Podcast Transcription

Announcer [00:01:22] Tired of the 9 to 5. Tired of only dreaming about the things you want to do. Want to have more time for your family. More time for you. More time for you. This is the Breakthrough Real Estate Investing podcast, where we interview qualified guests in the real estate industry all across Canada. We want you to live life on your terms, and we want to help you break through to that life through the power of real estate investing. This is the Breakthrough Real Estate Investing podcast. Now your hosts Rob Break and Sandy MacKay.

Rob Break [00:02:03] Good morning or afternoon or whenever you’re listening to this. Welcome again to another episode of the Breakthrough Real Estate Investing podcast. And here with me as usual is Sandy MacKay and Rob. Good morning.

Sandy Mackay [00:02:19] Good morning. Afternoon. I know that whatever it is for you, sometimes we’re different now with the time zones, but yeah, let’s go with it.

Rob Break [00:02:28] Yeah. Right now as we’re recording it is morning and I’m 2 hours behind you. I was just commenting on how quickly the interview comes up on these days. So it’s like I got to get my kids ready. I got to get them, you know, something to do and somewhere to go so that it’s quiet here and, you know, clean up, get everything ready. Cause some video. I don’t know why are we are we doing what are we doing with the videos of this right now?

Sandy Mackay [00:02:55] They’re all over the place right now. You’re not following enough. You’re obviously got it. Yeah, I was obviously I go subscribe and like and follow our YouTube channel. That’s right. And certainly our social media feeds to catch up on some of these clips.

Rob Break [00:03:09] Absolutely. And of course, go over to our website, Breakthrough REI Podcast dot CA. You can download and listen to all the shows and communicate with all the guests that we’ve had on over the past, oh, I don’t know, 175 episodes or something like that now and you can get a free gift.

Sandy Mackay [00:03:29] Yeah, the ultimate strategy for building wealth, the real estates. And you will get that when you go subscribe to our channel and you know what is say if people haven’t gone on our website recently and I think we’ll be close to them by the time this episode ends, I was it’s getting revamped, so it’ll be a few new and exciting things on there too. So people should certainly go check all that we have on the on the website and subscribe so that they never miss out.

Rob Break [00:03:55] Yeah. Yeah. And we’ll talk more about that probably next show.

Sandy Mackay [00:03:58] Mm hmm. Absolutely.

Rob Break [00:04:03] And, you know, go over to iTunes and write and review the show that always helps get us out there to as many people as possible who are looking for this kind of information. Leave us a review. Let us know what kind of topics you’d want to hear on the show, maybe some guest recommendations and whatever else do you think that we should be doing? So that would be very, very helpful. Go over there on iTunes and leave us a reading review. What’s the name of Sandy? What’s happening with you?

Sandy Mackay [00:04:32] Hmm. You know, lots of exciting things into the fall of this year, 2022 that we’re working on. So I’m going to have a few like. Call them announcements sort of things on some new endeavors. And so I’ve been kind of navigating that. And you know, part of that is some new stuff, new things with our shows there and the podcasts and bringing in some more collaborators and kind of revamping our investment strategy too. For myself personally, because we’ve done a whole bunch of the strategy models and primarily still sticking with that, although we’re just transitioning to doing some bigger, bigger, bigger. Investments. And I haven’t done a lot of the 2 to 4 units for a while like kind of taking almost getting close to a year. We have obviously have some projects we have done and new ones for a while and partially because we’re focusing on some bigger stuff, less transactions, more units generally. And we’re navigating the crazy market of 2022, right. Which is been not without some downs for the first time in a while, which has been interesting. And I’m raving to anybody that will listen embedded meditation that it’s probably the best buying opportunity that we might see in a while if it’s probably maybe the best one that will come around again, because we have a window here in summer, probably in the fall, maybe into 2023, even where the rates are scaring people away and the prices are down. Cannot see how that possibly is going to stay for too much longer. First, simple supply and demand without getting into too many details. Simple supply of the will eventually come back around and. You know, we’ll be sitting here and saying, we told you so again. Best time to buy real estate was yesterday and next best time was 20 years ago. This is you know there’ll be a that 20 years can make itself up pretty fast here in the next couple of years. If we’re not if we don’t just continue to take action. You know what I missed out on yesterday?

Rob Break [00:06:45] I thought the best time to buy was today.

Sandy Mackay [00:06:47] But what did I say? Yes. Yesterday that I it’s always good to.

Rob Break [00:06:52] Yeah, today’s good. So people and we’re going to probably get into that a little bit more as well during the interview with Dan McMullen, who we’re pretty happy to have on here today. And thanks for taking the time to come out and talk to us.

Dan McMullen [00:07:04] Yeah, awesome to be here. Thank you.

Sandy Mackay [00:07:07] Super happy to have here, Dan. Yeah, and I’ll give a brief intro for you. For our listeners, Dan lives in Brooklyn, Ontario, which is just a little north of with the Durham region and lives with his wife and three kids. The High School for Z teacher in Markham. And he started the real estate journey three years ago, investing in the Peterborough area and also which is South Southern Ontario, I suppose the University of Southern Ontario, right? Yeah.

Dan McMullen [00:07:34] Yeah, yeah.

Sandy Mackay [00:07:36] And he has many strategies long term buy and hold. We focused on student rentals and duplexes. Also interesting a lot, interestingly enough, utilizing the infinite banking strategy, which we’ve talked about many times on our show and our great connection there with ascendant financial. And they’ve been using the Internet banking strategy and whole life insurance policies to also in your investment strategy. So I’ll probably touch on that obits and also the host of a monthly mastermind group called the Cash Flow Crew. And so learn a bit more about what that’s all about too. And yeah, it’s nice to have you on the show and look forward to learning more about your journey.

Dan McMullen [00:08:16] Yeah, good to be here. And I certainly have lots to share. And here we go.

Rob Break [00:08:21] Yeah, I’ve been on that webcast. It was super fun and I’m sure we’re going to talk about that a little bit more. Yeah, good group. A good group of people.

Dan McMullen [00:08:29] ROBISON Great having you. Having you. Come on there, Sandy. We would love to get you on. It’s just and it’s just a small group. We’re trying to scale that a little bit, make it a little more professional. But we the idea is we have monthly meetings where we bring on sort of, you know, great guests who have lots to share and just teach us about what they have going on in their own life. And we can collaborate with likeminded individuals via Zoom. Right now, we’ve kind of continuing the sort of the pandemic trend of doing things over Zoom, and it’s been really successful so far.

Rob Break [00:09:03] Yeah, it’s awesome. And like I said, good group of people that you have and I’m sure that it will expand. So, you know, let’s just start out like that. So it doesn’t have to be 100% real estate related. But let’s hear about, you know, a little bit about you and how you got started in real estate investing.

Dan McMullen [00:09:20] Yeah, so high school for that teacher, family guy sort of just working the 9 to 5. I think the real big turning point when it comes to the real estate journey, maybe something to do with turning 40, but you sort of you approach 40 and I certainly was like, okay, you always feel like you should be getting ahead. You always have this sort of vision that you’re going to get ahead as you get further along into your career, that your savings will increase or everything will just get better financially. And I just sort of think to myself like, okay, you know, you have three kids. I’m fairly successful. My career, I’ve maxed out as a teacher, teacher salary and I’m just I feel like I’m spinning my wheels. So, you know, you start to look around and you see these bigger homes or you see people living differently. So then you sort of become curious on, okay, what are people doing in order to achieve or have a different sort of outlook on money? So I started, you know, just digging in, doing a little bit of research, just sort of asking people, hey, what are you up to these days? And I came across a good a good friend, Scott who Robb you know, him, who has six investment properties at the time. And so we were just casually talking and he said, Oh, I have six rental properties. I said, No way. I’m really interested in also potentially getting a rental property. So he funny enough and here’s a plug for you guys. He said, Hey, check out this podcast me through the breakthrough podcast. To me, I, you know, I’m very new to podcasting at that time and that was in 2019, May of 2019. And I sort of listen to your podcast. So that’s really where sort of the why and the where it all it all started.

Rob Break [00:11:03] That’s awesome. Yeah. Thanks for that. You know, it’s nice to hear those stories that, you know, we’ve been able to help somebody get started anyways and like expose a little bit more of real estate, you know, beginners, if you get the moving and take action. It wasn’t long before you took action. Right. Like, you.

Dan McMullen [00:11:24] Know, it was we bought we bought in August. So I was he was made August. The guy was ready to rock, ready to go. And I think, you know, when people are ready, I’m sure both you see your clients and you, you know, when they’re ready to take action. And I was I was certainly ready. And the cool thing about and the importance of podcasts and the importance of what you guys are doing is you allow you allow people like me to borrow your confidence. And I really like that expression, borrowing someone’s confidence. And it’s just, you know, you don’t feel confident in doing your buying an investment property. It’s a real daunting, scary thing if you don’t have that knowledge. But if you can start listening to podcasts, you can start networking, start creating a power team, you’re borrowing everybody’s confidence in order to take action. And I think downloading free podcasts are just such a simple way.

Rob Break [00:12:14] Mm hmm.

Sandy Mackay [00:12:16] Yeah, super cool. I love that. I love that outlook perspective. And I love to know how you were able to take action faster because that is, you know, made in August. We’re talking about three or four months that you had a buildup of stuff before that where you were getting knowledge or getting confidence in some other way, honestly. So that powerful I.

Dan McMullen [00:12:35] Literally I literally just laid it out so simple. But I just I was a copycat. So, you know, I kind of got myself right beside my buddy Scott and I connected with Rob very, very quickly, you know, and Rob also has some investment properties up in in the Peterborough area. And I just I literally just had a template. They had a template and I just copied it. I bought my first student rental. I bought five doors down from my buddy Scott and I literally just I took his realtor, I took like banking for like we I just literally did what he did. And I think that’s a great story that that people listening can do is just find someone who’s already doing it and copy it. Doesn’t have to, you know, to recreate the will.

Sandy Mackay [00:13:22] I that’s resonated with me really hard right now because I’ve been of late been really looking into just the fact of, you know, people who follow proven models and just kind of submit to what the model is already works. A lot of people, especially like entrepreneurial type people, tend to be I think they tend to give themselves a little too much benefit that they’re like they’re creative geniuses and that they have this great new strategy that’s going to like revolutionize things. And I think the reality is that the easiest and fastest way forward is to follow a model like you’re saying and copy someone they’re copying mostly what they’ve done. And just why would that if it’s proven and it’s not a one off and it’s proven and it’s you know, multiple people have done that same model. I mean, why not start with that and then build upon your creative flavor to it later on?

Dan McMullen [00:14:09] Well, that’s it is the starting point, right. And they say the first one’s the hardest one. It’s so true because you don’t have you don’t know what you don’t know. And so if you’re if you’re doing that copycat model right from the start, then you, you know, you’re going to get more creative as your investment journey goes on because you are going to want to use some fresh ideas or some creative challenges. And really, this is being an investor. It is a challenge like we all like to take a product, change it and make it your own. And I feel like that’s what investing is, is you’re taking sort of this raw house and you are changing its application into a cash flowing asset.

Rob Break [00:14:48] Yeah. And you guys have gotten really creative with, with some of your student rentals, which we’ll talk about too. But I wanted to say one step further on what we were just saying. There is mentorship can be very, very powerful, right? Like that’s the accountability that’s added on top of that. Like is, is, is extremely powerful because you’re looking up to somebody who is doing what you want to do and then they’re saying, okay, I’m holding you accountable to take this step, right? So in my journey anyway, that’s been a really, really helpful thing.

Dan McMullen [00:15:22] No, I agree, Robyn. And being a teacher at heart and just trying to really, you know, why am I doing what I’m doing like said why are do I keep buying these properties and making my life more complicated when I already have full time job and three kids at home and like, there’s a lot going on, but I do feel an obligation to go down this path. So and then I can share my journey with other people and invite them to come down this path as well. Because I feel there’s a lot of people out there who are feeling like I’m very lucky. I have an amazing job. My high school teacher has kind of won the lottery when it comes to going to work to play sports all day and teach, teach students. It’s awesome. But not everyone has that that luxury. And if you can if I can inspire some people who potentially are in do not like their job as much and they can find a way to supplement their income or change their life. And that gives a lot of gratitude towards I really feel good about that and I still until school I’m only three years in so I still have lots to learn. But it’s an it’s a slow journey and just sort of grinding with it.

Rob Break [00:16:30] It’s not always about replacing 9 to 5 either. Like you really enjoy what you’re doing. So it’s more about, you know, the actual lifestyle outside of work.

Dan McMullen [00:16:39] Yeah. But by doing, by doing what I’m doing, I’m going to be able to travel. I’m going to be able to we’re taking a little bit time off in a couple of years. I’m doing a deferred salary right now with my teaching job where you can do what’s called a four or five, where you work, you work for four years at a reduced salary and then you get a year off. And the idea is to come visit you in Costa Rica, Rob, during that year off.

Rob Break [00:17:02] Me.

Dan McMullen [00:17:02] To do to do various things and without sort of the supplemental income coming in from the real estate, those sort of life experiences might be harder to do when you’re just relying on that one source of income.

Rob Break [00:17:16] So even when you are copying but quote unquote what other people have done and starting out and doing exactly what they’ve done, there must be some challenges that were still there despite all of that. Let’s talk about some of the bigger ones that you ran into and how you got around them.

Dan McMullen [00:17:34] Yeah, the first thing I guess is just to get your partner on board. My wife was certainly a little reluctant at the start because, you know, here we are, the young family and, you know, she’s like, you want to buy a rental property and you want to you want to do this and that. And that’s definitely a huge obstacle I’m sure a lot of people face because we are very much programed from our parents and from our families on how money works. And a lot of people leveraging is very, very scary for a lot of people. So, you know, borrowing money in order to buy these assets just isn’t programed into some people. A lot of people are savers. You know, if you don’t have the money, you don’t spend the money. So and real estate we leverage a lot so that’s always a real challenge is just trying to get. Various people comfortable with. With what our vision was.

Rob Break [00:18:26] Mm hmm. Mm hmm. Mm hmm. And how like. How do you do that? Yeah. I’m sure there’s people listening that the exact same issue. And it’s not like. It’s not like winning. It’s more like. Like learning together.

Dan McMullen [00:18:46] It is. And it’s so through my podcasting, through my reading, through my networking, through my connections, I gained a lot of confidence in what I was doing. And I felt very confident. And I feel like once I was able to communicate that confidence to my partner or to my family members, they could really feel that I sure I knew what I was doing. And obviously, I have role models. And I would I would, you know, share with me my role models were we’re also staying with my partner and my family members. And that really was key. If I wasn’t demonstrating and doing the actual homework prior to making these purchases, like if I was just doing it on a whim and didn’t create this sort of power team and this knowledge, then that would be that would be certainly problematic. But my partner definitely felt that I was I was doing the right homework in order to take that next step.

Sandy Mackay [00:19:42] So something much different from raising money or getting an investor to partner with you type thing and similar. You need to show confidence and credibility, whether that’s yourself or through your networking power, borrowing credibility or you said borrowing confidence. Both those can play a big factor there, I think. Right. And we’ve got a lot of guests, really some couples on the show in the past where this has been a great topic, where it’s because most couples are kind of different and complementary in a lot of ways. That’s usually not always, but often that’s part of what makes it a great, great couple. And that generally means one person, maybe a little more risk averse than the other or other, you know, the different mindsets. Right. So it could certainly see the challenges of that. And I don’t think we can we can talk forever on that. It just shows around that that’s a whole relationship advice that show. But there’s, there’s, I’m sure there’s tons of people every podcast. Yeah. What I would do with that, I for one probably was more the one that got dragged into it when we were starting. And my wife and I, I was probably your wife in this case versus you, which, you know, I mean, anyone can get excited and learn enough that they get confident and, you know, who knows where it takes.

Dan McMullen [00:20:55] You think the most important thing is you really have to start taking the inner journey as far as becoming well-read when it comes to your psychological makeup and your relationship with fear and money, it really it really plays a major role when it comes to investing. It’s like, okay, what’s the worst that can happen? And if this is the worst that can happen, I need to have that mindset where I’m going to overcome whatever comes my way. And so it’s really making sure that you sort of take those steps to. To make sure you have all your building blocks in place and you’re starting your foundation properly.

Rob Break [00:21:32] Right. I think it’s important to not just say, you know, you talked to Scott one day, he says, I got rental properties and then like 5 minutes later you got to arriving. Say, guess what we’re doing? Yeah. You know, that’s that it’s important to what I found. And, you know, my wife and I have had lots of conversations on this is like, how did we end up here? Right. And like, how did we, you know, let’s go back and learn a little bit from where we came from. And one of the big things was, you know, when. Because I’ve tried all kinds of things before I found real estate. I just knew I wasn’t in the right spot. Right. Just trying to figure out what where I was supposed to be. And when it came to doing some real estate investing, I was like, well, what got you on board with that? And she always said, because you could answer some of my questions or everything else you wanted to do. You know, you’re just it was just a whim, right? And you had no knowledge on this. I could tell you were learning. You were you were exciting. You were figuring things out, talking to people. Right. So that, I think is a big part of it.

Sandy Mackay [00:22:43] What’s the worst that can happen in real estate is not all that bad really either. Especially Canadian real estate, right?

Rob Break [00:22:49] People tend to think that it’s like a lot worse things can happen. I mean, I don’t know. Realistically, I guess the chances of something. Your chances are pretty good of things going okay I think, especially if you are paying attention and talking to other people who have done the same thing.

Dan McMullen [00:23:10] I think you’re being very intentional on what you’re investing in and that’s something we’ve really focused on in our in our investment journey is you really put the odds in your favor. So you’re buying good properties, you’re attracting great tenants. You’re making sure that you’re providing great property management. So you’re really being intentional along the way. I think you’re going to have great success. I think you probably get yourself in a little bit of trouble when you’re trying to buy neighbors that that that can be a little bit rough and you’re just not giving it the attention that it always deserves.

Sandy Mackay [00:23:46] Do you have challenges with the management of the tenants and finding tenants and placing them there? I any challenges on that side of things for you?

Dan McMullen [00:23:55] Yeah, we’re.

Sandy Mackay [00:23:56] Really, really asking especially to because I know you dabble in certain rentals and those are always a little more typically a little more work than a straight rental.

Dan McMullen [00:24:04] Honestly, we’ve had really good success the we so but again we’ve been very intentional. So when we buy we like to buy in between sort of we’re looking June, July, August, September for student rental. We’re looking to purchase that. And then what we’re doing is we begin the rental right away in say, August, September. And we’re actually looking to we’re looking to rent for May 1st. So we are actually and we’re doing the rentals, let’s say October through March. So we’re actually carrying the property ourselves for sort of six months there. But what we’re doing is we’re actually in November, we start to list the property and we actually do tours with the students coming through. And what we’ve found is the very best students are the ones in the fall who are looking for. And so we’ve been very, very lucky where we feel like we have the best students, we feel like we have a really great product up in Peterborough. We’re buying really nice homes and so far it’s been a great success. Even through COVID. We, you know, that was that was our sort of getting our feet wet in the rental and that was right through COVID. We only we lost a couple of students who said that they needed to change things up, but we were able to replace those very, very quick in the house.

Sandy Mackay [00:25:28] Yeah, I didn’t that didn’t hit with me when you said you started in 2019 then same time to start because within your first year stuff went crazy, right? So how did you keep going through that? Was that it? Did you ever think to go, uh, this is this is the worst thing that can happen? And this is this is this is this is not good for us.

Dan McMullen [00:25:47] It’s funny, I was I was talking to my buddy Scott and we, you know, we kind of went we said we we’ve kind of planned for everything except the pandemic. We weren’t expecting that one. So but here’s the thing. I think students, they want to live in their student houses like they really want to be around other students. So even in the lockdowns, even when things were going sideways, they really they still were going to school virtually. And they wanted to be in that house. That’s where their friends are. And they were still getting a little bit of the university experience. So we kept on going through that in our head. We were actually communicating with our with our students saying, hey, how are you feeling about this? You know, do you see yourself needing a change or you going to move back home? And they were communicating and saying, no, we really want to be at the house. So it worked out really well.

Rob Break [00:26:36] So let’s talk about the types of properties that you buy. So you met you touched a bit on it. You guys really focus on nicer houses. And are all of your places student rentals?

Dan McMullen [00:26:47] No. So right now in the portfolio we have, we’re still small, but we are growing. So we have two eight bedroom student rentals up in Peterborough. And we also we did a duplex conversion in a town called Millbrook, which is just south of Peterborough. So we have three properties right now. We were yeah. So we’re, we’re, what we really focus on is buying sort of nice, nicer homes, nice neighborhoods and their bigger homes. So like both of our student rentals are bungalows, five bedrooms upstairs, three bedrooms downstairs, three full baths in the house. And they’re just they’re in really nice neighborhoods. What we think about is, if ever we need our exit strategy, we feel if we spend more money up front with appreciation and time and market, if we want to turn around and turn these into single family homes again, we’re going to get a really good buck selling it in the future. So that’s kind of our long term vision on what we’re doing.

Rob Break [00:27:48] And one of the things I want to mention is because people listening to this might not know it because it’s very sort of unique to Peterborough, the licensing process because those posted rentals are 100% legal and you’ve got a business license to run them. Right. And you go through a process with the city to bring them to where they want them in order to have the eight bedrooms in them. Right. And rent them out to students is a fantastic model that they have allowed there.

Dan McMullen [00:28:21] If for me, I’m very, very comfortable with that. You know, being a teacher, having a young family, I wanted to do things very much on the straight and narrow upfront. So the C period was fantastic to work with. So they actually have the fire inspectors come in their checking smoke alarms, egress windows. So they’re signing off on my property saying, hey, this is safe, this is good to go. And when I communicate with parents, I’m saying, hey, this has been inspected property, we have a license to do this. And this insurance allows us, because we have this sort of confidence that we’re instilling, this allows us to get really, really premium rents because we’re licensed and we have the best product. So we see we see Peterborough as just a great spot to do this.

Rob Break [00:29:06] So when you first go in, you’re looking for something that you want to turn into, like an eight bedroom home. It’s obviously not an eight bedroom home when you find it. How do you evaluate the type of property that you want to buy?

Dan McMullen [00:29:20] Yeah. So the first one we first when we bought it was actually it was a it was a bungalow, two bedrooms upstairs and two bedrooms downstairs. And we were you could just kind of walk through the space and you can kind of visualize where can I quit bedrooms? So in that one, it had a dining room. So we put a wall through. We separated the dining room off and made it created another bedroom. There is a common space, a huge common space in the in the basement. So we took half that common space and we created another bedroom there. And then there is a massive living room. So we made the living room a little bit smaller. So we put another bedroom there. And then, Rob, I’m sure you remember what we did. We got very creative with that first tune rental. There is a massive cavity in the ceiling of the garage and we actually started brainstorming. Could we fit another bedroom in the ceiling of the garage because it was an 18 foot ceiling in the garage. So we actually did it. We, we got an engineer beam. We ran it right across the garage. The garage still has about a foot, eight feet of headroom, but we able to put a massive bedroom in the ceiling of the garage. And that’s been fantastic to create the eight bedroom. So that actually it took us two years to pay off the construction costs for that that sort of addition or bedroom. So we’re now cash going clean on that that addition.

Rob Break [00:30:50] Yeah that was that was really cool. I remember seeing that and it’s not even the whole garage because it’s still like half of the garage is still 18 feet high. That’s right. It’s the back side of it. That’s a little lower. And it really doesn’t impact that that much. Very, very cool idea. I thought that was when you guys had that.

Dan McMullen [00:31:09] Yeah. And then the next June rental the same thing we just there had been a stale last August there had been a really stale listing that we decided to throw an offer in on a sort of a big bungalow. And again, we did the same thing. We walked through the house, we said, okay, room, massive dining room. We can put two rooms in there. Massive common space in the in the basement. Let’s put a let’s put two rooms down there and it’s worked out fantastic. Each one of our houses has a common space and the upper floor and lower floor, kitchen, upstairs, kitchen that you’re not allowed another stove in the basement. But both of our places have kitchenettes in the basement where they can do coffee or simple breakfast, etc.. So we’re very intentional and want to make the, the experience the best for the, for the students living there.

Rob Break [00:32:00] Yeah. And the other thing to, to mention is it’s very important that it doesn’t look like just a chopped up series of jail cells where, you know, you walk in and the parents are like, oh, my gosh, they what have they done here? That’s not that’s not what you’re doing. I don’t.

Dan McMullen [00:32:16] Know. Again, I believe we’re selling you’re selling this product to the parents. The parents are the ones. And I make phone conversations, each one of the parents. And when they’re actually inquiring about renting the property and I’m talking it through with them, they’re the ones, for the most part are signing the checks. They want their son or daughter to be living in a fantastic sort of environment. So it is definitely it doesn’t have that it very much has a family home feel. And that’s what we want what we want to provide.

Sandy Mackay [00:32:46] I heard you I heard you say that it was a there’s a sale listing. This is 2021 fall 2021.

Dan McMullen [00:32:51] This was last August.

Sandy Mackay [00:32:53] Yeah. So fall to August 2021. There’s a still listing and a pretty hot market. I think that and I just hear you talk about that deal, it reminded me that, you know, even regardless of the market, there’s deals out there and sometimes it just takes a little bit of grace creativity to either make the deal happen or just to find the opportunities and the deals. Because if that was a sale listing and it was sitting around for a bit, you know, there’s a lot of people that looked at it and said, not for me, not for me, not for me. And I think that it doesn’t mean it’s not a good deal. I mean, there’s lots of opportunities out there that I’ve seen, too, where it’s like you just take the right set of eyes of the right, you know, the right creative mindset to go through there and find and make the deal a great deal versus just getting around and waiting for them to come up.

Dan McMullen [00:33:40] This property that we bought; it was it was an expensive property. Like they were asking, we can go over numbers. They were asking originally they’re asking 829 for this property. And it was, it was stale because no one was going to pay 89 the way the kitchen was configured in this particular house. No one was going to pay 89 for a type of kitchen like that. But we were we’re saying, oh, this is fantastic for students. So we, we started the bidding and 750 and we were able to scoop it up for 775 and we obviously the rates were fantastic back, back a year ago. So we were like lock, lock in a great interest rate and the property’s castle and I icing up.

Rob Break [00:34:21] Very, very good. So I mean, again, like we’re trying to prepare people for what can happen, right? Like, so again, it’s not all been good. There was challenges that you talked about, but sort of let’s talk about the worst situation that you’ve had because we want to draw these out, the people. We want to understand that there are bad things that can happen and you just overcome them, right? You find a way to get around.

Dan McMullen [00:34:53] Yeah. I think through the typical everything, everything costs more than what you imagine. So you definitely when it comes to the renovation, one thing we did run into is our renovation costs on that particular, the second property being, what was it, August eight through August, October, November of 2021. We didn’t expect our renter to cost, but it did. Materials were up, labor was up, so everything was inflated. So certainly you need to budget a lot more. It did end up costing the renovation a lot more than what we had anticipated. And what we made sure that we also did was there’s small little details that we wanted to do to be proactive on the house. So we spent some money. So, for example, has an old air conditioning unit. So and the lines for the air conditioning unit were not to coat so well, they were drywall and we bit the ball and we actually we put brand new lines for the AC unit because we didn’t want the students moved in. We didn’t want to do any drywall work once they had been in to in order to replace the AC. So we actually spent more money preparing the place for future sort of things that might happen. So I would definitely like if we’re going through this, it’s you have your budget and then I’d add ten, ten, 20% on to that for renovations. So that’s certainly one of them.

Rob Break [00:36:18] Yeah.

Dan McMullen [00:36:19] I think, you know, for the most part, everyone, all the students and the parents have been great. But when you are charging like we’re charging upwards of 775 sorry, 725 for some of our rooms, there is an expectation from parents and from some of the students that the house is certainly, you know, it’s in order is in complete working condition. So you do have to answer some extra some extra emails and some extra phone calls and just kind of making sure everyone is happy. So you are putting fires out in that respect a little bit.

Rob Break [00:36:53] That’s interesting to just to point out the fact that like. When we were in Peterborough. You know, I would say like five years ago we were looking at three or four years ago even. And we’re looking at multi units sometimes looking at like triplexes. And literally each unit would be like 775 that would be the rent for the, for each unit in the triplex in Peterborough at the time. So it’s interesting that you can take some like a really nice family home and those bedrooms and get like $700 a room. Yes.

Dan McMullen [00:37:29] Yeah. I think, again, you’re providing an incredible product. Some of these you know, some of the rooms have an en suite to them. They have a walk in closet. So we’re taking these really nice homes that have that have their built ins in them. So the students are really getting sort of what they expect from their own homes, and they’re actually getting that in the university town. So we’ve just find a way to sort of given them that experience. And we do need to charge those rents in order to buy these nicer homes. So it definitely so far has been successful. And it’s working out.

Sandy Mackay [00:38:10] So let’s talk about you. Where things going for the future? What you talk about the future over there. You’re kind of renovating for the future and obviously have a longer term outlook on a lot of this than some people might. Well, I’ll say we’re kind of. Where else do you see your business going?

Dan McMullen [00:38:25] Yeah, it’s funny. You certainly I think, Sandy, I resonate with you because you’re you say that you’re pivoting a little bit and you kind of I feel like we reached plateaus and we’re like, okay, we need to see where we’re going next. And I give a lot of thought, too, to that. So do we keep continue with what we’re doing? Do we keep maybe pivot and try something else? I think I would like to try the one property per year and keep stacking a few of these. Like we have a really good thing going and if we can sort of keep adding one property a year and I say we, I’m actually investing with my, my great buddy Ryan and my brother Jeff. So we’ve created this little power team that we have and it’s worked out really, really well where we each have a different skill set. I’m kind of the people guy. We have my brother who’s definitely the real handy person and then Ryan’s really great with municipalities and kind of connecting with people in that respect. So that’s a little sort of upside tidbit is if you were looking to get into this, maybe think about who may complement your skill set, join forces with them to get in, and that might be a great way to gain some confidence to do that. So circling back, what am I doing? Yeah. So I think I’d like to continue to scale, scale the real estate. My, one of my real goals is to not that I really enjoy my job in it and I and I’m going to continue to definitely do it. But I might, I would challenge myself to replace my salary with passive income through real estate or through other means of cash flow. So I’m looking to do that by 2024 when I have my year off. So I believe if I can continue stacking these properties, continue with my infinite banking, that we should definitely talk a little a little bit here. I think I might be able to accomplish that. So that’s sort of what the future holds in that respect.

Rob Break [00:40:17] Let’s talk about the infinite banking. Has that played a role yet in your purchase of properties?

Dan McMullen [00:40:24] Yeah, for sure it has played a role I’ve been able to do so with even a banking concept is I’m taking a mutually owned dividend, paying for life insurance policies and I am funding these policies and there are multiple policies. I have multiple through my family system. And what’s cool about these policies is as you fund them, they are creating what they call cash value. And what is fantastic is I’m able to take a collateralized loan against my policy and the insurance company will give me money against my policies so I can take. So what’s great about these policies is they’re compounding uninterrupted interest for the rest of my life on these policies. So I’m able to put cash into sort of we’ll call it a master bank or my master bank, which I’m calling, and I’m able to put money into these policies that will compound forever, but I’m able to borrow against the value of them. So to me, that like is fantastic. I’m, I’m actually receiving dividends on these policies. I can borrow money in order to fund renovations for my real estate. So I actually took policy loans to fund renovations for my last my last rental, which was incredible. And in turn, what’s happening now is I’m able to run the rents through my infinite banking. So as money comes in for rents, I can put those into premiums paid, or I can also put that towards policy loan repayments. And so because I have a fairly substantial flow of money and that’s a real thing for your listeners that you that is the key. It’s money in, money out. So real estate investors, we often something we forget about is the flow of money. We have a lot of money coming in our direction. I’m able to do something with it before I have to send it out to payments, taxes, everything. So I’m able to collect the dividend or the power of that money before it exits my system. It’s a little bit of a complicated system. I really recommend the book Becoming Your Own Banker by Nelson Nash, and I’m also happy to if anyone wants to reach out to me and I’ll give my share of information, but I’m happy to just be sort of a someone to chat with about the system and how I’m implementing it.

Rob Break [00:43:05] Yeah, that’s really, really cool. And you’re just chatting. Like you’re not you’re not part of the broker, not make any money off. It’s just worked well for you.

Dan McMullen [00:43:14] Yeah. And what I found is, like, I am connected with I’m not connected with anybody, but I want to you know, Peter Lamont, I believe Peter is a friend of the show. He’s my coach through all of this. So he is an actual advisor. But I find a lot of people like to reach out to me because I have no affiliation with anybody. I’m just someone who’s actually doing this, so I can just really give my perspective on how I’m implementing this this system.

Rob Break [00:43:41] Yeah. Really cool. I. And so I guess let’s talk about how powerful it’s been then. Can you quantify that?

Dan McMullen [00:43:54] It’s so this is this is not a get a get rich quick scheme. This is a slow and steady build. So, like, let’s use an example of your $10,000 annual premium policy. So for example, let’s say I have a oh, I can just give you an example. I just paid a $15,000 policy in July. So and this was my year or two of that policy. So as the money goes in, so I have $15,000 in there right away, I would have a cash value available for loan. I could borrow back $8,000 of that. So now I have the $15,000 in there making a dividend and I can borrow back money in order to quickly, let’s say, pay renovation. And then now as the money comes back through the student rental, I can replace that money that I borrowed. And it’s in that sense, creating a family bank. So circling back, how do I quantify how it’s doing? I have policies that are coming up in a year four, which is fantastic. I really feel that by the year five or six, I’m going to be able to borrow a substantial amount of money in order to deploy and then in order to create investment opportunities for the money to replenish those accounts plus some. So I would say this is like if you were to scale this out and really have a vision like you, a 5 to 10 year plan for implementing something like this, I would say is realistic. And it’s I’ve been incredible how quickly the four years has gone and it’s about taking action now. So, you know, any I feel real estate is sort of it’s a you know, it’s an it’s a slow and steady build over a lifetime. And you’re going to you’re going to be very happy at the end. And I feel that this is just another complimentary tool in the toolbox for that.

Sandy Mackay [00:45:56] A married couple with real estate. Yeah.

Dan McMullen [00:45:59] Because of the flow of money. Right. There’s this. It really, really does.

Rob Break [00:46:05] It’s like an it’s like an old school Smith maneuver on speed or something that.

Dan McMullen [00:46:14] A lot of people have sort of made that connection. But if you really look at it, it’s very much like real estate. And here’s the analogy. I can buy a house, and as the value of that house goes up, I can take a he lock off that house and then I can take that money and I can reinvest that. Right. The same thing with these policies. I can buy a policy and this policy is going to increase in value forever because that’s the way it’s designed. And as it increases value, I can take a collateralized loan and then I can go and do more investments with it. So really they’re very, very similar in what they are. They’re just they’re just different in the actual product.

Rob Break [00:46:53] Yeah.

Sandy Mackay [00:46:54] That’s the only is the only investment there that I’ve found that is really mirroring real estate is very similar to real estate in the same way as you just said. And that’s why I love it too. It just makes so much sense. And I mean, most people might as well get life insurance anyways. It’s the actual just life insurance. The fact of it is, is valuable in my opinion, and add on the other benefits of just the cherry on top.

Dan McMullen [00:47:19] It’s incredible. I think everyone needs that. And especially as we have some you know; we have liabilities that might be taken care of in a case of something awful happening. It’s definitely it gives you peace of mind in that respect. And it’s it again, it’s different. Like you need to educate yourself on this. You need to reach out to people who are doing it. But one big thing and Rob, you’ve always you’ve said this is be an action taker like you just need to. If you hear about something and you’re curious about it, don’t just discard it and move on. Like investigate it. See what’s going on. Maybe dabble. Like talk to people podcast, read some books and then make an informed decision on that. Because there is there definitely is that stigma when it comes to life insurances policies. And they’re all very, very different in how to design and who sells them.

Rob Break [00:48:07] Mm hmm. Let’s talk about since you just mentioned, you know. Resources that people should tap into. What which ones can you recommend? Let’s talk about for new investors. What would you say people should be looking into? You mentioned the book by Nelson. What else?

Dan McMullen [00:48:25] Yeah, like I. I guess I’m talking about across the whole investment game. You have to read Thinking Grow Rich by Napoleon Hill. That’s like you have to read that book. It’s all about mindset and where you’re going, who, not how. Dan Sullivan’s book is a fantastic book. So it’s like, who it. Who is out there to help you achieve what you want. So, Rob, you are you are a who for me, like you were the guy. I needed somebody. I need a real estate agent who I could rely on. So I sort of outsource that to you. And you would have different whose throughout like Rob I’m sure you guys could both figure out who might be your who’s that have helped you scale in and grow so. That’s a really good book I would definitely recommend another one by Dan. So it’s called Gap and Gain. So it’s about measuring your successes. So we often, you know, it’s, it’s, what did we achieve? Like we all have goals and sometimes we’re too hard on ourselves because we don’t, we don’t measure what we’ve accomplished. We only measure the goal and we can kind of get defeated or we can be harder self if we haven’t, if we haven’t achieved what we set out to do. So those are sort of, you know, some books there, obviously. Rich Dad Poor Dad is a is a game changer for so many people. Cashflow quadrant by Robert Kawasaki also is another great one is how you’re making your money worrying that’s coming from you chuckled must be something up with that.

Rob Break [00:50:00] Yeah. Just like these are all fantastic books. There’s so many of them, you know?

Sandy Mackay [00:50:07] Yeah. Sounds like it sounds like. Like being learning based is probably a Yeah. A benefit to anything but to real estate for sure. And I love those books to think grow, which I think is, you know, you really said everyone must read that honesty. That’s like the foundational book to before even investment. It’s just the mindset behind it all. And I think that’s like a starting point for most people. If them read that, even if they’re even if they think they’re beyond that, I think it’s a great foundational that’s really put your mindset in the right place.

Rob Break [00:50:39] If you want a super quick read that’s very similar in its foundations, I guess as that there’s the science of getting rich, too. It’s like you can burn through that book in a day and it basically covers all the ideas. But it’s a real quick read. I think it’s even older actually, than I am thinking grow rich.

Dan McMullen [00:51:04] And it’s a very simple concept. It’s, it’s, it’s what you focus on will expand and where your energy goes and if you can if you just have these ideas and I want to build a you know, I want to buy a house and like you literally start focusing on that and you’re going to whatever you focus on, you’re going to eventually run toward that and try and achieve that. It’s a very simple concept that a lot of people just don’t understand. So it’s like when you read that real late pop goes off when you read that book.

Rob Break [00:51:39] You mentioned. So lastly, but let’s stay on this and we’ll talk about, you know, in those different things or maybe from somewhere else, what’s a piece of info or advice that’s always stuck with you and how is it helped you?

Dan McMullen [00:51:53] Piece of advice. I listen to a podcast called Quote of the Day by Sean Croxton, and his biggest saying is Little by little, little becomes a lot. So little by little, a little becomes a lot. So every so my whole thing is every day I think to myself, what am I doing today? That’s going to be a little bit to help for tomorrow? And then those little things stack upon each other. So, you know, every day I want to be doing something a little bit in order to improve, and that could even be like reading 30 pages of a book that could be listening to your podcast, that could be trying to tighten up my I could be calling one of the service providers for Internet updates, my rentals to try and get a better rate that could be going on realtor or looking at properties. So it really is what am I doing every single day that’s going to compound in order to sort of make my life better and that it could be exercise relationships just you need to take action every single day. So just sort of leaving with the listeners, that’s something I really feel passionate about. Little by little, little becomes a lot. I think it’s awesome.

Sandy Mackay [00:53:07] Love. I want to the same as your best model of going, you know, taking a little slow. Little by little, it becomes a lot. You said it’s a long way, though. It I mean, 5 to 10 years. It goes by pretty fast. I think when you have that longer term outlook, a little by little becomes a lot pretty fast.

Rob Break [00:53:27] Yeah, I love this. And you know what? Some of my favorite podcasts that we’ve done are more just the ideology behind it. All right. And I think that that’s a super important thing, because the biggest roadblock for a lot of people is not that they don’t understand the action steps to get there. It’s more it’s more the belief in in what they’re doing. Right. That can really block people. There’s tons of people that know every step of what to do and they still aren’t doing it.

Dan McMullen [00:54:00] Yeah. Yeah. You know, and I think something that’s really becoming clear in the last, last little while is just how amazing the investment community is. Like, are so many people out there who are willing to share, are willing to help, are willing to talk, are willing to get together. And that was kind of one of my things with cash flow crew. It’s just it’s just creating a platform where people can come together, share, grow, learn, and just be all around like minded individuals. So it’s just what a great community, everyone’s pulling and pushing the same direction. And I think the idea of abundance is very is very important. There’s enough for all of us if we all work together and everything. So having a scarcity mindset versus an abundance mindset is like having an abundance mindset versus a scarcity mindset is very, very important for all of us.

Rob Break [00:54:51] Yeah. Yeah, agreed. And so how can people join your webinars?

Dan McMullen [00:54:59] Yeah, I’m. God, please come. Like, we’re. We’re very inclusive. We want. We want anyone you want to join up. Email me at den cash flow crew dot k. Maybe it can be put in the show notes there as well. I’m also jumping on Instagram. I’m trying to be a bit more influential, but I’m really trying to put out content where I’m helping to improve people’s lives. So that exercise, whether that’s relationships, whether that’s raising kids, whether that’s investing, just trying to be a role model, a figure in that sense. So that’s on Instagram at Den McMullen Lifestyles on Instagram. Check me out on that.

Rob Break [00:55:42] Dan McMullen Lifestyles, yeah. We’ll have all this stuff in the show notes, guys, for you to go ahead and reach out to Dan and join that webinar that he has. I think, you know, I had fun and like I said, I really like the crew people that you had on there.

Dan McMullen [00:55:59] Yeah, it’s a really good bunch. And, you know, it’s just about learning and sharing and it’s a really great hangout. So I welcome anyone to us. Jump on. Thanks, Rob.

Rob Break [00:56:08] Yeah. And it’s been a real pleasure, you know, getting to know over the past few years, getting to know you and your brother who, you know, I helped actually buy a house right next to my old place. So we were neighbors for a little while and that was fun. And Ryan, to getting to know you guys has been a pleasure.

Dan McMullen [00:56:26] Yeah, thanks. I really appreciate those kind the kind words our paths of certainly crossed many, many times and I really appreciate that. Thank you.

Rob Break [00:56:36] So thanks again for sharing all this. And we had a great time.

Dan McMullen [00:56:41] Awesome. A long time. Listen to the show. It’s really cooled to be on with you, Sandy and Rob. I really appreciate it.

Sandy Mackay [00:56:49] Really. We love having it. I love these shows where we have great stories. Obviously, at this point. We’ve been doing this eight plus years. There’s a few more people out there like you and some of us in this. And they’ve got a great story to share. I mean, reach out to us. We’d love to have more guests like you, not just a tutor on horns, but it’s a great story.

Rob Break [00:57:06] It doesn’t hurt, though, and.

Sandy Mackay [00:57:08] It doesn’t hurt if I’m honest. Yeah, but you’ve got a great story there and you’ve built up some great stuff, so congrats on the way to get into the action.

Dan McMullen [00:57:15] Yeah, thanks for all.

Rob Break [00:57:16] And I mean I don’t really care about our Hornsby intuited the fact is that we started this really so that we could learn but also you know I mean it has become a tool that is that has worked well for our businesses. But Sandy, when you and I started this, it was more just to talk and help people.

Sandy Mackay [00:57:36] You know, we.

Rob Break [00:57:37] We were we weren’t realtors. We were just wanting to learn, right? Wanting to get on and talk to people and explore all the different pitfalls and ups that you can, you know, experience through this.

Sandy Mackay [00:57:52] It was because it was pretty in line with the little by little becomes a lot. It was it was kind of doing a little by little and then it became a lot of fun.

Rob Break [00:58:00] I’m certainly glad we didn’t wait for. What do they say done is better than perfect because we were far from perfect, right? Anyone going back? Maybe. I don’t know. It took us a while to find a groove, I think. Yeah.

Sandy Mackay [00:58:13] Oh, yeah.

Rob Break [00:58:14] But it’s been fun. Okay, Dan, thanks a lot, man. Thanks for taking the time to talk to us today. Sandy, how can people reach out to you?

Sandy Mackay [00:58:22] Send Freedom Rep’s dot COM or connect with me on Instagram or Facebook as well.

Rob Break [00:58:27] And people can reach me at Rob. Mr. Breakthrough. Okay. Thanks, guys. We’ll see you next time.

Announcer [00:58:33] You’ve been listening to the Breakthrough Real Estate Investing podcast. We hope you’ve gotten some useful and practical information from the show, and we hope you’ve been inspired to take control and live life on your terms. We’ll be back soon. But in the meantime, make sure to like, rate and review the show. And don’t forget to subscribe and listen on Apple Podcasts and Spotify. See you next time.

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