ITF 81 | Financial Freedom

 

There’s no magic in finding the path to financial freedom. It doesn’t happen overnight. You have to have the knowledge you need to get there. For Matt Amabile, that path started with self-education through books. From then, he met an investment agent who helped him begin investing in real estate properties. He eventually expanded his portfolio by having more units and properties. Now, he is on the path to complete financial freedom with a passive income from rental properties that covers his average monthly spend. Be inspired to change your life to a satisfying one by listening to this episode!

If you want to join our affiliate program, go to www.rentredi.com and use our CODE: INVEST2FI to get 50% off on your first 6 months.

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The Path To Real Estate Success And Financial Freedom With Matt Amabile

I’m here with my cohost Zeona McIntyre, aka Z Money. How are you doing, Z?

I’m doing great because I just put an offer on a house and I haven’t done that in months. I’m hungry.

What do you think? Where’s the house? What does it look like?

We’re going to get it. It is a short-term rental potential in Washington State. Every time I’m zooming around on the map, I feel like I’m Brandon Turner. I’m like, “Where did Brandon live over here?” That has been fun.

Why Washington State? What’s up there besides rain in Seattle?

Moody cabins that look like Twilight and the sound is incredible. There’s so much water everywhere and kayaking. When global warming happens, you’ll have something to drink. I get scared about buying properties in places where you’re right on the edge of the water like Florida or places where hurricanes could wipe them out. I feel good up there.

How far is that from Northern Idaho?

I don’t know but I know it’s about an hour and a half from Seattle, so it would probably be a little bit of a trek. I see where you’re trying to go there. You’re trying to get to my cabin.

I love to go hang out in your cabin. Fingers crossed. You’ll have to keep us posted on your house. That’s super exciting. We are starting to get the itch to look more in Idaho, Denver and a couple of different places to maybe get some Airbnb combo, maybe do some land. What do you think about that, Z? Let’s say I want to buy a piece of land and throw a year up on it as an Airbnb. Do you think that would do well or are we out of our minds?

People do it but if you’ve never done it before, are you going to do it well? I don’t know. I would say partner with somebody who does it. That’s a good way to go about it. I don’t like buying land. Maybe that’s just my mistake. You don’t have utilities and you have to figure out water. It seems like a big pain. That’s what I think.

I just want to get your perspective. We may or may not listen to it.

I know a lot of people want to do tiny homes and stuff. My sister lives off-grid in her tiny home in Maui and they have a composting toilet. Are you going to have somebody taking out somebody else’s composted junk? That’s intense. They have propane. They are off the grid but there are not that many things. It’s more of an experience where somebody has to be a little bit rustic to stay there. It’s not a pampered stay.

You’re not getting the luxuries. You’re not living this luxurious human life that we now have. We’re winded for 300 years and that’s how everyone lives. Speaking of trashy into classy, we got Matt Amabile on our show and he has a tremendous story, which I am semi-obsessed with because he full out sent it. He started off with a monstrous quadplex of a project and it made him fearless. Now, he’s crushing it and he’s got 23 doors and hopefully 25 soon.

It’s an inspiring story. It blew both of our minds towards the end. We get a lot of laughs in there, so check it out.

Let’s bring him on the show.

If you’re thinking about becoming a real estate agent like us, you might want to go to Kaplan. That’s where I got my license and I found that they made all this dull information interesting and memorable. If you’re looking at getting your license, see if they have your state. They cover a lot of states but not all of them. If you want to get a little discount, use our code Invest2. Thanks, guys.

Matt Amabile, welcome to the show. How are you doing?

I’m doing great, Craig. Thank you, Z Money. Nice to meet both of you.

It’s nice to have you.

We’ve been chatting back and forth on Instagram here for some time now. I’ve been following along with your story. It’s awesome to finally get you on the show and hear a little bit about it. Why don’t we take it way back to when you first heard about financial independence? Tell us about that moment.

I went to Rutgers University and graduated there with a Supply Chain degree. I came out with a job making around $55,000. I had some debt in my name at that point and I was sleeping on my cousin’s couch, and then it all went down. I was waking up at 5:00 AM every day to go to the city, working in this job, and making $55,000. My girlfriend broke up with me. I’m miserable. I have no idea what I want to do with my life so I started reading. Money was what was keeping me sleeping on a couch. I looked up the best personal finance books. The first three that I read in this order were Rich Dad Poor Dad, Rental Property Investing by Brandon Turner, and then House Hacking written by yours truly over there.

That’s a great order. If I’m going to read the first three books, that’s the first three.

That got me interested in financial freedom. I started meticulously saving from there and working on getting my first house hack.

ITF 81 | Financial Freedom
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

How did you pick up Rich Dad Poor Dad? Did someone recommend that to you or were you just googling personal finance books?

That was all through googling. I googled what is the best book that can make money.

Rich Dad Poor Dad is such an iconic book and that’s the way it goes. That shifted your mindset from being a worker to being a thinker and how to achieve this goal of financial independence. You read these three books, what do you do next?

The next book I read was Set for Life. Scott goes through there like, “If you work a sales job and it’s performance-based, you can increase your income.” I started looking at ways to increase my income. I switched jobs to a job that was closer to my family. I moved home, lived with my mom, and started looking for house hacks in that area. I was in the New York City area, which is way too expensive for me. I started looking at house hacks near my hometown. I partnered with an agent that was my dad’s high school friend and we ended up finding a great property for me to offer on.

I’m curious about this agent. Because you went with a family friend, did you feel like they knew about investing and that they could help you with running the numbers, or were you on your own about that one?

I was on my own about that one. That’s where the education from Rental Property Investing, that book by Brandon Turner, using the BiggerPockets rental calculator, doing all that practice, looking at properties and running analysis came into play. Once this agent brought a property to the table and I could run my analysis, I put it through Rentometer and the BiggerPockets analyzer. I saw it was a good deal and I jumped in.

Did you feel any reservations about your numbers? Were you thinking, “Am I doing this correctly?” Sometimes it’s good to have that sounding board if you’ve got an agent that is familiar with investment property. I know I leaned heavily on that. I know a lot of people do. How did that go for you?

My agent did have some investment property behind them, but it was about me being solid with my numbers. In May of 2020, a foreclosure property was up for $125,000 and I offered $155,000 because I knew that the numbers would work so well and I wasn’t scared to jump in there.

This is in New Jersey?

Yeah.

You can get properties for $155,000 in New Jersey?

This is a four-unit property as well. There was a lot of work and a lot of heartaches that went into this first deal.

It sounds like we’re going to definitely need to dive into this. Before we get into all the work and stuff you did, what was the foreclosure process like in general and through COVID? Because you’re in the heat of COVID in May of 2020.

I just made an offer. I didn’t follow it. I was like, “I’m going to let the agent do his thing. He knows how to handle this.” I told the agent, “I want to offer this.” He came back to me and said, “The bank said no,” and then a month later, the bank comes back and says the other buyer dropped out and they’ll accept my offer. Since it was an FHA loan, they don’t want that to take so much time. I got my offer accepted.

COVID started delaying things, which was good for me because I had no idea how to close on a property. It ended up taking me three and a half months to close. Within that time, I was able to do my due diligence and I told the bank that I wanted an extra $20,000 off the property. After my offer was accepted, I got it brought down to $20,000.

I’m curious what would have been the normal term because I have a property under contract now in New Jersey that is a referral. I was surprised that typically in New Jersey, I learned it was 60 days or no quicker than 45. In Colorado, we can close in ten days if it’s gash. We can do it so much faster. I was curious how much delay was there?

Honestly, it probably could have closed way quicker than I did it. I had no idea what I was doing. I was frustrated with all the documents they were asking for. I slowed the process down myself. If you’re closing cash and tell the bank you could get it done, you might be able to get it done quicker.

You said you went ahead and negotiated this thing down from $155,000 to $135,000. How do those negotiations come up? What power did you have at that point so you could negotiate?

It was already two months when my offer was accepted. The bank has been sitting there. I was hoping to close on this thing for two months. I went in and told them that I wanted more equity in my property and the property to close after we got some appraisals back. They said, “We’ll reduce your purchase price by $10,000.” Later down the line, I didn’t want to put so much money in to close on the property so I asked for $10,000 off of closing costs as a seller assist, and they granted that too. It ended up being $8,500 because they couldn’t give me the full $10,000.

That’s something you can do with banks but I imagine in today’s market, being just a seller and a buyer, they would not do that. It was cool to be working with a bank. Craig, have you done any foreclosures? I have not.

I have not done a foreclosure.

I’m curious how they are different.

Your timing was also impeccable. The bank was scared as hell going into COVID that they would never be able to offload this property. The whole economy was in the tank. It’s the perfect timing that you took advantage of. Call it luck or whatever you want, but you were there ready at the right time. I want to throw that out there as well. Let’s talk a little bit about the foreclosure process too.

When you don’t have an idea on what you want to do, read books. You’ll learn a lot and discover what you want. Click To Tweet

The foreclosure process was similar to a normal purchase. I had my title company and attorney come in. They started dealing with the bank’s attorneys. From there, it was a smooth process. I was the one who delayed it because I had no idea what I was doing. The FHA delayed it as well because I had to get an FHA inspector into my house. This is a full gut renovation. We had to lay out a full plan for this property, as well as a budget. I had to go find contractors and get my contractors in place and approved by FHA for a $120,000 renovation. This all had to be done within the closing period. For me as a brand-new investor, that happening in 1 or 2 months wasn’t possible.

Did you do the 203(k) loan?

Correct.

Can you tell everybody what the 203(k) loan is?

203(k) loan is a renovation loan. I’m sure it’s part of the FHA, Federal Housing Administration loan. You can put 3.5% down, but you can get the purchase price of the house and the renovation loan is rolled in. My purchase price ended up being $145,000 and there were $120,000 of renovation costs, so I got a loan for around $265,000 but I had to put 3.5% of that down.

That is such a good strategy to do if you’re looking to get a job. Usually with foreclosures, from my understanding, you have to buy in cash like you’re buying them at the courthouse steps or at an auction. How are you able to skirt around that?

Honestly, I don’t know. This is slight news to me so I should check in on it. They had it for $125,000 and I offered $155,000, but they rejected it. Maybe that was a cash offer that they were hoping was going to come to the table and maybe mine was the only other offer that existed. Maybe that’s how I got it pulled off.

You bought this place for $145,000. You get $120,000 rehab. Your total loan amount is $265,000 minus 3.5%. How much more of a pain is it to do the 203(k) loan versus the FHA because of all the paperwork and stuff you got to do?

It’s a learning process. Bringing in the inspectors and going through all the FHA guidelines, you have to check a lot of boxes. There are a lot of different contractors that are involved in this, plumbing, HVAC, and electrical. Everyone needs to be licensed. Everyone needs to be on the game, filling out permits, getting licensing, and setting everything up with FHA. It is a pain. You have the town inspectors who come in and inspect, but you also have the FHA inspector who makes sure that everything is getting done to the bank’s level.

Would you do it again? It sounds like a huge project to take on for your first investment. For people that are reading this, are you going to recommend that?

It was huge and hard. It took a year and a half for me to finish up this project. I could have been sitting on a lot of debt or paying a lot of debt that whole time but luckily, I got in at the right time. I took advantage of COVID forbearance and it didn’t affect my credit. I was able to modify it and move all those payments to the back of my loan. I would do this 1,000 times over because it’s the biggest learning lesson of my entire life. It has propelled my real estate investing career forward. Now, everything else I do is easy.

Do you think that now, you would be able to get contractors to do the 203(k) loans? Because I’ve heard time and time again that contractors hate doing paperwork. That’s why they like to work with their hands and punch nails and do whatever. I’m shocked that you were able to get all these guys lined up and do the paperwork for you.

It was a pain. That is why it took so long to close on this. Today, there is so much work that contractors have that it would be hard to get somebody to do this. Over this year and a half period, I went through three different contractors and had to get them all set up with FHA again.

Do you have a job during this time?

Yes.

You’re working a full-time job. I take that you’re not doing much of the hands-on work yourself. You’re doing that with all the contractors. How does that work? How are they getting paid? Is the bank that you’ve got your loan with paying them during milestones?

We have the FHA inspector. The contractors do the work and you’re allowed five draws throughout the entire FHA process. If you do more than five draws, you pay an extra $500 per draw. The FHA inspectors come in and take a look at the house. They see the quality of the work that was done and how far along in the project they are, and then they decide how much money the contractor gets. That was a big problem throughout because some contractors thought that they should be getting more money from the bank and the bank didn’t think so. I had contractors leave. I had to shell out some of my own money at times to get the job done.

I want to echo that people talk about 203(k) loans like it’s a God-given gift. It can be great. In your scenario, there are a lot of positives but there are also a whole lot of negatives. You’re funneling money out on your own. No one ever talks about it. All of the paperwork and all the stuff that the contractors have to do, which they hate doing, they don’t like to do that so they walk out and you got to find a new contractor. Doing one of these loans, sure you can do it, but the process might extend and all that. Z, do you have anything you want to add?

I’m curious, did you do your unit first so that you could live there and then start doing the others? What was the process? Was that the last unit?

It was what I was hoping to be able to do. Little did I know jumping into real estate that this property was condemned. You cannot live in a condemned building until every single unit has its certificate of habitability. My town tends to be very tough with getting the certificate of habitability. Taking it from uninhabitable and condemned to livable, modern and new was a process. I didn’t get to move in for a year and a half.

If you have to move in after a year and a half, that gets you past a year mark that you need to do a house hack. Did you ever have to move in or did you still have to move in for a year when the process was over?

No, I did not have to move in. It’s where I’m calling you from right now. I made my apartment a place that I’d want to live in. I like living here, so I did.

Everyone, big news, Invest2FI has now partnered with RentRedi because that is the software system that both I and Zeona use to do property management for our rental properties. It makes things super easy. We can send applications and get background checks and credit checks. When tenants come in, they can pay rent automatically through there. They can submit maintenance requests. You can do everything you need to do for property management all in one place.

ITF 81 | Financial Freedom
Financial Freedom: Be the guy that buys these properties, fixes them up, raises the standard of living, and makes it a good area again.

 

RentRedi is the thing that we’ve done. I’ve been using them for years now. That’s why we reached out to them for a relationship on the show. I’m super excited to have them on board. If you go to RentRedi.com and use the code INVEST2FI, you’ll get 50% off your first six months. Sign up and use the coupon code INVEST2FI. I can’t wait to see you there. Hit us up on Instagram. Hit us up wherever. Let us know what you think of RentRedi. It’s an amazing software. I use it all the time. You can access it from your phone. Thanks so much and let’s get back to the episode.

Why don’t we get into the actual numbers now that it’s all said and done? With the all-in purchase price plus rehab, you’re in for $265,000. What does your mortgage payment look like? What are you getting for rent these days? How does that look?

My principal interest taxes and insurance every month are $1,965. I live in one of the four apartments, and then the other three apartments rent for $3,400.

You’re making $3,400 over about a $2,000 mortgage. That’s $1,400 over the mortgage while living for free. Are those two-bed, one-bath kind of places?

There’s one two-bed and then there are two one-bed downstairs. I live in a two-bed. Once I move out of here, I should expect around $1,300, $1,400 for this apartment.

You’re looking at $4,800 on a $2,000 mortgage. You set some money aside for reserves and all that kind of stuff. You are probably cashflowing about $2,000 a month on this one property. That’s what you are getting paid for all your work.

You’ll love this one. I live in a two-bedroom so I put the other bedroom on Airbnb. I’ve got an extra $300 or $400 that comes in every month from people who want a private room for a night, go stay there and leave.

Not to say that you didn’t work for this. Clearly, it took you a year and a half and you probably ripped a lot of hair out and all that kind of stuff. At least you got paid for your reward which is great, and you learned a whole lot. Do you know what your property is now worth after the rehab and all that kind of stuff?

It appraised at $375,000.

Not only did you make $110,000, just an equity portion of that over the course of a year and a half. That’s a salary for a lot of people. You got a cashflowing asset of $2,000 a month in perpetuity, which is amazing. The power of real estate and the power of that first deal. Even though you couldn’t do the second one quickly, as quick as maybe you wanted to, you got a killer first deal.

That’s another thing. I had to wait time to get into my next deal.

Let’s go into that next deal. I’m curious. You’re still living in the first one. What’s the plan with the second?

On the same street that I have this first one on, I have a duplex down the street. That was the second deal that I ever bought. That was a great deal. I bought that in June of 2021. I saw it brought in around $2,400 a month. It was on the market for $160,000. I knew it would appraise at least $180,000. I went to buy it and it appraised at $220,000 three months later. I bought it with hard money, and then I refinanced it into a 30-year fixed. Within three months, I was able to refinance and get all my money back out of that.

That takes some courage to buy a property with hard money because simply you need 20% or 25% down on that, plus the loan is expensive. How did you go ahead and front of that 25% down payment?

Hard money was only 10% down. $160,000 was a $16,000 down payment. Where they get you on hard money is the fees. I probably paid $10,000 in fees there, but there was no prepayment penalty so I knew I could refinance and grab my money back out quickly.

Was your initial plan to rehab that at all or did you know that it was clearly undervalued and you could just hotel it?

I knew that the value was there. It was undervalued. That’s how I bought the rest of my portfolio. It has been finding these undervalued properties all within the same town and doing it that way.

How do you find all these deals? I can imagine it’s just laying around on the MLS.

The first one I bought was on the MLS for six hours. I got at it and made that offer without even seeing it. I went and saw it and did that work. I had a property with a seller that was under contract at one point, but I skip traced his phone number and I called the seller. He was in attorney review. He liked me and he backed out of that deal. He came and sold it to me. I don’t advocate for that. I’ve got some off-market stuff coming in but most of it was on market. I just got to it real quick.

I see deals on the market all the time, maybe not in your direct neighborhoods. You’re lucky that you live in a neighborhood that is cheaper. This idea that there are no deals left and you can’t find anything on the MLS is BS. People need to get that out of their heads because they are missing out on stuff without looking for it.

The one thing that I focused on was the 1% rule. Now, I know my market. I know the values and the rents. If you know an area rents for X, use the 1% rule. Try and find something that makes sense. Once you find something that works with the 1% rule, do a little further analysis. That could be a new investment property for you.

What I like about it is that the 1% rule doesn’t work for everybody. People get frustrated with that. What I like is having a quick analysis. For me, when I’m analyzing short term rentals, I look at the gross numbers of what it can make, and then I know that if it’s 15% of the purchase price, it’s going to do well. If I’m ready to sort them out, I’ll go in later and do all my numbers. It’s nice to have the quick and dirty way to look at it. For you, it’s the 1% rule but for people, they need to figure out what their quick and dirty is so they can sort.

There are few markets where the 1% rule still works. I know in Denver, you’ll never buy a deal if you look for the 1% rule. What I look for is, “Can I get $1,000 off my mortgage?” I roughly know what the mortgage payment is and that usually works in Denver. Do your quick and dirty and you’ll be able to analyze deals in ten seconds. If they pass the quick and dirty, then you go deeper. You’ve got a larger portfolio. You’re like the deal finder. What your strength is, if you’re going to put yourself in your 20%, is finding good deals. What does your portfolio look like now? Where are your passive income and all that good stuff?

There’s a lot of heartaches that goes into your first deal. Click To Tweet

I just closed on door number 22, and then hopefully, I’ll close on number 23. My passive income at this point with the new property I bought will be around $5,200, after factoring in capital expenditures, repairs, vacancies and things like that. I only had these four units from May of 2022. This place got rented out in June of 2021. From June 2021 to now, that’s when I bought the majority of my portfolio.

For the record, we’re recording this in April of 2022. In less than a year, you’ve gone from 4 units to 23 units and you’ve got a full-time job. That’s almost probably the most impressive part of it all. How are you scaling this quickly?

The main strategy has been deal-finding and learning my finances. Being able to find these properties with around 30% to 35% equity built into them so then I can buy the property with hard money, have that money sit for 2 or 3 months, and then refinance right away. Pull that money back out and go buy another property. It’s basically rinse and repeat.

You don’t even need to rehab these properties.

One of my properties I did. I put a new roof on and new flooring down. It took a week. Now that I did this big four-unit and everything else like that, the small stuff is easier.

My question is do you think it’s risky at all? You’re buying properties for what you think is 70% or 80% of value, but you don’t know. You don’t know what the appraiser is going to appraise that, and you get expensive money. How do you have the confidence to go about and do that?

I just look at it like I’m young and if I make a mistake, I’ll have to make up for that mistake somewhere else. I’ll take that risk. I know two different appraisers in town and they’re not the ones who get picked to appraise my properties, but I call them prior to making an offer. I’m verifying like, “What do you think this property would be worth if you were to do this appraisal?” I’ll usually average the two and it will come out.

Have you had any that come in low? I’ve got one right now on a house that we are helping somebody sell and it came in low, which is shocking because everything is selling for so high right now. It’s screwing everyone.

I had one property that I was hoping would come in around $180,000 and it came in at $164,000 on the appraisal. I was only getting 70% on that refi, so it’s a difference between cashing out $9,000 or $10,000 on the property, which affected the amount that I had to invest after that. So far, everything has been good. The property I bought, I’m doing this with partners. It’s a six-unit deal. I’m getting 50% equity. I know the market. I am doing a rehab on this property. It’s a $600,000 purchase. They’re putting down all the money and it appraised at $1 million. We closed on this, so now my job is to renovate this thing and get this thing stabilized.

That’s a cool $200,000 payday for you. Not to mention when you increase the rents. This is a commercial property so it’s valued differently. Net operating income divided by the cap rate gives you what it’s worth. By increasing the rents by $50 or $100, you’re going to be adding a few zeros to payday. That right there is the power in commercial which we could do a whole different episode on. That’s awesome. I love that.

My analysis in the past was questioning like, “Are my assumptions correct? Is the appraisal going to come in at this rate? Will I be able to cash out?” Now with commercial, I’m moving more to 5, 6 and 8 units, it’s more predictable because I can base it on income. Now all I have to do is analyse. You want to buy good property so you’re not having big capital expenditures, repairs, and things like that. It’s easier to do that analysis for me.

Because there’s no arbitrary like, “What’s that operating income? What’s the cap rate for the area?” It’s a simple division formula and you got your value. If people wanted to do what you’re doing on the single-family level where you started out, it sounds like you want to go more commercial, which I totally understand. It sounds like one of your secret ingredients is getting to know appraisers. Maybe you pay him $50 every time you call them or something. Maybe you have a good relationship where you don’t have to do that. It’s still worth that, in my opinion. Where would you go to find an appraiser to network with and do this for you?

Luckily, my dad’s real estate agent hooked me up with one appraiser, and then that appraiser hooked me up with another appraiser in town. If you asked a real estate agent, they could probably tell you the last person that appraised property in that town. You could go talk to that appraiser and ask if they know anybody else in the area that would be willing to give a new investor. That’s what I always use. I’m like, “I’m a new investor and I like your help,” and see if they will help you out. Pay him $50 and get a quick idea on that.

Your network is always going to be your best frame of reference to get introduced to people. If not, you should be joining your local REIAs and the meetups. Ask your lender if they know any appraisers. Your lender will probably know more than your real estate agent, but your real estate agent may know some too, so ask both. That’s a great start because that seems like the secret formula right there, getting the appraiser’s opinion.

Definitely, and knowing the values.

You hinted on moving towards commercial and bringing on partnerships. Where are you trying to go with this? I like to think about goals and not just collecting more and more. Do you have a cashflow number or do you have something you’re striving for?

I do have a cashflow number. I want to get to $10,000 every month. I have an overall goal and it’s with this town. I grew up in this town for the first seven years of my life and we moved away because it wasn’t a good area. It’s cleaned up over the years but ever since I’ve been living here, I moved back and I’m making connections in the town. I want to be the guy that buys these properties up, fixes them up, raises the standard of living, and makes them a good area again. That’s what has been exciting to me about this area.

Do you want to be the mayor? Do you want to own the town?

It would be cool. One of the first things I did when I bought this property is I found the mayor of the town on LinkedIn. I reached out and said, “I bought this property and I’m trying to clean this up for your town.” He reached back. I showed him the property when it was all done. We’ll go out to lunch every now and then. He appreciates what I’m doing and networking has helped me out there.

You’re going to be taking his job. You’re going to rename the town Amabileville.

That’s funny.

I’m going to visit Amabile, New Jersey.

There’s a town for sale in Colorado, which is so funny. I don’t know how they did that. I guess they got enough of the properties to sell. If you have $6 million, you can buy an entire town. That’s cool.

ITF 81 | Financial Freedom
Financial Freedom: If you have the idea in your mind that real estate is what you want to do and that it’s going to work, find a deal that’s going to work.

 

I was thinking that. I was like, “What if I own this entire town? I could sell it all in one portfolio and somebody would technically be buying a town.”

You would be the mayor, secretary, treasurer. You do everything. I think about this randomly. Sometimes it is stupid. It’s crazy that the French gave the US the entire Louisiana purchase for $10 million. Think about how much land that covers. Even with inflation and stuff, it’s like, “Holy shit.”

It doesn’t even seem like it would make sense back then but we got it.

That’s real estate. We need to head into the final part of our show. Before we get there, Matt, are there any words of wisdom you want to impart to our audience?

From my first deal, what I learned is if you have the idea in your mind that real estate is what you want to do and that it’s going to work, find a deal that’s going to work. Even if you’re doing a renovation for a year and a half, know that it’s going to work out once it’s done and once you have that asset.

When in doubt, zoom out. That’s good advice because your problems right now are so small and there’s so little. If you zoom out to a 3, 5, 10-year time period, you’re going to forget this problem existed. If you’re going to get a benefit from that problem like your $2,000 a month and $100,000-something that you made from the property, probably more now, that problem isn’t so bad anymore. When in doubt, zoom out. That’s my mantra. Z, anything you want to add before we head into the Final Four?

I like that you always have these ridiculous sayings. I appreciate you. You’re setting yourself up to be a dad. You’re going to dad-ism the whole thing.

You keep the stash calm. I like this stash when it’s strong and you’re a dad material. You got to get your new balances and you’ll be good.

I get the new balances already. I’ve been preparing. We’re ready. With that being said, let’s head into the Final Four. Z, kick us off.

What are you reading now since reading started your whole journey?

I’m reading Lifeonaire, which Brandon Turner recommended. So far, it’s been great to open me up and zoom out to see how great life is.

It’s such a good book.

Save that.

You got to read that one, Z. What is the best piece of advice you’ve ever received?

The best piece of advice is to invest in yourself. It doesn’t matter how small the investment is. In the beginning, I was investing in myself by buying books, one book at a time. I was like, “$20 for a book.” At this point, I’m getting personal coaching, success coaching, and things like that. It levels up as you level up yourself.

That’s the biggest ROI investment you’ll ever make. In one book, you’re going to retain that knowledge forever. It’s always going to be there. You’re always going to have that. Books are some of the highest forms of leverage. You’ve got people that are doing years of studying and distilling it down into a 3 or 4-hour read. That’s amazing.

What is your why?

It’s a little weird because I don’t want kids for another ten years or so. I see myself wanting to be a dad with some kids and being able to spend all of my time with my kids, playing sports, doing whatever I can to make their lives great. I want to have that flexibility. I also want to be able to travel and go see the world in my twenties. Those two things are my main drivers.

How old are you now?

Twenty-four.

He has as many units as years of life, almost.

Is that what you’re going for?

My birthday is May 20. I’ll turn 25. I’m trying to get at least two more doors by then.

Everything’s a learning process. Work your way through them and everything else will seem pretty easy. Click To Tweet

The last question we’re going to ask you is what is used to be considered trashy but is now classy?

The town that I live in and investing in.

That’s a good answer. I wasn’t certain you’re going to go that way but I like that. Where can people find out more about you?

The main spot where I’ve been doing stuff is Instagram. It’s @MattAmabile. Hit me up on LinkedIn, Facebook, anywhere.

Thank you so much for coming on the show. This was an amazing episode. Your growth is inspiring to a lot of people, including myself. I can’t wait to see where you’re at a year from now. At this trajectory, you’re going to be mayor at least.

I appreciate you both having me on the show. It’s been a real pleasure talking with both of you, Z and Craig.

Thanks so much and we’ll talk to you soon.

Thanks for being here.

Thanks, guys.

That was Matt Amabile. What do you think of that?

I liked Matt. I had a great time. I want to highlight a couple of important things that came up in this show. If you learn your system for your quick and dirty analysis, you can find unlimited deals just like Matt is. I’ve figured out a good system with Airbnb analysis for myself and I’ve got a spreadsheet of properties all over the US like 30 deep. If I had unlimited partnerships, it seems like I could keep buying properties left and right. That is available for everybody. You just need to figure out what your niche is and how you’re going to analyze them.

You mentioned this 15% rule, which I’ve never heard before. 15% of the purchase price of the property should be your gross annual Airbnb income. Would you say that’s a fairly good rule of thumb?

Yeah. What I want at the end of the day is to make at least 25% cash-on-cash. A friend once told me, “The way I look at it is for every $100,000, I want to make $20,000, which is 20%.” When I went in there and I was digging around, I found, “17% still works. 16% still works.” I figured out that 15% is a good threshold for me. All I have to do is see the purchase price, see what it makes on AirDNA, and do 15%. It either is or it isn’t, and then I don’t waste any more time. You would be surprised that a lot do make that 15%, which means a lot of these properties can make 25% to 35% cash-in-cash and more. There are lots of properties out there.

Honestly, that might be the biggest nugget you’ve ever dropped on the show. Not to say that there are not a lot of them, but I’ve never heard that before so that’s awesome. That opens up the whole country for you because you can do that analysis so easily and quickly. Make sure you know your taxes, insurance and stuff. That’s awesome. I love it.

One thing that’s great is that it’s so simple. If you come up with something super simple, you can train a VA or an assistant to do it. My assistant helps me with it. I look at Redfin because I like Redfin. I heart different places and I favorite them. She looks at them later and tells me yay or nay. They either make it to the spreadsheet or they don’t. You could pay a VA $4 an hour and have them do this analysis for you. If you’re somebody who’s wanting to do a lot of deals or look all over the US, you need to know your criteria.

I’m going to steal that 15% rule. I’m going to put it on Instagram and stuff. I hope you’re okay with that.

Just credit me.

In this episode with Matt, I’m so impressed with how he took on this monstrosity of a project with the 203(k) loan, which is incredibly difficult to get done in the middle of a pandemic which helped him. It would probably be scary. He full-on sent it with all those properties, looking at properties, meeting appraisers, and getting that value from appraisers so that he knows what the price is going to come in at, so he knows if it’s 70% of value or less. That way, he can easily go and refinance it and basically, BRRR it without doing the rehab part. I love that method. If you can do that method, I highly recommend it. It’s a great way to scale fast. As you can see, he’s gone from four doors in under a year and he’s only 24 years old. What’s your excuse?

It’s inspiring. I’m glad we got to have him on the show. We need to move out of here.

Before we do, we need to ask you guys to please leave us a rating or review on iTunes. Let us know how we’re doing on Instagram. I’m @TheFIGuy, Zeona is @ZeonaMcIntyre. We’re trying to get her to change her name to Z Money, so make sure to message her about that. We appreciate all the reviews. Thank you all so much, and we’ll see you all next episode.

 

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About Matt Amabile

ITF 81 | Financial FreedomMatt Amabile, 24 years old, owns 14 units across 5 properties with a mixture of single-family and multifamily. Matt dug deep into FI when he found himself unsatisfied with his position in life after college and knew he needed to make a change. Matt is now on the path to complete financial freedom with his passive income from rental properties covering his average monthly spend.