean by that is OK. Well, yeah, you're doing the self management right now, but what if you hired someone else to do those tasks? And now you're writing a book? Like you have these podcasts, like you're getting all this information? Now you're writing a book and you're building your personal brand and you're you're setting yourself up as the authority, but you wouldn't have written a book if you were getting up at 4 am to respond to tenant communications. You know, now you're getting up at 4 am, but writing a book versus which can exponentially change things, versus responding to tenants about transactional issues. So it's not don't work. It's what can really move the needle for me this year. I'm going to do that and hire out. For the rest, All right.

Speaker 1: 44:52

So, when it comes to when you made the leap from you know, your W2 job, what drove that decision? Did you? Did you meet your financial goal? Were you becoming a bad employee because you were getting so bad? What, what you know? What was it that that you said, hey, this is the time. I'm right, I had a son?

Speaker 2: 45:17

OK, ok.

Speaker 2: 45:18

So that changed everything for me and I realized that I could. I could be a business owner, have a full time job and be a good father and husband. And I had to pick two. And you know I chose business and family right and in order to. You know there's other things like sleep and everything else. But I just I just said, look, I can't. And that was the, that was the catalyst.

Speaker 2: 45:50

I had been building up to that point and arguably I could have walked away much sooner than I did. But again, as a risk averse person, I think I had, I don't know, 130 or 140 apartments and two guys that I partnered with on a bigger deal where I bought I say partner, but I bought solely like a tranche of properties. They bought other stuff and you know they had left their jobs as well and they were still buying it. And I was like, huh, well, these guys not only originated the deal but financed it without jobs, like I guess I don't need one either. And then I just said, look, I want to be a good dad, so I'm out, but that's a.

Speaker 1: 46:28

Having a family. I was gonna be my question because I know you mentioned being bankable and having a job, having a w2 wages. So for the audience, how did you make that transition, like you went from not having a job, are you still bankable and how does that work now without w2 wages?

Speaker 2: 46:47

Right. So the first thing was insurance. You know we're having a family so we want to make sure we had our health insurance lined up. So that's just a non-starter. There's other things, just to make sure that are set up in advance that you can't get later, like auto loans, home loans, things like get anything that you want Like a primary residence, car loans, anything like that get out of the way, like life insurance policies, stuff like that. So do all that stuff. But then having cash in the bank where you plan to get the loans, banks love that. So start courting these banks and Find out who you want to work with for your rental properties. They're usually small community banks. Put your cash in their bank and they'll love you right and they'll want to. They'll want to bend over backwards to make you happy and they'll do the loan. So that's that's what I did. And then also in my deal-finding company, I'm now on payroll.

Speaker 2: 47:49

So the, the, I have a W, I still have a w2. It's not that I don't, but it's I just employ myself and so I'm paying taxes on it. It's all above the line payroll and I can show the banks hey, I'm making money from all these deals. Part of that is coming in as w2 wage. I have 10 years of experience doing this. It's consistent, right. And so they kind of look at the w2 that I'm getting is like, okay, well, this guy's been you know any other startup companies getting a w2. We could accept the pay stubs from you know. If it's a 10 year old company, we should accept them from him, right, because I just I have so many tax returns at this point. But that's why working while you're building that business and working w2 for, like a larger company, this is so important as you're getting started and then you can eventually be your own w2 employer, right, don't take away the w2, but self-employ yourself.

Speaker 1: 48:45

Yeah, you first person I've ever spoken to that Really broke it down that way that you transition from a traditional w2 working for a big company to like, hey, I created my own w2 for me and employed myself. So you know that's, I open it for me. I didn't even think about that. So that's kudos to you again for that. Hopefully the audience really leaned in or listening or watching that, because that, you know, that's pretty cool.

Speaker 2: 49:14

The banks want two years. Yeah, they want a minimum of two. Most of the time three years of tax returns. So for anyone who's considering, within the next three years, leaving your corporate job, just set up payroll, put yourself on payroll right, because then you can show tax returns that hey, I've been making this much from the company. And Even if it's a single member LLC and it's passed through right, it doesn't matter. Like just, I mean, there's some tax stuff like you have to set it up as an s-corp, but it's only, it's a form that your accountant does. So just get yourself on On payroll to your s-corp, file that return, show some income, pay the tax and it.

Speaker 2: 49:52

It's annoying, but don't let the tax tail wag the dog. Don't try to pay nothing in taxes and then you can't get loans. That's the big mistake I see people make is they try to pay. Oh, like they, they, they show no profitability on their few rental properties that they have. Then the banks want to stop lending to them. So put yourself on payroll and use bonus depreciation to not pay tax and show profitability because the the banks had back depreciation, so that's a mouthful. But for those that have a couple properties, you can hopefully bend it from that and and and and work it to your benefit.

Speaker 1: 50:28

I mean, it's not like I need to bring you back when the show regularly so we can break down, because there's so many different things that we kind of you know Touched on that. I feel like it's really episode work, you know, from commercial real estate to cash out refines to s-corp. So For this, for the sake of this episode, why don't you just close this out with you know final thoughts on For the audience, on how they should potentially start their real estate investment career or learn more, and then also tell us about how we can reach you, your website, your programs and social media?

Speaker 2: 51:06

Absolutely sure. So last thoughts, it all start. The most valuable real estate in the world is between your ears. It all starts there in our brains, our mindset, the way we think. So get your mindset right, your philosophy about Investing and wealth and money from there get bankable. So that's your income, your credit, your cash savings. Then find where you want to invest, find your team and then find the property and Get educated. Keep your job, get educated, obsess about learning about real estate investing and then go get deals. I mean, that's, that's ten years of how you quit your job using real estate, consolidated into 45 seconds. So, and then as far as social media and my website so I've been just seeing if anyone out there is a private money lender. You know I'd love to work directly. I work with the big national lenders. I've done over a hundred deals, but if anyone's a private lender that you'd like to work with me, please reach out. P's on properties, calm, and we're P's on properties all over all the social media platforms.

Speaker 2: 52:18

Spell that out Sure, it's P E Z O N as in November, p's on properties calm.

Speaker 1: 52:26

Perfect, perfect. Well, matt, I really appreciate your time. I was a great discussion, so thank you so much, and hopefully you'll be back, you know talk to you, so I'd love that.

Speaker 2: 52:38

Yeah, thank you and thanks again to you, and I hope the listeners got value. Thanks, moses, see you there. You.