Table of Contents - Small Multi Sweet Spot with Georges El Masri
Dave Debeau [00:00:10] Hi Everyone, Dave Debeau here with another episode of the Property Profits Real Estate podcast today, zooming in from beautiful Oakville, Ontario, we've got George Elmasry. How are you doing today, George?
Georges El Masri [00:00:19] I'm doing very well, thank you very much.
Dave Debeau [00:00:22] All right. And I'm embarrassed to say this, but I already chatted with George for about seven minutes, having a lovely discussion before I realized I didn't press record. So we're doing this again. So, George, I appreciate your patience. And let's let's jump in with the the question that I start with, and that is the fact that you've got an interesting business model. You're doing a lot of different stuff. You're a realtor, you're a podcast, and you're a real estate entrepreneur. You're an actual hands on investor. And what I found fascinating about looking into what you're up to is the asset class that you're focusing on. So you're focusing on small multifamily properties between your sweet spot as being between four and six doors per property. You're doing that in the Golden Horseshoe area in Ontario. So, George, why don't you what do we start out by telling us? Why do you like that asset class?
Georges El Masri [00:01:21] Yeah, well, we did it in seven minutes earlier. We'll try to do in three and a half now. Yeah. So I appreciate the opportunities when it comes to multi units or small multis because of the the vacancy basically. And when tenants don't pay the fact that you still have enough income for the property to support itself. So what I what I was explaining in the past was that the first property I bought was a single family home. I had some troubles with the tenants. They were often late on their payments and I was covering their mortgage or starting their rental with my own personal income at that time. And that just causes extra stress and whatnot. So I just love the idea that I can have a property for one person is not paying. I have three or four other people that are and I won't have any issues paying the mortgage at the end of the month.
Dave Debeau [00:02:08] Right. So you've got one property and multiple income sources. You have a vacancy, you have a challenge with one tenant. The other ones are going to keep you afloat. You aren't having to go dip into your own personal savings to to augment that property. Make sense. All right. So four to six units, interesting area to focus on. And I like it because, again, a lot of people that I've interviewed, they're either focusing on single family homes, doing a bunch of flips with them or wholesaling, or they're doing the bird strategy, that sort of thing. Or we get other people that are doing multifamily properties, but they're focusing on much larger properties and trying to get into the really, really big deals. You have found your sweet spot in the four to six units. So first thing is we understand why. But do you also find that there is a competitive advantage by focusing on that size of a property you're not competing with the big guns? Would that be fair to say?
Georges El Masri [00:03:06] That's that's a good point. Yeah, I never really thought about that. I'm not competing with those big guys. I'm not a big guy myself right now for it to be competing with that type of person. But I do like the fact that I find not many people know how to evaluate four to six unit or multi unit property in general. I think most people, most novice investors are intermediate investors are comfortable with duplexes, maybe a triplex. But yeah, I find that I do have an advantage in the sense that I understand how to evaluate them and I know what it takes to get them and how to manage them. So it definitely gives me a bit of an advantage against others.
Dave Debeau [00:03:45] Yeah, it makes sense because you're it's a little bit too big for the little guys and it's too small for the really big guys. So that's yeah. That's kind of a nice spot to be in. All right. So George, explain to me again, if you don't mind, when it comes to the size of properties, you can kind of depending on how many doors, you know, you can go residential or commercial financing. Yes. I mean, that you focus on residential financing, even if it's six units, because five units and up you could get commercial financing. Why do you prefer the residential finance?
Georges El Masri [00:04:16] OK, so the first thing is you get a more favorable interest rate. It's easier to to qualify. You don't have to do a phase one environmental. You don't have to be for all the broker fees and all that. You're just getting it through through the bank. So the costs are lower. The the lower fees are the same as a typical mortgage. So, yeah, for that reason, it's just basically cheaper. And the other part that I really like about it is that because I own a five unit property, if in the future I decide that I want to refinance under a commercial mortgage, I have that flexibility. It opens more doors for me that way.
Dave Debeau [00:04:50] So a lot of people like the idea of commercial financing for multifamily properties because the financing is based a lot more on the profitability of the property versus the financial status. Of the borrower versus when you're getting a residential mortgage, they're really just drilling you about, hey, it's not based on so much the cash flow of the property or the profitability of the property. It's how much money is George making and can he keep the sucker afloat? So have you found that that limits how many properties you can qualify for?
Georges El Masri [00:05:27] Absolutely. Every everybody's going to hit a limit at some point, and there are ways to work around it. At the end of the day, you're probably going to need help at some point in your career. You're going to have to work with somebody, a partner. You're going to have to raise capital somewhere. But for the time being, there is a way to to finance these things. So we're working on it, but we're always open to other options to very cool.
Dave Debeau [00:05:48] So are you currently working with investor partners or joint venture partners?
Georges El Masri [00:05:52] Yes, we are. So my fiancee and I, we actually got a four plex recently. We did that with a partner. So, yeah, we're working on always working on something new. There's always opportunities and we're always looking.
Dave Debeau [00:06:04] Most definitely. So as a realtor, you've kind of got a bit of an unfair advantage or competitive advantage compared to a non realtor investor when it comes to finding deals. But I'm sure you're not finding them all on the MLS. What are some of the ways that you find these kind of properties?
Georges El Masri [00:06:23] Yeah, I love looking for off market opportunities. And part of that is because if you can get them for a bit of a discount, let's say that you don't charge commission or whatever you get, get it for a discount. You have so much more flexibility to refinance later on or even right after closing if you get a private mortgage or something, and making sure that your down payments a little bit lower in that case or whatever, whatever the case might be. So what I'm doing, I'm constantly looking on Kagi. I'm looking we have an exclusive network. So as part of being a realtor, I have access to exclusive listings from other brokerages. And I often look for opportunities there
Dave Debeau [00:07:01] because what I what is an exclusive listing is that I've heard of is not like a pocket listing is.
Georges El Masri [00:07:07] Yeah, pretty much. Yeah. So an exclusive listing is just one that's not on the MLS. But a realtor signed a listing agreement with a seller saying that I have the right to market this to my colleagues and to my clients.
Dave Debeau [00:07:19] So why would a seller want to do that versus having it on the MLS just as well?
Georges El Masri [00:07:24] For example, during covid, some people may not want 15, 20 people walking through their home. So they're going to say, OK, if you have a buyer, bring them over. I'm OK with that. So that could be an example of why somebody may not want to put it on the MLS.
Dave Debeau [00:07:38] Makes sense. I never thought of it that way. Good. All right. So you've got access to these exclusive listings. Yeah, that's another big advantage. And calling Kagi, what else do you do that tends to work well for you?
Georges El Masri [00:07:51] I do marketing campaigns. I will send out like a little fliers and stuff like that. I reach out to my network. I've got them on wholesaler's lists.
Dave Debeau [00:08:01] Interesting. So when are you sending out fliers? Do you like blanket entire neighborhoods? Are you your rightful approach? Just the four to six unit type properties?
Georges El Masri [00:08:13] Yeah, I try to focus on neighborhoods that have more of those four to six unit properties. Why should I waste my energy on properties that I'm not interested in? So definitely more. More so on four to six units.
Dave Debeau [00:08:25] So are you actually physically handing out fliers or are you saying you might be a candidate post? But what do you mean
Georges El Masri [00:08:31] through Canada Post or with stamps or whatever?
Dave Debeau [00:08:34] Cool. So so how do you find out who the. Because typically I would guess most four to six unit building is, the owner isn't necessarily living in the building. So how do you how do you get that letter to the actual owner? Do you do some research ahead of time?
Georges El Masri [00:08:49] Yeah. You could maybe Google the address or sometimes you just address it to the homeowner. OK, so it doesn't always work. I'm not saying that you get one hundred percent response from from that mailer, but you would
Dave Debeau [00:09:02] be a multibillionaire if you got that.
Georges El Masri [00:09:05] Yeah, exactly. Exactly. So you just got to try it and see what what works. There is all these different methods that you have to try and and you find opportunities in different ways.
Dave Debeau [00:09:14] Yeah, definitely. In the more different things that you do on a consistent basis, that's how you start to create that snowball effect. It's very, very cool. All right. So, George, if somebody is interested in and starting to do this, these kind of deals. What would you suggest to those people as far as the first steps they should be taking or books they could be reading or courses they could be taking? Any tips for folks who say, hey, I kind of like this idea, I'd like to do it in my area?
Georges El Masri [00:09:45] Yeah, well, I think you need help. I can say that the reason that I've become this comfortable or even that I dove into four to six units is because I hired a coach and I got help. And that's not the only way to do it. Obviously, you can read books, you can have a mentor, you can have a partner, somebody who will do do the deal, show you how it's done. There's a bunch of different ways to do it. But I really think that you need help. It's hard to to grow quickly if you're trying to do everything on your own.
Dave Debeau [00:10:14] Very, very wise words. I agree with you 100 percent. So, yeah, just full disclosure, George doesn't offer any coaching, so he's not going to try to get you in as a as a coaching cloud or anything like that. Very good advice. Yeah. And I like that idea. I like the idea of both actually coach getting some coaching or mentoring or training from somebody who's actually doing what you want to do. And then if you can partner up with, especially for your first year, if you can go on board as the perhaps the money partner with an active person. But part of the deal is that you get to tag along on their coattails and watch what they're doing and ask questions and and get a good idea of how that works. That's a massive shortcut as well. Do you have any of your joint venture partners that are doing that with you, George?
Georges El Masri [00:10:59] Well, at this point, I think the partners that we're working with are more so they don't really know how to do a deal like this. They don't really want to manage it either. They don't want to be hassle. Yeah, they have full time jobs and whatnot. So those are more so the partners that we have. But I often have people reach out to me and say, hey, if we did do something together, would you show me how you do it? Would you would you walk me through or are you just going to kind of do it yourself and you just want me to be passive? So I'm always open to either one vertical.
Dave Debeau [00:11:29] So when it comes to finding investors and joint venture partners, what are some of the things that you find are working well for you?
Georges El Masri [00:11:38] Yeah, well, I don't know if, you know, Russell Wescott
Dave Debeau [00:11:41] doesn't play well.
Georges El Masri [00:11:42] Yeah, yeah. The guy. So I had him on my podcast recently and we were kind of doing like a bit of a role play. Well, while we were on there. And he basically asked me what my personal goals are, what my hobbies are, what I enjoy doing, and to kind of something's up. He always brought back our partnership to remind me of what I'm trying to achieve and how he's going to help me achieve that through our partnership. So I thought that that was awesome. I never really thought about it that way. I always thought about I can help you with cash flow or equity or I can help you save for retirement. But I never thought, like, hey, let me find out what your personal goals are, what you like, and I'll help you get there.
Dave Debeau [00:12:23] That's that's an amazing mindshift, isn't it?
Georges El Masri [00:12:27] It is definitely.
Dave Debeau [00:12:28] This is a very, very sharp guy, that's for sure. Yeah. And when it comes to actually shaking the tree and finding these investor partners, what are you doing that's that's working well for you? How do you how do you get them interested?
Georges El Masri [00:12:42] Yeah. So I'm always asking. So any time that I see somebody who's interested in investing but they don't know how or they're afraid, I always bring it up. There is probably a point where I was maybe unsure of that or maybe I didn't have the confidence to. But that's starting to change quite a bit. Now, I follow up with people so I don't just ask somebody once and if they say no, never talk to them again, I'll I'll check in with them again in a couple of months or whatever. So, yeah, I was always on the lookout, always staying in touch and talking to people.
Dave Debeau [00:13:11] Makes sense. All right. And George, I know you've got a podcast. Why don't you tell us a little bit about your podcast and why did you get it started and what's what kind of impact has that had on you for your businesses?
Georges El Masri [00:13:24] Yeah, so it's the well off podcast a lot of time. Yeah. Yeah. Thanks. Yeah. So it's on the Apple platform, Spotify, all that. So why, why I started. I have a friend who is also an investor and a realtor and he had a podcast and I just kind of looked up to him because he's accomplished so much and I thought, OK, he's able to help all these people. I want to do something similar. So I figured it's an opportunity to share a good message and I get to pick people's brains, which is awesome. So a lot of people that I probably never would have had an opportunity to sit down with and have a conversation with are open to it. When you say I'm recording a podcast, so I like that, too.
Dave Debeau [00:14:03] Yeah. Smart stuff. Awesome. Time flies are having fun, my friend. So if people want to find out more about you and what you're up to, where should
Georges El Masri [00:14:11] you could go to Well-off Dossie or if you want to check out the podcast well off podcast dossie.
Dave Debeau [00:14:18] Beautiful, beautiful, beautiful choice of nice short you know, way better that way. Shorter than property profits. Real Estate Podcast
Georges El Masri [00:14:29] PoshTots.
Dave Debeau [00:14:31] Thank you so much for being on my podcast, and I appreciate it.
Georges El Masri [00:14:34] Thanks, Dave. Appreciate you having me on.
Dave Debeau [00:14:36] All right, everybody, take care. We'll talk to you on the next episode. Bye bye. Well, hey there. Thanks for tuning into the Property Profits podcast. If you like this episode, that's great. Please go ahead and subscribe on iTunes. Give us a good review. That would be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You can get a PDF version at investor attraction book, dot com again, investor attraction book, dot com ticker.