Michael Dominguez sits down with Mickey Anderson, host of The Hustle Less Profit More Podcast. This podcast outlines Michael’s experience in real estate investing and the keys he used in building sustainable wealth. 

Michael Dominguez is an award-winning sales representative, a member of the RE/MAX Hall of Fame and the founder of Doors to Wealth Real Estate Group, a team of realtors focused on educating and assisting people in investment real estate. After becoming a realtor in 2008, Michael bought his first investment property and proceeded to add to his portfolio for 10 consecutive years. Throughout his realtor career, he has completed over 300 investment property transactions. Source: Episode 15 of The Hustle Less Profit More Podcast

Michael: I know dozens of people that have become multi-millionaires as a result of their real estate holdings. And, and I don’t know a lot of people that have done it without real estate. If you wanna catch a lot of fish, well you go to the place where all the fish.

Michael: If you wanna become wealthy, you go to the place where all the wealthy people are, and that’s real estate.

Introduction to Michael

Michael: 00:52 Normally I don’t mention this, but I grew up in the Windsor, Ontario area, and, uh, for those that don’t know where that is, it’s, uh, across the border from Detroit, Michigan.

Michael: And, uh, so yeah, both Mickey and I went to school, like, you know, minutes from each other, which is kind of hilarious. Mm-hmm. . Uh, and then I went to University Windsor too, actually. But, uh, but yeah, my, uh, my background is, is, uh, uh, I got, I did what everyone. Tends to do, maybe I had a lot of entrepreneurial, entrepreneurial spirit, uh, in my teenage and early twenties.

Michael: But you end up, uh, graduating university, you get the, uh, the traditional nine to five job. You meet a girl, you get married, you have a kid, you get a couple promotions and before you know what you’re stuck in, in the rat race and don’t know what to do. You buy a, you know, I was able to buy a house and I had a mortgage and, uh, had a spouse that wasn’t really making a lot of money.

Michael: And, uh, and, and honestly, my entrepreneurial spirit kind of went in the back burner. It wasn’t dead, but it was certainly on life support and, uh, and fast forwards when I was 40 recently divorced. Uh, have a, you know, uh, a kid who’s not quite 10. Uh, it starting a new relationship and. And sort of not where anywhere near I was hoping to be.

Michael: At that point in my life, I, I had all these goals and aspirations and I just wasn’t there. So it wasn’t necessarily right on my 40th birthday, but around that time, I kind of turned my life around and started focusing on, on ways of truly building. Wealth. And, uh, it was around that time we were buying a house here in, in with the Ontario and we, uh, uh, we were introduced by a realtor, uh, to a bunch of different houses and she was also a broker and says, You’d be great for real estate and you’d be a great realtor.

Michael: And I said, Oh, yeah, sure, you’d say that to all the boys. And, uh, but she says, No, no, no, you’d be great at it. So I thought about it and researched it, decided to go forward and. And quickly became a real estate agent and started focusing on investors and, and that’s how I got started on my journey.

Mickey: Wow.

Mickey: You know, it reminds me very much I, of my parents, so my parents joke that they started kind of their careers later in life and there’s a kind of a gift to it because you get a lot outta your system and you kinda reset with the wisdom.

Michael: Things did not do correctly. I, yeah, I could. I could write a book on that. And coincidentally, I do.

Educate Yourself on Real Estate Investing

Mickey: 03:17 Oh, I love it. Well, selfishly, I’m super excited to have you here because I have been thinking about real estate investing for a really long time, but like most people, it seems scary. The unknown is terrifying, and there seems like a huge knowledge gap between the concept or idea of.

Mickey: Oh, I could buy a property and start to invest in real estate versus actually taking action. Okay. So for those of us who are really just starting to toy with the idea of getting into real estate investing, what can we start to do to educate ourselves and, and decide whether it’s a good decision for us?

Michael: The first question I, I, I always ask that with a question back. Anybody who’s already a homeowner and you, you mentioned you and your, your, your husband have a, have a home, um, Every dollar of current net worth that you have, give or take, approximately how much of that came from the purchase of your primary residence and then your upgraded primary residence?

Michael: Ooh, ish. I’m not gonna hold you to exact number. Would it be over 50%? Would it be over 75%?

Mickey: I wanna say probably

Michael: around 50. Okay. So half of your net. Came as a result of the purchase of your home. And actually, to be honest, that’s actually a really low number. Uh, I know people that have, in all honesty, like my folks, for example, 80 to 90% of their wealth came from their, their personal residences.

Michael: Residences. And it’s one of those things where I tell people, I said, Keep in mind that at least in your own personal experience, in your own circle of France, the vast majority of the wealth that we’re building can, can come from real estate especi. In markets like Canadian real Estate. It’s not like you’re saying while there’s a one in a million shot that it’s gonna be successful.

Michael: As a matter of fact, in my circle, I know dozens of people that have become multi-millionaires as a result of, of their real estate holdings. And, and I don’t know a lot of people that have done it without real estate. So if you, you know, I, I mentioned this in my book. If you, if you wanna catch a lot of fish, well you go to the place where all the fish.

Michael: If you wanna become wealthy, you go to the place where all the wealthy people are, and that’s real estate. So with that in mind, the first thing I would tell you is not all real estate is equal and, and the most important thing is to start to do your research and, and homework. I have an entire chapter called, uh, Becoming an Insider Trader.

Michael: And you know, the term inside insider trading is one of those things that um, uh, we obviously. Associate that with equities and, you know, and, and Martha Stewart and, and, and making investments with all this insider knowledge and perhaps going to prison. Well, in real estate, it is the best possible thing that you can do.

Michael: And I’m gonna use my market in the greater Toronto area as an example, and. I know the market fundamentals in this area, and specifically I know the areas that I’m investing and my area is not Ottawa. Ottawa is way too big of a market. Um, even honestly, Canata might even be, uh, almost too large of a market.

Michael: So you find areas in that town that have the right market fundamentals, and some of the things that I look for is, Is growing population, growing job base, uh, growing, uh, mass transit, uh, you know, transit hubs are a huge thing. And when you start to understand what, what drives and, and makes real estate go up in value, it becomes no longer this big foreign, oh my God, how can I know what’s gonna happen with real estate to becoming very predictable and honestly kind of boring?

Michael: Um, and. Because you just know, You just know that the values are gonna go up and, and so if I can buy a quality property in a quality neighborhood, attracting quality tenants, I can hold onto it for a long time. And this little side hustle will make me quality profits. Uh, I don’t wanna be making scrunchies on the side.

Michael: I don’t wanna. I don’t wanna be driving Uber Eats in my evenings and weekends. Uh, the whole concept of hustle less is, is just being a lot smarter about things and, and, and finding things that can really make a significant difference in your life. And certainly real estate investing is one of those things.

Mickey: Growing up and even into my late twenties and early thirties, there were a lot of house flipping shows watched in this household, and that was really my first introduction to the idea of purchasing real estate was man, people flipped these houses and it looks like a lot of work. It looks very risky, and so I really love the fact that you’re saying don’t buy the trashy house or the risky investment.

Mickey: Choose not just the property, but the actual location really. Carefully. Uh, what a, a different idea from what I had of what real estate investing was.

Michael: I actually look at, um, I’ve got a avatar, my ideal tenant profile, and, and so my ideal tenants are between the ages of 25 and 30. They, uh, they, you know, it’s usually a couple.

Michael: Uh, I don’t care if it’s male, female, female, female, it doesn’t matter. But a couple, uh, they’re making solid income. They’ve got a good credit score and they’ve got a, an aspiration to one day become a homeowner. That’s the kind of person I’m looking for. They may have a child, they likely have a pet. I’m a pet fairy kind of guy, so that’s totally cool with me.

Michael: Uh, I’ve actually designed my houses to be more pet friendly and, and so by creating my avatar of my dream tenant, that allows me to, when I was looking for properties, I was actually looking for properties where my ideal tenants would want to rent. And, and so it all started with the tenant profile because I could tell you as someone who has owned properties that have needed a lot of work and been in mediocre area, Easily, 80% of my efforts were on the one or two properties, which were my pain in the ass properties, and we’ve now divested ourselves from those properties, and we’re focused only on the quality properties and quality neighborhoods.

Michael: In my book, I, I interviewed a number of, uh, uh, success story people and, uh, many of them spent as little as two or three hours a month in their portfolio, and they’ve become millionaires as a result of that.

Mickey: Wow. It’s. Just the idea of becoming a mil, the armchair millionaire, as your book is titled, It feels a little, almost like a whimsical dream, but the fact that you’re able to really give us some tangible steps.

Mickey: Right. The avatar, I love that In marketing, we do the exact same thing. You create an avatar and then you build your products and services and your business around the avatar and Absolutely. For me, I never thought it’s always fined the property and then find the tenant. But you’re saying, No, no, no. Figure out your ideal tenant first and then work back.

Michael: If, going back to the flipping and, and flipping, you’re absolutely right. It’s, it’s, everyone’s watched our share HG TV shows and amazingly, in 30 to 60 minutes, these very pretty people are able to do three or four things and magically the place is ready in three weeks and it’s, and they’ve supposedly made.

Michael: Um, a hundred thousand dollars in their efforts. First of all, most of it is complete and total bullshit. There’s nothing to it. They, they don’t factor in the caring costs of, or the financing costs in their profits. They certainly don’t include their real estate fees. They don’t include land transfer tax.

Michael: Uh, I could tell you a lot of people I know that have done flips, if you break even on your first flip, considered that to be a successful first flip. Uh, if you are, if you are. A contractor and can do a lot of the work yourself. Absolutely. You could turn a profit because you’re essentially, you’re creating your own job.

Michael: And that’s cool. That’s, that’s a great way to do it if that’s what you wanna do. But you’re, as soon as you stop doing the flips, the, the, the evenings and weekends, the money stops. The, the great thing about owning assets such as real. Is all the work that I did in 20 16, 20 14. I, I’m still to this day re receiving residuals as a result of that.

Michael: And, and really every three months we’re taking money out of our account and it’s, it’s, it’s funding my life. And so, um, the amount of hours worked compared to the amount of money we’re generating. Uh, we’re, we’re basically putting no money, no hours work into it, just, it’s just that cash cow that just keeps producing.

Building a Portfolio

Mickey: 12:07 I when, when you say that at first, when you mentioned, you know, just a couple hours a week to maintain your portfolio, um, I could kind of picture myself in the seat of a real estate investor, you know, checking in on properties, managing tenants, that sort of thing. But the idea of building a portfolio from scratch seems like a lot of work.

Mickey: Is it possible to do. In a minimal amount of time, or is this something where you put a lot of work up front and slowly start to kind of deviate or lessen the workload?

Michael: Yeah. And obviously every person who’s listening to this podcast is coming from it in a different, in different place. I could tell you where I was at.

Michael: I owned, uh, a house that, well I’m in right now. Actually at the time was worth about 600. I had about $600,000 in equity in the home. Uh, it was only worth 600,000, so I didn’t have any debt on it. And so essentially I used, uh, I was able to qualify for my refi. I had a really strong nine to. Income as a realtor, I was doing quite well there, so I really didn’t need the, um, the cash flow from the properties.

Michael: I was focused more on wealth building and I’m gonna come back to that a little bit cause there’s a real difference there. And so what I was doing was I would. Uh, was able to, in Canada, you were able to qualify for the most part and get an 80% loan to value mortgage. So let’s, let’s pick a nice easy number here.

Michael: Let’s say the property is worth $800,000. So the bank would be willing to offer you a, uh, 75 or 80% of that. So you know, a neighbor of like $600,000 in mortgage. So you have to come up with 200 grand yourself. Maybe, you know, maybe a little different than that, but pretty close and. I was able to take the $200,000, using that example from my primary home as a line of credit, uh, HeLOCK.

Michael: And the rest, I was able to qualify against a home. And for those that are weak at math, 80% plus 20% equals 100% financed. And so this particular property was essentially a hundred percent borrowed. Now, the downside in having a property that’s fat leveraged. is that it’s likely not going to cash flow an awful lot.

Michael: And, and I was okay with that and because my nine to five job was making as much money as it was, but uh, over time I was able to force some appreciation on the properties by doing a renovation, adding a legal secondary unit. And that’s the thing I advocate so much is not buying. That single family townhouse or, or going the other way and buying that huge multi-unit building where it has a bunch of ods p tenant profile.

Michael: Uh, but more so, um, or, you know, disability and such like that, but more so that avatar that attracts, you know, that I can attract and, and that that bungalow with a basement apartment is absolutely perfect for that. And so, uh, so yeah, so once you did. I often sat back and didn’t do much else, and then a year later I did it again, and a year later I did it again.

Michael: Maybe some of the properties that I had done three years ago, I refinanced them and then took money from that and did it again. So my cash flow was very affected by that because I kept refinancing against my portfolio. I wasn’t necessarily trying to do it all in a, in a year or two. Matter of fact, I’m a big believer in the, um, in the quote, actually, it’s right up there.

Michael: Uh, people tend to overestimate what you can accomplish in one year and they underestimate what you can accomplish in 10. Yeah. And my goal was to buy a property every year for 10 straight years. That was my goal, and that’s what I was able to do. Some of them with partners, but eventually I just kept adding and adding and adding to my portfolio.

Michael: And then once I reached that decade, then I kind of flipped the. I said, Okay, I’m not focused on wealth building anymore. I don’t need to refinance anymore. But now as the tenants move out, I’m gonna re, I’m gonna get a higher rent. And I just found different ways to improve the cash flow in properties. And so I went from one or $3,000 in cash flow to six to $8,000 in cash flow because I had a portfolio that could do that.

Michael: And uh, and yeah, that’s, that’s how it all started. And, and. It’s hard to do it all at once. You need a lot of partners. It needs to be a full time gig to make it really work, but, But someone who’s just working a few hours a month, absolutely. They could buy a property a year for sure. Even if it’s every other year, it’s still gonna make a huge trip in your life.

Mickey: Yeah, I, I like the idea that we get to kind of decide the rules about how we go about it, right? There’s a quote from, um, The Psychology of Money by Morgan Housel and it’s, um, all about know the game you’re playing and don’t be influenced by other people playing a different game. And I think that. Because I just recently joined a real estate investing group.

Mickey: It’s a women’s group here of all real estate investors to learn and connect and network and just kind of soak up as much knowledge as I can. And one of the things that I noticed right off the bat was the vast difference in portfolios, goals, plans of everyone within the group, right? There’s no one size fits all box in real estate investing.

Mickey: And so for someone coming in maybe only wanting to buy one property and and leverage that for long term. That’s okay.

Michael: And, and that’s why I wrote the book that I did. I didn’t want to write it for the person who wants to have 30 and 50 properties, although you could use some of these fundamentals that could grow your portfolio to that level.

Michael: This was written to help people buy their first, second, and third investment properties. I call that the Triple Crown Club. Uh, as a matter of fact, one of the success stories I chose was a young couple and they ended up buying two properties and. and with the bright cash flow and appreciation, uh, they recently had a child and that was part of the interview I did.

Michael: And their first inclination when they, when they started to calculate how much they would need for their son to go through school and university and pay for hockey and all these things, they came up with a number and they said, Oh my God, how are we gonna afford that? And then it just almost was like an aha moment.

Michael: It hit them that the property they bought three years before that, , all they needed to do was refinance that once or twice over the course of the child’s lifetime or sell it, but even refinance it and that could pay for the child’s entire education. So one smart decision that they did before the child was even born, um, has basically changed the fortunes of their lives.

Michael: How’s that for a success story? It wasn’t 17 properties. It was. Or one,

Reduce Real Estate Investing Risk

Mickey: 18:28 you know, you mentioned protect, predictable property buying and using the avatar to kind of reverse engineer this process. Is there anything else we can do to make real estate investing maybe feel a little less risky and more predictable?

Michael: Um, you’re doing something that’s fantastic and I advocate this all the time, wherever. Listening from, I guarantee you that within an hour of where you are, there is a meetup group. And again, it’s one thing to do online, but there’s, there’s some, there’s nothing that can match rubbing shoulders with other action takers.

Michael: Uh, the biggest challenge that we face in our, in our nine to five lives is that everyone who’s in our work space, as well as most of our circle of friends, very few of them are likely taking action and buying real estate. So they may not. Intentionally, uh, discouraging you from moving forward, but just their, their nervousness, uh, will, uh, will sometimes put some doubt into your mind.

Michael: I tell people, uh, you think investing in real estate is risky. Uh, how risky is it to not invest in real estate work 40, 40 years, insane job and put money into a RSP and tfsa and hope and pray that that money’s gonna be enough for you to retire? That my mind is the risky move to do so. By rubbing shoulders with people that are actually taking action and doing it.

Michael: And um, when I started to invest in real estate, I did have some friends that said, Oh sure, I bet you bought another property now. And, but meanwhile, in my investment group, they, they applaud me and then they actually teased me and say, What, You only bought one. And it’s just a different mindset when you, when you, when you’re rubbing shoulders with a different circle.

Michael: And if you aren’t nearing one or is it just too busy? Cuz your nine to five is just taking too much time. There are 8 billion different podcasts that are out nowadays. There are some great audible books, uh, as a matter of fact, including Arm Share Real Estate. Millionaire is now an audio book. Um, uh, just start to educate, self educate, use the university, uh, in your automobile and, and, and, and start to really learn and, and make it seem like it just, it’s a natural next progression in your life.

Michael: It make it so it’s an obvious thing. It’s it, and take the risk rate out.

Mickey: One thing that you mentioned earlier that I think is really helpful for a lot of us is it’s not the property as you buy it necessarily, that’s going to be the wealth building machine. It’s increasing the value of that property over time, because a lot of us, if the idea of buying one property feels expensive and risky, investing in renovations right off the bat feels even worse.

Mickey: Right? It’s super scary. And so maybe pushing the, um, Um, the renovations further back and kind of timing those out can be a plan as well to manage the risk or manage the amount of money you’re investing. It

Michael: depends on what the renovation is. Yeah. Um, spending $50,000 on landscaping, your rental property, including adding in all sorts of hard scape like, uh, Um, a walkway and stuff like that maybe isn’t the best use of your money.

Michael: Uh, building a legal accessory apartment in the basement, which can essentially increase the rental income by 50 to 75%, uh, over what you’re already making, and all of a sudden turn your property into a cash flow generating machine. Um, that might be okay. . Yeah. So, you know, so, so just using a little bit of common sense, but you know, like the question I always ask myself before I do any renovation, what, when I was growing my portfolio was.

Michael: Will this attract a better quality tenant? Yes or no? Will this increase the value for either a, a sale or a refinance? Yes or no? Um, is this, if I don’t do the renovation, will there be some damages that will come as a result of that? Yes or no? If the answer is, is no in every one of those circumstances, it’s probably a, uh, something you can defer.

Michael: But, but if the answer is, yeah, if I don’t replace this roof, um, it’s gonna. Thousands and thousands of dollars of damage. Yeah, it might not raise the value of the place, but it’s still a good thing to do.

Mickey: Yeah. No, I, I, I appreciate that because, you know, for those of us who’ve never renovated a home, right?

Mickey: We bought our house new, even our townhouse was relatively new and didn’t need, like, I think we did a little bit of work in the basement, but not much the idea, especially when neither of us are contractors and you see these flipping homes where there’s a real estate agent and a contractor duo tackling all these things.

Mickey: It feels like I’m missing a significant amount of knowledge to make those kind of decisions. So I, I love that actionable checklist you just gave.

Michael: Well, and, and, and also you, you sort of already alluded to it as well, everybody knows somebody who’s a realtor.

Michael: Just because you’re a realtor doesn’t mean you’re an investment realtor. If I go to the doctors and I need brain surgery, I’m not gonna go to my general doctor for that brain surgery if I’m gonna buy an investment property.

Michael: Uh, my best friend Susie, who I’ve known since she was six and now is a real estate agent. If she doesn’t currently invest in real estate that is not attending a lot of these events. Maybe she’s not the best person to pick for that. Um, and so finding an agent, finding a mortgage broker, finding a team that, that understands real estate investing is so imperative.

Michael: And, and honestly, in if people that are downloading this, uh, this, this podcast, uh, if you, if you’re self-employed and you’ve got a team around you, you can appreciate the value of a team. Like having a strong team makes all the difference in. Yeah,

Mickey: when we talk about building that team, especially as a new real estate investor, can you talk to us a little bit about how to choose and who to choose when we’re starting to find those key people to help us start to build a portfolio?

Michael: Well, yeah, there’s nothing wrong.

Michael: if, if you’re, if you, if you’re trying to create some sort of a goal, um, ask them what they, they see as far as their vision for what’s a quality investment property. Uh, as a matter of fact, I believe going to a meetup and uh, and, and actually seeing some of these people in action is probably the absolute best way to find some of these people.

Michael: So if they’re not going to the local meet, Might not be my person to begin with. And so that’s where I’ve got most of my connection was through that, or people that I respected there who then passed on a lawyer’s name or something like that. Uh, so that would be the first thing I would do is what are their, what are their goals?

Michael: Like as a financial advisor, people are constantly reaching out to me and saying, Hey, would you like me to help finance or, um, invest your. And I ask them, Well, how much money have you got? And first of all, they feel offended that I even ask that question. But most of these people don’t have the slightest knowledge of how to handle finances for themselves.

Michael: And, you know, all I’m renting and living in my mom’s basement. Well, no, I’m not gonna give you my million dollars to invest. Thank you. Yeah,

Mickey: yeah. No, that’s, It’s funny because we, we do hear people who are happy to give advice and try and tell us things even though they’ve never actually done. Or, or put themselves in the same position.

Partnering in Real Estate

Mickey: 25:39 So I, I appreciate that. One of the questions I really wanted to ask, because I hear about it a lot in this new group that I’ve joined, is the idea of partnering with another investor to start growing your portfolio. I would love to know your take on whether that can be a good idea and how to go about that process.

Michael: Yeah. There’s, there’s four main components I guess you might wanna say, in terms of. Of adding the property. One is the, the research to find the, the right property. Uh, the next is, is the, the renovation to get it started. And secondarily to that, the ongoing management of that, of that portfolio, that property.

Michael: The third one is the actual, uh, down the down payment amount. The qualifying with, or, well hang on the, the down. Getting the money, the a hundred, 200, $300,000 needed to do the down payment plus the renovation. And the fourth component is the qualifying with the bank. And, and a lot of people with the money don’t necessarily qualify.

Michael: I, I’m in that boat, for example. Mm-hmm. . So if you think of it as those four main. Buckets. Uh, there are times that you might be able to fill two those buckets really, really well. Uh, maybe you become the market expert. Uh, maybe you are willing to do the work on an ongoing basis, but you don’t have a lot of money and you can’t qualify.

Michael: Well, if you could find someone that has those other two components, maybe they don’t have the time to do the day to day work, Maybe they don’t have the time to, uh, uh, to do the renovation. Again, it’s the old commercial where I’ve got chocolate. You’ve got peanut butter together, we make a great, uh, great treat.

Michael: Uh, it’s along those lines where if you, you find the right partner that could really work out well. Another component that I did was, me personally is I partnered with people that were also active partners, and we came in 50 50 and it was somebody, honestly, it’s, it’s a, it’s another level of a marriage really is what it is.

Michael: Um, and so you have to be darn sure that it’s someone that you can like and live with for a long period of time. And so in that way, we’ve divided up the tasks and so we were able to make that work as well. So it can work. I’ve seen it where it’s gone miserably wrong. Uh, when the money partner is not happy with the active partners efforts, um, their speed.

Michael: Whatever that can, that can turn a relationship really sour really fast. So there, there’s upside, but there is an element of risk. You have to definitely know who you’re getting into bed with and, uh, if you, if you don’t, if you’re just, if you’re so desperate for the money, if you’re trying to build your portfolio looking for money and you’re willing to take some.

Michael: Asshole with the, with the ability to qualify. Maybe that’s not the best way to go. Mm-hmm. .

Mickey: Yeah. And I like your take on the idea of using real estate as a means to buy wealth and not just quickly generate fast. Cash because we think of the same thing when it comes to business, right? It’s there are people who get into business to try and make money really quickly and then get out.

Mickey: And I think it seems like there are people who do the same thing in real estate. Yeah. Um, but when we’re talking about building personal freedom, building personal wealth, building balance, and enjoying your life, The fast cash model doesn’t necessarily sit right.

Michael: There’s an element of risk. You’re, you’re, you’re riding a wave of appreciation.

Michael: Like anybody who’s uh, paid attention to the news at all, you could have bought a shack. A year and a half ago. And then the value surged in value because of the number of reasons why, Um, it, it wasn’t this person who bought the shack was all that smart. It just, they, they caught a wave. And that’s what flipping is, is that I know a number of people that have gotten burned because when they were ready to sell, the market wasn’t as hot as when they bought, bought it, and they put a hundred or $500,000 in the re.

Michael: And it was worth barely more than what they paid for. And it was, uh, it’s a, it’s a sad situation when they’re in the flipping game. But in a buy hold, once I purchase this property, as long as the property is covering itself and, and hopefully making a few dollars on the side, it almost doesn’t matter that the property goes up 20% or even drops 20% in value.

Michael: I’m cash flowing. I’m, I’m not in the real estate market anymore. I’m in the rental market. And, uh, and so. And historically, um, the rental values here in Ontario with the population that’s been growing in all of the cities, the rent numbers just keep going up and up and up. And as the property values have surged in the big cities, a lot of the people that we’re renting prior have now sold their rental spa spaces to people that have moved into it.

Michael: So it’s even less rental units today than there was three years ago in a lot of these cities. So there’s more people and less rentals available. Guess what’s happening to rental values? So they’re just surging. And, and it’s been, it’s been, honestly, it’s been pretty easy. It’s not like the old days where, where, you know, you had a hard time finding somebody with a 600 credit score because everybody who was anybody was buying a house.

Michael: I’ve got a tenant in my, in one of my WI properties that she’s a lawyer making over a hundred k a year. Her husband’s, uh, works for the city and making 50, 60 grand a. But they can’t buy a house right now because they’ve got so much student debt and they don’t have any money for a down payment a couple years.

Michael: They’re gonna buy, they’re buy perfect tenants. They’re, they’re great tenants, but they’re not necessarily gonna be, um, able to buy a house right away. It’s, it’s a different world and us to take advantage of it. Yeah, I’d love

Residential vs Commercial Real Estate

Mickey: 31:15 to pick your brain a little bit about the difference between buying residential real estate or rental real estate versus commercial real estate, or even land, just land development.

Mickey: Um, when we’re deciding how to build our portfolios. Is it like stocks where you wanna diversified portfolio?

Michael: I, I’m, I follow the teachings of Warren Buffet, where I have a lot of my eggs in one basket, and I just watch that basket really closely and. And we could take a look at each one of those things.

Michael: Land is by far the most speculative, first of all, it’s very difficult to leverage. A lot of the banks don’t want even loan against that. So you’re, you’re coming with a hundred percent down. And how the land goes up in value is if you have the skillset or the, uh, luck that your property is redeveloped in a way that you can actually develop.

Michael: You can either sell it at that point or you can do the development yourself. That’s a major league approach to investing and it’s, it’s a lot of work when it comes to commercial again, um, the commercial game, I, I grew up in the real estate or in the, in the, uh, uh, in the retail world. And retail and commercial has changed tremendously over the last 50 years.

Michael: Heck, they’ve changed over the last three or five years and. If I took my DeLorean time machine 20 years in the future in Canada, I could go to your subdivision and I could be pretty darn sure that the subdivision’s gonna be almost exactly the same as it is today. And I like the certainty of of that.

Michael: Whereas in a commercial space, you know, with the Zoom world that’s going on right now, are we sure that that’s gonna be a great investment in 20 years, is buying that plaza with 16 different retail location. Uh, is that the best location? I don’t know. There’s an element of risk there. Um, like I would sure that blockbuster was gonna be a big thing for the next a hundred years, but it didn’t.

Michael: So, so, um, uh, but residential is very certain and unless all of a sudden owning or living in a house here in Canada became out of fashion, I can pretty much speculate. Homes will be just as valuable or likely more valuable in 20 years than they are today. So I find that residential real estate to be by far a lower risk, uh, investment situation.

Michael: Yeah,

Mickey: that helps a ton, especially for someone like me who had initially had dreams of buying some sort of a commercial property and renting out the other spaces in order to have my own office in that space. But seeing you’re so right with residential, you can really make. Kind of tenant avatar and choose the property based on that.

Mickey: But with commercially, you don’t have that same necessarily luxury of being able to choose exactly what kind of businesses go where and who. Right. So,

Michael: um, and yeah, and another thought that you can consider, which I, I’m not advocating by the way mm-hmm. , is to, uh, get a mixed use building where you have, uh, commercial space downstairs where your office could be and then have tenants upstairs.

Michael: And it sounds good in. But just think about, try to imagine the existing inventory of buildings that are, that are currently mixed use. Yeah. And then think about the quality of tenant profile that’s upstairs in a downtown core on, uh, trying to think of some of the streets in Ottawa, but yeah, on Main Street, Ottawa.

Michael: And, and, and you think. Is that the tenant profile? I really want, The answer is no. So I use the same philosophy that I’m using for my, um, my long time vacation. We actually looked at buying a vacation house and we decided against it because we said, Why don’t we just do two to three months short term rentals, rent anywhere we wanted the world, and then use all the extra money real estate here in the greater Toronto.

Michael: Make the cash flow and with that cash flow could go anywhere we want to go. And going to your scenario, if you could make enough money through your other ventures, you could use some of those funds to, to lease the place you’d rather lease rather than something you’re obligated to lease just because you own it. Yeah.

Differences in Canadian Real Estate

Mickey: 35:23 Oh, I love it. I’m getting free advice here and I’m so soaking all of it. . That’s my favorite part here. Um, I wanna talk about the book because for a lot of us finding trustworthy and reliable sources of information online can be. Challenging, especially knowing in the Canadian market in particular here, it’s very different from the us right?

Mickey: The it is, the laws are different, the strategies are different, and so I would love to know more about the book and what we can learn from it.

Michael: Yeah, so the book is called Armchair Real Estate Millionaire, and it’s both available, just so you know, in uh, um, audio version as well as the, uh, book that’s available on Amazon and Indigo and all those fun places.

Michael: So, I wrote the book, um, not for someone to. 20 and 50 properties to buy one, two, and three properties. And they go through teaching people the basic fundamentals of what to look for in a real estate investment. And then secondarily, um, the next steps to go forward. So sort of a, a bit of a how to guided how to get going on it and, um, With my wife.

Michael: She has 25 years of HR experience. She worked for ibm. Um, she’s helped in developing the kind of leases that we want to have, and we talk a lot about having the right type of lease setting, the right type of, uh, structure in place. So it’s very systemized along the process. And, and honestly, that’s the best way to describe it.

Michael: It’s, it’s creating a bit of a system and, and if you have enough success with that, maybe you can go forward it by a second and a third. And that’s really. What I advocate a lot of people, much like what? Crazy visions are of buying this beautiful multi-unit building in the, you know, this, this huge building.

Michael: And that way on your phone you can show all your friends your picture of your, of this is my building, but I have these boring 1000 square foot bungalows with basement apartments, which aren’t very exciting and sexy I’ve met. But they’re cash flow generating machines. They’re wealth building machines.

Michael: And here’s the cool thing as well is, is, and I have an entire chapter about this, which is a whole different conversation. , but the buyer of my property, if I ever need to sell it could either be another investor, it could be a multi-generational family, which is very prevalent in the cities here in Canada, especially with all the immigration we’ve been seeing.

Michael: I find that the long time Canadians don’t wanna spend anywhere near as much time with their family, which is why of course, I’ve moved from Windsor four hours away just to avoid that situation. But multi-generational. And then lastly, of course, is the millennials and, and Gen Zs who are having such a struggle trying to get going in their real estate lives.

Michael: So I, I try to advocate and teach them to maybe live in the basement apartment of this particular property, rent out the upstairs. And really start to house hack and build wealth. So there’s three different buyers that can buy this place going forward. And, and that’s, that’s so exciting. And, and we talk about a lot of that and, and it’s a very simple, basic approach.

Michael: It’s, it’s one of those things that. You know, already 80% of what’s there. It’s just, it’s just sort of saying, Yeah, you’re right. Yeah, you’re right. And that’s really what my book was all about. My mentors taught me so many of the market fundamentals and the right fundamentals of real estate that I’ve just passed those on going forward.

Advice for New Solo Business Owners

Mickey: 38:46 For the listeners, this is my favorite question to ask if you could give one piece of advice to these new solo business owners who are busy, but.

Mickey: They want long-term freedom, They want generational wealth, They wanna take steps in that direction, but they’re not quite sure how or when. What would you tell them to do first?

Michael: Oh, first, oh boy. Um, what would I tell them first? Um, I think a lot of these guys are already doing a lot of the right steps, but, um, they’re, they know their business really well and.

Michael: And really use their, their business for, uh, it’s not necessarily a forever thing. Like, like I became a realtor with the intention of building up my business so that it could be, uh, an asset that I could pass on to the next person and, and generate wealth with that. Uh, this isn’t necessarily first, but always have that in the fact of they’re mine to, uh, to uh, um, put your business in a position where, It’s, it’s saleable.

Michael: It’s, it’s, it, it’s use it for what it is. It’s not necessarily the most important thing in your life, but it’s, it’s helping you develop that, that that cash flow and that wealth and, and then, but once you reach that point, they should look to diversify in something like real estate. Because in, I, I talked about having all your eggs in one basket, and that’s great.

Michael: If you can all of a sudden start buying other assets. So that’s not really the answer you asked me, but it’s, uh, good. That would be the advice I would ask any young person who’s, who’s in, or when I say young, I’m not even talking age young in their business, is to, um, is to, to have a five, 10 year plan. And part of that plan is, is to start taking some of.

Michael: Money and start to build other assets. And if you can start focusing on building wealth producing assets, um, and just keep doing that over and over again, uh, that’s only gonna lead to success long term.

Mickey: I love that advice. I think a lot of us build our businesses. Without realizing it, but we build it and it’s a, it’s a liability

Mickey: It’s not an asset for the most part, right? It generates some revenue, but we can’t necessarily sell it because it’s us and it’s dependent upon us. But as we start to take those steps to find ways, whether it’s within our business or outside of our business, to generate that wealth and accumulate assets, we’re gonna experience more freedom and more stability over time.

Mickey: I love that advice.

Michael: I created Doors to Wealth, and that was my real estate business. Before that, it was called the Michael Dominguez team.

Michael: The Michael Dominguez team. Could not have been sold because if you sell it no longer Michael’s there, it’s, it’s not good. Uh, so I, with intention, I created Doors to Wealth with the intention of selling the business five years later. And that’s what I did. And so I’m now getting residual income from the efforts I did for, for 10, 15 years as a realtor.

Michael: I’m now getting, um, But four or $5,000 a month every month for five years as a, as a means of selling it. Um, so with my real estate as well as the business sale, as well as doing private mortgages, I’m now receiving enough ca passive income that I don’t need to work anymore. I, if I want to, I can still take on clients, but I don’t need to.

Michael: And that’s, and that really is, I think what all of us self-employed people are trying to do is get to that level of financial freedom so that they can. Hustle Less than profit More. That’s it.

Mickey: That’s it. Yeah. It’s a, it’s tricky when you build a personal brand. Cause a lot of us, um, we just don’t know what we don’t know when we first get started, but I, I, I love that.

Mickey: With the exit plan in mind, even if it’s not necessarily the goal to exit setting it up so that if you need to, you can, and to make some money off of it is absolutely ideal.

Michael: I’m an avatar guy. My avatar is, I wanna live a certain life and, and, and a lot of the things I do get me to that level. Oh, I, I, I wanted to tell you this one story.

Michael: Yes. I was, I was working. As an active realtor, uh, about three, four years ago, and I’d reached my financial freedom number or I was really, really close to that number, but I was still working my typical 50, 60 hour work week as, as many of the people listening on this podcast are probably doing as well.

Michael: And, um, and so I was at a Sunday open house. And there was a mother and son that came in. The son was probably 18 to 20 years of age or something like that. And so I like talking to kids that are at that age and sort of telling ’em both. And we were in a duplex at the time. And so, uh, usually another realtor’s upstairs and I’m in the basement and I’m giving the, the pitch on the quality investing and building wealth and blah, blah, blah.

Michael: And so, you know, he’s listening to it all. I was saying, you know, if you can, you know, in five years or 10 years, buy a house like this, live in one unit that’s gonna really set you forward. I wish I’d had thought of that when I was in my twenties, all that stuff. And then he just looks at me and says, Well, if you’re so rich, why are you working on a Sunday afternoon?

Michael: And, uh, and, and so I gave him some smart asset advice. I said, Well, I’m here to help and pass it on. He says, You know, that’s smart. Is he’s right. Why am I working on a Sunday? A. And so if I can offer anybody who’s listening here and is working 50, 60 hours a week, uh, if we all know the fable, the, uh, the an and the Grasshopper or the ant, it’s hustling all the time.

Michael: And the Grasshopper is sitting on his ass. And, and then, and then the fable is, is that when winter comes, the, the ant is able to eat and the Grasshopper dies. You know, Starves dies. Um, I. All of us ants to take on your inner grasshopper a little bit. And don’t forget to live your best life and, uh, and make that the goal at the end of the time because you just simply don’t know how many years we’ve got where we’re active and going.

Michael: You can’t say, Well, let’s work till we’re 70 and then I’ll have tons of money to spend there. Like, you know, anybody who knows somebody in their seventies. You know, their big event is going to Shopper’s Drug Mart for the afternoon sort of thing. So Senior discount. Yeah. .

Mickey: I used to work at Shoppers on the weekends, so I know, I know that.

Michael: Avatar . Yeah, exactly. So, you know, and so I’m really making an attempt and honestly, there are days where, where there are times when I’m doing my road trips where I, I think. Geez, I don’t know how many years I could do this. Like last year I did a road trip. I drove through Route 66 from Chicago to LA and in my Corvette convertible and had a great time on my own.

Michael: Nobody want, nobody can afford or wants to go with me anyway. Plus my Corvette’s not big enough. Uh, and this year I drove back from Los Angeles. I was in LA for two months on a, uh, not, not vacation wintering. And then I drove back. It took me about three, four weeks to drive back and I drove through much to the United States, drove about 7,000 kilometers.

Michael: Took my time coming back. And just seeing all these things that I always said one day I wanna do that. One day I wanna do that. Well, when is one day gonna happen? Make sure one day. Happened sooner rather than later. Yeah.

Mickey: I, man, I know for me, I always kept saying and envisioning this point at which I would stop working weekends and stop having the extra job and stop doing all that stuff.

Mickey: But it wasn’t tangible. It was like this, Oh, I’ll make enough money, but, but that’s not enough. You have to know, or at least set that non-negotiable. Okay. Like, when is the date that I’m going to stop doing this and start enjoying my life?

Michael: It, and that’s, that’s a great concept. Then just simply magically have it happen.

Michael: It doesn’t just happen. You have to start taking steps today, uh, to start building assets that can start to generate the cash flow so you can live your best life. Like obviously any of us can quit and then buy a tent and then, and you know, live in, live in live on the homeless side of the, up under the bridge.

Michael: Uh, but that’s not necessarily the life I wanna live. I. I wanna have, you know, maybe I can’t find, well, I usually fly first class, but I, I don’t fly private. I, you know, I’m not doing any of that stuff. But I don’t have a, um, a Lamborghini, I’ve got a Corvette. So like I had to make some, some choices, but I’m still living my best life and I’m enjoying myself and, uh, and.

Michael: And yeah, it all started with taking action and, and it was a 10 year, 15 year plan. And, and now, you know, as, as Dave Ramsey says, if you, if you live like no one else today, one day you’ll be able to live like no one else in the future. I missed, I didn’t say that line exactly right. But that’s pretty much the mindset is I’m living like no one else now because I really worked hard where a lot of my friends just wouldn’t work as hard as I,

Mickey: Yeah.

Mickey: Build assets. Build your avatar, reverse engineer. Go with predictable long term wealth building and surround yourself with people who’ve done it, who will support you. Do it. Did I get it all? Yeah, that’s

Michael: good. Yeah. Honestly. Yeah. And read my book.

Mickey: Yes. Yes, absolutely. I’m gonna link the book in the description.

Mickey: Thank you so much, Michael, for joining us today. I so appreciate your time and wisdom, and I know that the audience now is ready to dig in and start looking and investing in real estate, so thank you.

Michael: You’re welcome. It was a lot of fun.