A significant percentage of Canadians are looking to get into the real estate market in this country. For some people, it’s a first-time investment or to strengthen their already-existing real estate portfolio. For other people, it’s about finding a place to live and call their own. If you fall into either of these categories, you’ll want to tune into this episode.
Get ready for an in-depth conversation with savvy real estate investor Scott McGillivray, as he shares the ins and outs of his journey from a university student facing housing challenges to a real estate investment guru. Discover Scott's strategic approaches to investment, key financial insights, and personal anecdotes that highlight the resilience required to thrive in the competitive world of real estate.
Whether you’re an aspiring entrepreneur or a Canadian looking to dip your toes into real estate investing in Canada, this episode is for you!
“Why take financial advice from broke people when I have — I hate to say it — I have these people who have a track record of success with money, giving me different advice?”
[09:24] “You have to be ruthless about achieving your goals. And you have to make smart goals. So set up your goals to make sure that they're realistic, they're time bound, that there's a certain metric attached to them.”
[20:36] “You can hate losing, that's great, but you can't be afraid of it. You just have to learn how to understand this part of the process. It's worth losing ten times, it's all worth it when you win that one time. But if you're afraid, you never get the win.”
[22:55] “When the work needs to be done, the best thing you can do is lead by example.”
[43:55] “One of the biggest secrets to succeeding as an entrepreneur, I believe, is making sure that other people get to their goals.”
Scott McGillivray is a prominent Canadian real estate expert, entrepreneur, and television host, renowned for his expertise in real estate investments and home renovation. With his extensive knowledge and charismatic presence, McGillivray is a powerful force in the real estate world, dedicated to educating people about investment strategies and the potential for real estate to generate wealth.
Scott McGillivray's journey from a college student to a real estate magnate is not just inspiring but also a testament to the power of knowledge, strategy, and persistence in achieving financial independence.
Connect with Scott on his website, or follow him on Facebook, Instagram, and X. You can also subscribe to his YouTube channel for a wealth of real estate investment advice.
If you did, be sure to subscribe and share it with your friends!
Post a review and share it! If you enjoyed tuning in, leave us a review. You can also share this with your friends and family — especially if you know anyone looking to begin their journey into real estate investments.
Have any questions? You can connect with me on LinkedIn or through CIBC’sFacebook,Twitter, orInstagram.
Thanks for tuning in! For more updates, visit our website. You can also listen to more amazing episodes on Spotify or Apple Podcasts.
Carissa Lucreziano: Welcome to Smart Advice, a podcast connecting you with real financial advice, investment strategies and economic trends—empowering you with insights you need to make smart decisions about your money. I'm CIBC’s financial advice expert, Carissa Lucreziano. And today, we're going to talk about investing in real estate, all through the insights of one of my favourite real estate gurus.
This episode is extra special because today I am sitting down with Scott McGillivray. And he's going to share with us his successes and lessons learned along the way in building his real estate empire. You're gonna want to listen in, especially if you are one of the 26% of Canadians that want to invest in real estate in the next few years, or part of the approximate 4.4 million that own investment properties and want to keep on building.
We know Scott as an HGTV host and master renovator and there's so much more to this accomplished entrepreneur and respected influencer. He is the CEO of McGillivray group, a full service brand and production agency, and McGillivray Entertainment Media that produces his HGTV shows, as well as Canada's Got Talent. He's also a co-founder of Keyspire, a real estate investing education company.
Scott, I am out of breath introducing you. I forgot to mention you are a super cool guy. Awesome guy, too. So happy you're here. Welcome to the podcast.
Scott McGillvray: I'm happy to be on your podcast. And I'm excited about our conversation today.
Carissa: Yes, me too. And I've had the pleasure of working with you on some projects like your Buying In series, which is so cool, because you're helping real people make an impact in their lives, whether it is creating a new space for them, improving accessibility for families, or you know, helping them earn an income through their business.
But there is so much more to this project. Let's talk about your story. When you were in university, you bought your first investment property, some may not know that you started your real estate empire with little experience, minimal funding and a whole lot of heart. How did you do this?
Scott: Yeah, the origin story is fairly organic. I mean, it wasn't a natural progression for me to get into real estate. I don't come from a real estate family. I don't have any previous real estate training. I didn't go to school for real estate investing. I was actually in university for a Bachelor of Commerce degree.
When my roommates and I, the landlord of our rental property sold the house and so we were left pretty much homeless within 60 days. With the impossibility of finding another rental property I explored all options, including a realtor who suggested I buy a place versus renting one which I really laughed off as a bit of a joke at first. I'm like, that's impossible.
The idea I think, right now and even back 23 years ago, when I purchased my first property, the idea of acquiring real estate is really daunting for most people. They say right now it is the most difficult time ever for a first time homebuyer to enter the real estate market. And I remember 23 years ago, my mom said to me, Scott, it is the most difficult time ever to buy real estate.
So it's not getting easier is what I would say. And it's always hard to be a first time home buyer. It's even harder to become a first time real estate investor. But I always say the best opportunities in life are just beyond the things that are really difficult, because that creates like a firewall of individuals who aren't eager enough aren't, I guess entrepreneurial enough to pursue these things. So when I started to hear things like, oh, you can't buy real estate, you shouldn't do it. It's too big of a deal.
But I looked at the fundamentals of yeah, it is a big deal, because there's a tremendous amount of money here. I knew exactly how much rent my roommates and I were spending because I was the one that collected it from all my roommates, and would deposit it in my landlord's bank account. And so I was exposed, I guess, quickly, by being somewhat the responsible one in the group to the fact that boy, we're spending a lot of money on this property.
And then when I looked into actually purchasing a property, because we had to, I realised that with the help of a financial advisor and a mortgage advisor, that the amount of rent we were paying was less than than a mortgage, the property taxes and the insurance on that property, which are your three primary expenses.
Carissa: Yeah. And I heard like, this was your big aha moment. When you saw that difference in that gap in the income versus the expenses.
Scott: I was mad. I remember thinking, I can't believe that, like landlords are making money on us living here, especially with the circumstances that I had been in where the landlords did nothing. I mean, we were the ones cutting the grass. There was no repair and maintenance. There were no services that came with it.
Like literally it's like you get the keys, deal with the rest, hand them in when you're done. That had been my experience as a student tenant. So to imagine that somebody was making money. I remember thinking, “Man, this landlord sits at home sleeping on his couch doing nothing. I could do that.”
Carissa: That's when the light bulb kind of went off?
Scott: The light bulb exploded. It's not even like the light bulb went off, it blew up. And I realised this is something I have to do. And I think that pressure is a privilege, I like to say, because I was in a situation where there was no Plan B, there were no other options. There was no money coming from the parents, there was no backup plan, it was: survive. That's the mode I was in. I was paying my own way through school, I was also on student loans. So I was way behind the eight ball.
I remember some of my friends whose parents paid for the university and stuff. And I was always like, wow, they're gonna be way ahead of me, these people. I'm starting from behind the start line with all this debt. And so I decided I have to do something now. Like I have to get ahead of them. And buying a property in those early days was not easy. I had to literally almost break all the rules of what it takes to be a first time homeowner.
But I leveraged everything that was possible. I had a letter from my employer, I had to try to find a cosigner because my credit wasn't where it needed to be. I looked at taking out money on my credit cards for a down payment, I ended up using my student loan as my down payment, which seems super controversial. But the timing lined up perfectly with the beginning of the school year and my student loan. And I was already spending almost $5,000 of my student loan on rent every year anyway.
So I figured if I could keep my down payment at 5%, on $117,000 property, along with some closing costs, basically, just over a year's worth of rent was a down payment. I knew I had two more years, so I was better off buying. I made an interesting discovery young and maybe it's because I just didn't have enough experience. I looked at the math, and I let that make the decision for me. I had no emotion. I had no preconceived notions about real estate, it was like is this logical, right?
And as you get older, and as you have more life experience, you become a little more cautious, I think. And so your fear just compounds, the longer you delay becoming an entrepreneur or taking advantage of an opportunity, or pursuing something that logically would be beneficial for you, you start to come up with excuses why you shouldn't do it.
So I think getting in early was the universe's gift to me, right. Like the fact that I was able to corral all of these things together in order to make it happen was a testament to the people I had surrounded myself with.
One of the things I remember is that I had asked my friends, my roommates, I'm like, do you guys want to go in on this and buy this property? And they all came back? And we're like, no, like my parents said, “No, we can't do it, very sorry.” They didn't know anything. Then I remember asking my mom and my brother and my mom's like, “Absolutely not. This is a terrible idea. You know, you're too young, you don't have a real job.”
But when I talked to the real estate agent, and the financial advisor and the mortgage advisor, they were like, “This is a genius idea. You should totally do it.” And then for a second, I was like, my real estate agent drives like a $100,000 car. Right? My broker is sitting in this spectacular office and lives in one of the best neighbourhoods in town.
Why would I listen to my friends and family who are all broke? Why take financial advice from broke people when I have — I hate to say it — I have these people who have a track record of success with money, giving me different advice?
Carissa: Your example is showing that you know, your friends and family can have a big influence. And that's why so many people like you said you may be sitting on the fence and not going after that opportunity because they're influenced by that.
But using logic doing your homework, like you said, and on the topic of success. Part of your story, which inspires so many, is that you had 25 properties by the age of 25. That is incredible. But as we were just speaking, success doesn't just happen by accident. A big piece of it, I bet, is determination, work ethic to accomplish these big milestones along the way.
Scott: You have to be ruthless about achieving your goals. And you have to make smart goals. So set up your goals to make sure that they're realistic, they're time bound, that there's a certain metric attached to them.
So purchasing my first property was just: I needed somewhere to live. I needed something that I could afford. I lived in the worst room in the basement in order to make sure that everyone else was paying their rent and didn't think that I was taking advantage of a situation. And my first goal was just to have somewhere to live.
And then the second year when I was able to pull equity out of that first home to buy two more and realised if I wasn't living here, I could be actually making money, I can generate an income. I started to reverse engineer it to: if I were to get a job, versus how many houses would I have to have to make $60,000 a year was my first milestone.
I'm like, what would it take in terms of rental properties to get to $60,000 a year, and I thought it was eight properties, I'm like, it's eight properties based on my math. I can make $60,000 a year, which after getting three properties, you go to get more financing. And the first thing everyone says is no, you're out, you've hit your limit, you're lucky that you even got to here.
So then I had to explore other options out there, that year that I had three, I thought, okay, I'm never gonna get never gonna get eight, because three seems to be the limit. And like, no one else will finance me.
But through some creative genius, the market had changed, there were new mortgage options out there, there were different types of lenders. And so I was able to leverage a couple different ways to acquire these properties. And then I kind of got to eight, and I realised, my spending habits have increased slightly. I need things to grow, I needed more tools, and I needed to hire somebody to work for me.
So I was like, okay, you know what would be great? 25 properties, by the time I'm 25. I gave myself like two more years to get to 25 properties. And at the time, again, it seemed absolutely ridiculous, I had to do crazy things in order to make that happen.
One of the things that people love about this story is I remember, I talked to my mortgage advisor, and he was like, look, he's like, you'll be lucky to get one more mortgage, he's like, the landscape is changing. They're changing the rules. There's different thresholds now, and interest rates are changing. And he's like, I've even shopped around, he's like, out of every lender A-lenders. B-lenders, he's like, I've got, basically there's eight different companies, and they're all saying the same thing. This year, they could give you one more loan, and that's it.
I was like, oh, my gosh, everybody's you know, in the rest of them won't give you one at all. Everyone I've checked is, there's only eight companies that would give you one more loan, it's gotta be under $225,000, which was hard to find a property under 225. But I did it, I found one under 225. And they started looking at all of them, I went to look at all the properties out there.
And then I came up with this crazy idea. I'm like, how am I ever gonna get to 25 properties? If I can only get one? You know, I've got eight lenders saying only one more alone. So I went back to my mortgage advisor and I said, “I got a crazy idea. What if I buy one more property with all eight of those lenders, since they've all agreed that I can be approved for one more? Why don’t I do one more times eight?”
And he was like, “That's a crazy idea. Honestly, between them doing a credit check and things, you would have to line up like they don't have to close on the same day, basically.” And so I did it, I put in offers on all these properties with the same closing day. And I took each one to each of the different lenders. It's a bit of a crazy story.
But I was relentless at getting to my goal. When I hit 25 properties, just before I turned 26 years old, I was exhausted. I pushed myself to my limit, it's the first time I had really kind of hit a crisis mode for myself. I'm like, I can't do it all. And I definitely can't get any more financing right now, because I was way too leveraged. And so I had to bring in partners after that.
So I started partnering with people purchasing properties, and creating an investor group and taking private money in and then all of a sudden, what happens is a few years go by, you're still being creative, you're at 40 properties that you're fractional owner on some of them, the original portfolio was now those first five to ten properties, we're getting to that sort of 789 year mark.
All of a sudden, I had hundreds of thousands of dollars of equity, almost a million. By the time I was 30, I had over a million dollars of equity that I could pull out and spread across as more down payments. And that's when the whole business model really exposed itself.
Carissa: It's funny as you're talking through. I wonder then if you actually realise what you were doing effectively was a business plan and building your business just by all of the little planning components.
Scott: At first it was about getting cash flow, like creating my own income. And then it was about growing it so that I could get the income up, basically giving myself a raise when I realised I could give myself a raise. I was like of course I'm gonna promote myself as much as possible. More properties equals a raise. And then the whole business model revealed itself which was: it's the long term equity that you build all that heavy lifting the cash flow.
It's really hard to generate enough cash flow to make it seem worthwhile. The cash flow really should be to cover all your costs, allow you to do some upgrades, and put some money in your pocket in order to insulate you against any further expenses and, and give you a bit of income, of course.
But it's going to be really hard to become super wealthy off of the cashflow alone, because typically, there's just not enough there. It's the fact that you are generating equity and building equity in this portfolio over time that you can get access to and leverage without creating, triggering any tax implications, which gives you access to all of that leverage, it becomes this idea of, it's compounded growth.
And you're taking all of the middle people out of the equation, you're taking the tax person out of the equation, because you're not actually selling the properties. You're taking all of the transactional costs out and putting those back in your pocket because you're not selling and having those fees and moving fees.
So it's high level, I always say there's three ways to make money in real estate that you need to understand and focus on. One is positive cash flow. And that should be your first indication as to whether or not a property is a good one, if you can generate positive cash flow, great.
The second thing is you want it to have long term growth called passive appreciation, you want the value to go up over time, which may happen naturally with inflation and that type of stuff. But you want to put yourself in the path of progress, ideally. So looking at communities that are well positioned for growth.
The last is forced appreciation. Those are the physical things you do to a property in order to push its value forward quickly. The combination of those three things is the trifecta for real estate investing,
Carissa: On cash flow, because it's tough these days. Now, like you said, though, a few years ago, people said it was tough then too. But is there a certain runway that you have for positive cash flow, like if you are at par slightly below? And let's just say you have a couple years where you start to get into that positive zone? Is that something that you should consider? Or is that too positive right off the bat?
Scott: When you're starting out, the goal is to get a positive cash flowing property. Because you know, as you become more sophisticated, or your portfolio gets bigger, you might look into doing severances and land developments and land banking, those things are a little riskier. Those things, they suck more resources from you upfront than they do provide.
But your first few properties should be positive cash flowing properties. You're not going to find them though, you're gonna have to create them. And I've always created my best cash flowing properties. If you look online, you go searching for properties, you can look at 100,000 properties every day for your entire life. And it's pretty rare that someone is just gonna be like, yeah I got this great cash flowing property that's amazing with great tenants. And I'm going to list it for a discount so someone else can make all the money.
It doesn't happen that way. You got to create these things. So you're looking for examples or opportunities to transform a property or duplex a property you have to know kind of get to know all the different tools that you have in order to modify a piece of real estate into something that can be monetised.
I've tried a little bit of everything and when times get difficult in one category, I switch to another. You know, it's, single family homes aren't cash flowing? Student rentals are. I focused on student rentals. When student rentals weren’t cash flowing? I got into duplexes, triplexes and fourplexes. When those weren't cash flowing. I did some commercial investing, and then I did multifamily then short term vacation rentals back to student rentals, because they're crushing it again.
Carissa: It's knowing how to pivot.
Scott: It's just knowing how to let the math make the decision for you. And then reverse engineer from there.
Carissa: And that's hard, because the emotional piece is what holds so many people back and there's a quote I heard you say, and I just love it. It's, “When you are afraid of losing, you're too scared to try. When you hate losing, you never give up.” I just love this. Why do you think so many people are afraid to try investing in real estate?
Scott: I honestly believe that we are conditioned to be afraid to not be perfect.
We're taught how to be compliant and how to follow a structure. That's what our curriculum does and how to do it extremely well so that you can be average. I hate to say it, but that's really — if you do everything right you've now managed to be the perfect average person, which has really not ever been my goal. Like I would never go into a race and be like I'm really hoping to finish somewhere in the middle. I want to win. Right? I like winning.
But if you like winning, you also have to know that losing is part of learning how to win. So, where a lot of people are like, well, I if I don't win, I'm not even gonna run because you know, I don't think I'm gonna win. Doesn't matter, you can't be afraid to lose. If you're afraid to lose, you're not going to try anything. And that is a terrible byproduct of some of the ways in which people learn.
And if we can find a way to pivot that slightly into a situation where it's like, okay, losing sucks, but, and you can hate losing, that's great, but you can't be afraid of it. You just have to learn how to understand this part of the process. It's worth losing ten times, it's all worth it when you win that one time. But if you're afraid you never get the win.
So it's a very small, sounds like a small difference. But yeah, I said this a few years ago, because someone's like, well, I'm afraid that I'm not going to make it in real estate, so I'm not going to do it. And we started having conversations. I said, I hate not making money in real estate, but I'm not afraid to not make money in real estate. It's happened. Not every deal is perfect. So just if you can switch your fear, to a bit of a frustration, yeah, that's a whole, it's gonna drive you.
Carissa: I was listening to one of the podcasts you were on where you said, I like construction. But I'm the real estate investment guy. Like, this is what I love doing. You started as a contractor, you're a licensed contractor now. And you're still so hands on with your properties.
Like I've actually witnessed this on your set where you're like you're walking by in your steel toe boots, you got your tool belt on and you're like you're building a pergola I heard you also drove up to Barrie one early morning at 2am in the winter to fix like a broken pipe. Why are you still so hands on?
Scott: I will always be hands on. I've heard advice out there where it's like, oh you have to work on your business, not in your business. And when you're really successful, other people are going to do all that. I honestly don't know any truly successful entrepreneur that hasn't been in the trenches still leads by example. It's just not sexy to talk about it.
Yeah, it's great to generate wealth from a successful business or a successful portfolio. But people just want to see results. Let's be honest, like, if you look at social and digital now, it's just all you're seeing is the results.
If somebody's on vacation in a beautiful place, and you're like I want to go there, I would prefer someone to post, here's me working for six months doing something I actually hate doing. But that afforded me the opportunity to go on this vacation, like, people look past the work that needs to be done. I've always embraced the work. I'm not great at everything. I'm good at a lot of things, I always like to say I'm like a jack of all trades, master of none.
But when the work needs to be done, the best thing you can do is lead by example. If the floor is dirty, and there isn't someone there to sweep it, I'm going to sweep it, because I believe that the job site should be clean. Am I the best sweeper in the world? No. But if I'm doing it, and the rest of the team sees that, it's hard not to get on board with the vision, right? I'm all in. If I'm doing something I'm all in. And it doesn't matter which part of the process I'm doing. I will help.
Now, that being said, Yeah, I started off as the property manager and trying to buy it. And you'll have to lean on professionals to help you build your business because you can't do everything. You do have to pick what your specialty is. And I would say, at this point in my career, I'm the entrepreneur. It’s what I am. I have to manifest the result and, and put it all towards an idea and build a vision that can be shared and find a team that can help make it happen. And that started with real estate, the business model with real estate.
But for a long time, I did have to do all the things. I was the property manager and the gardener and the landlord and the plumber and the contractor. And I think that I would never do it differently. Like I always, looking back. I learned so many things about this. And from time to time I still do it. But I put as many people in place to take care of what their specialty is for sure. And then you can repeat the business model.
I find that real estate investing is much like any other business that I do. You do the calculations, what's the cash flow gonna be? What are all the expenses? How am I going to use someone else's money to finance this and cover the cost of financing, right? And what's the product really so real estate, you're providing the service of shelter, you're leveraging institutional money, the banks funding for the most part in order to do it, and you are paying other people to make sure that it's executed with excellence.
If you can learn how to do that, well you can apply that so that you are the visionary of any company, just like my production company, the production company. I didn't have any experience in production, I got into TV because there's somebody who wanted to show about real estate investing. And now I own a production company. And we do lots of shows.
But I have to protect the business model so that everybody can get paid and that everything thrives, and there's a bit of a profit at the end. So, yes, you have to hone in eventually what your specialty is, but don't be afraid to try all the things even if you're not good at them.
Carissa: Yeah. And I think too, as you said, being an entrepreneur and some of that strength is getting back into the trenches, I think that's what I'm hearing is what really keeps you grounded. And so on the whole, you were chatting and you said about I think you had like 100 properties or something before you said, okay, like I kind of need help with managing this.
When you think about somebody who's trying to build their real estate portfolio or building it in the process of how many properties do you think is almost too much? And is is there a time where you want to hand over that toolbox to someone else?
Scott: Yeah, there is it everyone has to self identify their own capacity, right? And where are you coming from? I train a lot of people, the majority of people who come to me are first time real estate investors. And the statistics that I have from almost half a million people have come through courses or live events, training events that we've done. And we've surveyed a lot of people.
So in the group, the average first time investor that comes to ask me for help is a 51 year old female. Typically, they are either in a relationship or partnership of some sort. So there may be with their husband or they’re with their sister or they're with their best friend.
And that person, if you dig, drive deeper, has some pent up frustration that they haven't been able to pursue what they've wanted to do in their lives. And they've recognized that real estate might be the gateway for them to take control of their financial future, even though they have retirement on their horizon at 51. You've thought about retirement.
So there's a sense of urgency as well, which is why these are also my favourite people. Because they've had enough life experience to realise they probably should have done things differently. They've got enough runway left that they can actually do something and they have a goal, right. So there's a certain maturity that comes with it; you have to be realistic.
If you're 21 years old, and you are becoming a real estate investor Versus if you're 61 years old, and becoming a real estate investor, your approach is going to be slightly different. And your involvement is going to be very different. Right, you might buy one property and be a passive investor, you're okay to pay a property manager, and to have other people do the work and posts on the platform and pay some fees here and there, because you're keeping it real, super simple. Your returns are stable, but not crazy. And you're building a future benefit out of the equity that you're participating in.
Whereas a 21 year old, I'm like, guess what you're doing, you're moving in the basement, and you're renting out the rest of the house, and you're cutting the grass and you're doing all these things. Because you have no dependents, you have the time, you need to trade your time for dollars when you're young, and you need to trade dollars for dollars as you get older. It depends on your situation.
But for me, I was in my 20s. And I loved doing everything. I just realised for me, that I had hit limits, you can only manage so many people by yourself. You know, I realised after close to a hundred units that I don't want to be a property manager, I want to be a property investor, a real estate investor. And now I want to scale. And so by my late 20s, early 30s, is when I started to get into second markets,.I finally switched my strategy from buy more of what you know, and do it all yourself. And I flipped a switch in my brain.
I said it's time to invest where returns are best. And returns are best when I'm not cutting the grass. Right. So that was a pivotal moment in my career. So I started investing in Canada and the United States quite aggressively, learning about the differences in the two countries and the strategies that existed, which was fantastic. And I never really looked back.
Carissa: Yeah. You've continued to build your portfolio over the years. And it seems like you're continuing on that trajectory, but so much has changed in the housing market, the economic environment. How do you continue to adapt to these changes, especially within the last few years when the environment has changed so rapidly?
Scott: Well, it's not lost on me how challenging it is. Easier said than done, real estate investing — always. And people look at it and they think It gets super daunting. And the first thing I'll say is that real estate investing is not easy. But the formula is simple. It's simple to understand. It's a simple process. It's not doesn't take rocket science to be a real estate investor.
But it's still hard work. And there's some challenging moments. And I think anyone that tries something great- I mean, even if you look at, there's risks and challenges and having a job, which is supposed to be stable. You might not like your co workers, you might not like your boss, you might get fired, or or downsized or forced into retirement, all of those things suck too, doesn't mean a job is easy either, and real estate's the same way, it can be super lucrative, but you can have bad tenants and challenges with a contractor.
And it was probably 15 years ago, I was doing income property. We were several seasons in, social media went from being something that you just looked at to being something you interacted with. So all of a sudden, direct messaging became a thing, which was interesting.
Doing TV for several years was very two dimensional. I'd renovate a house, I put it on TV, you get to watch it, end of story. Then social media came out, I do a show, you get to watch it, and then you contact me. And you get feedback and comments on it. I was like, what the heck! So I started at first I was like, okay, I'm gonna respond to people. And it was like 10 people a day, then it was 100 people a day, and then it was thousands. And you couldn't, but you start to get an idea that holy smokes, people have a lot of questions.
And the first thing I'll say is: don't believe everything you see on television. You can't renovate a kitchen between commercial breaks. You can't become a real estate investor in 30 minutes.
Carissa: They make it look easy.
Scott: We edit it down, right. I think it's important. One of the things I say to the investors in our network, when we do like a high level, this is someone who's done all their training, and they've gone out, maybe bought their first place. And now they're looking at scaling. I say, now that you're here, I'm going to be honest with you. This is hard. And there's some really tough stuff coming up, then the glamour like that whole shiny perspective of real estate investing, it's gonna get a little dolled up right now.
Because it's hard managing tenants, dealing with interest rate hikes, having so many people tell you, you can't do things, getting into conversations with people that were friends or co-workers who are now jealous maybe of your situation, or say something behind your back or wish the worst upon you, or there's so many things that can happen out there. But it's important to have that real conversation.
I don't think it should deter anyone, because it's all worth it. I always say it's all worth it. And you're not the first person to go through it. If it makes you feel any better. I've taken many bullets, right, when it comes to dealing with challenging situations. And I will tell you from all the good and bad experiences, it's all totally worth it.
Carissa: Worth it. Yeah, perseverance. And I'm sure you've heard this so many times, I've heard it just friends and family like many people will say the best time to buy was like five, ten years ago, I should have could have would have is the dream of owning real estate as an investment still attainable. People are getting crafty at trying to figure this out.
Scott: Yeah, well, the best time to invest in real estate. Everybody's missed it, unfortunately. It was anytime before today. So unless you're planning on inventing a time machine, stop worrying about that. The second best time is as soon as possible. And the worst thing you can do is delay the opportunity to invest.
Because investing isn't about timing the market; it's about time in the market. So being able to identify what the optimal entry point is for you is the most important part, because the market will change. There's always a silver lining, though, anytime there's the government makes all kinds of policy changes, thresholds to qualifying for mortgages, taxes on vacant properties, foreign buyer taxes and interest rate decisions like monetary policy, all of these things between the Bank of Canada and the government, they really throw a wrench in your plans sometimes, right?
And so you have to do some shifting, but at the same time, I find for every time there's a lever that gets pulled down, another lever gets picked up. And you have to be vigilant for that. Interest rates go up, everybody starts panicking. I know that that also means that housing prices are probably going to come down a little bit.
So I'm like I'm focused on that. I'm like, okay, lower housing prices, lower housing prices, interest rates go down, I might not be able to purchase because prices go up. But maybe it's a good time to refinance and pull equity out and do some value-added improvements. When you're leveraging all three investing strategies between cash flow, passive and forced appreciation.
There's always something to do whether it's a buyers' market, a seller's market, a flat market. I'm like, I'm so happy just as long as the market is in existence I'm happy. It’s on its way up? Great. It's on its way down? Perfect. I can buy more. It's flat? Wonderful — cash flow. And I'll wait. So it's really setting yourself up to take advantage of the next fluctuation in the market. Instead of trying to catch whatever is already happening. You gotta buy the rumour, not the news and real estate.
Carissa: Yeah, and I mean, waiting isn't a strategy for anybody. You can just even look at an amortisation schedule over ten, fifteen years and see how much a property that you're looking at, based on okay, there's variables like interest rates and how they change. But time passes really quickly to your point. And it's a long-term game.
Scott: Well, listen, doing nothing is a decision as much as it is doing something is a decision, right? So if you go back a couple of years, and you say, I was scared to buy a property two years ago, so I decided not to buy and then that person's neighbour said, Well, I decided to buy. Let's just look at that.
So you think the person who bought, lucky for them the markets up 20%, over two years, they've done quite well? The neighbour who did nothing might think, well, I missed the opportunity for 20%. But the truth is, there was 7% inflation and 5% inflation, you've actually lost another 12% on your money, because you did nothing.
So you decided to lose 12% against your neighbour who decided to make 20%. That's major. So the decision to do nothing can sometimes be the worst decision of all, because there's still an impact. Don't think that zero decision is neutral. There's always inflation. So every year that you decide to do nothing, you've lost another 2-3%. Maybe more.
Carissa: Your savings eroding. Yeah. You know, I've heard that some of your university roommates have regrets not going in with you on some of your properties. So let's talk about regrets. Maybe more about lessons learned? What are some of the biggest for you?
Scott: You know, when I look back, people are like, would you do anything differently? Like, what's your biggest regret? I think my biggest regret is learning through trial and error more than working with professionals. Because I made a lot of investing strategies that held me back or lost me money, which sucks.
I look back, I started flipping properties for a few years, because I kind of started second guessing and like a few like, people who are flipping properties are maybe making more money, and I was buying them and fixing them up and selling them and sometimes I would make 40 or 50 grand, and sometimes I would make no money at all. But what pains me the most is to go back 15 years later and look at what those homes are worth now. I've lost a ton of money on all of them.
Carissa: I've heard your Hawaii story.
Scott: Oh, on my honeymoon. Oh, I was such a- but it was my honeymoon. So all, good. I joke about that with my wife that I'm so obsessed with real estate even on our honeymoon. We booked a sunset cruise. We went snorkelling. And I went to a real estate event. We went together.
I was like, if you go to this real estate seminar, they're giving out free boat tour coupons, which were worth like 200 bucks each and like totally worth it. I want to hear what they have to say. And it was about a new condo development. They were trying to sell condos and I went to the Bank of Hawaii at the time and set up.
I decided, so I had myself lined up to buy a bunch of these because I'm like, they're beautiful. It's Waikiki. They're on the beach. They seem really affordable. Cash was good. And I spent probably the better half of a day of our honeymoon doing all of this. And then I was like, it's my honeymoon. This is silly. I shouldn't do this. And I was like, because I had to go back the next day and do all the paperwork.
I was kind of talking to my wife about it, I could see it in her eyes. I'm like, I might make a lot of money. But I have a feeling that's really going to cost me if I go through with it. Yeah, I walked away from a whole bunch of units that I had secured at a really great price. And those are worth 10x, each one of them, of what I had them secured for today.
So there's lots of those opportunities that I think most people look back and say, I wish I had done more. I wish I had tried more things. And I have those two. But aside from those because you can't fix them. The things that you could fix, and that I would advise people is to start asking questions now to the professionals.
The smartest thing I did was engage with a trusted real estate agent, and a financial advisor, a mortgage advisor at the time, who taught me things that I wasn't learning in school. Showed me a pathway to success when unqualified people were telling me I couldn't do it. You'll never get a mortgage. I ended up getting a mortgage. I don't think I leaned into that enough.
I went on the difficult path of “I'll figure it out. I'll do it myself. I'll figure it out. I'll do it myself.” And although I was able to grow my business quickly and reinvest profits, it took a lot of bandwidth. I missed out on a lot of things by being overly obsessed with my real estate investing career at the time.
Carissa: Yeah. And I mean it you know, you've said it, asking questions and learning and really doing your homework that it can make the world of a difference. When you started Income Property many years ago, you convinced a network that there was an untapped audience of people that want to be real estate investors. In your opinion, what does that audience look like today?
Scott: You know what, that audience is even bigger today. I think I got into TV by accident, I had a friend that worked in production, who heard what I was doing. And then they asked me to go on to a show, but it wasn't a show about real estate investing. It was about renovations.
So I kind of worked in the background a couple times, thought it was interesting, but I'm like, this isn't for me. Like, I'm not interested in being famous. I'm interested in being rich. And they're not paying me enough to be that. So I was just kind of like, thanks. but no thanks.
And interestingly enough, they're like, well, you're good at this, though. You know, like people, the fans. So you've got fans on here. And what is it that you want to do? I'm like, I want to do my rental properties, real estate investing. That's what I'm obsessed with. And that's my vibe, right?
There was this moment where they're like, I don't know if anybody's gonna watch that. Like, it sounds so technical and financial, they even said, don't use the word financial. People don't find that entertaining, right? There was all this research that this show. And they're like, “What do you even call these?” I'm like, they're called income properties. I remember the production executive from the network saying, oh, okay, let us take that away and come up with a catchy name. And they'll be like, “That's the working title for now.”
Yeah, so we launched the show, with a working title of Income Property. And it was just me helping out a friend put in a basement apartment. And they had their like, the pilot-rated well, like people liked it, they built an audience, right. And they've, so they're like, Okay, we're gonna try doing a season of this. So we did a whole season, and it quickly became a top three show. And then multiple seasons, multiple seasons.
Then the financial crisis of 2008, especially in the United States. Almost every show in the real estate space was frowned upon. And there was a big article about how HGTV needs to rethink their programming because they've gotten into too many get-rich-quick your house is an ATM machine type shows.
Then they said the only show that people should be watching is Income Property. It's the only one that talks about long term investing, and gives people real solutions to homeownership and being able to afford a mortgage, which in the US was a big deal. So the show got a lot of backing at the time because of what was happening.; it became the rising star out of the financial crisis of here's real solutions to homeownership, where your house is actually a long term investment. It was a top three show for 12 years or something crazy like that.
Carissa: Congratulations.
Scott: Yeah, but it was exhausting. Yeah, I was like, I'm building a lot of these for other people. And it's distracting me from doing my own in some capacity. But I get it, it helps people and I, I'm one of those people, I am just as happy seeing someone else make money as I am making myself money, like I just enjoy that. I love seeing that moment where somebody hits their goal or achieves their milestone or acquires their first property, there's a certain energy that I feed off of with that.
Carissa: I can tell you really do want to help people and you continue to, from the different facets of your business.
Scott: It's important and it actually — something that I don't know if I've ever discussed on a recording ever before is this. One of the biggest secrets to succeeding as an entrepreneur, I believe, is making sure that other people get to their goals.
Because the universe believes in what goes around comes around, which in behavioural economics is the law of reciprocity. So it's proven scientifically, and it's felt spiritually across every culture in every corner of every continent in the world, that if you help somebody with something, they're going to wish you well and want to help you.
Maybe it happened because of the universe. Or maybe it happened because I learned about behavioural economics, whatever the reason, doesn't matter. But I have found that investing time and energy to make sure that other people succeed, has come back 10 times in reciprocity from people who have promoted or watched or driven traffic or bought products or like they're just like, hey, you did this for my friend and I urge you did this and you helped me with that. And it's not everybody but if one out of ten of a million people that you helped comes back to help you that's still a lot of support that you're getting.
As an entrepreneur — I always say there's two types of entrepreneurs. There are people who stand on other people's backs to get to the top, who are the loneliest, wealthiest people I know. I never want to be that person. And then there are those who have helped everyone around them; the people around them have held them up high to get there. They're surrounded by great people, success is defined in many different ways, and money is just one of them.
But some of the wealthiest people I know are also the most miserable people I know. So be careful when you say, success is about achieving this amount of money, make sure that it's not the only thing at the top of your list. Because it'll be very, you'll be very lonely there, depending on how you got there.
Carissa: Yeah, it's so impactful. And for me, that's paying it forward. And I think that's part of your mantra, because as we started this conversation you talked about living in the basement, unfinished basement, and your tenants were living in the rooms that were renovated. And you've carried that through for all of your business. So you continue to inspire so many, you've built an incredible career and business. What's next for you?
Scott: Well, as you say that it reminds me to look backwards before I look forward sometimes. So I still have my first income property. And 23 years ago, I have that basement apartment. And every few years, I go back to the house between tenants. I just walk through the house. And I've tried to remember like, this is where you come from, this was a great time.
I lived in a basement apartment that was about 400 square feet. It was some of the best times in my life. That is where it started. It's important to remember that that is as much as who I am today, as I hope to be in 23 years from now.
And yeah, I would be happy to continue on this trajectory, I feel like the best is yet to come for me it realistically in terms of being able to enjoy my business and grow my businesses and help other people at the same time, I would say that I enjoy looking back at what it's taken to get here. And I respect and appreciate everyone that helped me get here.
I would say moving forward, I would love to continue on the path because it's exponential, and it feels good. The destination is not as clear as the journey is these days, I'm enjoying the journey, I enjoy the shows, we're doing lots more shows the production company, it's like we're in the life improvement business, the shows that we're going to do need to improve people's lives, whether it's through renovations on their home, or helping them get to their financial goals, or showing them something aspirational, or even Canada's Got Talent, showing them that your dreams can become your reality.
There's a platform for you to do it, and it seems to bring me joy and joy to other people. So I've embraced this mentality of abundance, and said we can create win-win scenarios all the way if we keep doing this.
So really leaning into that doing more shows continuing to grow the portfolio. I've gotten out of certain real estate categories, like single family and anything that's under 24 units, really, because I've done that, and I can do that. But I feel like that's an opportunity for someone else right now like that, that opportunity, that's someone else's entry point. So let's just leave that alone. There's room for everyone to prosper if we focus on that strategy.
Carissa: Thank you so much, Scott, for being on the podcast today. This conversation could continue but I know you're a busy guy. It's been such a pleasure to have you.
Scott: Absolutely. Thanks for having me.
Carissa: If you're one of the many Canadians looking to add real estate to your repertoire of assets, I hope this episode has inspired you to start thinking about a plan to achieve it.
If you're interested in having an advice conversation on how you can make your property ambitions come to life, our CIBC financial advisors and mortgage advisors are here to help you get a plan in motion, go to cibc.com and search “find an advisor” to connect with someone in your local area.
Thank you for tuning in to this episode of Smart Advice. To make sure you never miss an episode, subscribe or follow on your favourite podcast platform and visit us for more advice at cibc.com/smart advice.