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Announcer [00:01:22] Tired of the 9 to 5. Tired of only dreaming about the things you want to do. Want to have more time for your family. More time for you. More time for you. This is the Breakthrough Real Estate Investing podcast, where we interview qualified guests in the real estate industry all across Canada. We want you to live life on your terms, and we want to help you break through to that life through the power of real estate investing. This is the Breakthrough Real Estate Investing podcast. Now your hosts, Rob Break and Sandy MacKay.
Rob Break [00:02:02] Welcome, welcome, welcome, everybody. Thank you for joining us again today. Super pumped to be back. And it’s been it’s been a long summer. We took some time off, but of course, we stagger our shows, you know, the release date so that you guys don’t even know that. But, you know, it’s been a little while since you and I have gotten together here, so. So we might be a little bit rusty. We’ll see. We’ll see how it goes. Sandy, how are you?
Sandy Mackay [00:02:23] Rusty or maybe like completely rejuvenated.
Speaker 5 [00:02:26] Rejuvenate.
Sandy Mackay [00:02:27] One or the other. I guess I’m feeling good. Okay, good. You better be, because you’ve been, you know, hanging out down there. I know it’s probably a pretty hot summertime.
Rob Break [00:02:35] So you guys have been through summer, too, so, you know. Yeah, it’s all the same stuff.
Sandy Mackay [00:02:41] I think. I think we’re I think we’re fresh and refreshed and ready to roll.
Rob Break [00:02:45] Absolutely. Everybody knows. Go to our website Breakthrough REI Podcast dot CA. Download all of the past episodes that we’ve done. And also this is a great way to get in touch with everyone that we’ve done interviews with. If you find somebody particularly interesting or you know, they share a lot of information that you maybe want to learn more about, most of the people that we’ve interviewed, they’ve left like really, you know, like even their phone numbers and emails for sure of ways to get in contact with them. So you can reach pretty much anyone that we’ve ever done an interview with right there in the show notes. So go to that and get our free gift.
Sandy Mackay [00:03:26] Yeah. The ultimate strategy for really wealthy real estate. And you can pick up a breakthrough ARIA podcast that’s here. And as well when you do that, you of course jump on our email lists and never miss a show and never miss an update on what we’ve got going on.
Rob Break [00:03:42] And. And what is our free gift all about, Sandy? Like I know we’re going to touch on we’re going to go deep into that strategy today with Gary, our guest, who’s here waiting with us. But what is the free gift?
Sandy Mackay [00:03:55] Well, it’s really the foundational model of the what’s become known as the BR strategy, which, you know, often gets pretty, you know, talked about a lot of ways around duplexes, triplexes, etc.. It could be for pretty much any type of project out there could be for a development type. The building new builds commercial, big, small, medium, multi residential all everything in between there’s variations of that to work towards all different models. So it’s really a good foundational piece and then you can take that and run with it and whatever strategy you’re really going to implement.
Rob Break [00:04:33] Yeah, basically it’s a strategic guide on how to take a current property, whatever it may be, and renovating it or. Changing the use of the building or increasing the value of it in one of those two ways, or maybe even more. And then being able to like recapture some of that money that you’ve put into it and then carry it on and put it into other projects and continue, right? So it’s all about being able to keep going, you know, keep out of your portfolio.
Sandy Mackay [00:05:05] Optimizing the current one, getting it to its highest and best use, recycling that under the next one. And that’s how you really supercharge your portfolio.
Rob Break [00:05:15] Exactly. And, you know, go over to iTunes, leave us a rating or review there. That helps. It helps us get great guests. It helps us reach more of an audience. So, you know, if you have a couple minutes, please go over and just leave us your thoughts. It’s always helpful.
Sandy Mackay [00:05:31] Absolutely.
Rob Break [00:05:32] What’ve you been up to, Sandy? How is Summer.
Sandy Mackay [00:05:36] Hanging out around different places? The candidate, to be honest, last month or so. Did some cool trips out the East Coast. So got to actually met with some great investors around Halifax who bunch of places sounds like I was there forever. I was only there for like a little over two weeks, but. Halifax. Moncton. Fredericton. Montreal. St John’s, Newfoundland. And then I mixed in some fun golf in Cape Breton but met with investors in all those towns or cities, I should say, for some of them. And it was it was really cool. I got to learn a little bit about the market out there and realize that we need to need to bring on some gas from these markets. St John’s, Newfoundland is something we have never talked about and I’d love to get some. It was an interesting market, very different from anywhere I’ve seen in Canada specifically there. And they’re just interesting, booming markets. Halifax is going crazy so well at least that it you know, everyone’s a little slow right now but prior to the mid 2022 here, it was really booming. I think there’s a lot of growth there. So it’ll be interesting. I think if anyone is listening and they want to jump on our show and they think they can bring value for those markets, I think that’d be a cool, cool show in the near future for sure.
Rob Break [00:06:51] Yeah. We want to reach all of Canadians, right? Yeah. No matter which market you’re in. So I’d love to hear from some of those markets as well. Was that an organized event or is that just you just went traveling road trip?
Sandy Mackay [00:07:03] It was a little bit of a it started out as more just if it was going to be just the fun thing. The golf part was kind of the trigger for it. And then in Cape Breton and then parlayed that into doing running some training sessions, partnering with some of the Keller Williams brokerages in those areas. And just ended up making it a pretty eventful and active trip. And it was it was it was busy. But the best part was really just connecting with other investors and not just investors, real estate people, you know, people that are doing cool things in those markets. And yeah, like I said, I actually have some now that we’re talking about this, I have some great guests that we’re going to line up already there, come to my mind right now. But if anyone else out there wants to be on I mean, we’d love to have more content from those areas because they’re way different than southern Ontario, but they’ve been experiencing almost southern tier like growth because of everyone departing from so this area. Right. So it’s they’re all the it’s very interesting markets up there right now. They’re experiencing things that they’ve never experienced. And it’s that’s cool. And there’s some unique investment opportunities like the landlord tenant board and stuff is way different. You know, all of the Ontario folks love to complain about that. It’s a lot different. In New Brunswick, for example, there’s a lot a little more landlords friendly. Maybe not the appreciation that we get to benefit from, but there has been recently. So there’s yeah, there’s some interesting differences there that I think we should explore further.
Rob Break [00:08:34] Yeah, absolutely. Yeah. And I personally know a bunch of people who, you know, live in Ontario but have been investing in in. New Brunswick.
Sandy Mackay [00:08:49] St John. I know a lot of St John; I’ve heard a lot of that or Moncton I guess to.
Rob Break [00:08:54] Moncton I think Moncton more. But either way, you know, and I was looking at some investments out there and then didn’t pull the trigger on those. But yeah, no, definitely, definitely some interesting stuff. So yeah, if like you said, if anyone’s in those markets and wants to talk to us, we’d love to hear from you. I sent you a link Sandy. So we’re going to put that in the show notes, but it’s just we’ve got some really cool container house builds just starting up here like just got permits, so and we’ve got the land. So that’s going to start. It’s already started basically. You know, the lots have been cleared, they’ve been prepped. But once the now that we’ve got our permits, you know, it’s going to happen a lot quicker now. So you’ve got the link. It’s all just concepts. But you know, these are these are really close to the beach and play apenas. They’re going to be gorgeous. So, you know, anyone who wants to check that out can go into the show notes and click the link and see what we’re talking about.
Sandy Mackay [00:09:55] And there’s the price points on these are American dollars.
Rob Break [00:09:59] Yeah, yeah. Yep. 399, which is a great entry level price. Those are three bedrooms. So we sort of took the concept of something that I had seen in the area here that was two plus two then, and we changed the design a little bit. So now we’ve got three full bedrooms. Yeah, I think they’re gorgeous and they really fit in with the jungle like, right. Like they’re, they’re covered in that beautiful, beautiful wood finish. So anyway, we’re excited about those.
Sandy Mackay [00:10:25] They look super cool. Those are pretty cost effective. But I was I was expecting American because that was Canadian. That seems too cheap. But it looks like some great deals. And are you going to showcase any of that on your tour there in the next couple months?
Rob Break [00:10:40] Yeah, we will be. Yeah. And, and you know, other properties where we have opportunities to maybe do some more and some other different development opportunities. So I’m looking forward to that. I’ve got my eye on something else. So I’m going to be showing everybody.
Sandy Mackay [00:10:57] Awesome.
Rob Break [00:10:58] It’ll be fun. And that. Yeah. It’s all. It’s all sold out. But we’ve got our we’ve got our Investor Property Tour in conjunction with Durham area and that is November 18, 1920, here in the Gold Coast, kind of stay in Costa Rica. And it’s going to be fun. We’ve got 22 investors coming now. So to many, I think to be touring properties. So it’ll be a little bit easier to maybe do some of these development ideas where we can just all stand in a field and envision things together. We’ll be seeing some cool Airbnb rental properties too, though.
Sandy Mackay [00:11:40] Sounds exciting. Wish I was going to be there. Maybe the next one.
Rob Break [00:11:44] Well, Gary, our guest is not going to be at that one, but he was here recently and visited me down here. So that was fun. I want to welcome Gary to the show. Gary O’Brien.
Gary O’Brien [00:11:57] Hello. Yeah, nice to be here. Thank you very much for having me on the show. I’ve actually been a long time listener of the podcast and it’s kind of feels a little bit odd to be on the other side of the microphone here for this episode. But thank you very much, Rob, for that time in Costa Rica. You’re very kind in terms of taking us around, showing some properties there. We wanted to go to Costa Rica for vacation. I wanted to go for the property viewing. So it was a nice balance. So I kind of snuck a day in there to do that. So thank you very much.
Rob Break [00:12:31] Well, it was fun. And we hung out a bit, too.
Gary O’Brien [00:12:34] Yeah, it’s good. Yeah. No. How can you not there with the beach and the restaurants? Beach side? That was fantastic. Great.
Sandy Mackay [00:12:41] Yeah, awesome. Welcome to the show, Gary. You and your wife, Karen, you’ve been visiting relatives in 2014. A little background on you here that I have you been but you used to work in the film and television industry for 23 years as a 3-D animator and also part time teaching at a college level and. Years ago, realizing that the 9 to 5 will not provide enough for your retirements, like a lot of people end up realizing, and you started seeing friends and neighbors get involved. Real estate, you know, real estate was something to add to the bigger picture. Obviously, you got involved in that. And the buyer method, private lending seemed to be seemed to be your strategies of choice. And we’re going to talk a little bit about that today, some 70 seconds conversions. Your member term REI, listener, reader and obviously podcast books like you mentioned and real students of the investment real estate worlds and someone not from real estate investing backgrounds. You hope to inspire those that think real estate is only for full time agents and brokers. So it’s time to think again and hope to hear a lot more about that on the show here. Welcome again.
Gary O’Brien [00:13:53] Yeah. Thank you. Yes.
Rob Break [00:13:55] So, Gary. 2014. Take us back there. How did you get started in real estate investing?
Gary O’Brien [00:14:02] Well, yeah, like, I mean, as someone that isn’t in the real estate business, I mean, in terms of full time thing, I still work in film and TV. I’m a 3D animator and in computer animation. And so, you know, for us, it was a very much of a different thing. We saw friends and neighbors and stuff that we’re getting into real estate and we thought, wow, that’s really interesting and how they’re making it work for them in terms of the bigger picture, right? So we actually had a neighbor where we used to live and she was a bank manager at one of the banks and she and her husband had a rental property and it was I guess the tenant was the Ontario government because they were I guess for it was a house that was providing services for those that had physical challenges and stuff like that. So it was done through the government and, you know, very predictable rental payments every month. So that always stuck with me. Plus also with some friends of mine from years ago, they did the duplex conversion, you know, the neighbors, the BR method before it was called the bird method, way back when. And that always kind of stuck with me. So we always knew that getting into real estate would really be beneficial. And so when we saw, I guess when we thought that we were ready for this, when, you know, we got established in the house and moved to this new place, let’s look into this. So we did and we started we saw these Oshawa townhouses back in 2014. And, you know, back then they were a bit 233,000 I think they were selling for. And at the time we were kind of like, oh my God. Like, it’s very scary to do this and very daunting, right? Looking back now, I wish I like ten of them if I could, you know. But back then you don’t know. And so we kind of we were going to do it and then we were seeing all these are the lot is brand new construction, I should say. And we saw these lots being gobbled up by each and each person buying them. There’s only like six lots left. So like, oh my gosh, we talked to our neighbor. It was our former neighbor, I guess, and she was on vacation. So we had to wait a few more days. And we’re kind of getting all antsy about buying these buying this townhouse. So she came back from vacation. We called her right away and said, listen, we’re thinking about buying this townhouse. Did the numbers work for us? And she’s just like, buy it. Just go out and buy it.
Rob Break [00:16:31] Go get.
Gary O’Brien [00:16:31] It. Right? So she’s like, We’ll make the numbers work. We’ll make it happen. Don’t worry. Just go get it right. So that was the confidence that we needed. And we, you know, we jumped in the car with a checkbook that did it within 30 seconds of that call and ran down to the sales office. And we did it. And we were kind of like, wow, okay, now we have an extra this extra property to our name that we’re totally not used to. Right. And it was very out of our comfort zone and. And then I figured, Oh, I better learn how to be a landlord now. Like, if we’re renting this, how do I do that? And that’s the whole, you know, Durham REI that came round for me and reading the books and learning all that stuff. So it’s been it’s been quite a ride. It’s very interesting. I mean, we don’t have the biggest portfolio. I’m sure that people like I applaud those that have like the 30, 5000 properties and stuff. That’s fantastic. We’re growing at a rate that is at a pace that’s manageable for us. And that’s why we we’ve been buying one every other year or because we do a renovation. The way it’s worked for us has been using the blender and stuff and then flipping it over to a lender a year later. So within that year, we renovate it, we find tenants and then. You know that year comes up and then we switch over to an A lender. So that’s how we’ve been kind of working it, and that’s why we’ve got three, five units over three properties for now. But we still continue to grow. We’re still looking and looking at other options and trying to just grow that business.
Rob Break [00:18:04] So we’re going to dig deeper into the individual properties, the nets to in a minute. But like what are the big things that have stood out to you so far?
Gary O’Brien [00:18:16] The big things, both talking real estate, I think, and me coming from a creative background in terms of animation and art and all that kind of stuff, an artistic background. I always found real estate, or at least my impression of it years ago was this You either, like rent a place or you flip it. That’s it. Whereas over the years you learn like how creative real estate can really be like. The different strategies are amazing. The burr strategy flipping houses, vendor take backs, rent on Airbnb, Airbnb arbitrage, which I thought was amazing when I first found out about that private lending joint ventures. When you’re working outside of the banks, you can it can be as open as you want it to be and you can strike whatever deal works for everyone involved to make it a win. So within reason, obviously. But, you know, it’s quite something. It’s quite creative. Also, two other things that stand out are building your team. The people that you surround yourself with to help accomplish the next investment is huge. You got to really be able to know how to make friends fast, especially in a like for us we tried a different market and then yeah, like not knowing the town, not knowing the area, we really had to kind of make some friends fast and get to know people and who can do what and delegate and all those kinds of things. Got to trust your gut. And in regards to that, I mean, like as an example, when to hire, when to fire it, so be it. Be slow to hire someone but be fast. Fire them if need be. We went through that with one contractor for the Oxford duplex where the first couple of weeks in we were talking about getting egress and you know, all these kinds of things put in and is like he was bringing the wrong window or he was charging us way more like double for the half of the amount of drywall and taping to be done or taping not being done, you know, and we’re kind of adding it up and we’re going, this is not working. So within two weeks of we thought we found our contractor to help us. We had to let him go. You have to make decisions like that to make to go forward. Right. Because, you know, a few more weeks of that could have really set us back. Right. So we try to keep those kinds of things in mind. We knowing when to get a second opinion always helps. So making sure that you’re not just getting one quote, get a few of them can compare them to each other. That’s always. A huge benefit, too, because you can kind of gauge things better. And, you know, some contractors may come in and quote you a job that is like way beyond or way more than what it needs to be, whereas another one might come in and say, no, no, you just need that. And that is fine, like that small job. And you’re, you know, you’re not paying for this huge extravagant thing. You’re just paying for something that was much smaller scale in terms of the same fix. So those kinds of things are important. And then. Software. Some of the software that’s out there now, that makes things easier in terms of all the screening tenants and running your systems and stuff like that. I found that really helpful along the way too as well. And that’s all out there to, you know, to test and try out. And then last but certainly not least, I would say that’s a mentoring and coaching that’s important to get that because you really need a sounding board or someone that you can kind of go back to say. This is not what I’m used to. How would you handle this? And I think the mentoring and coaching to help guide you through the processes. I think that’s necessary and it’s a good thing to have in your back pocket.
Rob Break [00:22:14] Yeah. The big thing that I’m taking away from this is the guy, right? And I think that that’s really important that people tune in to that because you’ll know. You’ll know whether you’re meshing with a contractor. Right. Like in your in your case, like when something just doesn’t seem right. You know, it’s usually good to take a step back. Okay. Is it because I’ve worked with a lot of contractors over the years and some you know, you can just you can tell that they know what they’re doing, like the ease in which they get things done. You know, there’s a flow to their work. They understand what’s going on. It’s not like there’s not a mess everywhere. You know, and the numbers make sense when you look at what the what things cost. So when these things don’t feel right, you know, it’s probably because they’re not. So I.
Gary O’Brien [00:23:09] Mean, yeah, for sure. That’s huge. I remember one of the plumbers I spoke to just as a quick story. I spoke to one of the plumbers and he quoted me like such a big job, tier floors. And so I was like, I was almost like, like gutted in terms of worry and stress. Like, it put a lot of it on me. I think I forgot my wife’s birthday that week almost because of it. I just couldn’t sleep. You know, those just like it was. Yeah, that’s a daunting. Yes, but it was daunting. It was quite it was the heaviness of just like, oh, my God, what am I into here? Like, not expecting this because this was that was our first duplex conversion that we did. And that one was a bit scarier. And yeah, we kind of thought, Oh boy, what are we into here? You know what I mean? But after finding the right person and afterwards, we ended up getting a contractor that I still work with now. In fact, I just spoke to him the other day and he came in and worked on the job for us. He can do, you know, quite a bit of everything, really. He’s quite good and skilled and he was instrumental in moving us forward and getting us to the finish line on time. Right. So that was that was good. I mean, I can I’m pretty handy. I can do some of the jobs and some of the work as much as I can handle, but some things. Yeah, I could probably do it, but I’d rather pay someone who can do it quicker, cleaner, and has the right tools for the right job. And I think that’s huge, important in terms of moving forward and progressing and, you know, meeting your targets because if not, you can waste a lot of time and time and money. Right.
Rob Break [00:24:52] So and lastly, before we move on to the next subject, as far as the software goes, is there anything that you found that stood out for you like that’s a good resource you want to share?
Gary O’Brien [00:25:04] Yeah. Lately I’ve been using well, I’m actually screening tennis right now for one of the units and I’m going back to using rent a fi again. So I’ve been using that one and that’s a good sort of tenant screening software for the financials, for the banking, which is, which is great. It’s been very useful. And now I’m switching from one to another. I think I’m going to try single key for the tenant screening, for credit checks and all those kinds of things. Right, to collect all the information online. So I’m going to try them this time. I’m using another one, but I don’t know if they’re even still in business anymore, maybe naming them. But, you know, I just. I’m going to switch it to something new and try something new here. So yeah, I’m going to try that. But I mean, that’s just one of many. I also I’m my member of the front lobby, which is the Lender Credit Bureau, which is one of the tools that we can have as landlords, you know, that that help us. And also what was the last one there, tenant cloud. I’ve also kind of worked with too as well. And all these are just kind of like trying to keep your systems in place, right? And it helps that way because systems are everything when you’re running different properties at different times and you know, everything’s happening. So a good way to keep track of all that is using the software so that I open up one. One account, I guess you could say, and all I need is right there in front of me, so I try and use that stuff as much as possible.
Sandy Mackay [00:26:48] Awesome. Rob We don’t know yet, but we’re going to have someone from front lobby in the next little bit. That should be a good conversation. So software makes I mean, it can make things a lot easier if you’re using the right tools. So thanks for that and talk to us about how you plan out your BR conversions, what that process looks like. If you can go to go from right before you close on the property, after you close and then after renovations and tenanted and kind of those three phases. Can you take us through what that looked like for you?
Gary O’Brien [00:27:22] Sure. Yeah. Yeah. Well, what I’ll talk about is our latest property that we finished earlier this year. And I got to say, I had to be open and transparent here. I wasn’t even sure. Like knowing the numbers and the interest rates that we’re dealing with right now. This property that we bought in Chatham six months ago, this thing was a perfect buyer. It was cash flowing like crazy. It was doing really well. And it was I would call that a successful, you know, run. It’s a successful investment that we had. Now, with these interest rates, I’m kind of like, Oh my God, like it’s killing the cash flow. And I’m thinking to myself, Robin, Sandy will want me on the show if I don’t have something that’s totally a success, right? But then I had to kind of reframe my mind about this because then my wife is good at this kind of stuff, too. And she was kind of like, we’re talking about it and we’re saying how, no, this is the value in it. Like this is the struggle that investors are having. And in that regard, it’s good to talk about these kinds of things, to get them in front of us, to know that, yeah, we’re all tackling this new market that we’re in across the board. So I thought, No, no, there’s value in talking about this too, even though it’s the cash flow isn’t as strong as it once was. We should talk about. So, you know, we all looked like geniuses five years ago when we bought these properties. But now here’s where the rubber meets the road, and now we have to kind of navigate through all the weeds here. So but yeah, it’s been it’s been an it’s been a good process to go through. But I’m hoping, you know, this time next year or two years from now, we’re all sitting pretty again in terms of our situations. But in terms of the property itself, the Chatham property was yeah, if I break it down into like closing on it in terms and then the after we close and then after we finish the renovations leading up to the closing. So we found this property on the MLS last summer. So for those that can’t, they’re saying that you can’t find an MLS deal. You can.
Rob Break [00:29:33] Well, quick question, if I can interrupt you really quickly. This is in Chatham, right? This is this is a market you’re not familiar with. Why are you looking in the first place?
Gary O’Brien [00:29:43] Well, we kind of we kind of got sort of some information about Chatham. We are actually going to be buying something down there with another investor who was building purpose built duplexes. There are secondary suites, they call them there. So we actually got exposed to Chatham then probably. Almost a year earlier. And we found out some of the things that are happening in Chatham and what’s going on there. So we thought, okay, the prices, you can’t ignore the prices down there. They’re quite a lot different from the GTA and yet their rental rates are still strong. So that was enough for us to kind of say, Hey, we’ve got to look at Chatham. So we kind of got exposed to a year before and that’s why we kind of kept an eye on it. And then that’s when we saw this MLS listing and we, we, we jumped at it. So. What we were looking at on the Thursday, I think we saw it in Paris, came up and we’re looking at it. It’s got the ceiling height in the basement. It had big windows for egress. It had the back entrance into the basement. And it already had like a bathroom, a fireplace, a bedroom down there. I was like, oh, my God, this is all this could be an easy we’re hoping to be an easy renovation. So we looked at it online. I called up about it on the Thursday, Friday, called the town and just asked, but the zoning right away, because that’s one of your main things that could be an obstacle if you don’t have the right zoning. So they got back to me that day and I kind of I was saying, if you don’t mind kind of hurrying with the information because we planning on going to the open house the next day on the Saturday. So they got back to us and yes, it can be resolved as a secondary suite. So once I found that out, it was like, let’s move forward with this. And so we went down on a Saturday and for us it’s a four hour drive. And so I went down there and took a look at the open house. Yes, there were other people looking at it, so we kind of thought, oh, you know, we might have to be in a bidding war here. So we thought, let’s play our strongest card, and if we get it, we get it. If we don’t, we move on. We look at something else, right? So we are real estate agent. We put our bit in in our look. It was. It was for 20. They’re asking for 19. They’re asking for but that was way under the market value. That was just to bring in the bidding war. The real value of it was probably about maybe 460 something, I’m guessing, in terms of comparables. So. We kind of thought, oh, boy, okay, we don’t have any financing ready. We don’t have we’re buying this kind of like on the spot, not fully prepared to do so. Right. And we thought, well, let’s go ahead and we’ll try. We’ve been kind of somewhat getting prepared for a buying and making a purchase. So we were kind of not officially there, but we were on our way there. And so, um, so on a Saturday we went to the open house Sunday and we thought, okay, let’s put a bid in. And even then we’re our bit of we had to, we didn’t have financing, condition of, on financing. So we thought we have to kind of beef up our offer. So we said 475 and our real estate agent even told us, like, well, the house next door, the exact same model went for 495 last month. And so don’t expect to be getting this. And sure enough, on the Sunday we got the call. Congratulations. You just bought a house. It was just that one week in August where everyone went on vacation, COVID rules were kind of loosening up. Everyone wasn’t thinking about real estate at the time, so we ended up getting this and so is like, okay, well, now we have to do something about that to convert it to a second grade. So, so all that time you can do a lot in between that final, you know, purchasing until closing, right? So we got all our drawings done in terms of before closing, we got all our drawings for the secondary suite design. And so we would be submitted of getting that ready for submission on closing day or the next business day of closing day. Right. And in that time I’m already calling all the local drywall, electricians, all the trades and stuff that I would need to have them in there and just seeing what their schedules are like in the coming weeks, months, that when I think we’re going to be needing them in the meantime, I’m scheduling everything out on. I also use like a microsoft OneNote just as a way to keep my laptop and my phone updated. So if I’m at home, I can update all the contacts of in this new market. And also I can do it when I’m in Home Depot. I can just do it on my phone to send it updates on either end. Right. Which is pretty handy. So. That was good. And then so in the meantime, I’m calling all these trades, and then it comes to closing day and then closing day, obviously, you know, we. We have the plans all drawn up. We go through all the lawyers and I’m sourcing materials and stuff and then putting the systems in place. And then as we close on the property that Monday morning, I went to the town or submitted my paperwork for the work permits, and then knowing I have about it took about three weeks for the permits to come back. And so in those three weeks after closing, our plan was like I went down there Monday to Friday and worked on the house and came home on the weekends. So maybe not everybody was willing to do it, but I was in terms of and that was definitely hard to do in regards to being away from the families Monday to Friday from probably to four months. Right. But to do it, we had to do it. So I was tearing down the ceilings in the basement knowing that that oh, that was going to get redone. So that was my main objective to get to again, while I’m waiting for work permits to come in, I have about three weeks to get things ready for that to happen. And then we actually had a vacation booked to Saint Lucia during that time and we thought, wouldn’t we cancel them to keep it going? What do we do here is we let them know, let’s do it. We’re waiting for the workers to come in. Let’s just go enjoy. Right. So we did. And I know if taking a vacation during a renovation isn’t noise, everybody’s a thing. But we managed to do it. And then that week was the week that the permits were coming in. But the thing is, there was adjustments to the work permit. I thought, Oh no, but I got the emails while I was on vacation and I was like, okay, how am I going to do this? Right? So it ended up being the front or the entrance way to the basement needed to be reworked. It wasn’t quite what they wanted in regards to soundproofing and it right for the rating so that I took care of that as a phone call on the beach and that was kind of funny because it was like, here I am on vacation. The beach is like 40 feet away. And I’m talking about this to the inspector about editing our drawings here. So I thought, Yeah, I kind of get used to this. This is kind of nice, you know. So anyway, it all got worked out and back and forth with the new set of drawings, which I had drawn up. So I just would sort of relay the message back to the, to the person editing them. And then it all went through us. By the time we got back from vacation, I had the work permits ready to go and they got delivered and all was good. And once that happened, it was, you know, we’re ready to start moving. So in that time, it’s renovation. It’s getting the you know; I’ve already booked the electrician to come in a certain day. I know I’ve got plumbing and, you know, my handyman that’s coming in to do the work and all that kind of thing, right? So I try to use as much local trades in Chatham and but I also had my own painting and that was willing to come down and stay for a few days to do the work too, which was totally handy. It was fantastic for that, you know, instrumental. So. So that would be like getting all those trains lined up again. Calendars. I have it all charted out as to when I think things should be happening in Windows of opportunity. Because sometimes, like, for instance, the drywall only had two weeks in January to make this happen, right? So I was like, okay, I’ll get everything ready on my end for that window. After that, I had to wait five months. So those kinds of things are important to kind of queue up all the things that you need to. And so getting closer and closer to finishing this project. And again, it wasn’t a huge rental. We were keeping a lot of it because the basement was pretty much like it was a nice basement as it was. We were adding a new bedroom and redoing or putting in a kitchen, so and then know, reworking the entrance. So it wasn’t a huge amount, but it was enough to say that, you know, it’s going to take several months to do so. So once we got to the end of the rainbow, it was time to tenant it. Right. So after the renovations, tenants in the property, I found it to be actually a bit more of a challenge. It was I’m used to, you know, in Oshawa in terms of population and that kind of stuff. I know that one out of every however many phone calls I take about the place, I know that there’s a certain ratio there that would be a qualified tenant that would be a good fit. Whereas I just found in a different market, it was it was just taking a little bit longer to get to the qualified tenant. And then even then we let the first month go like we had to cover the first month of a vacant property. But I’d rather wait for the right person in the right fit, then just put anybody in there. And because that’s easy, but then it might come back to bite you in a year from now. Right? So that’s why I always thought, well, okay, we came in under budget. We came in on time. In terms of Toronto, I can afford to maybe just wait for that right person to come round. And so we covered the mortgage for, I think, an extra one or two months before we found the right people to take on those the tenancy there and they’ve been fantastic. So it’s all been working out pretty well. The only thing that’s not working is the interest rates. We can do something about that.
Sandy Mackay [00:40:26] What was the time of year they were renting that it?
Gary O’Brien [00:40:29] Uh. What was. We finished it in, I’d say early March. We finished the renovations, so I had by. April, I believe I had the top floor rented and then by sort of late May I had the bottom rented. So it took a bit of time, but well worth it.
Rob Break [00:40:55] So. So from what I’m getting is you’re doing all the property management yourself. You’re doing the general contractor work yourself. Why did you do some of that? Especially when you’re, you know, like you said, 4 hours away. Why did you decide to continue to do it that way?
Gary O’Brien [00:41:13] Well, I guess because we had the experience from the first duplex conversion and that was kind of scary, whereas this one seemed a lot easier. Everything kind of fell into place a bit better for this one. I guess with the experience. But also it wasn’t as big of a job either. So. So. Yeah, I tried to do as much as I could knowing I’m going to be down there from Monday to Friday. And I’m still working full time and part time like full time at my 9 to 5 job and then also my. Like teaching part time as well that I do. So, you know, it’s amazing what you can get done after hours and on weekends, you know, if need be. Right. And even before when before the day starts, you know, if you’re up early enough. So I just I knew I wanted to do. As much of the work myself as I can. Again, getting to know the market, getting to know what’s down there. I thought maybe being down there might be better for at least. At least for a short period of time. But then just as the project and we, you know, again, we came in on time in terms of finishing it. It was just good to be down there knowing the trades and keeping an eye on things. I felt more comfortable about that instead of having it handed off totally to someone else.
Rob Break [00:42:33] Well, I think one of the other interesting things is that you had said sort of the idea that, hey, if I’m not like the guru, maybe Sandy and Rob aren’t going to want to have had me on there for the interview. But like, this is the kind of real talk that we’ve set out to do right from the beginning, like we’ve seen the and I don’t know if you remember this or not, but I mean, I can’t even remember who it was we were talking to. But, you know, we always want to go, okay, what challenges have you run into, you know, and have the person give us a real answer so that people can learn from it? I don’t want we actually had a guest where they said, no, not no challenges, didn’t have anything. You know, God, it just like. Okay. All right. Next question. You know, but, you know, so from your point of view, then, when you looked at this obviously from the beginning and had a good idea of what it would Refinance for after you changed the use and to legal to use it, and then how much cash flow is going to get and use. And you saw, okay, it’s going to be a little lower, but why then would you and here’s the practical information that we’re looking for. Why then is this still a good deal? Why do you decide to continue and say, yes, we’re going to go for this?
Gary O’Brien [00:44:02] Well, I mean, it’s long term, like we’re in it for the long haul. I’m not going to be, you know, offloading this property anytime soon. So for me, I see the bigger picture long term. Yes. All the numbers worked out. In fact, it was called a, you know, a home run by, you know, people in the industry and a lot going on. I gave them the numbers. That is a home run. And but the way the market just has shifted, you know, it’s evaporated. It’s almost all the cash flow. And so right now it’s about keeping it going, keeping it still operating and knowing that hopefully in two years’ time I’ve been hearing 20, 24 when things are going to be the interest is going to be coming down again. So I’m hoping that it gets it improves our situation in the coming year or two.
Rob Break [00:44:57] Well, in the long term, there is always appreciation, you know, in the long term. So to put it in perspective, we’ve had different people on there who would who would, you know, put it like this, like there are people that take $500 a month, put it into an education fund for their kids. Like this is essentially the same thing, except for your earning a little bit of money off of it. And then you’ve got appreciation and you’ve got mortgage paydown happening all at the same time.
Gary O’Brien [00:45:28] Right? Yeah. No, that’s for sure. I mean, you can you can see the different pillars of wealth, I guess, that you can that you can build upon when you have a property like this for the long term, right? Yeah. Okay. You know, we’re in a bit of a rough spot here for the way our housing market is going for the values and the interest rates that we’re dealing with right now. But that’ll change. That’s not forever. It’s going to be better soon or, you know, in the coming year or two, whatever. So I know we have to ride this out and we’ll do that and we’ll get back into a better position.
Rob Break [00:46:08] So, I mean, it’s interesting because when you look at, you know, the prospect of being a real estate investor years ago, one might have thought of it as, okay, you buy a single family home and you rent it out, okay? So now our strategies have changed because of the way that the market turned and the and the extra profits that can be made by doing these different strategies. But I mean, you know, now maybe with the market shifts like this, you look at, okay, I’m going to buy a single family home, affordable price, the rents are still high. So now maybe this works again. Like, you know, it’s just it’s just about shifting mindset with the change in the market. Right. Right. There’s always something creative that can be done in order to make this profitable. That’s my opinion.
Gary O’Brien [00:46:56] Yeah. I’m hoping that we’re going to get to this kind of in the future. I’m going to get to that sweet spot where, I mean, I’m hoping this is happening, but with our softening of the of the market pricing. Right. And then with the interest rates, yes, they are high right now. If they can kind of come down at a certain point and maybe there’s going to be a some happy medium, I think there’s going to be opportunity out there for sure. I think there’s always opportunity in pretty much any market finding it. Okay, that might be a bit more challenge, but they’re out there.
Rob Break [00:47:29] I just wanted to mention something. Now that I’m just thinking of it, you you’ve this is like sort of off topic a real estate, but you’ve had a little bit of like sort of almost like fame and success with your paintings that you’ve been doing, right?
Gary O’Brien [00:47:45] Yeah, a little bit. I can talk about that if you want, like just quickly.
Rob Break [00:47:48] It’s interesting, right? Like you did this fantastic painting of Gord Downie. Yeah. And it’s been getting a lot of attention.
Gary O’Brien [00:47:57] Yeah, well, I did this painting back in the beginning of the pandemic, I guess, or finished it in late, late 2020. And just keep it brief. But yeah, it they released the image online social media and all that kind of thing and it went bananas. It was just crazy. It had like, like 3 million views on LinkedIn alone kind of thing, not counting Facebook or Instagram or anything like that. It garnered so much attention. This portrait of Gord Downie, the lead singer of the tragically hip that Gord Downie, his brother and the tragically hip management, both contacted me that weekend and they were like, Hey, Gary, nice job. We have to work together on this, right? And I was like, Oh, wow. Okay, great. So I was talking with Mike Downie and Gordy’s brother and he was telling me some stories and stuff like that was really entertaining and really good to hear. And then at the end of the conversation, he was saying how, you know, Gary, you kind of broke the rules here of that. I was like, What do you mean? I’m trying to do all the right things in terms of setting all this up and, you know, doing what we do. And he says, no, no, no, not in that way. He goes, A lot of people send me artwork of Gord and, you know, I see that. I see it all, he says. And he goes like, you know, the eyes are quite not quite there and the mouth is a little bit off and all this kind of stuff. But he goes, When I look at yours, he says, Yours is yours. A special. He said, You nailed it. He goes, That is my brother and I want one for my own home. I’ll say, Oh my God. I guess it was just amazing. I had like goose bumps, like, just like listening to I mean, I mean, just that was that was like it went right to the source. I couldn’t believe.
Rob Break [00:49:39] It. Yeah, we should.
Gary O’Brien [00:49:41] That has been quite a ride.
Rob Break [00:49:43] We should put the link for just so people can see it.
Gary O’Brien [00:49:47] But sure, if you want to. Yeah. Gary O’Brien. Yeah. Gary O’Brien. Fine. Archival.
Rob Break [00:49:51] Right. Okay. Perfect. Yeah. Go check that out. I love that painting. Super cool. Oh.
Gary O’Brien [00:49:56] Thank you. Yeah, thank you.
Rob Break [00:49:59] Back to the real estate stuff, I guess.
Gary O’Brien [00:50:02] Picture. Yes.
Rob Break [00:50:03] Sandy, you’re not me.
Sandy Mackay [00:50:04] You’re in on me. I was looking out of the earth.
Rob Break [00:50:08] Oh, here and there. Oh, do you see the painting?
Sandy Mackay [00:50:11] Yeah, I was second, though. Yeah, well, where do we leave off? Let’s talk about the. We talk about your Q&A event. Live here, ever?
Rob Break [00:50:18] No.
Gary O’Brien [00:50:18] Oh, no. Yeah, yeah, sure. Yeah. This. This is a. This is something I want to do. And again, I’m guessing talking more so to the newer investors, those that are looking for their first, second or third property. Right. And. The purpose of this is to kind let’s get some generating some discussion about this because I feel a lot of people think that they can’t or I don’t work in the industry, the real estate industry. That means I I’m not going to be buying properties over. But guess what you can like I don’t work in the industry either, but I’ve made this happen and I continue to do so. So if I can kind of help out in that regard, I’d really like to host a Q&A. I’m calling it a town hall where people can come in with their questions, with their opinions, or maybe some of their expertize as well. And let’s discuss, let’s generate let’s some let’s try. And, you know, for those who think they can’t do it, let’s make sure that. No. Open up the doors. Let’s make this happen. I think you can if you think you’re you know, you’re with the money or the time is constrained, knowing how to do renovations or where you live, you think it’s too expensive or something like that. I’m not familiar with borrowing from the bank or whatever the excuse is. Let’s tackle it. Let’s come to some solutions here. And knowing how to pull out equity buying in another town that, you know, just because you don’t live in that town doesn’t mean you can’t buy in another town that covers where you live, you know, and you’re investing and growing that other property, talking with your bank about hillocks and the paperwork involved and private lending and all those kind of things. Let’s, let’s bring it up in the open and let’s talk about that. I’m picking October 17th. I haven’t fully started anything official because I’m not sure about when this will be aired, but I’m hoping October 17th would work.
Rob Break [00:52:12] And yeah, I think this will be out in in like a week soon.
Sandy Mackay [00:52:17] Yeah.
Gary O’Brien [00:52:18] Okay. Yeah, yeah. This is just an okay, an informal discussion. Bring your ideas. And I don’t want to be the only one talking. I’m hoping everyone can add and really, you know, help give value to the discussion so they can email me for any info and I’ll send out a link to anybody that wants an invite.
Rob Break [00:52:37] Okay, great. And where do they and where do they where do they email you or how do they get in touch with us?
Gary O’Brien [00:52:43] You can get in touch with me. G k house info at gmail.com.
Rob Break [00:52:49] GK House info at gmail.com. That’ll be in the show notes. We got to wrap up here. But Gary, is that the best way for people to get in touch with you?
Gary O’Brien [00:53:00] Yeah, you can email me or I’m also on Instagram under GK House Invest and GK House Investing.
Rob Break [00:53:10] GK House Invest. Yeah. Got it. And that’s on Instagram. Okay.
Gary O’Brien [00:53:14] That’s Instagram handle. Yeah.
Rob Break [00:53:16] Perfect. And these will be in the show notes, guys. So you’ll be able to get in touch with Gary and be part of his live event. Awesome. Gary, thanks for sharing all this today.
Gary O’Brien [00:53:24] All right. Thank you. Thanks a lot for having me.
Sandy Mackay [00:53:26] I love when you dove deep on that because there’s details there that sometimes you don’t get a chance to go through with other guests. So that was awesome.
Rob Break [00:53:33] Appreciate it. I agree. 100%. Thank you. Great. Okay, Sandy, how can people get in touch with you?
Sandy Mackay [00:53:39] Sandy at freedom reps dot com or look me up on social media’s and connect with me on Instagram, Facebook, LinkedIn.
Rob Break [00:53:46] Awesome. Me too. All those social media things. I, you know, my handles for most of them. But I think if you just put in my name, I’ll come up or you can reach me at Rob at Mr. Breakthrough. Okay. Thanks, everyone, for joining us again. We’ll see you next time.
Announcer [00:54:01] You’ve been listening to the Breakthrough Real Estate Investing podcast. We hope you’ve gotten some useful and practical information from the show, and we hope you’ve been inspired to take control and live life on your terms. We’ll be back soon. But in the meantime, make sure to like, rate and review the show. And don’t forget to subscribe and listen on Apple Podcasts and Spotify. See you next time.