On a recent episode of Ritter on Real Estate, I sat down with someone who has shaped the education of thousands of real estate investors—through BiggerPockets, the Landlord Chronicles YouTube channel, and his best-selling book Raising Private Capital. Matt Faircloth has been a full-time investor for 20 years, raised hundreds of millions from private investors, and built a portfolio exceeding 2,000 units across the US.
Matt’s experience spans multiple cycles, asset classes, and market environments. What makes his perspective especially valuable today is the clarity with which he sees the current disruption—and the opportunities emerging from it.
Below is a breakdown of our conversation, the market signals he’s watching, and how he is repositioning his business for the next era of real estate investing.
From Single-Family Starter to 2,000+ Units: Matt’s Evolution
Matt began investing in 2005 by leaving his corporate job and buying small deals—single-family homes, duplexes, and flips—using his own capital and help from family. After weathering the 2008 downturn, he built a 30-unit portfolio through hands-on management.
Everything changed in 2011 when a networking call led to his first passive investor. That single $50,000 investment sparked a network effect: more investors, more deals, a YouTube channel, and ultimately a scaled multifamily business.
Today, Matt’s company controls over 2,000 units, operates a national debt fund, and recently closed its first hotel acquisition. He’s taken several deals full-cycle and raised roughly $775 million of private capital along the way.
“The Market Isn’t What It Was”—Why the Old Value-Add Playbook No Longer Works
When asked how today’s market differs from the last cycle, Matt’s view was blunt: investors can no longer rely on the classic value-add formula that dominated 2015–2021.
What has changed?
1. Income growth has stalled—especially in B/C-class properties: For years, rent increases were strong and predictable. Today, in many markets—particularly across the Southeast—rents in older product have flattened.
2. The value-add premium has compressed: The old playbook of upgrading a 1970s unit with stainless steel appliances, LVP flooring, and fresh paint and pushing rents $200–$300? In many markets, that lift is gone because tenants are already stretched to affordability limits.
3. Debt is no longer cheap: Bridge lenders once offered 75–85% of acquisition plus 100% of construction at 3–4% interest. Those days are over. Deals require more equity—and therefore require more yield to satisfy that equity.
4. Much of the “easy inventory” has already traded: The baby boomers who owned under-managed C-class assets have largely exited. Many of the once-neglected properties have already been modernized over the last decade.
Matt’s conclusion: traditional value-add is largely played out in the Southeast.
When Value-Add Still Works: Kent’s Midwest Counterpoint
I pushed back—because in the Midwest, the story can be different. Markets like Indiana and Ohio never saw the same rent run-ups.
They still offer:
– 1970s product that hasn’t been touched in decades
– Mismanaged Class A and B assets
– Continued organic rent growth
– More reasonable entry cap rates
The takeaway: value-add lives or dies based on the submarket.
In some regions it’s exhausted; in others, it’s resurging. Matt agreed that outliers exist—but emphasized that the financing environment still makes large repositioning projects challenging unless the deal has substantial operational inefficiencies or generational neglect.
Where Matt Sees Real Opportunity Now
1. Newer Builds (10–15 Years Old) That Need Light Renovations: These assets feel modern but are ready for cosmetic updates—new paint, updated flooring, refreshed interiors. Instead of a $300 rent bump, you might see $50–$75. But the return on capital can still be compelling when renovation budgets are lower and operational risk is reduced.
2. Distress or “Halfway There” Development Projects: Rising rates and construction inflation have sidelined many developers mid-project. Matt recently acquired a partially completed 36-unit building in this exact situation. These deals offer a unique ability to “finish the story” at a discount.
3. Public-Private Partnerships and Incentivized Development: In several states—New Jersey, Texas, North Carolina, South Carolina—local governments offer powerful tax incentives for new development or even for renovating existing stock.
Examples include:
– TIF financing
– Long-term tax abatements
– Reduced taxes for renting units at or below a percentage of AMI
– Joint ventures with local nonprofits
In one New Jersey project, Matt locked in property taxes at $8,000 per year for 20 years on a new 30-unit build—taxes that should have been $70,000+ annually. Without that incentive, the deal wouldn’t have penciled. For investors willing to navigate municipal programs, the value can be significant.
Entering the Hotel Space: Cash Flow First
One of Matt’s most interesting moves is expanding into limited-service hotels—brands like Hampton Inn, Home2 Suites, and Holiday Inn Express.
Why hotels? Cash flow.
Multifamily investors have grown accustomed to low cap rates and appreciation-heavy business plans. Hotels, by contrast, can produce meaningful cash flow from day one. Matt’s latest acquisition—a five-year-old flagged hotel near the Houston airport—delivered a 9% cash-on-cash return to investors immediately upon closing.
Other advantages:
– Hotels trade at higher cap rates than apartments
– Inflation passes through quickly via nightly rates
– Buying pre-2022 construction avoids inflated replacement costs
– Demand is driven by both business travel and family travel
And location is everything: highway visibility, proximity to major employers, airports, and strong brand affiliation.
Why He’s Leaning Toward Cash Flow Over Appreciation
Matt believes investor sentiment is shifting. After several years of IRR-heavy underwriting and unpredictable markets, many investors want:
– Reliable, high single-digit cash flow
– Conservative upside
– Collateral-backed security
– Clear downside protection
His business is moving toward deals targeting 8–12% cash-on-cash returns with modest appreciation, rather than underwriting to the 18–20% IRRs common a few years ago. And he highlights benefits that real estate offers over the stock market—especially in an environment where AI-driven public equities feel disconnected from fundamentals:
– Tax advantages through depreciation and cost segregation
– Collateral-backed investments rather than unsecured shares
– Leverage to amplify returns
– Direct control over operations
Inside DeRosa’s Debt Fund Strategy
Matt also emphasized the importance of private debt as a consistent income generator. His national debt fund issues hard money loans, delivering predictable yields backed by real collateral. For investors who value stability, this structure can complement equity investments to create a blended return profile.
Final Thoughts
Matt Faircloth has navigated multiple cycles, and his current strategy reflects the realities of today’s market: tighter lending, compressed value-add premiums, and the need to find yield in new places.
His approach blends:
– Light-lift renovation in newer product
– Opportunistic development rescue
– Tax-advantaged public-private partnerships
– Cash-flowing hotels
– Private debt for consistent income
As investors evaluate the next several years, Matt’s message is clear: The opportunities are still there—but they’re in different places than they were in 2015–2021. The winners will be those who adapt.