From Tanzania to Flipping in Canada with Jose Jafferji
This content is provided in partnership with Georges El Masri and the Well Off Podcast.
Podcast Transcription
Georges El-Masri [00:00:00] Welcome to the Wel Off podcast, where the goal is to motivate, inspire and share success principles. I'm here with my colleague Jose, who's also a fellow rock star, and Jose has been investing for a long time. I think it's been since his early 20s. He's done many projects. He's done the buy, fix, refinance strategy. He's worked on in multiunit properties and he specializes in flipping. So I've had a chance to connect with them on a few occasions. But this is the first time we really sit down and have a chat. And welcome to the show to start.
Jose Jafferji [00:00:33] Thank you very much. I'm very happy to be here.
Georges El-Masri [00:00:36] Great. I appreciate your time. I know you're not feeling too well today, but I appreciate that you came all the way out to the office to to make things happen. And as always, I want to start off by asking you about your childhood. We kind of talked about that a little bit. So if you want to tell me where you grew up, what you remember from your childhood.
Jose Jafferji [00:00:54] Yeah, sure thing. So my parents immigrated here when I was 10 years old, and it's all the way from East Africa in a country called Tanzania. So that's that's where I was born. And I had my uncle that lived here. They moved back from England. So it was fairly smooth transition. We used to visit him. So my my parents decided to move here, which was a great choice.
Georges El-Masri [00:01:23] Mm hmm. Great. So you grew up there for the first 10 years of your life. Do you remember much about the country, what your living conditions were like?
Jose Jafferji [00:01:33] Yeah, living conditions were pretty good. I mean, you know, in Africa, you were either doing well or you were really poor. So there isn't really a middle class or at that time. But, you know, it's starting to change now. It's been you know, things are improving there just so the quality of life wasn't too bad. But of course, you know, my parents strictly came here for education. That was the main reason.
Georges El-Masri [00:02:00] Mm hmm. Do you remember what your parents did there for work?
Jose Jafferji [00:02:03] Yeah, my my dad was a businessman, basically was a azouz in the shoe business. So he had a shoe store. You also did wholesaling as well to other smaller retailers.
Georges El-Masri [00:02:16] Cool, cool. So you kind of had that entrepreneur and you just from observing your dad when you were a kid.
Jose Jafferji [00:02:23] A little bit. A little bit. However, I would I should say I kind of have a almost like a rich dad, poor that story, because my uncle was the major influence in my life in terms of entrepreneurship. My uncle originally, like he's a physician, is a doctor, but he became more entrepreneurial. He started opening up clinics and then he has a big hospital, a 40 bed hospital in Tanzania as well. So he was always the one encouraging me to think entrepreneurial, you know, building that entrepreneurial spirit in me.
Georges El-Masri [00:03:01] That's interesting. So was was it the case where maybe your dad would say you need to go to school, get an education, then your uncle would say, you know what, you need to buy assets. You need to do this?
Jose Jafferji [00:03:11] Not exactly. Exactly. So my dad, you know, he was he was a businessman, but I don't think he was an entrepreneur. He he basically the he went into business because that's the only thing he knew how to do. Right. He didn't have much education and just kind of had some accounting background. So he, you know, start exploring what can we bring into the country to sell what was underutilized. So I should say a little bit entrepreneurial, but he definitely didn't encourage us to be entrepreneurs. He was especially coming to Canada. He definitely didn't want us to start a business, you know, felt like it was very risky. Mm.
Georges El-Masri [00:03:51] Yeah. I know when a lot of people come to Canada and they have children, a lot of people's goals are to get them educated and to make sure that they get a decent job and they live a decent life because sometimes those opportunities don't exist in the country that they come from.
Jose Jafferji [00:04:07] Yeah, absolutely. Yeah. One hundred percent agree. Right.
Georges El-Masri [00:04:10] And do you still stay in touch with your uncle to this day? Yeah.
Jose Jafferji [00:04:14] One hundred percent. You know, we talk on the phone, know at least once or twice a month. He's always encourages me to, you know, keep pushing forward through my challenges. And, you know, he's extremely proud of what I've accomplished so far. And, you know, he understands that I have so much more potential. So, you know, I call him papa. So which is like I know my second dad.
Georges El-Masri [00:04:42] Yeah. Yeah. Richard for it pretty much. Yeah. OK, so you stay in touch. Do you feel like he's still somebody that you turn to for advice or do you feel like you've kind of gone past that and you're doing something different from what he's doing?
Jose Jafferji [00:04:55] I don't necessarily ask him for advice. You know, I have a really good relationship. With my my dad as well, so I would bounce some ideas off him, but not necessarily he's he's super conservative. So any kind of, you know, the next property that I'm buying, if I talk to him about it, you know, he'll he'll always tell me, hey, are you sure the numbers are good on this? You know, should you be buying your third, fourth property? You know, because can you handle all this? Yeah, he's coming from a very protective. But, you know, it's my father and I have kind of a very friendly relationship. So we're open to chat about everything. Yeah.
Georges El-Masri [00:05:37] What was your dad's reaction when you first told when you first bought that investment property or that flip? I don't know what your first one was. Was it a flip?
Jose Jafferji [00:05:45] I wasn't a flip, but it was. Yeah, actually, I was sorry. Uh, my first property was in twenty seven. Yeah. We bought a project of Flip Project in Brampton. OK, and at the time, you know, I didn't know anything about what I was doing. I had no education or I didn't have any experience. I was working with a realtor that my dad recommended. So it was simply a matter of of, you know, whatever I've learned from HDTV apply that I didn't know about the my number. So I ended up overspending. Yeah. And eventually lost, uh, well, five thousand dollars on that.
Georges El-Masri [00:06:28] Oh, really. Once the project was complete, you lost a little bit.
Jose Jafferji [00:06:31] Yes. The market had, you know, two thousand seven to soften and actually and I know I, I bought it at a high price. That's, that's the thing with if you're, you know, whether you especially for flipping purposes, it's all in the by. Yeah. Right. You know that there's going to be money at the end as long as you buy. Right.
Georges El-Masri [00:06:51] OK, so before we get into that, can you kind of briefly explain what it is that you're doing today? We kind of touched on a little bit with the buy fixed refinance, but if you just want to describe it in your own words
Jose Jafferji [00:07:01] so you know everything I know you can either look at it that way, flipping the property back to yourself, which is the other also known as the poor strategy. Buy, renovate, rent, refinance, repeat. Um, so you know, or you can end up selling it. Yeah.
Georges El-Masri [00:07:20] Which the first one is a buy and hold strategy for the flip would be the exact same thing, except instead of refinancing it you end up selling it to a consumer.
Jose Jafferji [00:07:27] Exactly. Exactly. The the end result is the only thing that's different, but your process is exactly the same. Yeah. So I've been applying that same strategy since the very beginning. And then so after that first property in Brampton, I started researching what's the cheapest area in Ontario that I can go buy and which was Windsor, Ontario. So we bought, you know, close to about eight properties in Windsor from multifamily for Plexus to single family, did a few flips there and also went into some buy and hold as well. Same time.
Georges El-Masri [00:08:07] And that was in 2007.
Jose Jafferji [00:08:10] No, this was more so. Twenty nine.
Georges El-Masri [00:08:12] Twenty nine. So you waited two years after the first one to start buying in Windsor?
Jose Jafferji [00:08:17] Yeah, exactly. I said, you know what, let me do some more research. I started attending events, more educational seminars and actually in between I started exploring in the US, so I started buying in. I bought four properties in the US as well, which were all like power of sale, foreclosures and bank and all, like they used to call them, was a short sales there. So I used to buy them from wholesaler. Yeah. And basically we have them. And keep them as rentals.
Georges El-Masri [00:08:52] Yeah, yeah, so the short sale is when it's like a preventative move from the homeowner because they know that the bank will soon foreclose on their home. So they end up selling it before that happens, right?
Jose Jafferji [00:09:02] Yes, correct. OK, so in the States, it's that the system is foreclosure and not Paracel because it's a nonrecourse mortgage so they can simply walk away from the mortgage and the bank wouldn't do anything about it.
Georges El-Masri [00:09:18] Right. And people always ask about that here in Canada. People always say, well, can you look for foreclosure properties for me? And what they don't understand is that there are no foreclosures in Canada. It's power of sale. The difference is in a power of sale, the bank has an obligation to the homeowner to get as much as possible for that house. Otherwise, they could even risk being sued by the homeowner if they feel like it was under undersold.
Jose Jafferji [00:09:42] Yes, correct. In Ontario, we have our city, right. Ontario. So, for example, in Alberta, yeah, there's foreclosure and they have nonrecourse mortgages. So it's similar to what's happening in the US. The you know, people can walk away from mortgages in Alberta. I'm not too sure about all the other provinces, but A.C., you're absolutely right. Yeah, they have a policy process and that's why it's very difficult to find under market properties. Yeah, because they're extremely rare. Mm hmm.
Georges El-Masri [00:10:16] I want to ask you what percent of your business today are is flipping and then what percent is the buy, fix or buy, renovate, refinance strategy?
Jose Jafferji [00:10:25] So I you know, I didn't do so much flipping in terms of, you know, selling off the properties until like the last two or three years off and on. If I would find a deal, I would do it on a smaller scale, one or two properties a year. But majority of time I you know, I went to buy something that I could end up keeping so I would, you know, apply the Bush strategy and keep it and not and I didn't want to sell it because the market had been so strong.
Georges El-Masri [00:10:57] Are you constantly refinancing? These properties are getting hillocks, a home equity line of credit so that you can continue to buy or are you aiming to pay off those mortgages?
Jose Jafferji [00:11:08] You know, the the financing landscape has changed a little bit. So we used to until last year, do a lot of refinancing mortgages, getting a little bit tougher now. So our projects are a little bit, you know, strategies that we don't end up putting in a lot of work into it, the ones that were willing to keep. So we would put in as little as possible. So with the intention of not refinancing, so that just recently change with the new mortgage rules. But all this time, yeah, we would have every other month we would be refinancing a property, putting out the equity and purchasing another one. So we were on a, you know, a very quick cycle. And that money kept recycling and we kept them kept buying more and more properties.
Georges El-Masri [00:11:58] Now it's more let's just put the money into the property, do as little as possible to renovate it and just wait a few years and hope and hope that it
Jose Jafferji [00:12:07] continues to appreciate that. Now it's more so just buying and holding. And I have the other business which is buying and flipping my fix and sell, which is generating the extra income. And that's pretty much my primary source right now. Great.
Georges El-Masri [00:12:27] Where are you finding these properties? First of all, where are you buying and also how are you generating these opportunities?
Jose Jafferji [00:12:35] Yeah, so the is extremely important in the buying process, right. That you get the right deal. So we we do a lot of marketing. You know, offline marketing postcards will target certain neighborhoods. Fliers. We do signs. Bandit signs. Yes. Bandit signs. Lawn signs. We would so specific target areas which are more likely to generate those types of motivated sellers. We also do online marketing as well. You know, people click Google AdWords, things like that.
Georges El-Masri [00:13:15] What do you think has been the most effective source of of marketing for you?
Jose Jafferji [00:13:21] I would probably say in terms of, you know, the cost per lead or cost per conversion, which actually turns into a deal, I would say online lead, although we still have to go through a lot of leads, you know, maybe even 50 leads before we get one deal. So it's a lot of, you know, legwork in terms of screening, calling the leads back and following up with them because we have a very small segment of the market. That's actually what we're looking for. You know, they have to be in a distressed situation where the only option is to sell. And majority of time, the property needs quite a lot of work and it doesn't make sense for them. And they know it in themselves that I cannot put this on the market. Sometimes they're embarrassed, sometimes because the whole property, you know, we recently bought something that the entire basement was used as a doghouse. So like anybody that would walk in, they would basically one out, you know, so they knew that that because they had previous people, private buyers come through and they just walked away because they were too scared, you know, so stuff like that, which is, you know, extreme situations, which would give you the best, best leads. And those are the most profitable. Mm hmm.
Georges El-Masri [00:14:47] And where, for the most part, are you finding that your marketing is is generating leads? Which cities do you find you've had the most success.
Jose Jafferji [00:14:55] So we do a lot of work in Durham region, especially in Oshawa. You know, it's sort of all over the place. One of the tougher markets has been Hamilton saturated. Yeah. You know, sometimes, you know, if it's a market that has very agent dominated market, they sometimes end up going with a lot of times they end up going with an agent. Right, though it's a distress situation. But we we we certainly are working on a deal of the project in Hamilton right now. So, you know, there's always deals out there, but we're buying and, you know, we're closing on one in Toronto, the Danforth and Woodbine, which is a great area. And I think we got at a pretty decent price.
Georges El-Masri [00:15:42] Yeah, well, I've spoken to a couple of people that are kind of doing the same thing that you're doing. And it seems like most wholesalers and flippers are going all over the place. They don't have a specific market. They end up in Peterboro and then they go to Hamilton and Brantford and they're kind of all over. Why is it that you you choose to cast such a wide net?
Jose Jafferji [00:16:02] Because there's not that many deals out there now for what we're looking, because I have, you know, for example, my minimum profit margin on a deal is when I do my calculations. That minimum is forty thousand per flip project. And so, I mean, my average has been probably close to 60 because I'm I'm always conservative with my numbers. When I end up selling, I end up getting a little bit more for it. But, you know, the the reason we were casting a wider net is, is these types of leads, you know, these situations that these people are in, it's not as widespread. So that's why we have to cast a wide net to attract those those types of leads. And at the end of the day, it's I don't even go that far. My I'm fairly like I have basically one hour within one hour drive from where I live is where how far I would go. So I'm not going to Windsor, Ontario any more.
Georges El-Masri [00:17:00] Right. Right. Do you find that there's a lot of competition in what you're doing? Are there let's say somebody calls you because they have a distressed property. Have they already called someone else because they received a postcard or they went online and they found someone else who does it?
Jose Jafferji [00:17:18] Sometimes. Sometimes there is no competition. Sometimes they've they've talked to another guy or two, you know, another house buyer. So it's it it's it all depends. Sometimes they were shopping for who's giving them the highest price. Right. You know, which is fine. You know, sometimes, you know, one of our colleagues would get a deal. So we all kind of may work together. You know, if I'm looking for a deal and it's slow season for me or so I would I would end up buying it from them. Mhm.
Georges El-Masri [00:17:51] Right. Just because you want to get the work going, you want to generate some sort of income even though you might be eating away at some of your profits. Yes. Ah. And how's your, how's your sphere of influence. Do you find that you've got a lot of family and friends here just in general, a lot of contacts that you network with on a regular basis.
Jose Jafferji [00:18:08] Yeah. You know, when for the last at least five plus years I've been working really hard with doing a number of different groups just to see and learn. From other people and what they're up to also, you know, just being around, you know, somebody that's more successful than you. You always get the itch of to do more. Right. And that's sort of like almost a recharge or encouragement tool that I know for myself. I use that towards, you know, buying more properties or because, you know what? If you think that, you know, I've got three properties because that's your circle of influence only has one, then you're going to feel good about yourself. But if you're surrounded by people who have 50, you know, 100, then that's going to encourage you to do more. So I always look at it from more of a, you know, an encouragement, motivation point of view, right?
Georges El-Masri [00:19:06] Yes. Some people might be really upset by that. Look at this person. They're they're doing so much better than me. And then it might make them feel bad about themselves. But someone like yourself would say, OK, now I'm inspired to do a little bit more work, to get a little bit better, get some more homes.
Jose Jafferji [00:19:21] Yeah, exactly. You know what? It's for me, it's it's always been driving forces is keep pushing forward because there's there's so much, you know, stuff that you got to deal with on a on and off from a property management point of view, from renovation point of view. So, you know, you got to be surrounded by that group of people that, you know, are also going through the same thing.
Georges El-Masri [00:19:47] And part of what I was actually looking to ask you is about the sphere of influence. You said that you're doing a lot of online marketing, postcards, print mail, stuff like that. But does your family and your friends, do they know what you're doing and you ask them to keep their eyes and ears open for you?
Jose Jafferji [00:20:04] You know, I use my family and friends more so for raising capital. They do know what I what I, what I do. But, you know, it's not like they're going to hand me a distressed property. I don't I'm not looking for that. I'm also looking for a. Do you do you want to partner with me on this deal? Right. So, you know, I've been raising a lot of capital from family and friends. And it's you know, because I've documented a lot of my journey through my websites and my YouTube channel and Facebook and Instagram, you know, they kind of see me as an expert and they're there now after this many years are it's becoming easier for me to raise money. Right. Right.
Georges El-Masri [00:20:49] That's interesting that you say that. So I was thinking maybe you can ask them to help you locate projects to work on, but instead you're saying you want them to focus on using their capital to invest with you and to help you grow in that way instead.
Jose Jafferji [00:21:03] Yes. Yes, exactly. I you know, because of what I'm looking for in terms of a distressed properties, so rare is very hard to dig for those types of properties, you know, so it's it's very unlikely that they're going to actually bring me a deal. I'm also looking for because they don't understand my business structure and my what type of price I need to buy that. So typically, you know, my price, just to give you an idea, I'm buying it around 80 percent of after repair value. OK, so whatever the market price is that I would sell it at, I worked my numbers backwards. Right. So let's say the final sale price is going to be one million dollars. I would have to buy it at 80 percent, which is eight hundred thousand. And then I subtract my renovation costs, let's say, you know, a hundred thousand dollars in my renovation costs. I would have to buy that property for seven hundred thousand.
Georges El-Masri [00:22:01] Got it. Got it. And does that no work for lower priced properties as well. Yeah, it's the same thing, same thing.
Jose Jafferji [00:22:09] Because a lot of these expenses that you go through, you know, like you're going to have the land transfer tax, the when you sell the property, you're going to have the the commissions to pay, but all based on percentage. Right. So the percentage works pretty well. And I'm also, you know, when I'm talking to a motivated seller on the phone, I get a general sense of is this a small, medium or large rental? So I, I can ballpark what I'm going to pay for it. So I tell them on the phone, I give them an offer on the phone, and if that works within that range, then I go see them.
Georges El-Masri [00:22:47] Really you throw the number right over the phone. Yes. And how how is that worked for you? Do you find that people are receptive to it? Because I know that coming from real estate, being an active real estate agent, people always ask when they don't know you, what's your commission? And if you see your commission, then that's all they care about. Yeah, right. And then the conversation kind of ends there. And I'm assuming that what your people are looking for is a price. So if you give them price, how how do you find that that why is that beneficial for you?
Jose Jafferji [00:23:19] It's a good question. And I you know, when I first started, I didn't do that, but I felt like I was wasting a lot of my time to go there when they're you know, I tell them upfront that this price that I'm giving you is is a ballpark price. I haven't seen your property in person, but if this price range works with you, then, you know, I can come out and take a look at the property. So I'm almost trying to not sell them, you know, like I it's now I learned this from one of the trainings I've done in the past. It's called Going Negative. So you almost try to discourage them. So when somebody tries to discourage you, you actually then the other party is trying to sell you. Right. So that's what what I'm looking for. Yeah. Because then I know this is this is going to be a deal. So a lot of times when I before I go on the appointment, you know, 70 percent sure. Whether this is going to work out or not. Right.
Georges El-Masri [00:24:17] And have you ever or have you checked what the reception would be like if you were to ask them what they wanted? Because I know a lot of people probably say, no, I called you. I want to know the price. But do you ever just insist on having them tell you what their prices.
Jose Jafferji [00:24:30] Yeah, I do. I do. Ask them first, you know, what's kind of a price that you're looking to fetch for this house. If it's within a, you know, a range that I'm looking for, then I can always add value while I'm there. I will still go on that appointment. But if it's something like, you know, I'm willing to pay five hundred, but they're they want seven hundred thousand for it, which is like market value, you know, with seven or eight thousand which would be fixed up value. Yeah. Then. The guy is being unrealistic completely, so I would perhaps sometimes wait or put them on a follow up, they may come around. So it's kind of on a case by case basis. But majority of the times I wouldn't go see the property unless I know that there were within the range.
Georges El-Masri [00:25:25] And how many calls do you get, let's say, a week or a month from these potential sellers?
Jose Jafferji [00:25:32] Yeah, roughly, I would say about maybe 10 leads, you know, I, I could scale that to more, but at this point it's around 10, 10 per week.
Georges El-Masri [00:25:43] You have you get about 10 phone calls per week from people who are saying, I think I got your mail or I clicked on your website and I want to sell. What can I get? Yeah. And of those 10, what percent actually convert into sales?
Jose Jafferji [00:25:57] Olmeda. Well, right now I'm doing roughly one per month. OK, so
Georges El-Masri [00:26:04] so one out of forty one
Jose Jafferji [00:26:05] out of 40 is
Georges El-Masri [00:26:07] interesting.
Jose Jafferji [00:26:08] So yeah, it is very rare. But you know, ultimately in this business you only need one deal. Yeah. To really make a big difference. So and the way that I am, I'm not you know, I should be able to do more with some of the leads, but I kind of I shouldn't say waste time, but yeah, sometimes they do end up not working out. And so I'm starting another side of my business, which is the whole selling side, which, you know, sometimes a lot of these properties, they if they are in a rental quality area and if it would cash flow, then I can wholesale that and a retail buyer or an investor would be willing to pay more than what I'm willing to pay for it. So it you know, there's some starting to build that buyers list for that. But at the end of the day, there's not a whole lot of serious buyers out there, you know, a lot of wannabes. But I speak to them on the phone all the time and know their criteria is so strict that it's like super impossible to find that. So they might look for a year and maybe get a one deal from me.
Georges El-Masri [00:27:17] OK, you're talking about your list of people. Do you have a team of people that you work with or is it just yourself right now?
Jose Jafferji [00:27:24] Yeah. So my team consists of my wife is part of my team and she handles all of our property management and the leasing side, any kind of maintenance issues on our on our rentals. So she handles all of the our buying whole side in a big way because we manage all of our properties in-house. And then we have a lady that works with us in. So we have a lady that works with us as an employee and in Hamilton and another buy in in the actual market. What do they do? So they're basically they do all the showings. They do coordinate things with tenants. They are the they're the eyes and ears on the ground.
Georges El-Masri [00:28:09] So they're part of the property management team. Yes. They're not part of the the acquisition team.
Jose Jafferji [00:28:14] OK, and as far as the and then we have I have two two people that are I should say they're contractors, but in a way they're like our employees that work with me on the projects and of the projects. So they go from job to job.
Georges El-Masri [00:28:33] And do they get paid contractually as in on a per property basis, or are they paid a salary?
Jose Jafferji [00:28:41] No, I pay them basically an hourly rate. OK, yeah. So and I also give them a bonus if you know when the property is completed or if they're putting in extra hours. So I've been fortunate to find some good quality, reliable people. And that's what you absolutely need in your you know, when you're in this business.
Georges El-Masri [00:29:03] Where did you find your contractors?
Jose Jafferji [00:29:06] Referrals to family and friends, all kinds of different sources, sometimes, you know, just we try people out. If we like them to, they would stay on. So I have so much renovation's going on right now. For example, they are there is I have a total of six projects going on, two in Hamilton.
Georges El-Masri [00:29:28] OK, all rental projects.
Jose Jafferji [00:29:30] Yes. Yeah. And so one of them is, for example, in Hamilton is a sweet conversion. So we're adding a secondary suite. So that's going to be a buy and hold. But the other one in Hamilton is a fix and flip. OK, so it's all kind of works together as part of one ecosystem, I should say. You know, I have a ton of renovations going on at all the time. And we also in sometimes I'm buying specifically I prefer to buy in those cities because I have a team set up like Hamilton. Exactly. Yeah. And I have contractors lined up. You know, I'm not wasting time screening contractors. I know the quality of work is going to be good and it's less management for me. And then I have an admin. Part of my team is also an admin lady. She handles all of our bookkeeping and admin work as well as some advertising. Mm hmm.
Georges El-Masri [00:30:30] I was going to ask you earlier, I forgot to check with you, but how come you have a Spanish inspired name?
Jose Jafferji [00:30:37] Yeah, it's yeah. So my full name is Josepha. And, you know, when I was in high school, most people had a hard time pronouncing it, so I had to shorten it. And when I did, you know, it just kind of started. People started calling me Hosie. OK, then I. I had to change the spelling of my name because actually starts with an H.
Georges El-Masri [00:30:58] Oh really. Yeah. Oh that's interesting.
Jose Jafferji [00:31:01] So yeah, it's kind of interesting how it evolved.
Georges El-Masri [00:31:06] Yeah. So there must be some sort of relation between your, your original name and the Spanish version of your name.
Jose Jafferji [00:31:13] Yeah. So it was just basically they used to call it H you said E all right. And so it didn't I, I just changed it to because everybody used to say Yeah Jose anyways so I then just built it the Spanish way.
Georges El-Masri [00:31:30] OK, all right. That's interesting. All right, back to the to the real estate stuff. What do you envision happening for yourself, your team moving forward? What are you aiming for?
Jose Jafferji [00:31:42] Yeah, you know what, I want to get to a seven figure business in terms of everything, you know, I'm fairly close to doing that now.
Georges El-Masri [00:31:52] What do you mean seven figure? Are you talking about your annual income? Yes.
Jose Jafferji [00:31:56] OK, yeah. So which would include, you know, the flip projects, you know, some of my sales income and some of my buy and hold when we refinance all that. OK. OK. And of course that's just a that's a short term milestone. But you know, well, my long term vision would be getting into larger projects and, you know, development projects as well as I'm also looking for multifamily properties to add to my portfolio. So it's yeah. Like I definitely know that I what I what I'm passionate about, more so than ever, is transforming spaces, you know, that's why I love renovations. So I want to do it on a bigger scale, you know, into some development projects. And also the multifamily space is always interested me. And so I want to, you know, just think bigger and go into larger buying larger buildings with with partners.
Georges El-Masri [00:33:06] Well, what's driving you towards multi-family and how big are you talking? How many units? How many doors?
Jose Jafferji [00:33:12] Yeah. So I'm I'm right now actively looking for something that's 10 to 20 unit building. It could be slightly bigger, but it's very, very difficult to find in Ontario, especially like, you know, city like Hamilton, most of the inventory is overpriced, which is on the market. So it's it's a different angle. You have to go with a lot of networking with other brokers to bring your deals.
Georges El-Masri [00:33:44] Yeah. And what's driving you towards that? Why is it that you want to move in that direction?
Jose Jafferji [00:33:48] You know, primarily it's just that you do the same thing, same amount of work. But your you know, I could keep buying smaller properties, although the return on investment is is great on those. But if you apply the same strategy on a bigger building, it may be a little bit more long term. However, the you know, you make a larger gain at the end. So it's and we have at this point, you know, we have the infrastructure in place to be able to buy that. And I have you know, I'm always looking for financing partners to help me in getting into those larger buildings.
Georges El-Masri [00:34:26] If we look back at, say, twenty seven or two thousand nine, when you were getting into Windsor, do you remember why you had an interest in the first place to invest in real estate?
Jose Jafferji [00:34:36] Yeah. So, um, you know, that's a very interesting question because it brings back a lot of memories. You know, I always wanted to be a businessman or entrepreneur and I always wanted to work for myself, you know, right out of university. I went to McMaster University in Hamilton, studied engineering, and my first job out of school was with, um, with the company that I used to travel quite a bit for all over Ontario. And, you know, you know, it was a small company. So I had a good relationship with my my manager, the owner of the company. And he said that, you know, if you put in long hours, do a lot of work, we're going to give you a raise. And in twelve months. So that's what I did. I ended up spending a lot of long hours traveling, you know, just trying to prove myself exactly. At the end of 12 months, I went up to him and ask for a raise and, you know, he didn't want to give me a raise. So that just enforced in me that, you know what? I can have somebody else control my destiny. So that's when I started that kind of that spark inspired me to keep searching for something better. Yeah. And fortunately, then I started going into a lot of network marketing businesses and I learned, you know, about having that mindset into thinking bigger. And after the twenty seven twenty eight market stock market crash, you know, I started looking into, hey, there's got to be another way. And that's when I found real estate.
Georges El-Masri [00:36:21] And what ended up happening with your other investment properties? Did you still have them? Did you sell
Jose Jafferji [00:36:27] them? I ended up selling my US properties last year. However, I you know, they'll may go back to the US market and doing some multifamily deals.
Georges El-Masri [00:36:40] And did they perform well, by the way, your. Your properties in the US and where did you have them anyways,
Jose Jafferji [00:36:46] so I bought them in Rochester, New York. I'm not the greatest market, but it was, you know, when I first was going getting into real estate, I was just looking at the numbers. And that's the biggest mistake that a lot of newbie investors make, is that they're looking at it from strictly on the spreadsheet. It was giving me the most amount of cash flow. And these properties did give you a lot of cash flow, like you were literally getting over 15 percent, sometimes 20 percent cash on cash return. So extremely you sounded very lucrative. However, these properties were also in sort of distressed areas, didn't attract the best quality tenants. So we had more tenant turnover, we had more repairs and maintenance. And, you know, I held these properties for, you know, close to five years. At the end, you start to get more and more expensive, you know, and the cash flow started to decrease and the same thing happened. Funny enough, in the Windsor market as well, because I was buying distressed and not the best quality neighborhoods, attracting a lot of riffraff. So I learned from that point that I need to, you know, select cities that are not just cheap, but also have strong economic fundamentals. Mm hmm.
Georges El-Masri [00:38:13] Well, what you kind of touched on a little bit, but what do you think has been maybe if you want to share two or three of the biggest lessons in the last 10 years of you being involved in real estate?
Jose Jafferji [00:38:24] Yeah, one of the biggest lessons is having a support team or support network, because this is a team sport, you're going to go through a lot of ups and downs. You know, you're going to have to deal with bad. So you got to have people that you can call upon to help you in situation.
Georges El-Masri [00:38:43] What kind of people if
Jose Jafferji [00:38:44] you know, whether, you know, for example, if it's a contractor that you can call to relieve your stressful situation or save a basement leak or so. Yeah. Or if it's a tenant or a paralegal. So a power team, you know, secondly, I would say is that the, you know, strong mind mindset because you got to have a thick skin in this business. Otherwise, you know, a lot of people will end up buying a few properties, but they they won't be able to scale because you're going to be dealing with problems day in and day out. Right. So, you know, that's what the Windsor and the the other properties taught me is having a thick skin because, you know, we've dealt with all kinds of stuff. We used to have pretty much one eviction every month, you know, and thirdly, I would say is that positive mindset that you're going to know this is going to pay off, you know, that belief, belief in real estate as belief in yourself that you know what what I'm doing is for my future. It's going to you know, although, you know, you're not reaping the rewards right away and you buy the property. But, you know, even if you held the property for five, 10 years, you're going to be glad that you did buy that.
Georges El-Masri [00:40:01] Of course. And how were you able to scale so fast? You said you went from losing five thousand dollars by investing in two thousand seven into a house and flipping it. And in two thousand nine you bought eight properties. How are you able to do that?
Jose Jafferji [00:40:16] Yes, in Windsor, the market was obviously very, very distressed. And so, you know, I was buying properties for fifty thousand two hundred and twenty thousand and fifty thousand being a single family home. And we you know, I bought a fourplex. I remember four seventy five thousand, you know, and so we and I and then at the end end up selling them for about one forty to two hundred.
Georges El-Masri [00:40:43] So after how many years.
Jose Jafferji [00:40:46] But two to three. OK, so you did pretty well. Some of them are. We ended up flipping as well. So, you know, the the way that I've been able to scale is, you know, basically using the the birth strategy or flipped yourself strategy, always adding value by doing renovations, you know, always buying something that needs some work so you can get that boost right away. So not waiting for the market to catch up, but, you know, adding that value right away. And sometimes, you know, we used to refinance fairly quickly, but nowadays, you know, we may wait a year because some lenders want at least a year before you refinance. So, you know, it's just about recycling your money as quickly as possible. And, of course, you know, timing was great. We had a really great boom in the real estate market, especially in the last ten years. Yeah.
Georges El-Masri [00:41:44] And just to maybe if somebody doesn't understand what you're talking about when you say recycle your money, basically what you're doing is you're buying a property typically under market value and distressed. Yeah. So there's an opportunity for forced depreciation, which is the renovations. Basically, once you fix the property, you can then go to the bank and get market value for it. And what they do is typically they'll give you about 80 percent of the value.
Jose Jafferji [00:42:11] Correct.
Georges El-Masri [00:42:11] And you pay off the original mortgage. Hopefully you'll be able to pay off all the renovation. Exactly.
Jose Jafferji [00:42:16] Yeah.
Georges El-Masri [00:42:17] So you have nothing left in the property? Pretty much,
Jose Jafferji [00:42:20] yeah. You have very little, very little property. Yeah. And you know that you go into the next one,
Georges El-Masri [00:42:27] you're going to use that same money that you first invested and take it to the next project.
Jose Jafferji [00:42:31] That's right. We keep keep buying more and more based on all the value that you've created from the renovations. So, you know, sweet conversions is one of our primary strategies. Know adding a secondary suite booza boost the value of the property, boost the cash flow. You create great tenants. So it's a win win situation. Yeah. And at the end of the day, you can keep on repeating that process over and over again.
Georges El-Masri [00:42:59] Are you having trouble getting the full value? Because a lot of times when you're doing a legal second suite, the lenders are not appreciating the actual value of the property because they're comparing it to illegal units, illegal to unit properties. Are you finding that or are you able to justify.
Jose Jafferji [00:43:18] Yeah, we you know, I specifically I don't meet the appraisers any. Or however, I used to I used to have a set of my drawings, you know, my on the renovation money that I've spent, so some appraisers appreciate you providing that information. Some don't they don't care. They're going to do it their way anyways. So know, a lot of times we end up challenging the appraiser. No, 90 percent of time is not successful unless you end up going with different lender.
Georges El-Masri [00:43:50] So you're saying when you challenge them, you ask them to reappraise or you ask the lender to send another appraiser? Yeah. You know, with
Jose Jafferji [00:43:58] it, different lenders work differently. But if you're able to pick your own appraiser, at least a company, then there are some better than others. And we now then we specifically started sourcing people that understood income properties and investment properties. So they weren't sending somebody that's usually only doing single family homes. So we started asking the companies for those specific appraisers to get the, you know, get the advantage so that they understand we're doing something different. Right. This is not this is not as just a property with basement apartment or in-law apartment. Yeah, yeah. You know, we've spent the extra money. We've going to the city, you've got all the permits, got all the permits. So we show them all that. But, you know, sometimes it's still not in your favor. Most of the time our appraisers have come roaring value, but not by much. So we let it go. Right?
Georges El-Masri [00:45:02] Fair enough. OK, well, I think that's pretty much a lot for people to digest here. And I'll just jump into the final section of our podcast, which is the random five. I'm just going to. Yeah. Ask you five random questions. You just let me know what comes to mind first. Sure. What was your favorite meal as a child? And I know you grew up in a different country, so maybe you can tell us what it was there.
Jose Jafferji [00:45:26] You know what it was still burgers and fries. Oh, yeah. I'm still a big fan of burgers and fries.
Georges El-Masri [00:45:32] Was it like a different animal, though?
Jose Jafferji [00:45:35] No, no, no. It's the same stuff. Yeah. Especially fries. Like we you know, growing up, I have a plate of fries and ketchup, you know, just I still love it.
Georges El-Masri [00:45:47] Yeah. I been pretty, pretty normal childhood it sounds like. Yeah. What's the most important lesson you've learned? It could be General doesn't have to be real estate related. It can be if that's what you want.
Jose Jafferji [00:46:00] You know, I recently I've come to realize that you got to live your own life, you know, whatever makes you happy, and we live in, you know, a world with social media and in comparing yourself to others. So it's something that I personally sometimes struggle with. But it's you got to you know, right now, for example, I'm doing a lot of things that allows me to be at home now while still running my business. And forcefully, I had to think that way because, yes, I could save more money by not hiring as many people. But I learned to let that go and leverage other people's talents. So, you know, and you know. So for me, what was more important is spending time with family because my kids are young right now. I have twins and a three year old. So, you know, spending time, quality time at home is extremely valuable. And, you know, it took me a little bit a while to get to that realization that, you know, they're only going to be young for a short period of time.
Georges El-Masri [00:47:13] Mm hmm. OK, well, that's that's really good advice, actually. What would you do if you were famous for one day?
Jose Jafferji [00:47:21] If I was famous for one day, I would probably leverage that to my advantage to help more people. So, you know, I one of my missions in life is to educate other people and help them become more financially literate, help them understand how money works. So, you know, perhaps if I'm yes. If I'm famous, I can leverage that to influence more people
Georges El-Masri [00:47:51] to help them get out of the rat race and to help them learn how to become financially free. Is that right? Yeah. Yep, exactly. Well, that's that was I didn't expect that kind of answer, but that's really, really good of you to say that. Do you remember actually, not even to remember, but what was your favorite TV sitcom?
Jose Jafferji [00:48:10] Yeah, I still remember Steve Urkel and also Family Matters. I used to watch that every single day when I came home from school. Yeah.
Georges El-Masri [00:48:22] How old were you?
Jose Jafferji [00:48:23] I don't remember the exact age, but I was probably like, I don't know, 15 or so around that age. Yeah. And yeah, just used to love that show and it was like it was like my my routine was I came home. I used to watch that. Oh yeah.
Georges El-Masri [00:48:38] That's cool. Yeah. I that's one of the shows that I used to come across from time to time, but I was never really too too into it you know, but I'm sure it was a good one. What's been the most influential book in your life?
Jose Jafferji [00:48:52] Most influential book, I would say, is Napoleon Hill's thinking, or which, um, and, you know, because it truly encompasses everything you know about I look at it that in order for you to become successful, you have to become a better person. And that's what this is the most rewarding part is, yes, to be me, you could have become wealthy or your goal may be to become wealthy, but in the process you will become a better person. And that's truly the most rewarding part of your life, is is giving back to others, sharing your knowledge and, you know, impacting as many people as possible.
Georges El-Masri [00:49:38] It's interesting you say that because you're actually maybe the second or third person that says exactly that on the podcast. So that's that's cool to hear. And maybe one last thing I want to ask you. How are you going to teach your children to be wealthy, to have a wealthy mindset?
Jose Jafferji [00:49:53] It's going to be very good parenting and not, you know, making them realize not to take everything for granted. My childhood in Africa, I see a lot of poverty, so I don't take that for granted. So in a way, I don't think don't take things for granted because we live in a very fortunate country. We're very fortunate family, you know.
Georges El-Masri [00:50:19] Yeah, absolutely. 100 percent definitely very lucky to be here. And we have opportunities that very few people actually have. Yeah.
Jose Jafferji [00:50:27] Yeah. A hundred percent.
Georges El-Masri [00:50:28] Great. So. Well, first of all, again, thank you so much for coming on the show. And do you want to explain to people how you can possibly help what services you might be able to provide and what's the best way to contact you?
Jose Jafferji [00:50:40] Yeah, sure. You know what? Everything is on my website, so it's savvy. Real estate investor dot com spelt a v y real estate investor a dot com. You know, we've got a free report that I've got on my website. You can follow me on on Facebook and Instagram as well as my YouTube channel.
Georges El-Masri [00:51:04] Perfect. Perfect. Well, thank you and appreciate it and hope you'll enjoy the rest of your day.
Jose Jafferji [00:51:10] Thanks so much for having me.
Georges El-Masri [00:51:12] Thanks for listening to this episode of the Law podcast. If you enjoy the show, then I'd really appreciate if you left us a review on iTunes and let us know your thoughts in order for us to get a larger audience. It's really important to have reviews. Your sport is extremely appreciated. And also, don't forget to share the podcast with your friends and family until next time. I'm George Elmasry. Have a great day.