The Real Estate Investor who has over 80 tenants paying him EVERY MONTH!

A spacious studio with character and charm. No one can hear your screams. Oh Shh! Once you put it into wood, it's gonna shake your arm a lot. What's up, you guys? It's Graham here. So, I'm about to meet up with a real estate investor here in London, Ontario, Canada. His name is Matt McKeever, and him and I actually go way back. Almost a year ago, when I first started making YouTube videos, at the time his channel had way more subscribers than me, and I reached out. We had started talking about real estate, YouTube, and making videos, and all that good stuff.

So much, I meet up with him now, and he's gonna show me some of the properties he owns. I thought this would be a perfect opportunity to record that. I haven't sure some of his experiences, how he got into real estate, how he's making money doing that, and hopefully, they could be valuable for you guys to watch.

So anyway, I hope you guys enjoy it, and let's get to it. I guess Matt just bought this property right here, so let's go on in and talk a little bit about it.

Matt, what's up, man? So what did you buy this for?

So we bought this one for $148,000. It was listed for $165,000, so we were able to negotiate it down a little bit. The reason we negotiated was we knew that the back unit was technically in the legal boarding house, so it'd be impossible to get a mortgage on this property. So you have to come in cash, but that means you can score a great deal by coming in cash.

So what's the plan with this?

The idea is to blow this back. So this getting blown back here is real stuff. The wall right here is gonna get taken back all the way. So instead of having a tiny little claustrophobic kitchen and then a huge dining room, you're gonna just have a nice flow between the kitchen and the dining room. We'll do all the floors, everything's going new kitchen, and by the time we're done, it's gonna be livable.

So how much are you planning on spending?

So the entire renovation for this unit and then also I guess in the back...

Yeah, the back is going to be the major thing that's gonna cost a fair bit, but we're talking $50,000 to a little all-in, including holding and closing this from you. This year will be utilities included, so we'll be renting it for somewhere between $750 to $900 a month. The back units are going to be really... It's gonna be two separate units, but those would probably be around $800 a month. And then the garage, we could actually get... It's got a separate detached garage. We could probably get three to four hundred dollars a month with the garage.

So the goal is to end up being around close to $3,000 a month gross.

This is a crazy thing about Canadian real estate prices versus Los Angeles. The returns I'm getting in LA are a fraction of that. Like if you want $3,000 a month in LA, it’s minimum probably like $450,000. I'd say $450,000 US dollars, which is equivalent to probably about $575,000 Canadian, and that's just like the bare minimum. Other than that, you'd have to spend a million dollars if you want to get like $4,500 a month gross rents. It's pretty stupid.

So I dunno, I'm like I'm jealous of Matt being able to buy these places and get crazy high returns because in my market, like it sucks.

Yeah, yeah. And so like, we're usually buying undervalued assets, assets that aren't being fully utilized at their full potential. So we bought this property for $148,000, we'll spend say $50,000, let's call it $200,000 round numbers, we’ll get refinanced for somewhere between $250,000 to $300,000. And now that 80% level of value, that means we'll get all our money out. So once we're done, we'll just be left with a cash-flowing property.

See, that's the way to do it.

So how many properties do you own now?

So this one runs number 16.

So yeah, 16 properties. I started in 2010, so it's been a seven-year journey. The first four or five years, I find that I was just slowly kind of pacing up to it, and then the last two years, I've just been really ramping things up.

You got me beat, dude. I met weights is it 16 properties? There's 18 property syllabuses, so that's like even more units.

Yeah, so I'm literally 80 people a month cutting me a check or sending me a new transfer these days.

See, I have eight, just to compare. I've aged; he's got like... it's incredible. You see it? Incredible!

What I mean is, how do you even start getting the money to start doing that? How do you...

Yeah, the very first one in Canada, we also have some more favorable lending rules compared to the US. So we're able, on your first purchase, you can put 5% down. And so what I did was I bought a little student rental property, bought it for about $170,000, and it had five bedrooms. So I just lived in one bedroom, rented out the other four, and banked all that cash, saved it up. What that was able to do was go and put down my next down payment. I just kind of recycled the process over and over again.

You might notice a recurring theme between Matt and Jeff, who also did pretty much the same thing, and we have a few people here and there we're all kind of friends with. They'll do the same thing; they all like... they buy one of these units, live in one of the rooms, rent it all out. It pays for everything plus profit, and then they're able to cycle that money back into buying something else, and something else. And you just build up 16 properties in the process in seven years and buy a building one bedroom at a time.

So yeah, obviously house happiness would be the number one tip I have for anyone that's interested in real estate investing: get your personal expenses rock bottom and just bank everything else and use that for your next down payment.

That's honestly the way to do it, and it's like living below your means.

Because I'm absolutely... yeah, I'm sure, Matt, dude, if you want that Lamborghini...

Yeah, grab my car.

I do not have a fancy... to me, the car is an A to B tool, and absolutely.

He's telling me about this weird boarding house thing that's below. I think we should see that. It's almost freaky looking at it; it's kind of scary.

And in the meantime, as we're walking over, you got to check out his channel, Matt Makia. I'll put a link down below. This is what I was explaining at the very beginning: if you weigh more subs than me, and I was like looking up to his channel. I think I wanted his subs; I was like, I can't wait until I get to that number. So you guys, seriously, check out his channel. It's amazing. You guys have to subscribe, and yeah, let's go see this crazy downstairs.

Let's check out the dungeon.

Okay, here's the kitchen, guys. That's where all the culinary magic happens. Great stove right here, garburator right down there. Got the vaulted ceilings, custom light fixture... so you don't have smell-o-vision.

Show off one of the bedrooms. This is great. This is where the real magic happens!

Yeah, who needs windows? By fancy people in California, if you didn't need a window for a bedroom, how do you need windows here?

Bad, guys. Really special! If I said this spacious studio with character and charm, no one can hear your screams!

Yeah, and again, like, I know some people think that that's… did you see this water damage? But I call that character grease.

So the crew had to take off early; one of the guys had to go back. There was a family emergency, but so we still have that work to do. And since I know Graham's great...

Oh my god, yes! Yeah, we take out my waters, and thank you! Safety first; always wear safety goggles just in case.

Once you put it to wood, it's gonna shake your arm a lot. This is gonna be one of those slow-mo scenes, by the way.

[Music]

Be jealous of this one; his video isn't as cool as this.

Sorry, that was awesome. That was so much fun; I can get so used to that.

Yeah, still have another job site to go visit, Cry Street. So it's another duplex I just got this week. I usually try not to close on two houses in the week, but let's go see it.

Okay, so we're on the way now to his new duplex.

And why did you get into real estate in the first place? How did that come about? Why did you... when did you start?

Rich Dad Poor Dad was definitely... that was my gateway drug, cue and Jeff, right?

Yeah, same thing. I think like you're gonna find it's the case for so many people, right? That there was a book or a mentor guru that they first stumbled upon, and that was the catalyst to change in their life.

In my case, I think I was like 20 in university, and I just knew I didn't want to be behind a desk for the rest of my life. So how else are you gonna do it, right? Like I wasn't born rich; I was gonna have to make it myself. And real estate leverage was the only way I could see getting out of the rat race early.

I've honestly prided myself on being really good at strategic partnerships and just finding someone. Like, you know, you don't want to partner with someone that has the exact same skill set as yourself because that's gonna be a one plus one equals two. Whereas if you find someone that has a different skill set than yourself, that's a one plus one equals more than two.

So because I've always been like a numbers nerd, I really depended on the numbers for my first deal. So I bought this house; I knew it was gonna cost me about $1,500 a month to operate, including my mortgage payment. I knew I could rent it out for about $400 per bedroom, and since I had five bedrooms, I was gonna live in one and I was gonna rent out four other bedrooms... or at least that was the plan.

What that meant was I was actually gonna get paid $100 a month to live in my own house while paying down my mortgage. So that's what really gave me the safety to jump into that first deal. It was just really understanding the numbers and trusting in them.

You know what, I made a video about how to house hack, and I got so many comments—so many comments from people telling me "no, that's not possible, you can't do that." And so many people I met are doing exactly that. And so many of my clients are doing exactly that; buy one, you know, a multi-family. They live in one of the units, rent the other one, they live for free. I have another friend who just bought a place in Lancaster; he's doing that. He's renting out three of the bedrooms, lives in the in-law unit for completely free, and he makes a little profit by doing it.

I think for anybody interested in getting into real estate, it's probably the easiest way to start because it's your own place and you're gonna be there. You see everything that's going on; you're in direct control of it. And then it just kind of gets your feet wet to go and buy something else.

Alright, so now we got to his place on Price Street. They just had like some soggy drywall that had been leaking from before they replaced the roof; they never ended up replacing it. So strip it down, we'll keep the strapping, just re-put up the drywall. Nothing flashy.

You can see this really dark color, and so it's just a dungeon. There's no overhead light. We're doing strategic renovations here, guys, so we're not trying to spend a lot. We're just trying to get the best bang for our buck.

These floors here, even though they look scary, we'll actually be able to fix them up. And Graham's seen the floors at my personal residence, and they look the same.

That's my personal residence by the time they're done. Fancy light picture right there, and a modest name.

All kinds of plumbing issues and dinners! So there's no public person standing; we had just the upstairs tenant hasn't showered in his bathroom for over three months because I was just pouring down here and just throwing the floors. So he's been going over to his sister's to shower for the last three months.

Buying other people's problems and finding a way to fix them, anything! When you painted this, we'll either get really well cleaned or we'll probably re-glaze it. We're actually just going to keep the tile; there's a couple of spots that are gonna have to be patched or painted, but nothing too major.

Oh, what's that? The properties, Matt?

Yeah. This isn't the same type of Rhino that Graham does that you'll see on his channel, but we're gonna save these. These are all gonna get... we're gonna put down a new cover, not a new sink, and we're gonna play up the heritage. You got these character original covers, so it's gonna look brand new. Yeah, I mean gloss paint.

And this is one of the things I was discussing with Matt; in Los Angeles, you could never get away with doing this. You would have to tear the whole thing out; you'd have to tear the floors, all of this. You'd probably have to put in recessed lighting.

But the thing is, you spend the money, and you spend maybe on this kitchen; I'd probably spend twelve to fifteen thousand redoing this kitchen, but you get the return! We would see the improvement!

I think if you spent fifteen grand on this kitchen here, it's not like you're gonna get $2,000 a month in rent.

Exactly! So, in this case, we're gonna spend $3,000 on materials for this whole main floor, and that includes replacing most of the flooring. Then, for labor, I'm probably gonna spend four or five grand on labor. So we're gonna be ten thousand for the entire unit by the time we're done.

So we got possession yesterday; I had a neighbor come over and say they had a friend and want to rent it. And then right now in my wallet, I have a deposit check already for October 1st.

That's awesome! This is a great backyard.

Yeah, and so I like this upstairs, there's another apartment; it's currently occupied, so we won't jump into it.

But so this was all overgrown; you wouldn't recognize this right now. You could barely see the garage.

What's your reaction? Whoa!

Clearly, it was just caving in everywhere, right? Bought this sight unseen, so we didn't know what we were getting and doing. This garage, to be honest, was just a bonus for us.

So what wound up doing, like, we're gonna have to jack all this up; obviously, put in sister beams all along this. Like, this is all garbage, right?

So we're looking at properties that are in this type of shape; like how do you see past it?

Yeah, it takes a while to see past this, especially, good, like there's garbage piles here, there's like all kinds of insects. This was infested with mice.

When it comes down to it, I look at structural, right? Is the house gonna fall down? And so everything, it turns out, is almost always cosmetic.

Right now, this looks disgusting, but by the time we're done, this is gonna be bright white. It’s gonna look super clean; we're gonna have just a new countertop here.

The numbers on this property looked like this; we bought it for $140,000. They were asking $135,000, but we just wanted to do it. I knew it was a deal, and so upstairs is rent for $600 now. If someone wants to rent out the back for $300, so for me, that kind of tells me my quick back of the envelope numbers using the 1% rule is that this property would be worth about $200,000 to me once it's done.

Five renovate, rent, refinance, repeat. So we bought this for $140,000, we're going to renovate it for let’s say $20,000, so we're $160,000 into it.

So then we're going to rent it out for those numbers I said. Then we're going to refinance it. The bank will come in and say this is probably worth somewhere between $200,000 to $250,000.

So if they say it's worth $200,000, that means when we refinance it out at 80% loan to value, we're going to get a new mortgage for $160,000.

So that means that we're getting the house for free, plus we have $40,000 in equity. Now it's going cash flowing; it's probably going past $500 to $600 a month in cash flow.

If it comes in at $250,000, that means we're gonna get a mortgage for $200,000, which means we're actually gonna walk away with $40,000 extra compared to what we started with.

So that means I can now take the money I tied up in this deal, plus the $40,000 I just made, which is actually tax-free because there's no taxable gains when you refinance, whereas flippers have to pay taxable gains.

And so that's kind of how the numbers work. And so, you know, with experience, you start to learn the bank. Other than structural issues and foundation issues, there are almost no big deals in real estate. Right? Like, at least in Canada, you know, a new furnace, under five thousand dollars; new roof, under five thousand dollars, usually.

And plus, this thing's still supposed to be cash flowing every month. So that's kind of like how we get comfortable with the deals these days.

Like, the fastest value-add to iPhone 4 properties are adding laundry and dishwashers. You can literally add a dishwasher to the kitchen. Like, why the dishwasher into that kitchen?

And well, I used one on Kijiji for 50 bucks. I'll pay like an electrician and plumber to put it together, and it's honestly going to cost probably under $400 completely to get a new dishwasher.

But I can charge, and at least in London, Ontario, $50 more a month of rent just for having a dishwasher in the unit. And then laundry, you know, you can buy a nice little cheap stackable used unit for like $300.

It'll maybe cost you $1,000, $1,500 tops to get it installed, like get the electrical, plumbing, and venting done. So you're talking again under $2,000 in, and I can charge about $100 to even $150 more a month for having laundry in a rental unit.

So your payback period is so fast, right? And then you also get a higher-quality tenant because, like, what I often think about it is the same with, like, just put yourself in your tenant's shoes, right? Like, do you have a dishwasher in your house? Do you have laundry at your house, right?

Like the answer is yes to most landlords, and so that's what your tenants want too. And that's how you're gonna attract higher-quality tenants.

Intense, they're gonna stick around longer. Like, I was joking with Graham earlier that my college is an A to B tool; nothing flashy. That's why I like the exhaust this video on it; it's because it's just a tool.

Yeah, and like the thing is: there's always time to give that expensive car later, right?

Look, once you've made it, everyone wants to buy the fancy stuff before they've made it. And say, "No, no! Like, the people that actually buy the fancy stuff and keep the fancy stuff are the ones that already made it. The rest are just people that flash on the pans."

Right?

Yeah, Matt, thank you so much for giving me the tour of these two places, and you have 14 others that we haven't seen.

Yeah, so I think we'll probably have to in the future maybe do another video so we can show off like I see other vendors and stuff like that.

In the meantime, I throw showing my browser.

Yeah, in the meantime, I think we got to head into Tim Hortons. I have not been there, and I hadn't been there in forever. I wish we have Tim Hortons in LA; we don't.

So anyway, we're gonna go off to Tim Hortons, but you guys, thank you so much for watching. I really hope you enjoyed this. You gotta go check out Matt's channel if you haven't already; you gotta check it out.

I'm gonna put a link in the description, so feel free to add his channel. He makes a lot of really cool videos about real estate, especially around the London, Ontario area, so check that out.

And also, if you haven't already, make sure to click subscribe and click that like notification bell. You know all these YouTubers now are like saying you gotta click that notification bell, so do that so you don't miss out on any videos.

And then also feel free to add me on the Snapchat and the Instagram post. They're pretty much daily, so if you want to be a part of it there, feel free to add me.

And thank you again for watching. I hope you enjoyed it, and until next time, you can see that before they really peace! Be able to catch them together where they had like this just overhanging because that was left over from... Francis song.

They thrown up some random cabinets that didn't match the random cabinets to run that wall or on this wall; it was just a really pieced together kitchen.

And honestly, the crazy thing to me is that lots of landlords, they try and cut corners by doing this, and they maybe saved like $300 compared to just buying a full kitchen.

Like go to Goodwill, go to Habitat for Humanity, go to a used construction store, and you can find great kitchens that will fit the space for under a thousand dollars. You pay a guy 500 bucks to install it, and you have something that looks like a brand new kitchen for $1,500.

Whereas this guy probably spent 800 doing what he did. Like he said, maybe 50% of what I would have spent, but it looks terrible!

Yeah, I feel like this was worse than my duplex when it comes to holiday. You're like, "I'm great." It is this, like it's so funky-looking!