Hey folks, welcome back.Today I've got a special guest and an old friend, Michael B. Arthur, who's zooming in from beautiful Ottawa, Ontario.Michael is... a triple threat when it comes to real estate investing.He is a real estate investor.
He's done all sorts of different kinds of deals these days.He and his wife are focusing more on small multifamily properties.He's also a very, very experienced and knowledgeable real estate agent, a realtor.And he's also helped a lot of people
through coaching and training and teaching about real estate investing itself.I've had the pleasure of knowing Michael for quite a number of years now.And Michael, it's a pleasure to have you on the show.Welcome.
Oh, I appreciate it, Dave.Thanks.It's nice to see you again after all these years.Yes.Thank you.
So Michael, we were talking a little bit offline and you're getting on the soapbox today and you want to talk about something that really kind of irks you.
And that's something that you've seen as both a realtor and as an investor and as somebody who works with real estate investors.And that is some really big mistakes, kind of dumb mistakes, newer real estate investors
are continually making, all right, and it's costing them a lot of money.So let's talk about, what would you say is one of the bigger mistakes you see people making over and over and over again?
Yeah, yeah, yeah.Dave, just based on my experience, I've been in the real estate investor about 10 years right now, and there's three critical mistakes I've been seeing consistently from new real estate investors, and I call them the three Ds, okay?
The first one, is that a lot of new real estate investors look at the wrong data, right?
The data that they use is learning from somebody else through speculation to say, Oh, invest in this building or invest in this, in this area, blah, blah, blah, blah.
It's a brand new blah, blah, blah, blah, without looking at the real numbers of the property in question.Right?So they, they, they use that information. and put their money into the property that they thought that it's going to make, make the money.
And then they lose it.They lose money consistently every day.It's negative cashflow every month.And what they forget is that they rather there's a saying, I use one of the principles that I use as a real estate investor.
And as a coach, when I teach my clients is that they, forget to focus on the numbers rather than they use their emotions to make those decisions.
So what data are people looking at and which data are they forgetting to look at?
Okay, let me give you an example, okay?One example is that what I've learned is that you have to go to a city or a local government's economic development office, as an example.
What you do is when you go into that office, or you can do it online as well, is that you can retrieve information of upcoming projects in the neighborhood, in the city, or in the region or local town that you're living in or where you want to invest.
As the saying goes, you invest where the construction is happening and where the jobs are.So when you get that information of upcoming infrastructure projects, commercial development projects, residential projects,
those are opportunities where you can find existing properties, or you can find pieces of land to build on where there's opportunities for appreciation over time.A lot of you real estate investors don't do that.That's just one example.
That's just one example.So I've been seeing that where Like a lot of investors don't even do the proper analysis.They don't look at the cash on cash, the net yield, the DCR.You don't even look at that.You just want to invest.
Oh, I just want to make money based on speculation, based on what somebody told them, who's not even qualified or who's not even experienced.
So what do you see?And you're seeing people that are jumping in.Everybody around them seems to be buying real estate.They've got FOMO, fear of missing out.
So they just run in and buy a property and they- Buy a property, thinking, hoping that it will make money, be profitable and all that while they realize every month that they're consistently losing money, negative cashflow.And then they're forced.
Then they have to force either do a refinance or forced to sell. or stick with it.Or subsidize the hell out of it.
Yeah, so I know from my own personal experience working with people related to this, looking at the wrong data or incomplete data is also just relying on the owner to tell you the truth with the data that they give you or the realtor
just trusting blindly the information that you get from the realtor about a property.
So years ago when we were, I was working with my buddy Ken Beaton and we were looking at some properties in your neck of the woods, in Smiths Falls and areas around there.That was Ken's favorite thing is, you know, trust but verify.
Actually, he didn't even say trust but verify.It's like, don't believe a damn thing the seller's telling you.Reconfirm, re-verify, assume. that they're fudging the numbers and look at everything that way and really double check things.
And yeah, all sorts of stories about false rent rolls and all these kinds of things.So yeah, don't trust the data that you get from the seller all the time either.
Which is a great segue, which comes to the second big mistake.And that is Lack of due diligence.
It has a lot to do with data.So I guess the first one was more about where the market's going.And now the due diligence is more about the property itself.
Is that correct?Yeah, that's correct.Where, as an example, you brought the example of your experience with Ken Beaton, trust and verify. don't rely on what the seller says.
Don't rely on the MLS listing information because sometimes as you see in the MLS, a lot of these realtors, the listing agents, they misconstrued the numbers trying to say that, oh, it has a great cap rate and all this stuff.
And it's a great deal where the new real estate investors is relying on that And they make the purchase at that price while they realize that they're still losing money.Right.
Well, yeah, because here are a couple of things that I've seen with that, Michael, is number one, most realtors, unlike yourself, are not real estate investors. They are actually salespeople and the product they sell is property.
And the way they get compensated is by commissions.So we always have to remember that is, Hey, it's in your realtors best interest to sell you that property.Cause that's how they get paid.
Exactly.Because at the end of the day, as you said, the end goal is like, especially for the listing agent is for the, to buyer to buy the property.
they get paid their commission that as hard to deal closes and let the buyer deal with their problems.
Pretty much.And I've seen that countless times.
And in fact, I was being referred to, uh, by several people or people who have contacted me to work with them because they work with inexperienced realtors who don't even know, not even a lick or a stream or like a little teeny thing about real estate investing at all.
So I've seen it.I've seen it all.
Yeah.Well, I mean, obviously you're a real estate agent and an investor all rolled into one.Most of our folks listening or watching this are not in the Ottawa area.
So what would you recommend for somebody as a way to find a good, trustworthy, knowledgeable realtor?
Well, you have to do, you have to, you have to have an interview with them. in terms of their experience?And if number one, are they a real estate investor themselves?That's, that's the most important critical question.
Are they a real estate investor in themselves, right?How long have they been owning real estate investment for?What type of strategies do they use to build their portfolio?Are they doing a deburr strategy?Are they doing the rent to own strategy?
Are they doing Are they doing to scale?Are they refinancing?Stuff like that.These different types of strategies.Are they using tax liens, like where I learned from you, in terms of like auction stuff, all that stuff.Do they have that experience?
Are they doing what you want to do, basically?That's kind of what you want to see.And I will advise So people who are watching this, this, this interview, this is critically important.
It's important to ask realtors about asking them situational questions, right?Let me get, so let me give you an example, right?So let's say that you come across a property and you like it, the numbers look good.What would you do?
How would you analyze this property? Do, will you check the zoning?Will you check the history?Will you check to see if there is any liens on that property? Will you do your due diligence?
The second, the second D, the second mistake that new real estate investors do.You have to ask those types of situational questions, right?What happens?How, how do you negotiate the deal?What happens if the seller doesn't want to accept my deal?
What do you do?What, what strategies or options do you come up with for me to get this property that I want?Because it's going to positive cashflow for sure.Stuff like that.
So you have to ask these types of situational questions and, and listen to the tone, of, of the real estate agent or if it's on a phone or a zoom call, like we're doing right now or in person, look at their body language, get a sense of their tone.
Are they really telling you the truth?Are they, are they, do they know what they're talking about?Right.Do they have, do they, do they have a strategic game plan of how to deal with that stuff?Do they, do they have a checklist of what you need to do?
Well, how do you, how do you analyze a property?Right. Stuff like that.Do you have a calculator and an analyzer, online analyzing an Excel document or an online software program?Stuff like that.
That's critically important.
Yeah.All right.So we got the first two D's.First one is the data.So make sure you're looking at not just what's going on with the property, but what's going on around the property and in the community.And is it an up and coming
area of town that's going to appreciate nicely.The second one was doing the proper due diligence, making sure the deal is a deal, making sure that you're working with a good realtor who knows what the heck they're doing.What's the third one?
The third one is also critically important, is clear direction.You see, a lot of people they, especially new real estate investors, they want to get into real estate to make money, which is fine.Well, that's kind of the purpose, right?
That's the purpose.Yes.But the critical question, Dave, is what do you want to get out of real estate apart from making money?Do you want to donate to a local charity in your neighborhood?
Do you want to help your fund, your kids' children's education?Do you want to, uh, move from a small home or move from an apartment to a bigger house, to a bigger property?
Do you want to use the money to travel around the world or to set up your own business?Right.To transition from your nine to five job to establishing a new business as an entrepreneur or solopreneur.
So these are the types of things you have to like your why.OK, yes, you have the money, but how are you going to use that money from real estate to fund the lifestyle that you want to have for yourself? and your family. Yeah.
That's the, that's the, yeah.
I hear it all the time, Michael.I hear that.Yeah.I want to make a million bucks or I want to make 10 K a month.Great.That's fantastic.Why?What's, what are you going to do with the million bucks?What are you going to do with the 10 grand a month?
What, what does that actually mean to you?Cause otherwise it's just, it's just mental stuff, right?It's, it's not real, but exactly dial into that.Why?
Yeah.Good, good point.Like how are you, how are you, how are you going to use that money to impact
not only your life, but others in your life, people that you care about, people that you want to support, people who you want to take care of, stuff like that.A lot of you new real estate investors don't think like that at all.
99.9% of them, as you know, as well.And I've seen that not only as a real estate investor, but as a coach as well.So.
All right.Very, very cool, Michael.So you do a few different things in the real estate world.So I love that it's, it's kind of all combined.You're a realtor, you're an investor, you're a coach.
Walk me through a little bit, like as a realtor, what is your niche or what is your specialty?What is the market that you focus on the most?
So, so my specialty is mostly concentrating with new real estate investors, mostly. but also experiencing experienced real estate investors who want to scale their portfolio.Okay.
So what I do is that I sit down with them and ask them a series of questions, which using the, and part of it is part of the three D's that I, that I talk about, right.Just to get to know where their head is at, right.
So that we come up with a game plan that aligns to their, not only to their goals, but also more importantly to their values.Right. So that's what I sit down with.I just don't sit down with them.So yeah.Okay.
You want, you're interested in real estate.Okay.I'll send you properties.No, I want to sit down to get to know you first, who you are, your background, your family, your history, stuff like that.
So you're primarily working with people that are looking for single family homes or multifamily properties.
Yeah.Various, various, uh, mixed use, uh, commercial properties, um, distress properties, uh, even land. even land development as well.
You're in Ottawa, so what market area are you covering?
I pretty much cover everywhere, but mostly my focus is Ottawa South, Orleans, Nepean, Westboro, and as well as Kanata, and some of the rural areas as well that I'm familiar with.
All right, so in and around Ottawa, that makes sense.Okay, so that's the realtor side of things.
When it comes to Michael Arthur, the real estate investor, what kind of properties do you have and what kind of properties are you looking to acquire personally?
Right now I have, like right now it's a mixture of passive and active real estate investing that I'm doing, investments that I'm doing.I have,
I sold most of my properties, but I have one property that, which was my first home, which I converted into a basement apartment.
That's how I started getting into real estate investing, just to let you know, by the way, and I have two units of one above one, one below is doing well.
And then most, and then other investments is into using my TFSA RSPs and some money to lend to others. To either not only to invest in real estate, but to help them on the down payment on their 1st home.
Or as well as use money to renovate their property, either to. to, uh, for refinance or to flip and stuff like that.
And then myself and my wife, we're, we're venturing out into getting to multifamily, especially only small multifamily projects, but also, uh, commercial properties that have at least five units and above.
Very nice.All right.So yeah, that works nicely.So you've got your realtor business, you've got investment properties.It sounds like you're a private money lender on other people's projects as well.Yep.Okay.
And then you've gotten into the coaching biz as well.Now, correct me if I'm wrong, it kind of sounds like you do some coaching anyhow with your, with your realtor clients, you have to coach them as to what the hell they're doing.
Cause a lot of people come in not knowing what they're doing.So now you're, you're offering those kinds of services to people that might not be in your local area as well.Is that correct?
Yeah.Yeah.Yeah.Definitely.Yeah.Outside of Ottawa as well.Yep.Definitely.Yep.
And you focus more on newer real estate investors just getting started or just getting started or if they have a property or two,
then I can work with them.Sometimes I get, I do some consulting with the experienced real estate investors.If they want me to give them advice on a certain situation or problem or issue, stuff like that.
Yeah.Very cool.Well, Michael, this is awesome.It's really good reconnecting with you.And I'm, I'm impressed with how you have progressed since we last chatted.You've, you've done a lot in real estate.
Last time I was talking, you were just getting married.Now you got babies and all sorts of stuff happened.So congratulations.
Yeah.That's most of my full-time work. You got a two-year-old at this point.Yeah, yeah, yeah.Definitely, definitely keep you busy.That's another business.
That's another whole podcast there for sure.So people want to connect with you and find out more about what you're up to and maybe work with you one way or the other.How can they do that?
Best way to connect me is on Instagram.It's MikeTheAgent613. at Mike the agent, M I K E T H E A G E N T 6 1 3.They could connect me there.
And as well, um, when you go into my bio, I have a link that talks about, I always, I talk about the three D's, uh, briefly with you, but it goes more in depth as well.
There's two other critical mistakes that new real estate investors need to learn about, right.To avoid themselves losing money. So I talk about that as well.You'll see it in the link.
And it's basically a great video tutorial, which not only tells you what the mistakes are, but how to avoid them through practical real life strategies.
Awesome.Awesome.All right.Well, thanks very much, my friend.And everybody, thank you very much for tuning in.And we'll see you on the next episode.Take care.
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