Working Capital The Real Estate Podcast

Young Accountant Turned Real Estate Investor and YouTuber w/ Matt Mckeever|EP5

May 12, 2020

In This Episode

Matt McKeever is a CPA, entrepreneur, Youtuber, and Real Estate Investor. He began investing in London, Ontario in 2010. In 2015, Matt quickly built up his real estate portfolio implementing the BRRRR strategy. Matt also began his YouTube career. His channel has over 50,000 subscribers, and an average of 2000 views a day. Matt teaches viewers how to retire early, invest in real estate, and take control of their personal finances.  

In this episode, we talked about how he transition from working as a financial controller in a pharmaceutical company, left his CPA life and moved into real estate full time. In 2016, he shared how he started a Youtube channel on how people can retire early, BRRR strategy, building up portfolio, wholesaling, Matt’s future plans and many MORE! 

 

Quotes: 

 

  • “Real estate was really the vehicle that brought me financial independence” 

 

  • But ideally I want my reputation in my accomplishments to proceed me to such a degree that I should be able to get into most rooms. I should be able to book a meeting with most people, with anyone.” 

 

  • “If you find yourself in a situation where you can’t necessarily pay for education or mentorship that doesn’t have to hold you back as a real estate investor, that information is out there. You just need to go find it. 

 

 

Resources and Links: 

MLS 

Realtor.CA 

Matt McKeever’s Youtube 

Matt McKeever’s Instagram 

 

Transcript

0 (1s):

Welcome to the working capital 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, joining me and let’s build that portfolio one square foot at a time. Okay. Ladies and gentlemen, I am honored to have on as a guest Matt McKeever Matt McKeever is the CEO of <inaudible> and Oreck is the Ontario real estate conference and the CEO of control of your property, as well as a real estate Investor YouTuber conference organizer and an angel investor. Matt glad to have you on,

1 (39s):

You know, thanks so much for having me on I’m really happy to be here. Jesse right.

0 (44s):

So the way we like to start this office, maybe a kind of give our listeners a little bit of a background of, of who you are and how you got into real estate.

1 (53s):

Yeah, so Real estate was really the vehicle that brought me financial independence. So really tied into that, you know, the fire movement, financial independence retire early. So we discovered that kind of in my early twenties, when I was in university red Rich Dad Poor Dad did you know the generic real estate background and at age 25 is when I actually jumped in start buying and a rental properties here in London. Ontario just buying a property at a time back then. So Bob, when in 2015, 2016, 2017, so on and so forth. And then in 2016, that’s when I transitioned from being, you know, working full time at a pharmaceutical company, as they’re financial controller left my CPA life behind and moved into real estate investing full time, started a YouTube channel.

1 (1m 38s):

We really started engaging with social media and seeing the value behind that and just kind of things started spiraling after 2016. It’s actually,

0 (1m 46s):

You were talking a little bit about this prior to the show, but I discovered you through YouTube, you know, you guys put a bunch of great content out there. Maybe you could give listeners a little bit of a background that how he got started on kind of the, the YouTube and the social media side of things, because there’s a number of investors that get into the game, but never pick up a camera. So maybe you could fill us in on

1 (2m 7s):

Absolutely. So 2016 retired from the corporate world. He had all the time in the world. And so, you know, 31 years old being retired, not a lot of my peers, we’re in a similar position. So I found myself, you know, bored. And so I talk about, I wasted the first three to six months of that retirement, just kind of decompressing played way to many video games, drank too much booze, that sorta thing. And after that period of time, I kind of looked back on it and thought, you know, am I really proud of what I’ve done? And the answer was a resounding no. So I started writing it a really long emails to my friends, explaining how if they invest in real estate, they could actually reach financial independence and retire in five years or less, if they would just follow exactly what I did.

1 (2m 49s):

Those emails would often be 5,000 plus words. So I’m sure as you can imagine, not a single person ever responded to those emails. And at the time happened to be reading a book and that books, it, you know, speak to your audience and the language they’re used to being spoken to or in the language that they understand immediately click for me real estate. The reason so many of us are drawn to an attracted too. It is because it’s a real, you know, we can touch if we can feel it, you can walk through a property. And so because of that, I started to, you know, documenting my journey as real estate investor on YouTube. And again, that also kind of spurred from the time there was some great real estate content on the internet on YouTube, but all it was very American centric.

1 (3m 33s):

And so I really wanted to bridge the gap. So as a Canadian, I found that usually the best resources for us were either books that were written a couple of decades ago or like American content. And, and just really felt like there should be more Canadian content out there. And I didn’t see why other investors wouldn’t want to document their experiences and their processes, because I really do think that well, as I’ve gone through this entire journey, my, my thought process has evolved. Not really start to understand the tension. There is a currency. And I think it’s one of the most valuable currencies out there. And a lot of investors overlook the potential and that currency simply because the ROI is not immediate.

1 (4m 13s):

So it’s not like I’d put out a YouTube video. And then tomorrow I make a bunch of money is I put out multiple YouTube videos over, over a period of time consistently. And I start to be able to build a relationship with my audience. And so as my relationship with the audience matures, they grow into the light, no interest. Me and people liked doing business with people they liked know and trust. So that’s been a longterm benefit from the YouTube game. It’s definitely not something we’re the inner accounts it’s in me understands the Iowa ROI from day one. It really is a longterm play. But for me, based upon that, there is so much value out there. And just having these one to many conversations.

1 (4m 53s):

So even like being on this podcast, right, I looked at added on my YouTube channel on any given day. We’re probably getting 5,000 views. Well, that’s almost 5,000 conversations I’m having, because the average view on my YouTube channel, it was about seven or eight minutes. And realistically, you know, to be able to have that, that power of conversation, that volume is like, you know, you can’t put a price on that’s my opinion.

0 (5m 18s):

Yeah. Yeah. That’s interesting. There’s so much to go over there. The, the, you know, the first thing you said were people ask you certain things with real estate retiring, probably investing strategies. And then you give this huge answer. Here’s the key, here’s the solution and how many people, they just never take action. And I mean, you know, I’ve been investing in real estate now for nine or 10 years. And in the first few years, it always amazed me how many people that they would just never follow up. And then you start realizing that they don’t realize, or maybe they don’t want to go into real estate when they realize it, it is a get rich phenomenon, but it’s a get rich, slow phenomenon. It’s not, it’s not, you know, you buy your duplex and then the next day you’re, you’re throwing money around it.

0 (5m 58s):

So that that’s, I definitely can agree in a way. Definitely can relate to that. The second thing you mentioned on the Canadian front, just as a CPA yourself, like you probably see it even more than most investors, because, you know, I I’ve had the same frustration. We have multiple offices. Majority of our offices are in the United States, but being a Torontonian based out of Toronto, I can 100% agree with you. Not only where their not a real estate Resources 10 years ago or their very few, the only ones there really were, were American. And we just had Brandon Turner on the Podcast. And we were talking a little bit about this because you’ll hear an American, Podcast talked about 10 30, one exchanges talking about cost SEG. And then as a Canadian, you’re like, wait, what?

0 (6m 40s):

So I, you know, I can definitely relate with that in terms of your first actual investment or maybe your first investment of substance, what is that

1 (6m 49s):

Look like? So the very first property I ever bought was a student rental that I house act. So age 25, Bond’s a a hundred performance, two, and rental moved into one of the bedrooms. The property already had one girl living in the house. So she stayed, she was paying monthly rent, had to have my buddies moved in and start paying me rent as well, then found, you know, another stranger off Kijiji to move in and become a roommate. And at that point in time, I was able to more than pay my mortgage and utilities and all the costs associated with the property on a good month, I maybe be putting for a hundred dollars in my pocket. So at that point in time, I was able to just reduce my personal overhead, my lifestyle costs to near zero, and it really allowed the growth of my portfolio started compounding in there where I could save up enough money every year to go buy the next property.

1 (7m 39s):

You know, with time I learned other the value in other people’s money and really leveraging other people’s resources. But at the start, that’s really how it got rolling. Then in 2016, when I actually like quit my day job, that’s when I’ve really started seeing like that hockey stick, where it started really compounding where I was like, I built up the confidence and enough people I’d seen me investing for six years at that point that, you know, a lot of people that were on the sidelines in 2010, when I started decided to start tapping me and saying, Hey, you know, I’ve got a home equity line of credit for 300,000. What can you do with this? And then with the power of the bird investment strategy, I was able to make some really great JV propositions.

1 (8m 20s):

That would be an essence, you know, give me your home equity line of credit. I’m going go buy a property. We’ll renovate, fix it up, you know, get refinanced, I’ll get all your money back out. And then the only thing I’m going to ask from you is, you know, you give it back to me so I can go repeat the process and, and really just started cycling through the burrs that way.

0 (8m 39s):

And it gets at that point, they’d want to give it back to you. Cause the whole point is you’re, they’re seeing kind of the money they’re making. That’s actually something we also talked about. And maybe, you know, you could kind of give a give listeners who aren’t familiar with the burst strategy, just an overview of it, or maybe even a attach it to, to an experience you’ve had. Absolutely.

1 (8m 57s):

So a, the very first YouTube video I ever put it on my channel was actually me burring, a small duplex here in London and the numbers don’t really exist anymore, but just the audience last that long with me and I bought a duplex for 110,000 here in London, Ontario a, it was under a rented. So his girlfriend’s where maybe 11 to $1,200 a month total between the two units. At the time I got vacant possession of the property went and renovated, fixed it up, spent only $12,000. Plus my sweat equity on the project. So about 120 to all in the bank came back and reappraised it 150,000, which meant ad an 80% loan to value. We’re getting a new mortgage for one 20 or so all into the project.

1 (9m 40s):

I was really just $2,000 plus now I’d moved the rents from that 11, $1,200 a month up to it. It was either 15 or $1,600 a month. So I increased my cashflow. Plus got essentially all my capital back able to take that Capital you can go repeat the process. So bird stands for buy renovate, rent, refinance, and repeat. And as a Canadian, that repeat part is actually often overlooked because there’s real tax implications for us as Canadians, if we’re refinancing their property and using the proceeds of that refinance for non-investment purposes, that can actually, you know, call into question whether our interest is actually going to be tax deductible as an expense.

1 (10m 22s):

So that’s why I really emphasize the entire bird process on my YouTube channel. And the repeat is key

0 (10m 29s):

Is a great strategy from my point of view, because it’s not just kind of in the flipping business where you’re buying and flipping and that then that’s it. And one of the things I’ll tell, especially younger investors that if you go the pure flipping Rose, you have to really look at it as a, a as a job. As you know, you are an operator at that point, the moment you stop flipping is the moment the income a CS it to happen. So from basically the entry point for real estate for you, and two where you are today, usually there’s a time period in there that, you know, there’s kind of a, a scaling up and sometimes that’s gradual, sometimes it’s a bit of a hockey stick. So where did you go from those first few investments? Did you go into different asset classes?

0 (11m 9s):

Did he build on, on what you have? What was your path?

1 (11m 12s):

Yeah, so I was really focused on student rentals for the first few years, just because they were the best cash flowing asset I could find in my market after that, I started pivoting into small multifamily properties. So really specializing and, you know, century homes that at some point had been subdivided into kind of two to four units buying those properties and then just bringing them up to their highest, best use. Then recently I’ve been pivoting into larger multi-families. So, you know, again, in to the 10 plus unit buildings, purpose built and just doing burrs on a much bigger scale with them. So rather than burring a duplex or a fourplex, we are now during, you know, a 14 Plex, 17 Plex 31 unit.

1 (11m 53s):

And for me, each one, I kind of view it as like steps. So there is like a period where I kind of plateau and just start refining the business model. And then at some point in time, either get tired of that or decided that there’s a better higher use of my time. And then I’ll pivot into a new strategy and that is kind of a period of rapid growth and expansion. And then again, once we kind of go through that initial growth period kind of plateau where, okay, let’s stabilize all these buildings again, you refine the business model and then either I can hand it off to the, you know, as an employee and move on to the next strategy, or we just kind of wrap up that strategy and then move on to a, the next, most attractive strategy.

0 (12m 34s):

So when you’re looking at let, let’s call the, I don’t know, 10 to 15, 10 to 20 unit apartment buildings, you just kind of the nuts and bolts of it at first of all, in terms of the typical structure. And I know there’s usually no typical on real estate, but a number one, it, you know, how you approach those properties from an underwriting point of view, when it is in fact something where you’re maybe you’re putting short term debt and then stabilizing like a burst strategy. And then secondly, the actual structure AR we key in, you know, now that we have a Canadian on, and, you know, you S listeners will be able to have, you know, a little bit of a similar kind of you on this as well, But corporate structure, or, you know, are you holding them as JVs or you holding them with an incorporation?

0 (13m 14s):

So I guess to questions their underwriting and, and how you’re structuring the ownership with.

1 (13m 20s):

So I’m probably going to answer the question, both questions in a blended fashion. So the way I go about real estate investing at this point, and I think most real estate investors, at some point, if you decide that you’re really going to scale this into a replicable business, you need to stop using your own capital. So at this point in time in my career, I literally have a rule. I don’t use Matt money for real estate anymore. I only use real estate, or I only use my money for my active businesses. So that’s like, you know, my education company, cashflow tribe, or that’s my software company to control your property, whereas all the real estate I’m acquiring at this point, and the portfolios I’m growing is all through JV partners or short term debt.

1 (14m 1s):

Again, we like having control over the real estate asset. So my specific business model looks like a 60, 40 split where I’m attracting JV partners. They take a 40% split. I take a 60% split. We’re buying within corporations. Sometimes we’re sending up a new corporation for one off projects, or if it’s going to be a serial relationship, other times it’s simply our corporations like to separate corporations, entrained into a JV on a specific deal. You know, we’ve also done the, a LP structure is a limited partnership structures and things like that. Again, for me, it’s always going to come down to the deal as far as how I structure it. But as a general business model, a 60 40 split when possible I’d rather bring on debt.

1 (14m 45s):

So sometimes there’s the deals that are so good that I can just attract private debt and get people to sign off on that and get like that a hundred percent loan to value. In addition, sometimes we are getting very creative with our sellers, so I’m sure everyone’s familiar with a Canadian real estate market. It’s pretty hot these days. So a lot of sellers want top dollar and a lot of investors when they’re new to the game. When they see that top dollar price, this move on, instead for me, I’m like, okay, you want top dollar? Then I want top terms. And some of my top terms are going to be, I want giant VTB. I wanted to be interested in only I want, you know, this, that and the other. And all of a sudden, I’m just asking for the moon, because they’re asking for the moon in regards to pricing.

1 (15m 25s):

So again, whenever we get the opportunity to be talking to a seller directly, I’m never going to walk away from that opportunity until they literally tell me a screw off and never talked to them again, to really take that relationship to the furthest extent I’m capable of. So for us, a lot of our financing these days is relatively untraditional. So a vendor take back private loans, or the most traditional stuff I’m doing really is with credit unions at this point for financing a larger multifamily.

0 (15m 54s):

So for listeners that aren’t aware of vendor take back would be when the actual cellar is taking a portion of the mortgage, you know, and that can be a prime plus to the point. It can be at 8%. It’s just basically a kind of a private loan in terms of the, you know, having an Accountant on the show here in terms of the Canadian corporation, I guess, would be most similar to an escorp in the States. Would that be a fair comparison or would that be a C Corp?

1 (16m 19s):

I’m not super familiar with a U S corporate structure. So I wouldn’t want to give faulty advice. So definitely talked to your American CPA if you’re an American talking to your Canadian CPA, if you’re a Canadian, one thing I will say for, if there’s a lot of newer investors listening to this, if there’s brand new investors in Canada, I find way too often aspiring investors or a novice investors hold themselves back because they’re trying to build the perfect corporate structure a hundred percent. Like if I had a nickel for every time I was asked about a corporate structure, I would own all of Canada. So it’s really important. Like there is no perfect structure. And especially when you’re brand new to real estate investing, you don’t even know if you really want to be real estate investors.

1 (17m 0s):

So there’s very little harm and buying in your personal name. Oftentimes when you are buying a corporation, you’re still going to have to give some sort of personal blanket guarantee as well. So what I recommend for the people that are in that analysis paralysis, because a corporate structure, just go ahead, buy personally and get some sort of umbrella insurance policy. You get like a 2 million blanket umbrella insurance policy only going to cost you a few hundred dollars a year. And it’s going to give you the same, if not better protection odds are, then that corporation was going to do. So I really recommend people not get too hung up on corporate structure. Now, if we’re looking at building a massive scalable business where you’re like, we’re acquiring to a hundred units a year right now. So like, if your doing that, yes, you want to get your corporate structure set up, right.

1 (17m 44s):

But again, at something where you’re going to pay top dollar for it. So, you know, we’ve spent 15, 20 grand in the past to get our limited partnership structured. It’s done upright, but that’s an investment longterm and a resource that we can always go back to depending on our future partnerships.

0 (18m 0s):

Interesting. I couldn’t agree more. There’s so many times that, you know, somebody’s is like, do I have the right insurance? Don’t have the right corporate structure. And it’s like, at this point, it’s like, try to try to look for properties like L do the business of real estate. And what’s interesting actually is just on this point, I was speaking to a lawyer he’s based out of New York, but he’s a Canadian and what he was saying to me, and I’m not sure, you know, obviously it’s not legal or tax advice. But what he was saying to me is that a lot of Canadians get bogged down in corporate structure. When we think that the liability protection that we get with a corporation is going to be defending lawsuits that are more similar than the United States. For instance, class action lawsuits. And the United States is a very litigious country. You could have multi-million tens of million, hundreds of million dollar lawsuits.

0 (18m 44s):

And he said from the evidence he is seen in Canada, oftentimes like you just said, a blanket insurance policy typically covers off landlords for the liability component. But like you said, it’s, it’s not just one thing, right? It’s comingled with tax strategy, accounting, you know, legal. So when you say that you guys are doing 200 units a year, what does that look like? Is that, is that the community? I know you mentioned a little bit about the community of investors I’m that, you know, that you deal with w you know, what’s, the structure

1 (19m 12s):

Is there. So I’ve got a handful of different businesses, all involved in real estate investing. And I I’ve one, a set of corporations that just focus on like buying hold multi-families and sew in that corporation. You know, we’re buying, we’re aiming and, and we’re hitting is about 50 units a quarter. So what we’re mainly buying, and there is anything from an eight unit to a 50 unit, usually something in the, you know, 10 to 30 range is what we’re heading. These are almost always private sales. So probably 85 to 90% of the deals I do now, or a private off market deals, again, just because realtor.ca and the MLS are so hot. And the other thing is when multiple realtors are involved in a more complicated deal where you want to get creative on terms, there’s a greater chance for that game of broken telephone.

1 (19m 60s):

So, you know, more often when I can really sit down, you know, across from the Tim Horton’s table, from that seller and talked about VTB, it’s a lot easier than trying to explain it to my realtor, who is gonna explain it to their realtors, then go explain it to them. On the flip side, I’ve got a team of wholesalers that work for me. So I’ve got six full time wholesalers write. Now that literally, or just out there stirring up real estate opportunities, private deals, things of that nature. So any given month, we’re probably wholesaling five to 10 deals. And in addition, in a lot of the people in my education company, cashflow tribe ended up, you know, kinda getting first, write a refusal on those deals. So most of it just goes to that community in general.

0 (20m 40s):

So we’ll put a couple of links up to any of the content and you have, or any Links year for the company. Maybe you could kind of just give listeners who aren’t familiar with wholesaling. I just kind of an overview of as well as to what that is.

1 (20m 52s):

Yeah. So wholesaling real estate to the best of my knowledge, like before 2015, 2016, almost didn’t exist in Canada. It’s very much of a novel creation. So I can remember back in 2016, get in my first Ricoh complaint and panicking. So a, you know, the real estate council Ontario. Yeah. So that’s what Ricoh is. So in, in Canada, you’re definitely going to have to be very careful to make sure your on the right side of the rules and regulations in regards to wholesaling. But in essence, what it is is when a real estate investor finds it an opportunity that may be doesn’t fit their business model well, or they think that they can make more money just flipping the paper, that’s what they do. So I think the easiest way to think of wholesaling is flipping paper.

1 (21m 35s):

People are familiar with flipping houses, flipping cars. Well, this is literally just flipping legal contracts. So I enter into a purchase and sale agreement with a seller. Usually it’s going to be a private seller, but we do occasionally do this, even on the MLS and any contracting Canada, unless it States otherwise is going to be assignable. So essentially once you’ve entered into that contract, you now, and you’ve put down a deposit or in this money, you’ve now entered into a legally binding contract that you have an interest in, and you can sell your interest in that contract to another party. So a lot of investors now, or are focusing on, well, do I want to become the absolute best flipper? Do I want to become the absolute best Burr or do I want to become the best at finding the deals?

1 (22m 17s):

And to me, you’re a wholesaler, his, the person that’s best at finding deals. And we really dive deep into the sellers. Why, and I know a lot of people at first, thank that, you know, wholesaling must either be a scam or taken advantage of people, or, you know, they also assume that everyone’s always motivated by top dollar, but usually the people we’re dealing with is wholesalers money isn’t necessarily going to be their top motivator. There may be, want to sell a really fast, or they may be have privacy concerns. And to the privacy concerns, you can go in multiple directions. But oftentimes I may be a hoarder that doesn’t want their family, friends, neighbors to see how they live. Sometimes it’s someone with a really expensive collection that got a $500,000 Lego collection, and they don’t want the world to know about it.

1 (22m 59s):

So they don’t want strangers walking through their property. So when they can get someone just to walk through once, do a cash offer, they’re more interested in doing that deal. So usually most real wholesale opportunities are going to be a really unique situation that doesn’t fit the standard mold of realtor.ca.

0 (23m 16s):

Yeah. I remember, I think it was 2012 or 2013, you know, I condos in, in a lot of metropolitan areas have been hot in Canada in terms of what we used to do back then was just assignments, which you are essentially wholesaling write. It’s an assignment, have the actual contract. And I remember that time, I think one of our major newspapers at the Toronto star are there was a couple articles, basically, like you said, looking at real estate agents and, and trying to figure out if there are in compliance, because are other implications, at least in Ontario, there were implications of, you know, the taxes that you pay on wholesaling or, or signing. But I think it’s definitely definitely in the mainstream right now, but I know for awhile it had this connotation, like you said, of being maybe, you know, not on the up and up, which I think its it’s just another strategy and just people didn’t understand it.

0 (24m 4s):

And I think there is now that you’re seeing more YouTube videos about it kind of an understanding of what it is, but in terms of the actual, so you have the birth strategy, wholesaling, your, your buying a multi Rez, I guess, based on kind of some of the news we’ve got today, the fed just slash rates by 50 basis points a, the bank of Canada followed suit. We’ve had a downward pressure on cap rates and yield. Where are you guys finding these deals right now? Is it just that you just are rolling up your sleeves and, and looking for these off-market opportunities?

1 (24m 39s):

Yeah. So we implement a variety of creative strategies really to stir up in trust. So each market’s gonna be different, but here in Southwestern Ontario, we have a lot of success with handwritten flyer campaign. So these are those flyers and you get in your mail that their hand written that saying, Hey, I’m looking at buy a house on your street. If you, you or anyone, you know, are interested in selling, contact me here. So we’re probably doing, I don’t know, any given month, maybe 20 to 50,000 flyers are just going out on our behalf. It’s in different cities and markets. So that’s a big generator. We do a lot of what I call like hand to hand combat. So where it like every networking event you can imagine for real estate investors, either myself and my team, usually we’re wearing bright, obnoxious red jackets.

1 (25m 25s):

So it’s really easy to find us again, were just talking to all kinds of real estate investors. So we often find that like existing landlords, they have portfolios when they decide that they’ve had enough, they’ve had enough and they just want to like liquidate their entire portfolio once. And they’d rather have someone come in. That’s like, Hey, I can take down this entire portfolio. I might wholesale all of them individually, but no matter what, you know, I’ll take it down if someone else can’t. And so oftentimes some of our best opportunities are found there, just networking with other investors then as well. Like we’re not above driving for dollars knocking for dollars or what I really like calling Google street view for dollars these days. So like, I like to do initial vetting of a neighborhood or a street, but just going down Google street view.

1 (26m 10s):

What’s great about that is you can actually go back in time as well. So like a lot of people don’t realize I can jump back to 2015. Yeah. And see whether your grass was still on cut then. And it’s also an out in 2019 and that may be an indicator of someone that’s not really taking care of the property. So, and then beyond that, like literally we call realtors every single day. So my team’s probably, you know, grabbing a long extended phone call or a coffee or beer. We’re probably in like a dozen realtors a day just through different meetings. Again, making them aware of kind of what we’re looking to buy, what some of my companies are looking to buy what we’re hearing from other investors as well, as far as their appetite for real estate and kind of circling back.

1 (26m 52s):

I know a lot of people think right now that the market’s very bubbly and in perspective too, where it probably wasn’t the past. I certainly understand that. But for me, a lot of the real estate we’re buying in Southwestern Ontario is very much fundamental driven. So what I really liked to look at is across Ontario, Canada, minimum wage is like $15 an hour. If someone’s working full time at a minimum wage job, that means they’re doing about 2000 hours a year while a 2000 hours a year at 15 bucks, that’s $30,000 a year in income. They have stats. Canada shows us the average Canadian spent in about 30 to 40% of their income on shelter. So, you know, 30,000 times 30 or 40%, that means about 10 to $12,000 a year.

1 (27m 34s):

That one person on minimum wage can afford for shelter. So, you know, when we’re buying multi-families here in Southwestern Ontario, our average rents are probably between our average fair market rents are between 900 and $1,500 a month for a one to a two bedroom apartment. What that means is, you know, literally one person working full time on minimum wage can afford the sort of accommodations we’re providing. It means that a two person household on minimum wage, you can easily afford those accommodations. So for me, when we’re investing for cashflow in Southwestern Ontario, when the fundamentals lined out the way that they do it still feels like a no brainer to me in like, you know, the lower interest rates or just an added bonus to us.

1 (28m 17s):

Whereas I know a lot of listeners and the GTA there often chasing what I would consider to be the greater fool theory were really their only exit strategy is simply selling to someone else that wants to pay more. Yeah,

0 (28m 30s):

Yeah. A hundred percent. We, we see that. We see that time and time again where you a perfect example of that is preconstruction pricing right now because pre-construction pricing. If you really roll up your sleeves and look at anything in whether it’s in San Francisco, New York, Toronto, the pricing is factoring in a growth rate for the rent that we know that we don’t know is going to be the case, right? We’re, we’re assuming that they’re will be a certain amount of appreciation and a certain amount of rental growth, but you know, if you underwrite them to today’s, you know, maybe that’s not as fair, but if you underwrite it to today’s standards, you know, you’re looking at 2% cap rates, you’re looking at cap rates that are not even covering your, your actual debt.

0 (29m 10s):

So, and you know, and I think that’s, I think that’s true that when you’re going out and looking for these properties, you’re looking at fundamentals and I definitely echo a few of the points you said, and that is I see the population growth. And in Toronto specifically, I see immigration as a, as a driver. And I still think, although prices are high, it still a supply issue. We’re not supplying enough housing. You’re a little bit outside of the Toronto area. Do you typically invest in kind of, you know, an hour outside the city, two hours outside the city, or you also looking downtown areas

1 (29m 43s):

Here in London? Ontario a lot of my properties are adjacent to the downtown. So we’re investing like REITs in the core, center’s in the city for a multitude of reasons. One is a lots of like the, not a major major city. So it excluding say any, any major city in Canada that has an NHL team. Most of them didn’t necessarily have their downtown cores go through the store growth and rebound that’s a Toronto has, or Vancouver has. And so in London we’re right now, still kind of going through that gentrification period for our downtown cores where people want to start living a more urban lifestyle. And we’re seeing a lot of like the younger millennials pushing towards that.

1 (30m 23s):

So that’s of course, strategy of ours, but we’ll invest in any market in Southwestern Ontario. So a smaller cities like Sarnia out with 70,000 people or Chatham with 50,000, once we started going into really small markets, that’s where I tried a lot more carefully. So anything with less than 10,000 people as a population base overall, to me, isn’t attractive unless it’s extremely close to a major city center where it should a bedroom community that feels very stable. It has rapid growth from a, a development stage. Then I would still be attracted to it. But I grew up on a farm and a, you know, where the big town to us was like a 4,000 person population center.

1 (31m 4s):

That’s not a market that I’m naturally inclined to want to invest into just because the fundamentals there feel a lot more soft, where again, like in London I can really get dialed in because there’s also the data available there. Right? And so w a law real estate investors are on one edge of the spectrum. They’re either data oriented or a drama oriented they’re being driven by their emotions. So there is being driven by the numbers. I really liked to be firmly in that number is that,

0 (31m 28s):

Yeah, you’re not in the Accountant at all. That’s, that’s it, that’s a little unusual. And, you know, I, I guess just, just to add to that, you know, what I’ll tell younger investors are just kind of in my philosophy to you trying to take a look at where the path of a progression is from a transit standpoint, but also keeping in mind that these things change. So to your point about fundamentals that’s I think the first starting point, for instance, there’s a city about an hour away from Toronto called Hamilton, a I call kind of the Brooklyn too in New York of Ontario. And there was a billion dollars a year marked for transit, specifically, a, an LRT, a light rail transit, and the provincial government changed.

0 (32m 9s):

And the money is still there, but it’s going to go into a bit of a fun that still being an earmark for transit, but just to illustrate that, you know, when it comes to politics, you know, different parties go in and go out to plan change when it comes to transit. So I think you’re right. I think looking at cities that have established data and looking at cities that I like the term can’t remember, which Podcast, But 18 hour cities, so maybe not a 24 hour New York, but you know, something, you know, what maybe a Memphis or, or, you know, something in that’s a little bit of an offshoot, but that’s, that’s got a buzz going. So what do you see as, you know, your, your kind of five year plan? Like where would a, where it would, Matt like to be five years from now, as it pertains to, to your point

1 (32m 51s):

In regards to real estate, I want to keep growing my holding company. So in essence, where 200 units a year. So the goal is had over the next five years, we’d had to at least another thousand units to add to the portfolio. So that’s definitely a big milestone for me beyond that. I am a really big believer in having like those big audacious, hairy goals, like those bee hags. And, and that being said, so like, for me, the Real like, I literally it’s like written on my wall, just in my left ear. But so I’ve got, Turned 35 this year. I’ve got a 40 year 45 and 50 year old goal for myself. And at age 40, I really want to get just what I call obnoxious wealth.

1 (33m 34s):

And so that means just the story, the way,

0 (33m 36s):

You know, for it. I dunno if we say it on this podcast, but yeah.

1 (33m 39s):

Yeah. And so that as a doctor, as well were just really, there’s no restraints anymore, or at least know financial restraints on anything that I’d want to do. Yeah. I have a lot of creative projects I undertake. So like right now, this podcast is being shot and like the mansion, which has a house I live in where four of my employees will live with me. Right. So we’d like live work together. And it’s like a very unique environment, very much that start up environment. And we just started as a second house. And so I’ve got like a second group of wholesalers living in that house. And I’d like to eventually spread out all across Canada with like mansions in every major city. So oftentimes like these kind of random, like these random side projects or passion projects, I have aren’t necessarily a creative from day one from a financial standpoint.

1 (34m 25s):

So that we’re really building out my real estate business in my other active businesses to be wildly financially successful is as important to me just from that longterm goal perspective. And then at age 45, the big goal is I wanted to be able to take a meeting with anyone. So that means where, like, you know, I’ll maybe keep it a short list. Like Elon Musk, the president of the United States. Those people may be, won’t pick out my phone call, but ideally I want my reputation in my accomplishments to perceive me to such a degree that I should be able to get into most rooms. I should be able to book a meeting with most people.

0 (34m 59s):

Incredible. I like, I totally liked that view of it just being able to get into meeting with anybody. It’s funny, you’re not the first person and I’m sure you’re not the last that’s gonna say, you know, write on this wall here is what I was saying to Brandon. And the only reason I keep mentioning him is because we just recorded right before this podcast. And we were talking about vision boards and we were talking about kind of personal development. And I said, man, you know, in 10 years in the real estate investing, one thing I’ve, I’ve seen as a through line between personality types that invest is that you get me a hundred real estate investors in a room. I bet you, on average, they will be way higher, a certain way higher than average in terms of the books they’ve listened to or read this month, a personal development that there are engaged in goal setting.

0 (35m 42s):

It just seems to be philosophically that real estate investors are people that constantly are trying to try to better themselves in some way. And I think that’s really cool. And on that note, in terms of some of the resources that, you know, if you, you know, came back to your 20 year old self, or you came back to a newer real estate investor today that wants to get in, maybe just whether it’s some advice or some Resources that really helped you or that you wish you had at the time, maybe you could kind of, you know, mentioned a couple of those.

1 (36m 11s):

Absolutely. So number one, almost anything that you want to learn is out there for free on the internet and may take you a while to find it, but it’s absolutely buried there in some subreddits or on some YouTube tutorial. So if you find yourself in a situation where you can’t necessarily pay for education or mentorship, that doesn’t have to hold you back as a real estate investor, that information out there, you just needed to go find it. The number one mistake, I think I see most the aspiring investors due is simply not getting out there and networking. So the number of people that tell me, once I buy my first property, then I’ll go to that meetup. Once I have a deal, then I’ll go, go to that REI. And it’s really the exact opposite.

1 (36m 53s):

You know, the moment you decide that you’re passionate about this, the moment that that spark is lit and you about becoming a real estate investor, that’s when you need to start surrounding yourself with likeminded individuals, we have a saying here to take counsel. Now that advice. So the advice comes from someone that’s really drama driven. So there are very focused on just emotions. Like, Oh my God, isn’t that risky without knowing the numbers or you don’t want to be unclogging the toilet at 2:00 AM. Things of that nature where someone that’s giving you counsel, they’ve been there, done that, got that. T-shirt. And not only that, but they’re actively continuing to grow and develop and a manner that you aspire to, right? So if you don’t want to be that person, at least in the round that their giving you that counsel, then you shouldn’t be listening to them.

1 (37m 38s):

In my opinion. So way to often, I find people listening to their friends and family who have the best of intentions, but the worst advice. And so it’s really important that you, you qualify where you’re taking your information from, because, you know, if I wanted to become a billionaire, I should only take advice from billionaires. Realistically, if you want to become a millionaire, you should only take advice from millionaires. Realistically, if you want to become a real estate investor, don’t listen to anyone. That’s not a real estate investor. Yeah.

0 (38m 4s):

Yeah. And you know what, it’s, it’s funny, you mentioned, you know, having good intentions and I’m sure most of your friends do, but if they’re not in this space, you know, we’re comfortable with our friends being in the, kind of the same environment that we’re in and you see, somebody’s kind of living that, you know, you kinda, you see, you get a little bit, maybe, you know, maybe that’s not going to work out or you, you know, you should be worried about this. You should be worried about that. I think any real estate investor that has happened at some point at the beginning of their career and usually a successful story is that they didn’t listen that and they, they kind of, they broken anyways, well, you know what, we’re kind of wrapping up here. So maybe just on the resource side of things, obviously you’re YouTube channel is where people can, can find you and will put a link to that.

0 (38m 48s):

But if people wanna get out or reach out to you or, you know, check out Resources that, that you have, or your companies, what’s the best way to get ahold of you.

1 (38m 58s):

YouTube is my number one favorite way. So like leave a comment in the comments section and I try and respond to every comment. But beyond that, I’m on every major, a social media platform. So to send me a DM on Facebook or Instagram, I eventually get around to them. It sometimes takes a while, but yeah, I just really want to leave everyone with the impression that wherever you’re at and you’re real estate investing journey, all you need to do is like crush through that next limiting belief, overcome that next office as a call and understand that this will be a continuously iterative process. So there is no one point in time when you have all the knowledge or you have all the money or, or you have all the deals you’re going to be continuously hitting new barriers, new limiting beliefs.

1 (39m 40s):

But that’s actually a good thing because it means that you’ve made progress from the previous obstacle that you had in your life. So, yeah, just If and if you guys got any real estate basic questions, like there’s over 600 videos at this point in time that I’ve done on my YouTube channel. So I’ve almost answered every question already there. So I’d love it when you guys figure that out first,

0 (39m 59s):

My guest today has been Matt McKeever Matt thanks for coming on the working capital real estate broker.

1 (40m 3s):

Thanks. Jesse you appreciate it. Thanks for listening.

2 (40m 7s):

Do the work in Capital Podcast. My goal was to help individuals break into real estate investing as well as educate experienced investors. If you enjoyed the show, please,

0 (40m 15s):

For sure, with a friend or subscribe and give us a rating

2 (40m 17s):

On iTunes, they’re really helps us. If you have any questions

0 (40m 20s):

You want to learn more or like me to cover it,

2 (40m 22s):

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 or the working capital real estate podcast.