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episode # 336

A Real Estate Investor’s Opportunity is NOW with Adrian Pannozzo

Today’s guest went from being a Detective in the Greater Toronto Area to carrying 370+ doors in only 11 years… and he thinks he could have gotten there sooner! Adrian Pannozzo joins Matt & Adam today to explain how you can get there too. There are all sorts of excuses for not achieving your real estate goals – no time, no money, no stomach for today’s prices – but in the end it comes down to taking action. How did Adrian scale so quickly? How will he continue to move through this higher interest rate environment? And why is taking action today a better strategy than trying to time the bottom? Need a winning investment strategy? We’ve got you covered.

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Episode Summary


Who is Adrian Pannozzo?

I began investing in real estate 11 years ago. At that time, I was a full time police officer in the GTA. I started to buy investment properties with a HELOC (home equity line of credit) because I didn’t have any money. So we pulled the money out of our home and used that to get started.

Six to seven years after that first HELOC, we honed in on the BRRRR (buy, renovate, rent, refinance, repeat) strategy. We started a joint venture and partnered with like-minded investors. In 11 years, we’ve built a portfolio of over 370 doors across 74 multi-family properties. Those investments allowed me to leave the police department and retire early. 

What sparked your interest in real estate? Can you tell us about your first deal? 

I’m a meat and potatoes kind of guy. I was looking for something that would subsidize my income and give me some cash flow in retirement, above and beyond my pension. I wanted something I could touch, like real estate. I liked that the bricks and mortar were there and wouldn’t be gone in the morning, unlike a stock that might go belly up overnight. 

We started with a $200,000 HELOC that allowed us to buy our first three properties. Those were turn-key deals because I wasn’t aware of the BRRRR method at the time. After that, we focused on the BRRRR method. 

How did you educate yourself on real estate investing?

It was a lot of trial and error, to be honest. I did my first BRRRR property on my own with a sub-contractor. I read a lot of books, did a lot of research online, spoke to a lot of mortgage brokers, and just had a positive attitude. 

Hiring a mentor or a coach, or even partnering with experienced people, can accelerate the process. We’ve done well in 11 years but we could have done it even faster if I had leveraged other people’s knowledge and time. It wasn’t always roses for us but the successes have outweighed the failures.

What is the BRRRR method?

BRRRR is the acronym. B stands for Buy. We’re buying distressed properties. We’re looking for properties that are structurally sound but very dated when it comes to cosmetics. They need a facelift. The next step is Renovate. We want to renovate and force appreciation through our work. 

Next is Refinance. Some people rent first and then refinance, but we prefer to refinance first. It doesn’t matter which way you do it. So after renovations, we call the bank and refinance the property based on the higher value after our renovations. The goal of refinancing is to extract as much of your down payment and renovation costs as possible. You want to get your capital out. 

We then rent out the property, which is the next R. We go all out with our renovations so we can usually get a good rental price. We want to attract that AAA tenant who is willing to pay for a nicer product. Delinquency is very low with these AAA tenants. 

We’ll then recirculate the capital we were able to extract to another property, which is the final “R”, Repeat. 

Every step of the BRRRR is essential and you need to be sure of your numbers.

What makes a good real estate investment? How do you analyze deals?

99.9% of our investments are BRRRR purchases. We want to extract almost all of our capital injected. So that needs to play out in the numbers during our analysis. We are also looking for properties that cash flow. We’re not getting involved in projects that don’t have a fruitful exit. 

95% of our portfolio has undergone a refinance or a BRRRR. We don’t like to leave a lot of our own capital in these properties. If you start leaving 20-30% of your capital in properties, you’re going to run out. If you’re able to get that capital out, you can take advantage of the next opportunity and scale faster. 

Why did you choose to invest in Hamilton and how did you learn the Hamilton real estate market? 

My mortgage broker at the time actually steered us towards Hamilton. I didn’t know the first thing about Hamilton 11 years ago but he invested quite heavily there. So he pushed us in that direction.

After checking out properties in Hamilton and running the numbers, we were amazed at the cash flow. It was a no brainer! 85-90% of our investments are in Hamilton. 

Have the recent interest rate increases impacted your investment strategy?

The recent interest rate hikes have slowed down the market and price points are down. Hamilton is down about 20% in terms of pricing. So we’re pivoting our strategy. We’re being ultra-conservative with our numbers and our exit plans.

But we’re very excited for this time in the market. We buy properties aggressively and often. As we’re transitioning to a buyer’s market, I believe the opportunities are going to be very fruitful for us and our partners. Now we can put in conditions for a home inspection or financing, as opposed to the beginning of the year when you had to go in with no conditions and $100,000 over asking. 

It’s going to be an exciting time for us! 

Is now a good time to buy real estate?

Yes. In my opinion, the bulk of the price reduction in the market has already happened. I don’t think we’re going to see another 10-20% reduction. Maybe we’ll see 3-5%, but nothing huge. 

We have a lot of built up buyers now. A lot of buyers are sitting on the fence and waiting. As soon as the market starts to turn, they’re all going to pounce.

Our strategy is long term wealth and long term holds – we don’t do flips. So if we buy something today and the market goes down another 2% in the next few months, it won’t kill our investment. I’m going to hold this property regardless and ride the wave. If you’re doing a long term hold, you can’t lose. The market will come back up. 

Last year, everyone kept saying, “I can’t wait for these prices to come down!” Well, the prices are down 19-20%. So what are you waiting for? If you want to risk it and wait for them to go down further, go ahead. But me? I’m pulling the trigger. I know we’ll be all right in the long term. And at the end of the day, we’re going to cash flow. 

What should someone’s strategy be if they’re worried about rising interest rates? Should they opt for a fixed or variable term mortgage?

Most of our deals are with a variable rate mortgage. That gives us more flexibility. But after a refinance, I’m comfortable to lock in a two year fixed rate. I wouldn’t go five years though. 

What other Canadian real estate markets are you excited about?

I like the west end cities, like Brantford and Niagara. We’re looking to expand there. Price points and cash flow still work in those areas. You’re not cash flowing in Toronto. 

What does the Canadian real estate market look like in the next 1-3 years?

I think the next year will be status quo for Canadian real estate. I don’t think we’ll see a lot of big movement with rates or price points. That would be my guess. But after 1-2 years, I think we’ll start to see interest rates come down. I don’t think they’ll get as low as they were last year, but they should come down some. 

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