My journey in under 404 words
I had coffee with a good friend I grew up with in Whitecourt this week.
We hadn’t talked in a while and I realized many of my friends don’t know why I do what I do, what pushed me into commercial real estate and investing. So, I’ll take you back to one of the defining moments in my life.
I grew up in Whitecourt, AB, a small logging town in northern Alberta.
Both my parents were teachers. I had just graduated from high school and was working for my friend’s father. He owned a logging company, and in the summer, I built logging roads for them.
By the end of summer, after four months of working with his dad, I’d saved up $13,500 for University. My friend (who I won’t name) told me about an opportunity he was making money in and asked if I wanted to invest the money I’d saved for school with him. I put everything I earned that summer into his investment.
My parents heard about the investment opportunity and not wanting to miss out, my dad remortgaged their house ($100,000 CAD) to invest.
Six months went by and we didn’t hear a thing. As more time passed, and more excuses on why we hadn't seen a return followed, we soon came to the realization that the money was gone.
This investment lesson was a tough pill for me to swallow.
It taught me how NOT to invest, and how some people use greed to lure investors, especially hard-working individuals that don't have much experience with investing, into deals they shouldn’t be investing in.
They ended up losing the entire amount and spent the next 10 years paying of the mortgage again.
1 mistakes - set my parents back 10+ years.
Living this and seeing the consequences and strain it can put on people (over years) is why I share my journey and experiences here and my podcast.
I eventually landed a job in real estate, first with the City of Calgary (planning), then Sun Life (lending money on commercial real estate).
I was fortunate to have met 2 mentors who taught me the business of investing in commercial real estate the right way.
Given where I came from and my past experiences, my goal is to help hard working individuals entering the world of commercial real estate and development with the information that was been taught to me. How to asses the risks involved when investing in real estate.
Warren Buffett’s #1 Rule: “Don’t Lose Money.”
If all I do is help 1 person avoid the wrong investment- then all the podcasts, books and articles are worth it.
Longer Version of my Story:
I started like many Canadian real estate investors- looking for a safe place to invest.
I moved to Calgary AB at 17 and got my BA in Economics. My first real estate investment was in 2004; a 1943 war-time house with no basement or central heat. I made many mistakes.
When I started my real estate career I was young, no family, so working long hours and weekends didn't bother me.
Eventually I built a small portfolio of single family properties and was flipping homes - I figured this was the way to invest in real estate. Buy undervalued residential houses, fix them up and either rent or sell them.
From 2004 to 2008, this strategy worked very well.
In 2008, when the financial crisis hit, and my rental properties were making a few hundred a month in cash flow, but 1 vacancy and horrible tenant whipped out my cash flow for the year.
Rents started falling. I was being forced to sell properties. I recall having to rent out the house I lived in, and moved into a fixer upper I couldn't sell.
The little empire I'd built was crumbling. My foundation for investing was built on speculation and hope - not sound principles.
Technically, I was a millionaire on paper before 30, but I was miserable and working 2 full-time jobs- my day job as a commercial lender and nights and weekends flipping properties.
Equity rich, cash poor.
It was my wake up call- investing solely for Market Appreciation was gambling.
I had bought into the typical real estate investing Dream: own 10-17 Single Family Homes and one day I could retire...
Around this time I met my (now) father-in-law, a 40 year veteran developer and commercial real estate investor. He showed me how to raise money and find value add commercial properties. He taught me a systematic way of investing in the right properties.
Today, I am not retired. I develop 2-4 properties each year and am an owner in a construction company. I control my schedule and love what I do (most days).
My goal has always been to live life on my terms and I would say, that is a reality. I still wake up at 5:30am, put in a full days work. But, I travel when I want. I take my kids to school, soccer and go golfing on Thursday's at 1pm if I want.
There is still work to get to my dream, which is to pass along a certain amount of cash flowing real estate to my 3 kids - and is what keeps me going.
In my experience, few real estate investors have stress-free financial independence. It sounds good on a podcast or book - but in reality, those who have amassed a significant portfolio of real estate are not sitting on beach while their property managers send them a big check every month.
Just because you have a portfolio of $50M or $250M in real estate holdings, it may not equate to having enough passive cash flow to stop working. The amount of cash generated from your assets- will determine how much passive income is left at the end of the month.
I'm on the journey, like you. Still figuring things out. I still make mistakes (like a simple clause in a recent deal that cost me $700,000).
I have the unique benefit of accessing some of the top commercial real estate investors in Canada and the US. And, I want to share the lessons learned with you.
Because commercial real estate (CRE) is generally misunderstood by outsiders. It's common for new investors to be taken advantage of by insiders.
Not understanding the "Game of Commercial Real Estate" can be very expensive. When I was just getting into CRE, I met 2 guys who lost $6,000,000 on a single property.
They were smart residential real estate investors - and were in way over their head on a deal. Something like that can take years (if ever) to come back from.
The Game: finding opportunities that others don't see. What do you know that others don't? Why are you uniquely set to win in the game of real estate investing?
If you're just getting started and wondering if I'm someone you can trust for information - a good first place is to listen to my podcast: The Investing Advantage. I think there are 205 episodes. You can get a sense as my values and what I believe in.
I don't have all the answers. I'm committed to learning real estate investing and have been in it full time since 2004. Over that time, I've learned some valuable lessons, and hopefully they help someone avoid the mistakes I've made (or seen others make).
Personally - I love to mountain bike, road bike, run, weights (sealfit), golf, waterski, snowboard (last year my wife got me into downhill skiing). We travel a bit and spend most of our evenings taking our 3 kids to soccer and my son to hockey.