UK vs North America Investing with Gary Spencer-Smith

Microphone 10 21

Podcast Transcription

Dave Dubeau [00:00:09] Everyone. This is Dave Dubeau with another episode of the Property Profits Real Estate Podcast today. Zooming in an old friend from the island, we’ve got Gary Spencer-Smith, a very accomplished real estate entrepreneur originally from the UK. A background in the Navy got started in real estate, investing on the other side of the pond on a smaller scale. Then came over to Canada, I believe, around over seven or eight or seven.

Gary Spencer-Smith [00:00:36] Yep, that’s correct.

Dave Dubeau [00:00:37] And then jumped right in and started doing real estate deals and became a full time real estate investor, real estate entrepreneur, as we say, in 2012. So, Gary, welcome to the show.

Gary Spencer-Smith [00:00:47] Thanks, Dave. It’s nice to be speaking to you again. So, yeah, we were just reminiscing a little bit there before. It’s been quite a while and yet in such a short time as well.

Dave Dubeau [00:00:56] Time flies. The older I get, man, the faster it flies, that’s for sure. And last night we were chatting, I think it was 2012 was the last time I interviewed you on a completely different thing. We didn’t even have the podcast back then. Yeah, you were doing something pretty cool at that point. You were living in a very small community on Vancouver Island and the real estate market there was flat, had been flat for a while and continued to be flat for a number of years. And you were doing a really conservative but smart approach to rent owned real estate investing at that time, which, if my fuzzy memory serves me, was basically you’re buying houses with suites in them or buying houses and putting suites in them, getting a tenant buyer in one part and renting out the other part to make sure they get qualified for financing. All these guys are very conservative, and if they reneged on the deal, you still had a good cash flow in property, unlike a lot of rent on investors since that I think.

Gary Spencer-Smith [00:01:59] Yeah, no, that was pretty much it. Yeah, I was, you know, I didn’t really understand Rent to Own then it was just something that made sense. And you know, you see problems, you try and solve them and you look for a solution. And yeah, we were doing that and worked on my knowledge over the time and over the years. I believe it’s ten years since we talked.

Dave Dubeau [00:02:15] Yeah, time flies, man. So what have you been up to since then? What’s your main focus? What? Your bread and butter these days?

Gary Spencer-Smith [00:02:22] I think, you know, in 2012, they’re moving forward. I think I had three or four years of where I would say consolidate and doing one thing. And that was buying the single family home, the B C box, putting the C in the basement, moving on. I guess it would be like the bear. You know, we were finding joint venture partners, doing two or three houses with each person moving on and doing that.

Dave Dubeau [00:02:41] But you’re holding on to them or were you.

Gary Spencer-Smith [00:02:43] Holding on to still have them to this day? Quite a lot of them. Yet we were keeping them. I did. I only did the two rent owns at the time and then everything else.

Dave Dubeau [00:02:49] Because I was thinking, jeez, that’s a lot of work to be selling that off to a tender buyer.

Gary Spencer-Smith [00:02:53] That’s yeah. No we, we kept a hold of them and got doing that. But I changed the strategy like I started working within that business where I became the GC so I would manage the project. I actually have skills. I was working in that business as well, so I was getting paid from a time out. I worked in it. We were getting a joint venture, share the property, you know, 50 or 40 or 50%. And then we were also property management. So I started the property management company and that kind of became my bread and butter for right up until 2019 where we sold the property management company to a guy that worked for us, did a rental deal with him, just didn’t have the cash. So that makes total sense. Yeah. And then we just had the opportunity to buy a holiday resort right on Sproat Lake. So at that time we owned about 2024 rentals. We got something in our budget as something more, the rest all on the island. We had a commercial property, 20,000 square foot offices where I was, and then this opportunity came for the resort and it was just a huge lifestyle shift. It was like, Yeah, you know what this is like, I guess I’ve been working towards I lived on the lake, but I never spent any time because you were paying for living at the lake, right? And now this. It allowed me to work within a business that I love. I mean, I’m what can I shouldn’t say three months here. I’m working a defined time, three months of the year. The rest of the time is super flexible. So it allows me to be on the lake live on the lake. Everyone’s on holiday, everyone’s happy. You have 12 houseboats, a pub, a restaurant, two four bedroom Airbnbs and five rental cabins. Wow.

Dave Dubeau [00:04:20] Nice.

Gary Spencer-Smith [00:04:22] So beautiful. So that’s basically my retirement plan is just to live and work there and tinker in the business and get loving it, start to enjoy life. We took a month off to go to the UK, you know, seasonal ski passes every year now. So starting to reap the rewards if you know that work and I feel like we’re putting the last ten years.

Dave Dubeau [00:04:38] Well, congratulations. That’s wonderful. So besides the seasonal resort, are you still doing the bird strategy? You still buy any single family homes and that sort of thing? Or are you kind of just so?

Gary Spencer-Smith [00:04:50] I am. No, I didn’t because the market just went nuts. And, you know, the cost to rent and the cost of purchase, the supply and demand, all that was just it was like a feeding frenzy. So I wasn’t interested. And then we just had some announcement in the Alberni Valley. Yeah. There’s $1,000,000,000 development going in the city. Just the. Waterfront, which is going to make it like Campbell River. So from a turning in from like a mill, now it’s going to be like residential light, commercial shops, a nice boardwalk park. It’s got to become a waterfront community. And they the growth of the community will be about 25% in the next five years. So that’s a good solid growth work. So at that point when that was announced, then I looked at the market and we picked up a couple of different properties, a B.S. box, a paint and stuff. We did a duplex that had been derelict for 25 years. We picked that up and we’re picking that up at the price today. A derelict house for the same price. That was our after repair value ten years ago.

Dave Dubeau [00:05:46] So it’s crazy, isn’t it?

Gary Spencer-Smith [00:05:48] You just you look at what’s happened, but it’s still affordable, you know? And people everyone’s saying it’s not affordable because I think our average house price went above 500,000. But I’m like, okay, but I’m now renting a three bedroom suite for two grand upstairs, you know, a nice suite. And if you’ve got two people working a job that’s five 6000 a month coming in, that’s in the affordability index, and then a two bedroom in the basement you get in 1450. So before it was the 1% rule. Now of 500 grand, you probably get in about 35, 3600 bucks back in rent. So still decent as long as you get in the right area, whether the property taxes are lower. So.

Dave Dubeau [00:06:23] I mean, and you’ve got a kind of a long term perspective. That’s what we’re talking about off camera as well as, you know, in the boom times which we’re in right now, beginning of 2022, that we’re recording this, you know, like you’re saying, everybody looks like a genius, that they’ve given the property for three or four or five years. Right. But I love the fact that you got involved in this in a really flat market. I mean, that’s where you got your teeth and your whole investing philosophy, if I’m not mistaken, was not based at all on appreciation, was based on cash flow and mortgage paydown and the other profit centers.

Gary Spencer-Smith [00:07:01] I remember speaking to someone, you know, as I was actively looking for joint venture partners. And this is within my friends and family group member. Six months in, I can tell you how to make $1,000,000 in real estate. Like how when you buy four houses for 2050 grand each, rent them out for 20 years, pay the mortgage down, there’s a million bucks. No rocket science. Now let’s go buy a house. And that was pretty much how I attracted capital within my network conservative circle. So yeah, but don’t overpromise.

Dave Dubeau [00:07:31] And now you’re looking like a frickin hero to all those guys.

Gary Spencer-Smith [00:07:34] Oh, yeah. I mean, I’m, like, legendary now. I was way ahead of the curve at growth, but we know that’s not reality. You know, that’s no one could predict that. You know, it’s just it’s just, you know, the way things go. I mean, we can look at, you know, we can go way deep in this. And we understand the population growth and people coming in and the number of homes being built. But there’s a lot going on in the macro and micro. But it’s not it’s not something that I was I wasn’t like when you see the TV shows and I’m making 40,000 overnight 50. That wasn’t what was appealing to me. It was just, look, I can create myself a job. That’s why we did the property management. I can do jobs within real estate. I pay myself an hourly rate to go fix stuff and build and renovate and all that kind of stuff. And then I create some wealth on the back end. So it was like a three step strategy that I had and work. It takes yeah, it takes a cycle of real estate and you look back and go, Wow, I’ve actually done okay in that cycle. So yeah, I was I was lucky as well. You know, I had good people around me. Good team.

Dave Dubeau [00:08:29] Yeah, you did. You definitely did.

Gary Spencer-Smith [00:08:31] I know definitely how to.

Dave Dubeau [00:08:31] Get part of doing that. Now you’ve taken over revenue dot com which was originated by our friend Julie Broad back in the day. And now you’re running with that. You know what? Let’s I want to switch gears for a second here, Gary, because you’ve got a unique perspective being from the UK originally yourself and doing a few deals back in the day, back in the UK and then coming over to Canada and doing deals here. What can you tell me about the similarities and the differences between investing there and investing here? That’s a fascinating idea. Hold that thought for a second. Hi there. This is Dave Dubeau. And real estate investors hire me to raise capital the right way. Why? Because most of them are stuck with too small of a portfolio and they don’t know how to attract investors and raise money for their deals. So I help them to connect, capture and close their ideal money partners. Bottom line, when you’ve got a deal, you’re going to have the capital to do it. So go ahead and book a no cost capital clarity session with me at Book A chat with Dave dot COM. Again, that’s book a chat with Dave dot COM.

Gary Spencer-Smith [00:09:43] Yes. So the similarities. So I’ll hit them first because I think that’s probably the easiest. You know, there’s a mobile market, a mobile workforce that are moving around for jobs, even though, you know, the British version of moving along way is like an hour away. That’s like we do that just to go shopping in Canada. So there’s still a mobile market moving around for jobs, for things. So it’s a lot more condensed. You know, I think in life I think major cities like Vancouver feel make more room within those areas for jobs and the rent to purchase ratio was around the same when I saw it. You know, if I have 100 grand, you get $2,000 cash of income. So that was about where and you know, in a normal town, in normal scale, a normal street. But the difference is it’s a lot stricter controls over that really very left wing. Yes. So it’s you know, getting people out is really hard. I mean, I know some TV shows people can watch, but the reality of it is when you’re on the cold front, it’s actually it’s difficult if you get a bad tenant. So you tenant profile. But there’s a lot of tenants over there. A lot of people don’t own it. The houses are 100 years old now and the problems you have are things like there’s no parking because that street of houses was built when cars weren’t around, no one owned the car. Now three people own a car and every single house, it’s only six foot wide. So you end up having two different problems that you’ve got to try and solve over that. I found when I came over here, it was like going, in my opinion, back a generation. Everyone was a bit more relaxed. It wasn’t about as much as how the house looked. It was more about the space around the house. So the part where I was, anyway, you know, the boats, the cars, the trailers, all that kind of stuff, which was easier to achieve because a lot of the houses had bigger locks, were bigger spaces. But now we’re definitely seeing a shift. I’m sitting in my daughter’s apartment here. I moved in our first apartment. Everything is coming in. These multi families, I think we’re definitely seeing that shift towards a condensed living where people are moving into smaller spaces. You know, they want more of a lifestyle around that versus the big house or the huge yard. That’s not real. And that wasn’t real in England and it was reality here. But now I’m seeing that shift towards that. And I’m actually looking actively looking to shift gears into that multifamily in the town I’m in because I know that half a million dollars on a lake is not a fortnight’s doesn’t sounds crazy and not some people are going see by the government half a million to rip up. Yeah so it’s like but in our town half a million getting priced out. People that are growing up there. Right. But all they do is change the product on you. Okay. So you can’t buy a single family home with 3000 square feet, but you can buy this thousand square foot multifamily building for 300 and then we’ll see that. So there’s still so much room to grow. And now we’ve got, you know, population growth, that kind of stuff, which in the UK population growth and again similarly huge population growth. But a lot of that was being a part of Europe and the European migrants coming in like en masse and they were just looking for places to stay. So there was opportunities there. It’s just not something I want to play. And I felt more comfortable doing a single family home and couples do things like that. So very. And that was the difference. Yeah, definitely. I felt like we were a generation behind. So you had the foresight to see this is going to happen.

Dave Dubeau [00:12:59] MM Yeah. Interesting. Really great. Really interesting. And Gary, I know a couple of years ago you took over or you got involved with Revenue. Tell us a little bit about that. What do you guys do? What are you up to these days? I know that back in the day there, well, we’re just kind of on our tail end, hopefully, of this pandemic. So, yeah. How was that affected you guys? What are you up to with revenue?

Gary Spencer-Smith [00:13:21] So really, what happened? My stepdaughter, I was looking for a CEO to come in and help with rental. I was Profits as it was at the time and I just I couldn’t manage that workload beyond the tools, be the GC, run the property management company like it was just getting too much. And I was in among the main group with businesspeople and they’d suggest that I find a CEO. I already had a portfolio that was attractive to someone coming in and at the time my stepdaughter was working with me and she ended up becoming the CEO. Asked if she committed to five years, would she, you know, not give a 10% a year of ownership and would get 50% of anything we buy from that a move forward. So she was loved to do that, but she’s the one who purchased revenue. She bought the rights as Julie was just moving out and David moving down to L.A. there I think the license out there rookie to rock solid program and their rent to own and Creative Strategies program. So Clarissa purchased the licensing to that amount. She came in, I said, okay, but if you bring that and we’ll look at which brand is best and we’ll just amalgamate them into one. So couple of years things moved and then revenue just seemed a natural brand to have, you know, it had an established YouTube channel, I think it was like 2000 subscribers at the time we grew on. That’s like seven or eight, something like that. And then we were just looking because it’s more about people being aware of what you do, how to do things. I like the you know, we changed the mission statement slightly to be, you know, help people understand the real risks and rewards of profitable real estate so you can live a life that you love because a lot of us, you know, we get sold, me included, you know, a lot of times on the latest, shiniest thing that you follow and you spending money on. And a lot of the time we forget, as I did, to take a step back and actually let real estate fund the lives that you want to live. So we decided to use that to grow our Circle Network, and then from that we could connect with people, build relationships and you know, as you know, any relationships you build potentially can lead to profitable relationships and working relationships. And that’s kind of why we run it. It’s not really we’re not trying to become, you know, another big education company that’s not where we’re looking to generate money. We’re just trying to create a network and at the same time put some decent content out that people can follow. I think I’ve got. The top five lies at Tennants. I’ll tell you, it’s one of our top videos that’s controversial how I guess you can put it. You know, dealings got like I think one of the video was like 250000 minutes. Like the five things tended to never clean. And that’s still getting hate comments on it. It’s great.

Dave Dubeau [00:15:48] Gary. Time flies when we’re having fun. So people want to find out more about Gary Spencer-Smith and or Revenue. What should they do?

Gary Spencer-Smith [00:15:55] Yes, they can go to revenue income already. And why are you dot COM? Look on there. We’ve got information on a site that links to our YouTube channel and things like that as well. If you want to connect with me, feel free to reach out. I’m pretty much on all social media outlets, anyone, anyone’s looking at the island, the Bali, anything like that. I’m glad to help people out. Give to us regularly, speak to people who are looking at the area. You know, I’m a I’m not a believer that even though it’s a small town, I don’t believe in scarcity. So it’s you know, there’s so much going on. It’s there’s an abundance for everybody if you want to play in that field. So, yes, feel free to reach out any time to help.

Dave Dubeau [00:16:27] Fantastic. Gary, thank you so much. Has been a lot of fun reconnecting.

Gary Spencer-Smith [00:16:30] Thanks, Dave. Been a pleasure as always. See you in ten years.

Dave Dubeau [00:16:34] Hopefully sooner than that. All right, everybody, take care and we’ll see you on the next episode. Well, hey there. Thanks for tuning in to 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’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, we invite you to get a complimentary copy of my newest book right back. There it is, the money partner formula and get a PDF version at investor attraction book dot com again investor attraction book. Dot com. Take care.

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