Hey everybody, welcome back to the show. I’m really excited to have my good friends and business partners, Tina Palma and Matt Hodkiewicz. Today, they will share their story on how they transitioned from Corporate America to Single Family Investing and ultimately into Multi-Family Investing. The path that probably a lot of folks would like to take. Let’s get started! 

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: [00:00:00] Hey everybody. Welcome back to the show today. I’m really excited to have my friends and in some ways, business partners, Tina and Matt, uh, sharing their story and their story includes transitioning from corporate America, into single family investing and ultimately into multi-family investing. That’s a path that probably a lot of folks listening to this want to take so good show for you to tune in today.

professional real estate investors know that it’s not really about the real estate. That real estate is just a vehicle to freedom. A group of over a hundred of a nation’s leading real estate investors from across the country. Meet several times a year at the investor fuel real estate mastermind to share ideas on how to strengthen each other’s businesses, but also to come together as.

And build more fulfilling lives for all of those around us on today’s show, we’re going to continue our conversation, fueling our businesses and our [00:01:00] lives. I’m glad you’re here.

Hey guys. Welcome to the show.

Matt: Hey, thanks for having us.

Mike: Glad to see you guys. Um, I’m excited to talk about this. Honestly, your story is similar to mine. Corporate America got into single-family investing for really the last 14 years. The past three years have been primarily focused on multifamily investing.

And so I think that’s a common path of people wanting to become more independent. And then we kind of want to go bigger over time. Right. Do deals with more zeros behind it. So excited to dive into that today. Yep. So, would you mind tell us just a little bit about your backgrounds, uh, before we dive in. So folks can kind of understand the context of where you came from.

Tina: Sure. We both used to work at an it consulting company here in Wisconsin. And, um, you know, we did that each of us had it careers over 20 [00:02:00] years long and really Matt is our visionary and he thought. How do I get out of this rat race? You know, like kind of what’s the next step for us to start building well, and really came across real estate.

And so he said, let’s try this real estate thing. Um, so that really was, was how we started it. Then we spent some time flailing around trying to figure that. Um, gotten some the right circles and then built a flipping career that got us both out of corporate America. Matt was out in like 15 months, and then I followed two years later.

It took us three and a half years to get both of us out of corporate America.

Matt: And that’s about seven years ago, just to give some context to that. So, um, that was what 2017 is when I left my job. Full-time so. Um, we really enjoyed that. And we, like Tina said, we surrounded ourselves with, uh, kind of the right people got into some coaching groups, really understood how to do that.

Um, and then about three years ago, you know, we really said this is [00:03:00] great, but we’ve kind of created another job for ourselves. So yeah, we may be self-employed, but we, you know, uh, if we’re not flipping the paychecks stop coming. And so. We really wanted to kind of expand upon that and grow. And so we started looking at doing some, getting some rentals, single family homes, and really growing, uh, like a multi-family portfolio.

Tina: We built up a single family portfolio first, locally

Matt: that’s three years ago, we got our first apartment complexes and started to, to grow that as well. So

Tina: pretty cool. Yeah.

Mike: So w would you say, cause I think about this, I used to kind of say. Like kind of, you know, downplay my corporate background, my kind of referred to myself as a corporate refugee and you know, a lot of people it’s easy for people these days to say I could have just skipped that part of my life because it didn’t help me at all.

And I probably used to say that a little bit more and not those words, but kind of allude to like, I wish I would have just gotten into real estate sooner, which I think we all do. But there are things that you [00:04:00] learn in your background that allow that to kind of enable you to do things down the road.

Right. And as. It sales and consulting. You guys were providing service for people. It probably outsourced services consulting on our people would do things. I mean, it’s kind of ingrained to you to find help, right? Whether it’s coaching or other things, would you say that’s kind of helped you, uh, when you move forward here and when you moved into.

Absolutely.

Matt: I think, um, we actually have this conversation all the time, um, because we did come from the same background and we both transitioned together at that same time. And, um, I don’t regret those years, um, because we learned so much there as well. You know, we were huge systems and processes people because we kind of had to be in the, in the industry that we were in.

And I think that’s really launched our real estate business so much more by having those backgrounds, you know, having. Uh, systems in place, not just kind of shooting from the hip, hoping we can get some houses under contract, but really creating the right systems, having CRM, having the right team around us.

Um, we took those skills [00:05:00] out of that and just kind of

Mike: expanded upon what worked

Tina: for us, translated over. Like there’s a certain discipline, right? When you are going, you have the schedule, you’re accountable to other people, you’re accountable to things. So, um, I think it’s easy when you transition to kind of go, oh, I can wake up whenever I want.

I’m not really accountable to anyone, but real quickly. Um, you know, we knew that in order to see success, we needed to keep those same habits in place. And so we really have covered most of those in place.

Mike: One of the things that I’ve kind of. Uh, recently over the past year, a fair bit is some of the, I worked with some really big companies and they were so screwed up and I was like, I, why can’t I build that?

Like, it’s just kind of forced me to like dream bigger. I’m like, man, all the time. I’m like, I feel like I’m thinking too small, like I’m dreaming too small, right? Because I’ve seen companies that are like, my companies run better than I rented a car recently from Hertz. And it was like, the whole process was so screwed up and I find myself thinking about.[00:06:00]

Why did they do that? Why did, why don’t they have this process and stuff? And I’m like, this is a multi-billion dollar company. Look how screwed up they are. We built, we beat ourselves up over like little things, not working. Right. And we’re like, gosh, I’m better than Hertz. And they’re way larger than me.

Tina: I was just going to say, you have, that’s your brain.

You’ll do that one where it’s someplace. They’ll be like, why are they doing it like that? This kind of full name? I agree. And I think we get, we get to be in a position where we get to hold ourselves a little to a higher standard, you know, like I would never hold that or I would never want anyone to experience that.

Um, you know, those kinds of experiences you’ve just went through

Mike: with Hertz. Right. Right. So when you guys started to move into multi-family, did you start off? Cause obviously. I happen to know cause we’re, uh, partners on a $41 million deal. But when you first get into multi-family, I’m gonna use air quotes here where they big syndications like this, or were they smaller fourplexes six plus eight units, stuff like that?

Tina: Um, no, they were, they were smaller. So our first project was a 22 unit inhabitable building in the, in a D class [00:07:00] neighborhood in Kansas city. Um, and we, uh, we did that. Uh, four other people, two other couples, essentially. Um, and it was, uh, it was a really great project and learning experience. And, um, you know, we, that was a really successful actually endeavor for us.

Um, we sold that last year and, you know, we made, um, a nice profit on it and we had, you know, basically we, we created housing part, um, Homeless people. It was a transitional housing home to do that and that all the pieces together and then get it all nice and stable and then sold it to somebody else who was more interested in staying in that neighborhood.

It was enough for

Mike: us

Matt: to go. Sure. We realize, you know, we really liked that. There’s a lot of pieces from that we wanted to take away and say, you know, this is a, it’s just another adventure that we can kind of work our way into and do that. So it’s kind of funny. We didn’t really start small, I guess, 22.

It’s all relative, right? It’s 22. Yeah. [00:08:00] Chunk to, to take on. Um, and then from there we got 88 unit opportunity, and then we sprinkled in some small ones, we had a 16 unit and a, another 16, but yeah, um,

Mike: kinda been all over

Matt: the board with those really in the last three years, just really looking at opportunities.

And I guess my biggest takeaway from that is that, you know, the. It’s just more zeroes, right? Uh, what was an opportunities that the money that’s involved, but it’s all doable if you put

Mike: your mind to it, I guess. Sure, sure. And I think I know your answer, but to move to bigger properties, like what are the, what are the, I guess, pros and cons of cause a lot of times, uh, you know, Y I own investor fuel and we, people are like, oh, I’m interested in multi-family.

I want to get a couple of fourplexes. And we’re like, no, no, we’re, we’re generally talking about, not that there’s anything wrong with doing a 16 or 20 or any of that. Right. But at this level, we’re generally talking about larger properties that you would syndicate that have professional management and things like that.

And so maybe just talk a little bit about the differences. [00:09:00] Single-family kind of smaller multifamily, like the ones you just mentioned and then larger a hundred plus, you know, unit type properties that you’ve experienced, that you’ve experienced all of them at this point. Yeah,

Matt: I guess, uh, you know, on the single family side, we were already flipping and what we then started doing is cherry picking some of those houses and say, you know, I think this would make a really good rental.

Uh, Tina and I did. Self-manage the first handful of houses that we did, I guess. That’s my number one advice to anybody is not doing that idea. Um, we’re just, we weren’t cut out for it. I mean, there’s a million lessons to be learned there. I think you could argue that everyone should maybe put their hand in it a little bit to understand that it’s a complex process, right.

At the end of the day. Uh, the number one reason why Tina and I did not want to self manage anymore is there’s a lot of law, right? You want to make sure you’re, uh, you’re aware of all the tenant landlord laws that are out there and it’s just, that can become a

Mike: full-time job. Um, and then

Matt: sure. You got to understand all of your, your state laws, your federal laws, state laws, and local laws, all of that.

Mike: And generally getting [00:10:00] harder in generally not in the favor of the landlord. Right? Right.

Matt: Exactly. Your position, how to vet tenants and all that stuff. Um, moving on from there, you know, we, we did bring in some property management and realized that was the best thing that we could do with, you know, with that and really focus more on acquisition and kind of get away from that.

So I think, you know, to answer the other part of your question is, you know, there’s absolutely nothing wrong with starting with some small projects, right? A duplex, a fourplex. There’s also the understanding of you don’t know what you don’t know. And so if you want to get into something like this, I would recommend start with a duplex or a fourplex because you’re going to learn at a smaller scale, all the things you don’t know.

And then once you start to learn those and realize that, um, by all means you can scale, uh, not to scare anybody away, but on big projects, mistakes can be big dollars, right? And then smaller projects you can learn about. Easier,

Mike: so, yup. Yup. And some of the pros of the larger ones are essentially like single family, [00:11:00] as you guys know a lot of people you self-managed, I don’t know if you guys ever did any of your own rehabbing or anything like that.

I mean, uh, some, some kind of are way more hands-on right with the large multi-family there’s just no way you could be hands-on it kind of forces you to outsource almost everything. Absolutely. Yeah. And then talk a little about the differences in management, because with large syndications, you’re obviously dealing with large, generally large national or regional management companies and not necessarily a husband and wife team.

You know, might, might not be together forever or things. I also have some of my experiences. We hired one time we hired a husband wife team, and then like three months later they’re getting divorced and we’re like, oh my God, what does this mean for us?

Tina: Well, I would say, um, property management is a whole, like, I mean, you could do tons of shows I guess, on that.

Um, I think it’s important to make sure you have the right management for the. For your property, right? So like you were saying that, right, you, you can’t use a mom and pop property management to manage the big ones, but we actually made the mistake. The other [00:12:00] way we bought a, we had a big, big one come in to do a 48 unit and it was also disastrous for us.

So, um, we had to switch gears and bring in the right property management. And then we’ve really been trying to make sure that our skills are. So much better in how to manage the manager, right? Like to make sure that we’re having the dialogue and the frequency that’s needed with the data that’s needed to be shared so that all of our assets are getting managed appropriately.

Um, on the bigger scale. I mean, some of these big deals that we’re in, you know, those conversations are happening weekly, um, with the leasing piece of it, and then biweekly on the renovation piece of it. And, you know, we’re getting data and reports on a weekly basis on all of

Mike: that. Yup. Yup. And they have the resources to do that.

Right. I think you play at a smaller level. There’s just not enough money in it for a manager or whatever, to like provide a ton of reporting or real-time stuff. It’s just, they’re just not scaled up to way the, [00:13:00] where the, where the way that it is with a large multi-center. And

Matt: honestly, the other thing we learned, um, transitioning into bigger stuff is there’s a, what we call the , um, where you’ve got a big, big property that needs attention, but not big enough to, um, financially justify having full-time staff.

Um, we’ve kinda found that number, you know, somewhere between 50 and a hundred. It’s really hard to cashflow the numbers you need to, to have full-time staff there. Uh, and so we have a few of those properties that don’t have full-time staff on site, and they, they require a little bit more management just because of the size of them.

Um, and so for us, that really changed our buy box and that was one of the reasons we drew. Our multifamily now to say, we’re really not going to look at anything less than a hundred doors, because then I know we can afford the right. You know, obviously you gotta run your numbers and make sure things work, but you can afford those full-time staff that is dedicated to that property and pairs.

Well, with also your property management, who really can manage that.

Mike: Yeah, for sure. [00:14:00] So can you guys talk a little bit about that transition? I mean, obviously you’ve explained it here a little bit. It was just, it was like a, it’s a stair-step approach. Right. You tried this and then you moved on and you moved on, but what kind of guidance would you give people about moving into.

To multifamily. And let’s even talk a little bit about the difference between a GP and an LP, because a lot of folks can play in that space and have like no role, no kind of management role at all. They’re just completely passive. Right. But maybe just talk about the transition and then we can come back to the different soon GP and LP.

Sure. So

Tina: early on, um, when we were growing our flip business, you know, we have a S a guidance. Judge ourselves on is how uncomfortable were we? And we knew if we weren’t uncomfortable enough, we weren’t making enough progress, um, in our business. Right. And so then, you know, we built this business and it was successful and meeting our needs.

And then we decided to do multifamily and we went, we know real estate, we’ll just change. You know, we’ll just do this multifamily thing. And what we didn’t realize is it’s really a [00:15:00] different animal. And so. We had to get real uncomfortable again, to start building our multifamily business and then to figure out what roles, you know, we needed to be in.

And, um, we kind of were flailing around in that for awhile. Like we were buying things here or there. Um, but then we went, oh, we have to be in the right community, um, to learn what we didn’t know. And then that’s been a huge, drastic difference for

Matt: us. We talk about that a lot. You know what our flip business, we kind of dabbled in that a little bit for about a year.

And then we got with the right group and really got some good coaching and give us some direction. And that allowed us to really fast track the learning curve, uh, the discipline, the accountability, and it really launched that business for us when we started doing multi-family Tina and I are like, she mentioned, we know real estate, we can kind of figure this out.

And very quickly we went, well, what are we, what are we thinking here? It’s a whole different industry. And we knew what worked for us on the flipping inside. So we said, we need to find a community. We need. And [00:16:00] find somebody that can coach mentor hold us accountable, um, and how to build that business the right way.

And so we did that about a year and a half ago, and it’s the same thing. It’s really launching

Mike: that business

Tina: as well. And the GPLP thing we meant, we didn’t know that. You joined the group because we just structured our deals so much differently to understand that there’s really two sides on when have ownership.

And it’s, you know, the people that are actively managing that property in the GP role versus the limited partner role people who are letting their money work for them. Stay hands-off and just cash their checks,

Mike: right? Yup. Yeah. Simply investing in the deals like the LPs. I mean, my first deal that I invested in, uh, which was with Corey Peterson was, I was just an LP and I didn’t, I didn’t have a role at all.

I never even visited the property. I didn’t. Checks. And that was that right. And so, um, so I think that’s a lot of people don’t quite understand that yet. Especially if they’re, if they’re talking about getting [00:17:00] started in real estate investing, it’s like, Hey, one of the best ways to do it is just be at a distance and you can kind of, you know, the LPs are not all that involved in the day to day, but you can kind of learn a little bit how the process works.

What are they doing to improve the property, to add value and things like that. So it’s. It’s like being a grandparent versus a parent. Right? You don’t, at any point you can just like, ah, I’m kind of interested what’s going on over there, but you can just walk out like you don’t really have, you don’t really have to be there.

So. Let’s talk a little about the team-based nature of multi-family versus single family, because on the single family side, you know, w some of us did very well in that space. I flipped hundreds of houses and it served me well, made weight made way more money than I would have in corporate America, for sure.

But we were wearing every hat, marketing and sales, managing contractors, raising money, like whatever, whatever, like everything we have to kind of play that role largely because the business isn’t. Scaled up a ton. Right? I mean, it’s hard to [00:18:00] hit that high level of scale, although some do, but I w you know, even though we were doing 70 houses a year or so, um, we, we weren’t scaled up enough to have a huge team of people to do everything right.

But multi-family is very different. Right?

Tina: Well, um, one of the biggest things for us is, um, we’re in a small market. Like we market to five counties and our whole population is a half a million. Um, and so our scalability and single families really pretty little. Period like that. It’s just, it’s pretty small, but multifamily, we actually don’t own anything locally.

Um, we own some stuff in the state, four hours away, and then really we’re in seven different states right now. Um, so that’s, that’s like one thing and it was a huge door that opened for us. So we didn’t have to be so limited by a market. Um, but you’re right. We had to figure out how to be a team because, um, Locally.

It was just really Matt and I, an assistant. And we, we did wear all the hats, um, to manage all the pieces in [00:19:00] this part. Really, you find the right team and go, this is the role I can play. And you, and trust that the rest of the team is going to do the roles of the hats they’re wearing and pull that all together.

Matt: Yeah. Well, I think that’s another really cool thing about multifamily is that you do need to kind of put together a team. Um, I think there’s some key roles there. You’ve, you’ve got someone who’s got to find deals, right. And vet them. You’ve got to find someone who is a key principle. It means someone that can kind of back that loan.

Um, you got to find someone that can go raise money and you can be all of those pieces. Or you can find a team that put together that can do that together. Um, this way, if you’re really good at finding deals, You partner up with somebody who understands how to raise money and you can really launch that business that way.

Um, for anyone who wants to get into multi-family, if you say, Hey, I’m a great fit for one of those roles or any of those roles, you can really partner with other people team up with them and, uh, create, uh, a good business that

Mike: way. So, yeah. And the cool thing is, is it’s often other like [00:20:00] fellow investors, right?

It’s not like you find necessarily an acquisitions person or whatever to find deals. A lot of times it’s just an investor that wants to get into the space. They happen to be really good at that part of it. And they’ll like, I’ll do this. You do that. Probably everybody’s helping raise money. It takes, it takes a village to do that, right?

Yeah. That’s

Tina: cool. Yeah, you’re right. I mean, it’s, it’s other investors it’s um, and it’s also per deal, you know, like in that space, if you’re going to bring on a partner, it’s more of a marriage versus, uh, just dating

Mike: more of a deal. Then a, necessarily a overall business partner. Right. So if it, if it doesn’t, if it’s not a great relationship, you know, you don’t have to, they don’t have to be involved in the next dealer.

You don’t have to be

Tina: involved in the next, right. Exactly. But the team there’s that team too. And then there’s, you know, making sure you’re very property management, you know, and the right lawyer is super important. Um, and all of this, having all the right legal representation has been critical in this deal that [00:21:00] we’re doing right now, having the right lawyer.

Um, really helped negotiate. When we went to retrain, you know, he got us a lot of money off on our original offer price. Um, you know, so that’s been good. And then on the right construction crew, I mean, that’s true across all of them, but having construction

Matt: crews, I always think about the team. You know, I mentioned those can raise money and all that, but.

It’s a team sport all the way across the board. Right. Having the right property management, the right construction crews, the right legal team, the right, um, closing and title and all of that. Um, really no different, I suppose, in the flipping world, but understanding who you need around you, how to surround yourself with those people to really be succinct.

Sure building that team, so,

Mike: yep. Yep. In terms of surrounding yourself and you guys have talked about this, a little bit of coaching and making sure you’re around the right people, like you guys are obviously part of the investor fuel mastermind and you know, and a lot of people that are listening to this right now might not know.

Even though investor fuel has been around for coming up on five years. [00:22:00] Um, it was really just about a year ago that we started, um, the, uh, effect. We call it the cashflow group, but it’s effectively a multifamily investor groups. And I partnered with Corey Peterson on that. And now Georgia brew. We got a lot of amazing people in there, but maybe just talk a little bit about, uh, would you mind just giving a quick kind of testimonial of investor fuel from the multi-family side and kind of the impact it’s had on your business?

Tina: Yeah,

Matt: it’s been amazing. It really goes back to what I was just saying, a teen and I thought for a short period of time that we could kind of do this on her own and very quickly realized we don’t know what we don’t know, and we need to surround ourselves with the right people. Um, we actually reached out and tried to find those communities and, um, You know, Tina had heard about Corey Peterson and looked up his group and we really kind of vetted him and said, you know, this is the group we need to be in.

And so, um, we joined just blah, about almost a year and a half ago, and that has made such a difference for us. Um, the [00:23:00] entire investor field family has been amazing. Um, if we have questions, we know exactly who to reach out to. I mean, we’ve got. Coaching calls. We call them, you know, twice a month. We do deal days where we pitched deals and see, is it a deal deal, or no deal?

Um, you know, we can reach out to Corey and George anytime. Uh, with questions we have, um, even as simple as saying, Hey, I need. I need a lawyer for this. Um, you know, what are the questions even ask, you know, to find the right people. Um, and that community has always been there to kind of help guide us in the right

Mike: direction.

So,

Tina: um, and I would just say that, you know, we’ve been part of other environments and so, um, coming into investor fuel, it was a whole new experience for us. And, um, I, we love it. We love the. It’s different than everything we’ve ever been in. I love that. At the beginning of every meeting, you talk about like the rules of engagement, which is leave your ego at the door.

We’re all here to learn from each other. And I, I love that mentality, the recognizing the biggest givers into [00:24:00] the groups, because, um, I think that’s just so important that that’s the mindset we come into is like, how do we help others? And we have obviously the great coaching people right from the front of the room, but.

Connections we’ve made in the room have been invaluable as well. And, you know, just, um, we do, uh, every Friday morning, whoever wants to join our call and just our group will join on and we’ll talk about deals that we’re working or a challenge that we have. And with just, you know, um, people that are in that room.

And so that’s been really rewarding, um, and obviously helpful for us.

Mike: That’s awesome. Yeah. I would say, you know, we’re unique in that it’s, it’s not coaching per se. It’s more peer to peer and a network of people trying to help each other, lift each other up and, and in the multi-family side of force do deals together even.

Right. Absolutely. Yeah. That’s awesome. Well, we appreciate you guys a ton. If folks want to connect with you, obviously you’re always looking for people to invest in your deals, or you’re always looking for additional deals to do, uh, [00:25:00] how do they connect with.

Tina: Our company is smart investing and our website is smart investing, llc.com or obviously Facebook.

Make sure you spell Matt’s name out.

Mike: Yeah, yeah. We’ll spell it out. Uh, I won’t even, I won’t even read it off right now because somebody’s going to get in a car accident trying to scribble it down on the driver. So don’t do that. Everybody we’ll put links down below in the show. For your company and your Facebook profile.

So I appreciate you guys a ton. Thanks for joining us today. Thanks for sharing your story. Thank you. Awesome. And everybody, thanks for joining us today. If any of this resonated with you and you’re interested in checking out investor fuel, whether you’re a single family investor or whether you’re a multi-family investor or whether you’re somewhere in between making the transition, we’d love to talk to you.

You can go to investor fuel.com to learn more. And we’ll see you on the next show.

Are you an active real estate investor? If so, and you want to latch onto the power of surrounding yourself [00:26:00] with over a hundred of the nation’s leading real estate investors,

all

Mike: committed to building stronger businesses and living richer fuller lives. You should jump on a call with us to learn more about investor fuel, simply visit investor.

Dot com get started. .