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GROWING YOUR PORTFOLIO WITHOUT PARTNERS OR PROPERTY MANAGERS WITH MICHELLE GAUTHIER

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Podcast Transcription

Announcer [00:01:28] 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 house hosts Rob Break and Sandy MacKay.

Rob Break [00:02:09] Hello and welcome back, everybody. Glad you could join us today as usual. Sitting here with me is Sandy MacKay. How are you. There?

Sandy Mackay [00:02:17] I’m awesome. Excited to be back.

Rob Break [00:02:20] You don’t sound that excited. I got. I’m going to next time. It’s almost like the dance monkey can go. Be more excited. Yeah.

Sandy Mackay [00:02:30] Okay. Well, we got a lot more before the show then, is what you’re saying. Like jump on the trampoline or something. Get gone. Yeah.

Rob Break [00:02:36] I was doing jumping jacks just so I could get going. How are things?

Sandy Mackay [00:02:43] Fantastic. Real estate’s world is always fun and crazy, and this last little bit is no different, that’s for sure.

Rob Break [00:02:52] Yeah, well, we’ve got some exciting news. We’re planning an investor tour. Durham, REI is going to join forces with me, and we’re going to have we’re planning an investor tour here. It’s most likely going to be in November. Don’t have anything solid yet but stay tuned for more info on that. It’s probably going to be about 15. I think we’ll capita about 15 people and come down and check out, you know, what investing is all about in Costa Rica.

Sandy Mackay [00:03:20] That sounds pretty cool. You know, we should do this. I’m going to put you on the spot a lot here. But we should maybe come up with some sort of a prize or something that someone could win. Maybe partial payment or a free submariner.

Rob Break [00:03:32] Yeah. You are putting me on the spot. Yeah. No, I guess we’ll just overcharge everybody else.

Sandy Mackay [00:03:37] Yeah, yeah.

Rob Break [00:03:39] No, I don’t know something. We don’t have details yet. Maybe something like that. Sandy would like to foot the bill for somebody to come, so that’s great.

Sandy Mackay [00:03:46] They could even be that thing or something. Something that gives them value here and makes that maybe people excited about checking out.

Rob Break [00:03:54] You know what? We should probably, like, do something like that. You and I as well. Yeah, something like that. Yeah. But stay tuned for that. So as usual, everyone go over to our website Breakthrough REI podcast dot CA. You can listen to all of our past episodes, get in touch with all the past guests through the links in the show notes, and get our free gift.

Sandy Mackay [00:04:16] Yeah, the ultimate strategy for building wealth, the real estates and as well as you all know, you will also get on our MLS. You’ll learn about upcoming events like we just mentioned, maybe earn some free stuff and get our newsletter. Never miss out on the show and learn about everything else we’ve got going on.

Rob Break [00:04:35] Sandy is all about the free stuff today.

Sandy Mackay [00:04:38] Yeah, yeah, I know.

Rob Break [00:04:39] I’m getting generous, I. I don’t know you. He’ll give his number at the end. You can just call and see what he’s got to give away for sure.

Sandy Mackay [00:04:48] For sure. DME on somewhere and we’ll come up with something.

Rob Break [00:04:52] And by the way, I trust the writing review. It really, really helps. It doesn’t take long. Just go over it. Leave us a five star review, four star review. Whatever it is that you want to leave us, just let us know what you think and maybe give us some suggestions for upcoming guests or topics that we haven’t touched on yet. But yeah, it really helps to show get out to more people. And I think that’s it, right?

Sandy Mackay [00:05:17] That sounds good to me. I mean, we’ve got a couple other I think we’ll talk about this maybe next show, but we’ve got a couple other kind of shows or some value added extra content in the works that you and I were both working on. So we’ll release that next show, but you’ll have to tune in for the next episode to learn more.

Rob Break [00:05:31] Details on that coming up.

Sandy Mackay [00:05:37] Nothing major? No, nothing.

Rob Break [00:05:39] Okay. Nothing to promote it. All right. Let’s get into.

Sandy Mackay [00:05:42] That the next maybe that the next episode of the thing as well.

Rob Break [00:05:45] Okay. See you soon. All right. Well, I’m very happy to have Michelle Ghodsi with us today. You know, it’s been, I think, a long time coming for this interview. So we’re very happy to have you here. Thanks for joining us.

Michelle Gauthier [00:06:00] Thanks. Thanks for having me.

Sandy Mackay [00:06:02] Yeah, we’ve got Michelle along with her husband, Mike, seven, 12 years ago in real estate and always investing in whatever they could, mutual funds, our RRSPs and all that sort of thing. And they quickly realized that they made money on the operation of their home. They made more money on the appreciation of their home than any other major fund they had. And so over the years, they started investing more heavily in real estate, invested in rent, owns by holds flips. Coming into this year, 2022, they had a portfolio of 60 doors and the cool thing with that is zero joint venture partners into 2022. So self-owned and funded one way or another I suppose on your own. And so that’s pretty cool. That’s a great portfolio and we’ll learn more about what you’re doing with that and how you got there on the show. So thanks for being here.

Michelle Gauthier [00:06:54] Awesome. Thank you, guys.

Rob Break [00:06:57] Yeah. I’m really happy that you came on. I know that you say that. You know, you’re not necessarily into the whole podcast thing. So I really do appreciate you coming on and sharing. And that’s all we’re here to do, you know, not here to grill you or anything like that, just to learn about your story. And I think it’s an exciting one. So, again, thanks. Tell us a little bit about how you got started and tell us a little bit about yourself first and then how you got started in real estate investing. Well, I.

Michelle Gauthier [00:07:26] Live in London. We live in our flip house. We never thought we live in London, but we ended up moving into a house that we started flipping and actually fell in love with it. So started out in golf though we were the goal for 20 some years. That’s a little bit about me to have two kids. They’re older now. They’re in their early twenties, so it just doesn’t get any easier as they get older. Just different. Right. So, yeah, my husband and I started investing Mike about 12 years ago, like you said, Sandy, and we just saw that we weren’t making money in the mutual fund. Like we had dumped a lot of money into our peas. We had tons of hours. You did the whole employee mentality and who don’t know much invest in, you know what the financial advisor says, keep dumping money here and there. And now, like we’re not really making much money. We’ve made more money on our house going up here. And this was our simple, you know, we weren’t savvy investors were anything. And something popped up on my Facebook which said, you know, real estate education. And I’m like, hmm. So I said to Mike, let’s go to this to our cheeses, it seems. I mean, and, you know, I don’t promote any education company or anything like that, but we did it. We spent a boatload of money. And then, you know, by spending that money, it really put the pedal to the metal for us and said, okay, we have to do something with this. You know, and we you know, I like to say, you know, they try to promote it as you’re getting a university education in in a very short period of time with these education programs. So needless to say, 12 years ago we did it, we started investing, did a bunch of stuff, started out with rental, owns, did flips, we did buy and holds. That was kind of and then we did a larger apartment building and that was kind of what we had done at that point. And, and then just sort of rode out the next 12 years of just having them, you know, kind of get into Rob and I talked a little bit before this so this that we do not have partners and we manage them on our own. So that was the choices we made and we’ve just sort of kept our head above water all the time, you know, and I just had to deal with ebbs and flows. And it’s not an easy business for anyone who thinks it’s just, you know, you sit back and you cash your rent checks. It was it was a you know; it was a full on business. Well, while trying to hold down full time jobs for quite a while.

Rob Break [00:09:59] So yeah, and I think that there’s two sort of friends of mine. There’s probably when you go to an event like what you went to, it sounds like one of the ones like I’ve been to a lot of real estate events and not very many of them are actually too salesy. But it sounds like you went to one of the salesy ones and not say that that doesn’t offer like a ton of education. It probably does. But I think that there’s two ways to come out of something like that. You come out and go, what a waste of time. What a waste of time and money. Or you go, Darn, I spent a lot of money and I’m going to make this work. And, you know, I just think that there’s something to be said for just go get some education on real estate. If you’re if you’re listening to this like an event, if you can join up in an event and go out and meet up with other people who are doing it, that’s like priceless.

Michelle Gauthier [00:10:56] Yeah. Well, back in the day, there was there was not a lot like there’s so much opportunity, YouTube, these podcasts, everything. There’s so much opportunity out there for education without formal training. But back then, 12 years ago, it wasn’t, it wasn’t mainstream stuff. And so yeah, and we just obviously made the decision to, you know, we got to do something with the money we spent. So, so we did. But right now, you know, there is a lot more information online that you can, but you’re not playing with Monopoly money. At the end of the day, this is real money and this is your hard earned money. And you want it you want to have some education behind you don’t want to be, you know, shooting from the Hill is that’s dangerous.

Rob Break [00:11:38] Now, you mentioned that you had ebbs and flows and just kept your head above water. So I think that this is important to talk about the challenges that you had and how you overcame them. So can you talk about some of the bigger ones?

Michelle Gauthier [00:11:51] Sure. Yeah. No challenges. Well, we were you know, we were employed when we started out. We made a decision to not have partners. So just, you know, getting financing, working with lenders. We did most of it with the big banks, actually. So we were lucky that we because we had some we had some money. It was back in the day when, you know, the banks weren’t as stringent as they definitely are now. So we were able to, you know, financing always was a. But also picking a strategy I think was a challenge, like we were a little bit all over the place. And looking back now, you know, we did Rent to owns. We did some flips in there. We did we sort of, you know, if you find a property and you say, okay, I can do this with it, I can do that with it. So because we had all this education, we were kind of, you know, we could do multiple things, which is a good thing in on one hand. But on the other hand, you know, we did a lot of we were a little bit all over the place so but rent to owns in back to the rental conversation or rent to owns were challenging because at the back end of rental owns is always getting people qualified and you know you go into these things thinking okay you know you’re taking people’s money and we don’t take that lightly. We definitely, you know, try to work with people to get them, you know, to be these homeowners because we didn’t want these houses. And that was and that was challenging because we all know that the rules change on a on the fly when it comes to lenders. You know, today it’s this percentage qualification that, you know, they even had they didn’t have stress test back then. You know, they were 5% down. And then CMHC said, if you’re coming out of a rental, 10% down. And, you know, so we’re always pivoting with rent to owns and it did become challenging.

Rob Break [00:13:38] And so you guys did it where you would find the tenant first and qualify them and they would go shopping and pick a house that they liked. Correct. And then the idea is that in the three or whatever, usually three years, they would fix their credit, which is the whole reason they’re doing a rental home with you and be able to qualify with the bank at the end of the three years.

Michelle Gauthier [00:14:01] Yup, yup. Some of them were that. Some of them were, you know, it’s funny. And people say, you know, I don’t know how much money into the rent own conversation, but, you know, we did some where we kept people in their house that for extenuating circumstances had to sell to us. With the. Long term goal of buying it back from us. Right. Well, that that was an opportunity to and they were made you know, that was rule number one when we got into it. And, you know, when we did the rent, when we did the rental conversation and the education is don’t keep people in their house. But it always did work out for us because they, you know, they could sell us undervalue. They were buying it back. UNDERVALUE There was that that cushion there that if things didn’t go well, we were getting an undervalue property. But they were, you know, they we were able to get them qualified and they all every rent own has a story, right? Rent to owns ah, with lots of baggage and lots of stories. And everybody has a story. They’re definitely not. There’s no two that are cookie cutter, you know, experience. But we didn’t do a ton of them. We maybe did 25 of them. Maybe total. Not enough? Well.

Sandy Mackay [00:15:19] Not nothing. Nothing.

Michelle Gauthier [00:15:21] Maybe. Maybe. I don’t know. I’ve never really counted them up. There were enough of them.

Sandy Mackay [00:15:24] Why did you. Why did you say why did. Why was that? I guess your thought. I mean, you went through with it anyways and it kept them in their home. So why was it a thought not to do that originally? Was that some education, some advice that you’d been given or that seems like you’re really helping and doing a good thing in that?

Michelle Gauthier [00:15:41] Yeah, well, yeah. But they always say if people got into a situation and it’s like a marriage going to marriage counseling, right, that, you know, you’re having problems, then you go, it’s really eventually it’s going to happen again. So people get into a situation where they’ve had financial problems, they’ve got himself into a space where they need to sell their property. But like I said, there’s always a story and are they going to fall back into their old ways? Because there’s no there is no pain there. There’s no pain. There’s no, you know, taking them out of the house, putting them in another house, putting them in a smaller house. You know, there’s not that pain there.

Rob Break [00:16:19] And it’s not a change of atmosphere like awakening where they’re not able to stay there anymore.

Michelle Gauthier [00:16:25] Yeah. Yeah. So, I mean, so that was one of the rules that we had in our heads. But there was always a story, whether it was you know, there’s always a story with these. And there was a reason why they got into that situation. That is no longer a reason. So they just need time to get back on their feet. So.

Rob Break [00:16:46] Now, you mentioned financing also being one of the big challenges, and I think that’s pretty common across the board when we talk about challenges. And that’s something that people need to understand, is that these things aren’t going to be easy, especially if you go down the route that Michelle went down where you don’t have partners, you know, and you’re trying to qualify, get the money for everything on your own. You it’s not it’s not just going to you know, you’re not just going to call the same person at the same bank and get a yes. You know, you’re going to have to talk about those challenges. It’s not an easy thing, right?

Michelle Gauthier [00:17:19] No, it’s not. It’s not. And we did have to borrow a private money to from time to time, private money is now something that we had to do. But our position on partners is just simplicity and not answering to anybody because and we, you know, there was a couple like I’m kind of generalizing when I see partners like we I did have a little rent a, like a rental company and we did bring in partners for that like back in the early days and whatnot. But for the most part, our core business, green rich properties, we, we did it all on our own. But, and you use private money when we needed to. So, you know, just, just kind of, you know, made it work. Because for us, like I said, simplicity and we’re giving away 50% of the deal is something that, you know, I guess, you know, a lot of people can say you just really can’t grow that way in the right if you want to scale really large. But at the end of the day, I feel that someone else’s money is it is even more sacred than our own. And if I had someone else’s money that I had to through joint venture partners, then that. That that’s a responsibility.

Rob Break [00:18:25] Mm hmm.

Michelle Gauthier [00:18:26] That’s to me, that’s a huge responsibility. And I’d rather I’d rather be a little bit risky with my own money and feel good about it and be able to sleep at night than somebody else’s hard earned money. So that was just that was a route we both agreed.

Rob Break [00:18:41] Yeah, it’s definitely very stressful. And sometimes when things don’t work out exactly the way they’re supposed to. When you look when I look back on, you know, things that didn’t go exactly the way they were supposed to. Partners are definitely happy now. But, you know, sometimes there is definitely a little bit of tension. Right. So, yeah, it’s a tradeoff. Right. Can you keep growing? On a larger scale, definitely. But it’s just it’s like, is that what you want to do, though? We’ve talked about that a lot, too. Sandy online is like one person’s journey is not the same as another. Just because you’re a real estate investor doesn’t mean that you have to buy X amount of units or you don’t qualify and get out of the circle. Right. It’s just it’s a matter of what you want, like what kind of lifestyle you want. You want to deal with partners. Do you want that stress? Would you rather stay? I mean, it sounds like you guys have done amazing. So it’s certainly not staying small. You know, I think that that’s the wrong way to put it. But staying. Yeah, staying simple. There you go. Um, so, and we talk about that a lot, right? Sandy.

Sandy Mackay [00:19:50] I was thinking to a lot of people get it’s not too different than realtors, but you get all caught up in the numbers and know we’re going to sell this many houses or we’re going to buy this many houses. And, you know, it’s kind of people get kind of intrigued or enthralled with that hitting that big number. And, you know, people want to go on in some cases in the real investment community. You know, they want to go on stage and they want to talk about buying however many hundreds of houses or thousands of. And that can be that can be good. And I can also be a realtor world. We see this a lot where that often doesn’t mean a lot of net profit or net the margins are really great at the end of the day. And that’s what you’re eating into when you take on partners, usually you’re getting, you know, a 50% hit on the on the I mean, you can argue both ways because it’s 50% of nothing. But anyway.

Michelle Gauthier [00:20:42] Yeah.

Sandy Mackay [00:20:42] Yeah. But at the end of the day, the private money at let’s say 15% or whatever that number is for a short term and you own it 100% afterwards, you know, is a lot cheaper in the long run than 50% on going forever.

Michelle Gauthier [00:20:57] 100% as long as you know what you’re doing. Right. Because I’ve seen people, too, that overleverage and borrowing at 50 to 20% and. The whole pyramid comes. Comes falling down. Right. So, yeah. Yeah.

Rob Break [00:21:12] But I mean, that, that kind of thing certainly, you know, sells podcasts and it sells like it’s very flashy and it’s very, it’s very, you know, people are drawn to that kind of thing because we’ve talked to people who have done that kind of stuff. And that’s not to say it’s the wrong way, but we certainly talk to people on the podcast. You know, headline is, you know how house so-and-so bought 12 properties in 12 days, you know? All right. So, so and then.

Michelle Gauthier [00:21:43] It.

Rob Break [00:21:43] Gets a lot more downloads.

Michelle Gauthier [00:21:45] Right? Yeah. Because and they, they think, wow, I can do that. I mean, you know, and that’s great. But I mean, times aren’t going to be, you know, I dusting off my crystal ball here. Right. But times I don’t think are going to be as lucrative, like the everybody who bought 144 doors in one year or whatever, they look like brilliant stars. And they are. But the market helped out. Let’s face it, the market has been, you know, a major player to success. All these of a lot of people as included. Right. But now comes the challenging part, I think in the next few years where, you know, all of a sudden they think, you know, you’re not you can’t just you know, you can’t buy it a three cap and be successful. Right.

Sandy Mackay [00:22:37] Yeah. We talk a lot of people do, Rob. Right. Who have looking back and said I wish I had way less partnerships or I wish I never did like any of those partnerships. And they but you know, I can think of a couple of or interviews where they, you know, buying 50 plus properties a year and saying that was a terrible decision because it just blew up their life and not just their investment side, but their whole outside of business life and just ruined their lives in many ways for a short term. And it’s case by case, I think that it’s worth it for some people. It’s not worth it for others. Hindsight is 2020, you can kind of learn through it and, and, and go on your way. But, um, the psychology of money, I was just looking up at that book. There’s a great book about kind of that topic of how everyone’s different and everyone uses my differently. Everyone wants it, has a higher risk tolerance and others, etc. It’s really good. But. Morgan Housel Morgan who? So whoever you say last name is the author or that one, like in the last year or so, it’s like the psychology of money, the newer book. It’s only over the last one or two years, but really good on that topic. Exactly. Just off of how to gauge where your tolerance might lie and what might work for you go big or small on your own and lean or there’s no right answer.

Rob Break [00:23:53] Mm hmm.

Michelle Gauthier [00:23:54] And leans a big one, too, right? Because, you know, the more doors you get in, the more partners you get. It’s not just you, a bookkeeper, and, you know, it’s all behind you. It’s a whole team. And then, you know, their salaries and their expenses there and you know that that all leads into it.

Rob Break [00:24:12] Yeah. There’s also implications of working with partners who have other partners right under the same umbrella. So there’s all kinds of complications. But, but yeah, I mean, just like we’ve always said, we said this 100 times. As soon as you decide to be a real estate investor, guess what? All the challenges that are possibly in real estate investing now get thrown in front of your path and you’ve got to figure out how to navigate them. So that’s just what happens, right?

Sandy Mackay [00:24:44] You manage your units yourself, I believe, still. Is that right? And why have you always done that yourself? Have leveraged property management or aspects of property management at times?

Michelle Gauthier [00:24:55] When we first started out, we thought that that’s what we should do and we did. And then we found out that, you know, units weren’t painted and, you know, they were putting tenants in there that we didn’t necessarily want. And, you know, we quickly figured out that, you know what, even being 2 hours away from our properties because we would buy most of our buying old are in one market in southern Ontario. So we just thought, you know what I like at that point, I had quit my job. Mike was still working. And, you know, we figured you look at that line item and you say, I can it’s a job. I can do it like anybody else can. So we just made that decision. It’s not for everybody, but it put that line item back in our pocket, which made sense to us. And, and then we were able to, you know, justify it, I guess.

Sandy Mackay [00:25:50] And are you are your properties. You mentioned a lot or most of them are in one market. Are they all are they spread out much or are they all in one or two locations?

Michelle Gauthier [00:26:01] There are one or two locations. We actually sold 20. Four of them in January, 24 units.

Sandy Mackay [00:26:08] Wow. Wow. 24 units. How common is that? How many properties with that?

Michelle Gauthier [00:26:12] But that was six for Plexus. We sold and they were all in one street. So we just made the decision to we had been doing it for a lot of years, upwards of ten years on those properties and it just was time with the market. One buyer came in, bought the whole part, bought the whole thing. It just made sense to us. So we, we did it and we’re honestly it. It’s about simplifying and about not looking back and sort of doing a reset for Mike and I in terms of what do we want to do now? You know, do we want because we, you know, all those were like small they were they were basically townhouses. When I say for plexus, they were purpose built. They looked like each unit looks like a townhouse, main floor, living room, kitchen, three bedroom and a half bath on the main floor and then three bedrooms, full bath upstairs and then full basement, independent furnaces, independent hot water tanks, laundry room kind of thing. So they were independent townhouses and there were 24 of them, so and they were all three bedrooms. So it was, you know, it was.

Rob Break [00:27:21] It was a very, very lucrative decision.

Michelle Gauthier [00:27:24] Yes. Yeah.

Rob Break [00:27:25] And I think it’s. Yeah, exactly. If you could looking back you probably couldn’t of time the more perfectly really. We got rid of a couple of rate at that time too. So but it was definitely a good time I think, and a lot of times. I look back on selling places and I’m not super pumped on the ones that I’ve sold. But I think I honestly think that we couldn’t have timed it more perfectly like what you did this time.

Michelle Gauthier [00:27:55] So we’re always going to look back and say, I’m already looking back and saying we could have got more because the market did go up after we signed the deal. But, you know, we’ll all do that. But at the end of the day, like, we’ve learned not to get emotional about things. Like I talked to real estate investors that would never sell anything and every single property that they sold, they regret. But I mean, we just we got our time back. Yes. We were self-managing. We could have outsourced it. But nobody, I believe and this is a statement that everybody can blast before nobody cares about your properties the way you do.

Rob Break [00:28:30] Well, nobody would. Yeah, absolutely.

Michelle Gauthier [00:28:32] Yeah. And I don’t, you know, and it just it just it just by moving that out of our lives, it just it was such a breath of a sigh of relief. And we can look at new things. We can look at new strategies, new things we want to do.

Rob Break [00:28:49] So you didn’t have okay, I know you’ve already answered this, like it’s just blows me away. How is it that you manage all these properties yourself like this? To me, that’s more stressful than working with the partners. Like working with the tenants. All those tenants, 66 doors is, is a lot less than our buildings.

Michelle Gauthier [00:29:09] Right. And some we are yeah. Yeah. But still yeah.

Rob Break [00:29:14] It’s still inside.

Michelle Gauthier [00:29:17] You know, Mike used to say when he would on to the street he was like the ice cream man. So they would come running out in like, I need this, I need this, I need this. You know, we had systems and processes in place to simplify our life, you know, management of these things like, you know, and complaints and whatnot. So that I putting processes in place for tenants, then they just couldn’t ask for stuff. They had to put it in a system and there had to be a work order created and they could see. So a lot of it was, you know, systems in on the back end. But, you know, we it was a job. It was definitely a job he was doing. He was down dealing with stuff probably 3 to 4 days a week, dealing with those units. There were most of them are in one market. So. And they’re older, right. They’re built in the seventies.

Rob Break [00:30:07] So that is that’s really funny. I thought of all the tenants coming running out like he’s this great man.

Michelle Gauthier [00:30:15] Yeah.

Sandy Mackay [00:30:16] I could see that. Well, we’re like one or two of those tools that you said you were employing in there was to make it a little easier. Was there one or a few those that were like totally imperative that you were are you really done well?

Michelle Gauthier [00:30:28] Little team building them. Yeah. Yeah. Software. And we forced all the tenants to anything they wanted, any communication. Everything went in building. So and we had a maintenance guy too. Like when I say I do, we do it over on the ground. I mean it’s guy that for if you clicked a certain aspect in building with respect to your request. His name was Paul would get a message as well which filled him in on things so that if anything was urgent, you know, he could deal with it too. So.

Sandy Mackay [00:30:58] And he was he was like someone he had working only with you or he worked with a bunch of different.

Michelle Gauthier [00:31:04] He worked with other people too. Yeah. Yeah, but not.

Sandy Mackay [00:31:06] Some.

Michelle Gauthier [00:31:07] Management. Yeah, he was for maintenance. He was paid by the hour, that sort of thing. Yeah. So, yeah. So because we, we you need somebody like but if I could count on one hand how many times we were had urgent calls where, you know, you had flooding basements, you had issues where you had to stop, drop and roll basically, and get down there. Right? So for the most part, a lot of things could be dealt with. And, you know, simple things like for simple investors and I know we’re getting, you know, small and sort of into the details when they say this. But home hardware, home hardware, there is a home hardware on every in every small town. Set up an account at a home hardware for your company or your whatever, your personally. And then probably 40% of the requests can be fixed by making the tenant do the work on their own. Oh, I’ll call ahead. Going home hardware. Get this, get that. They go and take care of it. They pick it up. If it’s something small, whether it’s ant traps, bug spray, toilet plunger, I don’t care. I mean, if they can go pick up a $10 toilet plunger and I don’t have to engage somebody to come out and deal with something because they just they just can’t you know, you’re fixing 40% of the problems they’re fixing on their home.

Rob Break [00:32:22] Right. I like that.

Michelle Gauthier [00:32:23] Yeah.

Sandy Mackay [00:32:24] Yeah. For the little things. For sure.

Michelle Gauthier [00:32:25] The of things you. Right. And, and those were just little things that we did just to. God helps those who help themselves. Help yourself to get it right. Go get it right. Go get this. Have it ready for the handyman. Whatever. So they even just save the time of the handyman coming and going and grabbing it, huh? Make them do it. And they’re going.

Rob Break [00:32:47] To. They’re going to charge you an hour or so, even if, like. Yeah, like, let’s just say there’s four whatevers to choose from. The tenant picks, the most expensive one. It’s still like, well.

Michelle Gauthier [00:32:58] Usually home it usually home hardware. I would say, you know, get the cheapest one, get the cheapest door, handle whatever or get the you know, because I had an I get that. And then ten, ten, Mr. Tenant, come pick it up and then, you know, Mr. Handyman pop over when he’s doing five other things and put it in or whatnot.

Rob Break [00:33:14] Okay, I got you. Yeah, but it sounds it’s very, very comfortable initially.

Michelle Gauthier [00:33:19] It’s, you know, this we’re talking about the details versus the big picture, but it’s stuff that, you know, if you make a choice, you know, if people out there that have one or two units that don’t want to pay for property management.

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Michelle Gauthier [00:34:06] You know, there’s, there’s the ways that you can really you know.

Rob Break [00:34:10] That that piece of information is what we call the golden nugget that everyone’s looking for when they when they listen. So I think so anyway.

Michelle Gauthier [00:34:19] Like it was always a good thing. It always worked well for us. It always fixed it saved a lot of money.

Rob Break [00:34:24] I’ve never done that. I just have my guy, my one guy. And anytime the tenant calls me, swing by, see what’s going on. Right? Right. And that’s really handy, too. Yeah, don’t get me wrong.

Sandy Mackay [00:34:36] But I love it for the small things because it teaches the tenants a little bit about like the like cause because other, because when you’re going to fix it all the time and it’s the little things, even then you’re like don’t worry, it will come fixed. Or like it just never ends, right? They just, they get smaller and everything and they’re like, come on, there’s a little yes, there’s a few ants go like get that thing and put it. Or if you do that with yourself, it’s not.

Michelle Gauthier [00:34:59] You know, it goes away. And the whole part of roll call me five days later and say, hey, I still got the stuff held for, you know, this person you still want you know you still want. It must be went away right.

Rob Break [00:35:11] Back on the shelf.

Michelle Gauthier [00:35:12] When you when you make them. Do the work and, you know, do something. You know, and I don’t think of myself as.

Rob Break [00:35:20] Not worth the hassle for them. Then they’re not going to bother and ask you. I’ve gotten right to I always I think it’s one of the things that’s always stuck with me is early on when I started going to Durham, I remember Quentin was talking about how he will when he’s bringing tenants and right to do a walkthrough before they move in. And he would always say, okay, he would have a plunger beside the toilet and go, This is how you punch the toilet and do it as a joke, right? But it’s like here, it’s here and this is how you do it. So you don’t call me this.

Michelle Gauthier [00:35:56] That is a message. Be on the toilet of rights. Don’t exactly tell me you know.

Rob Break [00:36:03] So yeah.

Michelle Gauthier [00:36:04] No it’s definitely it a fixed a lot of problems for us so.

Rob Break [00:36:10] Great I love that it’s perfect.

Michelle Gauthier [00:36:12] And even building right like not don’t text me we don’t we don’t accept texts only when they’re getting the apartment and my texting them until we make them a tenant we set them up in the portal, they have a texting number, they have a, you know, then go and look at they can print out their own rent receipts, they can do anything and there’s no more texting. And then it’s an extra step for them to go and create a work order. And probably, probably, I don’t know the numbers, 20%, 30% of the time. That never even makes it in there. Right. Because it as long as you’re doing regular inspections, because you got to make sure that obviously then there’s the other set of tenants that don’t complain about anything and then, oh yeah, this is going to be three doors our three floors down for six months. I, yeah, I was going to get to telling you about that but didn’t really so tenant to.

Sandy Mackay [00:36:58] True.

Rob Break [00:36:59] So you got to make sure you get the inspections done as well. Yeah. So we have next year.

Sandy Mackay [00:37:08] Well, let’s go with what’s happening for the future that you say you’re selling some properties or you sold the properties. Is that is that is that something you’re doing more of? Are you going to acquire more? What are you doing with those? I mean, you said you’re kind of simplifying life or putting it. Are you reinvesting some of that?

Michelle Gauthier [00:37:24] Yeah, you’re looking at a reset right now. So we’re really kind of where we’re kind of trying to figure out our direction where like, you know, flowers in the wind right now, trying to figure out where we want to go. You know, we’ve been picking away at the possibility of buying some stuff out west. Bigger buildings, definitely bigger buildings we’d like. We would never do smaller stuff anymore. So there’s that and, you know, land development stuff. We’ve been looking at opportunities there and lending that’s kind of our short term go to right now in in inflationary times the worst place to have your money is sitting in cash. So we get it out there, we getting it moving on short term deals for investors, mostly on flip projects or when they’re waiting for financing. So we’re you know, we’re lending. We’re lending. We’re lending a lot to. You know, to get that get that good.

Rob Break [00:38:22] Yeah. Are you planning on, like, selling a bunch more of your stuff or what? No, they’re.

Michelle Gauthier [00:38:29] The ones that we have right now kind of fit in our portfolio. Other than one. But, yeah, it’s been a good property, so. So the bigger stuff will keep for now. Like we will keep. We. We have no intention of doing that. And then just, you know, just like I said, a reset. We’re not really we’re not really sure. We’re not really so.

Rob Break [00:38:49] Funny.

Michelle Gauthier [00:38:49] Looking we’re looking at opportunities from.

Rob Break [00:38:52] The doesn’t fly so much though I love that it’s just like well they all fit into our lives now except one. So I asked that I ask.

Michelle Gauthier [00:39:02] Well yeah, no, the one because I don’t want the tenants to ever see or think that you know. Yeah. It’s just a, it’s a duplex in golf that we, we had one of my kids living in for the longest time and now we rented it out to somebody else. We finally got them back home. So we’ll, we’ll keep that going. That’s been a great property. Well, it’s always been a great market for us. We’ve always had stellar tenants there. It’s been it’s been that that property’s been a joy. So we’ll keep that one. Yeah.

Sandy Mackay [00:39:34] Cool. Lending is that something that’s. How do you how does that work for you? Do you do you have people reaching out to you? Do you find the deals, the brokers or brokers?

Michelle Gauthier [00:39:46] We definitely haven’t used brokers. I mean, again, I this is kind of saying this. You’re going to get all kinds of people disagreeing with me or saying we’re not doing it right, but hey, it’s our money. We can do it. We want, right? So we, you know, there’s a place for brokers out there. They get paid, you know, a couple points or a point. And then because we, we borrowed money before we know and then the lender wants a couple a point or point and a half to go to the bank and get the money. And everybody gets, you know, rich on points or whatnot. We try to keep it simple. We don’t use brokers and everything’s registered on title. We don’t charge points right now. We don’t charge any points. We just charge a simple interest rate and we like the shorter term stuff. So, you know, if somebody needs it for 68 days, yeah, our interest rates aren’t low. Don’t, but they’re simple, right? Like there’s, you know, when people say, oh, well, I can get it for nine, 9% in three points. Well, I’m like, well worked up, worked that out on your shorter term deal, right? I mean, you’re actually paying 60% for your money, right? So yeah. So we encourage we love if people can turn around and maybe it’s an it’s a wholesale deal where they’re just buying and they’re re listing. I just did one that I think it’s 61 days from time of purchase to time of sale was 61 days he paid for 61 days. That’s it. Plus all of the fees, lawyers legal fees. Right. So that’s kind of how we do it. We only do first position. I’d have to be convinced on the second position.

Rob Break [00:41:22] But what’s the LTV? These?

Michelle Gauthier [00:41:26] It depends. Right? Like it depends. You know, if I’ve had borrower that’s come to us with a sweet deal that, you know, there’s a $150,000 of equity in the buy and then the plan is to put another 150 renovations into it. So maybe it would go up a little higher on the LTV than what a standard one. So I can’t couldn’t really say Rob. It’s just, it just depends on the.

Rob Break [00:41:49] Deal by deal. Okay. Yeah.

Sandy Mackay [00:41:52] You mentioned hotel. Just I know that maybe some listeners don’t really know what that is. We talk about wholesale quite a bit hotel we’ve so I don’t know if we’ve really talked about it much. I mean, it’s relatively similar, but you want to just.

Michelle Gauthier [00:42:03] Yeah. Is it a lot of hotels? Last year we did like 13 of them.

Sandy Mackay [00:42:07] In a market going up, up and up, like the hotels.

Michelle Gauthier [00:42:11] Yeah. So the hotel, you know, we always buy from wholesalers when we buy. So and then if we can come in, we can clean it up, do minimal, like minimal. When I say, you know, the definition of a true hotel is nothing, but there’s never nothing. But to me, if we can call the roof guy or and call the dumpster and jump guys, and that’s the extent of it, I still consider that a hotel deal. So you’re throwing on a new roof and you’re cleaning out a bunch of junk and bringing in a cleaner, and then you re listing it, and that’s it. And that’s to me would be a hotel deal. And you’re always going on market with it on the on the back end. A lot of times flippers would buy them. They would buy them. And then they get into. You know, it’s funny, we did one hotel deal with we didn’t know the investor that bought it, but we do now. And he’s like, why did you sell that? Like, and we made like, you know, 50, I think, on it. And then he made an extra 80, you know, maybe we should have not been so blindsided as to say. But, you know, I mean, we were able to get our money and recycle it and recycle it again in in three times the amount of time it took him to do that, that flip.

Rob Break [00:43:23] Yeah. So I agree. And that’s the same as saying like two flippers who have been flipping for the last five years. It’s like, why bother doing anything if they just held on to the entire portfolio of everything that they bought, you know, and didn’t sell it until January of this year. They would have made ten times as much money and done zero work. So, you know, yeah, it’s all it’s all just, you know, you can look back and say you could have done everything a bunch of things differently. Yeah.

Michelle Gauthier [00:43:52] If you have held on to a bit longer, whatever. But we wanted to get them out and it and I don’t think wholesaling personally is a strategy that is going to be that successful in the next. Couple of years because people are going to want more finished products and maybe they’ll still be a market depending on how cheap it is. Right for the flipper. They’re still going to be flippers out there. They still need Flippable property. So, you know, part of the.

Sandy Mackay [00:44:21] Risk on the flip, though, is the time in it, right? You never know what could shift as if you’re buying in January, February, maybe even early March this year. A lot of in least southern Ontario, a lot of flip projects might be people might be a little stressed about them right now potentially if they didn’t get in a good enough deal. Whereas the whole tale. You know, you could have gotten out within a month to get in.

Michelle Gauthier [00:44:43] And out, you know, with the old tale. What the market’s going to look like is you’re in and out really quick. I’m sitting on two big flip projects right now that we’re doing that we’re not panicking a little because we got them for a great price. But, you know, I don’t think we’re going to make they’re not going to be the huge home run that if we would if we would have turned around and just sold them right away, we probably would have made more money than doing the big rentals that we’re doing. But we kept people employed and you know, we have contractors that all got paid so well.

Rob Break [00:45:18] Yeah, yeah. That’s my machine. Yeah. Okay, let’s talk about a piece of in for advice that’s always stuck with you and how it’s helped you.

Michelle Gauthier [00:45:28] Um, yeah, you know what, I. There’s so many, but, I mean, I, I just see a lot of especially the little guys right there, you know, they’re going for the shiny penny, right? So, oh, Sudbury looks good. And then we buy one in, in, in Hamilton, and then there’s one down in Windsor. And I see that, you know, they’re buying these small multi families all over the place. Um, I, I think you should figure out a market, figure out it doesn’t have to be your, your local market. I know that that’s the comfort for everybody because they know the streets, you know, the market. But go find a market whether it cashflows, you know, something that makes sense where the numbers make sense and then just learn the market, try to buy in the market that goes back to that whole home hardware thing. Whereas, you know, if you can if you can get right place and you can set up a network, whether it’s property management or maintenance or whatever, and then, you know, you can be successful in that market.

Rob Break [00:46:28] Well, that’s even been our mentality sort of when I say, ah, I, I mean my team in Durham, Peterborough has agents, right where, where we’ll focus on just a couple of markets. And that way when people call and ask questions like, can I duplex this legally? Or What do I need to do in order to do plexus legally? Or Can I do a student rental here legally and all that kind of stuff? Then we can just go, Yeah or no, right? Just look at the property, look at the listing or yes or no. But when it’s outside of those areas, I don’t know. You know, there’s too much more work that I need to do to figure out the answer. So it’s sort of the same sort of the same idea. Yeah, I like that. Yeah. No, it’s definitely important to learn the market.

Michelle Gauthier [00:47:17] Don’t be don’t be all over the place because. Well.

Rob Break [00:47:21] I think that’s the strategy as well, too. Right. Like, you know, not to say that you’ve been super successful doing all kinds of different strategies, but it does help to do have a little bit of focus, rinse.

Michelle Gauthier [00:47:33] And repeat if it works and you’re making money at it, just keep, you know.

Sandy Mackay [00:47:38] I think that’s almost one of the themes for the show here is kind of just there’s a lot of lot to be said about simplifying and making things and making things as simple as possible and not overcomplicating and getting stuck in the middle. There’s so many people that kind of try and do everything or try and get that shiny objects to them going and they dabbling in this, that and everything. And there’s like no efficiencies in that. And you really can make a really stressful, not exciting life through that. And I mean, what do we do? Why do we invest in anything, really? It’s to get some version of freedom in our life, financial freedom and whatever that allows us to do because of that. I see a lot of people getting stuck in the and in my myself the time Sue is getting stuck in like all the different things that are out there and options and.

Michelle Gauthier [00:48:26] You know, and it’s yeah it’s just.

Sandy Mackay [00:48:27] It’s painful and it takes a lot, a lot of learning for people to figure that out sometimes and often. The simple way is, is, is just the best way. But like we said, the start really kind of everyone’s got different goals and different, different thoughts around all that. So it’s totally individual case by case.

Michelle Gauthier [00:48:44] Yes.

Sandy Mackay [00:48:44] But there’s a lot of lot to be said about keeping it simple, I guess is my point.

Michelle Gauthier [00:48:48] Yeah, I see so many like I’ve seen a lot of and I’m sure you guys have seen more people that have just quit with real estate completely. You know, they’ve, you know, they, they went nuts or whatever they, however their journey was. And then they’re just they’re just done, right? Whereas this shouldn’t be this this awful experience. If you build it right and you keep it manageable, whether it’s manageable or if you want to be big but have systems in place. And because, you know, this is this is a great strategy for retirement, for, you know, this is this is why we do it. And you don’t want to hate it. You don’t want to hate. Yes.

Rob Break [00:49:25] Yeah. Yeah. Like this is becoming a real estate investor. Definitely afforded, like, a very different lifestyle. Much more freedom than I could have ever imagined before discovering it. So you don’t want to trade one job for another? Let’s just put it that way. Right. Like, the whole idea of this is to. Have more freedom and build a true life. Right. So, yeah. That’s awesome. Yeah. Thank you for sharing everything with us today.

Michelle Gauthier [00:50:03] Thank you for having me. It was fun.

Rob Break [00:50:06] And people that want to get in touch with you and your money. How would they do that?

Michelle Gauthier [00:50:13] Okay. So Michelle at Green Ridge properties dot com so green our ID G properties property IRS dot com perfect.

Rob Break [00:50:25] And as usual we’ll have that in the show notes. So anyone that’s driving or whatever right now can write it down. Just click on the to click on the show notes and you’ll see all Michelle’s information in there. Sandy got to unmute and then tell us how people can get in touch with you.

Sandy Mackay [00:50:44] I’m on mute meetings. I got a dog in the background making some noise here. Squirrel outside. I’ll do my best to make it. Get this through. But reading RedState.com is the best way to connect. And. Yeah, super. Thanks a lot, Michelle. This is awesome.

Rob Break [00:51:01] Okay, back on mute.

Michelle Gauthier [00:51:03] That’s right.

Rob Break [00:51:06] And people can reach me at Rob and Mr. Breakthrough. Okay. Okay. Thank you, everybody, for listening. And we’ll see you next time.

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