Michael joined Candice Bakx-Friesen on the Investor Smarts podcast – Episode 89 | Building Real Estate Wealth.

0:48 – Michael discusses his journey into real estate investing

I started much later than you did in my investment journey, in my real estate journey is I woke up one day, I was 40 years old and I hadn’t reached many of my financial goals and dreams. I was working in middle management in a pet retail organisation and sort of just languishing there of sorts. And over the next two years after that, I was introduced to real estate and decided to become a Realtor. And going forward, within a year or two after that, I gravitated towards the investors. I just felt that they were my people. And so, at first, obviously, I was helping out others to buy some investment properties. And if I’m going to be honest with myself, as much as any other reason, I bought my first investment property, if nothing else, to make me more relatable to my clients. And I quickly started to realise the financial benefits of buying real estate.

And not unlike very many or some of your most successful clients, my goal wasn’t to build my portfolio overnight. I never wanted to become a full time Realtor, full time investor, I wanted to stay as a full time Realtor. And so I bought one investment property a year for ten straight years. That was my goal. And my area that I invest in is in the greater Toronto area, more in the Oshawa and Whitby area. I do have a couple of properties just outside of that region, but that’s pretty much where I invested. I did that for ten straight years and as a Realtor, I became a very successful Realtor. I was the real estate investment network, realtor the year a couple of times and that was pretty successful. In that end, I had a pretty successful team. But honestly, the real estate holdings that we have is the number one factor that has truly just changed my life.

3:20 – How to gather the confidence to get started – and working your network

Yeah, I’m a super fan of building your financial intelligence, for sure, as you’re getting going. And there is an element of paralysis by analysis type of situation. But in many cases, I find that people just don’t put the hours in to really educate themselves properly. And that’s what holds them back a whole lot. One of the things, and we’ll talk about more later on in my book itself, is I followed the teachings of the Real Estate Investment Network and they had their formula for determining what a quality market is. One of the things that I think hold people back more than anything else is just that fear of losing all of your money, losing your investment. And I believe a lot of the reason why that is that they just haven’t done enough research to convince themselves that this is, in fact, the best market to invest in. So, taking the Greater Toronto area as an example, the prices have just skyrocketed here in the last few years. But does that mean that the prices are now overvalued? Or is there still upside to move forward? There’s no point in guessing, and the same is true in Winnipeg or Alberta or the United States.

I really understand what a real estate market is. You need to do your diligence. And so I personally look for markets that have really strong GDP, gross domestic product growth, population growth, and are already having a real housing issue in terms of prices going up.

Affordability is getting more and more difficult. That’s the kind of market that I feel is a quality market. And by buying a quality property at a quality market, you can actually attract some really great quality tenants. And then by having that tenant for years and years, I can tell you that in my portfolio, as well as pretty much all of my clients, we had virtually no missed rent payments over the last two years. That would be my first bit of advice, is you might think you’re doing research, but to really become a market insider is something that’s in your power to do and just take the action to do so.

12:50 – How to handle mindset blocks and changed thoughts around money and property

first of all, that it is much more challenging to purchase a property today than it was when I was a kid. I basically had my first full time job and a few thousand dollars, and I was able to buy a property. And that’s simply not the case, I can tell you today. My wife and I have tenants. We have a tenant who’s a lawyer, and she’s making a solid six figure income, and her husband is also doing very well. And yet they’re still renters today because they don’t have the down payment money to come down on the property. So there is no doubt that they’re in a more challenging situation, but that does not mean it’s impossible. I can tell you that in the last two years, the number one reason why there’s such a surge in property values, well, there’s been a lot of reasons why, but one of the biggest ones is the number of buyers today are actually over 50% of the buyers are under the age of 35. And so people are still taking action today. In your circle, you may have a group of friends who are all not working or maybe sporadically working or simply not owning real estate, but I can tell you that there are circles out there that are actually taking action and moving forward.

And sometimes when you’re in your own little bubble, you don’t necessarily see that. But when you go out to investment groups like the one that you host, for example, you’ll start seeing people that are actually taking action. And there are strategies and there are tricks. And I have an entire chapter called the Millennial Profit where we talk about different strategies to move forward. And actually using that example that I used at the outset, where Jason was able to buy a property with as little as 5% down, and he was able to do that and he bought his place himself and he renovated himself. He put hundreds and thousands of hours into that property, getting it to where it is now. But the effort that he did less than five years ago has reaped tonnes of rewards already. Obviously, no one expected the surge in values we’ve seen across Canada in the last couple of years, but the reality is that we all knew it was going to be good.

20:16 – What advice does Michael have for what to do leading up to big goals?

Candice – Do you have any advice after everything you’ve read for people who are in that position of like, okay, I’m coming up to this magic number that’s kind of been the goal, maybe it’s ten years out, maybe it’s five years out, but any advice for what to do kind of leading up to that?

Michael – Well, many of us are we maybe don’t think of ourselves as such, but for the most part we’re high achievers in terms of our net wealth and stuff like that. And I’ve been tracking my net wealth for so many years, it was really cool that from 2018 to 2019, my net worth went up X, and then in 2020 it went up another X. And that’s really awesome. But at what point do you make a decision and sort of shift gears and say, I don’t need to increase my net wealth anymore if I can simply maintain or even, believe it or not, slightly see a decrease in your net wealth, but start to enjoy your life? And one of the things they talk about in the book is that you have a certain number of go go years, then it becomes your slogo years and then it’s your no go years. Honestly, I find too many people are working far too long in their go go years because they’re afraid of that they’re going to run out of money in their no go years. And so I believe that if you take more time and enjoy the things you want to do, at the end of the day, you enjoy it.

And all the work that we’ve done beforehand to cover the cash flow, it’s not like I’m dipping into my nest eggs, I’m just taking the fruit from my labour right now and just living my best life. And so it’s doable. This is stuff that’s doable. You can’t do it in a year, it takes you a decade or more. But if you have a real plan, you can make a huge difference in your life.

Candice – Yeah, I’ve found talking to people, that most people aren’t dreaming and they’re not really thinking about what they actually do want in those years. Let’s just say right after retirement, obviously you should probably be enjoying yourself throughout all the working years too. But if we just focus on sort of the post retirement years, you’ve built all this real estate wealth, or you could have invested in whatever you want throughout your working years, but focusing on real estate, you now get to those years where you go spend a pile of money.

32:30 – Passing the knowledge on to your kids

Candice – Kids don’t always listen to you as the parent, but you throw a book their way or an audio and get them on a few podcasts or different things that are out there. Articles, blogs, there’s so much out there. But get your kids involved, too, is my other advice. Always?

Michael – Absolutely. I joke about this in my book, but I was that C student that basically just squeezed through school. My writing style is not written in a way where I’m not going to win any scholarly awards or anything along those lines, but it’s written for someone to really enjoy and somebody joked that it’s a page turner. I include stories, humour and whatever else to try to keep people engaged, because, honestly, that’s my personality type as well. And there’s a chapter written specifically called The Millennial Prophet that was essentially written for kids under the age of 30 today, or even under 35, just to get moving and buying real estate, working with their folks, working with their family, trying to get moving on real estate. There’s a lot of opportunities out there. You just have to use a little bit of creativity. It’s not like back when we were kids, when you could just get a job and all of a sudden get a mortgage. There’s a lot more steps involved, but it’s not impossible.