May 31, 2022

Sofar, this topic has generated the most responses and, frankly, I’m not surprised. The best part, however, is that it’s given me the opportunities to further the dialogues with some of you and I so appreciate that. Many have thanked me for sharing while some accused me of ‘sitting on my high horse’ and preach. One way or another, I appreciate your time and effort. To those who have said that these articles are making a change in their lives (you know who you are), I am extremely happy for you and I thank you for allowing me to be authentic.

Every piece of writing I have created is meant to be positive, and even inspiring. This quote has been my guiding light for the last 8+ years of why I still teach and mentor.

More importantly, for the same reason why I write in the first place — to help people think about certain things ahead of time. After so many years, I do see many people WASTE away their talent, their drive, their ambitions, their money, their time and their goals as a result. Unfortunately, many of these cases have much to do with mindsets that do us a disservice. Fortunately, it’s given me the chance to share here.

Inthis article, I will conclude this now 4-part topic with the last deal breaker for me when choosing a real estate investing mentor.

3. Misalignment in values

Let’s define what value means in this context first. Here’s a high level thought process:

1. My personal values are health, sustainability, joy, fulfillment and impact.
2. When I’m choosing a mentor, I want to get a sense that we align on at least 2 of them. For example, health is an overarching value that covers beyond physical health. It also covers mental and financial health. If someone is financially successful and yet completely out of shape physically, I know there is a misalignment. While I’m all about leveraging money as one of the greatest tools in the world, I personally do not believe that it should come at the expense of my health in other areas.
3. Sustainability is a huge one. I’ve witnessed too many investors, entrepreneurs and ‘mentors’ (yes, using the quotation marks to be sarcastic here) come and gone over the years. Some as short as 6 months, some as long as 8 years. For example, we all know that what we focus on grows. A bodybuilder will tell you that the exercise and diet regimes are not a sustainable lifestyle. An high-level executive can only work so many hours for so long before a burnout happens amongst other long-term health implications. Staying power is key. And that power comes from having the right mindset, the required tools and the attitude.
4. When I interview new mentors in any areas of my life, I simply as them these 2 questions: why did you want to be a mentor in this area and why have you continued after so long? What I’m really looking for is the passion and the energy they exude. More so, the joy and the fulfillment that they get from doing what they do should show up in their voice, their eyes, their words and their body language. I want to feel their joy and their sense of fulfillment. Because I believe that nobody can (nor should) pour from an empty cup. If their desire to help others success is overflowing, we can pick up on that usually right away.
5. Impact — circling back to aligning on vision, I want my mentor to have a greater vision for their purpose, their life and their business other than just making some money from telling others what to do.

With all that said, here are the last few thoughts that I’d like to share here:

Real mentors don’t need your money to invest in their deals in any way.

They’ve built successes before you and without you. If the true intention is to teach you how to fish so you can eat for a lifetime, they should not treat you as OPM. At least, not at first. I remember one of my earlier mentors wanting to connect me with another student investor to potentially do a deal together in my early days. Very quickly, I found out that she was the “silent partner” in that business venture and also the licensed realtor for all his “deals”.

Real mentors encourage you to be authentic and honour your journey.

While you do have the support of a mentor (and maybe even a community at large), be honest and open about where you are in your journey. The whole “fake it till you make it” idea (while I understand it’s used sometimes to combat imposter syndrome) tends to do more harm than good. I believe in “face it till you make it”. If people judge you based on how green you are in the first place, that means you are already misaligned on some core values. It’s easier to move on from that than to dwell on it.

Watch how you are (or might be) mentored in the way you approach deals/opportunities and especially with people. Some industry professionals can sniff a newbie from mile away. If you’re trying to pull a fast one on them, it’s the fastest way to put giant speed bump on your journey.

Whenever I am out conducting in-field work with my mentees, I always ask them to be honest and truthful in everything they say. Sounds like a basic requirement for being an investor with solid values and integrity, doesn’t it? Yet, you’d be surprised at how many are taught to puff up their chest and embellish their knowledge, skills and experience level.

Don’t get it twisted here! I do encourage my students to use the line “I have invested in my education and have a mentor guiding me through my first few deals” when necessary. After all, leveraging our results and systems is part of the education. Doctors and surgeons all have mentors at different levels, we are no different here.

Real mentors do the work with you behind the scenes.

Thanks to social media, ‘progress’ is loitered all over everyone’s feeds without context. While it’s good for marketing purposes, note that a real mentor does the work and often goes unrecognized. Countless calls, texts, in-person and video meetings we do are just part of the process we do with our students. Some mentors these days post every single chat and screenshots of a coaching call. This brings me to 2 questions that challenge me daily: Are you busy or productive? Are you creating real results or creating a facade?

This is obviously a very grey area these days. We want to celebrate wins — big and small — because it creates positive reinforcement internally. We also want to leverage the wins as much as we can for marketing purposes. However, many have focused on the marketing rather than doing the work themselves. I recall meeting a “newbie” (his word, not mine) about 18 months ago. He admitted that he focused on 1 single strategy and only had done less than a handful of deals at the time (oh, and in 1 city only). To my surprise, he started a podcast and became popular during the pandemic. Less than a year ago, he started “coaching” others on strategies that he told me he knew nothing about nor had the interest for. Unfortunately, he’s not the first person like this I’ve known over the years. It’s just that, social media (especially) has made it even harder to tell the difference upon first look these days. On a positive note, results is always the one thing that we fall back on especially on the quest for financial independence and financial freedom. Results is what give a few of the mentors the staying power to stay in this industry.

Lastly, some random and final thoughts here:

A mentor is part of your power team, both a short- and long-term business partner.

Real mentors help you pull the different ingredients together to cook up the results YOU WANT (vs pushing certain outcomes on you).

Many groups, clubs, coaching programs — both online and live- masquerade “buying” as “investing”. Learn to tell the difference. I’m really hoping that my previous articles have shed some light on how for you. If not, you’re more than welcome to reach out to me directly: tim@trustyourtalentacademy.ue1.rapydapps.cloud anytime for a chat.

Like vs respect — I want to be able to respect my mentor first. This one took me a while to grasp. A mentor is someone I look up to and respect from the get-go. I don’t always have to like them as a whole (I know this sounds terrible right now) because I’m wanting to be mentored for a specific set of skills initially. If we end up liking each other and form a relationship beyond the mentorship, great!

Mentors should have mentors. I need to know that they consistently invest in their own growth — professionally and personally. To be more specific, networking, signing up for club memberships and attending a few webinars for market updates here and there do not count as professional development. I want to learn that they are going into programs and full curriculums to further their growth. After all, that’s why I want a mentor.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

Lastly and definitely not least, Bootcamp! If you prefer the live interaction and delivery to help you build some foundation, our next Bootcamp is just around the corner. Go ahead and register for a session for either June 11 or June 12 to help you further your financial education.

(Written at home in Edmonton, AB)

June 7, 2022

First things first, definitions matter! I’m strictly using “getting paid” for being an investor as the baseline here. So, here’s a list of things that are taken into account while making the differentiation between what qualifies as amateur vs professional investors:

• Getting paid = compensated by the deals they have created directly and indirectly
• Professional investors have short- and long-term plans and strategies for building their portfolios for specific financial goals (as opposed to property collectors — buying for the sake of buying)
• Professional investors have an exit strategy on how they transition from being the managing/active partners (most of the times in the beginning) to being the capital/passive partners over time
• Professional investors also recognize that they are amateurs at the same time — more of a growth mindset driven statement

The inspiration for this article came from a few readers’ suggestion (you know who you are) — thank you and hope you enjoy this!

I guess this is in line with the previous 4 articles. However, the funny thing is this: what I’m about to share are things that had been ‘taught’ to me early on in my financial education. Yet, many were not ‘learned’ (and felt to be true) until years later. Some of them MUCH later.

Before going any further, I want to be extremely clear about this: knowing how to spot them doesn’t mean you treat the any differently in terms of respect. The purpose I want to accomplish with this topic is to help you become more efficient and effective as a real estate investor — both as an amateur and professional. Yes, I said both. I believe that we are all both at the same time these days in the world of real estate investing especially if you follow the SMP Philosophy. Nobody truly knows and has executed on EVERY SINGLE strategy available. In addition, nobody’s invested in every single (viable) market available.

Knowing how to spot them means you can pivot and create more meaningful and productive conversations when you first meet them. And, perhaps, supportive and mutually-beneficial long-term relationships!

So, let’s dive right in!

How many properties do you have?

This one is probably the biggest tell-tell sign.

Most professional (and trained) real estate investors understand that property is simply the investment tool we use to achieve the financial goals we have. And, once again, following the SMP Philosophy, property is at the bottom of the list.

For amateurs, it can seem like this is the fastest way for them to size up the other person. Using the number of properties the other person has to determine how much respect, time and patience they should give — especially at a networking event. Even if the intention is positive — they want to learn from someone who ‘knows’ more than they do, this often backfires because people can sense it when you are disingenuous in your interactions with them. The opposite is also true. People who have collected properties over time may use that to judge how much time they would spend with the amateurs. If this describes you in any way, STOP IT! You’re letting your ego get in the way.

From both personal observations and personal experience, a newly educated investor on a single strategy with a focused market picked out can easily outshine a wealthy property collector.

The point is this: it’s not a bad question, it’s just a bad first question. If you are hunting for a REI Mentor, it’s natural that you are curious and want to know more about their experiences — in strategies, markets, the types and number of properties they have transacted and held — to give them the financial freedom (or independence) that they have today.

Remember, everyone has something to offer regardless of how you classify them. With amateurs, I simply want to see if I can add value to their growth — be it a chat to share experiences, adding to their knowledge vault (or bridging their knowledge gap), or helping them get started by working on a deal together. With other professionals, I also just want to see if I can add value to their journey — from trading ‘war’ stories to collaborating together in any other ways possible. The common thread is — add value. It’s not about you.

I use the BRRRR strategy.

This is a short but brutally important one. BRRRR (buy-renovate-rent-refinance-repeat) is NOT a strategy, it’s a process. I cannot stress this enough.

It’s the fundamental process of performance improvement regardless of the asset class you choose to use. This is a marketing term that became popularized in recent years. Strictly speaking, when you are leveraging a property-first strategy in real estate investing, 99% of times you NEED to BRRRR. Otherwise, what is the point?

BRRRR was known to me as:

• Buy, add value, cashout-refinance (commonly used in the US), or
• Money in, money out, income for life and asset for free (if you get to pull out 100% of your initial ‘money in/investment’)

From day 1 of my financial education, without fail, every trainer and Mentor has emphasized on the concept of value-add in every deal, every property and every step of the way. One of them call ‘real estate investors’ as ‘transaction engineers’. That also took me a few years to fully grasp through living the life of a full-time investor.

With a hard asset like real estate, value-add has a broad spectrum of meanings. Putting it plainly, value-add can literally mean anything between sweat equity to a gazillion dollars. You can paper flip through the Wholesale & Assignment strategy. You can also take a piece of empty or under-utilized land in the middle of nowhere on this planet and put a world class city on it (think of Dubai and Las Vegas).

So, I’ve learned to stay hip and relevant by using the phrase ‘BRRRR’. I’ve also learned to use it like: We leverage the BRRRR process in all of our property-first strategies/deals. This ain’t about sounding smart. It’s simply about sounding like you understand how business works — even if your business is real estate investing.

One last note on the BRRRR process is that it does NOT say anything about cash flow/profit, or as we call it, performance of the asset. This is why, it’s NOT a strategy. A strategy tells you how you make money and how much money you make in the world of real estate investing. I’m only highlighting this because I’ve seen way too many folks BRRRR themselves into even more financial distress. While, on paper, it sounds great and makes 100% sense, it is only a part of the process of any good deal.

I regret selling my properties.

Amateur alert!!!

My best analogy (which I’m oddly proud of) is that properties and buildings are like people. The older we get, the more problems we have. Meaning, the more expensive it is to maintain.

Here’s a quick techno-babble for my trained RE investors: your NOI (net operating income) goes down over time typically with every property in your portfolio. This decreases the capitalization rate (aka. Cap Rate). With the rising interest rates, your cashflow will decrease from higher debt servicing amounts.

A professional investor understands (at all times) that learning how to invest is learning how to make money work harder for us. As pointed out in Financial Education: Know the Difference — Cash on Cash Return vs Return on Investment, real estate is just our vehicle in investing. The goal is to create better financial resources and blueprints for ourselves, and hopefully generations to come. Making sure our money is working hard for us at all time is, in my opinion, the highest level of the art of investing.

Why would you want to make 10% when your money can be making 20%? Why would you want to make 50% when your money can be making infinite return? Selling your properties for the purpose of reinvigorating your capital’s ability to work harder for you is not only smart and the way the pros do it, but an absolutely necessary and natural part of being an investor.

Anyone that tells you to simply hang on to your properties for life is an amateur. This is a lesson that I refused to see early on when one of my Mentors pointed out to me. Silly me!

With that said, this directly ties to the concept of “velocity of money”. For those of you who are curious and interested in learning more, there are lots of articles and videos available for your research.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

Lastly and definitely not least, Bootcamp! If you prefer the live interaction and delivery to help you build some foundation, our next Bootcamp is just around the corner. Go ahead and register for a session for either June 11 or June 12 to help you further your financial education.

(Written at home in Edmonton, AB)

July 19, 2022

(WARNING: COLOURFUL LANGUAGE)

Cashflow — another highly used marketing buzz word by real estate buyers who masquerade as investors and coaches to make their ‘deals’ sound better than they are these days. My attempt as usual with this article is this: help as many people understand the difference between cashflow, cashflow management and, MOST IMPORTANTLY, cashflow mindset.

With so many people reaching out these days asking for perspectives, opinions and experiences during a time like this — looming recession and high interest rate (cost of borrowing), I always like to go back to the basics to stay grounded.

According to Investopedia, cashflow is defined as “the movement of money in and out of a company. Cash received signifies inflows, and cash spent signifies outflows. The cash flow statement is a financial statement that reports on a company’s sources and usage of cash over some time.”

First thing first, let’s quickly break this definition down:

• It’s the ‘movement of money’ in and out of a company. If you’ve had the chance to check out some of the My Daily Dose with Tim videos, you’ll know that I treat EACH and EVERY property like an independent business. And like a business, we want to be making a profit at the end of every month (unless it’s meant to be non-profit from the start).
• Cashflow is sometimes synonymous as profit. If you’ve gone to any sort of business school, you’ll learn this very definition in your 101 class: Revenue — Expenses = Profit. As a result, cashflow is also an indicator of how well the business is run — kind of makes sense. At any given point, the goal is to maximize revenue and minimize expenses. That brings me to a very important point here: the emphasis should be on creating POSITIVE CASHFLOW.
• In most real estate investing strategies (refer to the Wheel of Wealth articles), the high level formula actually looks more like this picture (yes, that’s my handwriting on a flip chart — don’t judge 😉):

Well, well, well…it looks like we are missing a crucial component here with the simplified version before: debt service (aka cost of borrowing). Unless you are purchasing your properties with cash (and why would you?!), chances are you need to maintain the debt servicing on a regular basis. And the terms and rates of the debt service will ultimately determine the cashflow/profit.

As I’m writing this, I know many buyers (who have been posing as investors and coaches) have stopped buying while I’m in the process of acquiring/closing on 12 properties (16 doors) from 2 tired landlords — in both Canada and the US. I’m also making the biggest daily gains from trading futures since I started learning last September.

I’m definitely NOT braggin’ since I was not always able to capture every economic downturn to the best of my ability (as mentioned in the previous article). However, I did learn from a mentor at the beginning of my financial education career that Financial education will allow anyone to make money and grow wealth when the market is going up, down and sideways. That was the ‘sales pitch’ that got me. Today, it remains the main reason why I’m pro financial education and NOT just real estate investing.

When you are financially educated, you will learn be excited about economic downturns for these 2 main reasons:

1. Your money will go further when value drops. People see higher interest rate/inflation and decreasing value as a double whammy. When, in fact, it’s the most amazing thing when you are able to leverage debt to build wealth. As mentioned in the previous article, regardless of rate, the devaluation of money is also the devaluation of debt. Plus, most investors are still able to borrow money for a mortgage (depending on types of property) anywhere between 4.5% — 8% in North America when inflation just clocked in at 7.7% in Canada and 9.1% in the US (at time of writing this article). That literally means that your debt is FREE MONEY still. While on paper, the rates are ‘going up’, let’s not forget that it’s based on comparison of what people have gotten used to in the last decade or so largely due to global financial crisis. Mind you, I’m not denying the fact that the higher cost of borrowing can eat into your cashflow as a result initially (see calculation formula above again). This is precisely the reason why time and time again I emphasize on buying for positive cashflow. It’s the survival tool in a recession. However, when values are dropping, it also makes certain asset classes more “affordable” to get into.
2. You can increase your overall net worth dramatically coming out of it if you learn to acquire assets properly during this period of time. The value will bounce back up —it’s cyclical. It’s the good old saying of “buy low, sell high”. And also, what I’ve learned from trading is this — unrealized losses and gains don’t matter as long as you are making a positive cashflow. Think about this example: whenever Elon Musk says something dumb (according to the majority’s opinion or media’s scrutiny), his company value drops. But was he or his company hurting? No! Because they are protected by positive cashflow/performance. The same goes for all big and major companies that we’ve come to know: Coca-Cola, Nike, Microsoft, Google, Facebook/Meta, etc. The values of these companies go up and down on a daily basis — sometimes in the millions and billions — and they continue to grow and thrive over time. This is also when trained stock investors buy more shares — when the values are lower (in comparison). We are simply going through the initial contraction of a recession. So, understand these 3 stages (important!): as money (as currency) devalues with inflation, the value of things (especially assets) also goes down while the price goes up (initially — I know, makes little to no sense sometimes). Then the price will go down due to supply and demand and the loss of buying power. Over time, as inflation gets under control, the value of money stabilizes, value and price will inevitably go up in the long run.

I sincerely hope that you have fully absorbed what was shared here as this article will serve as the foundation for what’s more to come. If you enjoyed it, please give me a clap and a follow so I know how I can continue to create relevant content on this platform.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next Bootcamp is on July 23 and July 24 (this weekend!). Go ahead and register for a session for either day to help you further your financial education.

Lastly, I just want to say thank you for your continuing support.

I aim to be authentic and adding value to your life.

I invest to build a life. I build business to create better life experiences.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB)

July 26, 2022

Have you ever felt financially desperate or hopeless, or both?

Don’t get me wrong. I did not come from most people’s class definition of a poor family. In fact, at one point in my life (between the age of 5–11), I had great creature comforts and then some. Dad’s government job was stable and Mom’s manufacturing business was growing. If you’re looking for a rags to riches story, I probably don’t fit that box. However, I do describe my upbringing as hopelessly middle class (if not lower middle-class).

There is absolutely no disrespect to my parents. I know they did their best given the upbringing they had. However, I also know that I wanted to break that mold. I had to — if I wanted something different. Something more. After all, my Mom’s the one that always said: the next generation should do better.

Many have asked me how I learned everything I’ve learned over the years, I usually paint them this picture:

• Just moved from Vancouver to Edmonton in 2009 as a bright-eyed 27 year-old wanting to climb that corporate ladder. I was willing to suffer through being lonely again leaving my close friends in search for a better future. After all, what’s hard work and sacrifice? Aren’t those the bare minimum requirement for success?
• After some consistent 80-hour weeks for months at my job, I was further beat down by opening my “investment statements” — mentally and emotionally — on a weekly basis.
• Feeling smart, I asked a co-worker (who is my mother’s age) how she manages her money as she looks to be doing pretty well — a beautiful house, amazing (not to mention constant) vacations and multiple luxury cars — all the while forgetting that she’s twice my age and has had way more time to accumulate her wealth. Regardless, I was connected to her ‘guy’. This was the guy that represented the developer that later on took every last penny of my hard earned money away from me — among many others. (Side note: this is why one of my favourite quotes is “Don’t compare your chapter 1 to someone else’s chapter 30.”)
• Feeling deflated, stressed, cheated and angry, I went to this meeting at a law firm with people in their 50’s, 60’s, 70’s…and maybe even 80’s. The scene I witnessed still shocks me to my very core every time I picture it. Imagine seeing people who are your parents’ and grandparents’ age — in a public space and they are just yelling, howling, crying and screaming. Nobody was able to get a full sentence out other than the lawyer representing us. The collective us that had our money ‘stolen’ in broad daylight. The collective us that thought: real estate is much safer than stocks and mutual funds. Since most of us already took giant losses and nobody knew if they would see their retirement funds bounce back, we all thought we were being smart cutting our losses and redirecting our money into real estate.
• Now imagine this: your parents and grandparents saying things like: “How am I going to live?” “How am I going to pay rent and put food on the table?” “I’m too old to go back to work.” “That was my entire life’s work.” Are you feeling what I’m feeling now?

Instead of feeling hopeful like I was potentially going to get my money back, I walked away from it feeling shook and completely numbed.

The reality slowly woke me as I auto-piloted myself home after that brief and emotionally disturbing meeting. Here I am —

• Been in the workforce for 3 years,
• Making a 6-figure income year after year,
• Living in a nice house,
• Driving a Mercedes,
• Having a rental condo back in Vancouver.

All the labels that should’ve been considered as success markers meant nothing. Because, the truth was this —

• I was having “Ramen Mondays” and “Deep Fried Fridays” to save money on food. When I first moved into this beautiful new home that’s 3 times the size of my Vancouver condo, I did not know all the surprise expenses that would pretty much incur immediately. Here’s a picture of our living room, dining room, media room, office space and storage:

Those are towel-covered moving boxes.

• I was using Future Shop (if you remember them) flyers and any flyers I could get as window coverings. Forget about buying new furniture or anything else other than the bare essentials.
• I was feeding into my Vancouver condo. This, I later learned is also called “paying my tenant to live in my property”. It was further draining my income.
• I was worth more dead than alive. With a lousy life insurance policy that came with my work benefits plan (always had a hard time finding life insurance for me due to my health conditions) and the recent ‘loss of money’, I was in negative net worth. In other words: I. WAS. BROKE.

That made me doubt everything I believed in — is working hard alone enough? Is having a high income job enough? Is having a corporate ladder to climb enough?

That made me question my choice to move away from my friends — my support network. Was the sacrifice worth it?

And, something happened.

Weeks later, on my drive to work one day, I heard about a financial education seminar. I perked up. Turning the volume a bit louder, I heard that it was about real estate investing. I was hooked.

That was January 2010.

As of today, I’ve been broke twice, literally. And those experiences are the fuel for these articles.

Of course, there are more layers as to why I continue to build cashflow and wealth through real estate (and yes, there are days that I get tired of the idea of the process of buying another property). However, it’s now time to share some lessons first. Lessons from both times when I was ‘broke’.

For starters, recognizing that our behaviour during a personal financial recession is usually the same behaviour we exhibit during an external financial recession.

Lessons from the 1st Negative Net Worth

1. Learn how to identify deals and calculate risks myself. You don’t know what you don’t know.
2. Find ways to make money when I sleep. You don’t know what you don’t know.
3. Create multiple income streams.
4. My financial well being is 100% my own responsibility and no on else’s.
5. Live largely yet frugally. Buy assets first and leverage assets to fund my liabilities.

Lessons from the 2nd Negative Net Worth

1. Get to Financial Freedom #2 (refer to previous article) first before taking on more risk.
2. As long as I stay above Financial Freedom #2, I’m ok to refi (after the BRRRR process) and let a few of properties in my portfolio go into negative cashflow with the plan to scale up. IMPORTANT concept here: despite what most people might think, not every Starbucks, Safeway or Exxon is profitable. However, as an overall corporation, they are.
3. Leverage the funds to acquire new performing assets, or feed into portfolio income (aka park it), or simply keep as contingency funds depending on the larger economic conditions.

The lessons got bigger.

Surprisingly, I also find these lessons very applicable and relevant to what most investors are going through these days — new and seasoned.

I have been speaking with many “investors” over the last couple of months who are looking for guidance and support. If there’s anything I can do to help, feel free to request for a call with me. I know that my team is also happy to support in any way they can as well.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next live in-person real estate investing Bootcamp is on September 24 and 25 in Toronto. Go ahead and speak to a Strategy Coach on how you can attend.

Lastly, I just want to say thank you for your continuing support.

I aim to be authentic and adding value to your life.

I invest to build a life. I build business to create better life experiences.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB)

August 2, 2022

Times like this right now are even more crucial to make sure that nobody falls into any traps set by desperate and hand-to-mouth “professionals”. These are lessons that were passed down to me by my Mentors along the way and — as usual — some of them I had to learn the hard way because I didn’t listen.

Before we go any further, I want to thank everyone who reached out to share that you could relate to some of my journey (especially the ones shared in the last article). My story may not be the most extraordinary (and it doesn’t have to be), as long as I’m making a difference in the world by sharing it, I’ve fulfilled my purpose here.

Some of you have also reached out to say that I seem to have gotten a little ‘too real’ here and there in the last few articles. Well, I don’t know what to tell ya other than a) I write like I talk, b) I’m looking to share authentically and c) I’m definitely lying if I tell you it’s all going to be rainbows and butterflies if you just get financially educated. That’s like saying “if you just go to school and get academically educated, the rest of your life is set”.

Often times, one of the first things I ask for when I get to share publicly is this: do you want me to tell you what you need to hear or what you want to hear? Almost in unison, it would be “what you need to hear” every time. Look — I’m not here to burst anyone’s bubble and I’m certainly not perfect, and I’m definitely here to share enough of my learnings with you so that you get to bypass some or most of the mistakes that I have made. The mistakes that have cost me millions (literally), sleepless nights, gallons of tears and sweat, and occasional yet severe self doubts about my ability to succeed at all.

Part 1 of this topic was better received that I could have ever imagined. I remember watching one of Robert Kiyosaki’s interviews. He said: “Overnight, I became the most hated man amongst all real estate agents in America because I’m telling people that your house is not your biggest asset, it’s your biggest liability.” These days, I can completely relate to that feeling. The truth when it comes to investing and money can often be unsettling, unwelcoming, unpopular and ill-received by many. Call me dumb, call me passionate, call me anything you want — but that’s the fuel for Part 2 of this same topic.

So, here we go again. And today, we’re only going to focus on ONE thing:

Using “Raising Capital” as a Marketing tool or Part of a Tag Line

This one is arguably the most used ‘phrase’ amongst the least educated. Or, worse yet — those with ulterior motives.

Before some of you bite my head off here, I’ll be the first to admit that “raising capital” is a legitimate activity, skill and business process not only for real estate investors, but for all entrepreneurs.

1. “Raising Capital” as a Marketing Tool

Strictly speaking about real estate investing, needing access to capital is the one topic that newbies dread and are often frightened by the most. The reality is: if the deal is good, the money will follow. Amongst all the Trainers and Mentors are Trust Your Talent, we always say to our students that “one day, you’ll have more money than you have deals.” Nobody initially believes us. Nobody. Then months and a couple of short years go by, one by one, they would come back and say things like: “I have money investors lining up and I have no deals!”

Let’s unpack that quickly here.

It’s not that there are no deals. It’s the fact that we’ve learned better as we do more deals and have gathered more experiences. We’ve simply tightened our business process, tweaked our investment criteria and goals along the way. As a result, elevated the demand of our deal quality over time.

I’ve also been saying to my students lots over the years: “if your first deal is your best one, you’re doing it wrong”. Again, if you know me, you know I love my grey area and seldom use words like right or wrong. I generally prefer “good or bad”, and “better or worse” in any situation.

Circling back to why this is seen as an amateur move is simply because of these reasons:

• Especially for newbies, knowledge and experience count first and foremost. I can be biased because I attribute any of my current financial success to the financial education that I got and applied over the years. It’s like most of us fresh out of school and applying for our first ‘real’ job in the world. It’s the classic paradox — you need to work to get experience and you also need experience to get work. When that’s not the case, the shortcut is typically having some kind of eduction backing us — be it academic or skill-specific.
• In order for some one to have the confidence in us and our deals, there are several factors at play here. Without digging into character and personality types, knowing how to find opportunities, analyze them and determining them as ‘good’ deal is step 1. This can be and often is accomplished by proper training on specific investment strategies.
• As both an active and passive investor, if you can’t (and I quote Jerry McGuire lovingly with all my heart) “SHOW ME THE MONEY”, you ain’t got a chance to get my money now, or ever!
• Investing can easily be a very logical activity — let the numbers do the talking and leave your emotions at the door. This is why learning how to identify exit strategies for any opportunities is what really separates the professionals and the amateurs. I often say: your exit strategies determine how you make money and how much you make.
• Why ‘exit’, you ask? Because getting into deals is actually the easy part especially for those who are untrained, emotional and easily swayed. I have an investor friend who jokes: “When the times are good, my 15 year-old daughter can make money from just buying and selling real estate, too!” Getting the money isn’t the be all end all. It’s just the beginning.

So, what’s the point here?

Simple — I’m looping back to knowing why you want to invest in the first place. What’s your goal? Which income bucket are you wanting to feed? How do you want your Wheel of Wealth to look like? What’s your S.M.P. as a result? Having clarity to these question is probably the BEST thing you can do for yourself. Otherwise, every opportunity can look like a ‘good deal’ and every ‘raising capital’ training or podcast can steal your most previous gift and stall your progress.

2. Using “Raising Capital” as Part of a Tagline

Often times, I see people who put things like these on their social media profiles:

• Raised $120 Million
• Owns $5.1 Billion in Real Estate
• Sourced 9 Figures to Acquire 1,500+ Units

Impressive? Yes!

True? Maybe.

Meaningful? No. (At least, not to me after 12 years in the game.)

I’ll be the first to tell you that I sought out people with these tag lines to learn from years ago when I first started out. After all, I also preach “follow the footsteps of the people who have accomplished what you want to accomplish”.

Here’s a quick graph to share with you before I go on:

I realized that I already had all the tools I needed through my training. It simply became “how can I share the wealth with others”.

Of course, it’s a little deeper than that. Here are a few reasons:

• While those tag lines mentioned above are super impressive, here’s what anyone reading this right now needs to get clear on: WHY are you investing in the first place? (Am I sounding like a broken record yet?)
• One of my Mentors illustrated the concept of ‘not needing a lot to accomplish financial freedom’ by asking this question: have you ever flown in an airplane before? Either way, the next time you fly and just seconds after the plane takes off, put your thumb on the window against the land below you. THAT is about how much real estate you need to be free for the rest of your life. And maybe for the many generations after you.” That was not an easy concept for me to grasp if I’m being completely honest here.
• Here’s what I’ve discovered for myself: if your answer is financial freedom to the question above (first bullet point) and you need $5,000/month to reach Financial Freedom #1 (refer to all linked articles if needed), the math can be simple. Assuming you have zero capital and no mortgage qualification after you’ve invested in your education (one of the biggest questions we get), you therefore need to rely on leveraging OPM (other people’s money) to get going. Let’s say you are running on a 50/50 split structure (keep in mind that this is all a very high level illustration of the concept): $5,000/month = $60,000/year.
• Depending on your strategies (usually a mix of a few if you’re properly trained as an investor), say your average cash-on-cash return is 10%, it means you need to have $600,000 in capital working for you just to cover your 50%. This now means you actually need to have $1,200,000 making 10% per annum at this point. Then the goal now is to find enough people (yes, plural — at least for most of us in the beginning) who’s willing to fund $1,200,000 in cash/capital before leveraging. If you’re leveraging at an average of 75% LTV (loan to value) on your acquisitions, this means that you are managing a portfolio of $4,800,000.
• As you can clearly see, raising $120,000,000 is great, and yet not quite necessary yet. Learning to honour your own financial freedom goals in the beginning is the most challenging and rewarding thing you can do for yourself so you do not fall into crafty marketing tactics.
• Another perspective I will also share here (and it’s a little dark — don’t say I didn’t warn you): there are quite a few people who only share how much money they’ve ‘raised’ over an unspecified timeframe, and not share the results of how much the funds they raised have made or even lost. I personally know a few like that and they are, unfortunately, still actively teaching others their methods. Of course, investing inherently has risks. I can also relate due to personal experience. Remember how I shared that I lost $1M overnight? In actuality, it was losing $1M in capital, over $5M in assets, >$300,000 in debt servicing and legal fees over the course of 3.5 years. Not to mention losing my pride, sanity and sense of self for a while.
• Listen (and I expect you to put on your best Oprah listening pose right now): I’ve known people with thousands of doors and have to hustle to keep the portfolio going. I’ve also known people with a couple dozen well-managed doors and their passive cashflow allows them to live life without a single worry till the day they die. Don’t let your ego get in the way because you want to sound like a big shot. I know I worshiped those who looked like they’ve accomplished on the outside. Then I learned to really look at what they are like on the inside that counts.
• Next, in business, we speak of asset and income protection. It’s difficult to even begin to discuss how incredibly stupid with claims like “I own X of real estate” since control without owning is (in my humble opinion) the absolutely highest art form of business and entrepreneurship. The world most valuable businesses today did not receive their valuation from goods and manufactured products sold. They got it from the appraisals and perceived values of the business’s combined systems, processes and good will. Unless you’re a public company, I would never recommend anyone who have built a success portfolio or business of any sort (especially when it’s largely built on OPM) to openly disclose value as it also tends to get misinterpreted in context.
• Lastly, like an annoying teenager, I might be stating the obvious a bit — what is “9 figures”? 100,000,000 is 9 figures. So is $999,000,000.

Phew! That wasn’t so hard.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next live in-person real estate investing Bootcamp is on September 24 and 25 in Toronto. Go ahead and speak to a Strategy Coach on how you can attend.

Lastly, I just want to say thank you for your continuing support.

I aim to be authentic and adding value to your life.

I invest to build a life. I build business to create better life experiences.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at the Maple Leaf Lounge in Calgary International Airport and completed in Cleveland, OH)

August 9, 2022

(WARNING: EXPLICIT LANGUAGE)

The aspiration to be a professional real estate investor at the age 28 put me in a world of in-betweens:

• Had higher living standards compared to my student days from a good paying job yet lack actual resources to create momentum at building a real estate portfolio
• Acted like a professional but still looked young-ish and was often taken less seriously when raising capital and seeking joint venture partners
• Acquired the knowledge and yet was shy about asking people for any sort of real money (in the beginning)

This led me down a path that was challenging and yet incredibly rewarding later on. The path was short and filled with skills and experiences that continued to serve my journey as an investor today. That path is creative financing.

Thank you to your feedback and suggestions — this is the first ‘interactive’ topic that I’m taking on. Gladly 😃

Creative financing was one of the things that really put a smile on my face during my initial real estate investing Bootcamp back in 2010. Like many, one of my biggest worries was asking people for money. Better yet, it was “appearing like I was begging for money”. Let’s just call a spade a spade now first — the former worry is from lack of confidence, lack of experience and lack of data; the latter is just ego.

Today, I focus on helping the students at Trust Your Talent understand the essence of “money will follow good deals”. This means that, as professional real estate investors, our purpose is to find opportunities, analyze them, determine whether they are good and viable deals, and structure them into win-win situations (some strategies such as Lease Options can create win-win-win-win-win situations!).

Before going any further, I want to kick start by building some context and foundation for understanding:

• “Your exit strategies determine how you make money and how much money you make.” Every deal would typically involve 3 main phases — acquisition, holding and exit. The acquisition phase includes obtaining financing. This means, more frequently, seller financing happens at this stage more than any others.
• Seller financing is great and can be flexible when executed properly. This comes from knowing what it is and the different ways to leverage seller financing.
• Seller financing is also commonly known as vendor-take-back or VTB, or owner financing. They will be used interchangeable throughout to help you absorb and comprehend them better.

Seller financing is an umbrella term that includes several different types of “legal paperwork” to facilitate depending on the mutual solution the seller and buyer agree on:

• traditional (or some would call it typical) mortgage documents,
• option contracts,
• agreement for sale, etc.

To me, these are the 3 most commonly heard and used ways to leverage seller financing. The rest will simply be the different “instruments” or, as mentioned before, “legal paperwork” (I would be using air quotes if you could hear me talk about this in person) that you will use depending on the suggestions of your lawyer and/or the different names certain government authorities name them. For example, in parts of the US, VTB is facilitated as a “land contract sale”.

While the idea of leveraging seller financing is very exciting, it truly is not built for everyone. More importantly, it’s not built for every deal. As much as we all like the sound of putting little to no money down to acquire properties, keep in mind that professional investors are performance based investors still. If taking on a VTB is going to hurt the performance of your property tremendously, don’t do it. In Part 1 of the Cashflow Management articles, you’ll remember that seller financing will fall under the debt servicing portion of the equation — either adding to the primary cost of borrowing or be a complete replacement. Regardless, it’s debt.

Also, often times, seller financing tends to be pricier money than other sources of debt we can leverage. Note that I did say “often times” — meaning that there will be situations where it could be the opposite. We will look into that as this series continues.

Today, I simply want to provide some food for thought here between the pros and cons of seller financing. However, I do want to stress this first: this list is my opinion and is formed based on honest transactions. Malicious and ill-intentioned seller-financing scenarios will be addressed later on during story time (sad, I know…but good learning lessons!).

Pros for Seller—

• Potential tax advantages
• Quicker closing time
• Cashflow from debt repayment
• Flexible negotiation

Pros for Buyer —

• Little or no money in the deal initially — this means that if you have some money, you can potentially acquire more properties with the same pot of cash (SCALE!)
• Anyone can leverage it regardless of income, credit, downpayment and any other common and self-imposed limiting beliefs like experience, age, market, etc.
• Quicker closing time — avoid the lengthy application and assessment periods with institutional lenders (especially these days) who seem to want your first born as collateral
• Flexible terms — it’s all about the buyers and sellers aligning on each other needs and financial goals on these transactions

Cons for Seller —

• May cash out less or nothing at all upon the initial closing of the deal/transaction
• Less flexibility to exit the agreement should life circumstances change after the agreement has been executed by both parties

Cons for Buyer —

• Higher cost of borrowing as mentioned before — we often say that “we buy houses — cash or terms”. Seller financing falls under terms and can sometimes weakens the Buyer’s position to negotiate.
• May end up taking more time educating the seller on the benefits of VTB than going the traditional financing route (but it’s still worth it in the end most of the time I’ll say)
• Potentially higher closing costs especially on legal fees to structure it properly for both parties as buyers tend to be the one fronting the legal bills other than paying for the seller’s independent legal advice

Acouple of quick tips here for my fellow investors on using VTB:

• Whenever possible, offer VTB when you sell — unbelievable tax saving potential and cashflow. My perspective is this: I’ve put in the work to build, renovate, and maintain all my properties to a quality standard. When I’m selling, I’d like to continue to make money from it as much as possible because I’m not putting garbage properties on the market to sell. In other words, I back my own products. Plus, cashflow!
• Ask for a VTB with every offer. Yes, EVERY OFFER. It doesn’t matter how big or small the property or price tag is. This will often times provide some insight as to how motivated the seller is. If for nothing else, it plants the seed at the beginning of the negotiation process that may come in handy later. (Side note: I frankly call this an alignment process. The word ‘negotiation’ tends to have a yucky negative connotation attached to it.)

I’m wanting to share this because I’m seeing many amateurs getting half-ass trained on the idea of seller financing especially when the ‘downturn is happening’. The result is often the sellers getting hurt and us “investors” getting a bad reputation. Listen — no deals are perfect at all times. However, amateurs f*cking sellers over intentionally and accidentally are equally bad in my opinion.

Excited to continue with this series with everyone and I hope to continue to add value and get feedback from you!

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next live in-person real estate investing Bootcamp is on September 24 and 25 in Toronto. Go ahead and speak to a Strategy Coach on how you can attend.

Lastly, I just want to say thank you for your continuing support.

I aim to be authentic and adding value to your life.

I invest to build a life. I build business to create better life experiences.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at the Four Points Windsor Hotel in Windsor, ON)

August 16, 2022

Some of you have asked from Part 1 of this series: what is a good deal?

That is truly the essence of every investment opportunity. If you’re also asking this question — Congratulations, you are on the right track!

I seldom speak in absolutes these days and that has been the result of my conscious effort to avoid that kind of trap and thinking. After all, all the ‘good investments’ that I was brought up on failed me (if you’ve been following the articles, you know what I mean). Some of them failed me BIG TIME, including real estate — before I was financially educated to leverage real estate to create income and wealth.

Through years of getting coaching and mentoring, I’ve adapted the idea that the world mostly works on spectrums. And this has helped strengthen my mindset tremendously as an investor and a business owner. There’s a Chinese proverb that loosely translates into: “If nobody was selfish, the world would end.” I remember thinking: Wow, this is such a horrible saying! As I grew up and life experiences built up, I simply realized that it’s actual a beautiful and insightful piece of timeless wisdom.

You see, like almost everything else in life, what’s a good situation might be a bad one for others. Vice versa. This is why, speaking more generally, seller financing is not always a good thing for active investors when the conditions aren’t just a fit for the deal. I have seen many over the years that would put through a seller financing deal just to say that they have done one and it ended up dragging them through court because the buyer didn’t know any better.

In short, seller financing becomes available when the necessary criteria align for both the seller and the buyer.

Inthis article, I will go into the first way of the most basic form of VTB. And that is VTB as a tradition/typical mortgage.

This is likely the most common way and really, the easiest way, to facilitate a bona fide VTB.

Since it’s a mortgage, this means that all typical criteria would apply: rates, length, payment frequency, etc. What’s more important to note (in my opinion — or IMO as the kids would text these days) is the position and the total LTV (loan to value) the VTB would be on the secured collateral.

Here’s a very simple yet important concept to be clear on — Seller financing is part of a bigger umbrella term of private lending. I’m sure some of you have already sniffed that out when I mentioned in the first article to offer VTB (as much as you can) when you sell your properties.

Many people are finding private lending deals these days to ‘park’ their money because they can generate double digit returns. These are also the same people who can get hurt without knowing how to analyze the deals their money is ‘secured’ on. Funny enough, these are also the ones who have been buying properties for the sake of buying them. Let’s unpack that a little bit more here, shall we?

From the Wheel of Wealth articles, we’ve learned that equity is like the piggy bank that we cannot open (often times especially with rental properties). Through offering VTB, you can automatically open that piggy bank and, often time, turn a non-performing asset into a performing one.

This example I’m sharing with you is hot off the press and a US-based deal.

After selling a few properties in May, the proceeds went into a 1031 Exchange as I had my eyes on a specific purchase (another story for later!).

Side bar: IRS Section 1031 — What is it? Section 1031 of the IRS tax code provides that taxable gain or loss shall not be recognized when property held for productive use in a trade or business or for any investment is exchanged solely to “like-kind” property. The term, “like-kind”, refers to the similarity in the nature or character of properties being exchanges, as opposed to the grade or quality of such properties.

I found a distressed seller who wanted to get out of her ‘leftover’ portfolio in the US. She was very motivated to sell and, as a result, open to 100% seller financing. Now, given that I had some funds in the 1031 Exchange to use, 100% VTB was not necessary in this case. However, whatever the balance of the total purchase price became VTB. Here’s the overview of how it came about:

• It’s a small portfolio of 11 single family properties with a total of 15 rentable units.
• The 15 units are split between 2 cities/states— in one city, all units are performing well and not so good in the other.
• The motivation for the seller to sell is that she did not want to stress over the non-performing units anymore.
• I negotiated for all 11 properties to be one package deal as they would be performing overall and giving me the time to stabilize the performance of the non-performing properties.
• The seller agreed to an 8% interest-only VTB on the outstanding balance — this is very comparable to most lending options through institutional lenders in the current lending climate for purchasing properties in corporations or LLCs in the US.
• The VTB saved both of us a lot of time because I did not have to go through the traditional qualification process (which can easily take 2–5 months right now after speaking to various mortgage brokers and lenders) for 11 properties in 2 states.
• The seller also agreed to the repayment starting 3 months after the closing of escrow to give me some runway to start to deal with the problem properties and tenants.
• We agreed to a 2-year closed VTB and can pay out the remaining balance anytime after that.
• The seller is now headache free, got a lump sum chunk of cash and will be cashflowing from her VTB. Meanwhile, I’ll be cashflowing and the cashflow can only improve.
• Best part about this: the seller did not lose money with the purchase price as agreed on and I still have money in the buy — VTB is funny like that when you structure it well!
• I also offered to pay for all closing costs as a gesture that helped with the negotiation process and shortened the closing timeline. This often times is a great tool to use as long as it still makes business sense.

Asyou have concluded for yourself, this was a process of alignment between the seller and myself.

And before some of you go and say “you’re lucky”, I want to let you know that I spent countless hours, spoke to 30+ people (between real estate agents, wholesalers, lenders and property managers) in 8 different markets before finding this opportunity. It also didn’t become a deal automatically just because the seller is willing to offer 100% VTB. All the necessary due diligence went into making sure it’s a viable deal.

For the conveyancing process and the mortgage documents, I simply commissioned a lawyer to create them. In certain cases and places, it’s perfectly acceptable for your trusted mortgage broker to help creating the mortgage documents or at least provide a template as your baseline. Upon closing, titles will be transferred and the VTB will be registered against hard asset. Her money is protected and I do not intend to default. Why? In this case, my 1031 Exchange — aka the downpayment — accounts for 55% of the total purchase price.

We have solved each other’s problems — she wanted to sell and I needed to buy (due to the 1031 Exchange requirements)! It’s a win-win. And that is the true essence of VTB.

Some quick tips for you to prepare your VTB offer:

• Build a financing track record to show your investing experience and existing portfolio.
• Include a snapshot of your financial statement — both corporation and personal.
• Demonstrate that you have some sort of expertise and knowledge in the strategy, market and or property type that you’re asking for VTB on.
• Be clear about your initial ask on your VTB terms and the reasons why.
• Remember that it’s often cash or terms — VTB tends to fall under terms and that means you likely will not get the cheapest rates but it will buy you the time you need to get your affairs together to buy out the VTB at a later date.
• If you do not have the experience or track record yet, showcase your financial/investing education (most people overlook this) and leverage your real estate investing mentor to help you in the alignment process.

More stories and examples to come with this series. Not to mention other ways of seller financing!

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next live in-person real estate investing Bootcamp is on September 24 and 25 in Toronto. Go ahead and speak to a Strategy Coach on how you can attend.

Lastly, I just want to say thank you for your continuing support. I aim to be authentic and adding value to your life.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB)

August 23, 2022

I’ve been so excited about writing this article that the excitement woke me up at 4am this morning.

Many of you have learned through reading my articles over the last few months that my ‘baby strategy’ is called Lease Options (aka ‘rent to own’ as its more commonly marketed term). There are reasons why I keep stressing with all my students from Day 1 that:

1. Lease Options is a form of creative/seller financing
2. You can tell who’s truly educated in Lease Options and who’s not by the way they see and use this strategy (should really be part of the “How to Spot a Professional vs Amateur” series)
3. Options, when used properly, is an amazing way to structure all-win deals (bold statement, I know — that’s how much I believe in it)

Lease Options, by definition, has 2 components: the lease and the option to purchase/renew, etc. When it comes to seller financing, they do tend to go together. So, it’s really called “lease with the option to purchase”.

Options — for anyone that has already gone through a real estate transaction of any kind would know — already exist in nearly every contract paperwork. Most people just know them as conditions, clauses or subjects.

For example, a typical list of conditions in an Offer to Purchase Agreement by the Buyer would include financing and inspection as the bare minimum. If we were to take a closer look at what this means:

• A financing condition is usually used when the Buyer needs to leverage a mortgage to complete the purchase. What the Buyer is really saying to the Seller on a higher level is that “I don’t want to buy this property if I cannot borrow the money I need to borrow”. This can also be interpreted as “I have the option to walk away if I don’t like the lending terms even if I’m approved for financing.” Of course, some Buyers will specify rates and terms of the approved financing as a second layer of protection. Some will go as far as listing out the funding date and other conditions of their own during this time.
• An inspection condition is easy. This is when the Buyer can simply say to the Seller that “if I don’t like anything I see in the inspection report, I have the option to renegotiate the Offer to Purchase and/or walk away from the accepted Offer.”

For some, if you’ve done a mortgage renewal in the past, it’s actually because that you have signed a mutual option to renew in your original mortgage documents (remember the day you felt like you were signing your life away?!).

With that said, given that the focus is seller financing, we will focus simply on the concept of ‘option to buy’. This means that — in a “lease with the option purchase” situation — the tenant (or leasee — a technical term by default due to signing a lease) has the option but not the obligation to exercise their right to purchase on or before the contract end date. In other words, the tenant/leasee has the first right of refusal to purchase the property.

Iwant to look at it from 2 different perspectives in the next couple of articles here with you — as a Buyer using Lease Options and as a Seller using Lease Options. Today, we’ll look at the former.

Before going any further, here are a few bullet points to keep in mind:

• A Buyer in this arrangement can also be called a Tenant Buyer, Leasee or Optionee (someone who’s granted the Option)
• A Seller in this arrangement can also be called a Leasor or Optionor (someone who’s granting the Option)
• The Optionee has the right but not the obligation to exercise their Option

As a Buyer

I have done countless VTB deals over the years as mentioned since Part 1 of this series due to the lack of personal resources at the beginning of my career and wanting to scale quickly. Leveraging Lease Options is definitely my favourite due to “having the right but not the obligation to buy”. We will look at how it’s different from Agreement for Sale later.

Purchasing 2 Mobile Home Parks in Texas via Rolling Options

I’m going to start by clarifying one thing quickly: many have challenged me that it should be Lease Option and not Lease Options. That challenge often comes from the lack of education and the lack of experience. One might even say that it comes from the lack of empathy and detachment from reality. Whoa! That got dark in a hurry. No fret — the simple point here really is that, regardless of which side you’re on, you always want multiple options to exit for the simple fact that not everything in life goes as planned. In a business transaction, it shows maturity, understanding and vision when you can plan ahead on how to leverage options to conduct transactions.

Now, picture this — it was June 2013. I was only 3.5 years into my ‘professional investing’ career. Wanting to branch out into the US and having learned about mobile home parks as an investment strategy and property type, I could not pass up the deal presented to me. Only, it wasn’t quite a deal I was ready for yet because I didn’t have the resources to jump on the deal, even with another partner. However, the whole point of creative financing is to let money be the least limiting factor as a professional investor. So, I was forced to get creative again — even if it’s not in the same country.

Side bar: there’s real estate buying and there’s investing in real estate. I’ve come to learn that investing is a broad spectrum word and, to a large degree, misused by mass media and even some in the real estate investing community. True investors are trained on the very foundation of how money works. Therefore, their knowledge and skills are universally applicable and know no borders.

With this one — 2 separately titled mobile home parks owned by the same seller — I came up with (what I later learned) is what people call a rolling option. This allowed me to purchase both parks totalling 144 units over an extended period of time while being a leasee with the owner. Without getting into too many details (how much time do you have to read today?! lol), I’m going to list out some of the background story, how the thought process and deal got structured:

• The owner was a 2nd generation landlord that initially inherited the property from his family estate and thought he would enjoy the cashflow from it with them being debt-free and all.
• The owner had very little to no experience managing the parks and the performance slowly got worse. (He was an accountant and had only done the “buy rent and pray” before.) During the due diligence period, I found out that he was attempting to save money by cutting necessary expenses to maintain the property. This was his accounting brains talking, not the investor’s mindset. I continue to stress the importance of understanding and operating from “it’s not how much it’ll cost me but how much it’ll make it”.
• When the leases ended, the tenants started leaving. As tenants left, he was putting new tenants in without a proper screening process (from lack of landlording experience) and without improving the physical properties. This created a very mixed tenant base with frequent internal conflicts.
• Taking his wife’s advice, he finally decided to sell to ‘cash out’. When he started to let the word out, the word travelled across the border through my network to me. Again, your network is your net worth!
• When we first met (on the phone), he had no idea what seller financing is or how it works. I learned that all he really wants is a certain level of cashflow per month from the parks originally. Now he wants cashflow (or just a pot of cash from selling) and not have to deal with the management and upkeep of these properties.
• Taking his small and common wish list into consideration while aligning with our business goals, I was able to have him agree to sell the parks in 3 phases over the course of 15 months that ended up taking nearly 20 months to complete.
• Phase 1: I would lease non-performing 38 units first with and overarching option to purchase the entire 144 units. While I’m in the process of ‘turning things around’ with these 38 units, he’s able to continue to make a small and shrinking income from the other 106 units.
• Phase 2: Once I have reached a certain level of performance with the 38 units, I’m able to lease out the next 70 units. Repeat the same process to raise performance.
• Phase 3: The last 36 units became the easiest because I wanted to have commercial leases for those. By commercial leases, I don’t mean having commercial tenants running businesses in there. Rather, due to its unique location in Texas (outside the Dallas-Fort Worth area), oil was booming in 2014 at this time and many companies were putting their workers and contractors nearby. In the end, I was able to lease out 36 units with 1 lease. That’s just 1 tenant and 1 rent collection to deal with!
• Keep in mind, I’m not personally managing all tenants, there’s always been a property management company that I work closely with.
• As soon as the corporate lease was signed, I exercised my option to purchase all 144 units at the predetermined price. Because the performance has been significantly improved, the new mortgage more than covered the purchase price and all capital expenditure at that point — making it an infinite return deal.

Now, many would think “wow, you’re so lucky!” To that, I will say, yes and it’s because I took the time to educate myself prior and was willing to dedicated 20 months of my life on making 1 deal work (not knowing if it was actually going to work in the beginning).

Were there man tears from stress? Yes.

Were there sleepless nights doubting myself if my ‘brilliant plan’ was going to work? Yes.

Were there times when I thought that it would take everything I got if my plan didn’t work? Hell yes!

The way I looked at it was: I wanted to buy, he wanted to sell. That’s the first alignment. The rest is a simple breakdown on each others’ actual money goals and align again on that front.

What I also want to point out is this: remember how I keep emphasizing that BRRRR is not a strategy but simply a process? This is a perfect example of that. The “B” or “buy” part here is just through a more creative way to achieve. While the “buy” part is not 100% done yet, I started the rest to renovate and rent. The actual completion of the “buy” part now is combined with the refinance.

The most exciting part is this: I can repeat this as many times as I want. Even though I didn’t pull out money to buy other things, I didn’t need it. The knowledge, experience, skills and confidence built from this deal has given me the rest of my career so far.

There may be some details worth sharing here because I want to be real with you all — it’s not always sunshine and rainbows — and hopefully you continue to get how important financial education really is. Not real estate investing, financial education through real estate investing!

1. During the periods of the leases (Phases 1 and 2 specifically), I had to pay rent to the owner whether or not there was money coming in.
2. Even when there was little to no money coming in, I had to incur large sums to money to get the units back up to shape. Some were on the actual mobile homes on the lots and some were capital expenditures to improve the overall park infrastructure.
3. It took countless hours to educate the owner on seller financing on a theoretical level. Once he was comfortable with me and the proposal, it took many billable hours between lawyers to finalize the lease and option agreements. Of course, those billable hours were many people’s annual salary at the time.
4. I had to bring on private lenders and a few JV (joint venture) partners to raise the funds required to go through what we now call the “stabilization period”.
5. Private lenders were also paid on a monthly basis regardless of income level. This is where I really learned the importance of borrowing more than needed (and it’s ok) in a real life deal.
6. Bringing in JV partners was not the first nor the most ideal way to approach this deal as I was ‘hoping’ for a an infinite return deal after all is said and done. And then I heard my mentor’s voice: don’t be greedy and don’t be cheap! And that’s just it. Very quickly, I realized that it was worth it to share my sweat equity (that turned into real equity) than to suffer the occasional anxiety attacks of running low on funds to bring my vision to life.

To this day, this remains one of my most memorable and heart-pounding deals. There were times in between when I wanted to give up and just take the hit and walk away. However, call it blind faith or call me stupid, I stuck with it.

I existed this deal in the beginning of 2017. That was when I also experienced for the first time the added benefit of currency exchange. When done strategically, it’s another way of growing the portfolio income in our Wheel of Wealth!

Excited to continue with this series with everyone and I hope to continue to add value and get feedback from you! A fun fact on this deal, too, is that I had NEVER VISITED nor SEEN this property in my life!

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next live in-person real estate investing Bootcamp is on September 24 and 25 in Toronto. Go ahead and speak to a Strategy Coach on how you can attend and learn more!

Lastly, I just want to say thank you for your continuing support. I aim to be authentic and adding value to your life.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB and edited in the air over the Canadian Rockies)

August 30, 2022

The content in this article is likely one of the most popularly used way of a Lease Options deal in North America. I say it’s popular simply because of its street name: Rent to Own. And it’s often used to help people obtain home ownerships when they have been rejected for a mortgage by institutional lenders.

This way of Lease Options is my actual ‘baby strategy’. If you read the previous article, you’d probably already figured that the mechanisms and thought process is relatively similar. Except that, in this case, I am the seller giving my tenant(s) (or tenant-buyer) the options to purchase/renew, etc. at the end of the contract term.

My husband and I chose this as our first focused strategy when we first started for a few simple reasons:

1. Great passive income/cashflow to help us get out of the rat race faster — we needed our time and health back desperately from working demanding corporate jobs (selfish)
2. Little to no tenant and property management once the Lease Options is set up and the tenant-buyers have moved in (selfish)
3. We get to help people achieve their dreams and goals of home ownership (win-win)
4. We get to build a solid team of realtors and mortgage brokers in every market with this strategy (win-win-win)
5. It’s an average of 2–4 years process to see results for both the investors and the tenant buyers. There’s no need to stress over long-term commitments here compared to a traditional buy & hold strategies especially when working with OPM (win-win-win again)
6. This is the ONLY strategy that can feed into all 3 income buckets (GIANT win from an investor’s perspective)

When I labeled certain reasons ‘selfish’, all I’m simply doing is reminding everyone the importance of WHY — (financial) GOAL — SMP again.

We all (at least 100% I’ve come across so far) choose to get financially educated so that we can fast track our desired financial results to help us LIVE A LIFE that we want. Also, to this day, I still strongly believe in the concept that “you can’t pour from an empty cup”. It’s ok to cater to your personal situation and make it better first before you give.

Now that we’ve got those things out of the way, here’s one of the BIGGEST reasons why we stuck it out and did 36 of these deals in the first 25 months of our investing career.

As a Seller

Here’s a little background —

Picture this (yes…I recently started watching the Golden Girls as part of my ‘getting cultured’ journey as an immigrant):

• Edmonton, August 2012 (pretty much exactly 10 years ago this week)
• We’ve acquired a new property for our new tenant-buyers who are a couple in their early 50’s with 4 children
• They are the typical middle class family — hard working parents that only want to provide for their children — and paycheque to paycheque as a result
• Having attempted to get a mortgage to buy their own house many times without success, they were very hesitant about getting into a “Rent to Own Program” (understandably so as there were many people in our home market back then that did not aim to set up their tenant buyers for success — another story altogether later)
• The husband was virtually non-communicative throughout the whole application and house shopping process
• On possession day of the property, we have just finished our walkthrough and now gathered around the kitchen island to finalize some paperwork
• Midway through signing the documents, the husband’s hand started to shake. We are now thinking he’s getting last minute cold feet and might want to back out of the whole arrangement
• We asked him to put the pen down and explain what’s happening…
• To our surprise, real tears started streaming down his cheeks and he’s getting all chocked up wanting to squeeze out words to say how grateful he feels and that he never thought this was possible
• Between the sniffles and his beautiful words (now basically everyone’s crying happy tears), it became clear to us why this is such an amazing strategy and that it became the 2nd of dozens more Rent to Owns so far in our investing career

Rey and I walked away from that meeting feeling immensely empowered and jazzed. Intellectually, we knew why this strategy is great — we get great cashflow from each deal that will allow us to ‘retire’ early and get our time back. But boy…emotionally, we had no idea what was in store for us until that day.

For those of you analyticals, here’s the other side of the deal:

• They did not have enough downpayment saved up as they were paycheque to paycheque for decades
• They did do the ‘typical’ thing and put money away in RRSP (Registered Retirement Savings Plan like the 401K, superannuation, etc.) and TFSA (Tax Free Savings Account) and was able to leverage it to get into and finish the Rent to Own program
• This was a 2-year arrangement and they had 2 adult children living at home willing to pitch in on their monthly rent to own commitment
• As the investors, we were cashflowing $1,700 per month (before JV split)
• There was ZERO issue with them for the entire duration (not all of them are this great to be completely transparent) — the biggest ‘request’ they had was if they could upgrade the flooring and we said yes

Icould never forget the giant smiles on their faces when they took title of the home that they had already lived in for 2 years and treated it as their own.

And that’s just it!

As the investor in this arrangement, we are essentially extending a private mortgage to them while helping them get set up to qualify for a traditional mortgage through an institutional lender.

Most of the tenant-buyers become tenant-buyers because they’re lacking one or all of the necessary criteria demanded by the big banks: income, credit and downpayment. The perfect trifecta needs to be there before anyone can properly qualify for what’s known as the ‘cheapest money’ on mortgage — A lenders.

This is where the knowledge and experience come in: helping your tenant -buyers get to the finish line. We all know life happens and not every tenant-buyer will complete the program. However, when executed properly and with integrity, our own success rate has been over 86% to date.

These 86% include (but not limited to):

• New immigrants who have the savings but no credit or income (yet)
• Self-employed folks who have accountants who do not understand mortgage rules and are advised poorly as a result
• People with bruised history and not knowing how to fix them even though they are making a steady income and have worked hard to save up for their first home

I always advise and encourage EVERYONE to learn more Lease Options even if it’s not their first or chosen strategy simply for the fact that it can make ANYONE a better and more sophisticated investor.

For those of you who are in and close to Toronto, ON — Trust Your Talent is running a 2-day LIVE IN-PERSON Real Estate Investing Bootcamp on September 24 & 25 where you will dig into this particular strategy amongst many others. You can visit the Bootcamp Registration page or talk to a Strategy Coach from Trust Your Talent Academy to learn more.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

Lastly, I just want to say thank you for your continuing support. I aim to be authentic and adding value to your life.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB)

September 6, 2022

What the A the F the S?!

Upon first glance, it seems like a new tool but it actually isn’t. Often times, when you use the acronym of AFS — Agreement for Sale — with people that are not educated nor active in the real estate transaction world, they will think it stands for a simple purchase agreement.

Well, they’s got that part right! The biggest difference is that an AFS — Agreement for Sale — (I’m just going to use AFS from now on so the word count doesn’t get fudged here) permits the Buyer to have a longer than usual closing period.

First thing first, this particular way of structuring a deal falls under the same premise that the Seller and Buyer align on a fundamental level like the ones previously discussed and illustrated: neither are in need of a quick (or standard) closing timeline. This is simply another way to obtain seller financing for buyers who may be able to leverage it to create win-win situations for both parties.

Again, I want to emphasize this: just because creative financing sounds cool and obtaining seller financing makes an investor sound smarter than usual does NOT mean seller financing is a fit in every situation and every deal.

Before going any further, I want to share this quick comparison chart to differentiate the 3 ways to leverage seller financing so far:

In the next article, we will look at the complete comparison so you can get the complete view of the differences. This way, we can just focus on AFS today.

As both a buyer and a seller in different situations, I have to admit: AFS is my least favourite form of seller financing. However, it’s not without its merits.

Let me share my very first AFS “deal” with you. Spoiler alert: I was neither the buyer nor the seller in this case!

An Unusual Compensation

Picture it: Edmonton, May 2012 (Yes…still watching the Golden Girls…). On a not particularly eventful day, I got a call from a commercial realtor that I had the chance of sharing my baby strategy (Lease Options) once at a networking event. He began to share with me that he has a client wanting to sell his 7-bay industrial property just outside of Edmonton (Alberta). This client of his also found out that one of his tenants that runs a auto body shop business wants to buy it but does not have the liquid cash to execute on it.

The realtor thought of me apparently because of how excited and passionate I was when I shared with everyone at that networking event about how creative financing is helping a 30-year old exit a 6-figure corporate job soon. And sure enough, 2 months after that, I declared Financial Freedom #1. The date was July 25, 2012. You will never forget the day you declare financial freedom.

Alright, back to the story…

This is literally how I remember parts of how that conversation went:

Realtor: Yeah…I recall you mentioning that you can help people buy properties with little to no money down?

Me: Well…yes (not knowing exactly what he was looking for yet).

Realtor: Well, I got this situation here that I’m hoping you can help with. And I don’t know how you’ll be paid but I trust you’ll figure that out.

Me: Sure. Happy to help! What’s the ‘situation’?

Look, the premise is simple here:

1. Seller wants to sell and is not in a huge rush
2. Buyer wants to buy and is lacking the financial means right now

There’s alignment! All I ended up doing is educating both the buyer and seller on VTB and figuring out which method is the best for both parties.

At the end of it all, we landed on using AFS and that was an ah-ha moment for me as well since I’ve been partial towards Lease with the Options to Purchase up to this point.

The Buyer was committed! He had a whole business plan about:

• How he was going to expand his business over the next 3 years taking up all 7 out of the 7 bays,
• How he was going to build more bays to rent it out once he takes up all 7 existing bays,
• How he had been waiting for an opportunity like this since he was a little boy and learning how to ‘tinker’ with his Dad’s Oldsmobile (THAT got to me and the Seller)

So, here’s the big ah-ha I took away and continue to apply today: when I know for sure that I want to acquire a specific property but lack the complete financial resources to satisfy traditional lending, I will use AFS. This means that — on a scale of 1 to 10 (10 being the highest) — I want this property at a level 10. Although, to be completely honest, these days I do have the privilege to gather my resources necessary to close on most deals having spent over a decade building up a reputation within the industry. Regardless, it’s a lesson that I will never lose and always share.

For those of you who are wondering exactly how this all got put together, here’s your favourite part:

• A 5-year long AFS was created by a lawyer after an initial Letter of Intent to align the Buyer and the Seller’s goals (bonus: with the option to extend another 2 years if the Seller needed it)
• The Seller agreed to a symbolic downpayment and offered a competitive interest rate for the balance
• The Seller’s main focus was the monthly cashflow (income from the Buyer’s monthly payment) as he was a retiring landlord
• The Buyer successfully grew his auto body shop business and business income as planned
• In fact, Buyer was ahead of schedule by almost 2 years but chose to continue to stay in the original agreement for the full 5-year term as a thank-you to the Seller so that the income would continue for him
• The Seller was happy with 60 payments during the AFS and happily walked away with a lump sum when the Buyer made the balloon payment at the end (did I mention the tax advantages the Seller got out of this deal? No? Well…I’ll have to share that next!)
• The Buyer paid for the Realtor’s commissions for the ‘Sale’ as part of the Agreement with the Seller

For me, the Buyer also wanted to pay me for my ‘knowledge and expertise’ and I refused. This was one of the BEST EXPERIENCES I have ever had as a real estate investor leading up this point. Little did I know that this passion to educate opened up another door for me 2 years later when I began to train and mentor others globally since 2014.

In the end, I did get a huge gift card from the Realtor. Huge enough that I could buy a brand new Dyson vacuum with it. Yes, I enjoy cleaning and love a good vacuum.

So, here you have it. While AFS is not my favourite from a technical standpoint, it has its way of making a deal work. As mentioned (and kind of like everything else in life these days), when I really want a property, I will use AFS as my acquisition strategy.

At this junction, I truly do hope that you are also starting to see the power of financial education. It has nothing to do with the ‘investment type’ or ‘asset class’ that matters. It has everything to do with your level of financial literacy.

For those of you who are in and close to Toronto, ON — Trust Your Talent is running a 2-day LIVE IN-PERSON Real Estate Investing Bootcamp on September 24 & 25 where you will dig into this particular strategy amongst many others. You can visit the Bootcamp Registration page or talk to a Strategy Coach from Trust Your Talent Academy to learn more.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two. If so, please share a clap here!

If you’re wanting to be a part of a community of active real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

Lastly, I just want to say thank you for your continuing support. I aim to be authentic and adding value to your life.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB)