 If you have a 30-year time frame to invest, okay, and you wait one year to invest, you actually have a 29-year time frame, so you lose the last year, which is the most valuable year. Right, so the key thing is to take action. I've had a lot of my audience ask about real estate. Even though I double dabble into it and I have a history of it, it's not really my forte. And so I know it's your forte. So what I would love to do today is run through the ABC crash course analysis of people who are interested within the real estate space or interested in getting into the space of where do they start? There's a lot of information out there. There's a lot of different opportunities. There's a lot of strategies when it comes to real estate investing, whether it's condo buying, multi-family home, commercial buying, et cetera, et cetera. So hopefully you can shed some light on your past experiences, what you've done in your past who were successful and worked for you, and hopefully this will be valuable for people. Yeah, sounds good, definitely happy to help. Cool, so the first question I have is, where was your start within the real estate realm? So I actually started not really planning to get into real estate investment, right? I mean, I think that's how most of us started everything, right, from business, everyone always asks, entrepreneur, how did you get started? The real truth is that you didn't really mean to. You accidentally did, like for most people. Same thing with the real estate. So I bought, when I was 19, I bought my first house, not because I understood real estate investment or that it was a good deal, only because in my naivety at the time, I said, I don't wanna pay rent. And I thought, okay, paying rent is kind of throwing money away. If I could buy a house somehow, then I could actually be saving that money instead of throwing it away. And so I actually, I never thought I was crazy, but I thought, well, why can't I buy a house, right? So I talked to real estate agents, they all said, no, there's no way, like you're 19, you don't even have credit. Why would you wanna buy a house? Why would you shackle yourself financially? My dad was pissed. He was like, you're an idiot, you're just a fucking idiot, dude. Why are you doing this? Like you're gonna throw your whole life away, right? Like why burden yourself with debt? But I kept on persisting. I was like, no, I wanna do this. So I talked to you, finally this one real estate agent, and he's like, all right, I can find you a house, because my price range was like $60,000, 50, 60. He's like, it's like a hundred is minimum. He's like, I can find you some shacks, like for what you're asking for, maybe when they show up in the market. So I was like, okay, fine, I don't care. I just wanna, I just need a place to live, right? I just don't wanna pay rent. So he finds me this place, you know, $68,000. It's not hooked up to city water. And he's like, he's like, you know, you gotta pay to have it hooked up to city water. I was like, oh, I don't have any money. I've got like, at that point I had like $2,000. He's like, you can't buy a house with no money. You know, gotta pay down payment. And so he's like, if you dig the ditch to connect the water, right? Then you can, you know, do that. And then trying to get a loan. I talked to so many mortgage brokers are like, no, no, there's no way you get, you have a credit history. Finally, I found this kind of shady mortgage broker. And he's like, yeah, I got a deal for you. It's like 13% interest rate, three year prepayment penalty. And I knew I was getting, you know, fleeced on that. But I said, well, you know what? I'll take it because I don't have any other option. So I took the deal and ended up buying the property and it was a mess. I had no idea what I was doing. I lived in the property at first and then I got this job offer in Los Angeles in Santa Monica. And it was a really good job offer at the time I was 19. So I got this job as a software developer for 75 bucks an hour. I was also at the same time I happened to get transferred. I was doing modeling and acting and I got transferred to an agency there, a parent agency was like, okay, I'm going LA. So I'd hop in my Geometro drive to LA and I let my friend live in my place, like rented out. I also had like a garage there that I was trying to convert over to actually make it into a unit, a rental unit. And man, it was a mess. So we don't have time for the whole story, but I had no idea what to do as a landlord. I had no idea how to rent the properties out. The property got destroyed multiple times. And what ended up happening though when I was in Santa Monica, like here I was 19, I was making 75 bucks an hour and a lot of that was per diem. So like around 25% of it was tax free. So I was making the equivalent at 19 and this is 20 years ago, of about $170, $180,000 a year about that equivalent salary. And I thought, okay, man, I'm rich. I'm solid, like you can't get better than this. So I said, okay, how long before I'm a millionaire? I sat down one night to do the calculation. And so I'm thinking, I'm like, okay, well, if I save as much money as possible, I'm still gonna have a high taxes, right, tax rate. But let's say I could live off of like $40,000 a year in LA. I was sleeping on the mattress on the floor at the time, by the way, like I was like, I'm gonna save all this money. I'm gonna become rich. And so I thought, okay, well, if I could manage to save $100,000 a year, I was like, oh shit, that'll take me 10 years to be a million. Oh, but then I forgot about inflation because it won't actually be a million dollars in 10 years. So realistically, it'll take 13 years of saving $100,000 a year, right? And I thought that's insane. I have to keep this job, not get fired, sleep on a mattress on the floor, right? Live off of, you know, for 13 years, just to say I'm a millionaire and a millionaire is not even rich. That's just like the beginning levels of having some kind of wealth. So I was like, shit, how does anyone do this? There's like, who's making more money than me? I knew no one making more money than me. I mean, what can I even make? Like $250,000, $300,000 a year? That's insane. There's no way. I'm already 19. I shouldn't even be getting paid this much. So I started researching and I said, how did people make money? Like, how do wealthy people make money? And it all came back to real estate. Every time I was like, wow, the way that people generate wealth in America is through real estate, that's the way. Because I even looked at, you know, what if I put money in the stock market and you know, I took a compound interest calculator, which by the way, that's a tool that everyone listening should be familiar with. Like you should play with a compound interest calculator. After this podcast, what I want you to do is go and find one online and just plug numbers into that until you realize what different rates of return and different initial capital and different times, length of investing. So you understand this, right? Because when I did that and I was looking at returns in the market and I was saying, oh, what if I get five or six percent return? It was like, still, you're talking 25, 30 years before you can actually have any real amount of wealth. So I was like, that's not an option. I was like, what most people think is an option, that's not an option. You're not gonna get rich that way, no way. But it came to real estate. And so that's when I started studying real estate. It's kind of funny. Back then, Trump was my guy. I was studying Trump way back, you know, 20 years ago because he was the guy, right? I mean, he had really done well in the real estate. I was studying other people as well, you know, and Gary Keller, for instance, he's got a really good book called The Millionaire Real Estate Investor that was one of my first books in real estate. So anyway, I figured out real estate was the way. And eventually I ended up dealing with a lot of problems with the property. I moved back to Boise, Idaho, where I had started. And immediately I bought a townhouse and then I immediately bought the unit next door. And I still had a big learning curve. I still made a lot of mistakes, you know, but this time I hired a property management company and I had to fire the property management company. But I basically made this commitment. I said, okay, what I'm gonna do, and I had this plan, I said, you know, I'm gonna buy one property every single year. Was it flipping it? No, just hold it, buy and hold, rent it out. And so what was your down-to-pause strategy? Was it just regular? Well, I'm not too sure the percentage down there. So what I did then was I was putting 10% down and then I was either getting a second mortgage or just getting PMI, which is mortgage insurance. And then paying it off, they're paying off the, either the second mortgage, which I don't know if they do second mortgages anymore. Probably they do, but... So the mortgage insurance down, is it if you put down 5% only? It was if you 10%, 10% was the minimum. If you have 20%, you don't have mortgage insurance. So that's basically what I was doing to buy those properties and yeah. And then the strategy was when you had the mortgage insurance that if the property value went up, you could have it reassessed, essentially get a new, get the new value and then drop the PMI off of it. So... And did you sell off your first property that you bought? I just sold it this year. I held it for 20 years. 20 years. Were they a crude value at least? Yeah, so I bought it for $68,000 and I think I ended up selling it for about $150,000. So pretty good amount of value, but the real value wasn't just that. I mean, I originally had rented it out for 500 bucks a month. And by the end, I was renting it for a thousand bucks a month. So, I was making a lot more cash flow on that plus also I had depreciation, right? Because see, there's three main ways that you make money in real estate. Technically, some people say four or five, but essentially you make money from cash flow. So if you buy property and you collect the rents and the rents are higher than the mortgage or if you bought it cash, you're gonna make money from there. Okay, now that's the smallest way you make money but you do make money from cash flow, right? So for example, you buy a property that has a cap rate of let's say 6%. That just means that if you bought it all cash, you'll get 6% return on your money, which is not bad. Just compared to other investment vehicles. So that's one way. The second way that you make money is through depreciation. So depreciation, at least in US tax law is such that if I have a property, let's say it's $100,000 in value, let's say 80,000 of that is structural and 20,000 is land. On the $80,000, I can straight line depreciate that property over 23 and a half years, right? So that is, and I think I always mix it up the number of years, but it's 20 something. I think it was 23 and a half. But anyway, for residential property, what that means is that I can take that $80,000 divided by 23.5 and I can show that as a loss on my taxes every single year, right? So you make money through that depreciation. The third way that you make money, actually I guess I'll get four in this case, is principal pay down. So you have a mortgage on the property, especially if you have tenants paying it and even if it breaks even, it washes. So you've got zero cash flow on it. The mortgage is being paid down. So you're paying down the principal, right? So you can imagine if I held a property for 20 years, I had quite a bit of principal pay down on that property that is essentially free, right? I'm not paying that, my tenants are paying that or that's one way of looking at it. And then the fourth way, which is actually the most important when you make money is through leveraged depreciation. And leveraged depreciation is the key. That's where you make the most money. What that means is that, so let's say I bought a property cash. If I bought a property cash, $100,000 property, let's say there's a 6% return on that property. I would make $6,000 a year. I'd make 6% a year. And when you buy cash, are you talking about just deposit or full straight cash? Full straight cash, just like if we just invested 100. Yeah, if I did that, I wouldn't have leveraged depreciation. I would still have appreciation. Let's say that that property goes up in value, okay? So I have a $100,000 property. I bought a cash and it goes up to, it goes up 10% in value. So it's now worth $110,000. What's my return on my investment? Did that again? It's a question. So I have $100,000 property. I bought it all cash. It goes up 10% in value. What's the return on my investment? Let me 10K. Yeah, and what in terms of percentage? 10%. Yeah, 10%. Okay. Now that was a easy one. It's kind of a trick question. So now let's say that same property I buy for $100,000, okay? But instead I put 20% down on it. So I invest $20,000 into the property, okay? I rent it out and everything. I lose the 6% cash flow on it. Forget about that. It ends up being a wash on the cash flow. Tenant rents it out, okay? But I'd break even on it, okay? Now, same scenario, it goes up $10,000. So the property value increases by 10%. Now what's my return on investment? I don't know, what is it? It's, so, okay. So if it was all cash, right? And it went up 10%, then you said I made $10,000, right? So I'm still making $10,000, but I invested $100,000 in the first scenario and I made $10,000. So that's a 10% return. In the second scenario, I invested $20,000, but I still made $10,000. So I got a 50% return on my initial investment. And that's the power of leverage appreciation. And that's the key to becoming rich and to making money in real estate, is that you're buying these properties, right? And my strategy is to buy and hold, okay? That's the only sensible strategy for real estate investing. Now, a lot of people are gonna get mad and upset, but I'll talk about the other activities I don't consider to be investing. They're real estate business activities, but they're not investing. To me, the definition of an investment is that it has to not rely on future events in order for it to produce a return, right? So speculation in my mind is anything where you need something to happen or you're hoping something to happen or you have good knowledge that you think something will happen, that's speculation. Investing in my definition is that it doesn't matter. Right now it's a good deal, right? So in that case, right, what we're doing or what my strategy is, I'm buying properties, okay? I'm renting them out. The tenants are paying the mortgage so I'm getting the principal pay down. I might get a little bit of cash flow on it or if I get zero, it's fine, it doesn't matter, okay? So I'm getting the principal pay down. I'm getting huge depreciation on the properties, especially when you own a lot of properties, but I'm biding time for them to go up in value because I have leverage appreciation. It's a leverage investment, right? So if I'm 5x levered, which means that I'm essentially borrowing 80% of the money from the bank, I still make money on the bank's money. That's the key to the leverage appreciation. And remember the debt service for that money that I'm borrowing is paid by the tenant, is paid by the rent that's coming in. So that's taken care of. So I'm essentially getting the bank's money for free and then getting the value from that appreciation which is a leverage to my investment and that's the strategy, right? And if you do that, then you keep on buying properties every year, then what's gonna happen is that you're gonna be getting somewhere, you might not get 50% return on your money every year, but if real estate on average just goes up, let's say 3%, okay? It's a 5x lever. So if you have a piece of real estate and you're levered such that you've put 20% down on it, whatever the appreciation is, you can multiply that by five. So if real estate goes up a modest 3% per year, you're actually making 3x5, 15% on that investment. That's not including all the other ways you make money, the depreciation, the principal pay down. So on average, a real estate investment, even if you're dumb, okay? Even if you make a stupid investment, it's just you just buy properties at market value which I recommend you buy them under market value, but even if you do and they're not great investments, you're still probably gonna get somewhere between a 15 to 20% return on your money. And if you buy good investments, it could be 30, 40, 50% return on your money. And we're not talking overall return. We're not talking irrespective rate of return at the end of the, we're talking yearly return, right? If my property goes up 3% and I have 20% down into it, I'm getting 15% appreciation return every single year. So that compounds very quickly. And that's why the compound interest calculator is such a great tool is because if you punch the numbers in, if you say, okay, well, if I invest in the stock market and I put $100,000 in the stock market and an S&P 500 index fund, okay? Probably the smartest stock market investment if you're gonna do that, okay? And you look at the historical rates of returns. And if you say, okay, let's say I can get a 7% return every year, right? If you punch that in and you start with $100,000, it's gonna take you a long time to even accumulate a million dollars. A very, very long time, okay? You're not gonna be able to enjoy your wealth, okay? And that's if everything goes well. Plus you're gonna pay taxes on that. Whereas with real estate, if you take that same $100,000 and you deploy that, let's say you deploy that as 20% investment in a $500,000 property, okay? And you're getting a return rate of 15%. Let's be conservative here. You're gonna be rich very quickly. When I say very quickly, I mean like 15 years, okay? That's, you're gonna have a significant amount of money. Plus you're not gonna pay taxes on that because at least I'm not sure what the laws are in Canada, but in the US we can do a 1031 exchange, which is a tax deferred exchange. So we never have to realize the gains of the property. We can just roll it into another property and continue our investment. How long does you have another property? You just have to identify another. There's some rules around that. I just sold like four, actually I sold, but no, six properties this year and rolled them all into one big commercial property doing a 1031 exchange. So I didn't pay any taxes on a huge gain that I made from those properties. Yeah, so if people are wondering what John's talking about, it's just that depending on, this applies to stocks or any commodity sale is capital gains tax. Yeah. So what kind of strategy did you have originally though for the type of properties that you wanted to acquire? So what I was looking for in which, again, going back to my whole theory of my definition of investing is cash flow properties. Cash flow is king because that means it's a solid investment. So there's a lot of different terms we could use that investors use. Cap rate would probably be the best term to describe this or you could say cash on cash return. Okay, cap rate is simply, like I said, if you buy the property, 100% cash, what is the actual return after all expenses that you will make on your money? So typically, you might see cap rates in residential markets anywhere from four to 10% depending on the market, right? If you buy a property in Los Angeles, you might see a cap rate of like two or 3%. If you buy one in somewhere, you know, Hillbilly, Alabama, it might be like 10 or 12%, right? Because it's not as desirable of a location. So, but cash flow is really the key thing because that is what makes it a solid investment and that's what makes this strategy work over time is because you just, you know, it's a game of survival. Really when you're buying the property, what you wanna do is you wanna hold onto that thing, okay? And that's the key thing. Now, a lot of people, you know, there's a lot of quote investment strategies. And like I said, I call those real estate businesses but they're not investment strategies. So for example, the most popular one is buy and flip, right? So buy and flip, it basically can be broken down into two components, right? So one component of it, and let's say, okay, let's just look at buy and flip. I was thinking buy and repair and hold, but if you just buy and flip, what happens is, let's say you buy property for, I don't know, $80,000, okay? And then you put $20,000 into it. So it's now you're totally in for $100,000 and you sell it for $150, so you, you know, pay some commissions and stuff and let's say that you pocket 50 grand, okay? So you didn't really invest in real estate. What you did is you ran a real estate business because what you did, if you take that, it's not like your money worked for you. It did in some degree, like the capital, that was the capital in order to start this business, think of that one property as business. And what ended up happening was you worked a bunch of hours and you earned an hourly wage on that property, which is totally different than investing. When I invest in a piece of real estate and I hold onto it for 20 years and I have property managers running the property, I'm not doing anything. My money is working for me and that's why it's investing. Whereas buy and flip can make you money, okay? A lot of people make money, but they're spending their time doing it. It's building a business. It's actually, you know, it doesn't automatically happen. You have to put in the time, even if you're not doing the work yourself, you have to hire the contractors, you have to manage the project, right? So that's why I don't consider that to be investing. I consider that to be a business. And there's a lot of other things that people do. Even when people do things like, you know, buying foreclosed properties or like, you know, there's no money down type of scenarios. What you're doing is you're essentially trading your labor and effort for a discount, for cash. Like you can, it's an actual gain that you're making, but the investment aspect of it is a totally different aspect, right? So if I go and I find a property, foreclosure property and I'm knocking on doors and I find an owner that will sell me their property, that's going to be in foreclosure and I set up the deal, right? And maybe I get a property that's just using 100,000 because it's an easy number, but that's let's say worth $100,000, but they give it to me for 60,000, okay? I made 40 grand and let's say I'm holding that property, but I made the 40 grand not from investing in real estate, but because of the work that I did in finding and scouting a deal, right? So that's a separate piece than the actual investment part and I count those things separately. In fact, when I look at my own returns on my property, I don't look at the discount that I got in negotiating a good deal and said I look at what is the actual market value of the property because if I buy a property under market value, let's say it's worth $100,000 and I buy it for $80,000. I made $20,000 because of my skill in negotiating and that's cash money that I already have right now. I don't consider that a return on my investment for the property because the property is still worth $100,000 because I could sell that property right now and realize that $20,000 gain. So it's equity, it's money that I'm investing in a property at that point. I know it's a little bit complicated, but yeah, so the moral of the story is just this, is that investing is the key in long-term investment for building true wealth in real estate. You know the saying goes location, location, location, because I can give you classical examples here in Canada. Canada, United States, well, it's a bit different, but there's places or provinces where since 2008 and 2009, the property value has diminished like fucking 40%. And so for you as a real estate investor, what heuristics or what do you use to determine like this is type of location that will mature in a crude in value within the next 10 years? So in general, it really doesn't matter that much, okay? Now, that seems like an indefensible argument, but let me give a little bit of a background on this, right? So for one, my investments are geared for 20 years, right? I consider anyone that if you really want to be serious about investing in real estate and building wealth, you should plan on holding a property for at least 20 years, that should be your plan. There's very few bad deals after 20 years. Yes, there are some places that you could have invested in and 20 years later, the property would be worth less than your investment, but it's very, very, you have to pick a really ugly duckling in order for that to happen, a really bad black sheet, right? It's very rare for that to happen, okay? Now, you can avoid that by being smart and investing in areas that have had strong markets and are, you know, for example, I wouldn't invest in Boondock, Alabama, like in just some random po-town, okay? I would invest in Montgomery, Alabama. I would invest in, you know, in Kansas City, I have investments in major cities, right? And some of those, you know, there are still things that could happen, right? If you invested in Detroit at one point, there's probably a 20-year period where if you invested in Detroit, you would regret that investment, but okay, it's a very rare happening. And you can write it out. So, you know, one of the biggest credits I have as a real estate investor is that I bought a majority of my property initially before, it was at 2009, was at the year the collapse before the big bubble, right? Oh, eight, yeah, okay. Yeah, so yeah, I bought them before 2009, right? So, oh, eight is when the event happened and I was holding, in fact, I had just bought a property, okay? I bought a foreplex for $425,000 in Boise, Idaho. And the next year, I got, you know, there were other buildings in that, in an apartment complex. And people were short-selling their properties, okay? And the value of the properties, the comps, people were selling identical foreplexes right next to mine for $225,000. So, my value got cut in half, 50% decline in one year, one year. Now, what did I do? Did I panic? Did I lose my shit? No, not at all. You know why? Because I had a 30-year fixed mortgage and guess what, didn't change. The mortgage payment didn't change. The rents I was getting didn't change. It was still a good deal. In fact, the rents went up because- The interest was the same, right? Yeah, the interest was the same because a fixed loan, if you get a 30-year fixed mortgage, it's not variable, it just stays, right? Now, there are a lot of people who are investing at the time that lost their asses because they got variable rate loans. And I remember going into the mortgage broker's office and they'd be like, oh, you're crazy. Why do you think you're smarter than all these other investors that are driving porches and shit? And they're getting these pay option arms and fixed variable rate loans. I said, no, I'm here to invest. I'm here for 20 years. I want a fixed rate that I know is not gonna change because it's a stable investment. I know it. Now, I still own that property, that forplex. I think it's how much that forplex is worth now. It's worth $600,000 now. So not only did it recover, but it went well beyond the recovery and I made a lot of money on that property. In fact, the whole time I was holding the property, for a majority of the time I was cash flowing, the rents went up. When I first bought the property, the rents were about $650 per unit and I have four units in there. I just rented one last month for 1,050. So the rents have almost doubled on that same investment. So my cash flow situation is much better than I just held it. And I had a lot of property that got cut in half in that 2008, 2009 timeframe, but I just held them and the property values eventually went up and it didn't matter because I had a 30 year fixed mortgage in there. So it's not to say that you can't ever pick a bad location and have something bad happen, but if you're in it for 20 years and even more so if you're in it for 25 or 30 years, it's almost impossible to make a bad real estate investment as long as you do just a small amount of due diligence, right? Again, you should avoid investing in sums and obviously bad areas where you're getting something for super cheap because it's like in a drug infested gang area. That's just common sense, but if you're investing in some suburb area or something like that, see the thing about location, location, location is that people use that to justify speculative moves. So people say, okay, well, I'm gonna invest in LA where they're buying a property that is negative cash flow and their only way to make money on the property is for the value to go up. In fact, they have to get, they can't get a 30 year fixed loan because they're losing money every month and their only hope, their only exit strategy for this property is that it goes up and they're like, well, it's a great location it's by the beach, property values in LA are gonna skyrocket. That's what's wrong right now, man. The minimum piece of shit house a million dollars. Yeah, so I would not invest in Toronto not because of location, but because of cash flow, right? That's why I evaluate everything by it because if I look at properties in Toronto, you can't get your rent to pay your mortgage, man. No fucking way. Right, so then that is an automatic no for me, right? Anywhere where I can have a property, just think of it this way, right? If you're never gonna sell the property, which if you do 1031 exchanges, you don't need to, or if you're just gonna hold onto it forever, you don't need to, right? You can make good money on the property, but if you get a property with a 30 year fixed loan and the mortgage is gonna stay the same for 30 years, okay, so payment is gonna stay the same. The rent is gonna stay the same or go up, right? Rent's do not go down. That doesn't ever happen. I mean, maybe there's some small isolated, I've never seen it happen, okay? Then if that's a solid investment, you're getting a decent return on that, you can continue that. It doesn't matter what happens to the market. It doesn't matter if all the prices go up, it doesn't matter if they go down, it doesn't matter what happens. You're still getting a solid return on your money and that's the game and that's how you make money is by being patient and being able to play the long game in real estate and that's the key. Would you recommend for first time that real estate people are getting their toes wet to go multi-family home or like a house or a condo? Like if you had to rewind again, what would you do differently? So I've thought about this quite a bit and it depends on where you are financially, right? So here's the most important thing is that you buy now, like stop delaying and I'll tell you why. So again, I love the compound interest calculator. It's my most fun toy, okay? Because it blows people's minds and shatters their dreams. Okay, so if I were to invest for 30 years in something, what is the most valuable year? What year do I get the greatest return on a compounding as interest investment? That's a question. The day that you sell. So most people would say you're 30, right? Because you actually get the highest, because if it compounds over time, but my answer is you're one, because if you have a 30 year timeframe to invest, okay, and you wait one year to invest, you actually have a 29 year timeframe. So you lose the last year, which is the most valuable year, right? So the key thing is to take action, right? Because when you're losing time, you think you're losing it off the front, but you're actually losing it off at the end. And that's where you make the most money, is that last year. So what I would recommend is that, you know, first of all, you just figure out whatever you can do to actually start investing. Okay, now I'm saying that first because I'm gonna outline what I think is ideal. And then if you can't do what's ideal, then you should do what's secondary. So what's ideal, and it took me some convincing, but I, you know, Grant Cardone finally convinced me. I was talking to him at an event where I was looking at investing and doing some investments with him. And he kept on saying about buying big. And see, I had always been the idea of buying some houses, buying some foreplexes, right? And what finally convinced me is he said, look, how do you like your property management company? And I was like, well, not so much. That's the problem, right? And he said, well, you know, you're hiring someone to do a service for you, but you're the customer when you hire a property management company. But when I have my big 40 unit or 100 unit building, I hire someone who works for me as a property manager. They work, I cut their paycheck. I'm not just one of their customers or clients. So I get to tell them what to do. So they are going to do a really good job, otherwise they're going to lose their job. And that's what convinced me was because the biggest struggle I've had in real estate investment is dealing with property managers and unfortunately them ripping you off, right? It's just, you know, one of the pitfalls of real estate is that you do have to deal with this. You know, I'll be honest with this. It's not all, you know, flowers and sunshine, right? There's this element of it. But so not only that, but the other argument is that if you buy big, you get a much bigger leverage return, right? So you can make a lot more money, you know, buying a big property. So what I would recommend, if you have the scratch to do it, is to buy the biggest property that you can, right? To invest as large as you can and to leverage yourself to the point of about, usually about 20%. And now you can mess with the leverage if you need to to make a deal work cash flow wise by putting less or more down, right? The more leverage you are that you can cash flow, the better. Now you have to make sure that you take into account maintenance and capital expenditures. So things that you might need to invest into property over time is that, you know, you're not gonna get your ideal scenario. You're not gonna collect rent every single month. There's gonna be some vacancies, you know, all that. But if you account for that, I'd recommend actually starting off buying an apartment building if you could, right? Or something big, right? Now I realize that most people don't have that, but for the people that are listening, that are running businesses that are making good money, that maybe you've got a couple of hundred thousand dollars in the bank and you're looking to invest, I wouldn't mess around with little houses or little properties for a couple of reasons. One, like I said, property management and just the leverage of it, okay? And two, because it's a big hassle, right? Take it from me, at one point I had 29 individual units that I owned, okay? This year I told you I sold six of them. It's like, if you wanna buy a big property and you wanna sell six small properties that are like $150,000 or so, it's a big, it's a lot of work, that's a lot of hassle, right? Dealing with real estate agents and all of this and contracts. And I mean, it's hard to move that money when it becomes big. Now when I was younger and $150,000 was a big deal, was a lot of money to me, sure, it seemed fine. But if you keep on acquiring little properties, at some point, you're gonna have to deal with this whole portfolio of little properties that you have which has a lot of overhead to it and I would have rather just had big properties. So what I'm doing now is I'm moving everything into big properties. I just bought a commercial property for, I just bought a cash for $1.1 million and I'm gonna refinance it later. But that's so much better. I took those six properties, I turned them into one commercial property and now I just collect the check and there's no hassle and if I wanna move it later, I can do that with one transaction. So that's, I would recommend going as big as you can, but if you can't, then just, again, the reason why I said at first that taking action right away is so important is just buy one property, just buy a house, just buy a condo, townhouse. It doesn't actually matter what the property is as long as it has a good return. If it has a good cap rate, right? If it has a good cash on cash return, if essentially your mortgage, like the rent, what you rented out is more than the mortgage and it covers all the other expenses of the property, golden, go for it. Stop wasting your time, stop trying to decide what is the best way, like if you waste a year, that'll cost you more money than analyzing and finding the perfect deal will gain you, right? And that's the critical thing to understand. If we're talking about a 20 or 30 year investment and you're getting compounding interest on that, taking action right away is so important. And I have a lot of real estate coaches or clients that I coach, I run a coaching business and that's the key thing I tell them is I give them all the advice. I coach them on how to find a good deal, how to negotiate a deal and how to find what markets to invest in and all of those things. But at the end of the day, I say, look, I'm telling you all the optimal things, but don't let that get in the way of you taking action, right? I'd rather you pay too much for a deal and get the deal and do it now and do another deal next year than you miss a deal that we wait six months and you do nothing or a year and do nothing because that will in the end cost you more money than you'll save or you'll earn by cutting a really good deal. That's good advice. Would you recommend then people for first time home buyers also go for a fixed interest rate for the mortgage? I always recommend a fixed interest rate. I think that's just the... And interest rates are historically low. It's basically free money. Today's free money, it's great. When you're talking three to 4% interest rates, just give me that all day long. Give me as much money as you can at a three or 4% interest rate and it doesn't... I don't even have to invest in real estate. See, the thing is why you invest in real estate is because the bank will give you the money on that. But if the bank just said, hey, I'll give you $5 million at a 4% interest rate, I will put that, I can make... I know I can make 6% guarantee so I'll have a 2% gain on their money, right? But if I put it in real estate, shit, I'm gonna make at least 10% more than what they're charging me interest, maybe 20% more. So that's the thing, that's the key here is, so fixed interest rate, go for it. And it secures you. Again, remember what's going to happen also, right? Real estate is a hedge against inflation. And a lot of people don't realize this as well. So let's say, to use that $100,000 property again, put $20,000, you borrow $80,000 from the bank. So you have a mortgage for $80,000. Now let's say inflation rears its ugly head, right? And we get inflation 2.5% to 3% every year, but let's say it continues over time and it goes up in time. So that $80,000 you initially owed, okay, debt, it's now worthless. It has decreased in value, you owe less money, even though on the dollar amount is the same, the dollar is worthless, that dollar, that you could buy 80,000 Big Macs before, okay? And then 10 years from now, that same $80,000, it only buys 40,000 Big Macs or whatever. You see what I'm saying? Like you have to equate it to something other than cash. Like a lot of people have a hard time understanding inflation because they don't understand that the dollar is actually losing value against real tangible things. Because a dollar is only a promissory note. It only is an IOU. It only represents value, right? But a Big Mac is value. I don't know why I'm using Big Mac, maybe because I'm hungry, but anyway- No, dawg, man, the king of fucking real estate. Exactly, that's it, there you go, there you go. So anyway, when you invest that money, right, and you get a mortgage from the bank over time, especially if you have, now, it only applies if you have a fixed interest rate, right? Because if it's an adjustable interest rate and inflation happens, the bank will adjust the interest rate based on whatever it's tied to in order to make it so that you owe the same amount of money or more, right? Depending on how the market moves against you. But if you have a fixed interest rate and you're getting 4% investment, like 4% rate on that loan, the value of what you owe goes down over time, which is amazing. It's the best way to guard against inflation. If you have money sitting in the bank, it loses value. If you have money owed, if you owe someone money, you gain money. It's as simple as that. I do have a question, though. I think United States applies for the same, but if you look at Canada and you look at all the provinces and all the territories, and you look at the medium salary, at least for the man is around 45K. In Toronto, real estate market's fucking insane, man. It's like one of the highest in all of North America. They'll go toe-to-toe against New York, Los Angeles. It's like literally a piece of shit house, smaller than 1800 square feet, is starting minimum at a million dollars with like a payment backyard. And so as a first time home buyer, that's 20%, right? So that's $200,000. I don't know about you, but I don't know too many people walking around $200,000 liquid cash. But my biggest concern for people entering the real estate space from the liquid cash standpoint is like, is there any strategies, advice or tips to kind of help people at least get their foot in the door? Yeah, so there's a couple of things. So first of all, we have to separate investing from making a smart financial decision in terms of buying, of where you live. Okay, so it's a false dichotomy to say which is better renting or buying your home. Because that's, so here's the way I try to explain this and it's sort of a hard thing to get your head around, but let's say that you're investing in property, okay? Basically, if you buy a home for you to live in, you're getting, it's two transactions, okay? So you've got the investment of the property itself, okay? But you're, and with that investment, you're gaining the best tenant you possibly could, okay? They're always gonna pay rent on time, okay? They are not gonna break shit, okay? They're gonna be just the best tenant, because it's you. That's your own tenant, okay? That's one side. The other side of the transaction is you as a renter. Now, if you buy a house that is too expensive or too big for you to live in, okay, then any of the money that you're paying in the mortgage, right, as the renter, because you're effectively paying rent on that or what the market value of the rent is, you're essentially paying that and so that's a waste, right? So again, it's kind of hard to wrap your brain around this, but you just have to think of it as those two separate things, right? You as the buyer or the investor and you as the renter, okay? So even if I find a good deal on a property and I buy it and I'm like, okay, I can live in it, I have to think about what is the market rent on that property? Because let's say I buy a property in Toronto and I buy it for a million dollars and I'm like, okay, well, I'm gonna buy my own home because that's a smart thing to do. It's better than renting. And so I buy a million dollar home and now I'm paying a mortgage of let's say, I don't know, $3,500, okay? So me as the investor, I have to then say, could I rent that property for $3,500? No. The most I could rent it for is like 2,000 or 2,500, okay? So it's a bad deal for me as the investor. Even if I have a tenant that will pay me the 2,500, the best tenant possible with me, it's still not a good deal for me as an investor. Then I have to look at it on the side of me as a renter. So as a renter, as me as a renter, I say, do I want a property that like, would this be the property that I would live in and pay $2,500 a month for? Or actually the full mortgage amount, $3,500. Would I overpay to rent a property? No, I wouldn't over, I wouldn't pay $1,000 more a month to rent a property. I'll just go across the street and rent from someone else, not from that jerk landlord who's myself, right? So you have to separate those out, like, you know, have this multiple personalities and think of it that way. And when you think of it that way, then those two decisions make sense. So as a renter, you should be trying to maximize the place you wanna live, location and the value and minimize the amount of rent that you pay, okay? As an investor, you should be wanting to buy a property that maximizes the value of the rent in comparison to the price you pay. They're maximizing your return on investment. So if you're living in Toronto now and you're making $45,000 a year, okay? Or you're probably not making that little, if you're living in Toronto, I don't know how you're getting by, but if you are, if you're, whatever, or you're trying to invest in real estate, don't invest in Toronto, okay? If you're gonna live there, rent there and find a cheap place to rent. In fact, if you're young and you can pull this off, don't even rent a place, rent a room, okay? Go find, like, you know, everyone asks, you know, no one likes the price that they have to pay for what they want. They ask how can I become richer? How I can, you know, build a business and become successful and financially free. And they don't like the answers that I give them, right, because the answer is you're gonna have to suck it up. It's gonna suck, right? You gotta fucking grind it out. This is not what people want to hear. They don't want to hear 20 years on the road. They don't want to hear renting a room and having roommates. You gotta give up some of that stuff, right? So if I were not making a huge amount of money, right? Now let's say I'm making $45,000 a year. The very first thing I would do is minimize my expenses as much as possible. So I would get rid of my car. I would get rid of, you know, or buy a junker car. I would go and I'd rent a room, okay? And I would make sure that I don't have any debt and I'm living as frugally as possible. Then I would take whatever money I could save and I wouldn't invest it in real estate, okay? Because if I'm only making that much money, I'm not gonna be able to buy very much real estate. I would invest it in me. I would invest it in, because I'm sorry, a lot of people are gonna be offended by this, but if you're making $45,000 a year, you ain't shit. You have not, you need to make some more money. Like you need to be making $90,000 a year. And you can. If you take the money that you're making from your shit job right now and you invest it in yourself, whether that be starting a business and learning the skills to do that, or even just, let's say you go to a coding bootcamp and become a software developer and make $100,000 a year. However, I don't care how you invest the money in yourself, but invest it in yourself and get to the point where you're making at least six figures. Then let's start talking about investing in real estate. Because it's really, it's gonna be so hard for you to do it on such a small income and the highest return investment that you can make, real estate is the highest return investment that you can make in general. But in specific, when your only, when your salary is so low, the highest return investment you can make is to invest in yourself. If you take $10,000 and you invest in yourself. His number one investment of all time was investing in public speaking. Yeah, yeah. His best investment hands down was becoming a better communicator. And that's, and look who that's coming from, right? I mean, that's, it speaks to the power of it. And so, so that's what I would do is I would invest in myself, get to the point where I'm making a good salary, again, still being frugal as hell, still living in a room, right? Renting a room if I can. Or if I have a family, like really getting the smallest little place that I can, or, or, you know, living outside of Toronto, that, you know, whatever it takes in order to save that money. And then when I have that money, so for the people that are making a decent income, you know, say a six figure income. Now, what I would do is not invest in Toronto, invest somewhere where you're gonna get a good, a good cap rate, where you're gonna get a good return, where you're gonna get cash flow. So go look at other markets, okay? Maybe there's other places in Canada that you could invest, okay? Or outside of Canada, right? I don't know how, I don't think there's any restriction from Canadian citizens investing in the US, at least not that I'm aware of. Yeah, so do it. You could have the same investment, like we're in a worldwide, you know, global economy now. You have the same investments, no matter who you are, where you are, at least if you're in a third world country to invest. So pick the good spot to invest and invest there. Don't invest necessarily where you live. In fact, me as a real estate investor, I've bought several properties sight unseen. In a city I've never even been in, or stepped a foot, and I didn't step a foot in it. I closed on a property and owned the property before I had even seen it. Because all I need is the numbers and the information. Well, John, I just want to thank you so much for sharing this. I know my audience will appreciate it. Is there any final words or any tips or advice you want to give people before we wrap this up? Let's see, I guess I would say one, go play with the compound interest calculator. Because, you know, in my Bulldog Mindset membership, I have a homework in there and I tell, and it's a dream crusher video where I'd say, how are you actually gonna achieve your financial benefits? How are you actually gonna become rich or become retired? Like how much money, calculate how much money you need to retire and then go plug that in and see what is the, you're making on the money that you're investing, right? How much money are you gonna invest and what is the return and see how long it's gonna take you, okay? You're gonna be old for most people. Otherwise, you better come up with a better plan, right? You either need more money or you need a better interest rate or you need more time. And time is not an option. So you either need to make more money or you need to have a better interest rate. So that's what I'd say is number one. And then, you know, if anyone wants to find out more about this kind of stuff or join the Bulldog Mindset membership, you can go to bulldogmindset.com. I've got a quiz there, which will tell you what your Bulldog score is from zero to 100 and will tell you, you know, how you're doing. It's got some financial questions in there and it's hard. It's hard. Most people score like 20s or 30s in there. But from there, I can help you with, we have a membership program where I have these lessons on real estate investing and building a business and a lot of things like that in there as well. So. Cool, John. Well, thank you so much. Ladies and gentlemen, I highly recommend go check out John's website, go check out his quiz. Once again, John, thank you so much for sharing your insights and knowledge and years of experience. Like always, if you guys listen to this on iTunes, leave a review. And if you're watching this on YouTube, leave a comment below this video. I'd love to know your thoughts, guys. Until next time. Adios.