Mat Simmons on Market Shifts, Diversification & Deal Flow

Mat Simmons (00:00)
we are. And the big thing, like I said, is making sure it’s diversified, right? We’ve, we’ve, we’ve all been taught how, how, you know, I’m 45, right? My whole life I’ve heard diversified, diversified, diversified, right? It protects you. But then us operators in real estate, like we hone in on one asset class only, and we do everything based off of that one asset class. And I think that worked for a period of time, but I think nowadays with the way the market environment has been,

I think diversification is really what’s going to save a lot of people.

Cody Crabb (02:03)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. And today we have Mat Simmons, founder of Simm Capital in the greater Pittsburgh area. He’s been in real estate since 2006 and he’s built his business by adapting through multiple market shifts from value add multifamily to affordable housing and now to like a pretty well diversified real estate fund across multiple asset classes. He’s going to talk to us about, you know,

how to shift with the market and kind of these pivots that he’s seeing and kind of why he decided to do those things. Mat, thanks for joining us today. Of course, yeah. So take me back a little bit. I love to hear the superhero origin story. Can you take me back to 2006? Like how did you get into real estate in the first place?

Mat Simmons (02:35)
Thanks for having me on. Happy to be here.

I’m

Yeah. So I was, um, a part of, was a partner in a business here locally in the Pittsburgh area. and, my partner and I basically ended up, well, we sold the company in 2006. and my, I, at that point I had no idea what I was doing. I was young. I was 26 years old. I was like, okay, I have some money. I’m not sure what to do, but I know real estate is kind of like a good thing. And so I was one of those guys that just decided, okay, I’m going to learn this myself and just dove in kind of what both be.

Cody Crabb (03:09)
you would be shocked at what percentage

of guests we have that say that exact thing. like, hey, I guess rich people have real estate. Might as well do that. Yeah.

Mat Simmons (03:15)
Yeah, right.

That’s kind what I looked at. was like, okay, well, we know, you know, 90 % of millionaires at least either made their money through real estate or have a large real estate portfolio. So I was like, okay, why? We’re not going to reinvent the wheel here. Let’s just let’s just go with it. And so that’s what I did. I mean, I just and I just started buying my own single family rentals in around the area.

Cody Crabb (03:25)
Yeah. Alright. Yeah. Yeah.

Mat Simmons (03:35)
And that grew kind of between 06 to 13 while I was doing some other business ventures and, you know, saw some success with those business ventures, saw some failures with those business ventures. But the one thing that was kind of constant was the real estate. And I kept kind of adding to the portfolio and growing it.

That’s really what provided the kind of foundation for my family and I through those years that when, you know, come 13, well, I had a really bad accident in 2011, was laid up for about a year and a half. and the real estate kind of helped get, get us through that tough time. And when I exited out of another company in 13, it was just kind of like the natural evolution to kind of say, okay, let’s just do everything real estate focused.

And that’s when the fund was born. That’s Simm Capital was founded.

Cody Crabb (04:21)
Gotcha, okay, cool. Yeah, and I think what you said just now about that was able to carry us through, people sometimes forget that even if you’ve got something like a real estate portfolio, you still have just as big of a chance of something like that happening to you. So your family could be really grateful that you have something like that in a situation like that. ⁓ Yeah, so how did that accident change? Was that a pivot point for you in terms of like,

Mat Simmons (04:36)
Sure.

Yeah, absolutely.

Cody Crabb (04:50)
how you thought about what you wanna do going forward or was it mostly just like, all right, let’s back in the saddle, let’s just do this.

Mat Simmons (04:55)
No,

it did. changed. I mean, it changed a lot for me. So I’m a daredevil. Like I’m an adrenaline junkie and always have been. I had a daughter when that accident happened. So I broke basically what happened is I broke my back. I shattered my back in three places. I broke my pelvis in two spots, compound fracture, right legs, broke six ribs. So I was like, I was, I was in ICU for a week. I was on bed rest for three months. I couldn’t move. I was in a wheelchair for like six months. Like it was a long

Cody Crabb (05:13)
my gosh.

Yeah.

Mat Simmons (05:22)
recovery and it shifted my, my, my priority list basically, right? Because my daughter was just, just, just shy of two years old at the time. and it’s funny because I remember, so this was all from a motorcycle accident. and I remember when I got back up on my feet, that

Cody Crabb (05:23)
Yeah.

Mat Simmons (06:30)
I got back on the bike, went to the track, my wife was with me at the time, my daughter was with me at the time, I felt good on the bike, on our way home, and I remember she pulled this picture out of her purse and she shows it to me, right? And this picture is of my daughter sitting on my lap while I was in the wheelchair. And it was like, that’s the moment where everything kinda clicked for me and shifted and said, my priorities have to change at this point.

And, you know, the real estate that we had, well, it wasn’t a huge portfolio at the time. It was enough to basically get us by because I wasn’t able to go into the business that I had at that point, you know, into the office, things weren’t running well. vendors weren’t being paid, you know, we were losing clients left and right. and it really, what I thought I had set up properly, I really learned that I didn’t have set up properly. it, it, it really was a turning point for me, both in business and

personal as to, things have to change moving forward. And so from that point on, I’ve always had this, this mindset of like, I can’t be everything to everyone. I need to surround myself with people that are really fricking good at things that a either I’m not good at, or I don’t want to do, or my time isn’t spent well doing. And that’s what I’ve learned over the years builds real true success, know, true wealth and true success that gives you a really good foundation.

Cody Crabb (07:25)
Yeah.

Yeah.

Mat Simmons (07:51)
So that when you do have accidents like that that happen, if you don’t have that backup, at least you have things that can kind of function and keep moving along.

Cody Crabb (07:59)
Gotcha, okay, so let’s fast forward to the present day. What does the company look like now? What are you involved in and what do you, you mentioned that you’re kind of mid pivot right now. I’d love to hear more about that as well as the reasons why I kind of behind it.

Mat Simmons (08:12)
Yeah,

so up till about 2020, know, basically in the beginning of COVID, we were

our business model was heavy value add multifamily. Typically class C plus B minus value add multifamily. We had a nice size portfolio, a couple hundred million dollars worth of real estate. We saw great success with that and then COVID hit and it kind of as rates started to increase, deal flow obviously dried up significantly and we’re like, okay, we need to pivot. We want to keep growing. We don’t want to sit around twiddling our thumbs doing nothing. We had a good portfolio. It was performing for us. We had, we had a large amount of equity in it so we didn’t have to worry about doing much

there, but we want, I wanted to keep growth going. And so we kind of pivoted to the affordable housing space and it worked really, really well for us 22, 23, 24. And then we kind of saw this, this shift in 25 with the sentiment around affordable housing. And I think a lot of that had to do with, and I’m not going to get political here, but a lot of that had to do with, with

Cody Crabb (09:11)
sure, if it’s what it is,

it’s what it is,

Mat Simmons (09:14)
Yeah. A lot of that had to do with, you know, things being floated out there about budgets being cut or reform on affordable housing or reform on subsidies or reform on low, you know, LIHTC credits, basically everything. Right. and when we saw that stuff started kind of being floated out there into the universe, we saw investor sentiment completely shifted on the affordable housing space. They’re like,

Cody Crabb (09:35)
And do you think that

was kind of a nebulous, like, I hope things aren’t like, you know what I mean? Like, is that just the of the sentiment that was out there or do you feel like that’s really what was going on?

Mat Simmons (10:20)
Yeah, that’s good question. I honestly think that… So people were worried… Yeah, I think probably a little bit of both. mean, you know…

Cody Crabb (10:24)
Maybe a little of both.

Mat Simmons (10:28)
we did a lot of subsidized housing in that portfolio and that fund and it worked really, really well. But when that stuff started being floated out there by the current administration, you saw housing authorities kind of proactively stop raising rents, right? Stop approving rent raises, stop approving new vouchers, right? In, in, basically preparation for their budgets to be cut. Well, that caused us as big opera as, you know, large operators to be like, Oh, great. Okay. Well, we relied on rent raises. You know, we saw, you know, 11 % average,

which rent raises across our portfolio from 23 to 24. You know what I mean? And then it was like 1 % from 24 to 25. And that’s a huge, huge swing when costs are going up, rates are still going up or elevated, maintenance frequencies up, stuff like that. So it all like kind of came to a head and we kind of said, okay, investors, they’re worried about this asset class at least because they don’t know what’s going to happen.

Cody Crabb (11:02)
Yeah.

Mat Simmons (11:24)
We’re already being affected from the housing authorities side of things because they’re even though their budgets haven’t been cut yet. It’s it’s affecting our ability to raise rents and get new vouchers and get new tenants, etc. And so we kind of well and then you saw coming in the 20 later on in 25 the whole floating of institutions are going to be banned from buying single family homes and our affordable housing portfolio. A lot of it is single family homes. And so

I’m the type of person where I don’t want to sit and wait for something to happen. I want to be proactive about stuff, right? I want to kind of get ahead of it. And so all of that stuff combined is kind of what caused me to say, okay, we need to now pivot. We need to get rid of a piece of this portfolio. We need to add some different asset classes to it. You know, add some more multifamily to this, go back to a kind of our bread and butter, bring in some commercial properties, bring in some development pieces of it, add a credit and debt portion to it to make it a much more well-rounded diversified portfolio for our investors.

that have non correlated, you know, income streams, right? You know, because if, if single family starts suffering rent rise, that doesn’t affect triple net commercial, you know what mean? And if, if triple net commercial starts, you know, being affected, you know, that doesn’t affect our single family development side of things. So the big focus was to have non correlated, you know, asset classes so that, you know, if one suffers, the other kind of can help prop it up and lift it up. And the pivot has actually worked really, really well for us. We’re still mid pivot. Obviously we’re still kind of

you know, off pieces of the portfolio and obviously we’re adding more to it, but investors seem to be really open and liking it.

Cody Crabb (13:01)
Gotcha, okay. So where are you actually the most bullish right now? Like where do you see things? This podcast listeners are all kind of real estate investors that are oftentimes kind of on the new side of things. I’d love to kind of hear like if you were gonna advise somebody on like what to do based on kind of what you’re seeing, I’d love to know kind of what would you say?

Mat Simmons (13:21)
Yeah.

So stay stay as far away from single family, small, you know, duplex, triplexes as you possibly can right now. Rent growth has become very, very stagnant in that space. Multifamily has been very, ⁓

kind of gridlocked through 25, but we’re starting to kind of see a little bit more deal flow right now. Stuff coming across our destiny pencils out a little bit better. So I think, I think there’s going to be opportunity in multifamily, not class a not B plus stuff, but you know, that kind of class C plus B minus, you know, type of class where, know, maybe it was built in the seventies or eighties, maybe even early nineties. It just needs kind of some upgrades and stuff like that. I think sellers are starting to kind of come back down out of the clouds.

Cody Crabb (13:55)
Yeah.

Mat Simmons (14:07)
and coming down the realistic valuations based off of where rates are and debt costs are. I do see opportunity in commercial, but not any commercial, just your multi-tenant, triple net stuff. ⁓

because that stuff suffered during COVID. And so you can, you can find it right now where you’re seeing distressed operators, not necessarily distressed properties, but distressed operators that are just kind of over it, right? You know, your smaller complexes that have like seven or eight tenants in there that you can pick up for, you know, four or five, six, $7 million, depending on where it’s located, where, you know, they, they haven’t really, you know, raised rents on their tenants or some of their tenants are coming up for renewal. Your occupancy might be a little bit low. but the property,

itself is solid and a good area. So we’re starting. We’ll you.

Cody Crabb (14:54)
Yeah, just

anecdotally, I’ve also heard of a lot of companies kind of rethinking the, you know, the return to office policies and things. I don’t think there’s any, there’s nothing wrong with, nothing wrong with kind of getting, getting ahead of that either. Yeah.

Mat Simmons (15:02)
You’ve a lot of it.

No, no, agree with you.

And then the other side of things is we really like the private debt credit side of things where we’re actually lending to other to other investors. We have a silo in our in our fund that, you know, is we’re just we’re lending out to other other operators, whether it’s developers, fix and flip guys, whatever it might be. Bridge debt. We really like that side of things as well.

Cody Crabb (15:29)
Hmm. Cool. Well, yeah, that’s interesting. think, you know, one side you’ve got kind of these solid commercial opportunities. The other side you’ve got kind of a lending play. It sounds like you really are kind of thinking down the line about what’s going to be happening.

Mat Simmons (15:48)
Well,

we are. And the big thing, like I said, is making sure it’s diversified, right? We’ve, we’ve, we’ve all been taught how, how, you know, I’m 45, right? My whole life I’ve heard diversified, diversified, diversified, right? It protects you. But then us operators in real estate, like we hone in on one asset class only, and we do everything based off of that one asset class. And I think that worked for a period of time, but I think nowadays with the way the market environment has been,

I think diversification is really what’s going to save a lot of people.

And so it’s like from a real estate standpoint, operators most of the time go against what they’ve been taught their whole life with diversification. And I agree to a point where you have to focus on one thing and get really, really good at it. And then you can move on to the next. But for some reason, no one ever moves on to the next. They just kind of focus on just that one asset class and that’s all they do. And those asset classes, I mean,

Cody Crabb (17:24)
Yeah.

Mat Simmons (17:26)
like everything, goes through cycles, right? And I saw it firsthand with multifamily during COVID, late 2020, 2021, the multifamily space completely dried up. was like deal flow dropped by 90%. And people that only focused on multifamily were hurting when those rates started climbing because they couldn’t make anything pencil. But if you’re diversified, you other asset classes that you know and understand and can invest in.

Cody Crabb (17:46)
Yeah.

Mat Simmons (17:55)
There’s always opportunity out there. You just have to find it.

Cody Crabb (17:58)
So when people are making a pivot of any kind, whether that’s to diversify or to change asset classes or to sell or to whatever, make a deal, if they’re kind of doing something different, what is maybe like your top couple of make sure you do this type of thing or make sure you avoid this type of things for a big pivot like that?

Mat Simmons (18:18)
I mean, education is everything. You have to make sure that you fully understand that where you’re pivoting to, you need to understand where you’re going, right? And it’s kind of like that, you know.

Cody Crabb (18:27)
Yeah.

Mat Simmons (18:29)
fail to plan, plan to fail type of thing, right? If you don’t plan ahead for that pivot and plan your pivot, you’re ultimately going to end up failing along the way. I think a lot of people try to fly by the seat of their pants and that’s just a recipe for disaster. Bring in people that, you know, if you’re not familiar with wherever you’re pivoting to, whatever asset class that might be, bring in experts in that space. You know, that’s what we’ve done. We’ve deployed capital out, you know, we like to think of ourselves now as not only owners and operators, but capital.

allocators as well, right? Where we’re basically like fundraisers and we have a big fund. We’re deploying capital out into other experts in their field, right? We’re deploying. So we’re not actually the ones going out and doing the development. We’re not the ones actually going out and you know, doing the value at multifamily right now, although we do some, but we’re actually deploying capital out into other experts in that field as well and letting them do it. And they just give us the returns that we get to our investors. You know what I mean? So

Cody Crabb (19:23)
There you go, yeah.

Mat Simmons (19:26)
know, relying on experts in the fields that you’re pivoting to, to either learn from or actually work with is key when you’re looking to pivot like that.

Cody Crabb (19:36)
Yeah, that’s really good. Because I mean, there’s a word for doing something, like doing something to see if you get massive returns without educating yourself. And that’s called gambling. Like, you can do it, but like that’s just to be clear, that is what you’re doing. Yeah, yeah. Okay, so as you look ahead, what are you the most excited for about Simm Capital over the next year, couple years?

Mat Simmons (19:45)
Roads, right. Most of the time it doesn’t work out. Yeah.

Yeah, so for us, think our continued growth into being more of a capital allocator versus just an owner operator, we see a lot of opportunity there. We’ve built some really good relationships over the years with people across all asset classes, whether it’s luxury development, commercial, multifamily.

ADU development out on the West Coast, things, I mean, we’ve built some really good relationships and we’re transitioning to be more kind of allocators. And I think that allows us to have a lot more growth opportunity because it keeps us from having to continue to scale up personnel to manage everything that’s going on. You know, whether it’s assets that are being managed, projects that are being managed, development, know, permitting, whatever it might be, we can deploy capital out to other experts and let them kind of do all that.

And for us, that’s kind of what I’m really excited about because I can see a lot of growth happening from that specifically.

Because it also helps others, you know, be more successful what it is that they want to do. If, if, if, know, you’re an investor is looking to raise capital to do, let’s say a multifamily project, but you know, they’re fairly new to it. They don’t know where to go. Come to us, you know, cause we know that space. We have the capital. We can deploy, we can co-g, we can co-gp, we can jv, whatever you want. So it gives us a lot more opportunity to actually be involved in deals versus just trying to do everything ourselves.

Cody Crabb (21:24)
Yeah, well that leads me perfectly into what I was gonna ask next, is if somebody’s listening and going, Mat knows what he’s talking about, I wanna work with Simm Capital, who do they need to be, where do they need to live, what kind of opportunity fits what you’re building and offering?

Mat Simmons (21:37)
Yeah, so it depends on the asset class, right? You know, if it’s a fix and flip or something like that, we pretty much look anywhere because that’s a short term type of deal, right? We’re not relying on local government for, you know.

comes to rents and eviction laws and stuff like that. You know, if it’s commercial, we kind of like the Midwest and the Southeast portion of the country. If it’s development, we’re pretty open to a lot of areas. We don’t do anything in New York. We stay the heck out of New York. We stay the heck out of New Jersey.

We like areas that are permitting wise fairly easy to get permitting. ⁓ If it’s anything that’s long-term, ⁓ you know, buy and hold such as, you know, multifamily, we really like the Midwest. We like the South and we like the Southeast. In those, in that asset class, again, not to go political, but we like red states. They’re much more landlord friendly, makes it easier to manage the property if you have to remove tenants, permitting’s a lot easier, et cetera. ⁓

Cody Crabb (22:35)
That’s not even

political. feel that this is practically like, you know, it’s just, yeah. Yeah.

Mat Simmons (22:38)
It is. Yeah. It’s just a practical thing. Yeah. I mean, because

we’ve had, you know, we’ve had assets in like an Ohio, even though it’s kind of a purple state, cities like Cleveland are very, very blue and it takes a year plus to evict people, you know, in Cleveland, cause you have to jump through all the hoops. So we don’t, we don’t want to be involved in that.

Cody Crabb (22:54)
Yeah,

makes sense.

Mat Simmons (22:56)
But yeah, I mean we’ll look at basically all five of the well for the five asset classes You know, we’ll do single-family fix and flips multifamily. We’ll do commercial we’ll do development new construction So, you know, we’re open to looking at pretty much anything

Cody Crabb (23:10)
Gotcha, and so where can they go to find you online?

Mat Simmons (23:13)
Just go to simmcapital.com, simmcapital.com. You can find me on Instagram, real Mat Simmons. My first name’s only spelled with one T, so just make sure you spell it right, you’ll find me. And I can put you in touch with my investment committee, and if you have a deal that you want us to look at, we’re easy to get a hold of and easy to work with.

Cody Crabb (23:29)
Fantastic. Well, Mat, this was great. Thanks so much for coming on and breaking this down for us. This has been really, really helpful for our listeners, I think.

Mat Simmons (23:37)
Yeah, my pleasure. Happy to be here. I love talking about this stuff.

Cody Crabb (23:39)
Yeah. And to

our listeners, thanks so much for joining us as well. If you got something out of this podcast, and I’m sure you did, please go ahead and hit subscribe, like, comment, all the things, and make sure you don’t miss an episode of Real Estate Pros. Until next time, we’ll see you later.