Table of Contents - Making BIG Profits in small Town Real Estate with Trevis McConaghy
Dave Debeau [00:00:09] Hey there, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. Hey, it is my great pleasure to be interviewing a new friend, relatively new friend, Travis McConaghy from small town Saskatchewan. So, Travis, I'm in Kamloops, B.C. Where are you calling in from today?
Trevis McConaghy [00:00:27] Good morning, Dave. I'm actually from Milford, Saskatchewan. So we're an hour and a half northeast of Saskatoon. And it's a really agricultural area. So quite a bit different country than where you're from.
Dave Debeau [00:00:36] Well, originally from I'm from Taylor Flach, British Columbia. So population 600 at that time. So I don't know how different it is actually a little bit different than Galman, so that's for sure. So Trevis really, really pleased to have you on the call. And folks, you're in for a treat here because Travis is doing exceptionally well in real estate with a very different twist on things. So Travis comes from an agricultural background, very successful farmer. Then he's gone to real estate investing and built up a very substantial real estate portfolio, doing creative things like moving houses and reallocating assets and focusing what I really want to do. And is Travis focuses on quite small towns. That's if I understand correctly. Travis says that's where the bulk of your real estate holdings are, are in small town Saskatchewan. Is that right?
Trevis McConaghy [00:01:27] Yeah, absolutely. I started investing in Millford, Saskatchewan, and it's actually where our farm is. And at the time it worked very well. And as I started growing, I invested sort of into the local area. So Melford is the only one. I've diverged a little bit in other communities, but they're very similar. I'm finding right now in other places such as sars-cov-2 and the market has really been depressed. It's been overbuilt, although Saskatoon is a great state, a great city with a diverse economy, it's just a challenging market right now. So I haven't been investing there. Regina had felt much of the same pressure, so I can buy a lot lower priced assets for, you know, much better price. Like I get a good price, get a good return.
Dave Debeau [00:02:09] So for folks that are aren't familiar with these towns, what are you looking at population wise? What are the populations like? For example, Millford, what's the population?
Trevis McConaghy [00:02:18] So the town I'm in is between six and six and a half thousand other towns, three and a half thousand. And Nipon is four and a half. So they're they're largely agriculture based. And they'd sort of be the hub for the northeast and or province. So I'd call it stable, boring, and it wouldn't be necessarily boring. But they're they're just great. You don't have the ups and downs of Loy minsters of past events. I love it for that reason.
Dave Debeau [00:02:43] OK, well, let's talk a little bit about that. So. Well, first of all, back let's back up a bit. So you started out, you were agriculture, you were farming. What what got you started investing in real estate?
Trevis McConaghy [00:02:54] Well, as a farmer, my dad my dad helped me get started and farming. So back to nineteen early nineties and it was a perfect time to be starting a farming. So farming is real estate. And so I was buying farmland. So I started with one quarter to buying farmland. So I've always been in real estate as long as I've been an adult. So it wasn't really divergent to start buying rental properties. I knew new buildings, I knew assets. And I said, OK, I want to buy more real estate. I finished university in two thousand looking for something to do, but a suite at Bungalow made a double suite at house into triple and just kind of went from there.
Dave Debeau [00:03:36] Nice. Nice. And what so you've got single family homes or suites in them. I think you've got multifamily properties as well. You've got a variety of different things. You've done some cool things like moving houses on to on to land. So tell us a little bit about what your main focus is real estate wise.
Trevis McConaghy [00:03:53] So there's a few things. So you need it. I bought single family homes and they sort of provide the bread and butter back in the day. You can buy small houses for 40 grand and you could keep picking them off every month, another little house. And they're really cheap and those houses have become worth significantly more now. Then I started doing more suite it houses and creating this week's strategy works good, but you're dealing with higher priced assets. Still cost the same to renovate here as it does in bigger cities. The end market is in there, though. The number three. Then I started buying smaller apartment buildings. There's really no larger ones available
Dave Debeau [00:04:26] for what size are you looking at? But how many units?
Trevis McConaghy [00:04:29] What sort of fourplex has bought? A number of floors. Then I bought a number of eight as of late, have been able to pick up some bigger ones. So 12 and 18 some sex. So we are getting some bigger assets, but they don't really exist in the small towns. The biggest that you'll have is about a twelve. So I've been doing that.
Dave Debeau [00:04:49] Yeah, OK, very, very cool. So I was going to ask so I mean, you come from a small town, you're that's that's where you're raised. You got in your blood, you understand it. A lot of people, you know, we get this real estate education says you got to be focusing on. Eager markets with more diverse economies to kind of minimize risks, but as you pointed out, the price point is pretty high and you're not necessarily minimizing your risk. But on the other hand, like I'm from B.C., so I'm familiar with some some towns that when it's good, it's great. But when the one industry in town shuts down, it's a ghost town after that and they can just kill everything. So what are you looking for in the communities that you're buying properties? And how do you how do you know that it's a good, stable community?
Trevis McConaghy [00:05:36] Well, I've lived here all my life, so I sort of become the local expert on my town. And when I diverge to other towns, so 40 kilometers in one hundred kilometers away, they're very, very similar. So I know what the local areas I know that farming isn't going anywhere. We have a very stable ag industry. We have lots of high throughput grain terminals, manufacturing, and we're the hub for the area. So I'm looking for growing or stable towns. So, you know, the town of Teesdale had twenty seven million dollars of development, I believe, a couple of years ago. And we're dealing with a town of thirty five hundred people. So very, very that's huge. The manufacturing has been excellent, being sort of that hub. I know it's not going anywhere. The people from the smaller, smaller towns are going into my town and and, you know, the towns, the other towns I invest in. So I'm quite comfortable there.
Dave Debeau [00:06:26] So when you say they're a hub, that's where everybody from the smaller, smaller areas, they come in to do their banking, to do their grocery shopping, to do all that kind of stuff.
Trevis McConaghy [00:06:35] Yeah, absolutely. So it could be like a stone bridge of Saskatoon. It's still a market in itself. But know the cities right now are just it's just a challenge. Many of them are overbuilt or many are resource driven. And I'm just not I don't like that's the cyclical economy.
Dave Debeau [00:06:54] Yeah. Yeah. Well, that makes a lot of sense. And like you say, a steady Eddie. It's kind of what did you call it, boring, stable and boring, stable. Nothing wrong with that. That's you know, that's one of the things that kind of appealed to me about Catholics as well, because in our area we've got cloner, which is kind of the sexy, sexy part, but it goes up and down. Omnibuses is more of a steady eddy kind of a community. It doesn't have the the quite the much as much of peaks and valleys. So and when you find
Trevis McConaghy [00:07:24] so when you find the strategy that you're doing this, what I'm doing is just buying and holding these properties. They don't sell. And the technology is if I buy today and finish the house in three to six months, I know what the value is going to be. It's not going to fluctuate. I've had lots of lots of friends in flipping markets. You could be saying in Hamilton where the market went crazy high and then maybe it leveled off, or in Winnipeg, a friend was sitting on seven houses in the market about a maybe nothing. So this is the challenge. I know that if I go from point A to point B, I know what point B is going to be, and I can pretty much be guaranteed it's going to be there.
Dave Debeau [00:08:00] Right. And you're not looking to flip, right? You're looking do you want to hold the stock or you want to get the the financing paid off and you've got a little cash machine?
Trevis McConaghy [00:08:08] Yeah. And the thing is, if I buy a distressed asset and I buy it right and clean it up, I can generally finance out as if the loan to value is seventy five percent. I can get all my money out and I can recycle it.
Dave Debeau [00:08:21] So it seems like that's when you're buying, for example, the single family home and putting a suite in it, or that's when you're buying an underperforming small
Trevis McConaghy [00:08:28] multiple sort of any assets. So whether I move the house, whether I fixed up a distressed property or whether I added a suite, I'm always targeting you've got to create twenty five percent and I'm generally now targeting thirty times. If you can do that, I don't do it because if you can serve your capital, you can keep going. If you don't, you're done. That's the problem.
Dave Debeau [00:08:48] Right. And that's you started working with other people's money. But it sounds like that you'd like to like to recycle your own money, which is.
Trevis McConaghy [00:08:54] Yeah, well, primarily. And I got a huge portfolio on my own. I do work significantly with other people and that's just a great way to massively expand your portfolio. But, you know, starting out, I was doing this and, you know, I'm doing it with other people's money. So we've got you say a dozen joint ventures on the side just growing rapidly. And most started one in there and half a dozen houses already. Nice. It happens quick for sure.
Dave Debeau [00:09:21] So I was asked a question, knowing what you know now, it sounds like you got off to a good start. You did a lot of things right. Would there be anything you do differently if you if you started from scratch right now?
Trevis McConaghy [00:09:32] Absolutely. So the biggest problem, I say maybe took me a year to get the last hundred doors, but it took me twelve years to get twelve doors. So when I started I didn't know what I didn't know, I didn't know where to go to get the resources. I didn't get help. Twenty so I bought my first house in twenty ten and it took me literally thirty two thousand. It took me until twenty ten to actually take the first real estate course of any sort. So I took an entrepreneurship course, took another one that fall and it was actually that education which propelled me ahead so. Absolutely find somebody that knows what they're doing. Find some group that you can be aligned with and then find some people locally doing what you're doing if you can. Absolutely key, because if you don't, you just you don't know what you don't know. Right. You got to you got to find people that you can work with and then and then take action. Most people just they sit in the sidelines. They're like, oh, you know, when's the best time to buy what was yesterday? So just just jump in and find somebody and take that leap of faith and find somebody to help you if you don't know what you're doing.
Dave Debeau [00:10:40] Exactly. So, you know, you've got a fun story about that, because you and I were speaking at an event recently and you had a fun story talking about moving a house like creating creating a revenue property almost out of thin air. Tell us a little bit about that, if you would.
Trevis McConaghy [00:10:57] Yeah, so, I mean, I've actually moved about 40 buildings today, which is a bit crazy. And people say, oh, I can't find a house that works well, nor can I, but I find them elsewhere. So I'll go on to say Kajiji or buy and sell or even, you know, MLS and I'll find a distressed asset in the wrong place and I'll move it. So I've moved houses nine hundred kilometers from place to place B, making a house in Calgary, Alberta, moving it to my town. And if you buy them for ten cents, five cents or four, get them for free. And you know what the end market is. You can do very, very well. So I know what the system is on the buy. I know where the what the land is. I know what I can put on the land and I know the appraised value. So in the end I'll be able to create I'll get my money out, but also create a bunch of money. And that strategy I've used to create money to buy apartment buildings.
Dave Debeau [00:11:52] Yeah, very, very, very cool. So just give us an example of because people have got a house for a penny or the house is going to sell you their house for a penny or dollar. So what kind of circumstances are you finding these distressed properties that you're going to pick up and move?
Trevis McConaghy [00:12:08] Well, as an example, yesterday in Saskatoon, I was texting a person in the house, literally is getting demolished. So why is it getting demolished? Well, it might be a 50 foot log. They're going to do two twenty five side by side infill houses. So we bought that exact situation in Saskatoon last year. We paid ten grand for house, picked the house up, moved it into Nipon. And the house, as I said, is ten grand and it appraised at one thirty five. So we do have to work work on the house once it's there. But if you buy the right product, you know what the costs are and you can do well.
Dave Debeau [00:12:39] So how much is it just for people who have never even heard of this buying a buy? And that makes so much sense, right? Somebody's going to be demolishing this house. You're it's actually a real big win win because you're saving them a hell of a lot of money on knocking the thing down and hauling all the junk away. You're paying them for it, but you have to have a plot a lot to put it on and be move this thing from one town to another. What is that kind of look like? What is it? What are we looking at cost wise?
Trevis McConaghy [00:13:11] So there's the bad assets. So you could deal with a single family homes. You could. So that's one on regular. Your typical for Joyce, so maybe twenty four by 40 bungalow you could deal with a duplex. So they're a little bit wider. So housing, selling lots of duplexes. The number three is modular homes. They're, they're quick and simple and painless. So you can find the same dimension of modular homes like say a double wide, sort of like the new trailer, but they're built the current standards. My rule of thumb is four on a sixteen wide. It's a thousand dollars per hundred K with a minimum of five. So you're going to be spending eight nine thousand dollars if you do a long move. But you could spend five grand if you do a short amount. So that's cheap. On a typical house, you're usually between about twelve and eighteen thousand. Lots of movers available and really quick and painless on the end or end thing now is to put them on through post because it's so quick and so easy. So you treat the house actually like a modular home, OK, you don't really need to go in and put an IKEA basement or a full basement or any of that. It just set it down and get it ready. Started and rented.
Dave Debeau [00:14:20] Nice. And so what do you what do you paint for the lots that you're putting these on? Because again, these are you're putting them in small town Saskatchewan. Yeah, well,
Trevis McConaghy [00:14:28] it's an interesting question. So I became my worst enemy in my town. I pretty much bought all the infill. You you buy twenty to thirty lots and they don't really exist anymore. So when the other time when I moved in, when we're buying them for interesting that we started about twelve grand and then we went down to about five to six and when we plant the house we get five back. So they're free, bought about five back to back for nothing nice. So, so very, very cheap. But if you get a thousand dollars rent on a house that you've bought for very little on land you've got for free and you fixed up, you know, it's pretty good return. That's a pretty the question I ask is, do you want. Retire, do you want to invest in Edmonton and you're going to do how many of these and you don't have cash flow and you know, it's a really long game. This is this can be a really short game if you do it right. Very good. Short assured, I guess. A sure way to get to retirement.
Dave Debeau [00:15:21] A shortcut. So if this thing goes, it sounds pretty cool, you know, because I know you're part of the real estate investment group in Saskatoon. You're one of the directors of that. So you see a lot of people kind of getting started. What would you recommend to city folk about getting educated about small town wherever? It doesn't need to be Saskatchewan. But if somebody says that sounds like a good idea, what would be your first steps on scouting out of town? And then also, what about things? Logistics, like property management?
Trevis McConaghy [00:15:53] Yeah. So what I found when I went into the town of Nipon, for example, I had no manager, so I bought an asset and had a manager and the manager actually took over everything that I bought there. So generally, some of the if you're buying bigger assets, they generally have management set strategy number one. But if you go to the economic development office or the town, they'll know people in small town. Everybody seems to know everybody. So it hasn't been a problem at all, finding good management. And we're actually paying probably half as much as we are in a city like five, six percent fund management. That's amazing. So, yeah, I mean, the numbers on the management work, it's you know, I pay thirty five dollars a door on the property, so it's not a lot.
Dave Debeau [00:16:35] So it sounds like you own half the town, so
Trevis McConaghy [00:16:42] you'll be the king where you are. Exactly. I heard a guy say the bright lights are the bright lights. Will you know, if you want to invest in a big city like Saskatoon, you're just one of how many thousand people or whatever doing this. I'm in my town. I'm one of a handful, and I can be the king of the town, know them and have rebuilt in Regina. And they specifically built there because they know the town, they know the people, and they can make an impact in a small town some little bit.
Dave Debeau [00:17:11] So if you were let's say you were dropped in British Columbia and you wanted to focus on small town, but you're not you don't have prior knowledge about stuff, what would you do for Rickon? What would you do for, you know, figure out whether it's a decent town to invest in or not?
Trevis McConaghy [00:17:26] I'd go and see because I come from an agriculture background and I know a lot of the valleys and in there full of agricultural resources, I need diverse resources. So like at Fort St. John might be cyclical. So that might be tough. But I know they've got AG, I know they've got the dam and I know they've got some other things going on like oil. So maybe maybe I'd find something that was diverse. If you're in maybe say, Cloner, I'd look at a town that's probably not too big so you can buy at a decent price, but stable and growing. I think towns surrounding Ploning, Namibia, Verden or Armstrong might be a good place right now because if people can't afford Cloner, they're going to go to the same type of environment, but at a cheaper price. So I'd find a bunch of drivers that are resources. I'd also find words retirement friendly because I know a lot of people move to B.C. for retirement. So there's sort of two stable things going on there.
Dave Debeau [00:18:24] Yeah, makes sense. Traves we're running out of time, my friend. I know it's a fast interview. I really appreciate your input. Just kind of opening up our minds to the idea of big bucks and small towns man, because that's that's definitely what you're doing. This group, if people are interested in finding out more about you, I know you're kind of a kind of an anomaly because you're not you don't have a big Web presence. You don't you know, you speak at events and you're very well known in your local area. But if people from outside of Saskatchewan want to find out more about Travis, what should they do?
Trevis McConaghy [00:18:55] Well, I say two things. You can go into Google. There's been a number of articles I've written, so that's number one. The number two is you can always reach out and phone me. So I'm sure you can find me on Facebook. So that's number two, if you wanted to show up in Saskatchewan children or events there. So we call it Regg. So from rags to riches. So real estate investors group is starting to show up and it's a free event. I know you've been out in and a group. Yeah, yeah. And it's not for profit. All we want to do is help people get to the next level. So come out. You know, when I align myself with lots of people, I go for coffee, I help them and you show up and I'll show up and I'll help you like I absolutely have no problem.
Dave Debeau [00:19:36] That's awesome. That's awesome. Travis, thank you very much, my friend. Appreciate the interview has been a lot of fun.
Trevis McConaghy [00:19:41] Yeah. Thank you, Dave. And keep up your continued success and keep up the coaching. I absolutely love what you're doing as well. So, yeah, you don't want to leave everybody if you're if you're wanting to get in and just take action, align yourself with the right people and you can make amazing things happen.
Dave Debeau [00:19:56] Very well set. Very well said. Travis, thank you very much, everybody. Thanks for tuning in. Well, thanks very much for checking out the property profits podcast and you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.