Canadian Real Estate Investor Success Stories

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REAL ESTATE BRINGS THE FAMILY TOGETHER

Donna Hamilton

At first, I minimized what I did as the deal-maker and manager in a
joint venture partnership. We may not be putting up the money, but we are doing the work. I get that now.

It wasn’t the wear and tear of a nine-to-five job that kept Donna Hamilton up at night. A waitress married to a refractory bricklayer whose high demand job kept him on the road and away from his young family, Donna saw a future that looked lonely and financially insecure.

Money was an issue, but time was even more scarce. It was nearly impossible to work any of her shifts around Luke’s schedule, especially since he was exhausted on rare days off. “We never even had so much as one weekend off,” Donna recalls. “It just worked, work, works.” In 2000, just days before their second daughter was born, Donna bought her and Luke’s first investment property, a condo. “We inherited good tenants,” she says. “We put up $10,000 [the property cost $65,000] and in September of 2006, it sold for $165,000. It would have gone for about $250,000 if we’d held onto it for a few months longer.” She utters the last sentence without a hint of regret. Frightened people may try to move forward while looking back.

But Donna Hamilton is no longer frightened. Soon after buying that first property, Donna followed a suggestion made by two trusted friends and enrolled in a Quickstart program. The program’s message was powerful, but the Real Estate Investment Network’s (REIN) $200 monthly fees sounded astronomical. Instead, she set out on her own, buying two more properties before realizing that $2,400 a year was a cheap way to strengthen her business with some of the real estate investment community’s best economic data and support. Six years later, the 41-year-old mother of six- and nine-year-old daughters is glad she made the investment. “I would not have 15 properties if it wasn’t for REIN,” she says. “REIN has helped with everything. That’s where I learned to screen tenants, it’s where I learned to set up joint venture partnerships, it’s where I learned how to find quality tenants.”

Quality tenants turn the wheels of Donna and Luke’s investment business.
Most of their tenants are families, young couples or young executives who want to live in the settled communities of West Edmonton. That clientele tends to stay put, meaning fewer turnovers and more opportunities to develop positive relationships. In the early days of their investing, Luke kept his day job. When his job slowed over the winter months, he renovated houses.

That boosted cash flow, but had a negative impact on their family life. “Luke was never really home,” says Donna “If he wasn’t away working, he was home—but logging long hours on renovations.” This year, her husband of 17 years took a giant step back from his job, freeing more time for renovation deals and more of the hands-on details of property management. Best of all, he’s now able to drop what he’s working on and go get the girls from school if Donna needs more time with a deal, or to look at the property. “Honestly, I’m good at finding good deals. But I figure I’ve looked at 300 to 400 houses. It definitely takes a lot of my time.” Looking ahead, Donna estimates they have more than $100,000 in equity in every property they own. It’s money they’ll use to finance more purchases. They’ll also bring in more joint venture partners, a business decision that brings its own set of due diligence.

Early experience with JVs showed the value of clarity. When one partner saw the money that could be made flipping a particular property before others thought it was time to put it on the market, they bought him out. Their planned renovation of that property took more than six months. “But we were focused on the bigger deal.

By the time it goes on the market, we figure our profit will be a couple hundred thousand.” One of her first JV deals taught a bigger lesson. Here, eyes wide open, Donna used her partner’s money to finance the deal. In return, Donna and Luke handled the renovation—and took a cut of the profit. Before that, she wondered why investors who put up the JV money often took only 50 percent of the profit. Once she’d worked through

VETERAN PASTOR USES REAL ESTATE TO MAKE A DIFFERENCE IN THE COMMUNITY
Scott Lewis and Laurie Lewis

Ours is not a rags-to-riches story. It’s about a slow and steady journey
towards increased resources for our family and for those whose needs we
can meet through our abundance.

When young couples show up at the door of his church for premarital counseling, pastor Scott Lewis likes to talk to them about money. He knows financial issues are behind a lot of failed marriages, precisely because few people really know how to talk about money. From where he sits, that’s a mistake. “If you think about it, money really is more important than a lot of the other stuff,” he suggests. “Not only because you need it to secure food, shelter, and clothing, but also because of what it lets you do in the world.” A pastor and teacher in church settings for almost 17 years, Scott currently leads a fledgling non-denominational Christian congregation in Sarnia, Ontario, a city of about 72,000 people nestled on the banks of Lake Huron. He and his wife, Laurie, bought their townhouse-style condo in

A year later, calculating that their church work would not necessarily be the only source of income they would need, they launched into real estate investment and bought a duplex with two semi-detached units. The thrill of that purchase was soon masked by the raw angst associated with their new role as landlords. The first tenants came with the property—and gave notice a month after the deal went through.

Given that one never cleaned and the other had a large family that left considerable wear-and-tear in its wake, Scott and Laurie made the best of things and used the break to spruce up the units. The litany of tenant issues continued to grow. One tenant had a pit bull and never cleaned up after the dog. Another had caused a kitchen fire that left smoke damage. One used such foul language that her phone calls left Laurie exhausted, and sick with stress. Add to that late-night calls over maintenance issues and tenants who moved without notice and it’s little wonder Scott and Laurie questioned the wisdom of their investment OVERCOMING PERSONAL ADVERSITY 9 decision. “This was all in the first few months of owning the property,” recalls Scott, now able to roll his eyes and laugh about the experience.

At the time, however, “it was awful.” When a man from their church talked to them about his new work managing properties, the Lewises listened with open ears. They were so strongly moved by their recent experiences as landlords, they told him they felt ready to sell their investment property. “He sat at our kitchen table,” says Scott, “and recommended we try property management first.” The transition took a while, but the experience was wonderful. Nearly six years later, that property continues to net $250-$350 a month. They’ve also refinanced the property twice, enabling them to purchase two more properties.

Because traditional lenders turned him down, the duplexes were bought with the help of a mortgage broker Scott found via the Internet. He was grateful for her help, but soon discovered they’d hit another investment wall. With four properties, including their own home, they just didn’t have anything to offer as a down payment on another property. Those who seek, find: Scott found what he was looking for by reading Real Estate Investing in Canada. That book inspired his search for more information about ways to invest in Canadian real estate. Days after he finished the book, he put down an offer on a fourplex under repossession.

They bought that complex in June 2006 and added another duplex just three months later. “We went from 6 individual rental units to 12 in a single year and leveraged the new purchases with refinanced money from other properties and a personal line of credit,” notes Scott. “All of a sudden we were able to buy property without needing to put very much of our own money into the deals.” Scott, who became a father to baby Ronan, a son, in 2003, credits Don Campbell with teaching him the value of building a “team” can now count on for advice and support with various deals and issues.

That helped him and Laurie grow their investment portfolio. Knowledge gleaned from reading real estate books and attending seminars also helps them find creative solutions to pressing problems. When their new church needed to reduce some of its own costs, Scott took a cut in salary, using his and Laurie’s investment portfolio to take the pressure off their church community. He also used his growing knowledge of investment to negotiate lower payments on their own homes.

PERSEVERANCE OVER LIFE’S MAJOR HURDLES, NO MATTER HOW HIGH THEY ARE
Irene Gluckie

It’s okay to ask for a better deal. And never take “no” for an answer.

“Are you going to fix that?” asks the young man sitting at the kitchen table as his landlady, Irene Gluckie walks by. Her tiny toolbox (measuring a scant 12 x 3 x 4 inches) in hand, she smiles at what she’s come to see as a question born more of ignorance than sexism.

The 59-year-old former schoolteacher turned real estate investor owns 21 properties and is what others call “handy.” She’s also smart. “Well, I am going to try,” is her quick reply to the unbelieving, “and if I can’t fix it, I know someone who can.” The daughter of Polish immigrants who came to rural Saskatchewan carrying more than their weight in painful memories of the Second World War, Irene has learned to focus on the job at hand. She’s all about getting the job done and getting it done right. Irene, a mother of four, bought her first investment property when still married in the early 1990s. The deal went sour and the Gluckies lost $40,000, a crippling amount for a couple with young children. Shaken, but wiser, her second attempt involved a $10,000 investment in a Fort McMurray townhouse.

She figures that property is now worth $300,000. “I say that with a big grin,” she says, “because I still own it.” Better still, a strong economy and good relationships with her tenants means it’s remarkably little work. “When my tenants are going to leave, they set me up with friends of theirs. I still carry out my tenant check, but this system has really worked for that property.” Closer to home, she also self-manages the 21 other homes in her portfolio. Success on the investment front has come through experience, including some with tenants-gone-bad, but the real story behind Irene Gluck goes well beyond what she does for a living. It speaks of a willingness to help other people—and it cries out from a resilience born of the life lessons no one seeks. Her third child, a baby daughter, died in 1979. Born with a congenital heart defect, the baby only lived for a few months. The child’s death left a 14 SECTION 1 the gaping hole in Irene’s heart.

In 1994, still coping with the end of her marriage and supporting three teenagers, she entered what she calls the “buying phase of my investment business,” eventually buying about a dozen of the properties she still owns today. She was also working full-time as a teacher focused on adolescent students with special needs. Her board moved her to a school that required a special-needs teacher known to be strong in math and English. Irene smiles at the irony behind the move. “I didn’t know English when I came to Canada with my parents. My mother used to tell me, ‘We came here with two hands each, and you.’” Irene felt fulfilled by teaching and pleased with how her real estate portfolio augmented her family’s future.

The pain of her daughter’s death dulled with time. And then the phone rang. In August 2002, her second-born and only son, Lindsey, died in a plane crash near Maple Ridge, B.C. He had been only a few days shy of his 25th birthday. The tragedy forced Irene to leave a job she loved. She remembers a young counselor telling her that she was depressed and needed to be honest about that before she could get better. “I refuse to be depressed,” was Irene’s response. “I am grieving. And what’s more, I have lost two children—and I have the right to grieve.” In the end, it was her real estate that kept her going. “Without that,” she says, “I might have been one of those people who stayed in bed all day and never answered the phone.” Once a teacher, always a teacher, and Irene credits her classroom experience with helping her teach people to be responsible tenants. Over the years, she’s helped several joint venture partners buy their own properties.

More recently, she set up a rent-to-own deal for one of Lindsey’s friends. “Some of my tenants seek my opinion on different things happening in their lives and that’s okay,” she says with a laugh. “But I take my business very seriously. When I counsel new tenants about my rental policy, I am very honest. I tell them, ‘Paying your rent on time is very important. In the hierarchy of things, it’s next in line to breathing.’” Her reputation for wise negotiation makes Irene a go-to person for fellow investors in her life. Ten of the 14 properties she tried to buy from June 2006 to June 2007 are in her portfolio, at least in part because she finds ways to make deals work.

table as his landlady, Irene Gluckie walks by. Her tiny toolbox (measuring a scant 12 x 3 x 4 inches) in hand, she smiles at what she’s come to see as a question born more of ignorance than sexism. The 59-year-old former schoolteacher turned real estate investor owns 21 properties and is what others call “handy.” She’s also smart. “Well, I am going to try,” is her quick reply to the unbelieving, “and if I can’t fix it, I know someone who can.” The daughter of Polish immigrants who came to rural Saskatchewan carrying more than their weight in painful memories of the Second World War, Irene has learned to focus on the job at hand. She’s all about getting the job done and getting it done right. Irene, a mother of four, bought her first investment property when still married in the early 1990s. The deal went sour and the Gluckies lost $40,000, a crippling amount for a couple with young children. Shaken, but wiser, her second attempt involved a $10,000 investment in a Fort McMurray townhouse. She figures that property is now worth $300,000.

“I say that with a big grin,” she says, “because I still own it.” Better still, a strong economy and good relationships with her tenants means it’s remarkably little work. “When my tenants are going to leave, they set me up with friends of theirs. I still carry out my tenant check, but this system has really worked for that property.” Closer to home, she also self-manages the 21 other homes in her portfolio.

Success on the investment front has come through experience, including some with tenants-gone-bad, but the real story behind Irene Gluck goes well beyond what she does for a living. It speaks of a willingness to help other people—and it cries out from a resilience born of the life lessons no one seeks. Her third child, a baby daughter, died in 1979. Born with a congenital heart defect, the baby only lived for a few months. The child’s death left a 14 SECTION 1 the gaping hole in Irene’s heart. In 1994, still coping with the end of her marriage and supporting three teenagers, she entered what she calls the “buying phase of my investment business,” eventually buying about a dozen of the properties she still owns today.

She was also working full-time as a teacher focused on adolescent students with special needs. Her board moved her to a school that required a special-needs teacher known to be strong in math and English. Irene smiles at the irony behind the move. “I didn’t know English when I came to Canada with my parents. My mother used to tell me, ‘We came here with two hands each, and you.’” Irene felt fulfilled by teaching and pleased with how her real estate portfolio augmented her family’s future.

The pain of her daughter’s death dulled with time. And then the phone rang. In August 2002, her second-born and only son, Lindsey, died in a plane crash near Maple Ridge, B.C. He had been only a few days shy of his 25th birthday. The tragedy forced Irene to leave a job she loved. She remembers a young counselor telling her that she was depressed and needed to be honest about that before she could get better. “I refuse to be depressed,” was Irene’s response. “I am grieving. And what’s more, I have lost two children—and I have the right to grieve.” In the end, it was her real estate that kept her going. “Without that,” she says, “I might have been one of those people who stayed in bed all day and never answered the phone.” Once a teacher, always a teacher, and Irene credits her classroom experience with helping her teach people to be responsible tenants. Over the years, she’s helped several joint venture partners buy their own properties. More recently, she set up a rent-to-own deal for one of Lindsey’s friends. “Some of my tenants seek my opinion on different things happening in their lives and that’s okay,” she says with a laugh. “But I take my business very seriously.

When I counsel new tenants about my rental policy, I am very honest. I tell them, ‘Paying your rent on time is very important. In the hierarchy of things, it’s next in line to breathing.’” Her reputation for wise negotiation makes Irene a go-to person for fellow investors in her life. Ten of the 14 properties she tried to buy from June 2006 to June 2007 are in her portfolio, at least in part because she finds ways to make deals work.

DON’T WAIT UNTIL A NEAR DEATH EXPERIENCE TO GET STARTED
Greg Bueckert

I like knowing my business provides an important service.

In 2001, an ailing Greg Bueckert was told he had less than six months to
live. Just home from a pleasure trip to Mexico, he’d picked up an opportunistic infection while scuba diving in ocean waters teeming with invisible bacteria. Invisible but nasty, those bacteria were bringing him down fast, compromising vital organs and leaving their host in physical ruin. A pharmacist with a better-than-average understanding of where medicine comes up short, he agreed with the prognosis.

Greg had one teenage daughter and two teenage stepchildren, so he turned his practical attention to getting his estate in order. “My father owned a lumberyard in the Medicine Hat area,” Greg recounts. “But he also owned about 20 revenue properties and when he died, they kept my mom going for more than 30 years. I’d dabbled in real estate investment for years, and now I wanted that kind of legacy.” A member of REIN since the late 1990s, Bueckert says he was already comfortable with investing: “I sold about 20 houses and 2 hotels in 1999, mostly in what I now understand was a fit of frustration over other business issues.

Looking back, I realize I probably saved the wrong business when I kept the pharmacy and let the properties go. It was definitely a decision that was impacted by emotion instead of real estate fundamentals, which I really do try to follow most of the time,” he says with a quick laugh. Six years later, Greg is alive and well, thanks to medicines that performed well above expectations. Better yet, a real estate portfolio born in crisis is thriving. Centered on a long-term buy-and-hold model, he owns 22 properties, most of them in Medicine Hat.

A few others are in Calgary and Edmonton. “I took what could be called a very linear path to investing,” says Greg. “By the time I sold the pharmacy to focus on investing, I already had some 18 SECTION 1 experience and some money. For the most part, I invest alone, although that’s changing thanks to a couple of big projects in the works.” One of those projects involves a $10-million-plus retrofit of a former school in Crowsnest Pass, west of Medicine Hat.

Whereas others may look at the site and see a green-roofed cube of a building, Greg sees 18 condominiums, likely owned by weekend and summer tourists from Calgary, Medicine Hat, and Lethbridge. With some of the region’s best hiking and ATV trails nearby, as well as an extensive cave system reputed to offer North America’s finest spelunking, Greg says that recreation-minded buyers are just waiting for a development like his Cameron School project.

While the details of that development haven’t fallen in place as quickly as he’d like, Greg is shopping the deal to European investors and figures construction will be well underway by the fall of 2007. He’s also dreaming about the penthouse suite, which he’ll keep for himself. The rest of his portfolio includes condos, an apartment block and duplexes. He also employs four full-time tradespeople, up from one just four years ago, and depends on them to deal with property maintenance issues and to renovate homes he’s purchased to upgrade and sell in Medicine Hat’s lucrative re-sale market.

While he loves the demolition side of a reno project, Greg has learned to hire out basic property management. He doesn’t want to collect rent cheques. He doesn’t want to hear about every tenant and maintenance issues. But he does like to be around people who understand what his business is about, which is why he routinely makes the three-hour road trip to attend REIN meetings, where he can share news of high-intensity investment business, without people thinking he’s either crazy or greedy. When people say he’s lucky, Greg rolls his eyes. Having come back from the brink of his own serious illness, and having weathered the pain of a recent divorce, he knows his success isn’t about luck. It’s about his knowledge of the local market, where he’s lived all of his life.

The people who only see the success don’t see him scouting poster boards in local shopping centers or driving around to follow up on referrals. They don’t see the relationship he’s built with his tradespeople, men whose work, and lives, he respects. They don’t see his willingness to take action in relation to their own willingness to talk about investment as if it’s something they can’t do, or wouldn’t stoop to do.

FROM THE BRINK OF DISASTER TO THE BRINK OF SUCCESS
Jules McKenzie

Our fundamental error was buying older properties, particularly in our
little town, where some of those houses are over 100 years old. We didn’t
have a specific plan or the funds to complete these major renovations.

The plan was simple. Living in Orillia, Ontario, Jules and Ange McKenzie would buy undervalued old houses in need of repair, fix them up and hold them as revenue properties to supplement monthly cash flow. Using a U.S.-based investment strategy that taught them how to boost their credit card limits and access highly leveraged lines of credit, they would secure their family’s financial future with properties that increased in long-term wealth. It was a strategy that cost them $35,000 in up-front fees and it was brilliantly designed to keep them laughing all the way to the bank.

Two years later, there was no time for laughter. “We tried to model the successful results of the U.S. students,” says Jules, a police officer with the Mnjikang Police Service. (He’s been with that service for six years and was an Ontario Provincial Police officer for 11 years before that.) Instead of success, however, he and Ange accumulated $140,000 in high-interest debt, cost their family of five several stressful moves and pushed them to the brink of bankruptcy all because they followed an American-based investment system that didn’t take into account that Canada’s market is very different.

A couple of years after launching their revenue property business with that first strategy, they could track most of their properties in lost savings and mounting debt. By the time they tallied repairs and electrical upgrades, commission and the need to cover part of the purchaser’s down payment, one of their first properties cost them about $20,000.

Another deal on an eightplex cost them $27,000 when a dispute with a contractor led them to walk away from the deal. Yet another fixer-upper robbed them of $30,000. The turning point came in August 2003 when Jules joined the Real Estate Investment Network. OVERCOMING PERSONAL ADVERSITY 23 A year later, armed with a few better investments and a whole lot more Canadian-specific knowledge, a professional credit counselor helped the family get into a legal process by which they could avoid bankruptcy. Under terms negotiated with their creditors, the McKenzies kept their existing properties, which, by then, were generating enough revenue to cover all expenses. Jules recalls that the move to a Canadian system signaled a massive “shift in what we were trying to do.” From near bankruptcy, their portfolio has since grown to include 43 properties held with joint venture partners, as well as two single-family homes, including one with a suited basement.

“Our fundamental error was buying older properties,” Jules reflects, “particularly in our little town, where some of those houses are over 100 years old. We didn’t have a specific plan or the funds to complete these major renovations.” Now firmly focused on buying townhouses and condominiums, they find their condo fees cover most exterior maintenance costs. Following our new-found systems to analyze and buy real estate has taken the guesswork out of cash flow projections. “We’re able to set up what I call generational wealth,” says Jules. “We’re investing on the basis of economic fundamentals and we’re confident our properties will continue to appreciate. So far, we have nine joint venture partners and they trust their money with us because we have adopted an informed approach to investing.” Ange laughs when asked how they put some of the tougher lessons to work in their investment business.

It turns out one tenant, provided with “free” water, provided a laundry service for an extended family. With that experience under their belts, their next rental unit included a coin-operated washer and dryer that paid for itself in about 18 months. “Our gains haven’t come without costs, because it’s been a struggle for us,” she admits.

“But I feel like we can at least see the light now—and we’re almost at the end of the tunnel.” Her optimism is fuelled by a May 2005 deal to buy 38 townhomes with joint venture partners. Jules found the deal, then brought in six JV partners and dropped his personal share to 25% to make it work. “Why 25%? Well, I figure that 25% of something is better than 100% of nothing,” says Jules. “Besides, this property is managed by a great property manager and I just have to manage the manager.”

IF AT FIRST YOU DON’T SUCCEED . . .FIND A BETTER MENTOR!
Domenic Mandato

That property was heartache, but I learned a lot about managing property and I learned a lot about finding solutions instead of being dragged down by problems. More than anything, I learned I could do this.

Domenic Mandato remembers the property that nearly broke his spirit. With a basement suite plus two suites upstairs (one two-bedroom and one bachelor), it had all the makings of a cash cow. He owned a handful of investment properties scattered across the country, but this one in Maple Ridge was close to his Vancouver-area home.

It looked like the ideal property on which to cut his property management teeth. Unfortunately for Domenic, very little went according to his plan. The two suites upstairs were sporadically rented, and tenant issues slashed into the time he had to renovate the basement suite before tenants could move in. “I remember feeling physically sick when I turned onto that street,” he recalls, “because nine times out of ten, something was going wrong.” When Domenic decided to sell the house, one of his contacts offered $200,000, a nice increase from the $155,000 he’d paid, even after $15,000 in upgrades were included. When Domenic wavered, the buyer cut his offer.

Before long, only $150,000 was left on the table. “I was devastated,” he says. “But my biggest fear was that maybe I wasn’t cut out for real estate investment. I believed this was my future and it wasn’t working.” In the end, his wife, Rosa, encouraged Domenic to give the place another go. Following up on a comment made by the same buyer who kept dropping his price, they converted the upstairs to a single suite. “Lo and behold,” says Domenic, “it ran great for about 18 months.” A couple of years later, in 2003, they sold it for $195,000, using the money to help their family relocate to his new job in Calgary.

A business development manager for an automation company in Calgary, Domenic took his first real estate seminar back in 1999. The deal on their first family home closed that same year and, with Rosa expecting their first baby, they used a line of credit to buy a property with a 28 SECTION 1 investment firm that sells property at its seminars. Following similar leads, they also bought into a triplex in Montreal and a couple of properties in Ontario. None of these turned out exactly as the information indicated.

Frustrated, but with no way to prove his investments were not delivering what he thought he’d been promised, Domenic clung to the notion he could generate long-term wealth via real estate—if only someone could help him out. In fairness, at least one of the educational programs he paid for included mentorship—sort of.

Domenic was darned disappointed to learn their version of mentorship meant he paid good money to be “on the phone with what felt like 100 other investors.” To make matters worse, those same mentors told him they couldn’t answer his “Canadian” questions. Chagrined by his first stab at property management and frustrated by the failed mentorship, Domenic broached the subject of real estate investment with the realtor who helped them find a home in Calgary.

That guy put him onto REIN, and it changed Domenic’s life. “I’d been burned so many times before,” he says, “so I asked an awful lot of questions. I was excited to find out Don Campbell himself led the meetings and I joined in June 2003.” A few months later, he attended a Don Campbell presentation on buying multi-family properties. Determined to move his portfolio in that direction, Domenic followed leads and started buying. Now parents to three young children, ages seven, four and two, Domenic and Rosa owned 62 units by July 2007 and were negotiating for 42 more.

All of the units are in economically strong areas. The toughest part of his business right now is juggling a day job alongside the management of his real estate holdings. He understands the value of that paycheque and appreciates how his job brings him in contact with some of the senior executives pulling the expansion strings on Canada’s oil and gas industry. There is a strategy for coping with that anxiety, confides Domenic. “It’s called planning for the future. I’ve got some good properties in place and with rents increasing over time, cash flow will be good, too. There is no question in my mind I will be a real estate investor for many years to come because it is now so enjoyable.” Domenic bases that forecast on a mid-2007 portfolio that tipped the scales at $10 million—not bad for a guy who bought his first investment

property with a line of credit then came close to walking away from real
estate investment when tenants got the best of his unsophisticated landlording skills.

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