Agents Building Cashflow

EP 181: From Small Deals to Big Wins with Will Matheson

• Will Matheson

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In this episode, Randal has a candid chat with Will Matheson, co-founder of Matheson Capital, to explore his journey from brokerage to building a thriving real estate investment firm. Will shares his bold decision to start small, invest in multifamily properties, and gradually scale up to larger deals. He delves into the challenges of raising capital and market trends and his insights on short-term versus long-term investment strategies.

The conversation is filled with actionable advice for real estate investors at all levels. Don’t miss this insightful episode to uncover strategies for turning your commissions into cash flow and achieving financial freedom!

Key takeaways to listen to:

  • The importance of starting small and gradually scaling investments in multifamily real estate.
  • Debunking the myth that "money will come" if you have a good deal and emphasizing the need for a strong track record.
  • Benefits of short-term hold strategies for building credibility and capital.
  • Why it’s better to employ a long-term investment strategy for consistent cash flow and scalability.
  • How to navigate the challenges of raising capital in the current market.

About Will Matheson

Will Matheson is a Co-Founder of Matheson Capital, a real estate investment firm based in Charleston, South Carolina.

Connect with Will Matheson:

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To connect with Randal and learn more about passive investing, visit www.ridgelineig.com and follow our social media pages below!

Will Matheson: [00:00:00] If you're starting on bigger deals, that's more money to raise, that's a higher barrier to entry. It's just harder. And there is this saying, and you've probably heard it a million times. I hate this saying it is my least favorite saying in real estate. It's like, Oh, if you have a good deal, the money will come.

No. Like you have to have a track record. You have to have connections. People have to trust you. I've worked with private equity firms, you know, I can send them a deal, but they're the first thing they're going to do, who are you, what have you done? 

Intro: If you're a real estate agent earning 200, 000 a year, and you want to grow your passive income, check out.

This show is for you learn secrets, other agents use, and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities. So you can take your commissions and turn them into cashflow. Here's your host, Randall. Let's dive in. 

Randal McLeaird: Hey, welcome back to the show.

It's good to have you here today. Always enjoy our conversations and introducing you to a guest that we have on today. [00:01:00] It's Will Matheson of Matheson Capital. We talk about how he went from the broker side of the business, which is the Marks Millichap side of the business into the ownership side and the investing side.

His journey, how they started small, buying small multis and moving into larger deals that they're working on right now, his take on the market and where they're going in the next year. So it's a good conversation with an operator who's been in the business for a while. A young guy crushing it with his brother.

It's, it's a great conversation. He knows a lot about multifamily. So jump in, enjoy the conversation. This is Will. Here we go. Hey, Will, welcome to the show, man. It's good to have you on. I'm excited to have the conversation and chat with you, just real estate talk shop a little bit and kind of see what you're working on these days.

Will Matheson: for having me. Appreciate 

Randal McLeaird: it. For sure. So, you know, we're talking just now about your backstory and how you got into Matheson Capital, which you're running now with your brother. Tell me before you got into that, you were working at Marks Millichap. So what was the evolution, you know, coming from school straight into working at a [00:02:00] brokerage shop and then getting into Matheson Capital?

Will Matheson: So it's actually, uh, it was a pretty fun story for my brother and I. So we were working together at Marks and Milichap out of their North Carolina office doing primarily retail brokerage. And the way the company actually started, we weren't a buyer. We weren't buying assets. The first thing we ever did was actually a hard money loan.

We had a client of ours in a big town, 31 exchange could have been. 30 million or so. This was all the way back in 2015. So my memory is a little hazy at this point, but, um, they, they split their exchange and they did their first closing. And for their second closing, they had a million dollar equity shortfall in only 30 days before their clock expired or something like that.

They couldn't get more loan proceeds from the lender. And there wasn't enough time to find. You know, a new bank to do the purchasing on their new acquisition. So our senior broker at the time was like, find a hard money lender. We know their whole [00:03:00] schedule of real estate. And we could put the first lien on another property down.

So they get the million and then dah, dah, dah, dah, dah. And we just thought to ourselves. I remember Evan and I, we were talking on the phone one day after work and I'm just like, or maybe it was him again. It's all, it's all lore at this point. You know, we could do this. Like we could raise the million dollars they need, put a first loan on this at the personally guaranteed.

So that's what we did. That's how we started the company. We put that loan on and I want to say August, 2015, and it stayed there until December, 2016, which was a great way to supplement my early career earnings, which were not significant in 2015. 

Randal McLeaird: That is. Pretty bold though. I mean, that's pretty awesome.

It's not a, it's not a, a route, I guess that you typically would go straight into a million dollars. So did you raise that money or was it partly yours and you raised or how did that even look? 

Will Matheson: So we mostly, we raised pretty much all of that money. We raised it. It was [00:04:00] really great. I think we did something like, 800 over SOFR, which SOFR at the time was nothing.

And we probably could have gotten a thousand over SOFR because while we were on the conversation, they had asked like, so it's a thousand over SOFR. Right. And we corrected them down, uh, rookie mistakes from a 23 year old. So that was, uh, that was a good move, but no, it was. It was a really awesome, it was bold, I'll definitely say that.

I did, the next part of the story is, you know, Evan and I, we left for grad school, we left Marcus for grad school in April of 2017, and I remember doing a job interview in early 2018, and trying to explain this to the person interviewing me. And, um, it's actually, it resulted in them asking essentially, where did you get the balls to do something like that?

And my answer was terrible, which is why nobody hires me. Um, and my answer was essentially like, it wasn't that hard. [00:05:00] Like, where'd you get the skillset to do it? It wasn't a skillset. The guy was worth 30 million, like, 

Randal McLeaird: um, common sense. That's what got me. Yeah. Yeah. Not a good answer 

Will Matheson: for a job interview.

Randal McLeaird: That's funny. I interviewed my buddy who I was just telling you about his shop. They had a developer here at San Antonio and he was hiring somebody. And I went into an interview and I like started flipping houses. That's it. So I had this machine that was going and I was making money. And so he asked me some similar question, like, so how do you spend your days?

Or like, how much time do you spend on this? And I was like, not much. I mean, I just have been kind of hanging out. What's my answer in this interview? It wasn't like, uh, you know, I built this whole system and, you know, but you know, it's kind of one of those things. So. Good for you for answering. And the other side of that is good for you.

It was an, an, an honest, you know, approach the 800 sofa question, 800 or a thousand. So you can look at that either way, like you missed out or you probably gained some, you know, some goodwill, some people when you, when you. Put it that way. 

Will Matheson: I hope so. 

Randal McLeaird: Yeah. So you guys got into [00:06:00] this deal, um, you didn't get a job, but that you were interviewing with this other guy.

But what was the process when you guys, you did that loan and then you went back to grad school, right? You were going to a straight business school. So 

Will Matheson: we finished the loan in December, 2016. And by then I think we had already gotten into Columbia universities, master's in real estate development program.

So it's a one year program in New York, really great. Like the professors are people in the real estate industry because, you know, it's Manhattan, it's the real estate capital of America pretty much. So. Met a lot of great people, learned a lot, and as Evan and I were leaving Columbia, we had done some job interviews, and we're really just talking because we lived two floors apart.

We're in the same building, I was on the sixth floor, he was on the fourth. And, um, we're just talking and we're like, you know, what do we want to do? And our conclusion was essentially, look, we've had a little bit of an [00:07:00] entrepreneurial thing before, back with that loan, we actually bought a property in Los Angeles with one of our classmates in January of 2018, while we were still in the program, we sold it in March of 2018.

So two months later, made some nice money. And we're just like, You know, what do we want to do? And we decided we could try climbing the corporate ladder for 10, 15, 20 years to then leave and try to raise money from a bunch of funds, et cetera, et cetera, or we could just go start buying properties right now and they'll be smaller and it'll be hard, but we don't have the golden handcuffs.

I was nearly married, but. With no kids and my brother wasn't married and we're just like, you know, we don't have the golden handcuffs. Let's go for it. Let's start our business. Let's scale it up. Let's start small. And, uh, you know, instead of waiting 20 years to walk out and buy institutional size deals, we'll, we'll do it in 10 or seven or eight or whatever.

Randal McLeaird: Let me ask you, looking back on that decision, would you give that advice to yourself, start at the [00:08:00] small and then go to the one 50 plus unit? Yeah. Or would you stick with the approach that you guys? 

Will Matheson: I would 100 percent stick with the approach that we took. I see a lot of people, people reach out to me for advice somewhat frequently because I, you know, I post on LinkedIn a lot.

And, um, I see a lot of people who go through coaching programs and they're saying, yeah, you got to buy bigger stuff for scale. And, you know, that in my opinion, you know, one out of a hundred people end up really doing that. Otherwise, you're getting into a deal where you've got 10 other co GPs where you don't really own anything, and the whole co GP system has its own issues with the SEC in some cases, depending on how it's structured.

And then the alternative is You're in all these co GPs, or you're just never buying anything. It's just really tough when you're trying to compete on these 20 million dollar deals, because the brokers know everybody in the market who owns a 20 million dollar deal. 

Randal McLeaird: Yeah. [00:09:00] 

Will Matheson: And they've transacted with those people, and those people have a track record, and you have no track record.

So if you want to overpay, I think that's a great way to go. But like I was telling you before we started, Evan and I started small. Our first deal was two units. Then we did. I know all the unit counts. It was two units, six units, six units, 15 units, 24 units, 32, 32, 69. And then we partnered with somebody at the end of 2021, where I think we bought, we were the junior partner in this.

So I don't know the number. Maybe it was 112 units. But we had just started with these really small deals. And each successive deal we did gave us more credibility with brokers. It was actually funny. We did, um, one of our deals we bought February, 2019, 15 units in Somerville, South Carolina. It's part of the Charleston MSA.

We bought that property. We closed another deal in December. And come summer 22, we actually had the opportunity to buy a 32 unit deal in Somerville. The broker who sold us [00:10:00] that property did not know we owned a 15 unit property in Somerville. He hadn't heard of that, but he knew we had bought the 24 unit property in Charlotte, and that's why he showed us the 32 units.

So it just, Every deal gave us more credibility with investors, with brokers. And it, you know, we didn't spend years barking up a tree to buy a deal where quite frankly, we couldn't erase the equity anymore. 

Randal McLeaird: Great advice. The reason I bring that up is because there are a lot of. Coaching programs, mentorships, and that sort of thing where they're pushing a go big or go home sort of strategy.

And so people come out of those things, you know, gung ho thinking that it's just the only way to go and I advocate for the approach that you guys took. So, yeah, thanks for being candid with that. And the other side of it is, you know, it's one of those things where I was talking to somebody the other day and they're like, look, You're going to have a more meaningful impact on your personal income if you buy a duplex than if you are going out and being a fraction of a fraction of an owner in a deal, you know?

You, you'll [00:11:00] get experienced that way, but anyway. 

Will Matheson: Well, no, so I'll also say this. And one of the, you know, I alluded to this, but one of the reasons we started small is I bought that first property when I was 25, when I was in grad school. And that, you know, we knew we couldn't raise the money for larger deals.

Like if I went and tried to buy, actually, I will tell you in, uh, 2019, just February, March, 2019, we had just finished four closings. Two units, six units, six units, 15 units. We went under contract on a 55 unit deal in Charlotte. We thought we had a great price, a hundred a door. We needed to raise 2 million or something, and we couldn't raise the money.

And we lost, I don't know, 30, 000 in pursuit costs, but we didn't have the Rolodex, we didn't have the network. We tried to find partners. Someone later put the deal under contract at pretty much the same price. They used the exact same property manager we were going to use, and they sold it for Like they bought it a [00:12:00] hundred, a unit, and they sold for like one 50, two years later, it would have been a home run of a deal, but we didn't have the, we couldn't raise the money.

And that's another thing. Like if you're starting on bigger deals, that's more money to raise. That's a higher barrier to entry. It's just harder. And there is this saying. And you've probably heard it a million times. I hate this saying it is my least favorite saying in real estate It's like oh if you have a good deal the money will come.

Randal McLeaird: Yeah. 

Will Matheson: No Like you have to have a track record. You have to have connections people have to trust you I've worked with private equity firms, you know I can send them a deal but they're the first thing they're going to do. Who are you? What have you done? I had this conversation with someone who wanted to get into the industry and they said that line to me and I'm like, who told you that?

Like, oh, this guy. I'm like, yo, how old is he? Cause this guy was my age. He was like 30 when we had this conversation. I said, how old is he? He's like in his fifties. Yeah. What'd he do before he got into real estate? Oh, it was a Silicon Valley CEO. Well, yeah. If he finds a [00:13:00] good deal, the money comes. 

Randal McLeaird: Yeah, the Rolodex backs it up.

Yeah, good advice for sure. Let's talk about the transition because when I was going through looking at the transaction history that you guys have up on MathCap, I love the name by the way. It's like super easy to type in. 

Will Matheson: I'll tell you why. 

Randal McLeaird: Yeah. 

Will Matheson: So, when I was, uh, when I was at Marcus Millichap, I had two email addresses because a lot of teams at Marcus, they built their own team websites in addition to their Marcus Millichap addresses.

And there's a lot of cold calling, so you're telling people your emails over the phone. I had two emails. One of them was, I think, William. Matheson at MarcusMillichap. com. Which is just a joy to transcribe to people over the phone. And my other email was not significant. It was better, but it was not significantly better.

It was will at green spawn, invest. com. Both of them just a mouthful to tell somebody. So when we picked our [00:14:00] website, we bought it when we were in grad school, I saw math cap was available. I think it was like 5, 000, which was a big amount to spend considering we didn't even know we were going to do a company, but like, no, no, no.

We need to buy this thing because Will and Evan at Mathcap. com, that's as short as it's ever going to get. 

Randal McLeaird: Yep. And not William Matheson at Mathcap. Yeah. Now I see that, man. I saw it and immediately it was like, good for you guys for taking that thing down. That's good. But let me go to the deals that you guys were buying, right?

Okay. So when I look at it, it looks like you guys started again with the small, but you had these short fuses on these things. So you're buying at, you know, a one year hold time and flipping these properties. So you're basically doing a commercial flip, right? Going in, forced appreciation, reno ing the units and filling it up and then selling it.

One, I love that model, right? That's what I've been doing on the, on the single family side for years and years and years. And a couple questions around that. One, are you still seeing that type of deal? Are there a lot of those or you feel like those have been [00:15:00] bought up and, and a lot of them traded hands in the last like five years?

Will Matheson: Okay, so to answer that question, they are harder to find the larger you get. I do believe one of our acquisitions that we made in 2023 will be able to successfully sell, buy and sell within a two year period just because it was a distressed sale, but that short term hold period was a key part of our initial strategy when we got started.

And I'll touch on that because I think that's where you're going with question two. And, um, Now that we've established ourselves more as a company, now that we've earned the trust of a lot of investors, we do like to use more of say your typical real estate strategy, five, seven, 10 year holds, things like that.

We were building to the point where we wouldn't have to do these really aggressive quick turn value add plays. 

Randal McLeaird: Yeah. I mean, that's a great way to one, build your cash reserves because you're in and out of these deals, you're returning that capital quickly to investors, investors tend to like that, [00:16:00] but in general, in the market, are you still seeing those, you know, 30 to 50 unit deals that haven't?

Had that aggressive value add program in the markets that you're in. I'll be 

Will Matheson: honest. We don't spend as much time looking for them. Okay. That's we want to buy larger and larger properties, primarily for management reasons. They're harder to manage at smaller sizes. There are benefits to scale, even though I said, you know, that the whole, you have to get scale early.

I think not exactly true, but there are benefits to it. I'm just saying the ability to do a smaller deal outweighs the benefit of the scale. 

Randal McLeaird: Yeah, that you can't do it. Can't buy it. Doesn't matter. Not being able to buy is a significant barrier. Yes, that is the problem. I literally just got on the phone with a broker in between the last call and this one, and they have a deal that's local and they want, you know, 2.

25 and I'm at one seven and. The conversation has been going on and on. It's a, you know, 16 unit deal here locally [00:17:00] and You know, I've just been in that price point with those types of deals nonstop. That's an aside. It doesn't really, uh, you know, to the point of not being able to buy. I'm unable to buy because the profile of the return just doesn't seem to make sense.

The pricing still hasn't made sense to me. But anyway, I wanted to talk about some of the, the deals. So when I was reading through one of the deals that you guys did, it sounded like you said, We implemented a, because they're smaller deals, like management is a challenge, but you guys implemented some sort of like offsite management process.

So is that accurate? Or did I misunderstand what I read? 

Will Matheson: And such property we're talking about. 

Randal McLeaird: I didn't know if you guys had found a way to, because when I first started into this, everyone's telling you, you know, you go big because of third party management on site. Staff and it's easier to manage those things.

And so I started looking at on the smaller deals, if you can solve the problem of management by having it somehow automated, almost like storage facilities are automated or have become more and more automated, that takes out a huge line [00:18:00] item on your budget. And so then you could be more aggressive on your pricing and you have a huge value ad that you could add because of the management component.

That's why long story. I'm asking if you guys found some way to do that or if I misunderstood that. 

Will Matheson: I believe on Timberstone, that was, that was 69 units. I think it was staffed at one point prior to when we, there was like SUDEV staffing when we bought it and we were able to take that completely offsite.

I will say for the smaller properties, I kind of view it this way. You tend to think that, And this is actually another benefit of starting small. The bigger things get, the more efficient the market for it tends to become. And in property management, you know, I don't, I don't mean to slight anybody. If you just had to use generalities, you would say the biggest property managers, the people who are managing the biggest buildings are probably the best property managers.

So as you move lower and lower in the [00:19:00] unit count, the pricing is going to become less efficient because you know, every now and then, like we bought a property off the MLS. You never see that like buying an apartment complex off the MLS can be an absolute steal, but the pricing becomes less efficient because the brokers don't do as much.

There aren't as many comps to base off of and the management is oftentimes less efficient. So if you can find a good property manager. They can make a world of difference. And we've worked with quite a few and we think we've found some good property managers in the smaller space, but the inefficiency of that portion of the market, you can really benefit from.

Randal McLeaird: Yeah. That's kind of what I was. Thinking in general, like again, if you I'm a broker, and so we were planning on buying and managing some of this stuff in house and learning that process and kind of seeing what that looks like. But I also don't want to necessarily do that long term. That is not a business I'm trying to stand up and do.

Are you guys vertically integrated on some of the stuff you guys are buying? Are you guys? We 

Will Matheson: have a partner. [00:20:00] I was going to say we have a partner who manages our assets for us and he invests in the deals. So we don't, we're not traditionally vertically integrated, but we do have buy in from our management partner.

Yeah. 

Randal McLeaird: Yeah. That's helpful. One, I think it gives you guys insight into kind of the operations on what they're working on and, and, or more so maybe, but They have skin in the game, so to say, if he's invested. 

Will Matheson: So we did not do this, but I think there is some validity to the idea of if you're getting started and you're doing this full time or even if you're doing it part time, but if you're getting started buying smaller apartment complexes, I think there's a lot of validity to owner managing them.

One, if you're doing it full time, I'll just be very blunt. Like if you're charging a 2 percent acquisition fee on a million dollar deal, it's 20, That's not going to get you through the entire year asset management fees on a property that size are not worth anything. So managing your own properties, it can be an additional income stream, but it [00:21:00] can also teach you so much.

You will learn so much from managing properties. 

Randal McLeaird: Yeah. Yeah. What are some of the key, again, you guys did that, right? Were you guys self managing some of your smaller ones? 

Will Matheson: No, no, that's actually something we've never done. That's, that's why I said, we did not do it. Part of me is like, ah, maybe we should have.

We've since found good management partners and, you know, we're buying larger properties. So. 

Randal McLeaird: All right. So then I guess let's talk about that shift. So you guys are now looking at and buying One, you know, the market has changed since you guys started. And again, I looked at, you know, what you guys are trying to deploy on a per deal basis, you know, look like a hundred plus units plus a 15 million plus purchase price.

Something along those lines. Is that accurate for, 

Will Matheson: yes. Our most recent acquisition was 38 million, 248 units in Savannah, Georgia. 

Randal McLeaird: Okay. And so moving again from the smaller into the bigger unit sizes. How have you guys found capital raising on those deals in the [00:22:00] current market? 

Will Matheson: So that's a bit of a it's a bit of a double edged sword there and i'll actually just to really give a long answer I'm going to circle back to our initial strategy on this so high level to answer your question Capital raising is difficult.

It's more difficult than it was in 2021. You know, the market was hot. People were throwing money out there, but we are also raising more money year over year, you know, and that, that largely coincides with our growth. This year is going to be our largest equity year ever. 2023 was bigger than 22, 22 is bigger than 21, et cetera.

So we've been, we've been growing despite the market contracting. So. One of the reasons that again, we started with smaller properties. I mentioned it. So we had less equity to raise and we did shorter term hold periods because we wanted to build a track record. But that has this added benefit where to use an example, if you raised a million dollars and put it into a property and you sat on that [00:23:00] property for 10 years and you delivered all of these dividends.

That's great. Your investors are probably happy, you know, but you've raised a million dollars and you've bought one property. We are very transparent with our investors when we bought these deals. We told them that they were going to be short term holds. They understood our incentives. We had performance bonuses.

And we don't do 1031 exchanges, which comes into play here. But when we would buy a deal, if we'd raise a million dollars and we return 2 million to investors, they'd get that money back and they'd come and do our next acquisition with us. And they'd be like, Oh, you know, I want to invest. I'm so happy with the last one.

So theoretically I could have raised the same money from the same investor three times and it counts as raising money three different times. So like on our track record, it'll show like I raised. Instead of saying I raised 1 million, I raised three, it was the same million three times and I got three acquisition fees and I got three promotes.

And again, we, we tell all of our investors, like this is part of our strategy is [00:24:00] to grow. We are performance based, et cetera, et cetera. So again, circling back, it's been harder to raise money, but we are raising more than ever. And because we use fixed rate debt, we sold, fortunately, we sold pretty much everything in our portfolio at the end of 21, beginning at 22.

Yeah. We have a lot of happy investors. You know, we're in a pretty good spot. 

Randal McLeaird: Look pretty good. Pretty smart in doing that. I guess I want to talk then about like return profiles, you know, the types of terms that you guys do on some of these deals, I don't know if you can talk about that and I don't know if you have anything open that you're actually raising for or not.

Will Matheson: Uh, nothing. We're trying to syndicate right now. Obviously, you can see on our website, our average LP IRR has been 40%, which, you know, being candid, if you know how IRR works, that's bolstered by the fact that we've had shorter term holds. We've been selling a lot of properties under two years. But today, you know, we're typically trying to [00:25:00] offer our investors north of 18 percent IRRs.

That's what we're typically trying to offer. Now we focus more on, say, three, five, seven year holds in some perspectives. Because we have built that trust. We've built that track record and we want to establish a little bit more of a business is as we the way we think about it is owning a property for 357 years.

That's more of a business. Whereas doing these really short term turnaround plays on properties. That's really we view it as more of a service. It's not as consistent. It's not as sustainable. And to a point you made earlier, you know, it's been 10 plus years of a lot of apartment investing. It's hard to find those properties that are fresh and you can really get in and get out of.

Randal McLeaird: Yeah. That's what I was wondering. A buddy of mine did one here in San Antonio and I saw what he did. I mean, it, it, it, yeah. It's great when you can find those and do those, [00:26:00] but, uh, okay. So when you guys are going through and raise the money, the returns, again, how are you structuring? I just like to talk about it just because then it gives.

Anyone looking at alternative investing, an idea of how these deals are structured. So on your early deals, you said that you guys had some sort of waterfall with, with bonuses built in for you guys, if you hit certain hurdles, right? I'm assuming IRR or some kind of target return, right? How has that changed on these other deals?

And, um, like, are you structuring typical 770 30, 80 20? Like, how do you guys structure your setup on your syndications? 

Will Matheson: So when we got started, you know, in the, in the good years, it was 7, 8 percent preferred returns to investors with maybe a 30 percent promote on top of that. And maybe we'd layer in other things where it's like, if we exceed 20%, we'll get X.

If we exceed 25%, we'll get Y because. Nobody complains when you deliver more than a 25 percent return in a short [00:27:00] amount of time. Everyone's happy with that. So that was, that was kind of how we started. We have, just generally speaking, the equity environment has changed because so many people are wary of investing in 2023 and 2024.

Preferred returns have been rising and the promote splits on top of those have been falling. Because, you know, the equity that is investing has a lot more say people want to do a lot of preferred equity or meds debt instead of traditional equity. So when they do come out, they might say we want a 10 percent prep, or we want an 11 percent prep with a 20 percent promote to you on top of that or something.

So the terms are definitely more investor favorable right now, which, you know, if you want to look at it that way, it makes it a good time to invest as an LTE. 

Randal McLeaird: Yeah. Yeah. That makes sense. Good feedback. So I also want to talk, I guess, about your, uh, investors that have come along with on the ride and again, early days, they're looking at a short, quick hit their money's [00:28:00] in and out.

It's back. They can use it. They can reinvest or not, but they have access to that capital. And so how has, has the conversation shifted with you guys and your investors? Saying, look guys, we want long term, we want fixed rate debt. We're not trying to just turn and pop these things we want. Do you have any, I guess, ambitions to change it to where it's just either a fund structure where you're just going out and you have that capital at play and some kind of like evergreen fund where you guys can deploy that capital as needed and just turn it internally so that you guys can go out and turn properties or hold them long term.

It's like five questions in there. So maybe we can back up. 

Will Matheson: No, I mean, the simple answer is that a fund is really just the ultimate form of vertical integration. Um, if you have a discretionary fund, investment fund, You know, that means that you can go out there and buy any investment you think is a good investment.

You, it helps you buy investments to be honest, because you can tell brokers and owners, I have [00:29:00] total discretion over this. So, you know, I, I think the, the end game dream of anybody in this industry is to have a discretionary fund where as soon as they see your property, they just notify the investors, Hey, here's the capital call, found a great opportunity and the money comes in.

Being very blunt. I know that we are, uh, we are not close to that. So don't spend a lot of time thinking about it. Yeah. You know, for the time being, we're just going to continue to focus. On each individual asset and, uh, yeah, we're one asset at a time type of group. 

Randal McLeaird: Yeah. And I said, okay, good feedback. Your investors though, is the conversation at all shifting again with them?

They are happy with the longer term holds and more consistent. There's a group that, you know, when you have, I guess, investors who aren't IRR driven, right. It changes your, Ability to go after certain types of assets. And so I guess that's the question. Are your investors mostly [00:30:00] IRR driven or are they looking for like a coupon type of deal where they can come in and park your capital and know that it's going to be safe and secure for years to come?

Will Matheson: Oh, I mean, in the end, I think even if investors are looking for that coupon. I mean, that still is an IRR equation. It's just a different risk profile. You know, the quick in and outs, even when we were doing the shorter deals, we were modeling three years, but we told them we're trying to sell it in one a year and a day for capital gains reasons.

We've retained a really strong amount of our investors as we've grown. And they also, you know, it's one of those things where, yes, it might not be the short get in, get out, but that's. That's like complaining about hitting a double because you wanted to hit a home run, you know, good investments are good investments.

And 

Randal McLeaird: if they've largely come along for the ride. Yeah, that makes sense. What are you guys seeing for the next six months? What are you guys trying to do? You are a year 

Will Matheson: in our general position has been, now's a good time to buy. [00:31:00] Prices are down 20 to 33 percent based on. Or from the peak based on who you ask for the longest time.

A lot of equity was on the sideline. You are seeing a change with KKR and Blackstone making some acquisitions. And I think you're going to see a little bit of a follow the leader mentality in terms of, Oh, well now the big guys are back in the game. So we're not going to get fired if we get back in the game because we're following Blackstone.

So I think prices have dropped. Debt is hard to come by. A lot of equity has been, or is just now coming. It's been on the sidelines. It's coming back in. So I, my outlook is three years, five years from now, Rates will be lower, liquidity will be higher, demand will be higher. So now's a good time to buy. And we're actively, we're actively looking to buy.

Randal McLeaird: Well, I think that's probably a good place, man, to leave it. Just it's having the conversation and kind of seeing where you guys [00:32:00] have gone, the progression, you know, I'm in that same belief. I think if you could, my thoughts right now, or if I could buy something right now, Rates drop, it's immediate increase in value just from now until when the, when that happens.

And then over the next five years, you know, that's, uh, I think it's a good time. So, are you guys focusing still just in the Carolinas? Is that the buy box right now? 

Will Matheson: We are southeast focused. We own one property in Georgia. 

Randal McLeaird: Uh, uh, we're 

Will Matheson: currently, you know, we look in Alabama, Tennessee, Virginia as well. But, you know, we were really opportunity driven.

We do think the Carolina is just a phenomenal demographic growth factors. Um, good job, good political environments, good economic environments. So that continues to be our primary 

Randal McLeaird: focus. Yeah. Awesome. Well, it's been awesome catching up with you. I appreciate you jumping on and just telling me more about your business, what you're working on and sharing your knowledge with us.

If anyone wants to reach out to Will directly, I'm going [00:33:00] to put a contact info in the show notes for reaching out to you on your website and feel free to reach out, talk to him about any opportunities they may have coming up. So again, well, thanks for jumping on. Thank you for having me. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional.

If you want to stay up to date, the best way is to make sure you're subscribed. So if you haven't done that, go ahead and do it We'll catch you on the next episode. 

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Randal McLeaird

Host
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Will Matheson

Guest