Podcast Episode 78 Transcript

Episode 78: From School Teacher To 80 Million in Assets with Quentin D'Souza

Are you ready to bring your real estate game to the next level? My name is James Prendamano. I'm the CEO and founder of Prereal, and over the past 25 years, I've closed over a billion dollars in transactional real estate. Each week, a meeting with outstanding investors, investors, highperforming individuals and visionaries operating in the real estate space. These are the people that are actually out there in the real estate game right now. Getting it Done this podcast aims at bringing anyone's game to the next level. This is the Prereal Podcast welcome, everyone, to the Prereal Podcast. We are joined today by Quentin D'Souza. Quentin is the founder of Apple Rich Homes and author of several books, one of which we're going to talk about today in detail, the Action Takers Real Estate Investing Planner. But he also happens to have a portfolio that's pushing up close to $100 million in assets. So we are super excited to have Quentin on the show today. Quentin, thank you so much for taking the time out.

Thank you. I really appreciate it, James.

So where to begin? You've kind of run the gamut with asset classes, and you've built really a remarkable portfolio. We were talking offline before we started the show. And The Action Takers Real Estate Investing Planner is a book that is centered around goals, if you will. And Quentin can get into this. And I was just watching earlier today one of the YouTube posts that you had up talking about goals. And of course, being that we're getting into the end of the year, this is the most appropriate time to have this discussion. Before we get into the specifics, can you give the audience? If you had to give a two or three minute elevator pitch, could you just give them your background? Because it's pretty remarkable.

Thanks. I appreciate that. Yeah. I was a teacher. I started investing in real estate in 2004, and I was really a pre construction property. And then in 2008, I started to buy three or four properties a year. We're using the borough method, which we called the Buy fix, Refinance and rent because there was no acronym at the time. That was people have been doing it for decades. So it's just a strategy that I used to build. My portfolio started with one to four unit properties. By the time I got to 2013, I could leave my job as a teacher. I have a master's in education, and the school board was pushing me to become a school principal. I decided not to do that and continue to focus on my real estate portfolio, which had been growing in the background.

And then in 2014, I started to invest full time. I flipped about a dozen houses 2015, I realized that flipping houses was actually more of a job than I had before. So I stopped doing that. And I focused on repositioning apartment buildings in 2015. And that's where I've been able to grow and scale, bring on partners. And that's really where the real estate portfolio jumped in value and also jumped in rents. We've really got that humming along. And I have a business now rather than being self employed, which is what I felt like I was before. So that brings me to this point. I've written several books, all available on Amazon, and I kind of share the different strategies that I've used and different things that I've learned over time.

So at the very beginning, I focused on property management and I wrote a book on property management. Then I wanted to improve my filling vacancies process. So I wrote a book on filling vacancies. I co wrote a book with my friends on the buy, fixed, refinance and rent strategy, which people on Amazon tend to point out is called the Borough strategy. But we wrote that book before then, right. And I just continue to share my knowledge because I'm still a teacher. That's what I do. But I am more focused on my real estate portfolio than ever before. I realized that instead of teaching people to buy real estate, it made more sense to invest in real estate yourself. And that's really where I focused and growing my portfolio. If we close all the transactions that I have in the pipeline today, by March, we should exceed over 100 million in assets. So it's really good. And I do partnerships. I don't do syndications in the same way as it's outlined in how you see in the US, the smallest ownership stake I have in any asset is 25%. And then, of course, the most is 100%. Right.

So sometimes I'll own a building by myself. So it just depends on what I'm doing. That's the crux of it. My high level where I'm at. I also invest in the US. I've got some properties in the US. I've got four in Tampa. I've invested in a bunch of syndications down there for a different reason, more for currency hedging. And also hedging against the Canadian economy. And when we go on vacation, we always spend US dollars. So it works out pretty well. Okay. So thank you for the intro. It's tough to roll all of that up in a few eloquent sentences. And for many of us, we think about doing this, and we think about launching our career and stepping away from what it is that we did for our nine to five to get into the business.

Like you had said, the Borough method became sexy recently. Those of us who have been doing it for 20 or 30 years, we never called it the Borough Method. That didn't exist. And it's difficult, though, for folks to make a clear, intentional decision to take that step. So I'm curious for you. You're a teacher not too long ago, right? What was the trigger for you? Where was someone in real estate or what was it that said, you know what? I want to do something different here. I've been always doing things on the side forever. Like even when I was a kid I was like mowing lawns and I had three paper routes and I would get my sister to help me put the papers together and then I would deliver that. I was always doing different things, but I found that the way that I saw teaching and the way I saw a school principal, I felt like it was somebody who was the role had changed and become something that's more like a middle manager that kind of just does what the school board is kind of pushing down and that's not something, that's not the reason why I wanted to be in that type of position. I am somebody who likes to be in control of what's going on and how things are going and I wanted to do that and I saw a business as a way for me to be able to do that myself. I wanted control of my time. I didn't want to have somebody tell me where to be and when to be there. I wanted to be control on my location. So I wanted to be able to say, I'm going to work from here or I'm going to work from Ottawa, I'm going to work from California, wherever I am. I wanted to have financial freedom so I didn't have to worry about working. And if I didn't want to work and go golfing, I could do that. And I also wanted to have thought freedom and that's something that people perhaps don't think about. But when you have a job, somebody else is telling you how to think and I am not one of those kind of guys. So all of those reasons helped me to make that decision. And then in 2014, once I was able to achieve financial freedom through my real estate portfolio, then I could find my true north and kind of keep growing. Right. And I got this little ring, I don't know if you can see it. I got this little Pinky ring and I got the 2014 on it with a little star and it's just a reminder to me that's when I started to find my true north, right. Try to figure out the real direction of my life and where it was going to go and before that it was something else. Finding your true north was this. You're talking about a lot of things that seem obvious on the surface, but they're not, right. Control of your time, control of location, financial freedom, thought freedom. Was it a purposeful, methodical process of stating goals, clearly identifying these are real, intentional, specific things you're talking about, right. So in the abstract, these are things that we think of all the time. But how did you get to such an intentional, specific set of things to pursue? That's a good question and it's part of my planning process. How I do my goal settings. So I do ten year goals. So I don't just do goals for the next 90 days or the next three years. I do goals for ten years. So back in 2010, I was setting goals for 2020 and I set goals not just on financial, but like relationship, physical, health goals, all of those type of areas. Right? So I'm setting all those goals and what I intended to look like ten years from now, I've got like a vision board that I have. It's actually a screen saver on my computer, not a screen saver, but you know, that background on your computer. So I've been looking at that for a decade. I've got a ten year letter to myself that's on my bulletin board that I read and I refer back to myself and that gets renewed every couple of years, actually, I go back and I set new goals because what I've found is that I've been able to achieve the goals that I put down as ten year goals a lot sooner than it took me to do. So I'll give you an example. You don't know my history, but I used to weigh £330.10 years ago, I had set those goals to run a marathon and my weight at that time, it's just not conceivable, right? But what I did was I looked at those goals and as I continued to develop my 90 day plan, because I don't do annual planning, I plan out 90 days. I've been doing that for over a decade and I was able to achieve the goal. So I started off losing weight, then I started to do a five K run, then I did a ten K run and then I did a half marathon and then I did a full marathon. And so I was able to achieve those goals in four or five years versus the ten years that I thought it would take me to do right. Or the goals that I had set myself for ten years. And the same thing happens with all my goals that I set. And that's why it seems like I'm really intentional, because I am. I do have a ten year horizon that I'm looking at and then I'm working backwards to be able to achieve those goals. And I don't do annual planning. I've never done annual planning. I always do 90 day goals. The reason why is that what happens. What I found when I used to do annual planning is that I would look at it in January and then I might look at it again in October and I wonder how come I never achieved my goals right? But when I have 90 day goals, I'm always looking at it every quarter and then I'm bringing it down as I'm writing my plan for the week out. Because I do a weekly plan, like on Sunday night, I'll look at my quarterly plan and I'll work on certain goals that are helping me to achieve my quarterly goals. So everything becomes interconnected. And that's part of how I do my goal setting and goal planning. And at different times sometimes I would say that this whole idea of being balanced, I think, is kind of a sham. It's hard to be balanced. You can't be balanced sometimes. You've got to be like you're focused on your finances and you really got to work on that. Sometimes it's like health. Like you really got to focus on your health because something's happened. Right. But this idea of being a balanced and perfectly balanced person, I don't think it's possible. But I think we shift from time to time. And if there is something that is totally out of alignment, it's up to us to try to bring that up a little bit. Right. And to bring that back into alignment as best we can. And usually that's something that you can see that comes out in your life when you're doing like, your quarterly plans. It could be relationship issues, it could be health issues, could be financial issues, whatever it is. Right. So that's all part of that planning process for me anyways, that's kind of long winded approach to being specific about ten year goals. But that's how I do everything. Right. So we all get to this time of year, Quentin, and we all sit down and we write down what we're going to accomplish next year. We've got a team of about 30 folks here, great people I'm very blessed to work with, and we're starting to focus now a lot more on mindset and planning and financial literacy and goals, something that for a traditional brokerage, really was completely absent. Nobody sat down and taught me about this stuff when I started 25 years ago in the business. And we're finding that more times than not, folks fall woefully short of the goals that they jot down for their New Year's resolution and all that good stuff that happens. Right. And then I'm sure that the Action Takers Real estate Investing planner walks you through some of this stuff. But for you, before you got to this point, was there a mentor? I mean, why did it work for you? That's what I'm trying to get to. Why did it work for you with such resounding results? So I've taken a lot of coaching myself. So I've been part of the Strategic Coach, which is Dan Sullivan's program. I am part of the entrepreneur organization. I've gone through a lot of Tony Robbins materials, and what I've built is something that I felt worked for me and worked for real estate investing. Right. What I've also found is that all of those kind of work in concert with each other and create something that I find is effective. There are a lot of tools within that that I speak about in the book, but really, there are things like having an accountability partner. So every week on Monday, I'll go over the three goals that I'm working on this week. So I've got three priorities this week that I'm working on. I'm working on three items towards my quarterly plan and eat that frog activity that I'm going to do on Monday morning. I'm working on finding funding and financing properties every week because that's what I do as a real estate investor. There are items that I'm delegating this week or dumping or I got to do. So I've got that on there. And then I'm celebrating my life by doing some sort of activity. And I'm working on a center of influence from my quarterly plan. So every week I'm doing those things and I'm going on Monday, I am talking to my accountability partner that I've had for years and years. And I'm telling him, these are the things that I'm working on. These are the things that I did from last week. And then if I have to repeat the same thing over again to my accountability partner, I get annoyed with myself. Right. I don't like saying that I didn't get things done because I annoy myself. And if you do that in two weeks or three weeks, it's just not good. Then you just get it done. Right. So that accountability piece helps me. Planning out the week on Monday helps me. Making sure that I celebrate the success that I have helps me because I'm very practical and specific about what I'm celebrating. Also, depending on what you're working on, you have to be able to measure it. So, like in a brokerage, you might be talking about sales or listings or something like that. Like when I'm thinking about the way that I'm measuring, it could be gross rents. What are my gross rents for the month? Do I want to get my gross rents up for the year or for the quarter? So I always focus on the quarter. And so I look at how much in gross rents, how many new assets am I going to acquire this quarter, right. And I want to make sure that I want to push that up. So all of that kind of feeds into what I'm doing. If I'm trying to grow wealthy, what's the thing that I have to measure? I have to measure my net worth. If you haven't done a balance statement before, how do you know what your net worth is? Right. If you're trying to lose weight, you got to measure yourself. Right. Like all of these things are about measuring. So that's one of the other things that I do is that I'm actually measuring. Like when I do my quarterly plan, I actually have a balance sheet. Right. I'm also scripting out the different sources of income that I have and what they currently are now. Right. Because I have a lot of sources of income. I just don't have one source of income. Right. What happens to a lot of people is that they have one source of income, and if they lose it, they're scrambling to find a replacement for that one source of income, right? Yes. So for me, that's what teaching used to be for me. But I cross that out back in 2014 and I replaced it with other things. So book income is not a good example. But you're not going to get rich off. But my real estate portfolio, which is huge. Right. We get probably close to $450,000 a month in rent. It's a big number. And that's continuing to grow and grow. On top of that, we have the assets that are growing as well from appreciation perspective, because we buy an appreciating market that has cash flow. Right. So that we get that one, too. I'm looking at not only that, but I've got a property management business that's a component of that where I have a team that I've hired who works for me. Right. It's not a large amount of income, but it is something I have a real estate club that I run, and there's people that are members that are part of that and they pay $80 a month to be part of that. So that's another source of income. Now could I cross out one of those sources of income and still be okay? Absolutely. If I find that the club is taking up too much of my time, I can stop it. Right. If I don't want to promote the books anymore, I cannot do that. And those income would still come in from the books, but it wouldn't be the same. Right. But I can stop all of those because I have other sources of income. And so if people do that, if they create their purposeful in how they plan and the goal set and they create these different sources of income, then they can cross out. If they lose their job, it's okay. Right. Because they have other sources of income to cover it. And that's what I encourage people to do with real estate investing. It's a great way to be able to do that, to have something that continues to pay you every month if you're buying the asset. Well, in a good appreciating market with cash flow pays you every month to own it, it's hedged. Right. Now, you've got negative real rates, like where your inflation rate is higher than what you're borrowing for. It's a no brainer. And you're borrowing at a higher like what other type of assets does a bank give you five times the amount that you are putting down in order to own an asset? It's beautiful, right. So it only makes sense to be able to have at least at least one so that you can have that for part of your retirement, if that's what your goal is. Right. And I would encourage everybody to have one outside of their principal residence. Right. So have a couple of these rental properties chugging along or invest in somebody else's project in a multifamily project, whatever you feel comfortable with. Like maybe because being a landlord isn't for everybody. But there are so many different ways to invest in real estate now, and you don't have to go to the stock market to be able to do that. You don't have to invest in a REIT to do that today. There's like podcasts like your podcast and connect to other people to be able to do that. So there's just so many opportunities. Sorry, I could keep going. No, Quentin, this is really valuable stuff, and it's valuable to me. So I know it's valuable to the audience that we see now on social media, almost like a caricature of the real estate investor. Right. And it's a beautiful woman or a beautiful man, and they're relaxed and they're on a beach and enjoying life, and everybody is a millionaire and everybody is doing so well. That's not the reality of it. And it requires a massive amount of discipline to achieve the level of success that you have achieved. I've been in and around the business for 30 years. I've seen great markets. I've seen not so great markets. 2008 was no walk in the park, but it did yield a lot of opportunity. And the longer I'm in the business, the more well rounded we become. Right. And understanding what's coming down the pipe and what are the angles and where are the opportunities to seek. But to get there, it's a hell of a journey. It's not easy to make these massive leaps in asset class jumps that you've made. I mean, to go from one to four families up to, as we had said at the onset, pushing $100 million in portfolio. I've seen a lot of folks, including myself, get stuck along the way. You start buying two family, three family, four family. I made a mistake years ago of buying a building that was a great value. It cash flowed, but it was not in my local market. And it was in a market that was not dense enough where I was able to acquire any kind of critical mass. So I was in no man's land. It wasn't a big enough asset to have a full time maintenance person because it would have stopped the cash flow. But there was not enough opportunity around there to pick up enough units to get to that level. Right. So these are mistakes that you fall into as you're going along. And I think it's fascinating that you've done it with such absolute precision. And we have a book club here that we do every Tuesday morning. And I'm going to add the action takers real estate investing planner to the book club, because I think it all starts and stops with goals and intentionality. I think you have to be extraordinarily defined and intentional in what it is that you're trying to achieve. So as you're setting these goals up and you're taking a look at ten years down the road. You had said that you chopped these up into 90 day sections, and then I guess it's a 90 day overview. And then do you have weekly planners? Daily planners. How are you breaking that 90 day period up? And what does that look like? Yeah. So once I've done my of course, I spend a lot of time on my ten year goal. Right. And planning like a day. It's not like I do it in an hour or something like that. This is where you spend a day kind of working on the quarterly plan takes probably three or 4 hours to do it because I'm connecting it up to the ten year. Then every Sunday night, I work on my weekly plan. My weekly plan is on my desk right beside me. I still do it in paper because I'm still old school like that. Right. Like, I've got a paper copy of my weekly plan and I refer to it. And as I get things done during the week, I'm checking it off. Right. As I'm going through it, I'm actively insured. And the reason why I kind of like having a paper version. And maybe this is just me is because I always see it. If I have it on my app or if I have it on a computer program, it's closed. I don't see it. But every time I look to my right, I see what I need to work on. And then I'm focused on it, and I'm working on it. That's part of it. Being able to see that plan and then focusing on it, I can see what I have to check off and what I've already checked off this week. And then when I go back to look at it at the beginning of the day, I see, oh, man, I got to get that done. So then I'll work on it. Right. And so that's what I find has been helpful for me when it comes to the ten year goals. Quarterly plan, weekly plan. And then when I do my quarterly plan, there are a few different tools that are part of the quarterly plan that help me to prepare me in order to when I'm working on my weekly plans to give me a focus. Right. So if I didn't have financial freedom, then I would be focusing on my quarterly plan to add more income into what I'm doing. Right. So my focus would probably be to add another let's say if you were to ask me ten years ago, it might be like add another $1,000 in cash flow to my monthly cash flow for the quarter. That would be a quarterly goal, for example, that I would work on. And what would that look like? The actions for me? It would probably have been acquired two to three more duplexes during that quarter. How would I also do that? I would probably take on partners to be able to do that because I found that if I took on a partner, we may have been able to cash flow $800 a month or $1,000 a month. But if I didn't have to bring the money, then I could still achieve $500. But I could scale more. Like I could do a little bit more on the scaling side. So that's what I would do. And that's all part of my quarterly. And then when I look at my weekly, I'd say, okay, I need to find two duplexes or two properties that I need to be able to duplex. I would add value to it. So I buy a single family home and add an accessory apartment to it. You might call it an accessory dwelling unit, something like that. So that would be part of it. The funding part would be find a potential partner. But I'm always looking for partners every week. Right. So that's part of the process. And then financing would be okay, what banks can I work with or what credit unions or who private lender can I work with? Who's going to help me achieve that particular goal, right? Yeah. I'm sorry. Just to be clear there, you're saying that you're seeking partners out. Are you seeking partners that are staking equity and you're going out and securing traditional institutional debt to conclude the transaction? They're putting up capital and their passive investors. Is that what you're doing? Yeah. So it depends. When I was doing one to four unit properties. So this is before, right. I would take on partners who would bring the property and qualify for the mortgage. So it would be more of a straight joint venture partnership that you might have heard of in the past. That's how I would do it. But I would do all the work and we would split it 50 50 because I had the model, I have the team, I have the trades, I have all the relationships to ensure that everything gets done. And what we would do then is once all the work was done, we would refinance the property. They would get their funds out as much as we could on the refinance. Most of the time it wasn't a home run. Occasionally, like one in ten, it would be a home run and they get all their money back. But usually they would get back on top of the renovation costs, let's say five or 10% when they were putting 20% down. So that's a huge number. And then they would roll that into the next property because they got the funds back. They're super happy, they're getting cash flow. And so it was easy to scale because I kept doing all the work, they kept bringing the money, helping to qualify, and then we could continue to scale as we get into the larger apartment buildings. The way that the partnerships work would be different. Right. So what I would do is I would have the same sort of system, except we would have a corporate structure. And when you have the corporate structure, the Corporation would buy the apartment building and then the partners would buy shares in the Corporation. They would own shares up to 50%, and then I would own 50% because I'm finding the property, I'm spending the time repositioning it. In the US. Often you see that it's like an 80 20 split or something like that, or a 70 30 split. In Canada, I've always done a 50 50. So I have the track record, I have the experience, I have the team. So that's the way I've always positioned it. You can partner with me or not. I don't care because I've been doing this long enough that I know what I'm bringing. So I've been able to do that with partners and I still own 50% and they own 50%. They bring all the funds because it's an apartment building. I'm doing the like in the US, you have non recourse loans for apartments. It doesn't happen in Canada. Everything is recourse in Canada except for Alberta, but everything is recourse in Canada. And you have to personally guarantee everything because when I look in the US and the kind of stuff that I can do down there, I'm like, wow, this is like Candyland. I got so many different lenders to work with and stuff like that. You don't know how much I appreciate when I look at stuff in the US, how many opportunities you have down there. It's really amazing. Anyway, so I've got to qualify, I've got to be personal guaranteeing on these buildings. And then my partners are bringing the funds and I'm going through the same process I used to do on one to four unit properties. But now it takes me two or three years to do on the apartment building. So, for example, I just bought a twelve unit building three years ago for one point 75 million. I just got it refinanced or reappraised now for two point 65 million and we have a new mortgage for 1.9 million. So my partner is getting back his 500,000 and we're splitting the 75K each, and he's rolling that into a 24 unit building that I'm buying. Right. So it just keeps snowballing. Right. And then as you do this and you develop a good reputation, more and more people are going to want to do that with you. Right. As people get to know you and they like you and they see that you are trustworthy and you continue to do what you say you're going to do. These people will tell these people and then you can continue to grow, right? Yeah, no doubt about it. In the States, you hear a lot of the folks that are just getting into the business doing 70 30s and 80 20s, but we do deals 50 50 and we do the inverse. We've gone as high as 75 25 because like you said, we've been doing this for 30 years. We've made our clients. Thankfully, we've done really well for our clients over decades now. So when you have that track record and you're bringing the expertise, you're bringing the deals, the returns can be really attractive. Even when an investor is only taking 25% back on a deal, they could be really attractive and having some of the tools that we have here, as you had mentioned, like non recourse debt, it really gives you the opportunity to take some shots and you could do some damage here. I'm curious, as your underwriting deals now, what does that look like for you? Are you focused on cash? On cash? Are you focused on the cash flow? What metrics stand out for you in a typical building? What type of returns are you looking for at this stage in your career? Yeah, that's a good question, because a lot of the like, when you look at Toronto and you look at cap rates, they're like sub 2% cap rates. It's like craziness. Right. So I'm looking at other markets within Southern Ontario where I can get like a four and a half cap rate, and even that is kind of tight. But I know that when I turn over those units that there's like a four or $500 difference in rent. So the future rent bump on the turnover is going to allow me to get the value increase that will bump that up enough. I also want to see I'll tell you what, because I understand both markets in the US, when you deal with Fannie Mae and Freddie Mac and those type of lenders, your rates are still higher than my rates with CMHC in Canada. So we can get like a sub 2% rate sometimes. And this is for apartment buildings with like a 35 year M, 30 year Am, sometimes a 40 year Am. If it's a new build and you can get a higher loan to value like 85%, typically conventional is 75%. But when you go to CMHC, which is equivalent to your agency debt, you can get up higher. And so what ends up happening is that results in a better ROI for me on my investments. I would never leave investing in Ontario except for the fact that I can get some currency hedging. And I understand real estate, so I can continue to invest in it in the US, but my returns are quite good. And so there's a lot of opportunity for me here. The challenge that I have is that the real estate market in Ontario is like California and New York, man. It can be like rent control. Right. Our rent control is ridiculous. Right. You can't do any rent increases and like next year's rent increase is 1.2%. So it's tough. But if you're turning over a unit and it becomes vacant, you can bring it up to market rent. Right. And so those two books that I've written on property management. I understand the market. I understand how to be able to do what I need to do in order to turn over those units. So I'm looking at four and a half cap rate. I'm still looking at cash flow from the asset. I do not buy anything that's negative cash flow, even for the apartment buildings. And I want to see a spread between what my rate is for borrowing and the cap rate. I want to see that 2% spread at least, because at least within that spread, I know that I'm going to be able to carry the asset. And then I'll start working on and repositioning the asset. We'll lower the expenses. We'll put in Led lights. We'll do the low flow toilets. We'll do everything that we need to do to turn over to reduce the expenses. And then we'll start working on increasing cash for keys, do whatever we have to do to put pressure on those low quality tenants in the building. Like, really work on that until we can get it to where we want it. And then we'll go and refinance the asset. And particularly on bigger buildings. I find that this works really well. Right. And sometimes we get lucky. Like, we bought seven apartment buildings this year and we bought it at like a five and a quarter cap rate and the actual cap rate compressed by the time we went from conventional debt to agency debt. Right. And so the cap rate became closer to four and a quarter. So we're actually getting more from agency than we thought we were going to get. So we actually did even better on that. So we're actually returning funds to our partners. So you never know, right. This is the beauty of real estate. That's like a bonus, right? It doesn't always happen like that. But that was really cool. But we work hard like we do. We work hard to make sure that we are able to do this. And I've got the bumps and bruises to prove it. Right. There's always some challenges, but I never say that I make mistakes. It's always about I've had some good learning opportunities. Right. I love it. So you're focusing on something that not enough people talk about. We wrote up here a program years ago that was focused on the commercial side, but it was called the RPO, the Real Estate Portfolio Optimization program. And this is something that folks do not put enough time and energy into after you've acquired the asset. There is just gold Nuggets. Typically in any transaction, in any deal, there are ways to optimize and skinny up on the expense side and to drive revenue on the income side. And that's something that folks don't spend enough time, in my opinion, looking at everyone's always racing to the next deal, right. It's the hustle. And we have found that just by taking a much sharper look at the existing portfolio, there's an opportunity to really unlock some serious cash there? Absolutely. I think the difference is that they have not taken on the role of asset manager. They have left it to the property manager and said, you property manager, you do what you do and everything's going to be all right because I picked the right property manager. That's not it. That's just the beginning, right? You have to manage the ass. I talked to a couple of guys. They took me out to lunch because they're starting to get into buildings about like a 25 unit building. And they were asking me how they were telling people that they were getting returns of 10% or 12% or whatever it was. And then I looked at what they were doing, and they did reduce the expenses. So they were working on Led lights and that sort of thing. But they weren't trying to maximize the turnover of their units. So they just had the 25 units. They had three units turnover. And I was like, wow, that's great. Three units. It's like 12% or something like that. Right. And I said, what did you do to get those over? Oh, no, those were all natural. So you didn't even work on it when you got those done because each of those units turned over and it was a $500 rent increase on each one. And like on a four cap property, that's hundreds of thousands of dollars. What if all they did was work on getting three more in that one year? They could have made a half a million dollars on that asset. Just a little bit more work. Work on being an asset manager. Right. Instead of letting your property manager do what they do just by themselves. If you can take on that role as an asset manager, that's definitely something that could change the value of buildings. Dynamically. Huge, dynamically. See, you're looking at vacancy and turnover as opportunity. And most real estate investors today at least are looking at vacancy as we would rather take a bird in the hand than worry about what we could potentially do insofar as driving revenue. But to your point, there is real opportunity when you're I call it being an operator. I have one of my business partners. He is just a brilliant operator. He finds those opportunities and understands he's not afraid of vacancy. He's not afraid of pushing the envelope because he understands when you're an actual operator or manager and hands on that there's just winds everywhere, man. There's winds everywhere. So for us down here, I'm curious what the climate is up there. Regulatory risk is a major challenge for us here in New York now, and there is not the opportunity that there used to be. Although a lot of the legislation is well intended, oftentimes in practice, it just doesn't work. So from a regulatory perspective, is that something that's part of your analysis as you're moving through the process? And for us, it's now top of the board on just about every project we look at. Or what are the regulatory risks? Is that something that really is coming to focus for you? Well, regulatory risks are something that's always been a part of what we do. Right. With the rent control rules that we've always had with the landlord tenant board regulations that we have, it's always been a huge risk. And it makes me actually want to reach out and look into different places. And that's also a good opportunity for me to continue to push into the US. Right? Yeah, because I can go into the Southern States and it's just totally different. Right. And so, yeah, I would say that becomes part of it. But I also know how to play within the rules and the properties that we're purchasing in those areas where regulations are higher, it also means that there are less competition. There's less people who are going to play in that space. The small landlords that play in that space, they usually get out of the market within a couple of years because they realize that especially the landlords, they have one or two units, and then all of a sudden they have like a professional tenant that gets in there, and then it takes them two years to get the tenant out. And the asset isn't even worth as much as it costs them to be able to, like all of those things play into. So if I understand that much better, I wouldn't say that I'm a large scale landlord, but I would say that I'm bigger than average. I feel like I can withstand that a lot better. I'm happy if you don't pay in one of my buildings, because when I turn it over, the value of that building is going to go up $100,000 versus it cost me maybe, let's say ten or $12,000 to get rid of you. Right. So there's that opportunity. Whereas in a comparative method, in those one to four unit space where the small landlords place, it doesn't matter because they don't use net operating income to define what the value of their property is. It's about who sold their property next door. And so they can't get that value increase where I can get it in those apartment building spaces, it's actually more worthwhile for me to be in the larger buildings because I have an advantage over those one to four unit space people. Oh, my gosh. Like the Facebook groups that are like in Ontario for landlords and for tenants, but just to try to help the government, I guess they think that they're well intentioned, but everything that they do seems to do the opposite of what their intentions are. Right. They put these additional regulations to protect tenants, let's say, but really all they're doing is they're creating less supply, higher rents because of that. They tried to put rent control on because. Why? Because there's no supply. Why? Because they have rent control. It's a selfreplicating. Yes, regulations are something that we look at. But for me, the way I play within that, that's where I shine, because I can take something and make it into something different. And I've created a lot of value over the last decade. I'm okay. It doesn't matter what happens. I'm going to be okay at this point. I'm not going to go under because of any big changes. But at the same time, I'm going to take my money where it is valued most. And if I have to, I would right at this point, I know very well that I can play within the space and I understand the regulations and I know it better than the average person, and that's why I can succeed in this particular area. It's a really good question, actually, because a lot of people, as soon as they hear about New York or they hear about California, they go, I'm out of here. It's crazy. But you know what? The thing is, if you can be successful here or in those markets, you can be successful anywhere. That's true. It's like a piece of cake after that, right? There's no doubt that practicing for the last 25 years in New York has given me a unique skill set that as I've done more and more work in these emerging and secondary and even tertiary markets, it's just a far easier way of doing things, honestly. And you touched on a really important point before. You said you're going to go where they're valuing your dollar most. The unfortunate reality here is a lot of investors are feeling that it's just so much easier to do business in other places. That New York was the draw for New York, and the reason people tolerated the legislative thresholds were because this was the epicenter for jobs. This is where if something went vacant, inevitably you are going to find somebody else to backfill it, right? That's what it came down to. It was about dollars and cents. But as we're continuing to decentralize and people are working more and more remote, and now companies are subscribing to the remote opportunity they're decentralizing. It is really cast a bit of doubt over what is the New York market look like in 1520 years. We were telling people four or five years ago, I shouldn't have bought that lot in downtown Manhattan 20 years ago, said nobody ever until now, people are starting to look at the opportunity cost and the threats and the legislative threats and inflation and all of the things that are happening, and they're starting to hedge. They're starting to go into different markets. So that brings me to my next question. Are you exclusively in the multifamily space? Do you have commercial holdings as well? You know what I don't go into? I do have a little bit of retail, but I don't have any large commercial and I don't have industrial. I did have storage before, but we sold off the storage. It was just too much unless you have a lot of scale, it becomes a pain in the butt, right? Yeah. We had something like 60 units or something like that. It's just too small to scale. So we got rid of that. The retail that we have is just storefront. And upstairs we had office and we're converting it to residential. So it's a play on that particular market so that we can create more residential in order to up the value of the building and again, be able to create do that value add. So I kind of stay away from commercial. I'm kind of scared of office. It's something that really I don't know what the future is. And when you're saying all that, I was in Orlando about a month and a half ago, and there were so many people from New York there, I was actually shocked. I was like, you're from New York. Yeah. What are you doing here? It's like, yeah, well, my company said that I can work anywhere, so this is where I'm working. And it was like, there's a lot of people there. So I was surprised. And California as well, which kind of shocked me. So it was very interesting to hear that's anecdotal I couldn't tell you what the real numbers are, but for me, I thought that was weird. I hear that Americans move from state to state more easily than in perhaps other countries that you see people move from province, from promise, state to state. But it just seems so weird that there were so many people from New York there. Right. And some of the businesses had actually relocated to Florida. Right. Because I think it was because of some tax reasons or something like that, the income tax, New York versus Florida, again, that ties back directly Clinton to regulatory threats. Right. So I know that it's not your home market, so it's tough for you to put your finger on it. But let me give you a quick stat. One of the very well respected organizations here in New York released a report a few weeks ago, and the report indicated that 8%. 8% of office workers returned to work five days a week in New York City. 8%. That's crazy. Yeah. That makes me want to think about office altogether as an asset class particularly. But the other thing, too, is that everything is cyclical and it may take two decades to recover. Maybe the best time in the world because nobody likes it. Right. It's hard to say, but I would not want to be in that asset class today if I was looking at two or three or four or five years out. Like, I wouldn't want to look at that. Maybe if I had a 20 year out type of perspective. But right now, that's scary. That makes me go. Luckily, I'm focused in the Southern States right now for my US stuff. I'm in Tampa, and I've got some stuff in Texas and Arizona. That's where I'm focused right now. And it's kind of interesting that you're bringing that up. So how do you feel about the where are you focused on in the markets in New York then? Are you in residential? Yeah. So unique time for us. When we started to see the legislation ramp up against the multifamily landlord owner a few years ago, we recommended to clients, get out then, and many of them did. And we saw real opportunity in logistics, manufacturing, micro logistics. And we did very well for our clients. And property out here has easily doubled in the last couple of years. So we saw that coming. We shifted to manufacturing. And now with inflation becoming a reality, that again gives us this challenge, but opportunity to reevaluate. Right. So where do you go next and what do you do next? And we think that in some of the Southern States there is still real opportunity. But again, you've got to be careful down there because you do have a lot of folks that are buying payments. They're not buying sound real estate deals. Right. And they're creating these submarkets because you know what happens? One or two or three of them fall and that becomes kind of the bar. And that's the comp. And then everybody trades off that comp. But if you're not careful as the market shift, you hit a hiccup here. And if you're not optimizing those units and you're not pulling out those RPO Nuggets we talked about, you could end up in a really difficult spot where in a few years some uncertainty in the market inflation continues to rage along. I'm concerned about what's going to happen to some of that short term debt folks that are in these three and five year deals, interest only. Yeah. Now all of a sudden rates have crept up significantly, and the big institutional lenders are only looking at that a plus credit. We know what happens when the market turns right. I think there's going to be 2024, 2025, I believe will be the greatest buying opportunity ever in the country. But I think it's also going to be very tough for some folks that didn't have their debt stacked properly. I do think in 2022 we're going to start to see more tighter lending requirements and lending standards. I think that there's going to be more of a push for that. We're having a lot of reassuring that's happening. So I can see how well that industrial is going to continue to do because of that reassuring. But also I think that there is a real challenge for housing, like just people living in places. Right. And whether you're buying a single family home or you're living in a multi unit apartment building, the challenge is that there's just not enough housing no matter where you are. It seems that seems to be the case now when it comes to where to invest. I always think most of the time you're betting on the jockey and not necessarily the horse because you could have like a secondary market but you have an experienced operator who's been doing work in that market for 20 years. Everything else could be going to but that guy in that market or that lady in that market who really knows it is going to do extremely well, right. When I say New York and you say wow, but we're looking at industrial in here that's you because your experience and you've shifted and you've changed. So people are betting on you not necessarily like new York or what's going on there. And that's the same for other places around the country or in other countries. Right. It's always about who knows what it is that they're doing. They've been doing it for a while. They've gone full cycle on projects. They can demonstrate the results and that's where you want to be when you're looking at those different projects all over the place. If you're going to go into another market and you're going to invest with somebody else, Just make sure that they have the track record in that market to be able to demonstrate success, right? Absolutely. Without question. I've kept you here for already an hour and I feel like I could go for hours more. This has been a fascinating chat, Quentin. What's the best way for folks to find your content and to find you?

I mean, the best way is to go to my podcast, getrealwealthy. Com. I've got a YouTube channel there. Or you can catch me on Instagram or Twitter, acumen Rei or you can go to my link tree, which is link. I don't know what it is. That's the URL thing with whatever we'll have. It all below, folks. So again, for the audience, definitely take the time to give Clinton's content a good, thorough look. It is outstanding.

Again, the success here can't be argued with and he does take you down a real pragmatic path of how to get those goals. Set the action takers real estate investing planner. We're adding it to book club next month. I suggest everybody give it a shot. Quinton, it's been an absolute pleasure having you on. Thank you so much. Thank you so much, James, for having me. I really appreciate it and I love the insights and the conversation. It was a lot of fun. Yeah. Same here. Thanks so much. As always. Everybody out there, please stay safe. Bye you.