From Bank Teller to Real Estate Success in Multifamily Using BRRRR Method

I am happy to welcome Matt Drouin to the show today. Matt is a partner at OakGrove Development, a real estate investment and development firm with a special focus on value-add commercial and residential properties in Rochester, NY. Over the last 15 years, he has been in real estate management, brokerage, and development and has grown his portfolio to 120 units of residential and commercial property. Matt’s company mission is in developing real estate projects that not only add value to their investors but also put long-term community interests front and center. He believes that you can do well as a real estate developer and that ultimately community-centric development boosts profits for investors.

Matt first shares his background story and how he first got into real estate. After finishing his four-year liberal arts degree, studying business with a concentration in finance, Matt had a vision that he was going to be hired immediately out of college. Unfortunately, no one wanted to hire a liberal arts student with a general business degree with no experience. Eventually, Matt was able to get a job as a part-time bank teller in his hometown, but after two months he was sick of it. His father, who had some experience in the real estate world, advised him to get a real estate license and become a realtor. His first property was a fourplex, he lived in one of the units and rented out the rest.

We then move on to discussing Matt’s second career move as a realtor. For his second property, he chose to buy a house down the street from his first property. According to his calculations, he had to buy it for $80,000 to make the numbers work. So, he made an offer for $80,000 in cash and they accepted it. The only problem was that Matt didn't have $80,000 in cash. This is when he was introduced to private money lenders and was able to get a loan with 7% interest deferred, meaning he only had to pay back the interest and the payments once he refinanced the property.

Next, we talk about how Matt went from 14 to 120 units in the last 5 years. After losing both of his parents in his 20s, Matt decided to focus all of his energy on fast-tracking his career. Using the experience and the knowledge he accumulated working for larger-scale management development companies, he purchased his first million-dollar property. He was able to raise $300,000 from friends and family; he used $200,000 of it for the down payment, and he used the rest of it for smart capital improvements, as well as funding an operating account. In three years, he was able to push the value of that property from $1 million to $1.6 million. This deal alone was bringing him a cash flow of $40,000 a year and Matt realized that he can just recycle this BRRRR method over and over again, focusing on $1 million to $2 million properties.

We then discuss Matt’s development company, ROC Real Capital. A few years ago, Matt and his partner David started a development company focusing on more transformational development projects in marginal neighborhoods, mostly vacant buildings that they want to reposition or redevelop. They also formed a management company to manage both Matt’s assets and the assets they acquire together. The reason for that is because Matt believes that a third-party management can’t give their tenants the attention that they need.

Eventually, we talk about Matt’s team. He shares that they currently have a couple of maintenance people who are also on-site at some of their development projects and manage the subcontractors. Other than that, they have a leasing person and a bookkeeper. Matt’s partner, David runs their management company, but once they stabilize their properties after they're redeveloped, they want to bring in a full-time property manager so that David can step away from those responsibilities.

Lastly, we talk about different ways of finding deals. Matt explains that in terms of commercial deals, the relationship with commercial brokers is a huge source of deals for single-family to five-family types of properties. This is where you can get a lot of off-market deals. Another great tool to finding deals is being considered a subject matter expert with every debate in your sphere and growing that sphere is very important for building relationships with people, so that when you have a business conversation with somebody they feel like they already know you.

Make sure you don’t miss this fun episode of the Just Start Real Estate Podcast with Matt Drouin and learn all about the BRRRR method when it comes to multifamily deals!

Notable Quotes:

“My mistake was I thought that I needed to have experience or credibility in order to have permission from the universe to purchase larger properties.”

Matt Drouin

“I had 14 units back in 2016 and now I'm up to 120 units of residential and commercial properties. The way I scaled that portfolio was through utilizing the BRRRR method, but on larger, multi-million dollar properties.”

Matt Drouin

“As a real estate broker myself, I've seen what the 1031 exchange does to clients. It's like a gun against your head, and people don't make good decisions in that type of scenario.”

Matt Drouin

“It gets difficult to make good business decisions when you’re on a first-name basis with all your people.”

Mike Simmons

“If you're looking to grow the business, you might have to self-manage, but don't be afraid to eventually give up stuff. It's worth it to pay other people that are qualified professionals to do that.”

Matt Drouin

“I love to give value to other people, and put the ladder down and help people build wealth and earn financial independence, utilizing real estate as the tool.”