![Canadian Real Estate Investor Builds Wealth Here In US Multifamily With Brent Ritchie [EP082] cover](https://darinbatchelder.com/wp-content/uploads/2022/01/EP82-FeaturedImage_c3c6b3dbce2a3b738b12e8774ccf22fe_2000.png)
Are you a Canadian real estate investor that wants to invest in the US? Brent Ritchie is a Canadian real estate investor that went looking and found a way to build wealth here in US multifamily. He's invested in over 2,600 units and it all started with him deciding to come to the US for a weekend real estate conference. He has an engineering background and is very team-focused. Brent believes "proximity is power" and also believes in transparency in communication with his investors, partners, and other team members. You can learn more about how Brent built his portfolio by listening to this episode!
Table of Contents:
- Where To Listen To The Podcast
- A Canadian Real Estate Investor Who Didn’t Know How To Do It
- Success Story of a Canadian Real Estate Investor
- Proximity is Power
- A Canadian Real Estate Investor Enters the Multifamily Space
- A City Kid Growing Up on a Farm
- The Current Situation of a Canadian Real Estate Investor
- How to Reach Brent Ritchie
A Canadian Real Estate Investor Who Didn’t Know How To Do It
Darin: Brent Ritchie grew up and lived in Canada until recently when he moved his family to Florida. He wanted to invest in US real estate, but he didn't know how to do it. Then he came to a weekend conference in the US, and that kicked off his journey to building wealth in US multifamily.
Brent and I are both part of the same multifamily mentorship group, the Brad Sumrok Group. We met a number of years ago and I've just seen him skyrocket. He's been in part of a ton of deals. Very interested to hear his take on things. First question, how many properties and how many units are you currently invested in?
Brent: I've had the fortune of working with many wonderful people. That’s the success that we'll get into; the units, the teamwork and just working with great people. I have owned, operated, and managed over 2,600 units. Currently under management is 1,561 units, and that’s all across Southeast, Arizona and Texas.
Darin: You are the first person that I've had on the show that is from Canada. You came down, joined a group based in Dallas, Texas, and then you start partnering and investing with people all across the country. Talk about mindset. Why did you choose to come to the US instead of investing in Canada? What was the value that you brought to the table because you've partnered with a lot of different people?
Limiting Beliefs
Brent: Mindset, you nailed it head-on. That is so much either the limiting beliefs that we have within ourselves or that we tell ourselves, can we do it? Can I not do it? So many people, myself included, had a couple of different businesses along the way. It’s like that little purple book, which has probably tainted a lot of us. The Rich Dad Poor Dad book has planted this seed in our minds of a very different life rather than the corporate America, the corporate grind. I've always been entrepreneurial and had that passion and desire within me. It was there and it's always like I don't want to just be working for somebody else. So, how do I get to that point?
I had an engineering background, and we can get to that a little bit more. But really you nailed it, that mindset, and you figure out your why. It’s so cliché and you hear it all the time, but you figure out your why, your how, your what, and those are very important tools. You're going to figure out a way, so we get into that grind. I was working full time doing engineering and then into industrial engineering sales. After that, it was like; I don't want to do this. This is not for me; this is not the life that I want to go down. You're at the whim of some employer.
Darin: Was that a one moment thing? Do you remember one moment when you were working in W2 and you're like, that's it! I'm going to figure out a way or a process.
The Book That Nagged the Mind of a Canadian Real Estate Investor
Brent: That little purple book, I was 19 or 20, early in my career when I read that. It constantly nagged my mind of having something else. I've always had side hustle, side businesses, trying to figure out a path on how to get out of this corporate world. How do I stop trading time for money and how do I experience life differently? I’d say that was a pivotal moment a long time ago. Then, it was almost a continual process of course, but, how do I find a vehicle that really allows the lifestyle to suit that?
Darin: You were in Canada, working, and you know that you wanted something different. What's the next action step that you took to propel you forward?
Brent: It’s probably a business that I had before. It was a side hustle business and it wasn't having the results or the yield that I really wanted it to. So, I want to do something in the real estate field. I know that's a sector that 90% of people have made their wealth in. 90% of millionaires have made their money in real estate. I always had that in my mind. Then, it was listening to real estate radio guys, hearing their podcast, connecting with people, and Brad Sumrok. He was talking about a bunch of different paradigms that shouted for me.
It's easier to own 60 plus units rather than lower. You don't need to start in a single family to go to multifamily and just really hearing about that, it really resonated, connected. He was an engineer. I was an engineer and then really flying down to July, 2017 to an event to really look into this more.
Finding the Right Fit for a Canadian Real Estate Investor
Brent: Is this the right fit? Are these people real? Is it just a bunch of hoopla and meeting lots of wonderful people? I know we connected quite a few years back as well, but you're just seeing success. So many success stories and it was almost like you can have your cake and you eat it too. You're able to have a system that you can own. You're not actively involved in the day-to-day, somebody else is operating it.
So from there I‘m like, okay, it's worth learning what I have to do as a Canadian to come into the US to invest and go through this process. It's worth it flying from Toronto back and forth just to go through this. It showed the possibilities and the options and the opportunities, and I’m very grateful for that.
Darin: I applaud you and a number of things that you said. One, you took a chance and invested your own money and time to fly to Dallas and go to an event. You even mentioned it, there was some skepticism. Is this real, are these people for real? Are people really making money? But you're like, I'm going to find out for myself. There's a lot of people that will just listen to the real estate radio guys or another podcast. They don't take that step to get on the plane and find out for themselves.
I had a similar experience where I was looking for a way to go bigger. So I went to a meetup group and met some people from the Sumrok group. I joined the Sumrok group without going to one of his events.
Success Story of a Canadian Real Estate Investor
Darin: The next step I did was doing a bunch of Starbucks meetings with syndicators, and find out if this is real. People were like, I couldn't believe how open people were. My net worth was 500,000, now it's five million. Then another person says the same thing, and then another person and another. I’m like, if they can do it, I can do it. That's part of it, when you talked about all the success stories that you saw there.
When you surround yourself with all these people that have done it, you end up saying, they're smart people, but I'm smart too. I can figure this out if they can. But you're in a different country. How did that change things? You come down, you decide, yes, this is real, I'm going to do this. What additional complexity did it bring living in Canada?
Brent: Part of it was I'm a podcast junkie. I’m constantly learning and listening to people. Another one was a lady from another country as well. She was investing and she’s saying, typically there's two or three additional forms that's required in order to get into investing in another country and wherever you are. That could be investing in the islands or in central or south America or overseas.
There's typically other two, three forms and entities. You're almost in, you and I can make such a big thing. Then it gets complicated and you get into the details and the weeds of it. You break it down and find your strategic key people that know the route, the steps. There's something in the Sunbelt States, in Florida, or Arizona, apparently 30% of the real estate is owned by Canadians. It's a large amount.
Not a Foreign Concept for a Canadian Real Estate Investor
Brent: That's where I was like, there's a lot of Canadians that are already doing this, so it's not a foreign concept. Really it's just finding who knows, who is knowledgeable, capable that I can connect with. That process took time; it cost a lot of money. You're consulting different experts. As a business owner you're trying to figure out your tax implications and your asset protection. How do I do things that are in compliance with various bodies? Simplistically, there's usually an entity that you invest through.
Then there's a couple of forms that you fill out, you have professionals who know. Once you're able to distill that, it simplifies. The journey was not simple and figuring out how to do that was not simple. Again, we'd mentioned it was expensive. But once you figured out that path, then really it's actually not too bad. There's a couple of extra steps and it's a great process, so it’s worth it.
Darin: I haven’t had any foreign investors in any of the deals that I've worked on. But I have talked to attorneys about it. From what they've indicated to me, it's as simple as somebody in Canada or another country forming an LLC in the US, funding that LLC. US LLC is then the investor in the deal. Is that a structure on how things worked or is it different?
Brent: This will get into a tax professional thing. I'm not a tax professional. But, from what I've understood, an LLC may be taxed as a C corporation or more commonly an entity that is used as a limited partnership. So a US limited partnership where Canadians invest into the limited partner.
The Most Common Entities
Brent: From that, the limited partner invests into the entity. There's a bit more involved with that, but that is one of the most common entities that people use if they're investing individually.
Darin: I've seen you partner on some monster deals too and with a lot of different partners. One thing that comes to my mind is, there's different value that different general partners can bring together in a team. When I think of Brent Ritchie, I'm like, well, he's a Canadian. He's got a completely different network of people potentially that want to invest, and that's very attractive. If you have a big network in Canada and those Canadians don't know how to do it, you are the point person to help them get involved in deals, that's a great partner then, to partner on a bunch of deals. Is that the value you brought on these deals?
Brent: Definitely that's one of the aspects. Probably, my engineering background ended a lot in heavy construction. I did civil structural engineering. This is the bridge behind me, you can see it too. I did a lot of large infrastructure projects. On the small range would be a hundred million dollars and then going up quite a bit larger.
A lot of that project management, construction and engineering background skills bring a lot of value in sourcing, underwriting, evaluating, and even the teamwork and putting together teams for projects. That would be one of the major aspects and benefits. There are nuances for sure. The Canadian securities associations are different and have different requirements from the US immigration or the US securities and the SEC.
A More Stringent Process for a Canadian Real Estate Investor
Brent: There are nuances with that. If you're doing accredited investors, that process is actually a lot more stringent for Canadian investors. I understand it's a million liquid or five million net worth or 200 or 300, similar to the US. Those ones are a bit easier of a barrier, where the million liquid or five million net worth cuts to quite a few more investors. The other exception is your close friends and family and business associates. It just limits the pool of investors that you're able to bring in a little bit more. I'll be doing a session with Canadian securities personnel, security's lawyer, and our CPA that does across border Canada, US. That's something, a session we'll be doing up soon.
Darin: Will you put that up on your website?
Brent: I got to add a section to my website where I can add blog spots or notes.
Darin: At some time in the future, maybe it'll be up there. From a listener's perspective, you and I, we're both sold that it makes sense to go bigger, 60 units, 100 units, and 200 units. But mindset gets in the way, and beginning listeners that are just trying to break in the space. Some people have told me in sidebar conversations, I think I'm too young or I think I'm too old. I don't have enough money, or enough experience.
These are all the things that can limit them from partnering with people that do have the experience, the money, and the relationships. When you first flew down, you didn't have the experience but you networked with people, you built relationships. Then you started to get asked to be part of certain deals.
Proximity is Power
Darin: You must have performed because then other people go and tell people, Brent's a good guy. He did what he said he was going to do. Then you get asked to the party on the next one.
Brent: It's almost like that proximity is power.
We've probably heard the adage as well, that proximity is power. Where are the networks, the groups, and the people that are actually getting a lot done? There's probably a fair amount of snake oil in certain real estate spaces. But in certain groups, these are the ones that are buying a tremendous amount of volume. These are the brands, the other sponsors that are going out and doing it, and not just excited about the whole thing. They’re actually getting it done.
That Sumrok ecosystem that we're part of is a massive force to be reckoned with and followed by a tremendous amount of people. While still working at my full-time job, I’d get off on weekends, fly on a Friday evening, get back by Sunday and then be at work by Monday morning. But it was worth flying down just to be in this group. I didn't come from a real estate background, I did construction which is more on the infrastructure side.
Besides the single family home that I owned, I didn't have any other real estate experience, specifically on the ownership side. That's where it was going from zero. The first property I bought was a 120 unit multifamily property. Zero to 120 in Glendale, which is the Phoenix MSA and you know how well the Phoenix market has done. We bought that and got it under contract. Everyone's regret is we didn't just buy a ton more back then.
Shaking up a Very Happy Canadian Real Estate Investor
Brent: It was really that 2018 pricing at 97 a door. Now I don't know, they're on 200 a door. It's shaken out some very happy investors. In the meantime we've been doing 12% annualized distributions. You go from zero to I'm a professional and whatever other space. Being in an environment where maybe your net worth isn't as high, or you're thinking you're too young or too old, or whatever excuses.
You just put yourself in those quality systems, in those quality places, be part of that environment. One of Warren Buffett’s expressions, if he had to say he had nothing and had to start all over again, he would just go to an area. Go to a really wealthy restaurant in that local area and just buy soup. The only thing you could afford was soup and he'd just eat it really slowly.
You're listening to everyone else around you, you're in that environment, you're in that setting. No matter what your background is, you got to get around the right people. Maybe that's not in your city, maybe it's not even in your country. The limiting beliefs are what exist in our own mind. But, we are very capable people. Just be a person of integrity. Do what you say, say what you do. That's going to pay off over time.
That is where we've had the fortune and the success of partnering with people again and again. You get the opportunity to grow your nest egg. You're growing the investors who trust you, you're growing all those things. It takes time, and it takes a lot of grind. But then you get to that point when you just continually be a person of integrity.
A Ton of Value
Darin: If you feel you don't have a ton of value, you can take a smaller piece of the deal in the beginning to get the experience. There are some people out there that are going to say, no, but that's life. That's every business that you're in. If you’ve ever been in sales, how many times have you been told no? You're going to have partners that you talk to and they don't want to partner with you, but you keep at it. Then all of a sudden you find somebody that's like, you know what, I'll partner with you.
You get your first deal and in the next deal, you get a bigger piece because you have the experience. I think that it's available to everybody, but it's not going to be handed to you. All these people that come on, Brent, other syndicators, it wasn't handed to them. There was grind, there were a lot of no’s before that. There was trying this, trying that, until he got his first deal, and then he went from zero to 120 units. Then he is off to the races. In total, he has done 2,600 units. So what markets are you focused on in the US?
Brent: For a long time, I’m focused on Florida and then Arizona, which we ultimately bought in. Then Texas, I would say was the other major market. Right now, Florida is just a crazy hot market. Anybody that's in the market right now just knows how you're underwriting a deal in Texas. You're going to look at your five year growth, maybe you're in that 30, 30% range over five years. Where in Florida, that same projection means you're underwriting.
A Canadian Real Estate Investor Fresh Off the Plane
Brent: How aggressive you need to be is more in the 45, 50, 55 range. So it's a significantly hotter market. We're developing in central Florida, doing a class A development, which is a lot of fun. I love that aspect of things, I love Florida, and I love living here. We just moved down here from Canada about two weeks ago, Monday, so I would say I'm fresh off the plane.
Darin: Why did you move to Florida from Canada?
Brent: That is a bigger question. Really taxes are a big reason. So CRA, IRS, hopefully you guys aren't listening to this. But taxes are a big reason and you want to just look at that chart over time. If I'm growing my net worth, I'm growing my income, looking at getting taxed consistently; maybe it's 40%, 50%. If you're an employee, the tax rate in Ontario is 54% on the top range. So it's really a huge burden. That was definitely a large path.
This real estate space, real estate game is very much a relationship business. Being able to be there in the market, networking with people, interacting with your peers, your real estate, your agents and brokers and all your parties is very important, and just having those relationship, that rapport. That was a huge aspect, the ability for business.
Right now, things in Canada are going a little crazy. It's more fuel in the fire as they gear up for another lockdown. Florida talks about lockdown in a couple of weeks. I don't think we've ever actually got out of the lockdown officially yet.
Darin: The wife and the kids are excited as well?
Sunshine, Palm Trees, and Beaches
Brent: It was a journey getting them to that place. You got family, friends, everything. You're almost leaving your entire support network, support system, and then bringing them here. So God is good. We came with other good friends from British Columbia who were leaving for very similar reasons down to this area, in Tampa Bay. Sunshine, palm trees, and beaches also help. But yes, mainly taxes and freedom would be the two major driving forces.
Darin: I like that saying, God is good. Why multifamily? I'm 51. I was brought up in the mindset of, “get good grades, get a good job, climb the corporate ladder, put 10, 20% in 401(k) and let it grow into this big nest egg.” All of a sudden, being exposed to this asset class has changed the mindset so dramatically. You talk about that purple book that started things for you back when you were 19 or 20, Rich Dad Poor Dad. When you start doing it, you start seeing the real benefits of it. Why multifamily investing instead of just putting your money in the stock market?
Brent: It's a bit like you guys, invest in the market, invest in your mutual funds in lackluster performance. I don't know if I've averaged my returns over the last 10 years of doing that, but I'm sure they're not great. Sometimes they're up and down and really, I don't know if I'd be hitting six, 7%. You're on, and then you're tax-deferred and then you're going to get taxed on. It was one of those things early on that I've seen that compound effect. What is it? The eighth wonder of the world is compound.
A Canadian Real Estate Investor Enters the Multifamily Space
Brent: You see that over time, how that impacts things, but they'd usually show an example at 10%. If you're used to your work, your corporate world job, you're investing through your advisor, your returns were really just dismal.
Then you enter this multifamily space, especially the last couple of years. People have been crushing it. You go from 7% is a good return to you entering this multifamily world. You're like, anyone that got 7% is like something went really wrong.
You see you have fantastic returns, obviously the depreciation cost mitigation strategies. Now on your gains you're able to utilize and leverage a lot of your tax advantages to bring down your taxable income even further. Those are great aspects. Michael Becker talked about SPI, about when you are on any stock. I don't know the CEO of Apple. There's no correspondence I can have with the CEO of Apple, and ask, my returns dipped down what's going on, or, the market is performing.
This is very much very personal. You’re a physical owner of that part of real estate. You know the sponsors. You're going to have conversations and relationships with them. You can ask questions. This private equities world has really been phenomenal.
The adage of people living under a bridge is a pretty good motivator for them to pay rent. It's been the darling of real estate for the last couple of years. I know when COVID hit, there’s that fear of what's going to happen? Are people going to be able to pay rents? But really, that desire, that ability, there's that fundamental need to have a place to live. I don't see that going away anywhere.
Mutual Funds and Stocks
Darin: You talked about mutual funds and stocks. When I look at my experience, I'm going to caveat this with what you said. It has been a super-hot market. I've only been in it for the last four years. I don't know what a normal market and the returns are on something like this. But where I see the big advantages are, leverage and tax efficiency. If you were to buy $100,000 worth of Amazon stock, it has to double in price for you to double your money. But that's not the case in these real estate transactions. Say you're buying a $10 million property, seven million or more could be debt. Then three million plus rehab money is going to be the equity portion.
You don't have to go from 10 million to 20 million to double the equity, you could go from 10 million to 14 million and potentially double the investors’ money. People don't fully understand that, until they get involved with something like this. You did mention the tax benefits. But if you're receiving dividends or you sell stock, you're paying tax on that.
When you're getting distributions, you have depreciation that is covering those distributions. You're paying no tax while you hold the asset. Now, when you sell the asset for a gain, you're going to have a taxable event. But those are two major components I believe in the return structure being so significantly better.
I understand why the government does this whole accredited and sophisticated thing. They're trying to protect people from having their money being scammed, only by having people that have money and know what they're doing get involved in these transactions. But it's a bummer that it's only available to people that have money.
The Canadian Real Estate Investor Can Get Wealthier
Darin: The people that have money can get wealthier. It is much more affordable than you think. When you look at these apartment complexes, 20, 30, 50 million, you think, there's no way I can get involved in that. But you can invest 50,000 or 100,000 into one of those deals. It's just a syndication, a collection of people coming together to buy an asset that they couldn't do on their own. What do you do to continue to learn and get uncomfortable?
Brent: Always in that state of surrounding yourself with people that are more successful than you in the area where you want to grow. When I joined this whole system, I spent more on this program than I did in four years of university doing my engineering degree.
Darin: Was there a little bit of selling to the wife to do that?
Brent: Yes. You can imagine, she's like, you want to do what?
Darin: Now she's like, thank God you did that.
Brent: Many times along the way it has been that push, that stretch. That was a big stretch of course. Then when you invest that much, you're doing it, come hell or high water. You're going to make this work. It’s the same thing with joining a mastermind. You are investing so much, but you're surrounding yourself. You're putting yourself again in that environment, that ecosystem, that smaller group of people that are really just growing and learning.
So you have the mindset, you have your skillset, everything at a certain level where you're at. Then to really grow to that next level, grow beyond, and grow to where I'd like to be.
New Challenges and New Problems
Brent: Who do I need to become? What skills do I need to learn, and the mindset I need to shift and change to get there? I don't think that ever really stops. The moment we stop or we get lazy or we get apathetic, then we can easily start to go downhill or go sideways. So how do you build and scale systems? Now it's just new challenges and new problems. Okay, now I'm hiring people and managing them, how is that all working? I need to learn and grow and have the skillsets for those new opportunities that I've stepped into as well.
Darin: There's a thought process, one, should I hire a mentor or should I do it on my own? Then somebody that hires a mentor, it's like, once I get my first deal, then I'll be off and running. I won't need to learn all these things that I already know. But then, I've learned from interviewing so many successful people that it doesn't matter where you are. There's always somebody that's lower than you and somebody that's higher than you. These successful people that I've interviewed, it's one after the other.
Once they get to one level, they're searching for the next level. How do I get there? They could be learning from a completely different group. I've met so many people. I love that you said that you joined a mastermind. There are so many people I know that have joined a multifamily mentorship group. Afterwards, they join a mastermind that is there to take him to another complete level. I know people that have a billion dollars or more in assets.
What Propels a Canadian Real Estate Investor Forward
Darin: They're paying money to have proximity with other people that are extremely successful. They share their ideas and get ideas from other people. It helps propel them forward.
Brent: That's almost full disclosure openness. We came here, moved our family down to this Tampa Bay area, just south of it. We’ve picked a spot from Toronto and our friends from British Columbia. We're living in this place. That is one of my mindsets too, it’s understanding that proximity is power. Where do we want to live? What community do we want to live in? Where are we going to develop or build schools in your environment and church?
That's where we're at right now. We're renting currently. We just sold our place and rented it here. Our next chapter is where we’re going to buy and develop and be in that place.
Darin: So many different stories. I remember last year I was playing golf at a very exclusive club. Afterwards, we're all having a beer, talking about summer vacations, and where we are going. One guy's like, we're renting this house, this major mansion for two months. I'm like, that's foreign to me. Most people I know are taking a week vacation, maybe lopping the weekends on both sides. That's how most Americans think.
But all of a sudden, I'm in proximity of these people that have figured out a way to take off two months. I'm sure there's still some work that happens during that time, but good for them. There's always something to learn and some way to grow. How did you grow up? Did you have brothers, sisters? Were you wealthy, not wealthy?
A City Kid Growing Up on a Farm
Brent: Maybe middle class. I grew up on a farm. I'm really a city kid who grew up in the country, in a family of four. I have an older brother, older sister, myself and a younger brother. I'm the third. I always like that vantage, not like I had a choice. But I like that vantage because I get to learn from other people's successes and failures and then hopefully not repeat those.
It's a mantra that I've had throughout life and I still very much to this day love to learn from other people and love to avoid pitfalls. It's like if somebody was going to walk through a minefield, you want to be on the back of somebody else. Or right behind somebody who knows the path and knows how to get there and knows which mines to avoid. As a third child, I had the fortune of learning from my older siblings who will probably listen to this one as well, about what to do and what not to do.
Darin: I don't know many people that grew up on a farm, but I think there's a lot of chores. I would imagine it forms a very strong work ethic.
Brent: When you're so little, you can't walk that much, you actually drive the tractor. Then once you're able to walk a little bit more, maybe your younger siblings or your cousins will drive the tractor and then you'll walk. You always have something to do and you don't have a choice about the tasks in front of you. So grateful for that opportunity to work and really have that strong work ethic. You just do whatever it takes.
Value for Time and Money
Brent: I'm trying to instill them in my kids too, I have three little girls. I don't want to live on our farm. Thankful for the opportunity, but I want them to have so much responsibility, so many chores, learn the value for money, value for time. Unfortunately I don't have a farm for them to have all this work and things you need to take care of.
Yes, I grew up outside of Parkhill, Ontario, Canada, on a farm. I always had in my heart, in my mind, of doing something more and it just wasn't there. This town where I grew up, there were maybe 1100 or 1200 people, now there’s maybe 800 people. It's just a rural community, but a great community with lots of aunts and uncles. My dad still lives on the farm to this date.
From a young age, I wanted to do something different. I want to do something of significance with my life. So I went to school in the city instead of in this small little town. Then I went to the university and aspired for different opportunities. That's the background, a lot of the journey behind. But, I love my family and miss them greatly.
Darin: Not everybody is like this, but a lot of people that are successful at some age, a lot of times at an early age. It doesn't have to be tough, they have this belief in themselves that they’re going to find a way. They’re going to find a way to be successful, to do something different, and to go outside the norm.
The Belief That Pushed a Canadian Real Estate Investor to Success
Darin: That belief helps drive them, and give them the determination and persistence to take chances. Take a risk, take a chance, whether it's getting involved in real estate investing or starting a business. Even if you just stay in a W2 but you move from one career path to another, those are all risks. If you have this nagging feeling in your gut that you're not in the right place, you've got to take a risk. Some people had that feeling like you had early on. It helps to take that risk because you know that you're searching for something different.
Brent: Even in not making a decision, staying in the same place is a risk. Companies are constantly changing. The adage about getting a good job, a good education so you can get a good job, so you can provide for your family, is a 1970s, 80s mantra. That really doesn't exist today. Companies want you to bring the skillsets for them. It's a constantly evolving, changing process when you work for a company.
In 2000, 10 years later, 52% of the fortune 500 companies were no longer around. The rate of change in today's society is wild. By staying in the same place, by not pursuing those dreams and the vision that's in your heart, or maybe it's so buried deep in there. You're so afraid to make a choice.
It's really just being courageous. Courage is not being afraid of your outcome, but just making a decision in spite of that. Sometimes that is a 10 to 20 second decision. Okay, I'm going to do this. I'm so afraid, but I'm still going to do this.
What Brings Constant Uncertainty
Brent: When I was working in several corporate jobs before, everything kept changing. The commission structure keeps changing, the hierarchy, and the board changes. That brings constant uncertainty as well. There's a significant amount of risk that people don't even evaluate with a job. That mantra, we're seeing it crumble.
Darin: You're a sales person. All of a sudden your territory gets cut in half or you were supposed to sell this amount. Then next year, you're supposed to sell double to make the same amount of money. You have no power, no control over any of that. When you first get into this real estate game, there's a subset of investors that trust you and get involved. As you provide solid returns, they happen to tell other people and that investor base tends to grow over time. Talk about that evolution with the investor base.
Brent: It's just constant communication, keeping up with your investors, and being transparent about everything. When there are issues, how would I like to be handled? If some issue with one of my investments happens, I treat people with the same respect that I would want for myself.
Really, it's just being transparent, being a person of integrity, doing what you say, and saying what you do. Just having that openness and that honesty, it's your fiduciary responsibility that you hold to your investors as well. It’s generally, genuinely caring about people. People tell people, and are like, you got to connect with Brent and he's doing some deals. It really does create your investor database. It’s expanding the people that really know you, like you, trust you and want to do business with you.
How You Should Treat People’s Money
Brent: Wanting to invest the money that I've been saving and working my butt off to earn. Just having that and continually rolling it forward. It's just treating people's money like your own money, but I would say even better than your own money. Treat people's money even more cautiously than maybe how you treat your own money.
Darin: You brought up transparency and I hear that over and over again. I'm in agreement with you. I think about how I want to be treated. I'm a passive investor in a lot of deals too, so I want to have that same philosophy because it's not always easy. Talk about a situation where things weren't rosy and you had to be transparent.
Brent: We have a project right now in Houston, I'll not disclose the name, but we took over the project. You're like, this is your occupancy and these are your numbers. You understand, you own and underwrite to that and we're here. We're going to take the property up here. I'm using visuals, but for everybody listening, I'm taking the property and I'm going to grow it 30%. So it's looking at what is in a snapshot in time.
But then as you take over properties, what can be a common occurrence in the industry is sometimes people stuff the units with tenants that maybe wouldn't have qualified. They wouldn't have been okay with it at the beginning of their ownership period. That is unfortunately something that happens in the industry. When you take over, maybe you'll have a bunch of tenants that are not paying or your books were accrual instead of cash. There are some things that maybe you don't see in that process.
The Current Situation of a Canadian Real Estate Investor
Brent: It’s just like, this is something that we've owned and managed. The partners on that deal have done over 18 deals. Collectively, we've never experienced anything like that, but here's where we're at. Here's our current situation that's unfolding. This is how we're going to grow back. Just stepping up to the plate, taking initiative, and making sure that you do right by everybody, do right by your investors. Keep them up to date along the way in and in the process too.
Darin: You tell people what’s going on. That's what I’d want to know as an investor. I want to know the good, the bad and the ugly. But I also don't want you to just tell me that it's bad. Tell me what you're doing about it. You and the other general partners get on the call and say, we haven't seen this before, but this is what we should do. You come up with a plan, and then you communicate that to your investor base because they trust you with their hard-earned money.
A lot of people understand it's not going to be a straight line up. Some people have false expectations. They do think it's a straight line up. But a lot of people understand there's going to be challenges and hiccups. They also want to know that there's somebody that's got the eye on the ball and is taking action and making the necessary changes to make that happen.
You talked about the relationship business before. Some people don't really understand how crucial the relationship side of the real estate business is. Talk about that in terms of, one, you're partners with a lot of people.
Why People Don’t Get Started
Darin: Two, you're building relationships with investors and brokers, and property management companies. The one piece that's not really talked about as much is when you do end up having an issue. You or somebody else on the GP team may not have come in contact with it. But you may have talked to somebody else that’s in the business, and you can pick up the phone and call that person. One little short conversation could all of a sudden help you propel and put together an action plan. If you didn't have that contact you might have a lot of trial and error getting there.
Brent: It's almost like, I can comment in one sidebar and then we'll come back. That was almost my fear. I see that quite a bit with a lot of people that are starting out in this space. It's almost like, I'm afraid, this sounds crazy. I'm not sure how to approach this. And so they don't get started.
When you have an ecosystem, when you have that environment, you got the Darins, you got people that really have been there before, this isn't their first rodeo. This isn't their first project, this is their 5th, 10th, 15th, 20th. Now you're in an ecosystem of people that have vetted out vendors. They have vetted out issues, problems, and are constantly changing the world with debt, and equity, and everything else. Your whole stock is always unfolding.
It's looking at and having those trusted people that you can rely on, that have been there before, that you can bounce ideas off, pick up the call, hey, what about this? Have you ever approached this situation? No, I haven't, but check with Juan or whatever the situation.
The Powerful Ecosystem
Brent: That ecosystem has been so powerful, and it's hugely comfortable too. It's not like I'm doing this on my own.
Multifamily is a team sport and it's surrounding yourself and being around those great people that you want to do business with. Just having that ecosystem, those people, and those mentors around you that could be your peers. It could be coaches, your people that put the program together or other people in the industry professions that you can have those conversations with. This goes back to building those relationships. You never know where things go and where things lead. It's never burning bridges and being that person.
Darin: They take your call and they actually give you the advice. When you burn the bridges, then your call goes to the voicemail and you don't get the call back. What's the next big stretch goal for Mr. Brent Ritchie?
Brent: Growing, teaming up with more people and hiring. Our next step is definitely hiring more people. It'll be scaling our business, scaling our systems. Right now as we speak I'm onboarding new software and getting our systems ready to take on 2022 in a big way. That's where we're at and definitely looking forward and building that flywheel momentum. Just putting these steps and these people in the right process to really launch and take the things to a much greater level.
Darin: What do you like to do outside of work?
Brent: I'm a fun junkie. I love playing with my kids. We went to water parks and amusement parks and went to the beaches, sailing. I'm a big fan of sailing. Kiteboarding is something that I'm attempting to get better at.
Darin: Have you done it before?
A Great Sport
Brent: I got the kite part down, but the kite and the board combination is a challenge.
Darin: It always looks so cool. When you go to the beach and you see these guys cruise and hit the waves and they jump up in the air 10, 15 feet. Something I want to try, but I haven't done it yet.
Brent: The motivation for me was that most of the guys doing it were in their mid-40s to mid-60s and in great shape. I'm like, that's a great sport to get into. Snowboarding, I'm a huge fan as well. Pretty much a lot of board sports, I enjoy and try to do. I enjoy playing golf with a bunch of buddies but I don't take it too seriously, because I frustrate myself more than anything.
Darin: It's a tough game.
Brent: The next step is lessons. I've been doing it for a while, but like we know in this space, be in that environment, surround yourself with people that are much better. Be with the people that can help you get from where you are to where you want to go.
A Guy Who Lived in Canada
Darin: How does somebody reach out to you? If they want to get to know you better, what's the best way for them to do that?
Brent: We got our website, enritchinvestments.com. You can connect with us there or you can reach me at brent@enritchinvestments.com. We can set up a call and see where things go. That's probably the best way to get a hold of me. I'm on LinkedIn and Facebook as well. Instagram is becoming a new thing that I probably got to get into.
Darin: Here's a guy who lived in Canada and didn't let that stop him from moving forward. He didn't have any experience, but he went and found it. He’s built relationships and has done over 2,600 units. Don't let that mindset of yours stop you from taking a chance. Appreciate you guys listening. Brent, appreciate you coming on. Until next week.
