Real Estate Coaching For Success With Mike Peters & Elizabeth Kelly
Hello. Welcome to the Wisdom Lifestyle Money Show. My name is Mike Peters, and I am the commercial mortgage manager at Lend City Mortgages here in Windsor, Ontario. We are an agency within Dominion Lending Centre Expert Financial. My guest today, I'm very excited to have Elizabeth Kelly with me today.
Mike Peters:Elizabeth is a real estate coach. She was initially with, Rich Dad Canada for 8 years and was instrumental in assisting thousands of people begin their real estate investing journey before she began her own company, Elizabeth Kelly Consulting and Coaching. She's also a real estate investor since 2,005 and has accumulated a portfolio of properties. She specializes in acquisition and management of rent to own and multi unit residentials. Elizabeth, welcome to the show.
Elizabeth Kelly:Thanks so much for having me. It's great to be here.
Mike Peters:Let's, start with a bit of your background. How did you evolve from an investor, I suspect, to a coach?
Elizabeth Kelly:When I was, a trainer for Rich Dad, it was about 8 years, and I had the privilege of seeing students come through my room. I taught the very first initially, I taught the sales and negotiations course and the rent to own course. And then, I wrote and taught the momentum course which is where new investors learn the fundamentals of how to start investing in real estate, but from a business perspective, not from a, hey. I'm gonna buy a little I'm gonna buy the house next store and rent it out. It was more people who wanted to scale and build a business.
Elizabeth Kelly:And I would see the same people at events and that years would go by and they hadn't taken action and they hadn't done anything despite having all the education. And I thought there has to be a a better way to help people. So in 2020, when COVID shut everything down, I started 1 on 1 coaching with people, and the results, the ability to be able to walk beside people on their journey is absolutely. Honestly, I think I I get as much out of it as as my clients do. Just it's such a privilege.
Mike Peters:Yeah. Yeah. And the satisfaction of helping, assisting people, hey. It's a passion. Any coach, has to have a passion for assisting people.
Mike Peters:You are a real estate investor, so you have obviously brought in some of your strategies that, that, can you just elaborate on when you got into investing? Was it a result of your affiliation with, Rich Dad Canada, or were you an investor prior to that? That how did that all shape up?
Elizabeth Kelly:I started investing in 2,005 when I met my husband. He and his best friend and and first business partner had a couple of pre construction condos. So there was a apartment building here in Newmarket that used to be a rental, and then they changed they were in the process of changing it over. So they kept talking about how cheap the units were and how it'll be so easy. So I bought a couple of those, and we were so proud of ourselves, and then they brought in a special assessment.
Elizabeth Kelly:So at that point, we owned 6 units in the one condo building at $45100 a unit, and our cash flow evaporated overnight. And we went, there has to be a better way to do this. So that was when my husband came across the rich dad, the 2 hour preview session. So he went to it and he came back. He's, I am so excited.
Elizabeth Kelly:He said, we have to go. We have to go this weekend. We have to see what it's all about. So my husband's an engineer. He spent a lot of money on his education.
Elizabeth Kelly:I have a degree, a science degree in kinesiology and a post grad certificate in sport administration and event planning. And we went to the 3 day weekend and we looked at each other and the entire package of courses was $60,000. Wow. And we said, how much are you making as an engineer, and how much am I making as at that time, I was actually, an insurance representative. I had just written my home auto and life insurance licenses or exams to be licensed, and we said, we're in.
Elizabeth Kelly:Like, this is what we wanna do. We know this is what we wanna do. We've been doing the right thing but the wrong way, so we wanna really figure this out because this is our retirement plan. And we went in whole hog, and within a year, we had taken all the courses, we had taken a mentorship, and we just came out of the gate like gangbusters. So that was 2,008, and by 2010, we were doing guest speaking in the rich dad courses.
Elizabeth Kelly:We were going back and talking about what our journey was like and the steps we had taken. And by 2012, I was asked to be a trainer and share some of our journey because we grew really quickly, which I don't recommend anymore.
Mike Peters:Yes. Did you shift from your experience with condos to other types of properties?
Elizabeth Kelly:Yeah. So the first condos weren't working for us. So the first thing I did was once we took the rent to own course, I flipped them all over to rent to owns. And then once we took the once we learned about multifamilies, I ran the numbers. We had an 8 bedroom legal licensed rooming house in Barrie for Georgian college students, and it took me 2 years to figure out.
Elizabeth Kelly:I liked student rentals just fine, but not to college students. They're too transient. They come in for a semester and then they go and do a co op, and then they come back again. And even with parental guarantees, people were breaching leases. University students, they sign the lease in May.
Elizabeth Kelly:They pay for the summer so that they have somewhere to live in the fall. It's perfect. So I would never again do student rentals in a college town, only university. But we figured out that wasn't working for us anymore because the financing of that was holding us back from growing in other areas, So we sold that property. And once we'd froumed our portfolio down, then we're like, okay.
Elizabeth Kelly:We're ready for multifamily, and that's when we started growing. And then come 2010, and all of a sudden because we had been buying with 5% down. And all of a sudden, the government's low, no. Investors now put 20% down, and a whole bunch of the investors that were in my network and were part of the courses I was taking in the events I was attending, they all threw up their hands and went, we can't invest. How are we supposed to invest?
Elizabeth Kelly:20% down? The numbers are crap. They don't work. And so a whole bunch of people left, and we just looked at each other and said, we gotta make this work. We gotta figure this out.
Elizabeth Kelly:And that's when we started getting into RRSPs, registered funds, and second mortgages and private lending.
Mike Peters:Okay.
Elizabeth Kelly:And then we just grew from there.
Mike Peters:Yeah. Now in regards to rent to own with the prices of real estate going up so much as they did over the boom period, there are a lot of people that can't afford their first home.
Elizabeth Kelly:Absolutely. Are
Mike Peters:you still involved with, rent to own? And do you do quotes on on how that works?
Elizabeth Kelly:Yes. There are a number of rent to own providers in Ontario that we spent months working on their program, their offerings, them, their how they choose their clients, and what markets they're active in. I like rent to own as a strategy because my background, I worked for the Heart and Stroke Foundation. I worked for the MS Society. I worked for United Way.
Elizabeth Kelly:I have to feel good about what I do at the end of the day. This for me is not about making money, and my journey has led me to where I feel happiest. I wanna go to bed knowing that I made a difference in somebody else's life, not just my own.
Mike Peters:Yeah. So, actually, then what I just heard is that you're actually coaching rent to own entities to implement strategies. That's something I think that's very useful for our audience because I do believe that we do have, quite a following of initial people, even just trying to get that 1st residential home that, that come to lens city. So that's very valuable. What, let's talk a little bit about your power team.
Mike Peters:You you obviously have a group of individuals that you bring to the table to insist assist you with, with your client base. And how did you form that power team? How do you select people or organ entities to become part of your power team?
Elizabeth Kelly:That's such a great question. For me, the number one piece of it has to be integrity. There has to be a connection and an alignment between who they are when they conduct business and how they're gonna treat my clients or my referrals. When we hang out with people, it's like when you're in school. If you hang out with the jocks, then everybody assumes you're a jock.
Elizabeth Kelly:And if you hang out with the, I don't know, the goth, then you should dress like a goth. It's the same thing in business where if there's no alignment between integrity, you are assumed to be the same as the company you keep. So for me, 1st and foremost, there has to be integrity there. Another piece that's really important is knowledge. Mike, commercial financing.
Elizabeth Kelly:So I'm comfortable sending someone to you who needs commercial financing because you know how to do it. The ins and outs. You're not gonna steer them wrong. A lot of people when they start investing don't realize that there's actually an order that you should be approaching lenders in because different lenders have different criteria. So you don't want to go to the lender that should be number 5, and you go to them first, and now you have less options for borrowing.
Elizabeth Kelly:So an expert like you is key because you have years of experience to share to help people plan. If it's not just I need to get this deal done. It's getting this deal done. How do I do it? And what is the impact on future deals?
Mike Peters:That's correct. Yeah. I find that in in in my role that I I do a little bit of coaching myself. Right? I I have a lot of and first time, investors that are ever either they've hit their their threshold, what their CIBC or one of the big banks, the 5 properties that investment properties that they will allow them to have.
Mike Peters:And now it's time to go commercial, and they don't really understand commercial mortgages. And so therefore, my system when in evaluating properties in, in learning that, but I also guide them to coaches such as yourself, because I really think the first thing that they have to do is figure out what is their strategy. You're choosing their perfect strategy. Remove the hype out of strategic planning, etcetera, and just get down to the basics of, where do you want to be in 5 years? So how do you assist a newbie or even somebody that's just reached that point that they need to change their strategy in order to, achieve their goals?
Mike Peters:What is the perfect strategy at that point?
Elizabeth Kelly:I think the perfect strategy, as you said, Mike, really depends on what someone's goals are. If someone wants to earn cash flow, for example, but doesn't have a lot of time, then the ideal strategy for them is gonna be very different than someone who says, you know what, I'm on maternity leave right now and I just I wanna put some time and energy into something so that now I can generate enough income that I can go back part time and spend time with my family, or someone who says, I love my job. I don't ever wanna leave it, but you know what? I want one bangin' vacation a year that is gonna create life changing memories. Knowing what the end result needs to be, there should be a fit.
Elizabeth Kelly:A lot of people create stress and friction in their lives because they choose a strategy that's not in alignment with where they are now and where they wanna get to. So when I have people come to me, they're like, I have 8 children under the age of 4, and I wanna do flipping. There is no alignment there. You're creating stress because what you're missing is time. Figuring out that end result, then you match the strategy to it, and there's all kinds of factors.
Elizabeth Kelly:One of the things that I consider with clients right off the bat is what is your qualifying ability for mortgages and what market is close to you? Some people need to have that comfort of, I need to be able to drive by a property every day on my way home from work. The concept of investing in another province, it doesn't matter how good the numbers are. They're not comfortable with that. You then choose either a market and a strategy or a strategy and then look for a market where it works.
Elizabeth Kelly:And then from there, we build the team of professionals. And the way I look at it as a coach is I'm not threatened. If you're helping people run numbers, that doesn't threaten me as a coach. That's tremendous. That benefits the client because now they have 2 sets of eyes on numbers, and they have 2 heads with a ton of experience, and they know how to do due diligence and all those other things in order to benefit them on their journey.
Elizabeth Kelly:So I think it's phenomenal to have a a solid team of professionals around you to help you learn and grow as quickly as possible. My job as a coach is to make sure that they're looking at all the aspect. So you're gonna help them with the numbers. I'll look at numbers with them too, but I'm also gonna talk to them about should they incorporate. I'm gonna talk to them about a great accountant who will be able to help them remit their taxes and build their accounting and bookkeeping system from the beginning.
Elizabeth Kelly:We'll talk to them about all kinds of different things.
Mike Peters:Yeah. That's critical. One of the things, obviously, as a mortgage person, I cannot give legal or accounting advice, and so that I have to direct them. But a lot of these clients don't have a real estate lawyer. They don't have an accountant that they've got a bookkeeper and somebody that doesn't know how to structure things in in their best interest.
Mike Peters:So let's talk a little bit about your team. We're talking lawyers and accountants. Obviously, you probably have some property managers that you recommend. What are some of the other members of your power team?
Elizabeth Kelly:I have, obviously, home inspectors and appraisers that are part of my team. Realtors are a tremendous part of the team. I know that a lot of realtors say I can help you anywhere in Ontario, but one of my criteria for choosing people is that they have to be experts. If you're not an expert in the market, if it's not if you want to invest in Brantford, then you really should be looking for a realtor who is in Brantford on a regular basis, who knows what the average cost of a 3 bedroom, 2 bathroom home is, who knows the best neighborhoods and communities. When we started buying multifamily is in New Brunswick, I didn't know Saint John very well, and we figured out afterwards we bought in some of the worst neighborhoods.
Elizabeth Kelly:The numbers look fantastic on paper, but what I hadn't factored in was the bad tenant cost, the one where people come and go, the one where people move out because they have bed bugs and they leave all their furniture behind, So now you have to pay 1,000 to remove their all their belongings and a few thousand more to treat for the bed bugs. So the initial numbers looked good, and I had chosen a realtor who was more concerned with closing the sale than he was with making sure that in the long run, we were financially save stable.
Mike Peters:Yeah. Yeah. I find depending on the property, a lot of res there are a lot of residential real estate agents, and they'll put out a MLS on a property and forecast numbers on what rents could be. The banks aren't really interested on what rents could be, especially in Ontario where you can only raise the rent 2.5%. They wanna know what the rents are now.
Mike Peters:And so I I find that a lot of my clients are getting exposed to commercial deals by residential agents. And then I tried to direct them to experts that that actually know how to analyze it. Because commercial mortgages are business mortgages. They're not on your personal financial situation. First and foremost, that building is in the bank size is viewed as a business.
Mike Peters:As you say, you you hit the appraiser on the nail on the head. He has to he or she has to know how to appraise a commercial building you can't send in on because there's the income approach versus the structural integrity of the building approach, comparables in the neighborhood when they combine those. So the appraiser, the inspector, do you recommend home inspections in, in all instances or, or property inspections to your client?
Elizabeth Kelly:Absolutely. Without a doubt. There, by the time I've had a a qualified realtor go through, whoever my experts are, whether it's a structural engineer or mechanical engineer, and I've had the inspection done, there's very little likelihood that I'm gonna walk through and go, oh, guys. There's mold all over the roof here. Like, how did you miss that?
Elizabeth Kelly:That's not what's gonna happen. But this is where, especially when you're new to real estate, you have to have experts around you to tell you what you don't know yet, to teach you the information, the pieces of your puzzle that are missing. And I don't think any one person can be everything to someone, but I think it's important to have those people who can answer your questions. And I like that you pointed out about the financing moving from residential to commercial because I think there's a tremendous misconception out there. I'm sure you see it all the time, Mike, that when you're in the commercial financing space, that your income doesn't matter and you don't have to have any money because it's all based on the building.
Mike Peters:Yeah. Yeah. I get that all the time. I see it on a daily basis. What I really liked about what you said is if you start with the couple that have 8 children and they wanna buy a fixer upper, you obviously have a team.
Mike Peters:So do you have a menu of service when like, you do that first initial consult and you help them define that strategy that meets their both their financial, their personal lifestyle, what they their jobs, whatever they got going on, and the money that they have to invest. And so once you've got that initial strategy, then do you sit down with them and say, okay. I'm gonna bring these members on the team. We're gonna, like, I recommend this real estate agent in Bradford. That's good market, by the way.
Mike Peters:It's Yeah. You know, not far from. It's within driving distance. You don't have to drive by it every day. But if you're in Kitchener or if you're in Hamilton or if you're in Toronto, it's just down the highway.
Mike Peters:Like, wouldn't market. So then do you you lay out the strategy? Like, they've got I'm a strategic planner from Okay. Like, at the municipal level, help the city of Windsor right strategies for growth. You you have your vision and then your goals.
Mike Peters:And then from there, you gotta lay out the objectives. Okay. And then the strategies and then the objectives and then the initiatives. Is that kind of a service that you provide? It's like a whole, this is what we're doing today.
Mike Peters:Once we get that objective met, this is what we're doing tomorrow. That kind of thing. Is it a process? Oh, like a Absolutely.
Elizabeth Kelly:Yeah. And we all my coaching is completely customized. I don't have this 12 week boot camp where week 1 is this and week 2 is this. It's very much looking at the client's situation. Some people come to real estate with a tremendous skill set.
Elizabeth Kelly:They're in sales, they're in negotiations, they're engineers. They're all these different trades and different experiences that are tremendously supportive for their real estate. So we look at it, and because I was a trainer across Canada, I have people in a lot of different markets. I have a network of people. So I'll help people set up their entire power team based on referrals and recommendations.
Elizabeth Kelly:I also like to connect investors with other people who have the same strategy, who are at the same place, and it gives them that additional layer of accountability where it's like, hey. Here's someone who is in the same situation or has just gone through the same situation, and I'd like you guys to connect, get to know each other, you can support each other, and you can talk about the challenges that you're having. And it helps them expand their network as well because we all know that as real estate investors, we all almost always reach a point where we can't qualify for anymore, even with the commercial stuff sometimes.
Mike Peters:Oh, yes. So in introducing these people, you're possibly introducing them to joint venture opportunities where that's the next step in, in growing their portfolio. So obviously they have to get to know and trust that person who's in or entity that's in in a similar situation. You've mentioned markets in that you have a a network. What do you see as some of the the hotter markets for our listeners who may be in those markets?
Mike Peters:Like, I do firmly believe when you get to a stage and you have a you wanna do something in Nova Scotia because of property prices, but you live in Manitoba. Well, maybe not Manitoba because it's a good investment opportunity too, but let's say Ontario and you see what's happening in Ontario and you want something on the bay of Fundy in, in Nova Scotia as, Airbnb and a small town or whatever. How do you introduce them to one of your real estate partners in that region to scout after your strategy to scout out properties? And then potentially you may have a JV partner in Nova Scotia that you wanna marry that, introduce that person up to. Is that all part of what you do?
Mike Peters:Because I know that I have a lot of clients that they may be Ontario clients, especially Ontario clients that are Mike, where do I go next? Where's the next hut? And how do I go there without having to go there?
Elizabeth Kelly:Yeah. I've invested in most of the provinces in the country. I definitely have my favorites. We had almost 50 units in in Saint John, New Brunswick, and the surrounding areas. I was born in Halifax.
Elizabeth Kelly:We've done rent to owns in Newfoundland. We bought in Alberta. We've done a lot. We've bought in Quebec. It it really I find it comes down to, again, what is the overall goal?
Elizabeth Kelly:Like, I have one client who wanted to buy in PEI because his family's there. And then he's doing an Airbnb with it, but this gives him the opportunity to host friends and family from out of town. I have another client who looked I can't remember. He was looking at buying somewhere in Mexico because he wanted to be able to have a write off to be able to go on vacation a couple of and then helping figure people figure out. Again, it's about that customized solution.
Elizabeth Kelly:So if someone is really attached to a market and they say, all my family's here, I wanna have I wanna be able to write off my flights home twice a year, and I wanna be able to spend summers here. Okay. Then we're gonna look for a property here, but you can't assume that every strategy is gonna work in every market because they don't. Like you said, a small community on the Bay of Fundy, really, you're probably not doing you're probably not doing flips. There's not a huge demand for people who wanna buy there, but short term rentals make sense.
Elizabeth Kelly:Maybe you can find an apartment building or you can build an apartment building or build a resort, something like that. There has to be a fit. A lot of people assume every strategy works in every market and they don't. They really don't.
Mike Peters:You mentioned Mexico. I'm not sure if you're aware that we're licensed to provide mortgages in the United States. Do a lot of your clients have an interest because there are obviously more markets in the United States and some of the areas have better climates than Canada. So you coach people in US investing.
Elizabeth Kelly:I can. We've done some deals down in Florida. We did tax liens indeed, so we went to the tax sales and bought properties that were up for auction a number of years ago. So I wouldn't say the US is my expertise. But again, I was at Erwin Seto's workshop a couple of weeks ago where Scott came in and was talking about the financing options in the US.
Elizabeth Kelly:And it's I want the opportunity to take a look at and vet experts before I go back to my clients who are talking about the US and say, yeah. You know what? I I believe these guys are credible. They have integrity. These these are the steps they've taken.
Elizabeth Kelly:I think that they're people that we can they pass the first round of of the sniff test, and then you go deeper from there. But I would never wanna recommend someone or something to my clients that I hadn't tried myself.
Mike Peters:Yeah. That that's a very good point. And as Scott is on the talking circuit about, our our initiatives in the US, and they're gaining traction. We're, we're getting a lot of interest, in US, creative financing since I'm in the financing mortgage business, what kind of strategies do you use? I like the rent to own.
Mike Peters:I as you say, you have to have a passion for what you do. And for me, it's this first time home buyer in Ontario right now. It's, it's just very difficult for, even if the couples both graduated same time from the university and one's a junior accountant with a firm and the other just starting nursing. By the time they pay their student loans offer or just the amount of their student loans to be able to buy a house, that's a near and dear to my heart, to kinda area. But what about, what do you see as alternatives for those people that that need to buy that first home besides rental, creative financing?
Elizabeth Kelly:Yeah. There there's definitely such a tremendous reliance on that kind of middle generation and being able to get support from your parents. It's incredibly hard for Canadians to buy without without that support. But one of the things I like to do is focus on, house hacking for investors. So if I have someone who comes to me and they don't qualify for as much as they would need to buy a house in the area, then we'll look around for a property that's a duplex so that they can use the income from the additional suite to help them qualify.
Elizabeth Kelly:And then 5 years, 7 years down the road when, you know, that maybe they have a small family, then they can pull some of the equity out of that property, buy their dream home, and then keep that as a cash flowing income producing asset. That's really I like to transition people from being renters to owners to becoming investors, like that transition that we make from being, you know, employed to self employed to business
Mike Peters:owners. Yeah. That's a great strategy that I really liked that strategy because even with rents today, being what there are, trying to save a down payment. So if you can get that gift or if you have a joint venture partner that, if you buy the duplex and the upstairs needs some renovation. So you have a buddy who's a contractor, who's willing to throw some money in and enjoy a little bit.
Mike Peters:You buy him out over time. So now you do have that investment property and you move on and buy your single family home. And that is one of the benefits of commercial mortgages is that if it's in a Corp, over time, it comes off your personal credit personal situation. If you have 2 years of, decent, financial returns on that property, and then you can buy a bigger principal residence. Your biggest challenge for new investors.
Mike Peters:We've already touched upon it. It's raising the initial capital.
Elizabeth Kelly:That's definitely from a tactic, technical, tactical perspective. It's definitely that What I'm seeing a lot of though is overwhelm. There's so much information. And when I started investing almost 20 years ago, like, the Internet wasn't a thing. There wasn't all these online groups and courses and social media and everything coming at you so hard and fast.
Elizabeth Kelly:It was, oh, look. They I'll look in the newspaper. Oh, look. There's a a realtor in Newmarket who's hosting a session. I'm gonna go to that.
Elizabeth Kelly:But new investors tend to be overwhelmed, and they struggle to pick and choose the pieces of information that are applicable to them to help them create this road map to achieving their goals. And then once they have that, then they struggle to find the right people that are in place to support them on that journey. And once they have that piece, then they struggle to structure the deals. Anywhere you are in the process, there's gonna be different individual challenges. And I think that's why it's so important to have an expert like you who can have a conversation about financing so that you can tell people what's coming down the pipe.
Elizabeth Kelly:So you may not have a multiunit building under contract right now, but here are the things that we're gonna need as part of the application process, and here are the things that you need to consider before you put in an offer because if you don't meet if the income can't cover the expenses by a ratio of at least 1.2, we're not gonna get financing on it. So don't even waste your time.
Mike Peters:Yeah. It's funny you mentioned that. I have a client who, he's looking at was looking at a property in New Fallon, $100,000 with a farmhouse and his strategy was to sever it and put up a single family, modular home. And just in coaching him within 2 weeks, he's looking at a 6 unit building and not the farmhouse anymore because I explained to him, that's raw land. If that's, we sever it, you're only going to get 50 do you get most of your referrals from repeat customers?
Mike Peters:Do you get most of your referrals from repeat customers or is it your, you mentioned back in the day, it was the newspaper. It was word-of-mouth. Hey, you gotta go to the Hilton or Holiday Inn because Joe speaking over there. And a lot of people did that. I guess sometimes I wish I did that when I was 20 years old, but that was the way then.
Mike Peters:But now with the internet presence, is that how words getting out or is it's your repeat business, because of your success or your ability to help people become successful.
Elizabeth Kelly:I I would say that probably the majority of it come from referrals from my existing clients, but there's also a good chunk of it. I host, an event once a year called the Resilience Summit. I have clients that come from there. I also host a monthly webinar series on a variety of different issues and challenges. I bring experts in to answer questions that I'm seeing are being asked a lot.
Elizabeth Kelly:I have a Facebook group called the Canadian Real Estate Investing, excuse me, mastermind. So questions that I see being asked there, I'll then reach out to my network of experts and say, who do I think would be a good fit to come in and do an hour of free intensive education on this particular subject and actually answer some of the questions that are being asked. So they come in for a variety of podcasts like this. It gives people an opportunity, I hope, get to know me a little bit and understand what I stand for. The way I look at the initial conversation I have with potential clients is this is about us getting to know each other.
Elizabeth Kelly:I'm not gonna be a fit for everyone. This is not a a hardcore sell. This is really understanding who you are, what you want, what you need, and if I'm a fit for you, that's amazing. And if I'm not, I have a whole network of people I can refer you to as well. And it's I don't do this to make money.
Elizabeth Kelly:I don't need this to keep a roof over my head. I do it because it's the the transformation and my clients doing their first deals. It counts way more to me than if I was to buy another piece of property.
Mike Peters:Yeah. Yeah. That's where I'm heading here is your niche just from hearing what you've had to say today. I think it's assisting people to get started. And then I think it's once they get started and they have a modest portfolio, it's taking them to the next level.
Mike Peters:Do you do a lot of, like, the next level, apartment buildings, 24 units, or is it more I'm not gonna call it mom and pop, but I'm call it. The investor that is looking for that added income versus the investor that's looking for assets that that one day they're gonna sell for their retirement. Right? So Mhmm. Is it the client that needs the income to to have that vacation that you mentioned, or is it the client that's increasing his portfolio so that one day, when he sells his portfolio, he's retired comfortably in Arizona or Mont Tremblant.
Elizabeth Kelly:Mont Tremblant. I I'd say that it's probably a fairly equal mix. What I tend to find though is when people come to me when they've already got portfolios, typically, they wanna spend some time tuning up that portfolio, making sure it's optimized, and then they're looking for that next level. Because it sounds silly, but real estate can get boring. If you're not just, you know, fulfilled by the thrill of the chase, then a lot of times what we talk about is starting businesses.
Elizabeth Kelly:So I've helped clients start rent to own companies. I've helped clients start property management companies. I've helped clients start construction companies. Yeah. So it's that, like, what's next, Pete.
Mike Peters:Yeah. I guess if you saw it see one of your clients who's, done a wonderful job flipping or renovating and then flipping a house, increasing the value, Mhmm. And you know that he or she has, talent to get into kitchen renovation or whatever, right, to start that, that other company. I did not know that, you assisted, people in getting started in business. That's really good.
Mike Peters:Because the more businesses, the more small businesses, the revenue generating engine of our country. So if someone wanted to reach out to you today or tomorrow, what would be the best way to reach you, Elizabeth?
Elizabeth Kelly:Probably, Instagram is a really good one. You can find me on Facebook, but Instagram is probably the best one. I'm spending a lot of time there right now or LinkedIn. Just Elizabeth Kelly Consulting, and I absolutely love to hear from people. I'd love to hear about their journey.
Elizabeth Kelly:I'd love to hear about the challenges they're facing. And if I can pull in an expert or if I can share some wisdom or I I do have a YouTube channel as well with previous webinars so people can go there. But, again, it's that tremendous access to free information, which is amazing If people want help figuring out what of that information actually applies to them, then I'm more than happy to chat.
Mike Peters:I I think that your passion, it comes out in in what you've said today, and that's integrity. I can see that as well is that, you're you've mentioned more than once that you're not in it for the money. You take the greatest pleasure from assisting people achieve their objectives. And what you've said from the beginning is understanding what that is. I I often I have a mix of investors that some of them, they need the passive income.
Mike Peters:When I look at their tax returns, there's nothing there. There was older couples with living on CPP. It's it's their investment properties that, they keep them afloat. And then I have other clients that they're just wanna sit on a portfolio. They don't need the money.
Mike Peters:They're a doctor or a lawyer or an engineer in chief who, you know, that, that want to, just sit on that portfolio when you mentioned. Changing of strategy. So then you actually tell people, your clients, it's time you sell those duplexes.
Elizabeth Kelly:I do.
Mike Peters:If you wanna get there, it's time you sell that duplex or or duplex or or this, and they might have to be personally attached to that duplex because it was the first that got them going, but it it hinders them to get to the next step.
Elizabeth Kelly:Yep. I had a a coaching client and we looked at her portfolio and she had one house that was negatively cash flowing about $450 a month, and she had $300,000 worth of equity in the property. And I said to her, what's cool what's over here? She goes, what was the house that I bought? And it was my very first house.
Elizabeth Kelly:And I'm like, but you're negatively cash flowing and you've got a ton of equity in there that you can't utilize. And she goes, I'm attached to it and it took me a couple of weeks, but I brought her around. There were some tears, but at the end of the day, it was the best possible thing. We have this mentality as investors that we become property hoarders and more is better, and more is not better. Cash flow is better.
Elizabeth Kelly:1 cash flowing property is infinitely better than 10 that don't.
Mike Peters:Yep. Exactly. And with prices today on those larger units, CMHC, do you, you have a CMHC consultant that you deal with? Because I see a lot of properties that are overvalued and only the people that can put 30%, even with with with CMHC is the only way that these properties are gonna get sold. Do you work with CMHC?
Mike Peters:I work Besides
Elizabeth Kelly:I work with whoever the broker is on the deal. So if, for example, I had a client with you as his commercial mortgage broker, then I would be saying Mike is the expert. Ask Mike who he would recommend, and we'll connect with that person. I I think Perfect. The so where I would see myself coming in with something like that might be along the lines of, hey.
Elizabeth Kelly:Let's negotiate a vendor take back. Let's try and reduce the amount of down payment. Let's see how we can work this out. You're the one with the experience, so we would set up a call with you and go, hey, Mike. What numbers should we be using for interest rates right now?
Elizabeth Kelly:What kind of timelines are you seeing to get stuff done with CMHC financing? Who are the lenders that that you can transition from them into CMHC? Because we know that they keep they keep moving the cheese on us. Every time we turn around, they move the cheese.
Mike Peters:Yeah. The good news, though, with CMHC is that they've cleaned house in terms of files. With COVID and everything that was going on, the wait times were 6 months. We're down to 6 weeks, 6 to 7 weeks.
Elizabeth Kelly:That's fantastic. I'm happy to hear that.
Mike Peters:Yeah, because, it was just crazy. I, It wasn't even worthwhile to even attempt it because the vendor, the seller of the property, you're not gonna get a offer purchase and sale at 6 months old conditional on CMHC. Once you get that certificate, I'm saying you get a cert you can possibly get a certificate of insurance from CMAC, which is basically gold at that time. And that's about 6 weeks. It still might not close for a month after, but if you can get that.
Mike Peters:So a condition of sale is that certificate. Once that's in hand, then you know that the property's gonna close. It's just a matter of the processing time with lawyers and etcetera. And I'm I really enjoyed our conversation today, Elizabeth. Do you have anything you wanna ask me or anything that you'd like to add?
Elizabeth Kelly:I would love to know. So I know there were a lot of people a couple of years ago who bought properties. They might have bought properties with private money, for example, so that they could close quickly with the idea of refinancing into CMHC and then CMHC brought in changes, and it was no. We will only take refis from these lenders. How are you seeing that going right now for people who are investing in multifamily?
Elizabeth Kelly:Are there people who are stuck in privates that you're having to transition them? Would their plans have to be extended because they have to cycle through a couple of different lenders?
Mike Peters:I'm seeing a lot of people stuck in privates. With interest rates going up like they did, a lot of my prudent investors with multiple properties took the equity out just before the rates went through the roof.
Elizabeth Kelly:Oh, wow.
Mike Peters:They've got coaches like you. They've got they've got people that say, hey. Get the equity out. I'm watching the markets. I'm watching the Bank of Canada rates.
Mike Peters:I take it out now. Nobody realized that it was going to be that swift. I have a lot of clients that are trying to get out of privates. Private bridges across their entire portfolio. I'm looking at, that portfolio, and and there's nothing there.
Mike Peters:Even their primary residences
Elizabeth Kelly:are attached. Yeah.
Mike Peters:So So what we try to do with them is I work with their private lender to try to chip away at at the debt that is owed that private lender. The problem with that is you can't change the loan to value that private lender has across the the blanket. So there's some things that have to happen, and some of them are you might have to sell a couple of these to get out of the private, and then we reevaluate. So it goes back to the tiers. It's, but I've got 23 properties in my portfolio and I wanna grow my portfolio.
Mike Peters:You went and took a blanket out across $2,000,000 blanket, and you did that. You're gonna have to sell some of these properties to to get out of that blanket in order to take that portfolio, which went from 23 maybe down to 20 because 3 of those properties will take care of the blanket. Mhmm. And now you can grow again
Elizabeth Kelly:Yep.
Mike Peters:At today's rates, and those rates are gonna go down. So that is a very common piece of advice that I have to give to people now is to those with large portfolios that are stuck in privates. CMHC is not it it's if it depends on the equity in the home, whether you're in the apartment building, whether or not it makes value to or makes sense to go with the CMHC. It depends on whether you want to put money into, as you say, they change the benchmark, they change, you're going to do accessibility. You're going to do solar panels on the roof.
Mike Peters:Are you going to change it from oil? Are you going to change, the electrical, throat and you could have half a $1,000,000 in a, in a 10plex in upgrades in order to qualify for 80, 90, even a 100% loan to value in CMHC, but you you have to have the money to do that. And so there it's tough. It's tough. I'm doing more CMHC standard than, select, or whatever that
Elizabeth Kelly:Yeah.
Mike Peters:Acronym is. Mhmm. Because it just doesn't make sense unless you have money to put in to that property to Yeah. Qualify. Each one of those targets increases the loan to value by 5%, and CMHC will do up to a 100%, 40, 50 year amortization at rates that beat the band.
Mike Peters:It's just a matter of are you willing to actually invest in the property Yeah. To get it to qualify for each one of those fixes.
Elizabeth Kelly:Yeah. And some of the times I look at the numbers too with people, they're like, oh, I'm gonna do 85% loan to value. And I'm like, the numbers are garbage. The numbers are garbage at 85% loan to value. Like, you're negative cash flowing.
Elizabeth Kelly:Just this is my this is one of my favorite things that I say now. Just because you can do something doesn't mean you should. So just because you can refinance it to 85% loan to value doesn't mean that you should be doing that because nobody should be taking on a negatively cash flowing append unless you have a plan to move it to positive in the next 12 to 18 months.
Mike Peters:Yep. Yep. Exactly. I have a had a client that just bought a a 6 plex, cash. And we're working with him to get CMHC.
Mike Peters:He's he bought a cash. And he thought, you know what, it doesn't matter that I'm going to lose $500 This is one of those investors that just wanted to increase his portfolio for the future. And then he just, after 6 months of seeing negative cashflow, he called me. He said, Mike, I said, I told you not to buy it, but, now we're gonna get you a CMHC mortgage. Every scenario in my business is different.
Mike Peters:I wake up every day and I field calls. I follow-up. I do analysis. And that's what keeps me going is that each one is different. And it's it keeps me really excited to get up and see what the new challenges are.
Mike Peters:There's everyone. There's a challenge, especially in commercial mortgages. It is not it's not the residential mortgage that's based on your family's income and similar properties in the neighborhood. It's about business. It is a business and you're in the business of helping people grow that business, right?
Mike Peters:They gotta jump in and say, you know what? I wanna be in business. Do I wanna be actively running this business or do I want to, allow others to run it? And, and be the cash behind their business. And that's why a coach like yourself is so valuable.
Mike Peters:Just sit down with someone like Elizabeth, preferably Elizabeth, and, and go over that initial strategy. If you've got 5 kids, then it's it. And you, or you just had your second child and now it's time for mom to stay home and you want a property that's cash flowing to augment the income that she may have lost by going part time in her job or the cost of daycare at that stage of life. If you don't have private daycare or subsidized daycare. So I really appreciate you jumping on this podcast, Elizabeth, your, your breath of knowledge is, is wonderful on, and your network is invaluable, takes years to build a network like that.
Mike Peters:So I'm really proud of you and what you've accomplished. And, I look forward to, hopefully working with you in the future and hopefully that you, gained some traction out of this podcast.
Elizabeth Kelly:Absolutely. Thank you so much, Mike. I appreciate you introducing me to your listeners and to your network, and I definitely think we've got commercial financing to talk about in the future.
Mike Peters:Alright. Great. Bye for now. I look forward talking to you again. Thanks.
Mike Peters:Thank you.
Elizabeth Kelly:Take care. Bye bye.