Investing in Real Estate with Your Spouse with Matt and Liz | BiggerPockets Podcast #88

TL;DR

Matt and Liz Faircloth share insights on real estate investing and working with a spouse.

Transcript

building your business alongside your significant other can be tough that's why today we're excited to introduce you to Matt and Liz Faircloth who share their real estate story of building their investment business alongside each other I really think you're gonna love this interview before we get to it I do want to invite you to download our free b... Read More

Key Insights

• Matt and Liz Faircloth emphasize the importance of having a clear business plan and understanding each other's strengths when working with a spouse in real estate investing.
• They started their real estate journey with a house hack and expanded to over 100 units, highlighting the benefits of starting small and scaling up.
• The Faircloths discuss the use of private equity and private lending as essential tools for scaling their real estate business.
• They stress the significance of hiring the right team and managing employees effectively to maintain a healthy business culture.
• Matt and Liz talk about the challenges of flipping properties and the unexpected costs that can arise, advocating for modular homes as a more predictable alternative.
• They highlight the importance of having a clear 'why' and maintaining a positive perspective to overcome challenges in real estate investing.
• The Faircloths share their experience with 1031 exchanges as a strategy for deferring taxes and growing their real estate portfolio.
• They mention the role of BiggerPockets as a valuable resource for learning and connecting with other real estate investors.

Questions & Answers

Q: How did Matt and Liz Faircloth start their real estate journey?

Matt and Liz Faircloth began their real estate journey in 2002 by purchasing a single-family home and using it as a house hack. They lived in one part of the house while renting out the other parts, which allowed them to live for free and earn a small profit. This initial investment sparked their interest in real estate and set the foundation for their future investments.

Q: What are the key elements of working successfully with a spouse in real estate?

The key elements of working successfully with a spouse in real estate include having a clear business plan, understanding each other's strengths and roles, maintaining open and honest communication, and ensuring that both partners are aligned with the business's goals and values. Matt and Liz emphasize the importance of setting clear boundaries and respecting each other's skills.

Q: How do Matt and Liz Faircloth manage their real estate business?

Matt and Liz Faircloth manage their real estate business by hiring a dedicated team of 11 employees, including an office manager, tenant relations manager, and a construction team. They focus on creating a positive company culture, maintaining clear communication, and ensuring that each team member understands their roles and responsibilities. They also emphasize the importance of managing employees effectively to keep the business running smoothly.

Q: What financing strategies do the Faircloths use for their real estate investments?

The Faircloths use private equity and private lending as their primary financing strategies. Private equity involves raising funds from investors who become limited partners in a property, sharing in the profits. Private lending involves borrowing short-term funds from private individuals, often through self-directed IRAs, for specific projects. These strategies allow them to scale their business and invest in larger properties without using their own capital.

Q: What challenges have the Faircloths faced in flipping properties?

The Faircloths have faced several challenges in flipping properties, including unexpected costs such as finding termite damage and structural issues that required significant repairs. These challenges have led them to explore modular homes as a more predictable and cost-effective alternative to traditional fix-and-flips. They emphasize the importance of thorough inspections and planning to mitigate risks in flipping properties.

Q: How do the Faircloths approach hiring employees for their business?

The Faircloths approach hiring employees by clearly defining job roles and responsibilities, understanding the skills and behaviors needed for each position, and ensuring that potential hires align with the company's culture and values. They emphasize the importance of hiring slowly and managing employees effectively to maintain a motivated and cohesive team. They also advocate for regular communication and feedback to keep employees engaged.

Q: What is the Faircloths' vision for their real estate business?

The Faircloths' vision for their real estate business is to continue expanding their portfolio by raising private equity and investing in larger properties. They aim to revitalize urban areas and transform lives through real estate. Additionally, they plan to explore modular homes as an alternative to traditional fix-and-flips and are interested in developing educational resources to help other investors succeed in real estate.

Q: What advice do the Faircloths have for new real estate investors?

The Faircloths advise new real estate investors to start by getting clear on their 'why' and developing a solid business plan. They recommend starting with small investments, mastering a specific strategy, and gradually scaling up. They also emphasize the importance of maintaining a positive perspective, learning from mistakes, and building a strong track record before seeking private equity or larger investments.

Summary & Key Takeaways

• Matt and Liz Faircloth started their real estate investment journey with a house hack in 2002 and have since expanded to over 100 units. They emphasize the importance of having a clear business plan and understanding each other's strengths when working with a spouse.

• The Faircloths discuss using private equity and private lending to scale their real estate business. They highlight the significance of hiring the right team and managing employees effectively to maintain a healthy business culture.

• They share insights on the challenges of flipping properties, advocating for modular homes as a more predictable alternative. They also discuss the benefits of 1031 exchanges and the importance of having a clear 'why' in real estate investing.