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Podcast Transcription
Georges El Masri [00:00:01] Welcome to the War podcast, where the goal is to motivate, inspire and share success principles. I’m your host. Georges El Masri Thank you for tuning in to our podcast. I’m your host Georges El Masri And today I interviewed Matthew Frederick, who is a long term investor. He’s been investing since; I believe it was the eighties that he said so. He’s been in it for multiple years and he has looked at so many different strategies. He’s actually originally from Trinidad and he came here and bought his first property when he was 19 years old, and through his brother’s help, his brother pushed him. They ended up buying a bunch of properties together. Since then, they’ve gotten into multifamily storage solutions, self-storage solutions. He’s also building in Belize. He’s got properties in the States, so he’s looked at so many different things and we just touched on some of his systems. We talked about the benefits of owning self-storage, the cash flow that he generates from them. We talked about owning strip malls and commercial and how that’s kind of different from residential. So if you guys are interested in maybe just expanding your knowledge on certain topics, certain things that you might not hear too much about on podcasts, I think this is a great one for you. And if you enjoy it, make sure to share this with somebody who’s going to benefit a friend or a family member. And also make sure to leave us a review on the Apple Podcast platform that would be greatly appreciated. And then finally, if you want to find out about some of the opportunities that I have in the Niagara region, we’ve got some multi units. We’re looking at 3 to 6 unit buildings and we have a couple of opportunities. So feel free to reach out to me on Instagram while off X is what you can look up and I will be happy to connect with you. Enjoy the episode. I am here with Matthew Frederick today. Matthew, I appreciate you coming out. I like to start off by asking you a little bit about your childhood, where you grew up. So if you want to just tell us a bit about your history.
Matthew Fredrick [00:02:01] Well, I was born in the Caribbean. I was born in Trinidad and Tobago, the small island. I came here when I was seven. Interesting enough, the fact that I was an immigrant when it came to Canada back in the seventies, back in 1972, you know, my parents told me you have to work twice as hard to get as far. I didn’t have a choice. I had to actually make something of myself. And therefore, when I was 19 years old, I bought my first property and I bought it 80% cash and my parents put 20% of their 10% mortgage, which is the reverse of what you normally see. Yeah.
Georges El Masri [00:02:34] Okay, cool. So Trinidad, when did you come to Canada?
Matthew Fredrick [00:02:38] So back in 1972. So that makes me 57 now. And so I’ve been investing my first house at 19. Now that’s 27 years ago, but I got seriously involved in real estate when I was about 30 sorry, 24, 25 years old. I was a teacher.
Georges El Masri [00:02:53] Okay. So you started off as a teacher. That was your first career?
Matthew Fredrick [00:02:57] Yeah, well, you know, when I was 18, 19, I was in the military part time in the reserves. So I was a soldier and I was going to school. When I graduated school, I actually got a job at the Bank of Montreal, which was a great start, their main computer center. The problem with that is I was working 40% of my time programing, somebody else’s program, and 6% of my time doing things that I didn’t want to do. But it would have been a great career. I just didn’t want it. It wasn’t me and I left, which is a hard choice to make, because once you get out of school, you get picked up by a very large company, you don’t walk away. And I did. I went to IBM. I liked it because I was able to literally go out and do half my day out of the office, half my day in the office, which I really enjoyed. Yeah. And then I became a teacher and my brother was a police officer and he came to me and he says, you know, would you invest with me? I’m like, No, I already bought my first house. I don’t need to buy again. I’m a teacher. And he says, Well, I’m your older brother. I have a gun, you’re a systems guy, you’re going to invest with me. And therefore I had no choice. Yeah. So I became an investor after that.
Georges El Masri [00:04:03] Okay, awesome. So you said you started taking it seriously at around 24, 24, 25. Was that when your brother kind of pushed you into it or did that come after?
Matthew Fredrick [00:04:15] No, exactly. So a lot of people got into real estate investing because maybe they always knew about it. I always had the bug for it. I didn’t. I just bought my first house just to have a house and my first house I lived in the upper section. The kitchen was shared with the lower unit. Now back in those days, we call that, you know, live in one unit, rent the other unit, share kitchen today they call that house hacking. Yeah, but so I bought that property, but I was never going to buy a property again. My but my brother being a police officer, seeing properties all day long and he’s more visionary. I’m more of a systems guy. Yeah. He wanted me to put together the system to make it happen, so. Yeah, kind of forced me into it.
Georges El Masri [00:04:54] Okay. Yeah. So tell me, how did that go from there? Did you just. Buy one property with your brother or did you guys invest in multiple properties together?
Matthew Fredrick [00:05:02] Well, my first property was at 19, so by the time I was 25 years old, I already had some equity in my property. And because I had that equity, it was making me some money. I was able to borrow against it and I was able to buy two properties. And because he had a really great salary, I had a great salary as well. I’ll be able to buy two properties together and then we bought a third and these were multifamily properties. So there were triplexes in four places which I think served us well. We started in the Hamilton, Ontario downtown.
Georges El Masri [00:05:32] Yeah.
Matthew Fredrick [00:05:33] All Victorian homes, and we had those for a few years, but then we maxed out, we hit the ceiling, we couldn’t go anymore, and therefore we had to do some things more creative to get some financing.
Georges El Masri [00:05:44] Yeah. And I remember hearing a little bit about your story in the past. I know you’ve dabbled with a lot of different strategies. I think you had also at one point got into self-storage. Self-Storage, yeah. Tell us a bit about some of the other strategies you’ve gone with.
Matthew Fredrick [00:06:02] So a lot of people say pick one strategy and just be great at that. And, you know, I do agree with it. The thing is, I’ve been around for a long time. So when you invested for 30 something years, you realize that certain strategies only work in certain seasons. Let me give an example. For the last ten years, people have been doing BR, you know, buy, renovate, refinance, you know, rent it out, take the money out and do it again. But for most of my life, investing all the way through the eighties and nineties and obviously the 2000 interest rates have been five or 6% properties appreciated 5% a year. And appraisers were very sticky when it comes to giving any grandiose appraisals. So BR didn’t work that well the way it does today. So in different times you do different strategies now. I liked self-storage of all the different types of investing because I don’t have to worry about fridges or stoves or washes or dryers or kids. I love them or pets love them too. But as a landlord, I don’t love them that much. Yeah, all I’m doing is I’m buying land with a self-storage on it and people they pay rent. 252 654 This empty space which I don’t even have to heat, and therefore I got into the original type of self-storage that you see out there, the elderly kind of garages. But it’s ugly, but it’s a moneymaker. Yeah, incredible.
Georges El Masri [00:07:23] Where which area did you start investing in? Self-Storage.
Matthew Fredrick [00:07:26] So I started north of Toronto, and so I would say a few areas between Barry all the way up to Minton.
Georges El Masri [00:07:35] Oh, okay.
Matthew Fredrick [00:07:35] So not like right in the city. Yeah. You know, today, self-storage looks different. You get three stories, you have over 600 units. That’s a whole different concept, which I like as well, because now land is more expensive, so therefore you have to go vertical in order to afford that land. Yeah, but of all the real estate I’ve ever had, I think self-storage has been the most profitable and the easiest to run, but not too easy to get. And they stay in the family for a long time.
Georges El Masri [00:08:03] Okay. So can you tell us a little bit about how you find self-storage options or opportunities and also how do you buy them? Like what does it look like to own self-storage?
Matthew Fredrick [00:08:14] While self-storage is not financed the same way a house would be financed, it’s more commercial property, industrial even, and I tend to get 50% financing. You can probably do better 65%, but in most cases I get 50% financing. It’s very hard to expand them because cities don’t really like them. They don’t make the original self-storage because you have all that land and acreage too. And really you have one or two employees not really paying a lot of taxes because you’re not really developing it. Yeah, so cities are not crazy about that. Look, but of course, the new ones are cities I think they’re okay with. But ultimately, how I got my first self-storage, I stumbled across it. I used to head up to my cottage that stopped by an old timer all the time, said, get him a coffee because the Tim Hortons is about a half hour away from where this guy was. And, you know, and I’d stop by, give him a coffee, we chat just about anything because I want to learn about the area. And after about six years, he said to me, you know, I have prostate cancer, I’m dying and I want to sell you my self-storage. I’m like, Well, I don’t do self-storage. It’s not really attractive. He goes, Listen, my wife isn’t beautiful, but she’s a good woman. She goes, Self-Storage, you know, that’s the way to go. So I’m like, Okay, I bought it. And after I bought it, he passed away. A great gentleman. Yeah, but out of kindness is how I got that deal. And it’s been super profitable for me. But normally what you do is you look for a piece of land and you check the zoning to see if it can be zoned for self-storage. Yeah, very hard to convert to that zoning. And if you see a small self-storage unit, if it has some land next to it, you may want to buy that and expand it. Yeah, but financing is about 50% and financially it makes a lot of money.
Georges El Masri [00:09:57] So. When you get into the self-storage, is that more of an appreciation play or a cash flow play?
Matthew Fredrick [00:10:03] For me, that was a cash flow play because the land has gone up in value tremendously, but that was never the main goal of it. Land has doubled only because sorry, land has doubled and tripled only because there’s less of it. But it’s really a heavy duty cash flow play with very little property management and responsibility. Yeah. You know, today I have 24 to 34 unit buildings, so I have people who actually manage those for me when I get a phone call. It’s usually the world is coming apart. Yeah, that was my brother and me. Once we started buying houses, we started with about three houses, like I said, and then we got to about 16 houses, you know, having 16 houses and managing yourself. You think you’re rich? You look rich. You look rich on paper. You come home after a hard day’s work and you had a phone call. Something is wrong, and you have to go and fix that. Yeah. So I found having 16 houses was like having 16 children. Yeah. And yes, I look good on paper, but he was driving me crazy. So therefore I wanted to go to the larger units where I can get an onsite manager.
Georges El Masri [00:11:07] Okay. So yeah, we’ll touch on the multi-unit in a second, but I wanted to ask a little bit more about self-storage because I’ve never had anyone actually talk about it. Okay, so what does it look like to own self-storage? You said there isn’t too much management, whatnot. What kind of issues do you come across if you do get that call? What is it that somebody is telling you about what issues?
Matthew Fredrick [00:11:29] So really? Okay, so my main expenses are really just my security cameras, my internet, and I’ll have somebody there on Mondays, maybe Wednesdays and maybe Saturdays. The rest of the time it’s just 24 hour access. So that’s where your expenses, your expenses, your electrical for your lighting systems and things like that. The problems I get is when somebody backs up into the door. Oh, I know. It’s kind of silly.
Georges El Masri [00:11:53] Yeah.
Matthew Fredrick [00:11:54] How do you do that? And yes, I have insurance, but the fact is people backing the door creates a problem. And sometimes a greater problem is when they missed the door and they hit the little, small column in between the two doors. Oh, yeah. Now, obviously, you have to have good security fences and you have to be careful of who you allow to store things in your storage. For instance, if people are storing Harley-Davidsons or parts for Honda Civics, people love to steal those things. Gives them an incentive to cut through your fence and try to break in and steal things. Yeah, so those are some of your problems. What I don’t see is what I see on television. When somebody leaves a unit, you know how you have the auctions? Yeah. People come to the auctions and people leave units, they leave me junk. So it costs me about 3 to $500 to get rid of their stuff. Yeah. I’ve never found a car boda or something amazing.
Georges El Masri [00:12:45] Yeah.
Matthew Fredrick [00:12:45] Like I see on television.
Georges El Masri [00:12:47] What about, like, if someone’s storing drugs or something like that? Do you ever come across a situation? How do you mitigate against that?
Matthew Fredrick [00:12:53] Yeah. So what we have is we tell our people that we work with the OP. No, we don’t. But we just tell them we work with the OPI, with their dog training system and we haven’t come on in every three months and just have a look at each of the units. So we tell them that. But we also have a policy that states that, you know, they can’t do that. And also to there’s things that you can’t store, like everybody wants to store their tires, they’re going to be careful because tires are flammable. So we have to be careful that people are not storing flammable things we can do or have checks on them. And we do have security cameras so we can see what people store. But again, if it’s drugs and things like that, you really you really don’t know. Yeah. See, if you had a house, you’re renting it to somebody. You really don’t know what they’re storing. Yeah, but we have our rules that if you break these rules, you’ll lose your deposit. Yeah. And if deposit is big enough, large enough, people tend to have an issue. One thing people don’t understand this, but with self-storage, people say, if I’m 100% rented, that’s great, I’m making maximum dollars. But you never want to be 100%. See, with real estate, you want all your apartments, rent it all your stores rent it. But with self-storage, you want about probably 94% rented because you always want to leave some room for somebody who wants to move from a small unit to a larger unit. If there’s no space to go to a large unit, they’ll go somewhere else. They’ll never come back. And if someone’s driving by and they want to come on in, if you’re fully rented all the time, you become irrelevant. Yeah. So it’s I want to be at 92% capacity and I make most of my money there and give leeway for people.
Georges El Masri [00:14:27] Yeah. What about increasing the rates? Are you able to do that at your discretion or do you have to follow certain rules, kind of like rent rules?
Matthew Fredrick [00:14:35] Well, that’s the good news. We can increase the rates to whatever we want because it’s pretty much commercial real estate and has commercial real estate. You have a contract and whatever your contract is, whether it’s a three month or six month or one year, you can do whatever you want with that. The same as if I had a strip plaza, which I do, and I have tenants in my strip plaza, I can pass everything on to them and increase the rents to whatever. Right one. So there’s no landlord board that determines that, right? The market determines that if you’re too expensive for what you’re offering. Now, obviously, if you can get heated and you can get second or third levels, that would be great. But the higher up you go, the less you can charge. And probably you have to have an elevated up there. There’s a cost to that as well.
Georges El Masri [00:15:16] That’s for sure. What about how do you maintain the 92 to 94% occupancy rate? How do you make sure that you don’t reach that 100%?
Matthew Fredrick [00:15:25] Well, we also have a waiting list. So and most of our self-storage, let’s say our facilities, we have a waiting list of about maybe 45 people waiting to get on. So we deliberately say that we just don’t have room and we have to do that because, again, we have to be considerate of our existing customers. We have to be able to allow them to grow up or grow down. Yeah. So generally we have a waiting list. I think most people have a waiting list. Yeah.
Georges El Masri [00:15:50] Okay. And I would assume you’re generating a pretty substantial cash flow to be to continue to do this, because if you’re making two, 300 bucks a month, it’s probably not worth it right now. Worth the time?
Matthew Fredrick [00:16:00] No, it’s heavy, heavy duty. Cash flow. Yeah. Yeah. Because keep in mind that my expenses are my property taxes, my insurance, just some lawn and snow, mostly snow removal, deicing and electrical, just for lights and simple things. Right. Security. There’s not a whole lot of maintenance. And, you know, I do see people hit the wall every now and then, but that’s not a lot of people if you put the proper bumpers in place so that it offends the tenants, you know, like, why do you have these big bumpers?
Georges El Masri [00:16:30] Yeah.
Matthew Fredrick [00:16:31] But for you.
Georges El Masri [00:16:33] Oh, okay. So you would say that your self-storage, self-storage strategy is better than multi-unit, in your opinion, you like it more. I know it’s personal preference. I’m just asking your preference.
Matthew Fredrick [00:16:45] Yes. So there’s more cash flow? Mm hmm. Double. Triple the cash flow, actually. Now for me, looking at my portfolio, my self-storage makes three times the cash flow, and it’s three times easier to run a maintain. My next level is my strip plazas, but my strip classes have 6 to 8 stores. So they’re small. Not the large malls or anything. Six or eight stores. And but you have to make sure you have what I call in our IP system, recession proof businesses, Internet proof businesses, and now pandemic proof businesses. Mm hmm. So restaurants are not pandemic proof businesses. Yeah. And a lot of strip plazas will have a restaurant anchoring it. I tend to want to stay away from that. Mm hmm. Now, it’s an that is, if I need to get my haircut, I can’t send my hair to China and get it cut and have it sent back to me. Could I get my hair cut there? Isn’t it? Won’t worry that although the pandemic did and they were recession proof businesses like variety stores and pizzas and law offices, as long as it has the right mix, that’s really great. Then my next love is the six or six units strip plaza with six apartments above it. Now, I have best of both worlds.
Georges El Masri [00:17:59] Yeah. So now you’re talking about mixed use buildings.
Matthew Fredrick [00:18:02] Mixed use buildings? Yeah. Then I go to multifamily now. Multifamily, six units. I don’t like to buy two reasons. Those are the entry level for people who have a bunch of houses are like, you know what? I have some houses. Why don’t I combine them one and I buy something in one spot? So now I have a six unit multifamily. The problem is because they cut their teeth on those. It’s like your first born. You learn to be a parent when they want to sell those things. Anybody who sells a six unit tends to want maybe 50% more than what it’s actually worth because they work so hard to learn the process. Mm hmm. And I’m not crazy about paying 50% more than the value just because somebody learned and had a hard time on it. Secondly, it’s still six units and not enough money for you to get a property manager. So you’re still managing it? Yeah. And then third, it’s the entry level, so you have a lot of competition. I like the 12 to 24 unit because it’s a sweet spot. Too big for the small guy. Too small for the big guy. Mm hmm. And it’s big enough to have a property manager take care of all your problems and maybe even a site supervisor. So it’s a great scenario, but you have to bring in JV partners in most cases for something like that because it’s more money.
Georges El Masri [00:19:16] Yeah. Yeah. Yeah. I’m kind of curious because again, like, you’re one of the first people that talks about strip malls and commercial and whatnot. So what is it? I know you kind of touched on the RFP system and pizza places. Do you ever have any medical building or any medical practices in your in your commercial stuff?
Matthew Fredrick [00:19:40] So medical retail, I call it. And yes, that’s great. Yeah. So those worked very well. What I like about the retail component is it’s pretty much two types of rent. I’m getting my net rent. Well, you have net and you have gross. GROSS means obviously they pay one price. I don’t like that. I like net. That’s where they pay price per square foot as a rent and then they pay price per TMI for taxes from meters and insurance. And what that means is if anything goes wrong, like if I have to, my taxes go up, whatever they are, whatever my insurance, whatever my maintenance, the roof falls in. Anything that goes wrong with that building, I can attribute that back to the tenant. Yeah, you can’t do that when it comes to multifamily. At the same time, I can set my rates. I can say I want this much money and every year I’m an increase of by this much. And if the person does not pay within 15 days now COVID was different, but normally in 15 days you can put a lock on that door. Yeah, that’s the person’s business. And lastly, I can provide them with just a shell and they will go and spend 100 to $200000 putting in all the leasehold improvements to improve that. And when they leave, they leave all those improvements. Yeah. So it’s a lot easier to rent than to deal with multifamily.
Georges El Masri [00:20:56] Yeah. Do you ever? Because I remember one time I was talking to someone and they had commercial units and they said they had so much turnover. And one of the units they had like ten different layers of flooring, that kind of thing. Have you ever had anything like that happen?
Matthew Fredrick [00:21:12] Yeah, I’ve seen that before. But you have to have obviously control of exactly what the person is doing to the property. So when someone comes in, they say they want to renovate a space. I have approval on exactly who they use, what they use and how they do it because it’s still my place. So, yes, it’s possible that if you lack control or have a system, you’re always going to lose. Right.
Georges El Masri [00:21:36] So what happens if the person can’t pay? Like, do you take personal guarantees from the person that’s renting the commercial space from you.
Matthew Fredrick [00:21:43] So the person can’t pay? I mean, in 15 days we can lock them out and within 60 days we can sell all their contents. But obviously it’s a business and someone’s life. So I could look at my lease and I can say, Are these good tenants? And what is the situation? Is this going to be a three month or six month tough time? And if it is, maybe I can adjust their rent down right now and then increase it in the future. So I might adjust the contract. Maybe they’re paying, let’s say, $10 per square foot for the next three years or $10 then ten, 15 and 11. Yeah, I might say tell you what, maybe you could do 850, eight, 50, eight, 50 and then 14, 14, 14 or something like that and just sit with them. Yeah. And then make it work for them. But they have to show me that they’re coming to the table and they’re doing their best.
Georges El Masri [00:22:29] Yeah, well, I’m sure there’s people that might be trying a new business. They might be starting something, and it may not go as planned. So in that situation, if they’re just not generate income enough to pay, pay off the lease and whatnot, what would you do in that case?
Matthew Fredrick [00:22:44] Well, two things. Number one, I have to say to myself, maybe these people are not good in business and maybe they shouldn’t be in that business. I may be failing, letting that person’s business die. It’s probably the best thing I’m doing for them. I used to watch American Idol and Simon Cowell was so cruel to people. But some people can’t sing and they spend so much time trying to do something they shouldn’t be doing. So sometimes I may just have to have them honor the contract because that’s a lesson. Yeah, whatever things go wrong for me, knowing I don’t get a break from the bank, I literally have to fulfill my commitments. Yeah. So sometimes I may hold them to the standard that they promised, and I may have to close them down. And that’s what I may do. But if it’s possible that it’s a situation that I think that these people can benefit from their business, then I can work a few things out with them. Yeah, I can reduce rent. I can also sometimes I might spend some time with them. I might commit one hour a week with a business license. I’ve had several restaurants. I’ve had a manufacturing company; I’ve had three wellness clinics. So because I’m a businessman, sometimes just sitting down with them and showing them how to do the run the business. Yeah, because they know their stuff. They may not know how to run the business.
Georges El Masri [00:23:54] Right. Right.
Matthew Fredrick [00:23:55] And I show them that. Yes.
Georges El Masri [00:23:57] Okay. Yeah. Yeah. I was just kind of curious about this whole thing because I’ve never really explored commercial as a as an option. But it’s good to know. And it sounds like you have a lot more control on the commercial side, which I already knew aside from commercial. So you touched on multi is there anything else that you you’ve done that you’ve enjoyed that you’ve had success with?
Matthew Fredrick [00:24:19] Well, in Belize right now, Bally’s Central America, I am building three storey houses out of concrete and rebar. So I’m enjoying building these properties and beliefs, which is something that I like. I’ve done a lot of studying on modular builds, so modular is not mobile. Mobile is a mobile home talking about building a property with modular components that are built in a factory, even up to a point of a three or four storey building. I haven’t done it yet, but I have, as a developer, have built 113 house subdivisions. I’ve got 35 house subdivisions. I focus on semis. I like a semi better than a. Single house. I did one big basement. I have one big roof. I have one common wall and I’m selling two houses. So I like the semi. Yeah. At the same time, I build four storey, three, two, four storey, 50 unit condo buildings, let’s say from 30 to 50 units. And I build with wood so that I like doing I haven’t done that in the last few years cause it’s been interesting for me, but I would probably get back into building but doing something called modular building because it’s done a lot faster.
Georges El Masri [00:25:26] Are you talking about during that here or in Bali? So here.
Matthew Fredrick [00:25:29] Oh, okay. In Canada, yeah.
Georges El Masri [00:25:30] Yeah.
Matthew Fredrick [00:25:31] Now in Belize, it’s a great place to build. At the same time, they’re building regulations a whole lot different from here. There are literally no regulations. We literally have to set one. I shouldn’t say that, but we literally have to set the standard down there in how to do things. And although there are regulations that monitor the same where they are here.
Georges El Masri [00:25:51] What made you want to start building in Belize?
Matthew Fredrick [00:25:55] Well, but back in 2007, I took six months off. I talked to about four or five friends. I says, you know what, every single one of you, me, $3,000 each. They say, What for? I go, I’m going to go spend six months traveling Central America, Honduras, Nicaragua, Panama, Costa Rica, even Belize, Southern Mexico. I spent six months and I’m going to spend about 3 to 4 weeks in every area. Immerse myself, wake up, talk to the old timer at the local coffee shop and understand the culture of the place. And I said, After six months, I’m going to let you know where you should be investing. And Belize stood up. So I never even knew what believes was, but I liked it because it was pretty much the same parliamentary system as we have here. We have a Westminister by criminal system here in Canada. They have that there are two same law system, same common law system for property. There’s so many things I’ve liked about it. I thought, okay, you know what? I’m going to start investing there. And for these friends that paid me this money to go on vacation because they couldn’t and I could, and we ended up getting a 27 unit subdivision down there that we actually ended up building. And that’s really why I chose Belize. It was it was there and I liked it. It stood up. Yeah. And so it wasn’t a I knew Belize was a place to go and I like the fact that it was English speaking that all documentation is in English today. I’m trying to learn Spanish. Yeah, but. But in most places it’s Spanish, right?
Georges El Masri [00:27:24] Yeah, yeah, yeah. That makes sense. So what’s your plan with these places that you’re building and beliefs? Are you going to hold on to them? Are you going to rent them out? Sell them?
Matthew Fredrick [00:27:33] Well, right now what we’re doing is we’re building these three story properties. Each story, it’s about a thousand square foot per story. And each story, we’re going to rent the main floor to what we call ex-patriots, people who have retired. They’re from Australia, from England, from Canada or the U.S. They’re going to be there full time for two years now. You won’t make as much money. If it was Airbnb, you’d make more money on that main floor. But we want somebody there consistently all the time. And then the second and third floor. We might Airbnb be it the third floor, we may use it for our friends and family. Also, we’re going to build a few of those, really have two of them on the go. And now we have a contract to build three executive homes for some guys from Texas and from Arizona.
Georges El Masri [00:28:19] Yeah, well, it sounds like you’ve already you like you already own a lot of real estate. You have cashflow coming in from your from your different projects and whatnot. Why do you continue to do this? Why don’t you just take a break, relax, go to the beach, enjoy life, and not worry about working or building or doing anything.
Matthew Fredrick [00:28:36] Well, the good news is I that’s what I do. So I start really working full time at age 50. I’m 57 now and this interview today is pretty much the first thing I’ve done. First day I’ve actually put a suit on since January 1st. So you’ve brought me out of my retirement. But ultimately I’m a person that when I’m ready to go, when I’m like 95 or 98, I don’t want to sit there and think, Man, I’m going to die. I want to say, I’m ready to die. Please, I am done. This caterpillar means to be a butterfly. Yeah. I’m not a person for sitting around on the beach. I’m from the Caribbean. I already have color. I don’t need to get a tan. Yeah, so I find that. And I remember I was in Jamaica, I spent two weeks there, ended up creating a little bus company. So after a week on the beach, I’m bored out of my mind. I ended up hiring a guy to I rent them the whole day as a taxi. And after I said to him, Why don’t you have a bus company, a minibus company? And he goes, I don’t have the money. I says, Let’s talk about it. So for me, it’s like doing stuff that’s the just the heat for me and that’s the juice. So I really can’t sit around doing nothing and I like developing myself and traveling as well. So I like the best of both worlds.
Georges El Masri [00:29:49] All right. So I’ve heard that before. You’re not the first person to say that. You can’t just sit around and do nothing. I understand, because obviously you have a work gene I got. True to where you are today. You wouldn’t you wouldn’t have all these properties and everything if you wanted to live back all your life. So it seems like a very common thing and it’s good. Like if once you reach a certain point, you have the cash flow coming in, your life changes and you don’t have to work anymore. But you do it because you can. And I’m sure you know. Is there anything that still stresses you out these days or are you just relaxed and enjoying life and just doing what you love to do?
Matthew Fredrick [00:30:24] Well, it all Real Estate. The problem is that people have problem, whether it’s a tenant, even though I have property managers, whether it’s the property manager themselves, whether it’s the contractor, even when I’m on a job site, I’m a grown man and I work with grown men and women, but I have to deal with the guy who thinks he’s God talking to the electrician, who thinks they’re God talking to the plumber who thinks they’re God. Now, once I’m dealing with these three people, then I have to deal with all the trades below them. Literally blame these three guys for all their problems. So life imitates high school. So even though my real estate is great and I have a great system, every now and then I get phone calls and it’s not really dealing with some of the tougher problems. It’s dealing with the humanity problems. Like I have some business partners who invest with me and once they get into actually invest in themselves, they might be a couple who might buy a property and they want to invest in that property and they might do something together. And for instance, you might have a male and female, and sometimes the male does more of the physical work and sometimes the female does a lot more the logistics. The problem here is a male, and it can be either way. But guy goes to the job site, he spends a whole day. He can see what he just accomplished. I just finished the room, but his wife is doing 15 things that take ten different parts to do. So he comes home and says, Man, I had a great day. What did you do and what did you complete? And she says, Well, I didn’t complete anything. And he’s like, Oh my God, you know, can you get anything done? So she’s feeling as though we’re sick and I can’t get anything done. I feel not accomplished. He’s seeing accomplishments every day and he doesn’t understand what I’m going through. So what I’m saying is I’m always dealing with relationships and personalities. Yeah, he’s got to understand that she’s gotten things that take ten parts each. Yeah, you know what I’m saying?
Georges El Masri [00:32:15] Yeah, for sure.
Matthew Fredrick [00:32:16] So from the dealing with the job site people, my general contractor, we’re the site supervisor. And then the trades we try to go through the site supervisor over them to go to general contractor and then create issues. Real estate is still a people problem.
Georges El Masri [00:32:32] Hundred percent. Yeah. You mentioned a couple times systems you mentioned in the beginning and throat. Can you tell us a bit about your systems? Maybe, maybe when it comes to multi-unit investing? Because I think most of the listeners are probably interested in that.
Matthew Fredrick [00:32:49] Okay. Sure. Now, systems come in two different forms, a system of how to do something and a system of things that you have, let’s say, being done. Mm hmm. So if I were to buy a multifamily building, my main concern is not the building. My main concern is where am I going to get the money to fund this thing? It’s a two or $3 million project or building or five below a building. Where am I gonna get that money? So if I don’t understand the wealthy mindset, I might tell somebody, Hey, this has got great cash flow, it’s got great appreciation, great neighborhood. I have good experience. You’re going to make money here. Well, that’s not talking to somebody who has money. Someone who has money. I have to have a system where I show them how I’m going to protect them. Liability wise, you invest in my project, I’m going to protect you. Liability wise, so you don’t get sued. I’ll tell you something, because I make more money today. Lawsuits scare me more than no cash flow. Because when you have money, you’re in a 10th floor, people come after you. So I need to show my investor how I’m going to protect them from liability. Secondly, I don’t have to show them how they actually make money with the tax system. In other words, what is my tax system? My liability protection system. My tax system? Because if you make a lot of money but you lose all the taxes, you haven’t got any money at all, then I have to show them my system of how I literally give them the ability to jump out. In other words, they can leave at this point. Leave at this point, leave at that point. It’s like an airplane. People get you get to hear the folks tell them emergency exits. But those things are only good on the runway. Those things are not good at 50,000 feet. So people need exits all the way along the way. At the same time, I have to show them all the other systems I have in place in case I’m not there. So once I put those systems in place, then I can say I’ve earned the right to say to them, okay. And now I’ll show that you can make cash flow and appreciation and so and so forth. So systems are important to be able to show somebody that what you have is going to protect them in a number of ways. I’ve only given you three of, let’s say, 12 things. And then, of course, once you have a property, you know, itself, it has systems just like a car, right? A car’s got a brake system. Steering system. It’s got a gasoline system. So you’re building has a heating system, cooling system, electrical system, plumbing system. And then you have to create a protocol to manage each of those systems and not wait until they break. What do I do to preempt it? To preempt the breaking of it. Mm hmm. So that’s really where the systems come in place and the people to come in and deal with those things. So if had to sit there and plan out, what can go wrong with the heating system in this building and plan out every single step of the way? Who am I going to call? When are they going to be called? What it’s going to cost me. At the same time, what should I do not to get that problem?
Georges El Masri [00:35:43] Yeah.
Matthew Fredrick [00:35:44] And once that system is in place, then I look at something else. The roof system? Mm hmm. So you’ve got to break everything down like a car, like. Like the human body. Yeah.
Georges El Masri [00:35:52] Yeah, that’s pretty cool. Everything you’re doing with the system, which is really a great way to scale, because, you know, if you’re trying to figure everything out on the fly, it’s not as consistent and easy to do so. That’s pretty cool, I guess. The next thing I want to ask you about is what has you excited over the next few months? What are you looking forward to?
Matthew Fredrick [00:36:15] One thing I mentioned is that I do have that military experience because I was in the reserves for the time I was 17. At the time I was 27. The Army Reserves is all about systems, right? My excitement is I’m actually looking at the U.S. right now, although I have bought in Arizona back in 2007 when everybody was running away from the U.S., I went down there about three properties in Scottsdale, and I rent them out as executive rentals to corporations, which means I provide the chef, I provide the fitness worker, I provide the missus legal MREs, I provide the lawn, I provide the driver, all local businesses packaged to corporations so that their executives, when they fly in, don’t have to go to hotels. They can stay at these properties. And back in 2000, I bought properties in Cape Coral, Florida, and those were great properties, but I hadn’t looked at the U.S. since then. But today, because prices are so expensive, even something as simple as Hamilton, Ontario, a dinky house can go for $91,000. All of a sudden, if you go to the Fort Erie area of Buffalo, you can at 22 hours’ drive. You can buy a property for $250,000 Canadian. You’re still paying, of course, $0.30 more in the dollar, but it doesn’t matter anymore. And on top of it all, even if you were to do a withholding tax of 30% or even file tax returns and pay 15%, you can buy four houses and make four times the money now in the U.S. than you can in a simple town like Hamilton.
Georges El Masri [00:37:45] Mm hmm.
Matthew Fredrick [00:37:45] So I’ve been looking at that market just out of curiosity, I’ve been investigating it in my in my last few months of retirement.
Georges El Masri [00:37:54] Yeah.
Matthew Fredrick [00:37:54] And I might look into that a little bit more details. But I do love Canada. This is a great place to invest. I always invest here, but because the prices are quite high now, it doesn’t really matter if I have to drive an hour and a half a day. You’re driving 3 hours to get a little price here.
Georges El Masri [00:38:11] Yeah, for sure. Oh, cool. Yeah, that’s. That’s all interesting stuff. Yeah. You’ve explored a lot of different markets and whatnot, and it’s cool to see that you’re always looking for opportunities to finish things off. How do people reach you and what services, if anything, are you providing these days?
Matthew Fredrick [00:38:27] Okay. I will say this, though, that although my story sounds amazing, I’ve had a large drawbacks. I’ve made mistakes, I’ve lost money, I’ve done a lot of bonehead, stupid things. So everything looks good on the surface. But it’s hard to be successful at real estate investing. And there’s a lot of people issues you have to deal with for me to reach me. You can always get me at my website. It’s six. Six letters are c s a welcome. You can always reach me at my email. My first name is Matthew with one t so m83 w dot f at r cc well dot com contact me. I do coach people more one on one. I don’t spend a lot of time coaching the masses, but if someone’s serious and interesting in getting into self-storage or multifamily or upgrading their system, I will pick people on a per person basis because once you get to a certain stage in life, you really only want to work with people who are motivated and people who want to get something done. I don’t need to, you know, be a, you know, like a babysitter to people. Yeah. So it hurts my head. So literally, I will work with people because I was a teacher. I still like teaching.
Georges El Masri [00:39:39] Yeah.
Matthew Fredrick [00:39:39] Yeah.
Georges El Masri [00:39:40] Well, that’s awesome. I thank you so much for coming by all the way from Ancaster today. I don’t know if you’re staying in your condo in Vaughan, but it’s great to have you here and thank you for sharing your story.
Matthew Fredrick [00:39:50] Yeah, it’s really great to be here. I really appreciate you.
Georges El Masri [00:39:54] Thanks for listening to this episode. Your support is. Really appreciate it. And if you can share this with a friend or family member, that might benefit from the information. Remember, our goal is to motivate and inspire others to take action and to build wealth and to become well-off. Enjoy the rest of your day.