Episode 10 – Real Estate Investor Mike Burgess

You’re listening to Your Happy Place podcast. Each week we will be bring you interviews with real estate experts and investors. The show features interviews and discussions on real estate investing, property management and inspiration. With your host Jenna Ross.

Jenna: Today on the podcast we have Mike Burgess. He is a seasoned real estate investor in the north end of Dartmouth. Welcome to the podcast Mike.

Mike: Thank you Jenna. Glad to be here, very excited for our time today.

Jenna: It is always a pleasure to speak to you. I always learn so much fro your vast experience in real estate investing. The last time that I spoke with you I had the pleasure of interviewing you at our local Real Estate Investing meet up in Halifax or Dartmouth I should say. Since then a lot of things have changed with our economy and the world around us. We have the COVID 19 pandemic that we are all wrestling with and trying to deal with. We also, unfortunately in Nova Scotia, had what is now being called Canada’s worst mass shooting in history and my family dealt with the Porters Lake forest fire. We were evacuated from out of control forest fires but thankfully now we are safely back in our house. The rest of definitely North America and different parts of the world were dealing with protests with Black Lives Matter on top of everything else so it has been quite a time. How are you sort of dealing with all of that, and how are your tenants doing?

Mike: I’ve made out fairly well. Your are definitely right, down the road when we look back the year 2020 I think is going to be the year unprecedented events. In my case, my daughter had given birth to her first child a baby girl in mid March. She is in New Brunswick and we haven’t been able to see her yet. I think that is my one of my biggest challenges since all the happenings in the world and here in our providence here recently. 

From a tenant perspective when the COVID situation started to unfold I was really concerned how a lot of the tenants were going to be able to deal with those challenges. You know the isolation and just the entire different way of life. I think it sort of taught me that a lot of us live in a single family home under the roof with our family and that’s it. But in a multi unit building even more so in economical challenge neighbourhood I think it adds to a little more challenges, you know being restricted to a smaller unit, square footage wise and the people who do have jobs that are laid of all of sudden they are home all day just a lot more people under that particular roof that sort of vastly changes the dynamics of the day to day way of life.

In my case I joined the 5 AM Club. It’s been about 72 days now so just about the pandemic had sort of rolled out. 

My routine is get up at 5:00 in the morning go for a brisk four kilometre walk, come back and do some journaling and then read for an hour. I found it has really been an advantage to be able to have some time to think about my business and life and how to attack things. Obviously I have to go to bed a little earlier but I think it is a lot better routine. That is about how the last couple of months have played out for myself and the tenants.

Jenna: Congratulations on a grandchild, that is so exciting and I hope that you get to visit really soon. Your 5:00 AM club is that with Robin Sharma or is that a different 5 AM club?

Mike: It’s directly related to Robin Sharma. I had the advantage of seeing Robin in an event in Toronto it’s been probably about twenty years ago now. I am a member of Private Investment Club and the suggestion of the 5 AM club was a result of working with Sunil Tulsiani. That has been his routine and he has been coaxing me to start my routine and do that for some time so one of the calls that we were on together two to three months ago, you know he said, “Why don’t you do the 5am club?” And without thinking I said ok sure. It was a few days after the alarm came very early it started to sink in what I committed to but onward and upward.

Jenna: That is so excellent. The fact that you got to meet Robin Sharma I am so jealous, I hope to meet him some day. That’s one of my top goals for sure. I just love him and his books, so inspirational. I bought his book The 5 AM Club and I did try it and I do want to try to get back into it myself. I found it was really helpful. I’m looking to do that again because it does make a big difference and I think what I found is that I need a lot of sleep so I need to almost take a nap in the afternoon but you accomplish so much more when you do your day like that, when you start it that way. 

Mike: So you have read his book you said? I believe he has the strategy of The 1166 is that correct? So one thing a day for and hour a day for sixty six days to change a habit. 

Jenna: Basically, yeah. You get up and you start your day at 5 am, you do some exercise, you do some journaling, some mediation and that kind of thing then start your day that way. And do it everyday and that is the challenge I find. Getting up that early, I am not a morning person so even if I did the 6 am club I think that would be better than what I have been doing in the current situation we have been finding ourselves in. Can you tell us how initially you got started in real estate investing?

Mike: Sure. I was twenty two years old, when my dad when he was alive he was basically my coach and mentor and walked myself into that process. I was still living at home with my parents and going to university with my parents, going to university and I had a little bit of money saved over the years of working part time jobs and what not and I used that as a down payment. My first property was a four unit building on Albro Lake Road. 

I basically did a lot of sweat equity to improve the property and analyze what my dad taught me, how can you add value to the property and justify raising rent to market rents and that in turn would drive up the value of the property.

Really it is a simple process of buy an under utilized building and renovate it so it was in better shape, raise the rents have it refinanced and repeat. That is really what I have done over the years is just keep working away at trying to improve properties while I am acquiring them. 

Jenna: That’s so amazing that you had your dad as an inspiration and like a mentor and you got started so young. And where did you take things after that 4plex you bought?

Mike: So I had that 4plex, then a triplex and I believe it was the third one that I had bought a bungalow that neighbored very closely to what is the same neighbourhood as my original 4 unit building. That bungalow, I contacted a few friends for room mates and basically rented out a couple of rooms when I bought that building to friends and then additionally built a one bed room basement apartment in that property. 

I lived there for a few years and then it was about the time that I got married. 

We built a house in Bedford and turned that bungalow actually into actually three units, two bedrooms, one bedroom and a bachelor. It was very self sustaining from a financial point of view and when we have the advantage of doing that when we are young it kind has that multiplying affect, similar to how compound interest grows I guess it sort of sets things up to really be able to drive equity and build a portfolio. 

As I said I just continued to do that over the years, that was all on a part time bases as I had a full time job.

 In 1997 I had moved to Montreal, lived there for a little while and when I divorced I came back home and said ok what can I do coming out of the divorce to commute quite often to Montreal to see my kids as they were relatively young, ten and twelve at the time. It was very important to maintain those relationships that best that I could. 

So for instance, the first year we were divorced I was basically in Montreal a week, Halifax a week back to Montreal. Every other week it was a trip. I did that for a year and then we had changed it over to once a month. It was about ten days in the middle of the month and the remainder of that month that I was in Nova Scotia it was 12-16 hour days almost every waking hour resurrecting a 12 unit apartment building I was working on. It had been closed up for five years so that was my driving force to keep me busy and it surely did. I learned a lot it was a lot of fun. From a growth perspective to be able to resurrect a property that was closed for five years it was quite a steep learning curve and very much enjoyed that process. Just sort of been adding additional properties to that ever since.

I have a few in Florida over that past few years that my goal is to have a couple of trips in the winter months away from out snowy conditions for a little bit of recuperating and spend time in Florida in the winter months.

Jenna: That is a great goal. Have you been getting to Florida or is that something you are looking to do?

Mike: That’s more on the bucket list. Over the few years really been driven in managing the properties. We have talked about this before I have to learn hand over the torch a little bit to somebody else who is capable and competent and be able to carry on and that would allow me to be able to explore some goals and aspirations.

Jenna: It is hard to let go and I can totally see and appreciate that and I know that you are extremely involved with your tenants in a nice way and you are definitely, it is obvious to see like when I met for coffee around the corner from the area that you have buildings and stuff that you know every one there some of the people there are your tenants and you are well known and well respected and I can imagine it is hard to let that go. It is a big part of you. You have spent a lot of time there.

Mike: Yes. Like I said it is necessary for growth so just a necessity to open up for new challenges and opportunities. It will come.

Jenna: Absolutely and it certainly will. Can you describe to us how things have changed over the years in the area of north end of Dartmouth where you have your investments. How has the community changed?

Mike: I see north Dartmouth as making huge advancements. I think there are a lot of long term residents that have a lot of heart and a lot of pride and have spent their entire lives in this community and will probably never want to leave this community.  

It was predominantly, in 2004 when I started to acquire some buildings on Pinecrest Drive, reflecting back to those days to give you a little perspective there was nine boarded up apartment buildings within a couple of blocks. For some years we have zero boarded up properties. 

When you would drive down the street and see boards on windows and shopping carts in front of most buildings, shopping carts that people have gone to Sobeys and that is how they got their groceries home and then they would just leave them on the front lawns. That’s how it was. It was really different then.

When we turned on the news there would be quite often times report of some type of crime, drugs, robbery or what have you within the Pinecrest, Brule, Primrose Road and Jackson Road sort of area of north end Dartmouth. And now that gradually declined over the years that’s my observation. We still do see that part it is I different parts of HRM. It can happen in Sackville, Spryfield or Cole Harbour or south end Halifax. 

Unfortunately bad things can happen just about any where. North end Dartmouth, I contribute a lot different organizations and focuses to sort of bring aid and help and growth to the community. One of the ones that sticks out in my mind is the United Way. It has a strong presence in Dartmouth North for about five years. They looked at how they could build relationships and that was sort of the approach. And when neighbors knew neighbors they would look out for each other. From an HRM perspective, we have had councilors that have been very involved. Bylaws to raise the bar for people to look after things in a much better way. 

This goes back to the days of Peter Kelly being  Mayor he had made a few trips over and walked Pinecrest Drive and on his walks I noticed he picked up garbage and by the time he got down the street he had quite a handful. After that day within a week or two every other lamp post had a garbage can on it. So I always respected him that he basically lead by example. That was a small unpublished thing that he did but for those of us who witnessed it I think it sent a strong positive message. 

I think that perhaps it is things like that that I try i emulate. I think it is a combination of a lot of different efforts that good organizations, Halifax Police Department. North End Dartmouth was the first community that they rolled out the community based officer, so the police officer would be based within the north end of Dartmouth and his roll, it was or is to establish relationships between the community and the police. 

They were there for support and within the schools. It was a learning and support and preventative role. 

We have had numerous officers in that position and they each have done a phenomenal job as they each sort of came in to that role and put their own personalities and perspectives in that. As a result I really have to give a huge shout out to what we now called The North Growth. It is a combination of Dartmouth Family Centre and The Food Centre which is now housed under one roof on Primrose. And when we finish this pandemic and we’re back up and running on a personal face to face basis they have just been a phenomenal resource for the community and helping  teach and show people how to cook and what to cook from a healthy perspective and we just have a lot of great things in Dartmouth North. I’m just continually amazed at what we have within our own community here.

Jenna: It’s so nice to see and hear about with just the time that you have invested in there and kind of what you said Mayor Peter Kelly it’s the small changes that make a big difference. I think that definitely you made quite a legacy there you know with making small changes yourself to improve things and it goes a long way so it is so wonderful to see and I think the food programs and like you said teaching people to cook healthy foods and grow food and things like that is so important for raising children and just for health and wellness and it is very very nice to see.

Mike: Like I said I think it is just a combination of a lot of great things. It has been very exciting over the years to be a part of that. I guess I look at myself as one small cog of many many on that wheel of success. 

Jenna: I know that anybody who has met you, you have such a humbleness about yourself and such a curiosity and willingness to learn and listen. It’s very obvious when I see you at an event or something like you are well known and everybody 

smiles when they think of your name or if your name is mentioned. When you join a webinar and people are shouting out to you so definitely you have a lot of respect for sure in the real estate investing circle I would say Canada wide for sure. It is really 

nice to see. On that note, what advice to do you have for new real estate investors who might be getting started?

Mike: I guess. Thank you first of all for the recognition. So what I would like to pass on to somebody starting out. I guess there are so many different strategies to be able to invest and it is something someone can start in their 20’s or 50’s. Like the cliche about when is the best time to plant an oak tree? You know twenty years ago, when’s the second best, right now.  

I would say if any of your listeners have an interest in becoming a real estate investor start filling your toolbox and relationships with plenty of meet ups. Listen to your podcasts, Greg is doing the online now but you guys host personal meetings for real estate investors so attend as many as those as you can. 

As real estate investors there are people in those rooms, if you can make those relationships and some times it is a matter of team work. One person may have different resources or strengths and a friend or new colleague may have a complimentary resource or strengths that you could put together to build a successful strategy in inquiring properties.

 I guess to sort of reflect back on one of my methods when I was younger we briefly talked about it earlier if you can acquire even a small house with the centre plan of coming into making this a more of legal scenario within peninsula Halifax and a good portion of Dartmouth to add a second unit in a house that’s a huge way to phenomenally build equity into a property. You know if you are starting out start around your comfortable level or slightly beyond and learn as you go. Understand that if you make mistakes, look at that as a good thing. Ask yourself “what could you have done differently, what will you do differently the next time to learn from that mistake?” Talk to other people that you can learn from what their advice would be. 

If I am in a conversation with some one and if there is some advice that I can pass on in a conversation I am happy to do that. It really is about the relationships and building the skills. Yeah just take action I guess is what I would sum up to new investors.

Jenna: That is excellent advice. As you know this spring we lost a Canadian real estate investor Stefan Aarnio and I know that you had mentioned before one time we chatted about his book and Money People Deal that concept. Can you explain a little bit about that?

Mike: I don’t think I mentioned it to you I almost had the chance of meeting Stefan, I never ever did have the opportunity but I was at a private investment club in Toronto and his name tag was sitting right beside me. I don’t know what happened but he didn’t attend unfortunately fate didn’t bring us together. 

He was a young fella in his thirties who recently passed away, very sad in that respect. He had written several books and one of them that I sort of had gone through a little bit basically Money People Deal. 

What I learned from that, basically there are three pillars that are necessary in bringing a deal together. The money, basically you need a down payment and or the mortgage to be able to purchase that property. You need the deal, basically the property that is ideally one that you can acquire that is below market value is ideal if it needs some work put that in your calculations of what you are willing to invest in it. In other words just round numbers if a property was I am going to state 1980 values but if a property was $100,000.00 and it needed $20,000.00 of rehab or work to bring it up to a decent standard you wouldn’t want to pay more then $80,000.00 for it. Anyways, the money was number one, the deal was number 2 and you need people. The people is basically describe as we perceive it as the power team. You need a lawyer to be able to close your deal. You want a real estate agent to help you find it and walk you through the contracts that are involved in it and you need your banking people to be able to do your financing. Contractors or trades people to do renovations. Those three pillars The Money People Deal you know we talked about it briefly before but if you have two of those systems in place it is very easy to get the third. If you have the money and you have the deal then it is pretty attractive for contractors to be able to align themselves with your lawyer. It’s easy for your power team to come. If you have a great deal and you have the power team you are in a very attractive situation for people to want to lend you money. Again, if you have two of those three things the third is going to come easily. But as a new investor don’t be overly intimidated by the fact that you don’t necessarily have all three at the same time. Just have the focus to relationships amongst people and that is where help and support can come from to be able to bring everything together.

Jenna: It is a neat way to look at it and I think it really helpful especially if some body is new just to think of it that way that if you are missing one piece of the puzzle it will come if you have the other two. I like that a lot. What opportunities or trends do you see coming out of the current economic environment that we find ourselves in now?

Mike: As a trend I think from what I see and what people I have talked to and what not retail and commercial properties could be in serious jeopardy. We can see a lot of vacancies in that sector of it. 

In our Halifax market we have had a low vacancy rate going into the COVID situation and they classified construction as basically an essential service. Construction pretty much carried on throughout the COVID situation while many people were sitting home quarantining so that really speaks volume to the necessity for our residential real estate so homes and apartment buildings. I think we have seen people working from home and it will be interesting to see if this plays out that a lot of people will want to end up continuing wanting to work from home. If that does happen I think a lot of people have been setting up shop at their dining room table or living room chesterfields so if it turns to be a little bit more of a permanent thing we may see people wanting to upscale into a larger apartment building or a larger home that sort of facilitates a dedicated office that gives the privacy and set up to be able to work efficiently without the daily household obstacles for that focus. It seems like industrial 

real estate is going to remain I believe should remain barely unchanged. I think especially in our Halifax market our residential I see a lot of opportunities we just sort of go out and if we are focused on that they will come to us. Have our eyes open to look for those opportunities.

Jenna: It seems like there is more opportunities coming right now. I seeing that trend and that maybe some of the older landlords might be getting just tired of what they are doing and might think ok maybe this is a good time to move on from it. I think there will be a lot of opportunities coming. And curious to know, the question I have for you, where is your happy place?

Mike: It varies. Looking forward my happy place is going to be able to get across the New Brunswick border to see my grand daughter and create less of a work schedule that allows me to watch her grow and be a support for her and one of her biggest fans. 

That moving forward is going to be my biggest one reflecting to what I had alluded to before full filling my goal of spending a month or two one or two trips in Florida during the winters. This will come when I turn over the torch of sorta managing some of the properties and acquiring some larger multi unit buildings in addition to that.

Jenna: That is so nice. I think the pandemic has sort of made a lot of people think about what is really important and people, family and relationships and I think it wonderful that you are going to be there for your grand daughter and I am sure they are just waiting for you to come. It is so nice and exciting and it’s a great goal as well to take vacation, longer vacations as you certainly earned this so that will be nice for you  I think by the time it’s time to travel and go you will be ready, that is just awesome. I want to thank you so much for coming on the podcast and I want you to share if you can how listeners might be able to connect with you to learn more.

Mike: The easiest way might be by email. Shoot me an email mike@successbyburgess.com.

Jenna: Perfect. Thanks again for coming Mike and I hope to chat with you more on the podcast in the future. 

Mike: Thank you again for having me. I always enjoy our chats Jenna and look forward to some adventures.

Jenna: For sure. 

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