Episode Transcript
[00:00:01] Speaker A: If you're looking for the skills and tools to succeed in real estate investing, you've come to the right place. This show is about breaking through barriers, breaking through limiting beliefs, and breaking through.
[00:00:13] Speaker B: To the life that you want to.
[00:00:15] Speaker A: Live through the power of real estate investing. You're listening to the Breakthrough Real Estate Investing Podcast.
[00:00:21] Speaker C: And now here are your hosts, Rob.
[00:00:24] Speaker A: Brake and Quinton D'Souza.
Welcome, everybody. Thanks for joining us again today. Really appreciate you guys always listening to us and, and tuning in to hear all the knowledge that our guests bring and that Quentin brings, because Quentin always brings some knowledge. Hey, Quentin, how's it going?
[00:00:42] Speaker D: Hey. Good. How about yourself, Rob?
[00:00:44] Speaker A: I'm doing really, really good. Really good. I just got back from the gym just like you, so I'm all energized and, and excited about our guest today.
[00:00:56] Speaker D: Yeah, so am I. It's been a really interesting week last. Last week with everything that's been going on. And I was just in an. At an event with Benjamin Tall, and it was a small, intimate event, and it was great to get his insights onto the future, like trends and macro, and also just like, what's been happening with tariffs, and it's like, oh, no, off. Everything is interesting, but.
[00:01:22] Speaker A: Interesting. That's the right word.
[00:01:24] Speaker D: Yeah, for sure. But I, I'm really keen on bringing these two guests in. They've. They've done some amazing things, so I'm. I'm pretty excited about it.
[00:01:35] Speaker A: Yeah, me too. We're gonna get to them just one minute. But first, I want everyone to go over to Breakthrough reipodcast, ca. We got a brand new website and. But the same as before, you can go over there and get in contact with all of our guests, listen to all the old shows, and then of course, go over to Apple Podcasts and leave us a rating and review. And one more thing I wanted to mention is that I would like everybody to go over and check out our Instagram page. It's just Breakthrough rei because I put out a post the other day just inviting people who started in real estate but have branched out into other things, invited them to come and share their stories with us on the podcast. So I think that'd be interesting to hear some of those stories. Don't you think so?
[00:02:20] Speaker D: Oh, yeah, absolutely. I know quite a few people that have been really successful in other endeavors, so I'd love to hear their stories too. For sure.
[00:02:30] Speaker C: Yeah.
[00:02:31] Speaker A: So someone that's used real estate as like a springboard to get into something else that'd be interesting to hear. So if you if you have or know somebody like that, get in touch with us.
[00:02:40] Speaker D: Yeah, absolutely.
[00:02:42] Speaker A: That's it, Quentin. That's all the housekeeping.
[00:02:45] Speaker D: Okay. So I, I want to introduce these two because I'm excited. We had them speak at Durham REI and they were spectacular.
Even though it was their first, first speaking event, I think with that size of an audience, they did great. So I'm going to introduce both of them and then we'll get right into a little bit about their story. So going to, I'm going to start off with. Jude Gomes is an industrial engineer. He's an entrepreneur, a co founder of Fergo Group. They specialize in commercial real estate acquisitions and management.
With experience managing a 300 unit portfolio off market deals. He excels in negotiation and value creation. And he is the founder of Task Tuesday, the virtual assistant agency serving real estate professionals. And he's got his analytics, analytical skills and engineering skills all together. So that, that's some of the stuff he brings to the Fergo Group.
And Clint, I'm gonna. Clintia Clienta Fernandez is a mechanical engineer, commercial real estate agent and co founder of the Fergo Group.
With a sharp eye for process optimization and operational efficiency, she ensures every deal runs smoothly.
Her ability to streamline operations and tackle complex projects has helped establish Virgo Group as a leader in commercial real estate. Outside of work, she's a dedicated power lifter, applying the same discipline and resilience to both business and fitness. And her drive for excellent pushes her to set new standards and inspire those around her.
[00:04:35] Speaker A: Very cool. Welcome guys. Thanks for joining us.
[00:04:37] Speaker B: Thank you. Thanks for having us. Rob and Quinton, we really appreciate it and we're excited, honestly. So this is my actual. My first podcast and then June's been on a couple. This is our first one together. So this is exciting.
[00:04:50] Speaker D: Oh, cool.
[00:04:51] Speaker B: Cool.
[00:04:52] Speaker D: Yeah. And I gotta ask you, as a power lifter, what's your like? Do you want to share any details about that? Yeah, sure.
[00:05:01] Speaker B: So. So. So powerlifting is mainly. So it's like your one rep max of squat bench and deadlift. And then at powerlifting competitions you basically get three attempts for each lift.
So like I guess my PRs. So my squat PR is 264 pounds, my bench PR is 121 pounds, and then my deadlift PR is 308 pounds.
[00:05:26] Speaker D: Wow.
[00:05:28] Speaker A: You could do.
[00:05:29] Speaker D: You could like lift me. That's insane.
[00:05:34] Speaker B: Yeah.
[00:05:34] Speaker D: Well, you better watch out, Jude. You're in trouble.
[00:05:39] Speaker C: Yeah. Okay. Yeah.
[00:05:41] Speaker D: Awesome.
[00:05:42] Speaker C: So.
[00:05:42] Speaker D: So tell us a little bit about yourselves and how you got started. Yeah.
[00:05:46] Speaker B: For sure. So we'll start off with a little bit about how we got started, and then we'll kind of talk about now how we like source deals, how we find deals, and kind of dig deeper into that. So as I mentioned, at the Durham rei, Right. So the way we started, we kind of have to go back four years ago, back when we were working in high school and university, Basically everything that we earned, we saved. So Jude had a couple side hustles. He worked as he had his own landscaping company, worked at warehouses. I was a lifeguard, worked at warehouses. So basically all the money we earned, we just saved it. No fancy cars, nothing. Didn't have no family inheritance, right. So we had to, basically it was just the two of us. And then once we started dating, we realized that we had kind of like a shared vision of creating something for ourselves and creating something for our future.
And then shortly after, Covid approached, and during this time, I don't know if you guys remember, but the gym equipment was a hot commodity and everyone was basically making gyms in their basement, right? So we started approaching basically private gym owners that were closing shop because obviously everything closed down. So they were selling off their equipment for super cheap, like pennies on the dollar. And we would buy it off of them and then sell it off of Facebook Marketplace, make it a little bit of extra cash, right? And then as shortly after that, we came across the book Rich Dad, Poor Dad. And that's when we realized, okay, cool, like, the gym equipment is great, but it's not going to be like, long term. So we put down the equipment and we started to look into real estate. And that was our end goal, to figure out a way to buy our first rental property. So basically after that, we started researching different areas in Ontario where we could invest. And our number one priority was that it had to be cheap, right? Because obviously we weren't working with a lot of cash, had to be cheap. But at the same time, we wanted to make sure that the city where we were investing had some sort of infrastructure and there was an economy, right? So we looked into Windsor, and that's where we bought our first rental property. And we thought they had a university, college, hospital. It was on the border of the U.S. canada, people going in and out. So, like, okay, cool. A couple of weeks later, we firmed up on our first property, and then we ended up closing a month later. So that was when we were 19, and it was a turnkey property, put 20% down with the traditional route. And all we had to do was Put tenants in there. And back then, I'm sure you guys remember, the interest rates were super low, so we were able to cash flow basically $1,000 a month. And we're like, holy shit. Like, how can we repeat this? How can we keep doing this? But then we soon realized that we were tapped out on the capital because every penny that we had to our name, we put into that. And then at the same time, we had no more borrowing power. Right. So that's when we started to kind of learn everything that we could. And we came across the burst strategy. So we listened to podcasts, we started reading, started going to networking events, and then we're like, okay, we have to find a way to creatively source these deals. And Jude will touch a little bit more about how we went from that to finding the next couple of properties.
[00:08:49] Speaker D: And when you bought your first property, how much funds did you have to be able to start this journey? Because where you are now and where you started are totally different. So, like, how much funds were you able to bring to the table to get started on?
[00:09:06] Speaker B: Yeah, So I had 30 grand saved up, and he had 30 grand saved up. So we combined our 60 grand, and we had just enough for the down payment and closing costs. Like, that was it. Like, after that, that was it. Like, we had nothing else left. Right. So that's how much we needed. And then. Yeah, and then we got financing and went from there.
[00:09:26] Speaker A: So did you ever doubt that that was the right thing to do with that money?
[00:09:31] Speaker C: Definitely.
[00:09:31] Speaker B: Yeah, definitely.
[00:09:33] Speaker A: And what was it that kind of pushed you through to decide that, yes, it is the right thing?
[00:09:38] Speaker C: Like, we. We automatically knew that, you know, successful people invest into real estate or they somehow get their feet wet into real estate. So we knew that, you know, long term, we want to have some sort of assets to our name, and we didn't know how big we wanted to get. We didn't know where, you know, what that would actually look like. We just did step one. We just wanted to figure out how to do step one, and we knew that this is the way to do it. Worst case scenario, we still work our jobs at the warehouses. Right? So. And also, worst case scenario, if it's sitting vacant, there's no tenants in there, we can afford the mortgage, which was very low at the time. And. But obviously, when we rented out the property, we were immediately cash flowing, and we were cash flowing, like, over $1,000 a month. So our. Our IM. Our goal immediately shifted. We're like, okay, we want to buy 30 more houses and how do we retire from our jobs? And then our goals just kept getting bigger. So that's how we.
[00:10:27] Speaker B: And also like worst case scenario, like when we first thought about it, we're like, okay, like if everything kind of goes crumbling down, that's okay. Like you said, we have our jobs and we also were living with our parents at the time. Right. So obviously the expenses are very minimized. When you're living at home, you don't have a lot, like you don't have ran. You don't have like a lot of things that you would traditionally pay for if you were living on your own. Right.
[00:10:49] Speaker A: And what did your parents think of this?
[00:10:51] Speaker B: They were scared.
They were quite like kind of on the fence. They were encouraging.
When we started looking, they were like, okay, cool. But then we actually did it. They were like, oh wow, you guys actually did that. Right. So they were a little bit on the fence and like, for them it was more of like what happens if something happens between the both of us. Right. So that was where their concern came from. So we made sure to get everything done with the lawyer, get everything done properly with the corporation. Like everything's like split. Probably God forbid anything were to happen then at least it's divided properly.
[00:11:26] Speaker D: Awesome.
[00:11:27] Speaker A: Yeah, very cool. And they don't do anything like that. Your parents don't. So my parents state investments.
[00:11:34] Speaker B: Yeah. So my parents are real estate agents, both my parents and they like cater to like residential real estate mainly. So once we started to get into like the investment standpoint of it, like they were like kind of intrigued and now like they're looking to get their investment as well.
[00:11:50] Speaker A: You're teaching them a lesson.
[00:11:52] Speaker B: Yeah.
[00:11:52] Speaker D: Cool. Very cool.
[00:11:54] Speaker B: Yeah.
[00:11:55] Speaker C: Yeah. Mine were a little bit on the opposite side, like zero, like zero family and like investments or anything like that. And, and you know, it was a new concept to them because you know, 19 year old kid, like finish your degree, finish your school, then worry about everything else. You know what I mean? So that's, that's, that was their biggest thing. And then you know, obviously they, they knew that both of us, they, we worked very hard, like early on and you know, delivering newspapers, random side hustles. They knew that we collected some sort of nest egg and now we want to go invest. So after that point it was, it was pretty, pretty easy to convince.
[00:12:25] Speaker A: You know, I have to say it, like it's, it's, it's extremely rare for people your age at that time to have, you know, that much money saved up.
[00:12:37] Speaker B: Yeah.
[00:12:37] Speaker D: But even, even having that money. But Then being able to take the risk to go out and apply what you've learned right away. But, you know, when I think about it, this is the perfect time to do it. This is the time that you want to do it in life. Because you know what? Like, without telling, like most people.
Most people wouldn't, but this is the time to do it. You can recover from risks easier. You can. You know, you'll. You're. You're able to kind of pivot a little bit more. You have the backups of your fan. Like, you. This is like, really. It's really amazing that you were able to do this, but I mean, this is definitely the time to do it, so. And you got to tell people about some of your deals, because it's like, it's incredible.
[00:13:30] Speaker A: Well, I want to know, what was that first one?
[00:13:33] Speaker B: So the first one was a single family house in Windsor. We purchased it for 310,000, and it was a four bedroom, one and a half bath that was already renovated.
[00:13:46] Speaker A: Huh, that sounds amazing. And. And you were able to cash flow a thousand dollars a month?
[00:13:52] Speaker B: Yeah.
[00:13:52] Speaker C: On that property, our mortgage was like less than 800amonth. All. All costs and stuff. Like, single family. The tenants paid mostly utilities, so very little operating costs on that. So, you know, obviously the cash flow was pretty big. And the first one, we. We didn't have any experience in like, real estate. What types of assets we just said, okay, we'll buy.
[00:14:11] Speaker B: Property management. None of that.
[00:14:12] Speaker C: Yeah, Contacts. And then after we bought the first one, then we started learning everything about the brrrr process. Renovating, adding value mortgage. We didn't even know how to qualify for a mortgage at the time, so. So then. Yeah. Yeah.
[00:14:26] Speaker A: And let me guess, you have a copy of the Property management Toolbox?
[00:14:29] Speaker D: No, probably not back then.
[00:14:33] Speaker C: Back then, no. But now, yes.
[00:14:34] Speaker D: You know, there you go.
[00:14:36] Speaker C: Yeah. Yeah.
[00:14:37] Speaker A: You got to read all Quentin's books. Yeah. Everybody listening. Go buy Quentin's books. How many books you have? 4.
You got the Planner. No, no, go. Wait, just. It's a little break here. Come on. What books? What are your books again? Tell everybody.
[00:14:55] Speaker D: Yeah, it's the Property Management Toolbox.
[00:14:57] Speaker A: That's a great one.
[00:14:58] Speaker D: Yeah. The ultimate wealth strategy.
[00:15:01] Speaker A: That's a good one.
[00:15:02] Speaker D: Yeah. There's the investment planner, where you're.
[00:15:06] Speaker A: That's a good one.
[00:15:07] Speaker D: Well, thank you.
[00:15:08] Speaker A: This is.
[00:15:08] Speaker D: That's really nice of you. Finding property Toolbox. You know, also the funding, your properties, like, I go through, like the joint venture process, that sort of thing.
So there's all types of Books, mostly I have books so that I don't have to answer questions from people.
It just makes it so much easier. And I put it all together so people can go out and pick them up.
[00:15:35] Speaker A: Well, you have them because you have too much knowledge in your head and you need it, you need to spill it out.
But yeah, those are all great books. Can people get them on Amazon or what?
[00:15:45] Speaker D: Yeah, they can. All of them except one. One I only sell at meetings and it's on the, you know, joint venture process because it's something I, I prefer not to have on Amazon. But. But anyways, thank you for that, I appreciate it. But. But these guys, they're, they are finding deals in unique ways and they've created a whole business around it afterwards, which is super cool. So you got to share about like how do you find deals? But you moved from. And maybe do it by telling the stories of your next purchases. So, you know, you went from the single family home to your. Was it sixplex?
[00:16:27] Speaker B: No. So we went from the single family home to. So basically a year later, because we had tapped out on the capital and the borrowing power, we ended up selling the single family house. And basically it wasn't really any of our doing, but the timing of the market, it was like the peak. And we ended up getting a good amount in our pockets. So after everything that we learned, we're like, okay, we need to do a complete 180. We're not going to go the traditional financing route, we're going to get commercial financing and we're not going to buy turnkey properties. We're going to buy the shitty crack houses that have needles on the floors, that have all the smells, the animals, everything. So basically after we sold the single family house, we bought a duplex and a triplex in Chatham. And for both of those properties, we were able to basically close with them. Vendor takebacks and private, like a short term. And then also at the same time we were able to get in there and work before closing. So that's something that we negotiated with the sellers to allow us, because of the condition of the property, to come in there and renovate the property. So the triplex, we were almost able to finish the entire renovation before we even closed on it. So then we focused on leasing out the units and then refinancing with commercial financing.
[00:17:39] Speaker C: Yeah, so after our very first one, we immediately kind of realized that, okay, we cannot do the exact same thing that we did on the first one for the second one because we wanted to compress that timeline and get the second one a lot quicker. So we, we immediately pivoted to starting to source our own deals. And that was a big theme that we started implementing in our own portfolio because we knew that, okay, you know, this was during COVID everyone was bidding on properties. We had to somehow find our own deals and commute, like meet sellers directly and try to pitch our own terms. Just like Leanne said, we don't have the most amount of money. We, we, we have the skill, we have the hunger and we have the desire to, to, to buy properties and renovate properties and do all the work, but we just don't know how to, you know, we just maybe don't have the most amount of funds. So then we got creative. We started using things like vendor takebacks. This is where the seller finances us a portion of the property so we can get in, do our value add and then essentially exit to a longer term commercial type financing. And we learned the commercial financing is very important because instead of us, you know, the bank looking at us as individuals, they will look at the property, how it's performing, how much income it's making, how much cash flow it's bringing in. And after that we essentially only focused on deals which made sense on, you know, underwriting and commercial financing. And then we kind of scaled that way and then found our own deals, communicated with owners, and then pitched our certain terms that we, we were looking for.
[00:18:59] Speaker A: So communicating with owners, that seems to be the big thing. How do you go about doing that?
[00:19:06] Speaker C: Yeah, so clienta, unfortunately that Cleanta is a real estate agent. She got her license early on to our investing journey. So we were able to use her tools and her, I guess, platforms to figure out who owns properties, how much they own it for, when they bought it, and then specifically target properties in the areas that we invest in and, and just try to communicate with owners directly, call them, you know, just figure out how to reach out to them.
[00:19:31] Speaker B: Basically like what we do is we like farm certain areas and we'll choose areas that like for example, just Google Maps and see buildings or like multiplexes that we like and that we think we would want to buy. And then basically with jira, warehouse is what we use. So with your warehouse we're able to see who the owners are, if it's a corporation, if it's an actual owner, when they bought it and how much they bought it for. But the creative part that not many people will do and the thing that we spend the time and effort doing is finding these owners and finding the contacts of Them. Right. Because most of them are usually older people and, like, you can't just search up their name and find them because they most likely don't have any social media. They don't have a lot of things on the Internet. So, like, Jude can give me an example of, like, how, like, he's messaged, like, the kids in the past. Like, he's reached out to, like, different family members. Right. So obviously you got to get creative in finding their contact.
And then one like to. For me personally, like, I was trying to get a building owner's contact, and I ended up reaching out to the property management. But with property management, they won't just give their contact. So what I did was I basically said that I got this as a referral, and my client wants to use their property management services. So if there's any way that they could give any of their current, like whoever they're working for as a referral, that I can call them and speak to them and get a good reference. And they were more than willing to give the number then. Right. So it's just the way you kind of pitch it.
[00:20:57] Speaker D: Yeah. You're approaching.
[00:20:58] Speaker A: That's so much fun. You guys are having a blast, you know. But, yeah, I used to go. So I started out as doing wholesaling, and I used to go, like, do yellow letters, do the signs on the.
[00:21:13] Speaker D: Side of the road.
[00:21:14] Speaker A: I used to go to city hall and just scan through all the properties and find out, like, I would specifically look for houses where the owner didn't live in them, so the owner had a different home address. And in city hall, you can go look all that stuff up, up. So that was so much fun. And then tracking them down and. And. And getting the deal done. Yeah, that's good stuff, guys.
[00:21:39] Speaker D: So you moved from the duplex and triplex, and then what was your next purchase after that?
[00:21:44] Speaker B: So the next one was the fourplex and the six Flex. Do you want to touch more about the six Flex?
[00:21:49] Speaker C: Yeah. So the. The triplex duplex, we. We finished that pretty quickly in the first, like, four to six months. Ish. We turned that over, repositioned it, got it to essentially a nice commercial financing in the end, and then we pulled out our capital and then we bought the. The four plex and the six Plex, basically around the same time. And the strategies that we purchased both of those exact same thing that we did on the triplex duplex. Two separate owners, we negotiated vendor takebacks, typically in second position, where we're able to essentially supplement our down payment. So both of those properties, you know, Fourplex we bought for 346, Flex we bought for 450. Both of those properties have sex. Yeah, both of those properties.
[00:22:27] Speaker A: Are you finding these?
[00:22:28] Speaker C: Well, same thing.
[00:22:31] Speaker D: They're doing that. They're working hard. They're. They're finding the deals. Right. They're not just. It doesn't just appear on the mls, Right.
[00:22:38] Speaker C: Yeah. You got to sit down at Tim Hortons with some of these owners and pitch your terms, convince their wife that we should buy the property.
[00:22:44] Speaker B: Yeah.
[00:22:45] Speaker C: And, and there you go. You know, so that's what we did with the fourplex. We. They weren't willing to do vtb, but we had to sit down with them and, and convince them that, look, your property is in very, it's very distressed situation right now. So we're going to go in, we're going to renovate, add value, and then pay you out within a, within a year. And then we ended up doing that in three months on the four Plex and around the same time, the six plex, we had the project going on the background because we had to get permits for that one. That one took a little bit longer. Closer to seven to eight months. And same, same situation. Second position VTB owner had it several, like a very long time. And then we took over the project. It was fully vacant. Both of these were pretty much fully vacant when we bought. So it allowed us to be comfortable taking on that quote, unquote, private, private debt and then close on the property with zero down and put our capital towards the renovations and then refinance into, into longer term.
[00:23:35] Speaker A: So if everyone's listening, the key phrase that he just said was closed on the property with zero down. That's what you just said.
[00:23:43] Speaker C: That's. That's what I said.
[00:23:44] Speaker B: Yes, yeah.
[00:23:46] Speaker D: Yes. But the, but the other piece is that they were investing all the money that they would have put down into the renovations of the property. That's what gave the owners who were in like a VTB or in a second position comfort. Comfort.
[00:24:03] Speaker A: Right.
[00:24:03] Speaker D: And the track record that they've already done so.
[00:24:06] Speaker B: Yeah.
[00:24:07] Speaker D: Right.
[00:24:07] Speaker B: And it's also building rapport with the seller. Right. Like what, what happened with the 6 Flex, like this specific property is that we had called him two years ago asking if he wanted to sell his property and he said, no, I'm going to renovate it myself. And like, he was the kind of guy, like, he wanted to do all the work himself. We're like, okay, cool, you do that. Like, you know, like, good luck kind of thing and then. But we kept on following up with him every couple of months to ask him how the project was going, so that we just kind of stayed on the top of his mind. And then two years later, he approached us saying that he had some health conditions which were unfortunate, and he could no longer continue it. And it was basically in the initial state than when he had started the project. Right. So with that being said, like the five units were able to come vacant, but he was also able to understand that one. We've been obviously talking to him. So we're building that revolution door and he's seen us do the other projects that we were working on. But at the same time he understood that he would need to give some sort of a financing for us to even like get. Get into the door and get the project started. Right. And he knew that we were able to do it and it would cost him more harm if you were just to hold on to it because he wasn't physically able to work on the property. So.
[00:25:16] Speaker D: Yeah, that's very interesting. And then. So this six plex and the four plex, you were able to, after you did all the renovations, pull all your capital out and then these two properties are cash flow positive as well, right?
[00:25:30] Speaker B: Correct.
[00:25:31] Speaker D: Yeah, yeah. Even after you pulled out all your capital, right? Yes. And do you still own these properties or did you get rid of them?
[00:25:38] Speaker C: Yes, we. We own. So yeah, we. We essentially repositioned those properties very stable now. Got pulled out our equity even a little bit more actually. And. And just because we bought it at very good pricing, not much holding costs as well. So. Yeah, so those ones we reposition, fully renovated and we're cash flowing now, and it's just a part of our portfolio. And then we took the capital to the next set. Next projects.
[00:26:00] Speaker B: Yeah.
[00:26:00] Speaker D: And what was the next project?
[00:26:02] Speaker A: One last thing though, before you go to the next project. Where's the. So you have the. Do you still have the triplex and the duplex in Chatham?
[00:26:10] Speaker C: No, we sold those ones.
[00:26:11] Speaker A: You sold those? Oh, okay. And where are the 4 Plex and 6 Plex?
[00:26:17] Speaker B: So the fourplex is in Leamington and the 6 Plex is in Sarnia.
[00:26:21] Speaker A: Where's Leamington?
[00:26:22] Speaker B: Leamington is my favorite market.
30 minutes from Windsor. Like 30 to 40 minutes from Windsor. And the really cool part about Leamington that like, not many people know is that it has a Mexican consulate there. So they have a lot of immigrant workers coming in and they specialize in like the greenhouses and like, that's Basically what Leamington is known for. So they have a lot of workers coming in. These are very like hard working individuals that obviously need a place to live at the end of the day. And these tenants, like, they take care of the property. Like it's literally their home. Right. So like they're very, very grateful that you're able to provide them with housing. They pay on time, they like, they'll do our lawn, do the snow removal and like, they don't complain much.
[00:27:05] Speaker A: Right.
[00:27:06] Speaker B: So it's like, it's very good.
[00:27:08] Speaker D: Yeah, that's, that's cool. So you have.
[00:27:11] Speaker A: Wait a minute, wait a minute. You have them. Do you have your tenants do what? Which one is that in Leamington? The fourplex, the four plex. And they're all clearing their own snow?
[00:27:21] Speaker B: Yep, yep. And long.
Yep.
[00:27:27] Speaker D: Yeah, I can tell Rob's already impressed, so.
[00:27:30] Speaker A: Very impressed. Yeah, I'm very impressed.
[00:27:33] Speaker D: But wait, you're not, you're not. Watch this. Okay, so, so go. So you've taken this, you've gone from the six plex, now you pulled your capital out and then what do you do next?
[00:27:45] Speaker B: So we then got into a temple that sits on six acres of land. So that was our next purchase and that actually came through building connections with our power team. So our property manager in Sarnia for the six plex, so she knew that this was going to be listed eventually and she kind of had some insider on it. So she sent it over to us because she knew how we would be able to turn it over and like the work that we've done. And then basically we were able to go in there before it got listed and get it under, under contract and close on.
[00:28:18] Speaker D: That's awesome.
[00:28:19] Speaker B: It allowed us to kind of like talk to tenants and like kind of work on that while, like during the closing process.
[00:28:26] Speaker D: And so with that, that 10 plex, what did you do any creative financing with that?
[00:28:33] Speaker C: So the, the 10 plex, we, it was more of a, it was kind of an estate, estate sale. I guess. The owner passed away. They owned it for like 60 or 60 years or so. So the kids took over. Kid ended is, I mean he's an adult, he's a lawyer, so he wanted a quick sale. So the only way to kind of make that work is we just got a significant good deal on the price and then we just closed quicker. Not really much creative terms on that. We just had to close on it with normal financing and then that kind of put a light under our butt to kind of get the project done quickly. So we, it was, it was almost fully, fully occupied when we bought it. All the rents were probably 30 to 40% of market. And we, we went there, we, we negotiated vacancies with the tenants. We ended up getting the full, full 10 Plex turned over and renovated. And so there was a point where the full building was vacant for like two to three months. And then after nine months from when we closed is when we like it was building was fully leased, fully repositioned and we took it to commercial financing and pulled out our, our equity.
[00:29:32] Speaker D: All your equity or more than your equity?
[00:29:36] Speaker C: More than. Well, to give you an idea, I mean we bought it for 1.2 and right now it's worth like conservatively 2.5 million.
So obviously, you know, decent amount of equity that we were able to renovation cost you.
So the, I mean there's soft cost and hard cost. So total we spent about like just under 300,000. So 250 to 300 on the entire building.
[00:30:01] Speaker A: Yeah, and it was whatever your whole.
[00:30:03] Speaker B: Than anything the renovations, like it wasn't super insane.
[00:30:06] Speaker A: Just like flooring, paint, kitchen, everything else in the building was good.
[00:30:12] Speaker C: Yeah, yeah, yeah.
[00:30:14] Speaker D: So, so, so you took this success that you did. See the problem is this is like, like if you ever go to a movie with me and I know what like the end of the movie is, this is my, my wife must get so annoyed. Like, but like, okay, so, so now, so now you, you like you did this ten flex and you, you and you got the capital back and you got more than what you put into it. I'm assuming you got like pretty decent like maybe CMHC financing. 80, 85 or conventional this one.
[00:30:50] Speaker C: So we, because of the timeline, we were very quick with the turnover. So there's a minimum I guess holding period.
[00:30:56] Speaker B: So they need us to wait for a year. I think it is like, I think like 10 or 12 months. And we closed on this in March of last year and then refinanced by November.
[00:31:04] Speaker D: Yeah, so they've, they've changed the criteria. So you should, you could. Okay, but that's good. So you're in the conventional. Were you able to, what kind of LTV were you able to get?
[00:31:15] Speaker C: 75, 75, 25 year M. You know, we're cash flowing pretty well even at that. And then our, our I guess theory is that if we're able to make the deal work and the work deal is really good at these numbers, then with CMHC as a second stage refi or exit, then we, we can pull out even more money and Be cash flowing even more, more than we are now. So that's our theory and it'll be like a nice bonus in the future to us.
[00:31:38] Speaker D: Yeah, that's, that's awesome. Okay, so you had this success in the 10 Plex and then you said, you know, Clantha Jude, we have done this, what do we do next?
[00:31:50] Speaker B: Yeah. So whenever we know that like a project is coming towards its end, right, like we're closer to the refinance, we kind of double down on like searching for properties and like searching for listings and like searching for what we want to get into next. So during the time that this was kind of coming to its conclusion, we start, we actually cold called the seller of the 19 unit apartment building that we bought. We cold called them and basically went back and forth for like five months negotiating what we wanted, the price that they wanted, the terms that they wanted, and the terms that we wanted because we wanted to get in there before, talk to the tenants, negotiate the, then 11 so that when we close we're kind of ready to start the renovations and go from there. So that's what we did. Went back and forth for five months and then finally we put it on paper and then we closed a couple months later.
[00:32:42] Speaker D: That's amazing. So like, maybe you could describe a little bit about the deal, like run us through this purchase. Because like, honestly I've got to say that most people that I know aren't 23 or 22 buying 19 unit apartment buildings. Actually a lot of people at the meeting were all looking at each other, each other, like, did they just say that they just bought in 19 years? And then, and then Jude says, yeah, and I'm graduating like in another month or two, I gotta go to my graduation. I was just like, oh, stop it. This is, this is so awesome.
[00:33:16] Speaker C: I, I, I guess the, the way we got more comfortable with these big numbers and these big units and these, you know, big price tags, I guess you could say is because I, I just watched like after we bought our first one, I, I started kind of reaching out to, you know, apartment buildings owners and I, I was fortunate enough to come across a mentor that owned several hundred units. So he was buying buildings and he was, you know, he's in his mid-30s and just like, like kind of doing exactly what we're doing, but on a huge, on a huge scale. And that taught me a lot. But that also like set the expectation in my head that wow, it's, it's actually very doable, it's very possible. Right. So we, we not like I, we never limited ourselves in terms of how big we can get and, and our age is just a number. At the end of the day, like any, any seller we meet, we like, we try to avoid the question of how old we are if anything. We try to, we try to avoid it. So, so yeah, so this 19 unit building was our, our next venture immediately after closing on the 10 plex. For me, I just like to find deals. I'm a, I'm a deal junkie. I like to negotiate, I like to, to like find the next opportunity and client is really good at the management and turning things over. What she's good at, what's actually important.
[00:34:20] Speaker A: Well let me ask you this. How many like how many deals do you go after and you know, to get one?
[00:34:30] Speaker C: Let's say like, like a lot, like.
[00:34:33] Speaker B: Analyze a lot of deals before we're like okay, cool. Like let's actually offer and one to quantify it.
[00:34:39] Speaker C: I think so maybe like it's hard to quantify it for sure. But the, the problem I guess we were facing and, and what we noticed was that we try, we looked at everything for ourselves. Like okay, every individual deal, like if it doesn't make sense, keep in mind our criteria is very, very strict. So but we didn't realize that oh there's you know, 10 different other owners or buyers that would buy this property. So that's how we sort of made it into a business by essentially like any deals that we get that don't fit our criteria, we will assign the deal or essentially find a buyer for the deal and charge the seller commission. And, and that's how we sort of made that into a, into a business as well. So, so we're capitalizing on the deals that we don't take on. But yeah, there's like at least, least a couple dozen deals that we go through that don't make sense before one, before one even starts to make sense.
[00:35:28] Speaker D: So with this 19 unit, what did you do? Like it. Was there any creative financing or like how, how were you able to like maybe run us through some of the like this particular purchase?
[00:35:39] Speaker C: Yeah, for sure. So, so it's 19 units, it's in Windsor. We clienta told you the backstory. So essentially we paid 2.7 for it, so about 142 a door.
So the strategy here is we're going to be adding the 20th apartment through the city with permits and then we're. We. Before we actually closed we, we closed very close to a 7% cap rate, meaning we actually negotiated seven vacancies with the tenants before we closed. So they weren't vacant on the closing, but they were scheduled to be vacant and essentially tenants were being compensated. So we closed at a very high cap rate when the building was actually, you know, in the area. And the quality of the building were appraising between the mid 5 caps gap range. Right. So there was a significant lift before we even closed on the building. So that, you know, the as is appraised value over 3.6. So we created that extra equity there to go in and you know, pull out later on down the line. So there wasn't any creative financing to get in the deal because we, we just put our standard 25 down and then we like now we're in the process.
[00:36:41] Speaker B: And that came from the 10 unit refinance. Right. So that was the capital that was recycled that we got from there. We put it down over here and then we're on a bridge to go into cmhc.
[00:36:52] Speaker A: And what do you just. Did you guys, have you went to CMHC yet?
[00:36:58] Speaker B: Not yet.
[00:36:58] Speaker A: Not yet. What do you anticipate the value of the property to be when you go to them?
[00:37:04] Speaker C: So like, so we got our after repair value.
[00:37:06] Speaker B: Yeah, go ahead.
[00:37:07] Speaker C: Like, like when we closed, essentially, as is value based on those extra vacancies was 3.6. So that's down.
[00:37:12] Speaker A: You've got everybody out and you're renovating.
[00:37:14] Speaker C: Yes, yes, yes. So that's like the baseline of what we, we should expect. So 3.6 to, you know, $4 million in that range.
[00:37:22] Speaker A: Yeah, I would say it's probably going to be closer to 4 million most likely.
[00:37:26] Speaker D: Do you know what I. From a ballpark figure, looking at these numbers, you started off with 60k and I want to say that your net worth is probably about 4 million, 4 and a half.
Sorry, I don't want to say it on the podcast, but like, I have a feeling that, like it's like based on what you've told anyways, I'm like, wow, that's, that's super awesome. Congratulations.
[00:37:52] Speaker A: So did all of the tenants sign the N11s?
[00:37:56] Speaker C: No. So, so the. Okay, out of 20 units, sorry, 19 units, 10 of them were already paying market rent, so we're talking 16 to 1800.
[00:38:03] Speaker A: Okay, so you don't need them out of there?
[00:38:05] Speaker C: No, we don't need them out. If anything, we want to keep those, those good people in there. So we focused on the, the few that were low market. So out of, of nine units that were that are low market, essentially seven so far have signed and we're working on a couple more, so. So. And then on top of that, we're adding the extra apartment as well. So.
[00:38:22] Speaker A: Yeah, now how do you add an extra apartment?
[00:38:25] Speaker B: So the laundry room is actually like, I'm gonna say like 700 square feet. 800 square feet.
Yeah. It's huge. It's huge. So basically when we walked in there the first time, we're like, this is an additional unit. This is not a laundry room. This is an additional unit. So basically, like, we were able to get our architect in there and like, basically design the space where there's still a common laundry room for people to use in the building. Plus like a one bed slash bachelor unit down there as well.
[00:38:55] Speaker C: We didn't mention that this building specifically was built. Like we bought it from the original builder of the property. He built it back in 1979.
[00:39:03] Speaker B: Yeah.
[00:39:03] Speaker C: And he owned it with his wife. And they never. They built a bunch of other buildings and this is the one they kept. Full concrete construction, pitched roof, really, really good quality. And that's why they took care of.
[00:39:13] Speaker B: This property like their child. Like it was their price possession. Like anytime someone left and they would renovate the place, they would put brand new stainless steel appliances in there. Like not even like secondhand stainless steel, like brand new stainless steel. Right. So they obviously cared a lot for the property.
[00:39:30] Speaker C: So and, and they, they cared about who the property was also going to. There's been dozens and dozens and dozens of people that approached them and, and we developed a relationship with them and, and a good connection. And they happen to be the same, you know, Christian as well. So. So we, we related on that and clean.
[00:39:45] Speaker B: They were Catholic. They like that we were Catholic.
[00:39:49] Speaker C: And like the wife like was. It was like, this is. These are the people who are going to buy the building. Even though the husband technically owned it. She said, you know what? These guys are the, the guys to.
[00:39:57] Speaker D: To.
[00:39:58] Speaker C: We're selling the building too. Yeah.
[00:40:00] Speaker D: That's really cool. That's. It's interesting how you. And the thing is that most people. People don't understand that based on your. Like, we're doing the same thing. We're adding five units to through three apartment buildings. And they're like, in the next month and a half, we'll have completed it, but based on the cap rate that you're talking about five and a half and you add a new income of what. What do you think you're going to rent that unit for?
[00:40:26] Speaker B: So we actually rented. We just rented one of the one bedrooms for 1550 and then.
[00:40:31] Speaker D: So this one, is it going to be like, about 1550?
[00:40:35] Speaker A: The new one.
[00:40:36] Speaker D: The new one.
[00:40:36] Speaker B: The new one, yes. The new one bed is 1550, and the two beds are around 1800.
[00:40:40] Speaker C: 1850, but like the. The 20th apartment. Yeah. Give or take. Maybe a little bit smaller. So let's say fifteen hundred dollars.
[00:40:46] Speaker D: Yeah, yeah, fifteen hundred. So based on the cap rate of the building, how much value do you add to the building based on that? Because people don't understand why would you want to, like, get rid of the space. But I think for this podcast, it'd be interesting. So how much value do you actually add to the building, Jude?
[00:41:04] Speaker C: So let's say, you know, we rent out this new space that. That didn't exist before. It wasn't an apartment before. We're adding income to this space that wasn't in, you know, capitalized before. So now at 1500amonth, theoretically, this space is now worth $327,000 of value that we created. And I don't think it cost 327,000 to make that a unit.
[00:41:25] Speaker D: Yeah. Does not.
[00:41:26] Speaker C: That's the value that we created.
[00:41:28] Speaker D: That's.
[00:41:28] Speaker B: That's the thing for, like, when it comes to, like, rehoming the tenants as well.
[00:41:33] Speaker D: Right.
[00:41:33] Speaker B: When it comes to providing some sort of incentive for them to leave, people don't realize that. Yeah, it sounds like a lot, but if you think about the value that you've actually created, it's a lot more than that. Right. Per unit.
[00:41:46] Speaker D: You know what, you're. You're absorbed more than, like, I talk to people about this all the time in, like, people don't. Don't seem to understand it, but you both have grasped it so well. It's. It's really good to see. I'm totally excited for your future. Like, you've got so much. You're. You've got so many years of potential to go. It's so awesome. So you, you like. Oh, man. But you've got to have some, like, advice for people who are just getting starting. Started out as well. Well. Right. Like, there must be some, like, some pieces that, you know, you've taken that you think would be really helpful for people, for sure.
[00:42:29] Speaker B: So we both kind of have our own pieces of advice.
[00:42:32] Speaker D: Okay.
[00:42:33] Speaker B: What I would say, because I'm more of, like, a people's person, so it's good to run your numbers, but don't treat people like numbers. Right. At the end of the day, there's more to the transaction, and it's building that connection with people and Making sure that you treat them as a human and that you have a genuine connection with them. Right. The deal is kind of like a byproduct of the relationship that you built, because if they trust you and they know who you are, they'd be more than willing to do, like, a deal with you.
[00:43:03] Speaker C: Yeah. Yeah. I think, I think also one thing that a lot of people make the mistake of, especially in the beginning, is they, they try to overanalyze and figure out, like, the best possible way to do things and just look at every different scenario. But see, if, if we, we thought if we had that mindset in the very beginning, we wouldn't even have made the first step we, if we were thinking about step 10. So analysis paralysis is definitely, like a very, very big thing. Like, people should just make that step and not think too much and, and just get it done. Because we, if we didn't buy that first property, one had missed out on probably significant appreciation and, and if we just waited to, to go, you know, to do more research or attention conferences and things like that, but we just said, you know what? This is where we want to do, where we want to go. This is what we want to achieve. Let's just, let's just make that first step.
[00:43:51] Speaker D: That's awesome. That's. That's really good.
[00:43:54] Speaker B: And like, when you're, when you're like, I just want to add on to that, like, when you're growing and when you're doing something, like you're going to fail at some point, like, you're going to have your downfalls, but you got to. Got to get, get back up and basically just outlast it. Right? That's one thing that we've learned is if we do something long enough and outlast the market, outlast whatever is going on, you will win in the end. Right? You just need to be able to outlast it and like, obviously analyze your deals, but take action, because if you're not going to take action on it, then there's no point of analyzing your deals at all. Right?
[00:44:24] Speaker D: Yeah, that's it.
[00:44:27] Speaker A: I wanted to ask, like, what there. There must have been. Obviously this is an amazing story, but there must have been some big challenges. And I just want to know what some of the bigger challenges were for you guys and how did you overcome them.
[00:44:40] Speaker B: For sure. So one of the challenges that we faced pretty early on was kind of like being a little too naive in the sense of, like, hiring people. So when it comes to, like, I'll give you an Example, So when we were doing one of our initial projects, we hired a renovation company that kind of seemed like they knew what they were doing and, like, were able to, like, articulate and talk about the projects that they've done. But there was no actual, like, foundation to that. And basically, long story short, we ended up losing over six figures in that renovation.
Luckily, it was like. It wasn't borrowed capital. It was like our own capital at that point. So at the end of the day, like I said, we have to make peace with it, right? Like, we are obviously going through the legal process of it as well, but that's long term, as you guys know. So we had to make peace with it and just moved on and said, okay, like, this was our learning experience. Now we know to properly vet these kinds of people because a lot of people will say a lot of things, but don't necessarily. Their actions don't match their words. Right? So that's what we learned from that, is that. That people properly go take a look at their previous projects, see what they've done. Right. Get references, do all of that. Don't just trust people for their face value.
[00:45:54] Speaker D: That's.
[00:45:55] Speaker A: That's a good one.
[00:45:55] Speaker D: That's good advice for sure.
[00:45:57] Speaker A: Yeah.
[00:45:57] Speaker B: Yeah.
[00:45:58] Speaker D: You know, it's funny, like, I actually met Cleantha at a private lending event before I even got introduced, because I. I was like, a friend of mine, Paul introduced me to Jude, and then I was on the phone, and then Clienta starts talking. I'm like, wait a minute. This is the same person who was talking about the apartment building and something else before. Like, you know, it's. It's amazing how these connections kind of come together, right? It. It's. It's really cool that, you know, and. And it's part of the due diligence process of people. Like, you know, in this business, there are lots of people who talk about stuff and people who have social media and do a whole bunch of things like that. And the people that actually do are a small portion of those people. And I'm glad that I met you before and then, you know, connected with you both together and had you out, because I feel like, you know, you're doing. And you're. You. I can't wait to see what you do in the next year because, you know, I know what's next for you guys. Like, what. What do you want to do next?
[00:47:12] Speaker B: Yeah, for sure. So we obviously want to scale our own portfolio. And, like, we're constantly looking at deals, analyzing deals. Deals, right. Trying to figure out what's the next deal for us? But like Jude mentioned earlier, like the deals that didn't necessarily work for us, we were able to find buyers and kind of connect the pieces together. So that's been a big focus for us as well as creating a business around it. As we mentioned earlier, I'm also a licensed agent. So basically now my niche and my focus is multi family apartment buildings all over the place. So we do southwestern Ontario. We're also doing like in and around the GT ta, like Hamilton area and basically just connecting buyers and sellers together.
[00:47:51] Speaker A: Wow, that's great.
You know what? I, I think, well, logically it makes sense. You went from 10 to 20, so now you got to go from 20 to 40.
[00:48:01] Speaker B: Hopefully.
[00:48:03] Speaker C: Minimum. Minimum, yeah, minimum.
[00:48:07] Speaker A: Logical progression.
[00:48:08] Speaker D: Well, you were talking about buying a, about a hundred units in the next year, or am I mistaken?
[00:48:17] Speaker C: Maybe I said that I was like feeling the, the dopamine on stage.
But I mean I, I guess long term our goal is to grow to hundreds of units and, and I think we're, we're at a stage where we understand the business model and how to manage properties. We, we now it's just simply just get finding the deals and, and putting the pieces together like, you know, so I guess that would be a goal.
[00:48:40] Speaker B: And there's also like a lot of deals out there just that deals that need to meet the criteria. Right. Because there are deals where like you can invest in but obviously like you kind of have to have some of your funds locked in for a longer period of time. And the deals that we look at, like we're trying to basically within a year to year and a half max, then move on to the next project. Right. So, yeah, so weird.
[00:49:03] Speaker A: Guys, I want to thank you so much for sharing. All this has been amazing. I appreciate you guys taking the time to come on the show.
[00:49:11] Speaker C: Yeah, no, thank you guys so much for having us. I really appreciate it.
[00:49:15] Speaker A: Now where can people learn more about you?
[00:49:19] Speaker C: Yeah, so our, we're, you know, we try to be stay active on Instagram. Virgo group is our main handle and then my individual handle is my name, Jude Gomes. Clienta is Clienta F. And yeah, feel free to reach out to us on Instagram or even LinkedIn. LinkedIn is just our first and last name and yeah, I would love to connect with other people looking to get into buildings or even own buildings already or just shoot, you know, shoot different ideas off of each other. We just love this business and space that we're in and anybody that owned buildings, we somehow correlate or relate to each other. So it's just, it's just a nice small community.
[00:49:51] Speaker B: Also, people who are looking to start out don't be afraid to kind of reach out to us. Right. Like if you don't own any investments, but you're very intrigued by the topic of it and like, that's how it started with us too. We were just intrigued, right. Like, we're curious to know how this would work and that's what got us in the door. So if you're interested, you want to learn how you can do it. Like if you have family members that are willing to kind of work with you. Right. Like there's different possible ways you can make it work. So you're looking to get into your first investment as well, reach out to us, not just if you already own buildings.
[00:50:22] Speaker D: That's awesome. And, and your graduation, Jude, is one.
[00:50:27] Speaker C: It's, it's in June actually.
So today's Monday. Tomorrow is my last exam, actually, my very last exam. And then I'll.
[00:50:37] Speaker D: That's awesome. Very good. Congratulations.
[00:50:39] Speaker A: And Rob, does it.
[00:50:41] Speaker D: Doesn't this like inspire the hell out of you?
[00:50:44] Speaker A: Oh, yeah, absolutely.
[00:50:45] Speaker D: I'm so excited, I'm so excited about this.
[00:50:48] Speaker A: I kind of fell off on the Canadian real estate. Now I'm just like, man, I'm going to go see what I can come come up with.
[00:50:54] Speaker C: No, no, you know what, you, you can focus on us while we find the deals here. How about that?
[00:50:59] Speaker A: Well, I'm in Costa Rica, so I've been kind of focusing there. But yeah, yeah, I was like, oh, there's no more deals in Ontario.
[00:51:08] Speaker D: There is.
[00:51:09] Speaker B: If you look hard enough, you find the deal, you'll create the deal yourself, right?
[00:51:14] Speaker A: Yeah, but all those, all of those, all of their contact information is going to be in the show notes. So if you didn't have a chance to write it down or whatever while you were listening there, just go into the show notes and that' there. So, Quinton, how can people get in touch with you?
[00:51:29] Speaker D: Yeah, I love talking about real estate. If you want to book a 15 minute call, go to Quintindisouza.com I'm happy to chat about real estate investing. If you're interested in finding a great group of people like, and listen to people like you've heard on the podcast, come up to Durham, rei. We've got events every month and it's a great group of investors that are, are action takers and getting things done. And that's, that's what I like. Otherwise I certainly wouldn't do it anymore.
[00:51:59] Speaker A: Quentin, you're pretty harsh. I know that. You say, like, if you. If you're not. If you don't buy something, don't come to my meetings.
[00:52:05] Speaker D: Yeah. Well, why do I want to do it? I have a big portfolio myself, and I'm fine. I don't have to do it. I. I just get frustrated sometimes. And you know what? I want to see people that are. I like. I want to create a group where people are actually taking action. I. I don't want a group of a thousand people that. Where two people are taking action. I want a group of 80 people where 70 people are taking action and the other 10 are trying to get it done. And that's. That's what I wanted to do. Sorry, I was a bit of a soapbox. I wasn't much of a.
All right, Rob, how do people get a hold of.
[00:52:41] Speaker A: Appreciated your pushing at one point in time, you know, thank you.
And people can reach me@robisterbreakthrough.ca. just send me an email, go over to mantaraylodgecr.com and check out our. Our hotel that we have here. And if you're interested in coming down, then, you know, maybe that's an option to stay there.
[00:53:00] Speaker D: So I want to come down and visit you soon. So we'll. I'll take you up on that.
[00:53:05] Speaker A: Sounds good. All right, everybody, I appreciate this, and. And to everybody listening, thank you again, and we'll see you next time.
