Episode 8 – Real Estate Investor Juleanna Freeman

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 and inspirations. With your host Jenna Ross.

Jenna: Today on the podcast I have with me Juleanna Freeman. She is a real estate investor and I manage a duplex for her in Halifax, NS. Welcome to the podcast Juleanna.

Juleanna: Thanks Jenna, happy to be here.

Jenna: Please tell me how you initially got started into real estate investing?

Juleanna: When I met my husband and we started talking about the plans we have and what we wanted to achieve, we quickly determined the best vehicle for us to achieve our goals was through real estate. It’s really the only investment vehicle where you can leverage your investment four fold or five fold I guess you know 20% down and you get 100% of a very expensive asset it was sort of a no brainer for us. 

Where we live on the west coast it’s really quite cost prohibitive and it was even back then and my husband was initially, he grew up in Nova Scotia so he said if we were going to invest somewhere else I wouldn’t mind investing there and I said ok. 

We started to look in the town that he grew up and ended up buying. At one point we owned a 4plex and two triplexes there. We since sold off one triplex and one 4plex because we wanted to reorient our investment. As our knowledge base grew and we knew more about the market there we determined that what would best suit us more toward the urban centre as opposed to the secondary ? locations and so that is what we are moving towards now. 

Jenna: That is so cool. Do you have a book or mentor that inspired you on your real estate investing journey?

Juleanna: I have done a lot of reading over the years, Derick lets me sort of steer the ship a bit more. He works sixty to seventy hours a week as a carpenter in the film industry so he really doesn’t have the time. So I have done a lot of reading everything  from The Rich Dad Poor Dad to actually getting into rental property management stuff but when we decided we really were going to start to try to elevate our investing experience we decided to invest in ourselves and our education and we actually joined Keyspire which was definitely an expensive option but part of it was being able to be surrounded by a bunch of like minded investors but it was also a lot of coaching built into the membership which was really important to me to be able to personalize the educational experience it wasn’t just sort of a general here is what every body does because it doesn’t really work that way. You really need to be able to bounce your individual investing questions off somebody knowledgeable and you don’t often have that when you are first starting out.

Jenna: That’s incredible. I know a number of people that follow Keyspire and are going through the training and coaching and I think you can kind of collapse time when you are utilizing that kind of training and coaching and I think it is a great idea to do. 

Juleanna: For me, it really has made us braver in terms of. It wouldn’t have crossed my mind to look at vendor take back mortgages or try to go in with joint ventures or to do private lending or to create multiple offers yourself by saying ok well fine we will do a long closing with this offer and a shorter closing with this offer or you choose which one you want. And I’m like you can do that? She’s like oh yeah I do that all the time. 

All of these little things just blows your mind but it has made us much braver to try things out.

Jenna: Yes, that is really awesome that you are using all those different strategies and trying things and that is all part of it. Can you tell us about your triplex you have?

Juleanna: We were actually closing on a 4plex in this town where my husband grew up and while we were there because we could not get over how reasonable the prices were for the amount of rent you were taking in and we were very green and we thought yeah that sounds really good and really didn’t do as much due diligence as we really should have. At the time I asked the realtor who was showing us around, do you have anything else? She said that I know of this one triplex that is off the market right now but I think he would do it as a private sale. So we ended up purchasing a triplex on a double corner lot for $85,000 and for gross rents were $1750 a month. Everything was a little dated or what have you but I remember walking into the upstairs space and it felt like a loft. All I could think of at the time, if this had been in Toronto people would have been fighting to live in this space, it’s the top floor of this adorable little house. 

Again we were really green and we were buying for vision for what we could see for the potential it could be. We have been very fortunate because everything we bought that we have since sold we made money on it. We still have that triplex although we are considering selling it now because we want to move our capital more into the urban centre or to have it available for things like joint ventures and stuff but all things considering it has done really well for us and has been a really good learning experience. 

Jenna: What a crazy deal that is. There’s people that are going to hear this and be like yeah that was a mistake and I don’t think there was any mistake cause there’s all earnings any will will definitely come ahead when you do sell for sure.

Juleanna: I remember when we were signing up closing documents on I think is was the sale of the 4plex and the lawyer who was signing it up for us who was an old senior partner at my office and he said do you regret buying this? And I said no we made $40,000.00 so we got paid to learn. We learned a lot on this. There’s not just one way to make money in real estate. You have to think what your goals are and what you are buying for. That’s another things as our journey has gone on that we have become a little more specific about. Everyone one goes for at least in markets like Vancouver and Toronto it’s capital appreciation, it’s your equity going up. You know you want to buy it and seven and sell for nine which are crazy numbers for a lot of parts of the country. But there is also cash flow which is again a big thing for specific investors but there’s also force savings its the fact that we put $8500.00 down on this triplex, even if we sold it for $100,00.00 or $85,000.00 somebody else has paid down the mortgage and we are going to get the difference. So the return on our $8500.00 investment is really good so you can’t get lost in or so focused on the only way to make money in real estate is cash flow. 

Jenna: No, you have to look at every thing. It’s really an excellent investment. So for that triplex you have property managers taking care of that one. 

Juleanna: We do, it would definitely save us money to be there so that my husband who is actually a carpenter in the film industry, and is really really handy. There’s a lot of stuff that we have to pay a handyman for. I think that I would still have a manager in place because it’s nice to have it a bit of a removed from your tenants and your business. So I might still have a manager but it would be nice to have Derick could do a lot of the day to day work. Even if he could mow the lawn. In the summer I can spend $150.00 a month just to have the lawns mowed because it is hard to find someone who is reliable and when you do you have to pay what they charge. It is a big lot so all those little things add up. 

Jenna: For sure and as we mentioned I manage a duplex for you both in Halifax and we had the unfortunate experience of going through a hurricane and having some damage that occurred and we got to work together pretty closely through that. Juleanna: You were a hero. Jenna: Yes it was quite a time and the thing that stood out for me about you was a lot of my owners, I am use to taking care of places and owners live all over the world and I haven’t met them quite like you but the thing that stood out going through that experience was that you are very involved in the ways that you need to be to push, when you have insurance claims to push and push things along and try to get what your insurance is paying for out of the deal and there was a big back log because of the amount of claims at that time so that was very refreshing to see you working from your end to get what you needed accomplished. 

Juleanna: I think we were also fortunate in having not so much the insurance adjuster who I felt was quite hands off but the restoration company the representative for the restoration company who was dealing with it was actually an awesome advocate for us. He would tell me, “ok, you didn’t hear this from me, but this is what you need to say”. Or this is how you need to address this or if we are going to do this, it is going to cost you this much so you can propose that at an alternative. And all these things were a new experience because we have never been through a hurricane with an insurance claim. Having someone to actually take the time to educate me on what I needed to say and do to affect the best outcome was so helpful.

 It definitely was stressful. I don’t know if I would have handled it as well if I didn’t have him in my corner sort of mentoring me through this experience and now I will know next time more pray to God there is no next time but if there is ever a next time how to handle it and what to do. All of these things again with real estate there are so many first that you through as an investor and each time you keep learning honesty by doing. You can read, and you should read and educate yourself as much as possible but the doing of it is really is what will bring you along.

Jenna: I find the same thing. For me with our investments they have been single family so a lot of them have been very straight forward but through property management I have seen everything that I never thought I would see. It just blows my mind and I take learnings from everything and I think your insurance claim was one of probably four or five that I kinda of crept through and survived in a months span and I think the thing that I| learned going through that is tenants never want to live through it and I think what I want to take from it is it’s almost impossible to keep tenants happy through it and it is something I am going to have in the back of my head next time because every single time it causes stress, it is stressful for them so it’s good to know that because it is never personal and sometimes they just have to go. It is something that I am thinking from the property management angle. And insurance claims are no fun and I think you definitely got through and learned lots and I think the squeaky wheel, Juleanna: I was a squeaker, Jenna: Yeah I think that kinda helped because it was just hard to get things done is a timely manner with all of the back log with what they had to deal with.

Juleanna: I think the crucial number one thing that I learned was that tenants have tenant insurance. From our scenario of course the tenants that was affected didn’t want to use her insurance but that’s neither here or there but they need to have insurance in place and two the squeaky wheel definitely gets the grease but learning again it is not personal but is is always very personal to us when it belongs to us whether it is our home, our investment property and that is our full focus and there is nothing wrong with pushing but be polite, be professional and really don’t get super worked up about it because you will get so much of a helpful reaction, like the fellow at the restoration company would thank me for not getting mad and him and it’s like well you are helping me get through this and I guess my attitude with him actually helped getting even a better result than if I had gotten really fussed and worked up. I don’t think it would have been as smooth of an experience.

Jenna: That is a really fair point. I can’t imagine what it would be like to do that job and some of the things with that project just kinda went sideways or delayed. At the end of the day it is frustrating but you have to keep everything professional so. I am so happy that we moved on from that and hopefully we don’t have to deal with that again.  Juleanna: That would be good. You know the other thing with that too is things came to light behind the walls with the restoration that we would not have know about. Even though we had an inspection and everything else and the inspection came out clean, they found things that were installed incorrectly or installed over something else so all of that actually got repaired and actually improved our building which was also an odd side benefit of the whole experience.  

Jenna: You have to have some silver linings there. Can you tell us about your vacation rental cottage?

Juleanna: Our cottage. So our cottage is. The first time I ever went to Nova Scotia was the year after our wedding I think it was back in 2010. We went to Melmerby Beach which is on the northern shore of Nova Scotia and it is a hidden gem in every way. It is a two kilometer long white sand beach, it is what you would see in a New England postcard with white sand dunes, little sea grass, little fences and little birds running in and out and it’s the warmest waters north of the Carolina’s late July through August. It’s like being in a bathtub and you body surf there and it’s absolutely stunning and I remember seeing this and looking around and thinking how does the rest of Canada not know about this place. And supposedly there are four or five spots along the northern shore where you get this were the current hits along the coast and you get these gorgeous warm beaches with beautiful sand and it became an instant dream that I wanted to have a cottage here. Let’s have a cottage here. Of course it was a dream then I started to dream about, let’s go back everyone thalks about Rich Dad Poor Dad being a really important read to them, it’s quite general in a lot of ways but one thing that kinds struck with me is getting your assets to pay for your liabilities if you will. Like if you want a boat, have an asset to pay for it. If you want to have a camper, have an asset to pay for it that sheds income that you can use. So to us it was how to have this cottage. It was my mission to have this cottage. We actually found one that was a for closure that we almost bought to the point where we had it down to $25,000.00 for a custom built house on a 1/4 acre because it was a bad divorce. The fellow took his share of the money built this house, basically didn’t make his mortgage payments and took of to Thailand. We were like yes we will buy this but it ended up going pear shape for a variety of reasons including where it was sited on the lot and it was over a part that could have been a road and the neighbors could at any point come and insist the house be moved, could it be moved, we were looking in to all this stuff and when that fell through I remember being deeply disappointed but then our realtor said, what about this one? And I had looked at this I think about a year before and actually I quite like it but then we found this other thing and we started to look at that one. So when it fell through we went back to this one and it was still on the market. It was one of those things where, I don’t know if you ever found that, where there was three other offers and I’m like this was on the market for three years and now you people decide to put offers on this cottage. 

Anyways long story short, we ended up buying it, it’s a 1400 sq ft, 3 bedroom, 2 bath on an acre lot five minute walk from Melmerby Beach. You hear an occasional vehicle but it is all birch trees and when it’s really bad weather you can here the waves with the storm but it’s just far enough, as much as we love being on the ocean with everything going on with global warming and every thing else we just don’t feel comfortable buying oceanfront and we talked to a lady who was right down on the shore and I think the retaining wall that she had to build for the edge of her property was something like 75,000.00 to try to keep the erosion at bay so we were very comfortable with this. So we bought the cottage for $212,000.00 back in 2013 and we arrived in the middle of a tropical storm. I furnished it site unseen, I had 52 boxes delivered from Ikea, my husband started to build tables, the dining room table and outdoor table. I put together sofas. We had it painted as before it was all different colors. We had it painted, our big splurge was quartz counter tops that looked like beach glass but now we decided we have a $900.00 month mortgage and property tax payment now we have to rent it out. We had already discussed that before hand, one of my girlfriends had a place in Whistler during the winter season she sometimes makes over $20,00 a month renting it out. Now of course that is a real aberration because it is Whistler but we talked a lot about how she took care of it vetted potential guests and she sent me her initial contract that she used which I then ran by the lawyers in my office that I got some fine tuning on and we talked it over and initially we talked about renting it out for $1500.00 a week and I remember thinking I wonder if anyone is going to want to rent it.

 We put it up fairly late in the 2014 season because we had to do some more work on the property as it was quite marshy so we had french drains put in and we had it graded. So we put it up in April 2014 and within a month it was fully rented out for the summer. Anyways we went wow ok, our property manager for our triplex is actually the same person who looks after our cottage. We initially found him through and add to mow the lawn but we started chatting with him about what else we could get him to do and it turned out that his wife you to work at the local hospital. She use to manage the whole department to do with the linens and housekeeping I guess it is. She is super meticulous and so he said let me talk to her and sure enough she said yeah I will do it. We worked out how much it would cost them to do the cleaning, the turn around between guests and we kind of fine tuned the process as we went. It takes them for a good guest about four to five hours to turn everything over, for really bad guests, which we only had a couple of thank god, it can be quite extensive, I charge a $150.00 cleaning fee to the guest which goes straight do Don and Sally we keep none of it and if there is anything over and above, I have a clause in my rental contract that indicates their damage deposit will be fully refunded to them assuming there is no damage or excessive cleaning required. Don and Sally will take pictures of everything, you know if there is stained linens, something is broken, if there is trash left what ever it is I deduct that cost off the damage deposit and I return the difference. 

Right now with COVID, we still have people trying to rent our cottage but I don’t know if we are actually rent it out this summer. It rents for $1725.00 a week and prior to COVID it was rented for 10 weeks already by the beginning of March. So our cost for the year with mortgage and property tax is $10,800 is our carrying cost, insurance, tv, cable, internet kind of thing the costs are very minimal. I pay Don and Sally to wake up the cottage at the beginning of the season and they go in and do a deep clean, make sure all the water tanks and well pumps and every thing else in functioning get it all up and running to Sally’s specifications. We sort of fine tuned it over the years where it use to be I didn’t think twice about having someone leave at 11:00 and having someone come in in the afternoon and then Sally said I am finding that a little stressful and I’m like you know what they make it happen for us to have this so absolutely if it’s one day between that’s fine that’s great ok. 

We now have a number of return guest who come back every summer or every other summer, we’ve had lovely people who have left from badminton sets to board games for other guests to enjoy so we have had some really great experiences and it has enabled us to have when we can get there this lovely cottage five minutes from this beautiful beach. So you know in that sense the Rich Dad Poor Dad model was one of those things that we really were able to implement and put into action and use in a way that I think for us it was one of the perfect models for that.

Jenna: It is interesting to me about the Rich Dad Poor Dad model because my husband Greg uses that as well if he is going to purchase a toy or something else to find revenue somewhere else to go towards it to pay of like you said the liability or the debt or what have you. It’s kind of neat you are the first person that I have heard speaking of that. It’s interesting that you are implementing it in real life as well.  Juleanna: It’s really cool, somebody said how are you going to pay for that. Yeah we had to come up with the down payment but is is like now someone else is paying the mortgage every year on it. And last fall we actually got a bonus. We had ten weeks rented and all of a sudden out of the blue I got a phone call which I actually thought was a prank call and I actually had to go and look them up. It was an executive rental placement and they had a client who had a flood in the near by town and they wanted to rent our cottage for up to three months at the full rate. They didn’t try to discount it and I remember thinking this sounds too good to be true. So I vetted them a little bit and sure enough it was real. So over and above our usual which actually worked out really well because I had been in school so I didn’t have an income stream so here is an extra $30,000.00 because they left in mid December. They were there for four and a half months. So that was like woo-hoo. That took care of sort of every thing. With the hurricane and we had a couple other things come up we had to take care of and all of a sudden we had the money to do it there was no stress or strain for it, it was nice. 

Jenna: That is awesome. For our listeners in case any one is interested, your cottage is for sale right now isn’t it?

Juleanna: We actually did just decide to put our cottage up for sale. One of the things that the COVID crisis has brought to mind was, what do we want to do going forward? How do we want to live? It’s not enough to just put your head down and kinda grind for the next five to ten years. What are you grinding towards? And we started to think how do we want to live. Do we want to stay here on the west coast or do we not? We sort of had talked over the years about the idea or retiring to Halifax or moving to Halifax and of course we are going to have this lovely cottage about an hour and a quarter away and my husband said well if we are going to do that I don’t want to live in just a suburb I want some land. He wants a workshop and I said I understand that so we started to look. Then he said well I want to be on a lake. We don’t want the ocean, but we do want water frontage, and if we are going to live on a lake do we need this cottage because we are going to have this every day. This is the plan. And that was actually a ha well that is an interesting thought. And the cottage has appreciated and of course it’s been paid down the mortgage is now around $140,00.00. It is currently listed for $325,000.00 essentially. We are listing it with all the major furnishings. We will take out all the personal stuff and the art and what have you. 

We have an accepted offer on a 6 acre parcel in the eastern shore on a beautiful not too big lake about thirty minutes outside of downtown Halifax and you know five to ten minutes from shopping and sort of amenities. It’s like wow we can’t believe we found this so we are going to let our cottage go, sadly but again it is strategic in that now we will take this cash and we have owned it now for seven years and we will now redeploy this cash hopefully into other investments which will then keep building out.  I guess you just have to sort of reevaluate periodically what your goals are going to be because there’s that old chestnut about you never sell your real estate. But if it doesn’t serve you anymore or as Marie Kondo would say if it doesn’t spark joy. There is nothing wrong if you do it in a fashion that is going to keep moving you ahead in your journey or at least in my mind.

Jenna: I completely agree. Hopefully you find someone out there. It is beautiful from the pictures it looks like a beautiful cottage and I think for someone else who wants to do the vacation rentals or otherwise it seems like a really good deal.

Juleanna: I hope someone else will think that too. We put a lot of word and love and improvements into it over the years and it is a fully winterized four season. It is essentially a home and it is all on one level and nicely spread out. I am going to miss it if it sells before we get to go back there I am going to be a bit sad that we didn’t get to have one more sort of visit but if it goes to somebody who loves it as much as we do I can’t ask for anything more.

Jenna: No for sure, I think somebody is going to grab it and love it. It’s four seasons, is it? Juleanna yeah. Jenna: That is perfect. Juleanna: We actually bought it as a four season but it wasn’t and the first winter we went there and had Christmas there the pipes broke because it had been incorrectly winterized. The fellow had done it himself so we were boiling snow to wash dishes and what have you but we had it professionally winterized and skirted and it looks a proper house now. 

Jenna: What are your real estate investing plans for the next few years?

Juleanna: Well, on a personal level we are going to have to start seriously look at what we want to do with the six acres of parcel that we bought on this lake and start to plan out what our home is going to be so that is on the personal level. On the investing level once the cottage is sold and we did the refi on our duplex in Halifax which was almost, it wasn’t fully a bur because we really didn’t renovate it so much, we resided it because of the hurricane we paid for part of the re siding but we did a refi on it and we pulled out a 95% of our down payment which has been great. We bought that for $359,000.00 and it appraised for 435,000.00 which is fantastic and that is under a year so I think we got in just at the right time with that one. The down payment we were going to use that to buy another property but now some of the money we used to do some improvements in our primary residence but we are keeping a chunk of it aside for possible joint venture opportunity and then we want to start doing more joint ventures. It’s been real interesting because we tried, we did some private lending which has worked out really well for us but I find actually quite stressful so I don’t know if I really want to do that again. I have a couple of ideas to see if there is anything that can be done with, I am going to keep them a little close to the vest till I figure that out a little bit more. 

We want to start orienting ourselves being a part of the bigger project. Be it either a large scale apartment building those types of things. I would rather have a smaller piece of something big than no piece of anything. I know Derick wants to do at least one flip so if we find the right place and we are actually there I am going to go ok that’s fine go ahead we will do that. But it’s going to be a lot of work. We wanted to able to buy one property a year for the next 5-10 years. We will see what is going on now globally how it will affect our real estate market. It can be really frightening but there can still be a lot of opportunities there just like in the stock market when everybody is selling if the fundamentals are there you really want to look at it like the market is on sale when the stock is on sale and it can be the same with real estate. It just the subject to financing if the lenders are tightening up their lending guidelines again, some insurers are getting out of some spaces. There are going to be some challenges to it but I think for us we really want to move towards joint ventures and bigger projects.

Jenna: I completely agree with you that it’s nice to have an open mind with what’s happening right now and just look at things, monitor things and I think there are still lots of deals to be had and it’s only just beginning and for people who are wanting to make an opportunity the time is great. It is great for Halifax. Investing in this area is a great idea right now. I have one final question for you and that would be, where is your happy place?

Juleanna: My happy place. My first thought is Paris. But I think my happy place on a day to day level is it’s curled up on the sofa with my dogs and my husband and you know just sort of relaxing. On a bigger scale I would say it would be Puerto Vallarta, that’s my happy place. I love Puerto Vallarta so much and that is part of our goal like you asked in the next five years once we have more time on our investment journey we really do want to have a warm weather place to go to during Nova Scotia winters and right now my husband is leaning to Portugal but I’m still stuck on PuertoVallarta. 

Jenna: That is fantastic. My happy place is in the sun too somewhere warm. Juleanna: I couldn’t tan to save my life but give me an umbrella and a mango mojito and I am happy.

Jenna: Juleanna where can our listeners go to learn more? Juleanna: To contact me? They can always contact me by email@juleannafreeman@outlook.com.

Jenna: Thank you for coming on the podcast Juleanna.

Juleanna: Thanks for inviting me Jenna. I was lovely to chat with you.

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