Raising Private Capital, Building a 1000 Unit Portfolio, and Working with Your Spouse with Matt Faircloth

My guest today is Matt Faircloth. Matt is BiggerPockets contributor and Amazon Best Selling Author of Raising Private Capital, How to Build your Real Estate Empire with Other People's Money. He is also the Founder and CEO of DeRosa Group and has been a full-time investor for 15 years. Matt has successfully completed projects involving dozens of fix and flips, office buildings, single-family homes, and apartment buildings. He has amassed a portfolio of over 1000+ units and raised tens of millions of equity for these real estate projects.

Matt first shares his background story and how he first got into real estate. Before becoming a full-time real estate investor, Matt was a sales engineer. During that time, he met his future wife who introduced him to Rich Dad, Poor Dad. This book turned him onto the power of investing and entrepreneurship and he fell in love with the business of real estate. Soon after that, they started doing some real investing together as a couple while they were dating, and by the time we got married, they had done a reasonable amount of investing. After the crash in 2008, they didn’t have any equity anymore because everything was decimated but what they did have was a reasonable management protocol, and friends who wanted to give real estate investing a try. So, they started assembling their friends and colleagues, who eventually became their first passive investors, for a $50,000 deal.

We then move on to discussing Matt’s first deal. He shares that his first deal was a house hack; he bought a three bedroom house that he rented to two of his friends, making him $60 a month while he was living there for free. Next, he and his wife bought a duplex with money they borrowed from her father. They fixed it up and rented that out as well. After some time, they decided to sell that second property using a 1031 exchange, which avoids paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale, within certain time limits, in a property or properties of like kind and equal or greater value.

Next, we talk about when it is a good time to start looking for private money. Matt explains that every real estate investor has to bring in private capital at some point. Because, unless you win the lottery, your pockets will run dry and you will not want to expose your capital to a deal. Matt also believes that we need to change our perspective on private money, because when it comes to private lenders, they're not doing us a favor, we're offering them an opportunity.

We then discuss Matt’s thoughts on spouses working together as real estate investors. He shares that this is absolutely possible as long as both partners respect the other as well as each other’s personality style. Matt also goes on to explain that it took some time for him and his wife to figure out the best way to work together since they both have pretty dominant personalities. Real estate investing takes two things: time and money. Both of those things are burdens for a marriage and every real estate investor needs to have their spouse’s support if they plan on being successful.

We then talk about some of the big mistakes people make when they're trying to raise money for a project. Matt shares that there are two big mistakes that people make when it comes to raising money. First, they act like investors are doing them a favor, when in reality they are offering those investors an opportunity. Second, they shop for money when they need it. If you wait until you have a deal to raise the money, you’ll have to bring in a partner with a good network and good connections and you’ll end up giving away a lot of your profit. So instead, build the network first and make your base aware of the magic of real estate investing, as a passive investor.

Next, we talk about Matt’s YouTube channel Landlord Chronicles. Matt shares that he stated his channel by mistake six years ago but he currently has 31,000 subscribers. He started by posting videos that he originally shot for his lenders and after seeing that people responded well to it, he decided to create content especially for his YouTube channel. Now, he posts videos every Monday and Thursday. His educational videos range from Mentorship Monday to a Day In The Life.

Lastly, we talk about Matt’s company called DeRosa Group. Matt explains that their company is dedicated to transforming lives through real estate. They believe that real estate is an amazing vehicle for people to achieve their net worth goals, their income goals, and financial freedom. Matt believes that real estate can provide people a great place to work, live, invest, and run a business.

Make sure you don’t miss this episode of Just Start Real Estate with fully transparent Matt Faircloth and get to know all about raising private capital!

Notable Quotes:

“The questions I get asked all the time are: how do I find better leads and how do I find more money.”

Mike Simmons

“People think you have to do deals with millions of dollars - you don't. Our first deal was $50,000.”

Matt Faircloth

“If I had a redo, I would have just stayed in my lane and stuck to residential leasing and rentals until I really mastered that.”

Matt Faircloth

“At some point, every real estate investor has to bring in private capital.”

Matt Faircloth

“These private investors, they're not doing us a favor, we're offering them an opportunity.”

Matt Faircloth

“There's nothing that tightens up the marriage better than to be connected to your financial future and work towards a common financial goal together.“

Matt Faircloth

“I have yet to see a real estate investor that's successful in this business that does not have their spouse supporting them. You don't have to invest with your spouse, but real estate investing takes two things: time and money, both of which are burdens on your marriage.”