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Dave Dubeau [00:00:09] Everybody. Dave Here, we’re on another episode of the podcast today. We’ve got a returning friend and guest and real estate entrepreneur extraordinaire Adrian Panozzo. Adrian is zooming in from cottage country in Ontario because as we’re recording this, it’s summertime and that’s what real estate folks in Ontario do. In the summer, they hang out in the cottages. So, Adrian, good to see you again, my friend.
Adrian Panozzo [00:00:35] Yeah, absolutely, Dave. Thanks for having me back on the show. It’s amazing how time flies. It’s been two years since we spoke.
Dave Dubeau [00:00:42] Yeah, it’s been two years. And we were chatting a little bit off camera and it’s amazing what you’ve done in the last two years. And for folks that didn’t check out Adrian’s episode before, make sure you do that. This will be a very good compare and contrast. Plus, Adrian is focusing on multifamily properties, and last time we talked less than two years ago, he was hovering around 200 units in his portfolio, which is pretty darn impressive. And he’s on target to have doubled that by the end of this year, bring it up to 400 units. So that’s what we’re going to be talking about is how you have managed, because it took you about ten years to get to that first stage and you weren’t slacking and two years you’ve almost doubled that, which is amazing. So Adrian, love to unwrap what’s been going on over the last couple of years that has just allowed you to have this meteoric growth?
Adrian Panozzo [00:01:42] Yeah, no, absolutely. I think, Dave, we really, really can complement ourselves on the success we’ve had in the last couple of years, all to do with really perfecting the bird strategy, which I know you’re quite familiar with the buy, renovate, refinance, rent, repeat strategy. It’s really allowed us to capitalize the industry in the joint venture market and attract really at a high level, a lot of different joint venture partners because of the success we’ve had and the numbers we’re putting forward on our bird projects. So it’s essentially allowed our job partners to rinse and repeat their capital and basically capital and capital out and they’re like, Wow, that was awesome. Adrian It was painless, it was quick, it was easy. And they’re like.
Dave Dubeau [00:02:38] There’s are more. Yeah, well, hey, well, let’s back up just a secondary, Adrian, if you don’t mind. So take us back ten years or so when you’re first getting started in this. What did those bird type were you doing birds back then and what did those birds look like where they single family homes? What did your joint venture arrangements look like? And then fast forward to today and let’s take a look at what you’re doing nowadays and how you’ve scaled it.
Adrian Panozzo [00:03:06] Yeah. So obviously when we started, we didn’t have the team of professionals that we have now. We’ve grown into obviously our companies and whatnot when we started. You know, my first few properties were turnkey, to be quite honest with you. I didn’t even know about the BR, but then when we started exploring in BR, we weren’t as good as we are at it now in the numbers. And too we didn’t have our in-house construction company, we didn’t have in-house property management and everything that goes with that. So I think, you know, basically we’ve progressed into what I like to say, the Costco of fact, where we have our group of companies under one roof who facilitate these incredible returns and help the success of our BR. So we’ve.
Dave Dubeau [00:03:56] We’ve known there were way, way back in the day where just doing bears on single family arms and these days or.
Adrian Panozzo [00:04:01] Complexes or more duplexes maybe a triplex here and there you know one of our biggest purchases towards the end of 2021. Well, actually, we didn’t take possession until 2022, I believe was a 45 unit building, purpose built apartment building, 45 units. Obviously, when you’re when you’re perfecting the BR, you know, and bringing in 45, 50 doors at a time, you’re scaling that portfolio really quickly.
Dave Dubeau [00:04:33] Oh, for sure. Well, okay, so let’s take a look at that. So way back in the day, you’re doing duplexes now. You’re doing quite large multifamily properties. That’s. And you’re doing this in Ontario, correct? Yeah. If I recall correctly, you’re going around the Hamilton areas is your sweet spot, if I’m not mistaken. Okay, so let’s take a look. At a burr on a 45 unit building. You know, other people would call that perhaps, you know, increasing the NOI increase, you know, bring it to higher, better use, that sort of thing. What does the BR on a building that size kind of look like for Adrian and his joint venture partners?
Adrian Panozzo [00:05:13] It’s funny, you know, even the concepts, the meat and potatoes of a burger, it’s like riding a bike, you know, once you take the wheels off and you perfected riding your bike without the training wheels, it’s just on a bigger scale. Are you writing a mountain bike? Are you driving a high speed racing bike? Whatever. But the concept is the same. All the handlebars, work the pedals, keep it straight and don’t fall, so to speak. But yeah, so our systems and models we’ve built over the last couple of years, several years, actually have enabled us for that growth. So the concepts, the scene is just obviously on that 45 unit building you got, you know, these big multifamily buildings, they come fully kind of it. Yeah.
Dave Dubeau [00:05:57] And you’re in a very unfriendly landlord province. So how are you able to turn those units around and increase the ramps, increase the values with that many tenants in place?
Adrian Panozzo [00:06:11] Yeah. So quite simply, cash for keys. Okay. Yeah, we worked those numbers in our budget, in our analysis, we’re putting those numbers in. There are carrying costs or cash for keys costs. You know, all those projections are in our initial analysis when we’re honing in on not building. And so we’re accounting for those payouts of those tenants and whatnot. And then ultimately like renovating those units in apartment buildings, because there’s really nothing structural. It’s all cosmetic, you know, floors, paint, trim.
Dave Dubeau [00:06:46] How old how old was that building that you bought for 45.
Adrian Panozzo [00:06:49] 70, 75.
Dave Dubeau [00:06:51] Oh, okay. Yeah. Yeah.
Adrian Panozzo [00:06:52] So they don’t it’s a.
Dave Dubeau [00:06:53] Good solid building, probably good sized units as well. Absolutely needed some massive updating, I’m sure.
Adrian Panozzo [00:07:00] Yeah. So the tenants move on their way. Usually were in and out in 30 days per unit. Okay. So paint trim, kitchen, bath lighting, but nothing structural, which is great. And we can save time there by just not having to get go through the whole permit process with the city because we’re just doing cosmetic stuff. So our goal is in and out for 30 days per unit.
Dave Dubeau [00:07:26] And are you doing one, you two at a time or multiple units at a time?
Adrian Panozzo [00:07:29] Multiple, multiple.
Dave Dubeau [00:07:31] So give or take on.
Adrian Panozzo [00:07:33] Three or four units on the go is just how quick can we get those tenants to accept that, offer the legacy tenants and then obviously move on.
Dave Dubeau [00:07:42] Now just out of curiosity, because I’ve coincidentally spoken with a few other investors in the Ontario market recently, same kind of situations. What are you kind of looking at for a cost for doing the cash for keys in this kind of situation? What are you budgeting for? Give or take. I know it’s different for each tenet, but, you know, you got to have the ballpark in mind.
Adrian Panozzo [00:08:07] Yeah, so good question. We’re ranging anywhere, let’s say, from three months’ rent compensation to potentially depending on the unit, the size and so forth, maybe up to $5,000.
Dave Dubeau [00:08:23] Wow. Yeah. So that’s a big chunk of change for sure. Now, you know, what about you got to have a few folks there that just absolutely don’t want to leave. How do you how do you work around those folks?
Adrian Panozzo [00:08:38] We’re just persistent. You know, ultimately, you can’t force them to leave. You know, they have rights, obviously, under the landlord tenant board. But it’s just baby steps and negotiation and, you know, helping them potentially find a new place and helping them navigate that as they most of them have been there a long time. So they haven’t been out in the market looking. They really don’t.
Dave Dubeau [00:09:03] Know. It must be a massive sticker shock for them when they see what current market rents are compared to what they are.
Adrian Panozzo [00:09:10] There’s definitely more than what they’re paying for, sure. But yeah, you know, our goal is to have them use those cash for keys dollars to compensate the difference in rent.
Dave Dubeau [00:09:22] Yeah, definitely. No, that makes a lot of sense, Adrian. Wow. That’s another fantastic idea. Hold on to that. Dr. Sack will be right back. Now, are you a real estate investor? We ran out of cash or credit to grow your portfolio. Are you looking to grow your portfolio using other people’s money and raising capital? Well, I want to show you how to raise six figures or more in six weeks or less at my upcoming Investor Attraction workshop. You can get your ticket and find out all about it at Investor Traction Workshop dot com. We’re going to spend a full day taking a deep dove into this roadmap that I’ve used to raise millions from ideas and I’ve helped other people, just like you, cumulatively raise hundreds and hundreds of millions of dollars for their deals as well. So again, you can check that out at Investor Attraction Workshop dot com. And as a loyal listener to the podcast, you’ll get 50% off your ticket when you use the discount code podcast. That’s right. Discount Code podcast at Investor Attraction Workshop dot com. See you at the next workshop. Well, that that is very, very cool. So you’re probably you’re looking at getting that whole place, that 45 unit building kind of turned around within a year, give or take with your cruise and with what’s going on there, what do you anticipate? If you’re able to share what were rents before, what rents on average are going to look like afterwards, what’s kind of the difference, the uplift that you’re going to have on that building?
Adrian Panozzo [00:10:44] We’re usually looking at some of these units. The rents are literally going to double. Wow.
Dave Dubeau [00:10:49] I would imagine for sure. Yeah, I can see that.
Adrian Panozzo [00:10:51] You know, some people have been there a number of years and they’re paying, you know, potentially 850 for a two bedroom apartment and most two bedrooms. Now, in that geographical area, you know, give or take, they’re about, you know, on the low end 18, on the high end, 1900 dollars. So, yeah, you’re we’re almost doubling, if not doubling the rental income. That’s our goal anyway.
Dave Dubeau [00:11:17] Yeah. Well, that is exciting stuff, Adrian, for sure. So if you don’t mind sharing, how do you how do you structure these? I mean, back when you were doing the duplexes and the triplexes, chances are you were probably structuring these as joint venture joint ventures with investor partners, one investor per deal type thing, one or two kind of thing. These bigger deals, are you working with much bigger joint venture partners or are you working with multiple people per deal? How is that looking like for you these days?
Adrian Panozzo [00:11:49] Yeah, good question, Dave. Both like, for example, this, this, this one we’re talking about now, that was one very successful entrepreneur that came to the table on his own with all the capital required.
Dave Dubeau [00:12:03] That must have been a big chunk.
Adrian Panozzo [00:12:05] But yeah, that was a big chunk of change obviously. But we have also done other JVs on a bigger scale with 2 to 3 investors. Right. G partners as well. So we’ve done both. Ideally, the last partners on one deal is the better ed.
Dave Dubeau [00:12:25] The better.
Adrian Panozzo [00:12:25] For everyone, right. You know, so yeah, we tend to question we’ve done both before and doubling or tripling people up depending on the size of the size of the deal.
Dave Dubeau [00:12:36] Exciting. You know, that makes a lot of sense. And I would imagine that you’re starting to see that as you’re growing your portfolio, as you’re getting more success with this. You know, it sounds like you’re probably able to get your investors most, if not all of their capital back out of the deal fairly quickly. So, for example, you know, typically with a smaller BR, a single family home or a duplex or triplex, most of the investors I’ve spoken with, they’re looking to be in and out of that and refinanced ideally within 6 to 8 months, maybe a year on the on the long side. What are you looking at for these bigger buyers? What’s the time frame typically for the refi?
Adrian Panozzo [00:13:19] Yeah. So this 45 unit building that we were talking about there that we purchased and we’re deploying the BR on, we’re looking at a year and a half to maximum two years. Okay. We’ve already had some great success in some of those units already. We’ve probably renovated half of the building. We’re just shy, but we’re just shy of half of the building already. So overall, you know, a bigger acquisition like that, anywhere from a year and a half to maximum two years is our goal.
Dave Dubeau [00:13:51] Very cool.
Adrian Panozzo [00:13:52] Money and money. Out. Rinse and repeat.
Dave Dubeau [00:13:55] Yeah. Now, I don’t know about how it works with you, Adrian, but I know for myself, when I was doing single family homes, typically a joint venture arrangement would be a 5050 type of a deal. Investors bring the capital, we bring the deal, we bring the knowhow, the management, all that stuff. We split a province 5050 when I moved in to multifamily in order to make it now, mind you, we weren’t doing the BR so there wasn’t anywhere near the kind of lift that that you’re getting there. Have you do you modify the split depending on the size of the deal or do you kind of keep it a 5050 all the way across? How do you typically do that?
Adrian Panozzo [00:14:34] Yeah, good question. 98% of the time and we keep it at 50 to 50. But there has been occasions where we’ve done bigger deals that will we will modify the share structure, given the amount of capital that’s required. Obviously. And obviously, we just want it we want to be fair both ways. We want to be fair to the JV partner. And likewise, we want to be treated fairly. So we try to create that win scenario between ourselves and them. So we’re both really benefiting from that structure. So yes, we’ve done. But more often than not, it’s 5050. Obviously, the bigger stuff is negotiable. Yeah, that’s the right word.
Dave Dubeau [00:15:16] So you mentioned early on in our conversation, you’re doing what you call the Costco model. Can you kind of unwrap that for us a little bit? Explain what does that look like for you? It sounds like way back in the day when you first got started. Well, first of all, when you first got start, were you still working full time? I know you used to be a. Police officer. So was this a part time thing or did you jump in full time right from the get-go? And it sounds like when you first got it started, obviously you had outside or you’re self-managing, you’re at outside management for your properties outside contractors. Now. Now it sounds like you’ve kind of brought it in-house. How does that look?
Adrian Panozzo [00:15:52] Yeah, we did bring it all in-house a few years back now. So like I mentioned, we have the in-house construction and we have the in-house property management and whatnot. So. And yeah, I guess my word is the Costco effect of having these companies under one roof. And our mindset was, you know, we wanted to appeal to those joint venture partners, investors that, hey, you walk through the door and there’s everything under one roof where you don’t have to go to seven different grocery stores to do your shopping sort of speak. So that’s what we create. And it’s been working really, really well, actually. And I think our JV partners appreciate the fact that everything is set up that way. Making life easy for everybody.
Dave Dubeau [00:16:40] Now makes a lot of sense. And now are you guys at the stage now where in addition to your own work, you’re doing work for other people, management for other people, construction for other people, or do you keep it all in-house and you’re just doing your own thing for your own projects?
Adrian Panozzo [00:16:57] No, we keep it all in-house. We didn’t really want to set up trying to get all kinds of different business from other investors on other properties we’re not involved with. Unfortunately, for the most part, it’s just really for peace of mind for our investors to say, Hey, I’m dealing directly, you know what to say. Hey, I’m dealing directly with Adrian and his group of companies per say. And there’s no, you know, going on Kijiji looking for fly by night kind of characters or anything like that. It’s us, it’s our group of companies and you have that security in mind and benefit for that.
Dave Dubeau [00:17:35] So just out of curiosity, what is your what does your crew look like these days? Because it sounds like you’ve got a lot of stuff on the go.
Adrian Panozzo [00:17:42] Ah yeah. So we have our construction team now. It’s probably 10 to 12 strong, plus a number of subcontractors that we bring in for the right project or the right thing that needs to be done if it’s outside our scope of work and we have a, like I mentioned, in-house property management, so obviously a leasing department to find great tenants on a 24 hour, seven day a week maintenance. I’m called apartment. We have in-house bookkeeping, accounts payable, accounts receivable and everything in between really to really just shape that model really well. So we are there exciting news is we’re expanding to we bought a 6000 square foot commercial building that was being our team and now as well as two story 3000 square feet and we’re going to house our team there, which is kind of exciting. We’re looking at getting possession in the fall. I believe so, yeah. That’s kind of happening in the background too. So that’s super exciting. Yeah, it’s been it’s been a great couple of years, to say the least. Well, that’s.
Dave Dubeau [00:18:53] Wonderful.
Adrian Panozzo [00:18:53] Since we last I was last on your podcast.
Dave Dubeau [00:18:57] So Adrian, for folks that want to connect with you to find out more about you and what you’re up to, I know you’ve got a podcast, you’ve got all sorts of things on the go. Let us know where people can reach out and connect.
Adrian Panozzo [00:19:07] Yeah. Thanks, Dave. So easiest way is just shoot me an email if you’re interested in getting involved with us or the birth strategy or just pick my brain. My email address is Adrian a d I am at invest wif e p c dot COM perfect.
Dave Dubeau [00:19:26] And your podcast, what’s it called?
Adrian Panozzo [00:19:28] More like Real Estate Investing podcast. And actually my daughter came up with the name of the podcast and I thought it was as soon as she said it. I thought it was brilliant because really, Dave, as investors, what do we offer? We’re after a lifestyle. We’re after more to life. We’re after more than the 9 to 5 and all that stuff in between. So yeah, kind of resonated with me. But More to Life Real Estate Investing podcast.
Dave Dubeau [00:19:54] Fantastic. Adrian It’s always a lot of fun. Keep rocking and rolling, my friend. Congratulations on your success. It’s well-deserved.
Adrian Panozzo [00:20:01] Cheers. Thanks, Dave.
Dave Dubeau [00:20:02] All right, everybody, take care. We’ll see you on the next episode. Well, hey there. Thanks for tuning in to the Property Profits podcast. If you like this episode, that’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, so we invite you to get a complimentary copy of my newest book right back. There it is the money partner formula. You get a PDF version at Investor Attraction Box. Dot com again. Investor attraction book. Dot com. Take care.