Microphone 1 2

Podcast Transcription

Sandy Mackay [00:00:31] Breakthrough Real Estate Investing Podcast Episode 102.

Announcer [00:00:36] If you are looking for the skills and tools to succeed in real estate investing, you’ve come to the right place. This show is about breaking through barriers, breaking through limiting beliefs and breaking through to the life that you want to live through the power of real estate investing. This is the Breakthrough Real Estate Investing podcast, and now here are your hosts Rob Break and Sandy MacKay.

Rob Break [00:01:10] Welcome everyone, and thanks for joining us again. Hey, Sandy, how are you?

Sandy Mackay [00:01:14] Hey, Rob, I’m awesome yourself.

Rob Break [00:01:16] Very, very good. I’m looking forward to this interview going to be good.

Sandy Mackay [00:01:22] You got a great guest standing by. We’re excited. We’ll get to that in just a minute. Start to the housekeeping items again. As always, want to encourage everyone to go over to our website breakthrough REIT podcast dossier and you can listen to every episode. You can comment on the episodes. You can download our free report there. The Ultimate Strategy for Building Wealth the Real Estates, which will also get you on our email lists and get you updates on all of our episodes. All of our events, street tours, all bonds, a whole bunch of stuff, a whole bunch of out of value there that you don’t want to miss out on. So go over and get on the list there and get that free report at the same time.

Rob Break [00:01:58] It’s pretty much anything you could possibly want to know about us.

Sandy Mackay [00:02:02] A lot. A lot.

Rob Break [00:02:04] Yeah, Sandy writes on there. Whatever he is, getting dressed in that day will be on their

Sandy Mackay [00:02:10] color socks on the day and things like that.

Rob Break [00:02:12] How are your cats feeling? Yeah, I think I’m feeling right now I was here in our Meow or him meow a couple of minutes ago.

Sandy Mackay [00:02:19] Nah, she’s gone. She’s gone.

Rob Break [00:02:21] He’s got not going to be rudely interrupting us. Hope not. So how are things?

Sandy Mackay [00:02:30] Things are fantastic. You know, we’re getting in the prime time to be buying properties right end of the year. So I think that’s the that’s the message we’re putting out there to our clients and ourselves and everyone else to talk to us. It’s a good time to buy it. So end of the year, people are asleep at the wheel. Busy with other things and we’ve noticed in the years past there’s little less competition, some opportunities to be had. So we’re going to we’re going to focus on buying a few things before the end of the year. How about yourself?

Rob Break [00:02:58] Yeah, I find the same thing too. And November’s always my busiest month. Whether it’s well, it must be, it must be just that market, right? Or must be that people are saying, OK, if I’m going to buy my property this year needs to be now because Christmas is coming. And, you know, as soon as December hits, things slow down quite a bit. So yeah, it’s definitely prime buying time in our markets as well.

Sandy Mackay [00:03:22] Mm-Hmm. The Christmas music started to play. The snow is starting to show up here and there, and people are going to people are not going to be in the house buy mode for the most part.

Rob Break [00:03:32] So my wife is already decorating for Christmas. Yeah, literally like three days after Halloween or something like that. I know right now. And yeah, there’s already Christmas stuff going up to get us all into the spirit. So I don’t mind. One thing I wanted to one last thing I want to mention, too, is that people should hop on over to iTunes as well and leave us a rating and review five-star reviews. Always help us out a lot. Get the show recognized and an out there for more people to consume and be able to learn from all of the interesting, exciting, knowledgeable guests that we have on, just like the one that we have today. What a Segway. Yeah, you go this here with us. How are you, Brady?

Brady MacDonald [00:04:18] I’m doing great guys. Thanks a lot for having me.

Sandy Mackay [00:04:21] And so Brady and his wife, Christy, they’ve they sort of became real estate investing in 2014. And at that point, they realized, you know, the wealth and freedom that could be had in real estate investing. And by mid-2018, they had purchased and renovated over 75 properties. So it took some pretty heavy action there. And throughout the journey, they created and perfected strategies and systems to make renovations. Co-venture partnerships and property management run smoothly and became real estate. Investing has won a bunch of awards. 2015 2017 2018 Rains Top Player of the Year award 2017 There were chain real estate wealth joint Venture of the Year Award and 2017 Rain Co-venture of the Year Award and Promise Rather than never. Those are some of the big ones. And so congrats on those accolades and welcome to the show, Brady. Glad to have you on.

Brady MacDonald [00:05:16] Yeah, thanks a lot, guys. I’m looking forward to chat with you guys and sharing some, well, some knowledge.

Rob Break [00:05:22] Yeah, Brady, thanks for being here. Appreciate it. I guess that start the way we always do. Tell us how you got started in real estate investing.

Brady MacDonald [00:05:30] Yeah. So Sandy was saying, we started. We actually met a guy, and a lot of people will know Andrew Brennan. And so my wife’s a real estate appraiser. I was working for Hydro One at the time, so I was actually teaching the guys how to climb trees, climb and rope trees around the hydro lines. So we were looking for something more and just hoping that Christie was doing an appraisal for Andrew and didn’t know him or know of him. And she’s like, oh, hey, I recognize you. What do you do? And he said, well, you know, full time real estate investor and I’ve got. She’s like, well, how many properties avenues like he said he had. Turns out he had eight doors, right? And he’s like, Yeah, I bought six of those this year, and it was only June. And she’s like, mind blown. She’s like, my husband’s going to love to talk to you. So she came in the car, told me about this. I wrote down literally on my notepad. You know, forty-four duplexes Typekit three hundred thousand equals this. How much cash, how much mortgage paid out, how much appreciation this guy is making, like he’s making almost a million bucks a year. So that’s when the light went off. And so that was in 2014. We ended up meeting with Andrew realized that we didn’t know anything about real estate investing. Meanwhile, we had two income properties kind of by accident, but so we really saw the light and started educating ourselves listening to your podcast. This was four or five years ago reading all the real estate investing in Canada books. Kristy joined Raine. We we’re doing all the meet ups and in 15 we did one property kind of figured out a strategy that was to buy, convert it to a duplex or a second suite, refinance it and then rent it out. So that first property went fairly well, and that was kind of like, but that’s when we decided that that was our strategy. Actually, that was in 14. Sorry. And then, yeah, from there we just basically tried to scale that strategy as much as we could over the years. But yeah, that’s ultimately have got started, which was basically one conversation. I made a post about that today. One conversation literally changed their life.

Sandy Mackay [00:07:27] Mm hmm. Cool. And Andrew’s a friend of the show houseguest early on. Rob? Well, maybe the first 10.

Rob Break [00:07:35] Yeah, it was one of the first ones, and we do have plans to have him on again. So we should be hearing from him again soon.

Brady MacDonald [00:07:42] Yeah.

Sandy Mackay [00:07:44] So what’s what strategies to employ and why? You touched on it? Let’s dove deeper on that.

Brady MacDonald [00:07:50] Yeah. So we stick stuck to the basics or stuck to our strategy. Our theory is stick to one strategy, perfect that and especially at the start. So that’s what we’ve done. So we primarily by single family homes, convert them to legal second suites, refinance them and then rent them in. And obviously, throughout the years, depending on cashflow capital requirements, you know, to continue to continue to buy or just personal cashflow. We’ve had to sell some. So, you know, depending on the year, some years we sold a lot more than others, but generally they’re all turnkey. Legal second suites was what we were creating. Now we are kind of again looking to scale, and one way we can do that is still to renovate, but to add more units to a building. So we’re buying some stuff that we’re converting into triplexes and for Plex’s, as well as buying some five-to-10-unit buildings where we’re not necessarily creating them, but we are doing cash for keys to deal with the tenants, renovating all the units in the entire building, getting top rents and then go back to the bank with the higher net operating income and to refinance that way to pull out of the equity. So those are primarily the two strategies that we’ve used. We’ve done a couple of single-family flips as kind of an alternative option when things didn’t go as planned. But yeah, that’s those are the strategies we generally employ.

Rob Break [00:09:15] So quickly, let’s go off on a tangent there. You said you turn to a flip and things didn’t go as planned. So tell us about those things that didn’t go as planned and why the strategy changed along with it.

Brady MacDonald [00:09:25] Yeah. So it was one was actually more recent. We literally closed on it a week and a half ago, so it was a property in very near the lake and it was a great I was really excited about it. Neal, like literally a block away from the like two-minute walk from Lake. So little, you know, again, you’re always going to learn something, no matter how many properties you’ve done. I went to apply for the building permit, submitted the drawings. They said, OK, well, because it’s in the flood, the floodplain, the Lake Simcoe Conservation Authority’s floodplain, you all you need to get their blessing first. So I applied to them on the drawings. They saw a second unit entrance and she’s the lady said, oh, by the way, if you plan to put a second suite in there, it’s not permitted. And I’m like, oh man, like, you know, you just try to take the second unit off the drawing and resubmit it. But you know, I figured chances are they’re going to catch us. So we’re just like, no, what were our exit strategies again? Well, it’s kind of one of the things you want to try to think about. Any time is if plans don’t go as planned. What other options do you have? So the only other option for this property was to convert it to a while, just turn it into a single-family flat. So that stand up, that’s what we ended up doing. Generally, a single-family flip costs us a lot more to renovate than a duplex conversion because the finishes generally need to be a little bit nicer. And at the end of the day, we like it profited like $15000, and it took three months longer than it should over four months. So all in all, wasn’t a loss, but nonetheless a learning experience, for sure.

Rob Break [00:11:06] Yeah. And a lot of municipalities do have like a GIS tool where you can go on now. You’re probably aware of it now. I am, yeah, a flood plain because that’s something that’ll stop anybody in their tracks quicker than quicker than anything else. Because, yeah, conservation authority. You know, I had a friend of mine who bought something, and the way that it worked around here was that up until a certain point, the applications never went to the conservation authority. And then one day they decided, you know what? That’s going to be part of our process. We’re going to send all the applications through the conservation authority, and they’re going to have the final say on it. Well, when that started happening, there was a lot of applications that were coming back, you know? And so the initial initially you try to fight it, right? And, you know, attempts to do that have proven futile. Yeah. So I’ve got to say it’s it. It’s not even worth your time to look at anything inside flood plains. Very important thing to take into account when buying something.

Brady MacDonald [00:12:16] Yeah, absolutely.

Sandy Mackay [00:12:19] And Brady, do you focus? Is it all in one, all in Barrie? Is it all around Barrie? Where do you actually invest with locations?

Brady MacDonald [00:12:26] So we focus a lot on Barrie. Obviously, it’s the largest center and where we are, you know, it’s kind of like the hub of the growth, kind of like Toronto, Barrie is Toronto. So from Barrie, we go outside in the Midland, Collingwood, a really and independent tank, so the larger of the municipalities of around Barrie. The reason we went outside of Barrie primarily initially was just the scalability and our ability back in twenty sixteen, seventeen, primarily 17, when the like the real estate market was booming, you know, things that there wasn’t tons of properties on the market. And we that year we did thirty-two properties to sort of find that volume of good deals. We had to look outside of area and I’m really glad we did, actually, because the other towns have done really, really well since.

Rob Break [00:13:20] It’s amazing, that’s almost three a month.

Brady MacDonald [00:13:24] Yeah. Yeah. The average from since we’ve started was about three a month, I actually did the math there the day.

Rob Break [00:13:30] Very, very cool.

Sandy Mackay [00:13:32] Yeah, let’s talk about joint ventures and how you’ve helped that build your real estate portfolio. Can you tell us a little bit about that and how you helped create win partnerships of that?

Brady MacDonald [00:13:43] Sure. Yeah. So we do utilize 80, 80 percent of the deals that we do our through joint ventures. And so we’ve been we started this back in 2015 was when we really started growing our business. So we were just to step back a little bit just to show why we got into joint ventures. So when we first started, Christie and I refinanced two of our primary our two properties. One was their primary residence and another one was an investment property, and I can’t. I gave a hundred and fifty thousand dollars. That was. So we started buying. We converted them to duplexes, refinance them and as we’re able to do four properties from April on to the later on that year. And we knew we were going to run out of money. So we started offering our services before we ran out of money to joint venture partnerships. And by then we had already created systems and processes and we looked like a business. So it actually attracted the investors fairly quickly, and we started with our friends and family and home inspectors and mortgage wraps and stuff like that, people that knew and were watching what we were doing fairly closely. So, you know, our joint venture structure is no different than most people. It’s 50 50 where the investor provides the purchase money as well as the renovation money, and they qualify for the more the mortgage independently. And then we do joint venture agreements to protect, protect both sides. Yeah, so it works out fairly well, so again, that we if we when we implement the strategy that we buy, convert to illegal second suite generally in Bury or area, it might cost the investor about seventy-five thousand dollars to purchase and about 60 to 70 thousand dollars to Reno, Toronto and buy. When we refinance, we’re all about twenty to thirty thousand dollars back.

Sandy Mackay [00:15:33] On a typical duplex, right on

Brady MacDonald [00:15:35] a duplex conversion generally, yeah, yeah. Mm hmm.

Rob Break [00:15:39] Yes. Just through the numbers, though, what is what is the purchase price and then what’s the refi value in that kind of thing?

Brady MacDonald [00:15:45] Yeah. OK. So generally, the purchase price? Well, we haven’t purchased over 385 in Bury, so. So it’s 365 to three is purchase price renovation is sixty to seventy-five thousand dollars and then refinance are coming in five thirty-five forty-five.

Rob Break [00:16:09] Very good.

Brady MacDonald [00:16:10] Yeah, very good. And these are properties like we will buy, you know, to like all some older two-bedroom homes, that the dining room can be converted into a three bedroom. So maybe like 850 to 900 square feet. And you know, they’re coming in at five hundred and thirty. So we’re getting good, getting good value in the refinances.

Rob Break [00:16:30] I love that, and I love that strategy of finding the two bedrooms because they are generally cheaper, and you can add that third bedroom. I found a lot of people doing that, a lot of value there where especially if you know, there’s a nice big in kitchen area.

Brady MacDonald [00:16:44] Right? Yeah.

Sandy Mackay [00:16:46] So you end up with no dining room, right at the end of the day.

Brady MacDonald [00:16:49] That’s correct. Yeah. So it’s kind of like a bit of an open concept kitchen, living room and dining room all together.

Sandy Mackay [00:16:55] The only downside on those, you know, is just the maybe on resale. They might not get that family that’s going to live upstairs, right and house hack or whatever they want to do. But you know, still, regardless, if there’s value there that you can find, otherwise, it’s a great strategy.

Rob Break [00:17:11] Yeah. Other everything that you can do, too, is whenever we do that, we’re just putting up a wall. We’re not attaching it to the floor of the ceiling. So basically, we’re just attaching it wall to wall to block that off, make it a bedroom. And then later, you know, trimming it out. The corners are obviously taped, whatever, but you can easily remove those walls and then we haven’t damaged the floor to ceiling windows fixing up the walls. And now your resale. I mean, if that’s what you’re concerned about at that point, you can always just take the wall out.

Brady MacDonald [00:17:40] Yeah, that’s a good point.

Sandy Mackay [00:17:42] Yeah, I’m just playing devil’s advocate.

Brady MacDonald [00:17:44] Yeah, yeah, I’d be. You know what? So over the years, we’ve flipped probably about 30 properties, and most of them are legal second suites. And I can’t remember one property up here that’s actually gone to an owner occupied, which of course, probably because I mean, if I was a first-time homebuyer looking to get into the market and I couldn’t at the moment, I think, you know, a legal second suit would help qualify in that.

Rob Break [00:18:08] But how do you know for sure, though, to?

Brady MacDonald [00:18:11] How do you know

Rob Break [00:18:12] who’s buying it?

Sandy Mackay [00:18:13] Oh, you think that up there, there should be a lot of first-time buyers, right, buying that stuff, you know?

Brady MacDonald [00:18:20] Well, because we rent them fully while we sell them fully occupied. Right? So that’s yeah. Yeah. So I mean, we’ve had a few inquiries where they said, OK, if we bought it, you know, how can we get the tenants? You have the top unit vacant, but does it actually not once? Is that happened? I’m surprised.

Sandy Mackay [00:18:37] But so do you go into those purchases with two plans to exit plan sort of like refinance and hold or flip? Or do you know, going in?

Brady MacDonald [00:18:47] Generally, we know going in. Yeah, yeah, yeah. But certain areas and bury, I have no problem buying and holding and because I’m not too worried, too worried about the area as there’s this, there’s one particular area, Barrie, where it has a bad stigma, stigma from the eighties. And if you’re, it’s great place to buy, a great place to rent. You get the same tenant profile as you do across the entire city, but it has a stigma. So if I know I’m purposely going to be flipping it, I generally hesitate from buying in that area for a flip just because the agents really push that stigma.

Rob Break [00:19:26] What is the stigma?

Brady MacDonald [00:19:28] Well, so know, I believe most of these houses were built in the 80s, and so there was a lower threshold or lower income say, of the population. So it was it’s a rough or dynamic or it was rough done, different dynamic now. But now they’re more affordable. They are affordable, are more affordable. They’re definitely the, I’d say, first time homebuyer level. So just through natural reasons, it is cleaning up and there’s a couple of streets in there, 100 percent, one by one. But ninety nine percent or 90 percent of them, I would.

Rob Break [00:20:05] So you do buy if you’re going to just hold and rent one percent. Yeah. Umm hmm. OK, so we sort of touched on the more I mean, I guess we really went through it. What you offer to the joint venture partners is the expertise basically finding the right property that’s going to appraise for those numbers that you said and knowing what renovations need to be done in order to get it there, right? Yeah.

Brady MacDonald [00:20:33] So yeah, so.

Rob Break [00:20:35] OK, good. Go ahead.

Brady MacDonald [00:20:36] No, I was just going to say, Yeah, so what’s, I guess, a little bit different than I thought when we started this journey. And since day one, we started hiring staff. So we’ve got in-house nine full time renovators and then five ladies in the back office that help manage and make sure that the books and the tracking of expenses are all super tight, but that that really is a benefit, I think, to the investors as well, because we do this at costs, we don’t mark up our labor or our materials. So, you know, we’re get it. We’re able to get things, at least in our opinion, you know, they’re done on schedule. And, you know, to the lowest price point that, I mean, at least I think we can do. Yeah. So that’s just a value-add thing. And when we do, when we work with our ambassadors and we hold these properties and manage them for long term, we also take the same approach to management. So we have a full, you know, all of our staff manage the properties in-house, and all of that is also extended to the joint venture properties that cost. So there isn’t necessarily a management fee. We just basically if say, we have to show the talent, show a property and it takes two hours to show it, maybe say to my two hours a month to pay the bills and accept the rents, then that’s exactly what we build. I build a property just to do that.

Sandy Mackay [00:21:54] And so that allows me to focus on finding great properties, right? Which I assume is probably your kind of focus and rallies and finding more partners to do good deals

Brady MacDonald [00:22:03] with that is one hundred percent. My focus, yes, that’s a large part of my responsibility. I do have that like the renovation, the team they directly report to me. But then my primary focus is finding deals and doing like onboarding investors and just creating those relationships, educating them to a point where they can confidently go into to a real estate transaction with us.

Rob Break [00:22:26] So this stuff wasn’t all in place when you woke up the other day. No, I have melded into that. Yeah. So let’s talk about the steps that you took to scaling to where you are.

Brady MacDonald [00:22:38] OK, yeah. So my previous employer was Hydro One. So, you know, we’re huge on safety and they have systems and processes for everything. So I was really used to that. And when we started off with business and we hired our first admin and office and then I started hiring our employees in the field. I took the same approach because, you know, although I know the systems and I know the processes, the only, you know, I can’t expect everybody else to take on all that memory and all that knowledge. So the only way to make sure that things get done properly and processes are followed, and things aren’t missed was to create checklists and systems for almost everything. So, you know, for example, when you go back into just the starting renovations, I was driving around like a crazy man every single day while I was working full time, picking up materials, looking for different materials, you know, Home Depot, Lowe’s, all these different places. And then, you know, actually, I’ll give the credit to Ian Sabo. And if you read his book, one of the things he did was go to the Home Depot and pick out all the SKUs that you want to use. So literally, you know, and still, to this day, we’ve started renovations and our materials system ideas in such a way where it’s the same material. Yeah, exactly. Rhinoceroses. So same paint color, same cabinet, same kitchen counter, same face. That same light, same you name it, it’s all the same. So again, that was again, one way to manage costs. Know everybody knows what we want, right? You’re really just transferring what I’ve got my brain on to paper and they just follow it. So from a back-office perspective, you know, we’ve done everything so from purchasing to ensuring that the joint venture documents and all the purchase documents, et cetera, are in a certain place and then they get uploaded on to the computer. So then they can be looked at or found relatively quickly when requested to the renovations, to its tenant placement, to accepting rents, paying bills, tracking expenses through systems in place for all of that stuff and their bill, because that’s the kind of the foundation to scale if you have. If you don’t have this stuff and you buy 20 properties in one year, it’s you know that that that tower is going to tip over when you know, when documents are required. So I think that hits on one aspect of scale. I guess the other aspect of with our ability to scale was we took upon the strategy to hire and empower people. So, you know, there’s only so much, so many hours in the day for Kristy and me to do certain tasks. So, you know, if now we have 14, 15 ish people working for us, we’re actually able to do 15 times the amount of work. So we’ve got two project managers. They have equal responsibility to manage the rest of the renovation stuff. And then we also have an office manager and then delegated employees who look after different tasks required for bookkeeping and tenant placement, as well as dealing with tenant issues, issues and calls and communication. So having that ability to rely on people that are following your processes and systems really gave us that ability to take on as many projects as we could.

Sandy Mackay [00:26:11] Awesome. And I guess and work with a lot of people like that, you end up talking a lot about goals and goal setting things like that with others and yourselves. I assume you have some models or systems around that. Probably. How do you how do you go about doing that? And I mean, you’ve done some pretty cool stuff for only being in this for really full on for what four years now do three deals a month. I love the idea of systematized and all that. I’m sure you have some goal setting tips that you can share with people as well, right?

Brady MacDonald [00:26:40] Yeah, absolutely. So, you know, when we first started, you hear you hear everybody about, you know, everybody says the importance of setting goals. You know, back in the day, we started with rain, and it was, you know, what is your why? Which I mean, we all need one. We all have to have one because it’s the reason why we work so hard is to get something or achieve something. So when we started out, we actually created a dream board, Kristy, and I, and we still have that same that is still owned. The only dream board that we’ve created. Now we do know that we need to revisit that, but a lot of the things that we did actually put on there, I was like, there’s no way any of this stuff is going to happen, like in recent, in recent, upcoming or, say, upcoming years. And it’s amazing. You do that and you set that vision and your why, then you really can’t achieve it at most. How about half the things on that vision board? We were able to get. So the other thing you know, Krista and I, obviously there is a lot of value. I feel added when you can, two people are pushing each other and working together to one common goal. And I mean, you try to push that out to your entire team as well, right? If the entire company and all of our employees have the same goal, you know, say, for example, of, you know, just making like one of our primary goals with our ambassadors is to make sure that they that we take care of their money, but like better than they could take care of it. So abouts in being super accountable for every dollar and trying to do things as, you know, frugal, but also, you know, with the best professionalism, et cetera, possible. So in our employees literally take that to heart. So I probably am going off on a little bit of a tangent here. But yeah, so goal setting, I guess, you know, like if that dream board was big for us. The number, you know, our number changed, our goal necessarily isn’t like a dollar value. Originally, it was 12 properties when we when we first started, it was, and Christie thought we were nuts. We’re like, there’s no way we are having 12 properties and we got like six. I’m like, we are permitted up to 20. And she’s like, she’s like, I quit. I’m not doing this. I’m not doing this. So it’s like there’s like a bit of a ying and a yang in our relationship, but it’s amazing. You get to one goal. Once you accomplish a few goals, you realize that we are generally setting our goals a little low. And I mean, I think you guys have probably heard of like the 10x rule, and now I’m really getting my eyes are really opening up to the ability that we can achieve so much more. We just have to put our mind to it. So if you kind of follow the Grant Cardone thing, if say you say your goal is to do a thousand units, well, let’s face it, if you get to 300 units, you blow it and you know, 90 percent of the people are or not blowing your expectations originally out of the park.

Sandy Mackay [00:29:35] Yeah, yeah. Most people set pretty realistic goals. I mean, like five years, you can accomplish so much, right? I think, you know, you do something pretty what you might think is crazy in one year. And then if you can do that, like what you can do in the next five is just going to be 100 times what you’ve actually maybe originally thought. Absolutely. People always underestimate what you can do in like a five-year timeframe.

Brady MacDonald [00:29:57] I agree.

Sandy Mackay [00:29:59] Usually overestimate what they can do in one year, actually and underestimate the five. Yeah. What are some challenges? Obviously, they’ve had some challenges and overcame a lot to get to where you are. Nobody, nobody succeeds at a high level without going through some challenges. So what have been some of the big ones and how did you get through the.

Brady MacDonald [00:30:17] Yeah. So like, we’ve never really lost on a deal that we’ve that we’ve purchased. Like one of the worst ones was probably that when I said that we converted plan was to convert to a duplex. Turns out you couldn’t convert it to try or just. It was sorry. It was just a single-family home flip didn’t make very much money. Other single-family home didn’t make very much money. But more recently, so again, we set goals and we push ourselves to new limits. And generally, when you’re getting that first, you know you’re doing that first deal that’s outside of your box, your norm, you know, that is where the failures are going to happen. And I could be honest. So I. So we tied up this church for $1.2 million. The intention was to convert it into like 15 16 units. So we started down that road, likely didn’t do as much due diligence. While the due diligence required for this type of commercial property for financing and development is like. A hundred times for like a single-family home conversion to a duplex or even a triplex, so. So we went down the road, we started with phase one. Environmental did the phase two that cost us 20 grand. We did homicide, an appraisal that was another three grand there. Something else was triggered. We’re about 30 grand into this. And then, you know, you talked to one person of the city, and they said, no, it wouldn’t trigger development fees. And then you talked to another person, they said no, because you’re changing the use of the church or intensifying sensitizing the use. That is what triggers development fees. So the development fees on the church ended up they were going to be $400000. And so, you know, in my eyes, I’m like, OK, there’s you know, the church is one point to the renovation I thought was about 1.4 million. Now you add another four hundred thousand that that was my wiggle room and my buffer for air anywhere else. So we ultimately, we walked on the church. We had a clause in there that allowed us to do that based on certain findings in a phase two. So we’re able to get out of the deal, but you still have costs associated to the environmental. So those were the thirty thousand thirty-thousand-dollar loss. And I mean, it’s the way I guess I look at it, it’s a I have a liver. What is it? Win or learn mindset. So, I mean, it’s a loss financially. I learned a ton during the process, obviously would approach it totally different the next time because I’m sure there will be a next time. But yeah, so I mean, the other way I look at it as I didn’t go to college or university, so it’s just part of my education.

Rob Break [00:33:00] Did they do they have any grants that were possible with that, and they asked for it?

Brady MacDonald [00:33:06] Yeah, that was one thing that I was well advised. The lady at the development office said. You could ask them about the grants and their wives, but not until 2020 20. So the money had been the pot had been used up for twenty nineteen. Yeah, so. I mean, it’s an ongoing issue. I have been to the city of Barrie on some development topics, and they are looking at trying to address that, especially for these types of developments where they’re creating affordable housing, but they’re talking about a pot. And then it’s just like, well, how who’s going to get that pot? And I wouldn’t say that you’d want to rely on the pot like to help with development fees. At least I wouldn’t.

Rob Break [00:33:50] But no.

Brady MacDonald [00:33:51] So yes, I’d say that was that was a fairly that was a pretty big learning curve. And all our perspective probably a failure, but kind of learned we live in learn.

Rob Break [00:34:06] But you know what? There’s lots of people that spend 20 $30000 on education just from sitting down into a conference room with somebody. So I wouldn’t say that, you know, digging into something like this and coming up the amount that you’ve learned is probably at least as much, if not more, than some might learn. I’m one of those conferences. So yeah, you know what? We all live and learn, and I just that’s the price of the education. Yeah, that’s the way I look at it anyway.

Brady MacDonald [00:34:33] Yeah, no. I agree.

Rob Break [00:34:35] Makes sense. OK, next question we’ve got for you is you have a property management company now.

Brady MacDonald [00:34:41] Yeah, yeah. So we launched live with, yeah, we launched live with BC Property Management four months ago. Yes. And so we had always managed our own portfolio and our investors portfolio. So currently we have about one hundred and sixty-five units in our portfolio. And so what we actually did so in twenty eighteen, Christi and I were cruising around the Bahamas and the Florida Keys for about six months of the year. And so we thought at the time, OK, how can we lighten the load for our staff? How can we lighten the load for Christie so she can actually enjoy your time down there? When we were away, it was like two weeks on, two weeks off kind of that we were away, so we thought, OK, well, that’s how your property manager. So OK, so that’s fine. We knew a property manager in town. We moved our portfolio, our personal properties over to this person, and that’s fine. So anyway, votes within six months, the what the ultimate thing that happened was. We had two evictions and then there was two other units where our staff went to do maintenance to the property where the tenants were just gone. And I hope and so that’s basically for evictions or for vacant units to evictions truly and to just disappeared tenants and. And we didn’t know about this. We weren’t told about this. Property manager didn’t know about the two vacant units. They place the two evictions. I don’t know why. Is this the best option out here? And you know, we have a fairly we have really good track record. We’ve only had to evict one person and that was before we started, say, real estate investing like a business. So we just said, you know, let’s offer, let’s make sure that we can offer a better service. And so that’s where we came up with it that initially got gave us the reasoning to do it is to make sure that we could provide something better if that’s the best that was out there. So, yeah, we lost it where, you know, so we’re looking after properties or managing properties across Simcoe County. So throughout the areas that we invest, we obviously we know the markets very well because we invest in them ourselves. We are offering renovation and maintenance services as well in house, which is, I think, a value added. So, you know, the landlords don’t need to deal with it themselves. If there is a vacancy, then we can get our team in there basically the day or the day after the sides move out, repainting, et cetera. So, you know, we’re the typical property management fees are applied. We can just simply place tenants at a onetime thing, or we can do the full-on property management where we accept Iran’s pay. The bills, you know, deal with all the tenant issues and complaints, do inspections, maintenance, renovations, etc. So we’re excited to scale that that business in add a lot of good service to the market.

Rob Break [00:37:37] Right on, right on, so that is called B.K. Property Management

Brady MacDonald [00:37:40] Live with B.K. Property Management.

Rob Break [00:37:42] Live with me. Yeah, OK. Yeah, I’m sure there’s some people in the area that’ll be reaching out to you, and we’ll have all your info in the show notes. So that’ll be good. Now. Let’s. What do you think is your biggest tip that you can leave with people to in regard to not treating real estate investing as a hobby, more as a business?

Brady MacDonald [00:38:09] Yeah. So I mean, the first thing you need to realize is that, you know, if you have one property of income coming in and you have expenses, income, and expenses, that’s a business, right? So and I mean, the people that are going to give real estate investing the bad name or the horror stories that you’re going to hear are from real estate investors who don’t treat it like a business who are, you know, hobby real estate investors, for example. We were there once we had snakes in the wall. We evicted that tenant and it cost a ton of money and a ton of renovations. And then we treated it like a business. We educated ourselves. And that’s the biggest thing is education removes a lot of the barriers and removes most of the risks associated to investing. So I guess, you know, in essence, that would probably be it. Educate yourself properly. And I mean, it’s all at our fingertips. Listen, this podcast, you guys, if you if somebody listen to all your podcasts, they will know most of what you need to know, right? All the Canadian books, if you educate yourself, you’re going to remove most the risks associated to the investing.

Rob Break [00:39:20] Well, there’s one thing we got to clear up for them then, or at least for me. So what? When you say snakes in the wall is that is that like, is that a literal?

Sandy Mackay [00:39:30] Yeah. I was thinking the same thing as, I like that headline line I’ve never heard before.

Brady MacDonald [00:39:35] That’s literally like, yeah. So this is again, this is so we had two properties when we first started. No, just by accident. Kristy and I had two properties before we started investing proper like a business. And so, yeah. Boyfriend moves our typical scenario. Boyfriend moves out, girlfriend, cat or, you know, the lady couldn’t afford rent. She stops, she starts paying late then. So it drags on. I’m like, I gotta go. Check this place out. So I go, check it out. Did it do a walk through? You know, I didn’t get proper notice or like because I just texted her and I walk in there and the house is absolutely destroyed. It has these two massive blood pythons in the basement. Is it kind of as might go off in a bit of a tragedy? And it’s kind of a surprise story. So two blood pythons in the basement house is actually absolutely destroyed. Dog hair, dog stop everywhere. I’m like, So I call the self-help, but this is another good tip for people that are self-managing. There’s that landlord self-help phone number Google that it’s free. It’s free for us, right? So there’s I think they’re lawyers so they can advise. So I call this the self-help line and they say, OK, oh, there a gun. There was a gun in the house, and I didn’t know if the gun was real. I, it looked real to me. So I, I call the cops and oh no, no. She said, don’t. She said, Let’s start again. Let’s pretend you didn’t see any of this because you didn’t get proper notice. Go write a notice and stick it to the door. So I did that and then I showed up to re inspect it the next day with proper notice. Then I called the cops. And the cops can determine that the gun wasn’t what it was like a big lug, like a real looking baby gun, but then also determined that the blood pythons were illegal and very so. I ended up getting her out because of that. But when we went back to look at with the bylaw officer went back to look at them. She hid the snakes in the walls of the house, so watch out for snakes in the walls

Rob Break [00:41:34] and they couldn’t find them.

Brady MacDonald [00:41:36] Now they ended up getting them out. I realized this after, after, when she had moved out and we had to fix the house. And I’m like, what? And that’s what it was. She had cut holes in the back of the back wall behind the shower faucet and slid them down there and then cut a hole at the bottom to take the back out.

Rob Break [00:41:55] Interesting. Yeah.

Sandy Mackay [00:41:57] And so just to clarify, that’s before that’s you’re treating it as a hobby at this point.

Brady MacDonald [00:42:01] That was pre hobby, hobby investing. Yeah, I don’t know.

Rob Break [00:42:06] I don’t know. I don’t know. Yeah. Let’s try this again tomorrow.

Brady MacDonald [00:42:13] Yeah, it’s

Rob Break [00:42:14] a great idea for listening to them. Yeah, no. That’s a funny story, though. At least you got them out.

Brady MacDonald [00:42:24] Yeah, we got them. That’s right. And I actually was able to garnish your wages and get all the money back. So.

Sandy Mackay [00:42:30] Oh, nice. Yeah.

Brady MacDonald [00:42:31] Yeah, at least get had a job

Sandy Mackay [00:42:32] that can be

Rob Break [00:42:33] tough. They locked in there or they didn’t come out, come crawling over the next person. Moved anything,

Brady MacDonald [00:42:40] right? Yeah.

Rob Break [00:42:42] Oh, very good.

Sandy Mackay [00:42:46] Let’s hear about this training system you’re working on or you’re developing here for investors. You got something coming out in the new year. So that’ll be in 2020. Yeah, 2020.

Brady MacDonald [00:42:55] Yeah. So Christine, I again, we’ve talked about systems on this earlier, but so we’re big system people. We’ve spoke at different events. We’re just at the right club last week and she talked for about 20 minutes on systems. I talked about scaling through staff and just your strategy, but the feedback from people, and I think it’s an ongoing challenge that we hear is that, you know, how to how can you scale and like, how do you keep everything straight and your finances and so Christie’s talked about systems and people are absolutely blown away about it. You know, generally, I think that’s a struggle that people have. So the feedback really opened our eyes to the point that we need to truly offer an amazing course, teach people, give people the of the systems that we have and give them coaching on how they can tailor to their business. So that’s our plan. You know, I’m a type of guy where if I get an idea, it’s like, how fast can we implement this? Let’s get it done. Like, that’s how things get done. So we’ve actually booked the trip. Just Christina. It’s a work trip to Mexico on the 21st in November, seven days, and we’ll be coming back out with the content. So we have, you know, we have the systems in, and my background is creating content and training for Hydro one, that’s what I did a training center. So yeah, so by December, mid-December, we plan to have it start. Probably, what do they call that? A pilot? And then January, we hope to have it be able to roll it out and start offering it to two other investors to help them run their business.

Rob Break [00:44:35] That is amazing not to let us know when it comes out so well, and we can post links for that too.

Sandy Mackay [00:44:42] That’s great. There’s not a not a ton of education around that. I think the system side, which is what you need to do to scale it to where you guys are and beyond. Like, yes, I definitely need it a lot. A lot of people miss that

Rob Break [00:44:52] and I struggle with a lot for sure. So I’d be I’d be interested in learning about it when it comes out.

Brady MacDonald [00:45:01] Great. Yeah, I’ll keep you guys in post. Posted for sure.

Rob Break [00:45:07] Brady, you haven’t been out to Durham area, have you?

Brady MacDonald [00:45:10] I have not

Rob Break [00:45:12] because I mean, like you wrote in the sort of the same circles as Brendan’s there all the time.

Brady MacDonald [00:45:17] Yeah. You know what? You know what, it’s kind of weird like, well, I’m, you know, I’m always looking back at where we were and as your, you know, as you’re going through this life of ours and I’m looking back and I honestly, I and I’m just going to be brutally honest here, all. I think like we’re so in focus in our business, it’s like I’ve just we had this like final strategy where we had one strategy, we perfected it. It’s like it’s all you need to do is just keep doing that strategy. But then, you know, as you grow into different aspects of life, you realize that you need relationships, you need to be out there and keep growing. And so we found herself in a silo. So we really didn’t go to any meet ups for probably the last year and a half two years. Now, looking back, I can see that was a mistake because now I had need to like you. We’re lucky to scale the multiple different avenues and the relationships are everything, so you will be seeing me there. That’s the moral of the story

Rob Break [00:46:15] right on wall. I mean, you’ve got a lot to share. And if you guys presented that right club, maybe I can. Maybe I can talk to them about how you present there, too.

Brady MacDonald [00:46:24] Absolutely. We’d love to.

Rob Break [00:46:26] OK.

Sandy Mackay [00:46:28] You can also just listen to the show, too and get all the stuff you need to get to endure, you got the inside, oh, you got all that stuff, right? Hopefully, that’s up there and it helps others. Great to have you on here. How can people get in touch with you?

Brady MacDonald [00:46:40] Yeah. So my personal cell phone number, you can actually have it seven zero five, I’m going to give it out because nobody’s going to call me anyway, because most people don’t. But seven zero five seven zero five seven nine five one four zero. That’s my personal cell phone number. My email Brady at peak hour I and okay. And then you can check us out on Facebook. We got live with B.K. Property Management, B.K. Real Estate Investing.

Sandy Mackay [00:47:04] Who should call you, who should call you who? Who do you want to connect with?

Brady MacDonald [00:47:08] You know, I’d like to, you know, obviously if you are interested in entertaining the idea of getting into real estate, hands free joint ventures, I don’t have a ton of time for coaching. I have no problem answering a few phone calls, though. Like I, when I when I was starting my growth period, I needed somebody to just to bounce a few quick phone calls or questions off of got me over that hurdle and keep going. So I’ve no problem anybody calling me for those types of reasons. And then, you know, if you want to start, you know, get together, and learn about the berry market. Realtors love talking and working with realtors to help service their clients for the property management aspect or even an educational aspect if you know somebody is looking to come to Berry. I think there’s a lot of value added, like if I could help realtors with their investment clients, there’s a lot of value added by you know, sitting down for an hour and talking about the basics of real estate investing from a third, third point, third point of view. You know, that can really add value, and I think we can add value in everybody’s relationships there. So.

Rob Break [00:48:09] That’s right. That’s great, and we’ll have all the links to all of those things in our show notes, so. So you’ll be able to easily access it over a breakthrough our podcast dossier face Brady, man. This has been

Brady MacDonald [00:48:20] awesome. Yeah. Thanks, Rob. Appreciate it. I appreciate this. It’s been great.

Rob Break [00:48:27] Sandy, how can people get in touch with you?

Sandy Mackay [00:48:30] Two eight nine three eight nine six eight four six or in Fort McKay Realty Network Icon.

Rob Break [00:48:37] And if you can reach me at Geez, I always do the podcast from when I start doing my own Robert list. A breakthrough dossier. Easier and awesome. Good stuff, guys. Thanks and thanks for everyone for listening, and we’ll see you again next time.

Brady MacDonald [00:48:54] Thanks a lot, guys. Now.

Listen to The Podcast