Scott Dillingham: 00:21

Welcome back to the Wisdom Lifestyle Money Show. I'm your host, Scott Gillingham. 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 a 150 doors in the Hamilton and Niagara region.

Scott Dillingham: 00:36

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: 00:49

Thanks for having me, Scott. It's a pleasure to be here.

Scott Dillingham: 00:51

Yeah. No worries. I 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.

Scott Dillingham: 01:00

And I'm curious how you got started into the world of investing.

Jeffrey Woods: 01:04

Yeah. So I'll give you a kind of a a really brief background. So 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. Yep. Stumbled across real estate.

Jeffrey Woods: 01:22

I 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. And 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 I felt that I was, you know, a a new real estate, tycoon and had it all figured out. 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 learned 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.

Jeffrey Woods: 02:18

And after many years of educating myself, moved on to bigger deals, multifamily commercial deals, small apartment complexes, and so on. No.

Scott Dillingham: 02:28

That's awesome. It kinda sounds like mine. I was I made a joint venture partnership. The guy's 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: 02:42

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. So it was super cool.

Scott Dillingham: 02:56

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: 03:04

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? You just kept pulling the funds out of the properties and reinvesting it?

Jeffrey Woods: 03:14

So I certainly used that strategy, the BRRRR strategy. But in the beginning, I used my own capital, which was limited. And then from there, the way that, we were able to scale quickly so I took on a a partner of mine who is a friend and also was into real estate at the time, and we kinda joined forces. And 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.

Jeffrey Woods: 03:46

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. But, ultimately, they love 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 a 100 rental units. And through joint venture partnerships and private money, we exceeded that in under 6 years.

Scott Dillingham: 04:29

That's incredible. No. That's awesome. Yeah. And I'm seeing a lot more.

Scott Dillingham: 04:33

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? A lot more people are wanting to

Jeffrey Woods: 04:47

partner? 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, you know, high paying corporate job and a family and so on. So it makes a really nice synergistic part partnership.

Jeffrey Woods: 05:12

And, yeah, that's that's, you know, what I find many new investors do to get started.

Scott Dillingham: 05:18

Yep. And then for you, I know at the beginning I introduced you as, you know, 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: 05:33

Correct.

Scott Dillingham: 05:34

Yeah. Yeah.

Jeffrey Woods: 05:35

Yeah. 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. So 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: 06:10

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 so maybe we know how to avoid it?

Jeffrey Woods: 06:24

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, you know, the whole gamut. And it's a never ending learning process. And, well, a lot of times when you listen to podcasts, we talk about, you know, 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: 07:19

So we wanted to make sure that we were partnered with individuals that had the same vision as us. And 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. And 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: 07:56

Yeah. No. You're right. And one of the biggest mistakes that I see investors make, whether 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.

Scott Dillingham: 08:09

I see so many people just jump in and try to rush because they want to get going, and that's where the biggest mistakes are made that I see. Right? 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, you know, happen.

Scott Dillingham: 08:32

So in the world of investing, what is exciting you today? Right? Because you've done so much. Right? You've done the multifamily, the the flips.

Scott Dillingham: 08:40

Right? The residential. You've done a whole gamut of things. What's exciting you now?

Jeffrey Woods: 08:45

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, you know, thought about what I wanna 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, you know, be somewhat semi retired and run my portfolio from a distance.

Jeffrey Woods: 09:33

And, thankfully, I was able to do that, and I started to look at Dominican Republic, many other places, but I landed on Dominican Republic in 2018. And I had the groundwork laid out there. And then when we got hit with COVID and and all of that stuff, It just kinda forced me to move up my plans a little bit quicker. And 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.

Jeffrey Woods: 10:19

I've discovered that this is not the place where I really wanna build a substantial portfolio and redeploy a ton of capital. It's great from a a lifestyle perspective, you know, if you wanna be a snowbird and spend 6 months here. 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.

Jeffrey Woods: 10:57

And so what I'm gonna 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 for my lifestyle is I own property in Ontario, Canada. I own property in the Dominican Republic, and Georgia, North Carolina, Florida is right in the middle. And I can get direct flights to Toronto or the Doctor, so it allows me to grow and scale and manage and and take care of business from either location.

Scott Dillingham: 11:40

No. That's super cool. I don't you I mean, you've probably heard this, but I, like you, love Canada. Right? And but you're right.

Scott Dillingham: 11:49

There's so many different investment opportunities, and we have investors that ask us to finance US properties all the time. So it it actually got us into financing in the state. So we've partnered with many lenders to to lend to foreign buyers for investment properties. So we've got that set up. But the one cool thing is I myself was looking at the Carolinas north and south.

Scott Dillingham: 12:13

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. I don't know if you knew that. But it's like Yeah. 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.

Scott Dillingham: 12:32

So that's super cool.

Jeffrey Woods: 12:34

Yeah. I like it as well. Because for me, it's, you know, the priority from an investment too, I'm also looking at lifestyle. So I wanna build a too, I'm also looking at lifestyle. So I wanna build a portfolio, though, in places where I actually wanna spend some time as well.

Jeffrey Woods: 12:55

And so North Carolina is kinda that happy medium where you've got the 4 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, you know, or the flood zones and these types of issues that you really gotta dive into. And so I I like it. It's, you know, geographically, it's well positioned economically. You know, Charlotte in particular, I think, is is got a lot of potential with Job Grove with the 2nd largest banking hub in in the entire country next to New York. You know, there's certainly some positive attributes to that area for sure.

Scott Dillingham: 13:34

No. That's awesome. And and just for fun, no, 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. Okay?

Scott Dillingham: 13:46

In Ontario, where I currently live, it can take anywhere from 8 months to a year and a half to evict a nonpaying tenant just based on the current demand and and, you know, backlog and things from COVID for the tribunal. Roughly, you know, in North Carolina, do you know how long it would take if someone wasn't paying rent?

Jeffrey Woods: 14:07

I don't know the exact, amount of time, but it's significantly less than that. Right? So because I I looked at various places. Texas, for example, I think is 21 days. And, you know, states like North Carolina, Florida, Georgia, these states that are landlord friendly are gonna be around that time frame, but significantly faster than any province in Canada.

Scott Dillingham: 14:34

Yep. I've heard that. So I've heard in less than 30 days, you can have somebody out. Yeah. And like you said, 3 weeks.

Scott Dillingham: 14:40

Yeah.

Jeffrey Woods: 14:41

Yeah. And and the other thing, just so just that alone. So as I mentioned, you know, a 150 units and we managed, many more than that. But just that one factor alone over the past 25 years would equate to several 100,000, if not 1,000,000 of dollars in profit that we lost as a result of being in Ontario and dealing with, you know, 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, but I'm guessing it's quite significant.

Jeffrey Woods: 15:25

So just that one aspect alone is really worth considering.

Scott Dillingham: 15:30

Yep. Yep. No. Exactly. And then I'm gonna just give one more example.

Scott Dillingham: 15:34

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 4 times what they used to be. Like, the the rate increases were more than 4 times.

Scott Dillingham: 15:48

I'm just saying the rates because they're around 2%. Now they're anywhere between 6 to 8, 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: 16:04

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 time. So what we're seeing here is lots of landlords where their payments are 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, you know, the Carolinas if this happened?

Scott Dillingham: 16:36

How can you protect yourself as a investor there?

Jeffrey Woods: 16:39

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.

Jeffrey Woods: 16:57

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. And the the other thing that you mentioned there with mortgages, you know, oftentimes, many investors, that I speak to, they would take the variable rate mortgage because low interest improves their cash flow and not really, preplanning for rate increases because we've been spoiled for so long. And then when they get these increases, now they're once cash flowing property is negative. Right?

Jeffrey Woods: 17:33

So then they're scrambling with that. And even the people that locked in for a 5 year term, when that term comes due at the new interest rates, their expenses are gonna go up significantly. Whereas in the US, many of these mortgages that they got for 2, 3, 4 percent are locked in for 30 years. Yeah. Right?

Jeffrey Woods: 17:54

So that's another massive advantage. Imagine your portfolio at 3% locked in for 30 years.

Scott Dillingham: 18:01

Yeah. It's impressive.

Jeffrey Woods: 18:03

So yeah.

Scott Dillingham: 18:03

It's 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 40 year interest only payment in the states. You don't see that in Canada either, which is insane. Right? It's

Jeffrey Woods: 18:18

it's Exactly. 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 40 year term at the higher interest rate or, you know, talk to a mortgage specialist.

Jeffrey Woods: 18:35

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 Q3 Q4 of 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: 19:02

That's right. And I'll touch on one more huge advantage too that I've not seen in Canada. So in Canada, you can either get like an open mortgage or you can choose your term. But in the states, you can still have that 30 or 40 year term, but you can choose. So by default, after 5 years of maintaining that mortgage, you can then refinance and switch lenders at any time, and there's no penalty ever.

Scott Dillingham: 19:26

So So it's like a diminishing penalty each year you hold that mortgage. But you can accelerate that as well. You can say, you know what? I might want to do something in 2 years. You know, I'll pay a little bit of a rate premium, but then after 2 years, my mortgage is fully open and I can switch at any time if I need to.

Scott Dillingham: 19:41

So you get that flexibility too, which they don't really give you here. 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 2 years, let's say, for our example, you are open even if you don't decide to take action till year 4.

Scott Dillingham: 19:59

You don't have to play the game and keep renewing. And so it's just smoother, I find, overall.

Jeffrey Woods: 20:05

Yeah. Yeah. Many more options. Another benefit that I discovered too is that, you know, some of these lenders in the US will will essentially lend on residential property, 1 to 4 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: 20:29

And so that in of itself simplifies the process for especially for Canadians breaking into the US market.

Scott Dillingham: 20:37

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: 20:45

Those are the lenders that we have access to. Actually, we we go from 1 to 8 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.

Scott Dillingham: 20:58

They're just doing some background checks and stuff, which I know will be fine. But we'll have that probably within 30 days. But yeah. So you're right. It's just on the cash flow.

Scott Dillingham: 21:07

And even if it's not so you call it like a debt coverage ratio, they're looking for a certain number. 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 REIT 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.

Scott Dillingham: 21:27

But still, it means you can buy anything, really. So the qualifications, it's just so easy.

Jeffrey Woods: 21:33

Yeah. Much much easier. And in abundance, more opportunity as well because, you know, a lot a lot of these major cities in the US are significantly larger than Canada, so they just have more supply as well.

Scott Dillingham: 21:47

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.

Scott Dillingham: 21:54

But I'll say the last final major piece that I really is that 1031 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. So 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. Your net worth will be reflective of a much higher figure than if you pay taxes upfront like in Canada.

Jeffrey Woods: 22:25

Yeah. Yeah. There's, so many benefits. Yeah. Yeah.

Scott Dillingham: 22:28

No. I love it. I love it. So just back to Dominican Republic. What made you decide to move there?

Scott Dillingham: 22:34

There's lots of cool places. I hear Canadians going to Costa Rica all the time. And, and you went to Dominican Republic. So what, what happened there?

Jeffrey Woods: 22:42

Yes. I explored many different areas. I've been through, 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?

Jeffrey Woods: 22:56

So for me, I wanted I wanted to experience a new culture. I wanted the island life. I liked the fact that Dominican Republic was open to foreign investment and made it relatively easy for people to come and stay. And 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, I I could easily do that, and it was close proximity, you know, 3 and a half, 4 hour flight, and I'm back in Toronto.

Jeffrey Woods: 23:30

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. But now being here, more full time, and again, there's many wonderful, parts to living here. But from a building a large lucrative real estate portfolio, there's significantly better opportunity and far easier to do in the US.

Scott Dillingham: 24:02

Yeah. No. I agree. It makes sense. So I know we have to wrap up here because we're reaching our our time.

Scott Dillingham: 24:09

And

Jeffrey Woods: 24:10

I know

Scott Dillingham: 24:10

at the beginning as well, you you talked about joint venture partnerships and things like that. I know that right now you're full. Right? You've you're fully booked with with the partners. But where should people when that opens up and you have that capacity for more partners, where should they go or how do they touch base with you, depend potentially connect and whether you're accepting joint venture partners in Canada, the states or whatever, where do they go to reach you?

Jeffrey Woods: 24:38

Yeah. The best place to reach me, Scott, is at my website, jefferywoods.com. And it's, jeffery. So for some reason, my parents kinda switched up the ending, so a lot of people look at r e y. But it's jefferywoodsw0ds.com.

Jeffrey Woods: 24:57

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: 25:05

No. That's incredible. I would love to, as well as investing in the states where 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.

Scott Dillingham: 25:17

There's some things going on there, a lower purchase price, but, you know, there's it's interesting. So 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: 25:30

Yeah. Absolutely. It's 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 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.

Jeffrey Woods: 25:50

And, you know, and we can just kinda lean on each other and help each other and grow and all prosper together because there's just an abundance of opportunity. And, you know, that's one of the things I really have to do is not only create wealth for myself, but for everyone around me.

Scott Dillingham: 26:05

Yeah. And I love that you said that because you know what? Canadians too, the process is different than somebody in 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?

Scott Dillingham: 26:25

You've got to set up your your tax entity. Right? Whether that's a corporation, partnership. Right? You've there's steps, but it's not difficult.

Scott Dillingham: 26:33

It's just a matter of knowing what those steps are. So I agree. I love it. But Yeah. No.

Scott Dillingham: 26:38

Thanks so much for coming on, Jeff. I really appreciate you, and looking forward to airing this, and we'll chat soon.

Jeffrey Woods: 26:45

It was my pleasure, Scott. Thank you for having me. Alright. Take care. Take care.