On this episode Ben Lakoff interviews Matt Bowles on the Alternative Asset Allocation podcast. Ben draws out Matt’s expertise on how to understand the unique dynamics of residential investment property as an asset class. Matt explains the multi-dimensional nature of the asset class and how rental properties have 5 profit centers, compared to most other asset classes that have only one. They talk about the biggest risks associated with rental property investing and how Matt’s company, Maverick Investor Group, helps their clients leapfrog over many of the up-front risks by buying turnkey rental properties that come new or fully-renovated with tenants and local property management already in place. Matt talks about how residential investment property is the most debt favored asset class, the most tax-advantaged asset class, and one of the only investments that enables you to profit from inflation. He also explains the importance of owning hard assets, with intrinsic value, that you control. Matt also gives tips about how to choose investor-advantaged markets, make your money when you buy so you don’t have to speculate, and choose recession resilient areas for owning your rental properties. He also goes into the COVID-19 era trends and shares strategies for real estate investing during the pandemic. FULL SHOW NOTES at www.TheMaverickShow.com
Episode #103: Matt Bowles Interviewed on How to Analyze and Invest in Turnkey Rental Properties
Episode Summary
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About the Guest
Matt Bowles
Matt Bowles co-founded Maverick Investor Group in 2007 as a fully-remote company to help people buy cash-flowing rental properties in the best U.S. real estate markets, regardless of where they live. He has been featured in major national media and was named one of the “Top 50 Real Estate Opinion Makers and Market Leaders”. Matt and his co-founders at Maverick have helped individual real estate investors buy over $100 million in residential investment property across 15 U.S. States. Matt has been a full-time digital nomad with no permanent base since 2013 and has run his company from 65 different countries on 6 continents in the last 7 years. He is also the host of The Maverick Show podcast where he interviews today’s most interesting real estate investors, entrepreneurs and world travelers. Matt is a proponent of “stylish minimalism” and travels the world through multiple climates with carry-on luggage only. He is also a sought-after speaker and has addressed conferences around the world ranging from the Nomad Summit to South-by-Southwest on topics relating to real estate investing, location-independent entrepreneurship, and long-term world travel.
What You'll Learn
- The 5 Profit Centers of Owning Residential Investment Property
- How to Buy Cash-flowing Rental Properties in “Investor-Advantaged” Markets
- Understanding the Real State Investing Risk and How to Mitigate Them
Links From the Episode
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Time Stamped Show Notes
[4:09] Matt’s Background in Founding Maverick Investor Group in 2007
- How Maverick’s remote business model benefits their real estate investor client
- How Maverick helps real estate investors build diversified portfolios of rental properties
[7:20] Selecting Investor Advantaged Markets
- Working with local market specialists
- Sourcing turnkey rental properties that are already cash-flowing
- Understanding real estate market cycles
- Why the best real estate markets change over time
- How to make your money when you buy
[14:16] Understanding the 5 Profit Centers of Residential Investment Property
- Single family rental properties as a multi-dimensional asset class
- Positive Cash Flow
- Market Appreciation
- Mortgage Principal Paydown
[22:05] The Unique Tax Benefits of Residential Investment Property
- Why residential investment property is the most tax-advantaged
- Why the government provides tax incentives for buying and holding rental property
- Understanding depreciation
- Qualifying as a real estate professional
- The 1031 Exchange provision
- Deferring capital gains and depreciation recapture until death
[29:43] How to Profit from Inflation by Buying and Holding Rental Property
[38:37] Understanding the Risks of Single Family Rentals and How to Mitigate Them
- Risks in buying distressed properties and renovating them yourself
- Avoiding the up-front risks by buying “turnkey” performing rental properties
- Closing on cash-flowing assets
- Understanding vacancy and maintenance
- Understanding eviction risk in “landlord friendly markets”
- Eviction insurance
- Factoring in maintenance assumptions up front
[55:24] The Potential for Disruption of the Housing Supply
- COVID-19 impact on the housing market
- Why the single family rental market is more resilient than the commercial market
- Population trends
- Future technological disruptions of homebuilding
- Pivoting to provide value and profit from changing trends
[1:01:53] How to Identify “Investor-Advantaged” Markets
- Price to Rent ratios
- Expense variations between markets
- Cap Rates
- The importance of doing beyond price to rent ratios
- Why most properties in every market are not a good investment
- Setting up a “retail exit strategy”
- Advantages to single family rentals over apartments
- Understanding a “segmented liquidation strategy”
[1:15:44] How Passive is Rental Property Investing, Really?
[1:19:16] Get Matt’s Free Report and Free Video Consult with Maverick Investor Group
