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HIGHLIGHTS FROM THE PODCAST:
1:05 - What to expect from Atlanta Real Estate Investors podcast 4:23 - The recession hit and the wake up call it brought to investors 6:06 - Spencer and Matthew talk about what they did when the market blew up & how gkhouses came to be 10:09 - What to expect from Atlanta Real Estate Investors podcast
FULL TRANSCRIPT OF THE PODCAST AUDIO
Spencer Sutton: All right, everybody. Welcome to the first episode of The Atlanta Real Estate Investor. I'm one of your hosts, Spencer Sutton, and I've got Matthew Whitaker here with me, so we are pumped. We're excited because this is our very first episode and we can't wait to bring you some great information, some great guests on this show. So Matthew, welcome. Matthew Whitaker: Yeah, what's up everybody? This is actually our second time to shoot the first episode, so one of the things you'll realize about us is that it doesn't take brains to do real estate. Spencer Sutton: Or podcasts. Matthew Whitaker: Yeah, we had already shot pretty much this whole podcast and then realized that we had not hit record. But very pumped to be doing this, very pumped to... Atlanta's such a great market, such an investible market. If you look at anytime somebody does a list, Atlanta is at the top, or at least one of the top two or three locations on a list of investible markets. So very excited to get to talk to some of the people that are making things happen in Atlanta. Spencer Sutton: Yeah. I mean, we've already recorded two episodes with two people who are local here in Atlanta and they are doing great things, so we can't wait to bring you their thoughts, strategies, best places to invest. It doesn't matter if you're a wholesaler or a flipper or a rental investor, long-term rental investor, we're going to bring you some great information. So not only are we going to have some local experts, we're also going to be bringing you some more nationally known experts to give us some insight on not only just Atlanta, but also the rest of the real estate world in this country. So I'm excited, and Matthew, why don't we just start by telling people who we are and what we do and why we're here? Why did we even start this podcast? Matthew Whitaker: So one of the things, when you go and start listening to somebody, the whole thing I'm always thinking is, "What gives them the right to tell me what to do?" And we're not going to be out here telling you what to do, hopefully we'll interview some really incredible people that'll have the right strategies, but we have made a lot of mistakes and doing this thing a long time. I've been doing it since I was 23 years old, I bought my first house from probably the... Spencer Sutton: The best investor. Matthew Whitaker: No, somebody that was taking advantage of a 23 year old. I can't think of the right adjective right now, but that was you. You sold me my first house and you drug me into this life of real estate investing. Spencer Sutton: Yeah. So I was in my mid thirties, I guess, early thirties, and you were the next sucker to come around. So I had a rental house I wanted to sell, and you were it. Now, I was wholesaling houses in Birmingham, we got introduced, good friend of ours, a mutual friend introduced us. Matthew was this young kid who really wanted to get into real estate, I was already doing it, bought that HomeVestors franchise in 2003. And so it was a good introduction, sold you a house, sold you more than one house actually, I think I sold you a couple houses, one in a different part of town, but then you bought the franchise yourself. Matthew Whitaker: Yeah. I actually partnered up with some investors. I always joke, they had a lot of money and no time, I had a lot of time and no money, and so we got married. And from 2004, early 2004, until late 2007, we did over a hundred deals together. Some of that was fix and flip, some of that was wholesale and some of it we put into our own portfolio. Spencer Sutton: Yeah, we did very similar. We didn't do any flips. We did some kind of whole tailing, where you put a house back on the market, clean it up, but most of everything we did was wholesale, and then we started buying rentals. First rental package was a 10 house portfolio, it was probably the worst set of houses I've ever bought in my life, but I got 10 houses for $100,000, so I thought, "Oh, this is..." Matthew Whitaker: How can you lose, right? Spencer Sutton: And really, back in those days, and you're buying in 2005, 2006, it was tough to lose because you could find somebody to buy just about anything. There were people out there buying all kinds of houses, but fast forward to end of 2007, when the writing was on the wall... Matthew Whitaker: Well I wish I had read it, because I didn't read it. Spencer Sutton: Yeah. So what's the quote you always use from Warren Buffet? Matthew Whitaker: Well, in 2007, 2008, when the tide went out, we've realized who wasn't swimming with any shorts on. And we realized, we thought we knew what we were doing. I thought I was really smart. I thought I knew how to make money. And now all of a sudden there's just no market to sell homes to. Spencer Sutton: Yeah, we definitely confused brains for a bull market. We thought we were very savvy investors and really, it was just a great, great market back in those days. But end the 2007, 2008, there was not a lot of action going on for either one of us. Matthew Whitaker: Can I tell you a funny story real quick? It just shows you where I was, where my head space was at the time. Spencer Sutton: And you were young too. Matthew Whitaker: I was. I was in my mid twenties, but I was in a small group one time with my church and they asked what your spiritual gift was, and what I came up with was making money. I am good at making money. Spencer Sutton: Of all the spiritual gifts and that wasn't even on the sheet. You just made that one up. Matthew Whitaker: No, I just came up with that myself, because that's the only thing I could think of that I was good at. And then 2007, 2008 hit, and I just realized how dumb I was. Spencer Sutton: You were like, "I'm going to change that to, 'I'm good at losing money', that's my spiritual gift". Matthew Whitaker: I am losing money and losing it fast. You could not drop houses' prices fast enough. I bought a house one time and we put about 70 grand into it to fix it up, and while this was happening. I sold it exactly a year later, so carrying costs, insurance, power, all the things, after investing $70,000 in, for almost the exact same price that I bought it for. Like hood to hood, it was the same price. And so it was so bad. It was a bad time. Spencer Sutton: So what happened when the market blew up? I'll tell you what I did. I actually, my partner and I decided just to dissolve our company. I had some rental houses, he had some, and so I started a nonprofit called Neverthirst. We were providing access to clean water in developing countries, so I was traveling all over the world and trying to figure out what to do with these rental houses. Matthew Whitaker: You got out of the business, so that was a wise thing to do at the time, and I decided to stay in it. So there was a gentleman down in Macon, Georgia who was selling homes to investors, and it was kind of the early days of turnkey, he had come up with this concept. I think they even called it Macon bacon, but the whole idea was that you would sell a portfolio or a rental home to an investor that was already occupied and that investor would use it as a fairly passive investment. Matthew Whitaker: So what we decided was, "Look, if we're going to continue to buy and sell homes, we're going to have to get into the strategy because there's nowhere else to sell, there's no retail market to sell it to". And so we started a property management company called gkhouses with the whole idea that we would only manage homes that we sold to investors. And we did that for about five years and look, it was not super lucrative, it was more like a slog. We were just grinding on a daily basis to make payroll and make ends meet. I was fortunate to have some investors that had money, and so my real estate career may have ended in a pile of dust had the investors not had money. Matthew Whitaker: So for five years we just sold houses to investors, kept the management, you were doing Neverthirst and providing the clean water to people. And about 2013, I realized, "Hey, growing the management company is way easier than going out and hunting down deals from deal to deal". And so I kind of pivoted what gkhouses was and started essentially just trying to grow the management company, managing for people other than just the investors that we sold homes to. So at that time we managed about 250 homes in and around the Birmingham metro area, and since then we've grown that to about 2,700 homes when we're recording this, and we're in eight different markets, obviously one of those is Atlanta, and we are actively growing our property management business. Spencer Sutton: Yeah. I'm really thankful you did start gkhouses back in 2008 because I didn't really know what to do with my rentals. I mean, I had been managing them, but now that I was traveling, I needed to hand them over to a professional property manager. So you weren't professional... Matthew Whitaker: Yeah I wasn't professional. Spencer Sutton: Yeah, I was about to say, you were not professional, but I trusted you to do the right thing with my houses and maybe send me a little money every month. So, that's what we did, and then in 2013 is when you really decided to focus in on growing this management company. Matthew Whitaker: Yeah. And so we just want to provide an ecosystem where investors can be very successful, and one of the ways we do that is through this podcast, through the education. And so we're going to have some incredible guests on, that we don't want to just provide value for the rental investor, we want to provide value for all investors and provide an ecosystem for education. And you and I are going to be in the middle of that. We might have some other co-hosts that we'll bring on, but the whole idea is that we continue to educate the market and be a resource to people, whether they're getting in for the first time and just kicking the tires of this investment thing, or they've been in for many years and want to learn a new strategy or hear what others are doing. So we're hoping to talk to some of the top investors, whether they're rental investors, flip investors, wholesale investors in the Atlanta market. Spencer Sutton: What I love about that is just that people get in the business through different avenues, right? So they get in and they think, "Hey, I want to flip. I want to flip a couple of houses then maybe with the proceeds, I want to start buying some rentals", and so there's all kinds of different strategies that we're going to look at. We're going to talk to experts to better educate everybody, and we're going to learn a lot ourselves, so I'm very excited about it. I've already learned a lot, just talking to the two folks that we've had that we've interviewed so far. Matthew Whitaker: Yeah. We're going to be that curious friend that will keep asking questions and trying to learn what the tricks of the trade are for each strategy and for each person. And we're also going to delve into the psychology of being a good investor and finding deals in Atlanta and what it's going to take. So we're super excited about this. I mean, I'm pumped. I think Atlanta is such an awesome place to be doing this, and I'm very excited about what's going to happen. Spencer Sutton: All right. So listen, if you really want to learn a lot about Atlanta real estate and hear from some incredible guests, I'm going to encourage you, go ahead and listen to the podcasts that we've already released. If you're listening to this one, this is the first one, we've got a couple more that have been released right away, and then we're going to be bringing them to you every other week. And so stay tuned, go ahead and subscribe so that you don't miss anything, we are going to be wherever you get your podcasts, that's going to be iTunes, Spotify, wherever you get those podcasts. So Matthew, anything else we need to let the audience know? Matthew Whitaker: The other thing I would say is just please leave a review. It helps other people find the show and helps us grow our audience. The more we grow our audience, the better guests we're able to have. Spencer Sutton: That's right. Okay everybody, listen, thanks so much and we look forward to seeing you all in the next episode.
