 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 4% to 10% depending on the market, right? If you buy a property in Los Angeles, you might see a cap rate of like 2% or 3%. If you buy one in somewhere, Hillbilly, Alabama, it might be like 10 or 12%, right? Because it's not as desirable of a location. 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, it's a game of survival. Really, when you're buying the property, what you wanna do is you wanna hold on to that thing. And that's the key thing. Now, a lot of people, there's a lot of quote investment strategies. And like I said, I call those real estate businesses but they're not investment strategy. 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 a 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 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, 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 buying foreclosed properties or 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 gonna 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 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. I know the saying goes location, location, location because I can give you classical examples here in Canada. Canada, United States, a lot is 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, so 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, 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 Kansas City, I have investments in major cities, right? And some of those, 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 one of the biggest credits I have as a real estate investor is that I bought a majority of my property initially before, was it 2009, was that the year the collapse before the big bubble, right? Oh, yeah, okay. Yeah, so yeah, I bought them before 2009, right? So, 08 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 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? And 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, okay? 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 30 or fixed mortgage in there. 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. Again, you should avoid investing in sums and obviously bad areas where you're getting something for super cheap because it's in a drug-infested gang area. That's just common sense, but if you're investing in some suburb area or something like that, you 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 with right now, man. The minimum piece of shit, how is 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, like 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's 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 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 is interest investment? That's a question. The day that you sell. So most people would say year 30, right? Because you actually get the highest return because of the compounds over time. But my answer is year 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. 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, first of all, you just figure out whatever you can do to actually start investing. Okay, and 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 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'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 gonna do a really good job, otherwise they're gonna 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 one of the pitfalls of real estate is that you do have to deal with this. I'll be honest with this. It's not all 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 and 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 cashflow wise by putting less or more down, right? The more leverage you are that you can cashflow 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're not gonna get your ideal scenario. You're not gonna collect rent every single month. There's gonna be some vacancies, 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 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, it 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 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. 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, 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. 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.