Sarah: I actually didn't have social media until two, three years ago and just went all out. I think a lot of people that I've met actually came through my social media. How many of you guys are here from The REITE Club? Because you saw something on Instagram or Facebook. What about the podcast? I guess that's another form of social media, potentially. How many of you guys have seen Matt McKeever's videos on YouTube? What about mine that I did with him? You guys watched that there's 8,000 views on one of them, maybe a little bit more than 8,000. That is pretty incredible. Like I've had a lot of people reach out that wanted more information or had questions about that.
If you haven't been on Matt McKeever's videos. I don't know if you're taking new applications, go and see him potentially. If you've got a great story. I think a few other people have actually been on his videos as well, better in this room today. This industry is quite small at the end of the day. In my opinion, about a degree of separation from knowing all the investors out there that are actively educating themselves. In this game at the moment, I think that's actually pretty cool.
How many of you guys have seen Mel and Dave on social media? How many of you are going to hear Mel and Dave for the very first time? You guys are very active on social media. That's actually how I came across both of you. It was actually through Instagram and all your stories. I'm like, I've got to figure out who these people are. Investor Mel and Dave Dupuis, our innovative real estate investors who have acquired over 100 apartments, 24 properties in just a few short years. That's very impressive. Using creative strategies they've increased their portfolio significantly without any of their own money.
Through their mentoring programs, participants learn all of their proven strategies so they can implement them and achieve success of their own. Mel and Dave are authors of the number one bestseller book, real estate investing secrets, which are at their table, guide to creating wealth and freedom. They have been voted top three best apartments for rent in 2018 and 2019 have been nominated for business of the year award.
The power couple has also been on various interviews, podcasts across Canada and the US. Recently mine as well, airing soon, including a four week series with CBC radio and the breakthrough real estate investing podcast, which has many downloads and their online presence is very impressive with over 33,000 followers across social media platforms. Welcome Mel and Dave.
Dave: We've done a lot of presentations, a lot of speaking, and I'm mad at Dave because in high school, when everyone else was doing presentations, I would find the smart group, team up with them. During the presentation, I would just hold the billboard and go like this and avoid speaking. I still get nervous with public speaking. Anyway, it does a little bit about us.
Mel: Today we're going to be talking about the secrets to real estate investing. At first we had five and we realized that half an hour anyhow, we're trying to sneak in as many as we can in half an hour. Why should you listen to Mel and Dave? Dave and I, we purchase properties. We bought 12 properties in less than 12 months and that's solely owned. That's multi-family residences. It costs us $0 and it's a hundred percent ours.
We're not venturing with anybody else. It is fully ours. We now have a portfolio of over a hundred units. We have our Amazon bestselling book as well, that it made number one, Amazon a few different times and in different categories including real estate and investment.
Dave: We were nominated and we did end up winning business of the year for 2019. We couldn't do it without our staff. We can't do it without our construction manager, Jeff, our director of operations, Jim, we have two virtual assistants now in Mexico, Eric and Mary. We couldn't do it without our team like she was saying as well, top three apartments for rent in 2018 and 2019. We're landlords, but we're also good landlords. I want to make money while feeling good about it. Anyone can be a slumlord. I want to avoid that. Speakers and mentors across North America. So secrets, anyone can do real estate.
Mel: There's really nothing special about Dave and I, you don't know the steps, you don't know until you start.
Dave: We didn't come from a rich family, mom and dad didn't give me the buildings. They didn't give me money to do it. I was actually raised by a single mom until I was eight. Not trying to do a sob story, but no one gave us anything. Basically, how do we get started even though we have no money?
Mel: This is our story. That's Dave, holding his first property. When we met Dave, we already had one house. I had a duplex and a triplex as well. And then we thought, hey let's start buying those states. We decided to do that. The reason I wanted to continue to buy real estate is because I quickly realized, but it's great cash flow. My duplex is making you around 1,200 bucks a month. My triplex is making me over $1,500 a month. That's a lot of money every month that is coming in and helping. Just have that extra cash. That's why it interested me and Dave is a little bit more passionate than I am.
Dave: I read a book in high school. I knew I wanted to be a millionaire. By the time I achieve the goal at 33 right now. I know you guys love us probably younger, but so the book I read was basically how to become a millionaire through real estate. I thought, okay you don't quite go against the grain. The other thing too was the tax advantages. I started to read about that. It's one thing to make money, but it's one thing to also keep money. That's why I jumped into real estate.
Mel: That's me here. As I was saying earlier, one rental property equals two weeks of my pay. If I have two rental properties, equaling four weeks of my pay. Now, these are obviously high cash link properties. They're multi family present residences. I can't walk around too much. My heels are going to dig in. But I was making good money. I was working at our college making over 70K a year, had a pension, had benefits but it wasn't enough. I knew that I wanted to do more. That's the thing.
People would tell me all the time. Now you have the perfect job. Why would you ever want to leave? And yes, I was making good money and I had a pension, with three kids. It's beneficial to have the benefits and all that, but it wasn't good enough cause I was stuck because I didn't have the freedom. I didn't have the freedom
Dave: Security and freedom are two vastly different things. Melanie had security. What's the difference between security and freedom. I like doing these analogies, but who's the most secure person in the world? People in jail, 24/7, they're watching, they're told what to do, when to do it and how to do it. Without a choice they're very secure. That's not what I want. I want the opposite. I want freedom. The job she had was security, but it wasn't freedom. That's what everyone should have reached for is that freedom.
Mel: You say security, but what if we get a new call, a new president at our college and they shuffle things around. Can happen in large organizations. All of a sudden, Melanie is no longer employed because we restructured. You think you're safe, but you may not actually be secure. You just never know. We decided to reverse engineer the way we were thinking. We started thinking this way more and more. Once we realized, wait a second, with the number of properties, I can buy certain things from the cashflow that we are thinking of. We thought to ourselves, hey, what if I buy 12 properties? What's going to happen? If I buy 12 properties and we were able to do that in less than 12 months.
Dave: Back then, we bought this when it was 20%. Back then it was 5%. I wish we were still in those days. We should have bought more then.
Mel: Yes, that's when we had about five, six properties. We did the 5% at first. That was the easiest back then. Some of you remember back then it was a lot easier than we had 20%. The whole BRRRR strategy, but then once again, we got stuck and we wanted to achieve that. How we achieved that was with creative financing. And we'll talk about that in a bit.
Dave: It was funny because back then we were doing that flip to sell for BRRRR. We didn't know what it was called. We were just common sense to us. We were doing that. Once we hit that wall at around five, six or seven we discovered the leverage of OPM, Other People's Money. That's when we bought the 12 and 12, a hundred percent owned, we got a hundred percent of the cash. Once we did that, guess what happened?
Mel: I was able to quit my job at 39 and finally free myself up. He's jealous now. And again, this was all due to doing a few things. One, it was investing in our own growth. We'll talk about that and the other one was creative financing and Dave gets really excited. I'll take him over the next slide.
Dave: Creative financing, break it down, guys I love this stuff. Owner financing, we do this all the time and we're showing our mentorees right now. Basically, we do first mortgages with the sellers we're doing. He held 80% of the purchase price, a second mortgage vendor back. We do those as well. You know where the bank will give you the initial 75% to 80% and then the seller will hold down. Basically, the down payment, a hundred percent financing.
We had about four properties. Three of them were completely mortgage-free. We literally got a hundred percent financing through the seller and on those ones, we didn't pay legal fees. We didn't pay land transfer. We got a check on closing. We thought we'd like to do it now. We'd like to get checks when we call these buildings.
Mel: Literally, no money down. We closed the deal, no lawyer fees. We go to our lawyers. Here's the keys. Here's your check, how awesome is that?
Dave: That's what's going to be my check on closing and they're like, leave me alone. Usually people pay money anyway, private lending. We are secured like Dan was saying earlier, RRSP. We've got a lady who's in the wings right now. She's got 200K and again, we're just trying to find the perfect deal for her. But yeah, we do that all the time, promissory notes. You know what, I find funny promissory notes that's the actual legal name.
It sounds like Mickey mouse. It sounds like an IOU. Hey, give me some money and I'll promise to pay you back. But so we like to call it contractual agreement sounds a little bit more mature and mortgage.
Private lending, we get a lot of our mortgages through privately. The difference between up top and the bottom is up top. Previous owner is holding the mortgage and you don't need to do that. Anyone that has private money can be a mortgage holder.
Mel: How do we do that? And how can we continue to do that successfully? This is how it starts. We needed to change the way that we were thinking. We used to think, and some view, perhaps still think this way, that it is bad debt. It's a bad thing. But what we quickly discovered is the more in debt than we get. Richard we're getting as well. Let me clarify that as long as it's good debt. We love that. We get excited about that, good debt. Let's talk about bad debt first.
Bad debt are things like boats, skidoos, Lamborghinis, or we're talking about that one. That's bad debt. What's good debt? Multifamily residences, where your cash flow is higher than your expenses. For us, I'm deeper in debt.
Dave: I love leveraging debt. Now, when I send deals to the bank or private people, I don't even call it mortgages anymore. I said, hey, I need more debt. I just have a dry sense of humor. That's how much I love that.
Mel: Education is another good example as well of debt. You think about your kids and I think if my kids of course all the time and I'm willing to obviously send them off to school. They get a good foundation so they can do and be whatever they want to be. But then as we are adults, it's so ironic because then, and we see it all the time. People are going to wait a second. You want me to invest in myself to grow and I'll do it on my own.
Tracy this morning, talked about it very well saying there's absolutely a way where you can do it for yourself and you can get there with lots of bumps and really slowly, or it can expedite it. That's another strategy that we use as well. As soon as we started really investing in ourselves and our growth and yet it's money upfront, but it's not a cost, it's an investment. That's when we really were able to expedite our growth.
Dave: Get that in your head. Debt is very good, very powerful.
Mel: What would you prefer?
Dave: I'll go through both guys quickly, so paid in full and a big fat mortgage. I prefer a big fat mortgage all day, every day. I know, and I'll break down both quickly, so everyone always wants to strive to pay down your mortgage, double up on the mortgage payments, then I'll be mortgage free. I have the opposite mindset where I find money in the bank in equity. I find when you don't have a mortgage on something, it's dead money. Basically, what I mean by that is when you're not taking that money out and refinancing and investing in other investments, your money is doing nothing.
You don't have a mortgage payment, but suck that money out, refinance it, get some other assets, get some cash flow. The other thing too is when your asset is paid off fully. The income will be much higher, obviously because your expenses will be down, but you're missing out on those tax breaks and that's so powerful. Your income's going to be higher at the end of the year. And then you and your accountant will be scrambling as to how do we make this, how do we get expenses? How do we write this off? How do we depreciate? It's a double-edged sword. Whereas the other one, when you have a big fat mortgage, like I love, you're using OPM other people's money.
You're taking that money out of there. And when you suck up that refi, everyone knows that it's non-taxable and you're buying more cash flowing assets. At the end of the year, maybe the one asset didn't make as much money. However, you've got a couple more. And now you and your accountant, get the plate. How do we not pay Justin Trudeau any tax money legally?
Mel: Another part of our strategies is creating win-win partnerships. As Homer says, I like those odds. When we started off we made a lot of mistakes. One of our mistakes is that we're very competitive. We wanted to win and want to win big, and that's all we wanted. We were closed minded because we didn't realize that if you're only focusing on yourself being the winner, guess what? Someone's losing. And if someone's losing, how long are they going to want to do business for really long, and then how long before that goes around?
We change our way of thinking and thought, wait a second let's do win-win scenarios. That's where we shifted. That's when again, we're able to grow a little bit more. Let's say for example we find a cash flowing property and the owner is set on his price. I'm willing to give him his full asking price. If it's cash flowing, I'm completely fine with that. Because at the end of the day, if it's $10,000, that's going to make a difference. I shouldn't be buying that property anyways. Instead I might use negotiation. Perhaps there's renovations that need to be done, maybe the roof is really old.
Dave: What we usually love to do guys is hey, I'll give you your philosophy. I don't want to pay land transfer, so they end up, I don't want to pay legal fees, tacked onto the mortgage was at roof, looks a little rough, but we throw that in there. Everything's, into the price I could have given you. I could give you 500 and for 500, I'm getting all this in it. That's been our philosophy. It's a win-win if they get to go to the coffee shop the next day. The police just bought my building full of pop. That being said, that was our strategy to zero down.
Mel: Another tip as well as asking them when they want to close. Because often that question isn't us, but it might make a difference for capital gains purposes. We already have some deals on the contract but we waited for next year. We got to wait a couple months for them. We don't care. We're still buying this year because for them it matters. That was one of the negotiations. Really talk to them, ask the question, stop talking for a little bit and listen to the feedback you're getting, because they're going to let you know exactly.
I sold the building this year. Okay right away you should be thinking probably not gonna want to sell this year. Let's ask him if he's willing to or if you prefer next year and then use that as your negotiation tool.
Dave: It's pretty powerful to see what you can negotiate into a deal once you've met their needs.
Mel: Same with private lenders. You want to make it a win-win? Why should somebody invest in us? We're making sure to pay them a fair amount back. That way they're happy, we're happy. It's a win-win situation.
Dave: Absolutely, and that's the thing. Find those cash flowing deals where you can pay a private lender. If you're thinking, I'm not going to pay them 12%, 13%. I'm set on 11% or 10%. Maybe your building was not solid to start off with. We have no problem paying our private lenders some good money because we find some good buildings and we put zero down. And at the end of the day we refinance and pay them out. We have zero down assets, the cash flows for the rest of our lives. That's our philosophy. It has to be a win-win.
Mel: Sometimes we'll have people saying, coming to us, say here's a 100K here's 500K, invest with you guys. And that's fantastic. But at times, and it happens, we will say, sorry, not right now, we don't have a deal right now that we can justify paying you this. We get a hold off. Don't be afraid and especially when you start cause that get really excited the first few people that approach, but it can't give them money.
We had to pay the back. Just don't get too excited, make sure you have that exit strategy, which is actually going to bring me to the next slide. Exit before you enter, and that's not a typo. That is correct. Exit before you enter, you need to know how to exit a deal before you enter. That's a huge mistake people make.
Dave: Absolutely and we turn away so many deals that seem to make sense. But if we don't see that exit strategy, because again, yes, you got the investment. Yes, you got the investor initially, but if you can't pay them back, what good are you? You know what I mean? What's your worth if you're not making the investor money? This is crucial guys, and this is where people get hung up.
Mel: That was one of my fears. When we first started with the Cape. I'm going to use other people's money. I want to be able to repay them. How do I do that? I want to make sure, so we actually ended up meeting with people from our town and different cities as well that had large portfolios and ended up losing it.
Thankfully, they were very kind and willing to share with us what went wrong and what they could've done differently. At the end of the day, it all came down to their exit strategy. They didn't have a proper one. If you're going to be investing, make sure that your exit strategy and that is set up properly because that's one of the biggest mistakes people make when BRRRng money
Dave: One of the things that they do guys, is they bank on things that they can't. They want the interest rates to stay low. When they go up, oh great. That's out of my control. What am I going to do? They want the market to keep appreciating when that doesn't happen. Those are things you cannot bank on. The things that we do that are tangible and they can bank on is I know that if I force this appreciation, get the lift. Then I'll get a higher appraisal. Those are things again that are within your control. If you've done your numbers properly.
Mel: We purchased 12 properties as it is fairly recently, that was in 2017. We purchased the 12 properties this year. We have a couple of finalizing at the bank right now. By the end of year, we're going to have repaid 11 out of the 12. They were five-year contracts. Then paying back my lender's three years early. When that happens two things are happening. A. My monthly cash flow is increasing substantially because think about it for a second. Private lender one, I was paying him 325, private lender two, I was paying 650.
Once I do that, I have 3000, at least more a month that I'm receiving in my pocket for not doing anything. And I paid back 11 people so that we're not expecting their money for another three years. Guess what they're doing with their money? Hey, you made me money. Here's more money. Let's do it all over again. That's exactly what's happening.
Dave: That's another win-win guys. That's the word of mouth that happens. Mel was saying, so seven have already been paid, four at the bank right now. The cool thing is our exit strategy is going to work a little too well. I shouldn't say typical, but it's going to outperform what we thought, because usually, you buy the property, you get the lift, you get the forced depreciation, you repay the mortgage.
You're the private lender in one at a time, but these four buildings that are currently at the bank right now, they've performed so much better than we thought. That's actually going to wipe out all our other second mortgages and all that. This is the power of knowing how you're going to exit before you enter. When you talk to the lenders and we talked to the mortgages and you can show them, hey, here's my game plan. You've just solved all their questions and all their needs.
Investing equals multiple streams of income. We all know that. Here's the three that we like. Equity is that behind the scenes stuff. I find that kind of boring. It helps the ratio as everyone loves it. The banks love it. The residual income. That's why I love the cash flow every month. That's the buildings in our area. We got great cash flow. That's what we strive for. Work in the exit strategy, work in the win-win and the tax write-offs guys, like I was saying, you can make a whole whack of money, but if you're paying Justin Trudeau, what's it worth.
Mel: If you think about it for a second day, when I was at our college and I was making 70K plus, but I'm not keeping 70 K in my pocket. Last year, we made a lot of money out of our a hundred plus properties or units, and we've got a $6,000 check back. How crazy is that?
Dave: Seven figures of rental income. And because of all the legal, we have a financial controller, we have a good tax team, because of all the great part of real estate, we've got a $6,000 return and we went to Disney world with the kids.
Mel: It's legal, we don't do anything that's illegal. It's just, you don't know what you don't know. You don't know how to structure. It's learning those kinds of strategies.
Dave: If you're a doctor or lawyer or whatever, making that money, you're paying high taxes, real estate, you can strategically shelter, strategically write it off all legal.
Mel: Essentially, there's one barrier with anything and we see that and we reflect on this all the time. When we get to the next stage of our business, the only barrier is ourselves. What is stopping you guys from doing whatever you want to be, whether it's your first property or your 10th property or your 20th property, the only barrier it turns those fingered around is you.
This is me before I met him. I had a nice BMW. I was happy. And then we decided, let's do real estate. Yeah, Dave convinced me. It doesn't look too good, but it's really bad. We bought a used rusty van. I would open the door and the rest would fall. I could literally put my fingers there to hold it like bullets.
Dave: I love that van, actually. I still love it. I don't have any more, but guys, this is what made sense. We knew we wanted to explode. I didn't want to have big fat car payments at the bank. I didn't want to affect my ratios, my debt coverage, or my total debt servicing. I wanted to make sure that the bankers couldn't say no or any financial. My numbers were all awesome. We swallow our pride, our neighborhood of $5,000. Literally like you can see all the rest. I used to go through the drive-thru or the carwash and be scared cause I'm like, this is going to affect the structure.
I did love that. Another funny little story we used to go to Walmart. We still go to Walmart. We have a vehicle, the next vehicle you park a little further, that's the safe zone and you go to pull in and you either get out, move the car to go somewhere else. This van, I didn't care. I literally would come up with the van. I would nudge up against the cart and slowly push it out of the way and make myself a parking spot. It was cool having that vehicle.
Mel: Basically, it was a sacrifice. That I want to sell my BMW, no, I didn't want to. People are thinking like, what went wrong with Mel getting her properties didn't work out. The gossip started, it sucked, but it worked. And then now, because we did it, sacrifice short-term to get the results that we want, long-term. Now we're driving the vehicles that we want. Last year I bought my brand new pro white escalate that was on my vision board that I wanted for a long time. They've got his big truck that he wanted to drive.
Dave: It's basically our property management company. When you guys go in the park, that's the truck we drove down. If you go out in the parking lot, see if you can find that mobile billboard somewhere in the parking lot.
Mel: We continue to set goals. That's our next goal. Five-year goal again, we're not going to be paying for it. It's going to be money for our properties.
Dave: Why would I pay for that? My buildings are going to buy that, not me.
Mel: How are we going to do that? Wrap up our strategy.
Dave: Our massive goal, we currently have over a hundred. We just made the school a couple of weeks ago. We want to own a hundred units by ourselves like Melanie but one of them, two apartments, whatever you want to call them doors. In the next five years, it's at a hundred, we're at a hundred. In five years we want a thousand. A thousand doors in the next five years. We're already at a hundred. We need to get 900 in five years. We've broken it down again, reverse engineer. What do we need? That is 180 per year. We're doing it annually. It's 90. That's our goal, 90 doors every six months.
Mel: Guys know where you're heading. What's your goal? Sometimes it's not very clear. If you have a goal, what's your one year goal? If you have one of your goals, what do you need to do in the next six months? We know we need to look at a lot of properties to get to our goal. And guess what? We're crushing numbers. We have deals under contract because we're always moving ahead. Aim high and invest in yourself as well. The important piece is about willing to learn and skyrocket your growth cause that's so important.
Dave: Power of visualization. I'm not going to get all mumbo-jumbo on you here, but no one wants to secret the law of attraction. I don't believe in it. No one else lives with her. Okay, cool. So anyway, I suggest you look at it. Law of attraction is huge. Even if you don't believe it, do it, try it. Vision boards, we do it all the time. The house we have, we wanted this massive house. It wasn't even on the market. We ended up getting it all. Mel was actually on my vision board and she didn't have a choice. You have to marry me.
Power of visualization. Now, we've got that thousand units. We're going to get it and you know what? Investing in yourself, massive action, at the five-year mark, if we didn't hit the thousand week, we got 850. I'm pretty damn happy with that. If that happens, I'm not upset with myself.
Mel: Guys, to wrap it up and Matt did a great job at explaining social media. Follow us investors Mel and Dave. As Sarah mentioned we try to give a lot of value, a lot of tips on what to do, what not to do, the biggest mistakes we've made. Follow us there and we post every day.
Dave: Come to our booth guys. We have a lot of chocolate. If you don't eat it, I will put your business cards or fill out whatever sheets.
We're giving away an hour of mentorship. It's usually about a thousand dollars price tag but thank you to The REITE Club for having us. I want to get a member here,
Mel: People have made the rounds yet. The odds are really good. Go and put your name in there for one hour.
Dave: And just to pitch our mentorship guys, we're doing mentorship. It's basically an eight week thing, an eight week mentorship. It's two hours live with Mel and Dave.. What's going to be more that kind of strategies as to how in the heck are we buying all these buildings with no money and getting a check on close. I gave you guys, scratch the surface.
Mel: Congrats to you guys for coming today, cause that's obviously you're committed to your growth just by taking the time and paying to be here as well. Yes, if you're interested to find out more about our mentoring program, come see us.
We'll give you some more information. We have a huge discount for people coming today. Super nice discounts. If you're interested, come see us. The code is very creative, so the code is a REITE Club. That's a code. Remember that and yeah, we can talk more later. We're here tonight for the wine as well. Hopefully we'll get to cheer with some of you tonight. Thank you so much. Thanks everyone for having us.
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