Matt Aitchison on Investing in Real Estate Using Other People’s Money – EP 52

October 21, 2021

Interview with Matt Aitchison

Matt Aitchison on Investing in Real Estate Using Other People’s Money

How do you start investing in real estate if you don’t have any money?

Matt Aitchison is a real estate investor, syndicator, speaker, and host of the Millionaire Mindcast podcast. He’s flipped hundreds of houses, built a Top 1000 real estate team in the U.S, and now focuses solely on raising capital for syndications and scaling his passive income portfolio, which consists of commercial strip centers, hospitality assets, and single family rentals.

Matt graduated from college with what he calls “a really expensive piece of paper” that he knew he wasn’t going to use.

Thankfully, he ended up finding a mentor-seeks-mentee ad on Craigslist, and spent the next year flipping more than 100 houses for the guy who’d posted it. Matt didn’t earn a dime, but he got an education that’s paid back in spades!

At 21 years old, Matt branched out on his own. He bought his first home for $75,000, fixed it up, and sold it three months later for $210,000.

In this episode, you’ll hear about how Matt Aitchison structured his first real estate deal using 100% of other people’s money. We also talk about syndications, the power of relationships, private lending, underwriting a deal, and much more!

Featured on This Episode: Matt Aitchison

✅ What he Matt Aitchison does: Matt is a real estate investor, syndicator, and speaker. He’s flipped hundreds of houses, built a Top 1000 real estate team in the U.S, and now focuses solely on raising capital for syndications, and scaling his passive income portfolio. He’s also host of the Millionaire Mindcast podcast.

💬 Words of wisdom: When Matt Aitchison started out with private lenders, he knew he was using other people’s money, and he was very conservative in the risks he took. Holding that responsibility in such high regard paid off by earning trust with his private lenders.

🔎 Where to find Matt Aitchison: LinkedIn | Instagram | Twitter

Investor Insights

How Matt structured his first real estate deal—and made over $100k in only 3 months!
How to use 100% of other people’s money to invest in real estate.
How to use the “Likability Formula” to build your network and connect with ANYONE!
Why relationships are infinitely more important than money and net worth.
Choosing aspirational role models.
How to get crystal clear on the vision for your life.
The benefits of owning a small piece of a big pie.
Sweetening the deal for private investors.
Real estate underwriting and planning for the worst case scenario.
Building passive income with real estate.
Navigating the seasons of hustle and grind.

Matt Aitchison | Fund the Deal and the Money will Follow

Episode Highlights

Adding value for others creates value for yourself

“Something that I lead with on a daily basis is, How can I add value to people? How can I show up with humility? How can I bring confidence? Not only in myself but to other people, as others have done for me on my journey. When you look up after 11 or 12 years of doing that, you realize that you’ve got a pretty cool group of people that you have access to, with great opportunities. At the same time, it’s allowed me to build some very genuine, authentic relationships. That’s a great way to build out a network and appreciate your relationships.” – Matt Aitchison

Know who your role models are

“I have role models and mentors based on all the gardens of my life. Some may be in close proximity, some of them may be an online influencer like Tony Robbins. Whether it’s in time of crisis or of opportunity, you can be that much more purposeful and pointed, knowing that these are the individuals that you want to model yourself after.” – Matt Aitchison

Learn to grow from every face plant

“It’s been stepping stone after stepping stone after stepping stone. A lot of failing forward happens every single day. Those face plants are celebrated and welcomed. As long as you get up and you brush yourself off, and you continue to improve and grow from those opportunities, there’s no way you’re going to lose. That’s our mindset, and it’s been a really fun journey.” – Matt Aitchison

It doesn’t matter where you’re starting from

“My biggest mental and physical hurdle was, I’m living at home with my dad. I have $800 in my bank account. I’ve got a $2,500 credit card limit and it’s already maxed out. Nobody’s going to give me money. I’ve never even bought a house for myself. Why would somebody give me money? And one of my very first mentors said, Find the deal and if it’s really a deal, the money will follow. I believed her, and then I adopted that mindset.” – Matt Aitchison

Get creative when raising money for second position

“There are three circles of people that you can try to find money from for that second position. You have your inner circle — Mom, Dad, family, close friends. You have your outer circle: the people you associate with, that you might know in your networks. And then you have your social circle: people that you work with or who are in your industry online. I’ve raised a lot of money in Facebook groups and at Mastermind Events.” – Matt Aitchison

A slice of something is better than 100% of nothing

“I’d rather own a slice of a watermelon than 100% of nothing. When you’re first starting out, bring that watermelon to somebody and slice it up, and everybody wins. And now you’re going to have some real momentum behind you. You’re going to have a newfound confidence at the next opportunity you find, which will get you across the finish line. Maybe you start structuring things differently as you get more of your own money, or you’ve got more leverage.” – Matt Aitchison

When you’re borrowing from other people, take it seriously

“If you’re going to take other people’s money, you’re responsible for something that is extremely important to their livelihood, their lifestyle, and their happiness. I hold that responsibility in very high regard. If you want to be reckless with your own money, go for it. But when you’re talking about other people’s money, there’s another level that I wish more people would operate at. The people who are massively successful and who have used other people’s money have approached every single deal with that mindset.” – Matt Aitchison

Matt Aitchison Tweetables

“There is no amount of money that I would ever go after that would sacrifice the time I have with my wife and kids.” - Matt Aitchison Click To Tweet

“I'm a loving human being but my standards are not. I don't have to sacrifice my standards to make other's feel comfortable about the life that they're choosing to lead.” - Matt Aitchison Click To Tweet

“Every single person that you interact with has something to teach you, but it's nobody's responsibility to give you that information or wisdom but your own.” - Robert Herjavec Click To Tweet

Resources

Matt Aitchison Website
Find Matt Aitchison on LinkedIn | Instagram | Twitter
Millionaire Mindcast podcast with Matt Aitchison
David Osborn
Robert Herjavec
The Likability Factor
How to Win Friends and Influence People

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Read the Full Transcript with Matt Aitchison

Justin Donald: Well, Matty, it is so nice to have you on the show. It’s really funny because we have really played a little bit of phone tag and reschedule here for a bit. So, it’s been a long time coming like months in the making and I’m so excited that our time is here. So, welcome.

Matt Aitchison: Dude, we made it happen. First, I got you up on my show and the overwhelming positive response that we received from our conversation was awesome. I feel like you and I share a lot of similarities in terms of our values and our beliefs and how we attack investing and lifestyle. So, any conversation that I get to have with the Justin Donald, I’m going to take you up on that.

Justin Donald: You’re too kind. Well, I have a ton of fun on your show, and it’s really fun just seeing the engagement that you get from different communities when you’re a guest and the people that reach out and connect. And it’s just always so fun to meet new people from different worlds, different networks. And so, you have just a massive following. You know, it’s really cool to see the followings that each of us have and really just meeting fun people from each other’s networks. It’s really fun. I got to tell you, you have an incredible following. People just love you. You’ve got your own podcasts, you got your network there, you’ve got the GoBundance crew, and people just swear by you and your team and your expertise. I have so many people that say, “Well, Matty said this,” and you get like a million different names, which we got to get into as well, nicknames, that is. But how did you build such a great following?

Matt Aitchison: I got a really big payroll so I just pay people a lot. No. You know, I’ve thought about this and I had actually somebody asked me this question the other day, and I’ve kind of boiled it down over the course of the years to what I call the likability formula. And we all kind of know those people that when you’re around them and you leave that experience or conversation or whatever it may be, you go, “Ah, man, I just really like that person. Like, I want to be friends with them or I want to be around them or they fire me up, they inspire me.” And we all know who those people are and I’ve always wanted and aspired and held myself accountable to being one of those people. And so, when I kind of boiled down, this was a mutual friend of ours, David Osborn, and he’s been a mentor of mine. I met David when I was 25 and I got in proximity to him because I am a big believer that we grow into the conversations, we grow into the environments that we really choose to engage with and put ourselves in. And I kind of have two different stories in terms of one not so good based on the people that I surround myself with and the environments I always put myself in and the results that came because of that, and also the opposite.

But in this context, dealing with people like David Osborn who are very wealthy and financially abundant, but also somebody who lives very intentionally and purposefully in all kinds of gardens or categories of life. And I was shocked that someone like him would mentor and be as open and as supportive to someone like me. And I asked him, I was like, “Man, why are you helping me? I’m just curious why you’re mentoring me because I want to know. I want to know what are these things or qualities or characteristics people like you look for so that I can make sure to spotlight and kind of sharpen my ax in those areas for future mentors or relationships that I want to build.” And he goes, “I’ll be honest with you, man. I just like you and I want to see you win.” And I’ve heard more and more people say that over and over because I like to ask those questions. I’m a big question asker. I believe that the quality of the questions that we ask in our lives dictate the quality of answers we get. And sometimes we miss, a lot of people miss those opportunities to ask those questions in whatever capacity or context of life it is. And so, as I was engaging more and more people along my journey, some of the things that kept coming up kind of helped me form what I call the likability formula or the likability equation. And number one is a part of, one, the variable in that equation is humility.

You know, no matter how successful, how “awesome” somebody says somebody else is, when somebody shows up with this sense of humility to a conversation or an engagement, it really kind of breaks down the barriers and creates this connectivity, this authenticity that whether you’re rich, poor, successful, in the middle of your journey, just beginning, it allows this bridge to be built for two people to connect. The second piece of that equation is confidence. So, I’ve always known that I’m not the smartest, I’m not the fastest, I’m not the strongest, but I am confident in my ability and who I am and how I show up that if I don’t know something, I can figure it out or there’s some way that I can bring the third piece of this value. If you’re somebody that is always looking to add value into every experience, opportunity, situation that you’re a part of, and you couple all of that with just being a really hard worker, it just makes somebody likable. And so, those were things that I see in other people and I admire in other people, and I want to go and help those people and I want to push them and challenge them and support them in achieving whatever it is that they want. And at the same time, it’s something that I always look to elevate in myself because it’s characteristics and qualities that I admire in others, too. And so, I think that is maybe one little piece of my identity in terms of those being kind of qualities that I admire in others and that I want to elevate and enhance and uphold in myself. And when you can do those things, it really does allow you to connect anybody and everybody.

Matt Aitchison: One of the first interviews I ever did on my podcast was with Robert Herjavec from Shark Tank and I remember asking him this question and it kind of closed the loop on that but it ties into how to connect and build a great network and to meet people of all different types of backgrounds, races, ethnicities, economics, business, and industry. I mean, you name it. I’ve always been a very curious person and when I was asking him this question of, “What is one thing…” He spoke very highly of his father. His father was one of his mentors. His father had passed away. And basically, on his deathbed, he had said – I said, “What was one of the things that your father told you that still applies today as it did the first day in business to where you’re at today with all the success that you’ve accumulated?” And he said, “The one thing that my dad taught me was every single person that you interact with has something to teach you, but it’s nobody’s responsibility to give you that information or wisdom or value but your own.” And so, that kind of tied into my approach of, “Man. I’m just going to ask questions and I’m going to be genuinely interested in people and I’m going to be genuinely focused on how I can bring value or connect dots and figure out ways to be somebody that is a multiplier and an addition instead of a subtractor and a divider, which unfortunately we see both sides of that in today’s landscape.”

And so, that’s something that I always consistently lead with on a daily basis is going out and how can I add value to people? How can I show up with humility? How can I bring confidence in not only in myself but maybe bring some of that into other people, as others have done that for me on my journey? And when you look up after 11, 12 years of doing that, one, you realize you got a pretty cool group of people that you have access to with great opportunities but at the same time, it has really allowed me to build some very genuine, authentic relationships that others like for like they see that and they recognize that. And I think that’s a very great way to go and build out a network and appreciate your relationships.

Justin Donald: Wow, Matty. There’s so much wisdom in what you just shared. I mean, we could unpack every single one of those points that you made. It was just tremendous. You know, I remember back, this is a decade ago, I read a book called The Likability Factor by Tim Sanders

Matt Aitchison: Wow. There’s actually a book on it.

Justin Donald: Yes. And by the way, his likability keys are different than yours or some shared, but some different. So, like you have your own but that was my first exposure or experience beyond How to Win Friends and Influence People by Dale Carnegie. I mean, I really think those are the two books that most greatly influenced my intentionality on likability and relationship building and just being intentional with connecting with people. And I think you had the privilege of hearing Tim Sanders speak and give a message to our company at that time and it was incredible. And the lessons that I learned were great. And so, you’re just so spot on that when you are likable, there’s just so much more good stuff that happens. I was talking with someone earlier today, someone interviewing for The Lifestyle Investor Mastermind. And one of the things that he shared with me is that he felt that relationships were just so important to him and it’s more important than any net worth or money he could ever make, and I agreed with them. I said, “That’s exactly the type of person that I’m looking for in our mastermind,” because relationships are infinitely more important than money and net worth. And it takes a lot of people a lifetime to figure that out. They figure it out on their dying bed when they don’t have more of it or when it’s running low and when time is running thin but other people, they figure it out early on in life. And the irony of it all, Matty, and you get this is the better relationships you have ultimately, the more success you’re going to have, the more financial success, the more business success because it takes people and good relationships.

Matt Aitchison: Yeah. And great people want to be with other great people. They realize there are some catalyst or event or experience in your life where you realize and ultimately, right, you prioritize accordingly based on your core values and based on the people you really want to do life with and financially, early on in my career, I was doing well. But I also realized, you know, I do a quarterly exercise and I basically draw a line down the center of a piece of paper. I put multiplication and addition sign on the left side, I put a subtraction and a division sign on the right side, and I kind of go back and look at my quarter and reflect on who I spent the most time with. And we all know that kind of cliched statement and it’s cliche because it’s so true and people say it over and over. But I realize that a lot of the people that I was surrounding myself with were kind of they were gossiping and they were kind of negative and they were naysayers and pessimistic and always, “Why I can’t do something?” instead of, “How can I do something?” And so, I really started getting a lot more tension around my relationships and I kind of drew some lines in the sand, honestly, around who I was going to engage with. Not that I wasn’t going to still show love and appreciation, respect to those people, but I also kind of raised the standard of what I would and wouldn’t tolerate in my life, in my business, in my network, in my circle.

And it was amazing when you set standards for whether it’s your life or your business or your health or whatever it may be, there’s a way that you can call people up to those standards and give them an opportunity to go on that journey with you or you can feel comfortable and still love and respect and appreciate letting them go on their own journey but keeping them at a distance. And as I did that more and more and I kind of evolved in how I was having those conversations and kind of breaking some of those, I guess, ties you could call them, it’s amazing when you allow people to get off the bus, what room it creates for the people who align with those standards to get onto the bus and how that can transform, I mean, your financial future, your business, your friendships, your family, even. And sometimes I get that question asked a lot of the times is what if that negative person is your spouse or it’s your mom or your dad or your best friend forever. And again, I think when people come from a place of true love and it’s obviously how you can communicate it to call someone up. Instead of calling them out, call them up to a higher version of themselves and kind of show them that path and put a hand out and allow them to come on that journey with you. You know, those kind of tough conversations, those are leadership conversations, but those are also the conversations that not only have transformed my life, but you get to see what the people who do opt in to that, what it does to transform their life and how appreciative and how loyal they become and how much they want to add value to you because of that.

And so, drawing those lines in the sand and creating those standards for your life I think are really, really important. And I think a lot of people sacrifice and play down to other people’s standards instead of calling people and holding people accountable to their own. And the people that I really admire and respect and have learned a great deal from, they’re ruthless in their standards. One of my favorite quotes and kind of one of my mantras that I live by is I’m a loving human being but my standards are not. And I can still show love and appreciation for people that may not align with my standards, but it doesn’t mean that I have to sacrifice my standards to make them feel comfortable about the life that they’re choosing to lead and live. So, I think that’s something that as people get more confident as well as more clear on what those things are, who they are, what they stand for, I just said, “Man, I want to do more of life with people that I love, that inspire me, that challenge me,” and sometimes those are tough conversations, too. Some of my greatest mentors have said things that have like, “Ooh, that hurt, man,” but it was also the truth and it was what called me up to a higher version of myself. And that’s something that I try and do for other people as well.

Justin Donald: You know, you’ve mentioned so many great things here that we talk a lot about on this podcast, one of them being your peer group, another one being mentors. And I think it’s imperative to be intentional about where you’re spending time, because to take what you said a step further or step in another direction, if you’re not intentional, you’re going to have a life by default and you’re going to have relationships by default. And that doesn’t mean that they can’t be great relationships and maybe you luck into just some great by default relationships. But the likelihood is that that is not the case, that you not only need to be intentional with the relationships that you’re in but you need to be intentional about who those relationships are going to be on the onset. Who are those people? And so, something that my wife and I do every single year is we sit down and we plan out our year and we figure out, “Hey, who are the couples that are most important to us that we want to make sure that we get time with?” And then for me, personally, it’s who is my top 10? Who do I need to make sure that I’m scheduling flights to see? I’ll fly them in, I’ll go see them. But maybe it’s not a couple thing, but maybe it’s just a one-on-one and recognizing, “Hey, who are your one-on-one relationships and then who are your couple relationships?” because they may not be the same. Or you might each have a spouse that there’s nothing like bad, there’s no animosity, but maybe they just don’t resonate the way that you and that person resonate.

And then I have a category of mentors. Who are going to be my mentors for the year? And you talked about David Osborn. I’ve just learned a ton from him. He’s been in my mentor category and really has just been a wealth of knowledge, just loves to share and loves to give. But I think it’s important that you have these people in your life that pull you up, that make you want to be more of a man or more of a woman, and to show up in a way that is better than how you’re showing up today, even if you’re showing up stupendously today that they make you want to be better. They inspire you.

Matt Aitchison: It’s one of those things I call them my board of directors. So, based on all the gardens of my life, I have kind of role models and mentors in each of those categories. And some may be in close proximity or accessible to you. Some of them may be an online influencer or Tony Robbins, right? But knowing who those people are, then when it’s time to whether it’s in time of crisis or it’s in time of opportunity, you can be that much more purposeful and pointed at who you engage with, knowing that these are the individuals that you want to model after, that you want to duplicate and replicate results or qualities or outcomes that they have. And for me, I don’t just look at financial or business success. I look at do they have a good relationship with their partner or their spouse? Do they have connection and respect and spend that time with their kids? Do they give to charities and communities? I look at the whole picture because, for me, I’ve made a choice that I don’t allow people to speak into my life from a character standpoint if I don’t feel aligned with their core values. Now, if you can just teach me a strategy and a scale and it’s just we’re talking about running a play, cool, I’m all ears. But if you’re going to speak into grooming my character or shaping my identity, those are things that I really pay attention to and I suggest people go a couple of layers deeper, peel back the layers of the onion to make sure that what source you’re drinking from is something that’s going to nourish and elevate and enhance your body, your mind, your spirit, your whole being versus it just being something that may be the complete opposite.

So, the details of life are so important, and I’m not a detail-oriented guy, by the way. I move fast. I talk fast. One of my early assistants told me it’s like you’re chucking bowling balls over your shoulder all the time and you’re expecting us to catch him and organize them. So, I’ve gotten a little bit better about some of those things but at the end of the day, you have to know what’s your North Star and what are you moving towards? And a lot of people lack clarity when I ask people what do they want for their lives or their lifestyle and it’s, “Well, I want to make more money or I want to travel more. I want more time doing X or with this person Y,” but they’re not like crystal clear on exactly what that looks like. And it becomes very hard to make decisions in the busy, distracted world we live in when you’re not crystal clear on what that is. So, when you can get clear on what that vision looks like for you in all of those areas of life, and that’s why I reiterate my three-year vision every single year and why I track those progress and goals and milestones quarterly and we break it down monthly and we get so granular, one, because that’s not my personality. And I know that in order for me to be able to do those things as purposefully, as intentionally, as efficiently as I possibly can, I need to make sure that I’m clear on what my North Star is so that way, every decision I make is aligned with that, is congruent with that, because if it’s not, it’s just a distraction. And it might be serving my ego, but it’s not serving the outcomes and desires that I have for my life. And so, those are some of the frameworks that I built around my non-organized, my non-detailed self-knowing that, hey, these are my bumpers to my bowling alley to make sure I’m not bowling gutter balls and I’m still knocking down pins. And with these types of frameworks, I’m giving myself the best chance to hit a strike or a spare.

Justin Donald: Yeah. That is powerful and I love what you talked about with alignment of core values and that’s where you let people speak into your life from a character standpoint. I think that that’s so powerful. On a few levels like one of the things that I think is important is that you’re clear and you’re intentional about who you’re spending time with but then the next level is that you are intentional with the questions you’re asking and the engagement that you’re giving inside of those relationships. Because to just be clear is not good enough on who you want to spend time with, but to actually take a relationship to the depth that it can go, that takes quality time and that takes a discipline and a desire to want to go there and to be willing to be vulnerable and be transparent. And I love what you talked about with kind of family values, how are they relationally? How are they with their spouse? How are they with their kids? Because these are things I look for. And I think that that is just imperative. And by the way, I’m so excited that we are able to connect right now here in this moment. We talked off air about this but this is the last episode I’m doing in my home studio. And I’m tearing this thing down like pretty much right when we’re done.

Matt Aitchison: We’re bringing the house down, dude.

Justin Donald: Bring it down. I’m going to be in a new location and I actually don’t know when it’s going to be because we’re in the process of building and nothing goes to the timeline that you think it’s going to be on. And so, I don’t know when I’m going to podcast again. I’ve got enough episodes for the rest of the year, but it’ll be interesting to see kind of what that new setup looks like but I’m just excited that you get to close it out. You know, you’re the final episode in this location because I’m really enjoying the content that you’re bringing and I even love to transition into you and a lot of the success you’ve had because I think you started just flipping homes, right? Like there are a good number of people I feel like that got a good start flipping homes. You buy a home, you rehab it, you sell it for a little bit more, hopefully. Maybe you don’t the first couple of times or as much as you think. And then you do it again and you keep reinvesting those dollars and get more homes. And this is a way to earn income. It’s a little bit different than buying and holding where you have that passive income. And I know you do a lot more of that today but I’d love to hear your story because you flip at least 100 homes, probably hundreds of homes. I love to hear how you got your start.

Matt Aitchison: Yeah. Well, I graduated from college with a really expensive piece of paper that I knew I was going to do absolutely nothing with. And as I was interviewing for jobs $30,000 to $40,000 a year, I went, “Well, this is not aligned or congruent with my goals and the life that I’ve got envisioned for myself.” One day I was sitting at home after moving back in with my parents and I was writing down what I called my career hit list and it was kind of all the things that at that time I was looking for, which was I wanted to be my own boss, I wanted the freedom and flexibility of being an entrepreneur, I wanted no ceiling on what I could make financially so I didn’t want to be capped from an income perspective. I wanted to be in a space that allowed me to help people and help others achieve their goals, provide value. I wanted somewhat of that lifestyle, the design, the sexiness that goes along with all of that. But as I got to the very end, I wrote something down and it was I want to create wealth. And when I started looking at all the industries and “jobs” that were out there, I kept coming back to real estate.

And I was scouring Craigslist one day and I saw literally one of those ads, a mentor seeks mentee, da, da, da, da, right? And so, I called the guy. This was back in 2010 when there were a significant amount of foreclosures and kind of the recovery beginning or really finding the bottom of the market back in 2010. And I ended up working for a guy for almost a year. We flipped over 100 houses that first year and I learned Project Me. I was basically doing everything and he was clipping 50, 60, 70, sometimes $100,000 a house and I literally was making nothing. And it was the best education I’d ever gotten. It gave me the confidence and the know-how to believe that 21 years old, I could go and do this for myself. And so, I started hunting down and lead generating four deals myself and after a bunch of FUs and nos and door shut in my face, I found that one house and it was literally the glorified cat lady house. She had over 100 stray cats inside of her home.

Justin Donald: How many?

Matt Aitchison: Hundred stray cats.

Justin Donald: Oh, my goodness sakes.

Matt Aitchison: And so, when you walk up in that house, I mean, it was like you got probably kicked by Garfield and the smell of pee, right? It was just overwhelming. And at the same time, this nostalgic smell was success to me. It was what gave me this opportunity, the stepping stone to get on this journey myself. I bought it for $75,000. I put about 30 into it, let’s say, and I sold it for $210,000 three months later. And so, from living at home, a couple hundred bucks in my savings account, some credit cards, no credit, I was able to creatively fund and structure the entire deal with 100% of other people’s money and it was like that light bulb went off in my head of going instead of me, which I heard at the time, all of the reasons why I couldn’t do it, I need to start asking myself, how do I continue to make this happen over and over and over again? And my brain, after asking that question, went to work and figuring out how do I do more of these with my own money? And so, over the course of the last 10 years, I’m flipping hundreds of houses using 100% of other people’s money. That kind of got me into that investor path. I built up a real estate team for five years with my business partner at the same time. So, we were listing all the flips. We were getting all of the leads. We’re still servicing retail buyers as well and sellers. And we made it two years back-to-back to the top 1,000 teams ranked in Wall Street Journal and I realized I just wasn’t passionate about that.

But I partnered with a construction company to kind of have all of these ancillary businesses that were serving and cross-pollinating and supporting one another but I got to a place where I started looking at my income and my time. And the return of my time was far greater in the investing arena than it was in real estate and the construction side of things. So, I really kind of planted my flag and went all in there but as you know, right, it was still a job. I was only as good as my last flip or the next one in my pipeline. And so, I realized I needed to start keeping some of these assets. So, I started holding some of my single families and kind of doing the BRRRR strategy where I’d get them, I’d fix them up, we’d put a tenant in there, I’d season them, and I’d go and refinance out all of the capital and I’d own 100% of these assets and still cash flowing them. And in California, if you could do that and you get to capture all the upside in appreciation, which we get in being really a heavy appreciation state, not necessarily a great cash flow state, but I was finding some of those. So, anything that I could cash flow, I would hold. And then I started to kind of get a little bit bigger and go into duplexes and then four-plexes, and then that led me into buying commercial strip centers. And so, I’ve been buying commercial strip centers every year. And then I fell into the hospitality world and thought I could buy a hotel and that was going to be just like real estate investing and it would be passive, no big deal. And that was a living, breathing 24/7, 365 business. It was almost like a startup. And I actually fell in love with it.

Matt Aitchison: During the COVID pandemic, it was scary. I mean I thought the ship was going down and I had to let my staff go and I was forced to kind of dig back into that business from cleaning, the housekeeping, the laundry, the everything but it was a blessing because it also taught me so much about the industry. Now, I have three hotels up in Lake Tahoe. We’re working on a 122-ground-up luxury boutique hotel in downtown San Antonio on the Riverwalk. It’s an opportunity zone. And then over the course of those years, at the same time, just through my network, the podcast, mastermind groups, I kind of stumbled my way into private equity and hedge funds and family offices and kind of placing equity into development and other types of real estate assets and opportunities. And so, it’s been a stepping stone after stepping stone after stepping stone. Definitely a lot of failing forward that happens every single day. We celebrate that in our kind of ecosystem and team and environment that we’re pushing and growing. And those kind of face plants are celebrated and welcomed. As long as you get up and you brush yourself off and you continue to improve and grow from those opportunities, you don’t stop. There’s no way you’re going to lose. And that’s our mindset mentality and it’s been a really fun journey, man. I’m super passionate about real estate and this vehicle, as you and I share many similar belief systems around why this asset class is so amazing. When managed, leveraged, and operated properly, the opportunities are endless in this space.

Justin Donald: Yeah. There’s no doubt and there are two ways to do it. There’s the way that involves a lot of your time and there’s a way to do it where it is truly passive. And we should dissect that a little bit. Before we do, you’re very well known in your circles for using other people’s money to fund deals. So, you said your very first deal, the cat house, this one was creatively funded and I’d love to hear how you do it because a lot of people if you’re not into flips and you’ve never done this and you’re like, “How do I do it? It seems like a lot of money.” There are creative ways you can do it. There are seller finance that exists. You can get loans for all the rehab work that you would do in a home that then you would pay back once you flipped the home. So, there are ways to do it where it’s not a lot of out-of-pocket cost but I’d love to hear how you structured your first one. And if there are any differences on some of the future ones that you learned with some hack, some investment hacks, I’d love to hear them.

Matt Aitchison: Yeah. I mean, my mindset that I try and instill in everybody, especially the new investors being that the biggest hurdle, right? I mean, this was my biggest mental and what felt like a physical hurdle was I’m living at home with my dad. I have $800 in my bank account like I got a $2,500 credit card limit and it’s already maxed out. Nobody’s going to give me money. I’ve never even bought a house for myself. Why would somebody give me money? And one of my very first mentors, she said, “Find the deal and if it’s really a deal, the money will follow,” and I believed her, and that I adopted that mindset. And so, when I said, “Find the deal and if it’s really a deal, the money will follow,” I found the deal. I underwrote it. And again, I didn’t know what I didn’t know. I thought it was a great deal. I had a much greater deal on my hands than I even knew. And she said, “You go to a private money lender or “a hard money lender” and you’re going to see how good of a deal it is because they’re going to base their LTV off of how deep of a discount you really have in that deal.” So, they ended up funding 90% of my purchase price. Of that $75,000 price tag, they funded 90% of that and they said, “We’ll give you 100% of that rehab budget as well. So, you basically just have to come up with the 10% down payment that’s missing.”

And ultimately, what I did was, you know, there’s really three circles of people that you can go and try and find money from for that kind of second position. You have kind of your inner circle. We’ll call that mom, dad, family, really, really close friends. You have your outer circle, which is kind of your people that you associate with, might know in your networks, and then kind of your social circle, maybe people that you work with or in your industry online. You know, I’ve raised a lot of money in Facebook groups and at mastermind events and things like that. So, I remember just pounding the phones and trying to connect with as many people as I could to get that last 10%. What I did was not only that 10%, I said, “You know what, I’m going to be holding this property for maybe three to six months. So, let me get six months of holding costs and mortgage payments wrapped up into that second as well so that way it’s no out-of-pocket money for me because I don’t have money to pay the mortgage payment. I don’t have money to even pay the utility bills. So, let me figure out how to get that figured out.” I gave them a flat interest and a couple of points. Points meaning interest points on that total amount. And they basically funded the remaining funds needed to close on that property and I was off and running. The bank or the hard money lender funded the majority of the first. Then my second lender came in and covered the remainder of what was left. We closed the escrow, we started the rehab process, got everything ready to rock, put it on the market, and obviously that amount, that 75,000 plus that 30, that 105 out of the 210 that I sold it for, got paid off and the remainder came to me.

Matt Aitchison: There are many different ways, though, that you can do this, right? You can bring a capital partner in and split the profits 50/50. There are so many different ways. I always tell people when you’re first getting started, instead of trying to do it all on your own, go to someone like Justin, go to someone like me, go to some other investor in your market or in your network that you trust, that you know has experience, that you know has a good track record, that has all of the team that you need so that when you get that learning curve really shortened up, you get it expedited, you know you’re going to get quality results, you know you’re going to get a tap into other resources and networks that have taken those individuals years, sometimes decades to build. And that kind of learning lesson, that kind of network, those kind of resources, that’s priceless. And I always tell people this is my mentality. I’d rather own a slice of a watermelon than 100% of nothing or a raisin. And when you’re first starting out, go and bring that watermelon to somebody and slice it up and everybody wins. And now you’re going to have some real momentum behind you. You’re going to have a newfound confidence to know that the next opportunity you find, you’re going to get the ability to get that across the finish line and maybe you start structuring things differently as you get more maybe of your own money or you’ve got a little bit more leverage in terms of your experience or what you can bring to the table but, yeah, just little breadcrumbs along the trail, right?

Just keep following those and you’re going to end up in a space and along the trail at some point in time when you look up and look back and go, “Wow. I’ve actually covered a lot of ground and, holy cow, I got a lot of tools on my toolbelt now that I can actually put to work.” Those are things that people overlook. The money is great but don’t look at what you’re giving up. Look at what you’re getting and look at now how you can use that for. I can use working for that guy for almost a year for free, well, guess what? I used what he taught me and, yeah, maybe I could have made $200,000 or $300,000 if he was paying me accordingly, but he gave me a gift that went out and made me a lot of money over the course of the next decade because I went in and learned. So, that is one of the things that I think people often overlook is they don’t want to give up too much. But really, you have to always remember like what are you gaining? And if you’re playing the long-term game, how much value and ROI can you turn on what you gained by applying that for the rest of your career, your investing life?

Justin Donald: That’s right. Yeah. There’s a return that you get on the money and then there’s a return that you get on the education or the mentorship. And so, that’s why it’s good to own a small piece of a big pie because you learn so much in the process. So, people all the time want the whole pie but what if the whole pie only 2 Xs when you can have a slice of a pie that 100 times X or 1,000 X, whatever it is. And so, it’s just so smart to not be greedy and to be generous. I try and coach people all the time to be more generous and more giving on the equity side, then whatever you think you should, because you only need a piece. You only need a part of it and you might as well have a bunch of people in there that are good at the thing they do that help grow that pie. And those are people that do it without your time. So, everyone wins. It’s a true win-win. And you had mentioned in your example here, and I love that you were able to do this with no money down out of your own pocket, $7,500 plus which is your 10% plus three to six months of mortgage and utility, whatever that ended up coming out to. What I love about it so you’ve got someone that comes in the second position.

So, your primary lender, the hard money lender or private lender, they would be in the first position. They’d have a lien, a first lien on that property. Something goes wrong. They take that property. They’re happy to do that trade all day because they know the value of it. The second position, though, they don’t have that same security. The private lender’s never going to sign off on that. They want the asset if something goes wrong. So, generally, you got to offer something a little bit more attractive and that’s why you said you are offered percentages and then a couple of points, meaning you just paid a percentage like off the top based on the total value of the loan that you would just owe them no matter what, no matter how long you borrowed that money for. And so, I just want our listeners to kind of understand how that works, being in first position versus second position and the value prop and just the risk-reward ratio needs to be there. Now, in this instance, there is enough value in the property that the person in the second position felt pretty good.

Matt Aitchison: Exactly. That’s the key there that I always tell people is when you go borrowing other people’s money for second position, you are stewarding their capital and responsible for their capital in a way that is different than the first. And so, you really have to make sure you’re underwriting very, very accordingly to insulate and mitigate their risk. The last thing, and thank God I’ve never lost anybody’s money, I don’t plan on doing that but it’s one of those things where you better make sure that you are if you’re going to take 100% of what is necessary to lock that deal up and close on that deal, that everybody’s money is safe in that deal and that even in a worst case scenario they’re going to get made whole. And that’s really important. I think all people, especially guys understanding that your career is much bigger than one deal and you go and you mess up one deal, it can also ruin your investing career and your reputation. And so, I’ve been fortunate enough to build a great reputation with all of my LPs and all of my investors who’ve given me capital, trusted me to grow their money through my business and the vehicle and the product that I’ve chosen, which is real estate. And knowing that I plan on doing this for, I’m 33, I plan on doing this into my 80s.

Now, I don’t know. As long as I can pick up a damn pen and look at a real estate deal, I’ll do it because I love it. But at the same time, you have to realize like I always say whether it’s wealth building, building the right relationships, building the right business, my mentality is always a marathon. Yeah. There are going to be many strategic sprints along the way and there will be people a part of that race but when it comes to the best things in life, it’s the crock pot mentality versus the microwave mindset. The microwave spits out something quick and easy and, yeah, it does its job but at the end of the day, let’s be honest, all the ingredients that go into the crock pot and the time and everything fusing together always puts out a much better dish that we all get to enjoy. So, when it came to building those relationships with my private lenders earning that trust, you have to make sure you’re stewarding that capital properly. And that’s why I was always very conservative in the beginning in terms of if I’m risking other people’s money, I was going much more conservative on my after repair value instead of shooting for the moon. I was being a little bit more aggressive in terms of being a little higher on my rehab budget and I was being a little bit more conservative on the timeline that it would take in order to acquire, optimize, and dispose of the asset.

So, as I built in some of those buffers, I was able to say, “Hey, does this deal still stand on its own? Does it still make sense even with those things in it?” Because the last thing I want to do is shoot for the moon and say it’s not going to cost that much and we’re going to do it in three months and I’m wrong on all three of those things and now I just lost that person’s money in second position and they never, one, want to invest with me again and, oh, yeah, they’re going to go and tell every single person in your network that Matt was a crap underwriter, a horrible operator, don’t ever give any of your money to him. And that was one thing that I was very, very, very, very intentional about and have been from syndicating apartments and laundromats to the hotels to just flips is you have to make sure that if you’re going to take other people’s money, you’re responsible for something that is extremely, extremely important to their livelihood, to their lifestyle and, honestly, let’s just be honest, to their happiness. And so, I hold that responsibility in a very, very, very high, high regard and integrity and ethics and making sure you’re doing the right thing when it comes to investing. Hey, you want to be reckless with your own money, go for it. But when you’re talking about other people’s money, there’s another level that I wish more people would operate at. And you see the people who are massively successful and have had long great successful investing careers, who have used other people’s money, it’s because they’ve gone and approached every single deal with that mindset.

Justin Donald: Yeah. And that’s so important because, as you know, I look at a lot of deals as you look at a lot of deals and I would say most people do not do a worst-case scenario for underwriting.

Matt Aitchison: Always blue sky, right?

Justin Donald: Yeah. And it’s like where are you getting these from? Your end cap rate is probably not going to be this high. And you can’t raise rents 50% year one like, yeah, might be undervalued but your pro forma is so far off. And I want people to underwrite so conservatively, so worst-case scenario that the returns exceed expectations. It’s interesting because there are a few different ways. So, I look at this as like people trying to transition into passive income, trying to get out of working for someone else. A lot of these let’s call them employees, they transition to business owner but they become a slave to that business and they end up working more hours than they did as an employee. Very common. Well, in the real estate world, that happens as well where you transition and then all of a sudden, you’ve built this prison for yourself where you have all these properties and you don’t know how to scale and you’re running it yourself and it’s a very active, labor-intensive situation or problem. But the unique thing here is you can always figure out how to scale and always bring people in later and so you’re buying assets that produce income and maybe there’s a season where you work harder or longer to figure it out. And so, there’s a way that you can transition out.

Or the other thing you could do is instead of just buying and owning deeded property, you just trust people like you and other great syndicators that run it, that find it, that have a professional third party management or in-house management where they run the operation, they run that investment. And then you truly are a passive investor sitting on the sidelines. You called it an LP, a limited partner, while the GP or general partner or sponsor runs the investment. And I’d love to hear your thoughts on that because you have really had a lot of success and you’ve expanded your portfolio into a lot more the cash-flowing types of deals.

Matt Aitchison: Yeah. I think, again, I always ask people is what are your goals and when do you want to achieve them by? Based on that, there is always a vehicle, a product to market, a strategy that is most synergistic with that. And some people just don’t know what those things are. Let’s just narrow the lane, five-lane freeway of investing down to real estate investments. Syndications, as you and I both know, if you’re not the sponsor and the GP and you’re an LP are literally as passive as they come. You wire your funds and after doing your due diligence on the deal and the pro forma and then, of course, even more importantly, the team behind the pro forma. I see all kinds of amazing blue sky, “Oh, my gosh, this is the best deal type of marketing and offering memorandums,” and yet at the end of the day, as I’ve looked in the rearview mirror and seen some of those amazing deals that can’t go wrong, the teams, the syndicators, the sponsors, the operators, the managers of the deal, they suck. And so, it’s very, very important to make sure that if you’re going to be passive and you’re going to kind of give the keys to your “financial investment” to somebody else that you really trust in who is stewarding the capital and making sure that what that blue sky is on the piece of paper, the pro forma spreadsheet that you’re seeing is actually captured through the operations and optimization of that particular asset. So, that’s one way of doing it.

Because I’m in the trenches and I trust in myself, I trust in my team, I failed my way forward over the last decade and I’ve learned a lot, I’ve put a lot of tools on my tool belt, I am that syndicator. That’s something that I said I am okay with building this one because I love it and I’m passionate about it too because I like being the horse that people are going to bet on. I got plenty of gasoline in the tank to run many more races around the track, and I’m okay in certain capacities and context, being very active in this. This is my operating business. So, I manage and operate and own a lot of my own assets. We don’t outsource operations and management on anything that I own. Now, that being said, some of the syndications that I’ve done, we get great management teams in place and we vet them out. So, I think, again, it always comes back to us like what are your goals? When do you want to achieve them by and what are you willing to do in order to get there? Are you willing to work 40 hours a week to get there for a certain period of time? You said something that stood out to me, Justin, which is there are seasons of hustle and grind to then stabilize and normalize as you kind of break through a ceiling, what do you need to do to make that your new floor and make it as passive as possible? There’s been many stages of my entrepreneurial or investing journey as I’m sure many of you can relate to have gone, “Man, I’m working my ass off.” And then a year goes by and you get some systems in place and you learn and you get more efficient. Maybe you bring some people on board to delegate and create more leverage in your life. You’re like, oh, I got 20 hours freed up. What do I go and apply this to? So, I think again those are things that you have to think about.

Matt Aitchison: How do you scale, at least in terms of time, freedom systems and infrastructure, and people through your org chart? You do these things with these people and it produces that result. You can find a way to make that as passive as possible. And I think that is what people need to ask themselves so that way you don’t be the one who’s wearing the cap of every single department in your business and like Justin said, being the slave to your business. You actually create something that creates freedom in your life, which is ultimately what everybody wants at the end of the day anyways, right? We want to have true freedom to make the choices that we want with our time and where we allocate that and who we allocate it with. And so, that’s something that I’m always thinking of right now. I’m going to season the hustle. I said, man, I’m building this hotel empire. This is going to require me to roll my sleeves up and I just came out of a season of being pretty damn passive and taking months off with my family and doing things like that. And my family’s on board with this and that’s a big thing as well as I told myself there is no amount of money that I would ever, ever go after, that we would sacrifice the time that I have with my kids and my wife and my kids are at a stage right now where they think I am the coolest MOFO on the planet. And I know they probably are going to think that way forever but that’s my goal at least and everything that I do. If I race any time with them, I replace that time with them. And that’s something that if I am going to make a decision on something that is actively going to require my time, it’s a family decision now. I’ve earned the right to do that.

And I think that’s another question that I often ask myself and I tell people to ask themselves this too is what does it take to earn the right to have X or to do Y? Hey, if you want to go take a month off and not answer your phone and sit on a beach somewhere or travel the world, okay, cool. Well, what does it take to earn the right to do that? How many months of reserves do you need in your operating account to fill that level of financial comfort? How many people do you need doing X and Y activities in your business that you don’t have to do anymore that you can delegate and leverage and just check in with them on? Whatever it may be, asking yourself what does it take to earn the right? Because then you know what you actually, one, need to do and when you do it, you know that nobody can take that away from you. It was earned, not given, and it’s something that is sustainable and you know that you put in the necessary due diligence and work and effort to get that outcome and enjoy that outcome. So, I look at that question in all areas of my life, and in particular in my investing decisions and in my businesses but to come back and kind of close the loop on that, I have my fundamentals, I remove emotion from my decision-making, I do heavy due diligence on people first, deal second, and I let my fundamentals tell me what the right decision is.

Justin Donald: I love it. Hey, this has been so much fun. You are the king of analogies. Your analogies are fantastic. I just love analogies because they kind of pull everything together. So good. Where can our listeners and those watching, where can they learn more about you?

Matt Aitchison: You can always go to my website, MattAichison.com or Millionaire Mindcast. I’m putting out three episodes a week. I’ve been doing that for four-plus years now on my podcast. I’m always posting on Instagram is my main platform. I release some videos on YouTube as well. But, yeah, reach out to me, shoot me a DM. Say what up. I love connecting with each and every listener, whether it’s on my own podcast or being on amazing podcasts like this with you, Justin. Feel free to reach out and I always respond.

Justin Donald: Awesome, Matty. Thanks so much for spending some time with us today. I’d like to end our show the way I always do, which is to encourage our audience to take some action today. Build the lifestyle that you desire, a life by design, not by default. So, take one step towards achieving financial freedom today and watch what happens as you continually do that over time. Thanks for joining us and we’ll catch you next week.

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