Welcome back to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. Today, I have an amazing guest with us, Jeffrey Woods. He's been a full time real estate investor since 1998. He's owned over 150 doors in the Hamilton and Niagara region.
Scott Dillingham:He's owned a property management company, a renovation company, he's done flips, private lending, coaching, all kinds of things. Now looking into investing in other countries. So welcome, Jeff. I'm so excited to have you.
Jeffrey Woods:Thanks for having me, Scott. It's a pleasure to be here.
Scott Dillingham:Yeah, no worries. I appreciate it. You know, there's a lot of investors that I see, they try to get started and they don't know where to get started to pick up that momentum to get going. I'm curious how you got started into the world of investing.
Jeffrey Woods:Yeah, so I'll give you a kind of a really brief background. I was a poor broke college kid struggling very early on, and always entrepreneurial minded and wanted to figure out a way to create financial independence. Stumbled across real estate, worked really hard, saved up all my money to buy my first property which was a beat up bank power of sale back in '98. From there, I fixed it up and started to rent bedrooms to college kids and figured out that not only would it cover all of my expenses, but it would put cash flow in my pocket. And so I felt that I was a new real estate tycoon and had it all figured out.
Jeffrey Woods:So quickly took my profits to buy my second property and learned a lot of valuable lessons because I bought a bad property in a bad area with bad tenants, with fire code issues, and dealing with landlord tenant boards, and learnt a lot of very valuable lessons with that. And then from there, quickly figured out that I needed to be educated and learn from people that have more experience and have done it and are successful in the field. After many years of educating myself, moved on to bigger deals, multifamily commercial deals, small apartment complexes and so on.
Scott Dillingham:No, that's awesome. It kind of sounds like mine. I I made a joint venture partnership. The guys like you find the house, put in a cash offer, and we'll move forward. So I found this house that the after repair value was really positive.
Scott Dillingham:There was a large spread that you could get over the cost of rentals. But like you, it needed everything. I had bad tenants the first time around. And I really learned from my very first property. I had to do everything with it.
Scott Dillingham:So it was super cool. So no, that's great. So then how did you go? I know you took the courses and then you started getting into other things. How did you find the capital for that?
Scott Dillingham:I know you kind of said after the first one, you know, you had some funds from that to move forward. Is that what you kept doing? Just kept pulling the funds out of the properties and reinvesting it?
Jeffrey Woods:I certainly used that strategy, the BRRRR strategy, but in the beginning I used my own capital, which was limited. Then from there, the way that we were able to scale quickly. So I took on a partner of mine who was a friend and also was into real estate at the time and we kind of joined forces. Through my training and coaching and education, I discovered, you know, using other people's money and private funds and self directed funds. And so I began to take on joint venture partners and from there we were able to deliver on our deals and, you know, buy undervalued properties and fix them up and add value and then refinance them and pay back our joint venture partners capital, many times in full, sometimes, you know, a large portion of it.
Jeffrey Woods:But ultimately, they loved the hands free investment and every time we paid them back, they wanted to reinvest and buy more. So from there, it quickly scaled and we did, you know, for me, I had this goal, this what I thought was a huge vision of having 100 rental units. And through joint venture partnerships and private money, we exceeded that in under six years.
Scott Dillingham:That's incredible. No, that's awesome. And I'm seeing a lot more. I don't know about you, but I'm seeing a lot more investors try to set up and do joint venture partnerships now because the cost of everything is is much higher, than it used to be. Are you finding that too?
Scott Dillingham:A lot more people are wanting to partner?
Jeffrey Woods:Yeah, it's certainly a good strategy for individuals that are willing to put in the work and have the time and the knowledge and dealing with the acquisitions and the management and so forth, but don't have capital. And so to partner with other people that have the capital, but may not have the time because they've got a high paying corporate job and a family and so on. So it makes a really nice synergistic partnership. And yeah, that's what I find many new investors do to get started.
Scott Dillingham:Yep. And then for you, I know at the beginning I introduced you as a full time investor. So then based on what you just said there, I'm assuming you're the partner that structures and does all the work and then you try to find the money partners.
Jeffrey Woods:Correct. I was willing to because remember when I first started, I was a broke college kid in debt, you know, no money management skills and just trying to figure it all out. I went to work and started, things really started to turn around when I took my money and started investing in my education rather than in the real estate. And then through the education, I was able to learn all these strategies and systems that really ultimately allowed me to then go back and scale my real estate portfolio much bigger and much faster than I ever could have on my own.
Scott Dillingham:That's awesome. And you're talking about the success from it. But did you have any challenges or troubles that you faced? Setting up a joint venture partner? Would you be able to talk about one of those challenges?
Scott Dillingham:So maybe we know how to avoid it?
Jeffrey Woods:Yeah, I mean, there's many challenges along the way, you know, and learning lessons and hurdles and constantly putting out fires and learning how to deal with each individual, you know, not only joint venture partners, but dealing with tenants, dealing with contractors, the whole gamut. It's a never ending learning process. Well, a lot of times when you listen to podcasts, talk about the positives and the pluses, but there s many downsides to it too. So one of the things that I think we did well, you know, based on my education was we really took our time to figure it out on our own and get educated and then really vet our joint venture partnerships well. Because you are creating, like our strategy was multifamily and long term holds for our joint venture partners.
Jeffrey Woods:So we wanted to make sure that we were partnered with individuals that had the same vision as us. So we looked for high income earners, corporate guys, wife, family, no time, but understood the value of investing in real estate and then partnered with them. Before we accepted any money or did a deal, we made sure we're on the same page and of course everything was documented through lawyers and joint venture partnerships and so on. I think it's just really about vetting your partners well and effective communication along the way.
Scott Dillingham:Yeah, no, you're right. And one of the biggest mistakes that I see investors make, they're doing it on their own or with partners or whatever, and you said it there, you vet them properly and thoroughly. In other words, take it slow. I see so many people just jump in and try to rush because they wanna get going, and that's where the biggest mistakes are made that I see. Right?
Scott Dillingham:Where if you just settle down, let the excitement die away a little bit, and then just look at the numbers, look at the partnerships, see if you can work well together. I think that's super important. So I love that you said that because I think that's very important and that's where a lot of mistakes happen. Investing, what is exciting you today? Right?
Scott Dillingham:Because you've done so much, right? You've done the multifamily, the flips, right? The residential, you've done a whole gamut of things. What's exciting you now?
Jeffrey Woods:Yes, I love Canada, you know, many family and friends in Canada. But unfortunately, I've seen kind of the writing on the wall where it's getting progressively harder to effectively build a real estate portfolio with housing prices, the landlord tenant board issues, and you know, all of these things that have come to pass. And so, what I've done, and kind of my goal very early on when I thought about what I want to do and what's my vision, I've always dreamt of having a property down south where I can get out of the cold Canadian winters and really enjoy the tropical lifestyle and be somewhat semi retired and run my portfolio from a distance. Thankfully, I was able to do that and I started to look at Dominican Republic and many other places, but I landed on Dominican Republic in 2018. I had the groundwork laid out there and then when we got hit with COVID and all of that stuff, it just kind of forced me to move up my plans a little bit quicker.
Jeffrey Woods:I came down to The Dominican Republic in 2021 and pretty much been living the semi retired tropical lifestyle here in Doctor. And as wonderful as the beautiful beaches are and the sunshine and the fresh fruits and vegetables and all of that wonderful stuff. I've discovered that this is not the place where I really want to build a substantial portfolio and redeploy a ton of capital. It's great from a lifestyle perspective. You know, if you want to be a snowbird and spend six months here.
Jeffrey Woods:And certainly there is some opportunity here. But what I've found with just doing research and looking into various countries and states and provinces and, you know, doing all the background, I think that the best opportunity going forward is certain states, certain cities and certain states within The USA. And so what I'm going to do going forward is begin to build my portfolio, specifically targeting North Carolina, Atlanta, Georgia. Many Canadians are looking at Florida and Texas. But for me, I like that kind of geographical location because the other thing it does for me, my lifestyle, is I own property in Ontario, Canada.
Jeffrey Woods:I own property in The Dominican Republic and Georgia, North Carolina, Florida is right in the middle. I can get direct flights to Toronto or the Doctor, so it allows me to grow and scale and manage and take care of business from either location.
Scott Dillingham:No, that's super cool. Mean, you've probably heard this, but I like you love Canada. But you're right. There's so many different investment opportunities. We have investors that ask us to finance US properties all the time.
Scott Dillingham:It actually got us into financing in The States. So we've partnered with many lenders to lend to foreign buyers for investment properties. We've got that set up. But the one cool thing is I myself was looking at the Carolinas, north and south. And one of the coolest things that I thought, you know, not about jobs or anything, but they actually have the most consistent temperature year round.
Scott Dillingham:I don't know if you knew that. But it's
Jeffrey Woods:like Yeah.
Scott Dillingham:Whether it's winter, summer, spring, fall, like, it's almost the same all the time. So I thought that was really cool and unique there.
Jeffrey Woods:So that's super cool. Yeah. I like it as well because for me, it's, you know, the priority from an investment perspective is always cash flow appreciation, job growth, you know, these type of things that we consider. But now that I'm getting a little bit older too, I'm also looking at lifestyle. So I want to build a portfolio in places where I actually want to spend some time as well.
Jeffrey Woods:North Carolina is kind of that happy medium where you've got the four seasons, you've got the great weather, but you're not necessarily dealing with the hurricanes in Florida or the high insurance prices in Florida or the flood zones and these types of issues that you really got to dive into. Like it. Geographically, it's well positioned economically. Charlotte in particular, I think, has got a lot of potential with JobGrowth, second largest banking hub in the entire country, next to New York. You know, there's certainly some positive attributes to that area for sure.
Scott Dillingham:No. That's awesome. And and just for fun, now I did not look into this, so I'm hoping you've got the answer here. But let's compare it to Canada. Let's play devil's advocate.
Scott Dillingham:Okay? In Ontario, where I currently live, it can take anywhere from eight months to a year and a half to evict a nonpaying tenant just based on the current demand and backlog and things from COVID for the tribunal. Roughly, North Carolina, do you know how long it would take if someone wasn't paying rent?
Jeffrey Woods:I don't know the exact amount of time, but it's significantly less than that, right? Yeah. Because I looked at various places. Texas, for example, I think is twenty one days and states like North Carolina, Florida, Georgia, these states that are landlord friendly are going to be around that timeframe, but significantly faster than any province in Canada.
Scott Dillingham:Yep. I've heard that. So I've heard in less than thirty days, you can have somebody out.
Jeffrey Woods:Yeah.
Scott Dillingham:And like you said, three weeks. Yeah.
Jeffrey Woods:Yeah. And and the other thing, just so just that alone. So as I mentioned, you know, 150 units and we managed many more than that. But just that one factor alone over the past twenty five years would equate to several 100,000, if not millions of dollars in profit that we lost as a result of being in Ontario and dealing with those types of issues, delays getting people out and damage that is very difficult to collect on. I never went back and actually calculated a number, probably because I would cry, I'm guessing So it's quite just that one aspect alone is really worth considering.
Scott Dillingham:Yep, yep, no, exactly. And then I'm going to just give one more example, And I know this answer. I know you're gonna know this answer too. But in Ontario, right, the rates went up on Canada, really. They went up four times what they used to be.
Scott Dillingham:Like, the the rate increases were more than four times. I'm just saying the rates cause they were around 2%. Now they're anywhere between six to eight depending on your lender, right? If it's an A lender or B lender, depending on how many properties and stuff that you own. That's caused a lot of landlords mortgage payments to drastically increase as they come up for renewal.
Scott Dillingham:Now in Ontario specifically, you can only barely increase the rents, right? You have to follow the Ontario's guideline that they produce annually as far as how much you can raise the rent if you have a tenant that's been in the property for numerous times. So what we're seeing here is lots of landlords where their payments on their mortgage are much higher than the rent they can collect, and they cannot raise the rates. But what would happen in Atlanta or The Carolinas if this happened? How can you protect yourself as an investor there?
Jeffrey Woods:Yeah, so again, many of these states have no restrictions as to how much rent you can increase. You know, if you need more income to offset expenses or if you're dealing with a problematic tenant, you know, you have that right. It's your property, you're the owner, and you have the right to charge the rent that you deem fit. So, again, it's just another massive benefit. The other thing that you mentioned there with mortgages, you know, often times many investors that I speak to, they would take the variable rate mortgage because low interest improves their cash flow and not really pre planning for rate increases because we've been spoiled for so long.
Jeffrey Woods:Then when they get these increases, now their once cash flowing property is negative, alright, so then they're scrambling with that. Even the people that locked in for a five year term, when that term comes due at the new interest rates, expenses are going to go up significantly. Whereas in The US, many of these mortgages that they got for two, three, 4% are locked in for thirty years. Right? So that's another massive advantage.
Jeffrey Woods:Imagine your portfolio at 3% locked in for thirty years.
Scott Dillingham:Yeah. It's impressive.
Jeffrey Woods:So, yeah,
Scott Dillingham:impressive. And there's even so one of our lenders too, and I don't I know this is rare, but one of our lenders even has a forty year interest only payment in The States. You don't see that in Canada either, which is insane, right?
Jeffrey Woods:More options. Yeah, so what you could do now, the interest rates in The US are much higher if you're just getting started as well, but what you could do is take that forty year term at the higher interest rate or talk to a mortgage specialist. But if you're paying interest only, keeping your cash flow high and your expenses a little bit lower, And then when the rates do come down, as some people have forecasted in probably quarter three and 2024, rates start to fall a little bit, then you could look at refinancing and restructuring the mortgage. Again, just more options that you can explore to determine if it meets your cash flow criteria.
Scott Dillingham:That's right. And I'll touch on one more huge advantage too that I've not seen in Canada. So in Canada, can either get like an open mortgage or you can choose your term. But in The States, you can still have that thirty or forty year term, but you can choose. So by default, after five years of maintaining that mortgage, you can then refinance and switch lenders at any time, and there's no penalty ever.
Scott Dillingham:So it's like a diminishing penalty each year you hold that mortgage. But you can accelerate that as well. You can see, you know what, I might want to do something in two years. You know, I'll pay a little bit of a rate premium, but then after two years, my mortgage is fully open and I can switch at any time if I need to. So you get that flexibility too, which they don't really give you here.
Scott Dillingham:You can try to match it up with your terms, but if you're not ready when your term renews, then you're kind of renewing into something else. Right? So it's hard to match it up. Or this, after two years, let's say, for our example, you are open even if you don't decide to take action till year four. You don't have to play the game and keep renewing.
Scott Dillingham:And so it's just smoother, I find, overall.
Jeffrey Woods:Yeah. Yeah. Many more options. Another benefit that I discovered too is that some of these lenders in The US will essentially lend on residential property, one to four units, based on the cash flow of the property and not the individual. So they look at it very similar to a commercial mortgage, but yet you can acquire residential property.
Jeffrey Woods:And so that in of itself simplifies the process for, especially for Canadians breaking into The US market.
Scott Dillingham:Yeah. You're right. You nailed it right there. And it doesn't matter if they're maxed out in Canada because they're not looking at the Canadian income. They're not looking at Canadian credit.
Scott Dillingham:Those are the lenders that we have access to. Actually, we we go from one to eight units, and we're currently onboarding with a commercial yep. We're currently onboarding with a commercial lender that will do unlimited. It doesn't matter how many units. They're just doing some background checks and stuff, which I know will be fine.
Scott Dillingham:But we'll have that probably within thirty days. But yeah. So your rent is just on the cash flow. And even if it's not so we call it, like, a debt coverage ratio. They're looking for a certain number.
Scott Dillingham:I have lenders that don't even have a minimum debt coverage ratio. So you can buy something that still does not even cash flow. There will be a bit of a rate premium if it doesn't cash flow. You know, as an investor to get the best rate savings, you want it to have a positive cash flow. But still, it means you can buy anything, really.
Scott Dillingham:So the qualifications are just so easy.
Jeffrey Woods:Yeah. Much, much easier and an abundance more opportunity as well because, you know, a large a lot of these major cities in The US are significantly larger than Canada, so they just have more supply as well.
Scott Dillingham:Yep. No for sure and you know I don't want this to be all about US, I mean we're both excited about it because we're both getting into it. But I'll say the last final major piece that I really like is that ten thirty one exchange, right, where you don't have to pay the taxes when you sell a property, you can defer it to another property if you're still investing. Then all that extra capital that you would have had to pay on taxes in Canada, you can then reinvest it and grow it. So at the very end, you're still way better off.
Scott Dillingham:Your net worth will be reflective of a much higher figure than if you paid taxes upfront like in Canada.
Jeffrey Woods:Yeah. Yeah. There's so many benefits. Yeah. Yeah.
Scott Dillingham:No, I love it. I love it. So just back to Dominican Republic, what made you decide to move there? There's lots of cool places. Hear Canadians going to Costa Rica all the time and you went Dominican Republic.
Scott Dillingham:So what happened there?
Jeffrey Woods:Yes, I explored many different areas. I've been throughout South And Central America. I also went to Costa Rica, you know, and of course, there's always Florida, which many Canadians choose as their tropical destination, right? So for me, I wanted to experience a new culture. I wanted the island life.
Jeffrey Woods:I liked the fact that Dominican Republic was open to foreign investment and made it relatively easy for people to come and stay. I also liked that they had direct flights all year long. You know, in the event that I had to get back for family or business purposes, could easily do that and it was close proximity, you know, three and a half, four hour flight and I'm back in Toronto. You know, all of those factors combined with the affordability as well, kind of made me hone in here and ultimately land on this place as a tropical destination. Now being here more full time, and again there's many wonderful parts to living here, but from building a large lucrative real estate portfolio, there's significantly better opportunity and far easier to do in The US.
Scott Dillingham:Yeah. No, I agree. It makes sense. So I know we have to wrap up here because we're reaching our our time. And I know at the beginning as well, you you talked about joint venture partnerships and things like that.
Scott Dillingham:And I know that right now you're full. Right? You've You're fully booked with the partners. But when that opens up and you have that capacity for more partners, where should they go? Or how do they touch base with you to potentially connect?
Scott Dillingham:Whether you're accepting joint venture partners in Canada, The States or whatever, where do they go to reach you?
Jeffrey Woods:Yeah, the best place to reach me, Scott, is at my website, jeffreywoods.com. It's J E F F E R Y. So for some reason my parents kind of switched up the ending, a lot of people look at R E Y, but it's jefery,woods,w00ds.com and yeah, they can reach out to me there and I'm happy to, you know, speak with new investors and help out any way I can.
Scott Dillingham:No, that's incredible. I would love to as well as you're investing in The States, we're going to be making many trips down there. We are going to Atlanta, South Carolina. I want to kind of check out Ohio too. There's some things going on there.
Scott Dillingham:A lower purchase price, but it's interesting. I want to check that out too. But we'll touch base and we'll see where you're at that time and maybe we can meet up and look at some properties together.
Jeffrey Woods:Yeah, absolutely. That's the beautiful part of a lot of the relationships that I built in Canada. Many of them have already invested in The US or are looking to do so. And so I think we can leverage those relationships and help each other out. And I know if somebody is looking for mortgages, I can send them your way and we can just kind of lean on each other and help each other and grow and all prosper together because there's just an abundance of opportunity.
Jeffrey Woods:You know, that's one of the things I really like to do is not only create wealth for myself, but for everyone around me.
Scott Dillingham:Yeah. And I love that you said that because you know what Canadians too, the process is different than somebody in The States buying too. So I think, like you said, having that network of people that know what they're doing and are going through it with you, I think will make the journey easier because there's extra steps involved, right, that are not necessarily needed in Canada. Right? You've got to set up your your tax entity, right, whether that's a corporation, partnership.
Scott Dillingham:Right? You there's steps, but it's not difficult. It's just a matter of knowing what those steps are. So I agree. I love it.
Scott Dillingham:But Yeah. No. Thanks so much for coming on, Jeff. I really appreciate you. And looking forward to airing this and we'll chat soon.
Jeffrey Woods:It was my pleasure, Scott. Thank you for having me. Alright. Take care. Take care.