Focus Builds Real Wealth: Matt Ricciardella on Niche Investing, Alpha, and Market Discipline

Matt Ricciardella (00:00)
Well, frankly, a lot of them are. ⁓ It’s not that we’re finding needles in a haystack that no one found. A lot of these communities that we’re buying, Scott, they’re large. I mean, we’re talking 20, 30, $40 million acquisitions is kind of what we’re after at this stage. And it’s not like those fly below the radar. What it comes down to is a lot of these folks, again, it really means something to them. They have a vision and a legacy.

Scott Bursey (02:01)
Welcome back to the Real Estate Pros Podcast. I’m your host Scott Bursey. And today we’re thrilled to welcome a true authority in the investment capital strategy. Matt Ricciardella of Crystal View Capital. Matt is known for providing clear, actionable guidance on identifying value and helping investors strategically deploy capital to navigate complex market cycles. Welcome to the show, Matt.

Matt Ricciardella (02:28)
Thanks for having me, Scott. Glad to be here.

Scott Bursey (02:31)
Absolutely, it’s our pleasure. Matt, before we dive into the market dynamics, please give our audience the story of your journey. How’d you first get into real estate?

Matt Ricciardella (02:43)
Yeah, well it’s a long story, but I’ll give you an abbreviated version. I grew up in upstate New York, originally in the Catskill Mountains, and you know, from a family business, a restaurant business, and started working at a very young age, you nine, ten years old washing dishes, and learned the value of a dollar at a very young age, and always wanted to go out west as a kid. I wanted to go to California and…

you know, see the other coast. So I did that. I moved out when I was 19 years old and I was going to Cal State Long Beach at the time. It was the only school that accepted me and wasn’t a great student. What happened to story is I wanted to be close to the beach and I applied to all the universities, USC, UCLA, you name it. Cal State Long Beach, God bless them. They were the only ones that took me so I went.

Scott Bursey (03:24)
You

Matt Ricciardella (03:38)
But I wasn’t a great student. I dropped out and always had this passion and desire to ⁓ make a lot of money, to be in business. But obviously without a degree, I kind of thought to myself, what can I get into that’s going to allow me to do that? And I kind of fell in and thought, hey, real estate. And all you got to do is get a real estate license. At that time, I was a realtor. And the way I built my career and my business was I got on the phone and cold called all day.

So I would pick up the phone and make 100, 150, 200 contacts a day, knock on doors, get in front of owners. And it’s funny because it’s very relevant to what we do today. And I built my business up at a young age and there was a long time where I didn’t make any money. It’s a commission based business. So year would go by, you wouldn’t know where you’re going to get your next meal. You didn’t know how you’re going to pay rent, but you kind of just put your head down and continually grind it out.

Eventually it paid off. So I went from a place of not knowing how to pay rent, not knowing where I’m going to get my next meal to being 21, 22 years old making $400,000 a year just by sticking to these strategies. it was really starting to work. And the story about how I got into investments is one day I was making a cold call. The guy’s name was Jurgis Mykalonis and he had a duplex in Long

Called them up.

And he said, why don’t you buy it? And I thought, well, I couldn’t even, I can’t even get a credit card loan. How am I going to buy a duplex? This is the day and age when they were giving out loans to babysitters. I mean, it was no docs, dated income, ninja loans. So I was able to qualify and I ended up buying this place, bought it for $314,000. I was 22 years old. I think it was 2004. Sold it.

year and a half later for $750,000. And that was the start of my investment career. Rolled that into more flips, rolled that into eventually commercial real estate because I was looking for more passive income, but followed the same approach of getting on the phone, building rapport, building a relationship with the owner, and then basically positioning myself as the ideal suitor for their asset.

And that kind of translated into what we do today. We have a full team of professionals that are doing just that. They’re getting in front of people, building rapport, taking them out to dinner, talking about how we’re a family-run organization. We have real values and principles. We invest back into the communities that we own. care about the residents. And that means something to these folks, because they built it up from the ground up. It could have been their grandfather or their father that built it.

It’s more than who could strike the largest check. It’s who’s going to care the most. And that’s us. So that’s a long-winded way of kind of showing you how I started and how we ended up where we are today.

Scott Bursey (07:30)
talk about rolling your sleeves up and applying yourself. That is awesome. Matt, you’ve built a reputation for sourcing 92 % of your deals off market. In today’s highly competitive environment, how do you maintain that pipeline without succumbing to the institutional bidding wars that have compressed cap rates in other sectors?

Matt Ricciardella (07:37)
Thank you.

Well, you know, we made a promise to our investor, Scott, and that promise was we were going to do everything we can to drive the best overall absolute return possible. use in your words, if we succumb to bidding processes and auctions and bidding against other buyers that are in the space, which this has become a very heated space, these assets have become coveted. If we were to do that,

we would sacrifice returns. And that’s not a promise that we made to our investors. The promise that we made is we’re going to do everything we can. And that requires rolling up your sleeves, to use your words, a lot of hard work, getting in front of these legacy owners, and identifying Crystal View as the ideal suitor for the asset. And by doing that, we’re not competing with the large institutional capital providers that are in the space. And we could really buy at a fair valuation.

And then we could take our vertically integrated organization where we have an in-house property management asset management team, identify where those properties are underperforming, and then execute on a business plan to refine operations and really drive net operating income so we could deliver the risk adjusted returns to our investors that we promised to them. So that’s why we do it.

Scott Bursey (09:17)
That’s a,

yes, ⁓ and that is a huge edge. In a market full of bidding wars, staying vertical and off market is the only way to actually project margins. How are you finding?

Matt Ricciardella (09:25)
It really is.

Well, how do you deliver alpha?

If we’re doing what everyone else is doing, all the alpha is pulled out of what we provide of our organization. You know what mean? You’re basically going to get the bogey, the market average. People pay us fees and a carry to give them a little extra, to give them an edge. And the only way we’re going to give them the edge is we’ve to work our butts off on a daily basis and stick to our principles.

Scott Bursey (10:38)
Hey I love it. Man how are you finding the mom and pop owners who aren’t already being bombarded with the big funds?

Matt Ricciardella (10:47)
Well, frankly, a lot of them are. ⁓ It’s not that we’re finding needles in a haystack that no one found. A lot of these communities that we’re buying, Scott, they’re large. I mean, we’re talking 20, 30, $40 million acquisitions is kind of what we’re after at this stage. And it’s not like those fly below the radar. What it comes down to is a lot of these folks, again, it really means something to them. They have a vision and a legacy.

for this particular property, and they want to see someone carry that on. And typically, a large institutional capital provider, whether it’s a private equity fund out of Wall Street or some large endowment fund, they’re just looking to allocate capital and generate a return. They’re not going to get down into the weeds for us. We’re family run. We’re going to get down into the weeds. So that alone is an edge.

That alone allows us to differentiate ourselves. Again, it’s not who could just strike the largest check. And it’s about building the relationship. This is a relationship business. People like to do business that they see, know, like, and trust. we invest that. mean, again, I’m almost on a weekly basis. I’m out on the road visiting with somebody. And that’s where the magic happens. You can’t win in the real estate game by sitting behind your desk. You got to get out in the field.

You got to get in front of the sellers. You got to get in front of your managers. You got to see what the competitors are doing. Because if not, again, all your alphas whittled away. You’re just going to be average. And that’s not an option for us.

Scott Bursey (12:25)
It doesn’t sound like it. No, those relationships are so critical. And beyond capital, what is the most important non-negotiable metric you advise your clients to track for long-term portfolio health,

Matt Ricciardella (12:31)
100%.

You mean our investors?

Scott Bursey (12:45)
Yes.

Matt Ricciardella (12:48)
You know, I think each investor, Scott, is different. They’re driven by different metrics. You know, some folks are very long-term oriented, where they’re kind of, they’re looking for tax advantages, which these, owning these properties provide. Others are looking for the highest cash on cash return. Others are looking for the highest IRRs. You know, it completely depends. And what I find is it depends on where they are in their life cycle. You know, somebody,

who, and this is kind of an interesting conversation, because we’re just now talking about how we’re going to devise our vehicles in the future, because a lot of our investors are looking for us to buy assets and basically never sell. So think about it like an evergreen, an open-ended fund. And we really want to provide that product. And more of these larger legacy investments, they’ll go in there. You’re not going to probably hit the high cash on cash returns.

but you are going to be able to own these assets for decades upon decades and you’re going to drive unbelievable value by because they’re not building any more of these things. You’re going to own something that’s going to become in super high demand where the supply of it is actually shrinking. So that’s on one side. On the other side, we were thinking of having another vehicle that’s more, we’re going to buy distress and we’re really going to focus on

driving value quickly, whether it’s bringing rents to market, increasing occupancy, ⁓ bringing in new homes. And what that is going to provide is higher cash on cash, higher IRR, but we’re probably going to flip out of and sell the properties within those vehicles quicker. So you could kind of make both sides happy. They can make an allocation if they want the higher IRRs on one hand. And then if they’re looking for the more legacy long-term holds.

that they’re going to really drive the most absolute value, they’ll have that in the Evergreen Fund.

Scott Bursey (14:47)
point well taken. And man, interested to know how do you help your clients to find their ideal deal? And what are the two to three filtering questions used to quickly disqualify deals that look good on paper but are fundamentally flawed?

Matt Ricciardella (15:47)
Yeah. So our clients, Scott, they come to us. don’t really… The structure of a fund vehicle is we really… We talk to them about deals we’re doing, but unlike a syndication where you’re marketing a single asset, what they’re doing is this is a blind pool vehicle. So they’re investing in the fund. And then by virtue of that, we’re buying a portfolio of assets where they get diversification, where we don’t need their consent to really buy anything. But what we do…

is we provide them parameters around what we like and what we invest into. And that’s how they make commitments to Crystalview. Of course, along with that is our historical track record performance, the referrals that investors give other investors. But hopefully that answers that question.

Scott Bursey (16:37)
yes, it does very clearly. And Matt, beyond capital, what is the single biggest bottleneck you see right now for real estate professionals trying to move from a transaction focused business to a scalable enterprise?

Matt Ricciardella (16:56)
systems. We were talking about that before the call. You know, I think the biggest bottleneck is yes, it’s a challenging environment to raise capital. ⁓ It’s a challenging environment to find great deals and great value in the marketplace. But what’s also very challenging and where I see a lot of our peers and competitors make missteps.

is they don’t have the vertically integrated organization. So what they’re doing is they’re buying marketed deals, they’re participating in auctions, they’re paying full value. And then after they do that, they don’t have the infrastructure and the team to effectively execute a business plan and create value. They’re finding a third party property management company. They’re engaging them and then they’re kind of hoping that everything works out. Well, we always say hoping is not a strategy. We control our own destiny here.

And the only way you’re going to do that is you’ve got to control that process from A to Z because nobody, and you know this, nobody’s going to care like the owner. So that’s where I see a lot of issues happen in our peers and competitors because it’s a busted process. The third party property manager is going to collect the rents, they’re going to give you a balance sheet, a P &L, and that’s about it. But in terms of bringing in homes, where are we going to cut costs?

How can we enhance the curb appeal so this is going to be a better positioned community? The marketing, all of that is internal here at Crystal View. And that’s what’s really driving our alpha.

Scott Bursey (18:25)
It all boils down to preparation. Having a good game plan. Absolutely.

Matt Ricciardella (18:29)
Yeah, team. A good game

plan, a good team, the infrastructure, the wherewithal, and then being willing to put in the work. You know, at the end of the day, you gotta be willing, this is not something that kind of falls in place. You gotta work tirelessly to execute this thing.

Scott Bursey (18:48)
And Matt, what major market risk or threat are you watching most closely right now? I gotta ask you.

Matt Ricciardella (18:57)
Yeah, know, several. ⁓ Let’s be honest with one another. We had this discussion before our call. I could never sit here and say, hey, we’ve got no threats. I’m not worried about a thing because if so…

I wouldn’t be a prudent capital allocator. You should always be thinking about what’s looming over the horizon and how to position yourself to mitigate those risks and those threats. And I see them differently in both asset classes that we own. On the self-storage side, a threat that has been happening that’s starting to abate is oversupply. Certain markets have been very much oversupplied. There’s been a building boom right after COVID, and it’s been

challenging

to raise rents and it’s been challenging to increase occupancy in those markets quite frankly. But we’re luckily in mostly the secondary and tertiary markets and as a result of that we still have been able to really grow revenue and execute our business plan. But that that’s certainly been a threat in the storage space. But now because of inflation and interest rates that the new supply coming to market has been cut back drastically.

So I think that’s going to be that will bode well for that property on the manufactured housing side. It’s very different. You’re not seeing virtually any supply come to market. So very supply constraint, NIMBY, not my backyard. Nobody wants to see a new mobile home community built. But the demand for these things is through the roof. mean, the actual residents that want to buy homes in our communities is higher than any time I’ve seen in my career. And I’ve been doing this for

close to 20 years. The reason for that is you’ve got inflation, you’ve got the cost of a stick built home, you’ve got interest rates where they are. cannot afford, most people can’t afford to buy a five, $600,000 home on the salary that they’re on, but they can afford to buy an 80, $90, $100,000 double wide or single wide in our community, which is beautiful by the way. So we give them that opportunity to live the American dream and we could grow.

our occupancy and we could deliver better returns for our investors as a result. So it’s a win, win, win across the board. But the threat that I see in that industry is regulatory red tape. know, if rent control comes into some of these markets, our ability to keep up with inflation is taken off the table. And that’s a real, that’s a real threat if we’re going to be honest with one another. So.

Scott Bursey (21:35)
point well taken Matt if you can walk us through what is your most valuable non deal related metric for identifying you know the health of your enterprise right now.

Matt Ricciardella (21:49)
Yeah, great question. Culture. Culture, culture, culture. You know what I mean? I think that’s what it all comes back to. And it starts at the top. You know, for me, I was chatting with you briefly. I’m out on the road. I’m visiting with our managers on a daily basis. We have a very flat structure here. It’s non-hierarchical. And it really shows because I sit down, I have lunch with our management teams that are on site.

and I want to hear what’s going on, what’s working, what’s not working. I give them that platform to open up and give me the raw honest truth. And then I could go back to my team at the corporate level and make adjustments to make sure we’re operating more efficiently to alleviate those bottlenecks. Because that’s at the end of the day is going to drive more value. But it’s really about culture. This is not a business where a CEO could come in.

kind of sit back at their desk and bark orders and expect this thing to run right or sit on the beach and just ask, you’re going to have to roll up your sleeves and get down in the trenches with the troops if you want to win. And that’s the advice I’d give anybody who’s thinking about getting into the investment management business. This is not a passive game. You got to love your work. You got to love your craft and be passionate about it. And then it just kind of resonates from the top down when they see that.

It’s either get on the train or find somewhere else. And this is not for everybody. doesn’t make them a bad person, Scott. But we want people that are passionate about the business. Because if they’re not, they’re just going to slow the rest of us down.

Scott Bursey (23:30)
And the big nugget I’m taking away from that, Matt, is be involved.

Matt Ricciardella (23:37)
Yeah, 100%. Be passionate. Yup, you gotta be involved.

Scott Bursey (23:39)
Have that interaction. Absolutely. You bet.

And the last question I have here for you. What is a major lesson or perspective shift you’ve embraced recently that has fundamentally changed the way you approach market opportunities?

Matt Ricciardella (24:02)
You know, I think it’s a great question. I think when you find a niche, and this is not only an answer to your question in the investment business, but in life in general, I think we as people within our human nature, if something’s working for us, we have this kind of tendency to dabble, right? Like you have…

Understand what your circle of competence is. Like as an example for us, our circle of competence is we buy manufactured housing communities. We create real value through our vertically integrated platform. We’ve got an edge in terms of how we source deals. That works really well. You know, I’ve been guilty of going out there and dabbling and trying other things and trying other hybrid businesses from here.

And if you don’t have the core infrastructure, it’s just going to pull your attention away from what you do so well. So my advice would be when you find your circle of competence, which you understand, and you find your edge, lean into it and be the best, rather than dabbling in eight different things and ones that are pulling your attention in eight different directions.

Scott Bursey (25:13)
Absolutely, it all boils down to focus and commitment.

Matt Ricciardella (25:17)
Yep, maniacal focus and be a master at your craft. Don’t be a jack of all trades. That works for some people, but it doesn’t work for me.

Scott Bursey (25:29)
Point well taken. And that’s an incredibly valuable takeaway, Matt. Thank you for sharing your deep expertise with the Real Estate Pros community.

Matt Ricciardella (25:41)
Thank you, Scott, for having me. It’s been a pleasure.

Scott Bursey (25:43)
Before we let you go though, for our listeners who want to follow your journey or find out a little bit more about your culture, how can they contact you?

Matt Ricciardella (25:55)
Yeah, so anybody interested in learning more about what we do at Crystalview, [email protected] or feel free to visit our website crystalviewcapital.com.

Scott Bursey (26:08)
Awesome. Matt, this has been a pleasure.

Matt Ricciardella (26:12)
It’s been a pleasure. It’s been all mine, Scott. Thanks for having me.

Scott Bursey (26:16)
And thank you to all of our listeners for tuning in. If you found value in today’s episode, make sure you’re subscribed. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.