Matt Ryan is an investor, entrepreneur, expert in real estate development, and the founder of re-viv, a company born out of his passion for high-performance construction, community development, and sustainable buildings.
The catalyst was a community member in the neighborhood where he bought his first investment property: Ms. Pam. From then on, Matt has been dedicated to revitalizing neighborhoods through impactful investment real estate strategies to create affordable housing that is walkable, bikeable, and close to necessary retail and job centers for people from all walks of life.
Matt is adept in commercial transactions and is skilled in the duties of a broker, property manager, and general contractor. He has raised over a million in private money and has a portfolio worth over four and a half million! There’s no doubt that you will get a ton of value from this episode!
Key Takeaways:
- The importance of affordable housing.
- Private money is the boost that your real estate business needs.
- Mistakes Matt made when trying to raise private money and the lessons he’s learned.
- Raising private money takes time to get the hang of.
- Find your unique selling point: differentiate yourself from your competition.
- The money comes first, and the deals follow the money.
- The difference between Return on Investment and Internal Rate of Return
- What is re-viv, and what do they do as a company?
- Co-Living is the latest growing niche in real estate
- Qualifications of a co-living tenant
- The income generated through the Co-Living niche’s technique of buying by the gallon and selling by the squirt
Connect with Matt:
Website: https://www.re-viv.com
Check out my book: 7 Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help You Build Incredible Wealth!
Get it here for FREE: www.jayconner.com/moneyguide
Sign up for the Private Money Academy and get 4-weeks free: https://jay-conner.mykajabi.com/offers/AMM4hCPW/checkout
Sign up for the Private Money Academy Conference: https://www.JaysLiveEvent.com
Timestamps:
0:01 – Raising Private Money with Jay Conner
1:04 – Today’s Guest: Matt Ryan
2:51 – Private Money Is What’s Been Missing In Your RE Business
11:37 – Lessons Learned In Raising Private Money
19:11 – Jay’s Free Money Guide: https://www.JayConner.com/MoneyGuide
20:05 – The Money Comes First
24:26 – Return Of Investment vs. Internal Rate Of Return
26:47 – Co-Living: The Newest Growing Niche In Real Estate
31:48 – Connect With Matt Ryan – https://www.re-viv.com
33:05 – Multi-Family Properties To Co-Living Residence
34:26 – How To Qualify To Become A Co-Living Tenant
41:01 – Buy It Buy The Gallon, Sell It By The Squirt
Discover The Fastest Growing Niche In Real Estate With Jay Conner & Matt Ryan
[00:00:00] Jay Conner:
My guest today on Raising Private Money has raised over $1 million in Private Money himself. Now he started back in 2013 with only $95,000 in the checkbook, but now today he has a portfolio of four and a half million dollars in real estate. Now, in addition to that, back in 2015, he moved to San Francisco to base his new endeavor on the idea of revitalizing communities through impactful investment real estate strategies.
Now, my guess is gonna share with you exactly. What it is that motivated him to find what is called Re-viv. So with over 10 years of experience in real estate and construction, my guest founded Re-viv to re-engineer, residential and commercial real estate in what we call underserved communities. Now he’s an expert at handling all facets of commercial transactions.
Which include duties as a broker, a property manager, a general contractor, and he’s demonstrated a proven strong track record in commercial real estate while raising private money, and he’s got a personal portfolio. Where he has achieved over 25% internal rate of return since he started in just a moment.
You’re going to meet my special guest, Matt Ryan, right after this.
[00:01:35] Narrator:
If you are a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal then you are in the right place on raising private money, we’ll speak with new end seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first.
Now, here’s your host, Jay Conner.
[00:02:15] Jay Conner:
Welcome to the show, Matt. Thank you, Jay. I appreciate it. Absolutely. Now, Matt, what I discovered in my own real estate investing career and business is there was a. Pivotal moment in my real estate investing career that changed everything. And that pivotal moment for me was I was from 2003 to 2009, I was relying on the local bank and mortgage companies to fund my real estate deals, and I was on the phone with my banker in January 2009.
I’d had a. Beautiful relationship with the bank. For six years, they have been funding all my deals. I’d never heard of private money, didn’t know anything about it, and I learned in January 2009, the bank has closed my line of credit. Had no way to fund my deals. That was my pivotal moment. I was able to learn about private money.
In a very short period of time, I raised $2,150,000, in the first 90 days that the bank had cut me off. That was my pivotal moment because that experience has had more of an impact on my real estate investing career in 20 years versus anything else that happened. In fact, in the first 12 months of being cut off from the bank, We tripled our business because I had access to private money.
And you know what, Matt, if it hadn’t been for that experience of being cut off from the bank, you and I wouldn’t even be visiting here today. On Raising private money podcast. Without that experience, I wouldn’t have had the opportunity to coach over 2000 real estate investors on how they can raise private money and never miss out on deals for not having funding.
That was my pivotal moment. What has been and what was your pivotal moment?
[00:04:16] Matt Ryan:
Yeah, for me it was, I go back to the first duplex the first true investment property. I had my house hacked. I didn’t know it was house hacking at the time. Up until that point, buying a small house in Charlotte, North Carolina condo that was for short sailed and, renting it out to buddies.
But the duplex that I bought for $65,000 in, up and coming neighborhood in Charlotte, was the first real estate project, the investment project that I had done. And then of course through my experience with the local community member, Ms. Pam, and understanding her story and how, value add investing and other forms of, real estate development is pushing Ms. Pam out and giving my experience in green building and sustainable construction and understanding how it important it is for middle income and lower income individuals to have access to these communities that are, walkable, bikeable, have. Transit corridors, she walked to her job every morning and took the bus every night to her second shift.
Understanding how pivotal it was for those people to have access to not only affordable housing but well-located housing. That really became the genesis for Re-viv. And, how do we revitalize these communities? How do we re-engineer them, these pockets of urban cores, in a way that’s conducive to all walks of life, and especially the Miss PAMs that was really the light bulb moment for me? And without, that investment, I wouldn’t have had my financial, trajectory wouldn’t have accelerated. And of course, I wouldn’t be able to connect the dots between then this next phase and what is, inevitably become my life and my career.
[00:05:40] Jay Conner:
Did you start out investing in real estate with private money or did that come a little bit later?
[00:05:46] Matt Ryan:
That just came a little bit later. Yeah, and for me it was like everyone, a lot of people start, it was family and friends money. I was actually really close to syndicating the first deal that I did, which I put together under Re-viv envelope, and I put it in front of a fellow syndicate who actually told me, Matt, you don’t need to syndicate this.
Matter of fact, you’re gonna be a lot better off. If you just raised this capital as private debt, and leverage it, almost 98% at the time and, stabilize it, refinance out. And he said, let me do the numbers on what I just spoke about and get back to me. I called him the next day.
I was like what do I owe you? What’s the fee for this? He’s just, passing it along to someone else. And so it was really cool At that moment, I did exactly what he said I executed on, and of course, we refinanced out and we owned the deal outright and he had done a couple of deals that way when he was first started, cuz the margins were good enough and that was a really pivotal moment for us, and we continued to do that, up until the last, couple years where we’ve really started to get more aggressive as far as raising, people who aren’t family and friends, that we don’t have a relationship and trying to build a an investor pool here at Re-viv.
[00:06:49] Jay Conner:
So you started raising private money with family and friends and your own connections and centers of influence, and then you’ve grown it from there. So what was it? What was it that happened in your real estate investing business that triggered you to start seeking private money? Yeah. Were you short on cash?
You had to, had you maxed out with the banks? What was it that moved you to learn about and start raising private money?
[00:07:23] Matt Ryan:
Yeah, it’s. The goal was to always become a syndicator and fund manager, right? So I started with the end in mind. I knew I wanted to formulate that type of business.
But as a lot of people who have tried to do this, when you’re first starting out, there’s not a lot of. Limited partners, people who will really take a bet on you. Even at that point, I had five and a half years of construction. I had been a self-sustaining entrepreneur. I had bootstrapped a company out of the ashes of the recession and construction.
I had accomplished some things that I felt were, worthy and, something that I was proud of and, I’d cut my teeth as an entrepreneur. But interestingly enough, a lot of retail LPs, people who were bigger, LPs that could write big checks, they were still like, listen, you’re a little bit early on.
I always joke with some of my friends is I feel like I have a. You get done with your master’s degree and you go out there and you try to find a job and someone says, you know what, I’m really looking for someone with a Ph.D., not with a Master’s. And that’s what it felt like.
To answer your question and just do a quick abbreviation, we’ve actually raised about 2 million in equity, including my own equity that I’ve put down on projects and an additional 2 million, so to about 4 million total raised of capital on that 27% IRA and yeah, exactly that.
We just. We’re starting to reach a level of critical mass where we’re at 13 and a half million assets that we’re getting ready to stabilize across six different sites. And yeah, it’s exactly that. Like our capital requirements, we’ve out-punted our coverage so to speak. And As much as you enjoy those, easy kinds of relationships with family and friends.
We wanted to move on and take on all outside LP interests because you also need that interest to be able to keep the lights on as a syndicator, right? You have to do deals unfortunately and accumulate some fees to be able to cover your overhead. And unfortunately, because a lot of the deals that we go into, In-house that even when we were structured with private debt it’s not enough to keep the lights on and a lot of those deals are still long-term deals that a lot of our equities locked up and so on and so forth.
And so we found a great balance in doing that. But yeah, that’s, at the end of the day, it was always part of our business strategy and part of our business model. And at this point, if we’re gonna continue to grow and scale from, the next a hundred million and, hit our next round of objectives, inevitably we’re gonna have to do that with outside capital.
[00:09:32] Jay Conner:
Absolutely. As you’ve been raising, what year did you start raising private money?
[00:09:36] Matt Ryan:
Yeah, I tinkered around with it initially and I wasn’t very successful at it, so actively, we tested the market four or five years ago. We pulled back and I think we’ve really put our head down and really started to get aggressive again, probably in the last year or two where we’re, spending a lot of money on content.
We’re spending a lot of time on paid ads, we’re really being aggressive at it. So I would say in the last, call it 12 to 18 months is when we’ve really started, put our head down and get aggressive again. And yep.
[00:10:06] Jay Conner:
Matt, you just said something very interesting, and based on what you said and what you’re getting ready to say, our listeners can really learn something very important from your experience.
You said just a moment ago that when you started out raising private money, you weren’t very successful at it. So with that being the case, and by the way, welcome to the Club, with that being the case. What mistakes or mistakes did you make as you first started out raising private money? Yeah. And if you knew today, if you knew then what you do know today about private money, what would you go back and do differently?
What were those mistakes and lessons learned?
[00:10:48] Matt Ryan:
Yeah, always a lot to unpack there, right? For me it was, Everyone says, get a deal and you’ll find the money. And I just, I think that’s such, you laugh, right? But it’s still just like constantly reiterated and I see it all the time on Facebook groups and it’s I got a deal.
And so I put a lot of time in operationally being good at sourcing deals and getting sexy deals, off-market deals. We were sourcing 50% of our deals. Off the market at one point, doing this all in-house burning a lot of capital and not just money, but our internal time trying to source direct, deals and compete against brokers.
And realizing that’s a David Goliath, like us being David, right? They have. Six brokers covering what? Just me and a small team of people. And so that was the biggest mistake because you get those deals, you get those opportunities, and then you start trying to run around and raise money with people that you really don’t have established relationships with.
And you’re like, wow. Like we’ve fallen completely flat on our faces. It didn’t work out.
[00:11:46] Jay Conner:
I am so glad you are sharing real-life experiences. Yeah, because I’m sick and tired of the
Gurus out there preaching and teaching. Get the deal under contract, the money will show up. I want the throw-up. I know. If I hear that one more time, I know it’s like I know. It’s like where. Where, yeah. Where is the money going to show up? Yes. Where is it gonna show?
[00:12:15] Matt Ryan:
Yeah, cuz exactly like if you’re writing, especially out here, ultra-competitive deals, sometimes we were putting deals, we were, we were doing smaller deals.
We were trying to scale co-living, so we were making offers on deals where we didn’t have a contingency in, we didn’t have an inspection period cuz these were like single-family homes that we were gun a gut and completely reno. And so it is like, how do you raise capital for a deal? You had to have soft commits, you had to have the money ready.
So you know that. Yeah. And so for us, it was like, everyone wants to be a syndicator, but the time, the thing of it is you have to realize that there’s really a point in time where you reach that level of critical mass. And I don’t know what it is for most people, you gotta put your 10,000 hours in.
You have to really build trust amongst people and you have to have a unique product. Value add is a low barrier to entry, but it created a very crowded marketplace for a long period of time. We actually got out of value add deals. Because everybody was trying to do it and everyone was paying ridiculous prices.
So for the co-living product, when we pivoted to that, it was like, okay, we found a nice little interesting niche and it set us back because it was a new product and it’s still a new idea. And it’s still been difficult to raise money around, but now as it is, the industry is reaching a level of critical mass and reputation.
And you find those early-stage investors who are used to taking a little bit riskier gambles to get, absorb, to get a bite of the market early and finding that right person now all of a sudden. To get to the second part of your question, it’s, it just takes time and it takes just, a complete grinding effort of failure and just trying everything.
If I had to go back, what would I do differently? Frankly, I would’ve invested passively with a few syndicators and fund managers with some of the capital that I had, and I would’ve made money while learning from them and probably got introduced to some other LPs, right? And then spawn off and said, Hey, I got a deal.
Are you interested? That would’ve been one way. The second way I would’ve done it is I would’ve picked one marketing median. Whether it’s outbound LinkedIn or Facebook ads. And I would’ve just committed to that for a year or two. You know what I mean? And really stuck with it and found one way in my, I’ve grown my syndication company with little to no partners, so I’ve never had that kind of structural outlay where I could just focus on one thing.
I’ve had to really be the jack of all trades, so I’ve had a lot of limited time and energy to go to networking events. I really had to get a good bang for my buck. And how I’m creating an inbound volume of potential retail investors. People who are gonna invest 35 to $250,000, and that was always a part of my thesis.
I wanted to make our deals accessible to small investors because I believe in that, but that’s also inherently difficult. A lot of syndicators start out by finding, we call ’em whales in the industry, right? Someone who can stroke a 500 to a million dollar check or more, and they’re gonna get a bigger cut, of the GP or the waterfall or whatever.
And then those guys reach, scale what those people relatively quickly. And that’s an avenue people can take. If you have those contacts. And so that’s the thing, I think it’s really, it’s difficult to manage is you gotta pick a strategy and you gotta really stick with that strategy cuz you’re gonna fail for six to nine months and before you’re gonna finally hit the bell curve and you won’t even know when it’s coming.
And that’s the, I think that’s where capital raising, be ready to fail for almost 12 months before you even reach a point. And that’s just anecdotally my story. It may take other people longer. And I would say the kind of the two-part second part to that, the second question is you really have to focus on communicating why you are different.
Everyone’s doing a value add deal, right? Everyone’s, everyone’s getting at this low barrier of entry. We’re gonna take a C apartment, we’re gonna kick these people out. We’re gonna double rinse. Why are you different? What makes your deal and why should I invest with you? With the other guys who are on Crowd Street, who has 20 years experience, billion a u m.
They got the niceties, they got the, 30 people on staff. You are a small guy trying to do your first two or three deals. Why? Why should I do business with you? And it’s interesting because you get asked that question by some rather aggressive, frank retail investors initially, and you go and you get hit with it.
And you don’t find yourself getting hit with that question unless you’ve answered it for yourself. And work on your communication strategy as to what your niche is and how you’re gonna drive that home. And it damn well better not be the same story that you hear on Cloudstreet and everything else.
And so you gotta find something different. And for us, once we’ve, once we found the co-living product, in Re-viv in its thesis, it’s the broader thesis of a company, we have a very unique strategy. The problem is we couldn’t scale that given the size and the company of who we were today. So we had to pick one product that was early in the marketplace that we believed in, that fit the broader thesis of who we are as a company, and we had to drive that home.
In the tech world, they call it the MVP, the minimal viable product, right? What is the thing that gives you your competitive edge that you’re gonna drive to the moon? And for us, once we found it, everything became a little bit easier. Now it’s not easy. We’re still, just going through the dr, the drudgery of trying to raise capital and build a network in an audience.
But gosh, where we are today, where versus where we were three to four years ago it feels like night and day.
[00:17:35] Jay Conner:
Matt, let’s give everybody a gift for hanging in with us here so far on the show. If you are a real estate investor and you’re struggling to raise private money to have funding for your deals, or are you a seasoned real estate investor and you just want more funding for your deals?
I’m so excited about the new private money guide. Seven reasons why private money will skyrocket your business and help you build incredible wealth. You can download this guide to get you on the fast track to private money for free at www.JayConner.com/MoneyGuide.
To get on the fast track to getting all the private money you would want for your deals. Matt as we were talking a moment ago, I’m just sick and tired of people saying get the deal on the contract, the money will show up. I’ve also heard ’em say the money follows the deals wrong, the deal, the money comes first. And then the deals follow the money. It’s like the worst time. I know. You tell me, Matt. The worst time I know to be raising private money is when you need it.
[00:18:59] Matt Ryan:
Yeah. And you there’s this really interesting thing where you smell of desperation. And no one likes to deal with desperation, right?
People want people who are like, I don’t really need your money, but I’ll take you in. That’s the biggest mind trick. You can always play with the potential investors. Yeah, I don’t really need this money, but if you’re willing to come into the deal Yeah. I mean it’s, and the thing of it is there’s different types of capital structures, right?
And for us, we never wanted to. We never wanted to give up more. You know what I mean? Because when you’re starting and you’re trying to build a company, you really need more of those act fees to survive, right? The waterfall’s great, but you need the upfront to keep, like I said, to keep the lights on. It’s like a big struggle for syndicators and people who are gonna take a big sizable chunk of that upfront fee.
When you get into that type of capital, what’s really gonna happen is you’re gonna give up more. Then what do you should? And frankly, you’re gonna get someone who isn’t buying into this long-term relationship with you. And everyone talks about relationships. Relationships in the industry, and what does that mean?
It’s, to me, it’s someone who believes in the thesis of you and your team and the product that you’re investing in. And that’s not something that you create by IRR and cash on cash and a fancy pitch deck. It’s really getting into the droves and the trenches of understanding. This is the 10 years. Of runway that we’re going after, right?
And once you do that, it takes a lot more time upfront, but the dividends pay because you’re not having to go in and recreate the wheel, right? You’re not just doing a deal and then having to go find a next partner who’s sharing you and taking advantage of you because they can. You’re you.
It’s someone who believes in you and your team and your product. And it’s just really that, it is that simple. Of course, the process is not that simple because as you said, there are a lot of misconceptions and everyone wants to believe that raising capital is easy and everyone wants to throw out this high i r deal.
And I think it lends itself to a lot of risks because, and I tell people, any retail investor, I’m like if you expect me to get your attention with a fancy IRR or ROI, Guess what? It’s not gonna happen. We shoot for middle-of-the-fairway returns on a proforma basis. I will walk you through how we’re, I think we’re gonna outperform and why I think we’re gonna outperform, but I’m not gonna sell you.
On high IRR, I don’t want those investors coming into me. Those aren’t the type of people that I want to partner with on deals. And that’s, it’s hard, right? I put myself at a disadvantage from day one, but I want long-term relationships. I want the people who are gonna to be like, you didn’t get me a 22%.
I want the people who are gonna to be like, man, you really outperformed on this deal. You underperformed in the, or you underperformed a little bit, but in the last two, you’ve really outperformed. And I still believe in you as a firm and your thesis. And those are the relationships you gotta bill.
And you just have to be patient. And I think it’s hard in today’s world where everyone wants critical mass and scale and, those things are rewarded. The overnight success is rewarded, but the long-term tenure player has looked at the tortoise, right? And. I think it’s really difficult in our space and in our world, but for me, it’s been good and it’s been beneficial and I’ve built a great real estate portfolio and, I don’t have to raise retail lp.
I don’t have to go to a hundred million. I could stay where I’m at right now. Frankly, I can retire off the income just to stabilize these properties. But I believe in my product and I believe in building this idea. And so for me it’s a it’s a critical step. But for anyone else, you, you could, if you wanna retire at 35 or 40 it’s a possibility.
Certainly, or have enough income where you could feel comfortable.
[00:22:28] Jay Conner:
Matt, you just mentioned ROI, and return on investment. You just mentioned IRR, which stands for internal rate of return. I want you to define what’s the difference between the return on investment and the internal rate of return, but before you do?
I wanna make sure everybody understands that. Your company Re-viv has an opportunity. You have investors. You’re looking to establish new relationships with investors that are just looking for passive high rates of returns safely and securely. I want you to tell people about Re-viv.
You’ve been talking about your mission. You’ve been talking about your thesis, so I want you to tell me. Our audience about that. But before you do what’s the difference from their perspective between a return on investment ROI and an IRR?
[00:23:17] Matt Ryan:
Yeah. When you do a regular return on investment calculation, you’re not taking into consideration what they call the time value of money.
So the internal rate of return it can get very complicated, but essentially what it does is it does exactly that. It takes into consideration the fact that. Money erodes over time, right? So we have high interest, right? Or excuse me, high inflation right now. So money is eroding. So the internal rate of return compensates for that in its calculation.
And there are three different ways that you can do it in Excel. It’s very basic functionality, frankly. And it’s really important to understand those different methodologies because if you just say, Hey, I’ve got a 22% ROI, that’s great, but if that’s over, say a 10-year timeframe, And you’re starting to incorporate an inflationary rate or a discount or reinvestment rate of zero, your IRR may be much lower than that.
So when you’re benchmarking one deal or one investment versus the other, we use internal rate of return more commonly in the financial investment space because it’s taken into consideration again that money erodes over time and that a lot of longer deals, seven to 10-year deals. Oh, if you’re doing an opportunity zone deal, you’ll see lower IRRs simply because of that fact.
There’s an old saying, time is the enemy of IRR. And so that’s just an important distinction. It’s simple, but it can be fairly complicated, from a mathematical perspective. Sure.
[00:24:40] Jay Conner:
So you’ve been talking about your company Re-viv. We heard the story about Ms. Pam Yeah. Who was, motivated to do what you are doing? So unpack for us what is Re-viv. What does Re-Viv do? Yeah. What’s the long, what’s your long-term vision for Re-viv? What’s the opportunity fund zone? Why would someone want to get involved with doing business with you and being a passive investor?
[00:25:08] Matt Ryan:
Yeah, I, so I’ll take it forward to the microcosm of what we’re focusing on right now, which is co-living. And the reason we liked co-living, which is a rent-a-bedroom strategy aimed at 22 to 35-year-olds is that, for one, we’re delivering basically a class a b plus product at the bottom 15% of the rental market.
So the average studio in Sacramento, in Denver is probably renting for 1650, upwards of close to $2,000. We’re offering a bedroom with shared common furnished amenities for 1200, not including utilities. So 1250 inclusive utilities, roughly speaking. So there’s a pretty significant cost difference there, right?
And affordability for this younger 22 to 35 demographic in major urban areas like Denver and Sacramento, where the jobs, the high paying jobs are, it’s a really big issue. A lot of these people are spending upwards of 40% of their income. Affordability is a major issue, not just for that demographic, but for other demographics like the mis pans, right?
And the reason we like the co-living product is not only cuz it tailors to that audience. But we also see, something happening in the real estate space where these younger individuals are flocking to these up-and-coming neighborhoods, these middle to lower middle-income neighborhoods because the housing stock is inevitably affordable where the Miss Pans live.
But then there are the, older tenants. Community members are thus getting pushed out because those two groups are competing with one another. For this type of housing, which is typically low density, a single-family home, a do try, quadplex, maybe a 10-unit building, and what’s happening in these neighborhoods is we’re not able to deliver the product fast enough.
Mainly because of the regulatory barriers that have been put in place by building departments and planning departments across the country. And so what we like about co-living is that we feel like we can rapidly deliver products to this demographic, and it takes the pressure off the competition between these younger individuals who are just seeking an affordable place to live, and the Miss PAMs of the world who are just seeking to stay in their neighborhood and maintain their affordable rent.
Taking that a step further, Re-viv’s thesis is to take a community-based approach to investment. So a non-asset specific, but area-specific approach. And it pi, it piggybacks on this larger idea where I can’t acc, had this idea for my neighborhood that I was invested in, where I bought my duplex as to how we were gonna revitalize that neighborhood and focus not just on providing market-rate housing, but affordable housing.
And looking outside the box of affordable housing and traditional means of providing affordable housing. Because a lot of what’s happening in the affordable housing world is we have basically a redistributed tax and redistribution model. And it’s not easy for a small-scale developer or boutique developer to offer affordable housing.
Especially here in the Bay. You have to work for a large institutional nonprofit. You have to wait several years to get your projects approved. You have to put these complex tax structures. And so at the these, at the very, core of who we are at Re-viv, is we wanna become innovators in the housing space to tackle these issues.
Because really what we see is that this middle-income to lower-income people are getting pushed further and further outside of the opportunities. In these high-paying job cores, the majority of the jobs are being produced in major urban cores. Brooking Institute coming outta the last recession, 75% of the jobs were produced in markets of over a million dollars or a million people.
So this isn’t a trend that’s gonna slow down even in the post covid era. And so what’s happening is people are getting pushed further and further outside the cities. They’re being subjected to commutes, super commutes. And even as we build transportation infrastructure, These people are just being starved of opportunity and young people included.
And we see suburban sprawl and especially the ex-urban sprawl really as a negative, a net negative to our society. And we, we see these, especially to steal a term from John Burns, this kind of servant. Arteries, these neighborhoods that are gentrifying and revitalizing as the core opportunity for real estate investment in the next coming decades.
And so we’re trying to tie all that together in a model that is innovative and, finds a balance between both those interests. And that was really the again the core and kind of thesis of Re-viv.
[00:29:20] Jay Conner:
That’s really interesting, Matt. I’ve got a couple more really important questions for you, but before I ask those questions go ahead and share how our listeners and viewers can get in touch with you and learn more about how they can invest with you and get good rates of return safely and securely.
[00:29:39] Matt Ryan:
Yeah, absolutely. Just go to www.Re-viv.com. On the homepage there, you can take a look at our current deal that we have open for a few select investors. That’s our deal in Sacramento. And then there’s also a handy little link there. You can schedule a time. My assistant will reach out to you to just get a little bit of information about, the context of the conversation, and what you’d like to talk about, and then you can speak with me directly and we can talk more about, not only the existing opportunities that we have open but the opportunities that we’ll also be pursuing in the co-living space and get familiar with that product.
Hopefully, buy into what we’re looking at and what we see as one of the biggest opportunities in the multifamily space.
[00:30:13] Jay Conner:
And for everyone that’s listening, Re-viv.com has not spelled the way you may think. So be sure and take note of this. We will have this in the show notes. You can scroll down and see it on the website.
Matt, what’s the minimum investment?
[00:30:43] Matt Ryan: 35 K right now.
[00:30:44] Jay Conner:
35 K. Okay. Very low entry point. I’ve got a lot of private lenders myself. I’ve got 47 private lenders investing in our deals right now. So this concept of co-living, that is someone being able to rent a room.
Having a common furnished area. Is any of your co-living offered in single-family houses or all of ’em? Multiplexes?
[00:31:11] Matt Ryan:
Yeah. All of them are pretty much multiplexes. Interestingly enough, the two deals that we’re doing in Denver and Sacramento were historically single-family homes that were then converted into commercial offices.
And we’ll be converting back into residential and tr. Boarding houses are how they’ve traditionally been set up. We tend to try to break them up. So we have nowhere between four to maybe five, even sometimes six people sharing a common space depending on the existing layout. Now, a lot of what most co-living operators are doing is they’re doing ground-up development specific for co-living, but with these existing assets, you have a little bit fewer options available, cuz you’re converting an existing building.
But that’s typically how it’s fractionalized. And how it’s set up.
[00:31:55] Jay Conner:
For a real estate investor or a passive investor that might want to get involved, there are some very common questions that I’d like for you to answer. Sure. For people that have never been exposed to how this co-living thing works, number one, How do you decide who qualifies to be a co-living tenant?
What kind of background check do you do? How, what’s the approval process? And I’ll just rattle off all the questions and you already know where they are, and then you can just go for it. So how do they qualify? What kind of deposit is required? How do you, how do they lock their door and keep their stuff private?
Yeah. How do you know, how do you manage people getting along with other people in this co-living environment? How often do they pay rent? Who manages it? How often do you go in there and make sure that the whole place isn’t torn apart? Like, how do all those logistics work?
[00:32:52] Matt Ryan:
Starting with the tenant screening process, it’s very similar to how you would vet someone for a multi-family building, with the exception, that you have background checks, you have one month’s deposit income verification. The exception is that once you have, say, a couple of interested candidates who are serious about actually renting the room, you then set up interviews or screening with the existing tenants.
And that’s where fit actually matters in the co-living space, right? Like you want to make sure that the individuals that you’re bringing in are gonna jive with the existing tenants that are there. And while there’s some democratization to that process as an owner, right? You can’t constantly be at the whims of the existing tenants.
So you do your best, and operators do their best to give everyone a voice and an opportunity to, Raise any concerns that they may have. And so that way they feel engaged in the process cuz this person’s gonna be sharing amenity space with them. You’re looking for red flags. And that’s how it’s been traditionally run.
You know the thing about the operating models that’s been around for many years, especially in Europe, you’re seeing. Tech platforms are being, started, in European countries that are making the pairing and matchmaking process even more simplified and frictionless for prospective tenants.
And then from a management perspective, the nice thing about co-living is you’re typically having someone who’s onsite, who’s running like a team lead for that individual dwelling unit or building depending on the size and scale. And, the majority of the operators that we’re looking to pair with, Our experienced co-living operators so they understand the ins and outs of this product.
They’ve been, compensated structurally in a way that, allows them to make up for that extra time, energy, and effort that they’re u utilizing to not only maintain the common areas but to also place the tenants, and therefore, they understand the nuances of it. And at the end of the day, again, as I said, it’s a business model that’s been operating for decades, not years now.
And it’s continually even getting more sophisticated and frictionless for prospective tenants. And at a point in time where operators are getting even better and better in offering amenities and com ways of keeping people engaged in community life activities, dinners, so on and so forth, and providing additional amenities.
[00:35:02] Jay Conner:
You mentioned that for the tenant it’s a lot more affordable. So instead of renting an entire household, yeah, you’re renting a room with
as far as the operator goes, or the owner of that asset, what would you say on average? Is a multiple of say just straight rent that they could, if they were like renting out the entire property versus a room at the time.
[00:35:36] Matt Ryan:
As in what’s the premium that we get relative to say multi-family?
[00:35:39] Jay Conner:
So let’s say for example, in the example you gave, if someone was renting for $2,200 a month, they’re gonna be able to rent a room for say, $1,250 a month. Yeah. So you, as the operator. How much more income are you gonna be able to get, assuming full occupancy, which you’re not gonna have a hundred percent occupancy all the time?
But assuming a hundred percent occupancy, how much more rent can you bring in versus just renting the whole thing out?
[00:36:07] Matt Ryan:
This is completely anecdotal and also within the context of bringing together a lot of analysis of existing property managers and conversations amongst other developers.
We’ve seen anywhere between a 15 to 35% net operating premium based on traditional multi-family. So if you were to compare the same building and you were to just lease it up as studios, one bedroom, two three bedroom, which is your typical unit, ma unit matrix on a multi-family development, we’re seeing those numbers on a rent per square foot basis, right?
Like gross rents or net collected rents. We’ve seen really substantial, like almost double the amount of rent on a per square foot basis. We’ve seen some really high numbers. It all depends on what your square foot makeup is. And that’s the thing is those guys who are getting, say, double on a rent per square foot basis, and on paper, they’re n o I looked, 45 to 55% higher.
They were really small rooms. So when Covid hit, all of a sudden they were facing, massive vacancies. Whereas some of the co-living spaces that were, in that 25 to 35% kind of sweet spot, but had a little bit more space, they were seeing, vacancy of course increase, but a lot less turnover and even people moving back in.
That’s the interesting thing like anything in the marketplace when it’s a little too good to be true, it probably is. And I say again the key metric from a developer and for those really sophisticated, operators and investors, We’re trying to reach 50 to 75 basis points, additional spread on the exit cap versus traditional multi-family.
And really 75 is the key there. That’s what we’re trying, that, that’s essentially what we’re trying to hit. In addition to, again, a premium on NOI and a premium on net rent. Obviously, net rent and gross rent are a little bit, we’re a little bit less concerned about that cause it’s higher up on the balance, or, excuse me, the income statement.
[00:38:00] Jay Conner:
Your business model reminds me of what my marketing mentor told me years ago. He said, Jay, no matter what you’re selling, buy it by the gallon and sell it by the squirt. So you’re not renting out households, you’re renting out rooms. You’re selling it by the squirt. So I love it. Matt, what an enlightening show, an enlightening guest you’ve been.
Thank you so much for joining me, and one more time to connect with Matt, talk with him personally and talk about the opportunity of investing with him and getting a really high rate of return safely and securely. You can locate Matt Ryan at www.Re-viv.com, and that’ll be down in the show notes as well.
Matt, thank you so much.
[00:38:51] Matt Ryan:
My pleasure, Jay. Thanks so much for having me.
[00:38:53] Jay Conner:
You got it. And there you have it. Another amazing episode of Raising Private Money. I’m Jay Conner, your host, the Private Money Authority, and we need your help in order for us to continue to have amazing guests such as Matt Ryan that we had today.
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[00:39:35] Narrator:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide.
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