Podcast Transcription

Erwin Szeto [00:00:06] Hello and welcome to another episode of The Truth about Real Estate best in show. My name is Erwin Szeto. Anyway, it’s back to school. It just means back to work and have a little bit of the one of those weird ones that actually like to work and enjoy my routine. That work is a bit fun for me because we get to implement a lot of change in people’s lives anyway. So Cherry and I dropped off our kids this morning. We rode our bike. I guess we’re different because I didn’t see any other parents riding a bike to school. We deliberately did it because by riding a bike, we were able to take shortcuts through parks, and we didn’t have the park ride a mile away from the school because everyone else is dropping off their kids today. So, yeah, they made a lessons logistically. The kids were they didn’t have any tears, no clinging to the kids already know everything and don’t need us anymore. From my youngest, it’s his first day of real school as a no more preschool. Yay. That’s best to me, like 500 bucks a week or a month or something like that. And that’s a public school. Yes, I said public school. And for a lot of you wealth hackers out there, I know for you it’s a private school or. I know a lot of, you know, wealth hackers who feel the same way and pay for private school using their job income, which is totally cool. I think everything is a choice. There’s nothing wrong with it either way. I personally just prefer to rely more on my wife and I to do more education for our kids around business and investing. You know, stuff’s not taught in school, public or private school and could very well provide them a higher return. There’s just a chance of that happening. We are raising about hackers, kids who are independent and have control of their destiny financially. At least they’ll control everything. Control, to me, means financial security. So I’m going to make sure that they can live free of student debt, free of rent and free mortgage payments. They won’t. They won’t live lavishly. I still believe in building strength of character, you know, steal strength and steal. They’ll have to be some difficulty and challenge for what they do. But you know, I have challenges every day in running my business, so I don’t think it necessarily be poor to be challenged anyway. They won’t live lavishly. We’re still talking about starter homes for them, whether it be Toronto or Vancouver, but maybe it will be a two bedroom condo instead of a one. They have room for old dad to come visit anyway. Speaking of Toronto, here’s the latest on rents in Toronto. Surfing Facebook Marketplace the other night last night and found a modern downtown condo offering a one bedroom, one bathroom for $6500. Wow. Great deal rate. Then you read the full description. The offering is actually a bedroom with en suite bathroom in a one bedroom plus den and two full bathroom condo apartment. The landlord is going to gross close to $3000 per month for a one bedroom plus two bathroom condo apartment. Creative business? Yes. Much cheaper for a one bedroom bath. This is much cheaper than your traditional one bedroom, one bathroom apartment where you have exclusive rights to the kitchen and the rest of the place. But this is what the world’s coming to, and to me, choice is what I’d rather be the landlord or the tenant. The same applies for what I want my kid or my mom or dad to pay us for rent or what I prefer to collect these rents wherever I choose to invest. It really is a choice in the matter of courage that decides whether which side you’re on, even if you don’t have the down payment today. I’ve been there before. I’ve run out of down payment money before and I made the decision to invest in myself to earn more job income, save more for my credit, live frugal have the courage to push harder because no one else is going to do for you. That’s why you listen to this podcast, unless you’re my kid and I help push a little money. Have you been asking about my Airbnb progress? It’s funny. I talk about a lot investing, but this one keeps coming up. I can’t direct messages from my social media and email the progress of my Airbnb. The summer was amazing. We were over ninety five percent booked September. Not so much time of this podcast. I think we have 11 days of the 30 booked, so that is not very good. We’re exploring options for offering it. The house is a furnished rental to young professionals by the end, and that is probably going to be the best optimal return on minimizing risks. This is not a condemnation of short term rentals, but rather the formula that I was using was not providing desired results. I pay a property manager a well-deserved 20 percent of rents. We outsource cleaning and pretty much everything else. But the investment will go negative cash flow if the temporarily other months continue like this? So am I a failure? I don’t know. I’d like to think I’m not a failure because the plan is to rent out four bedrooms for $800 a pop. So we’re going to rent, try to rent out the house for thirty two hundred dollars two again. People with jobs, so not the end of the world, so not to sell short term rentals are bad. We have island members in the same city as where I invest just Hamilton and they’re having success and the three of us together will be sharing it because it’s no island meeting, so our members may learn the latest and best practices on this newer strategy. So speaking of to our test strategies, we are dropping knowledge bombs on the November nine at the November 9th World Hacker Conference, all day at the Toronto Congress Center at the conference. Considering the lineup of experts, we have I. And expect all attendees to have more than one takeaway and one connection made for seriously, most of you will have a lot more than that. If you’re looking to start a business or grow your business to the next level, you need to be there as we have expert speakers sharing how they started a business literally from sitting on the floor of their garage. So zero to eight figures, including Profits five for three times in a row. If you want to level up your real estate investing or buy your first investment, you need to be here. The window of opportunity is shrinking. If you’re reading the news and you are following where markets are going, the window of opportunity is shrinking and you want to know the best strategies to cash flow and capitalize on this opportunity. This once in a lifetime opportunity before it’s too late to seriously, what do you think’s going to happen 10 years? For those of you who have been investing, I’m sure you all want to wish you started 10 years soon. Imagine what the next 10 years will look like if you learn more about how to hack stock option investing. By selling options to make six figures and 30 minutes a day, you need to be at the World Hacker Conference. I’ve already made almost three hundred dollars, not even trying that hard. So to give you an REI number, I’m about three percent not even deploying all my capital. And I’m going to make another trade tomorrow myself around three and a half percent in less than a month. Finally, if you want to preserve your money so you minimize your taxes, maximize incentives, essentially tax hack to keep as much money as possible for your retirement family favorite charities, you will want to be the best hacker conference. Otherwise, you’re going to be giving it to the government. And I don’t know how you feel about that, but I run my own charity and I know how efficient it is versus you. Only read the headlines about government waste anyway. Billion no matter where you are in your career. Job self-employed, entrepreneur, big business. Little business investor. You will all walk away armed with more knowledge on how to tenants your results. Oh, by the way, you risk getting a card wanted to be there as well. He’s one of the top trainers in the world, especially on sales, social media genius, marketing genius, and he’s got a sizable portfolio. His one company has over $1.2 billion of assets under management. The WW Dot Wealth Hacker Dossier, the tickets before our prices go up again, we sold it, sold another block of tickets, so we raised our prices right after Labor Day and now that everyone’s back from the summer. Ticket sales are probably ramp up, so please take action as soon as you can to take advantage of cheaper ticket prices. Speaking of short term rentals, Mr. Step Habit uses Airbnb as part of his repertoire in his rental hacking. He is the CEO of Rental Hacker Dot Com and Luxe Rentals Space, a young man who’s already spent an extended period of time in Costa Rica. He says it was around like three to six months or something like that. That’s amazing, and he’s a young guy. He’s operating a portfolio with from there. What’s interesting about this story is how he’s implemented several strategies, including rooming house Airbnb, then go back to roomy house. He actually doesn’t rent to students, prefers young professionals. It’s kinda like where I got my idea from Airbnb legal suites as like basement suites, and he’s started a mini hotel. He’s getting fantastic rent by pushing the envelope with just a small number of properties. I think space stories should give a lot of young people and those just starting out a lot of hope. Plus, his use of automation in his management is impressive. Get those pens and notepads ready. Without further ado, I give you Sve Pavic.. So I want to start. Let’s start with there. You’re just talking about cash flow. I saw you posted something that you’re celebrating. Was it your first 50 grand month?

Sve Pavic [00:08:25] Yeah. I mean, like, it’s been building up to that. But this month is the first time where, like all of the gross revenue, all of the income from all of my investments from Real Estate specifically, so not including any of the other online, you know, income, I don’t count that. But specifically, Real Estate hit fifty thousand dollars this month. And I know a lot of people are gonna be like, Oh, you know, that’s amazing. But what’s the real story there? Like, what’s the revenue there or what’s the profit there? And the profit is like very, very high over 80 percent. And a large part of that is due to the fact that I have now expanded my portfolios to have three different types of main revenue generating systems that I do now, and I’m constantly experimenting and tweaking them. But through these three systems that I call the rental hacking pyramid that we’re going to talk about today, I’m able to generate like a multi six figure income in a much faster amount of time than, I would say, the average investor. And I think the common misconception with Real Estate is that, you know, we’ll have to settle for mediocre cash flow or minimal cash flow, and I don’t believe in that. So all of my strategies are all I want to say necessarily unique because they have been done before. But I focus on certain techniques and strategies that give me these higher returns because I want to maximize my REI as much as possible.

Erwin Szeto [00:09:41] Oh boy, where we start because I want to dig right into it. But I also want to ask you about Costa Rica for six months. Is your ass posting those pictures when we’re freezing our nuts off minus whatever and snowstorms? Oh man, you’re like sunburn.

Sve Pavic [00:09:57] Yeah, I mean, it was really it was something that we’ve been wanting to do for a long time, and I’ll go through my whole how it went from like zero to where I am today. But with this was this was like always for me, like a lifelong goal to be able to travel, to be able to go to different countries and have a passive business model that every single month. I don’t have to work for this income. And so we spent six months in Costa Rica. We rented some amazing houses. We Airbnb, amazing houses there with pools by the ocean and went to the beach every single day. It was like literally amazing. And so we just had a daughter right now, so a young daughter with us. So she was like six months traveling. So that was all you know, she was six months when we were in Costa Rica and then, yeah, we just came back. So but now she’s like, yeah, like, you’re an almost year and a half, pretty much what’s so, so in Costa Rica, we went all over, but the two main places that we stayed at was Santa Teresa, which is like a small lake kind of hippie surf town where, we’re kind of coming in. It’s kind of like an under, I would say, developed place. I would say that would be if you’re looking for like, what exactly is Costa Rica like? That is the place to go, and that’s why we went there. But then we decided to move. Ground and travel, we switched up our Airbnb as we went around, and yeah, then we ended up in play Hotel Coco, which is like further north. This is on the west, on the Pacific side, so that the beaches was amazing. And yeah, like the thing is that it gets really hot there too. So you kind of learn,

Erwin Szeto [00:11:27] you know, you better not be complaining or freezing or not safe in winter.

Sve Pavic [00:11:31] It was it was over 40 degrees, so it was pretty hot. But yeah, man, it was it was awesome. And that basically that trip proved to me that that this is like a really good passive business model. This can be done without you physically having to be there. Yes, you do have to have systems in place, people in place, all this kind of good stuff before you can do that. But the fact that it can be done, and not only that it can be done, but that like I was essentially managing my contractors as Real Estate investors. We do this, but I was doing this all from Costa Rica, right? And we’re like Facebook, you know, messaging each other and Facebook living and stuff like that. The fact that it could be done it was awesome and the fact that I grew my business as well while I was gone and it was just like a truly amazing experience and coming back, it just you take everything for granted here. I think in America, how easy we have things and there is definitely people have hardship there and it’s definitely a much more difficult life. So I definitely felt blessed when I came back here and made me grind harder to.

Erwin Szeto [00:12:30] I think they’re still pretty happy folks down there, though they do live in paradise,

Sve Pavic [00:12:34] they live in paradise. And the motto is Put a vida, which is pure life. The good life, you know, not stressing. And that’s all good. But, you know, still a shaky economy, shaky political kind of system like nothing, nothing dangerous or anything like that. But, you know, definitely not as First World Country, like we have it here in America or Canada. So wherever we’re behind there, but beautiful country, we love that we’ll be back there for sure. We’re scoping out some investment properties. Unfortunately, the Canadian dollar is so weak right now compared to the American. But yeah, you can get you can pick up property there for a hundred grand, you know, close to the ocean and Airbnb in and have it for free. No problem.

Erwin Szeto [00:13:13] That’s awesome. How much was it costing you for accommodation while you were in Costa Rica?

Sve Pavic [00:13:18] Yeah, it was around like, I try to keep it around two grand a month because my air. And what I wanted to talk about here is like what the experiment was for us as air being actually our own unit. So it was like we already had it fully furnished. It was already done and we were going to go to Costa Rica. And the goal basically was, we want all of our travel expenses, all of our accommodation, everything being paid for by the Airbnb. And it happened. And not only did it happen but like on the lowest month we pulled in like three grand. And then this month we’re doing like six grand has been consistent between that range, you know, throughout this entire time. Now we’re in peak season. So obviously like we’re hitting five or six thousand dollars per month consistently from one unit. But even in the winter, in the low season, we had more than enough. So that would always cover wherever we wanted to go. And you know, the grand Kaadan is like saying, Yeah, it’s coming into your conference. So yeah, like he has strong opinions and strong views on the fact that you should always be renting wherever you’re going. And then, you know, whatever you own, you should rent out. And for most people, I would recommend, you know, that strategy is only until you kind of achieve financial freedom or remote or something like that, because I do agree with that when you are traveling or when you are going somewhere and you, for example, have the ability to rent out your own unit and travel somewhere for cheaper. And you know, we’ve been to Thailand before and you could live like a king, like my exit plan, my like. My worst case scenario is me retiring to Thailand and living like ten times wealthier than I do here. So it just shows you that, you know, the power of money and having the freedom and location dependents to travel and how you can use that to your advantage. So I do believe in that when Grant Cardone says that, I do believe that that’s good for somebody who wants to be a little bit more nomadic or travel. And so that’s essentially what we did. We rented out our unit on Airbnb that we were staying and it’s been killing it every single month. So much so that we are no longer living in that unit and that is like a full rental property. And we just bought like a brand new preconstruction like big house here for us, for a primary residence. And it was still cheaper than us living there in a small three bedroom apartment in Toronto.

Erwin Szeto [00:15:27] So it’s pretty awesome. Yeah, let’s go to the beginning. What were you doing before your investing?

Sve Pavic [00:15:34] Yeah, it’s you know, it’s something I don’t talk a whole lot about, but I do mention, you know, from time to time, I think it’s important to write like I follow the traditional model, you know, very like I said, very thankful for my parents. They always provided for me and push me. And, you know, I ended up going to university, which was a big question mark at the time. And, you know, I don’t want to say that like, I’m anti post-secondary school. But if you want to be financially free, if you want to be rich, if you want to not work a day job, that’s really not going to be the model because what happened was I went to university and all that good stuff, and the only way I was able to get jobs and to move up the corporate ladder was through connections and networking. Actually, where I went to school, all this and really had nothing to do with anything. And luckily, I was put a lot of summer internships through the advice of my parents, et cetera, et cetera. I worked at different banks, work at different companies in all of downtown Toronto, et cetera. And as soon as soon as I graduated, I immediately started working. But while I was sitting at university, I went to U of T. I had the realization that look, look, all my peers, everybody else is graduating. They can’t get jobs, all right. And the ones who can’t get jobs like they don’t pay that well. And like, I see wealthy people around me all the time, how are these people wealthy? Are these people working jobs, like most of the time, if we’re talking about very wealthy people, they’re not working job, they’re not treating their time for money. So I was educating myself all during university and reading rich dad, poor dad Robert Kiyosaki. I went, you know, destroyed all the books, destroyed every single podcast I can, and just started learning as much as possible. And then so what was interesting is like, I graduated starting my, you know, full time work and started moving around jobs, trying to get better salaries and stuff like that. At that point, you know, I moved out on my own with my girlfriend, my like my wife now, but my girlfriend at the time, and we got a really cheap apartment and we got the cheapest apartment. And my mom and my parents were so upset and they came there and they were like, you know, used to living in like Forest Hill nice area. And then I’m renting like some really cheap apartment. But why I had the foresight from studying from, you know, doing all this research that my goal was to own a rental property and eventually not have to work a day job. Like I knew that that was the kind of end goal. I didn’t know how it was going to get there, especially since even though I like, I was getting really good jobs and I was getting a high salary after taxes in this country, you know, 50 percent if you’re making a good salary, et cetera, et cetera, et cetera, you know, it doesn’t. There’s not enough after tax income, even with a six figure salary. So at my peak, before I quit my job, I had a six figure salary, REIN. So that was like everyone’s dream, but like I wasn’t fulfilled, right? And the money doesn’t fulfill. You because I wasn’t I wasn’t passionate about what I was doing, and I always wanted to have my own business, and so basically the whole time I was working there, I was just hustling on the side, doing Real Estate, learning, implementing. I renovated like the first house, almost entirely myself with my wife and like, and friends and family and stuff like that. We probably saved a hundred thousand dollars in sweat equity. So I don’t do that today. I have teams. But this was what I needed to do to be financially free. You need to make that short term sacrifice. You need to put your foot in the ground. So my foot in the ground was, I’m renting the cheapest apartment I could find. It was like $700 at the time and it was like the smallest apartment. But in one in one year, I had enough in where I was, essentially where I could take that savings and buying property, but I didn’t even do that. I just kept that money in savings because I obviously needed a decent emergency fund for renovations or anything else I was going to need for the property, so I didn’t even want to touch that money. And so the first property actually did was I just used a loan, so I had a little bit of money in RRSPs and I actually took an RSP loan and then I channeled my RSP, which for some of you guys, if you guys are in the states, it’s just a retirement savings, and I channeled that money through there. And, you know, I had to pay a portion of it back kind of over time. But I couple that with also a tax credit where you’re essentially you’re not going to pay any income tax on that money. So I used a loan and then I funneled that to myself, and I used that to put a five percent down payment on a first house, which was a fixer upper bungalow in Scarborough. And the main reason I bought it, aside from it being a great like a great mess, was the best investment I ever had was the fact that it was a complete fixer upper. But it had all the requirements for a secondary suite and had a separate entrance that had a high ceiling height and had to walk out. It backed onto a ravine and had a huge backyard and had a slide deck and had ample parking. Like all of these things met my criteria, and the last thing that I met was, Yeah, me and my wife can live in one of the units when if it’s done and it’s not going to be a huge house, but by doing that, by house hacking, we’re essentially living for free. As soon as that happened. That’s when I know it’s like my finances. My business, like everything, started going up because I essentially eliminated like the number one expense that people have, which is housing. So I always recommend if your goal is to get to financial freedom. If you’re not already there as soon as possible, house hacking is the way to start is the way I did it, and I essentially bought that property and all of my properties going forward using other people’s money like OPM. So I didn’t use any of the money that I made for my work or anything and any of the cash flow or anything like that. It’s all using leverage. And I think no, like too few people are educated in this area. As real estate investors, we are educated, but too few people are so sorry. I kind of went on like a long tangent, but that’s OK.

Erwin Szeto [00:21:00] Let’s go. So with that Scarborough house, then where did the downpayment come from? Or are you referring to OPM because you refiled it and took all your money out?

Sve Pavic [00:21:10] Yeah. So I needed to come up with 30000, right? And coincidentally, that was the amount of money that I had in savings that I was able to save up in that one year with my wife at that really cheap apartment that we had to kind of sacrifice for. But so I had that amount, but that was the same amount that I put a down payment. But I actually didn’t use that money because I needed obviously to have savings in an emergency fund contingency, something at that age, you know, as opposed to just working paycheck to paycheck. And that was the amount that I wanted to have. So I didn’t want to touch any of that. So I used a form of other people’s money, which was a loan. I just happened to channel it through my retirement savings and use some of the money. Like, I had a little bit of money in there, but not really like much at all. So I managed to channel a loan through there, and then I passed it personally through the first time home buyers tax credit. So in a way, like did not pay any tax on any of that income versus if I just took, you know, took the money that I earned to buy the property that would be after tax dollars. So this was, yeah, before tax dollars. So it just made much more sense for me to. And then to eventually slowly pay that kind of loan off for low and back. And another, you know, another thing that I did was, you know, so we had the mortgage, obviously. So that was ninety five percent LTV and the renovation. I actually tacked on another forty thousand into the mortgage by something called a purchase plus mortgage, or I believe it’s a two or three K in the states and essentially a tax on renovation up to 10 percent of the value of the property. So I use 40 grand, which I use to build a basement apartment from scratch and a lot. We saved a lot of money by doing sweat equity to this day to use Home Depot 18 month financing shower to Home Depot free plug right there. Eighteen months. I mean, you guys, you guys make it easy for me. So yeah, that’s what that’s basically what I do, and that’s what I’m talking about is using other people’s money, using leverage lines of credit loans, mortgages, whatever it is, probably the money or money, whatever you got to do like, you’ve got to figure out how you can get that money and make it worth it. And so.

Erwin Szeto [00:23:12] Sorry, states can slow you down there because you dropped a golden nugget, I hope everyone picked it up. So when you said you borrowed money to run it through your ah, your RSP so that you could save on taxes and also use that. As for your first time homeowner, benefit for your down payment. And if anyone doesn’t know about this, it’s quite common for people to take care of an RSP loan, which is usually very low. Very cheap interest in order to do what let’s face talking about. So if you, if any young people are listening to this and who are first time buyers or, you know, someone who can be a first time buyer, that’s a really good strategy.

Sve Pavic [00:23:45] Yeah. And just to add to that, if for some reason you don’t like that, just one method. But there’s so many other methods you can do low interest credit cards or interest free credit cards and do something called credit churning or what I call credit hacking, where you’re essentially just moving balances. And I’ve done that to fund renovations and all this kind of stuff. So the main advantage is that to buy your first property, you only need to put five percent down and you can literally like because it’s such a smaller amount, like even 30000. If you have a decent credit score, you can easily get 20 to 30000 within, like 30 to 60 days from low interest cards or something like that. I’m not saying to finance your rental properties on high interest credit cards, but I’m saying you have to understand how to use leverage and whatever it gets done. So like I literally every few months, just look at my balance limits, try to raise them or try to get new cars, or I’m always researching what is the best way. And even though I might not use everything, it’s much, much handier to have cheap cash available to you if you need to do something quickly. And, yeah, love it. That’s what I recommend for everybody. I love it

Erwin Szeto [00:24:51] where people get started on like the low interest credit stuff, credit card stuff. I’m not endorsing any of those folks, so it’s just, you know,

Sve Pavic [00:24:59] yeah, I mean, obviously,

Erwin Szeto [00:25:02] you know, it’s a liability thing. I’m not saying that your strategy is not good.

Sve Pavic [00:25:06] Yeah. And I think like the number one thing is that we don’t we’re not talking about the core kind of philosophy of this, which is the difference between good and bad debt. And everybody who’s read, read, rich dad, poor dad knows the difference of good debt and bad debt. And so, so long as it makes, it’s making you money. I will every day take on that if the bank comes to me and says I will give you $10 million at like a sub six percent interest rate. Of course, you’d be crazy not to take that every day if you’re experienced or knowledgeable, Real Estate investor, who’s done a few, at least a few deals. Anybody can turn that money into more than six percent, you know what I’m saying? So I think it’s the fastest way into that. People can say, like, there’s no way you’re going to be saving 20 percent down for every one of your properties. There’s no way, even if you have a very, very high salary, even if you’re a doctor or whatever like that, like it doesn’t matter. You’re not going to be coming up with, you know, where I’m investing is like a hundred thousand to one hundred and fifty with maximum with renovation every single time. No, you’re not going to come up with that. And if you do, it’s going to be after tax dollars, too. So if you’re putting $100000 down that you save, you actually probably cost you like a hundred and fifty thousand plus to earn that. And that’s like a whole other area that people do not understand that concept that they’re using good debt. It’s not even tax free money and always a tax free money, but it’s such a low interest rate, especially in today, that it’s literally like getting free money. If inflation is three minimum three percent, which they say, I think inflation is much higher, but let’s say at least three percent and you’re borrowing at like four percent. Like, literally, it’s almost it’s almost free money, right? So these concepts, a lot of people have to kind of understand and accept. And then then the next step is, OK, how do I use this in like the least risky way possible to make the most amount of money?

Erwin Szeto [00:26:51] Let’s just take a second to give a shout out to all the folks who are saying that actually, someone has a nice thing to say about you now. Aurora’s has been following your journeys. Keep doing and inspiring. And then Christy Alison McDonald once wants to do a mastermind in Costa Rica. We can make. You can make your entire stay there deductible.

Sve Pavic [00:27:10] I honestly, I was so tempted to do it because we had like extra bedrooms in the houses. And I was going to do a mastermind there and stuff like that. But hey, man, when you got a little baby and you got a little kid, your life is kind of revolving around that and stuff like that.

Erwin Szeto [00:27:24] So just buy a boat and then Airbnb.

Sve Pavic [00:27:27] It might be a little bit crazy. I actually I actually have the colleague who’s not so crazy that you say that, but it’s actually like a future potential investment that I make.

Erwin Szeto [00:27:36] Awesome. OK. So how did you stumble upon stars? So you mentioned you a duplex in Scarborough?

Sve Pavic [00:27:44] Yeah. So this duplex in Scarborough, which is like, literally like been my holy grail. It’s like it’s literally like just a gift that keeps on giving. And I have to admit, obviously, a part of that is the strong appreciation that we’ve been getting, you know, within the past half decade here where you’re in Toronto. But that place really just showed me like what is possible with real estate and to always keep running. And so what happened with that property is we finished the basement, we rented that out. We were living for free now and. He did it long term, long term tenants, so just getting started. It was a two bedroom suite. Beautifully finished, in my opinion, like the best. It was still considered a basement apartment, quote unquote, but it’s a walk out. So in my opinion, it’s like the best apartment there in Scarborough and always got high rent for it. And essentially from then we were living for free and then we renovated over the course of like a year while we were working, whatever our own unit. And that’s where we dug into because we were really interested in just doing as much as possible ourselves just out of a learning experience because we were so interested in being successful real investors. So we actually renovated like 80 to 90 percent. Aside from the major things like electrical or plumbing and stuff like that in that property and did just very high REI renovations, you know, refinished cabinets, repainted cabinets, changed out hardware, extended islands and kitchens and extended hardwood floors, and just redid the whole bathroom and did some nice exterior landscaping and stuff like that. And yeah, so this is when I realized, like, how am I going to get the next investment property? And at that point, I was studying this strategy that BiggerPockets was promoting, which was the Burr strategy, or the Burr method, which is basically that you’re buying, you’re renovating, you’re renting it out and then you’re refinancing it. And so I also call that strategy the refinance hack, and it’s a hack because literally the bank will give you cold, hard cash at, like we said, near free money with such low interest rates just based on the value of your house. So by doing so, we immediately were able to get $100000 home equity line of credit, which we use for the second property, which at that point we had to buy further away. So we had to research new markets because at that point, like the properties were way to like, they appreciate way too much. They’re a little bit. I’m not going to say overpriced, but not good criteria for a rental property. The cash flow didn’t make as much sense, especially if you’re just doing the kind of duplex or a secondary suite conversion model where you’re renting to units. So we bought the second property again, used all leverage, all financing, used a home equity line of credit, again used Home Depot 18 month financing. The good thing is with that unit is that we were still getting our feet wet, and so I didn’t want to do like completely do a crazy renovation. So we immediately had one floor rented and we started renovating again a basement to do the secondary suite and all of that kind of stuff. But the difference with this model is I was researching into the room rental model and I was looking at how can I get more cash flow? I wasn’t satisfied with five hundred to max a thousand per month. I really wanted like a few thousand dollars per month cash flow. This is before I discovered short term rental and I started doing room rentals long term and I just started renting out. Each room by the bedroom made sure that it was in a city that allowed it and, you know, made sure that it passed all building codes and fire codes and all that good stuff. And by doing this model, I was able to consistently churn out like minimum one to $2000 plus per month in passive cash flow just by renting out rooms. And that’s what that strategy is. What I call like just rental hacking, that’s a rental action strategy is that if you can just get a couple of room rentals, in my opinion, properties, you don’t even have to go into short term rental because a whole other ballgame. If you just do a couple of long term room rentals with like two or three properties, you could easily have, you know, $5000 plus per month in passive cash flow. And I think that’s, you know, I think that’s enough for most people to live comfortably on without being excessive. And I don’t think it’s a little amount as well. Like you could live off much less than that and be a lot more frugal if you wanted to. So a couple of these room rentals really is what needed to be done for financial freedom. The thing is for me, I had the one property in Scarborough. I had the second property and I refinanced that one again. And at that point I was actually ending the contract and my current work. And it was like a decision where I was going to keep going and keep grinding it out. And five, where I really wasn’t content, even though I had a great salary and was helping me out. But at the same time, I was like, didn’t have enough time like the job was demanding. You know how it is with a nine to five grind, you come home. And if you especially if you have family like you’re just dinner and put kids to bed, and that’s kind of it. So it’s a lot harder to kind of focus. So I decided at that point I was going to quit my job and I’m going to focus and I’m going to get another rental property. I’m going to focus on really expanding my income at that point. I also refinanced the first property, the Scarbrough House, again by connecting with another savvier mortgage broker focus for investors. And I was able to pull out another two hundred thousand grand from there. And that’s as well. When I started doing private money lending for me, like in the rental housing period I was mentioning that earlier is that the first one is like rental hacking or I’m just renting by the bedroom. And I think that’s for a lot of people the safest way to quit their 9-to-5. That’s your goal or financial. And just have a few of those. Then I started doing short term rental when I went to Costa Rica, and we can kind of touch on that. But then at the same time, I was doing private money lending and where I really realized the possibility of making a lot of money once you have money is using that is through private money lending. And if you know somebody has never done it, you’re essentially loaning somebody else money. In this scenario, we are loaning them to do something real estate related. For me personally, I have evolved where I only lend to flippers that I know that I trust, that I’ve already had a lot of money invested kind of over time. So yeah, for me, that’s the rental hiking period. But I would say for most people start off with just doing the rentals, doing room rentals, in my opinion, is very good. And then the second one is the short term rentals. And when we went to Costa Rica and rented out our unit and you know, we’re making minimum three and a half thousand up to 6000 per month from just a unit. So that house was cash flowing like over $5000 a month. Just because the Airbnb is so high and you know, the lower unit is essentially paying for all the expenses. So that’s what really opened my eyes to short term rentals. So this third property that we bought, which we’ve been renovating since it’s been in Costa Rica, the third duplex is now almost finished. One of the units is already done and it’s already. I just actually went there to take photos and it’s fully staged and cleaned, and the cleaner has been in there and was ready to get going. And then I have another unit in the basement which will be finished in a few weeks, and I am hoping to essentially crank out a mini hotel style where I rent by the bedroom individually short term as well. Because it’s very close to a hospital, it’s like right across to a hospital. The plan is to target these people, so it’s an interesting time to do this podcast because like I said, we’re always evolving and experimenting, and it would be interesting to report back on that income, but I’m hoping through that house to pull in six figures from one property. And that’s kind of like my goal, and I want to see how far I can take it. And so that’s basically in a nutshell, using constantly refinance properties, renovating them and using leverage to amass. And that’s right, now today I have three million dollars’ worth of real estate. Part of that is taking into the fact that we just bought like a bigger primary residence property for ourselves is being built right now. That should be done soon. But in total, it’s like I went from zero to three million and I legitimately have not used like a single dollar of my own money. That’s the crazy part. Wow.

Erwin Szeto [00:35:44] So how many income properties do you have producing your income right now?

Sve Pavic [00:35:47] So it’s two duplexes. One of them is, yeah, two duplexes. One of them is doing that hybrid model with the half of it short term rented and then the basement being rented out. And then the other one is that is room rental and there’s a third one. But the second a second duplex is being rented like long term by the room. And then the third one there is about to go live will be like a short term room rental, but also two units. And actually, we turned a three bedroom, two bathroom bungalow into a seven bedroom, three bathroom duplex. So we’ve almost like doubled square footage and everything like that. So it will be really exciting to see where that takes us. So as you can see, I don’t have a huge portfolio. Yeah, I’m

Erwin Szeto [00:36:39] impressed how much money you’re able to extract. I just two or three properties.

Sve Pavic [00:36:43] Yeah. And like I said, a lot of that has to do with just chasing the returns. And now I do have to admit a large part of my income is through private money lending. I’ve essentially used banks money. I remember I was told you had like 200000 seed money that I started to use that and essentially just reinvesting Profits and scaling and scaling and just reinvesting a lot of it, you know, not spending a lot of it. And that’s the private money lending has really realized. Like once you have a few hundred thousand dollars like for me, I would just recommend everyone start moving once they to have a few rentals, start moving money to that and having multiple six figure income streams and just start reinvesting all those Profits and you’ll just get compounded interest over time. And all of a sudden, next thing you know, one day, one month you hit $50000 in total revenue, which is like crazy. So I’m hoping we’re going to continue and go over that once the mini hotel is finished, and it’ll be interesting to kind of see. But the other thing is that all of this is fully passive income. So I’m not like running around and necessarily managing myself. These properties I’m using like proxies and other people so that I can manage it from my laptop. So that is the really, for me was the impressive thing that I could literally get it to the state where the business could be fully passive. So one of the things I actually want to talk about for a lot of either new or experienced investors is really right now with technology, how good we have it with technology today, with monitoring, securing your properties, using technology. So all of my properties are smart home automated. They all have nest thermostats, which I control temperatures. They have temperature sensors in every single bedroom, on every single floor because, you know, the temperature might be different. I have exterior cameras surveilling the property 24-7 with signs that are posted, and this is just through experience that I’ve learned. But once I started implementing these, home automation is literally made my life so much easier. The one thing that’s key is smart locks for short term rentals and being able to program a code on the fly from my smartphone as soon as I get a booking and having the code, having a check in and checkout time and a code expire after then. And all of these kind of things and other technology that I use is something called noise aware. Shout out to noise aware, and they detect the loudness of sounds in your apartment building or unit. So if somebody is having a crazy party, you will get a text message or a ping notifying you, Hey, it’s above this certain decibel. You should contact this person before disturbs other guests or a police car or something like that. So by using this home automation, I believe myself to really make the business passive and not have to rely on as many people. So for my short term rental business, I also have a piece of software that enables the guests when they book and all of this kind of stuff, and it integrates with my cleaner and sends her the calendar in the schedule and all of the stuff. It’s called your reporter app if you guys want to check it out online. But that’s what I use. I mean, there’s many vacation management softwares, but by using like smart technology, I have made the jump. I probably eliminated in-person jobs and I’ve made it much, much easier to manage. I love being able to at any point of my time, slip open my phone, check out every single camera on every single one of my properties. Know exactly what’s going on. Seeing that my contractors are working on one property, you know, seeing you know who’s on another property, making sure the lawn is good. Like once you do this, you actually like the need for a property manager can look certain. Things can be delegated to like other people and you can automate it. And one of the reasons I love short term rental, aside from the cash flow, is literally it’s just me managing it and just my cleaner going in there and cleaning. I don’t even have to message her or them when they go cleaning, they’re just going to get automatic automated messages. They have a calendar that they check. It’s like fully automated. And if there’s just something that needs to be fixed or something, you know, there’s a handyman, that’s a phone call, and that’s it. Like, you don’t need to get 20 percent away of your revenue to a property management company, and you just need to have people in place and you do have handyman or contractors you. Contractors and cleaners for a short term rental. The rest you can manage if you get to a really large operation, you can hire virtual assistants to help managing the messaging. It’s literally such a small amount of my time that I am just mess. If an out of a question, I just message them. But most of the time is just an automated interaction, with emails going off and text messages going off and all of this kind of stuff. And by doing so, and that’s what I set up before I went to Costa Rica. And by doing so, I really allowed me to make much, much more passive business model than I was before then panicking from Costa Rica. Oh no, what’s going on with my properties and that kind of stuff. So I think that’s going to be important going forward for people if they want to have a manager remotely and have a little bit more safety, especially when it comes to short term rentals.

Erwin Szeto [00:41:27] This is all awesome. See if anyone has questions. Go ahead. Jamie Blacklock is asking if it’s a house or condo. It sounds like it’s a house because you’re duplexing it, if you imagine. Yes.

Sve Pavic [00:41:37] Yeah. And you know what? Like for Airbnb and other people, do they do condos or they do something called rental arbitrage, which, you know, I don’t do and I’m not knocking on rental arbitrage. And you know, who knows, I might experimented with it in the future if I want to. But for me, my strategy, my overall real estate investing strategy, like most successful investors, is buy and hold right. We want to own the asset. So right then there we have way more advantage over arbitrage, right? Regardless of how much money it takes us to get into it. Once we own that asset and we’re cash flowing, something we have for life and with using refinancing and these other people money and all these different techniques and strategies, you are literally like all of my houses. I’m owning within three to five years for free because I’m just refinancing all the money out, right? And so I would say buy and hold is the best and I don’t invest in condos. I actually don’t like condos and an investment, and I only buy detached freehold properties. It has to be freehold because I don’t want to ever answer to an HOA or have any issues around maintenance or repairs or anything like that and a condo board, especially short term rental life lot. People are going to mistake where they buy a property way and start short term renting it and then even read the H-2A rules. Natural way is run by a bunch of old people who are there. But the point is that you always want to make sure that you are in control, you want our independence, you want your independence. And that’s why I like to be attached to. I’m not saying that if you don’t buy a detached house, not a good investment, but what are we buying when we’re buying a house? We’re not buying the house; we’re buying the land right? Like the house is done. You see that all the time in bigger cities right there, knocking down bungalows and they’re putting, you know, that’s what they’re doing in my parents’ neighborhood, they’re putting up $3 million houses. What is the most valuable piece is the land that it’s built on. And so if I would recommend anybody is always look for a land value associated with and then an improvement plan, the renovation. And that’s also why I don’t do turnkey investments because they don’t have the opportunity to pull my money out if I don’t do any improvements or anything like that. So yeah, this is not a condo. These are all houses. I like residential, small multifamily, you know, I don’t like pure single where you’re just renting to one family. There’s too much risk if they don’t pay or if something happens, there goes all your cash flow. That’s one of the main reasons I actually went to the room. Rental strategy is aside from cash flow, I wanted the least amount of risk. So what are the chances that six plus people are going to lose their job or that six plus people aren’t going to pay you on time versus one person renting like an entire house, right? So I don’t do single family. I do small multifamily. I like two to four units. I actually really like the strategy of just doing the bungalows, single family, two duplex conversion that is done really well and then just making as many bedrooms as comfortable, adding as many bathrooms, doing as many smart renovations as possible to just really increase the value. Like, I started putting in heated floors in all of my bathrooms because it’s something that I’ve found. My guests really like being in the cold winter, but I also found that it’s another thing that just increases the value and is really not a huge cost when you’re, you know, doing a bathroom from scratch. So that’s basically my what I would recommend is strategy. In a nutshell,

Erwin Szeto [00:44:53] you’re renting by the room. How many rooms and what are you getting per room? Because I remember we’ve traded comments before on Facebook on the subject. I don’t know many people doing the strategy, so this is fascinating to me.

Sve Pavic [00:45:03] So it evolved from like I was looking at student rentals REIN, but I didn’t want to deal with students. I know that sounds bad. And again, my strategy is very similar to student rentals, actually. Yeah, and it’s actually the same. It’s the same strategy, but we’re targeting a different demographic. So instead of me starting at targeting students, which I still can do, and I make sure that if I’m doing the strategy, I always like by close to a university or college town. So my backup is, yeah, I could always rent to students. But actually what I found is that they are people who aren’t necessarily students in undergraduate, but they may have graduated from those colleges. Universities got jobs. Entry level jobs somewhere around the neighborhood or whatever and just need to rent like a bedroom, or they’re like a group of people coming together and need to rent a couple of rooms. So there is actually like a large demand for people who are single. You know, sometimes they can be a couple, but then you’re going to have to charge extra for utilities and all this kind of stuff. But they’re usually single individuals. I would say, like under the age of 40, you know, 30 and who are early on in their careers, who just graduated from that university and who stay there for at least one plus years and multiple years and just pay their rent on time. And you don’t have any issues and they kind of get along with their roommates. So with this strategy, there is a lot of things that I’ve learned over time that you need to know, and I’m not going to go through all of them because I have like a whole course that teaches you this. But the main thing is like, if you’re renting rooms, you got to make sure that there’s cleaning schedules. You know, there’s agreements between people, stuff like if somebody’s bringing some furniture or something, right? And like all this other kind of stuff. So there’s these very specific things. But if you execute the strategy properly, you can get very, very good cash flow to 2x multiple two to three times x multiple. What you would similarly do for just a duplex. Some people think, yeah, it’s more hassle. Yeah, it’s more work. And when you have turnovers, like you have more turnovers because there’s more units available and more rooms available. The thing is that if you have created like a passive automated kind of system, then then is just a part of the standard operating procedure to go and kind of fill that room. So I’m also playing like I’m also playing with the idea of potentially again doing. I really like also this hybrid model. I don’t think too many people are experimenting this model, but renting like one of the units, either by the room, long term or just long term to kind of pay for the expenses of the property to kind of always make sure that your expenses are kind of getting paid for it and then use another floor like the more desirable floor unit and short term rent that out, either as an entire unit or by the bedroom. And that’s like your profit maximizer. And then you can get, you know, well over 3x what you would get from not using that strategy. So, yeah, like I’m very, very bullish on short term rentals. There are some risks associated with them. Every business has risks, so your job is just to mitigate them, but I’m very bullish on them. I think a good portfolio has a mix of long term and short term rentals, though, and so I don’t think I’ll switch all my units to short term rental. I think I’ll still keep the room rentals like the long term and stuff like that and just start experimenting with doing more hybrid models. Or we’re going to see all this many hotel turns out and what that’s pulling in and moving for the next property. But yeah, this hybrid model, I think for experienced investors is something to try. And I know a lot of a lot of my colleagues who are real estate investors that you know as well are now experimenting with Airbnb in at least one of their units.

Erwin Szeto [00:48:38] I can, you know, I think we all need especially anyone who has a decent sized portfolio. It’s not a bad idea to have some diversification away from the landlord tenant board or to you. How much more do you get per room for your strategy versus a student rental? Do you get more?

Sve Pavic [00:48:52] I don’t know. I don’t like you, don’t necessarily get more, and it depends how you set it up. So like I started with just like unfurnished and just renting a long term because my goal is long term. You could do and like this is what I was alluding to with the hybrid model is you could also do the same thing with furnished and just do like short term or monthly. But I was just doing strictly on Friday, so it’s essentially the same as renting or doing studio rental. But you’re not necessarily targeting students with a high turnover because my thing was I didn’t want a lot of turnover. I wanted it to be much more passive, but I still wanted that same cash flow as a studio rental and everybody in studio rentals cash cow. But I also know, like I was a student and I’ve seen student rentals and I’ve seen what they’re capable of. And I’ve never had those type of damages in my properties. Whenever my tenants leave, like the place is cleaned, like the place is nice and clean, like I don’t even need to get a cleaner if they’ve cleaned it up. Nice. So that is why I went there is because I went more with the passive model, but I’m still generating. Yes, so what? I charge per room right now, six hundred dollars a month per room. Obviously, it depends. You got to play with it depending on the room size, whether you’re on a main floor and a basement or upper or lower unit, you know, whether it’s a master, all that kind of stuff. But I yeah, it’s like five seventy five to six hundred per month right now is kind of I think it’s kind of safe. It should be higher, in my opinion, on some of these because, you know, rooms were renting for five to six hundred per room, you know, 10 years ago, kind of thing. So. And how many victims do you have? So I always shoot for a minimum of six bedrooms in the house, so I have six in that one. And then I could have I could have fit a seventh one, but I just didn’t want to. I didn’t want to confine the space too much and I wanted to leave a living room. So I always have backup strategies, so I left the living room. Actually left a living room that could have been another bedroom, but I decided to leave a living room put in like a washer dryer, make it kind of like nice, have a little common area for the tenants just to kind of appreciate that as opposed to just maximizing it and just being rooms, room rooms and a kitchen. And like I said, I always have a backup strategy. So OK, worst case scenario, you can rent the entire apartment if for some reason you’re having trouble filling the rooms or you just don’t want to employ that strategy. So that is the other thing is you always have that exit strategies in your play. Even with my mini hotel, if that doesn’t work out, then I’m just going to rent the units short term and that doesn’t work out. So I’m going to do. A hybrid model was renting one unit short term and one unit long term, which so would be an investor. It’s also, you know, you have to try things right, like there is no right or wrong answer. And if your goal is just to make a lot of money, then you’re going to try harder at different things, right? And so that’s why a lot of times it’s like, you know, how much? How much is that extra cash flow worth to you just being a little bit more creative, hustling a little bit more figure out a little bit higher return strategy? I see Tom had a comment. He was like after paying utilities. How much would you cash flow? Yeah. So I got six rooms, a six hundred thirty six hundred. I rent a garage out for 100. I was thinking about putting in some sheds. Right. So these are all creative ideas that I do to kind of extract more cash flow. If you have parking like extra parking, you can easily rent that out. So, yeah, it’s been more than that. But utilities, you know what? Utilities, people think that having more people, your utilities are going to skyrocket. My utilities are about the same, which has always been around two hundred dollars a month, and it goes up and down in the winter and summer, and it’s not. But I’m running air conditioning in the unit, all this kind of stuff. But I always make sure that, you know, my tech is up there. I got high efficiency furnace, I got high efficiency air conditioner or a newer air conditioner. So we’re all Energy Star, energy efficient, all that kind of good stuff. Yeah. So it was like a couple two hundred bucks a month for utilities. And you know, there’s things that you can do to monitor utilities and, you know, you can get reports and stuff like that. So I follow that stuff just out of curiosity. And what I found is like over the past two years, plus whatever has been more or less two hundred dollars a month, that’s really, you know, like it’s kind of weird, but that’s what it averages out to be.

Erwin Szeto [00:53:04] And what market is you’re rooming house in?

Sve Pavic [00:53:07] Yeah. So Peterborough, is that one. And that’s where, like, I’m kind of investing now. I think that it has a lot of growth potential and I’ve been doing pretty well there. I think that it’s a great place where you can still pick up good properties, sub four hundred K properties that are prime for duplex conversions or any of that kind of stuff. And otherwise you could. You could also just do like a single family home and have like one kitchen, let’s say, and a bathroom and just you don’t necessarily need to do multiple units, but the refi value like will help you out a lot. So I found that it was it was kind of worth it. But yeah, you can. You can execute the strategy just having like a single family house and having like six bedrooms but having just like one really big kitchen. But I would like what I recommend is to split it up if you can. If you feel like if you’re an area that you’re investing that allows like duplex conversions or secondary suites or multifamily like if it allows it, I will say like it’s better to just do it if you’re already doing renovations upfront and then you got an exit. But be your refi value is going to go up and you’re going to get that money back like all the money. Anything that I’ve put in renovation, I know I’m always going to get that back. And then some, you know what I mean?

Erwin Szeto [00:54:25] I can’t wait to hear the results of your hotel strategy if no one’s listening and has is doing a similar hotel strategy with basically by the room SDR. Please comment.

Sve Pavic [00:54:34] Yeah, I would love if somebody does have experience doing that. I would love to know. I mean, I’ve been, you know, just searching online and I see a few other people have done this and they’ve done this at scale too. So they’ve done like, you know, 50 plus bedroom unit apartment buildings or something like that and just SDR, the whole thing or something like that. So like, I think that it would be interesting to hear other people’s perspective at the same time, I think it also depends largely on where you’re investing and what the demand is. And this stuff like a large reason of why I’m doing this strategy is because the hospital is very close by and I’m going to be targeting a lot of people who are looking for short term accommodation who are coming to the hospital and it’s like the largest hospital in the area has massive renovations, like it’s literally like a gigantic hospital and people drive like two or three hours away to visit it. Now I’m not saying to go out and do the strategy, but I definitely will report back on it, on how it’s going. But I am interested to know if anyone else is doing it. I know a few people have done it before, but yeah, it’s always good to hear other people’s perspective.

Erwin Szeto [00:55:41] And then what do you think you’re going to charge for a nightly rate for a room?

Sve Pavic [00:55:46] It’s going to depend. But what my goal is to so it’ll be around like 60 to maybe like 80, 90 dollars per room, I want to be out. So there’s only like one hotel in the area and then the Airbnbs are all like units that you have to rent out the entire unit. And we’re like a much higher nightly rate. So I’m trying to beat the hotels and just trying to get a lower price range, but I don’t want to be too low as well. And that’s without cleaning, right? So I will charge a cleaning fee, whatever it takes my cleaner, obviously, to clean on top of that. But I think if we’re at around all in the sub $100 mark, I think that that is like four. And by the way, my renovations are all like high end of the apartment. They’re all high end looking, you know, they’re all like high end. So they’re not just like, you’re going to slap it together and it’s not even renovated, but these are all nicely renovated units and apartments. And that’s why I can also command a little bit more premium pricing on all my rental units. I’m always at the top of the I’m always leading like; I’m always testing the highest amount of rent. I’m not the highest person necessarily, but I’m always testing it and I’ll go just like maybe below the highest person, or I’ll go just maybe below. But I always want to be at the top of the rent. I actually I don’t want to be the bargain when it comes to short term rental or even long term rental. I don’t want to be like the apartment where it’s like, Oh my God, it’s such a steal, you know, because it’s landlords had it for 30 years. Well, if you’re going to have it for such a steal, then you’re not going to be able to maintain and renovate that property adequately. And also, it doesn’t help your cash flow. So I’ve always aimed at the highest. I’ve always renovated to the best quality that I could do. Bear in mind the budget like, I’m not doing crazy, crazy stuff, but just smart renovations, but always making them look very nice, very high. And I’ve always gotten premium rents, whether it’s short term and long term as a result of that. And so this the short term unit that’s killing it right now. That’s like I did six grand this month. The thing about that is that I actually just increase the nightly rate and I’m pushing the nightly rate and I’m at 210 a night right now. And I know that I can be at two hundred and fifty a night next summer plus in the high season. So yeah, if you do quality renovation quality work like you should be asking premium money for that and people will be glad to pay that

Erwin Szeto [00:58:03] to finish off with your mini hotel strategy. How many rooms are you renting and then are you going to have locks on each door?

Sve Pavic [00:58:11] Yeah, so each door is a smart lock, automated with keypad, keyless entry. There’s no locks on any like no physical keys that anybody can use anywhere on the property, basically. So there is I never have any key exchanges or anything like that. Everything is smart locks, so I had to buy like so there seven bedrooms in total out to buy seven smart locks. That’s crazy. Plus, I had to buy two for each front door right to the to the entryway to the apartments are actually two by nine. Smart locks. Good thing is that I went to Lowe’s and I did a price match with an extra 10 percent off. And now, like a two hundred and twenty five dollars lock ended up being like a hundred and sixty dollars, which I then financed on again, a credit card or something like that. And just keep rolling with it and use cash flow and to pay it off. And then once it’s available again, use it again and keep going. So yeah, like the mini hotel will have smart locks and like home automation to the most degree. And I’m going to see like there’s noise aware as well on the property, but I’m going to see even installing maybe water meters. I have a pump in there, so I’ve up a meter and detector, water detector, all that good stuff. So yeah, I’m trying to get as awesome as possible and it’s going to be exciting to see what is going to happen with it and whether is going to be like the best investment that I’ve heard is going to be the biggest flop that I’ve ever did. I don’t know. But stay tuned.

Erwin Szeto [00:59:35] Yeah. Worst case, you own the house. So sorry, how many bedrooms was that? Was your mini hotel going to be?

Sve Pavic [00:59:40] So it’s seven bedrooms, four bedrooms on the main unit, and we added a second bathroom to it with two bathrooms and then three bedroom downstairs. And by the way, these are not like if you’re thinking about like, how big are these bedrooms like? They are all decent sized bedroom. These are not like tiny little, small bedrooms. I kind of was like, No, I’m literally just using the existing footprint. And so, you know, in this case scenario, there is a garage that was no longer a garage and wasn’t being utilized. And we converted all of that to interior square footage and built like a whole other master bedroom back there. Having a whole other storage area like there is a lot like this has been the largest, the biggest project, the most renovation, the most amount of things that could go wrong has gone wrong. The most

Erwin Szeto [01:00:25] cleaning bill. That would be the biggest cleaning bill, for sure.

Sve Pavic [01:00:28] Oh my god. Yeah. When the cleaners send me the post renovation bill on that, I was just like, Oh, I’m going.

Erwin Szeto [01:00:34] All right. That room’s clean.

Sve Pavic [01:00:36] Oh, well, when once it’s going like the cleaning fee is paid by the.

Erwin Szeto [01:00:41] Or just for anyone who is unfamiliar with Airbnb, that’s pretty classic. Someone actually asked the question where you advertise advertising these rooms and Airbnb mercuric.

Sve Pavic [01:00:50] So yeah, so if there are like long term rentals and I’m just doing the rent room rentals, I’m advertising on Kijiji and Craigslist and Facebook and you know, whatever free you know or whatever is being used, I guess, in your area. Right. So I know certain websites are more popular for other websites and you can like post your plays all over the place. Most of mine have actually come from could, like a few from Craigslist, I don’t even really post to Craigslist anymore. And now Facebook is like, you know, another good one as well. But that’s where those guests are coming from the short term rental. So like we say, Airbnb. But really, Airbnb is just a sales platform. What we’re talking about is short term rental. So we are using Airbnb, which is a sales channel. There are other sales channels like TripAdvisor and HomeAway, VRBO, Expedia and you know, we’re on all of them. But for the majority, almost 90 plus percent of our business comes Airbnb. Now the risk is that you don’t want Airbnb controlling all of your business. So the long term play, once you have validated that you have strong cash flow and it’s worth it is now converting from an Airbnb into your own short term rental where you’re getting your own clients, your own customers through things like, you know, ads or, you know, Google targeting or stuff like that. So like when people search that your city or area plus, you know, a hotel or short term rental or apartment for entry, something like that short term that your name will pop up. That’s what I think is should be the long term goal. And that’s actually like my long term goal is I would like to be less dependent on Airbnb. However, at the same time, you know, making six grand a month from one three bedroom unit apartment like, you can’t say no to that, too. So, you know, like everything, it takes time.

Erwin Szeto [01:02:35] So I was just reading some numbers based on a seven bedroom does using. I used to build number seventy five dollars a night. So seventy five dollars a night, 30 days a month time, seven rooms in the house. So if you’re completely occupied somewhere sixteen thousand dollars, so let’s have a see you’re half occupied, that’s like eight grand a month.

Sve Pavic [01:02:56] Yeah, I’m actually doing it at 75 percent occupancy, which I use twenty one day. That’s always kind of my average that I take when I’m when I’m analyzing it because I feel like 75 percent is a good occupancy to shoot for. I mean, ideally just

Erwin Szeto [01:03:09] grand a month. Let me close 11 grand a month.

Sve Pavic [01:03:12] Yeah, so I’m hoping so. I said I’m hoping to post six figures from on property. But like, we’re also talking a little bit hypothetical here because I, while I do have a business plan and a business case and extensive research like we haven’t gotten those bookings yet. But this is the thing, guys. This is the point of being a creative, flexible investor. If this strategy does not work every single room, well, then I’m going to rent like one of the floors or the entire unit out on Airbnb. So actually, what I’m planning to do is having said in my calendar that somebody can book the entire apartment like a few months in advance for, let’s say, a very high rate that would almost be as close as, let’s say, what I would get renting all rooms at occupancy and I’ll have that available and I’m sure I’ll get some bookings from there. And then the ones that are closer out, you know, then making those available by the room, you know, if for some reason the occupancy is not there. So there is a lot of bit of experimenting, there’s also going to be I’ll be doing some direct marketing, you know, putting fliers or getting contacts at the hospital, et cetera, to just kind of try to get my own customers a little bit that way. But, you know, I will be largely, you know, relying on Airbnb. And I mean, personally, it is the best platform for short term rental. I am on all these other platforms and they are all garbage when it comes to Airbnb and managing a short term rental business. And I’ve just had headaches with other sites like Booking.com and everything, and I’m like, I’m not going to bash them. But like, yeah, like I don’t I don’t even use Booking.com anymore. But Airbnb. And then the goal is to then move to direct to customer with direct marketing and owning your own customers. And yeah. So Thomas asked, I think it’s a good question about, you know, when it comes with city bylaws license. You know, I only invest in places that allow short term rental. I only invest in places that like this you can legally do, and that’s what I would recommend for everybody else. So a lot of people invest in short term rental into a market that has not been either regulated. There’s not been like a decision on the regulation or it’s illegal and you’re kind of shooting yourself in the foot. You’re kind of setting yourself up for failure because if something does happen and you get found out and you get shut down like there’s nothing you can do, and if your whole business model was rent and the whole reason you were going to be able to cash flow was renting a short term like, that’s going to be a problem, right? So always go where you know, where it’s legal. You know it’s all, you’re all good. You’re all kosher. Follow all building codes, fire code safety codes. You know, my entire house is hard wired with smoke alarms and every single freaking room. It’s such overkill. But why? Because that’s the building codes, the fire code. It’s safety. It’s important it saves lives. So we do it right. So I think where people get tricked up on it is they don’t they invest where it’s not legal or it’s not yet decided. And then they don’t do things per building code or fire code or whatever and then get into some kind of hot water there. So yeah, if you if you meet those criteria, it’s really that that’s all it comes down to it.

Erwin Szeto [01:06:14] So this has been awesome. So we’re doing a promo phase. Obviously, a wealth hacker unfortunately can’t be at our wealth hacker conference. So for anyone who is going to be at the wealth hacker conference, if you buy a ticket and use the discount code, say, which is actually spelled as V e, then you’ll get Z. What do you what’s your you have a free mini course?

Sve Pavic [01:06:35] Yeah, so you’ll get my free seven. I have a seven day free mini course rental hacking as well. And so every

Erwin Szeto [01:06:43] hacker should have this rental hacking package.

Sve Pavic [01:06:46] Yeah, yeah, pretty much. And you know, like the free mini course, I actually spend a lot of time. It’s not one of those clickbait things that I just do to grab your email or something like that. And it’s really like for me, I put a lot of info and we talked a lot about it today too. But I took like, literally, if you needed an overview, a seven day mini overview of everything that needs to do to successfully execute the strategy, then you got to download the mini course and I made it for literally the newbie new person. And like I’ve thought of, how would I write this so that somebody and when I was in their shoes, when I was in? You can also get this. I understand this and execute the strategy. So people tell me that just from the mini course that they gained so much knowledge and value and all that good stuff.

Erwin Szeto [01:07:37] So how did a lot of our just talking to you here? Russell Westcott dispensing high a commie dude. That’s all I’m saying about Russell Westbrook. So one last time, unfortunately, Fey has other things to do. He has to be in Mexico with his family during the world hacker conference. But if you go to wealth hacker dossier to buy a ticket use discount code, you save 10 percent across all tickets. SVT is a discount code and say, Well, work gets you a copy of Stays Mini course or cover a lot of this stuff, and this is impressive stuff. I’m really impressed how much you’re able to extract from not a big portfolio.

Sve Pavic [01:08:17] Yeah. And you know, you know, we didn’t even actually talk about this, and I just wanted to touch on it. But again, a lot of it, a lot of it has come down to networking. And since I have started, you know, being more involved on social media, connecting with Real Estate investors, et cetera, my income has also been increasing as well. So actually, I’m on track if you can believe it to make a million dollars through Facebook connections alone.

Erwin Szeto [01:08:44] So if you spend more time on Facebook,

Sve Pavic [01:08:47] yeah, yeah, people, people think that Facebook is just like a fool, but they don’t realize, like literally, Facebook is like the best way, in my opinion, to, you know, to network and partner with people and raise capital and raise money. So yeah. And so like I said, a lot, a lot of that income is from private money lending as well. And so now I offer as well other people to get in on it. And yeah, I’m offering double digit returns for private money lending. So if you are interested in lending out some of your money, whether it’s, you know, money that you have on a line of credit, like we talked about OPM or just some of your own money, maybe the best way is just to reach out through the rental hacking page on Facebook to find me or just finding me on Facebook. I also have a free Facebook group. If everyone is not in that, I know a lot of people are watching that live right now. But if you are not in my free Facebook group, let me know it is rental hacking, so you have to search real estate investors, real estate investors and entrepreneurs group in brackets, rental hacking or you can go on my Facebook profile and find a link through there. But yeah, we just actually crossed over 1000 members, which has been super exciting. We’re getting so much engagement daily. People are sharing, you know what they’re doing. I’m posting, they’re all my projects and I’ll post all the numbers from any hotel. And I actually just I have a whole bunch of photos on my phone that I was going to post to the Facebook group that I took over the weekend of the main unit, all like finished and ready to go. So people have an understanding of like, you know, the quality that we’re talking about.

Erwin Szeto [01:10:24] Awesome. Awesome. I want to ask because you were talking about private lending before we were recording what kind of terms are usually looking for when you’re lending for four flips?

Sve Pavic [01:10:32] Yeah. So I’m always trying to get like, you know, at least double digit returns. And the thing is that the thing with private money lending is that. Once you have capital, it’s like the, in my opinion, the easiest way to scale to have more capital, and it’s the most passive business model. So yeah, so I’m looking for double digit returns. I’m looking for somebody like there’s a lot of criteria with private money lending, but in a nutshell, somebody who is in the game as me, I’m targeting flippers who are in the game and who are recognized in the community, who either appear in magazines or have a podcast or something like that, like this is their full time business and then lending to them and trying to negotiate a decent, decently good rate better without going through a mortgage broker as well. And just to get a higher rate of return. So you’re kind of cutting out the middleman, but for anyone else, you know, like you can go through a mortgage broker all day and get like seven percent on the low end, all the way up to like 12 percent on the high and maximum 50 percent that I’ve seen through a mortgage broker, you know, either in a first or second position. So you can always go that way. And then the thing is, once you if you develop your own network like I have, which is how I was able to really accelerate my income is literally skipping that middleman, finding flippers, finding the people with private money, lending like who need this money and are willing to pay a slightly more than, you know, or you’re taking whatever the mortgage broker would take as a cut so you could get even a higher rate of return. So, yeah, I get over 15 percent return on investment, minimum and yeah. And so if anyone’s interested, they could message in and let me know. But yeah, I pretty much pay double digit returns as well. So it’s going really well. And all of the people that I have are now forming into, you know, like colleagues like, you know, we’re going to be partners for a long time. And I think that’s the other thing is like always trying to find the win. And it’s not just about you making as much money as possible, but like, like you said, like agreeing on the terms with the person. I’m like, What are those terms going to be? And you know, is the money worth it to you to be lent out? Or can you do, you know, better returns on your own projects, but it’s going to take you more time? So one of the reasons I like private money lending is, and the reason I started it was because I had that large home equity line of credit. I had a large funding they used from a refinance and I didn’t want to stick it back into properties and wait six months, plus whatever it is with renovation and everything like that. I wanted cash flow from day one and I wanted something more liquid so that if I ever needed my money back, it’s not necessarily stuck in Real Estate. And so that’s the pinnacle, in my opinion of that rental hacking pyramid that I’m talking about, which is private money lending is at the top. So once you have the money, then you’re just using that to make more money and continuing, you know, you’re going to continue to acquire more properties and stuff like that. But once you have now some capital to start with, it’s much easier to make money and I want it to be. I do like being a bit diversified in everything as well. So I think in the long run, you know, it’s a good strategy once you have some money.

Erwin Szeto [01:13:43] If you’re looking for another month plus another stream of income, you’ve got to try the stock options stuff.

Sve Pavic [01:13:48] I saw that you were talking about it, so I’m going to have to pick your brain. I saw you did a Facebook Live with the guys, so I’m going to have to see that and we’ll have to talk about that. But listen, so other people know it’s not like I’ve only done Real Estate. I have tried and failed in multiple businesses. We all

Erwin Szeto [01:14:04] have. That’s how we ended up here. And really, it’s

Sve Pavic [01:14:08] everybody has the shiny objects and you’re at the beginning. So we’ve all failed in affiliate marketing or like we’ve all, you know, we’ve all tried affiliate marketing. We’ve already stock pickers. Yeah. And all this stuff and I spend like this is not part of the story at all. But I spent like a year developing a product, importing it from China and selling on Amazon. And it started. And in one day I made like two grand. And right after that day, I got an email from Amazon saying, You’re listing and your account has been shut down because there’s another Chinese guy who’s claiming he has the patent on this thing when really there was no pan to begin with. So like I’ve done this, I feel. Me and my wife did an Etsy store where she was making handmade custom signs and everything like this, and then it was making good income and all this kind of stuff. But at the end of the day, like all of those things, it was not a consistent, dependable passengers influence stream like Real Estate was. And it literally like it was putting in so much effort. And, you know, with the end goal of one day that it will blow up. But at the end of the day, like the only thing that’s really been consistent for me is income from Real Estate.

Erwin Szeto [01:15:13] That’s how we all get up here. We’re all just pragmatists. We stick with whatever we stick with, whatever works right. That’s what entrepreneurs do, they? We’re way over time. Thanks so much again for doing this one last time website in your Facebook group.

Sve Pavic [01:15:26] Yeah. So you can go to my website rental hacking dot com and then you can see some of my stuff there. I got free stuff and got other stuff. And then the Facebook group is, you can search it, real estate investors and ultra. Premier’s group in brackets, rental hacking. I’m not sure if you just search rental hacking, if it’s going to come up like my Facebook page might come up and my stuff might come up, which then you could find the group and also the group is in my. The link of my Facebook profile and my personal profile, which is to be Paddick. So through there you can find kind of follow, you know what I’m doing. And then and yeah, and I recommend everyone join the Facebook group because that’s where we’re posting a lot of like daily content.

Erwin Szeto [01:16:05] Awesome. And then one last time for friends. This way, SVT is your discount code for Wealth Hacker Conference. Both Hacker Dossier. All right. Thanks again for doing this a lot. Thank you. Thanks. Congratulations.

Sve Pavic [01:16:18] That’s well done. Thanks that. We’re going to we’re going to keep going forward and we’ll see how far we can take it. And you know, I’m glad that I’m like, I’m fortunate that I can share this story to help other people doing things that are, you know, inspiring and life changing. And if there’s one thing, one sentence I want to leave everybody with today is and this is kind of like my motto is that your only one rental away?

Erwin Szeto [01:16:41] Yeah. When you’re going to gross like ten grand a month? Yeah.

Sve Pavic [01:16:46] Or something like that. Yeah. Oh no. Need a lot, right? You don’t need 100 rentals. You just need a few good ones. So.

Erwin Szeto [01:16:54] All right. Thanks again, sir. All right. Have a good one. Thanks, Neal. You have been, well, tracking the storm’s path to financial success or questions on investing in houses, duplexes, business suites, courthouses, triplexes, syndicated mortgages, private equity, public equities, sandwich leases, Lisa owns dune rentals, Airbnb wholesaling offer two deals midterm rentals, house construction. I’ll admit it when I don’t know the answer, but we’ll dollar Fred for an answer. If so, if you have a question, we don’t have any fancy means to receive questions. So if you enjoy the show and want to leave a five star review on iTunes, go ahead and type in your question. It’ll definitely make its way to me, and I’ll answer your question on a future episode of this podcast. If the questions are really good, I may even bite you on the show, which is how two of our guests have been on the show before. I’m actually friends with one of them now. Anyway, I’m also grateful for all your positive comments and fans of the show. It is my view that life would be a little bit better if we could all make and save a bit more money at the end of the month. And if you make a lot more than your family and community would benefit even more, and nothing would make me happier the next time my name is Erwin and I am a wild hacker bringing you the truth about real estate investing for Canadians. You.

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