Sarah Larbi: Brooke Shang, is a creative real estate investor and has replaced her corporate income with REI income. Now a coach and mentor with Trust Your Talent Academy. Brooke is the author of the award-winning book, Financial Freedom The Royal Way.
You don't have to be a strategy specialist or a market expert to be a successful real estate investor. Brooke focuses tonight on navigating through the ups and the downs and the sideways markets with multiple strategies.
Brooke Shang: Since I'm the only lady today on stage. Thank you Gary for sharing. I have a very similar story. I'm still in the corporate world and the reason I got into real estate is because I thought I finally got the job that I wanted, and climbed the ladder. Why am I paying more tax? And our life wasn't any better at all.
So my point is, that's why we're here. Everybody has a story. That might be why you started. That's how I started, and everybody has a reason to do it. However, just imagine what that extra income could do for you. It's really not about how many doors or how much exactly it brings to you. It's about what it's gonna do with your life.
I think everybody could invest no matter which direction the market goes up, down, sideways, you can always invest. So just by a show of hands, are you actively investing today more than before? Wow. At least one third. Are you waiting to see where the market lands? That's okay if you're doing that as well because we do see a lot of people waiting.
That's why there are not as many listings today, not as many buyers, not as many completed deals on the market today. And I'm here as a real estate investor. I look at Gary. I look at Chris. Everybody is so professional and I wanna be like them. However, I focus on what we are here today, being a real estate investor, so leverage my time.
If anything I share today resonates with you. However, there's realtor and lawyers and also mortgage brokers here. We are here as educators. I'm here not to solicit deals just to show you what we've done, and my goal is to provide you with a little bit of my experience and I provided some tools. If you pick up a sheet of paper, we'll go through that.
I wish I had more time. However, today, since we're focusing on additional units, think about what deals like that could bring to you. Is that what you wanna focus on? Is that what you're good. And actually, I've moved around different markets because the goal is we have to focus on what we want. We're not door collectors, we're not property buyers. We're here to invest.
So focus on who you can approach to leverage the time. So OPM, other people's money. We know the bank, private investors who can provide us with funds or your JV partners or daddy and mommy or your friends who're interested in what you're doing and willing to be your JV partner, for example.
And one of the reason I think people stay with their job 40/40/40. Does anybody know what that means? 40/40/40 rule. So just to give you a brief description of what it is, basically it means work 40 years, and when we retire after 40 years, we rely on 40% of the income. That's based on when we have our highest earning and also 40 hours per week.
That's how much time we spent on our jobs. So if that's the life you're looking for, that's not why you're investing. I'm sure that's why you're looking for something different. Why do people stick to that? I can tell you one reason I still stick to my job is I can still contribute. However, if that's my only source of income, I got a 5% raise.
By the way, last year when everybody was raising their hands, I thought it was fantastic. But look at inflation today. Does that really improve our life when that's the only thing you're relying on? And here's a few reasons why people rely on that or stick to that, holding onto that and not willing to go any further.
Not even trying to see if there's one or two deals to do. One reason is people don't think that they have a plan. They don't know what to do or actually, in Canada, I immigrated from Taiwan. It's surprising to see a free country. People really rely on the government thinking that we can rely on security.
The government will give us what we needed. I get that other Serb, this is a different time. However, is that really enough? And I know we're here because we wanna take control of our finances, of our lives, and that's why we're doing that. Another reason people don't plan for retirement is people cannot imagine themselves at that age.
And there's an experiment that was done. And I also watch a Netflix documentary cuz people can relate. If you're 20 today, you cannot imagine what it's like when you're 75. So if you're interested to see what it's like, use an app. Even Snapchat age yourself for 40 years. Can you really relate to that person?
And when we are healthy, we never think we're gonna get sick. That's why people don't focus on the future. They focus on today. And 50% of people in Canada can only live paycheck to paycheck. And 25% of people cannot even do that. I actually see a lot of tenants. It's not a matter of what happens, it's a matter of when.
If you have enough rental properties and in the game long enough, I've seen a lot of tenants not being able to pay. Not everybody went all the way. A lot of the times we find ways to help them solve the problem. However, when you're there, it's really easy to fall through the crack and I don't wanna see that.
I do everything I could to help the tenants, especially with all the resources we have today. We could probably help them find a cheaper property, what they can afford, or come up with a plan, or when we say we screen the tenant, however, we have to understand life happens. So we have to think about what we're gonna do.
If you're with a financial planner with a. , this is actually what the banks are doing. And when they tell you to buy mutual funds, it is a 4% increase per year to be conservative. They don't wanna give you a high expectation, and however, this is very achievable. So I look through US data and Canadian data.
On average. Right now, I'm using the data that's on stats. Stats can website. So if you're looking at an average medium, in 2019. I think there is newer data, however, this is what's currently published around 329,000. That's their net worth. However, if you're really thinking about living a better life, really, is that enough?
So if we use a 72% rule, what that means is how long it takes you to double your income. So say for example, if it's. Seven years. Then you divide that by seven, about 10 years. So I'm just using rough math. I'm not very analytical. However, I know that as investors you wanna see numbers. So if we just base on that, how long does it take you to retire?
So after 12 years, if we use 6% at 47, that's around my age. You're gonna get a net worth about 468. And the log of the bankers tell you, even in the states, save up a million dollars and that's how much you need to retire. Why is that? Because if you work 40 years by the age of 65 using the same number, you're gonna save up about that much.
About a million dollars is your net worth. However, can you comfortably live on that? Just even today? What's the inflation rate? Around 7% roughly. So that doesn't even keep you at the same standard of leave living. However, that's a number we are looking at. So just to put things into perspective, I've seen some of you holding the sheets.
I hand it out if you have a pen of paper and pa if you have a pen and paper, just cross out how many years you have lived. So be honest. Where are you today? So really simple math. If you're around mid 40, 60% of your life is gone, how much time do you have? Don't you think you need a plan to plan for your real estate investing?
I'm using the example to show you that the average age in Canada is 82 point. If you're a lady like me, you live a little bit longer. So if you're male in Canada, around 80, I think currently, so on average it is about 82.3. That's the average life expectancy. So when you get a chance to cross out how many years you have left, think about what you wanna do and I base it on three rules.
I think it's really important. I think Chris mentioned different rules about control. To me, cash flow is control. That's the number one thing. It's like a business. So if you do not have control of your cash flow, the business is not making money. It's not a viable business.
And that's why you look at alternatives, suite of basements, and even. Probably it's not gonna cash flow anymore. I actually started investing when the REITE Club started in 26, end of 20 16, 20 17, and at that time, everything went up. I'm actually really fortunate. I never experienced property value going down until recently, and I've always seen interest rate going down.
That's why everything I had is variable interest rate. I don't think it's ever gonna go. The property value will always go up. However, that's what we see today. So luckily, I think I'm always grounded cuz I have a mentor, I'm educated. I'm always thinking, oh my God, I'm not gonna bank on appreciation. It's really hard when you see the market keeps going up and I'm thinking this is gonna be forever.
Like I mentioned earlier, people think what they see. Status quo today is gonna be the forever status. Which is not the case, and you see that today. So number one, cash flow. Number two, return on investments. Why is return on investment? The second? For example, if you have $10, you're making $5, you have to put in all the work.
It might not be worth it for you. I can tell you that cuz I was a Amazon seller for a period of time. You put in a lot of work, $10 items, you're making $5. Maybe ROI sounds pretty good. However, you have to put in a lot of work because what's important is your time. Time is everything. So you wanna maximize what you can do and maximize your cash flow.
And ROI shows you how fast you can run with the cash you have or with your invest. And our approach is pretty simple. It's really all about us to start. It doesn't matter if you're in Ara region, if you're in Durham region, it doesn't really matter. All it comes down to is start from you, from yourself. If you have a very specific goal, this is what I do, and.
You might wanna do that as well. It's personal, so you can put it on a little piece of paper. I carry it in my wallet and if you open up my book, I have three goals. When I wrote the book, everything happened. So I think if you talk about it, write it down and think about it, it will happen. And like Gary mentioned, you focus on different buckets of income.
Then you think about what am I supposed to do as an I. . I can tell you when I started, I really wanted cash flow cuz I wanna make sure the concept worked. I thought about long term wealth. However, I wanna test a concept. If I just sit there waiting for appreciation long enough, I will have created some wealth.
However, I'm thinking, what if I wanna accelerate it a little bit faster of all the time I have. What can I do with my time? And I know in the book, rich, that Poor Dad is talking about, don't focus on earned income. I'm doing this and coaching or teaching, and even my day job, I do it because I love it. I'm willing to spend my time doing it.
I have that option because I have income from real estate, multiple streams of. . So perhaps you're doing lending, you're doing different things. Think about how you wanna focus your time. And a big reason for me at least, to get into different real estate deals because it's so interesting. We can get so creative.
There's nothing else. No vehicle, like real estate where you can leverage, where you can leverage other people's. As much as real estate, and I think when I started one, know if the broker mentioned the bank is gonna offer you money to buy your property, but they're not gonna lend you money to even buy their own mutual funds, then I'm thinking Sure.
They understand the power of real estate as well. So if you're thinking about earned income, usually it starts from fix and flip. A lot of people do that whole. If you joint venture partner, you have to work to find deals. Passive income, like lease option, the cash flow from different deals, and also income property.
I know single family may not cash flow today. How can we make a cash flow so we can create passive income? , private lending portfolio income. A lot of the times we wanna have wealth, we wanna create wealth, and that's when you start to see portfolio income. And also passive income is when you can sleep at night and properties are making money for you.
I'm gonna go through, there's several ways of setting yourself up and mention smp, focus on the strategy that gets you to your goal. And think about long term, short term, midterm, what you wanna do. Personally, I focus on all different strategies cuz I have short term goals. I wanna make cashflow or if you're flippers, you wanna make a big bucket of income first to get yourself started.
And in short term, some of the vehicles are quite expensive. I bought property with credit cards and some flippers. Might be able to do that as well. Use it to buy materials. For example, midterm, for example, joint venture. So in my case, my joint venture is usually 3, 4, 5 years. And sometime it lines up with the mortgage terms, say for example, five years.
In the long term you're getting residential mortgage and also commercial mortgage, depending on the property. And you can see the cost and also the time, the timeline you're accumulating. So these are the thing you think about based on your personal goal. So go first, then you decide on the strategy, the market.
And I've invested in all different markets as well. So this is a just a quick example of my investment in Ontario. It's also throughout Canada, but I thought, I'm in Ontario today, so it might resonates more with you to show you that you can do it in different markets as well. You don't have to only invest in your backyard.
So here's an example, since we're talking about weed, additional units, et cetera. Here's an actual example of a property I purchased about four years ago. 80% loan to value is the mortgage, and then we put in the second suite. So $88,000 roughly is how much we put in to add in the second unit. Since we've gone through the concept, I actually just wanna take you through to show you that a deal like this, not zero money left in the deal. However, after refinanced, we only had about $9,000 left in the deal. So this is one way of looking at it. After you pull out the equity, you can go on to the next deal. However, think about the cash flow. I'm aiming to be realistic.
There's some enforcing costs. Sometimes, for example, you have to take out a tree or something happens. And after refinancing this actually negative cash flow, I can tell you a few things we can do. In this case, since you're here first, we can add in another unit and luckily I've seen brands going up since I started.
I'm very spoiled. Since 2017, all the price went up and rent constantly went up as well. So think about what you wanna do in this case. I can tell you what I did. I didn't borrow as much, so I just wanna make sure I borrow it enough for the property to continue to cash flow. However, it's up to you what you want it to.
If you wanna hold it long term, the point. , we buy and sell to create capital. So like I mentioned, a lot of people started by fix and flip or if they don't have any money, there's no reason why you cannot wholesale starting today. If you're just connecting different people together, you can even co wholesale with other people.
The point is, there's so many opportunities and as long as you can spot the opportunity, solve a problem, there's always ways to make. When I started, I didn't have a wholesale deal. I only had people I knew that wanna invest. So I just connect them together and I call wholesale with somebody else and eventually you, we wanna have the bucket of gold so we can start to buy a whole property for long term.
It's a balance act. However, that's what we do as investors. So I just wanna leave you with this. This is a five year plan, so I quickly throw up some number based on the strategies we're talking about today. If you're adding in a unit to fix and flip, perhaps you can get a wholesale fee if you're putting in the second suite or the third in this case today, put in how much cash flow you can expect.
So you have that sheet on the table. Just run the numbers. So in your market, what's a realistic number? If you can cash, say, 500 per unit, how many do you need to reach your goal? To me, when I started, my goal is to reach $5,000 per month of passive income. That doesn't include wholesale, that doesn't include anything.
Some people focus on the overall income, so you can focus on 65,000, maybe you're actively wholesaling and flipping. So I wanna just leave you with that so you can start to plan. So people who start to plan always have a better rate of success. So make sure you continue to plan. And another thing is always continue to learn.
I constantly found there's constantly things to learn. It never stops. And third, Pivot whenever the market change. Think about ways you can pivot. Continue to cash flow. Thank you for today. I'm so glad we can go live. Thank you.
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