Real Estate Investing: Duplex, Triplex, and Multifamily Value-Add Strategies With Matt Fillipoff

Matt Fillipoff (00:00)
I’d like the great deal. I’ll take the great deal any day. Anytime a great deal pops up, I’m like, what can we do to make this deal happen? We’ve gotten some very good deals. Last year we went on a little bit of a buying frenzy, buying great deals. The project side of it’s been a little bit of a disaster and delays and surprises and tight on the budget and waiting for funding from something and it…

Dylan Silver (00:01)
Taking the great deal.

Matt Fillipoff (00:28)
It’s still been fine. It’s still been fine.

Dylan Silver (02:02)
Hey, folks, welcome back to the show. Today we’re joined by Matt Fillipoff realtor, contractor and multifamily investor based on the Ottawa market in Canada. Matt brings a unique operator perspective by combining deal flow, construction expertise and investment strategy. He’s actively working on multifamily opportunities while helping clients navigate the market, giving him a full stack view of what it takes to find, build and scale real estate deals in today’s environment. Welcome to the show, Matt.

Matt Fillipoff (02:30)
I’m nervous now.

Dylan Silver (02:33)
Thanks. Thanks for taking the time today. Now, when we talk about investing in the multifamily space, sometimes this is people’s segue into real estate. Other times they’ve scaled from other asset classes. How did you get into the real estate space?

Matt Fillipoff (02:35)
Yeah, absolutely.

⁓ bought, I bought a property very young, ⁓ when I think it was 22, I bought a property, ⁓ ended up getting a couple of roommates. He was like, Hey, I’m got a little bit of money coming in here, paying for the house. like, I like this. ⁓ sold that it was just a townhouse. I sold that property, made a little bit of money. Probably should have kept it. but, did that a couple of times. And then I bought another one that I.

wanted to fix up and sell and I was living in it at the time because I was young and it didn’t sell and I ended up renting it out and I thought hey like the cash flow is pretty good on this. I like this rental thing. I got a great tenant the first time. So I had such a good experience that I was like hey I’m gonna start buying more of these. Got into construction a little bit more because we were working on fixer uppers. Got my real estate license and that all kind of tied together to

to compliment one another.

Dylan Silver (03:44)
Now, what drew you into multifamily investing and also too, when we talk multifamily, are we talking small multifamily like two to four units or two to 10? Are we talking much larger like small apartment buildings?

Matt Fillipoff (03:57)
So we, I say we because my wife’s very involved with this business now as well. We, or I started with single family ⁓ because at the time the market was very different. Single family, there was cashflow and finally I made kind of a step and I was actually nervous to go into a duplex saying, this is very different, I think, than buying a single family home, which now I don’t think it’s any different. ⁓

But we kind of took that step of like, I’m to buy a duplex, try this out. I was like, Oh, wow. Now I’ve got two people paying me rent under one roof. Um, we have gone single duplex, triplex, uh, up to, up to 14 units. Um,

Dylan Silver (04:40)
and scale from there.

Matt Fillipoff (05:29)
Two, three units are great properties, I personally believe. ⁓ But also we have this 14 plex that’s in our portfolio that we absolutely love. It’s got a great big lot that someday will be hopefully developable. ⁓ But the small multifamily, I’ve always done well with it personally. I like it. I find they’re pretty easy to control, pretty easy to manage. ⁓

Personally, have the opinion. I’ve heard a lot of people say, you you want to buy bigger buildings. You want to have more units under the same roof. You’re only doing one roof. You’re only doing one ⁓ boiler system, for example, because obviously heat’s a big deal for us in Canada. ⁓ It’s still cold. There’s still snow on the ground here. It’s terrible. ⁓

Dylan Silver (06:16)
Yeah.

What makes a multifamily deal ⁓ pencil and succeed on the exit as well when you do ultimately look to sell these deals? What makes a multifamily deal work?

Matt Fillipoff (06:34)
I’m very hands on because we’ve got the construction side of things. ⁓ So we’re doing, we’re adding a lot of value with renovation. So I think a lot of investors I’ve seen are doing, ⁓ they’re looking for something, hey, I’m just going to write a check. It’s already got tenants. Maybe it’s got a little bit of cashflow. We’re looking for a vacant duplex, a vacant triplex.

We did, we bought a four o’clock a couple of years ago where two units were vacant and then we were able to build a fifth unit in the basement. That’s a lot of added value where in a year or two, we can create a lot of equity, go to the bank, refinance this, get our money back. And then I don’t, we don’t mind sitting on these properties a little bit longer. ⁓ we also have, I think a bit of a longer term exit strategy that we’re not looking to sell these properties anytime soon.

So for the investor that’s looking to even a duplex or triplex, I know guys, they want to buy a property, fix it up, sell that duplex or triplex, basically flip it. They’re looking at numbers a little more cautiously, I think, because they now have to turn around and sell that for a profit fairly quickly. When we’re going on to a property for 10 years or planning to hold a property for 20 or 30 years, naturally it’s going to grow on its own, even though we’ve already done a bunch of work as well.

Dylan Silver (07:42)
Right.

How does being both a contractor and a realtor give you an advantage when evaluating these deals?

Matt Fillipoff (08:00)
It’s terrible. I’m losing my mind. I’m just so busy. I actually made a note about that because I was going to mention it for somebody who wants to grow. Like I want to keep growing. I want to keep building this portfolio for somebody who is an investor and wants to keep adding doors. ⁓ These business will complement each other. So this week we were trying to get occupancy on an apartment, an example. We bought a single family home, turning it into two apartments.

We found a tenant for the front four bedroom apartment. We needed to get our occupancy. needed to pass our inspection. The building inspector says, Hey, you need to do this, this, this. And by the way, I want seven windows changed tomorrow. And because we’re so involved, we are very involved in, in a window, ⁓ business. you know, we’re calling all, all the people we know that have overstock of windows can, can this fit, can this fit?

and we’re able to find windows on super short notice just to get this done. So I think having a business that complements your investment business as a second, one is a secondary source of income, but two, it’s going to help a lot of realtors, a lot of mortgage brokers who know they own rental properties, they’re investing, ⁓ probably not as many contractors as you’d think.

But when I talk to like my plumber and my electricians and they say, hey, we want to start buying properties. Well, yeah, you can do most of work yourself. You’re handy for the renovations. You got the contacts, you know, other trades. This is, I think, a very good way to to. ⁓

Dylan Silver (10:12)
bridge the gap

into ⁓ an area where you won’t have to hire out, right? Because if you understand the trades, then you’re not having to manage crews without understanding realistic deadlines, scope of work. That’s a huge thing right now. was talking with another multifamily investor, different market, but same principles apply. You could walk into a project and if you don’t understand the scope of work from the get-go, that’s gonna be a huge…

know, drain on your exit or if you’re doing any type of, you know, value add rehab, it’s going to just have this snowball effect, right?

Matt Fillipoff (10:50)
Absolutely. we like on the construction side, we focus on for clients, which we don’t do a lot of, but we focus on egress windows. So basement apartments, people are adding either a window to add a basement apartment or they’re adding ⁓ walkout basement. And all the time you get these homeowners or new investors and they don’t know what they’re doing. They’re not really sure. They don’t know what stuff costs.

They can’t walk into a building and say, okay, you know, I know this is going to cost me 50,000 bucks. You tell them, Hey, this and this, and this is going to cost you 15. And their eyes kind of pop. they say, wow. I didn’t budget for that. Well, it’s a lack of experience. doesn’t mean it doesn’t work. Doesn’t mean, you know, Hey, if you’re not, you know, anybody can invest and anybody can be a property owner. But I think the more you’re involved.

the better. Yeah, there’s lots of, don’t get me wrong, there’s lots of people that are very passive and they do very well. I’m not knocking that, but from my experience and the way I’ve always done it is the more involved we’re very hands on with our property management. I’m very hands on with my paralegal for when we’re doing evictions and stuff. The more hands on the dirtier I get my hands, the more I think I’m going to be able to wrap my head around the whole picture. there is, I mean, as you know, like there’s a lot of

Dylan Silver (11:45)
on a hands-on level.

Matt Fillipoff (12:13)
There’s a lot of hats you’ve got to wear when you’re an investor and if you’re very involved.

Dylan Silver (12:18)
What’s happening in the Ottawa market right now that investors might be overlooking?

Matt Fillipoff (12:23)
⁓ Good question. Prices have gone down a little bit. We tend to stick personally to the outskirts, so we’re sticking to stuff maybe an hour from the city. Ottawa is a good base, but I do see investors paying more in ⁓ the city and getting lower cash flow growth. Personally, I don’t really see the growth there right now. ⁓ So when I’m talking about some of these city and

call them city investors. They’re saying, hey, you know, have you have you looked 45 minutes south of Ottawa? Have you looked at Cornwall? It’s an hour from Ottawa. You know, you can buy a duplex for 200, 250 thousand dollars and the numbers make sense here for that price. And sometimes we go, oh, yeah, I never really thought of that. And other people are, oh, hey, you know, I’m driving from Toronto to look at properties on the outskirts of Ottawa because I see the cash flow returns. So

⁓ I’m a cash flow guy so I always think maybe some of the city investors are kind of shortchanging themselves that there’s cash better cash flow opportunities. ⁓

Dylan Silver (13:31)
Now, when you’re talking about value add rehab and then also being a cash flow guy, when you’re looking at these multifamily deals, are you looking for opportunities where you can increase rents as soon as you acquire the property? Or is this a play where you’re looking at doing some type of value add rehab, but not necessarily coming in and increasing rents?

Matt Fillipoff (14:35)
It depends. So the ideal scenario is, you know, the vacant duplex, the vacant triplex. In the cases where, let’s say there is, you know, let’s say there’s a five or six unit building, there’s three or four occupied units. We’re not, those people have been there, you know, five, 10, 25 years, some of them, we’re not looking to make any changes. We’re not trying to go in there, hey, we’re going to redo this, crank your rent, try and increase your rent.

There’s a lot of rules with it for the market that we’re in. We can’t just say, hey, we’re going to give you a new kitchen, new bathroom. And by the way, we want $500 a month more. It just doesn’t fly.

Dylan Silver (15:09)
Now, if someone wanted to break into the multifamily space today in the Ottawa market, what’s the first move that they should make?

Matt Fillipoff (15:19)
Call me. No, I’m just kidding. I think people don’t realize, some people have money to invest, some people don’t. see a lot of like, invest with other people’s money, this and that. I think there’s a lot of opportunities people don’t realize. Like call, there’s mortgage brokers you can call, that’ll help you find money, find a second mortgage to help you get into the market with.

no money or very little money without having to drag partners into it. I think that some people are a little bit scared of the hands-on, getting their hands too dirty, taking on too big of a project, which is fair. Like there’s, I’ve taken on a few projects that I’m, you know, on edge about. ⁓ But I also think that, you know, people aren’t

They’re not, and they’re not thinking outside the box enough. They’re not looking, I’m talking as, go look at a single family where you can very easily convert and add a second unit because you’re instantly adding value. You know, go look at like we’d like to, I’ve been talking about for a long time. We’d like to start looking at duplexes, let’s say, or triplex where we can build an addition and add an extra unit or add that fifth unit to that fourplex we had bought.

Dylan Silver (16:18)
How are you? Cash flow.

Matt Fillipoff (16:34)
⁓ And they are big projects, like they are, it is a lot of work, but it’s not as scary as people think. ⁓

Dylan Silver (16:43)
Yeah,

I think you know, a lot of times people think that adding an additional door means additional issues. But then when you have a vacancy in a single family home, well, now you’ve got to foot the bill your entirely yourself and you maybe have to pivot your strategy, right. So there’s risks to every strategy. And certainly in the multifamily space, as soon as people start to get into it, there is a mentality of which exists for a lot of folks go big or go home. If you’re going to buy 20 units, you might as well buy 50 that type of thing.

A bonus question for you here, Matt. Would you rather have a great deal with average execution or an average deal with great execution?

Matt Fillipoff (17:22)
I’d like the great deal. I’ll take the great deal any day. Anytime a great deal pops up, I’m like, what can we do to make this deal happen? We’ve gotten some very good deals. Last year we went on a little bit of a buying frenzy, buying great deals. The project side of it’s been a little bit of a disaster and delays and surprises and tight on the budget and waiting for funding from something and it…

Dylan Silver (17:23)
Taking the great deal.

Matt Fillipoff (17:50)
It’s still been fine. It’s still been fine.

But we found some very great deals. We bought a very old building that had been sitting vacant for quite a long time. We are putting five apartments in that building. So huge upgrade to the hydro service coming in. Tons of demolition, tons of new framing, whole new floor plans, paid, we’ll say peanuts for the property.

And the cost of those renovations are going to be so high. But when we sit down and we look at the cashflow, once this is fully occupied, it’s like, an, it’s an excellent project. It’s just, most people would just be very, very uncomfortable with that. I’m even uncomfortable doing it, but I see, I see the benefit in the lawnmower.

Dylan Silver (18:33)
make the

money in the acquisition, right? The money’s made at the acquisition. We are coming up on time here, Matt. Any new projects that you’re working on and then as well, what’s the best way for folks to reach out to you?

Matt Fillipoff (18:45)
Yeah, we’ve got lots of projects on the go. ⁓ There’s always more coming. We’re always willing to take private money for deals if people are looking to just very passively lend out some money. ⁓ Here it’s, you people can put in TFSA or RSP money that goes through a trust company that they manage everything. ⁓ We steer away, I steer away from partners because I just don’t play well with others. ⁓

but there’s lots of opportunities for me to help people find a deal for themselves, or again, if they wanna just passively get a good interest rate on their money and be very hands off, ⁓ we do that lots as well. ⁓ I’m on Facebook, I’ve got my Facebook page, it’s Matt Fillipoff at Explorer Realty. ⁓ I’ve got my website and I’m not hard to track down if somebody’s looking for me, so hopefully.

somebody will give me a call, but we’ve got lots on the go. maybe, maybe nobody will give me a call. That’d be great.

Dylan Silver (19:47)
Thank you so much for joining us today. Thanks for taking the time.

Matt Fillipoff (19:50)
Awesome,

thanks, Dylan.