Transform Your Investment Game: Richie Matthews on Tech and Real Estate

Erika (00:00.984)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika. And today I’m thrilled to be joined by Richie Matthews, who’s making waves in the real estate space with some awesome tech. He is running iStateUSA. Richie, thanks for coming on the show today.

Richie Matthews, Rentalizer.AI (00:19.186)
Thank you.

Erika (00:21.036)
I’m really excited for our listeners to hear about how you’re leveraging technology to shake things up in the real estate space. Let’s jump right in. those of our listeners who aren’t that familiar, can you tell us more about iStay and how’d you get started in real estate?

Richie Matthews, Rentalizer.AI (00:37.458)
Sure, yeah, so I was an amateur investor. My wife and I both ran a public relations company. We did events mostly. And so my business took me out of town most of the time and we had children and our kids became of the age where I wanted to be home more. And so we turned our sort of passive side thing of real estate into a full-time occupation, starting with short-term rentals. And…

As most people know and in most amateur investors, it takes a lot of cash takes a lot of upfront takes a lot of

you do get a property the problem that most buy and hold real estate investors have is that they don’t have time to manage their own properties and if they farm it out to a manager it’s expensive. So we figured out a way to get cash quickly which was arbitrage. So we rental arbitrage. I’ve acquired 62 rental properties by leasing them, getting them on short-term rental and mid-term rental sites and keeping the difference. The margins are typically 2x or even 3x rent in most markets these days and so I started

right in the beginning of COVID. We scaled all through 2020, picked up 18 properties the next year, another 26 properties.

and kept growing and the cash from that business, beside replacing the income we lost during COVID, because our events business went away, became the fuel for our real estate stuff. And on the real estate side, we do a lot of seller finance and sub two. So we’re buyers here in Southern California, sub two and seller finance where we can get it. And the cash you’re gonna need from that comes typically from our arbitrage stuff. So I actually think there’s a kind of a dual strategy here. So we’re doing buy and hold stuff.

Richie Matthews, Rentalizer.AI (02:17.07)
seller finance mostly and the arbitrage has been just a vehicle for us first to replace the income we lost but then now as a way for us to fund a lot of our projects and to your question about tech I’ve always been a proponent of automations because of the expense it takes out of operation costs to do it yourself

And so I never considered a property manager. It was always how do I do it myself? But I the first year I was the business was running me I was answering phone calls and hiring trick cleaners and things so VA’s virtual assistants became a key to that and that’s what they are now our front desk is You know is everything for us. Otherwise, we wouldn’t be able to do this

here in the United States, our front desk, we overseas our front desk. So we train and hire our own people. But even then, it’s very labor intensive. And so the key to that was supplying tech for the VA’s to automate everything themselves. And that’s always how we did this. But in the last…

I mean even six months everything’s changed with AI. There are so many publicly available real estate tools in AI that help us automate. So most small investors now are armed with a lot of really good tech to run their property portfolio themselves completely, right? So they’re not doing a lot of the work and so…

I created rentalizer.ai for that. That’s basically what we use internally and now I’ve made it available publicly. there are some other tools most people can actually create some really, really quickly. So I think everything’s going to change in the next few months in a lot of industries and real estates, especially because of the technology available, most smaller investors. So I’m a real estate company, but we have a very tech focused approach to our day to day operations.

Erika (04:14.722)
That’s really interesting, Richie. Talking about the AI more and the automation, if someone in the industry is looking for a technology to simplify their life, what would you say are the essentials that people should look for?

Richie Matthews, Rentalizer.AI (04:29.34)
Yeah, so if you, you know, there are some tools out there you can subscribe to. Some of them are pretty pricey and they’re good, like Aerodna for one is one where a lot of people use Aerodna to find out what other hosts are earning, to run comparable property analysis, do things like that and it’s good data. But at end of the day, Aerodna is a scraper. They just scrape the data to try to glean from Airbnb and Verbo what other hosts are earning. And so if you think about it, you could really almost use any tech,

scraper out there

which is how that’s my approach. never liked their interface and I don’t like the way they run comps. So we selectively take from their data properties that I consider a comp, meaning I don’t like to, you know, I’m not going to compare apples and oranges or geographically if a comp is, know, if a property is across a river or something like that, it’s not a comp. the way we run our comps very specific and before I used to copy and paste their data into spreadsheets. And now you can go out there and get all kinds of tools. Rentalizer is one of them where

a new investor you can go out and find what what properties are earning and what potentially they’ll make and then I another tool that finds out what the cost of that supply that property is whether you’re buying it for cash through a mortgage or if you’re rental arbitrage and you can find what rent mortgage is versus what revenue potentially will be for short-term rentals or even mid-term rentals and I have a whole program I mean we’re really invested heavily into mid-term rentals government medical corporate and

insurance and so it’s not just about short-term rentals but let’s call it the furnished rental business and so you can find right now most investors can go right on to ARDNA or Rabu or

Richie Matthews, Rentalizer.AI (06:12.536)
Mash advisor and some of these tools and find that but it can be cumbersome and it can actually take you a lot of time and if you know you have a full-time job and a family a lot of that’s prohibitively time-consuming so the the next big phase of this whole business should be Automating it so you can type in an address it runs comps for you and then compares that your your potential earnings Versus what the cost may be and there’s nothing out there. We built it on rentalizer to AI really for ourselves, but that’s where it’s step one is

Right step one is how do I find a market and then the next? Phase of that is how do you acquire a property and so we have an entire tool for that that reaches out to landlords mostly through like Zillow and then the third step is okay now I have a property whether you’re buying it or you’re renting it as arbitrage now How do I run it and that’s what I was I was talking about earlier? Property management tools that you’re able to do everything yourself most of the big software companies are not quite there yet They’ll probably will be though

where they’re giving you the ability to like a dashboard where you can connect all your properties through like Airbnb and Virgo. can connect them through one dashboard and calendar and all that. Those are available. There’s a company like Hospitable and a few other big ones. And they have automations, but none of them are really leveraging tech or AI yet.

we are. And so that’s I think the easiest way for an amateur investor to get into the you know to get in the game without spending all the money on all these other services, cleaning services and property management services and really expensive software. And so that’s the way that I think that will even the playing field in the coming months and years. I think things are about to really change significantly from what I’ve seen some of the software tools that are out there.

Erika (07:57.932)
Yeah, it really looks like it’s quite the opportunity. Now, you had talked about when you first got in the real estate, you were talking about all those short-term rentals. I’m sure you’ve got a story there that is worth sharing. We value real talk, real moments. Was there ever a deal that you had the pivot fast and think quickly on your feet?

Richie Matthews, Rentalizer.AI (08:24.658)
Yeah.

Yeah, for sure. I learned I didn’t you our system was something that just sort of fine-tuned over a year and a half about from early 2020 through the end of 2021 mid 2021, which was I initially didn’t focus on single family homes and condominiums for rental arbitrage. I would approach an owner of a home or approach or approach a condo owner and say, hey, would you like us to sub rent those? I see it’s on the market for, you know, period of time vacant. And sometimes we would get a yes.

times it was not a real need for us they would I would rather as a landlord rather have a tenant than a company in my property running a business out of a short-term rental or otherwise

So I was getting yeses, but they weren’t really all in and and the problem I had mostly was the upfront cost to furnish a house first and last deposit all that stuff Well, then I discovered in apartments in corporate leasing The the norm is a very modest deposit if one at all So corporate leases typically don’t sign you don’t pay a deposit or very low and they’re gonna give you what they call rent concessions Upfront rent free so almost nothing for the cost of furniture. You can now you can you can get a you know

a rental, a turnkey rental. So I started focusing on apartments after learning the hard way and it was a hard pivot.

Richie Matthews, Rentalizer.AI (09:41.464)
then during 2020 I pivoted out of or 2021 ish I pivoted out of studios and C class properties and A and I found what I consider our you know our entire strategy which is B or B minus class apartment buildings two-bedroom in cities where there’s work business and leisure travel so while everyone when when COVID ended when a lot of people entered the market again in 2022

you know, some properties became less and less competitive, studios and some of those. And so we focused on all of the traveler markets, the traveler markets where there are work, business and leisure, midterm rental business, and then vacationers instead of hosts that we’re focusing on vacationers. And that’s our approach now. And I think that is the most prudent way, no matter what happens in the economy of the world. If people are traveling to my market for, if they’re a traveling nurse or an engineer, teacher,

that’s on sabbatical, they need to go to the university, convention center, military base. We focus on markets where those things occur, where there’s four seasons of vacationers, and then there’s a dynamic economy, so there’s business travel. So if you’re diversified, and then we just find a certain class of apartment, I don’t want to get in the weeds on that, but a certain type of apartment that we look for that really works where there’s a need, where vacancies are up. And the reason why vacancies are up right now across the country in apartments, not in houses, houses, totally different market.

is macro and local. in the last four or five years, developers have moved to Tennessee and Texas and Florida from states like mine in California for a lot of different reasons and did a lot of construction and we’re at the tail end of that. So there’s a lot of apartment inventory on the market right now. And so the slicker newer buildings are getting the occupancy where the building slightly older, B or B minus in a great neighborhood are feeling the pain. And when you start approaching 10 or 15 % vacancy, you have a major problem.

as an owner. And so we come along, talk about corporate leasing with them and work out a deal. And so there’s that. And then there’s other macro reasons like the interest rates. Last year was inflation. A few years before that was recession from COVID. So those are the sort of reasons. There’s even cyclical reasons, seasonal. So there’s always reasons why vacancies tick up. We can come in and offer a solution to that. And in return, we jump over the whole buying of a property for this just to get to the income part.

Erika (12:10.562)
Wow, you’ve got a wealth of knowledge right there through all those experiences that you’ve had over the years.

Richie Matthews, Rentalizer.AI (12:16.892)
Yeah, I’ve had 10,000 reservations since we started this thing. I came into this with, had a few rattles, but with zero experience in short-term rattles and just sort of go head first.

you know, because we had to. We had to figure out how you know, replace the income we lost. It was a real need for it. We had a couple, we had two rental arbitrage when COVID started. We had one in February, one in March. A week later, everything hit the fan. And so we just, just pursued this and just scaled and then adjusted here and there. The biggest pivot to your earlier question was out of single family homes. Single family homes are fantastic if you’re going to buy them. It’s a longer term play. You build the equity. There’s maybe a trickle of, of, of

Income went up buying hold real estate real estate investors aren’t there for the income part of it, right? It’s over the longer term play but and what we learned over time It was just to get your paid back your furniture Expense or whatever up front and then get paid back that so you can start growing was the only way to do this And so for us, it’s the apartment model

Erika (13:21.262)
I’m sure you’ve had moments too that you couldn’t have been where you are without building a network. I feel like every real estate expert has a strong network of people. What kind of advice would you give to people out there looking to build their network?

Richie Matthews, Rentalizer.AI (13:37.116)
Yeah, that actually happened first, to your point. That’s a fantastic thing. I joined, there was a couple of pivotal groups that I joined. One of them was Pace Morby Sub 2 community. I’m in his community and in his program there. That was one of them. They have a very vibrant online group, 10,000 or even more now, mostly on Facebook. And then we have our own rental arbitrage with Richie Matthews, also a Facebook community, people there to support each other. There’s people collaborating, doing deals.

You know I have people in some of my markets where they’re hiring housekeepers together and things like that and without a doubt that is I think the most that would Without the communities we belong to I don’t think we would have been able to scale like we did and have access to resources That we would otherwise had to pay for things like that. So

really key to join a community, even if you’ve already started. I think it’s a good idea to do that, participate in various live events and things like that to connect with others.

Erika (14:40.984)
Do you have a specific story of connection that was a big win for building your business?

Richie Matthews, Rentalizer.AI (14:47.112)
Yeah, well, so my operations guy eric was referred to me and and I didn’t have hospitality experience before innately or nor did I ever learn it nor did I have the inclination I don’t think i’m good at it eric to his credit was a hospitality guy went to school for it was just good at it And so I was good at scaling was getting acquired properties and all that good stuff But the operations was something that didn’t interest me and I was doing it for almost the entire year of 2020 And because of that, like I said earlier, you know things suffered our guests are

our guest experience suffered, our reviews reflected that. so…

If I didn’t find someone as fast as I did with Eric who’s you know helped really helped me scale then I mostly I would have been stuck I would have been stuck in you know operations of this and so I was able to get free not immediately but over time over several months I was able to to stop doing some of the tasks I was doing design and pricing and hiring and I never communicated with guests after that I wrote a lot of the copy and we did that but then it was the way he and I put together our system it allowed me to scale

I mean, here’s an example in in February of 2021 one year into this I had 18 properties hired Eric He was fully on board at about a month later

And then six months after I hired him or from March, we had 35 properties. And the whole year I was thinking, well, get to keep that capital if I don’t hire someone right away. And once I got over that limited mindset and I hired somebody and we basically doubled our portfolio in a short period of time, it was evident to me that I needed to get out of some parts of the business so could let others who are better than me at it. And then after about another year, we put together our system. And then I was able to really move and scale and stuff like that.

Richie Matthews, Rentalizer.AI (16:31.474)
just letting go of some of my previous you know like I always thought the way that a business owner was to wear all the hats do everything and obviously that’s not the way to do this and so I learned it during during my scaling of I stay

Erika (16:46.124)
I love that. yeah, you know the saying, a rising tide lifts all boats. And you lifted them up in that moment to give them the opportunity. And it worked out wonderfully.

Richie Matthews, Rentalizer.AI (17:00.156)
Yeah, it was great.

Erika (17:03.32)
So Richie, what is next on the horizon for you? What are you looking to accomplish?

Richie Matthews, Rentalizer.AI (17:09.5)
Well, I am working on finishing the tool I mentioned earlier, rentalizer.ai. have…

the acquisitions agent, I’m not gonna get into the weeds on this, but AI, basically if you think about AI, AI like you chat GPT is the brain. And AI agents are the arms and legs, they’re the muscle, right, for AI. And so agents as they’re called are things that will allow someone to take action on something. So most of them are pretty automated. So actually make phone calls, it does emails, it will do all kinds of actions on it. And so we’ve built a tool up until now required me to fuel it. So I would actually type,

to meet to meet owners or to for arbitrage or buying properties. And so we created an agent. We’re testing it now. That’s actually going to do most of the actions. I’m not at the we’re not at the point where voice agents are that good. I know a lot of people say they are. I don’t think so. Who wants to speak to it? The moment you speaking to a you know, you’re speaking to AI and your conversation is different. It’s like gambling. When you’re gambling with real money. It’s real when you’re gambling with make believe money and you’re having fun. It’s different. It’s you’re going to you’re going to gamble differently. And I think communication is no different. So we’re not there yet.

I don’t think so who knows maybe in a day from now we will be with the way things are moving so our AI Agents are mostly email and text

and then they basically set up a phone call for a human being to close the deal and that kind of thing. But our acquisitions agent is there, yeah. So that’s, I’ve been working on that daily. I’ve been working on that right before I jumped on this pod. And so I’ll be working on it later today with the people that I, my developers. So I think that’s the forefront of this is if you can acquire property, most of the automate, most of the basic stuff can be done. You could do this at scale. It’s a numbers game, right? We’re in a numbers game business. And so if you can contact a lot of different owners,

Richie Matthews, Rentalizer.AI (18:55.1)
them, qualify them and get to a point where you can then have a conversation with them. Fantastic and I’m actually believing in a short period of time even that conversation part eventually might get there but right now that’s saving me 80-85 % of my daily tasks and trying to get new deals and so we’re working on that now with rentalizer.ai

Erika (19:16.61)
That’s so exciting. Well, Richie, before we let you go, if someone listening wants to connect with you, learn more about the tools that you’re building, learn more about iStayUSA, what’s the best way for them to reach you?

Richie Matthews, Rentalizer.AI (19:29.788)
Yeah, you can just go right to rentalizer.ai and say, hey, Rich, and message me. Just mention the podcast. Or you can just go to my website, richiemathews.com. R-I-C-H-I-E, Matthews with two Ts dot com. And you can just message me. And if you want to reference this podcast, it’ll be easier for me to get back to you.

Erika (19:49.518)
Richie, thank you so much for your time, your insights, and sharing your story with us.

Richie Matthews, Rentalizer.AI (19:54.268)
Thank you, Erica.

Erika (19:56.334)
For everyone tuning in, if you love this episode, make sure you’re subscribed to the Real Estate Pro Show. We’ve got more conversations like this coming your way with folks like Richie who are pushing the boundaries of what’s possible in real estate. We’ll catch you on the next episode.