Real Estate Investing

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Matt Theriault – Epic Real Estate Investing

 

 

Podcast Overview:

00:00 Single vs. Multi-Family Investment Pros/Cons
04:13 Multifamily vs. Single-Family Valuation
08:59 Falling for Music: DJ Journey
11:35 Hip Hop DJ Albums Success
16:02 Unpredictable Decline in Record Sales
17:25 “Transition and Change in Music”
20:51 Music Industry Layoffs Amid Digital Disruption
26:13 “Shifting from Agent to Investor”
28:06 Creative Real Estate Acquisition Strategies
33:09 Alternative Home Buying Solutions
33:53 Quick Cash Home Buying Offer
39:32 “Buying Into Elite Networks”
40:45 Real Estate Guidance and Services
45:30 Real Estate: Top Tax Benefits
47:06 Real Estate Tax Benefits
52:29 Seeking Reliable Tax Advisors

Podcast Transcription:

Matt Theriault [00:00:00]:
This new definition of wealth. So I had just come from the music business. I thought wealthy was you just meant you had a lot of money. And his definition was, no. You have enough money coming in each month to cover your bills, and that money that’s coming in isn’t necessarily tied directly to your efforts.

James Kademan [00:00:19]:
You have found Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. Downloadable audio episodes can be found in the podcast link found at drawincustomers.com. We are locally underwritten by the Bank of Sun Prairie, calls on call extraordinary answering service, as well as the bold business book. And today, we’re welcoming slash preparing to learn from Matt Theriault, owner of Epic Real Estate. Matt, I apologize. He told me I was gonna mess that name up. I hope I didn’t mess it up terribly.

Matt Theriault [00:00:50]:
No. You got pretty close. You got closer than Matt. But,

James Kademan [00:00:53]:
what happy to be, James. I appreciate that. So, Matt, today, we’re talking real estate. So let’s just start out with what is Epic Real Estate.

Matt Theriault [00:01:00]:
Well, Epic Real Estate is a a company Matt kind of a two headed company where we show people how to invest in real estate and those people that wanna be a little bit more hands on. And then we have another portion of it that my wife runs where she actually does the investing for them. So she does all the heavy lifting. So some people wanna be hands In. Some people wanna be hands Draw. But, pretty much our client wants real estate so they can retire early.

James Kademan [00:01:23]:
Nice. Yeah. And is this when you say two pronged, I guess, as far as that goes, how long have you been doing it?

Matt Theriault [00:01:30]:
Let’s see. I’ve been investing myself almost twenty years now, nineteen years or so. Been teaching for about fifteen.

James Kademan [00:01:38]:
Okay. Mhmm. Somebody think twenty years. So you got in right before the market crash of right?

Matt Theriault [00:01:44]:
Correct. There’s not too many of us that are still around.

James Kademan [00:01:47]:
Alright. So so great timing. Right?

Matt Theriault [00:01:50]:
Yeah. Well, in hindsight, I think it was, right,

James Kademan [00:01:54]:
when In was happening. So? Yeah. I mean from where you were leveraged, I guess, in o ‘8.

Matt Theriault [00:01:59]:
Yeah. I mean, it it also depended on your strategy. You know, if you were fit the people that got really hurt then were the people that were doing the fix and flips and had five, six, seven projects going on at once. And then they had bought all this money to do those projects. And when the market flipped, now they were stuck and they couldn’t sell them. That was a lot of people, and that was most people that got hurt. And then, but that wasn’t my strategy. I was a buy and hold type investor.

James Kademan [00:02:24]:
So Right. So tell me about that. Is it residential, commercial?

Matt Theriault [00:02:28]:
Yeah. Almost exclusively single families. I’ve dabbled it In, multifamily housing, but I just came back to single family because it’s simple. It’s easy.

James Kademan [00:02:38]:
Now I have heard as far as single family goes, I was listening to another podcast, not as good as this one, but another podcast.

Matt Theriault [00:02:44]:
Not even.

James Kademan [00:02:45]:
And essentially, there was a debate going between multifamily versus single family. And the single family guy had a very good argument, I thought. Mhmm. And he basically said you will always be able to sell a single family house. There will never be a time when there’s not a family looking to live somewhere.

Matt Theriault [00:03:02]:
Yeah. I mean, there’s pros and cons to both for sure, and I don’t I don’t, hold it against the multifamily people because I think they do have a good argument. It just depends on how involved you wanna be. And I think In what he said, like, there’s always there’s typically a pretty a much easier exit strategy available for the single family person. Most of the time, you don’t get to benefit from market appreciation and upswings in multifamily as you do single family. But then on the other side within when it comes to operations, if you can really fine tune and dial in your operations on a multifamily, you can essentially force appreciation. So In there there’s good to both. I don’t think there’s a perfect investment strategy or a perfect asset class out there.

Matt Theriault [00:03:53]:
Right? They all everything has kinda has its fleas, and everything has its, you know, its its good size too.

James Kademan [00:04:00]:
Sure. Let’s talk about that forced appreciation because I think I understand, but just for myself as well as the Customers, is the idea that you buy a place, build it up so you can raise the rents, and Theriault, you can sell the property for more? Yeah.

Matt Theriault [00:04:13]:
I mean, essentially because, you know, it did it really has to go with how Matt homes are valued or how real estate is valued. So single family homes are pretty much valued based on what a similar house recently sold for. Right? So if this house sold for that, then my house is pretty close to theirs, then my house is probably worth something similar. When it comes to multifamily, it’s not as easy to find comparables. Like, there’s just not a bunch of 40 unit buildings all sitting on a row in the same city that you can compare them against. And, typically, those are purchased as investment, vehicles. So it’s really the the performance of those properties have a greater impact on the value than it does, like, a single family house. So, yes, you can raise rents, but you can also reduce costs.

Matt Theriault [00:05:00]:
Right? I mean, you go through it and find different ways to streamline whether it’s through energy or through its new service providers or, you know, there’s all different ways to upgrades, updates, stuff like that.

James Kademan [00:05:13]:
Okay. So twenty odd years ago when you got started or let’s go even further Authentic two, twenty three years. Mhmm. What was the trigger, the turning point for you to get into the real estate game?

Matt Theriault [00:05:25]:
Yeah. I was in the music business for fifteen, sixteen years.

James Kademan [00:05:28]:
Oh, were you really?

Matt Theriault [00:05:29]:
Yeah. And then Oh, that’s awesome. Had a small little hip hop label with major label distribution and did really well until, you know, this thing called Napster came along and people stopped buying music. Right? And people just started downloading it for free. And so, you know, at the time that that was happening, I mean, no one could even couldn’t even, even imagined it. Right? Right. Six months. I mean, six months of selling no compact discs, no CDs.

Matt Theriault [00:05:56]:
Matt that’ll put you out of business really, really fast in Matt business. Alright. And a whirlwind. I mean, in six months, I was out of business and, you know, the wife didn’t appreciate Matt. So she took off because she needed a guy with a job and income and then, filed bankruptcy. So it was it was a big giant whirlwind. And at that time, I was thinking I was 34 years old. And I thought I had life made, and I had no idea what happened.

Matt Theriault [00:06:21]:
Like, in six months, my life was just completely different, and I had no clue. In hindsight, it’s crystal clear. But at the time, I didn’t know, like, this digital download thing was such a big deal. Right. But it really was. I mean, iTunes wasn’t even On wasn’t even started

James Kademan [00:06:36]:
yet. No. No. I still remember Napster and, man, the other I don’t remember the names of the other players. There’s Napster went away. I feel like they’d one would go away, five would take their place. Yeah.

Matt Theriault [00:06:49]:
I think there’s, like, LimeWire was one. LimeWire? Yeah. LimeWire. Then there was this thing called BitTorrent type thing where you could download all this stuff. And

James Kademan [00:06:57]:
Yeah. And so then they

Matt Theriault [00:06:58]:
were trying to sell the downloads, and now they don’t even sell the downloads. And now you just get all the music for free for $4 a month or whatever it is.

James Kademan [00:07:04]:
Right. Interesting. So tell me, do you mind if we dig into the whole record label thing a little bit?

Matt Theriault [00:07:09]:
Sure. No. I love talking about it.

James Kademan [00:07:11]:
So how do you get into being a person in a record label or owning a record label? That’s a

Matt Theriault [00:07:16]:
very interesting story. I was born and raised in Irvine, California, Newport Beach in Irvine, California, which is very much probably the center of the universe for yuppies at the time. I don’t even know if people remember Matt that phrase is, but that’s really what it was. And I was, you know, I went to an all white high school, very, you know, conservative and just very vanilla, sterile. It was a brand new school. Like, I think I was the first graduating class there to go four years when a brand new suburban development I mean, everything was just brand new and crystal clean and pure and just it was

James Kademan [00:07:52]:
Matt for lives there.

Matt Theriault [00:07:53]:
Theriault sterile. Yeah. And, I was in the musical theater, and we were doing this performance of Flashdance. And, the the grand finale required break dancers. And so our our choir teacher, quote, unquote, went to the other side of the track to try and recruit some, break dancers and to no luck. But she did find one guy that came over, and he taught me and the only other guy in this musical theater class. And so we did the grand finale. And so we were in, like, three months, we figured out how to break dance, all that kind of stuff.

Matt Theriault [00:08:30]:
But that was such a pivotal moment because it just I fell in love with that culture. This was nineteen eighty three, eighty four.

James Kademan [00:08:38]:
Oh, wow. So breakdancing was huge back then.

Matt Theriault [00:08:41]:
Oh, I mean but it was right at the beginning. It was in its infancy as far as being a national awareness. And, you know, he brought his radio and the music that he played. I was like, I’d never heard anything like that ever before in my life, and it just captured me. I think In was, what, 16, 15, 16 years old.

James Kademan [00:08:59]:
Alright.

Matt Theriault [00:08:59]:
And I just I fell in love with the whole thing, and I would drive all over from city to city just trying to find out what this music was and how I could buy some. I didn’t know how to ask for it. Like, I I had to walk into the store and go, boom, boom, boom, boom, boom. Like, I tried and sound it out for the for the music store clerk, and a lot of them just looked at me crazy. And, but eventually got into it, and I became I became a disc jockey. And then I started making my own music and and taking my little drum machine to my gigs and mixing records with the drum machine and and then eventually started making my own records. And I put records in the trunk of my car, and I would drive from record store to record store. You ever been to Southern California?

James Kademan [00:09:46]:
I have. San Diego. Okay. One of my favorite places In the

Matt Theriault [00:09:50]:
world. In. Yep.

James Kademan [00:09:51]:
I lived in

Matt Theriault [00:09:51]:
Orange County, and I would take off and I’d drive up to LA, then I’d drive up to San Francisco, then I’d make a right turn, go inland all through San Bernardino and Riverside, all the way down to San Diego On all the way back up. I had this tour of about 50 different music stores in that giant circle, and it’ll take me the whole week to do that. And I just put my music On consignment in each one of those stores. And then by the time I finished that loop, it was time to head off again to go and collect for what had sold and replenish whatever whatever new release we had. So I did that for about a year and a half, two years. We literally sold music out of the trunk of my car. And, and then I got the, attention of EMI Music. And they said, hey.

Matt Theriault [00:10:33]:
We see all the noise you’re making down there in Southern California. We’d like to distribute your music globally. And they gave me this Draw, and I think Matt was 22, 20 three years old and got a check for a hundred thousand dollars. And I was like, for records I hadn’t even made yet, and I was like, wow. So that kinda kicked off the whole music business, and then it it went up from there.

James Kademan [00:10:56]:
Right. So did you have other artists besides you that were making music that you were distributing?

Matt Theriault [00:11:01]:
Yeah. One thing I I kind of pioneered was, these dance music compilations. And so people would, there was some different labels. I think Thump Records was one that was doing it really, really well. And they would go out and they would find this big name disc jockey, a dance disc jockey, then they would go out to all these small, little In labels and license dance music. Then the the DJ would mix that live, and they’d put it out on a CD. So it was like a legal mixed tape. And so those got really big, and every big dance disc jockey had Matt.

Matt Theriault [00:11:35]:
So I saw I took that concept and took it to hip hop. So I found out all the hip hop DJs and went out and licensed all this independent hip hop music, and it’s kinda just made the the DJ was the star of the of the record album. And so that’s what we did, and those sold, you know, forty, fifty, 60 thousand units every single time, and we’d release one of those once a month. And, it was just me and three of my buddies. That was a great, great living. Cost of 75¢ to make a CD. The wholesale price was $8. And it was just like, wow.

Matt Theriault [00:12:07]:
I’m getting paid to do this, which was just totally remarkable. So that’s how we started. That was our big success. And I had a couple artists, and I had some one offs. I mean, Eminem, we had a single with Eminem before anyone knew who he was. The brand new heavies, I don’t know if you remember them. We had Yeah.

James Kademan [00:12:22]:
I remember the name. I couldn’t Yeah. Tell you On.

Matt Theriault [00:12:24]:
Most def, we had a single with them. Nice. Classic five. And so we had some big big names. In mean, they’re big now. They weren’t then. And so, I mean, I look back, there’s certainly some missed opportunities there. But, Eminem, it was funny.

Matt Theriault [00:12:38]:
The the Eminem story that people ask me about. He sounded so different than anything else out there at the time that I didn’t like it. I was like, oh, I don’t like this kind of rap. And I was like, dang. Missed that one. But, two years later

James Kademan [00:12:53]:
Can’t all be home runs. Right?

Matt Theriault [00:12:54]:
Yeah. Like, three years later, he was a household name. But,

James Kademan [00:12:58]:
Dang. Tell me just really quick without I don’t need to dwell on this or anything, but just the curiosity is blowing my mind here. Mhmm. You got a bunch of records, but you have to go to a record manufacturer or stamper or whatever they call them Mhmm.

Matt Theriault [00:13:10]:
To

James Kademan [00:13:10]:
get these records pumped out, and you had to front the money for that, I imagine.

Matt Theriault [00:13:15]:
Mhmm. Yeah. Yeah.

James Kademan [00:13:16]:
How big of a deal was that?

Matt Theriault [00:13:17]:
Yeah. They were small amounts. Right? So I had to get 300, four hundred records pressed at a time. And so that would cost me, like, I don’t know, $2.75 for the for the vinyl because that’s what I’ve initially started selling. So that’s, like, maybe a thousand bucks. Right? And then I’d go sell In, and I’d get about a dollar 50 markup on it. So I’d come back with, you know, $3,500 or $2,500, something like Matt, and press some more and just kinda kept that rotation going. But when I got that first order from from EMI, they’d asked me for, hey.

Matt Theriault [00:13:48]:
Can you send us 500? And I was like, I didn’t have 500. Right? And so that’s and then they said, well, we need 500 of that, 500 of that, 500 of that, 500 of that. And that was just that was such a big giant paradigm shift because I’m selling five or 10 at a time per store. Right? And all of a sudden, they want 500 of each one of my releases, and it was just like, well, I don’t have the money to press Matt. So to your point. And that’s where this idea of, hey. We could just advance you the money. That’d be no problem.

Matt Theriault [00:14:16]:
Matt, like, wow. You would do that? Because this was just a totally different world to me. Right? Yeah. I was thinking very much like you. I mean, I was operating very much based around what the context of your question is. Like, how do you come up with Call all the money to do that? Well, I didn’t. I just did very little at a time. I press a little, sell

James Kademan [00:14:33]:
a little, press a little, sell a little. Now I got another question as far as records go. Mhmm. So records in Southern California, I picture getting wavy and melty in the car. Mhmm. So is that an issue? Yeah.

Matt Theriault [00:14:45]:
I had all kinds of strategies for keeping the records flat. So Alright. First of all first thing, like, my radar was on fire for any parking space with shade. So it was like and I that still has stuck with me today. Here we are thirty years later. I still like, my my eyes look for the shade in a parking lot. But I had, some what do you call it? The kinda like these metallic blankets that I put over my my records in the trunk of the car, and then I pack them really tight so they’d stay straight. And so I pack them really tight that way.

Matt Theriault [00:15:17]:
So Alright.

James Kademan [00:15:17]:
This was the system.

Matt Theriault [00:15:19]:
No one’s ever asked me about that, but I had a system for it.

James Kademan [00:15:21]:
Well, I’ve had a couple records go bad when I learned that the sun through a windshield is not a good place for

Matt Theriault [00:15:28]:
a record to be. Uh-uh. Uh-uh.

James Kademan [00:15:31]:
So you’re still like, I’ll just be going for a couple minutes. Right? And then you come back like, oh. Yeah.

Matt Theriault [00:15:36]:
What happened? Them in the windshield. That that was lesson number one for sure.

James Kademan [00:15:39]:
No. Interesting. So you go through all Matt, and then Napster comes around. What was the moment where you’re just like, oh, this is not good, and we gotta find something else? Was it when the wife left, or was it previous to that?

Matt Theriault [00:15:56]:
It was it happened before the wife left because she left after the income stopped.

James Kademan [00:16:01]:
Right. So

Matt Theriault [00:16:02]:
so we were still making a little bit of income there at the very, very end, but just nominal. And, you know, I I pressed like, the last two records I’d pressed, I was like because I’d noticed a slowdown in the sales. So and I had a formula for these records that I was making. So, like, it was very predictable of what it was going to be. And then, when I saw sales started to slow down, like, those last two releases, I was like, okay. Let me let me kick this up a notch and really focus on these and really make something special. And I made two records that I was just, like, some one of the more prouder moments of my life of what I pressed, and they sold almost nothing. That was the clue.

Matt Theriault [00:16:41]:
Like, wait a minute. I went out On I got some big names on it. I spent extra on promotion. I had I had the placement in all the music stores. I had center page, advertisements Call all the biggest industry magazines and everything and nothing. And previously, that would have been In a home run almost every single time if I did that. And so with that, that that was, like, the pivotal moment. I was like, okay.

Matt Theriault [00:17:03]:
I gotta find something else to do. So I started producing for other people and not trying to make my money off of the record so much. So I was became a producer more than Matt record label owner.

James Kademan [00:17:14]:
And so To the point that you would be contracted out to there or somebody else’s stuff.

Matt Theriault [00:17:18]:
It was just a gun for hire. Like, for example, I did the last thing I worked on was with In.

James Kademan [00:17:24]:
And Oh, nice.

Matt Theriault [00:17:25]:
This is kinda when they broke up and they were coming back together. So I found a new member. I brought the new member. I got to produce a couple records for them, and and, that did okay. And I think while I was doing that, I saw in the newspaper that EMI had sold their vinyl plant. And I was like, ah, there’s the writing on the wall. And when they sold their vinyl plant, that means they’re not gonna make vinyl anymore. And And that’s what I was doing at the that was a big portion.

Matt Theriault [00:17:53]:
I mean, that’s a big portion of the hip hop culture. It was vinyl at the time. Mhmm. And I was like, uh-oh. There’s a that’s a clue. And so that was that was the big moment where I was like, okay. I gotta figure out something else to do.

James Kademan [00:18:03]:
Alright. And did you do that into In suppose the time. That’s, Napster time. Matt CDs. So you went through the records and then into cassettes and then into CDs.

Matt Theriault [00:18:14]:
Yeah. So we did compact disc for the consumer, but we always had to make vinyl versions of things because our big promoter were underground hip hop DJs. Oh. Because we were we weren’t, like, in the in the gangster rap type stuff, which was so popular. NWA was so big. We were more of, like, the independent underground earthy type stuff. Like, think most Draw if you’re a hip hop fan, like like that. And, so he was like he was one of my favorite MCs of all time at the time and still is today.

Matt Theriault [00:18:43]:
But we were like that. So, really, our whole means of promoting was through nightclubs and then late night radio.

James Kademan [00:18:49]:
Wow. Yeah. Alright. So just so I understand this, was the music that you were creating or helping to get out there, did that end up on Napster, or people were just consuming so much volume of music that there wasn’t room for or they didn’t care?

Matt Theriault [00:19:05]:
Oh, no. It ended up on Napster.

James Kademan [00:19:07]:
It did.

Matt Theriault [00:19:08]:
Because remember Napster was was a sharing method. So if they uploaded our music onto their computer and they were a Napster member, then our music was on Napster.

James Kademan [00:19:17]:
Just like that. Boom. Yeah. Alright.

Matt Theriault [00:19:19]:
It wasn’t like On intentional upload. It’s just if it was on your computer, and it was on Napster.

James Kademan [00:19:25]:
Yeah. Interesting. That is crazy. So then how do you shift from producing being the hired gun into getting into real estate?

Matt Theriault [00:19:34]:
Yeah. So that In dried up. It was interesting. My very first project I ever produced that I got paid for in music, I think it was 17 years old, eight 17 or 18. I produced a song for Vanilla Ice.

James Kademan [00:19:46]:
Oh, fun.

Matt Theriault [00:19:46]:
It was On his follow-up album, though. I missed the whole wave of what made him all famous. But I thought, hey. I’ve I got two songs on Vanilla Ice’s next album. It’s gonna be amazing. I have made it. And that album never came out, and we never heard really from Vanilla Ice again. But, so It never came out.

Matt Theriault [00:20:04]:
Say again?

James Kademan [00:20:05]:
It never came out at all.

Matt Theriault [00:20:07]:
It never even came out.

James Kademan [00:20:08]:
Uh-uh. Wow.

Matt Theriault [00:20:09]:
Yep. And so because, really, Vanilla Ice never came out again. You know? He had the the ride with he was, like, the one hit wonder guy. And so I remember I get I got paid a thousand dollars for each one of those. So I had Matt $2,000. I think I was 17 years old, and I was like, wow. $2,000, like, was so much money at the time for doing something that I would have done for free. And, In my very last project that I did, with In, I got paid a thousand dollars.

James Kademan [00:20:37]:
So I

Matt Theriault [00:20:37]:
went Woah. Call circle. Right? And I came all the way back right down at 34 years old, and I got a thousand dollars for that. There was no budget. They were trying to resurrect the group and everything. And and so but I was happy to do it. But I was just kinda like, alright. I gotta find something else to do.

Matt Theriault [00:20:51]:
And at that time, you know, Sony Music had laid off 10,000 people. Universal Music had laid off 10,000. And then, like, six months later, Sony Music laid off another 10,000 people. So I was like, wow. If if the big boys aren’t making it, if Napster is having that big of an impact on the big guys, then who am I to think that I can survive this? And it was like the Internet and everything. It was just like, I just didn’t know anything about anything other than how to make music. That was my only only skill. So but I had to Matt.

Matt Theriault [00:21:19]:
I had to provide for myself. So I went out and started looking for a job. I just went out into the real world and submitting applications and found out very quickly that I wasn’t qualified for anything, per my documentation and my certificates credentials, there wasn’t wasn’t a whole lot of demand for an unemployed entertainment entrepreneur. So I did all kinds of things. I sold cars. I sold insurance. I went through a number of different multilevel marketing businesses and everything.

James Kademan [00:21:51]:
The Amway’s of the world?

Matt Theriault [00:21:52]:
Yep. Went through all of that because that’s I I went through a temp service. I remember I was signed up to be a temp, and I remember the, the little girl. I don’t know. She’s probably 24, 20 five years old, and she was administering the test. So I had to take the typing test to see how many words per minute. And I remember when I got done with the test, she was like, oh, wow. You’re really a fast typer.

Matt Theriault [00:22:15]:
I think we we can keep you busy. And I was just like, oh my god. It was it was so patronizing, and she was, like, so proud of me on how fast I typed. I was like, oh my god. I gotta find something else to do. But, I ended up bagging groceries for about six months while I was just In figured out. And, unfortunately, the the grocery store was, the whole grocery union was In On strike. So they were paying, like, $22 an hour.

James Kademan [00:22:41]:
Dang. For bagging groceries, that’s alright. Yeah.

Matt Theriault [00:22:43]:
Yeah. I was like, okay. I can handle this for a second. And I don’t know. Six months went by. The strike hadn’t ended, and I was like, you know what? It doesn’t look like anyone’s coming to save me. And if I don’t figure out something to do, I’m gonna be here for the rest of my life. And the, grocery store manager I was 34 years old at the time.

Matt Theriault [00:23:01]:
The grocery store manager was 34. He’d been there forever. And he said, you know what? I’m only two years away from taking down my pension. So at 36, he would have been there twenty years. So he’s gonna be able to pull 70% of his salary for the rest of his life via his his

James Kademan [00:23:16]:
Wow. His pension. Good for him.

Matt Theriault [00:23:18]:
Totally. But he said,

James Kademan [00:23:20]:
look what else I’ve done along the way. And he pulled out this little photo album.

Matt Theriault [00:23:24]:
Do you remember photo albums, James?

James Kademan [00:23:25]:
Oh, yeah.

Matt Theriault [00:23:26]:
Yeah. You know photo albums. You you you look like you’re close to my age. Yeah. And, he said he showed me some pictures of some apartment buildings he had. He said, look. I’ve been able to amass these along the way. Had a couple of them in Los Angeles.

Matt Theriault [00:23:40]:
And the passive income from those apartment buildings were actually going to exceed his pension. And he said these words to me, and it changed my life forever, and I’ve said it a million times since. But he said, you know, Matt, real estate, it’s the final frontier for average guys like you and me to make some real money.

James Kademan [00:23:57]:
Oh my gosh. I love that.

Matt Theriault [00:23:59]:
Yeah. And I was just like, wow. There’s three really pivotal moments in Matt. There are three operative operative words Theriault. Like, the final frontier well, gosh. I’ve been sitting here searching for six, seven months. Haven’t found anything. And he said for average guys he said for the average person.

Matt Theriault [00:24:15]:
I was like, I was feeling far below average at that moment in my life. So, like, who am I to aspire to be above that? And he said to make real money. Now, like, yes. I really miss my real money from the music business. I need to make some real money. And so that’s In where I just chose real estate for that those one comments. I didn’t know if he was telling me the truth or not. In hindsight, he was.

Matt Theriault [00:24:34]:
But at the time, I was like, I got nothing else better to go On. So that’s the direction I’m going. So that’s how it turned into real estate.

James Kademan [00:24:39]:
That is awesome. So tell me, how did you get started? You’re bagging groceries, making you 20 some bucks an hour. Now you gotta go from there to investing.

Matt Theriault [00:24:49]:
Well, here’s what happened is Matt is the strike finally ended, and one of the, the head bosses, one of the regional managers had come to me and says, you know, Matt, hearing a lot of great things about you. We love to keep you. You’re fantastic. We really appreciate the work and the service you provided here. But if you’re gonna continue working with us, you have to go union, And that means you have to start at the bottom. And so everyone starts at $7 an hour.

James Kademan [00:25:15]:
Oh, there’s a punch in the gut.

Matt Theriault [00:25:17]:
And I wasn’t living off of $22 an hour. And said, oh my gosh. So that night, going home very miserable and depressed, I took a bottle of wine home and went on got on the line and just started searching everything real estate because that I’d had that On just a couple weeks before then with the with the grocery store manager and found an estranged aunt that I hadn’t talked to in probably fifteen years, and she was the number one real estate agent just two cities over from where I was. Wow. Yeah.

James Kademan [00:25:49]:
The stars are starting to align.

Matt Theriault [00:25:51]:
Totally. And I was done with my bottle of wine, so I was filled with liquid courage and just fired off the email to her. And in the morning, she responded. We had lunch that day, and within twenty four hours, I was in real estate agent school. So I thought that’s where I was supposed to start. I think that’s where a lot of people think. If you’re getting into real estate, you gotta get your license or whatever, and that’s just kinda what I thought. I didn’t really have any guidance.

Matt Theriault [00:26:13]:
And, you know, it took me about three or four years to realize, you know what? If real estate is where all the money is at, I’m sitting on the wrong side of the desk. I On to be an investor because I had a couple of clients that were, and I was able to compare On the closing statements their profits with my commissions. And I was like, you know what? I want the profits. I want what they’re getting. I wanna do what they’re doing. And so that was a big pivotal moment where I had declared to, never represent another person on their sale or purchase of real estate. I was only gonna represent myself. And so I made a big giant investment in my real estate investing education.

Matt Theriault [00:26:52]:
And, you know, that’s where it started.

James Kademan [00:26:55]:
Did your aunt was your aunt an investor as well, or she was just agent?

Matt Theriault [00:26:59]:
Sort of. She she’s like she’s kinda like your real estate agent from central casting. Like, she was she was just and she was really good at what she did, and she was the the queen of the office and you know? And she bought real estate along the way, but very much in a traditional way. You know? She’d put 20% down. She’d go to a bank. She’d get a loan, and she just hold on to it. And she owned, like, I don’t know. She owned eight, nine houses in the same track that she lived in.

Matt Theriault [00:27:25]:
So, yeah, she invested in that regard, but I don’t think she considered herself a real estate investor. She considered herself a real estate agent.

James Kademan [00:27:31]:
Gotcha. Okay. So you transitioned to investor. Yeah. There had to be, I imagine, a point when you break off from being the real estate agent, and you really start honing your skills as an investor. Tell me a little bit about that.

Matt Theriault [00:27:46]:
Yeah. People think they hear real estate agent and real estate investor, and they think there’s probably a lot of similarities. And there’s really not. They’re they’re very, very different. I mean, they all Draw both deal in real estate, and that’s about where it ends. You know, as a real estate agent, you’re a service provider. You’re representing somebody else. As an investor, it’s your job.

Matt Theriault [00:28:06]:
You’re representing yourself, and it’s your job to to make money. That’s the mission. And so those are just have two completely different mindsets. And when you get into the world of real estate investing, you start to see, wow, there’s other ways to acquire property, and there’s all these different types of property. It’s not just saving up a down payment, going to a bank, you know, jumping through all their hoops and and going that route as most people use to to buy their own primary residence. But I really was attracted to what we call creative acquisitions, where you could take properties over with the existing financing already in place, where you could, negotiate seller financing. And then we started looking for off market properties, not the stuff that’s online with the multiple listing service or what you see on Zillow. Right? That’s where the that’s where the public plays.

Matt Theriault [00:28:57]:
We play off market, and so we just kinda go to the source. And I learned how to do all of Matt. And, you know, there’s this little book, I don’t know if you ever heard of it, called, Rich Dad Poor Dad. Have you heard of this book?

James Kademan [00:29:09]:
Oh, yeah. Oh, yeah. That’s it. That seems to be a common Yeah. In mentioned book when you’re interviewing people in the real estate world.

Matt Theriault [00:29:17]:
For sure. And On entrepreneurship really altogether encompassed. But there are two things I got from that book at that time, and one was this concept of passive income. You know? I speak English. I can take the word passive and income, put it together, and In figure out what it means. But to have it as an intention, something to pursue, that was just a wild and crazy idea for me. Like, that just was not just didn’t even exist in my universe. And so there was that I got from that book.

Matt Theriault [00:29:53]:
And then he had this whole definition of, this new definition of wealth. So I had just come from the music business. I thought wealthy was you just meant you had a lot of money. And his definition was, no. You have enough money coming in each month to cover your bills, and that money that’s coming in isn’t necessarily tied directly to your efforts. And so he had this new formula, this rat race escape formula. So it was to get your passive income to exceed your monthly expenses. And having just kind of thinking I was on top of the world and had the rug pulled out from under me, I never wanted to go back to that.

Matt Theriault [00:30:28]:
And so this whole idea really resonated with me. Like, you know, if if, say, someone pulled the rug out from under me in real estate, you know, at least I’d have this passive income thing that’ll keep paying. I would have to go bag groceries again. God forbid. So that really that just be that changed my whole world On changed my whole focus, my whole direction. And within three and a half years, I got to a point where the passive income from my real estate did exceed my expenses. And at that point, I wasn’t I wasn’t wealthy, right, by normal standards, what most people consider, but I was free. I didn’t have to work.

Matt Theriault [00:31:06]:
And having experienced both, a lot of money in the bank but still having to produce records every single month and have and then not having a lot of money in the bank, but not having to get out of bed if I didn’t want to. I In of preferred that. Right? I I kind of preferred the the the freedom over the wealth. And so, yeah, that kind of kicked me down this whole education path because I just thought Matt that time, I will by the time I did that, I was thinking In was 39, 40 years old. I was like, wow. Where would I be if I didn’t go through all of this? Like, I would have never learned about this. I would have had never had a reason to read a book like Rich Dad Poor Dad. I’ve never you know, In just wouldn’t have happened.

James Kademan [00:31:46]:
Right.

Matt Theriault [00:31:46]:
And I just thought, wow. Matt. What if they swapped out Catcher in the Rye in high school and gave you that book instead?

James Kademan [00:31:54]:
Oh, man. Right? I In hear you. Right?

Matt Theriault [00:31:56]:
How different life could have been. And so I just started thinking about that. Gosh. I would have never ever known about this. Because I didn’t come from a wealthy family. It was all a bunch of civil servants, police officers, and fire department, and, you know, aerospace engineers, stuff like Matt. Very conservative family, very traditional values. And, you know, they’re gonna work where they’re working for forty years.

Matt Theriault [00:32:13]:
They’re gonna max out their four zero one k’s and their pensions, and that’s that’s just their life. That’s the family I came from. So no one was teaching me about passive income. No one was teaching me about real estate investing. And, it was just about that time where my wife and I my new wife, got pregnant. And I was just like, you know what? I wanna pass this along to my son. Maybe I Call start something new on the start a new branch on the family tree, so to speak. And that’s where I I just started documenting everything and then selling it and teaching it.

Matt Theriault [00:32:42]:
And so, you know, he’s got a a perfect blueprint to follow. He’s 13 now. And, so that’s how the the whole teaching thing came into the into the world.

James Kademan [00:32:52]:
Mhmm. Tell me let’s dig into some of those pieces. The creative oh my gosh. What did you call it? Creative

Matt Theriault [00:33:00]:
financing? Positions.

James Kademan [00:33:01]:
Yeah. Yeah. Tell me a little bit about that or some of the options that you’ve worked with in that regard.

Matt Theriault [00:33:05]:
Sure. So most people when they go to buy

James Kademan [00:33:08]:
a house, they will go to a

Matt Theriault [00:33:09]:
bank to see how much they qualify for, and they’ll have to see how much they put down, and they’ll do the numbers. And then Matt the bank will tell them this is how much you can afford, and now you take that little letter, this prequalification letter, and you are shopping for a house. That’s how most people do it. I think it’s 93% of all houses are transacted in that manner. So I deal in the 7% that aren’t. So what we do is we go out and we look for people that are experiencing some sort of distress, whether it’s financial distress or personal distress or or their property itself is in distress. And for one reason or another, going the traditional route with a real estate agent is not a good solution for that person. And so they’ll reach out, and they’ll call one of us based on our marketing materials because we offer fast cash.

Matt Theriault [00:33:53]:
We can close quickly and, you know, no no you don’t have to fix up the house. You don’t have to do anything. There’s no fees or anything like that. And so we do our own marketing same way that pretty much real estate agents do, but we In target our marketing a little bit more to people in these types of situations. And they Call us. And so we might say, you know what? If you want fast cash, it’s it’s gonna be kind of this investor price. It’s gonna be low because we gotta fix it up, and then we’re probably gonna resell it. And that’s how we make our money.

Matt Theriault [00:34:20]:
We understand if we’re not the the right buyer for you. A lot we don’t fit a lot of times. Or what we could do is, you know, the market might allow us to push the price up a little bit more if you were willing to take some money now and the rest later.

James Kademan [00:34:35]:
Oh. How much

Matt Theriault [00:34:36]:
how much do you actually need right now? And so that’s kind of the two options. You get the Matt, low cash offer so they can get their money really quick and move on, or they can get pretty close to market value if they’re willing to accept payments over time. And so that is and it looks exactly like every other real estate transaction, but instead of me making payments to the bank, I’m making payments to the seller.

James Kademan [00:35:00]:
So can we, just for full understanding Mhmm. Put those in numbers in a hypothetical situation. Say the house is worth $400,000. Let’s just start with option one where you are buying them out for lower than market value to get them cash and move on.

Matt Theriault [00:35:18]:
Yep. Traditionally, typically, that number for the fast cash is gonna be somewhere between 6075% of the after repair value.

James Kademan [00:35:30]:
Okay.

Matt Theriault [00:35:31]:
Matt of the properties we see are not even close to being ready to go On the market. So there’s a lot of

James Kademan [00:35:36]:
They’re a little beat up.

Matt Theriault [00:35:36]:
Work that has to be done. Okay. So it’s usually somewhere between there. And that’s kind of a broad range, but it’s there, and it’s just a % dependent on the condition of the property, how much work needs to be done. The other way we could do it is maybe we could give you eighty, eighty five, even 90% On some regards or some instances, even a % In you could take some money now. So I’ll give you a small down payment so you can get on to your next location, and then I’ll just give you monthly payments for a set period of time.

James Kademan [00:36:02]:
So you give them example being you give them, whatever, $70,000 now. Yeah. So thinking it on the feet of down payment. Sometimes it’s no money down at all. Okay.

Matt Theriault [00:36:10]:
They might just be in a situation like, just get this off my back. Right? Just take it. And that happens. But it’s typically not what I mean, if it’s gonna be 20% and In 7% interest Matt, like what you get, like, well, I just go to the bank and do that. That’s there’s no benefit for me here. Right.

James Kademan [00:36:26]:
But if

Matt Theriault [00:36:26]:
I can give them close to market value, which no one else will offer them so I’ll so so we’ll say that $400,000 house. Say, you know, if they put it on the market, they wouldn’t get over 300 because it needs all this work. But what if I gave you $3.50 or $3.75, which is more than anyone else will give you, but you’re just gonna have to take it, over a longer period of time. And so that’s a good solution for a lot of people.

James Kademan [00:36:52]:
That is cool. So you’ll end up fixing it, selling it, getting your 400, and you can distribute it to them. They’re $3.50, 3 70 5. Yeah.

Matt Theriault [00:37:00]:
So So

James Kademan [00:37:00]:
you’re not having to come up with 400 Yeah. Or $2.50, whatever.

Matt Theriault [00:37:04]:
There there’s a lot of different ways. Like, in many instances, I try to hold on to everything. I don’t like to flip properties. I wanna hold them all. So I’ll arrange payments so that I can rent out the property, and it will still allow me to have a little bit left over each month. So it cash flows. So the property pays for itself. The other way I could do it is, you know, if I, say, I paid $3.50 for the $400,000 house and I’m making payments to them over thirty years, I can now once it’s all done and fixed, I can go sell it to someone else for $404.25, and take payments over thirty years from them just at a higher rate and create this arbitrage, this spread.

James Kademan [00:37:42]:
Gotcha. So they’re paying you $2. You’re paying them 1,500. You get the $500 every month difference. Whatever.

Matt Theriault [00:37:48]:
Exactly. And I’m not I don’t have to deal with toilets. I don’t have to deal with termites and all that stuff.

James Kademan [00:37:53]:
Sure. Yeah. Oh, I like that. That’s clever.

Matt Theriault [00:37:56]:
Yeah.

James Kademan [00:37:56]:
Tell me as far as the single family stuff

Matt Theriault [00:37:59]:
Mhmm.

James Kademan [00:38:00]:
Dealing with tenants and all that kind of stuff when you got a single family here, there, everywhere, do you are you the one painting and unclogging toilets, or do you have a No. A, No. A management company or something like that? Tell me about that.

Matt Theriault [00:38:14]:
Exactly. So we we hire property managers, and those are pretty much how we choose our markets also. It’s wherever the best property managements management relationships we have.

James Kademan [00:38:23]:
Okay. The

Matt Theriault [00:38:24]:
Theriault estate is contrary to popular belief. Real estate is pretty darn safe. And with just a basic education, it’s pretty difficult to mess it up. Where the risk comes into play are the people that you work with. Right? So it’s it’s basically either most people lose their money either with a bad contractor or a bad property manager.

James Kademan [00:38:46]:
Mhmm.

Matt Theriault [00:38:48]:
So we do as much due diligence on the people that we work with as we do the real estate itself and sometimes even more. So the property management is really the secret to the whole thing. It’s not finding good deals. It’s not finding great houses. It’s Call you get somebody to get that house to perform so it actually is an In. It pays you more than it costs you to own it. So, yeah, we have a really good system. We find property managers, and then we have a great system for managing property managers.

James Kademan [00:39:15]:
Alright. Yeah. So you mentioned you’re in California. You mentioned you just recently had a transaction in Milwaukee, Wisconsin. Yep. So you’re, whatever, three quarters of the way across the country.

Matt Theriault [00:39:26]:
Yep.

James Kademan [00:39:26]:
How do you find a property manager that far away and know that they’re good or figure out that they’re good?

Matt Theriault [00:39:32]:
Here’s another thing I wish they would have taught us in high school is that if you weren’t born into a rich family or a rich network, did you know you could buy your way in? They have these things called mastermind groups. And I’ve belonged to a number of those. I pay about a hundred grand a year in in mastermind groups just because of the network. And you you build these relationships across the country of like minded people that who also have means, and and some of these are very expensive, $2,550,000 dollars a year to join this group. But you’re in there with in a group with 50 people that also spent $50. So you’re you’re in with a a really you know, regardless of what the service offers, just you get to meet 50 people just like you, and so you create some amazing relationships. And real estate being such a people business, it’s, it’s an invaluable experience, and it’s a really good In, and it helps our operation run.

James Kademan [00:40:30]:
Nice. Mhmm. So then you let’s go with your wife, what she’s got going on

Matt Theriault [00:40:35]:
Mhmm.

James Kademan [00:40:36]:
With the investor piece, it sounds like. Mhmm. Tell me a little bit. Let’s just delve into the foundation of what she has going on On with Sure.

Matt Theriault [00:40:45]:
So, yeah, I’m I’m the one that goes out and teaches people how to do what I do. Right? So I just kinda gave you a little strategy. Now if you were you were my client, I would hold your hand, and we’d go through Matt whole process together until you’re comfortable doing it on your own. So there’s that type of person that wants to be hands on and wants to do it themselves. What my wife does is she deals more with the busy professional that knows that they want real estate. They need real estate somewhere in their financial plan, but they don’t have the time or the desire to go out and do all of that work. They don’t wanna do all that heavy lifting. So they’ll come to her, and then she’ll go out.

Matt Theriault [00:41:14]:
She’ll find a property for them. She’ll fix it up. She’ll put a tenant in place, and then she’ll arrange the property management. And she’ll just hand it over to them. She’ll even arrange the financing, hand it over to them on a silver platter as a cash producing asset. And so that’s what she does. It’s called turnkey real estate investing is is the phrase for it or the, yeah, the name for it in our industry. So that’s what she does.

Matt Theriault [00:41:36]:
She runs that, and she runs that in 10 different markets, nine or 10 different markets across the country.

James Kademan [00:41:41]:
Oh, wow. Okay.

Matt Theriault [00:41:42]:
We have our relationships. We have our realtors there. We have our contractors there. We have our property managers there In all of those different markets. And, so that’s what she runs.

James Kademan [00:41:51]:
Alright. And so when a when an investor comes to your wife, let’s say, does she say we need an investment of x, or do they say I have an investment of x and she finds something to fit that?

Matt Theriault [00:42:04]:
It really starts with their goals, what they On accomplish. Right? And then we look at their resources of of what they have available and how much of those goals or what we create a road map on how we’re gonna reach that goal.

James Kademan [00:42:15]:
Okay.

Matt Theriault [00:42:16]:
If someone kinda says they want a cash flowing house, then that’s really simple. That’s really easy. But if someone comes in and says, hey. I wanna leave my job in the next twenty four months, and I wanna do do it with passive income, you know, replacing my job’s income, then that takes a a much more involved plan and strategy. And so and then there’s everything in between.

James Kademan [00:42:35]:
Gotcha. In the majority of the investments that she’s working with, are they single family houses as well? Yes. Okay. Wow. That’s cool. Yeah. That is cool. Can you give me a range low and high investment? Because I imagine there’s there’s gonna be a threshold on the floor.

Matt Theriault [00:42:53]:
If you go across the country, if I mean, you don’t wanna buy a property unless it’s gonna pay you more than it costs you. Right? You want the income from the property to pay you more than whatever the debt is or the expenses are. So that little formula that the sweet spot right now in The United States and there’s some variables depending which market you’re in, but pretty much between, say, $75,000 and a hundred and $75,000 is is the price point of a house.

James Kademan [00:43:22]:
Okay.

Matt Theriault [00:43:22]:
And once you get above $202.25, then they start or they that cash flow formula starts to break. And so all of a sudden, the the rent isn’t keeping up with the value or the price of the house. So that’s kind of the sweet spot between,

James Kademan [00:43:38]:
you know, between a hundred

Matt Theriault [00:43:39]:
and 200 right now is probably where you’re at.

James Kademan [00:43:42]:
Okay.

Matt Theriault [00:43:42]:
Call, that’s a lot in the Midwest, a lot in the South. Not a whole lot available on the coasts Matt, Sure. That number.

James Kademan [00:43:51]:
Yeah. I guess In where I’m at I’m in Madison, Wisconsin. Mhmm. And I look at property around here, and it’s just like, I don’t understand how people are making it Mhmm. From an investment point of view. But you go half hour, hour outside Mhmm. And then you’re like, ah, okay. Now things start to

Matt Theriault [00:44:10]:
make sense.

James Kademan [00:44:10]:
That we were that we were

Matt Theriault [00:44:11]:
talking about just before, we started recording, I think, the property I just sold in Milwaukee. And that’s only, I think, two or three miles from the the baseball stadium.

James Kademan [00:44:23]:
Oh, nice.

Matt Theriault [00:44:24]:
And we that was the house was hundred and 75,000.

James Kademan [00:44:29]:
Milwaukee is a very interesting market because I look at that, and the stuff is half price there compared to Madison. And I don’t have any understanding as to why. It’s a bigger town. They have more amenities. Mhmm. Blah blah blah.

Matt Theriault [00:44:44]:
I’ve never even been there, so I I don’t know either. But I just know the numbers. It was one seventy five. It rented for, I think, $1,800 a month. But

James Kademan [00:44:53]:
we had

Matt Theriault [00:44:53]:
it as a short term rental, so it brought in about $4,000 a month. And so that was that was a good property for us.

James Kademan [00:45:01]:
Nice. And

Matt Theriault [00:45:01]:
that worked yep. And that that didn’t take, like Matt wasn’t a strike of luck or a stroke of luck for us to find something like that. Those are pretty Yeah. Available everywhere in The United States.

James Kademan [00:45:10]:
Alright. Mhmm. Tell me, do you mind if we dig into taxes a little bit?

Matt Theriault [00:45:14]:
Sure.

James Kademan [00:45:15]:
From the real estate side? I just had my first, segmented depreciation report done, all that jazz. I didn’t even know that was a thing until last year. Yeah. So tell me some of the tax advantages of investing in real estate.

Matt Theriault [00:45:30]:
Sure. Well, real estate is probably the most tax preferred asset class that’s available to just average people. Right? So first of all, if you own an income property, this this is the biggest tax advantage that everyone should embrace and whether it’s a real estate owner or not, but the real estate thing kinda kills two birds with one stone, is that when you own an income property, you are, in the IRS’ eyes a business owner. So now you just get a whole slew of of tax deductions, like like your cell phone, right, and your mileage and and, you know, office supplies and and whatever else you happen to buy at OfficeMax or Staples. And then you’ve got the your home office deduction. So the business thing is a really big deal because, you know, as an employee, you know, you are paid. They take your taxes out, and you get to keep what’s left. As a business owner, you’re paid.

Matt Theriault [00:46:29]:
You get to spend it all, and then they only tax what’s left. And Matt the the bottom line is that’s a very, very different bottom line. So that’s the first thing how real estate really benefits you tax wise is you are a business On. So now you are taxed everywhere like a business owner. So that’s huge. Then the second one would be, the, the depreciation that you’re talking about. That is one of the four, ROI quadrants or the the profit centers of real estate that most people just totally dismiss. And that’s about a three or 4% return every single year that you are owning that piece of real estate.

Matt Theriault [00:47:06]:
But people don’t see it as a return because it’s it’s not money coming into their pocket. It’s just money that’s not being taken out of their pocket. You know, with just that alone, those two things, being a business owner and and the depreciation, most people I mean, you take the person and they the median income, which, I don’t know, $50.60 grand a year, I think, is the median household income, I think. Three, four rental properties On virtually eliminate your tax liability altogether for that person. And for that alone, I mean, real estate is worth owning In it’s gonna go ahead and just kind of zap out your your whole tax liability. Legally, honestly, ethically, morally, with Call Sam’s blessing, it says it right there in the tax code. Hey. You do this, and we’ll give you this benefit.

Matt Theriault [00:47:51]:
You know? So that’s I mean, there’s no other asset class out there that provides that to you.

James Kademan [00:47:58]:
Yeah. What is the quote that I heard recently? It was something like, if you owe money in taxes, Matt just means you don’t own enough real estate or something like that.

Matt Theriault [00:48:06]:
I’ve never heard of Matt, but yeah. For sure. And so for here’s a great example In that, you know, we we’ve owned up to 350 units before. We’re down a little we’ve really, consolidated quite a bit since then. But we had so many tax deductions that we couldn’t use them Call, So they just kept on carrying forward. And this is how someone like a Donald Trump gets a tax Call, and he had he paid $700 that year for taxes. Well, you’re a billionaire. How’d you do this? Like, because of real estate.

Matt Theriault [00:48:38]:
Real estate gives that to you. So on a much smaller scale, obviously, we had all of these tax deductions that we were carrying forward. And, our accountant came to us and said, you know what? You’re never ever gonna be able to claim all of these. So let’s kind of restructure your whole portfolio so that you can. So that’s when we started selling our properties, but we’d sell them with seller financing. So we became the bank on those. Now those are taxed entirely differently. So the money that we receive from income from rentals is taxed as passive income, residual income.

Matt Theriault [00:49:14]:
Right? The money that we receive from selling our property by being the bank, that’s taxed as active income. It’s taxed at a much higher rate.

James Kademan [00:49:23]:
Oh, that is active. Okay.

Matt Theriault [00:49:25]:
Mhmm. And so what we did is we kinda just did this disbursement. The he did this whole analysis on our portfolio. He says, okay. Let’s take your worst performing properties from a management side, and let’s get those let’s get that headache out of here. And we’re just gonna sell those, but sell them with seller financing. So we continue to get the passive income from them, but we don’t have the management headaches on those properties. And so we did just enough to where they canceled each other out, and now we were able to start recouping all of our our tax deferrals that we had had from previous years.

Matt Theriault [00:49:58]:
So we took that, applied that to the higher tax rate of the seller finance properties. You following along?

James Kademan [00:50:06]:
Yeah. Okay. Definitely. Alright. Yeah.

Matt Theriault [00:50:08]:
And so so now we just kind of every couple years, we’ll do a balance, like, okay. Where are we at so we don’t have to pay more taxes than necessary, but we can still maximize our, passive In.

James Kademan [00:50:18]:
Nice. So when you sell these properties, are they properties that you’ve had for a while where you don’t have to deal with the depreciation, paying it back, something like that?

Matt Theriault [00:50:27]:
Yeah. Yeah. Theriault there’s different structures of how you can do that and kinda defer that and keep continue to kick that can down the road. It’s a little bit beyond my my knowledge base. I’ll probably mess it up if I explain it. But, yeah, all of that’s taken into account.

James Kademan [00:50:43]:
Okay.

Matt Theriault [00:50:44]:
Yep. Very

James Kademan [00:50:44]:
cool. I mentioned that’s having the right team, professional team accountants, and Totally. Real estate attorneys, things like that that know what they’re doing and have experience with it to help you.

Matt Theriault [00:50:55]:
But we don’t have any, like, highfalutin people. I mean, they’re they’re just, you know, they’re available and accessible to the average person for sure.

James Kademan [00:51:02]:
So it doesn’t Yeah. Yeah. I imagine. On, yeah. So I guess I just got a new accountant because my other accountant just did he was a typical w two guy. Mhmm. And I had the business stuff to him, and I think he was just getting to the point where he just didn’t know.

Matt Theriault [00:51:17]:
Yeah. Yeah. Outgrown for sure.

James Kademan [00:51:18]:
It was just outside of the scope of what he was a pushman, shoveman kinda guy. Mhmm. And, like, he was recommended. So I’m like, okay. I don’t know. He says accountant On his door, so it Customers that he knows things.

Matt Theriault [00:51:30]:
Right. Well, it’s really remarkable because, I mean, you just get TurboTax, and you go and and you can punch in all the real estate stuff, and the TurboTax will figure out a bunch of stuff for you. And it’s funny how many CPAs out there that don’t even have that awareness.

James Kademan [00:51:43]:
It is bizarre. It is definitely bizarre. I look at I look back at what I’m gonna call them mistakes that my accountants have made over the years Mhmm. That I only know of now. Right? I wasn’t smart enough to tell them fifteen years ago or even to look up online. Like, is this a thing?

Matt Theriault [00:52:01]:
Uh-huh. Right.

James Kademan [00:52:01]:
And In you think, like, how much did I pay how much did I pay in in taxes that I didn’t need to? Mhmm. I’m like, ugh. It pays to get someone that’s that knows what they’re doing. But on the flip side, you don’t necessarily know that they know what they’re doing.

Matt Theriault [00:52:17]:
Yeah. Because In

James Kademan [00:52:17]:
the On that I’ve worked with before, it’s not like they said, like, hey. I know 60% of what you need or anything. Mhmm.

Matt Theriault [00:52:24]:
Yeah. Yeah. No. It’s In it sounds like you’ve learned something since, though.

James Kademan [00:52:29]:
Yeah. Yeah. That was, as the tax bills get higher, you get more I guess, in my case, I just started doing homework on my own and reaching out to other business owners saying, who do you use? What do they do? Mhmm. And a lot of the people that I would talk to, business owners, would say, don’t use my guy.

Matt Theriault [00:52:50]:
Yeah.

James Kademan [00:52:51]:
He’s not that good. It was it was almost comical how many people I guess, when you compare the people that are just like, this is the one you need to talk to versus Mhmm. I’ve been using my guy for years. Don’t use him. It’s

Matt Theriault [00:53:05]:
funny. Yeah. I mean, from my students, I get that that request constantly. Do you know a good CPA? Do you know a good bookkeeper? And I’m like, yeah. I mean, my guy’s good, but, you know, it might be a little overkill for you right now, and you don’t wanna use anyone else that I know.

James Kademan [00:53:18]:
Sure.

Matt Theriault [00:53:18]:
So Fair. Similar.

James Kademan [00:53:20]:
So, Matt, how can people find you?

Matt Theriault [00:53:23]:
Well, I’ve got the longest running real estate investing podcast on the interwebs. We started in February Really? Yep. Started in 02/2009. So if you like podcasts, you can go to the epic real estate investing podcast. If you go to epicrealestateinvesting.com, it takes you right to the the iTunes link. So

James Kademan [00:53:39]:
Very cool. Yeah. Very cool. Now you said 02/2009.

Matt Theriault [00:53:43]:
Mhmm.

James Kademan [00:53:44]:
I so we’ve been going since 2017, and I get told that I was on the cusp of podcast, though. Oh, yeah. 02/2009? My gosh. Yeah.

Matt Theriault [00:53:52]:
I had to explain to people what a podcast was at the time.

James Kademan [00:53:55]:
That is incredible. How did you know? I’m just trying to think what the Internet was in 02/2009 because we’re talking when the razor phone was In beginning.

Matt Theriault [00:54:03]:
Okay? Relative infancy. And I had stumbled upon the book, The Four Hour Workweek.

James Kademan [00:54:10]:
Yeah. Great book.

Matt Theriault [00:54:11]:
And so I was listening to that via audio. I bought it on iTunes. And then I I liked the book so much. I went and I searched, what else does Tim Ferriss have? Right? And then it came up with all these little episodes, I guess. I just thought there were other books, right, other audiobooks. And so Tim Ferriss had a podcast at the time, and it said free next to it. I was like, well, I’ll listen to these, and and that was kinda like how I got introduced to a podcast. That way, I was just looking for more stuff from, from the same author of a audiobook I just listened to.

Matt Theriault [00:54:44]:
And then there there they were.

James Kademan [00:54:45]:
I was like, yeah.

Matt Theriault [00:54:46]:
I think I’m gonna do this.

James Kademan [00:54:48]:
That is cool. Because I’m just trying to think about even Internet speed back then compared to what it is now. Mhmm. I mean, now you can get 500 gig. No problem. But back then, I imagine 10 gig was

Matt Theriault [00:54:59]:
Yeah. But I think I had a smartphone.

James Kademan [00:55:03]:
I’m Matt I’m On two thousand. It’s so funny because people say twenty years ago, and I I still think in my head, okay. Nineteen ninety five. Mhmm. And, like, you’re like, no. No. Not quite that far. So Matt just, not it all blends

Matt Theriault [00:55:21]:
after all. Came out in January.

James Kademan [00:55:25]:
Okay.

Matt Theriault [00:55:26]:
So Matt this was 02/2009, so it had been around already for eight years.

James Kademan [00:55:29]:
Alright. Alright. Yeah. Interesting. I imagine still just finding the platform and the storage.

Matt Theriault [00:55:36]:
Yeah. The iPhone was released in 02/2007. So that’s about, yeah, right on the money. So 02/2009.

James Kademan [00:55:41]:
Alright.

Matt Theriault [00:55:41]:
On was out. ITunes was out. I’m good to go.

James Kademan [00:55:44]:
That’s cool. Yep. That is impressive. So tell me again what the name of the podcast is.

Matt Theriault [00:55:49]:
Epic Real Estate Investing.

James Kademan [00:55:52]:
Epic Real Estate Investing. I love it.

Matt Theriault [00:55:54]:
Just add a .com to Matt, and it’ll take you right to the iTunes.

James Kademan [00:55:57]:
Nice. Well, Matt, thank you so much for being on the show.

Matt Theriault [00:56:00]:
Thanks for having me, James. It was a pleasure.

James Kademan [00:56:01]:
Yeah. Likewise. This has been Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. My name is James Kademan, and Authentic Business Adventures is brought to you by Calls On Call, offering call answering and receptionist services for service businesses across the country on the web at callsoncall.com. And, of course, the bold business book, a book for the entrepreneur in all of us, available wherever fine books are sold. We’d like to thank you, our wonderful listeners, as well as Matt. Matt, tell me that website one more time. We’re gonna drill it In people’s heads.

Matt Theriault [00:56:37]:
Sure. Epicrealestateinvesting.com.

James Kademan [00:56:40]:
I love it. If you’re listening to this on the web, you should do us a huge favor. Give us a big Call thumbs up, subscribe, and, of course, share it with your entrepreneurial friends, especially those that may wanna walk away from bagging groceries and move on to real estate, or even if they wanna know the history of the recording producing business because that was a cool story there. I love that. Past episodes can be found morning, noon, and night at the podcast link fund at drawincustomers.com. Thank you for joining us. We will see you next week. I want you to stay awesome.

And if you do nothing else, enjoy your business.