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Jan 11, 2019

 

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.

Good morning everyone. This is Edna keep and we're here to give you some live real estate coaching today. So, I hope you're ready to learn some new stuff. Today our main topic is going to be about the forty year plan versus the five year plan and I think you're going to get a lot of value out of this because I know most of us are raised to believe that we need to have a forty year plan, which is go to school, get a good job and work for the men or the woman for the next forty years and then retire and live on seventy-five percent of the income we already couldn't live on. So hopefully I'll give you a few ideas about how you can avoid that and get into the five-year plan because I think that the forty-year plan is flawed. A lot of people work so hard and they don't have enough money. They don't get a chance to travel. They don't get a chance to, I don't know. Let me talk about some of my favorite things to do. They don't get to go shopping in New York, they don't get to go to shows, don't get to take their kids to nice places because they're too busy working. So, if we can get that forty-year plan knocked down to five years or even ten. What I you mean by that too, is not necessarily that you're going to retire, but that you've got your day to day expenses covered so that you can now focus on what you'd really like to do with your life, how you can give back to society, how you can grow as a person because those are ingrown things that were just meant to do. Most people feel better if they're giving back and contributing to society, they're not just out there looking for themselves. It's been a proven fact.

One of the things that I want to talk about is if you're relying on a government pension to help you sail through retirement, I suggest you have a very strong plan b because who knows what's actually going to be there and from experience with people that I know that are retiring today, what you're getting from the government is not a great lifestyle. So, if you're going to be content with that, you're probably not listening to the right show, but if you want more, I do have a plan for you. So, stick around and we'll talk about that.

The model we're taught in school about generating financial independence was taught to us when we're very young and like anything else, it's outdated now. The old plan was work hard, save your money, get out of debt, live below your means. So, I hated that one. Invest in a well-diversified portfolio of mutual funds. The main problem with the forty-year plan is there's no passive income in there. You know, if your mutual funds grow and grow and grow in your, you're really astute at saving, twenty-five percent of your money going forward, then you might do okay with that. Most people don't. Most people like to spend. Most people like to have nice things today. And if you have it in your mind that you have to work forever, you probably will. So, with passive income though, you get paid whether you work or not. So, if you can set up something that you can get recurring income over and over again for the rest of your life, I just think that that's the way to go. Whether it's a business or whether it's real estate.

I know one of the favorite things that I had when I was a mutual fund advisor and then it also works with life insurance as well, is once you've got money under management, you get what's called the service fee or trailer fee. That's kind of your recurring income that comes in no matter if you get up and go to work on that particular job that day or not. And I know it was a favorite part of mine, especially when my kids came along because then I got to stay home, and I didn't have to give up my whole lifestyle. Yeah, my income decreased, but it was still pretty decent and probably more than what most people were making. So, I was happy with it and I think my kids will agree with that.

So, the potential downfall of the forty-year plan is if you start late and human experience an equity market meltdown like we had in 2008, suddenly you can't make get. I know I went through that with clients and I felt so bad for them. There were people who were, fifty, fifty-five plus and they were thinking of retiring in the next five years. And with the market meltdown, it went down to like sixty percent to seventy percent of the value that they had when we were going through the plan. Suddenly what was going to be there covering their day to day expenses didn't cover it anymore. There were a few people that were okay because they over planned and overcommitted and they did fine, but most people don't over plan for stuff like that. So, they ended up having to plan differently, which was basically work another five years till the market turned around and they were able to build it back up to where they were.

When you're fifty-five and sixty years old, you don't have enough time left to accumulate that all over again. It took five years at least just for it to go back to where it was and now people are still going through ups and downs. So, it's another part that makes it really difficult is when you're relying on that. The stock market's a house of cards and that forty or model has left a lot of people stranded you. You ask around and you talk to people about that. I know we had a conversation the other day with her cousin and we're talking about, way back in the eighties when interest rates were so high, he wished that they had been the ones borrowing that they were the ones that were lending at that time. And I said you know what, that is a really good point, but what a lot of people did is they got stuck in that and they're twenty percent that they were earning as lenders dropped down to like one and two percent. So, if that was your only plan and a lot of people it was, that was their only plan. Well, you know what? After twenty years they were really shafted because they no longer could live on what they had originally been living on, right? The bank no longer wants savers. They want debtors. They want people to be in debt because that's how they make their biggest money. So, if you take your financial advice from a banker, just know that that their number one goal is to get you as far in debt as you can possibly go. And they'll tell you when you can't go into any more debt you're stuck, you're stuck there and you're in the rat race and you're going around and around and around and around and so very hard to get out.

I know when we play the cash flow game, the hardest ones to get out of the rat race are the ones that are used to earning a high income. And the reason that is because very, very quickly, you get into the lifestyle of living on that income. So, if all your friends are high-income earners, guess what? You have the nicest car. You had the nicest houses. You have the travel, you have your kids in every program out there. And that all costs money. I had to laugh because we were playing at cash flow the last time at our house, there was one group I think they were the doctors. So, the doctors are some of the hardest. And then they had three kids on top of it. So, which is the maximum kids you can have in the game? And they kept going, “Oh darn, we got another kid that has like six or seven hundred dollars a month that goes out of their pockets.” So, you know what, that's why the cashflow game is such a good game to play. It really teaches you about what it's going to take for you to get out of the rat race.

So, the next thing, one talk you talk to you about is my definition of financial freedom. And, and again, it's very much based on what Robert Kiyosaki teaches. So, some of you will have heard this before, but it's when you earn more than enough passive income to pay for your desired lifestyle. This can be achieved in five years rather than your forty if it's done properly. So, one of the things that we did is a back when we started with real estate, we had decided that if we could get fifty doors paying us one hundred dollars a month, that we'd be set. We had no intentions of giving up what we were already doing because we liked it. We were making good money doing it, it wasn't her plan. But when we were able to accumulate fifty doors in eighteen months, well then suddenly our plans changed. So, we went full time into real estate. And then I think most of you, you've heard the story of how well we've done since then, but you know, one of the things that you'll notice is, and we're talking about this again with some friends of ours the other night, you know, our lifestyle changed. We had all our house payments paid for, we had our vehicle payments paid for out of the rental income we were getting and then we decided to increase our lifestyle. So, we sold our house in Lake Ridge, which I think by now would have been paid for if we stayed there, built a million-dollar home on an acreage. And you know what, it still worked for us because our rental income was higher than our outgoing expenses. So, we could do it. We would never do it if we didn't have that recurring income come in. But lots and lots and lots of people do. So here, here's the definition. If your desired lifestyle costs you five thousand dollars a month, then by definition the moment you have five thousand a month coming in passive income, you're financially free. You don't have to build up this great big net worth. If your passive income is consistently coming in. You can be retired or financially free. However, you want to describe it. You've got enough passive income at that point to go fire your boss or just to make the choices that you want to make. It frees you up to now start thinking you don't have to be worrying about every dollar that comes into your house. You don't have to be worrying about getting out the door and getting to work every single day to earn that dollar. You've got it coming in and now he can start thinking about things that you love to do. Ways that you can give back to society. You can help other people and you know it just starts to feel better. And as you feel better and you're happier, you can just do more and more.

So, if passive income is your objective, how do you become financially free in five years? This is one of my specialities using none of your own money or your own credit. Well, your year one objective would be to acquire one small apartment building that generates you at least a thousand dollars a month in cash flow. And it doesn't have to be a thousand dollars a month. Today we're going with a five-year plan. That thousand dollars a month might not kick in for five years. Once you have in your investors paid back, right? So, then year two to acquire another one that generates a thousand dollars a month. And then repeat, rinse and repeat. So, you do that year three, year four, year five. Now, if you get really good at generating investor capital and helping other people invest in real estate and helping them become financially free, then you can do it in a quicker timeframe too. You can maybe buy two apartments in a year, maybe even three. It all depends on how many other people that you're helping do the same thing because that's the game that you play in real estate. It's really difficult to buy an apartment building all by yourself, especially if you don't have any experience because when you're applying for a mortgage, and I mean they're big mortgages, the lenders looking at what experience do you have, who's your team, who's your power team? It's not all about you and who's going to manage it and who's going to do your books and who's going to property manage and how do I know that you know, what you're doing, you know, stuff like that. So, you have to be involved with a power team who's done it before and sometimes you start out by investing in someone else's deal and see what it takes to get them approved for a mortgage so that you can see what it takes so that you can start working on your own deals that way. So, instead of focusing on net worth that you need to accumulate, I suggest that you focus on the passive income that you need to generate. And like I said, from there, you don't have to retire, you don't have to sit back and do nothing because, for most entrepreneurs out there, that's not what they want and do.

Even a couple of weeks ago when we were playing the cashflow game myself and one of the mastermind members were partners and we had the lower income. I can't remember. I think we were a business manager, so we're kind of middle of the road. We weren't real high income, but we weren't a real low. We were the first ones to get out of the rat race. And both her and I went, “This is boring. We still want to play. Can we still play?” We were out, we actually landed. Generally, you go around the outside loop, outside of the rat race two or three times before you get all the businesses you need to buy to get your passive income created higher. But we actually landed on our dream the very first go around. So, with that, we were out of the rat race and the game was considered won, but we were bored. And you know what, that is the same thing when we decided to increase our lifestyle, we knew we wanted more, we wanted to affect more lives. We knew we wanted more first ourselves. And so, we just kept going and now we've got several businesses and we have several different ways that income's coming into our house. And I absolutely love that, you know if the real estate market's down like it is right now, we're not getting as much cash flow on our buildings. In some cases, we're feeding our buildings. And I'm going to talk about that in a little bit because I had a student asked me the other day, what are some of the worst-case scenarios that can happen in real estate? And you know, everything's not gravy. Absolutely. So, they want to know the downside. So, I'm going to cover that in a bit.

But anyway, I want to finish this part off first. So, think about how many doors it would take you to cover off your day to day expenses and don't make it your dream life right away. Just make it. What's the absolute minimum I could get by on, so I could live life more on my terms? Would that be two thousand dollars a month? Would that be three thousand dollars a month? Would that be five thousand dollars? Would it be ten? You don't have to cover every single base at the beginning. You don't have to think about while I want to make fifty thousand dollars a month in a year, chances are a little slim you'll make fifty thousand dollars a month in a year. Not impossible but slim depending on where you are I think mentally up here.

Okay, perfect. So, does anyone have any questions about the forty-year plan versus the five-year plan? Does that feel totally out of reach to you? What do you think you might need in your life to actually change that from a forty-year plan to a five-year plan? You know, there are definitely things that you need in your life. One to start with is a power team, people who have already done what you want to do, that's the key because that's how you can learn quicker to get your goals is by working with people who already have accomplished what you want to accomplish. So, like I said, start with start with how much money you need per month to just cover your bills. So, if you can just cover your bills, what is that? Then figure out how many doors you need to be able to cover those bills and then figure out a way to get them.

And Adrian says, “I need to find an investor. That's the tough part.” And you know what it's for some people, it's the tough part. I'm going to recommend you check out my five-year plan. I think Chandelle can add it in here. www.the5year plan.ca. And that's what I teach people is how to find investors and most importantly, how to keep them returning and doing business with you. Again, and again and again. So again, most of us have been taught to think about retirement in her sixties, but it can happen in three to five years once you understand the proper model that you have to follow. And like I said, follow some people who've already done it. Adrian says, “What do you mean by how many doors?” Well, you know what that's a really good question because you know what, this is our jargon that we get talking after a while after we'd been in it for a while. And we don't often think about what that other people don't know what that means. But, you know, when we very first started our real estate classes, we were taught that if you can get fifty dollars a door cash flow to buy a property, now that fifty dollars cash flow, you'll have to make sure it's a real, meaning you can cover your mortgage, your property management, your repairs and maintenance, vacancy. Because sometimes you have high vacancy. You can cover all that and still make fifty dollars a month then than buy the property. Now, we decided to be a little bit more aggressive and we wanted to get a hundred dollars a door or one hundred dollars of property. So that's what we were focusing on. At that time, we were getting absolute fantastic rents in our area. It's actually dropped back a bit, but we were able to get one hundred dollars a door. So that's what I mean by doors. So, a door would be if you have a single family home where one family lives in it, that's one door. If you have a duplex that's two doors. So those two doors would be under one roof. If you have a fourplex, that's four doors. If you have an eighteen-unit apartment building, that's eighteen doors. Does that make sense?

And Adrian says, “Any idea how to find a Chinese investor from China?” Yes, I do have some ideas. What I would do is I would network with local Chinese people who know the people from over there. That's the quickest and fastest way. And, then when you're out there, don't be looking for what you can get from the people you're networking with, but think about what you can give. One of the best things you can do when you belong to a networking club is to give because the givers are the ones that get. The people that give more in a networking group are the ones that get more. So that's a really good start is to network with the people that you want to attract.

Anyway. I'm just going to read some of this because my team have written it out in a special way. So, if you had access to the funding sources and you knew how to find the deals, how many apartment units do you need to declare your financial freedom? That's the number I want you to focus on. The short-term objective. So again, if you need five thousand dollars a month to cover your day to day expenses, then you need fifty doors paying you one hundred dollars a month. Does that make sense? So, whatever your number is divided by fifty or one hundred dollars, depending on what's happening in your area, and that will give you your financial freedom. That's your short-term objective. From there, you can build it into wealth on top of that. Think about what you can give because if you're just going in thinking about what you can get and what you can take from the group, very soon people aren't going to want to talk to you. So, think about what you can give and be the one who gives the most because you will absolutely attract good people that way I can guarantee you that.

So anyway, I do cover the strategies and the details of this in my course called ninety days to five k. So, if you want to get more detail into that and really have some success this year, then I suggest you check out. And Chandelle did put it on there. It's www.the5yearplan.ca. If you, if you check that out, you will get a shortcut. I have students right now in that ninety day course that just started with me in January. They've been following me for a while, but they actually just started the course in January. One has strip mall under contract with fifteen percent vendor takeback. One has a twenty-four-unit apartment building that he can get with only seventeen percent down. One has two houses that she can get with five percent down that are cash flowing and fully tenanted and the group is just amazing. The stuff that they're doing in their already, believe me, you can follow. You don't have to wait five years to be getting your plan. If you get a chance to talk to some of these people, ask them about their numbers and what's going to happen. I know the one that we're talking to in his strip mall. He's going to be making like fifteen hundred dollars a month as soon as it closes. And then once his investors are paid off, well then it goes up from there. So, those are really good deals that people are getting in on. I hope that helped with sharing how you get out of the forty-year plan into the five-year plan because there's definitely a science behind it. It's not just hope and wish and pray. There's definitely techniques that you've got to follow and shortcuts that you can take to get there.

How can I get a mortgage or a loan with bad credit? You know, what you work with joint venture partners who can get you the mortgage or the loan. That's how you deal with bad credit. So, there is definitely a way. And the thing is you have to be honest with your investors that you know, talk about the mistakes you've made in the past and what you're learning. And of course, be learning because, you know, one of my students, Bailey actually said it best. He says, “You can’t expect an investor to invest with you if you don't invest in yourself. You have to invest in yourself to be continually improving because there are challenges in this market.” And which I'm going to talk about next because I did have a student that asked me, he's actually in the process of raising some capital and he’s getting some really good questions and he wants to be able to know what he could tell people that are some worst-case scenarios.

So, one of the things that I do cover off in I think its module five is about what I consider worst-case scenario all the way up to a best-case scenario and then a home run. So, I'm going to I'm going to talk about that. So, what we would consider an average case scenario when we're buying an apartment building is that we buy it. We generally are looking to buy it with some value add opportunities. So, ways where we can increase the value of it, like increase rents or decreased vacancy, fix it up, get more rent, that sort of thing. And that's called forced appreciation. So that increases the value of your building. And when we bring investors in, generally what we're looking to do is start paying them cash flow. We actually returned principal at the beginning of year two. Does that always happen? No, but I'm going to give you a standard I guess this has happened lots. So, it's our standard. That's how we present. Generally, you're going to get your funds back within five to seven years and then after you've got your money back, then your cash flow is really a return at that point is infinite because you've got all your principal back and you maintain ownership of that building as long as we own it.

So that's an average deal. So, some people say, “Well, what would you consider a good deal?” Well, you know what we've had a couple really good deals. One is we bought this twenty-four unit in Saskatoon and as a twenty-three, two bedrooms out of twenty-four and we renovated it, put new cupboards, new flooring. It hadn't been updated very good, it was built in the sixties and spent quite a bit of money on it in the first year and then we refinanced it in the second year. Actually, in eighteen months we had all our investor capital back to them. Now what happened there is we happened to refinance at a real high in the market. We were able to refinance the value of those doors. We paid ninety, remember ninety, ninety thousand a door. We were able to refinance them at a hundred and fifty thousand a door, so we did that in eighteen months. Did we think we were going to be able to do it in eighteen months? You know what? At that point, it was the plan because there was just things happening in the market and we got a really good deal on the building. Now, could it have went the other way? Absolutely, but we did it in eighteen months. They were refinanced, got all their money back and they still maintain their ownership. Okay, so that's a good scenario.

Another one, we bought one hundred and forty-four units and Le Ronge Saskatchewan. We bought it at six and a half million and two and a half years later we were able to refinance and pay all their investors, their principle back. Now the plan with that one was that we were all going to be able to start cash flowing right away. Now here are some things that could go wrong, so that one we were supposed to, I think personally be able to cash flow that ten thousand dollars a month. And what happened though is when we refinanced it, the CMHC group asked for certain things to be done in the building. So, we had to do a bunch of stuff that probably wouldn't have had to been done for a good five years probably, you know, the roof, I can't remember everything that we did out there because I don't handle that part of it. But, some of the things we could have done over the next five years. But they required us to do it now so that reduced our cash flow. So, some of our investors are really unhappy right now because they're thinking, “Well, why did we go and refinance it? Why wait? Why didn't we just keep it going the way we were and then we would have got our cash flow earlier.” Well, you know what, sometimes you don't know everything that's going to be required of you till you're already three-quarters of the way through the process.

So, you've spent the money and you’re working on it, you've promised the money back to everybody and then boom, you get hit with all these surprises. So that happens. So what that happens then is instead of getting cash flow, and I mean when we originally bought that, we told people they probably get if we just paid them back out of cash flow alone, they would have their principal back in four and a half years and if we were able to increase rents and refinance and all that, that it could be earlier. So, in reality, because we purchased that November of 2012, in July of 2015, we refinanced and got everybody's money back. They actually went on to buy two more buildings. Now that sounds awesome, doesn't it? They were able to get two more buildings.

I'm telling you some things that happen to make it not so awesome, but we always are thinking, you know what it is. None of them has been worst-case scenario yet. Sometimes it's delayed. Sometimes you don't get your cash flow when you think you're going to get it, but you know what? That's why I honestly believe you have to work on your mindset because if you just sit there and roll over and say, “Oh my God, it didn't work exactly the way I wanted it to. I'm screwed.” Well, you're not screwed. It's just going to take a while and that's one of the things that you have to be patient within real estate. One of the groups that I deal with, Walton, other land developers out of Calgary and they have a track record, I believe for over thirty years of over twelve percent return investments to their investors. Now, how have they been able to do this? Well, first of all, they pay cash for the land with your money and they don't have to worry about loans. Then what they do is they develop the land for sale and they sell it off, and so they basically buy by the acre and sell by the foot when it comes right down to it. So, a really good business model and generally they make really, really good money.

They always say the biggest risk in real estate is time. So, we just have to wait it out. Same with our worst-case scenario. So, here's a worst-case scenario. If we buy a building, we plan on renovating it, increasing rents, reducing vacancies, refinancing and getting the principal back and it doesn't happen that quickly. So, let's say vacancy rates higher, repairs and maintenance are higher than we expected, and you know, and until you own the building, you don't know what repairs and maintenance have. Even if you look in every single unit under every single cupboard, there's things that come up. So, you just have to roll with the punches. So worst case scenario, it takes longer to get your principal back and instead of the nice case scenarios where it's, you know, eighteen months or two and a half years, then we're sitting with the standard, you know, five to seven or if it's really bad, maybe ten, you know, because we're going through market cycles.

This is one of the challenges that we're having. When we refinanced La Ronge, so we refinanced Le Ronge, put her money in two buildings in one in Saskatoon and one in Regina and they're both experiencing higher than normal vacancy rates because that's what's happening in the market right now. Our one in Regina is not as bad but our one in Saskatoon, but I think Saskatoon right now is over ten percent vacancy. And in one of our buildings, we're experiencing higher we’re experiencing twenty percent vacancy. So, here's some of our worst-case scenarios that happen. The building we own in Saskatoon, thirty-six unit. It's kind of on the cost of a good neighbourhood or bad neighborhood. And what we were planning to do is upgraded to the better neighborhood. Really focus on that clientele and bring it up to standards, really nice-looking building. Well, you know what? Because of the time timing and the market didn't happen. We also, when we bought it was full. We had some very bad tenants in there we had to get rid of and you know what? That reduces cash flow. So, we've actually, and this is the worst-case scenario, and this is the first time it's happened to us. We've had to go back to our investors and get a cash call. Are the investors happy? Absolutely not. So, know that this could happen in a poor market. We've also spent twenty thousand dollars on pest control in that building, so we're struggling with getting it up to the class of building that we wanted to and part of it is because of what's happening in the Saskatoon market right now. So again, great building. It is going to take us longer than we expected and our investors that had to come up with more money, so know that that could happen. Those are some of your worst-case scenarios.

Here's another thing that happened to us. It was a little bit earlier in our real estate career and really it was just a way that we were thinking that kind of got us in trouble there. So, we bought a twenty-four-unit apartment building. It was our first one and we had hard money lenders on it and we got a lot of investors that my partner knew mostly. I had a couple of family members and we were paying twenty percent interest. Now the market was going up. We felt we would do okay, but our big plan was that we were going to condo convert these units and make a whole whack of money. That was what we thought and so we could afford to pay out these outrageous returns right. And we had a plan that was going to be done in under a year. Well, you know what, when we decided on that plan, all of a sudden, the city put a moratorium on how many buildings could be condo converted. Now we were lucky. We actually were one of the last, well, were we lucky? We're not sure. The jury's still out on that. We thought we were lucky at the time because we were one of the last ones allowed to condo convert at that time and we thought, oh thank Gosh, because you know we spent all this money getting it, working on it and getting these investors. So now it's going to work. We're going to get this condo conversion. Well, what happened was, because there were so many condos on the market, we get the prices we were expecting. Throughout that again, we had some rough times. We did get our investors fully paid out and we got it refinanced at one point we were only able to finance fifty percent because the rents were so low. But you know, now looking back on that property, we paid seventy-five thousand a door. We would kill for being able to pay seventy-five thousand a door today. We should have just kept it as a long-term rental and forgot about the condo conversion. But you know what, it seemed like the best way to make a lot of money and we felt that it would take us out of the rat race and we could be on the outside right. And it didn't work, we ended up, our investors all got paid. We made no money on that apartment, not a dime. We got out, we were able to keep our investors, thank God and they're still investing with us to this day, most of them. But that's another thing that can happen to you. Don't be so focused on the outcome sometimes sit back and you'd have been better maybe if we talked to some more longer-term investors who had long-term buy and holds because now that I think back on it, I would have liked to have been told you should just hold that as a long-term buy and hold. I don't know if we would have listened, but I would like to be thinking more about that. So those are some of our challenges.

Another challenge we've had is a building that we own here right in Regina. We bought an eighteen-unit, did really well. We got really low financing on it, one point six one CMHC financing, just hit that small little window where I don't think I've heard of anyone getting that kind of a rate and we've had a lot of luck. So about eight months later we bought another building and that building we were planning to do the same thing, but we had some challenges. First of all, we thought we'd be able to increase the rents a lot because the suites were really nice and big, but it so happened that that's when the market started going down in Regina. So, we weren't able to. We were able to get it full to get our conventional financing in place. But then we had a bunch of challenges with the boiler in the summer. It was making it really hot in there and we didn't have the spare parts… I don't know what they call. We didn't have it in stock, so we had to order it. So, by the time we ordered it, then we got it three weeks later and it was the wrong part. So, then we had to order it again this time our plumber said, we need to order a couple, so you guys have one in stock and you know what, and we had leaks in the building everywhere. We had two insurance claims in the first eighteen months of owning the building. So, our insurance rates went up triple. So sometimes those are the things that can go wrong. And then in the midst of all our challenges with the boiler, we had a whole pile of people move out because it was too hot in there in the middle of summer. So again, challenges that happened. Now, do we think we made a bad choice? No. Maybe we wish we wouldn't have bought that building, but you know what? We bought it. We have to make the best of it. And what we'll do is we'll make the best fit. We spent a lot of money on getting the boiler the pipes and everything like that fixed. And we have had next to nothing for plumbing bills for quite a while. So, we're happy we went that route and spent the money up front and we're slowly starting to get it filled up again and the people seem to be staying that are there. So, you know, those are more again, some of the challenges you can have.

Amanda said, “Would you recommend a private appraisal before going for refinancing to avoid upgrades that were produced… the cash flow like what happened in La Ronge?” You know what? CMHC does not require an appraisal upfront. They have their own set of rules. So, I don't think it would have stopped us. That's actually another challenge we have with the one in Saskatoon and this one is just conventional financing. But again, they asked for a bunch of stuff to be replaced that really didn't need to be replaced, but because they're the lender, they got the power. We've had to replace them. So not only are we not getting full rents on the property, but we have to pull money out of our pockets and do the work that the lender requires, and we've tried talking to them and let them know what's happening the market. And could we wait? No, they won't let us wait. So again, some of those things are thrown on you and you can't get around them. You just have to get through them. Do you know that country song? If you're going through hell, keep going. So, I'm not going to make you listen to me. But if you're going through hell, keep on going. You know what? Sometimes it happens, and you just can't stop. You just have to keep going and going and going and knowing that you know what real estate's one of the safest investments out there if you put in the time and sometimes it's just going to take it at the time. So those are some of the things that could go wrong. And if you have any questions about that, let me know.

Courtney says, “Vacancy rates are up in Winnipeg as well right now. If you're from Winnipeg, I'd suggest using more than two percent vacancy when analyzing your buildings.” Yes. You know what? Stick with five at least. And if your actual vacancy rate is higher, just use that number because CMHC is going to use that number. Adrian says, “Vancouver's four hundred to five hundred dollars a door.” Yes, I did know that. And you know what their cap rates are so low and one student on here was actually telling me there's some doors for sale in Vancouver at nine hundred dollars a door. So, four or five hundred doesn't even seem that bad. High vacancy. You know, years ago in Regina we had higher vacancies and then when we were originally buying, we just thought we were so smart because oh my gosh, we could get the highest rents, and somebody was a crappy tenant. You know, we can kick them out and get a new tenant in right away. And it was just no issue. And you know what, it's not like that right now. You've got to be selective, but you have to treat your tenants like customers. Because some of these people are paying you like twelve thousand dollars a year. Those are good numbers and you want to keep them happy if treat them like they're a customer, even though sometimes you feel like they're a big pain in the ass, most your tenants will be great. I would say ninety to ninety-five percent of your tenants are awesome people probably just like you were as a tenant, but there's the five to ten percent that makes it feel like it's the ninety percent that you're dealing with and just know that one of the main reasons people get out of real estate investing is dealing with that and so you've got to have a special personality to deal with those people. You got to be kind, you got to be understanding, but you'll also have to be firm and just know that going in and if you're a person that's a bit of a pushover, don't be your own property manager or if you're too mean and nasty, don't be in your own property manager. It's better to have arm's length. I always find like with my property managers, they can go, you know, what that's what the owners want. If I could, I'd work with you even more. We really enjoy having you as a tenant, but the owners are demanding. They need their rent by the end of the month or I'm sorry, I’ll have to kick you out. You know, there's just ways of working with them. So just know that.

Again, I recommend property management highly. We've never done our own. I even told my property manager at times, don't even tell me the whole story. I don't even want to know. If I want to know I'll ask, but just know I really don't want to know. I'm going to get stuck with the bill anyway. Why do I need to be miserable in the meantime thinking, “Oh, I got screwed and I got shafted and I'm mad and ticked off.” Just pay the bill. Do what you can to mitigate the risk of it happening again. And, don't continue worrying about it. Because if you do, you'll get drawn into the mess of it. And then you'll give up.

Adrian says, “How can I get investors for such high dollar value for the apartment building, let's say eighteen-unit of building for twenty million?” Well, you know what Adrian, you don't have to buy in Vancouver. We'll put it that way. I personally wouldn't be buying an apartment building and I mean you can make every building cash flow. All you have to do is pay cash for it or forty, fifty, sixty percent down. You can make that cash flow. You don't have to invest in the same city that you live. You can invest in other cities and actually get cash flow. One of the things I really like about Saskatchewan, even though we're going through higher than normal vacancy right now is we get them for still for a decent price. I think we're buying right now around we just bought a couple of brand-new buildings, well fairly new buildings at one hundred and twenty-seven a door their cash flowing. The last two buildings we bought in Regina personally ourselves. One hundred and thirteen a door. One's cash flowing nicely. One we're still struggling with trying to get the rents up and get it full and reduce the vacancy. So, I wouldn't be paying twenty million dollars for an eighteen-unit building myself. Not to say other people haven’t, but I wouldn't be.

Stephanie says, “I believe Vancouver just introduced a fifteen percent fee on any international investors as well. Vancouver has a lot of international money, so it may change things in the next little while.” You know what? That is entirely possible. It may change things in a while. Adrian says, “How can I invest in another city? How does that work and how do I convince the investors? I think that's a little tricky.” Actually, it's not that tricky. You just need to learn how. You need to learn and know your numbers inside and out. One of the homework projects that I give the people in my ninety day at five k class is analyze one hundred buildings. Let me tell you a story about to my young guys in my group right now, her twenty years old who are just doing awesome. They've analyzed two hundred and fifty buildings so they know their numbers, they're excited, they got a couple under management right now that are cash flowing really well and they're getting investors because investors understand once you talk to them properly and “How and where do I learn it?” Adrian says. Like I said, Chandelle posted a little earlier. If you want to check it out on the website, the5yearplan.ca is what it's called. It is in the feed here. If you want to look it up, that's where you can learn it. I've got students from around Canada and U.S. taking my training because I also teach people how to build their power team in whatever area they want to invest in. You don't even have to stay in Canada, but I show you how to find the good power team, how to find good buildings that cash flow and pay the bills without having to put fifty percent down and now that's one way. There's books that you can buy you. There's books you can read at the library that will get you started. If you don't have any money to take a course but know that taking a course and learning from somebody who's already done, it's one of your shortest paths to cash is what I say. Adrian says, “I don't have any money.” Well, you know what? There’s I think last week's Facebook live, Chandelle you correct me if I'm wrong, but we put out a sheet called fifty ways to find the money, so start there. Figure out fifty ways to find the money because you know what I honestly believe if you don't believe enough in yourself to invest in yourself, you're going to be the first person that rolls over and quits when the going gets tough. I have actually given my course to a couple people just to test out my theory and guess what? They never ever even finished it because they had no skin in the game. It got hard at about module three, module four, it gets a little hard because there's some homework to do, and if you don't do it, guess what? It just gets harder. So, that's my advice. You got to figure out how to get some money and then in the course I also teach you how to analyze buildings, but if you go to YouTube, you'll get people showing you on there all day long how to analyze a building. It's just some of them are complicated I find. But I do teach it in my course as well. There's books that you combine and no, it's not possible for me to give you the course. I was just saying I don't give to anybody because I've learned that if you don't have any skin in the game, you'll quit at about module three because it gets hard. And if you've put the money out and you've sweated tears to put the money out, you will do your homework. I know I see the success rate in the students that are doing the homework and I'm not seeing any success in the ones that don't. So, there you go.

Okay. Well, you know what, I have another appointment here right away. So, I'm going to sign off. Oh, and I have one more thing to mention actually my mentor, Shelley Hagen, she was my very first mentor when I started investing in real estate. She flew into Regina and spent the weekend with us and she took us around, took us to the courthouse to see about buying foreclosures, took us to a couple of drug houses to see what that was all about. And, she taught us a lot. We've been good friends with her over the years and now her and I are actually doing a course together on Saturday, right here in Regina. Actually, out here at White City, closer to where I lived for a full day of creative financing. So, I know you can still get tickets for it if you're interested. I think for one person it's for four-hundred and something and for two people it’s seven ninety-five. So, Shelley Hagan. She's from Calgary. Great Lady. She's coming here to help. The two of us are teaching. It's all about creative financing, how to buy properties with none of your own money and how to get started finding the money and how to build your credibility so that people will work with you and be an investor in your projects. So, I think Chandelle will put up the link for that as well if she's still on or Amanda. But I think you can still buy tickets till tonight. I think we have room for four more people. We've already got thirteen coming and I didn't get a really big room. I think we have room for four more if you guys bought your tickets for that. Oh, there we go. Amanda says, yeah, she's got the link on there if you're interested in that under events. So, thanks very much for listening. You can reach out to me if you have any more questions. You can go to my website at www.ednakeep.com and you can find out about some of my courses or some of the people that I recommend highly, and I look forward to working with you. And next Friday, same time, same place, we'll be talking more about free coaching Fridays and on Monday, for those of you that need some mindset training, we do Facebook live ten o’clock, Monday morning, all about mindset. That's one of the things that I feel have helped me most over the years is changing my mindset. And I used to be very, very negative and so I changed it and I still study it every day. So, I'm glad that you like it too. Okay, well thanks everyone for being on and we'll see you either Monday on mindset Monday or next Friday or if some of you decided to come to the course. I'll see you Saturday. Okay, take care. Have a good weekend. 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.