In this episode, Jose shares his investing strategy and some great tips for you to start or grow your portfolio.
– Being a business owner is the only way to grow your wealth and have financial freedom.
– Real estate is simple to understand, it’s not easy to implement.
– The gurus on t.v. make it look easier than it turns out to be.
– The best way to get started is to educate yourself and network with people who have done what you want to.
– Real estate investing is a team sport…you need people who can support you, help you and keep growing.
– After the education you have to take action! Your mistake are learning opportunities to get better.
– Reverse engineer the deal to find your offer price…and always add a 20% buffer.
– Secondary suites address affordable housing issues and increase your cash flow.
– What renovations you should avoid…check your neighbourhood and your bottom line.
– Start off small and move up to larger projects…you need to thicken your skin.
– How to find and test contractors.
“Real estate investing is like an adrenaline rush, once you start, you just can’t stop,” says Jose, who bought his first property five years ago and hasn’t stopped since. With a background in Engineering, and a knack for problem solving, he began his quest as an entrepreneur at the young age by buying his first property in 2007.
Jose was always interested in ‘all things financial,’ and spent a few years working in the financial services industry offering people mutual funds as a primary investment vehicle for retirement. However, everything changed after the late 2007 market crash where Jose and many of his clients lost a large chunk of their investment portfolios. He quickly learnt that the old mantra simply did not work:
1. Save regularly.
2. Hold your investments for very long periods.
3. Build a highly diversified portfolio of mutual funds.
4. Stay out of debt
This was a turning point for Jose who has since dedicated his life to learning and investing in real estate and has maintained a successful track record ever since. He says “I have always been the type of guy that loved learning about investing and also took a lot of stock and options training classes before real estate; I cannot put any of my money on the line without knowing the risks – that is just gambling.
Jose has successfully acquired a large portfolio of investment properties in Ontario and the USA. With work experience in Construction Management, Jose took on renovation projects for most of his properties. He says “I don’t like waiting for the market to appreciate, I like creating instant equity by increasing the value through strategic acquisition and renovation”. Together with joint venture partners, he has acquired 30 + units over the last few years.
Many of the properties he buys are in terrible shape. A large portion of his portfolio consists of foreclosures that he bought significantly under market value; on the same token, most of these properties were severely distressed and required a lot of work. “You name it, we have dealt with it,” says Jose who mentions underground plumbing issues, sewer back-ups, ceiling leaks, mould issues, foundation problems, and just recently a fire claim that left us severely under insured. “Along the way, I’ve had huge financial set backs as well, it hasn’t been all smooth sailing,” he adds. Early on, he got caught up with a contractor whom he had paid a large sum for materials; he didn’t finish the work, and disappeared. “I took a big hit, it was a substantial amount of cash,” says Jose, “but I have learnt from it and continued my journey in real estate investing since.”
The reason for Jose’s success today is because he had courage and took large risks (some that he now thinks were absolutely crazy). He says that not everything has to align in order for you to make a decision and take action. In the words of Aristotle, “For the things we have to learn before we can do them, we learn by doing them.” He also adds that resiliency is key; when you take a hit, you have to be able to bounce back and keep on moving forward!
“Everyone thinks attaining success is just about knowledge, and it is, but personal development is the most important thing,” says Jose. He adds that the skills required to build relationships, having mental endurance and envisioning the future by setting goals are essential for success. Fighting discouragement, both personal and societal are a huge part of any business he says, because there will inevitably be setbacks. “I spent 3 months of hard work on the first property I bought, and didn’t make a single cent on it,” says Jose. But it wasn’t long before he had forged ahead, and bought his second property, again facing multiple obstacles. Forging forward despite all these setbacks are what is required in any business, he adds. John Quincy Adams wrote, “Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.”
Jose is continuing to pursue his goals towards his vision of buying properties with joint venture capital and helping other people create wealth in the process. It is a win-win situation as the returns that I provide to my investors are much higher and safer than a stock or mutual fund. I like taking risks; however they have to be calculated risks with controls. Buying a stock or mutual fund gives you no control, the market could drop 10% tomorrow and there is nothing that can be done to change that. Jose educates people about money; how wealth is created over the long term, shows examples of sample deals in the past, and earns the trust of his partners.
His goal is to keep expanding his portfolio and purchase larger multi-family buildings with joint venture partners. He also would like to start getting into condo conversions and small scale development projects.