Table of Contents - Working Smart Not Hard in Real Estate with Mike Wolf
Dave Debeau [00:00:09] Hey there, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. And today it is my pleasure to finally pay down an old friend, an acquaintance of mine, Mr. Mike Wolf. And if you haven't heard of Mike, Mike is a very accomplished real estate entrepreneur. He's been doing this stuff for
Mike Wolf [00:00:28] 30 when you were born 30 years,
Dave Debeau [00:00:31] which is hard to believe because you're only like
Mike Wolf [00:00:32] thirty nine. But know this
Dave Debeau [00:00:36] for a long time, he's created what I suggest is probably everybody's dream lifestyle. This guy is a globe trotting around the world. Every time I see him on Facebook, he's popping up in some different exotic locale, all thanks to real estate investing. So, Mr. Mike Wealth, welcome to the show.
Mike Wolf [00:00:57] Hey, good to see you, Dave. Thanks so much for having me.
Dave Debeau [00:01:00] My pleasure. So, Mike, let's start at the beginning, and this is going to be a very free flow kind of a conversation. But how and why did real estate cross your radar in the first place?
Mike Wolf [00:01:11] Well, it was a very good mistake that I never I never actually intended to get into real estate. And so if we were to backtrack last century, I was you know, I remember being in the middle of grade 12, having absolutely no idea what I wanted to do when I graduated from high school. And my parents always were bugging me. I need to be doctor, lawyer, doctor, lawyer, doctor, lawyer. So anybody who knows me knows that I don't like blood. So Doctor was off the table. And so by default, I was going to be a lawyer and I went to University of Calgary, got my first degree and managed to rack up what seemed to me like an insurmountable novice to loans. And it was like twenty four thousand bucks, which in the eighties was a lot of money. And so I remember thinking, you know what, I'm going to go and pay this stuff off and then I'm going to go back at my second degree. And so I got a job at the phone company, which I had a friend whose mother was a manager there is now known as Tell US back in those days, just to date myself with Alberta government telephones. And so it was back that I was a government job that was union paid well. And so I was there. I won't tell you the whole long story, but while I was there, I bought my first property to live in. And then my mortgage broker calls me up one day and says, hey, Mike, you know what? Your credit's good. You're making enough money. If you want to buy another property, I can get you another mortgage. And I said, why do I want another property? And man, I wish I got that call every day. But so anyway, they said, well, you buy a property, you put a tenant in place, they make your mortgage payment for you, anything over and above that you get to keep. And you're twenty five years down the road, the mortgage is paid off and now you've got something is giving you gravy at the end of every month. I got that kind of makes sense. So I bought my First Avenue property and so working at the phone company two years later, the marketing koury takes off and I'm looking at how much equity I've got. And I never thought in my entire lifetime I would see that much money. And so especially for somebody who is still in debt with my student loan. So I remember thinking, hey, you know what? In the last two years, I made this much at the phone company and this much in real estate. And I don't even know what I'm doing in real estate. So basically I decided, well, if I could do this by mistake, what would happen if I did this on purpose? And so that was the start of a now 30 year career. And I wish I could say that everything off that went really, really smoothly.
Dave Debeau [00:03:29] The next. So boring, though, that would be so boring
Mike Wolf [00:03:32] and boring story. It would have made my life a lot less stressful. But you know, the challenge when you're in your mid twenties and you suddenly come into making some money, you feel like, hey, I know how to win the lottery. I know how to do this over and over. And of course, your ego gets the best of you. And so I thought, oh, well, you know, well, I mean, I got in with a long term approach. I was going to buy this property, hold it for twenty five years. I was the original plan. I want to got a taste of that first paycheck kind of kicked in. And I thought, oh, I'm just going to do this like every 90 days. And as you know and I know that if you do something by fluke and you can't duplicate it, that could be a problem. And so I maybe quit my job at the phone company a little prematurely and maybe tell my parents that, hey, you know what, screw that. I'm not I'm not going to law school. They're still pissed to me to this day. But basically, I kind of burnt all my bridges. And that was actually, in a way, it worked out to be a good thing, but. At the time was probably a dumb thing to do, so don't quit your job after you get that first paycheck. That's my advice.
Dave Debeau [00:04:32] All right. Very good. Well, hopefully, at least you're able to pay down or pay off your student loan.
Mike Wolf [00:04:36] Well, they're long gone now.
Dave Debeau [00:04:38] Fortunately, I met with that first deal, which is the older
Mike Wolf [00:04:41] I actually did. I did get rid of it. That's the first thing I did was paid that off. That was off my plate. But yeah, the thing about telling my parents that I wasn't going back to law school is after the next couple of years, I managed to lose almost all what I made. But I couldn't really tell my parents they were right. I couldn't go back and say, you know what, I should get a degree so I have something to fall back on. I couldn't tell them their rights. That led to the next phase where basically I found somebody who was doing what I wanted to do and basically said, hey, listen, I've got enough money to do one more real estate deal and I can't afford to screw this up. So if you're willing to be my partner on it and you teach me what you know, I'm willing to split profits with you. And that was my first mentor. And luckily I went that path. So what kind of
Dave Debeau [00:05:22] strategy was that?
Mike Wolf [00:05:23] Back in the day, back in those days, I went from what was meant to be a long term hold back on. I was fixing and flipping and I wanted to get in and get out really quickly. But unfortunately, I thought, oh, I don't need to pay an inspector and everything. The story things went way over budget, way over time. And like I said, my second and third deals, I managed to lose a good chunk of what I made. But then luckily I went from being a know it all to being very humble and asking for help for the first time.
Dave Debeau [00:05:53] So, Mike, over your 30 year career, I imagine you've tried a whole bunch of different kinds of real estate investing. What would you say? Well, especially nowadays, or what's your main bread and butter strategy?
Mike Wolf [00:06:07] Well, I have two things. One is and I recommend for everybody that this be their long term goal. I have a lot of passive income from now. I've gone back to what I originally did, and that was buying properties to hold for the long term and getting that that cash flow and passive income to have teams that collect my rent from me. I don't deal with that myself anymore or something I don't recommend people do is become their own property managers like I did early on. So that's one thing. And then over the years when I first started, I was in my early to mid twenties and a lot of my friends said, you're never you're never going to be successful as a real estate investor. And a lot of these people are now my clients. But once I became successful, a lot of my friends started to come to me and say, well, we want to invest in real estate, too, how do we do it? And they thought they could take me to Starbucks for an hour and I could teach me everything I know. And as you know, that doesn't work. So I started to at first I was buying properties for myself and then I started to buy properties for myself and my friends. And then it led to me buying properties myself, my friends and my friends, friends. And now it's led to me having a turkey real estate business where I sell properties in the US, mostly to Canadian investors who want to invest south of the border. And so I guess I'm fixing and flipping on a large scale. And my target audience is Canadian and other foreign investors, because now I've got over the years, I got to ask a lot of the same questions as I'm sure you do. And so I made a YouTube channel. Rasselas frequently asked questions, and now I've got people all over the world buying turnkey properties in the United States from me. So that's that is also a passive business because my teams do almost all the work with that. I set up the teams, the systems in place. So it's actually relatively passive income. So that and my portfolio buying whole properties are the two ways that I make most of them.
Dave Debeau [00:07:50] OK, so your your portfolio let's look at each one of those, if you don't mind. So your portfolio of buying old properties, what does that consist of? Primarily, are you single family, home sweet. It houses multiple families, bit everything.
Mike Wolf [00:08:04] I've tried pretty much everything over the years and for me was work best is just single family homes in the US now, like for example, in Atlanta, some of the homes that I resell started at seventy thousand dollars, US and DC. That's not even a shed. Even in Calgary, we're in the middle of a recession. The homes are five to six times more expensive here than they are there. And so I have a bunch of properties, single family homes. I still have some in Calgary that I bought a long time ago. And I have a bunch in different parts of the upper Midwest. And over time when things like you differently in most people's I don't stick with the same market. I go to a market, buy things. Well, they make sense. Well, the numbers make sense. And then when people start fighting over properties, I exit and move that money to the next market and just rinse and repeat. And I've done that in Vegas and Phenix and several Florida markets, Texas. And now we're very strong in Atlanta.
Dave Debeau [00:08:56] Smart, smart, very, very interesting. You find the markets that are on the way up by a bunch of single family homes there. Then when the market peaks or you think it's pretty close to peaking the sell off and go to the next market and rinse and repeat, is that
Mike Wolf [00:09:10] pretty much exactly. Eggs are smart, smart, smart.
Dave Debeau [00:09:14] OK, now let's talk a little bit about the turnkey properties. I guess you're probably doing those in the same markets that you're buying your properties.
Mike Wolf [00:09:24] Absolutely. I only sell at my own. So I only sell what I would buy myself of what I'm currently buying, and the big plus of that is obviously when we're doing large volume, we give you an idea. We sold around a thousand homes in Atlanta over the last seven to eight years. So obviously, when we're doing that kind of volume, we can go and buy directly from banks or distressed assets. And also when we're fixing up the homes, you know, if you were to come to Atlanta with me and go look at the homes after you saw two or three say, like, I don't need to see any more of that because all the same carpet, same appliances, same paint. Is very, very standardized. The economy of scale to get stuff a lot cheaper that way. And it also makes it really easy for me because as you mentioned, I love to travel. Last thing I want is people calling me all day long and saying, hey, what color paint should we do this or what? What carpet shall we use? So it makes it very, very easy and systemized and gives me my freedom.
Dave Debeau [00:10:19] Very, very nice. So, Mike, I imagine it took you quite a while to kind of figure out this this whole process. And a lot of Canadians are very, very excited and curious about the idea of investing in the states, but they're scared shitless and they've heard all these things about all the legal entities that you have to set up and double taxation, trying to get your money back into Canada and get your butt sued off by all those sue hungry Americans down there. So what do you say to Canadians or folks that are kind of concerned about that kind of stuff?
Mike Wolf [00:10:56] Yeah, well, my advice, first of all, a lot of the things that people are fearful of are actually worked for advantage. And so what I mean by that is through a similar transaction in Canada and I do the same sort of transaction with the same profits in the US, in most cases, I'm going to pay less tax on that transaction if you're set up properly, number one. No, to a lot of the stuff isn't really rocket science. If you're investing in Canada, you should be investing in an entity anyway. You should be buying your personal time anyway. So we're going to have an entity here or one there. It's the same process. But to me, when I look at the prices and the return on investment in any major Canadian city, it's like it's mind boggling to me when I see a little hick towns in the middle of nowhere where the homes are three, four or five times more expensive than the other cities I'm working in that have really good fundamentals like Atlanta. I love the government. There's very business friendly. So if you're a landlord, they give you preferential treatment over the tenant and that does not exist in most of Canada. Yeah, if I get rid of a bad tenant typically in around three weeks, I never had can kind of
Dave Debeau [00:12:02] six months here, right.
Mike Wolf [00:12:03] Exactly. And so but also for the same reason that, as I mentioned, business friendly. They also have tax benefits. There's a lot of companies have their head offices there. So if you look at Delta Airlines, Turner Broadcasting, Home Depot, I mean, the list goes on, CocaCola list goes on and on and on. And so when you have those kind of fundamentals, the economy's never going to suck there, because even if Coca-Cola shut their doors or all these other businesses in a whole bunch of different industries, it's not a one industry town. So these are some of the things that you want to look at if you're investing close to home just because it's convenient, you really get a lot of money on the table. And, you know, I've been investing in the US now for around 15 years. And since I started that, I haven't bought a single property in Canada. So I think that says something that will be a lot easier for me to invest in Canada. All things being equal, but it's not. And so you're missing out on a. My advice, if you don't don't go blindly investing down there, get somebody who knows what they're doing. A lot of Canadians come to me to buy in the States because I know how to move the money back and forth. I know how to deal with the taxation so you don't get double taxed. And I know how to do all the things that people are scared of. I was scared to see when I first started, but the opportunity was just too good to pass up. And I've had to over the years. I have some expensive lessons, but now I've got them figured out.
Dave Debeau [00:13:19] Yeah. Yeah. So speaking of that, what, what are some of the big mistakes you see Canadians making when they first make that foray into trying to buy properties in the States?
Mike Wolf [00:13:29] Well, the big thing is not know, not doing the research or quite often I think the biggest mistake I see people making is picking a market just because it's cheap. So it's great to find properties that are inexpensive, but you want to be ideally buying properties that are underpriced in a good market. And so as an example, one of the mistakes I made early on in my US career is myself and a couple of other investors. We wanted to test the waters in Detroit and back in the day. And I think even to this day, you could literally buy properties for dollar and we don't buy them for a dollar. We want a few steps up from that. But we bought homes that were pretty cheap, if I remember correctly, or like 30 and 40 thousand dollars. And that was a huge mistake. I ended up losing some money on those properties. I was very glad to exit that market. So go to market that has the right fundamentals. And so just really quick, because I know I don't have all day, but really quick, the things you want to look for first thing you want to look at is how landlord friendly is a market. And so you go to a place like California, and that's even worse than most of Canada can take you over a year to get rid of a bad tenant. And I don't know about you, Dave, but I've never had a mortgage company called me up, say, hey, I hear you're having trouble collecting your rent. You don't have to pay your mortgage to you get rent. No, no, I never did that happen. So it's pretty hard to run a business when you've got no income and you've got bills and you have no way to get rid of those tenants. So not only are they not paying you to get rid of them, so that's number one thing you want to look at. Number two is what are the chances of appreciation? And so things such as obviously growth and people moving there. And in the US, people will move quite frequently to other places in search of employment or lower cost living in Canada. We don't do that as much. In the US, it's very common. Then the third thing I look at, and this is often the first thing that people look at is our return on investment in terms of how much cash are you going to get? And if you go to that first, you ignore the other two. You're never going to actually achieve those numbers. You see on paper, like paper returns to they never materialized. So what do those first two things and then you get to that Arawa. And if you do that, you'll be in a pretty good position.
Dave Debeau [00:15:34] Awesome. Like time flies when you're having fun, my friend. We'll have to have you back on the show because goodness knows your bevy of wealth of information and knowledge and hard earned experience. So I appreciate your sharing some of that. If people want to find out more about you, Mike, what's the best way for them to do that?
Mike Wolf [00:15:52] They can go to my website, which is Mike Wolfe, Mastery dot com Wolf, just like the animal. And when you get there, by the way, there's a access to a free pass Vinnicombe master class. So you might want to sign up for that. And this is a lot of the stuff I've learned as a Canadian investing in the US and how I created my passive income there after making a whole bunch of mistakes that you don't need to make.
Dave Debeau [00:16:13] Beautiful. Mike, thank you very much, my friend. Really appreciate it. Thanks a lot of fun.
Mike Wolf [00:16:18] Yeah, it's great being here. Thank you.
Dave Debeau [00:16:20] All right, everybody. That's it for this week. Stay tuned for our next episode. Take care. Well, thanks very much for checking out the property profits podcast. And you like what we're doing here. Please head on over to iTunes. Subscribe read us and leave us the review.
Mike Wolf [00:16:37] Very, very much appreciated. And if you're looking to create a
Dave Debeau [00:16:41] regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.