Episode 13 – Investor Sean Kearney shares his journey with us

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

 

Jenna: Today on the podcast I am pleased to have Sean Kearney with me today. He is a real estate investor. Welcome to the podcast Sean.

Sean: Thank you very much for having me.

Jenna: How did you get started in real estate investing?

Sean: 2014, so about six years ago I had the opportunity to get a house that belonged to a hoarder. Previous to that my mother, working in banking her whole life and hated RRSP’s didn’t really believe RRSP’s were the way to retire. I was always looking for another way to secure that I could secure my retirement.

So in 2014 I came across a hoarder house. It was priced very right. I decided my mission was going to do a renovation, try to rent it out and if that went well I would move forward and if not I flip it and just recoup my money. 

Jenna: Awesome. That is really cool. Can you tell us from there how, it sounds like you do a fair amount of rent to own, and can you tell us a little bit about how you work those?

Sean: That first house started my addiction and I think about real estate investing as an addiction. I have such a happiness or high from getting to work in real estate. I love almost every aspect of it. For me my only regrets is that I didn’t find it sooner. After that first house that we did ended up tossing out over 10,000 tons of trash but I looked for a way to help other people to feel that same way. Everyone deserves to live the dream would be the proper way of home ownership but not every one has the tools available especially in Atlantic Canada. We don’t have a lot of high paying jobs and some people have to deal with cash jobs.

I took a few courses after my first real estate deal and I learned about rent to own. I had an old colleague reach out to me one day and couple of years ago and he was like I just got out of bankruptcy and I don’t have any credit and I remembered that you were doing real estate investing is there anything that you can do to help me because I want to own my own house? That kicked off the start of us to do rent to own. I used him as a trial to learn the process correctly and it is on going.

Basically what I do is I send him out with a real estate agent to go find his home. I give him a budget to work with. Generally people who do rent to own have bad credit and don’t qualify for mortgages with banks. You have to help them get that credit up. Part of the service is I sent them to my mortgage broker Leanne who you know very well and I am some of your listeners know her very well. Leanne will work with them to tell them how they need to build up their credit over a two or three year period so that they can qualify for the mortgage and buy the property back from me in two to three years.

What we do is we take an options payment which gives them the right to action the option which is essentially buy the house from us at any time between 2-3 years. We charge them a rent that covers the basics. By basics I mean it covers the the property, taxes, insurance, it puts a couple of bucks in our pocket. We are not looking to make a lot of money off this, we are looking for successful people to give them the dream to own their own home. That is where we were and where we are. So far it is going very well. We haven’t anyone buy the house from us but we never had anyone default and even if I have to extend the contract, I would rather extend the contract than anyone default because it’s their property, it’s not mine. My goal is to help these people own these properties. 

Jenna: That is so nice. I like your philosophy around it. I think it just goes so much better if your keeping your tenant buyer in mind and with that kind of end goal of them owning a home and you get to help them do that I think that is really nice. I like that. 

Sean: People ask me sometimes “Why don’t you go out and look at the homes?” It’s not my home, it’s their home. They have a budget to work with which we figure out with Leanne what they can qualify in a couple years we figure out how much needs to be put down. They have to have that 10 or 15% depending on what steps they need to go to build their credit and then we help them with that. 

At the end of the term, I have one guys who’s coming up very shortly and he is putting down 20% down so that option payment. When he goes execute that he will have that 20% down. He is taking the steps to build his credit. We keep on them. It’s not where we are one and down and we walk away. In our contracts we have a yearly meeting, make sure they go in and are keeping up with their part so that we can hole them accountable. We want them to own the house. Rent to Own have had a bad karma I guess you could say. Not even bad karma, bad jube jube in the US where people take advantage of people. They want that option payment money, they want them to default so they can throw someone else in there and keep their money. That is the complete opposite of us, myself and Trevor the company that we started. We want them to get that house so we put steps in place. We don’t accept everyone. We accept people that we believe are going to be successful. If they are going to be successful it puts a little bounce in my step. 

Jenna: That is a nice way to give back and build a business. I think that is really nice and think you will be successful doing it that way. You are going to have a nice reputation about it and it feels good. It is a win win which is what you want to do when you are in business with people. 

Sean: As I have said, I do it because I love it. If I could go back in time and tell myself get into real estate sooner. First of all I would be a lot farther along. You know when you get up in those jobs you have to force yourself to get up, you drag your butt to get to work and you are like why am I killing myself 80 hours a week making someone else rich. Real estate isn’t like that for me. Real estate is like oh I am doing a deal, oh it’s demo day. I love freaking demo day. I go in with a sledge hammer, I get to rip stuff up. It is so therapeutic for me. My family likes me more. I’m happier I am having fun. Real estate is just where it is.

Jenna: It is pretty awesome. I think you and a lot of men like demo day. It kinda charges people up.

Sean: There is nothing like taking apart a kitchen. One minute there is a full kitchen in there and a half hour later there is nothing but rubble. It’s the funnest thing in the world. It is just so, so fun. I was sitting around talking to my wife last night, I said to her “I think you need to do a flip” and I don’t like doing flips but I’m like I need to have a demo day. I need to rip things up. Jenna: Oh my gosh, I can hire you for a couple demo days when they come up. I will keep you on speed dial and have you come over for the day. Best day ever. What advice would you give to brand new investors who are just getting started.

Sean: Two things. Do your first deal. Do your deal. Don’t sit there reading about it, ho, humming about it, bang your head, educating yourself. Get out there and do one deal because after you do one deal that is where the real learning starts. The second thing is education. This industry is just like any thing else that is worth the while needing to go to school for. I have learned so much from coaches and experienced people who has been doing this for many years that is shortened my time line to getting independent. My eventual goal is a two hour meeting at the beginning of every month talking to my team and them living my life, my real estate investing life. That is my eventual goal. 

The education helped me get to that goal a lot faster because learning off the backs of people who are successful who have been doing it for 10-15 years and avoiding their mistakes. Those are the two most important things I would say with getting started. Do a deal because you will never learn as much when you are spending your own money and then get the education so that you know what to do better the next time and you can grow. I have so many options in my tool belt that I can deploy because of that education and Rent to Own is one of those tools that I learned from coaching.

Jenna: That is great advice, I agree. I definitely agree with getting going and doing a deal and not kind of doing the analysis paralysis thing which is easy to find to as it is scary in the beginning but like you said if you do a deal and surround yourself with people that can kinda help you so that you don’t make a terrible mistake but doing one deal is fine if you make a little mistake you just do better the next time. Sean: I guarantee you if you make a mistake with your own money you won’t make that same mistake again. Spending your own money is the best educator that you can. Then developing those systems and processes in place helps to help minimize the amount you need to spend going forward is just gold. You have to go out there and do your first deal.

Jenna: Yes for sure. On top of the next question is you are involved with Keyspire. Can you tell us a bit about that, what that’s like? I know you are doing some learning and coaching through them.

Sean: Keyspire started by Michael Sarracini and Scott McGillivray. Some of you might know Scott McGillivray from Income Property on HGTV. They started with student rentals many years ago. They developed an income property playbook on everything from rent to own, AFS, student rentals, land development deals, joint venturing and this is that education that I was previously talking about.

They have everything from I have no experience on how to hold a hammer to I am going to put up a 200 unit building with someone else’s money and collect 60%. They have what I call A-Z the whole scale. That is the education that I went with at the beginning. The only reason I went with that was Scott was coming here and my wife saw him and said ohhhh that’s the guy from TV lets go see him. I said ok. After listening to him and doing their three day course I learned a lot. I saw how that education would help me grow quicker and it has. Keyspire got, these numbers are probably low but 2,000 plus members. I have access to coaches if I get stuck, if I have questions. We have weekly meetings, monthly meetings, yearly meetings. Just the amount of help and education that you get from them, you would have to trip on your face not to be successful. I mean they have given you the steps from A-Z and as long as you, someone I know says this, “ How do you eat an elephant? One bite at a time. That is the only way you can eat an elephant”. If you follow their steps and you go step by step you will be successful and that was part of my education. That is what partly and mostly got me here where I am today.

Jenna: That is awesome. I have spoken with another investor and she also has had great success with it too and I think part of it too is the coaching and also the motivation and the accountability piece too. Sean: So the key thing about Keyspire. Some people don’t like it and they bashed it. They expected Keyspire to do the work for them. If you think of Keyspire as a library, they are going to walk you to the book, they are going to open the book for you, they are going to point to the line that you are going to read but you need to do the due diligence and read that line and if you have any questions you can ask their coaching or the librarian. You can ask their coach and they will explain it to you in a way that you can better understand it. Now some people in the past haven’t liked Keyspire but typically when I see people who don’t like Keyspire are people who don’t expect to do the work.

As anyone listening to this podcast knows if you do the work you will be successful. If you don’t do the work your just going to be sitting in the same spot doing nothing.

Through Keyspire I learned about RAIN, I learned about the United investors groups, Felix Investors there is a bunch of different levels of education and it all started with Keyspire. I owe every thing I am today. My partner Trevor I shouldn’t speak for him probably owes everything where he is today because Keyspire opened up those initial doors for us. 

Jenna: Speaking of your partner Trevor, your real estate investing partner Trevor, Sean: My business partner, I have had to say that a few times. We were initially introduced as partners and some people were thinking husband and husband partner but my wife got a little jealous and I think his wife got a little jealous too. So now I say my business partner Trevor. Jenna: Yes it is important to make that clarification, oh my gosh that is too funny. How did you two guys meet and become partners?

Sean: So we both actually signed up for Keyspire together. We were making a name for ourselves down here individually. The good thing about Keyspire is it opens you up to investors in Ontario and BC where they need to spend 2-300,000.00 to put 20% down where we only need to spend $50,000.00 and we see better returns. 

People were going from Ontario and BC saying I want to buy in Atlantic Canada and people were saying oh you need to go and talk to Sean and Trevor. You have to talk to Sean or Trevor or you have to talk to Trevor or Sean. Trevor came to me one day and said “man we are splitting things 50-50, they are coming to me or you. Why don’t we change that to me and you?” I thought about it, I am a control freak as you know. I know what I need to do, I want it done a certain way. I never really thought about partnering with anyone. I had one vision in mind and Trevor came to me and he suggested and what he suggested made a lot of sense. Back in November-December 2019 we decided to partner together and create Next Level Investments. 

Jenna: Very awesome. Congratulations, I think that just watching you guys together through Facebook personally that he seems to looks out for you and it is a very caring relationship that you guys have and nice working relationship and I think that is key and important.

Sean: He has some strengths where I am lacking and I have strengths where he is lacking. We are literally the yin and yang of each other. There are certain things that he is fan friggintastic at where I am one of those guys staring at a brick wall and then vice versa. It is a really good partnership we both have strengths. I have a care free happy attitude as I said I love what I do and I make sure everyone knows it and Trevor is more the serious type so again the yin and the yang. I’m the guy having fun and he is the guy straight to business as you have probably seen a few times. It has really helped us scale our business, we are up to 33 doors right now. We have properties in Saint John, Antigonish, Halifax. We are looking at properties in Sydney and some other places. We have actually started to pivot or tilt. We were going after multi units like 4-6 but now actually because of Keyspire’s help we are starting to look for multi units 20 units and above. We are growing the business and between the two of us it looks fun and exciting.

Jenna: That is exciting. Thirty three doors is incredible. That’s amazing and it is going to be interesting to watch you guys do more together. It will be exciting to see. It is certainly an exciting time. How have you found the real estate market since COVID came on the scene since March?

Sean: We had a couple of deals go through. We also do joint ventures. We are the working partners where we bring in the money partners. We had some really nice student rentals down in Antigonish that we were about to close on but when COVID hit it scared away our financial partners and that is fine with us because we don’t want our partners to do anything that they are uncertain of or anything that bothers them. I like to describe our partnerships with other people like family, we are bringing you into our family.

We have seen a bit of a slow down but with the pandemic going on there is a lot of potential. We see in the next year maybe 18 months that a lot of the part time landlords are going to get frustrated and then we are going to see those units or even those landlords who are using their line of credits or their helocs because their tenants aren’t paying or they don’t have the right tenants, they are going to need to get out and throw those units on the MLS and sell them. 

Right now we are finding deals and making deals but in the next 12-18 months we feel that it is going to be a fire sale. We are hoping, I’m hoping that a lot of these part time landlords will put their units on and we can buy them out and get our property manager to manage them and sit back and live that investors life style I was talking about earlier.

Jenna: That is cool and I completely agree with you. That is what I am kind of hearing that and I believe that will be coming because I believe the pandemic made a lot of people think about things. Tired landlords and tired of tenants and just don’t have the appetite for it any more and that will push a lot of people to reconsider and then like you said a fire sale. I think there will be a lot of properties for you to pick up and fix them and kind of make things nicer and move on.

Sean: We have been pretty lucky because one of the things Keyspire helped us was to help us pick better tenants out initially before we got our property manager. I think out of our 33 doors we only had one or two who had an issue paying the rent, meaning they were laid off and couldn’t pay and that’s fine if someone can’t pay rent especially through COVID we have no issues with that. Most of the people pay their rent and we don’t have to do any mortgage deferrals. We were still paying the banks.

This is all good because we are not under water or stress so when that 12-18 months comes out we will be in a lot better position to turn around with our financial partners and pick up many, many of those units that go on the market. We will have to do renovations and I will get demo day and I will be all happy. It is going to be interesting.

A lot of the people doing part time I want to say hobby landlord are realizing that you have to get the right people in there and you have to give them the attention that they need and you have to be a good human. For those people who are looking for a quick buck they will get out in the next 12-18 months and their exit will be our happiness actually our joy sounds better.

Jenna: Your joy. What I like about real estate investing is it kind of takes the emotions out of it when you are dealing with other real estate investors. You know, they want to exit and you want to help them do that. There are different things about capital gains that you can help the figure out. It’s not like buying a property from somebody that’s for closed on. I just think it would feel different just buying it from someone who just wants to move on to their next phase. Sean: Yeah you have AFS you have vendor take backs. These are things that can be used or pulled out of the toolbox for those hobby landlords and help the get out. They realized that’s it for the and that is fine and dandy. We look at it as a win for us but we also look at how can we help them? How can we get them out of that situation? The one property that I heard I was talking to a distressed landlord in Antigonish and said he said he had no time he a new job. I ended up buying those properties but during the conversation and this probably could go way back about advice I give is listen to people talking. 

This distressed landlord was getting out and selling those and I ended up buying them but during a conversation he told me he had four other properties he had no time for. 

I immediately turned around and said I represent a group of investors from Ontario so if you are ever interested in getting rid of those four other properties I would be more then interested in looking at them and helping you out. His nest response was, “What is your phone number?” because we were going through agents at that time. I ended up getting four other properties off market because of a distressed landlord because I listened. These are things that you will learn by going through the processes and they are huge wins because we got them for a really nice price because he didn’t want to deal with that crap. Sorry a little of topic but I thought it was important to share with people.

Jenna: That is awesome and I think that is what you kind of look for. Can you tell us what your goals are, I think we touched on it a little bit, but what are your goals that you have in mind for real estate investing?

Sean: Well my end goal is to build a team and have that team manage my investments. I need to spend 1-2 hours at the beginning of the month, make sure rents have been collected and there is nothing major brimming. Right now our goal for Next Level is to build the rent to own up. We would like to get at least 5-10 clients a year, get them into new house, again I get that energy where I love it, so I kind of feed off of it.

From there we are also looking at building our multi unit were expanding to 20-50 units so we are working on that. Work with our joint venture partners, we are always the working partners we’re expanding hopefully in Sydney soon. We are looking right now probably in the Moncton area. We are really focused on the Atlantic Canada as we really feel, I am an Atlantic Canada boy, born and bred in Halifax but Trevor is from Calgary originally so he has a pass. lol. He has been here for awhile so I gave him a pass. We really want to promote Atlantic Canada. Keyspire till we came in never really considered Atlantic Canada. They would come down here but they wouldn’t really spend much time and energy. Now we have investors coming in here, a lot of westerners from Keyspire buying properties so we just want to continue promoting how awesome it is here.

Jenna: I think I kinda of noted to when I started to see Halifax showing up as a place to invest in Canada Real Estate Wealth magazine but before that we were kind of like a mention but now I am seeing to that a lot of people from Ontario and out West are kind of realizing the secret that the cat is out of the bag there.

Sean: When we went to an investors seminar in Niagara Falls last year and I was having a conversation with one of the coaches and I was trying to expand out in Ontario and BC and she looked at me, and to be honest with you I didn’t see it till she almost rang my throat and she said, “Do you realize need to put $250,000.00 down to get an $800.00 return you only need to put $50,000. down to get any kind of dollar return?”

If you were to take that $250,000 and divide it by $50,000 and buy that many properties you are making a lot more with the same amount that we need in Ontario down there. I didn’t get it, to be honest with you and I don’t understand why it didn’t register with me. But she was my Keyspire coach and she kept wringing my neck and smacking me upside my head because I still wanted to expand Ontario because I wanted to get those 20-30% gains then one day I was just walking there and I was looking at a deal sheet and thought why do I want to put $250,000 for $300.00 a month cash flow. It’s like the light switch was turned, the lights in the back of my eyes actually lit up and I went to her and said, “I finally got it” and she had a good laugh on me. She tells that story to many people. So we focus on down here because we don’t need to put so much money down to get so much profit, so much cash flow.

The deals are around here.

Jenna: Yes. I am seeing with the tenants, they are moving here, the deals are here, it’s beautiful, the weather is up and down but I mean if you live here it just makes sense. I think you will do well here and I am hearing from people that Halifax is kind of like some of the bigger cities were twenty years ago so it is a good, Halifax and Atlantic Canada, like Moncton is good, Saint John is good all the places you are looking at are good. Growing cities and the vacant rates are low and even through COVID we are getting tons of applicants here. Rents are going up and it’s a good position and I mean if that changes you can definitely look elsewhere but for now it’s a good time.

Sean: We were talking to Scott McGillivry and we were in Halifax I think last year and we were talking and he turned to us and he basically pointed to Bedford West and he said “Do you see all the buildings they are putting up there? Do you see all those cranes?” and we said yeah and he said “in each major US cities in the past 20 years before that area has exploded those cranes started to come up and start building.” He gave some cities in Ontario like Sarnia because that name comes to mind or like London, different cities like that but apparently those cranes came in and started building those high rise apartments building and then within a 2-5 year period you started to see all the land values going up and the area exploding with people. 

He told us buy properties because in the next 5-10 years that property is going to be worth so much more because those cranes tell me, he is a pretty smart guy when it comes to investing in properties, that tells me that this area is going to explode so he was actually looking at properties to buy up here for his portfolio as well. So if Scott tells you that, I think we went out the next day and phoned every real estate agent we know and said hey if you got anything call us we will buy it.

Jenna: That is hilarious. Definitely in the past three years it really became a booming town in Halifax and I definitely noticed that and when they were building all the building in West Halifax, downtown Halifax there was a point where I was thinking like where are the people going to come from? They are just building so much. Sean: Or how are they going to afford it. Some people don’t know but I have used you to find a tenant service just so I can let people know but the previously tenant left that building to go to West Bedford and he is paying $2800.00 a month. This has everything. It has got pool, gym, maybe a sauna I don’t know. I was just curious how much they went from and they were previously only paying a $1000.00 a month. That was a big jump to go because they wanted a little bit more space. 

These units are charging them that much, how are these people, like we live in Nova Scotia, like how are affording that. On the side the fact that they are raising the rents so much makes my properties more attractive. Do you want to spend $2500 a month in a crowded building or do want to have a single family home for $1500 a month?

The growth in West Bedford, downtown and the buildings we see going up are helping the small to medium guys as well because people are getting tired of being in the crowded areas and they want their own house. They don’t want to deal with fire alarms going off at 2:00am and stuff like that so this benefits us and anyone who does properties like us. It’s good, it is an exciting time to get into real estate.

Jenna: I agree. It is a real exciting time and I think the pandemic has made people in buildings maybe look at wanting a little bit more space. Everything is growing and the buildings that are up are full and like you said they are paying quite a bit so it is a very, very exciting time. That brings me to one of my final questions for you is where is your happy place?

Sean: Where is my happy place? Well two places. Disney World. I am one of those Disney geeks. My family is a Disney geek, my daughter is eleven, when she was seven she ha been to Disney world fourteen times. Jenna: Wow, that is awesome. Sean: Once in Disneyland I got to go to a really cool place called Club 33, that was fantastic. That is my happy place. I found a way how I could expense my research trips to Disney World, other people will understand what I mean by that, any one else you will have to learn. Lol. 

The other happy place has been real estate. I get such a charge. Trevor doesn’t like this example but it is the only way that I can explain and get it out there how much I love real estate. Real estate is like crack and I am just hooked on it. Now I don’t do drugs at all but that’s my happy place. If I could do real estate 24/7 in Disney World I would be in heaven. 

Jenna: Oh my gosh, I would never have guessed. I love Disney World too and good friends of ours are a couple and we went to Disney World with them, they don’t have children, the are just a couple that are like, Sean, that is ok, Jenna: and it was fun going with them too because I have been there a few times myself and I really enjoy it myself. There is a place there that just sells Christmas decorations and stuff, Christmas and Disney so we bought a lot decorations there. I don’t know, it is just a lot of fun. That’s awesome, I love your answers. It is going to be an authentic one I think, I don’t know if I’ll hear that one again possibly but I agree that is a happy place. I love that, I didn’t know that about you. I think that is really, really cool. Where can our listeners go to learn more about you if they want to reach you?

Sean: We are currently developing our website and it is not up yet but it is nligroup.ca which stands for Next Level Investments Group but you can find me on Instagram. I have a face for radio so that is my name on Instagram and you will always be able to find links there. I am starting to get a little bit more postie as I get out there and skim more properties, make recommendations,as you know I’m starting on my social media a little bit more. I got a Diva light or at least I was told it was a Diva light that all those stars use. I am having fun playing with that but ihaveafaceforradio on Instagram is the best way to find us and nligroup.ca.

Jenna: Thanks so much for coming on the podcast Sean. We will have to have you and Trevor back another time together.

Sean: Why thank you very much and yeah we will bring Trevor on here and he will be straight and I will be flying and we will have a great time. Jenna: Awesome.

 

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