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Nov 16, 2018

 

I am passionate about helping new and experienced real estate investors grow their real estate portfolios and build a passive income lifestyle that gives them greater financial options and opportunities. My vision is to empower people by educating them on financial options.

Over the last nine years, I have built my own real estate portfolio to over 520 doors with a value of $60 million. I focus on long term buy and hold, apartment buildings and multi-family units. While I continue to add doors to my portfolio (I added another 85 in 2018 alone and have another 87 under contract to close shortly), my focus is on training others to do what I have done.

I am a real estate investment coach. Multiple Ways to Wealth is a training, education and membership organization for real estate investors that I have developed. It is based on my experience, knowledge and training.

I provide training, coaching and educational resources. Through my programs, I share my real-life experience and practical knowledge. I give those in my programs access to my network of successful real estate investors to learn from their knowledge and experience.

My specialty is finding the money. I know how to find, attract and keep investors happy. I help my students attract the right investors so they can add hundreds of doors to their portfolios by investing with joint venture partners.

Living the life you desire takes work. I am a firm believer that with the right mindset and the best training we can solve our biggest problems to live the life we deserve.

https://ednakeep.com/

 

Transcription:

Edna

Hey, hey. It's Edna Keep here. Welcome to the seven figure real estate podcast. I'm your host. I hope you enjoy the episode.

Hello everyone, Edna Keep here it's ten am Friday morning and we are live for our free coaching Friday. So welcome everyone and please bring up some questions I do have a couple here in front of me that people sent me over last night. They want to ask upfront and then they'll listen to the recording so. That's always an option for you too. So, what's everyone doing on this beautiful Friday rainy morning in Regina? At least we don't have snow I heard that there's snow in Toronto today. They're expecting snow, so they can keep it. We can go without it right. So, if anyone has any questions please shout them out on here.

One of the questions that came up here last night that somebody sent over to me was “I need to cash out on some of my properties. I have a Triplex up for sale and I'd like to keep it. But it does need repairs and my credit got completely trashed after my divorce. Do you have any ideas of how I can tap my equity with having bad credit?” One of the ideas that I would give you if you don't want to sell it is maybe bring in a joint venture partner and just talk about talk about the challenge that you're having and that you've got the opportunity to bring in a joint venture partner who maybe would get twenty-five percent of the deal or fifty percent and you figure it out because you know how much money you need and they can make it worth their while and make it worth your while. Because you know what when you when you sell and your credit's bad and you can't get new properties then you're kind of out of the game. So, I'd prefer to own half of the property to bring in a joint venture partner than not own any properties. So, I hope that helps.

One of the things that we found is after we thought about fifteen houses in our name we can't get mortgages anymore either and not for houses. We're even struggling to get through refinanced a little bit because of what's going on in the market. And so, our focus has been on apartment buildings but with that said we're just keeping our houses because we can't if we sold one we would just have to pay it out and keep our cash or get taxed on it. So, there's just no point. I mean we got some really good prices in the past. They're cash flowing and the odd time we’ve got to put some money in because vacancies are a little higher. But you know what it's still better than ending up with no property at all so that would be my little piece of advice there.

I’ve got to say we have a few people on here. OK. Now here's another question I have. “We have someone interested in investing with us as a silent partner and we pay them a percentage return on their money but want to avoid the whole bit about second mortgages on the property etc. Can they just buy a share of the company that paid a set dividend under pre-established terms?” You know what you can, but you know what you're going to have a fair amount of legal fees to change that company's shares. Personally, I'd probably just put a second mortgage on and probably cheaper for you. I’m not understanding totally why you want to avoid the second mortgage. So, if you if you hear this and you want more detail on that please get back to me and I'll finish answering it for you. But what's the downside for you of putting the second mortgage? Because sometimes I do totally understand that sometimes there are reasons why you don't want to do that. But until I know what they are I would stay away from selling shares of the company. But again, depends on the type of company. It might be a good idea.

OK. The next question is “I'm hoping to get some advice or perspective while holding a flexible but full-time job. How many properties can one manage on their own before using a property management company? I currently have one duplex and I'm about to close on a single family and an additional duplex. So that's five doors. I'm a bit concerned about what that would mean in terms my time commitment while still working full time.” You know what that's a really good question and now's a great time to be asking yourself that because from my experience what I find is that if people get four property and you're dealing with four sets of tenants and so that's really for doors you're signing leases, you're doing mortgages, you're doing the repairs and maintenance all that kind of stuff, four doors is about your limit. And I've seen that personally with lots of people you know they started at the same time as us they wanted to save some money, so they did not pay any property management and we meet like five or six years later than they’re stuck at four doors and they're going “How the heck did you get so many doors?” We said you know what from day one we got property management we knew we were going to grow, and we knew well, first of all, it just wasn't a job we wanted to do. We didn't want to be dealing with tenants and toilets. Neither of us are handy so it just didn't work for us. So, it was part of our business plan from day one. But what I recommend for people is you know even if you think you're going to manage your first few properties because you want to save the money put in your analysis. Money for property management and then pay yourself and then if you start and you want to grow further then take that money and pay someone else because it is very time-consuming and not to mention I think another thing that happens is you get overwhelmed with the calls, you get overwhelmed with all the day to day dealings on a property and that's why you need to hire property management and hire out repairs and maintenance. So, I hope that I hope that answers your questions and gives you a few good ideas about why we did it and how many you think you can manage. You know what at the same time I know people who've done with flexible jobs. I've known people who've done it so it kind of depends on what kind of lifestyle you want to lead. If you want to be busy doing it all the time that's one thing. We didn't. So that's that's a good point.

Rob says, “How easy is it to set up a separate company for each apartment building?” That's a good question, Rob. You know what we set up a new company for every property that we buy. We put it in the closing costs. We make sure we raise enough money from our investors to cover it. A lot of it the legal fees cost is you know title transfer different stuff like that is some of the things that are based on the cost of your building but if you talk to your lawyer it will cost you less than two thousand dollars to set up a corporation. And a lot of people just do it themselves. You can go online and set up a corporation all on your own. Just make sure that you're aware of how you want to set up the structure so that it's done properly. So that's a really good question. But yeah to me it's worth it. It's absolutely worth it having that separate corporation and paying the legal fee. So, I hope that helped anyone has any more questions please type them in.

OK, I got another question here that someone sent in “I'm relatively new to the investing world and I'm wondering how to leverage my home mortgage to get another property. What percentage equity on one hundred and thirty-thousand dollar property would I need? I don't have anything picked out but I'm not in a position to save very much monthly.” OK. Well, that's a good thing to know. We have a lot of investors that start out by using the equity out of their home and in Canada we at one point we could go up to ninety-five percent on our home property. So, your state your province everything could be different so you're going to have to find that out from a local mortgage broker and you know what I would just Google mortgage broker in my area and say how much down do I need on a rental property. So generally, on a rental property here in Canada anyway it's twenty percent if the market's not real healthy sometimes so go as high as thirty percent. So, keep that in mind too. But so, say it's twenty percent on one hundred and thirty thousand dollar properties. So real quick how I calculate that is a hundred and thirty thousand times ten percent, thirteen times two is twenty-six you need twenty-six thousand dollars. So, what I would do is when I go to the bank I tell people to get your home equity line of credit as high as it can go. You don't need to spend it and you only pay interest on the money you take out. So, when you're calculating your property to buy this. So, it's one hundred and thirty thousand dollar property. So, you're going to put twenty-six thousand dollars down. But keep in mind you've got your closing costs, your legal costs and all that sort of thing. So, you want to take out a little bit more for that and you should know your legal fees with your lawyers. But you know I always put a reserve fund aside in each bank account for each property. So, if it's a single family home twenty-five hundred, five thousand dollars you'd have to figure that out how much you need. But I would always get the maximum because every time you get an appraisal and refinance on a property it costs you money to get that done. So get it done once and then just leave the line of credit there and also keep in mind that don't use any of that line of credit personally because if you do your crossing that grey line and lenders will then be looking at how much of it used as personal, how much used it as business and if you can keep it as business it's all tax deductible and if you use it as personal and say Go buy a new TV. Well, then you've got to establish how much of it is now personal. How much is business? Some lines of credit actually watch that for you so be aware of that as well.

Damien's asking, “Why does establishing a separate corporation for each building make more sense than just adding to an existing Corporation?” OK. That's a really good question and you know what there's kind of a twofold answer there. One is each corporation gives you separation from being able to you know protect your property from liability or litigation or anything like that. So, if you have different joint venture partners in a corporation you have to have a separate corporation. You can't just add. Now if you have the same joint venture partner or it's just your own existing corporation you can. We have right now we have several houses under our company 3D Real Estate it's apartment buildings. We've always brought in different joint venture partners sometimes it's four sometimes it's twelve you know depending on the size of the building. So, you just want to know that they're going to sign a joint venture agreement. They're going to be on title, they're going to be on the mortgage and they don't want it tied up with any other buildings if anything happens and if anything happens with one building you want to make sure that not all your buildings are tied up because you have a challenge with one. Does that make good sense Damien? We also keep a separate bank account for every single property too and again it's just easier if you keep a certain amount of money in a bank account. You don't have any fees anyway and it's like the banks doing all your accounting for you each month. You try putting ten properties in one bank account it's going to be really hard to figure out which properties making money, and which one isn't. So, keep it all separate and if the bank does it for you, you know even if you don't have much money in your bank account what is it like nine bucks a month or something like that. And if you go with I think it's President's Choice CIBC. They have no fee service. So, keep that in mind too.

Renida says “I'm a realtor in Regina, in your opinion do you think that the new Federal Government's soft stress test is going to affect investors and flippers etc?” Yeah, you know what it will because they're going to stress test for five percent down. A lot of times I tell my students to stress test their own properties at five percent interest. I tell them to stress test their own because it's always nice to have a bit of a buffer but yeah, it's going to affect people especially ones who are walking that fine line. And you know the government's getting ready to increase interest rates. So, we want to be ready and know that we're not going to lose those properties because we didn't test stress test items ourselves.

Rob has a good question he says, “Can you use their line of credit as a way of financing without actually paying the interest on that line of credit?” I don't think so no if you're taking money out of your line of credit to use it for a down payment you have to start paying interest on it right away. I hope I understood your question the way that you wanted it to.

I've got to give you guys some good news then. So, two young fellows in my mastermind Tyler and Bailey they're nineteen and twelve got their first permanent building on the go. And so, they were at the Profit in the Prairies meeting on Wednesday and they're quite excited to get all the information about the property and stuff. They told me that they've already got meetings with three investors that are interested in investing with them. Isn’t that cool. And they've just been in the program since I can’t even remember exactly. I think they joined the ninety day program in April so they're so excited to have their first building under contract and it's a good one. So, they're quite excited. I don't think they'll have any challenge raising the money for it.

Drew says “Can your joint venture on properties that you already own but want to be able to pull cash from? Give up half ownership in exchange for 20 percent cash payment from an investor?” Yes, absolutely Drew you can and it's a great way to because if you've got an established property you can show them the numbers and there's no speculation there, you can show them the numbers that you already have. So, it's a great way. Although if the mortgage is in your name I wouldn't give up fifty percent. I would make it less because you've already guaranteed the mortgage. You're on the mortgage. But to pull out just the cash they're not on the mortgage, they're not responsible for the mortgage given them less you know thirty-five to forty percent is still a great number. Because our biggest challenge is not the cash, we can get cash, but our biggest challenge is being able to qualify for the mortgages. So, what we've even done on some of our joint ventures is we give people twenty or twenty-five percent just for holding the mortgage for us. And if you do that wrong it can be considered mortgage fraud but if you do a full joint venture agreement that says, “Yes I'm a partner on this” and you've got that registered there's nothing wrong with doing that. And yes, it's great so that's something to keep in mind because the rate you're going you're going to have pretty soon you're going to have too many mortgages in your name and you're going to have to get your joint venture partners to put the mortgages in their name. So, keep that in mind. Yeah, we've got we've got a few right now where they've done the mortgage only we put in the money and we look after everything and they've got twenty-five percent of a deal. So great way to do that too. Good question. Awesome.

“You should run for president in the U.S. you would destroy Donald or Hillary.” Oh, don't get me started on those two. I'm just glad that they're not running here because really to me they're both hard to pick although I still think I'd pick the Donald over the Hillary, so we'll see we probably get some comments on that. What I see about Donald is and I loved his show The Apprentice you know a lot of people think he's an asshole and that sort of things and you know what he is a little bit of one. He's a little bit chauvinist and indifferent stuff like that too. But you got to take the good with the bad and you know what I think that he's got that states has been missing with all their past presidents and that is a business aptitude. He knows how to run a business and he knows what it takes to make money and sometimes countries have to be run like a business because otherwise you're just going in the hole and that's what's happening with the U.S. right now. They're growing bigger and bigger and bigger in the hole. They need a business person in there to turn that around. Not a bleeding heart. And you know a little bit of a crook like I think Hillary is you know they line their own pockets. That's what they look at doing. And you know what Donald does not have to line his own pockets. He's got money of his own. He's in there. He doesn't need the government money. I'm sure he'll do some of the same things because I think they all do they give their people money and stuff like that or jobs to create money they'll give contracts to their own people I mean I think that's just standard to happen. It's kind of like us as business owners we'll pick our children or people we like as opposed to the person who's giving us the best price. It's not always about this price. It's about who you trust who you like to deal with and who you want to have a share of that money. It's just like when you get more established and you're getting joint venture partners. Who are you going to give you're your next best deal too? If you have a guy that's already got three properties with you and he's an awesome joint venture partner you're going to give it to him more so than that joint venture partner who's kind of cranky all the time. Absolutely. You will. I know I've had instances of that. I've got a couple joint venture partners they're just awesome to deal with. I shouldn't say a couple. Ninety-five percent of my investors are absolutely awesome to deal with. They're great people. They understand the markets. They understand that we don't have control over everything. They understand when there's mistakes made. I mean we're not happy when mistakes get made, we're not happy when the markets go down. We're on the same side of the fence as the investor. That's where you want to be. So, we definitely give priority to great investors. There's absolutely no doubt about that. So, if you're a president or prime minister, owner of your own company you're going to do that just like you know our kids will say “Something happened at school that's not fair. They put their favorites on the team.” I go “you know what get used to it because that's life. We all put our favorites on our team right.” So, when your kids say it's not fair just let them know that that's something they've got to start looking forward to they've got to make it so that those teachers and those coaches want them on their team right. Doesn't that make sense?

Billy says, “I started with a condo then an old house, now renting a three bedroom bungalow I will not sell my farm and have another business.” I'm not sure what you mean by I will not sell my farm or are you saying I will now sell my farm sometimes sells autocorrects are terrible.

Drew says, “It sounds like you're pushing O'Leary as PM for Canada.” You know what I actually kind of like that guy. Some of the stuff that he says on Dragons Den and I'm a big Dragons Den fan too it makes sense. You know you can't be a bleeding heart and run a good business. You've got to do stuff and I mean I understand that there's got to be some of that. I absolutely understand that business people don't have to be the ones that do it though. You've got to make business decisions sometimes even if… it's got to be good for the company as opposed to just good for the people because look at GM they had their pension and their wages so high that they ended up going bankrupt. Well does that do any good? No, it doesn't do any good at all. The companies now I'm not sure what kind of shape it's in now but I remember following that the time went into bankruptcy because they couldn't afford all that stuff. Well, that doesn't do any good at all. So, if you're running a company you have to think of a company first. Just like when you're doing joint venture partners partnerships and stuff like that you have to think of yourself first because if you're not a healthy business person guess what? That's going to catch up to you and then you're not going to be able to attract more investors. So, it is okay to look after yourself first.

I think I've answered all the questions that I've gotten so far. Let's see how far we're in well you know what we're almost in thirty minutes which is kind of what I'd planned. So, if there's no more questions today I'm going to sign off just to let you know we had a really great meeting at the Profit in the Prairies on Wednesday night. We had an accountant out and he did a very very good job of speaking, teaching us about the proper way to be managing our paperwork and stuff. And then we had Renee Kline out from Calgary who is a partner of ours. We've got a few deals on the go with him. We've also bought several properties from him, several apartment buildings because they get a lot of deals presented to them and then they, in turn, present them to us again it's relationship business. And if people like to deal with you and you're not nickel and diming them on every single thing that comes your way and you're okay with everybody making money on a deal, you're going to get more deals handed your way. So, keep that in mind too.

Rob says, “Will you comment on rental apartments in small towns and the risk involved.” That's a really good question, Rob. You know small towns have never been my favorite especially for houses but one of our best apartment buildings that we own is in La Ronge Saskatchewan. So, a small town I think it's less than twenty-five hundred people. Now there's things that you really need to research your town you need to know what's going on there. If it's a dying town and there's no industry there at all I wouldn't be buying. If it's if it's a town that's got good industry like say in Saskatchewan, its potash or oil based. There's always going to be workers there. You know a long long long time. So, you'll be fine for both houses and apartment buildings. But think about that like one of the reasons or one of the things when we were raising money for La Ronge with a lot of people say no you know what. Just not going to look at a small town and you know what part of that was from my own teachings because I always said you know it's a lot safer if you're in a big city because even a vacancy rate is you know six, eight, ten percent you still make money on your building. But in a small town if there is no industry there and you've got fifty percent vacancy a little tough plus there is no appreciation of value either. But La Ronge is the gateway to the north and there's not a lot of homes being built there and the reason this is not a lot of people want to think of that as a home base that they want to live forever. So, rentals are really popular up there and you know the rents were quite low when we took over the building, so we were able to increase the rents and build ourselves up some equity in that building so there's definitely a little bit more risk in a small town. So, I would be asking what the vacancy rate is. Don't just listen to the seller but get some get some word out on the street talk to other tenants. What are they paying for rent? What do they want to pay for rent? What appeals to them about looking at a different rental property? What kind of lease states sign if you bought a building and they moved in? what kind of amenities they're looking for? And take it from there but really really do the research on the town even go meet with the town office and see what they have coming out because sometimes the town know stuff that's coming up that the people living there don't.

Rob says, “Where do you see the rental market going in the near future?” You know what actually that reminds me of one of the things I wanted to talk about today so thank you very much. These are the questions that that are really good. When we talk about the market cycle there's the trough and boom and that sort of thing and I'm not going to draw it on the board right now just because all my boards are kind of all full. But just think of it this way think of it as a curvy line up and down. OK. So, if you're if you're looking at a curvy line and you've got your high spots and your low spots where I think we are in Regina right now is just a little bit above the lowest part. So, I think we will see a little bit of a drop yet maybe a little higher vacancy rate and maybe a little lower house pricing. But you know it's not going to stay there where we're going to go down maybe a little bit more maybe stay flat for even up to a year and I can't see it lasting longer than that. And then we're going to see an upward trend. So, if you're looking at purchasing, now's a good time to purchase not a good time to refinance because the banks are not liking any refinance opportunities right now. But yeah, we're in a market that's a good time to buy.

We're seeing lots and lots of opportunities and some of those opportunities are because people were building they started out in a good market. And by the time they were finished the market wasn't so good. So, we actually have an almost new building under contract for not as much as it would cost us to build it. So, you start watching for those opportunities you're going to get them. Crisis gives opportunities that's what you need to know. So, when vacancy rates are higher people get frustrated. They think “Jeez, I thought the good times were going to go on forever.” You're going to get a good building. We're working on one right now. I think the sellers are just frustrated with the market. From what I've kind of heard there haven't been the best manager maybe of their own property so they're looking at selling. Is it the best time to sell? No, because you know what private dealings haven't got down. They're still very solid in pricing. We're looking at I think the cheapest we got recently was one hundred and five a door. The one we got the offer on now is a hundred and fifty or so. The pricing hasn't gone down. We haven't got anything less than that.

Welcome, Courtney. He says, “Don't rub it in we would have loved to have been there.” Well, you know what and Courtney you would especially love this Wednesday because you know what it was our anniversary. So is our one-year anniversary so we treated all the members to a really nice cocktail and appetizer dinner before the meeting and you know what I think that is a great opportunity to build relationships with people. Everybody had a really good time. The meeting seemed to be better than ever. I said to one of the people there I’m not sure if it was because we all had a drink beforehand or what, but the meeting was exceptionally good last night. So, for you members that weren't able to make it should be on the website any time. So, you tell me if it was as good as we thought it was.

Courtney says, “I just heard a report on Winnipeg real estate on the fact that prices are still on the rise. A good place to invest?” Yes, and you know what it is we bought a building in Winnipeg this spring and we're looking at another one here this fall in Manitoba and I agree prices are on the rise. It's a great place to invest and a good time to invest.

Any other questions on here? You know the other thing that I read just the other day and I always recommend to people to get this report if they don't get it now and that's the CMHC report that comes out well from CMHC and it comes out monthly and they talk about prairie highlights and stuff like that you know even in there they're saying if you look at the house prices it's going to be turning around maybe kind of flat in 2017 but 2018 are going. One of my mentors that I follow in Alberta Russell Westcott he's been a speaker for Rein I think he said for twelve years and now he's stepping down and the reason is he wants to go full bore in investing because he thinks now is a great time to invest.

And guess what people he's in Alberta. So, what does that tell you? One of the experts in that area is stepping down from his speaking and I'm not sure all the duties he had with Rein, but he was absolutely awesome. He's a Saskatchewan boy and I love Rein it's a great real estate investing club I follow everything that they do. And so, I was kind of excited to hear that he's that he's stepping down from his duties there, so he can concentrate on his beliefs he called it and that is getting more properties under his name, so I thought that was really interesting. So, anybody on here who's wondering is now a good time to invest? Absolutely now's a good time to invest. So, start finding those joint venture partners. Start sharing with people what you think is happening out there. Share the CMHC report so it's third party and not just something you're saying but third-party reflections on stuff that's going on. They go right into rents and what vacancy rates are and stuff like that. Although I don't find that they are hundred percent on vacancy rates. They do have some good reporting so it's good to know.

If I don't have any more questions I think I will sign off because I do have another appointment at eleven o'clock. So, thank you all very very much for being on. We are definitely going to be doing this every Friday same time pull up my free coaching Fridays so any questions you have. Always keep in mind that you know what if you've got the question there's a very good chance that other people have the question. So, sharing it on here is a great place. Sometimes it makes me really stretch my thinking cap and I get a chance to view some of my ideas on here, so I really appreciate you all being on here and I don't see any more questions I'm going to sign off. So, everyone have an absolutely fantastic weekend I imagine a few of you will be dressing up and going out to the Halloween parties. I know there's lots going around going around here so it'll be a lot of fun. So, take care and we will talk to you next Friday. Bye for now.

Thank you so much for listening. It's my sincere intention that you got value from this episode. If you're interested in learning more about building your passive income through real estate either by investing with us as a joint venture partner or as a student discovering how you can attract investors to your deals and build your seven figure real estate portfolio by helping others build their passive income. Check out my website Ednakeep.com or watch my free masterclass Ednakeep.com/90daysto5k.