Montreal Big BRRRs with Axel Monsaingeon

Microphone 5 43

Podcast Transcription

Dave Dubeau [00:00:09] Hey, everyone, this is Dave Dubeau here with another episode of the Property Profits Real Estate podcast today, zooming in from the beautiful city of Montreal. We’ve got Mr. Axel Monsaingeon, how are you doing today, Axel?

Axel Monsaingeon [00:00:23] Super well, thanks for having me, Dave.

Dave Dubeau [00:00:25] My pleasure, and I hope I’m not destroying your last name too badly, but hopefully that’s close enough. So anyhow, Axel? Very interesting. Real estate entrepreneur, originally from the Caribbean, want to hear more about that? That’s for sure. Went to high school in Montreal, never left. And then after a lot, like a lot of people kind of doing stuff in the corporate world, he got sick and tired of that and got into real estate. Investing has been the best thing since sliced bread, right? That’s for sure. And he’s also a podcast host with the most, and I’ve had the pleasure of being on actual show as well. So, Axel, welcome.

Axel Monsaingeon [00:01:03] I thank you very much, David. It’s great to be on the other side of the microphone for once.

Dave Dubeau [00:01:07] Yeah, there you go. Exactly. So, Axel, what kind of real estate investing do you focus on primarily these days?

Axel Monsaingeon [00:01:13] So right now, mostly on multifamily, finding kind of distressed properties and optimizing them is what we’ve been doing for the last transactions.

Dave Dubeau [00:01:21] Nice. So what kind of what size properties are you looking at?

Axel Monsaingeon [00:01:24] So I actually like, you know, six units and above it’s kind of the bread and butter now. It’s kind of ironic for me to say that because the actual last two that I closed on were five units, so it was just on the borderline. But in both cases, we were able to optimize significantly, raised around, raise the value and then refi in order to repeat. And as we like to call it, just prime the pump.

Dave Dubeau [00:01:46] Yeah, exactly. Well, that’s very, very cool. So actually, I my curiosity is piqued. Where did you grow up? Where are you from originally in the Caribbean?

Axel Monsaingeon [00:01:54] So I grew up on a little island, and thanks to my parents, they cross the Atlantic on a boat and they were hoping to go to the south of the Pacific. They actually never made it past the Caribbean, and they ended up settling. After being in Guadeloupe for a while, they ended up settling on a little island just south of St. Maarten called the St. Barts. They were there for about 30 years, and then I ended up leaving the island because school starts really early over there. And so I ended up in Canada to finish high school.

Dave Dubeau [00:02:24] Very cool. Very, very, very. And what about your parents? They are still there. You got to go spring Caribbean.

Axel Monsaingeon [00:02:29] No, not as much the kind of split their time they’re mostly in in Europe now, back in France, with the rest of the family where we’re five kids, I have four sisters and all of them are in Europe, so I’m the only one on this side of the pond. And to be honest, everyone here is the Caribbean, and they’re like, What the hell are you doing here, man? Why wouldn’t you live over there and stuff? And the thing is that, yeah, it’s beautiful. And you know, St. Barts has this wonderful aura because at Christmas time, it’s full of yachts and celebrities and stuff, but it’s actually quite tough living down there. It’s a very different lifestyle is very restricted. There is very little culture in a way. And you know, there is no such thing as just going to the mall on a Saturday afternoon. Not that’s necessarily fun, but there’s a lot of restrictions. And my father always told me, like a small island, that is great, if you can, if you can leave it frequent, which. And so I, you know, I ended up here, started working. I went to university in Montreal and, you know, settled and have life here and start investing and met my wife and our two kids. And so I’m rooted here and I like it.

Dave Dubeau [00:03:29] I wouldn’t leave. I know what you mean. I lived in Costa Rica for 10 years and everybody says, What the hell do you come back for? But not quite as small as St. Barts have. What is a population of St. Barts?

Axel Monsaingeon [00:03:39] just now has grown quite a bit. It’s about 9000, I think. But during the season, it almost doubles when every bed is taken and hotels and villas and so on.

Dave Dubeau [00:03:48] Yeah. So again, the whole islands of sounds of a small, small city kind of same population. Yeah, yeah, yeah.

Axel Monsaingeon [00:03:55] Yeah. And I’ve left now for a little while. And so I don’t know as many people, obviously, because there’s been a bit of turnover. But back when I was living there, when my parents, my parents got there, there was three, three and a half thousand people living there. And it was a very deep sense of community, like almost on every island where, you know, mutual help and counting on one another and, you know, doing favors and stuff. And I guess as the island developed over time, it became more transactional.

Dave Dubeau [00:04:22] Yeah, more touristy, I’m sure. Yeah. All right. Well, let’s get back to real estate investing. That’s the name of the game here. So Axel, one of the things I wanted to ask you about. You focus primarily on investing in and around Montreal, correct? Yeah. Quebec. So what have you seen as from what you can tell being the major differences between in, between investing in and Quebec and the rest of Canada that you’re aware of?

Axel Monsaingeon [00:04:49] That’s a very good point. So full disclaimer. I have not done transaction in other provinces in Canada. So you know, my view is going to be a bit limited is just that Quebec likes to be different and specific about everything. And so I know, for example, with Ontario or B.C., there’s quite a few differences, for example, around the closing around financing. And stuff like Dubeau, some particularities that we have here is so much based around, obviously the notary and all the rules and regulation when it comes to tenants and can be a whole conversation in itself. There’s a lot of protection for tenants, which is good in some ways. And then more difficult in some others. But as you and your audience may know, like a lot of buildings in Montreal are actually in a really poor state. There are so many neighborhoods where you know, you look at true triplexes. Six units, 16 new buildings were in some of the buildings. You can’t even close the door because the foundation of sunk in and it’s so difficult to raise rents that a lot of owners are actually reluctant to do big maintenance. And so that’s really pushed on the decaying of the inventory out there.

Dave Dubeau [00:05:54] Interesting. And I don’t know if it’s true or not, but I’ve heard that there’s a higher percentage of renters in, well, at least around Montreal than some of the other areas in Canada. Are you aware of that? But that’s a good point.

Axel Monsaingeon [00:06:08] That’s a very good point, to be honest. I don’t know the stats, but I wouldn’t be surprised. And also because there is a big culture again of tenant protection, and some people really do make the choice for the rest of their life that they’d much rather be tenants because in a way, it’s cheaper and they don’t have to worry about maintenance. And so obviously they don’t build equity over those 30 years and they never get to actually pay down a mortgage. I wouldn’t be surprised compared to maybe other cities in Ontario or B.C. or even in Nova Scotia that that would be the case.

Dave Dubeau [00:06:39] So when you’re buying a kind of a dilapidated property, let’s say one of these last five places that you closed on, are you getting them vacant or do they already come with tenants in them?

Axel Monsaingeon [00:06:49] So the last one I actually lost to had tenants. They were, I guess, because we chose properly. Some tenants decided to leave in the last building. The one we’re doing now, there’s only really one that we had to have a conversation with and negotiate, and we just bought his lease back. But the other, the other ones left and one of them it was, you know, for immigration issues. One of them was he actually broke up with his girlfriend and just, you know, didn’t want to live there anymore. The other one wanted to move to a bigger place. In this case, we’ve been fairly lucky. And so we haven’t had to do some, you know, big negotiation with tenants because it’s obviously much easier to optimize a property if you can at least have it in phases and have it emptied so you can do the necessary renovation in order to put it to a market.

Dave Dubeau [00:07:36] That’s what I’m imagining for sure. So, OK, so that’s awesome. Have you ever had any situations where it’s been difficult to get a tenant to leave or are they, you know, they usually fairly open to negotiation or a?

Axel Monsaingeon [00:07:49] That’s a great question, Dave. It really depends. And it touches on a point that it took me almost years to realize. So first of all, answer your question like, I have some tenants that, yeah, in the back of my head, I call them professional tenants where they know all the rules and they will. They pretty much will not leave until they’re ready to, which is their right. Once again, and I totally respect that and respect the law, they will negotiate on every rent increase even when you’re talking about $20. And so with these ones, it’s a bit more difficult and we’re connected. And I wanted to share this with the audience is that real estate is, yeah, you’re buying brick and you’re buying a roof and you’re buying land and so on. But it is primarily just a people business. We are negotiating constantly with everyone for everything, whether you’re doing an acquisition and you negotiate with an owner, whether it’s with your tenants, whether it’s with your with contractors and suppliers, when you were doing a financing and stuff like that. And so at the beginning, I have to admit, like, I didn’t realize how much of the people aspect was important to go back to your question. Like Enhance, we’re negotiating with tenants is so important because you have to understand them, their profile, what are their objective and what is it that triggers them?

Dave Dubeau [00:09:07] Wow, that’s another fantastic idea. Hold on to that thought for a sec. We’ll be right back. Now, are you a real estate investor? We ran out of cash or credit to grow your portfolio. Are you looking to grow your portfolio using other people’s money and raising capital? Well, I want to show you how to raise six figures or more in six weeks or less at my upcoming Investor Attraction workshop. You can get your ticket and find out all about it at Investor Attraction Workshop dot com. We’re going to spend a full day taking a deep dove into this roadmap that I’ve used to raise millions for my deals, and I tell other people, just like you cumulatively raise hundreds and hundreds of millions of dollars for their deals as well. So again, you can check that out at Investor Attraction Workshop dot com. And as a loyal listener to the podcast, you’ll get 50 percent off your ticket when you use the Discount Code podcast. That’s right, discount code podcast at Investor Attraction Workshop dot com. See you at the next workshop! So Axl, when I don’t know if you’re open to kind of sharing these numbers and whatnot, but can you give us a. An idea of a let’s say, roughly speaking, what it costs you to get into one of these recent, let’s say, five flexes. Sure, how much you had to put in what the rent roll looked like before renovations, how much you put into for renovations. How much you were able to now that you got everything vacant, now you can bring things up to market rent. What does that look like? Because I imagine it’s fairly impressive.

Axel Monsaingeon [00:10:34] It’s fairly substantial. Yeah. And so I’ll use it like one of the previous because we actually did the full cycle and we finished the refinance and so on. So it’s a five unit that’s located in rather a C plus or B minus neighborhood. We bought it. It was a five unit. We bought it for four eighty five, so that was in twenty nineteen. So we don’t know how much the market went up. Since then, it was about mid-year was around May, and it was at the time making thirty two thousand a year. And so we demolished returned one bedrooms into two bedrooms because there is some a lot of wasted space, there’s a big technical room in the bag. There were some space downstairs and so on. We added a little staircase and we ended up after about a year, so we put about a hundred and twenty thousand into it.

Dave Dubeau [00:11:21] So and you’re up to about 600000.

Axel Monsaingeon [00:11:24] Yeah, so we’re about 600000 now in order to purchase it. Obviously, we just put about 100k and so on. But yeah, and then we when we did our refi, we had it appraised and it appraised at eight hundred. Nice. Yeah. And so we did our refi based on that and we were able to get more money that we put into it. And then we continued. And the thing is that this is when it’s amazing when you do the full cycle because sometimes you do hard work and we all know the reality of being a real estate investor where you do a lot of hard work for a while, but you really only get paid at the end. You’re the last one to get paid. Let’s be honest here. And when you finally do your refi and get the money that comes back and then you’re like, Wow, that was about, you know, 14, 15 months of work. Was it worth it? Absolutely. And this is where we’ve been repeating this is

Dave Dubeau [00:12:12] so what are the programs now science? What are the gross rents now of the property?

Axel Monsaingeon [00:12:18] OK. So on the gross rents, yeah. So right now it’s fifty two thousand. I should be able to give you the NOI right off the bat, and I don’t know whether we need to look at the numbers

Dave Dubeau [00:12:28] to get a just so but so

Axel Monsaingeon [00:12:30] within 14 months period, we went from 32000 to 52000. That’s huge. Yeah. And so, for example, three of those units were generating about $500 a month. And then we turned those rents into eight hundred eleven hundred and 1200, respectively. Now, two of those were one bedrooms that we turn into two bedrooms. Obviously, you type into a different market. We put some better appliances and this is the medium grades neighborhoods, so it shows the potential in optimizing.

Dave Dubeau [00:13:01] Yeah, definitely. So basically, you’re doing you’re doing BRS with multifamily properties. That’s right. Yeah, very cool. What else? And so how old was this building? Because I know there are a lot of historical buildings in Montreal, and I imagine those must be a whole. Oh yeah. Oh, situate, do you ever work with those kind of properties or yeah, we’re on.

Axel Monsaingeon [00:13:24] It’s funny that you ask, because this is exactly the sequence that we followed with the one we’re working on now and we’re about to close on a on another property pretty soon. So the one I was just going over at, this one was built in mid-fifties, so it still had a decent concrete foundation. It’s still a pretty well built. Now the one we’re working on right now; we are actually doing redoing the full foundation. It’s 1910 build a three storey building. It’s another five units. And during the inspection, this was an off market deal and during the inspection, we literally like started with a screwdriver, digging through the concrete foundation because it was shots. We had shot some foam on it. The humidity had stayed. It was just in a terrible state. And so we knew we were buying cheap, but we knew we were facing about a hundred and fifty thousand a work to do on it. And so and it’s stone, it’s not brick. And so the two facades adjacent our brick. So I just thought originally, Oh, we’ll just turn it into brick. And so it’s not heritage, but the city insisted, so obviously we did, you know, a full permit. So we’re changing. We’re redoing the foundation for stone facade to be redone, change all the doors and windows, redo the roof. I bought it as an anecdote. We bought it when as asked the owners, when was the last time they redid the roof? They didn’t know, and they had the property for 30 years. So you can imagine my face. And so I was like, OK, well, that’s one of the first thing that we’re going to redo it like you don’t need to. It’s fine. When we redid it, the guys removed four layers on top of each other and I asked them and it was wet underneath like it was starting to leak. It could have been bad. So I’m glad that

Dave Dubeau [00:15:01] it was that was that even built as a multifamily or was it a single big single family home turned into a.

Axel Monsaingeon [00:15:08] No, it was it was built as a multi-family three storey five units. Yeah, no, it had been built that way. Is this once again like lack of maintenance and deferred maintenance? And this is where there is really opportunities for people who are willing to do the hard work and fix someone else’s problem?

Dave Dubeau [00:15:26] Well, for sure, I know that’s where it all comes in. So I know actually, when you know, especially other Canadians kind of hear about these crises and whatnot compared to some other cities. Those are, you know, very, very reasonable prices now, the rents are quite a bit lower than what you might be accustomed to seeing in other places. What are some of the big? Because so I imagine people getting all hot to trot and ready to go take on Montreal. I’m sure you’ve seen it a few times. What is what are some of the main screw ups English Canadians do when they go and they try to invest in Montreal, a as newbie foreigners as it were coming into Quebec? Have you seen that happen?

Axel Monsaingeon [00:16:10] That’s a good question. And you’re right that, for example, there’s a lot more people from Ontario coming because they’re like, Oh my god, Montreal is so cheap. But I would say is trying to get into too many different things, and you’ve got to just kind of like pick one and educate yourself, learn the hard way and then go a mile deep. But some people are trying to do like, Oh, a little bit of this, a little bit of that. And then they never really get good at anything. But at the same time, those coming from Ontario probably already have experience over there, but it is a different market. And so one of the mistakes I do see is actually people. It’s not just valid for people from outside of Quebec coming here. It’s also valid for people that are here is sometimes investors wanting to touch too many different segments. And that’s and you’ve learned it as well. I guess once you develop a formula to stick with it, refine it, get better instead of just trying to go eat in every pot.

Dave Dubeau [00:17:06] Yeah, I would imagine it’s old time flies when we’re having fun, my friend. I’m sure a lot of people would like to find out more about you and what you do, and maybe it’d be smart if they listen to your podcast as well. So where should they go to check out about Axl?

Axel Monsaingeon [00:17:20] All right, great. Thank you very much. So as you mentioned at the beginning, I started a little podcast about real estate investing in Quebec. It’s called the very real estate effects. It can be found on all the platforms Spotify, Apple, iTunes, you name it. And then they can go and check out the websites. Are real estate effects dossiers some more information there? And if anyone wants to hit me up on LinkedIn or Instagram, it’s very real estate effect as well. They just hit me up and I’ll be glad to chat with them.

Dave Dubeau [00:17:48] And you’re basing Kabak and your podcast is about investing correct. But it’s in English. Correct?

Axel Monsaingeon [00:17:55] That’s right. Yes. And I realize, like Khimich is such an interesting province. Like, there was so much in French and I just thought, like, we’ll have, you know, half of the people here speak English, so why don’t we do that in English? And I’m actually really, really happy. I do. And also because I get to chat with fun guys like you.

Dave Dubeau [00:18:10] Yeah, that was a smart idea. It’s fun, guys like me who unfortunately don’t speak French for the dam. So that’s good. Good news for me. All right. Perfect, Jackson. Thank you very much for your insights and your time and keep rocking and rolling with what you’re doing in beautiful Montreal.

Axel Monsaingeon [00:18:25] Sounds good. Thank you very much, Dave, for having me have a wonderful day.

Dave Dubeau [00:18:28] You too. All right. All right. Take care. And see you on the next episode. Well, hey there. Thanks for tuning into the property Profits podcast if you’d like this episode. That’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, then we invite you to get a complimentary copy of my newest book right back there. There it is the money partner formula. You got a PDF version, an investor attraction book dot com again. Investor attraction, book dot com. Take care.

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