Table of Contents - Real Estate Allowing for Life After Tragedy with Jay Gabrani
Dave Debeau [00:00:09] Everyone, Dave Debeau, out here with another episode of the Property Profits Real Estate podcast today, zooming in all the way from beautiful Oakville, Ontario. We've got Jay Gerbrani. Jay, how are you doing today?
Jay Gabrani [00:00:22] Doing great, Dave. Fantastic to be with you.
Dave Debeau [00:00:25] It's great to have you. And Jay is a very successful real estate entrepreneur who has created an impressive portfolio, but more importantly is and created a very how can I put it, it's more lifestyle. Well, I'm trying to think of the right word enviable lifestyle because of this, which has allowed him to create some true time freedom, which definitely was very, very important for him, especially a few years back. And we'll we'll talk about that. But first of all, Jake, why don't we just talk a little bit about what is your main investment strategy and where are you doing it?
Jay Gabrani [00:01:03] Yes. So I am known as the guy with two left hands. All right. So when it comes to all the stuff with renovations and flipping totally, I recognize it's a weakness of mine, so I've never really touched it. I am a strict buy and hold long term guy. It served me pretty well. And that's the strategy. I just like I like things simple. I find buy and hold to be simple. So that's what I tend to stick with.
Dave Debeau [00:01:28] So you had two left hands. I'm as handy as a foot. That's what I love that.
Jay Gabrani [00:01:33] I'm going to take that one, by the way. I'll credit you.
Dave Debeau [00:01:35] That's just give me credit is all good. So you buy and hold. What do you typically buy and what, what are you holding on to. What are you getting? My burs just
Jay Gabrani [00:01:46] basically it's pretty easy to like I, I started in Edmonton, Alberta, back right at the top of credit crisis time. Couldn't buy it any higher than I did. And I switched focus to a very small one kilometer by two kilometer rectangle. I knew every property, all the street numbers, the sales prices, tenant profile, etc. So I concentrate in that area. And what I did was I concentrated on three bedroom bungalows which are on sixty by one hundred and twenty foot lots down the street. This area is a like 70 year old area. Those bungalows are being torn down and the big executive homes are being put up. So when I was buying heavy, I was making sure that it was three bedrooms, bungalow in reasonable shape, not totally worn out. It had to be down the street from what I call Big Brother. And that was my strategy. It was really simple, really focused if so. And it was all in south Oakville. If someone brought me a deal from north Oakville, I just said no. It was like no anywhere else. No, like, it's so easy when you're able to focus. And that's hopefully what the audience is going to take away. I'm sure we're going to talk about it a little bit more, but it helped me focus and that's what I bought.
Dave Debeau [00:02:58] OK, so if you're buying these properties there down the street from Big Brother, but you say you're holding on to them, are you turning them into big brothers or are you just keeping that bungalow on the property? You know what?
Jay Gabrani [00:03:11] We can turn them into big brothers. My family, my in-laws are heavily involved in construction. They built a couple of houses in this area. But I haven't yet simply because we started buying in right after the credit crisis to two thousand nine, ten, eleven things that we were buying for three mid three hundred's low for hundreds. They're all worth like eight fifty to nine fifty now. So converting them actually isn't as profitable. So I just hold them. I hold them, they're all rented out, they're all rented out to long like seven year ten and five year ten and eight year ten. And just I find it so easy I don't want to complicate my life with building it. So but that is obviously a future exit strategy. Yeah. No, that's available to us. But just not not yet.
Dave Debeau [00:04:00] So they're bungalow's, they have secondary suites in them. Are they just single family
Jay Gabrani [00:04:03] homes, single family, single family homes. One of them has a separate entrance, finished basement. But I actually still rent it out as a whole house. They're usually about eleven hundred to twelve hundred square feet above ground and the same thing below ground in the basement. Basements are pretty well all finished in this area because the houses are sold. People needed living space and I try and make sure there's two
Dave Debeau [00:04:24] balconies or where these all purchased back when they were cheap. Like bought.
Jay Gabrani [00:04:29] Yeah, cheap. Then they skyrocketed back in twenty sixteen. Right. They really took off and then the buy and hold model did not work. Right. So the only thing I'd done outside of that strategy is the only thing I bought in the last few years are some condos which are still in the area. So I know the area very well, I know the tenant profile and I got some I got pretty good deals on it because I bought early in the preconstruction process for a builder that I knew and yeah, that's it. So I haven't been actively buying because they're all like eight fifty nine fifty now and the rent's as pretty well everywhere. The rents don't catch up to appreciation. For quite a while and they still haven't caught up,
Dave Debeau [00:05:09] so I started asking because for those kind of price points, you can't you can't make it as a single family home and it might get close, you know, as a property of a secondary suite at or down or something. Yeah, yeah. Interesting. Very, very cool. So what was it that got you inspired and activated into real estate investing? What were you doing before? What got you into the whole thing?
Jay Gabrani [00:05:32] Sure. Even though I went to university trained and educated as a professional accountant, I pretty well I had always promised my parents I'd never work for anyone. After twenty five, the last day I ever had a job was the day before my twenty fifth birthday. I left the accounting firm I was working at. Let's just say ever since then I have been an entrepreneur, several different businesses, but in terms of real estate. So I started business in the late 90s when I left my work. But real estate was very specific. It was after my first child was born, Jaiden. He was born in August of 2005. And when I held him, I realized, oh, boy, life's changed. And up until then, let's say I was doing well as a bachelor. It was OK. It was fun. But now you have your newly married, you have your wife, you have the new son, got to buy a house, all that stuff. So all I wanted to do was I have always driven to be successful. I was always rather ambitious, but I wanted to know how millionaires became millionaires. And you can even see on the bookshelf behind me, there's lots and lots of books. Back in 2005, I just started reading. I joined an association. We both know Rain started learning. And then so it was mainly because my son was born. I was like, how do millionaires become millionaires? I read a whole bunch of stuff. I chose real estate.
Dave Debeau [00:06:47] Very nice. So then at that point you were buying in Edmonton, is that correct?
Jay Gabrani [00:06:52] That's right. So when he was born and I started researching in December of 2005, the same properties I bought like a year and a half later were a hundred and thirty thousand cheaper. I could have bought things for one hundred and thirty hundred and forty thousand. I was again focus. I was buying three bedroom townhouses in North Edmonton really close to the ring road. And if I bought right when he was born, I would have eight hundred and three hundred and forty. Instead I waited about eighteen months, credit crisis building up price of oil building up and I bought a two hundred and seventy thousand and literally I like I said, you couldn't buy any higher than me. It fell down to like under two hundred thousand in what seemed overnight, but maybe it took four or five months.
Dave Debeau [00:07:37] So what did you do with with those properties in Edmonton? Did you hold on to them until things came back around? Did you take a loss on them or what did you do?
Jay Gabrani [00:07:46] I basically did hold, but let's understand that it was negative cash flow now. So basically I held them. I still own two of them to this day. They still have not recovered pricing wise. But now that it's been since 2007, a lot of the pay down the mortgages have been paid down. So I'm OK. And again, I don't know what's going to happen with Alberta. I'm looking at it and saying, OK, I've been waiting for it for twelve, thirteen, fourteen years to improve, but it hasn't. So again, we just however, I will point out to people, if they're in that position, even though I've owned them for like over a decade, they've only ever been vacant three months. Wow. In total. So that's the good thing. If you can keep your stuff rented, that's kind of the name of the game when you're in trouble. Right? Like when you're going through some trouble, keep it rented, keep the space full. So that's one thing I want people to point out. It's not always doom and gloom, even when the numbers go down, if you stay rent.
Dave Debeau [00:08:46] Yeah, exactly. Because like you pointed out, especially over that kind of time frame, your tenants have been paying rent almost all that time except for three months. That's right. And they've been paying off your mortgage for you. So, I mean, your mortgage has been paid way, way down over those however many years.
Jay Gabrani [00:09:04] That's like forty. Fifty thousand. Yep. And under pressure.
Dave Debeau [00:09:08] All right. So then so you're buying a lot of single family homes. Where you working with investors? Were you just using your own capital? What did you do for downpayment.
Jay Gabrani [00:09:18] Yeah. Hopefully your ideas could get something out of this too is in Edmonton. It was all my own money and basically it evaporated in that four to six months. The down payment money I'd put in 20 percent down, all going. So by this time, my wife and I had two more children. So we have three children under five. I'm wiped out. No cash left. Business still running, but it even got hurt by the credit crisis. But I still knew I wanted to continue with real estate investing. That's when I switched focused. Oakville and Oakville was all with partners. One hundred percent JV partners. I started with the best man in my wedding. John, I go, John. I really screwed up in Edmonton, but I've been studying Oakville, right? I've been looking at the economic factors and I think it's going to boom. I don't have any money left. Do you want to go in with me? He's like, yeah, let's do it. He knew nothing about real estate. He had no inclination to learn real estate. But he's like, yeah, let's do it. Then slowly it starts. Right. I invite John, John invites Tony, Tony, invite Sam. And before you know it, you have partners basically saying, all right, we believe you. We like what you're doing. You have to be very trustworthy. You have to tell them the bad news and the good news. And people can raise money. There's money everywhere. Oh, my goodness gracious. There's so much money just sitting around. If you you should never have the excuse of there's no money because if you don't have it, that's fine. Partner, partner, be resourceful. It's not about having resources. It's about being resourceful. So, yes,
Dave Debeau [00:10:55] how how many properties were you able, if you don't mind sharing to build up to with your joint venture partners
Jay Gabrani [00:11:02] with the joint venture partners in Oakville? It was eight when you include what was in Edmonton, it was a total of about eleven. We had three in Edmonton, which again were mine. So those are all the lost ones. And the eight that we've done in Oakville, we still have six. We've sold a couple. I'm sure we'll get into that as well. But let's just say my partners are exceptionally happy. They've all told me it's the best investment they ever made.
Dave Debeau [00:11:26] Excellent. So with partners and with what you're doing there, is real estate your full time thing, or is there something else that's helping to cover the bills as well?
Jay Gabrani [00:11:35] Yeah, it's I always say it's tough to make a living on real estate cash flow, especially when you're in single family homes. You have to get some pretty good deals, maybe scale up a bit and you can have lots of cash flow coming in. But no, I run a business. The business is called Prepared Fathers. I'm basically a financial coach. I'm a financial coach for parents and kids who want to be financial all stars is what I call it because of my accounting background, business background, real estate background. I also invest quite a bit in stocks. So between the four of those, I love doing the consulting and coaching. So prepared fathers is my what we'll call everyday business that I do, I stay busy with now.
Dave Debeau [00:12:16] It's a very illustrative, however sad and tragic story about why you got into prepared fathers. Are you OK sharing a little bit about that? Sure.
Jay Gabrani [00:12:26] All right. So I'm sure a lot of your audience are married spouses, etc.. And there's one thing that I already know, having grown a little bit in life and experience things, is that people go through tough times, everyone goes through tough times. So I'm going to share the story about a tough time that I had. So I'm going to take you back. We had bought our eighth property in less than two years in Oakville, so that was 2011. We had just finished closing three properties in thirty days. Wow. Right. It was hectic. It was busy, but we got it done. And my wife and I were the ones building the portfolio in Oakville. She also was driving around and looking for stuff. She had a slip and fall accident. They have in 2011, like literally two weeks after we bought that property. And she went to the doctor. She wrenched her back. The next day she went to the doctor and got prescribed Oxycontin's. And let's just say that for the next three years, life was not very good. She eventually developed an addiction, unfortunately, to those pills, and it was just a very downward slippery slope. So from 2011 to 2014, we didn't buy any properties, even though we had all kinds of plans to keep buying properties, life kind of really got in a rut. It slowed down because things that she was just doing every day. We had three young kids, three young kids, household. She was super busy domestically. I was super busy business and real estate. And let's just say that that downward slope did not go very well. She eventually passed away and the reason she passed away was she didn't want to be here anymore. So it's one of those stories that I tell. If we were talking years ago, I wouldn't have been able to talk like I would have been screaming tears by now. But I do share it because I just want to encourage people out there. That was the biggest regret of my life, is not being able to help her and understand what she was going through at the time. So if there's someone out there in your family that's going through this thing, please just reach out and help them. That's why I share the story, because if someone can come to me years later and say, gee, I heard you on Dave's podcast and my brother and my sister was going through this and I reached out and helped them and help them feel better, get better, then it's more than any money that I could ever earn or anything like that. So that was a obviously an exceptionally difficult experience. And that is where the real estate certainly came in. Basically. What do I have now? Overnight, I became a single father, three kids, five, seven and nine. That whole domestic cycle kids cycle. That was all my wife, playdates and school and extracurriculars that all now became my domain. The business I was running at the. Time was a mobile marketing agency, I had clients, I had to shut it down. I just basically had to tell everyone, listen, guys, I can't handle anything for your issues and your problems. I got to look after my kids. So we basically I did a sabbatical day, like, I just shut everything down. There was no money coming in. But that's where my real estate came in. I was able to first buy a property, put a whole chunk of money in my bank account, six figures, and not have to look at it for whatever it was like 18 months, 19 months. And then I didn't I wasn't ready yet to come back. So then I sold the property and put that chunk of money in my bank account and I went another two and a half years. So my sabbatical was a total of four years. So I'll definitely point out to your audience, if you have any doubts about getting started in real estate or pushing through, raising money, etc., there's going to be times in your life you're going to need it. When I was writing out my Goulbourn years and years ago, I never wrote building a real estate portfolio in case my wife passes away. No, but that's exactly what ended up happening. So I encourage everyone to get moving. Don't delay like you never know. Life throws curve balls. We just went through a pandemic, right? We didn't know that was coming, but it came. So that's what I encourage people to do, is be ready for life's curveballs and real estate. Let me be ready after that was a tragic and obviously a very difficult experience to go through.
Dave Debeau [00:16:29] Oh, my God. For sure. Jay, thank you very much for sharing that. I appreciate that. And I'm sure that's a strong message for many people in a wake up call for some of us as well, right? I hope so. Heaven forbid that happens to anybody else. But stuff happens. Like you said, stuff happens. It might not be that, but something happens. Might be illness, maybe. Goodness knows what. So real estate gives you that financial cushion to fall back on. Yes. Or that you can take, you know, as you say, sabbatical time off is neither because you are busy as hell, I'm sure raising a family and that all the time being mom and dad, not for himself.
Jay Gabrani [00:17:11] It allowed me to drive my kids to school every day, pick them up every day and just spend literally hours and hours a day with them because I had to help. Not only was I going through it right, they lost their mom. So we talk about it. I needed to be there so that whenever they needed to communicate, I was there. Whenever they were going through an episode like something tough, a memory or something like that. I was there when we drove around. We had memories everywhere and we would talk about it. I was there to talk about it with them. So now I'm like, after years, you know, they're very well adjusted. I'm really proud of my kids. And they got dealt something very early in life that might like my I'm forty eight years old. My parents are still alive now, you know. So it's it's just one of those things that's difficult. But yeah, we got through it.
Dave Debeau [00:18:00] Jay, if people are interested in finding out more about you and connecting with you, what should they do?
Jay Gabrani [00:18:07] Great. I actually have some checklists for them, for your audience. So all they need to do is they can visit w w w dot prepared father's dot com forward slash Dave. And I think we have three investing checklists for them. So these are useful checklists or if you're a beginner or an intermediate, gives you some useful tips. Real estate investing, checklists, idol equity. If you have money sitting around, you want to learn how to invest it. There are some nice, useful checklists. I think everyone will find them valuable. So once again, we got prepared. Father's dot com forward slash Dave.
Dave Debeau [00:18:43] I appreciate that, Jane. And I know you're on to kind of a new project right now. This whole pandemic thing kind of brought something new out, and that's really exciting. Your what do you call it again? The team program.
Jay Gabrani [00:18:57] Yes. The teenager is the teen finance accelerator. So the simple story is pandemic hit. I got an email from the school board. Yeah, your kids are going to be home full time. And I was just shaking my head. I was like, what in the world am I going to do with these kids? At least during summers they can go out somewhere right here they couldn't. So I was just like, do you want me to teach you about finance, investing and stuff during this self isolation? They're like, yeah, because they knew they'd be bored. I told him to invite some more friends. I asked some people on Facebook, I knew your kids want to take part. We had 30 to 40 kids showing up and I taught six sessions about investing in finance. The feedback we received was enormous. So then I was like, why don't I just do this? Because I feel good about I love teaching. I love teaching young people. I love teaching adults. So we created something called the teen finance accelerator that people are interested if they have teenagers who they want to have learn. Sometimes parents and teens don't exactly see eye to eye. They can go to teen finance, accelerator, dotcom. Perfect.
Dave Debeau [00:19:58] All right. Thanks so much. It's always a pleasure.
Jay Gabrani [00:20:01] Fantastic. Great to be with you and thanks to the audience.
Dave Debeau [00:20:04] All right, everybody take care and we'll talk to you on the next episode. Bye bye. Well, thanks very much for checking out the property profits podcast. And you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.