Matt Javitch on Networking in Boston and the Mathematics of Real Estate Investing

Hacker Practice: GROWTH, SYSTEMS, and RISK for Startups and SMB

Release Date: 03/28/2017

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Hacker Practice: GROWTH, SYSTEMS, and RISK for Startups and SMB

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You know those people that everybody seems to like? They have charisma. They're affable. Like Jeff Daniels on the Newsroom.

That's Matt Javitch.

Matt has been taking a barbell-approach to investing in Boston real estate and startups. He's my go-to resource for investment advice because, unlike some advisors who try to sell me their advice, he makes a living off his investment thesis. Also, he's never tried to sell me a thing.

I invited Matt on the show to give me a deep dive into real estate investing fundamentals, quitting corporate life for startup investing and more.

We talk about

The networking scene in Boston
How to quit your job and start a business
The real estate investment market
How real estate investing is different and complementary to startup investing
How to get started in real estate investing
How to be successful in real estate investing

Pleas enjoy this episode of Hacker Practice with Matt Javitch:

Notes

[00:00] How Justus and Matt met

[01:00] Networking in Boston

Events are becoming more and more niche-specific
You know what you’re getting when the event is very specific

[5:00] Matt’s background in finance

Financial advising and real estate investment

[7:00] Why small networking events can be super valuable

Most events are really hit or miss
Networking is a numbers game

[10:00] What Matt did to prepare to leave

Saved capital
Built a network
Honed a valuable skill set as a real estate investment analyst

[14:45] Specific numbers around how to leave your job and get into real estate investing

Matt had 3-4 months of living expenses saved

$300-400k pledged from investment partners

[16:30] To be successful in real estate investing

Have a long term vision
Understand the financial risks
Have a safety net or “plan B”

[19:00] What would Matt do different if he started over

Would have been more aggressive buying properties while at his job

[20:30] What is Matt doing to mitigate risk of negative macro economic conditions

Invest in “primary” markets (cities etc.)
Some factors can’t be controlled but should be understood

[23:45] The dumbbell strategy and Matt’s investment in startups

Real estate is somewhat predictable compared to startups

[27:00] Angel investing in Boston vs. Silicon Valley

Boston has a conservative social and financial culture

[30:00] How to get started real estate investing without any debt

It’s challenging.
Usually you make more money when you favor debt over equity
Start with as little as $150-250k
Start in a secondary, suburban market. Matt gets specific in greater Boston area
Renovate, then rent or sell
Can also experiment in other markets like San Antonio, Texas
Southern markets are usually less expensive

[34:00] Different geographic regions have different risk factors

[37:00] Have $250k, bought a property, need to renovate, where do I start?

Everything is quantified on a per foot basis
Market research is critical. Different locations have different /sq ft costs. Understand the local housing market
Look at last 6 months and what prices local homes have sold at vs. your prospective investment
Brokers and legal costs often add up to around 5%+ of the cost

[42:30] How much money do you budget for renovation?

Again: focus on cost per square foot
P = initial cost / sq ft
R = cost of renovation / sq ft
C = P + R
F = price you sell the property at / sq ft
PROFIT = F - C

[46:00] Working with many contractors and sub-contractors

[47:15] Selling the property

Matt often lists and sells the house himself if it’s local (saves 2.5% commission)
Real estate agents have less incentive to negotiate on your behalf than you (Freakonomics)

[50:00] The most challenging part of real estate investing for Matt

Inspectors vs contractor drama
Local politics often play a role in inspection

[56:00] A big part of Matt’s success can be attributed to his likability and how he incentivizes contractors to do quality work

EQ is valuable in this regard

[59:00] Final requests and contact info

Do your homework and know your risks
Matt is happy to talk to any aspiring investors (startup or real estate)
Axilon Capital Partners
973.788.9333

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