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April 24, 2024 44 mins

How To Invest In Real Estate With No Money

How to invest in real estate when you're starting out is a key component to the peaks & valleys you'll face as an investor.

Welcome back to the "Inspired To Invest" podcast. This week, Judi Paré from Plentitude Inc. is a returning guest, this time here to speak to us about the importance of affordable housing and due diligence for both passive & active real estate investors.

If you'd rather watch this video than listen, click here.

Imagine facing a financial abyss and clawing your way back to stability, then striving to make a lasting impact on the housing crisis. 

Judi's voyage from monetary instability to real estate heavyweight is a testament to resilience & the power of savvy investing. She joins us, imparting wisdom on the nuances of affordable housing & the due diligence paramount for thriving in the real estate world. 

Her story is not just a personal triumph but a beacon for those seeking to turn adversity into social good through strategic investment.

As Canadians grapple with the stark reality of housing instability, the quest for affordable living spaces has never been more urgent. 

This episode isn't just about the struggles; it's about uncovering solutions and the ripple effects of collective efforts. We uncover the challenges that dishearten the younger generation & renters, and question the effectiveness of government interventions. 

The tales of homeowners downsizing to campers & seniors, caught in the web of soaring living costs, are stark reminders of the gravity of the situation. 

Yet, amidst these challenges, we uncover investment opportunities that promise not just returns, but also societal benefits.

Wrapping up our deep dive, we pivot to the criticality of financial literacy, highlighting programs that arm the youth with the financial prowess they need to navigate a complex future. 

Judi navigates us through the labyrinth of passive real estate investment, elucidating the importance of understanding risk & the potent mix of financial gain & societal contribution that comes with socially responsible investing. 

We close by championing the ultimate investment: oneself. 

Empowerment through knowledge isn't just a mantra; it's the key to unlocking a world of possibilities in your financial and investing journey.

To connect with Judi, go to plentitudeinc on social & https://plentitudeinc.com online.

Thank you to Judi from Plentitude Inc for bringing us this month’s episodes of “Inspired To Invest”.  

“Inspired to Invest” is proud to support the Beyond Success Program, a not-for-profit financial literacy program for students, launched by More To Give & MAK Investments. Find out more at https://more2give.ca/beyond.

Join us again on Wed., May. 8 to hear from a real estate investor who hosts one of the biggest real estate investing conferences in the entire country!

Thank you for tuning into & remember, “when you invest in yourself, the sky's the limit!"

Never miss an episode! https://serenaholmes.exprealty.com/ask/896312e0f685fdd06401c1e53ca6fd17

To connect with our host, Serena Holmes, go to https://www.linktr.ee/serenaholmes.

To buy a copy of The Accidental Entrepreneur, go to https://www.linktr.ee/serenaholmesauthor and for a free copy go to https://serenaholmes.exprealty.com/ask/f813c4efdfaead4980a467b614d73604 

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Welcome to the Inspire to Invest podcast, where
we're sharing stories from realestate investors and how
investing has changed theirlives.
This episode of the Inspire toInvest podcast has been brought
to you by Plentitude Inc.
Hey everybody, welcome to theInspire to Invest podcast.
I'm excited to have Judy Parayhere with us and, if you were

(00:23):
turning in last fall, she didjoin us to have a little
discussion on how she gotstarted in real estate and how
she scaled her portfolio.
So I'll fill you guys in, justin case you didn't catch that
episode.
But she's been in real estatesince 2014, and she's been a
coach for investors for the pasteight years.
She's a highly respected andtrusted coach, including one of
mine, with a large network ofpeers and colleagues in real

(00:45):
estate sales and development.
She's always on the pulse,looking for the best investment
and education opportunities toprovide to her partners as well
as her students, and when she'snot working, she can be found at
one of her vacation propertiesin either Northern Ontario or
Italy, which is pretty amazing.
She loves to travel the world.
Thanks for joining us again onInspire to Invest and we're just

(01:06):
going to dive right into it andwe're going to talk about
affordable housing and a bigtopic which is due diligence for
real estate investors right now.
How are you today, judy?
That's great, thank you.
Thank you for having me back.
So obviously, last time we didtalk about how you got started
into real estate and reallyyou've built this very

(01:29):
significant portfolio over thelast few years, but I know for
you, one of the things that'sreally, really important and
close to your heart is the topicof affordable housing, so maybe
you can talk about why you feellike this is so important and
how you're integrating it intoyour real estate portfolio.

Speaker 2 (01:40):
Yeah.
So I think a lot of peopledon't know this about me is in
1997, I had gone through aseparation.
1996, I had gone throughseparation 97, early part of the
year my house was up for sale.
It was.
We could no longer afford it.
We had an income property in it, our nanny lived in it and

(02:00):
that's how we were able toafford daycare.
To be honest is we had alive-in nanny.
I was a flight attendant at thetime, so I was traveling all
the time and needed somebody tohave full-time care for my kids
when my husband was working andwhen I was working.
And with the breakdown of themarriage, there's a couple of
things that happen that putpeople at risk.
One or two paychecks away, orthe majority of our population,

(02:31):
let's say more than one third ofCanadians, in unaffordable
housing.
I was in the same situation.
We were paying, you know, morethan half of what we were making
into our mortgage.
These are back in the timeswhen mortgage interest rates
were, you know, 12, 13, 14percent Right, and when my
husband and I separated, I was Iwas a bit of a money moron, to
be perfectly honest.
I didn't understand where themoney was going.
The money would show up, youknow, show up in my from my

(02:52):
paycheck into our bank account,and it was a joint bank account
and it would pay our mortgageand it would just set up
automatically, right.
So when we separated, I was nowresponsible for handling the
finances and doing these thingsand I just thought things would
happen automatically.
And they didn't quite.
They didn't quite happen thatway and money was being moved

(03:14):
around our accounts and whatnotand one day I came home from
work we got a demand letter thatsaid that we owed.
I was alone with the kids.
Demand letter that said that weowed.
I was alone with the kids andwe got a demand letter that said
that we owed almost $14,000 inarrears in mortgages that hadn't
been paid and back.
Yeah.
So, as a single mom, $14,000 isnot something I could come up

(03:36):
with easily.
You know, I barely had a creditcard with, you know, a $5,000
limit.
I, you know, my, my family was,uh, wasn't very well off.
I just didn't have resourcesfor that kind of money.
Um, so I was, you know I was.
I was a bit taken aback.
I was like how, how is thishappening that I owe this much
in mortgages?

(03:56):
And what I didn't know is mymortgage wasn't being paid.
It was, uh, my money was goinginto the bank account.
My husband had bought a house.
His mortgage was being paid.
There was some complications inthe way we were setting up our
banking and I wasn't aware.
I literally wasn't aware.
There's no excuse for it, but Ireally wasn't on the pulse of

(04:17):
my money.
I didn't understand money atthe time.
So, yes, I came home from thechildren, came off the bus and I
was waiting for them in thedriveway and when I went to get
into the house, I walked up tothe door with the kids in tow
and I couldn't get into my ownhouse.
I was completely locked out.
There was a sign on the doorthat said that the house had

(04:39):
been taken over by the lenderand who to contact if you had
any questions, and I went to theback door and I went to the
side door where my nanny'sentrance was, and all of the
locks had been changed.
So, there was no way in my houseand I contacted my son's school

(05:00):
.
He was coming off the bus alittle bit later and so I asked
if he could take the bus to afriend's house and stay at the
friend's house.
My youngest was in days, sothey were home a lot earlier.
So the oldest one I sent to afriend's house and I called the
parents and asked if he couldstay for the weekend because it
was nearing the weekend and sothey were going to provide him

(05:22):
with clothes and lunches and allof that for the last couple of
days of that week so that hecould stay with them.
So because we had nowhere to go, you know, I guess we could
have gone with family, but wehad nowhere to go.
My nanny was locked out, so Ididn't have, I lost daycare
immediately and put her intohomelessness as well, and and we

(05:44):
had nowhere that we could thatwe could go.
So, on the note, there was anaddress and there was a person
to contact and I went to theiroffice, which was in London,
Ontario, and I took my two kidsin tow with me and I sat there
until somebody would speak to meand that day begged for my

(06:05):
house back and they wouldn'tgive it to me.
And I kept begging and beggingand they said that they were
going to assign a propertymanager to and that they would
be managing it and I would haveto contact the property manager
to make arrangements to get mythings out, et cetera.
So what ended up happening thatday is I became a property
manager and I negotiated withthem the keys back and I became

(06:27):
the property manager of my ownhouse and worked with the lender
for the next few months inmaking sure the house was clean,
the yard was done, everythingwas packed up and ready for us
to move out, and I negotiatedthat we could stay until the end
of the school year, and thiswas in May.

Speaker 1 (06:44):
So I negotiated that.
Did they ever send you anynotices or anything like that?
In could stay until the end ofthe school year and this was in
May, so I negotiated that.
Did they ever send you anynotices or anything like that?
In regards to like the payments, yeah, so a notice did come.

Speaker 2 (06:52):
I didn't receive it.
It was rerouted to anotherindividual who lived in the home
who didn't open them, justthought, oh, I'm not going to
open these things.
This is, you know, sometimeswhen you're going through
financial trouble, you don'topen your bills.
You don't open statements.
You don't do this and a lot ofpeople do that.

(07:13):
You put their head in the sand.

Speaker 1 (07:14):
Oh my gosh.

Speaker 2 (07:15):
And that's what's happening is, our head was in
the sand.
We weren't.
We had a sale of the house, sowe were going to move anyway.
Like we were going to move, Iwas already looking for a place
to live, um, but our sale fellthrough.
It was a conditional offer.
It fell through and no othersale came through.
So during this time we weren'tpaying the mortgage, it wasn't

(07:35):
being paid and we really feltthat the the sale of the house
was going to take care of that.
And this was our lack ofunderstanding of really home
ownership and what the um thesame process is.
And we didn't know.
It was our first home, wedidn't know how it works and, uh
, and we ended up.

(07:55):
My husband had already moved,he already had a house of his
own, but me and my childrenended up with nowhere.
And so that day I negotiated mylittle heart out and I ended up
with with the keys back in anagreement that I would property
manage it for it and an exitstrategy on how they would exit

(08:16):
me.
And I still had no place tolive.
So I had to figure it out andnobody wanted me.
Yeah, as soon as you're notpaying your mortgage, it shows
up in your credit score.
So try renting a place whenthis is showing up on your
credit score, yeah, it's reallydifficult to find a place yeah,
so then what happened next?

Speaker 1 (08:34):
like where did you end up renting?

Speaker 2 (08:36):
I had a friend co-sign for me and uh for a
rental property and they theyco-signed and trusted me and uh
got me into a house to rent.
Um, and we moved in in the July.
So as soon as the school yearended we provided a lease
agreement with to the lender, uh, the house was sold.

(08:58):
Probably a few weeks later itclosed yeah.

Speaker 1 (09:02):
Yeah, no, that's a powerful story and I think
obviously, like sometimes lifethrows you lessons that are
harder than you want them tohave, but obviously an
entrepreneur was kind of bornbecause you negotiate.

Speaker 3 (09:13):
Yeah absolutely Like the property manager I.

Speaker 2 (09:17):
I literally learned so much just in listening to the
process.
Yeah, and I thought, what doyou mean?
People property manage and theyget paid for it?
Yeah, like how does that work?
And so I actually became, youknow, a pseudo property manager
there.
I would rent houses and leaseout rooms and stuff like that

(09:38):
and became a sandwich mixer.
That's how I started, yeah.

Speaker 1 (09:41):
But I mean, I think it goes to show you that you
know when you are going throughschool and stuff like that.
Nobody teaches you these basicfundamental life skills, right?
And it's kind of ironic whenyou think about it, because you
learn a lot of stuff in school.
A lot of it's not relevant orpractical, but something as
simple as understanding securedmortgages and the power that
that gives them as a lender,home ownership and budgeting and

(10:02):
all of those different thingsright.
So I think it's something thatdoes speak for itself in a lot
of ways.
Now, when you look at the waythat life is today, obviously
things are a lot different.
Here it's kind of the opposite.
You're probably in a buyer'smarket back then if you can sell
your house, but now we're inthis, you know, crazy situation
where there's just not enoughplaces for people to live and
it's a bit of a housing crisis.

(10:22):
So when you think about peoplethat are coming up the ranks in
these new generations, like, doyou think that they will be able
to afford to come back to themarkets where they were raised
or start their own families,like, I think, what are your
thoughts on where affordabilityplays into that?

Speaker 2 (10:36):
Yeah, I don't think necessarily.
To be honest, I think that youknow, unless you're being handed
that house down throughgenerational wealth and whatnot,
you may not be able to buy inthe neighborhood you grew up
with.
Like let's talk about the GTA.
It's highly improbable.
If you're, you know, if youcame or want to buy in the GTA,

(11:00):
you're going to have to amasssome wealth first.
You're going to have to gosomewhere else and get some
wealth unless it's family wealthbefore you can get into that
market, because you're notbuying one and $2 million homes
with 5% down.
You're just not allowed toright.
So you have to come up withsome sort of wealth.
So getting into home ownershipin the GTA or the greater

(11:22):
Vancouver area, for example, isgoing to be difficult.
My son just moved toSaskatchewan to build wealth.
So he's you know, by the end ofone year he'll have 10 doors
because he was able to move intoa market where it's more
affordable, where his money cango a little bit further, and
when he's amassed some wealth hecan come back to Ontario.

(11:44):
He can come back.
Now not everybody can do that,but my tip is that if you can't
live in the market you want tolive in because you can't afford
it, then rent, thinking thatyou need to live on your own in
a one bedroom or a two bedroom,and I never lived on my own

(12:11):
until I got married and bought ahouse, like I had roommates,
you know, and I think thatpeople are getting back to that
and savvy investors areinvesting with their friends.
You know I've seen a lot ofarticles of girlfriends
investing together or guyfriends, and they're just like
you know.
Let's just pool our resourcesand our buying power and let's
go buy something and get in themarket.

Speaker 1 (12:33):
Yeah, and I think to your point there.
I think it's just for anyonethat is considering that.
I think you know Kind of likethe saying like you don't
divorce a person, you married,right.
So when you go into a situationlike that, know that it's
obviously not going to be in thelong term and make sure that
you know her money partner insome ways and a few years into
it wanted to sell it.
So now she actually can'tafford to buy with the equity

(13:09):
she has left in that same market.
So she's in that exact samesituation.
So she bought a camper, soshe's a superintendent at a golf
course but she's like well,I'll just live in my camper for
now until we figure out whatwe're going to do, right, but
it's sad that that's kind of thestate of it.
But it begs the question whenyou think about governments and
community and stuff like that,like how do you think it's
possible to provide thisaffordable housing for this big

(13:31):
spectrum of residents that livehere or want to live here?

Speaker 2 (13:35):
Yeah, I honestly don't think that we're doing
enough.
To be honest, I think asinvestors, we have too many
investors that gravitate towardscash for keys and increasing
rents, which is adding to theproblem.
Yeah, it's actually creating abigger problem.
Yeah, renters are twice likelyto be in an unaffordable housing
situation than an owner.

(13:55):
They're twice as vulnerable asan owner.
And you know, I look at one ofmy tenants, bob, who's 78 years
old.
And you know I look at one ofmy tenants, bob, who's 78 years
old, and I bought this, thisproperty that had one tenant.
The rest of the units werevacant and Bob was one of these

(14:15):
tenants and he's paying fivehundred and fifty dollars a
month in rent and he pays withhis money draft.
At the end of every month, hegets his paycheck and he goes to
the bank and he gets me a moneydraft and he pays me.
And people have asked me well,why don't you just like that?
Rent on that property is worth$1,850 for that unit.
So why don't you give Bob cashfor keys and exit him?

(14:36):
And let's just do the quickmath on that.
Let's say I pay Bob $5,000 or$10,000 to leave and market rent
is almost $2,000 a month.
He's going to be out of moneyin three months.
Yeah, three months he will beout of money.

Speaker 1 (14:52):
Fixed income right, because I mean that's something
that, to be honest, like I neverreally looked at not to say, I
didn't look at price tags, likeI've always been cost sensitive,
but my husband and I talk aboutthat a lot is just how people
are affording things that are ona fixed income.
When you look at inflationwhether that's the rising rents,
the cost of food, justutilities and taxes and stuff
like that, like there's just somany things rising, and I think

(15:13):
it's just when you think aboutthe seniors and the vulnerable
population and stuff like that,like what do you think?
What kind of options do theyhave?

Speaker 2 (15:23):
do you think?
What kind of options do theyhave?
Well, they don't have a greatdeal of options, but there are
options and I think you knowthere's a couple of things that
I really love about seniorhousing and you know there's
government programs out therefor investors to invest in being
part of the solution, forexample, the MLI Select, or even
there's co-invest renovationfunds with CMHC and things like

(15:47):
that, where you can go and youcan find an apartment building
and you can add accessible unitsto it.
You can make accessible unitsto it and the government will
pay you $25,000 to do that, andso now you've got a unit that a
senior can move into.
It's accessible and they canage in place.
But also, because you you'reworking with CMHC, that can be

(16:10):
one of your affordable units inyour, in your property, so it's
accessible and affordable.
You gain all of these points andI think what people don't
realize is they think that youcan.
The best way to increase youryou know your NOI or your income
on a property is to increaserents, where you can also reduce
your expenses.

(16:31):
If you start reducing yourexpenses and let's take a look
at your mortgage being one ofthose expenses, one of your
greater expenses.
When you start working with thegovernment in the CMHC programs
and you build or convert intoaffordable and accessible
housing, you can solve some ofthe senior vulnerable issues
that we have, because you'regoing to get a 50 year

(16:54):
amortization.
You may only get a 40 year, butyou're at least getting a
longer amortization.
And this isn't even just aboutamortization, it's about the
rate.
When I build affordable housingand when I build senior housing
, my rate of construction loanis in the three percentile.
I'm not paying six and sevenpercent.
So imagine the cost savings youhave on the front end in

(17:16):
construction when you're gettingpreferred financing and then
that stays in place for up to 10years.
So you've got these great rates, which which make it affordable
for you as an investor to beable to have a return on
investment, but also a return onthe impact You're.

(17:37):
You know, from a socialperspective, you're being very
impactful and making choicesthat are helping people that are
vulnerable seniors, students,and seniors and students have,
and our youth are the mostvulnerable.

Speaker 1 (17:54):
Now, do you think that that's something that, when
you look at real estateinvestors I mean, obviously we
know a lot of them that havetaken that approach.
You know they're coming in andthey're either demolishing units
or giving cash or keys toimprove the value of the
property and then increase allof the rents, but do you think
that there's really enougheducation or awareness out there
of this side of the strategy aswell, when you think about the

(18:14):
action that they could be takingas those active real estate
investors that you know they canmake that money?

Speaker 2 (18:25):
obviously that's a priority, but then they're also
helping on this side of thescale as well.
Yeah, I don't think there'senough information and enough
education.
Like, our senior population inCanada is growing rapidly.
The number of seniors areexpected to double by 2036.
Wow, this is going to result ina significant increase in
demand for senior housing Right.
And then, according to a reportby the CMHC, a majority of

(18:49):
seniors in Canada prefer to agein their place, like to age at
home.
However, as their health, theirage or their needs change,
they're going to specializehousing Right Things that that
assist them, like assistedliving or long care facilities
and there's not enough of them.
And the cost of senior housingin canada can range greatly

(19:10):
depending on where you are.
It ranges from 2500 to sixthousand dollars a month, or
even ten thousand.

Speaker 1 (19:17):
I've heard in some yeah and I'm like, yeah, it's
just, it's just crazy servicesthat we're offering to justify
that it's crazy.

Speaker 2 (19:25):
It's.
I don't even know.
I don't even know how you canjustify that.

Speaker 3 (19:28):
I know one of the bills that we're doing in.

Speaker 2 (19:30):
Windsor is completely senior housing.
Yeah, completely, they'll agein place.
We're designing it in such away that if you need a hospital
bed in there, you can put ahospital bed.
Yeah, you'll have enough.

Speaker 1 (19:41):
probably know like that that segment is not rent
controlled.
Right, I was actually reallysurprised when I got my real
estate license to learn that,because you think this is
probably the most vulnerablepopulation.
So how is it possible thatsenior housing is not rent
controlled?

Speaker 2 (19:56):
Yeah, it's not rent controlled, because assisted
living isn't rent controlled andlong-term care facilities are
not controlled because they'reprivate.

Speaker 1 (20:05):
I know, but still, when you think about LTB and
stuff like that, like how isthat not connected, Right?
So I was very surprised tolearn that it's just yeah, it's
just not.

Speaker 2 (20:15):
So what we can do is we can create homes.
We can create safe, cleanplaces that that are accessible,
that handle the accessibilityneeds of our aging population.
And because we're making themaccessible, we're eligible for
grants.
Like our senior building inWindsor, they're going to

(20:36):
provide us with the community,the municipality is going to
provide us with the curvedsidewalks.
They'll do it.
They'll provide the paintmarkers, they'll provide the
braille on the sidewalks.
They'll do all of that stufffor us.
We'll probably have to contractit out, but they'll give us
funding to do it.
Yeah, and like, there's just somuch that we can do to help our

(20:57):
seniors and affordable.
And the thing, one of thethings that we need to consider
about too, is um, memory carefacilities, because we have an
aging population.
That's that's um.
You know, there's a prevalenceof conditions like alzheimer's
disease and and dementia.
Yeah, we need to start takingcare of the vulnerable
population.
So we're building homes thatand units that that.

(21:19):
Think of them 20 years from now.
Yeah, yeah, yeah, I think thatwe can do a lot.

Speaker 1 (21:26):
Yeah, I mean I think that that's why even recording a
podcast like this is soimportant, because it's
something that maybe is not onthe forefront of what investors
are thinking about and talkingabout, and they may not just be
aware of all the advantages thatcome along with that, and
you're doing something good, soI think it's kind of a feel good
action that you can take as aninvestor.
Now we're just going to take areally brief break from a word

(21:47):
from our sponsor, which happensto be Plenitude this month your
time to invest in buildingwealth with purpose with eight

(22:16):
projects in five cities.

Speaker 3 (22:30):
You can choose from two real estate income funds,
three real estate developmentfunds.
We have an abundance ofaffordable, accessible and age
in place options.
Sign up for a free strategycall with a member of our team.

Speaker 1 (23:01):
Thanks again for following along with this
episode of Inspired to Invest.
In addition to real estateinvesting and running my own
brand experience agency for 18years, I also published a book
called the AccidentalEntrepreneur in October of 2021.
This is my story and itchronicles how I turned tragedy

(23:22):
into triumph to embrace mydestiny in entrepreneurship.
If you're interested in pickingup a copy, you can find the
link at serenahomesrealtorcomand you can also find my link
tree with all of the retailersin the details below.
Thanks again for your support.
Inspired to Invest is proud tosupport the Beyond Success
program.
In today's complex world, it'sabsolutely crucial for our youth

(23:43):
to learn how to take charge oftheir financial future.
We believe that every youngperson deserves access to
accurate, practical financialinformation.
Designed to bridge the gap, theBeyond Success Program
leverages a comprehensiveeducational boot camp to equip
young minds with essentialfinancial literacy skills.
At Beyond Success, it's notjust about teaching financial

(24:05):
literacy.
It's also about fostering afoundation for a prosperous and
empowered future.
Join us Together, we can builda brighter financial future for
the next generations.
Join us Together, we can builda brighter financial future for
the next generations.
Hey, everybody, welcome back toInspire to Invest.

(24:26):
We have Judy Paré here fromPlenitude Inc and she's been
talking to us about affordablehousing and all the advantages
that that can offer to the realestate investors that are
creating these homes and theseopportunities, but how it also
helps the community andpopulations at large.
Now we're going to kind ofsegue to the second half of the
podcast into something that'sreally sensitive in our

(24:46):
community right now, which isdue diligence and how to protect
yourself as a passive realestate investor, but also how to
make sure that you're managingyour portfolio properly to
protect the people that areinvesting in you.
So maybe, just to get started,you can talk about some of the
situations that have occurredwithin the real estate investing
community maybe in the lastsix-ish months or so, and what

(25:08):
you think are maybe some of thecommon mistakes that people have
been making that have led intosituations like insolvency,
protection, bankruptcy, causingpayments to investors and stuff
like that.

Speaker 2 (25:20):
I think the biggest issue is that people grow their
portfolio, but not their team,and they, you know they're.
You need to have a businessinfrastructure that supports
your growth.
So, like an entrepreneurialoperating system you know that

(25:40):
includes people, processes,tools operating system you know
that includes people, processes,tools, technology all of the
things that are key to growingyour business.
They often run out of runwayand don't consider the burn rate
of carrying a project.
They don't consider how longit's going to take for that
project to complete, and I thinkit's really important that we

(26:01):
identify that some of the folksthat are having the most
difficulty don't haveinfrastructure.
They don't have key processesin place.
It comes as a surprise whenthis happens.
This shouldn't be a surprise Ifyou're an entrepreneur and
you're an investor, and you knowwe get a lot of people that go

(26:23):
from renter to investor, or so arenter to homeowner, homeowner
to investor and then investor tobusiness owner.
When you're an investor tobusiness owner, you need to
actually operate your businesslike it's a business, yeah, and
you need to get that guidance,and I don't think people are
looking at their portfolio wellenough to understand when

(26:45):
they're running out of runway.
Yeah, you know, I looked at myportfolio a couple years ago and
I didn't have a CPA.
You know, I had my accountantand whatnot.
But I called a friend who's aCPA and and said Can you take a
look at this?
Like, am I missing something?
And we looked at my entireportfolio and he laid some

(27:06):
calculations and formulas to itand said you need to sell
something.
I said I need to sell something.
I said this is my primaryresidence.
I don't want to sell my primaryresidence.
And he says you need to sellyour primary residence.
You will run out of runway ifyou don't.
And that's the term he used,term he used.
And I said well, what do youmean by that?
But because you, you get to apoint where you can no longer
leverage it, yeah right, becauseyou you just don't have and and

(27:31):
I'm not a big believer in goingover 80 loan to value, and I
think that that's a mistake thata lot of people are thinking
they they use other people'smoney like they don't have a
responsibility to it.
You have a fiduciaryresponsibility to care for that,
of course, like it's your ownand these are your investors.

(27:53):
And you need to be able tosometimes take criticism from
others and get guidance fromothers and be vulnerable and
open up your, your portfolio, oropen up your books per se to a
third party, someone who is um,that has the tools.

(28:16):
Yeah, and I mean I, becausewe're not accountants, and math
may not be your thing, butconstruction may be, now I think
like the team is one aspect toit.

Speaker 1 (28:25):
Now can you talk a little bit about how you know
you've seen real estateinvestors raising money, so I
know in our community there'sbeen a lot of talk about, you
know, using debt versus equityand just the different ways that
you, as an investor, can engageother people when you're
raising private money for yourprojects and what the
implications of that can be justin terms of, like you know, if

(28:46):
you are carrying that debt andproject runs late, like just
what those different scenarioscan look like as the investor
and then also, as you know, thepeople that are putting money
into those projects.

Speaker 2 (28:55):
Sure, so I think one of the things that's really
important is understanding wherethe money's coming from.
Are they in an equity position?
Are they in a private lendingposition?
Do they have security?
Let's talk a little bit aboutsecurity versus insecurity.
If you have security on aproperty through private lending
, through a mortgage first,second, third, whatever the

(29:16):
mortgage is or you have equityas a JV partner or a limited
partner equity as a JV partneror a limited partner you're in a
much better position as theborrower.
You're also in a much betterposition as the lender.
Yeah, sorry, you know, becausethe lender obviously gets their
security right.
They have something to fallback on and when you start water

(29:38):
falling, the debt order andwho's getting paid first, you
want to be first or second.
You certainly don't want to belast and you don't want to have
your security in question.
Right, and that's where P notescome into effect.
Right Is?
You now have a promissory noteand you're behind.
How many people don't even knowwhere you are on the list of

(29:58):
promissory that you're behind.
There's a difference betweenborrowing $20,000 from a family
member to get you your downpayment and to help you out to
get into your first home.
There's a difference.
But when I borrow and let'sjust say it was $100,000 home
down east and that was 20% down,right, but when I borrow 20%

(30:22):
down on a property and then I goget the funding a first
position mortgage, but this 20%over here is invisible debt
because it's a promissory.
It literally is invisible, notonly to institutions.

Speaker 1 (30:38):
You just cut out there for one second, so just
backtrack a sentence and youwant to start over it was so
good up until now.

Speaker 2 (30:46):
Sure Are we talking about promissory notes.
Yeah, yeah, okay, whereaboutsin the promissory note?

Speaker 1 (30:52):
So you can just talk about the position and the
invisible debt, okay.

Speaker 2 (30:57):
So when we start talking about promissory notes
versus private lending or amortgage let's say institutional
lending you get an 80% loan tovalue on your property and
you're in a first positionmortgage, but you've borrowed
your down payment through a youknow another party and it's done
on a property promissory note.

(31:20):
You're now 100% leveraged andthat promissory note is really
at risk because it's at 100%leveraged right and you're in
second position, but you're notreally in second position
because you don't know ifthere's another promissory note
for the construction, forexample.
I think it's important that youwork with mortgage brokers that
are credible.
I think it's important that youwork with mortgage brokers that

(31:41):
are credible that will find you.
There are private lenders.
There are private lenders thatwill lend you on the after
repair value.
It's higher risk.
You pay for it, it's expensive,but it's better than buying P&O

(32:06):
debt because you're notprotecting your lender when you
have the p note.

Speaker 1 (32:08):
So I just got the small example.
When you think 20 000, say,compared to a ratio of one
property, now obviously in ourcommunity it's not 20 000,
sometimes it could be 10 milliondollars, 20 million dollars and
it's so significant.
So you know, I'm not going tosay I would necessarily advocate
for promissory notes, like I dohave a lot of experience with
them and I had a lot of successfor over five years where
nothing had ever gone wrong.

(32:28):
But looking back, you know whatI'm learning now in this last,
say, four to six months wherethere have been some challenges.
What do you think are some ofthe things that a passive
investor should be asking andlooking at legally, in terms of
looking at financials and stufflike what do you think someone
should be asking and exploringto determine if it is a safe
investment?
And from the active side, like,what kind of things you know do

(32:51):
you provide to your investorsto make sure that they have the
full scope of the situation?

Speaker 2 (32:57):
yeah.
So I think there's two sides ofthis.
There's the borrower side.
Yeah, uh, what?
What are they producing?
Um, you, you, you want them tounderstand what the money's
going for.
So in some cases I've had toshow um construction budgets.
I've had to show, uh, what I'mdoing on the project and send
updates.
You know, send regular updates.

(33:17):
It's like, okay, I've borrowedthis money to do this on this
project.
My lenders want to know thatI'm doing it.
So, I have this video updates orI you know.
But the budget, I think, is oneof the biggest things.
And show quotes and show youknow, show where the money's
going.
Yeah, that's really importantis you should be able to show
where that money is going, notjust a blanket.

(33:38):
Oh, I need 60,000 for thisrenovation.
Do you have quotes?
What are you doing on this?
What, like I think that's oneof the things you can ask for is
well, what kind of work are youdoing on this?
Another thing is you know, Ijust recently went through a, an
acquisition that I wasn'texpecting.
I wasn't expecting thisacquisition.

(33:59):
I needed some private money,this acquisition.
I needed some private money andI needed it quickly.
So, yes, I entered to a coupleof peanuts to get that done.
And do I like promissory notes?
I don't like them.
I don't like them on both sides, you know.
I don't like them as a borrower, I don't like them as a, as the
lender, but I see the necessaryevil in them sometimes, or that

(34:23):
you know, to get you to point B.
Sometimes you have to do this.
But the most important thing isare you going to exit this?
How are you exiting that P note?
Are you doing it through a refi?
Are you doing and this is one ofthe things that you need to ask
is how will you exit mypromissory note?
And if it's through a refinance, find out when and when the

(34:45):
refinance is happening.
We're going through a ton ofrefinancing right now.
When the refinance is happening, let your lenders know if
you're not timeline.
we just had to ask for anextension on a mortgage and it's
not fun, but it's necessary andsometimes when people pull out,
you actually impact the projectmore than if you stay in.

(35:09):
So I think it's reallyimportant to know the project
you're in.
What is your money being usedfor?
There's so many people thathave lent and they don't know
where their money went.
They just lent on thecredibility of the individual
and they don't know where theirmoney went.
They just lent on thecredibility of the individual
and they don't know where theirmoney went.
And I think that's a big thingis you need to know where your

(35:30):
money's going.
And the last thing, I think,from a lender's perspective, is
you need to understand who youare really, who you are and what
you can afford to lose and yourtolerance for risk.
I have a lot of people thatcome to me in a coaching

(35:51):
scenario that said but I lovethis deal, it's 15 or 16% ROI,
is it if you don't get yourmoney back?
or if there's that risk.
There's a reason.
Credit cards have high interest.
They're directly related to thedefault rate on the credit card

(36:11):
.
So when you think of yourpromissory notes, you should
think that if you're getting 16%, there's a likelihood that
there's a 16% default.
Banks do this for a reason,right Like you have to be able
to afford that.
And one thing I think is youshould never give more than 10%

(36:33):
of what you have to anybody.

Speaker 1 (36:37):
Yeah, and I'm even finding too, like with some of
the lending that I had done,like there were times that I
made exceptions on what I feltcomfortable with and did a
little more, and you know, ofcourse, those are the ones that
have hit a snag.
But I think, just understandingwhat your bandwidth is and what
your comfortable lending, andthen, when it even comes to
diversifying, just reallydiversifying like companies that

(36:58):
have absolutely no attachmentto each other, and even, as
we've learned with the mortgagebroker situation recently, like
you know, a lot of people feltvery diversified and now,
because of what's happened,everybody has been impacted,
regardless of the fact that youcould be completely diversified,
right, Now, I guess, the otheraspect to know as well is there
are different commitment levelsdepending on how you come in as

(37:19):
an investor.
So you know, whether it's asyndicated mortgage or a
promissory note or a GPLP likethere could be different
implications on time.
So in some instances it couldbe very like fixed, like it's
supposed to be 12 months or sixmonths, but depending on the
nature of that relationship youknow, I know what you'd
mentioned with some of yourprojects in a GPLP like you know
, once you're in it then you'rekind of in it to that extent

(37:41):
when the project is done.
So maybe you can just shed alittle bit light on like what
that could look like.

Speaker 2 (37:45):
Sure.
So, and this is something thatpeople don't understand about
limited partnerships is thatthey're a partner, right, they
are a partner in the project andtheir money is actually being
used for the project and it'searmarked for the project.
So they're typically, from thegeneral partner's perspective,
there isn't an expectation topay it out during the being used
for the project and it'searmarked for the project.
Yeah, so they're.
They're typically, from thegeneral partner's perspective,
there isn't an expectation topay it out during the the the

(38:09):
project.
Yeah, and?
And now having to go raisemoney because somebody wants out
is not ideal, because it takesyou away from the actual
construction of what you'redoing.
Now you're, you're in this laneand doing something else rather
than doing the project.
And a lot of people don'tunderstand that limited
partnerships.
Although there's an estimate ofthe time, typically they say

(38:30):
it's going to be a one or twoyear term.
I have one recently that I havein Hamilton, cumberland, as an
example.
It was meant to be an 18 monthproject.
It should have been an 18 monthproject, but the city of
Hamilton took 16 months toprocess our permit, to give us a
permit.
So there is no way that you canactually do all of the work

(38:54):
that you're doing in two monthsbecause you can't do the work
without the permit, or youshould not do the work without
the permit because that createsrisk as well and insurance
liabilities.
So I think that time is reallyimportant, your time in the
project and your willingness tostay in it until the end and

(39:15):
understanding that sometimes,like you don't have that option.

Speaker 1 (39:17):
I mean there were syndicated mortgages I went into
six years ago that were allbetween 12 and 24 months and
here we are at six years with noend date in sight.
So you know, I think people gointo it, but you need to really
understand from a legalstandpoint.
You know what that could looklike, Cause it could say like
you want to understand theimplications and like how long
it could possibly go on, forwhat the risk of losing your

(39:38):
money is, and things like that.
But now I know that we're kindof running short on time.
Is there anything that you feellike you want to pass along to
either an active investor or apassive investor that we haven't
touched on, Like anything youfeel like is really valuable
advice based on your experience?

Speaker 2 (39:56):
I think that it's important to understand your
risk profile.
I mean, I talked a little bitabout it, but if you have no
tolerance to lose, then you haveno business doing private
lending or private equity,because that there is a risk,
there's an inherent risk indoing these, but slow and steady
wins the race.
I mean, there's lots ofopportunities out there that

(40:18):
give you consistently, you know,10% return, 8 to 10%.
They're lower risk, but theymove you forward in a reliable
way.
And I think that people shouldlook at their, their age and
their, their age when they'regoing into a deal and their
capacity to recover and the timethat they have to recover when

(40:43):
you're looking at privatelending or private equity.
This is why, um, graybrookdoesn't, um, you know, an 80
year olds isn't an idealinvestor in a Graybrook land
development deal.
Yeah Right, you need to havethe, the, the longevity and the
capacity to recover should youhave any losses.

(41:03):
Yeah Right, and I think that'ssomething really important to
think about.
And when you reach a certainage and I'm 58 years old, I'm
not, you know, although I doland development and I do these
things, I do it in a verycontrolled environment because I
have a very controlled team andI have processes in place.
It is high risk, but I'm notgoing to put all of my eggs in

(41:30):
one project because when you putall your eggs in and it gets
shaken up, it becomes scrambledright.
Like you, I think risk is one ofthe big things that people need
to think about and theirability to recover one of the
big things that people need tothink about, and their ability
to recover.
And one last thing is, ifyou're going to do investing
outside of you know privatelending, private equity,
whatever take a look at whyyou're doing investing in a

(41:53):
passive way and look at someprojects that do good, that have
a social impact, because then,if you can't reach your goal of
you know, a lot of us say, oh my, why is to do this?

Speaker 1 (42:06):
If you can't do that, alone.

Speaker 2 (42:08):
do it with somebody else who's doing it for you,
because you're going to get areturn on investment investment
and you're also going to get oursociety is going to get a
return on the impact that youmake.
So I think, just making goodchoices about where you placed
your money um money, know theorganization and what they're
doing and you know I thinkthat's something that we just

(42:30):
need to think about is what ismy money doing?

Speaker 1 (42:35):
I think that's a feel good way to look at it and I
know it's part of your companymission as well.
Now I think obviously a lot ofpeople value your input and be
interested in some of yourprojects.
So what would be the best wayfor people to find you?

Speaker 2 (42:48):
Yeah, so you can go to our website, which is
plentitudeinccom.
I'm on Instagram.
It's mamaJudes01, somethinglike that, mamajudes, and I'm on
Instagram.
I'm on Facebook.
You can find me on Facebook,but really I know you're going
to put the information below.
Uh, really, just check out ourwebsite and speak to somebody on

(43:10):
our team.

Speaker 1 (43:11):
Yeah, no, and I think that's important because
obviously there has been, youknow, lots of scandals kind of
in our community in the lastlittle while.
So you want to work withsomeone that is reputable and is
going to take care of yourmoney the same way that you
would.
So thank you for sharing yourwisdom with us today.
If you haven't enjoyed, pleasemake sure that you're following
along at Inspired to Investpodcast and you have subscribed
below, and remember, above allelse, when you invest in

(43:33):
yourself, the sky's the limit.
Thanks again, thank you toPlenitude Inc for bringing you
this episode of Inspired toInvest.
The views represented on thispodcast are for general
information only and does notconstitute investment or other
professional advice or anoffering of securities.
The host and guests featured onInspired to Invest make no

(43:55):
representations as to theperformance of any particular
investment.
Should you decide to make aninvestment, you are responsible
for conducting your own reviewand analysis.
It is recommended that youobtain independent legal
accounting and tax advice fromlicensed professionals.
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