Working Capital The Real Estate Podcast

Creative Real Estate Investing Strategies with Sarah Larbi|EP12

Jul 21, 2020

In This Episode

Sarah Larbi is a Real Estate Investor, speaker, mentor and podcaster. She specializes in helping take the mystery out of homeownership for Canadian’s who thought real estate investing was going to be out of reach. She has earned their trust and respect by having the drive and focus to embark, build and grow a 7-figure, 10 property. 14 door, investment portfolio by her mid 30’s all whilst employed full time.

In this episode we talked about how she started in real estate, deals she had, the main strategy she is using which is BRRRR, her podcast, her coaching program, how she manages her properties, favorite resources and many MORE!

Resources and Links:

https://sarahlarbi.com/

Don Campbell book

Sarah’s Instagram

 

Transcript

Jesse (1s):

Welcome to the Working Capital The Real Estate Podcast. My name is Jesse Fragale. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment or raising your first fund, join me and let’s build that portfolio one square foot at a time. All right, ladies and gentlemen, I have a special guest on the show today. Miss Sarah Larbi Sarah is a real estate investor, entrepreneur podcaster, and best of all speaker and Canadian Sarah how’s it going? Awesome. And how are you? I’m doing very well, given the circumstances we’re a, we’re still living through a Investing environment right now. Uhm, but that being said, I think, you know, I’m, I’m, I’m quite comfortable right now and fortunate.

Jesse (45s):

So thank you for coming on it’s it’s great to see you.

Sarah (49s):

Absolutely. Same to you. I think we, we originally Mets at a bigger pockets conference, I believe.

Jesse (55s):

That’s right. Yeah. I was speaking in Nashville, which now seems like years ago because it was out in the boat with people, but that’s right. Yeah. We were talking about commercial real estate there. How did you enjoy the conference?

Sarah (1m 7s):

It was good. I mean it’s, it’s quite interesting to see conferences in general just cause I do have a club and we run meetings every single month as well. So, you know, one of our big reasons for goal going was actually to see how they structured everything doing some Intel. Yeah. A little bit. So yeah, I know. I thought, I thought it was good. I mean some of the content was pretty basic, but I guess they have to accommodate for everybody that’s coming from all walks of the industry and a half in expertise level, I guess as well.

Jesse (1m 39s):

Yeah. Yeah. You know what, that’s the challenge with any of those conferences you’re talking to an audience that you don’t know what the level is at. And for me it was a little challenging too, because I was talking about commercial real estate and that’s even a, it’s a tougher one to figure out who has had exposure to it, who hasn’t. So, but all in all, I think it was, it was pretty good, but yeah. So maybe, you know, we could kick this off by talking a little bit about a kind of your background in how you got involved in real estate. And maybe before we go there, just, I want to mention the podcast that you’ve run. What’s the name of it? We’ll put a link up at the end of the show in the show notes, but maybe just kinda give a plug on that.

Sarah (2m 19s):

Yeah. I have two, actually one is called, where should I invest? And the other one is called the the right club. Podcast okay. And R E I T E stands for real estate investing in training and education. Perfect.

Jesse (2m 30s):

Awesome. Alright. So yeah, maybe a build up a little bit about kind of your journey and where you got started in this crazy world, the real estate.

Sarah (2m 37s):

Sure. So that started in 2013 and I guess fast forward to today I have 12 units, 10 properties, and a, I guess my main strategy is the birth strategy just because it allows you to recycle your money and, and keep going into scale. But I started really by buying the cheapest house, we could afford listening. Some podcasts, BiggerPockets was one of them the beginning and just taking action. I remember going to the bank and having no assets. I didn’t even understand what an asset wise, when you’re the financial advisor, there was like, what are your assets and your liability? And she was doing, you know, an assessment of where we were. And, and we had been working for a few years and it was like a wakeup call to have nothing to show bore all the hours that I’ve worked and the time that I’ve worked.

Sarah (3m 26s):

And that’s how it started is just, I got some fire under my butt to research how people become wealthy in how do you retire early and how do you build that sets in real estate, kind of turn back over and over and learn some, you know, enough about it to feel comfortable to, to buy the first one. And you know, it was saving cashing out some vacation, pay in the beginning to create that down payment. Cause I didn’t even know, you know, other ways to, to do it. So I thought you had to save for every single one and, and that’s how we got started

Jesse (3m 57s):

Right on. So w at the, a at the beginning, was there anybody that was an influence for you to get into real estate? W what was it about real estate that kind of pointed you in that direction?

Sarah (4m 6s):

It was just the research on Google and I wish there was somebody, cause I would probably exponentially got this business faster and more efficiently and, and made less mistakes, but it was just schooling in real estate just kept coming back over and over. And I’m like, okay, maybe the real estate is the way to go. And I had just started listening to some podcasts and I started reading some books and then I just became so interested in it that I’m just like, I got it. I got to do something now.

Jesse (4m 35s):

So we’ve, we’ve talked a little bit on the show about the burst strategy, but maybe you can go into a first of all, you know, what it is and what was appealing. You kind of alluded to this earlier, but what is, what was appealing about that for you and how you use that strategy today?

Sarah (4m 50s):

Yeah, absolutely. So I don’t think we did it until like, we, we slowly did. We didn’t even know what the burst strategy was. I don’t even think it was called the burst strategy back in 2013, 2014, but we slowly figured out after, in that, when I say we, me and my spouse, he is not as involved as the real estate thing. So like, you know, he’s, he’s good. And he, he trusts me in, in terms of our financial decisions. So that’s, that’s who, I mean by week, you know, over time, I think I’ve at the third one, realize that, Hey, there’s some equity, these to pursue properties, we can actually reuse and redo another one. So we didn’t do anything for wise until the third or fourth one. And then I realized that the market was just getting hotter in the sense that there was a lot more competition.

Sarah (5m 34s):

It seemed like there were more investors starting in 2050 and 2016, definitely in 2017 and the strategy we needed to change a little bit because I couldn’t find the same type of turnkey property that needed very minor rhinos that had the same cashflow at that price that I wanted. And so I had to buy stuff that needed more work and more work as time went on. And, and then I realized that you can quickly refinance part or all of your money that you put in, whether it’s your rental money, part of your down payment included or everything. And then you can easily go and buy the next one. And so, you know, that’s kind of when stuff started clicking and like, Oh, that’s how people get to 10 properties or five properties.

Sarah (6m 17s):

They don’t save for every single one. They use the bank at their own game and a sentence, right? So that’s, you know, that’s usually what I do and I’ll do cosmetic renos. I don’t do anything crazy. Like I’ll do some conversions and try fluxes and stuff like that, but it’s mostly single family, kitchen, bathroom scoring, paint lights, and that’s essentially it, like, those are like my favorite kind because they bring the best thing for the buck foundation issues, windows having to replace all that. It’s a lot of money and it doesn’t give you that same ROI. So I found that, you know, the more cosmetic you keep it, you don’t need permits for the cosmetic stuff either, which is also a nice, so you work at your pace, not the city’s pastes and ah, and ultimately, you know, it’s, that’s how we’ve done it.

Sarah (7m 5s):

Like now we’ve, we’ve done some where we’ve pulled out, you know, like I say, a burden worn, like a hole in one where you pull out like an entirely your, your rental cost, your heat, your holding costs your down payment, and then you make some money. And then there is some more where you’re like, okay, no, this is decent. I pulled debt out my rental budget and part of my down payment, I’m still fine with that. Like, I’d rather put in or have left 20 or 30 grand and in the original 80 potentially for, for that down payment, right. For 60 for that down payment.

Jesse (7m 33s):

So when you were initially looking at properties, like we had somebody that was on the podcast that was started actually as somebody that was flipping and then realize the burst strategy would be something useful for them to do. So kind of get renter’s and then hold it. Whereas it seems kind of the opposite for you where you were initially thinking as like a buy and hold, and then you’re like, well, wait a minute. I could employ the burst strategy with these properties.

Sarah (7m 57s):

Yeah. I think for me, I’m just not very, like, there’s some people that are super talented and they like doing renos and maybe that’s how they start. I knew nothing about rhino’s and I really still don’t know a whole lot. I just know how to delegate really well and put some, have a really good people on my team and take action on that. But I really, when I first started My there was a landlord or there was a flipper, right. This, this is kind of like, we don’t know that there’s all these other strategies in the beginning. And okay, so you’d be a landlord. It seems a little bit easier. Or you can flip, which I know nothing about. And I do not want to do my own rhinos. Like, I didn’t even know that you could hire out teams. Like, I dunno, the, the stuff that you don’t even know that you, you don’t know when you first started. Luckily I actually started, and I think that this over time we were like, okay, this is not as bad tenants.

Sarah (8m 41s):

Aren’t that horrible. They don’t catch the house. Well, some of them might, but I’m usually a heel. You’ll hear the horror stories and, and, and just overtime that has gotten more comfortable with, you know, doing and understanding of the rental process, understanding the costs of things, things need to be done. And then just building the team from there and not like, you know, any real estate investor that will tell you how they got successful. It’s usually because they have a good team of people in place and it’s, it’s not just one person it’s, it takes a good mortgage broker, a good realtor like that. I mean, there’s probably 20 people that I would say you want to have on your team that will make or break your success. And you want the best ones on your team.

Jesse (9m 20s):

Yeah. It seems to be a through line between people that, that can admit what they’re not great at, but being able to identify people that are successful and, and talented in those areas and getting that team together. So if you were to take us through one of, maybe one of the earlier bird deals that you did any unique deal that you had, where you employed the birth strategy, you know, what did that look like from the perspective of how did you finance it? Ah, how long was the duration, the type of upgrades you did? What was it, what did that process look like?

Sarah (9m 51s):

Yeah. So when I look for bird deals, I looked for like data properties that can still actually get finance through a lender’s and I still have a te for income. And I was planning on going part time this year, we don’t know what’s going to happen with, you know, this whole economy piece, but, you know, because I had a T for income and I was able to qualify, we did most of them using either Scotia or CBC or something along those lines. And, and we still get financed. So then essentially it’s a lot cheaper than 10%. And, and now I have done some where there’s private money and, you know, there’s points are, there was, you know, percentages, but if, if you can do something where your, your property can qualify within a lender, that’s definitely cheap money.

Sarah (10m 34s):

So essentially here’s an example. You know, we got really comfortable with a, the Brantford market in the beginning and just really understand what a good deal was really understood, like the streets themselves, how much ARV that they could bring when it’s all of a sudden done, how much of their rights work. And so I think it’s important to be an expert in that field, take a strategy to pick a location. And this is like really zoom zoom in on that. It was huge. So when, when property, we just ended up buying, it was, it was probably the best one we’ve done, but it sight unseen, send her a realtor that has already bought two to three with us in the past. I think this was loaded. Number five. I think it was probably to number five, but it for 151,000 Estate sale Pash, like we were hoping it was going to be decent.

Sarah (11m 20s):

And luckily it was, it’s pretty good put in $30,000 of Renault. So there’s two ways that I, I will do the Reynolds. I will either contract it out to a contractor or I will be the contractor depends on how much time I have. And you know, how much work is involved. You know, one takes more time when costs more money kind of way the pros and cons, like I’m doing one right now. That’s very hands off. I just hired the contractor. Cause I don’t have that extra time. But you know, if you do you being a contractor, you’re gonna save a lot of money. So the, we did a kitchen flooring bathrooms, paints, and who is a cost about 30,000 bucks, all in all.

Sarah (12m 2s):

And a, and obviously the, the interest was cheap and there was no points for The for the lenders. So that helped. And so that property that we bought for one 51 it’s refinanced essentially for two 75. Oh wow. So we were able to pull everything out. Now that’s not the say that you’re going to do that forever. Like if you’re looking for that perfect deal, like you’re going to be looking forever, especially with other investors that do this for a long time. So like, that was a great deal. There was some other ones where, you know, I’ve bought them with within the one 70 to two to two 50 Mark, the AOVs may be around 300 give or take like you may or may not be able to pull everything out depending.

Sarah (12m 43s):

But I, I am okay with leaving some of my down payment In cause I’ll just to refinance in a second time, right? Like you don’t have the only Rifai once there’s equity and the property in the market is going up and you’ve done a good job at analyzing that market a year and a half later, you can do another burn, pull the rest of

Jesse (12m 60s):

So w so first of all, for those that don’t know the ARV to is after rehab value, but the The and schedule a for the Americans, I, you know, that would be kind of your national lenders, a T it’s funny, you have to translate some of these things. The T for is your w two income. So you’re still working as an employee, as an employee, but those, those strategies that when you do refinance is always a refinance adding to your mortgage, or do you sometimes do a home equity line of credit? So you have a revolving a debt facility.

Sarah (13m 31s):

I’m glad that you asked that question, because that is an important question. Not every lender will lend on key locks. Not every lender will lend certain different ways. So that’s why there are certain banks that I like better because they have more flexibility, not it’s more important sometimes in the percentage of interest that they might charge you because it’s all cheap money at the end of the day. So I will say, I do combination of both. If I have HELOCs to pay off, I will do a cash out. As long as it’s still cash flows. If I don’t need the money right now, I don’t have anything to pay off. I will do pillbox and usually will actually do HELOCs. Cause I like the fact that you can pay them off and you can reuse them and you can pay them off and you for you and your mortgage doesn’t necessarily change.

Sarah (14m 12s):

So again, there’s, there’s two options. You can even do a combination of like, here’s how much cash I actually want. And for the rest in a box, you can do any combination, just let your mortgage broker knowhow, how you want to work it out. But that’s why you want to have a good mortgage broker on their team to, because there’ll be able to base on what you’re trying to do, guide you to the best lender, but also the best strategy for you. Is it a closed market which has an open mortgage? Is it variable is a fixed and there’s, I mean, there’s so many different variations. And then when you refinanced what you want to do with that,

Jesse (14m 44s):

Well, that’s actually a great question. You know, my, my area of real estate has always been buying hold, but I’ve always been curious for a flippers and for, for people that do the burst strategy, if they go in typically with an open mortgage and then just the ability to lock in a five year fixed, once they finish there, their renovations and rehab, if that, is that a strategy that you pursue or is there something specific you do with that?

Sarah (15m 8s):

If you’re a flipper, I mean, here in Canada, the ones that I know, well, they’ll just use private money, just a hundred percent fully. And, and they’ll just stay away from the bank’s. And usually when they will do the ones that are used to it, they’ll do flips that most of the lenders will probably don’t even want to lend on because even if you were preapproved, that does not mean that the property it’s going to actually pass. And often times they’re getting the properties that need a lot of work that will not, that will not even qualify on their own. So, you know, that would probably be where they go. Now, the difference between an open and closed mortgage is essentially if you have a five year open or a five year close, it could still be variable or fixed, right? That part doesn’t matter closed.

Sarah (15m 49s):

If you’re going to hang onto the property, do close, it’s going to be a lot less money is gonna be less interest opened as a means that you can pay back at any time. Usually interest rates are higher for that. So if you are going to flip somehow and you’re like, I’m going to want to pay it back in six months, maybe nine months and maybe open makes sense. And you’re qualifying with a lender like a bank potentially, you know, but if you’re going to offer it, I mean, its, we might as well go close. You’re probably gonna keep it from five in five years anyways, and then just go variable. So you have the flexibility to refinance and you don’t have to pay all with the hefty fines with a fixed.

Jesse (16m 24s):

Okay. Yeah. You definitely pay for the, any open mortgage you’re going to pay for that in Canada, especially a mortgage rules, I guess in the States are a little bit different, but you mentioned Branford. So Brantford is about an hour 45 minutes outside of downtown Toronto, you’d say.

Sarah (16m 41s):

Yeah. So I’m in Oakville. So it’s about 40 minutes from where I am.

Jesse (16m 44s):

I always like talking to people that are in like hotspot markets, whether it’s, you know, New York, Toronto, Vancouver, just because there’s so many people I’m sure to come up to you and you speak with on your podcast about breaking into the market and is it a good time? And I find that oftentimes they look at the historical prices and they kind of put cashflow on the side and they think about equity appreciation. And you know, if you’ve been Investing long enough, you know, they, that is not a strategy you want to pursue just focusing on equity. So what would you say to somebody that’s trying to break into markets like in our area, Toronto, the GTA or in any other hot market, what would you recommend that they do to kind of pursue a Investing

Sarah (17m 26s):

The Toronto market? Here’s the problem with the Toronto market. If you’re not going to cash cashflow and you’re gonna pay for a tenant’s to live their, when things like COBIT happen and all of a sudden you’re your tenants can no longer pay and you’ve had a huge mortgage and you lost your job, that’s going to grow. That’s a really suck of all you were doing is banking on appreciation because at some point people going to panic sell, and then I don’t see a huge crash. Like, you know, there was in the U S and in 2008, but I’m going to be a softening. And, and so then now you’re going to pay for your tenant. Who’s going to probably decide that they’re going to squat. And in Ontario, it’s going to likely take after this whole thing, because the landlord tenant board has closed 18 plus months to even get them out, going to likely lose that property.

Sarah (18m 14s):

Now I’m not saying that Toronto is a bad market. Like there’s there’s investors. I know that do well, but they convert and they create different units. Like they might take a property, big, you know, house and make it into four units or something along those lines. Airbnb isn’t really even an option anymore because of all the regulations. So personally, I’m not interested in that market. I, I, I love, like I grew up in bore West village. I love Toronto, but I would live there. I just don’t see the point of investing there now 20 years ago. Absolutely. You know, but at some, at some point that market does, you know, like, yeah, okay.

Sarah (18m 55s):

You’re going to be, you’re going to be banking on appreciation, but I don’t know, like that’s pretty risky to me.

Jesse (18m 59s):

Yeah. Well, I mean, it’s, it’s just, The, you know, its kind of a trick question to a certain extent because when people do ask me I’ll, I’ll say, you know, you have to find Strategies maybe in that area, but likely outside of that area. So you’re going to go to, you know, what they call 18 hour cities instead of a 24 hour city. Maybe you go an hour and a half out or two hours out or you do a development that’s, you know, different than if you’re just going to buy and hold. Because as you know, we’ve just seen a lot of these markets, you know, 3% cap rates, sub 3% cap rates where it’s just not, unless you have 40 a year debt or a 40 year money where these pension funds or investors can invest in investors like you and myself, it’s just, it’s not a market that you’re going to be able to make a return on,

Sarah (19m 41s):

Not with 20% down. Right. Like you could still do it, but like there’s a lot of people that have deep pockets and they’re like, you know what? I just want to invest in Toronto. Cause I feel like it’s a safe market, but I’m going to put a 50% down. Like he probably actually would, your ROI will be as good, but like will probably still cash to it.

Jesse (19m 55s):

Yeah, that’s right. If you’re putting a 40%, 50% down payment yeah. Then you might be able to cashflow, but yeah. Trying to break in and get into the kind of, Investing definitely not going to be the markets to, to start in, in terms of the, so where you’re at right now, you have 12 units and have those all been kind of this snowballing effect of the first couple that you purchased. And was there ever a point where you, you know, you got to a bank where they said, okay, you know, you’ve done this once, twice, three times where it wasn’t as easy anymore.

Sarah (20m 27s):

This is why you work with a mortgage broker because that is exactly what happened. We went to a big bank. I’m not gonna say who, but they’re known as Investor friendly. So we had a primary residence originally and I wanted to have a first rental and in our second rental and a third rental and they wanted more down each time, 20%, 25% than 35%. And we’re why, and, and it was getting a harder and harder. So, and then we started working with, with the mortgage broker who wouldn’t have entangled with a lot of stuff. So some banks, you know, will change the rules and regulations all the time. Like right now, Scotia who is very investor friendly just said, no more using a you’re a, he locks for your down payment. So, and again, over a strategic will find ways around it, but they’re always changing are the rules and how they, you know, want to qualify people.

Sarah (21m 16s):

So it’s an important that like you have somebody on your team that stays on top of all of this stuff because it does get harder as you acquire more, but not all lenders will cap U at the same amount. So there might be some to have the most flexibility, but they’ll say max five or six, but then there’s some other banks, they might be a little bit more expensive, like trust companies. And a lot of people think banks, but there’s trust companies like the lenders there’s credit unions, and then they might have a whole set of different criteria. And then you can get into commercial, which at that point in time, it doesn’t really matter if you have a job or not. Right. Yeah. There’s just about strategically doing, you know, whatever your goal is and getting to your goal. And I wouldn’t, I wouldn’t go straight to the bank, so I wouldn’t go straight to the lenders.

Sarah (21m 57s):

Cause you might as well have somebody on your team it’s going to work for you. That’s going to be with you along the way. Versus, you know, six months later you’ve got a new person to deal with at a bank like, Oh, that was changed jobs. Right. The good ones get promoted and a lot.

Jesse (22m 8s):

Yeah. I think that’s exactly right. And it’s, it seems like you’ve taken a holistic approach and basically see that the properties you have. And that’s what I love about the commercial side, because they’re looking at whether the real estate itself can sustain itself. Whether the balance sheet of the real estate is, is good enough to keep acquiring, whereas sometimes with a residential, unless like you say, you’re talking to a broker that has taken a listic approach. That can be a little bit more challenging in terms of the, the 12 units that you have now, what is your strategy with management and has it always been the same or had you done different things in the past?

Sarah (22m 44s):

I like self managing. I just, the only thing I really know, I have full control on this screening, the tenants for the right ones to come in and a, and so like I’m very, very thorough. Like they go through a lot before they get the keys and, and I think that is like, luckily that’s work in my favor. Like there’s been a few close calls in the beginning and I’m like, I really need to like, you know, sharpen this whole process. And that that’s been a big, I think a big reason why I’m still able to have a full time job. And it takes me, I don’t know, maybe a couple hours a month to manage everything. So not a whole lot because I have put the right tenants and I’ve done my due diligence and, and thorough screening process in there in the beginning.

Sarah (23m 25s):

But like, other than that, like, I mean, I don’t know, you get a good plumber and get a good HVAC person in a good electrician and a couple of handyman and like, yeah, okay. That’s going to happen. What I do is, I don’t know if they’ll text me or they’ll call me. And then I texted her called whoever needs to go. And then they send me an electronic invoice. It’s I don’t know. Like, I mean, you know, if it a 20 unit building, I wouldn’t want to have the calls of this person is making noise and this and that. But these are like mostly there’s one triplex. They’re a single families. What I’m closing on a six Plex mixed use with two commercials. But for the most part, you’re not that bogged down. And once you’re finished, the burner tenants are in, I mean, everything keeps me a couple hours a month.

Sarah (24m 5s):

Like it’s not, I’m not the one go in and clean the toilets or like the toilets or whatever it is. Like that’s a myth anyway.

Jesse (24m 13s):

Yeah. You’re delegating, you’re delegating the responsibility. So you just mentioned, sorry, the U have a six unit with two units of commercial. That’s you’ve just purchased her that you guys are

Sarah (24m 22s):

Yes. Purchased it with some friends and this was all before the COVID stuff. So it’s going to be interesting to see, we’re trying to move the date out a little bit. Cause of the commercial tenants was going to sign a lease. Didn’t sign the lease with the, a franchise company that was gonna purchase her when she’s a seller and then sent us another lease. And it was a gross lease instead of a net lease. I’m like, yeah,

Jesse (24m 51s):

We want the data

Sarah (24m 52s):

That, that, that stuff right now. And there’s a lot of back and forth. And the lawyers are in of, you know, how it finishes up, but you know, we need her to sign the lease and then we need to properly close on it. But because she’s been taking, I don’t know why she is thinking of it a long time to get me the lease that I originally accepted.

Jesse (25m 11s):

So his, this is this while they’re a purchase and sale agreement is conditional or it’s already been purchased and now you’re negotiating this

Sarah (25m 18s):

It’s done. It was well, it was actually through a wholesaler. So we had to take their, their terms and conditions, which we were finding originally, but we’d never had the direct contact with her. So there’s a few complicated things in that, like, because it’s still not closed. I don’t know what the outcome will be, but I will say it’s a, it’s a,

Jesse (25m 36s):

So that’s actually good. A that’s a good point to focus on their because a lot of people never make the transition into commercial. What was it? So just so I understand it, the two commercial units are those two retail ground floor units and then four units above. Yeah. That type of deal. So what, first of all, you said you did it with a couple of partners where they’re a couple partner’s that had done a commercial deal before, or is this green for everybody?

Sarah (26m 2s):

So we actually, there’s four of us and we are, we all have a lot of experience in the residential realm and we, so we really are working on our branding. And what we actually want to do is by land and do developments in pre construction and, and actually use a prefab company this came about where like, yeah, you know what, let’s, let’s do this one in the meantime and just add to the portfolio. And so that’s how it came about. Not necessarily that’s what we were looking for, but kind of fell in her lap. And I’m like,

Jesse (26m 30s):

Chilling will do the large commercial real estate deal.

Sarah (26m 34s):

It’s hard to find land. That’s already zoned for a long time.

Jesse (26m 38s):

Yeah.

Sarah (26m 40s):

We don’t want to do nothing for two years. And so what do some of these along the way until we find the right piece of land

Jesse (26m 46s):

Hmm. And do for you going through this process. So it was for a wholesaler. So they were selling the paper or the The deal to you. And was this somebody that you had known before? How, how, how, what was the,

Sarah (26m 57s):

The wholesaler is good. They just have teams of people. And then the people themselves that they hire put the contract together. We brought in a fairly quick, we were, we took the terms and conditions verbally. She had agreed obviously to, to the lease in, in the whole contract to follow through and the, the franchise, what was going to by her and then a buying Mmm. Her, and then she changed the lease and this was all after the conditions were removed. So again, we have to close on, it will come to close on it, but like verbally, she had agreed and I can’t talk too much about it cause it might be my go to legal, I don’t know.

Jesse (27m 36s):

And that’s really, yeah, that’s really, it’s just cool that a kind of breaking into that side. Cause I find that it’s just, it’s definitely, it’s still real estate, but there’s just things that, that are just a little bit more, not, not nuanced, but just new, like a, like you mentioned before a triple net lease, you know, getting a estimate for TMI that had an, all the additional rent and kinda of dealing with a gross lease as opposed to a net lease,

Sarah (28m 1s):

The difference is going to be totally different on the appraisal and to be totally different for the financing too. So, you know, we’ll see. I mean, if we have the clothes on, it will close on it with it, but it’s ah, she doesn’t sign the lease. I mean, technically we can just kick her out.

Jesse (28m 17s):

Hey, you know what, kicking out a commercial tenants a little bit easier, especially a lot, especially where we live. I wanted to talk about, you mentioned that you were working as an employee in kind of the early part of your real estate investing. Is that still, are you still doing that today or did you transition to full time in real estate?

Sarah (28m 36s):

I’m still working full time. I was actually ironically I was planning on going down to part time in April or, or leaving all together. But then this whole thing happened. I’m like, you know what, maybe I should keep my job if I have to carry all of my tenants, houses, all of this and who knows what’s going to happen. Right. Like how long it’s gonna last. So maybe it’s a blessing in disguise that, ah, I was having a conversation with my boss about just to say, Hey, you know what? Like, let’s see if we can go down to like three days a week. And he seemed pretty open. Obviously we have to ask the business, that kind of stuff. But you know, it’s, it’s good for financing and qualifying for financing, but as I am now realizing that I’m pretty much a, the goal that I wanted to have with all of these are paid down.

Sarah (29m 21s):

I can start JV. It was important for me to have my own portfolio to start, but now I can start J being, I can start looking at commercial properties. I don’t necessarily need the T4 w two income. And, but it was, it was great to get the cheapest type of financing with the best lenders is possible for, for when it lasted. Right. Yeah.

Jesse (29m 39s):

For sure. I think it’s such a, it’s a challenging thing to do for a lot of people to figure out when is the time that you can leave? I feel like there’s not having kids or getting married. There was never like the perfect time. It’s just, you take that step that you kind of, you know, you become a full time a Investor, but I also think once you do become a full time investor, if you find that you have more bandwidth, you will fill that. Like you were just saying right now. Well, we went to buy a commercial property. A we don’t want to do nothing for two years.

Sarah (30m 7s):

Yeah. I mean, I’ll tell you that not the real estate investing per se, but the Podcast the right club. Like everything else that I’m doing around the real estate coaching and speaking, and I mean, everything like that is a whole other full time job, right? Yeah.

Jesse (30m 24s):

That’s not even the job you’re talking about. That’s just on the side. This is on all sides. Yeah.

Sarah (30m 28s):

To another full time job on top of the full time job. But I enjoy, it’s like, I don’t really watch TV, like its kind of my, you know, what I enjoy doing. So,

Jesse (30m 37s):

So let’s, let’s talk about that a little bit. How did you get started into kind of the education space? Cause when we met in Nashville, you know, we talked about you had the Podcast you were doing speaking. So maybe you can talk a little bit about that.

Sarah (30m 51s):

Yeah. So I was doing some online group courses and coaching probably last year’s may be a little bit before. And then I just, I started doing a, a bird class where it’s three months long. It’s a mix of in class, on zoom and then actually in the field a for three months. And then I just take like 10, 12 students and we, you know, go through the whole process from start to finish. They meet my team. Like it’s very hands on as well versus just, you know, a weekend thing that people are gonna forget about. So, so that’s what I’ve started doing and you know, and I still do my online, my coaching. I can’t take on too many at a time cause ultimately like I’m just, I can’t do too much either.

Jesse (31m 35s):

You Investor real estate. Yeah. Yeah. Podcast

Sarah (31m 39s):

Hence, hence why I was going down to part time and you know, they may still, I, I likely will still do it, but now as were all isolated, I don’t have to commute. Like I travel no a cause for Canada, so we didn’t have to travel as much anymore. So I technically have a lot of extra time not commuting back and forth that I, I, you know, if this last another, I probably, we probably lost another two months at least. Right. So yeah,

Jesse (32m 2s):

Canadian side seems to be, I’m a little bit less open to getting back to whatever normalcy is in terms of the, the coaching side, is that coaching in real estate or is that just Jeff? Is that business coaching

Sarah (32m 15s):

Real estate? So it’s a, it’s mostly on the burst strategy. And then I will be launching like a tenant screening coaching module as well because especially for Canadians and you know, I can’t, I can’t say the same for the U S so different market by market, but in Canada, in, in many of us of our provinces is very favorable tenants and you know, we have to take control over where we can and, and it’s important to be very picky on who you give you the key to and who you let into your house because it can make or break your whole experience

Jesse (32m 50s):

A hundred percent. I’ve, you know, I’m sure you have as well as speak with a lot of, a lot of folks from the States, obviously on the Podcast and the idea that in normal times that you can evict a tenant, just, just because you want the motive there. If they continue to pay, even though that their lease term is done, they’re always shocked by, by that. And, and not, not even that, it’s, it’s also our inability to raise rent until we have a new tenants and in certain provinces. So that, that’s actually really interesting because I think that’s an area that it’s so important that you screen them properly, or you’re just going to be left with the potential liability.

Sarah (33m 28s):

Absolutely. Especially one time like this I’m and all of a sudden people start worrying about they going to put food on the table or they going to be able to Ford’s. This is, and this is where you hope that you pick the right ones and that you’ve communicated Weil. And that you’ve been also a good landlord along the way that they’re known to start taking advantage of you has a lot of pendants. No. Now, and we’ll take 18 months to Vic them if they don’t pay like that.

Jesse (33m 51s):

Yeah. And that’s the thing, I think there’s a difference between when people, even in the States, she saw moratoriums on evictions, but I think their, a lot of landlords didn’t communicate with their tenants. Like we put out immediately, we put out, you know, the rent is still do we know that, you know, the eviction, nobody will be evicted a, but we also put links up to where they could get help from the government. You know, what, what relief benefit, you know, work, where they can access. Cause it’s going to be them tenants really are the ones that if they can get these things, then they can give that to the landlord, pay the rent. Landlords can make their mortgage obligation and we all work together. But I think communication was a really big factor in that. I think landlords are just as much to blame I, if they’re not communicating with their tenants.

Sarah (34m 35s):

Yeah, absolutely.

Jesse (34m 36s):

So for the future for you over the next, I don’t know, let’s say five, five year time horizon, where would you like to be in terms of your portfolio and, and asset type, you mentioned development. Is that kind of the goal?

Sarah (34m 49s):

Yeah, so I mean, it depends for me personally, my own portfolio. I’m actually happy with what I have right now. I am going to be doing some JVs. A lot of people want to burn a burn and learn along the way. So I’m looking at some JV partners, ah, and actively looking for properties to, to go in with them as well. And then with real estate and purses that are for women who we are looking for lands, we are looking specifically in certain areas for a certain price point, certain acreage in certain zoning. Then we do want to do some, some prefab multifamily. And then I’m also joining a lobbying group for landlords in Ontario with Kayla, Andre.

Sarah (35m 29s):

I don’t know if you’ve heard of her. She’s from Ontario, landlord’s watching and she’s been advocating on her behalf for years and years and years to try to change some of the government. You know, residential tenancies act as is, as you probably know, very geared towards tenants and, and not helping landlords is same thing with a board and try to make some changes. That’s the one that will battle. But if we are a lobbying group will have a voice, it will have the ability of to get in front of some of the MPPs and some of the, you know, media to, to bring people together. Because if we are just doing their own thing, we, we keep, you know, accepting these changes that are not in our best interest, it’s going to be worse and worse and worse.

Sarah (36m 13s):

And so that is one thing that I’m focusing on and obviously the right club as well. We, we have, I dunno, a few thousand members, we were going coast to coast and every, every week now we do a webinar and we’ll have a specialist, you know, like we had Harry fine, former adjudicator talking for an hour with us. In we just wanna provide education or a comedian’s. And in real estate investing

Jesse (36m 40s):

And the red club, just a correct me if I’m wrong. Cause I believe I came to one of the events in a, was it Burlington? Just so it’s a West of Toronto. Is it aside from the online, why do you still do, is that a monthly event that you, ah, the team hosts,

Sarah (36m 54s):

We have events when we were let out of our houses. And so we have canceled up until June, cause we don’t know what’s going to happen. So we’re gonna resume like lean September by the other monthly event in Burlington a but we are launching a whole online platform as well for Canadians to be able to interact with each other. And then those that cannot come in to Burlington to actually see the, a, the meetings and the content. That’s all going to be reported and put our in our platform, we’ll have forums and all that good stuff.

Jesse (37m 22s):

Okay. That’s great. Well, before we go, I will ask you two more questions. And one is just recommendations for anybody breaking into real estate, whether it’s books or a favorite podcasts, what type of resources have been impactful for yourself that you’d recommend?

Sarah (37m 38s):

So from a Canadian Investing standpoint, Don Campbell has some great books. I learned a lot too. And I learned to that there’s a lot of differences between the U S and Canada when it comes to real estate investing, especially for taxes and financing and even some, some Strategies and ah, and just keep listening to podcasts. If you want to speed this up, get a coach depending on what strategy that you want to get. Right? If you want to Burr, then find a better coach. If you wanted to do rent to own find somebody is going to teach you that it’s doing it actively still not 10 years ago. Cause that’s another big piece. And that will probably help eliminate a lot of mistakes and costly, you know, errors as well as just to help you get there.

Jesse (38m 20s):

Yeah, for sure. And if people want to hear a bit more about what you’re doing or where they can reach you, what what’s the best route for them to go?

Sarah (38m 29s):

They can go to Sarah or larbi.com, which has my website. And when Instagram Investor Sarah Larbi LA RBI or they can go to the right club.com it’s R E I T E club.com

Jesse (38m 43s):

I guess today has been Sarah Larbi Sarah thanks for your time.

Sarah (38m 47s):

Thanks very much. It was fun.

Jesse (38m 50s):

Favor listening to the Working Capital Podcast My goal is to help individuals break into real estate investing as well as educate experience investors. If you enjoyed the show, please share with a friend subscribe and give us a rating on iTunes. It really helps us. If you have any questions, want to learn more or likely to cover a specific topic on the show, please reach out to me via instagram@jforgalsorheadtowwwdotjessefragale.com. My name is Jesse Fragale and I’ll see you back here for the next episode. Are the Working Capital The Real Estate Podcast.