Learn How Roberto Was Able to Quit His Law Career by Becoming A Successful Land Investor

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, thelandgeek.com and on this week's podcast, we actually have a star from Canada. But before we talk to our real estate superstar, I'd be remiss if I didn't properly introduce my co host. You know him, you love him. Scott Todd from scotttodd.net landmodo.com learn anything about anything. Investorninjas.com Scott Todd. How are you, Mark?

I'm great. How are you?

I'm great. I'm still trying to figure out how far to stand away from the mic. I hope it sounds better.

Well, why don't you just get a mic like I have and then the mics like over here or get a shotgun mic that just hangs and you could be like the mic could be right here.

I think I'm going to do that. I think I'm going to do it.

Keep up with the audio files. Is that what they're called? Audio experts?

Yeah. But you know what, speaking of experts, let's talk to our guest, Sarah Larby, whose goal is to inspire young professionals to realize their own property owning dreams when they thought real estate investment was going to be out of reach. She will. She. If you're not familiar, Sarah, she's the host of her own podcast, Where Should I Invest? She interviews fellow real estate investors about their strategies. She also co hosts investor learning sessions through the SO REIT Club. She has been featured in The Toronto Star, 1010 NEWS, Talk Radio, Canadian Real Estate wealth magazine, and is an avid speaker. She has a seven figure investment property portfolio by her early 30s. Take that, Scott Todd. You weren't seven figures by your early 30s.

No, I wasn't. It's okay.

You know, it's okay because we're still going to be nice to her. Sarah Larby, welcome.

Thank you. I'm excited to be here. And right before this we were talking about how this is one of my last podcasts before I take the summer off. So I'm excited to do it with you guys.

Yeah, we're so excited to have you. So, Sarah, let's just rewind the tape a bit. I imagine you started real estate investing in your teens.

I wish. I actually just started in 2013 and just was really focused and determined. And In October of 2020, I left the corporate job world for good.

Wow. Congratulations. Okay, so before we talk about that exit, where do you play on the Monopoly board? What is your specific real estate investing strategy?

Yeah, absolutely. So before I left because it's changed a little bit since then. But before I left it was the BRRRR strategy. As you guys are probably familiar with, it's essentially a mix of flipping and holding and I was able to do that with short term, midterm and long term rentals. The short term and midterm definitely boosted the cash flow, but you know, it's essentially the buy, renovate, rent, refinance, repeat. And then just this year since I left, I had a little bit more time. I started buy. I have actually three pieces of land that I bought. One is actually a five acre piece of property on the water. We're going to be building 15 cottages. We're going to make it a resort and then the other ones are some townhouse builds that we're doing. So it's changed, it's evolved. I'm excited about this new chapter. But essentially what got me to where I am today was the BRRR strategy.

Scott, Todra, your thoughts?

All right, so just for those that don't know, can you walk through the BRRRR strategy? I know you kind of hit the words, but kind of walk through those pieces again?

Yeah, absolutely. I mean, obviously the first step is to buy, figure out what the market fundamentals are, find a good area, find a house that's under market. Buying is definitely a big piece of it and building your team so that you can buy. Right. Renovating. You know, when I first started, that's step two. When I first started real estate investing, I didn't do any of that and it took a little bit longer for the first couple years when I realized I could add some renovations to force up the appreciation. So that's, you know, doing the right renovations, things that will get the most lift as possible. Rents, again, depends if you're doing it short term, midterm, long term. But you know, the renovated properties usually get higher rents. But I've developed a tenant screening process along the way. I can only speak for Ontario, that's where my properties are. But in Ontario it's very pro tenants and if you have a bad tenant in your, in your properties, it could take you up to a year to get them out. So definitely good tenant screening was very, very important. You know, and then refinancing, understanding, you know, how you're going to pull the money out is definitely important. And then repeating, you know, figuring out ways that you can scale, you know, I chose not to go the JV route. I did it, you know, with my spouse and I think having done that, done it that way, I Mean, could I have gotten a lot more properties? Sure, but there's something about the control that I liked. But, you know, repeating, utilizing private money and different money sources. So just to recap, you know, buy, renovate, rent, refinance, repeats is the process and it allows you to be able to, you know, acquire more properties with some, some or all of that initial money from the prior one.

Go ahead, Scott.

Like refinancing. Okay, so you're getting the money in there, you're going to refinance the property. Are you pulling out 80%? Are you pulling out 70%? And then is that the magic equation to keep it going? Because I would believe obviously that you have to pull out enough to get the next one going too. Is that right?

Yeah, absolutely. I mean, when I first started, the market wasn't as crazy as it is today, where there's like nothing out there and everybody is fighting for the same properties. When I first started, I was pretty much pulling everything out. Now, you know, I will still do it if I can pay back all of my holding costs, rental costs and at least half of my down payment. So I have 10% in. And then what I'll do is just keep a pulse on the market and, you know, appreciation. In Ontario, just because of the lack of available properties and all the immigration, we've done well from that point. Of course, cash flow is always more important. But just keeping a good pulse on the market allowed me to refinance the rest out within another nine months, 12 months after the first refi. So I think the days of waiting for that perfect deal to be able to refinance everything back out on the first go is a little bit harder than it used to be when I first got into it. It's not impossible. But right now what we're seeing there, we're holding off, everybody's holding offers, right? Holding offers. And you've got 10 offers and you've got this crazy person that's going to overpay for stuff. So, you know, off market properties, going through wholesalers, all that good stuff, you know, will likely help. And one of the things that, you know, we've, we've started looking is there's such a thing called. So there's Bill 108 in Ontario, which essentially allows for somebody like me to go in and buy a single family property, convert into two units, to duplex it, and then actually add an additional dwelling unit in the backyard. And that actually helps with a lot of the refinancing piece. And also the cash flow to give that A boost.

Interesting. Interesting. You know, I found it interesting that you even have a hard time with tenant screening in Ontario. We all know Canadians are way friendlier than Americans.

So is the system. Unfortunately, it's not friendlier to landlords, but.

It'S not friendlier to landlords. So, Sarah, before we get into like the nitty gritty of money sources and a case study on your latest deal, I wanted to talk a little bit about quitting your job. Because I can imagine there's people in their 30s right now that have been doing land investing or other types of real estate investing and they're wondering, how do, how do I know when to quit my job? What was it like quitting your job for you? What was your experience?

Yeah, absolutely. So I was, I don't know if people are going to be listening to this or seeing this, but I was just on my dock out here last summer in the middle of COVID and I was drinking some wine, staring at the water and I'm like, you know, why am I working crazy hours where I, you know, I started looking at my finances where, you know, I am missing opportunity to be able to grow and acquire and do more. But B, you know, when I was looking at like my cash flow and I'm like, I can live off of this, but doesn't mean I'm going to stop. And I was paying a lot of taxes. Of course the government likes to put your money in your pocket, in their pocket when you got a T4 job income, but it was, it was just literally drinking wine and be like, you know, I'm doing real estate to live the lifestyle. I can live it now, I might as well just go ahead and do it. And yeah, it was in the middle of COVID but it's the best thing I've ever done. What I did do though is I gave myself. This was probably back in May, June, May and June that I decided and then I ended up leaving in October. So I was, I called my mortgage broker and I'm like, hey, you know, as soon as I don't have another full time job or T4 income, which is what we call regular job incomes here in Canada, I'm not going to be able to qualify for much more. Obviously there's always commercial properties, but from a residential standpoint. So we refinanced the portfolio, unlocked equity. I was looking, I'm like, okay, well, who knows what's going to happen with COVID but if there's a downside, I've got a buffer. If there's an upside, that's fine, too. And then I give my employer a long notice. Um, I think I told him in June or July as well. And then we told the company and it was August. So they had. From. From that point on, I helped backfill my role. And then October 1st was the retirement day. And. And here's the thing is, as a real estate investor, do I want to stop and do nothing and literally just let my brain go to mush?

No.

Like, I'm going to keep doing stuff, but it's just an ability for me to say if I want to work five or 10 hours, if I want to be at the cottage all summer, have people come and visit me, I can. And it's definitely a lifestyle change. But it wasn't like a decision where I'm like, I'm going to do it today, or I've decided today and tomorrow I quit. There was definitely some planning involved.

Any hazing from the parents?

My parents have always been very supportive, which is nice. They were actually encouraging me to do it. My spouse was encouraging me to do it. And, you know, I think part of it is they're entrepreneurs. So when I'm like, we're going to go buy some real estate, they're like, hey, that's really cool. You know, my dad wants to now come in on some deals. So does my, you know, my mom. So, like, that's the lucky thing is that they've never said, hey, you're crazy. They were always like, yeah, whatever. You know, whatever makes sense. Like, they don't necessarily fully understand it, but I think that they trust me enough with, you know, where I want to go to just be supportive. And that's very helpful, for sure.

I love that. Scott. Todd, how lucky is that to have a supportive parent in your corner? Because oftentimes you'll hear that, security, security, get a good job, get a good education, and then they're not supportive out of fear. It's not out of lack of love, it's out of fear. And yet, you know, coming from our backgrounds, I know, you, me, we are supporting our kids to do what Sarah's doing. Sarah's probably going to do that with her children, but it is a mindset shift, right?

Yeah. And I think that one of the things that's obviously challenging is it is challenging to put your brain around not having to go to a corporate gig or you're your normal routine. Right. And Mark, we see this, we see this in coaching students. We see this where, you know, they're. They're successful. In getting their business to where they can quit their jobs. And then, you know, what happens is the survivor's guilt, I call it survivor's guilt kicks in. And it's, you know, it's that feeling like, oh my gosh, I should be working a full time job right now. And so what we do is we start to build our own businesses. Like, I've got to keep doing this 40 hours a week. And sometimes it takes someone to like shock you and go, why? And it's almost what Sarah was saying is I've been doing this to create a lifestyle for myself. Why do I now have to keep working 40 hours a week? Oh, I don't. Oh. And then you got to give yourself permission to kind of chill.

Sarah, did you struggle with that at all? I mean, you know, are your friends like, hey, you know, we're working 40, 50 hours a week while you're at the lake house doing, you know, multimillion dollar deals, working two hours a week.

I think part of it is I've surrounded myself with other like minded people probably in the last four or five years and really networked and found people that I could relate to that relating to me. And I was actually like in my close group of friends, the last person still working 9 to 5 now, not that my friends don't work like, you know, one's a realtor, but most of them are investors. And so it was actually me that had the horrible schedule. Now we're doing brunch on like a random Monday in the middle of the day. You know, do I still have some friends from like high school university that are working, you know, the 9 to 5? Absolutely. But you know, sometimes it's surrounding yourself with like minded people and you kind of push each other to achieve more, more and to do more. And it's actually pretty cool because I think there's three of us that retired throughout Covid and we're going to have a when things reopen because things are still closed right now in Ontario. But when things were going to reopen, we were actually talking this weekend about having a joint retirement party. One retired from being a lawyer, corporate lawyer, one was doing some like diagnostics and imaging stuff in the hospital. So, you know, I think, I think part of it is surround yourself with people that are going to push you to do more and be better and, and then it doesn't feel as crazy. And out there you're like, you know, the crazy thing is I was still holding a full time job and I'm like, all of them they get to hang out, they get to do all these things. So here. I might as well catch up here, right? So.

No, I love that. It's so funny because you. I love that Jim Rohn quote. You're the average of the five people you hang out with the most. So, Sarah, let's just take a look at your first deal, and let's use that as a case study. Walk us through it.

My very first one, I did not know anything, so I thought we had to save while we saved the 20% down. So I ended up having two jobs and put as much as I can into this rental property. It was $139,000 house from the 1850s. Somehow it's still standing today. And Matt, my boyfriend, you know, he's. He's a police officer, so he sees the worst of the worst. So he didn't really want to do real estate to begin with from the tenant perspective, to deal with the nightmares that we hear all the time, right on the news and whatnot. So he was, he, you know, he came around and he's. He's come around, but it took a couple years to convince him, like, hey, I want to do this. Like, this is how we're going to be wealthy and we're going to change our lives and be able to, like, do the things that we want to do without being stuck. And so the first one, his sister needed a place to live closer to her daughter's school, and she ended up being her tenant. We probably undercharged her. Had I screened her in my, my criteria today, I would have never rented to her. Their family, they're cool, but, like, you know, they say they'll rent a family for a certain reason. So they, she, she definitely, you know, put. Put us through a lot of things that, that, you know, as a landlord you can expect, right? No payment of rent delays, you know, the house being trashed. And I'm. I'm open to it. I mean, they know what they did. We're cool now, but it helps build, you know, like, gets rid of the fear. And I think part of the fear is a lot of the unknown. And when it happens, you kind of just maneuver through it. But, you know, we didn't lose money on it. Like, we, you know, that house probably today from 2013 for 130,000 is worth. It's in a really good area, right? We bought the ugliest street in a really, really good area, probably worth about 400 grand. And it's, it's so small. But in the grand scheme of Things. I mean, we've learned a lot. That's where you got to start. And. And we had to renovate it, like, small renos the first time, like, very, very basic. And then we had to renovate it a second time. But ultimately, like, we did well on it. It got us into the game, and, you know, it. It helped build processes and procedures along the way as well.

Scott, Todd, what are your thoughts?

Look, I think that, you know, at the end of the day, you just got to do it right. Like, you just got to start down the process. And the first deal is never perfect. It's never beautiful. The most important thing is you got the first deal done, and then you can move on to the second one. And I think that's where a lot of people stop. I mean, Mark, it's funny. I was thinking today because I was down in this neighborhood where my mom lives, and I was driving this street, and out of nowhere, this memory hit me. I had forgotten all about this until I saw this house. It was in the neighborhood. And the thing about this house was that I saw it, and I'm like, oh, my gosh, I can't. I remember that now. And what happened was it was. It was like my first deal. I had. I had watched the Carlton sheets type of infomercials, and I went out and I found this. This ugly house. You know, like the. The driving for dollars type of a thing. I find this house, and I talked to the owner. The house is vacant. And he's like, yeah, I'll sell you. I'll sell the property, and I'll sell it to you for. I think that the number was around, like, 60,000 somewhere in that range. Well, I didn't sign a. I didn't sign a contract or anything. I didn't know. Like, I just. I might. Okay, I think I'll pay you 60. The problem was I didn't have 60. I didn't have, like, $3,000. I had no money. And I'm doing the whole Carlton sheets, like, no money down type of a thing. So I get on the phone, and I find another real estate investor in the market. And he's. He. He's like, I want to see the house. So he meets me at the house. I still have the key. I walk into the house. He's like, how much do you have this thing for? I'm like, 60. And he goes, 60. I'll give you 65 for it. I'm like, bam, done. Let's do it. So I signed up the contract with the guy and he's like, okay, my title company's gonna call you. So the title company calls me, and they're like, hey, I see that. You know, you're selling the house for 60. Yep. But your name's not on the. On the, you know, county records. And I'm like, yeah, yeah, yeah. Seller's gonna sell it to me for 60,000. And they're like, okay, you got the contract. And I'm like, no. And they're like, you don't have a contract. I'm like, well, he told me. He told me, like, he'd sell it to me for 60, and I'm gonna sell to this guy for 65. Well, to make a long story short, like, I didn't really have a deal. Right. Like, and so the. The other realtor, he was. Or the other investor, he was kind of cool about it, but at the same time, it's agitated because I wasted his time. But the people ended up selling it because once they got wind that I was going to sell it to somebody else for 65, their price went up and I kind of got cut out of the deal there. But see, that's the thing is the first deal is ugly. I got scared, and I retracted and hid for a little while. But that's the thing is if you keep coming back to it, you won't fail. You just got to keep coming back, get over the fear and keep going, even when it's ugly and messy and all of this other stuff.

Yeah, it's really, really inspiring story. As far as the lesson being that the worst case scenario is you're learning a great lesson and the next one's going to be easier. But, Sarah, you said something really interesting to me. I put 20% down, which I didn't need to do, or I saved for 20% down, which I didn't need to do. If we could rewind the tape, walk us through all the things you would now do differently than you did on that first deal.

Yeah, absolutely. I mean, in Canada, you're able to utilize the equity in other properties in order to unlock that money to buy a down payment. So as an investment property, you still have to put 20% down. But what we've been able to do is when we had equity in other properties, as we learned along the way, rather than having to save all of that money for that next one, because our properties are at 65 grand. I mean, right now, you know, we're looking at, like, on. On a market that, you know, we're trying to birth for $500,000 properties, you know, 20% down is a lot to save. And so, you know, with, with this market specifically, like we have equity build up on our side, more so than maybe some places in the US where you're buying only for cash flow and the appreciation is minimal. Of course we want to buy ca. Our cash flow likely in this market won't be as good as some places in the U.S. but the appreciation has helped us. And if you find a good mortgage broker that can help you, you can unlock that equity and you can then reutilize the cash towards your next down payment. And that's what a lot of us are doing here. Doesn't work everywhere in Canada, but there are some markets that has potential for that.

Anything else you would change?

Oh, yeah, tons. Tons of stuff. I mean, you know, he learned along the way. You're like, I would change this, I would change that. I mean, from a financing standpoint, you know, we, we definitely should have worked with a mortgage broker from the beginning other than going to the bank, because they're all the lenders have different criteria. And you know, when we bought our second one or third one, like they wanted like more down payment, like they wanted like 25% down, then they want the other one, they wanted 35% down. And it was just the wrong bank to work with at that point in time. You know, had I known, I would have also put, you know, properties in my name only and then some in Matt's name only, and then we would have been able to acquire more with better lenders. You know, I would have figured out my, my contractors off the bat. I've had, you know, horror stories with contractors. I had to fire some. They were good at one job, they got into drugs on the next one. I mean, you know, the thing is like, you build your team over time and you know, had I known, if I, if I knew what I, what I know now, if I knew that back then, I would have definitely probably scaled faster. But I enjoy the mistakes in the sense that like, I'm like, okay, I learned from this. Like, you don't ever want to be somebody that's been successful and be like everything's been a piece of cake. Like, if you haven't, you know, lost something or made a mistake at something, you're not learning from anything. And so, you know, I wouldn't hire a coach, for example, that has made no mistakes whatsoever and has, you know, made everything perfect. I don't think you can really learn from that.

So is that, is that a shot At Scott Todd?

No, not at all. But, you know, but I think I probably, I could have hired a coach back then to help me build my team faster. I have a great team now and I have great contractors now. But you know that there's, there's, it takes time to do that stuff. And now I even have a coach to help me with the whole development stuff that I hired recently to just get me to that next level. So I think that piece is important. You know, definitely, like find a coach that's doing what you want to do that's hopefully still doing it. You know, you don't want them to have done it like 10 years ago because the markets change and everything changes so much, you know, But I likely would have, you know, scaled faster, better if I had somebody that helped me put all the pieces together from early on.

I love it. I love it. Scott Todd, you do make mistakes, right?

Oh, yeah.

I mean, I just don't see them.

Well, you know, when you have people around you that cover it up and filter, you know, abas, they kind of make it look seamless, right?

That's right. That's right. So, Sarah, we're at that point now in the podcast where we're going to ask you for your tip of the week. A website, a resource, maybe a book, something else actionable for the art of passive income listeners to go improve their businesses, improve their lives. What do you got?

I mean, I'm a co founder of theriteclub.com we provide real estate investing, education. It's free. Go on therightclub.com it's the. And then r e I t e club.com they can go to the forums, they can go to the marketplace. You can build your team that way. There's tons of great things. So I would say that. And then keep doing what you're doing. Like podcasts are how I really learned along the way as well. So you guys are providing this content out there, A lot of it can be free, doesn't have to cost a lot of money. Educate yourself and then just make sure that you take action. And the perfect deal is not perfect on purchase. You can make it really awesome along the way. But if you're just waiting for that perfect deal just to fall in your lap on your first go around, you know you're gonna be waiting for a long time because you're competing against a lot of people that have a lot of experience that can act a lot faster. So get some like, decent deals, make them great and keep going.

I love it. I love it. Before we get to Scott Todd's tip of the week, I have to give a shout out to our sponsor, which is flight school. Learn how the next 16 weeks can literally transform your life. Go up that mountain of land investing with Scott Todd, who is not perfect. Azure Sherpa. But he's going to take you up there quickly, safely and efficiently. And he's done it thousands of times. Not hundreds of times, not a couple times. Thousands of times. And oh, by the way, the tuition ain't going to cost you nothing. We guarantee it. We're going to promise the guarantee in writing that you will make back that flight school tuition 180 days or less. Just show us your work. You're going to make that back in terms or cash deals. Your next step, get on a call, learn more. Go to landgeek.com training thelandgeek.com training Scott Todd, what is your tip of the week mark?

You know, one of the things that people do is they start off with for their email marketing. They'll start off with like Mailchimp or maybe Graduate AWeber or ConvertKit or something else. But what happens is you have to pay per user that you have, right? Like pay per user. Well, if you're just starting out, I mean, if I were starting out, this is what I would do. I would change. But check out sendbox.com sendfox.com and you pay. I don't. They have a free plan. But then after a thousand people, you can upgrade to 5,000 people for a whopping $49 one time. D& then after that, as you grow, it's like a nominal $18 a month for unlimited people. So pretty cool.

That is really cool. Interesting. What's the catch? Oh, I know what the catch is. They're not going to make any money and then they're going to go out of business.

No, they charge you. Their catch is that your email list is going to grow. When you get to 18,5001 people, then you're at $18 a month. Okay, so they got a revenue model behind it.

All right, Cyril, you like that?

Sounds good to me.

All right. There you go. All right, fine. I'm not going to rip on your tip of the week, Scott Todd. Anyways, you guys have good tips, but my tip is the best one because it's the one that's going to really help you go deep on the brrr method. It's not going to keep you cool. It's going to put you in the blanket of real wealth. So learn more go to saralarby.com I have a link to it, saralarby.com as well as Sarah's tip of the week. And Scott's Tip of the week will be in the show Notes. Sarah Larby, are we good?

Thanks very much, Mark and Scott, for having me on. You guys are great hosts. Really had fun with you guys today.

Great. Well, thanks for being on. Even though you're at the lake house, probably getting ready to crack open a bottle of Chardonnay.

We're gonna do a little boat ride after this. You're standing in between my boat ride. Just kidding.

We're gonna wrap it up. Scott. Todd, are we good?

We're good, Mark.

All right. I want to thank the listeners. Just remind them the only way, the only way we're getting the quality of guests like a Sarah Larby from sarahlarby.com is if you do us three favors. You got to follow us, you got to rate us, you got to review the podcast. Send us a screenshot of that review. SupportLangi.com we're going to send for free the $97 wholetailing course how to Double youe Money, 30 days or less. All right, let's do this. One, two, three. Let freedom ring. All right. Go enjoy that boat ride, Sarah. Thanks, everybody.

Thanks, guys. Appreciate it.

Thanks. Thanks for listening to the Art of Passive Income Podcast. Start your journey at ww www.thelandgate.com and www.scotttod. net. Rate and review the podcast and email support at thelandgeek. Com. Your screenshot for a free passive income launch kit.