We're speaking with an excellent guest during this episode, with a story that is entirely relatable to people looking to make a change from their existing 9-5 careers into a pragmatic and patient real estate journey or for people looking for their first home and realizing that an investment property might be the right direction.
Michael Dominguez, an award-winning sales representative at RE/MAX Jazz Inc. Brokerage and the founder of Doors to Wealth Real Estate Group, a team of realtors focused on educating and assisting people in residential real estate.
One of the major and recurring lessons of this episode is that your first home should be thought of more as an investment opportunity than as a status symbol.
No get rich quick, no crypto millions, no 1,000 doors in 24 months - we're talking about setting forward on reasonable pathway to financial freedom, and cautiously but consistently adding to a portfolio.
Shortly after becoming a realtor in 2008, Michael purchased his first investment property, proceeding to add to his portfolio for 10 consecutive years.
Michael is the author of Armchair Real Estate Millionaire - If You're Sitting There Anyway, You Might As Well Build Your Wealth.
Things we discussed in this episode:
- Pivoting from a corporate career at age 43 into real estate
- Entering the real estate world during the sub-prime mortgage crisis
- Building long-term wealth through real estate with ADUs
- Picking ADU-friendly markets
- How ADUs can improve affordable housing in municipalities
- How first-time homebuyers should consider properties that can include ADUs
- Should investors get a real estate license of their own?
- Focusing on the "Hold" element of the Buy + Hold Strategy
- Becoming a millionaire by investing in just three properties
- The power of effective leveraging
- Learning how to constantly re-evaluate your portfolio
- Not looking toward the "forever home" as one's first home purchase
- The value of who not how.
Get in touch with Michael:
Website - https://armchairrealestatemillionaire.com/
Instagram - https://www.instagram.com/armchair_wealth/
Join Jason Muth and Attorney / Broker Rory Gill of NextHome Titletown and UrbanVillage Legal in Boston, Massachusetts for another episode of The Real Estate Law Podcast!
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The Real Estate Law Podcast is hosted by Jason Muth and Attorney / Broker Rory Gill.
This podcast and these show notes are not legal advice, but we hope you find both entertaining and informative.
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The Real Estate Law Podcast, because real estate is more than just pretty pictures and law goes well beyond the paperwork and courtroom arguments.
The first thing that I look at when determining not every market is going to be a suitable market for you to consider investing your, your wealth, your portfolio, or building a portfolio. So we took a look at where would be the best place to invest.Announcer:
You found The Real Estate Law Podcast, because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom argument. If you're a real estate professional, or looking to build real estate expertise, then welcome to the conversation and discover more at realestatelawpodcast.comJason Muth:
Welcome to another episode of The Real Estate Law Podcast. Thank you so much for listening. I'm Jason Muth your host along with Rory Gill attorney broker NextHome Titletown Real Estate UrbanVillage Legal in Boston. Hello, Rory.Rory Gill:
Hey, Jason, how are we doing?Jason Muth:
We're doing great. We're gonna have a great conversation today is super excited to talk to Michael Dominguez, we're going to introduce Michael in just a second. He's an author. He has an amazing book that is super informative for people that are just looking to either get started or figure out how to make some extra money in the real estate world. It's called Armchair Real Estate Millionaire. I love the little tagline you have it says if you're sitting there anyway, you might as well build your wealth. That is great. How did you come up with that, Michael?Michael Dominguez:
Honestly, I had a few people on my team. And we were trying to come up with something that was intelligent and witty. And then someone said something sarcastic and we kind of went with it. So it was really it was it was honestly just a brainstorming session of a few people that were throwing out goofy ideas and and throw it against the wall and it's stuck.Jason Muth:
Yeah, I think some of your principles that we're going to talk about in this podcast are very, very near and dear to our hearts. I almost think that we have a very similar strategy toward, you know, our real estate journeys. I think we're just a couple of years behind where you are. But Michael started as a Realtor in 2008, founder of doors to wealth Real Estate Group. You're based in Toronto, but right now you're in California. You've been there for a couple months now enjoying some of the sunshine. And we'd love to hear more about kind of the strategy that you've been doing. It sounds like the past you had you had a goal back in 2008 to do one property every year or one transaction or something every year for 10 years in a row, which was the exact goal that Rory and I set in for ourselves personally, in 2016. So we have to compare notes on where we are with our journey versus yours. But welcome to the podcast. Michael.Michael Dominguez:
Thanks so much for having me on. I really look forward to chatting as well. I had a chance to listen to one or two of your podcasts prior. And so I'm looking forward to this conversation.Jason Muth:
Well, thank you, we certainly appreciate your listening. I know we were talking beforehand. And you mentioned the episode that we did with accessory dwelling units, Paul Wells out in Colorado, which was a fantastic episode that Rory did solo. And Paul was great guest and I know that you've had success with ADUs as well. Michael, before we get into that, tell us a little bit about yourself, you know how you got to where you are today? And you know, where should we start?Michael Dominguez:
Yeah, I've been, as you said, I've been a realtor since 2008, I was 43 or so when I actually got the real estate license. And so I had a full career working in corporate America and corporate Canada. And focusing more on the retail management, I made it to upper middle management. And I had your traditional nine to five job I was making more money, paying more in taxes, doing more in commuting, doing more in going across the country on a regular basis, helping people out. But I really wasn't getting ahead. And I had a lot of goals when I was in my teens and 20s of being a millionaire and multi-millionaire by the time I was 35 or 40. And I hadn't reached any of those financial goals. So it wasn't like I woke up when I turned 40 It's sort of said, I'm gonna change my life. But you know, I kind of got to that point where I said, you know, I've got to do something different. So I was in a, you know, my, my longtime marriage ended, I was in a fresh relationship, I was in a position where I could could look at making some changes and, and the opportunity came up for me to move towards real estate. It was introduced to me I thought, Well, I've always done sales. So yeah, I went towards the real estate sector and, and started gravitating right away to the investors because I felt like it was talking about people, people that were thinking about long term wealth. And and that's that was the beginning of of everything, really.Jason Muth:
And that was around the time that the economy collapsed as well, which, you know, Canada, I'm sure was not immune to that.Michael Dominguez:
No, obviously the United States was ground zero when it came to the financial crisis. Our crisis wasn't nearly as severe as what happened here, the United States. But, but yeah, we certainly felt that it was it was it was one of those things where in the fall of 2008, I got going in my real estate career and thinking man, this is easy. And all of a sudden, like all the buyers just stopped for three to six months and that was a bit of a challeng. Had I not had support system with my wife making the nine to five money, it would have been a bit of a different story, I'm sure but, but again, our market did correct by spring of 2009.Rory Gill:
Yeah, it's a good time to enter the field because you have to start working in you incorporate good habits instead of instead of jumping in when the economy is great, and you can just coast by on some bad habits 100%.Michael Dominguez:
And yeah, it was I learned a lot of unique skills to try to put deals together because again, we're very creative person when it comes to deal making. And so I applied some of those some of those skills in terms of putting some deals together and then now fast forward today and now that the realtor, Steve and understand what some of those things are, because the market is so hot, you just put up any property on the market and and it's gonna sell. It was very different 15 years ago, for sure.Jason Muth:
Yeah, we're certainly seeing something today. You know, I remember a couple years ago when everything shut down, you know, we have we operate a couple of Airbnb, as we've talked about those on this podcast. Rory runs a brokerage in Boston, and a law firm that does a lot of transactional closings and whatnot. And boy, a lot of things not only dried up but like our calendar open up on the Airbnb is and you know, he and I were looking each other saying, Alright, well, now what what's gonna happen and you know, then you just kind of sit tight for a month or so and then everything rebooked and then the market just, you know, became what it is today very quickly. You know, so who knows how much longer this is going to last? You know, given interest rates and all the supply chain issues and issues that we're having with inventory, you know, with housing, which is certainly very tight everywhere. But you know, some of what you've done with your investing actually addresses that, you know, I know that in the ADU conversation we have with Paul Wells, one of his things he was passionate about was, you know, how we have a crisis right now with, you know, with finding any kind of affordable housing. Tell us a bit about some of the work that you've done in the adu space and how that's really helped set you on this, this journey that you're on with building long term wealth and real estate.Michael Dominguez:
Yeah, I appreciate that. The first thing that I look at when determining not every market is going to be a suitable market for you to to consider investing your, your wealth, your portfolio, or building a portfolio. So we took a look at where would be the best place to invest. And so where I started my search, was it actually talked more about it later on in the conversation as well. But I had the opportunity to be introduced to incredible mentors. And they taught me to look at markets that were even if they've been growing for five and 10 and 15 years, it's what's happening now and what's happening in the anticipated short term future, that's going to have a huge role in terms of where you want to be investing. So we were looking at properties that had markets with a strong, gross domestic product growth, population growth, employment growth. And so that was the first thing we looked at is finding the right type of market. So once we found that, then we started looking for markets that also allowed us to have ADUs, and not just an additional dwelling unit, but one where I did not have to be the owner of owner occupied, I can actually have an upper tenant and a lower tenant. And in many cases I was buying in my market, there's a lot of 1,000 square foot brick bungalows, and we were able to use a basement apartment and put a put a secondary suite there. Other opportunities in other markets might be to build up unit above, or a space behind or a garage loft or anything like that. But in my market was building on a basement apartments. And that's what we started doing is we were finding quality properties in quality neighborhoods. And and then we were able to find those properties in areas tenants actually want to live. And so we were getting quality tenants, not just simply the the people that couldn't afford anything else. And and they were always paying the rent, and we were holding on them for a long time. And before you know it, we were making some quality profits. And that's really what became my mantra going forward was just getting that quality property quality neighborhood, seeking those quality tenants and making quality profits.Rory Gill:
Right. I know you're about to say something. Yeah, I was just going to before we get too far into the subject you were talking about ADUs, which is a concept that people who listen maybe familiar with, but can you kind of paint just the basics of what an ADU is?Michael Dominguez:
100%. Yeah, there's a it's one of these things I use the analogy I say, you know, if I saw an alligator and crocodile I might not know what the difference is, but you know, there is a difference between them. There is a difference between a duplex and an ADU. A duplex is a property that was a purpose built two unit dwelling, that it actually in many cases has its own separate each one's their own separate dwelling unit. Each one has their own separate heating and water source and all that stuff. An ADU was built as a single family home. And then over time, an additional dwelling unit was added on at some point in the future after the actual original builder had has left the left the conversation, and whether that's a basement suite, a loft suite, a separate building into itself in the backyard. That's what an ADU is - it's truly an additional dwelling unit that was built onto a single family home.Rory Gill:
You know, this seems kind of like a no brainer for a lot of people. If you have, you know, one unit that you can rent out and you can convert it into two, it'll generate more profit. So what are the obstacles in the way that you know the way from prevent people from doing it in the first place?Michael Dominguez:
Yeah, the biggest thing, and this is with a law standpoint, the biggest challenge that you've got facing right now, is there are so many markets in Canada in the United States, where there are restrictions from from the municipal bylaw perspective, not allowing those suites to take place. Now my advice to anybody who's thinking of building an ADU is that should be rule number one is finding a market where it's acceptable. There are a lot of communities across North America, where City Council is looking for investment, they're looking for quality, affordable housing, and they're they're taking action to make that happen. So find those markets. And, and instead of fighting City Hall, like you know, yeah, you can, if you want to fight the good fight, but boy, boy, it's a lot of work. And I'd rather just find a market where it's going to work. It's not like I've got that many billions of dollars that I can buy everything, I'm gonna buy a market where people want me to invest.Rory Gill:
I mean, conversely, I mean, we're sitting in a market right now that so far hasn't given a lot of people, the opportunities to build at us the the convergence of exclusionary zoning rules, and nimbyism has made it pretty difficult for anybody to construct ADUs. But fortunately, it's not really the case. Across the continent. I mean, I know you're sitting in California, which passed a statewide rule because they were particularly acute housing crisis that really paved the way for a lot more ADUs to be constructed in California, could you just kind of give us a little bit of an explanation of that market, because hopefully, that is kind of indicator of how other markets are going to trend in the next decade.Michael Dominguez:
Yeah, and I'm also gonna get props that I mentioned before the show as well, I'm gonna give props to the state of Oregon. They, they were the first in the United States that really had a statewide rule, allowing us the comment, the joke was that they banned single family housing, that's not exactly what they did, they just basically allowed any builder that had a building block, where they can add a second or third unit right from the beginning, regardless of, of what the tenant said, or the neighbors were saying, and stuff like that. But here in California, what we're, what we're seeing is, whether they be laneway homes or add ons behind behind their house, in some cases, you can even add a third dwelling unit as well. And so where I always tell people that are saying not my backyard, is we all get older. And and as we reach the empty nest part of our life, that that 2,500 or 3,000, square foot home just isn't necessarily suitable for one or two people anymore. And so there's a lot of seniors that want to stay in a neighborhood, they they've raised their family, but they don't necessarily want to keep that that big house. So by by sort of sectioning off a percentage of your home, and and offering that as separate dwelling unit, not only could you either a make some extra rental income, or be perhaps there might be a family member, who, who can live in that in that area. So not only would be helping them out, but you know, you're living your best life and living with your favorite people, you know, and you're not living with them, you're, you're living in the same, the same location, but you've got your own, your own separate bedroom, your own separate, dwelling unit completely. It just happens that there's a maybe a shared wall or a shared space somewhere or shared lot or something like that. And that's what we're seeing here in California is a lot of that. But there are investors that are buying properties and then creating two or three dwelling units, and it's allowing them to cash flow, which is which is the most important of it all. It's so hard to cash flow here in California. Prices are so much.Jason Muth:
You know, my parents have been operating ADU for so many years without me even realizing they've been operating an ADU. Back when I was younger, and they still live in that same house I grew up in. They've been there for a long time, almost 50 years, which means that I'm almost 50. But I still have a 4 in front of my age, but downstairs it used to be a garage. It was a ranch house outside New York City. They were the only owners of the house. They converted the garage into an apartment for my grandparents back in the 80s My grandparents sold their house, a few towns away. They moved in downstairs, you know as as they needed additional care. You know, it certainly helped to have them downstairs. Once they when they passed away. The apartment was sitting there they rented it a little bit tenants moved out, my cousin moved in there for a little while, he moved out. My aunt moved in there, who was my mother's cousin, and she was caring for my great aunt, before she passed away a few years ago, but she lived there for a number of years. Now they have tenants again, and you know, it's just been this basement apartment, that seems to be a viable place that lots of people can live, you know, for long periods of time for a variety reasons.Michael Dominguez:
Yeah. So that's been not only good for your family, but also the community to offer affordable housing in. Imagine if there were hundreds if not thousands of them in the same community, it could change the face of rentals for sure. It's something that that we we saw 80 and 100 years ago, this is not a new concept. There's there's been borders and dwelling units that have been built forever. But it seems like it's become taboo to to consider allowing those kinds of people into my backyard that have tenants, how dare you have a tenant who's living in our neighborhood? It's ridiculous.Jason Muth:
It doesn't make sense to me either. I mean, like Rory and I live in a neighborhood in Boston that is very densely populated, as many urban neighborhoods are, we live in South Boston. A lot of the units here are triple deckers, I don't know if this out that gets kind of unique to New England, you see it in a lot of towns around New England, but, you know, these buildings that were meant to house an entire multi-generation of families many years ago. And then they were single family homes, and a lot of them, you know, became multiple apartments. And now they're multiple condos, you know, as people sold them, and developers bought them, and you get three different families that aren't related. Now, the living three condos, but I don't know, to me, it seems pretty basic, you know, you put a building on a lot you have multiple families have in there, like how hard is that?Michael Dominguez:
And you know, obviously, the upside of having densification, like, especially in a growing community, where, like, Massachusetts has a, you know, there's certain parts of the state that are certainly growing. Obviously, that state also has a reputation for being a little bit traditionalist. And so so you're gonna be facing those challenges as well. But no, it's a it's a huge need. And, you know, it's amazing how you see, like, type in the term housing prices or rental crisis, and the community that you're in, and you'll get a lot of articles written, and usually pro tenants of anti landlord comments. But nonetheless, that's because typically, the articles are written by people that are likely tenants themselves, but, but nonetheless, we have, we have a real issue. And so to what my advice to anyone listening to this podcast is, is not to fret about it, but to capitalize on the opportunity. And if there's such a huge housing need, or just like anything in a supply and demand side world, if there's a heck of a lot of demand, and a lot more demand expected going forward, maybe I should be buying some of that stuff. And that's really what I would I recommend, I don't want to buy that slumdog type of property that's in the worst part of a neighborhood that needs a ton of work. And even if I fixed it up, it would still be associated with 27 other houses on that neighborhood that are just as equally in poor condition. Let me buy that subdivision home and add an ADU with it not only cashflow on the property, but in an area where if I do decide to refinance it or sell it in the future, I'm pretty confident that I'm gonna get at least what I paid for, and hopefully a lot moreRory Gill:
Like this marketing strategy with ADUs - is this solely invested in ADUs, does that doesn't make up all of your real estate investments?Michael Dominguez:
For the most part, it is now people that don't do it early on, I did what everyone else did. And the very first thing that I was taught when I started looking at buying an investment property is you only make money on the back. That's one of the classic things that everybody always says, and to buy an undervalued property that needs work, and then fix it up. So my first two properties I bought were older dated. One was a six-plex, in a small market, and another one was one with an ADU, but it was one of the roughest parts in my city. And in both cases, I struggled with landlords I should say, struggled with tenants, and struggled collecting the rents. And even though on paper, they had incredible cash flow numbers, I felt after owning them for a number of years, I wasn't generating the level of cash flow that I thought that that I should be getting, because on paper, they're great. But you don't work in the fact that this last tenant didn't pay the last two months of rent the next tenant left behind $5,000 worth of damages, and, and so on and so forth. And before you know it, you look at it over the course of four or five years and you said that didn't work out very well. And meanwhile, that property that everyone else said I overpaid for because it was in a better neighborhood. That property was never with a vacancy, never with repair. In some cases, the good tenants made my places even nicer. They, you know, they'd say, Can I do some gardening work in my in the yard? Sure. And that's the kind of different style that we started getting. During COVID, I could share with you that a lot of people across North America had a lot of challenges receiving their rent from their tenants. That didn't happen with anybody with in my circle, we all were getting our tenants to pay for their rents, and they were very happy to, to be living in our units. And we were very happy to have them. And it was, it was, it was a pretty simple transaction over the last couple of years where a lot of people really struggled.Rory Gill:
This market right now, just kind of one of my thoughts for people entering the market is to be a little bit creative with what your opportunities are. I know we're talking about ADUs in the context of investment properties, non owner occupied, but right now, you know, I'm working with a lot of buyers who are priced out of the market, they can't really find there's not much inventory in the short term for them to find a home. Taking a look at properties with a creative lens possibly ADUs, it might be our properties that lend themselves to ADUs that are outside their their price point but allow them to collect a rent and maybe build some wealth are creative opportunities that I think are out there. So like you know you're still licensed agent when you think about people entering the market. Is this a good strategy for like a first time homebuyer to be aware of the ADU concept?Michael Dominguez:
Yeah. And that, honestly, is my absolute favorite conversation to talk to for anybody under the age of 35. In fact, just yesterday, I was talking to a longtime client of mine who has a son and his wife are looking at buying their first property. And and you know, without throwing anyone under the bus, the wife wants to buy the, the sparkly new three bedroom, townhouse or condo, you know, and whereas the son is a first time home, but it could potentially he could live in a two or three bedroom, one unit. And then there'll be another, another two bedroom apartment that's going to assist the amount of rent that they're that they're collecting. And it'll actually reduce the mortgage that they're paying. And to your point, Rory, you can actually have a, you can qualify for a larger amount of money in a situation like that. And that's really important, as well, as is that I may only qualify for a $500,000 property in that townhouse. But I might be able to get a six or $700,000 property if I've got $1,200 or $1,500 in rent that goes along with it.Rory Gill:
Just another question I like to ask people who have worked as a licensed real estate agent and who have you know, are active investors, should investors get a real estate license of their own.Michael Dominguez:
If your only intention is to be doing deals for yourself, I don't really see the huge need to do all of that you. If you get a team member who is is working in step with where you're at, and understands what your needs and goals are - there's a book that actually I'm reading right now called Who Not How - they teach the concept of you don't need to be the one stop shop is matter of fact, you could actually be in a situation where be really good at what you're doing right now. And then hire really good people to do things that you're not currently doing. I don't want to get my law degree. I don't want to be a lawyer. I don't want to become a a lender. So why would I get my mortgage broker license? Same goes with being a realtor. Now again, if you want to make this into your career, that's a different conversation altogether. But a good realtor on your team can give you everything that you need. So why go through the process of actually paying all like there's a lot of fees when you get your real estate license. So it would have to make a lot of sense to do it. So my advice is, do what you do really well and let other people do their what they do.Jason Muth:
My reasoning behind not doing it is because Rory has his I'm like, I don't need this. Like he's got it. He's the attorney. He's got the license, like just push it over to him. Yeah, we're in a unique situation. So Michael, let's let's shift gears a little bit. And let's talk about how to build long term wealth in real estate. And I wonder really, if it has to do with being that armchair real estate millionaire, as your book title, slowly suggests. How does your ten-year strategy that you employed in 2008-2009? How does that fit into all this? Because I have a sense I know that they're interconnected. And I would love to compare notes on your journey in ours. So yeah, let us know. Like, how do you build that wealth?Michael Dominguez:
Yeah, so I'm a buy and hold investor. And you can make a lot of money doing flips and really working hard in terms of doing all that stuff. But I'm a buy and hold investor and that's where I'm getting my big wealth. And the difference that I talked about in my book, and whenever I'm teaching courses or anything like that, I focus on the hold aspect moreso than the buy and that is so different than a lot of the books that are out there. They always say you got to make money on the bar, you got to you got to buy the best deal in the best neighborhood take advantage of Grandma, get that house and buy that really cheap property. I'm even okay, paying retail on a property if it has the right market fundamentals. And I go back again it it sounds a little cliche, but I really tried to find the the best quality properties I can get. And and then that allowed me to get the best tenants, I could get the rent markets that were appreciating, and I could just hold on to them for 5-10 years. Like they're like today is we're doing this podcast on the first of the month. So my wife, Lisa, just spent the last hour just collecting all the rents and just putting them all in there putting them all in. And in many cases, we've got a portfolio of a dozen properties. And we're spending two, three hours a month on our portfolio. And it's it's not taking a lot of time, there might be odd time that we have to fill a vacancy or something like that. But even then we're spending five to 10 hours in a month. So it really is that part time job that will make you a millionaire, because now you're leveraging what you've already earned, or what you've already got. And and if you're in appreciating markets, you're not just seeing appreciation on your maybe 20% down payment, but you're seeing appreciation on the whole value of the property. So using Boston as an example or the Boston area, if you've been seeing appreciation of 5% if you're able to buy this particular property, let's let's use a nice easy number, it's $500,000, you didn't have to put 500,000 into the investment, you could put in as little as $100,000 perhaps. And so but when it appreciated by 5%, or I'll use 10% of an argument. So easy math, that would be a $50,000 appreciation on the value of the property, the fact that you only put $100,000 in, if it had a 10% appreciation, that's a 50% ROI for that one year based on the amount of money you put in. That's how you can amplify your wealth in real estate, the leveraging opportunities that real estate offers is is just simply different than every other, it's an unfair advantage that real estate investing offers that nothing else will give you the leveraging opportunities at the low interest rates that you see in real estate.Rory Gill:
As a buy and hold investor, do you often refinance or do cash outs and tap the equity of your existing properties? Or do you like to just let that equity grow and pay down the the old loans?Michael Dominguez:
The quick answer is, it depends on what your goals are. For me, my goal, I didn't have millions of dollars, when I started this venture, I really didn't we had we had a house that was paid off, it was worth about $600,000 at the time. And so we had that equity, we had a little bit of other investments, but not a heck of a lot. And, and we didn't want to necessarily go into our our retirement savings plans and such like that 401k's in the US and you know, RSPs up Canada. So really, we had our house and a little bit of savings. And that's that was it. And so our goal was we decided to leverage our, our principal residence. And and, and get a line of credit on that and using that for our down payments. And then we were able to because we had our good nine to five jobs, we were able to get that 80% loan to value mortgage. And then we use the additional 20% from our line of credit. And for those that are weak at math that adds up to 100% finance. And it's very unique in the in the real estate world that you're able to get 100% financing on an investment. But that's really what we were able to do. And so fast forward a year or two is your a few years, we ran out of our downpayment money. And we thought, well, what are we going to do now? Well, because we put we invested in some of these properties that were appreciating, we are forcing the appreciation by renovating them, we were able to then refinance some of them. And then and continue and continue and continue. And that's what allowed us to get to that situation, we were able to buy one property here for 10 years. And it it wasn't necessarily a goal in year one. But that became my goal. I wasn't the type of guy like there's some people that quit their job, and they work full time as investors. And sometimes they, they buy more properties and I changed my underwear, it's shocking how many properties somebody and and again, me as a fan, I sort of applaud their their success, but it's not a very repeatable thing. They had a really unique set of skills and desires and opportunities. And that's great. This is a situation where someone who's working their nine to five job can can go out of their way and they can buy one investment property. And this is how you can do it. And and what I talked about as my triple crown club, you get up to just three properties, just figure a way to get into three properties, and then just hold on those properties for 10-20 years, that's going to make you a millionaire. I've kind of switched gears Rory in the last couple of years, where I'm no longer refinancing my properties. What I'm doing now is as my rent numbers are increasing, my cash flow is getting better. So where before I was focused more on wealth building because every time I was getting cash flow, I was refinancing to hurt the cash flow. Now I'm more focused on cash flow and less on wealth building. I'm not leveraged as well as I used to be stuff like that. That makes sense.Rory Gill:
Yeah, it makes perfect sense that kind of want to underscore that for people you know, depending on you know where you are in your life and how far along you are reaching your goals. Somebody who's sitting out being have a growth mentality and they want to gain as much equity as possible. whereas somebody who's kind of met their goals or hit their their financial numbers, might be more interested in the security and just ensuring that there's a consistent large amount of cash flow coming forward. So your goals might shift over time, too. So I just wanted to underscore the point there.Michael Dominguez:
100%. And one of the thoughts and this isn't what our strategy is. But here's another thought as you get older, like I'm in my mid to late 50s. Now, it's scary to say, but, but if I get into my 60s, or you know, approaching 70, I may not want to have a portfolio of 12 properties, but I don't see a situation where I'm going to sell everything, what I could theoretically do is over the course of a few years, I could sell half my portfolio essentially, pay off the other half. And now I've got 5,6,7 properties on free and clear, you're looking for cash flow, that'll do it, if you've got no mortgage debt, you're doing well. Now, again, that's crappy. From a leveraging standpoint, it's crappy from a wealth building standpoint. But if you're focused on cash flow, that's a pretty darn good way to do it.Rory Gill:
The purpose of this is, is to meet your lifestyle, it's not necessarily to, you know, to win this lifetime with the highest number possible. That's not what this is for this is about making sure that your investments support your lifestyle and your goals.Michael Dominguez:
Yeah, there's a book that I just read recently, which has been pretty inspirational, it's called Die With Zero, and I can't think of the gentleman's name Hoglund, or something like that. And, and it's just a different mindset, where we're right now all of us are in our active go go years, and, and too often, those of us will work until we're in 65, or something like that, and then and save every month dollar we have, and then all of a sudden, we hit our 70s or 80s. And we can't even spend it anyway. And at the end of the day, you see these people dying, and they've got a crapload of money, they either give it to their ungrateful heirs, or it goes to charity, it goes to taxes. And so what the book is talking about is saying, you know, maybe you don't work till 65, if you can build your wealth and, and live your lifestyle and generate enough rental income or, or cash flow on a regular basis, that it can support your lifestyle, maybe you can quit at 55 and go into a different venture into stuff that's more passionate than just simply, you know, to generate an income.Jason Muth:
That's something that I really subscribe to, as well. And something that has been on our mind or is in my mind, since we got our first investment property in 2016. And the paths are remarkably similar. Because, you know, you've mentioned a couple of things along the way about leverage and about one property a year and meeting your lifestyle. Like that's, that's what we feel too, you know, we don't need to collect all the cookies, you know, we just need enough, you know, to satiate ourselves. And you know, that first property and '16 I think that we didn't know what we were doing, and we just either were had a good intuition and figured our way into it. We're like, Hey, that looks like a cool property to Airbnb, it's down the street from his parents. It's a cool little lake, like, I think we could do it, I think we can get it at a good price we did, all those things came true, right? And then one became two, two became three, three became four, you know, four became five. And next thing you know, you kind of look back and and I remember each one of them along the way and how we were able to finance them. The first one was basically from savings. And then everything from that point forward, was partially cashflow, and partially with refinance, not refinancing with taking a HELOC out on our primary. We had a lot of equity in the primary home because we live in this neighborhood that got super hot and things appreciated. And we basically tap into into all of it. And I said to Rory, what a couple weeks ago, I said, you know, the amount of interest that we're paying for the past couple years on the HELOC what we've drawn, versus the amount of appreciation of the properties that we've purchased is staggering. It's staggering. It's 10. It's 10x. It's so much higher than what we've paid, you know, in interest that either we just got lucky. Or I'm like, why doesn't everybody do this?Michael Dominguez:
Yeah, that's the power of effective leveraging, like there are challenges when you leverage, you definitely don't want to be buying a property where it's gonna throw you in a negative cash flow situation, because I want my investments to support me versus me supporting them on a regular basis. And that's that's a real important distinction. And that's the beauty of the ADUs. I use the Goldilocks and three bears reference when I talk about it is I love single family homes. I love them. But as much as I love tenant profile location, I don't like the cash flow that comes from it. Secondarily, those multi unit buildings can really cashflow quite well, but I really don't like the tenant profile when I'm dealing with that. And a lot of people don't talk about that. They you know, a lot of if you if you look at a lot of investors, they graduate to the multi units. I don't want to graduate to those. I've had my multi units I'm done with those. The tenant profile sucks and it's is not what I want to do. So this is that just right sort of scenario where it has everything I'm looking for. And one comment I do want to make Jason as well, is the properties that you've purchased thus far. Every year or so you should always be reevaluating your current portfolio, because what you may have purchased in 2016, or 2019. may have made sense at that time. But, you know, hopefully you've had a little bit of appreciation. The question I always ask everybody is, would you buy that property today, if it was on the market, if you say hell no, then maybe it's time to consider divesting yourself with that one. And then using the profits from that, and perhaps, and we did that, we sold a few of our properties. And in some cases, we took the money, and we bought two of our favorite properties as a result of that, because we had such equity. So you know, just because you bought it in 2016. It's not some sacred cow, this is an investment. You've got to, you know, always be looking at what's the best course of action going forward?Jason Muth:
Yeah, that's really great advice. I mean, keeping your head on a swivel, right is what they say when you're playing hockey or basketball. Never know. I mean, like, if the market changes around you, your strategy changes if the property is not one you'd purchase today, it's certainly worth moving on from it if you can get a good price. We have been fortunate with appreciation in both markets we've invested - even Boston, we've invested Boston and then New Hampshire and in Provincetown, and they're all they've gone up and up and up and up. So it's just been it's been fortunate. And you mentioned something earlier about the couple with the woman that wanted the pristine three bedroom condo versus the guy that wanted something that you know, you can get some value out and get some money out of, you know, is that some advice that you'd give to millennials that are in the housing market right now. I mean, people basically just want to buy anything that they can get right? Today. But there's a different school of thought between like the forever home, that might not be that first home that you buy, but stereotypically, some people might want that to be the forever home. And the home that leads to the second home that leaves the third home that leaves the forever home. Like talk. Yeah.Michael Dominguez:
And you're taking me gusto Jason, you have a question? At the end where you said it, you have 30 minutes to talk about something? What are you going to talk about? This is what I was saving. So I'll come up with something else.Jason Muth:
You can talk about that right now. Well, grandfather in question number two right now.Michael Dominguez:
Honestly, it's my favorite thing to talk about for young people and not even young, but like, you know, people in their 20s 30s 40s even is, or for that matter, when I was just talking to somebody just again yesterday, and he's the same age as I am. And I was able to get my nine to five job out of school, and I got got married. And within a year of getting married, we were able to buy our first house and I really wasn't making a lot of money. But the circumstances were different then than they are today. So I'm talking to those of you that are maybe between the ages of 50 and 65, you've got a kid who's who's who's getting to that age where you were thinking of buy your first place. It's it's not that they're lazy. It's not that they're that they aren't interested in real estate, which is what some articles talk about. It's just that the the circumstances have changed so much. So my advice to to both parents, as well as kids is to do more research, it's certainly still possible to buy real estate. But you might have to take things a little differently, the market has changed a lot over the last generation. And so absolutely, in some cases, I'm telling people live in the weaker of the two units rent out the better house. Yeah, it's not your dream house, it's you know, your mom has has that beautiful granite countertop, beautiful kitchen. And you know, the sparkling bathroom and the walk in closet, your place isn't going to have any of that stuff. But it's probably better than the apartment you're living in right now at that, but now you're buying your first place. And, and all of a sudden, half the two thirds of your your mortgage and expenses are being covered by a tenant, you're into the market, it's appreciating. My advice to you is in 1,2,3,5 years when you get a position, then maybe buy a second property. And maybe that's also an investment property or maybe not. But eventually you can buy your dream home, but keep the house you already have then get a second tenant in that place. And now you're getting two rental incomes in that place. And the people that have done that there are there are a number of people who are in my circle, who are between the ages of 26 and 35. And they own three to five properties or more. And now they're they're millionaires as a result of their decisions. And meanwhile their friends are still renting their place and they're waiting for their dream home and they're getting priced out of the market because it's appreciating so fast. And they're complaining about you know, woe is us, but meanwhile the people that took action and continued to take action are really moving ahead.Jason Muth:
That's amazing advice. Go rewind this and listen to it again. If you're listening right now, like, and if you're that age,Michael Dominguez:
I could talk about this definitely a half an hour conversation, we're gonna have that just the walk,Rory Gill:
When I'd have a buyer consultation for the first time, and I raise the idea of kind of more creative properties, or you know, these combination investment properties that people can look at, or opportunities that are just better investments, some buyers will look at me like I'm crazy. And I know that that's not for them. And that just not something that they're interested in, unfortunately. But then every once in a while, you see the light bulb go off in somebody else's head. And it's a great feeling. Because you can get to work and come up with a real creative solution to get them into the housing market, and to make them have a good investment. But it usually means just that it means giving up that perfect home with the gleaming appliances and the fantastic view. And the you know, the concierge downstairs it said, getting getting them into something that's a lot more practical that'll actually serve their ends much better in the long run. So thank you for that.Michael Dominguez:
Yeah, there's a there's a Dave Ramsey quote, which I've quoted many, many times, is, if you if you live like no one else, and one day, you'll be able to live like no one else. And just because all of your circle of friends think you're crazy that you're that you're spending your your Saturday afternoons and evenings not going out to the parties, but you're you're renovating your basement apartment, or, or, or you're just getting everything ready for a tenant. And you know, they they think, come on, you're too young for that crap, that all of a sudden, five years later, you know, three week trip away in Europe or what have you. And then how do you afford that you've got you're making the same amount of money I'm making, but you've done things the right way.Jason Muth:
Yeah, you know, what's fun, what's fun is not working till you're 65. Right. And these are ways that you could do that. That's what that's what fun is. You know, for us, this has been fun along the way. Like I find enjoyment in doing this. I mean, I'm like you, Michael, I could talk about this for a long time. I'm not even a real estate professional. But, you know, I we have to give lots of credit to Bigger Pockets and places like that, that have made this level of education super accessible to lots of people. I mean, I think I remember finding that community back in 2014, or 2015, when a lot of people found it. And you listen, and you invest a lot of time and you invest time in podcasts like this, and podcasts like everything they've talked about there. And you figure out what the right strategy is. I mean, like early on, you would think that you have to invest, you have to buy 700 units in Akron, Ohio, God bless Akron, Ohio to be successful, but...Michael Dominguez:
Detroit, baby! Detroit, all these properties that you can buy for, you know, 30 bucks. And Detroit is much different right now, obviously, you know, the city has changed a lot. But yeah, I mean, like, there's so many different ways that you could find your way down this path. I mean, you know, the way that you found your success, you know, 10 years, 13 years into your journey is what we're doing right now. And it's manageable. It's, it's not scalable to the point that we're going to become Warren Buffett, but we don't want that, like, I don't want that. Like I just want enough to be happy, like I want enough to be secure, you know, and feel comfortable going away, feel comfortable spending money on stuff, feel like you've made a couple of good bets, right? It always feels good when you make a good bet, right had bet on that property. And I was right. I bet on that property. And I was right. I bet on those tenants and I was right. You know, like, that kind of stuff is what that's fun to me. Yeah, I'm not gonna lie to you guys. I don't wake up each day and say, Yeah, I get to be a landlord. It's not it's not that fun of a thing. But I I enjoy talking with other investors. Absolutely. But you know, it's not my thing necessarily being a landlord. My wife is far better at that than I am. She's She's the tough guy were too much of a pushover. But yeah, it's, it's, it can be absolutely, it could be life changing. And, you know, I, I want to reiterate, though, that it is not completely passive. Anybody who tells you Oh, it's just just set it and forget it. They're, they're simply lying to you. I can tell you the systems that that I speak of, there's far less work, you've got much better quality properties, much better quality tenants. And so you're not doing as much work. But it's still a part time job. But that part time job will make you a millionaire. You know, let's not drive for Uber Eats let's not build spreadsheets as a weekend hustle. This side hustle will make you wealthier than your nine to five job ever can.Jason Muth:
So it can make you an armchair real estate millionaire, right?Michael Dominguez:
Yeah, sitting back feet up. That's that's when I came up with the concept. I was literally sitting in my La-z-Boy chair watching TV and said, What can I make this book on? I don't know.Jason Muth:
It's a great read. I have not read the whole book. I've read excerpts from the book also. And I we are audiobook people. So you know, I'm going to make sure that we download that and listen on our next journey up to New Hampshire. So yeah, so that's great. And it's armchairrealestatemillionaire.com And that's where you can go find links to go purchase the book and learn more about Michael and you know, participate in this journey of finding wealth through real estate. It's a, there's lots of ways to do it. You could do it your arm chair sitting back, you could do it by swinging a hammer or some combination of those two.Michael Dominguez:
I'm really proud of the the audio book as a matter of fact, I look forward to your comments on it. I hired a great voice actor, I do too many arms and ahhs and to expressionists, you know, it's not my thing to just read a book and just sort of do it like that. So hiring a great actor who has done animation and other things was he does voice work. It was it's a well done book. So I look forward to hear your comments.Jason Muth:
Great, well we will, we'll definitely give it a listen and comment on the voice actor who you've hired. You could have done it yourself, though, Michael, you have a great voice.Michael Dominguez:
You know, it's funny. It's one of these things that in a podcast, that's awesome. In a speaking event, that's okay. But it's so different than when you're when you're actually sitting there. And even simple things as much as just doing a breath like that. All that gets heard. But this guy, just he could literally sit down and read an entire page and not screw up one time. I tried doing it. And I basically, I said, Yeah, this is I think it's about three pages into my book as a test. I said, Yeah, I, again, who not how is I wanted it to get out there. I wanted the message to be delivered. I just didn't feel I was the best person to do it. And honestly, if I had to do it, I probably wouldn't have done it. So you know, so who not how is the old name of the game?Jason Muth:
Work on your business? Not for it? Yeah. So that's a way to work on your business? Yep. We'll get into the follow up questions. You've actually answered two of them already. I believe. You answered our first one about what you get on stage and speak about it's a great subject. I mean, like really just telling young people, you know how to set them on the path. I can go on and on about that as well. The second question, I don't think you answered this one, though. But the second question is, you know, tell us what would happen early on in your life or career that impacts the way that you work today,Michael Dominguez:
I want to give props to the Real Estate Investment Network. BiggerPockets was phenomenal. In the, in the US. RAIN has been around a lot longer than that. They're upwards of 25 years now. And they're based out of Canada. But their their concepts are universal. I've been a realtor for about one or two years, and I was buying much like I was talking about already buying those crappy ass properties and crappy neighborhoods and getting crappy tenants and, and struggling through and saying, Holy mackerel, this is a lot of work. And I remember just, like almost crying after a couple of my interactions with tenants, because I just wasn't suited for that sort of thing. And so I had the opportunity to, to join RAIN. And, and I thought, Okay, well, I don't know if I'm going to learn that much. But you know, I could network I could, I could do deals, because I'm a realtor superstar now. And I found that the amount of education I got from them, and there was a mentor, his name is Don R. Campbell. And he's written a couple of books. And if you're looking for someone who can give you real advice, real strategies, he's like, he's a guy to listen to, for sure. Or to read. And I started to follow his teachings. And honestly, it was, it was a lightbulb moment for me, because how I operate everything else in my life is, is I like to associate with great people, I like to I, I want negative people out of my life. And yet here I was buying properties, where I was dealing with the, the worst of the worst in many cases, and, and, and getting very frustrated. So it just became a whole different mindset shift. And so so that was one moment, it was the time that I started to hear the teachings of RAIN, and it just changed the fortunes of my life. So I'll I'll be forever grateful. And actually, I give tribute to them in my book as well. I actually use some of their graphs, they gave me permission to use thankfully. And and I speak about that whenever I can.Jason Muth:
Rory, any final thoughts for Michael, we've covered a lot in this episode. And there's just so much great information that, you know, I really think that like people that are just looking to figure out how to get started, or figure out if they want to pivot in this direction, like this has just been a good listen, I'd go back and listen to it again.Rory Gill:
Well, I mean, this is there are a lot of lessons here that I want to drill down and kind of you know, particularly my buyer clients who are younger, it makes sure that they understand some of these concepts that their first home should be thought of more as an investment opportunity than as a status symbol. That's really kind of the first lesson that I want to drill down. And then to think creatively. Now, you know, ADUs are one method, and they work better in certain markets than in others in large part just due to legal restrictions. But there are a host of similarly creative ways to think about to maybe substitute for ADUs if they're out there. So looking at properties that are zoned for something that are a little bit greater than than their current use right now, looking at properties that just really need that elbow grease and that work to be brought up looking at properties that maybe have two master suites and seeing that is an opportunity to rent out additional space to people. But coming up with just being open minded and looking at the different catalogue of investment opportunities that are available to them, and then going for it, taking the risk going forward making a smart financial decision, and maybe having to repeat that same financial decision a few more times before you then pivot out and then look for the dream home. So there's a lesson there that you know, and maybe I'll just kind of direct future buyer clients to to this particular podcast because that's what I think people who are entering the market for the first time particularly in a market where there's really don't have the inventory of the dream homes right now. This is this is what they should be looking at instead.Michael Dominguez:
Yeah and the other thought I wanted to share as well is, this is a pretty scary proposition for anybody who's even thinking about something like this and you don't need to go it alone. And, and, you know, there's a whole world out there beyond what's available on the internet and podcasts and such like that. And, and there are local meetups in the in the communities that you're looking at investing, and you'll have the opportunity to meet with local other investors, real realtors, investors, mortgage brokers right down the list and start to build a team of people that know a lot more about this than you do and and see if what other people are already doing. You're not creating something brand new. Learn from what other people are currently doing. And and I use the term being an insider trader. In the equity world, being an insider trader is very faux pas you can't do that you could go to jail for something like that. In the real estate sector, becoming an insider trader just set you apart. It's actually it's encouraged. The more you know about your market, the better. There are things that I've learned about some of the properties that I was buying or considered buy, such as maybe it was in a flood zone. Well, I didn't know that, well, all of a sudden I learned it's in a flood or it's near a flood zone. This may be not a property I want to hold on to long term. So the more you learn about your market, your location, your your strategy, will help you going forward. And you know, and you mentioned your condos, condos are potentially an incredible investment, especially to short term rentals. But if all of a sudden your condo board eliminates the opportunity to doing short term rentals, which happens all the time across North America, well, maybe that's the time to sell that investment property and move on this is it is a very fluid situation where you you're doing what makes the most sense going forward. And if if circumstances change where that's no longer the best strategy, you will shift. And so being an insider being knowledgeable puts you in a position where you can you can react effectively and not be caught off guard.Jason Muth:
Tons of great advice. So much advice. I encourage everyone listening to this to go pick up Michael's book or listen to the audio book. It's called the Armchair Real Estate Millionaire if you're sitting there anyway, you might as well build your wealth. Amazing title. Great content. Michael, thank you so much for appearing on the podcast. We really appreciate all of your time today and all your insight. It's been a pleasure to get to know some of the things working in your head. Glad you shared it with us. Yeah. Rory, can you tell everyone where they can find you?Rory Gill:
You can find me through Nexthome Titletown nexthometitletown.com or Urban Village Legal urbanvillagelegal.com.Jason Muth:
Great. And thank you for listening. We'd encourage you to subscribe to this podcast if you haven't done so already. Or give us a thumbs up or comment. We love reviews. If you're listening on iTunes, give us a five star review if you think it's worth five stars, and if not, then don't review us. Not really kidding. So on behalf of everyone thank you so much again for listening. My name is Jason Muth and this has been The Real Estate Law Podcast.Announcer:
This has been The Real Estate Law Podcast. Because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom arguments. were powered by NextHome Titletown greater Boston's progressive real estate brokerage. More at nexthometitletown.com and UrbanVillage Legal, Massachusetts real estate counseling serving savvy property owners, lenders and investors more at urbanvillagelegal.com. Today's conversation was not legal advice, but we hope you found it entertaining and informative. Discover more at realestatelawpodcast.com Thank you for listening!