Infill Development Secrets: Transforming Boise Properties for Maximum Profit

John Harcar (00:01.714)
All right. Hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here today with Zach Matson. And besides his journey in real estate and business, we’re going to talk about what he’s doing with infill development, especially with the, you know, the housing things going on here, especially in Boise. We’ll talk about all that. But Zach, welcome to the show.

Zach Matson (00:23.308)
Yeah, thank you. Thanks for having me.

John Harcar (00:24.158)
Yep. Hey guys, I want you to remember here at Investor Fuel, we help real estate investors, service providers, kind of all real estate entrepreneurs, two to five X their business. And we do that by providing tools and resources to help grow the business they want and live the life they wanted to live. So Zach, man, I’m excited to talk about our topic today. But before we, before we do that, do me a favor and, kind of tell our audience a little bit about you and kind of your background and your in real estate and what got you to today.

Zach Matson (00:42.518)
Yeah, me too.

Zach Matson (00:52.462)
Yeah, so I started reading about real estate way back in like 2006 going to seminars Yeah, it was Yep Yep. Yep. Absolutely. And then that kind of you know that got my sparked my interest and then I bought It took me a few years, but I bought my first duplex in 2013 and Boise when I moved here and that kind of house hacked there. So I lived in one side basically for free rented out the other side and then

John Harcar (00:56.722)
Don’t say the purple book.

Purple book, Rich Dad Poor Dad.

John Harcar (01:21.182)
Mm-hmm.

Zach Matson (01:21.838)
bought my second one a less than two years later. then a few, about six months after that, got into flipping houses full time. And so that took me for a few years. And then I got into real estate development and new construction starting in 2019. I bought my first project and kind of made the full transition over 2020, 2021. And so that’s what I do to this day now. And I’m in infill development now.

John Harcar (01:46.728)
sweet. All right. If you’ve watched any of my podcasts, I’d like to go back. So before before you read the book, or you got your little introduction to real estate, what were you doing?

Zach Matson (01:56.046)
I was managing a retail furniture store.

John Harcar (01:58.782)
Okay. Was there any influences in your life, you know, that were in real estate, maybe an agent, someone who’s building? I mean, was there any of that past?

Zach Matson (02:09.557)
Yeah, not really. think it just sparked really from reading the Rich Dad Poor Dad and then kind of, you know, then that kind of sparked it. But then I just started going to seminars and stuff,

John Harcar (02:16.552)
Okay. Okay. When you say seminars, were they kind of like local weekly meetups? Were you going to like masterminds? What were you doing?

Zach Matson (02:24.653)
Those were kind of back in the day was, Rich Dad Port had actually put on like these free two day seminars or one day seminars for that kind of thing. And then other companies were doing it also. did some of those, a lot of those were pitches to longer term, bigger things. And actually eventually did one in 2014, I think it was.

John Harcar (02:44.924)
Okay, what did you do?

Zach Matson (02:47.469)
I forget the name of that one now, but it was essentially like, you know, they bring you on like three different weekend long training things on learning how to flip houses. The flipping formula, I think is what it was called. I’m not sure if they’re around it or but yeah, so I invested in myself and learned how to do it. you know, that was a, it really was a good investment. I made my money back that I paid on that on my very first flip and it kind of.

John Harcar (03:00.574)
Okay.

John Harcar (03:15.646)
Mm-hmm.

Zach Matson (03:17.197)
gave me the confidence I needed to continue forward with that. All the information is out there for probably less money than what I spent on it, but it was nice that it was all compiled in one place and I could spend the three weekends over the course of a few months learning it all and giving me the confidence to do it.

John Harcar (03:27.39)
Mm-hmm

John Harcar (03:36.412)
Yeah. And it’s like you said, I mean, you could have went and learned elsewhere, but why was it important for you to be able to focus on? And I guess this is kind of a mentorship, right? So why was it important for you to have that route versus the whatever I could find online and other type of information.

Zach Matson (03:52.854)
Yeah, I think it was because it was structured. So the structure helped and there was a commitment from me monetarily. I think if I hadn’t committed to it monetarily, it would have been like, I’ll do this eventually and I’ll learn for three years picking up stuff, but I’ll never make the commitment or it’ll take me a longer time to commit to doing it. that was kind of the case from 2006 when I went to my very first free seminar to my…

first purchase in 2013, it took me seven years. you know, whereas when I paid for that course, from that point to my very first deal that I bought was like maybe three months, so.

John Harcar (04:33.31)
Okay, so it accelerated your learning curve.

Zach Matson (04:36.161)
Yeah, yep.

John Harcar (04:37.7)
Awesome. When you started, what were some of the struggles you started, what you ran into? Like things that were, you know, when you started your business, like, man, this is difficult, more difficult than I thought.

Zach Matson (04:47.487)
Yeah, so to me it was scaling. So, you when I was flipping houses, I was, you know, I did that for a few years and I was trying every which way, you know, so I learned a lot during that flipping and that got me, you know, confident to start. I probably should have, you know, went through more mentorship on how to scale, but I never did that. So was kind of trying to figure that out on my own. So, you know, part of it was, yeah, just learning how to scale efficiently and, you know, kind of by trial and error a little bit. And, you know,

John Harcar (05:03.336)
Uh-huh.

Zach Matson (05:16.919)
probably relying on or taking too long to switch gears on how I knew I should have scaled.

John Harcar (05:24.27)
Now, when you say scale, do you mean scaling to do more deals to to with a bigger team internally, bigger construction teams? I mean, what does that scale look like?

Zach Matson (05:34.23)
Yeah, so doing more deals. at the time, you know, I was doing, you know, I started with one flip at a time. I was doing a lot of the work myself and I was trying to hire contractors and, and, know, I was basically doing one or two deals at a time all the time over the course of the, you know, three or four years that I was trying to flip. And so I really didn’t get to the scalability aspect until I switched to infill development.

John Harcar (05:59.678)
Okay, okay. And then what made you make that switch or how did you find the end fill stuff?

Zach Matson (06:05.675)
Yeah, so, you know, while I was flipping, I found a couple of, you know, build lots that, well, actually one house was a tear down and, I wasn’t planning on building new construction, but, it kind of turned out that the house had to be like a complete tear down. and so because I wasn’t familiar with new construction, I actually sold that after we tore it down and we still, you know, we still made money on that a little bit of money.

John Harcar (06:25.555)
Mmm.

Zach Matson (06:35.437)
because we got such a good deal on it because it was a tear down. But then there’s another lot that we thought we could build three houses. Turned out it was two, so we ended up buying that one. But then that basically kind of got me interested in the new construction and infill. And as I started analyzing deals, I realized there was potential to build multiple houses versus just doing one flip. And the profit margin was lot greater.

John Harcar (07:00.242)
Right. How did you learn to do the new construction? Just from your, you know, your time flipping homes? mean, was there anything specific you had that you would have went out and pursued as far as knowledge?

Zach Matson (07:11.053)
Yeah, so I think a lot of it was, know, when I first bought my very first duplex, I fixed up, you know, the half I was living in. I did that on my second house I owned. So I learned the construction knowledge piece there as far as like processes. didn’t necessarily, you know, I don’t have a construction background, but I, you know, kind of learned that there’s, you know, steps to construction. And then during the flipping process, I actually became a GC. So then I, you know, learned.

John Harcar (07:18.334)
Mm-hmm.

Zach Matson (07:37.858)
you know, more of the trades than more, you know, working with other trades and finding contractors. I also had a small crew, so kind of learned on, learned how to teach other people to do what I was doing, you know, that kind of thing. So kind of a self-taught a little bit, but then getting into new construction, realizing, well, and even really at the tail end of flipping with my own crew, realized it was more efficient to hire subcontractors.

From a time perspective a lot of times they would cost a little bit more money But they would get something done in a day or two. Whereas my guys would take maybe an entire week Because they weren’t specialized in it so then when you you know when you factor out those costs associated with paying your guys for a week and All the employee costs associated with that versus hiring a subcontractor that you know, they might cost double but in the long run it’s basically the same cost so

John Harcar (08:27.656)
Right.

Zach Matson (08:29.069)
Yeah, so then, you know, just transferring that then to new construction. you know, when I first did my first construction deal, I had to work through, you know, there’s good and bad contractors and everything. So I had to work through the subs and eventually I found, you know, a really great team of subcontractors for every trade.

John Harcar (08:39.262)
Mm.

John Harcar (08:46.962)
That’s awesome. did you find that? mean, besides the trial and error part, did you get referrals on any of these guys or anything like that?

Zach Matson (08:55.661)
I think I found some through some Facebook groups. A lot of them, you know, I’m trying to think back to where I found them. I think it was, you know, probably some Facebook construction groups, contractor groups. It wasn’t, you know, Google or, you know, anything like that. The guys I use in new construction are like, they don’t have their names plastered all over the side of their truck.

John Harcar (09:17.758)
Mm-hmm.

Zach Matson (09:17.997)
Typically when you get there with subcontractors, they’re not efficiently priced for new construction and make any kind of margin as the builder. So yeah, it’s a lot of guys. think I was probably recommended. Some other subs also, lot of subs know other subs. So I think, for example, my concrete guys knew some framers and the framers knew an electrician and that kind of thing. So you get…

John Harcar (09:24.476)
Right. Right.

John Harcar (09:41.384)
Sure.

Zach Matson (09:44.897)
You get a lot of referrals from other subs that work with these other subs on other jobs.

John Harcar (09:49.062)
Right on. What are you seeing or what do you think are some of the mistakes people make when they get into new construction going from, you know, flipping to new construction, hypothetically?

Zach Matson (09:58.892)
Yeah, I think, you know, for me, you know, my biggest mistake, I guess, was, you know, during the process, and I, you know, this is still to this day, always a challenge, but this was especially during the pandemic where, you know, we had supply issues. And I kind of let contractors say, you know, tell me, we can’t get this material. We’re going to push you off for, you know, they tell me it’s like two weeks, but then it’s like turns into three, then four, then.

three months and over time, that basically led to two houses taking six months longer to finish. Well, that’s six months of interest charges you pay. It ended up being, we missed the top of the market, so we ended up selling them for less. Now, during the process of when I bought the land to being built, those prices increased incredibly, so I did really well on those still, but I missed the top of the market by 10%.

Because at that point Boise had kind of slowed down a little bit and prices dipped due to the interest rates increasing. So that was basically like from the point I sold my first few houses in that subdivision to when it’s leveled off a little bit, it took me six months longer and missed the top of the market.

John Harcar (11:14.632)
Got it. So what is your team and your business look like today? Like, you know, what’s your focus? What are you building? What’s your lead gen look like? Those type of things.

Zach Matson (11:24.865)
Yeah, so today I actually still operate with a small team. have my creative director and then I have partnerships with other people for like project management, for entitlements and also construction. Then I have all my subcontractors for basically every trade. And then I use VAs for a lot of stuff. So we’re able to operate a small team.

Towards the end of this year, I’ll actually hire probably two or three more people full time, but right now it’s kind of lean and mean. And so, and we’re transitioning into like scaling up into larger scale. So before this we were doing, you know, 10 houses a year. Now we’re, last year alone, I picked up like, basically we’re in partnership or on our own have 80, more than 80 doors in the pipeline.

John Harcar (12:19.282)
Nice, all new build, new construction. Sweet.

Zach Matson (12:22.123)
Yeah, yep. So some of those are, you know, small subdivisions. I have a couple of small multifamily and then a condo development.

John Harcar (12:31.794)
That’s awesome. So how are you sourcing your deals? Are you buying from wholesalers? you looking just for land that’s on the market? I mean, what are you doing?

Zach Matson (12:41.355)
Yeah, so some of it is on the market. Let me think. So two of my subdivisions I bought were on the MLS. And because of the interest rates and because the builders were kind of unsure, a lot of builders weren’t buying land. And so that put a downward pressure on prices. So at the end of 2023, I saw some opportunities coming up where land was actually becoming a better deal now on the MLS. And so last year, I kind of committed to

you know, to scaling that way and I found some good deals on the MLS and bought those. And then, you know, a couple of deals were brought to me off market just from people I know in the, you know, in the investing community that, yeah, so, you know, I’m pretty niche too. Like where I do infield development, there’s really, in Boise, there’s not a lot of people that do it. Like I, there’s very little competition. So, and I network a lot. So the guys that know what I do, I kind of feel like I’m probably the only guy that they know that does it.

John Harcar (13:20.21)
the space.

John Harcar (13:36.68)
Okay.

Zach Matson (13:37.848)
two guys and there’s only like maybe a dozen or so of us that do the type of deals that I do. it’s easier to like when you have a niche, it’s easier to be that big fish in a small pond, even though I’m really like the small fish in the big pond, you know, nationally or even like, you know, locally as builders, but I have a very cool niche where, you know, I’m, you know, known to do what I do.

John Harcar (13:47.656)
Yeah.

John Harcar (14:01.585)
Why do so little people do it? Why is it only you and another guy maybe? mean, why doesn’t more flippers, builders, whatever go after infill-outs?

Zach Matson (14:11.821)
Yeah, so I think the challenge and you know I run into this to this day is that really with land you pretty much have to buy it in cash You know, you don’t get traditional bank loans, you know Some banks will loan on land but then it’s such a pain in the butt to get the funding You still have to put a lot of money down. It’s just it’s actually easier to just buy them cash and then your Financing on the tail end is easier to do that, too

But then you’re sitting on that land for three years before you have a finished product. So one, if people want to use their own cash, they’d rather maybe buy a flip for the same amount of money and turn around and make 30, 40 grand in six months versus a lot more in three years. And then the same thing I run into with trying to scale when we’re trying to raise money, is a lot of people tell me that they want their money turned around faster.

And so, you don’t typically get the kind of returns when you turn the money around faster. And there’s not as many deals now in Boise that you have the kind of returns that people expect. So that’s the challenge is just it’s a little bit longer play. It’s still shorter than these guys that are doing a lot of apartments indications. A lot of those deals are five to eight years. typically I tell people it’s two and a half years on the…

the best possible scenario from, you if you buy an Untitled land, and then it could take up to five years, but it’s usually in that three to three and a half year mark.

John Harcar (15:45.286)
You mentioned buying them in cash. Do ever buy them in creative finance, like seller finance, anything like that?

Zach Matson (15:51.394)
Yeah, we do that. A couple of deals that we’ve done with seller financing. And that’s the ideal situation if you can find off market especially and you can creatively either have the seller carry the note or the deal with this partnership I have is actually a partnership with the landowner or homeowner.

John Harcar (16:11.494)
Okay. when you’re, when you’re finding this infill lots, you say it takes about three years. Why does it take so long? it to get that entitlements to get all the plans approved and do all that? I mean, is that the, the, the reason why the length

Zach Matson (16:26.347)
Yeah, it’s basically, it’s three separate distinct processes that take a little bit of time. So the first is entitlement and that’s basically getting a project approved. And so the, know, there’s multiple steps with that. So you have to get planning and zoning approval, city council approval, and then you have to get your civil plans approved. And so that those three approvals, the first two maybe take like six months, but then the plans a lot of times take another three to three to six months.

And so you need all three of those approvals before you can break ground. and, you know, none of this is really super efficient with the government agencies either. You know, the civil plans you can have your engineer come up with in a month, but then like all the processes with the city takes another 11. you know, and then you have the next phase is the development, the development. that’s a horizontal everything, you know, ground level and below.

So that’s putting in your sewer, water lines, fire hydrants, streetlights, that kind of thing. And that construction process, again, that doesn’t take a super long time. It’s typically maybe four to six months. But then at the tail end, you have to have the plat signed off on. then that goes through, I think, eight different agencies. have to sign it. And it’s not like you bring it in and they sign it that day. They have an eight-week review process, each one of them. So it’s just super inefficient.

John Harcar (17:43.239)
Right, right.

Okay.

Zach Matson (17:50.22)
you know, through the agencies really. And, you know, some of the zoning stuff has gotten easier with, know, the Boise has updated their zoning code. So some of the processes have gotten a little easier in shortened timeframes. And a lot of other towns around here are following suit with that. But it’s still just, you know, takes time with all this stuff. Then the third phase is obviously the vertical building. And then that, you know, it takes six months, six to seven months to build a house, sometimes eight.

John Harcar (18:00.254)
Mm-hmm.

John Harcar (18:11.827)
Got it.

Zach Matson (18:20.029)
But then you have to get it sold. so that process basically, even if it sells right away, it still takes a month, month and a half to close. So best case scenario, you’re looking at seven months to build and sell a house. that’s really, that’s best case scenario, you usually want to plan for a year.

John Harcar (18:38.28)
Got it. What trends are you seeing in real estate investing now? Whether it’s new construction, whether it’s, you know, flips, whatever any, any specific trends that you’re starting to see.

Zach Matson (18:49.099)
Yeah, so what we are focusing on for other people as well, so we do our own development deals and those are longer plays than what we’re focusing on right now for bringing in additional revenue is actually doing lot splits for people. And so we have the team and skills already in place to identify properties that, you know, somebody can buy with a traditional mortgage and split off a lot and add another rental unit. Or actually in this case, a lot of times it’s

two, three, four, five doors on the same property that you split off or maybe you can split off multiple lots. And so there’s a really huge opportunity. At least I’ve noticed this in Boise and Meridian and we haven’t really looked at the other cities yet, but I’m sure there’s the same opportunity where somebody can go buy a house with a regular mortgage. And then, you know, when they’re, when they have a regular mortgage on it and rent it out or live in it or whatever, that buys them some time to go through that one year process of splitting that lot off.

But now you can split the lot off and all of a sudden you’re creating six figures in equity just by splitting off that lot. And you can either sell that lot or, you know, build on it. So basically what we’re kind of like pitching to other people is, hey, let us split this lot off for you. We can add rental units. And because you’re in the land now for essentially like the administrative costs of splitting that, you know, now you can build a rental unit and you’re walking into it with huge amount of equity where you don’t have to put that, you know, 40 % down.

John Harcar (20:06.588)
Mm-hmm.

John Harcar (20:14.248)
Yeah.

Zach Matson (20:14.571)
or 25 % down to cash flow, and you can actually cash flow or worst case break even, but not putting a huge amount of extra money into it. So you can ultimately turn one rental or one rental door into, you know, typically two, three, four, five, six, sometimes seven other additional doors with not a whole lot of money extra out of pocket.

John Harcar (20:37.246)
That’s awesome. That’s a great strategy, What do you think your keys to success? What do you look back on your experience, your growth? What do you think your keys to success are?

Zach Matson (20:50.005)
I think number one is just persistence. mean, business is hard, real estate is hard. You run into problems that you, once you go through them, you’re like, man, I should have seen that coming. But there’s just a lot of things you have to work through. And I think the people that make it and are successful are persistent and they work through issues and they figure it out and they just stick to it.

and eventually everything comes together and it works great.

John Harcar (21:20.99)
If folks are out there listening to this, they want to talk to you about kind of what you’re doing with the infield land. I mean, it just want to pick your brain on anything. I mean, guess how can they get in touch with you? What’s the best way to reach out?

Zach Matson (21:33.517)
Yeah, the best way is, know, well, number one, follow us on social media. We’re Matson Homes. And then also my, that flipping guy on Instagram. And so, and then you can send me a direct message back. Yeah. It’s flipping without the G at the end, but then got, goes into guys. So there’s one G.

John Harcar (21:48.328)
That flippin’ guy. That’s awesome.

Zach Matson (21:57.973)
Yeah, so reach out to us on socials. You can send me an email if you have questions about specific things in Boise, especially or Boise and surrounding areas. Zach, Zach ZACH at mattsonhomebuilders.com. So yeah, that’s yeah, we also have a YouTube channel, invest, build and proper prosper. And so we have a podcast ourselves that we kind of do. And then we also have all kinds of fun, fun.

know, reels and stuff about what we’re doing, so.

John Harcar (22:30.704)
Awesome. Man, guys, check it out. Go on the site. We’ll put all that stuff in the show notes. So those links will be in there. Zach, man, I appreciate you coming on and sharing that stuff, dude. I love what you’re doing. It’s good to talk to someone at Boise. Love to get together for some coffee sometime. guys, if you have any interest in talking with Zach, learning more about it, please reach out to him. I hope you guys all enjoyed the show. I know I sure did. And I’ll see you guys on the next one. Cheers.

Zach Matson (22:46.699)
Yeah, for sure.

Zach Matson (22:59.628)
I appreciate it.