Sarah Larbi: Welcome to this week's podcast episode. I'm Sarah Larbi, and I'm joined today by my wonderful co-host, Francois Lanthier. Welcome to the show. We've got a great guest today. Michael Ponte with 20 plus years of experience, and he's out in Western Canada, investing in Alberta. And we talk about a lot of the downturns and downsides and how to prepare for that.
Francois Lanthier: Great insights. I can't wait to share the interview with our listeners.
Sarah Larbi: Absolutely awesome. REITE Club community. Thanks for tuning in and let's bring in Michael Ponte. Michael, welcome to the show. How are you?
Michael Ponte: I am great. Thank you for the opportunity. Great to be here Sarah. Thanks to be here francois, I really appreciate the opportunity to kindly share. It's awesome.
Sarah Larbi: Very cool. Now give us a little bit of background on your real estate journey, how you got started in the first place.
Michael Ponte: I might be here all night. Like the reality is I've been starting, I started actually roughly around 20 years ago investing in real estate. Probably similar to what a lot of people have or people have started, if they just wanted to buy maybe one or two pieces of real estate. That's all they wanted and really didn't really know where the journey was gonna go.
That was me. I just bought a townhouse, and was losing $40 a month cash flow. Because they didn't really know much. I'm like, 40 bucks, that's not really much. It's just one lunch, I'm not gonna have a month. And so I did that, started to buy it and I bought my first property losing money, but again, wasn't sweating it.
Mortgage is being paid down. And then all of a sudden, guess what? Market rents went up and I noticed that, hey, Instead of losing 40 bucks, money was actually going in my pocket while this is interesting. And so I started to buy a couple more properties myself and started to grow and got into maybe five properties and like everybody gets into that position, the bank says That's enough for you, sir.
Then starts to tap you out. And as investors, we're like that's not what we want. We want to buy more. And so this whole world of joint ventures came in where There wasn't as much information as there is now, and there wasn't a detail. So I'm really trying to figure these things out and it started off with friends and family to begin with and started partnering up in some different deals.
Now, during this time I was actually working for a company called Dairyland, or Saputo, which is a very large dairy company across the country, and I was working. Like crazy hours, like insane hours. And traveling two and a half to three weeks out of every single month had two young kids. It was, the real estate side was just a little kind of side hustle.
Then it came to the realization, I'm just like, you know what? This could actually be something, right? And so I had to make that decision and do I want to go into real estate full-time? Is that even a feasible idea? Or do I continue to run almost two full-time jobs? And so we took a little bit of a leap of faith, which I don't encourage people to do right away.
Try to keep your job as long as you possibly can because you need to qualify for your mortgages and stuff. But we did take that leap and it was hard. It was very hard. And, if you want motivation, do that. Because if you got a family with young kids. That helps motivate you really quickly that hey, I still gotta put food on the table and kraft macaroni and cheese is probably not gonna cut it for every single night.
It just did grow by osmosis and honestly, we started to really scale the business, and we were really focused on more single family properties. For myself, I've been investing in Edmonton and in Calgary where I'm based in Vancouver and then started to look at other different markets as well.
We're also investing in northeast bc. We've also got properties in Halifax and also in Moncton as well, New Brunswick. And so we've really started to grow the business. We're now much more and more focused on multi-family investing, but it was a slow road.
It was something that I was trying to grow or buy 20 properties a month. It was about trying to make sure we're picking the right properties, not the wrong ones. And it's not to say mistakes were not made. There's lots of mistakes made throughout the whole process. Still make mistakes today.
That's okay. It's part of the journey. But it's been a fun journey, a long journey. I've learned a ton over the way, but I think to summarize a long-winded answer, Sarah it's really about, I just got started. I just began, I didn't really know what the heck I was doing to begin with.
There was not a lot of that information, but what I did know is when my eyes opened to what real estate was able to do as an opportunity I took advantage of it and really just tried to really push it hard. And it wasn't until later I realized that. This could be like a full-time gig and a full-time job.
Francois Lanthier: You mentioned lots of interesting things finding the right property. So what is the right property for you, if you don't mind expanding on that.
Michael Ponte: No problem. And that's a great question and thanks for asking that. And so for me I'm a big believer that you make your money on the bot. That's just my belief. And you'll get people that will say the opposite to that, and that's okay. We all do things a little bit differently. But as I mentioned earlier, I have invested in Alberta, Edmonton, and I've seen the goods and the bads of the real estate market.
I've seen the cycle. A few times, and the ups and downs. In markets like where I live and Fran, while we were just talking earlier, Our markets have just gone up like 15%, 20% per year and that, and we have a whole generation that thinks, oh, that's the way it works. This just continues to go up just by real estate. It just goes up.
Don't worry, everything will be fine. I'm telling you, the music does stop sometimes, guys, and it does happen. It is a very cyclical business and so when you know, we talk about learning, that was a very big learning experience. Create a little bit of cushion for yourself just in case things take a little bit of a downturn and it's about acquiring the properties.
For me, one of the most important pieces when we acquire, is to have a little cushion to protect yourself. So if the market goes down, hypothetically my property isn't underwater. And we've seen this both in Toronto and in Vancouver where there's been a pause or there's been a little bit of a decline and people are panicking.
You know what? That this is not normal. We've seen this. So for me that's a really important piece. And the second one for our business and this is gonna go against a lot of people back east and also Vancouver, is I'm a strong believer in cash flow. And so for me I treat every single property that I own as a business, period.
I don't care if it's a condo or a townhouse, and I use the analogy as imagining yourself buying a coffee shop like a business itself. Would you buy a business that loses money every month? Okay. And nobody would. So in the same breath, why would you do the same thing in real estate?
It just provides that extra cushion. It provides the income side and it supports yourself in case a downturn happens. And I've seen it before. I've seen people just assume that rents are gonna continue to go up. I've seen the situation where the assumption that values are gonna go up for only a downturn to actually occur.
Now not only is their property now underwater, second. The cashflow that they were hoping to get or the negative cash flow now becomes in my references, there's alligators, they're eating, taking money out of your pocket versus the other way around. So for us, those are two key things for us that we put a lot of attention and focus on. That's helped us sustain times of challenge.
Francois Lanthier: That's huge. Even in hot markets like Ottawa, I'm in Ottawa. We were talking about before recording Ottawa prices have gone up, purchase price, but actually rents have gone down in some parts of the city, which is shocking. The demand is really high. But I think that demand has caused a lot of people to become owners and not tenants anymore, which is counterintuitive.
Again, a lot of people were planning, I'm gonna get X amount. No, you're getting $400 less per month now. It's a double-edged sword. Same with,
I know Alberta, there's no rent control. So it can go both ways. Rents can go down. So yeah that's key. I'm so glad to hear someone else say it. Cash flow is king? And I know Sarah does too.
Sarah Larbi: Absolutely, I think it's great. And Michael, you've given so much information and like we could, we can take this conversation in so many directions, but I do wanna , go back for a second and add to what Francois was saying, and I think it's important to plan for the upside as just as much as the downside and, there are market cycles, right? They're gonna be different in years, they're gonna be different in severity and all that stuff. And by location. But you've been around investing for, you said, the last 20 years, and so you've seen your fair share of different cycles. Can you share maybe the last one that you've experienced?
What did that actually look like? And I don't know it doesn't have to be that specific, but in terms of , Drop in, purchase price, drop in rents with tightening of the lending lending rules as an example, and then what that actually felt like going through.
I think a lot of people think, like you said, they're gonna, it's gonna keep going up and up and really ultimately, I think for the, like Ontario, I can speak for Ontario anyway. The last 10 years has been a piece of cake. And for those that are non buying on cash flow and appreciation yeah, you did right now, but it doesn't mean it's always gonna be the case.
What can you share? Maybe just give us more examples of what actually happened the last downturn, and then you talked about a cushion, you talked about the cash flow, but may, but if you can expand and be more specific on what are some recommendations that they can do to plan.
Michael Ponte: Great question. That can go in so many different directions too, because again, we can be here for a couple of hours, to be honest with you. But it's an excellent question, so thank you for that. I'm gonna maybe reference the most recent one. And again, it's Alberta, unfortunately, they've dealt with. Now we're going now with the pandemic, the third kind of recessionary state in roughly 10 years. 10 1/2 10, 11 years. That's unheard of. We've had to deal with the 2008 recession. We heard you guys may have been aware of the 2014 15 actually 2015 kind of oil crisis where Saudi Arabia just opened up all the oil and just flooded the market causing all sorts of panic in issues.
The pandemic really as we all know, Hasn't really played out as where we what even myself thought in regards to the real estate market. It's bizarre that the real estate market has gone on fire, but there's still a pandemic, there's still issues with unemployment. There's things that we need to be aware of.
I'm gonna go use Sarah's, the one that happened recently in 2016. Okay. Because that one was probably much worse. And for those that don't know, the 2008 crash in Alberta, much worse. And so what happened, we had significant unemployment. We had people leaving that marketplace because at the end of the day when people are not working, they still have to feed their families.
What are they going to do? And so they go where the jobs are. So we saw a mass exodus of people going out to BC. We saw people going out back east in Ontario. So with that being said, you can imagine what happens to the rental market. You can understand what happens to the real estate market.
When you've got so much inventory, the only way you can differentiate yourself when you're trying to sell. The price. So prices obviously go down and that creates that little bit of a snowball effect. So all of a sudden there's no buyers for the property. What am I going to do? I've got an idea.
Why don't I rent it out? Because I can find tenants. There's still not as many tenants as before as well. So guess what I have to do? How do I differentiate myself to get a good tenant? Drop up the price. This is the snowball effect. And so with that situation, I'm gonna tell you right now, that experience and going through that a few times makes you guys, makes all of us better investors because you change systems, you do things much differently, but at the same time, you don't want to go through that.
Answer your question, Sarah. I'm gonna tell you right now, I was very fortunate that we came through that literally unscathed every single time. And it's because of the systems and strategies that we've had from day one as equity. We had that cushion. And so when prices did go down, even if it was.
An even keel of what we purchased it for. We were okay because every year mortgages were being paid off, so we weren't so dependent on appreciation. When I do my analysis for myself, for my potential investors I use the analogy of real estate as almost like an ice cream sundae. Okay. Where there's only a few things that we have control of.
When I analyze it the mortgage paydown is the ice cream. Okay. That's the foundation. I know I've got control. I have to pay that every single month. That I know is the equity. That's what I know I can provide as a return. The chocolate sauce and the sprinkles is actually the cash flow.
That's again, something that I can reasonably marginally control. Okay. The appreciation is the cherry on top. Okay. Just because the marketers are appreciating 10%, 15% per year doesn't mean that's gonna continue on. I have no control in that situation. So even in my analysis, I always budget like maybe 1% or maybe 2% because I don't know what it's going to be.
None of us do. Economists don't even really know. So it's better to under underestimate some of those comparisons. So to kind of reference what kind of transpired. We had a lot of vacancies. That was the biggest challenge for us and everybody. But my goal was how do we attract some of the best quality tendons in the profile that was there?
This is where we started to change our marketing strategies, being very creative. And again, it makes us better investors, but for me, the property's always cash flow. Every single time. And that was our saving grace if I just bought specifically to market and what the market ran to the market just to break even.
It would've been a significant amount of pain. And we had people that were buying. And I'll share a quick little story and I don't wanna respect the time that we have but it's one that's really important. We had this realtor that I know out there, what's the right word? Arrogance, maybe the wrong word. Confidence. Had a significant amount of confidence that prices were gonna continue to go up and that rents were gonna go up drastically. And they were on a multi-family frenzy in a lot of cases and buying like crazy and just buying.
This individual actually bought one of my buildings that I was selling, and he paid. Premium price. I'm like, thank you very much. Really appreciate that. I don't know how you're doing your analysis, but there's no way I would be buying this property at that same price anyway. The assumption was prices are gonna continue to go up.
It's not cash flowing now. But in a few months we'll get there. I dunno if anybody's ever heard or said that before, but they will. They reference it will come. If we just buy it now, it will come because that's the way the markets have. It didn't come. It did the complete opposite. And there was an individual that bought multiple deals.
Properties went underwater, properties, cash flow just went significantly down. And it's not even so much the cash flow is when you're dealing with vacancies. On top of that, it's like significant pain. 2016 for a lot of investors was pain, for a lot of individuals. And so when you're not paying attention and buying, I use the references.
We all have property analyzers that we're putting in our numbers and we tend to sometimes if I just make this, 2% vacancy or I make this 1% vacancy, I can get $10 a month cash flow. Let's call a spade a spade. You are only fooling yourself at the end of the day.
This is your investment. If you wanna fudge the numbers you're not fooling Sarah Francois, myself, you're fooling you. It goes right back to, you know what you said, Francois earlier. It's what are you doing this for? Understand what you're doing this for, to begin with and be real with yourself.
If this market doesn't make sense. Find another market. There's lots of markets across the country, states, wherever the case may be, just go with where the numbers are. So it's a longwinded answer, Sarah. And as you can see, I like to talk, but the reality is I understand there is pain that comes along with it.
Real estate is cyclical that some of the markets that I have lived in. It's had a very long run, a very wrong long run. I'm not gonna say that we're gonna have a crash. I ha I've been questioning this whole run for years, but I've been so wrong and I still, and I truly, I don't actually understand it, but it does happen.
History's always shown that you will see cycles. It's always to be better prepared and the more you prepare for yourself, healthy reserve funds, number one, big one. Don't just overspend by buying more properties and spend your reserves. Make sure you have cash flow. I can't enforce that one enough.
If you have the ability, I know it's challenging at hot markets. If you have the ability to find properties that have got a little bit of cushion, those are some of the best ways to protect yourself in this game For sure.
Francois Lanthier: I'd like to talk about your marketing strategies. So you mentioned you got creative, I'm excited to hear more. Did you start offering stuff like perks to your tenant? Housekeeping. Like what did you do to be special? Cause I know price. Yes. You don't want to be a dollarama. You wanna offer something else for the very best tenants. So what did you do?
Michael Ponte: Like it's a great one Francois, and thank you for sharing, for asking that. Honestly we had to take a step back. And we had to really go back and say, okay, some of the advertising wasn't actually working for us. So some of the old school mentalities are like Kijiji and other different platforms like Kijiji, Craig's we never did use Craigslist, but Kijiji was a big one back then.
Then we had other marketing platforms and then we had to go back and we're like, okay, we're not getting the leads that we once had, and why is that? And then we started to step back and had a pow wow with our group and just said, Let's understand. Our client and our tenant profile and who they are, what's their age, what's their demographics, all these things.
We came to the realization that who we were targeting before is completely different than who we're targeting now. It's just a lot of people are much more on social media with Facebook and Instagram and all these different types of programs. And then this is where Facebook marketplace becomes big.
Big eye-opener for us. And so we started to create our marketing strategy around social media and then started to really build on a database associated with that. What we did is we started so I've got our social media expert that's really referenced doing a lot of this stuff. We've got another link to another website that we have for, just for marketing itself. So internally, we have property managers. But what we've done is we've actually take the advertising in-house within our own company, so our property managers don't advertise at all. And what this does is I've got my finger on the pulse, or our company has their finger on the pulse.
If a property manager says it's been really quiet this week. I can say, you got 10 leads this week. Tell me about Joe Francis and da. And so we know exactly what's going on. So to answer even further is we took the marketing on just to have more clarity to this, have more visibility.
What are some of those key pieces that were really gonna be attractive to those potential individuals? So some of the ways that we did this. So for example, we would offer a plasma screen TV that sounds bizarre. 42 inch screen tv. Rent this property for a 42 inch screen tv. Here's the kicker, you don't get the TV until six months, but you must sign a one year lease.
Other things that we would do on the odd occasion is we would provide them with some type of a rental incentive. That rental incentive would be half month's rent that half month's. Will not come until month 12 of the lease agreement. So again, it's the way we've spun our advertising. Be try, but try to create some of that attraction.
But you gotta be really careful with that too, because if you gotta really think about it, who are the people that are really, you gotta understand the tenant profile, you're also attracting in that particular segment as well. So again, it's about being creative and I think the important message that I relay with you, with everybody is, In times of turbulence like this, you have to be paying really close attention to what others are doing.
Big companies, be it Boardwalk or Main Street. Main Street, and some of these other really big facilities do some really unique things. We never followed suit with half of the stuff that they did because I thought it was a little aggressive and my opinion was they're attracting a different type of tenant profile than what we were looking for.
It's important to balance that out a little bit. But the secret, the true secret to this is really to take control of our own destiny and our marketing. Because what happened is what people would say for example right now. Right now, people are looking for properties to move into June 1st.
That's what they're looking for a year later. I know when that lease agreement is gonna be coming up. And we've got this database, so guess what we're doing 60 days prior to before the lease agreement comes up, we're starting to show them ads and provide them with information about properties that we have available.
That's actually reduced our vacancy to like nothing. You hear all these vacancy rates like in Alberta, significantly higher. Like I think we're running, maybe not only even think one and a half percent we're really low, but it's just in regards to changing our marketing strategy. So it is simple. You have to be, you have to be creative. Now you, it makes you a better investor because you need to adopt. It's not like the same old.
Sarah Larbi: I'm glad that you mentioned that and Francois that was a great question. So obviously bringing the marketing in-house was a huge piece, but I do wanna add. That you are investing in Alberta, you are investing in a market that is more landlord friendly and you're investing in a market that doesn't have the rent increased restrictions. But I will say if so, me being in Ontario as an example and investing in Ontario, I want my tenants in and out in three to five years or less.
When they tell me that they're leaving, I love that because I'm capped by how much I can actually increase by, it's negligible. It's one or 2% a year which is absolutely nothing. So when they leave, I can bump it up, three, four $600. So I actually do want them to leave and we have such low vacancies to begin with that it's a different problem that we have.
Somebody that's with this, I wanna make sure that they understand your strategy. Is gonna be very dependent on the market. The market as well as the land landlord and tenant rules and laws and regulations. The other thing is if you do want to provide some incentives, I think the TV's a great idea.
I was always thinking of you know what, if you wanna boost cash flow or boost income and you offer rental items such as a big screen tv, you wanna wash your dryer. Here. There's this company called Easy Home and they do everything on rental, and I'm telling you, they make a lot of money.
You can be an Easy Home Landlord. Just careful that it doesn't, tie into your actual lease. So you're gonna have to do something different so that it's not part of your lawful lease. Cause you don't want that to be the case. As your example, Michael of reducing rent, my opinion would be we send them a check.
A separate thing, not a check, but maybe a gift card for that amount or something that is separate from the lease because you don't ever want to be writing any of that stuff in the lease for Ontario. That's what I can speak of. I can't speak of Alberta, but any thoughts on market differentiators.
Michael Ponte: Absolutely. And so to maybe to add to a point, cause you, you brought this up is just so you guys are all aware our property managers are definitely not myself. I'm not walking in the building with a 40 inch tv just so you guys are well aware. That's not coming to fruition.
The size of the TV is coming in a card that's above this size very small, and it's called Best Buy or something of that nature. You can get a model. X, y, Z 9 45 model number. This, that's your 40 inch. You wanna upgrade, fill your boots. We're not paying for it, but you get a dollar amount of X amount, right?
It's all the way you spin this. And to your point, Sarah, you're absolutely right. Every single market is very different in how you have to strategize. And that's the key, is you gotta be creative, as we all know. increases are happening in every expense known demand. We had a session just yesterday talking about insurance. I dunno if you guys have noticed insurance premiums have gone up.
Francois Lanthier: Big time.
Sarah Larbi: Quite a bit. Like a huge difference.
Michael Ponte: How do you make that up, Sarah, with 1%, 2% that's not happening. Even in Alberta, and this is the funny thing, is you, we don't have rent controls out there. We're still not able to catch up because again, the market is what the market is. It doesn't really matter, but how do you offset those types of expenses? So to your point, Sarah, it's just yeah, how do I make it for your particular situation, how do I make it almost. Comfortable enough to be somewhat reasonably uncomfortable in some cases, right?
You can get those terms in your building where for others, like if you look at Alberta, you almost don't wanna have a vacancy because you know what? You have to just deal with issues or for yourself. You know what? You may be able to get that lift of 15%, 20% per year because that's just the way the market is, and it's all about strategy.
For example, when you're dealing with a low vacancy, I'm not giving a TB. Right now there's no, I'm not doing TBs or any of that stuff. It's just you deal with those things when they come discounting rent and I always refer to this as kinda like a rent range. And so what happens is, the higher the rent, the better quality tenants you're probably gonna attract.
The lower the rent, the less quality tenants that you're going to attract. So when you're reducing your rent, You're not necessarily doing yourself a favor. All you're doing is attracting a different tenant profile. So just be aware of that. So that's why we keep the rents extremely high as we possibly can.
Maybe there is that dangling of a carrot that kind of maybe. Put that right over when they're comparing other properties. And that's what we're trying to do is, Hey, listen, if our properties are all the same and I'm giving you a TB, for example, they're gonna pick mine versus everybody else because there's a TB included.
I hope that answers your question, Sarah, but it's just like you, you do have to adjust your strategies. And then with what you're saying, sometimes it's not easy too, just so you guys are well aware. It's you that thinks you're doing the right thing and, but you do really have to stay close to the market when there's turbulence. When the market is extremely active and you've got high rental increases and low vacancy, what can I do to, like I said, make it comfortable to be uncomfortable a year later, if that makes sense.
Francois Lanthier: It totally does. So I'd like to circle back to something you mentioned at the beginning. So you have joint venture partners, that's something else as well that you need to keep your partners happy as well, cause Yes, cash flow and all that. But your partners joined in, joined forces with you for a reason. Can you tell us how you structure joint ventures and maybe what you do around it?
Michael Ponte: For sure. So in regards to the joint venturing side, that's again, it's a topic in itself that can go for a very long period of time. And it's a question that I get a lot about joint venture partnerships cause a lot of people struggle trying to find joint venture partners to begin with. But the reality is it's never the deal.
I can't enforce that one enough. Regardless if the market is going up or down, people are investing in the individual, behind the deal. And in that scenario, they really want to know that they can trust you. With their money, Francois is going to Belize with my hundred thousand dollars.
Now I wanna be able to trust Francois with that money. And so when you overcome that objection, first of all, which is the biggest objection you can sell a property to any investor as long as they trust you, and I make the joke is you know what? my investors, if I came to them with a property that says I'm gonna be investing in Tuktoyaktuk, and I'm not sure if Tuktoyaktuk is a good market or not.
Just so well aware. But if I came with them, they would most likely invest with me in this because they trust me a hundred percent. And that was the key. And so the way we kind of work with our joint venture partners and even though we, there's ups and downs in the market and there's ups and downs in cash flow.
This is a partnership, and with any investment, there's risk that comes along with it. The way to have a successful joint venture relationship is communication, and I can't enforce that one enough. And, there's uncomfortable discussions that we have to have sometimes. It's part of the business.
It's just what we have to do. But the worst thing you can do is try to sugar coat it or hide it. You might as well be upfront. And the more important thing is this situation. This is what's going on, this is what we're trying to do, to overcome the situation and just have clear lines of communication for a lot of our investor partners.
It's just what's the plan? And like I said, there's good things and bad things. All of a sudden we have a vacancy for three months, guys guess what. We're gonna bypass the cash flow this quarter just because we need to make sure we're maintaining our reserves because we don't know what the trend is gonna be in vacancy.
It's better to protect our reserves and bypass the cash flow in this particular quarter. And we'll see what happens next quarter. It's just the way it is, but everybody gets it and they understand it. And so this is just part of the process. And then so for myself, with the joint venture structure it varies Francois.
Again it's, what I do with our multi-family, it's a little bit different than I do with single family. And I'll be honest, I'm much more focused on the multi-family side, but I have my corporation that we have. And then when it comes to multi-family, we set up a separate corporation that owns the property itself, and there's shareholders with that corporation.
Then there's a joint venture structure that goes between the two companies that I oversee and manage the property itself. The corporation that owns the property is really just more of It's an operating company, but the shareholders really have no involvement. And then in regards to share splits maybe is what one of your questions are.
It varies. It just depends on what it looks like. Depending on the project itself. We're working on a situation right now where we've got a flip on a multi-family where the structure is gonna be heavily weighted of on an equity stake to our company. You'll hear people do 50%, you'll hear people do 65% to 35% to the real estate expert.65% to the money partner, and you'll also see 60%, 30%, and there's sometimes acquisition, disposition, fees, all those different things, type of things that happen as well. The answer that I tell a lot of people is, yeah, understand the structure, make sure that it's reasonable, but again, it's gotta be fair and equitable for your money partners as well as yourself.
I always say be a little bit greedy because this is your business. At the end of the day. It's a lot of work. It's a lot of work. And sometimes people, us real estate experts oh, I just wanna keep giving more money to my money partners. I'm like, no, because, It's a lot of work.
Think about all the stuff that you have to do, be a little bit greedy for yourself, but it's gotta be fair and equitable to both sides. And if your money partner doesn't get it, you've got the wrong money partner to be really honest with you. And again, that's a whole different topic in itself.
The reality is that's the way we like to look at it. We very picky on the people we bring in for money partners and rightfully so as they're screening. We do the same thing in return. It's extremely important to do this. So for those of you that are doing joint ventures, Screen your money partners. Treat it like a marriage because in some cases you might be working with these guys for three to five years. Can you work with these people?
Sarah Larbi: Michael, just a question about the screening. So Francois has obviously done it a great job. He's scaled up really quickly as well. It sounds like you have, with the JV route too. What are some of the things that you screen on or that you ask and you're like, this person is someone I wanna work with for the next three to five plus years? Or, this not the right fit. And this will be the last question before the lightning round. Feel free to share what you can.
Michael Ponte: A lightning round. Now you're scaring me. I think that the things that I'm looking for is common goals. That's the big one, is do they align with what we're trying to accomplish? Do they fit exactly what we're trying to accomplish? And so I'll use the example of this, and I have, believe it or not, these discussions quite regularly is somebody will reach out to me and say, Mike, I know I want to invest with you.
I'm like, that's great. So what in your mind is a good return on your investment? Just asking a really simple question like that. And they'll say I've got $20,000 and I would like you to turn that into a hundred thousand dollars in two years. And I'm like, that's fantastic.
That's excellent. I can't do that. And when you find something that does let me know, because I think I'd be happy to invest in that as well. So it's about reasonable expectations as well and being honest with yourself and the individual. And so if people are coming and coming into me and saying that, a reasonable return where I think it fits exactly with what our threshold and where we're at that's number one.
Secondly is I'm also trying to understand what their thought process is in regards to the relationship. Again, it's like a marriage. It's almost that gut feel. And I'm sure many of us that were single or married, we always had our gut feel when we met our spouse or significant others. Yeah, this one seems okay.
Then you also get your spider sense. It's eh, I don't know about this one. And that's the same thing with joint venture partnerships. And so for myself as a real estate expert I am managing this business. I don't need 20 other people trying to manage my business as well. If I've got somebody that's extremely high maintenance and they want to be fully involved in the process and they want to know, they wanna get phone calls and emails every second of every day about every single expense. Not gonna happen. Let's just be honest right here. And that's okay.
It's just not a fit for me. Somebody else might be interested in that. Francois I'm not sure if that's a somebody of your interest. But I've got people I can send your way if you're interested.
Francois Lanthier: That split would be different. It would be 10 for them, 90 for me than I can call you.
Michael Ponte: Exactly. So it, it goes right back to it. What am I trying to do personally in, in my business? It's my business at the end of the day and we talk sometimes about team members like your realtor, your mortgage broker, and those. I look at my money partners in some cases as. Part of my team as well, my financing team, and do I align, does my team align with what I'm trying to accomplish personally and in return, does it fit for them as well.
I'm trying to find commonalities. I'm trying to find that common relationship. And so when I go through my questions of potential investors, and some of the questions I ask you is, again, what are some of your common goals?
What are you trying to accomplish? What you know, do you have capital to invest? How much capital do you have to invest? Some of the things I don't look for is if somebody's only got $50,000 hypothetically, and that's all they own, I'm probably not gonna work with them because at any point in time they're one crisis away from saying Mike, I need that money back.
As we know, real estate, this is not liquid investment. So it becomes a little bit more challenging. So it's trying to find that right fit that makes sense. And it's, there's a lot of parameters that go along with that. But the biggest one is common goals. And I can feel that like we can work. Close together. So I hope that answers your question.
Sarah Larbi: Absolutely. That was awesome. Thank you so much, Michael. We could, we can have you back again and take the conversation in a whole different direction and there's so many great nuggets of information that you've provided. The next part of the podcast is our lightning round. So there's four total questions. Are you ready to play?
Michael Ponte: I'm scared but yes, go for it.
Sarah Larbi: Keep your answers like just short and sweet, 20 seconds or less, as much as possible. First answer that comes to mind. So number one, what is the best advice that you have ever received from another investor or at a networking event?
Michael Ponte: Best advice is always have clarity with your goals. Always just stay true to that particular goal because that's the end result of what you're trying to accomplish. That's everything's directed to that specific objective. Stay true to that because all your investments of everything that you're doing is to try to achieve what you're trying to do.
Francois Lanthier: I love it. So second question is, what is your favorite real estate, your resource for real estate investing? It could be a person, an event, a podcast, a book.
Michael Ponte: A lot of the Don Campbell books were excellent for me and I was a former rain member and a lot of that old material that we've had back then, there was just some absolutely gold nuggets that I still, to this day, I go in back and reference for sure.
Sarah Larbi: Those are great books. I think I've read all of Don's books.
Michael Ponte: They're all good. Amazing stuff.
Sarah Larbi: Awesome. Question number three, in your opinion, what is the one attribute that has made you most successful?
Michael Ponte: Definitely persistence and just persistence. You know what? You're gonna have ups and downs no matter what. It's how you overcome those obstacles that happen. Just stay persistent. Don't let negative things hold you down. And, we've had a lot of challenges. And so for us, we just push through, stay persistent, stay focused to the objective of what, why we started to begin with. And that was the key.
Francois Lanthier: Excellent. So true. So words of wisdom, 20 years of experience as well. So I'm sure you're persistent. Our fourth question, what do you typically do on a Sunday morning?
Michael Ponte: Sunday morning. The thing that I love to do is take the day off, to be honest with you. So usually my wife and I, we shut it all down and you need that mental break. No phones, no nothing. Go out, have breakfast with my wife, and then there's usually an outdoor activity that kind of comes along with it, but it's extremely important to disconnect, including social media as well. So I literally just shut things down for myself just to have that mental break and again, be present with what's really, truly important and why we're doing this, right? So that Sunday's is a real big one for me.
Sarah Larbi: Awesome. That's great. Michael, where can a REITE Club Nation or REITE Club community reach out to find out more about you.
Michael Ponte: Sure, for sure. I'll invite everybody join us on our Savvy Investor Facebook page. You guys are more than welcome to join. Very similar to what Francois and Sarah are doing in providing great information to all of you.
We're almost an offshoot of that in some cases, we're happy to share. Provide a community and you can definitely reach me out there. Otherwise you can go visit our website www.prosperityinvestments.ca, which is my company name. But I do highly encourage you guys to join us on Savvy Investor and learn a little bit about what we're about as well.
Sarah Larbi: Amazing Michael, and we always finish with this. Any last final words of advice?
Michael Ponte: I think, at the end of the day Just enjoy the journey guys. Like I said, they're it's a process. It's not a get rich quick scheme and it's not and don't also try to keep up with the Joneses. We see a lot of this stuff up in social media. People buying 20, 30 properties every single month. You know what? It's your pace. You don't have to be keeping up with anybody and just follow the stuff that, follow the steps that make it comfortable for you. And like I said, it's a journey. There's gonna be ups, there's gonna be downs.
Stay persistent. Understand why you got this to begin, the why you started your journey to begin with, and stay true to the process. And and like I said, it's a fun process. They'll give you days that you will lose some sleep, I wouldn't change it for the world.
Sarah Larbi: Awesome. Michael, thank you so much for being on the show. That was awesome.
Michael Ponte: Cool. Thank you for having me, guys. I really appreciate it. Thank you guys.
Francois Lanthier: Thank you. Hey, Sarah. So how did you enjoy the interview?
Sarah Larbi: I think it was awesome. Michael's got a ton of experience, wealth of knowledge, and it's always so interesting to learn about different markets and the ups and downs of what they've experienced with the oil and gas industry.
I felt it in the sense that back then I I was working at Lavasa for coffee and our calgary market, our Edmonton market, like that market did horribly for that year. And it was the oil and gas industry. We didn't really feel it then. But, clearly their housing and their rental market felt it as well.
It was interesting to learn and to get some insight on also the downsides and what happened and things that we should. Prepare for. So it was definitely super awesome to have Michael. And he's got tons of information. Like literally we'll have to have him back on to talk about, multi, we could have gone in different directions. We could have talked about multi-family, JVs we could have expanded on. Tons of things. What about you?
Francois Lanthier: The 20 years of experience, you can really hear it in what Michael was saying. I'm like, wow, okay. I'm not experienced as much as he is. And just learning from that and the different marketing strategies.
It was interesting to hear how in a market where there was lots of vacancy, he did not have vacancy or much less, and he's found ways to mitigate the vacancy by selecting joint venture partners. I do a lot of JVs. Totally agree with what he said. So it has to be a right fit. So yeah, so much learning, so much experience. Make sure to soak up all that information and apply it.
Sarah Larbi: Absolutely Francois great co-hosting with you, REITE Club Nation. Come grow with us.
- Log in or register to post comments
- ARNEL-LLEMIT-1637316866's Blog