January 8, 2024 • 41 mins
How does real estate investing shape your life beyond financial gain? Explore this intriguing idea with Matt Fore in a must-listen episode of the Ranch Investor Podcast.
Matt shares his journey from corporate life to real estate mastery, emphasizing 'Return on Intentionality' in investing. His insights on aligning property investments with personal values offer a unique perspective on financial success and life fulfillment.
Dive into current trends and strategies in the real estate market, tailored for both new and seasoned investors. Join us for an enlightening conversation that redefines the power of property investment.
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Transcript
Episode Transcript
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Colter DeVries (00:00):
Welcome to the Ranch Investor Podcast.
I am Colter DeVries, yourthree-year host.
I'm an accredited landconsultant with the Realtor Land
Institute and an accreditedfarm manager with ASFMRA
American Society of FarmManagers and Rural Appraisers.
Intro (00:18):
The Ranch Investor Podcast is the most downloaded
and informativeindustry-specific content that
intrigues while entertains.
Colter DeVries (00:27):
Before we get started, as usual, I'd love to
hear your feedback, so if youhave a recommended guest or a
subject, please let me know.
Well, Matt, for Next LevelIncome.
Thanks for joining us on theRanch Investor Podcast.
Before we get started, Matt,I'm going to do an introduction.
You spent 15 years in varioussales and leadership roles at
(00:51):
some of the largest technologycompanies in the world.
I'd like to hear more aboutthat as we get going.
You have been an active realestate investor, which is part
of the reason why I brought youon the Ranch Investor Podcast.
You also have your own, andthat is ice cream with investors
.
On a personal note, you loveendurance, cycling, investing
(01:14):
and a passion for living anintentional life.
Matt, let's get started withyour introduction.
What is an intentional life?
That's interesting.
I think we can go with that.
Matte Fore (01:26):
Yeah.
So I came up with this concepta couple of years ago, where
whenever you're on social mediatoday, you see all this like how
many doors people have assetsunder management, all these
sorts of things and when we'retalking about finance, we
typically talk about ROI returnon investment.
But what I have been focused onfor the past couple of years is
(01:49):
this idea that we should changewhat ROI means to return on
intentionality, and I think noneof this stuff matters in real
estate and having so many doorsand how much property you have
and all those sorts of things,unless you're using that to be
intentional in other areas ofyour life.
So we can go into a little bitabout backstory and why I'm big
on that, but I just believe thisidea that every day you should
(02:11):
wake up without a purpose.
Every day, you should try to beintentional with those you care
about and the hobbies that youhave, and so I'm really trying
to be on a mission right nowchanging what ROI means from
return on investment to returnon intentionality.
Colter DeVries (02:26):
Let's hear this backstory.
How did you come to return onintentionality, living an
intentional life?
That's interesting.
Matte Fore (02:33):
Sure, so you mentioned I'd spent 15 years in
sales and sales leadership atsome of the largest technology
companies in the world.
My real estate journey beganback in 2016, when I was
supposed to receive a lifechanging commission check, and I
grew up in a really rural townin East Tennessee which I'm sure
you and some of your listenerscan relate to, and so I never
(02:54):
really cared about big houses,cars, watches, boats, things
like that.
So I was looking for differentways that I was going to invest
this commission check, and Ilooked at everything from crypto
to bonds to annuities.
And then I had a buddy at thetime that said, hey, you should
look at this real estate thing.
It produces cash flow, itappreciates, it gives you some
tax benefits.
And then I got a call the weekof Christmas that year from my
(03:17):
VP who said, matt, we're notgoing to give you that
commission check, we're onlygoing to give you two cents on
the dollar from the money youearn.
And when I asked him like, hey,how did we come up with this
number?
What happened?
He said, well, how much moneyhave you made this year?
And when I told him, he said,well, isn't that enough?
And so it was that point that Irealized I, if I wanted to
achieve the financial goals Ihad in my life and pursue the
(03:39):
hobbies that I had and thepeople that I cared about, that
I was going to have to find adifferent way.
Right after that, though, Ifound out that my dad was going
to have to have triple bypasssurgery, and I lost my sister,
and so it kind of all culminatedin this moment of why are we
even doing all of this if wecan't be intentional with those
that we care about?
(03:59):
So that's kind of how it, howthis idea started and is morphed
from there.
Colter DeVries (04:05):
Would you say that intentional investing?
I like to say one of theaspects of a good investment is
it produces income, so it has.
So it has an annual yield, itappreciates in value, it has the
tax benefits as you mentioned,and it you have appreciation of
(04:27):
the investment.
So that's personal appreciation, whether that's use of a second
vacation home or art orcollector coins not that
collector coins produce anannual yield.
But you could try to check allthose boxes, wouldn't that be a
perfect investment?
Matte Fore (04:44):
Absolutely.
I mean, as I've kind of grownmy financial knowledge and
standing and things like that,people are always asking me hey,
is this a good investment?
Should I invest in this thing?
And I always take them back towell, what's a good investment
to you?
Do you understand theinvestment?
And, ultimately, I know what mycriteria is, but that doesn't
mean it should be your criteria.
(05:05):
So I'll use an example ofactive real estate.
If you're a surgeon or a doctor, or you have a bunch of kids or
hobbies on the side, do youreally want to change gears from
your day to day job and take ona whole new set of problems?
With active investing?
Yes, it may meet certaincriteria of producing X amount
(05:25):
of cash flow or appreciation andthose sorts of things, but are
you being intentional in otherareas of your life because
you're taking on another job?
So that's kind of how I'veshifted my investment to.
I've got my criteria butultimately, while investing in
this thing, help me be moreintentional in the areas of life
that I want to be intentionalin.
Colter DeVries (05:44):
To arrive at what your criteria is?
Do you ever do a mission,vision and values board and say
here's the plan.
We're going to try to stick tothis as best as possible and use
this as our guiding light.
Matte Fore (05:59):
Kind of we're going into the new year here as we're
recording this, and that's oneof the things that our family
has set down and starteddetermining where do we want to
be as a family, what do wereally value and how do we be
more intentional in pursuingthose values.
But ultimately, what I'mlooking for is the exact same
thing you mentioned in youranalysis of a good investment.
(06:21):
I want something that cashflows.
I want it to appreciatenatively above the rate of
inflation, which means thatnaturally it's going to
appreciate above the rate ofinflation.
And then I want to see nativetax benefits and no matter where
you go in the world, usuallythere's a tax benefit around
producing energy, producing foodand housing a population.
(06:43):
So that's kind of how I've mademy criteria of what I look for
in an investment.
Colter DeVries (06:49):
Well, it sounds like you think and consider
holistically.
That's right.
Holism would be a personalvalue of yours.
Matte Fore (06:59):
That's right.
That's right, like I personallydon't want to take on active
real estate projects unless Ican meet a certain extra hurdle
on my return, because I know thecomplications that come around
that.
Colter DeVries (07:13):
That's and that's how I am with residential
real estate.
And you always consider thetrailer parks and whether it's
just the slabs or the actual asDave Ramsey calls them, tin can
ATM machines.
If you're buying a trailer park, yeah, the annual yield looks
(07:34):
great, the depreciation looksgreat.
A lot about this.
You can leverage the heck outof those.
A lot about a trailer parklooks awesome, but holistically,
I don't think I want theheadache that has always steered
me away that I just I don'thave the time.
I don't want to develop thelearning curve.
(07:54):
It's going to come with some,some more understanding and if I
, if I do a residential or atrailer park, I'll probably
consider a property manager justto relieve myself of that,
because that sticks closer to myvalues of focusing on what
drives me, what my passions areand what I'm good at.
Matte Fore (08:15):
Yeah, so you're matching mobile home parks.
We we actually have 1000 mobilehome parks in our portfolio
today are lots, I would say, and, depending on when this airs,
we have 1000 more under contractgoing into 2024.
But make no mistake about it,it was a learning lesson around
dealing with some of theheadaches that come with mobile
home parks versus a brand new, aclass, multimillion dollar
(08:40):
apartment building and gettingdifferent clientele and tenants.
They each have their strugglesand it's one of those things I
think being a good investor isknowing what you're good at and
staying in that zone ofcompetency, and we had to go
learn how we could apply ourzone of competency to that level
.
But ever since then, you'reright, they are little ATM
machines that print cash.
Colter DeVries (09:01):
So one of the challenges we run into selling
rural real estate and say it'ssay it's vacant land on the
outskirts of a of a metropolitanarea that's basically held for
appreciation very low if any,probably no annual yield in that
situation.
But then when you get intofarmland you can probably get an
(09:22):
annual yield of two to 3% gross.
That's your cap rate and thenit goes down from there as you
get into Montana.
The recreation huntingproperties that you'd envision
as a trophy ranch, the annualyield and depending on the size,
like the smaller ones are goingto have, probably have less.
Granted, there's been some mega$200 million type sales out
(09:47):
there that have a cap rate of ahalf a percent but it can get as
low as a quarter of a percentand that's that's just taking
out the bare minimum propertytaxes and insurance.
And now you're at 25, 25 basispoint cap rate.
So one thing that we we fightwith is a lot of commercial
(10:11):
investors say, man, buying atrophy ranch is the dumbest
investment out there.
That is not an investment,that's a toy.
You're buying the hobby, you'rebuying playtime and there are
tax benefits, there'ssignificant tax benefits.
But but I also come back tothere's so many aspects that are
(10:32):
not priced into the market,that you cannot concessionize or
monetize, and that's as you canrelate to with your two kids,
quality time with familyexperiences, exclusive
experiences, property rights,and and how do you value those?
Or is it?
Should we be more strictly?
Look, I need to go for the 18cap.
(10:52):
This is, this is the reasonable, sensible, pragmatic thing.
Show me the 18 caps.
Matte Fore (10:59):
Yeah, I would say it depends on the person and what
their investing goals are right.
So most investors that I talkedto are trying to reach a certain
cash flow number so that theydon't have to worry about
getting fired from their job,taking relocation,
reorganizations inside theircompany and all those sorts of
things.
And then some investors outthere, the Ted Turner's of the
(11:21):
world, the Bill Gates of theworld they have so much cash
that they can go park it andland and say it's okay that this
doesn't yield and cash flowbecause it gives me some sort of
other tangible benefit, whetherit's hunting, whether it's a
second vacation home, whetherit's being able to go take your
kids somewhere and things likethat.
So I would.
I would say it really dependson the type of investor and what
(11:45):
their personal goals are.
I know for me personally, goingback to kind of my zone a
genius I wouldn't know how totake a 200 acre, 200 million
acre, 200,000 acre property andmake it into something that's
more valuable because that's notreally in my skill set.
But definitely if somebody hasthat skill set out there,
(12:05):
there's value to be made in anysort of real estate.
Colter DeVries (12:08):
Well, and I would consider that farm and
ranch is more of core realestate.
It's it's priced adequately inthe market every time.
It's it's kind of like yourlower Manhattan that there is a
lot of demand.
It's core real estate, it's.
It's stable.
You know that there's liquidity, there's going to be buyers,
not a lot of volatility orvariance.
(12:30):
But you mentioned cash flow isa good place to start and that I
would.
I would agree, for all of usaverage Americans who are not
Bill Gates and Ted Turner, thecash flow benchmark, the metric
Is, is kind of what we build ourlives around.
How can I get to passive incomeso I can do more of the things
I want in your case, cycling.
(12:54):
So how do you get enoughpassive income to become a
cyclist more over the UnitedStates?
Go to more areas and that'swhere I think you might have got
into next level income.
Is that next level income is?
Is that a consulting firm?
Yeah, next level income is acommercial real estate private
equity firm.
Matte Fore (13:15):
So my partner, chris , and I we basically what that
means is we help individualinvestors investing commercial
properties to receive cash flow,appreciation and tax benefits
Without actually having to actactively manage the tenants, the
termites, the toilets and allsorts of things like that.
So our asset classes range fromapartment complexes and mobile
(13:35):
home parks to car washes and wehave a debt fund.
So a lot of the things that wework with our investors around
is helping them understand thatthey can be involved in the
space passively.
They don't have to actively goput their name on the deed, find
the properties, get bank loans,managed tenants, all those
sorts of things.
But also, what is your end goal?
(13:57):
What are you trying to achieve?
And remember that the tax systemin America it's not.
It's not based on how muchmoney you make, it's based on
how you make it.
So if we can come to a numberof how much are your expenses,
we can back math that into.
Here's how much you need to beinvesting in different types of
asset classes to get to yourquote.
Unquote financial freedomnumber.
Colter DeVries (14:19):
That's financial freedom by 32 is that kind of
how you started this dream?
Matte Fore (14:23):
Yes, now I want to put an asterisk on it Financial
freedom by 32 didn't mean that Iwas buying first class Tickets
to air.
To buy it meant that Ibasically had enough money
coming in for my passiveinvestments to put a roof over
my head and put food on my tableindefinitely.
So what I found when I achievedthat at the age of 32 was the
(14:48):
intentionality piece.
I could go be more intentionalwith the people I cared about.
I didn't have to get up fromdinner to accept a phone call
from my boss who was yelling atme on Christmas Eve or New
Year's Eve or something likethat.
I could start saying no to thethings that didn't give me
energy in life and start sayingyes to the things that gave me
energy.
Colter DeVries (15:10):
Well, that's that is probably for a lot of
people developing a muscle,reworking a muscle, because when
you get this life or lifechanging commission, it would be
very tempting to spend it on atrip to Dubai and live the live
the big life.
That's sexy.
You can put that on Instagram,get a bunch of likes and some
hearts, you know, and that getsyou street cred, but then I
(15:37):
don't think putting a mobilehome park on Instagram gets as
much sexy shares.
So it takes this you have towork this new discipline, this
new muscle Of intentionality,and how the heck do people do
that?
Matte Fore (15:52):
Yeah, I think it goes back to again understanding
what your passions are.
So it all comes back to a why.
If I, if you, won the lotterytomorrow, one of these one
billion dollar mega jackpots orwhatever, what would you spend
your time doing?
And I would beg to say that alot of people that listen to
your show or podcast about realestate would not just go sit on
(16:14):
a beach and sit my ties all day.
Maybe they would for a day,maybe they would for a month,
but after that they would getbored and restless and want to
be more productive to society.
So what are those activities?
What?
What gives you energy?
What trains your energy?
In a perfect week, in a perfectmonth, what would your life
look like?
And once you have a prettyclear picture on that, that's
when you can go back and say, ok, well, how do I get there?
(16:36):
Regardless of whether you'reobsessed with money, like money,
think money is the root of allevil, regardless of your
feelings towards money, you needit to survive in society.
So we all have this moneyobligation that we have to go
solve.
So either you're going to golearn about it and figure out
how you can solve that problem,or you're going to allow
(16:59):
somebody else to tell you how tosolve it, which means,
basically, they're going to getrich off your ignorance.
So I, when I was early on in mycareer, I said this is
something that one I do careabout, but I'm interested in
solving.
And then, once I solved it, Iwas able to be more active in
the areas of life that gave meenergy.
Colter DeVries (17:16):
Well, you bring up a good point about the
listeners of Ice Cream withInvestors, your podcast and the
people I talk to.
The listeners of Ranch Investoris, I would say they're already
in this mind frame.
Their personalities, thecharacter that they have
developed is one that theyprobably aren't looking to build
(17:41):
their Instagram followers forthe next TikTok dance and get
all the hearts and likes whatyou have in Ice Cream with
Investors.
This is a form of peer support.
It's people listening to otherpeople of like interest, saying,
boy, I like what that guy, MattFour, had to say about
(18:04):
discipline and wholism andintentionality.
I've been longing for that andI talked to my wife about it.
I go to work and there's not thesame, there's not always the
same type of philosophy at workfor my coworkers, my peers in
person.
I need to go to these podcastswhere there's like-minded people
(18:28):
with the same values andvisions.
I guess this is an opportunityfor me to thank my listeners for
an awesome year, the third yearRanch Investor podcast and you,
when I get to bring you on.
This is my form of peer supportand accountability and new,
(18:49):
fresh ideas.
I just want to thank everyonefor a great 2023 and thank you
as well, Matt.
Matte Fore (18:56):
Yeah, no, I appreciate that.
When you were mentioning peersupport, I believe that the
people you hang out withultimately decide your future.
As someone with two kids, it'samazing to see the influence
that their friends have on them.
We were having thisconversation over the week.
It's crazy how, when my dadgrew up in rural West Virginia
(19:19):
and in a town of 400 people, youhad to be all in all to get
stuff done, because this was thelate 40s, early 50s in a rural
part of the country.
If you couldn't do it yourself,chances are you didn't know
someone that could go do it, soyou had to figure it out.
Well, the new world is reallyaround.
We're connecting in differenttime zones right now.
(19:41):
Across the internet, I get tosee your face, you get to see my
face, which I'm sorry aboutthat, but we get this
opportunity to connect withlike-minded individuals to help
us grow.
My real estate journey reallytook off when I started
consuming more content andsurrounding myself with those
people in my ears, when I wouldgo on my runs and my rides and
(20:01):
things like that, but also byreaching out to those folks, and
what you'll find in this spaceis that everybody wants to help
each other.
I mean, we're talking in amulti-trillion dollar industry.
There's enough for all of us toeat.
Everybody wants to help eachother, so reaching out, making
those connections, adding valueto other people, is ultimately
going to help you.
You yourself scale as well asus.
Colter DeVries (20:23):
Yeah, and my personal story is roughly 10
years ago when I left bankingand I thought I'd become the
world's greatest rancher whichthat was naive at 26.
That was also during a hugecycle bubble in the livestock
values that forever changed mylife for the better.
But at that time it was justaudio books.
(20:48):
I would pick up MalcolmGladwell and that was my form of
reaching outside of myimmediate tangible peer group
and you'd get all the audiobooks and you just have it
siloed.
It would just stay with you andyou didn't have I didn't have a
(21:12):
lot of people to bounce thatoff of.
And fortunately then came thepodcast and at that same time my
wife and I we're in our latetwenties, mid late twenties and
you start seeing things in yourlong time friend group, from
what I can remember, where Ijust didn't want to play that
(21:35):
game.
It just didn't feel comfortable.
Like buying the biggest houseyou could with a first time
homeowners loan, 5% down type ofa deal, paying mortgage
insurance, and then and then goleveraging a new car, a new
pickup in our case in Montanalike a 65 at that time $65,000
(21:56):
pickup and then and then,because you got the cash flow,
your paycheck is every otherweek.
Well, let's go leverage a boatin the summertime and maybe a
snowmobile in the wintertime,and all of that even before I
know my listeners give me.
They give me shit cause I'vementioned this a lot.
But even before I lost my ass inthe cattle market, matt, I was
(22:18):
still uncomfortable with thatamount of leverage and it just
felt like slavery.
Like I had that conversationwhen I was going down with my
bankers.
The ranching wasn't working outand they said well, coulter,
you can dig yourself out of thishole.
We know you can.
It's just gonna take 30 years.
(22:40):
Do you want to do that?
Matte Fore (22:44):
No, I don't.
I would say the biggest shifthappened to me when I lost that
commission check was this ideathat somebody else was gonna
control my life as long as I wasworking with inside of big
fortune 500 companies.
Somebody else was gonna controlhow much money I made, what I
did, all those sorts of things.
And one thing I'm prettypassionate about is we live in a
(23:05):
modest home today.
We could absolutely go live insomething bigger, but every time
you make that sort of apurchase a snowmobile, a new
pickup truck, a new house youare adding years on to your
working life.
You are adding time that youonly get finite number of time
Losing.
My sister taught me you onlyget a finite number of time and
you never know when that's goingto end.
(23:26):
Why do you want to spend moretime doing the things that you
don't give you the energy thatyou want not being intentional
in life because you wanted thebigger house, the nicer car, the
bigger snowmobile and thingslike that?
Colter DeVries (23:39):
Well, in my personal experience I can say
that developing the freedom.
So then immediately we kind ofwe didn't do the Dave Ramsey
program, but I listened toenough of Dave Ramsey on the AM
radio and I have a financebackground that I was like, all
right, the writing's on the wall, I get what the message is here
.
We immediately went into payingdown mortgage, paying down
(24:03):
paying off the cars, paying nocredit cards.
You know the whole three monthsavings emergency fund and that
felt good.
I know that it gets brought upon different channels and people
who are of the same like mine,but it just feels really good
personally when you're debt freefor the personal debt.
(24:26):
Now, I do agree that you shouldleverage income producing
assets to a certain point forthat leveraged cash flow, but it
just feels good to have thatdiscipline.
It's like at the end of everyworkout.
You know those endorphins.
You can't buy those.
Matte Fore (24:46):
That's right.
That's right.
I mean, look, dave Ramsey getsa lot of heat from finance
people.
I was actually listening to himlast night as I was falling
asleep and one of the things hewas talking about is the idea
that debt introduces risk.
I thought it was like it's afair point.
I think it was a less harshertone than he's given in the past
.
But he is correct that anytimeyou add debt, you're introducing
(25:07):
risk.
But ultimately, what you decideto do in your own personal
economy is a mix of math andemotion, and there's always
going to be a math answer to theequation and there's always
going to be an emotional side ofthe equation.
What you should do is a mix ofboth and I can't tell you what
(25:29):
your mix of both is.
But you shouldn't do allemotion and you definitely
shouldn't do all math.
You should find your rightblend of both and pursue a path
forward.
Colter DeVries (25:40):
Well, how did you come to launching a private
equity fund with a thousandmobile home lots?
I mean there's a certain amountof lots of risk in that, and
how do you balance that?
And I mean, just tell me abouthow difficult it was too, how
many years it took.
And I mean you're a prettyyoung guy, so to have
(26:03):
potentially 2000 mobile homelots and a private equity fund
at your age is a significantaccomplishment.
Matte Fore (26:11):
Yeah, I would say the answer to that question is a
lot of partnerships and a lotof meeting the right people.
So we at our firm come with alevel of competency in certain
areas of the real estatetransaction and the real estate
life cycle and then weunderstand where we don't have
expertise or where we don't havea team built out and where
(26:32):
we're gonna lean on otherpartners to go help us do some
of those things.
For example, I have no ideawhen I walk into a mobile home
how much work needs to be doneand how much it's gonna cost.
You could tell me it's gonnacost $2,000.
You could tell me it's gonnacost $10,000.
And with a little bit ofexperience I could tell you
which number is closer, but I'mnot really sure, down to the
(26:53):
penny, how much that's going tocost.
So I'm gonna have to leverageour other partners in this
equation, whether they beconstruction managers or things
like that, to help us understandwhat this is going to actually
take.
And I think that goes back tothe conversation we were having
earlier around.
When my dad grew up in ruralWest Virginia, he had to know
everything and be everything,because there was nobody else In
(27:15):
today's world I could get onchat, gpt, I can get on Reddit,
I can get on the internet andfind other ways to come up with
an answer here than having toknow everything myself.
So I think when I startedunderstanding these are the
things I'm really good at andcan help add value, and these
are the things that I don't careto go learn because it sucks my
(27:38):
energy and I can go find peoplethat can add value there.
And two and one plus one nowall of a sudden equals three.
Then that's when I started toscale and really see a lot of
success.
Colter DeVries (27:51):
Becauseå© today and I'm in a state where we
control the cabinets and we setup the machines to be home and
home.
I jumping back to China.
I see many people who assumecube and cube which is 20 feet
long.
No-transcript I'm concernedabout and think about I'm
(28:14):
concerned Mm.
Ok, she doesn't even need thatchat, gpt or something, and but
yeah, we, we, we are fortunatethat we have so much information
available to us Probably makespursuing those dreams a little
more within reach, I would saybecause because information used
(28:36):
to be hard to get, now it'scheap.
And now I would argue that mostdreams are closer.
Matte Fore (28:46):
I would argue the same.
I would say the difficulty nowin today's environment is that
can does not mean should, andwhat I mean by that is because I
can go do this, because I cango learn.
This does not mean I should golearn this and do this and kind
of circling back to the wholereturn on intentionality piece.
(29:06):
I know that for me I don't getenergy out of swinging hammers
and putting in the manual sideof the labor.
I know I can go do it.
I know I can go learn it, butthat's not where I want to spend
my time because it's going toultimately drain more energy
than give me energy.
(29:27):
So I would encourage everybodyto understand that you could go
achieve anything you want today.
You can go do anything you want.
It does not mean that youshould go achieve everything you
want and should go doeverything today.
Find the parts of your worldthat give you energy, that you
care about, that you have a zoneof competency.
Get really good at those andfind the best people around you
(29:49):
to supplement the things thatdrain your energy or don't give
you.
Don't add the value that youwant to add.
Colter DeVries (29:56):
Well, in in can versus should.
In your experience, did youhave to test things at a small
level like let's take the mobilehome park 20, let's say it's a
$20 million fund?
Did you have to start with twoof your own personal mobile
homes and say you know, I'mgoing to test this out at a
smaller level, build a trackrecord, prove the, prove, the
(30:21):
thesis, prove my, my managementskills, and just to see if I
can't?
Well, you know, I have a prettygood idea that I can, but to
see if I should, do I test thisat a small level before I jump
into a $20 million fund.
Matte Fore (30:37):
Yeah, I mean, I started all all this on a single
family background.
So my first investment was asingle family turnkey rental
that was right around the streetfrom where I lived.
I bought that because, one, Ijust lost that commission check
due to no power of my own.
So me putting down a 40,000down down payment for that was
(30:58):
one the cost of an MBA, so if Ifailed at this at least I would
get some education from it.
And two, it got me going in theright direction.
So I knew from that turnkeyrental that I could analyze
deals, that I could find deals.
Now my next deal was a flip.
So I bought a property holds onthe wholesale market.
I used hard money lending.
(31:19):
I understood that process.
I started down the process oftrying to fix some things in
that property when I learnedvery quickly that that's not
what I enjoy doing.
So I knew at that point that,hey, if I want to go do this, I
got to find a good partner.
And I found a good partner anda construction manager who could
go do a lot of the things thatwe needed to do.
So we started doing some flips,we did some burrs, we did some
(31:40):
things like that and then,ultimately, I ran out of cash.
I had to go find propertiesthat were valued not based off
of my income but based off ofthe asset itself, and that got
me into commercial real estate.
So I invested with somepartners, passively at first,
kind of looking over theirshoulders, understanding what
they were doing.
And then I got involved on theactive side and started putting
(32:03):
together deals, putting togetherthe financing, raising capital
and things like that.
Yes, I started on a very smallscale, but by the time we got to
the mobile home parks I knewthat I was never going to be the
one that was going to go inthere and swing hammers and
collect rent and manage theproperty where we're going to.
We were going to go findsomebody that could do some of
that work and we were going toadd value somewhere else in the
(32:25):
scale and the in the life cycle.
Colter DeVries (32:28):
Well, you brought up hard money lending
and I think it's time for mapfor his forecast.
It seems like and I want tohear your crystal ball that with
the way where rates are todayfed fund rates, your risk, free,
opportunity, cost of capitaland you're, you're borrowing
(32:48):
power and given where cap ratesare in commercial same with farm
and ranch, there they aresuppressed, compressed and do
not appear to be increasing atany point.
What I just I don't know whatit's going to take for cap rates
to improve and farm and ranchit's going to take.
I don't know.
(33:09):
I don't want to speculate there, but I want you to speculate.
What are what are we going tosee with commercial, with these
cap rates?
We hear about huge vacancyrates.
We hear about refinanceballoons, bubbles coming up and
then the financialization ofthese hard assets.
(33:30):
Do they just become paper money?
Do you?
Do you do more hard money loansand and turn a real property
into mortgage paper instead?
What?
What is going to happen overthe next two or three years?
Map?
Matte Fore (33:43):
Sure, so, since this is on the internet and, if I'm
wrong, it can be easily erasedand never brought up again.
I'll give you my forecast, butultimately, look, no one knows,
right?
If I knew the answer to that,then I would be living on a
private island somewhere and Idon't know if I would be
embracing the cold here inNashville today.
But I mean, I have a couple ofthesis that we are watching
(34:07):
right now.
The first thing is I do thinkrates go down next year, and
it's as simple as it's anelection year and no one wants
to see a 2008 happen again.
Regardless of what side of theaisle you're on, you do not want
to see another 2008.
Second is, it feels likeinflation has been moderated,
(34:28):
and I don't know if it'll getdown to a 2% level, but it will
get down to a three ish, threeand a half ish, and that will
give the Fed enough data thatthey want to lower their fed
funds rates, which ultimatelywill drag down property rates.
However, when that happens,rates prices on all real estate
(34:49):
will go back up, and so itdoesn't solve this problem of
affordability, and right nowthat is starting to become more
of a political issue thananything, and that has nothing
really to do, I think, with theeconomic environment.
It has to do with theregulatory environment more than
anything.
So you go into these big citieslike San Francisco and
(35:11):
California where everybody saysthey need affordable housing,
everybody's on board, and thenyou want to build something
affordable next to abillionaire's house and they say
wait a minute, no, we're not onboard, go put that somewhere
else.
So that doesn't solve theaffordable housing thing issues.
So if I'm an investor right now,there's two things we're
watching.
One we believe people will bemoving down the affordable stack
(35:34):
over the next couple of years,because, as interest rates
decline, as property pricesappreciate back again, we
believe that people of housingwill become more affordable and
people will be moving down thestack.
That's why we are very bullishon the mobile home park space is
because if that thesis playsout, then mobile home parks are
affordable housing for a lot offolks out there.
(35:55):
That allows them to not onlylive affordably, but also own a
piece of property affordably,which is hard to find these days
.
Not only that, but it's it'sshrinking in supply, so if more
demand is increasing, supply isdecreasing.
It's great economic position tobe in.
The second thing I think willhappen, though, is that probably
(36:17):
around 2025, 2026, 2027.
So not this next year, notreally the next 24 months, I
think inflation will go back up,and the reason being is because
you are on shoring all of yourmanufacturing that you've
offshored for a number of yearsand, just put simply, when you
(36:38):
took a $7 job and moved it to a$2 job and you're going to bring
it back to a $15 job, inflationis going to go up because
people are going to cost ofgoods are going to go up and
people will demand more, etc.
Which will cause another height.
So, if you are going to buyreal estate, the next three
years probably present your bestopportunity and then the back
(37:00):
half of the 2020s early 2030s,look a little bit shaky.
So that's kind of ourunderlying thesis and that's
kind of what we're looking atright now.
To your point around paperassets and being the bank,
essentially we're always goingto own real estate, but we also
do have a debt fund where welend out to fix and we're on a
(37:21):
short term basis on that money,so we're able to receive high
cash flow no tax benefits, noappreciation, but high cash flow
on short term basis, so that mymoney is always cycling back on
us and allows us to be nimblewhere we need to be nimble.
So I know that's probably along wind to dancer, but that's
what we're looking for.
Colter DeVries (37:40):
That's certainly what we're looking for with
with the loans.
Do you adjust your requiredequity position based on?
What do you?
What do you base the equityposition on?
Because that seems, given thethermometer of the economy,
maybe today is, if people areultra worried about a correction
(38:05):
in real estate values, you'regoing to increase that equity
position, right?
So where are you guys at todayand what's the range?
Matte Fore (38:12):
Yeah.
So, first off, even in a hardmoney loan fund, our LTV across
the portfolio is right around65%.
So we don't have 120% LTVs,100% LTVs and things like that.
However, what comprises that isa lot of tiers.
So if you wanted a 100% loan tovalue to the ARV, then we're
(38:37):
going to charge you 16 points,17 points, whatever that is, and
if you wanted a lower LTV, thenwe would charge 12 points, 11
points, something like that.
So we do have a mix of loans tovalue, depending on what tier
we're in, and we also chargehigher depending on what LTV you
want and things like that.
(38:58):
So it varies.
The ultimate answer is yes,though we do want to keep it
within that 65 to 70% range, sothat we're leaving us room, if a
borrower defaults, to go backand take over the property, add
the value and flip it at a stilla profit.
Colter DeVries (39:17):
Well, matt, this has been drinking through a
fire hose listening to youappreciate it.
Do you have in our last fiveminutes?
Do you have a couple plugs?
We plug next level income.
That is, your private equitygroup.
You've got the.
For those that enjoyed whatthey heard of Matt, we have
always got the next level incomeshow ice cream with investors
(39:39):
to learn a little bit more aboutcommercial.
Matte Fore (39:42):
Yeah, it's bringing on everybody from the real
estate industry.
So when I first got into thisbusiness, I thought that you
could only be the fix andflippers you see on HDTV.
What I've learned is there's somuch more to it.
So we have people that havetalked about fix flipping land.
We've had people that talkabout flipping apartments.
We have people that talk aboutflipping parking lots.
We've had people talking aboutbeing the debt.
(40:04):
So really, the goal is to bringon different people from the
real estate industry to talkabout their specific niche and
what they're doing andultimately, listeners can say,
hey, I know that this alignsmore with the intentionality
piece and things that I feellike I would be good at, and I
can just be a broker of thoseconnections.
So go check us out.
Ice cream with investors on allof your major podcast apps.
(40:27):
Would love to have you like andsubscribe and be a listener.
Colter DeVries (40:31):
And on that for next level income.
Thank you for coming on theranch investor podcast.
It's been a been a rewarding 45minutes.
Matte Fore (40:40):
You got it.
Thanks for having me.
Colter DeVries (40:42):
We at Ranch Investor are very interested in
hearing your thoughts, youropinion, your wants, desires,
hopes and dreams.
Everything on ranchsyndications, ranch investment,
ranch real estate syndicationsand DPP's direct participation
programs.
Please reach out.
Welcome to the Ranch Investor Podcast.
I am Colter DeVries, yourthree-year host.
I'm an accredited landconsultant with the Realtor Land
Institute and an accreditedfarm manager with ASFMRA
American Society of FarmManagers and Rural Appraisers.
Intro (00:18):
The Ranch Investor Podcast is the most downloaded
and informativeindustry-specific content that
intrigues while entertains.
Colter DeVries (00:27):
Before we get started, as usual, I'd love to
hear your feedback, so if youhave a recommended guest or a
subject, please let me know.
Well, Matt, for Next LevelIncome.
Thanks for joining us on theRanch Investor Podcast.
Before we get started, Matt,I'm going to do an introduction.
You spent 15 years in varioussales and leadership roles at
(00:51):
some of the largest technologycompanies in the world.
I'd like to hear more aboutthat as we get going.
You have been an active realestate investor, which is part
of the reason why I brought youon the Ranch Investor Podcast.
You also have your own, andthat is ice cream with investors
.
On a personal note, you loveendurance, cycling, investing
(01:14):
and a passion for living anintentional life.
Matt, let's get started withyour introduction.
What is an intentional life?
That's interesting.
I think we can go with that.
Matte Fore (01:26):
Yeah.
So I came up with this concepta couple of years ago, where
whenever you're on social mediatoday, you see all this like how
many doors people have assetsunder management, all these
sorts of things and when we'retalking about finance, we
typically talk about ROI returnon investment.
But what I have been focused onfor the past couple of years is
(01:49):
this idea that we should changewhat ROI means to return on
intentionality, and I think noneof this stuff matters in real
estate and having so many doorsand how much property you have
and all those sorts of things,unless you're using that to be
intentional in other areas ofyour life.
So we can go into a little bitabout backstory and why I'm big
on that, but I just believe thisidea that every day you should
(02:11):
wake up without a purpose.
Every day, you should try to beintentional with those you care
about and the hobbies that youhave, and so I'm really trying
to be on a mission right nowchanging what ROI means from
return on investment to returnon intentionality.
Colter DeVries (02:26):
Let's hear this backstory.
How did you come to return onintentionality, living an
intentional life?
That's interesting.
Matte Fore (02:33):
Sure, so you mentioned I'd spent 15 years in
sales and sales leadership atsome of the largest technology
companies in the world.
My real estate journey beganback in 2016, when I was
supposed to receive a lifechanging commission check, and I
grew up in a really rural townin East Tennessee which I'm sure
you and some of your listenerscan relate to, and so I never
(02:54):
really cared about big houses,cars, watches, boats, things
like that.
So I was looking for differentways that I was going to invest
this commission check, and Ilooked at everything from crypto
to bonds to annuities.
And then I had a buddy at thetime that said, hey, you should
look at this real estate thing.
It produces cash flow, itappreciates, it gives you some
tax benefits.
And then I got a call the weekof Christmas that year from my
(03:17):
VP who said, matt, we're notgoing to give you that
commission check, we're onlygoing to give you two cents on
the dollar from the money youearn.
And when I asked him like, hey,how did we come up with this
number?
What happened?
He said, well, how much moneyhave you made this year?
And when I told him, he said,well, isn't that enough?
And so it was that point that Irealized I, if I wanted to
achieve the financial goals Ihad in my life and pursue the
(03:39):
hobbies that I had and thepeople that I cared about, that
I was going to have to find adifferent way.
Right after that, though, Ifound out that my dad was going
to have to have triple bypasssurgery, and I lost my sister,
and so it kind of all culminatedin this moment of why are we
even doing all of this if wecan't be intentional with those
that we care about?
(03:59):
So that's kind of how it, howthis idea started and is morphed
from there.
Colter DeVries (04:05):
Would you say that intentional investing?
I like to say one of theaspects of a good investment is
it produces income, so it has.
So it has an annual yield, itappreciates in value, it has the
tax benefits as you mentioned,and it you have appreciation of
(04:27):
the investment.
So that's personal appreciation, whether that's use of a second
vacation home or art orcollector coins not that
collector coins produce anannual yield.
But you could try to check allthose boxes, wouldn't that be a
perfect investment?
Matte Fore (04:44):
Absolutely.
I mean, as I've kind of grownmy financial knowledge and
standing and things like that,people are always asking me hey,
is this a good investment?
Should I invest in this thing?
And I always take them back towell, what's a good investment
to you?
Do you understand theinvestment?
And, ultimately, I know what mycriteria is, but that doesn't
mean it should be your criteria.
(05:05):
So I'll use an example ofactive real estate.
If you're a surgeon or a doctor, or you have a bunch of kids or
hobbies on the side, do youreally want to change gears from
your day to day job and take ona whole new set of problems?
With active investing?
Yes, it may meet certaincriteria of producing X amount
(05:25):
of cash flow or appreciation andthose sorts of things, but are
you being intentional in otherareas of your life because
you're taking on another job?
So that's kind of how I'veshifted my investment to.
I've got my criteria butultimately, while investing in
this thing, help me be moreintentional in the areas of life
that I want to be intentionalin.
Colter DeVries (05:44):
To arrive at what your criteria is?
Do you ever do a mission,vision and values board and say
here's the plan.
We're going to try to stick tothis as best as possible and use
this as our guiding light.
Matte Fore (05:59):
Kind of we're going into the new year here as we're
recording this, and that's oneof the things that our family
has set down and starteddetermining where do we want to
be as a family, what do wereally value and how do we be
more intentional in pursuingthose values.
But ultimately, what I'mlooking for is the exact same
thing you mentioned in youranalysis of a good investment.
(06:21):
I want something that cashflows.
I want it to appreciatenatively above the rate of
inflation, which means thatnaturally it's going to
appreciate above the rate ofinflation.
And then I want to see nativetax benefits and no matter where
you go in the world, usuallythere's a tax benefit around
producing energy, producing foodand housing a population.
(06:43):
So that's kind of how I've mademy criteria of what I look for
in an investment.
Colter DeVries (06:49):
Well, it sounds like you think and consider
holistically.
That's right.
Holism would be a personalvalue of yours.
Matte Fore (06:59):
That's right.
That's right, like I personallydon't want to take on active
real estate projects unless Ican meet a certain extra hurdle
on my return, because I know thecomplications that come around
that.
Colter DeVries (07:13):
That's and that's how I am with residential
real estate.
And you always consider thetrailer parks and whether it's
just the slabs or the actual asDave Ramsey calls them, tin can
ATM machines.
If you're buying a trailer park, yeah, the annual yield looks
(07:34):
great, the depreciation looksgreat.
A lot about this.
You can leverage the heck outof those.
A lot about a trailer parklooks awesome, but holistically,
I don't think I want theheadache that has always steered
me away that I just I don'thave the time.
I don't want to develop thelearning curve.
(07:54):
It's going to come with some,some more understanding and if I
, if I do a residential or atrailer park, I'll probably
consider a property manager justto relieve myself of that,
because that sticks closer to myvalues of focusing on what
drives me, what my passions areand what I'm good at.
Matte Fore (08:15):
Yeah, so you're matching mobile home parks.
We we actually have 1000 mobilehome parks in our portfolio
today are lots, I would say, and, depending on when this airs,
we have 1000 more under contractgoing into 2024.
But make no mistake about it,it was a learning lesson around
dealing with some of theheadaches that come with mobile
home parks versus a brand new, aclass, multimillion dollar
(08:40):
apartment building and gettingdifferent clientele and tenants.
They each have their strugglesand it's one of those things I
think being a good investor isknowing what you're good at and
staying in that zone ofcompetency, and we had to go
learn how we could apply ourzone of competency to that level
.
But ever since then, you'reright, they are little ATM
machines that print cash.
Colter DeVries (09:01):
So one of the challenges we run into selling
rural real estate and say it'ssay it's vacant land on the
outskirts of a of a metropolitanarea that's basically held for
appreciation very low if any,probably no annual yield in that
situation.
But then when you get intofarmland you can probably get an
(09:22):
annual yield of two to 3% gross.
That's your cap rate and thenit goes down from there as you
get into Montana.
The recreation huntingproperties that you'd envision
as a trophy ranch, the annualyield and depending on the size,
like the smaller ones are goingto have, probably have less.
Granted, there's been some mega$200 million type sales out
(09:47):
there that have a cap rate of ahalf a percent but it can get as
low as a quarter of a percentand that's that's just taking
out the bare minimum propertytaxes and insurance.
And now you're at 25, 25 basispoint cap rate.
So one thing that we we fightwith is a lot of commercial
(10:11):
investors say, man, buying atrophy ranch is the dumbest
investment out there.
That is not an investment,that's a toy.
You're buying the hobby, you'rebuying playtime and there are
tax benefits, there'ssignificant tax benefits.
But but I also come back tothere's so many aspects that are
(10:32):
not priced into the market,that you cannot concessionize or
monetize, and that's as you canrelate to with your two kids,
quality time with familyexperiences, exclusive
experiences, property rights,and and how do you value those?
Or is it?
Should we be more strictly?
Look, I need to go for the 18cap.
(10:52):
This is, this is the reasonable, sensible, pragmatic thing.
Show me the 18 caps.
Matte Fore (10:59):
Yeah, I would say it depends on the person and what
their investing goals are right.
So most investors that I talkedto are trying to reach a certain
cash flow number so that theydon't have to worry about
getting fired from their job,taking relocation,
reorganizations inside theircompany and all those sorts of
things.
And then some investors outthere, the Ted Turner's of the
(11:21):
world, the Bill Gates of theworld they have so much cash
that they can go park it andland and say it's okay that this
doesn't yield and cash flowbecause it gives me some sort of
other tangible benefit, whetherit's hunting, whether it's a
second vacation home, whetherit's being able to go take your
kids somewhere and things likethat.
So I would.
I would say it really dependson the type of investor and what
(11:45):
their personal goals are.
I know for me personally, goingback to kind of my zone a
genius I wouldn't know how totake a 200 acre, 200 million
acre, 200,000 acre property andmake it into something that's
more valuable because that's notreally in my skill set.
But definitely if somebody hasthat skill set out there,
(12:05):
there's value to be made in anysort of real estate.
Colter DeVries (12:08):
Well, and I would consider that farm and
ranch is more of core realestate.
It's it's priced adequately inthe market every time.
It's it's kind of like yourlower Manhattan that there is a
lot of demand.
It's core real estate, it's.
It's stable.
You know that there's liquidity, there's going to be buyers,
not a lot of volatility orvariance.
(12:30):
But you mentioned cash flow isa good place to start and that I
would.
I would agree, for all of usaverage Americans who are not
Bill Gates and Ted Turner, thecash flow benchmark, the metric
Is, is kind of what we build ourlives around.
How can I get to passive incomeso I can do more of the things
I want in your case, cycling.
(12:54):
So how do you get enoughpassive income to become a
cyclist more over the UnitedStates?
Go to more areas and that'swhere I think you might have got
into next level income.
Is that next level income is?
Is that a consulting firm?
Yeah, next level income is acommercial real estate private
equity firm.
Matte Fore (13:15):
So my partner, chris , and I we basically what that
means is we help individualinvestors investing commercial
properties to receive cash flow,appreciation and tax benefits
Without actually having to actactively manage the tenants, the
termites, the toilets and allsorts of things like that.
So our asset classes range fromapartment complexes and mobile
(13:35):
home parks to car washes and wehave a debt fund.
So a lot of the things that wework with our investors around
is helping them understand thatthey can be involved in the
space passively.
They don't have to actively goput their name on the deed, find
the properties, get bank loans,managed tenants, all those
sorts of things.
But also, what is your end goal?
(13:57):
What are you trying to achieve?
And remember that the tax systemin America it's not.
It's not based on how muchmoney you make, it's based on
how you make it.
So if we can come to a numberof how much are your expenses,
we can back math that into.
Here's how much you need to beinvesting in different types of
asset classes to get to yourquote.
Unquote financial freedomnumber.
Colter DeVries (14:19):
That's financial freedom by 32 is that kind of
how you started this dream?
Matte Fore (14:23):
Yes, now I want to put an asterisk on it Financial
freedom by 32 didn't mean that Iwas buying first class Tickets
to air.
To buy it meant that Ibasically had enough money
coming in for my passiveinvestments to put a roof over
my head and put food on my tableindefinitely.
So what I found when I achievedthat at the age of 32 was the
(14:48):
intentionality piece.
I could go be more intentionalwith the people I cared about.
I didn't have to get up fromdinner to accept a phone call
from my boss who was yelling atme on Christmas Eve or New
Year's Eve or something likethat.
I could start saying no to thethings that didn't give me
energy in life and start sayingyes to the things that gave me
energy.
Colter DeVries (15:10):
Well, that's that is probably for a lot of
people developing a muscle,reworking a muscle, because when
you get this life or lifechanging commission, it would be
very tempting to spend it on atrip to Dubai and live the live
the big life.
That's sexy.
You can put that on Instagram,get a bunch of likes and some
hearts, you know, and that getsyou street cred, but then I
(15:37):
don't think putting a mobilehome park on Instagram gets as
much sexy shares.
So it takes this you have towork this new discipline, this
new muscle Of intentionality,and how the heck do people do
that?
Matte Fore (15:52):
Yeah, I think it goes back to again understanding
what your passions are.
So it all comes back to a why.
If I, if you, won the lotterytomorrow, one of these one
billion dollar mega jackpots orwhatever, what would you spend
your time doing?
And I would beg to say that alot of people that listen to
your show or podcast about realestate would not just go sit on
(16:14):
a beach and sit my ties all day.
Maybe they would for a day,maybe they would for a month,
but after that they would getbored and restless and want to
be more productive to society.
So what are those activities?
What?
What gives you energy?
What trains your energy?
In a perfect week, in a perfectmonth, what would your life
look like?
And once you have a prettyclear picture on that, that's
when you can go back and say, ok, well, how do I get there?
(16:36):
Regardless of whether you'reobsessed with money, like money,
think money is the root of allevil, regardless of your
feelings towards money, you needit to survive in society.
So we all have this moneyobligation that we have to go
solve.
So either you're going to golearn about it and figure out
how you can solve that problem,or you're going to allow
(16:59):
somebody else to tell you how tosolve it, which means,
basically, they're going to getrich off your ignorance.
So I, when I was early on in mycareer, I said this is
something that one I do careabout, but I'm interested in
solving.
And then, once I solved it, Iwas able to be more active in
the areas of life that gave meenergy.
Colter DeVries (17:16):
Well, you bring up a good point about the
listeners of Ice Cream withInvestors, your podcast and the
people I talk to.
The listeners of Ranch Investoris, I would say they're already
in this mind frame.
Their personalities, thecharacter that they have
developed is one that theyprobably aren't looking to build
(17:41):
their Instagram followers forthe next TikTok dance and get
all the hearts and likes whatyou have in Ice Cream with
Investors.
This is a form of peer support.
It's people listening to otherpeople of like interest, saying,
boy, I like what that guy, MattFour, had to say about
(18:04):
discipline and wholism andintentionality.
I've been longing for that andI talked to my wife about it.
I go to work and there's not thesame, there's not always the
same type of philosophy at workfor my coworkers, my peers in
person.
I need to go to these podcastswhere there's like-minded people
(18:28):
with the same values andvisions.
I guess this is an opportunityfor me to thank my listeners for
an awesome year, the third yearRanch Investor podcast and you,
when I get to bring you on.
This is my form of peer supportand accountability and new,
(18:49):
fresh ideas.
I just want to thank everyonefor a great 2023 and thank you
as well, Matt.
Matte Fore (18:56):
Yeah, no, I appreciate that.
When you were mentioning peersupport, I believe that the
people you hang out withultimately decide your future.
As someone with two kids, it'samazing to see the influence
that their friends have on them.
We were having thisconversation over the week.
It's crazy how, when my dadgrew up in rural West Virginia
(19:19):
and in a town of 400 people, youhad to be all in all to get
stuff done, because this was thelate 40s, early 50s in a rural
part of the country.
If you couldn't do it yourself,chances are you didn't know
someone that could go do it, soyou had to figure it out.
Well, the new world is reallyaround.
We're connecting in differenttime zones right now.
(19:41):
Across the internet, I get tosee your face, you get to see my
face, which I'm sorry aboutthat, but we get this
opportunity to connect withlike-minded individuals to help
us grow.
My real estate journey reallytook off when I started
consuming more content andsurrounding myself with those
people in my ears, when I wouldgo on my runs and my rides and
(20:01):
things like that, but also byreaching out to those folks, and
what you'll find in this spaceis that everybody wants to help
each other.
I mean, we're talking in amulti-trillion dollar industry.
There's enough for all of us toeat.
Everybody wants to help eachother, so reaching out, making
those connections, adding valueto other people, is ultimately
going to help you.
You yourself scale as well asus.
Colter DeVries (20:23):
Yeah, and my personal story is roughly 10
years ago when I left bankingand I thought I'd become the
world's greatest rancher whichthat was naive at 26.
That was also during a hugecycle bubble in the livestock
values that forever changed mylife for the better.
But at that time it was justaudio books.
(20:48):
I would pick up MalcolmGladwell and that was my form of
reaching outside of myimmediate tangible peer group
and you'd get all the audiobooks and you just have it
siloed.
It would just stay with you andyou didn't have I didn't have a
(21:12):
lot of people to bounce thatoff of.
And fortunately then came thepodcast and at that same time my
wife and I we're in our latetwenties, mid late twenties and
you start seeing things in yourlong time friend group, from
what I can remember, where Ijust didn't want to play that
(21:35):
game.
It just didn't feel comfortable.
Like buying the biggest houseyou could with a first time
homeowners loan, 5% down type ofa deal, paying mortgage
insurance, and then and then goleveraging a new car, a new
pickup in our case in Montanalike a 65 at that time $65,000
(21:56):
pickup and then and then,because you got the cash flow,
your paycheck is every otherweek.
Well, let's go leverage a boatin the summertime and maybe a
snowmobile in the wintertime,and all of that even before I
know my listeners give me.
They give me shit cause I'vementioned this a lot.
But even before I lost my ass inthe cattle market, matt, I was
(22:18):
still uncomfortable with thatamount of leverage and it just
felt like slavery.
Like I had that conversationwhen I was going down with my
bankers.
The ranching wasn't working outand they said well, coulter,
you can dig yourself out of thishole.
We know you can.
It's just gonna take 30 years.
(22:40):
Do you want to do that?
Matte Fore (22:44):
No, I don't.
I would say the biggest shifthappened to me when I lost that
commission check was this ideathat somebody else was gonna
control my life as long as I wasworking with inside of big
fortune 500 companies.
Somebody else was gonna controlhow much money I made, what I
did, all those sorts of things.
And one thing I'm prettypassionate about is we live in a
(23:05):
modest home today.
We could absolutely go live insomething bigger, but every time
you make that sort of apurchase a snowmobile, a new
pickup truck, a new house youare adding years on to your
working life.
You are adding time that youonly get finite number of time
Losing.
My sister taught me you onlyget a finite number of time and
you never know when that's goingto end.
(23:26):
Why do you want to spend moretime doing the things that you
don't give you the energy thatyou want not being intentional
in life because you wanted thebigger house, the nicer car, the
bigger snowmobile and thingslike that?
Colter DeVries (23:39):
Well, in my personal experience I can say
that developing the freedom.
So then immediately we kind ofwe didn't do the Dave Ramsey
program, but I listened toenough of Dave Ramsey on the AM
radio and I have a financebackground that I was like, all
right, the writing's on the wall, I get what the message is here
.
We immediately went into payingdown mortgage, paying down
(24:03):
paying off the cars, paying nocredit cards.
You know the whole three monthsavings emergency fund and that
felt good.
I know that it gets brought upon different channels and people
who are of the same like mine,but it just feels really good
personally when you're debt freefor the personal debt.
(24:26):
Now, I do agree that you shouldleverage income producing
assets to a certain point forthat leveraged cash flow, but it
just feels good to have thatdiscipline.
It's like at the end of everyworkout.
You know those endorphins.
You can't buy those.
Matte Fore (24:46):
That's right.
That's right.
I mean, look, dave Ramsey getsa lot of heat from finance
people.
I was actually listening to himlast night as I was falling
asleep and one of the things hewas talking about is the idea
that debt introduces risk.
I thought it was like it's afair point.
I think it was a less harshertone than he's given in the past
.
But he is correct that anytimeyou add debt, you're introducing
(25:07):
risk.
But ultimately, what you decideto do in your own personal
economy is a mix of math andemotion, and there's always
going to be a math answer to theequation and there's always
going to be an emotional side ofthe equation.
What you should do is a mix ofboth and I can't tell you what
(25:29):
your mix of both is.
But you shouldn't do allemotion and you definitely
shouldn't do all math.
You should find your rightblend of both and pursue a path
forward.
Colter DeVries (25:40):
Well, how did you come to launching a private
equity fund with a thousandmobile home lots?
I mean there's a certain amountof lots of risk in that, and
how do you balance that?
And I mean, just tell me abouthow difficult it was too, how
many years it took.
And I mean you're a prettyyoung guy, so to have
(26:03):
potentially 2000 mobile homelots and a private equity fund
at your age is a significantaccomplishment.
Matte Fore (26:11):
Yeah, I would say the answer to that question is a
lot of partnerships and a lotof meeting the right people.
So we at our firm come with alevel of competency in certain
areas of the real estatetransaction and the real estate
life cycle and then weunderstand where we don't have
expertise or where we don't havea team built out and where
(26:32):
we're gonna lean on otherpartners to go help us do some
of those things.
For example, I have no ideawhen I walk into a mobile home
how much work needs to be doneand how much it's gonna cost.
You could tell me it's gonnacost $2,000.
You could tell me it's gonnacost $10,000.
And with a little bit ofexperience I could tell you
which number is closer, but I'mnot really sure, down to the
(26:53):
penny, how much that's going tocost.
So I'm gonna have to leverageour other partners in this
equation, whether they beconstruction managers or things
like that, to help us understandwhat this is going to actually
take.
And I think that goes back tothe conversation we were having
earlier around.
When my dad grew up in ruralWest Virginia, he had to know
everything and be everything,because there was nobody else In
(27:15):
today's world I could get onchat, gpt, I can get on Reddit,
I can get on the internet andfind other ways to come up with
an answer here than having toknow everything myself.
So I think when I startedunderstanding these are the
things I'm really good at andcan help add value, and these
are the things that I don't careto go learn because it sucks my
(27:38):
energy and I can go find peoplethat can add value there.
And two and one plus one nowall of a sudden equals three.
Then that's when I started toscale and really see a lot of
success.
Colter DeVries (27:51):
Becauseå© today and I'm in a state where we
control the cabinets and we setup the machines to be home and
home.
I jumping back to China.
I see many people who assumecube and cube which is 20 feet
long.
No-transcript I'm concernedabout and think about I'm
(28:14):
concerned Mm.
Ok, she doesn't even need thatchat, gpt or something, and but
yeah, we, we, we are fortunatethat we have so much information
available to us Probably makespursuing those dreams a little
more within reach, I would saybecause because information used
(28:36):
to be hard to get, now it'scheap.
And now I would argue that mostdreams are closer.
Matte Fore (28:46):
I would argue the same.
I would say the difficulty nowin today's environment is that
can does not mean should, andwhat I mean by that is because I
can go do this, because I cango learn.
This does not mean I should golearn this and do this and kind
of circling back to the wholereturn on intentionality piece.
(29:06):
I know that for me I don't getenergy out of swinging hammers
and putting in the manual sideof the labor.
I know I can go do it.
I know I can go learn it, butthat's not where I want to spend
my time because it's going toultimately drain more energy
than give me energy.
(29:27):
So I would encourage everybodyto understand that you could go
achieve anything you want today.
You can go do anything you want.
It does not mean that youshould go achieve everything you
want and should go doeverything today.
Find the parts of your worldthat give you energy, that you
care about, that you have a zoneof competency.
Get really good at those andfind the best people around you
(29:49):
to supplement the things thatdrain your energy or don't give
you.
Don't add the value that youwant to add.
Colter DeVries (29:56):
Well, in in can versus should.
In your experience, did youhave to test things at a small
level like let's take the mobilehome park 20, let's say it's a
$20 million fund?
Did you have to start with twoof your own personal mobile
homes and say you know, I'mgoing to test this out at a
smaller level, build a trackrecord, prove the, prove, the
(30:21):
thesis, prove my, my managementskills, and just to see if I
can't?
Well, you know, I have a prettygood idea that I can, but to
see if I should, do I test thisat a small level before I jump
into a $20 million fund.
Matte Fore (30:37):
Yeah, I mean, I started all all this on a single
family background.
So my first investment was asingle family turnkey rental
that was right around the streetfrom where I lived.
I bought that because, one, Ijust lost that commission check
due to no power of my own.
So me putting down a 40,000down down payment for that was
(30:58):
one the cost of an MBA, so if Ifailed at this at least I would
get some education from it.
And two, it got me going in theright direction.
So I knew from that turnkeyrental that I could analyze
deals, that I could find deals.
Now my next deal was a flip.
So I bought a property holds onthe wholesale market.
I used hard money lending.
(31:19):
I understood that process.
I started down the process oftrying to fix some things in
that property when I learnedvery quickly that that's not
what I enjoy doing.
So I knew at that point that,hey, if I want to go do this, I
got to find a good partner.
And I found a good partner anda construction manager who could
go do a lot of the things thatwe needed to do.
So we started doing some flips,we did some burrs, we did some
(31:40):
things like that and then,ultimately, I ran out of cash.
I had to go find propertiesthat were valued not based off
of my income but based off ofthe asset itself, and that got
me into commercial real estate.
So I invested with somepartners, passively at first,
kind of looking over theirshoulders, understanding what
they were doing.
And then I got involved on theactive side and started putting
(32:03):
together deals, putting togetherthe financing, raising capital
and things like that.
Yes, I started on a very smallscale, but by the time we got to
the mobile home parks I knewthat I was never going to be the
one that was going to go inthere and swing hammers and
collect rent and manage theproperty where we're going to.
We were going to go findsomebody that could do some of
that work and we were going toadd value somewhere else in the
(32:25):
scale and the in the life cycle.
Colter DeVries (32:28):
Well, you brought up hard money lending
and I think it's time for mapfor his forecast.
It seems like and I want tohear your crystal ball that with
the way where rates are todayfed fund rates, your risk, free,
opportunity, cost of capitaland you're, you're borrowing
(32:48):
power and given where cap ratesare in commercial same with farm
and ranch, there they aresuppressed, compressed and do
not appear to be increasing atany point.
What I just I don't know whatit's going to take for cap rates
to improve and farm and ranchit's going to take.
I don't know.
(33:09):
I don't want to speculate there, but I want you to speculate.
What are what are we going tosee with commercial, with these
cap rates?
We hear about huge vacancyrates.
We hear about refinanceballoons, bubbles coming up and
then the financialization ofthese hard assets.
(33:30):
Do they just become paper money?
Do you?
Do you do more hard money loansand and turn a real property
into mortgage paper instead?
What?
What is going to happen overthe next two or three years?
Map?
Matte Fore (33:43):
Sure, so, since this is on the internet and, if I'm
wrong, it can be easily erasedand never brought up again.
I'll give you my forecast, butultimately, look, no one knows,
right?
If I knew the answer to that,then I would be living on a
private island somewhere and Idon't know if I would be
embracing the cold here inNashville today.
But I mean, I have a couple ofthesis that we are watching
(34:07):
right now.
The first thing is I do thinkrates go down next year, and
it's as simple as it's anelection year and no one wants
to see a 2008 happen again.
Regardless of what side of theaisle you're on, you do not want
to see another 2008.
Second is, it feels likeinflation has been moderated,
(34:28):
and I don't know if it'll getdown to a 2% level, but it will
get down to a three ish, threeand a half ish, and that will
give the Fed enough data thatthey want to lower their fed
funds rates, which ultimatelywill drag down property rates.
However, when that happens,rates prices on all real estate
(34:49):
will go back up, and so itdoesn't solve this problem of
affordability, and right nowthat is starting to become more
of a political issue thananything, and that has nothing
really to do, I think, with theeconomic environment.
It has to do with theregulatory environment more than
anything.
So you go into these big citieslike San Francisco and
(35:11):
California where everybody saysthey need affordable housing,
everybody's on board, and thenyou want to build something
affordable next to abillionaire's house and they say
wait a minute, no, we're not onboard, go put that somewhere
else.
So that doesn't solve theaffordable housing thing issues.
So if I'm an investor right now,there's two things we're
watching.
One we believe people will bemoving down the affordable stack
(35:34):
over the next couple of years,because, as interest rates
decline, as property pricesappreciate back again, we
believe that people of housingwill become more affordable and
people will be moving down thestack.
That's why we are very bullishon the mobile home park space is
because if that thesis playsout, then mobile home parks are
affordable housing for a lot offolks out there.
(35:55):
That allows them to not onlylive affordably, but also own a
piece of property affordably,which is hard to find these days
.
Not only that, but it's it'sshrinking in supply, so if more
demand is increasing, supply isdecreasing.
It's great economic position tobe in.
The second thing I think willhappen, though, is that probably
(36:17):
around 2025, 2026, 2027.
So not this next year, notreally the next 24 months, I
think inflation will go back up,and the reason being is because
you are on shoring all of yourmanufacturing that you've
offshored for a number of yearsand, just put simply, when you
(36:38):
took a $7 job and moved it to a$2 job and you're going to bring
it back to a $15 job, inflationis going to go up because
people are going to cost ofgoods are going to go up and
people will demand more, etc.
Which will cause another height.
So, if you are going to buyreal estate, the next three
years probably present your bestopportunity and then the back
(37:00):
half of the 2020s early 2030s,look a little bit shaky.
So that's kind of ourunderlying thesis and that's
kind of what we're looking atright now.
To your point around paperassets and being the bank,
essentially we're always goingto own real estate, but we also
do have a debt fund where welend out to fix and we're on a
(37:21):
short term basis on that money,so we're able to receive high
cash flow no tax benefits, noappreciation, but high cash flow
on short term basis, so that mymoney is always cycling back on
us and allows us to be nimblewhere we need to be nimble.
So I know that's probably along wind to dancer, but that's
what we're looking for.
Colter DeVries (37:40):
That's certainly what we're looking for with
with the loans.
Do you adjust your requiredequity position based on?
What do you?
What do you base the equityposition on?
Because that seems, given thethermometer of the economy,
maybe today is, if people areultra worried about a correction
(38:05):
in real estate values, you'regoing to increase that equity
position, right?
So where are you guys at todayand what's the range?
Matte Fore (38:12):
Yeah.
So, first off, even in a hardmoney loan fund, our LTV across
the portfolio is right around65%.
So we don't have 120% LTVs,100% LTVs and things like that.
However, what comprises that isa lot of tiers.
So if you wanted a 100% loan tovalue to the ARV, then we're
(38:37):
going to charge you 16 points,17 points, whatever that is, and
if you wanted a lower LTV, thenwe would charge 12 points, 11
points, something like that.
So we do have a mix of loans tovalue, depending on what tier
we're in, and we also chargehigher depending on what LTV you
want and things like that.
(38:58):
So it varies.
The ultimate answer is yes,though we do want to keep it
within that 65 to 70% range, sothat we're leaving us room, if a
borrower defaults, to go backand take over the property, add
the value and flip it at a stilla profit.
Colter DeVries (39:17):
Well, matt, this has been drinking through a
fire hose listening to youappreciate it.
Do you have in our last fiveminutes?
Do you have a couple plugs?
We plug next level income.
That is, your private equitygroup.
You've got the.
For those that enjoyed whatthey heard of Matt, we have
always got the next level incomeshow ice cream with investors
(39:39):
to learn a little bit more aboutcommercial.
Matte Fore (39:42):
Yeah, it's bringing on everybody from the real
estate industry.
So when I first got into thisbusiness, I thought that you
could only be the fix andflippers you see on HDTV.
What I've learned is there's somuch more to it.
So we have people that havetalked about fix flipping land.
We've had people that talkabout flipping apartments.
We have people that talk aboutflipping parking lots.
We've had people talking aboutbeing the debt.
(40:04):
So really, the goal is to bringon different people from the
real estate industry to talkabout their specific niche and
what they're doing andultimately, listeners can say,
hey, I know that this alignsmore with the intentionality
piece and things that I feellike I would be good at, and I
can just be a broker of thoseconnections.
So go check us out.
Ice cream with investors on allof your major podcast apps.
(40:27):
Would love to have you like andsubscribe and be a listener.
Colter DeVries (40:31):
And on that for next level income.
Thank you for coming on theranch investor podcast.
It's been a been a rewarding 45minutes.
Matte Fore (40:40):
You got it.
Thanks for having me.
Colter DeVries (40:42):
We at Ranch Investor are very interested in
hearing your thoughts, youropinion, your wants, desires,
hopes and dreams.
Everything on ranchsyndications, ranch investment,
ranch real estate syndicationsand DPP's direct participation
programs.
Please reach out.
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