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episode # 275

How to Build a Real Estate Empire in Under 10 Years with Adrian Pannozzo

There are all sorts of excuses for not achieving your real estate goals – no time, no money, no stomach for today’s prices. Well, today’s guest has overcome all these obstacles and with staggering results: 260+ doors in under 10 years! Real estate investor, Adrian Pannozzo, sits down with Matt & Adam to chart his trajectory from police officer to real estate mogul. Want a plan to build general wealth? How about a sure-fire investment strategy that creates a market buffer and huge cash-flow? Today’s episode will offer a clear road map to reach your real estate goals.

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Episode Summary


Please tell us about yourself.

10 years ago I started investing in real estate. I was 36 and working full time as a police officer in the GTA at the time. I left policing in 2017 on good terms. When I started out, I wanted to buy 1-2 rental properties that would generate cash flow that could subsidize my pension once I retired. My wife and I started with a home equity line of credit for our first purchase because we didn’t have a lot of savings in the bank. So we leveraged the equity in our home for a $200,000 line of credit to purchase our first two rental properties. Those two properties did well. They were both multi-family units in Hamilton and already tenanted. 

It then became addictive and we bought a few more rental properties. Fast forward to us building up a network of resources and starting joint ventures with different investors. We took our portfolio from four rental properties to 64 rental properties (260 units) with partners across Ontario. That enabled me to retire early from the police department. 

How did you take on and mitigate the risk in developing a large portfolio so quickly?

We transitioned our business model from buying turnkey properties to the BRRR (buy, rehab, rent, refinance, repeat) method. We looked for distressed properties and were able to extract the capital we put into the deal. We took out the down payment and our renovation costs, which allowed us to continue and circulate that capital. 

We do have all our eggs in one basket. My comfort level with real estate is high. We’re long term investors planning for generational wealth. Even if the market fluctuates, all of our properties cash flow and we have debt paydown. I think real estate is one of the safest places to invest your money. That brick and mortar isn’t going anywhere. It’s not about timing the market; it’s about time in the market. If you’re in for the long haul, you can’t lose. 

What is the biggest threat or risk to your portfolio?

The only risk would be a market correction. We’re at an all-time high right now. But if there is a correction, our properties cash flow $1000-1500 per month each, so we have a cushion even if interest rates go up. Our tenants are still paying down our debt and we have the asset of the property. Passive appreciation and long term holds are a no-brainer in my opinion. 

So I don’t see that as a big risk. We have the cash flow, the debt paydown, the property management company in place, the construction company under our roof, and knowledge in the industry. 

What rules guide your investing? What makes a good deal? 

My go-to is the BRRRR strategy. I’m doing nothing but BRRRRs right now. If we can’t extract all or close to all of the capital we put in, we’re not doing the deal. We’re not leaving money in properties. We’re refinancing in 6-8 months and extracting that capital. 

We don’t buy turnkey properties anymore. We buy properties that will appreciate with great renovations so we can take our money out. 

We have 95% of our properties in Hamilton, with a few in Toronto and the York region. We’re right in the downtown core of Hamilton. Most of our investments are multi-family properties. We just completed a 12-unit apartment building so we now own a $3 million apartment building with not a penny of our money in the property.  

Why did you settle on multi-family?

Cash flow. Typically, a four-unit multi-family property is going to cash flow over a single condo. We’re anywhere between $1100 and $1500 per month cash flow on each property. 

How do you find deals?

We have a real estate company with 14 people on our team. We door knock, we cold call and we have a solid reputation in Hamilton. We find a lot of attractive off-market deals. We have expertise in analyzing deals and can run the numbers to find a great deal. 

How do you approach running the numbers?

Our approach is 10 years in the making with 35-40 BRRRRs under our belt. If I buy this property at X, how much will the renovations be? If I put in Y in renovations, what is the property going to refinance for? 

Because we’re at a high level, we’re refinancing a project at least every two months. We use that fresh data to improve the numbers on our next project. Being realtors as well as investors, we’re in the market every day. We see what’s selling. So ultimately it’s a ton of experience and being in the space every day that allows us to have our numbers tight. 

What did the early BRRRR projects look like? What mistakes were made along the way?

The construction component was a challenge when I first started BRRRR-ing. Everyone has a bad story about a general contractor. That whole segment of the BRRRR can really make or break your project. I didn’t have a strong team or a go-to contractor when I started out. I have several horror stories and lost some money. That’s what led us to building our own in-house construction company. We have peace of mind knowing these are our people and they only work on our projects.

I would caution people just starting out to either 1) partner with someone who knows what they’re doing or 2) if you’re doing it on your own, be careful with construction as it can make or break your project. Ultimately, the numbers are super important. If you’re going to leave a ton of money in your project, you might as well have bought a turnkey place. If you’re BRRRR-ing, you want to get your money out of that deal. 

Do you monitor market cycles?

Yes, we’re always monitoring cycles. As realtors, we’re seeing what’s happening in the market daily. Will it affect whether I buy? It always comes back to the numbers. Since covid, prices are up $100,000-125,000. But that doesn’t affect whether we buy or not if the numbers still work. We have a long term mindset. When it’s not just a straight flip, you don’t have to worry about small corrections. We are holding for the long term. 

How are you developing your network?

Joint venture relationships are mostly developed through word of mouth. People we’ve worked with in the past refer us to their friends and family. Repeat business is also a big one for us. If we deliver what we promised we would, people want to do it again.

Pre-covid, we attended seminars and now we do monthly webinars to educate people on how you can use BRRRR in our area. The business really took off when I left the police force and word travelled fast. 

How much are your partners putting into these projects? 

On the residential side with four units and under, they would typically have a minimum of $300,000 to cover the down payment and renovation. We’re buying a distressed four-unit property for $700,000-750,000 in our area nowadays. So you need $160,000 just on the down payment. And then we have to renovate four separate units. I know $300,000 is a lot of money but it’s a lot of work.

If we’re buying a 12 unit apartment building, we would typically look for investors who have access to $600,000. Again, that covers the down payment, renovations, holding costs and so forth. 

What advice would you give to aspiring real estate investors? 

Whether you decide to BRRRR or buy turnkey, put your money in real estate. Put your money in and forget about it. Upkeep your property but let your money grow. I can’t stress enough the power of long term holds. You can’t lose. Whether it’s a condo, single-family or multi-family, in my opinion any investment in real estate means you’re doing well. Let your money sit there and grow.

How does mindset play a role in your strategy? 

The police department helped build my mindset. I’m not afraid to step outside of my comfort zone; that’s where you grow and create opportunities for yourself. The two biggest times I stepped outside of my comfort zone were my very first purchase in a brand new city, especially leveraging my house to buy it, and when I left a $140,000 career with benefits and a pension. 

I left a stable and secure job to try and grow this business. Ultimately, I was successful. But the mindset was that I was unstoppable. People tell me I’m very lucky to have what I have. But I created that luck. I stepped outside of my comfort zone. As a cop, you learn to run towards stuff people run away from. And you learn you can do it. I’ve made mistakes but I know long term holds will outweigh the mistakes I made.

Step outside of your comfort zone. If you’re on the fence, just do it. Create that luck for yourself. You won’t regret it. Long term holds can create wealth for you and your family. 

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