RG 349 – Top 5 Tips to Revitalize Multifamily Assets with Matt Ryan

Revitalizing a property takes a lot of time, money, and energy—but it can add value to both renters and property owners. Matt Ryan joins this week’s episode to explain how they help keep both parties happy.

Matt Ryan is the CEO of Re-viv, a private equity investment company that revitalizes communities through growth-inducing and impactful strategies that benefit both renters and investors. He has created an effective system that keeps tenants happy, makes buildings last longer, and brings significant returns to investors.

But how exactly does this system work? And what are the benefits for investors and developers? This model can be quite confusing to many, which is why we’re lucky to have Matt to tell us how it works and what it entails.

Interested in becoming an Investor with Reed? Click here to join his Investor email list.

Plus, Matt walks us through the co-living system Re-viv works on. Listen to how co-living works, how it helps renters afford housing, and how they enrich this type of living despite its inherent disadvantages.

KEY TAKEAWAYS

• Generally, owners don’t want to overpay to save a few bucks on utilities without incentivization.
• Even though you might not see ROI right away, revitalizing a property can extend its life.
• Co-living is a strategic housing option for renters who want to save money, especially in high-density areas.
• Energy efficiency strategies differ from area to area due to significant variations in climate.
• The right equipment is nothing without the right installer.

Links

https://www.linkedin.com/in/mattryan2/
https://re-viv.com/

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Reed Goossens (00:00):

Good day Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show, people

Matt Ryan (00:41):

Know what they’re getting themselves into, and, you know, hey, you’re saving 250, 550 bucks a month in rent. You know, there’s a reason why that is. You have to share something. There’s, you know, there’s always gonna be friction amongst tenants. And, you know, those are, those are property management issues that arise. Hey, I’m not gonna lie and say there’s not a higher operating expense associated, a higher turnover expense. But, uh, Brad Hargraves, who’s the chairman of Common, he’s the largest, the largest, you know, operator of co-living beds. He just did a, a great piece on his blog about how, you know, even with an average tendency of say, 16 to 18 months, they’re still maintaining 96 occupancy. You know, they’re beating all the, if not in line with all the traditional apartment investors when it comes to occupancy and turnover and, and really holding strong on metrics.

Speaker 3 (01:37):

Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews, go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (01:57):

Good day Good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US Podcast from Los Angeles. I’m your host, reed goossens. Good as always, Debbie with us on the show. Now, I’m glad that you’ve all tuned in to learn from my incredible guests, and each and every one of them are the cream of the crop here in the United States when it comes to real estate investing, business investing, and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us, how they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys, to get off the couch and go and take massive amounts of action.

Reed Goossens (02:44):

If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, Click on the video link, and it’ll take you to the video recordings of these podcasts where you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking in into today’s show.

Reed Goossens (03:32):

Turn the show of the pleasure of speaking with Matt Ryan from revive. Now, Matt’s passion in life is building companies that tackle socioeconomic issues through entrepreneurship. He strongly believes in the ability of the private sector to solve society’s most complex problems, and that entrepreneurs are at the foundation of all of it. Now, revive is on a mission to solve problem of affordable, accessible housing that’s close to job centers while yielding market rate returns for investors. So I’m really, really pumped and excited to have Matt on the show today to share his incredible experience and his knowledge in the affordable housing space. But enough at me. Let’s get him out here, Goodday. Matt, welcome to the show. How you doing today, mate?

Matt Ryan (04:07):

Doing great, buddy. How about you?

Reed Goossens (04:09):

Oh, I’m doing great. We’re just having a little bit of chat in the background for those people who are not following us on YouTube. Matt’s uh, got a little surfboard in the background. We’re just talking. Uh, do, do you get out much in the, uh, in the San Francisco Bay? I know there’s that weird wave that sometimes at the right swell goes underneath the, the bridge there that, uh, there’s not, it’s a nice lefthander.

Matt Ryan (04:26):

Yeah, I joke with everyone. Don’t, uh, don’t let the surfboard fool you. You know, that’s not even a hard top, that’s a soft top. So I’m a . I am a terrible surfer. It’s great exercise. I love getting out the ocean. But, uh, you know, here in San Francisco, we’re a li little limited on storage space for stuff like that. So at the end of the day, it made a good prop. And, you know, I’d say I probably played the instruments behind me more than I actually get on the surfboard. But yeah, it’s one of those things I’d like to do more of and actually get good at. But it’s been a challenge. I actually enjoy paddle surfing a lot. Mm-hmm. And I’ve done it in Hawaii, um, and know, but it’s, that’s, it’s a big investment and a big undertaking, right? Yeah. So I had to find that, be able to edge the time out for that.

Reed Goossens (05:04):

My, uh, my few things in life, I like, you know, keeping fit, getting good sleep, eating well, but surfing is my sort of return to nature. So I try and surf once a week. I’m a big avid surfer, the whole reason I live in Los Angeles, because I can surf and, um, yeah, so I’m, I’m, I’m planning going to sail leader here for my birthday coming up and trying to get to Bali at sometime this year for a, for a surf

Matt Ryan (05:24):

Trip. Fantastic. Yeah, I’ve heard about that. Yeah. See fly fishing back country camp, and that’s, those are my two jams. That’s how I, yeah, that’s how I these, so Love it. Love

Reed Goossens (05:32):

It, love it. Well, enough about our back stories. I want to get into it. Can you, uh, the first question I’ll ask all my guests when they come on the show is, can you rewind the clock and tell me how you meant your first ever dollar as a kid?

Matt Ryan (05:41):

Yeah, it’s funny, I was talking about this with a, with an investor yesterday at breakfast. We were kind of sharing those initial stories and, um, I remember I was maybe just start to being in high school or in junior high, and a buddy of mine was kind of bragging about how much money he made in his lawn business. And, you know, I was, I was broke my parents , you know, they gave me a little bit allowance, but never enough. And, uh, I said, you know what? I’m gonna, if he can do it, I can do it right. Which is really kind of interestingly enough that mentality’s kind of carried me through my career. And so I went around knocking door to door, probably knocked on a hundred homes, you know, got six clients for that summer and just serviced those clients for the entire summer.

Matt Ryan (06:22):

I, you know, I borrowed the, the yard tools from my dad, you know, and had a push mower, didn’t even have a, you know, a big fancy riding mower like he did. And, you know, loaded it up in my back of my Ford Explorer. And that was my first, that was my first hustle, and just kind of taught me, you know, what it takes to just kind of pull yourself up by the bootstraps and get out there and, and, you know, get business and then service that business. And it was a great experience for me.

Reed Goossens (06:44):

I, I doing that sort of, uh, blue collar hard yakka, as I say in Australia, I remember, um, tying steel and building pools in the summer in Australia, and it’s fricking hot down in those, in the, you know, 6 10, 6 to 10 feet below the surface. And just, you know, thanking, uh, whoever the hell’s up there, , uh, that, uh, that, uh, you know, I was gonna university and, you know, eventually not gonna have to be, you know, be, not that there’s anything wrong with labor being a laborer, but like that, that there was, you know, I was using more than just my physical skills, uh, physical labor to, to, to make an earning. So walk us through the journey of, you know, how you got into revive. Clearly there was, there’s probably some sort of backstory before you got into entrepreneurship. So what was it and how did, how, what does it look like?

Matt Ryan (07:26):

Yeah, I mean, I watched my father work corporate America for 25 years and, you know, I was young enough and, but also old enough to kind of see his and hear about his struggles. And so in 93, he actually moved down to South Carolina, where, where I grew up. Uh, we were in the Midwest at the time and moved around, you know, almost four times just to accommodate his job. And, um, he got the opportunity to go out on his own and, and work. He worked for international truck and engine company, and he got the opportunity to take over a bankrupt dealership. And he was so miserable with corporate that he’s like, you know, I’m just gonna take this chance. And he worked there for an entire year before he moved our, you know, our family down to South Carolina. And, you know, I say for me, my entrepreneurial journey started watching him, you know, with the freedom that he got, the wealth that he was able to create, but really just the freedom that he, that he created and the ability to create kind of his own brand.

Matt Ryan (08:17):

You know, he had struggled working for corporate, the bureaucracy that existed there. You know, he’s always kind of been a, a freewheeling guy, you know, no BS shoot you straight. And, you know, those things didn’t always navigate in the corporate space, you know. Um, and so for me, I kind of kept that entrepreneurial spirit within my own endeavors. I went back and worked for him for three years. I realized that wasn’t what I wanted to do. Um, you know, he kind of threw me into the deep end on some stuff, and I was looking for a career at that point. And, uh, I actually got into energy efficiency and green building sector because I found out that a, you know, I, I got in interested in, I’ve always been an environmentalist. Um, I got really interested in this local controversial coal plant, you know, and I re remember reading the story of, Hey, a 3% reduction in energy usage would mitigate the need for this controversial coal plant.

Matt Ryan (09:08):

And I’m like, this isn’t how, that can’t be that challenging, right? Hmm. And at the time, secretary Chu of, um, under the Obama administration, they were doing a lot of initiatives and funding for studies of energy efficiency and implementing energy efficiency measures and residential commercial buildings. And they was supposed to couple along with solar and, you know, clean energy generation. This was demand side, you know, um, um, solutions. And it was supposed to be a very blossoming industry that would also help kind of resurrect this very distressed construction industry of oh nine and oh 10. So I dove full in, I took, went to Southeast Energy Institute in Atlanta. I passed all my certifications in six months. I started cold calling on local builders, you know, a residential builders doing energy star certification. And three months later I landed my first contract and I moved up to Charlotte to locate the business there.

Matt Ryan (09:58):

And, uh, you know, within four months, the contract that was supposed to go for nine months to a year completely ran out . And I had to sink or swim, and I built the profit, you know, the company into profitability after three years. But I, you know, I was cutting my teeth in every direction, you know, just trying to, trying to make stuff work. The industry hadn’t really taken off. We were kind of becoming glorified subcontractors, you know, in addition to consultants and, um, other people had tried to grow and scale that type of business. I came out to San Francisco to meet one of them around 2015. You know, I’d been in the business for about five and a half years and was kind of trying to figure out my next move. I started buying real estate along the way. I bought a, for, you know, a short sale condo in Charlotte, and it was maybe right around that time or just a year before I had bought a foreclosed duplex.

Matt Ryan (10:45):

Um, so fast forward basically the industry, I said, I don’t think this is where I want to go. You know, I gotta find something else. Uh, so I moved to San Francisco. I wanted to be an entrepreneur. I had tried to raise capital for that endeavor. I said, I want to, you know, I wanna start companies and raise capital, and that’s what I want to do, and I’m gonna go to the epicenter to do it. And I always joke with people that, you know, I’m the only idiot who moved to San Francisco to actually start a private equity company versus, you know, a VC, back startup in technology . Um, you know, but it really came to fruition because of my experience in the duplex that I bought. There was a community member there, her name was Ms. Pam. She worked, or she lived two doors down from us, and she actually worked at my, my now stepdaughter’s school.

Matt Ryan (11:27):

And she walked to school every day where she was the chef. She, um, you know, this, this duplex that I bought was in a very up and coming college. It gentrifying neighborhood. She took the bus every night to her second shift to take care of her granddaughter. And one night my wife and I got talking about it, we said, you know, hey, well, what happens to the Miss PAMs when more people start moving into this neighborhood, buying up properties and trying to flip ’em and maybe pushing her out? And that was kind of my first, you know, identity with displacement and gentrification. So I wrote out a one pager. I got a meeting with a local developer through a friend of a friend, excuse me one second. I’ve been battling a cold. And I took it to him and he said, this is great. This is a fantastic idea.

Matt Ryan (12:08):

I called it the Miss Pam project. You know, I wanted to revitalize this neighborhood, but I wanted to do it in a way that was cognizant of the existing members, while also providing, you know, kind of forfor profit solutions and, you know, catering, excuse me, ta tailoring to the new people coming in to the, to the market, right? Everyone’s seeking affordable rents, which is, which is not uncommon. And, uh, he said, Matt, this is a fantastic idea, but you gotta understand that you need to make a return for your investors. If you can balance that and you can balance what you’re trying to accomplish, you’re gonna be successful beyond, you know, your imagination. And I didn’t know it at the time, you know, fast forward 12 months as I was trying to navigate, uh, career, then, you know, but that was the genesis that was revive, right?

Matt Ryan (12:54):

Mm-hmm. And so we fast forward into that, and I dove into that very quickly. We went into the value add space, um, that was kind of our initiative, or excuse me, that was kind of our initial piece, is we were gonna tackle, I call it the social side of value add investing, um, to save time. You know, we came up, up against a lot of market forces that kind of, uh, you know, had we had to put that on hold. And so it was kinda like, what’s the next thing for us that really fits in our thesis, right? What’s the next kind of product or or idea that we can launch? And that’s when we went into co-living. And, and frankly, we’ve never kind of looked back from there. We’ve been aggressively pursuing that since about 2019.

Reed Goossens (13:30):

That’s, that’s an incredible story. Um, we’re in South Carolina. Did you grow up,

Matt Ryan (13:35):

Uh, Columbia?

Reed Goossens (13:36):

Yeah. I mean, I’ve, I’ve just bid on three deals down there, actually. , I’ve, I just bought, uh, 281 units in Greenville, South Carolina. Really liked that market down

Matt Ryan (13:45):

There. Oh, Greenville’s, fantastic. And 15 and 16, you know, when I, I was just getting started. I didn’t have the muscle, you know, or, or the power to do it yet. I was looking at deals in Greenville. It was one of those markets that I thought mm-hmm. was just gonna, you know, we just

Reed Goossens (13:57):

Good little X factor.

Matt Ryan (13:58):

Yeah. And I just didn’t have, I had, I’ve always had a good intuition for market selection, but you know, I just didn’t have the infrastructure in place to take down those deals yet, so mm-hmm. , it’s, it’s a big what if for me. I’m happy you got in. It’s, it’s a killer market.

Reed Goossens (14:11):

Yeah. It’s a great little market. And we keep, we keep looking. Atactually was, it’s a affordability play that we’re doing, which we don’t need to talk about that. But on just slightly another note there, uh, have you ever heard of Cameron Cole, uh, the, the energy efficiency company that goes around to major, my wife used to work for them back in the day, and she’s actually in environmental science and, and, you know, do these energy audits for larger companies to determine where they can cut costs, right? Yeah. Um, so just thought that might, you might have come across it, but on our side of the rsn on an investment side, like one of the basic things we always do, particularly in the older buildings, is it’s such a great ROI, is replace all the toilets with low flow, low flow toilets, you know, low flow, uh, shower knobs. Um, and it’s such a easy way to prove that, that you spend a hundred thousand dollars, it could save you 20 to $40,000 a year in noi. That’s a, on a five cap, that’s a incredible value add. Um, but there is so much inefficiency in and around, you know, the building sector. Yes. Right? I, I come from structural, I’m a structural engineer that’s, I, I’ve built a lot of stuff here in California. Um, a lot of people are trying to move to this like cera, which obviously went bankrupt, if you know who they are.

Matt Ryan (15:17):

Oh, very

Reed Goossens (15:18):

Familiar. You know, like this sort of this, um, in a box in a warehouse sort of manufacturing, cuz there’s a lot of waste that’s produced with building products. But then you have old, the older aging, you know, communities that we buy with the HVAC and inefficiencies and energies and the, the insulation and, you know, trying to still provide that affordable housing without having to take on a 10 million project on a, you know, a 10 million , you know, investment. Right. And, you know, 281 units I bought in Greenville, South Carolina, we paid 35 million for that. You know, I’m gonna probably spend 5 million revitalizing that asset, but it’s not gonna hit all the, the windows and the, you know, insulation. And it just, there comes a point where you gotta look at what’s, what’s gonna move rents that’s still affordable, that can still get, you know, an ROI to an investor.

Reed Goossens (16:01):

So I’d be interested in, you know, coming with that guise of engineer, um, energy efficiency. Just before we get into the revive stuff, what’s your thoughts on, you know, how we become more efficient as buildings are continuing to age, right? And you’re getting to a point in some markets where, you know, it’s the existing asset is more expensive than brand new build, but to go through the reen entitlements and all that sort of stuff. So how do you go and breathe new life into a 50 year old asset that’s gonna last for another 50 years?

Matt Ryan (16:32):

Yeah, I mean, going back to, you know, my, the work that I did as call it a trade as a sub, we really were, we were kind of glorified building scientist, right? Mm-hmm. . So we were looking at energy efficiency, comfort, indoor air quality and durability. Those were kind of the four components. And it relay itself into this other value of what we consider just high performance construction, right? Pulling all those subtrades together, the insulator, the air ceiling, just a fancy term for sealing up cracks and crevices, you know, reducing the number of condition air that escapes from a building. Really interesting trade. Very difficult to train and implement, right? And so the thing, the, so there’s, there’s putting all that together, right? As a subcontractor it’s very, very challenging and that’s what we were kind of hoping to do. But it’s, it’s very difficult because as you mentioned, there’s consumers who are like, well yeah, I’m gonna save 75 bucks, you know, but are you gonna solve my problem?

Matt Ryan (17:28):

And that’s where we were kind of experiencing was like we were solving people’s problems and there was value there, but they didn’t wanna overspend to save 50 bucks on a utility. And it brings me back to another issue, which is you don’t pay your attendance utility bills, right? So what’s the incentive for you? You do the water fixtures cuz you probably pay the water bill, right? And so there’s a savings to you. So there’s always been a disaggregation between the tenant who pays the utility bill and the developer who implements. And so you really, we’ve started to implement programs, you know, Fannie and Freddie have a green mortgage program. They’re CPAC financing, which allows you to go in and basically finance the, these improvements and do it onto your property tax bill, which then carries through title if you transfer it so that owner doesn’t endure all that cost.

Matt Ryan (18:16):

And those mechanisms are there, but they’re not, they haven’t reached scale, right? And so we’ve, and I think we haven’t reached scale because there hasn’t been the right incentives to, you know, create enough profit extra for an investor to say, Hey, this is worth my time, energy, and effort. And you’re right, there is still an incredible amount of waste and, you know, air quality and comfort, those are important elements to attend an experience. And I think as we continue to implement more, you know, restrict building codes, that’s kind of the other problem too, is like, we don’t like mandates, we like incentives as investors, right? Um, you know, that we, we hopefully can kind of clear the path for more implementation and advanced building practices, but you’re right, there’s a huge gap there. And a lot of it’s just education. And we, we spend a lot of time educating track home builders of like, yeah, this costs more, but how much time are you spending on callbacks because you’re trying to install one H V AC system on a three story building versus installing two, right?

Matt Ryan (19:13):

And, and what is that, what’s the value to your tenant? What’s the value of all your time that you’re spending now diagnosing and troubleshooting this? Cuz you maybe didn’t design your HVC system correctly, or you went a little skimpy and tried to do one system when the system really needed two or maybe a system in a minis split, you know? And, and so there’s always that cost that you don’t see down the road that investors haven’t really, we haven’t really pinned that down as an industry. And we still had a long way to go and, you know, that all the problems that you’re talking about is kind of the reason I said, Hey, you know, I’m just gonna take my knowledge and expertise and, and use this to implement in my projects and I know it’s gonna benefit me and, and, and, you know, put my product above the rest. But, you know, there’s often instances where we’re paying more and, you know, there’s probably not a direct ROI in that, or at least a tangible one, right?

Reed Goossens (19:58):

Like, I can think of two assets I own right now, both with, um, boiler chill systems, right? And, and and ha and they’re built in the seventies and they’re coming up to 50 years old. And you’re like, is it make, we’ve got, we’ve got the HVAC lines from the boiler chiller that are causing issues, so we’ve gotta go replace that. That’s three or $400,000. Is there, is it come a point where you just go and flip the whole system to being individual hvac and where you put it, is it on the roof, is on the ground? And does that even gimme an roi? Does that increase the rents? Does it doesn’t increase the rents, but it may, you may it will save the next buyer from having to go and troubleshoot all that crap. And the, you’ve boxed in that issue, but there’s so many aging buildings out there, you can’t just keep going and knocking down and rebuilding and knocking down and rebuilding.

Reed Goossens (20:41):

You have to at some point revitalize. And that’s where those in those programs are so vital for investors like me, where I’m like, well, I don’t see an R ROI right now, but maybe if I could get my taxes abated or something like that, I will go and invest in this community and do the windows and do the HVAC and stuff that doesn’t, as, it doesn’t move the rent, but helps prolong that life, the building’s life. And maybe that building’s gonna continue to be a quote unquote affordable or workforce housing, you know, call it sub $1,500 rents, then maybe I’ll be more incentivized to do it. So I think Yeah, and the other thing you didn’t mention is like, it’s so fragmented. Each county, each state, each city totally is, is, is, you know, so different. You know, you go to South Carolina, they got a different viewpoint to then San Francisco, right? So Yep. You know, what are they that incentivized to, to do stuff?

Matt Ryan (21:28):

And interestingly enough, there’s more of a demand in col. You know, California is overly stringent in all these things. North Carolina has one of the most, or northern California has one of the most mild climates of anywhere in the country. South Carolina is an extreme climate. Right? You’ve been there before. It is extremely high humidity and we get down to 25 degrees it needs it the most. Right, right. Because of, because there’s so much energy intensity there because of the what you have to cool and all those things. And yeah, I mean the, the other instance, you know, without going too far in it is do you install a window HVAC unit in the wall for value add and we have standalone gas heaters that are kind of legacy, or do you endure the cost of a mini-split when then mm-hmm. do multiple heads. And you know, we did a system where we did the HVAC and then we did an in-wall plug-in fan system.

Matt Ryan (22:17):

Hmm. And that helps carry, you know, that cooling load into the other bedroom. But we’re, you know, after you look at the lifecycle of the in-wall heaters, no one wants to replace ’em. And then the AC units, the, even the nice quality ones for four or five, 600 bucks, you get three years out of ’em best. Mm-hmm. . Mm-hmm. , you know, so that’s where you come back. Remember I said the fourth prong is the durability component? And it’s not just the durability of the material, it’s the durability of the mechanical system that you’re installing and there’s just not enough information. You know, kind of putting that all together and, and a second life. Maybe I’ll have some time to revisit some of those things.

Reed Goossens (22:51):

. Well, it’s such a, it, it, it’s, uh, my next question was gonna be, and I want to want to move on from this, but it’s just like, yeah. Well it seems like you got jaded by it, right? You, you, you couldn’t find solutions and it, it, it, it, but it’s such a need there. So I, you know, I know we, we, we can’t solve the problems today on this show, but it’s, for those people listening, it’s like there needs to be progression as investors that we buying existing deals to provide that affordable, you know, workforce, housing. How do, how do we solve for it? I, I don’t have the answer, right? I, I don’t pretend to have the answer. I’m just, I’m an investor. You’re an investor, we’re a housing provider, but I do know some of these places need a ton of work. Yeah. And I ain’t, and I ain’t putting my hand up all the time to do it because it just doesn’t make sense from a, from, from, cause I’ve got a fiduciary responsibility to my investors.

Matt Ryan (23:32):

Well, it’s like everything else. So you can have all the right equipment. And this was our big mantra too, when we did it, the right equipment is nothing without the right installer. Mm-hmm. . And that’s where you, you, unless you have that, it doesn’t matter matter what you buy, what incentives you put in, you gotta have the people who understand the systems and understand the building as a whole mm-hmm. . And that’s still where we struggle as an industry. You know, that old industry that I was in, and that would be the jadedness that I, that I say I have, is that we just, it, it wasn’t conducive, you know, to

Speaker 4 (24:01):

Growth.

Speaker 5 (24:03):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value add deals, then head over to reedgoossens.com And sign up for my monthly newsletter. By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up to date now, back into the show.

Reed Goossens (24:39):

Well, let’s now pivot into revive and, and you, you, you meant there’s, it seems like it’ll be a couple of iterations. You mentioned market forces earlier. So we’ve talked a little bit about what you encountered that made you stop what you originally had planned out, set out to do.

Matt Ryan (24:52):

Yeah. We wanted to create a tenant focus, you know, retention model that we could scale for, for value add investing, right? Keeping tenants doing the necessary upgrades, implementing the energy efficiency and green building measures we talked about. And we kind of put to front performing together that when you factored in construction costs, leasing costs and vacancy costs, that if we could get to a rent escalation, you know, a to sign a two year lease with someone with a pretty steady rent escalation, sometimes 15, 18%, maybe more. But we would provide code level upgrades. You know, a lot of these apartments, the, the conditions of a lot of things were extremely aged, right? Carpet, you know, bathroom fixtures, you name it, vanities, not everyone’s wants granite countertop. They just want these things to function, right? And so we could make the necessary code level upgrades, keep them in and not have to worry about displacing people as part of our plan.

Matt Ryan (25:43):

And you know, there’s two main factors. Sacramento passed rent control shortly after, which in my opinion, it’s not a good policy. It’s not conducive to the things that we were trying to create, which is, okay, we’re taking an equity hit here okay. On these things. But if we had, say, a debt provider that could come in and give us 75 basis points, you know, like a Fannie Freddy on top of this to help finance and close the gap on the loss to lease that we have because of what we’re doing. You know, could that incentivize more developers to focus on tenant retention instead of displacing people? Okay. Or could we get a property tax abatement for doing that? And there’s models that kind of exist, but they typically exist for larger scale. And we see a significant need in this, you know, under 50 unit, right?

Matt Ryan (26:33):

The majority of the apartment buildings in the United States are actually that size, right? They’re mom and pop owners. So it’s like, what are we incentivizing and call it to, to, to, uh, steal a term from Daniel Perk, uh, in optico missing middle type value add. And so anyways, rent control three wrench in that the macro conditions were exactly that everybody and their mother was getting in the CMB value add. And so we were just seeing, you know, again, we were trying to focus on a model that we’re, you know, we’re using a little bit less return for a little bit of goodwill, right? And, and something that we were trying to do different. And then if we scaled it, eventually we could get to a point where we could find that solution on the back end. And I just said, you know what, it’s something, there’s a lot of resistance, there’s a lot of headwind here, especially with people going after these assets.

Matt Ryan (27:18):

You know, what’s another pivot? And it was around that time that opportunity zones was coming online, which we were using the economic innovation group’s data sets because revive, you know, focused on revitalizing neighborhoods was very core to their data, was very core to what we were trying to do. And so when we saw the ozones and then we saw co-living on top of that is kind of an innovative approach to affordable housing, we said, man, this really makes sense. Maybe this is something that, you know, is away from the herd enough that we can go after. And where we were seeing deals, people taking down value add deals that didn’t even cash flow, you know, a co-living deal cuz you’re getting a higher rent per square foot and a higher noi. Now all of a sudden we could eek out a cash flow on a high buried entry market like a Sacramento or an Oakland and Berkeley that people weren’t normally getting. So we thought there would be a lot of demand for this type of product. Um, and that’s ultimately why we pivoted.

Reed Goossens (28:09):

Just quickly explain to the listeners what co-living is.

Matt Ryan (28:13):

It’s a written bedroom strategy where we’re renting directly to say you as a, as a perspective tenant, and we’re furnishing the calming areas, we’re taking care of the utilities expenses for you, that’s inclusive of your rent. Uh, we’re including things like cleaning. There’s scheduled community activities. I’ve heard of catering, you name it. But basically it’s a much more frictionless, turnkey model to the, we call it the Craigslist model, where people are moving into high density areas, cities with major, you know, job producing cores going into a 3, 4, 5 bedroom trying to bring their rent down versus going and get a studio, right? That’s been going on for decades. That housing type has existed for almost a century, right? So at the beginning of, uh, uh, you know, and so, but now all of a sudden we have these operators moving in and making it very frictionless for these tenants. And so for the development side, there’s become a robust demand for those types of properties. And that’s essentially what it is.

Reed Goossens (29:07):

Um, what’s the, I know, have you seen f uh, when you say frictionless issues with the product around having to share, share a common space and essentially have roommates? Like has that been a big barrier in the projects that you’ve brought to market?

Matt Ryan (29:23):

Uh, in my understanding, traditionally, no. It’s not. People know what they’re getting themselves into and, you know, hey, you’re saving 250, 550 bucks a month in rent. You know, there’s a reason why that is. You have to share something. There’s, you know, there’s always gonna be friction amongst tenants. And, you know, those are, those are property management issues that arise. Hey, I’m not gonna lie and say there’s not a higher operating expense associated a higher turnover expense. But, uh, Brad Hargraves, who’s the chairman of Common, he’s the largest mm-hmm. and the largest, you know, operator of co-living beds. He just did a, a great piece on his blog about how, you know, even with an average tendency of say 16 to 18 months, they’re still maintaining 96 occupancy. You know, they’re beating all the, if not in line with all the traditional apartment investors when it comes to occupancy and turnover and, and really holding strong on metrics. You know, so it’s, you know, that’s just, it’s just kind of the nature of the beast. You gotta know what you’re getting yourself into and have a good operator in place.

Reed Goossens (30:19):

Walk us through what the model of revive looks like today. If you know I’m an investor or what are you doing? What? Walk me through an investment model.

Matt Ryan (30:29):

Yeah.

Reed Goossens (30:29):

Yeah. We’re, right now,

Matt Ryan (30:30):

Right now we’re stabilizing our 13 and half million of portfolio across three properties. Right. And, well, actually four, we just completed our fourth. Um, and we’re actively looking to continue to look for value add opportunities conducive to co-living setup, small scale co-living under 50 beds, 20 at a minimum. Um, but we also are trying to bring on equity partners to start building out a development pipeline because frankly, trying to find existing assets, um, for co-living is extremely challenging, right? It, it purpose built co-living is really kind of the wave of the future. Um, we feel like there’s other systematic ways in which you can do housing microdevelopments, that’s another market segment of this kind of affordable by design market that’s growing. And, uh, you know, that’s, we’re very bullish on that for all the reasons and kind of the things we alluded to in our original thesis. And, you know, for us, for us it’s now like going from the 40 units to the hundred to the thousand, right? And just continuing to, to be a leader in this, you know, as a developer of co-living. And we feel like there’s a pretty open runway for that.

Reed Goossens (31:32):

Yep. No, no, I think I, I happen to share an office with a good buddy of mine, um, beach City Capital, and he’s doing a, I think it’s a 25, no 50 unit co-living space in, uh, Mar Vista here. I’ve also sat in, um, in Hermosa Beach. You won’t get into the politics of Hermosa Beach, but you know, there’s a bit of a pushback, bit of an mian going on totally with like, you know, why are you bringing this dormitory style, you know, it’s essentially student housing for adults pretty much. And, and, and it’s, it’s hostile living essentially, but on a nicer scale and trying to get local cities to, to get on board. Um, I have seen a bit of pushback. Have you found the same pushback in the markets you are targeting?

Matt Ryan (32:15):

Yeah, I mean, so far the projects that we’ve taken on, we’ve converted, they’re small scales. So we’ve either converted them to the existing residential zoning codes, right? And so that we look at projects that we don’t have to go to a rezoning board, right? We don’t have community input mm-hmm. . So it’s called, we, you know, you’ve probably heard the term zoning by, right? Yep. So we haven’t had to do that thus far when we go to redevelopment as redevelop assets, you know, if we’re buying raw land and redeveloping, which really wouldn’t be our mo, but maybe we find a great deal, that’s to happen. Yeah, I mean, I think there’s definitely headwinds. The nice thing is, is that there’s zoning reform that’s kind of sweeping the United States, right? The nimis are getting called out. And the interesting thing that’s happening is the majority of the zoning reforms that have already happened, like in LA and other areas, they’re much more conducive to this type of housing because the rent that you’re delivering, that’s where the term affordable di by design comes from, is truly affordable.

Matt Ryan (33:13):

It’s easy to, it’s less, you know, it’s less difficult to sit into a, a community planning meeting and say, oh, but these are gonna be luxury apartments, you know, $4,000 a bedroom and uh, you know, we don’t want this type of housing. This is luxury. This is only gonna service the highest end. Versus, well, this is housing that’s gonna be $1,500 a room and, you know, available to people with 80 to 120 of the area medium income. This is the retail worker who can’t afford to live in Oakland, or can’t afford to live in Sacramento downtown right now if they were to rent a studio. And I think that’s the interesting thing is that a lot of the messaging around Nimbyism is against, call it more luxury housing, top of the market housing, but we’re building housing without a tax subsidy at the bottom, 15, 20% of the rental market.

Matt Ryan (34:02):

And it’s gonna be increasingly difficult for those people to stand there in the way of those projects. When you got, you know, again, that barista, that recent college grad saying, Hey, I’m not opposed to this housing. And you’re seeing that more and more of the younger generation mobilizing around the ybi movement because frankly, you know, the people who are standing in those meetings are the people that I’ve owned a single family home and been there 15, 20 years. And I get that they don’t want an apartment building built next to them. And, you know, and that’s, that’s an issue we’ll, we’ll avoid for today, right? . But the fact remains that, you know, we got 45 million G Gen Zs hitting the marketplace over the next 10, 10 years, over the next decade, and they’re paying on average of 42 to 44% of their income to rent. And that’s not sustainable. That’s not the American dream. That’s not what is gonna make them a productive generation of the future. And they’re already seeing similar headwinds that my generation, the millennials saw coming outta oh 8, 0 9. We don’t need to repeat those mistakes. And so I think for us, we’ve kind of got the narrative behind us. And, and I think that a lot of the, where I was trying to go with that is a lot of the zoning reforms are conducive to this type of housing, which I think is great.

Reed Goossens (35:11):

I completely agree. And, um, having a background in ground up construction as well, and just how difficult it is to try and get things built. You know, most major cities, you know, who, who’ve got a lot of people when pe people, you know, uh, it’s, everyone’s got one like an opinion, right? And so when everyone, when you bring a lot of people together and you go out to community opinion, which you need to do, which in, in don’t, don’t get me wrong, you do need to do that when you’re, when you’re getting new projects approved, but trying to get the, the buy-in from everyone, um, when it’s in, you know, we in the guise of, uh, community enrichment to try and make sure that the barista or the the checkout gal or guy can have a, somewhere affordable to live is really quite important.

Reed Goossens (35:50):

And I think co-living is, is a step in the right direction. Um, you know, hopefully not a Band-Aid step, you know, back to what we were talking about earlier with the existing housing, you can’t just keep building new stuff cuz you’re saying, you know, the, the, the, the really, the, the product to build it from scratch really is the only way to do it with co-living. Um, so it’s been an extremely interesting conversation, my friend. I could, I can can talk gu ear off and, and next time in San Francisco we should definitely meet up. Um, but I guess where in the next sort of five to 10 years, where do you see REVIVE going to in terms of a platform?

Matt Ryan (36:19):

Yeah, we want to continue to drive a truck through this co-living model, you know, and, and that’s, we wanna become a dominant player in that space. That’s our, call it mvp, you know, our minimum viable product. Uh, in the, once we get through that, I’d like to pivot back to our North Star, which is being a non-asset specific, but area specific developer. You know, I always tell people we, the whole premise of REVIVE is to go back to Miss Pam’s neighborhood. How do we turn that neighborhood around and make it conducive where we can keep her in the neighborhood but still provide housing mm-hmm. and being a for-profit developer, there’s a non-profit element to what we’re doing that we would, you know, we would work with local agencies and governments to mitigate, you know, barriers for building all types of housing. You know, very much a neighborhood specific approach, uh, for a ho for a host of reasons, right?

Matt Ryan (37:09):

And, and for us, from my perspective and my early thesis of REVIV is that, you know, being able to do that would mitigate some of the risk associated with real, with real estate investing, which is you often get trapped in the macro cycle of whatever your sector is or segment is, and then you got capital. You don’t make money unless you allocate capital, right? And what do you do? You’re like, we either make money or we sit on our hands and we don’t do anything and not make money and so let’s, we gotta get this capital allocated. And then that’s where people make mistakes, right? That’s what creates these issues. And uh, you know, for us, we, I still very much a big believer in that approach, not just for the social element, but for, you know, the risk mitigation. And so navigating back to that North Star in time I think would makes sense. But, you know, that’s the one thing about a successful business is you, you gotta have an MVP, you gotta have something that you can just rubber stamp and print and, and dominate at. And that’s, that’s what we’re we’re doing with co-living right now cuz it just checks all the boxes for us.

Reed Goossens (38:04):

I love it. I love it my friend. Look at the end of every show, we’d like to dive into the top five investing tips ready to get into

Matt Ryan (38:10):

It. Sure. Let’s do it

Reed Goossens (38:11):

Mate. Question number one is, what’s the daily habit you practice to keep on track towards your goals?

Matt Ryan (38:15):

Every single night I try to flush out what’s in my sauna projects and at the very least look at my Google calendar and make sure that I have the next day planned accordingly. And that anything that I, a meeting that I did or that I had that I didn’t follow up on or I don’t have, make sure those things are plugged in. Cuz I think the worst thing you can do is go go through your day meeting to meeting or interaction, interaction, not go in, record those things, do the proper follow-ups, and then do the same thing the next day, right? Mm-hmm. , you’re gonna be incredibly ineffective. That to me is the, the biggest, you know, r o ROI anyone can have is just spend 15, 30, 45 minutes at the end of the day, get ready for the next day, be ready to wake up and kick and know that you got everything else the day before behind you.

Reed Goossens (38:58):

Love it. Absolutely love it. Uh, question number two is, who’s been the most influential person in your career to date?

Matt Ryan (39:04):

Yeah, I mean, I go back to my old man. He’s, you know, he’s been the guy who’s inspired me across the way, you know, hearing his story, he was a mega commuter in Chicago, you know, moving from the suburbs drive to you qualify, there’s so much about his story that’s relevant to what we’re trying to accomplish at revive. And I say second to that, you know, my interaction with Ms. Pam, we were never that close, right? She was someone who helped babysit and worked at the school, but, you know, I’m very much inspired by those people who were, who were everyday working people trying to make it and, and then seeing larger social issues and policy issues that are having a negative impact on them. And, you know, I just, I’m very much inspired by, you know, this idea of the American dream and upward mobility and creating more opportunity for people. And I, I love the fact that real estate, you know, and where it’s located and how it’s built is very much conducive to all of that.

Reed Goossens (39:52):

Yeah. Completely agree with everything you just said there. Question number three is, what’s the most influential tool in your business? Meaning like, could it be a physical tool like a phone or a journal or is it a piece of software that you just can’t run the business without? What is it?

Matt Ryan (40:05):

I mean, I’m a real estate investor, right? So, um, I’m a big music nut and I remember listening to, to one of my favorite bands, uh, train as Stasio Phish talk about his gear one time. And he, you know, he talked about his old 80 year old amp that he’s had for decades, right? And he’s like, you know, as a guitarist you really just gotta know your equipment. Like you don’t, don’t worry about getting the Nick’s fancy tool. Know your equipment. My equipment is my pro forma man. It is, it is my spreadsheet. It is what I dive into when I’m at, when I’m worried about something at two o’clock in the morning. I’m in the middle of underwriting a project. I know the ins and outs of that spreadsheet. I’ve built ’em, you know, and so my, my financial modeling tools are, you know, and my comfort with those tools and the ability to navigate them, to me that’s, you know, that’s my spear at the end of the day that I, that I really keep sharp. So

Reed Goossens (40:55):

I love it. I’m completely the same way. It’s, it’s sort of, someone asked me for mine the other day, I’m like, would McLaren or Red Bull or Ferrari give away their, you know, the

Matt Ryan (41:07):

Recipe

Reed Goossens (41:07):

their recipe for, for driving fast cars and Formula One? No, they wouldn’t. It’s your Formula One racing car. It’s, you, you, you’ve tweaked it to the cow sheds and back, you know, so you’re, you’re not gonna give it away to anyone.

Matt Ryan (41:17):

Yeah, for sure.

Reed Goossens (41:18):

One sentence, what has been the biggest failure in your career and what’d you learn from that failure?

Matt Ryan (41:22):

You know, I, I did a LinkedIn post on this where I, I feel like I’ve been quote successful thus far and hopefully that stays true in building a small boutique development company. My biggest failure in doing it is that I tried to do it all myself. Mm-hmm. and I look back on it, I wish I’d have found key partners. Now, I didn’t have strong connections when I moved to San Francisco, right. I had to start all over again. But really, I wish I would’ve done something either gone work for another developer though. You know, I kind of tried people, my buddy, as my buddy told me, you’re not very employable , you know, but I wish I would’ve found more key partners where I could have relayed my areas of expertise versus for the last six, seven years becoming the jack of all trades master of none.

Matt Ryan (42:05):

I think it’s an incredibly inefficient way to start a company. I used to think that you could bootstrap a company. I don’t, I wouldn’t recommend trying to bootstrap a private equity company. Maybe you can do it if you’re doing software and you’re selling a widget, you know, but it’s just an incredibly hard business to get into. And I see a lot of people, because we have so many gurus out there saying, oh, it’s, you know, start a syndication company and apartment investment made easy. I don’t, maybe it’s easy for those guys. It’s been brutal for me and it’s been really tough and I’ve had a lot of lumps along the way and I really wish that I would’ve just, you know, kind of found a key partners and built a few key relationships and maybe, you know, shared more of the pie at first and done it that way than trying to just, you know, trudge through the mud on my own.

Reed Goossens (42:45):

I love it. But in saying that, there is a element of, you have need when you’re building any company, right? You have to be, wear all the hats in the beginning Yep. To understand who you need to go employ and what you’re good at and what you’re not good at. And it’s only comes with hindsight that, that, that you can look back and say, I wish I’d done that sooner. But that’s, you needed to go through those lumps because that’s probably your journey and that’s the way you get to becoming a more efficient business owner and ef efficient entrepreneur.

Matt Ryan (43:09):

So, yeah. And it’s interesting cuz that’s what my dad always taught me. He said, you know, you need to understand all the facets of the business. And you know, I, I like, I like nuance, I like to argue both sides of the ball, right. So I would, I agree with your sentiment. There’s a lot of truth to that, obviously for me, I think it’s, you gotta find a good equivocal balance where you’re not putting yourself in situations where what you don’t know is causing more and more headaches. Right. Because there’s, that’s the thing about real estate investing in Howard Marks, I love his book. It’s always the things you don’t know that blow up in your face and really increase risk. And you know, sometimes there’s a wisdom out there that you just don’t, you haven’t accrued yet. And you know Right. That’s where experience matters. So

Reed Goossens (43:46):

That’s exactly correct. Yep. Last question mate, is where can people reach you to continue the conversation That’ll be in your sphere? Where do they go?

Matt Ryan (43:51):

Yeah, just go to re-com. There’s a Calendly link on there. You can book a call with me, set up a time to talk. You can look at our gree deal, which is open. We keep that open so people can understand, you know, the mechanics of a co-living deal. Talk to me about how we underwrite. You know, we don’t, we don’t juice stuff and talk about high returns. We just, we talk about our underwriting process and how we keep things simple, middle of the fairway and, you know, that’s all there. And, you know, schedule call with me and we’ll kind of walk you through what we do and how we’re doing it, why we’re excited about it.

Reed Goossens (44:17):

Love it, mate. Well I wanna thank you so much for jumping on the today’s show. Just some of the things that we’re gonna reflect back to you. I think the, the importance of having a socially aware development company, as we start to see old buildings with your energy efficiency and, you know, the problems that I’m facing in my own, uh, portfolio, morph into ways to provide housing in a way that is affordable to the average folk who need to live in certain areas. And it’s, it’s, it’s not just a US problem, it’s, it’s, it’s in Australia, it’s in Europe, it’s in Mexico, it’s in Canada, it’s in Africa, it’s, it’s all across, right. Affordable housing’s always constantly gonna be an issue. It’s been an issue for the last 30, 30 years. It’s gonna be an issue for another next 30 years. So, um, constantly trying to sharpen that tool, as you said, mentioned, sharpen that spear before on your modeling, uh, with your proforma, but also the way we think about how we provide housing, uh, or revitalize other housings, uh, existing housing I should say. And then got, getting the buy-in from, you know, from the local government, which is always tough. It’s always challenging. So it’s, you know, we haven’t solved anything on this podcast. We need to be speaking for a lot more, many more years to be coming. But I think just, you know, having that conversation and talking openly about it is the place where we start to really start moving that needle or that ball down the fairway so we can get to our goal of providing that affordable housing for everyone. Did did I leave anything out there?

Matt Ryan (45:36):

No, I think you nailed it. And I think the momentum in what we’re talking about, it’s there more and more developers, emerging developers, syn indicators, you know, private equity people. We’re in an interesting time. We’re in an exciting time for everything we’re talking about and I think the future’s really bright for that. There’s a ton of momentum around it. And you know, I, I love seeing that. It’s, it’s truly inspirational and I think, I think we’re gonna solve a lot of these problems, you know, in our lifetime. So.

Reed Goossens (46:00):

Yeah, I do too. I do too. Alright mate, well good. Thank you again for jumping on today show. Enjoy the rest of your week and we’ll catch up very, very soon.

Matt Ryan (46:05):

My pleasure. Thank you, Reed.

Reed Goossens (46:06):

Well, there you have another cracking episode, Jim Pack with incredible episode with Matt. If you want to check out what he does, go over to reviv.com. That’s re-viv.com. Check out his G Street deal up there. It’s an example of how he does co-living and walks you through all the underwriting tools, tips and tricks to get into the co-living space and the returns that he provides to investors. I do really think this is an incredibly important topic that we’re talking about. So if you do have any comments around this topic, please reach out to me@inforeedgoons.com. I wanna thank you all again for taking some time outta your day to tune in, to continue to grow your financial iq, because that’s what we’re all about here on this show. The easiest way to give back is to give it a five star review on iTunes, and we’re gonna do this all again next week. So remember, be bold, be brave, and go give life a crack.