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episode # 164

What is Stopping You from Achieving your Real Estate Goals with Rick Hoogendoorn

What is stopping you? This is THE question for so many of us and one that plagued Rick Hoogendoorn for years. Whether it was his uncompleted manuscript, “The Bachelors Guide to Success,” or his movie scripts, “Divine Wind” & “Eternal Magic,” Rick would fizzle before the finish. And this carried through to his real estate goals as well. This predicament led Rick to look inward and some would say the results of his deep meditation were almost as epic as “Divine Wind”! He now has built and holds multiple apartment complexes in Victoria, has a thriving development company and real estate business, and writes books on the regular. Oh, and he also does a mean Al Pacino! Hoowaa!

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Episode Summary


 

About Rick:

Rick is a realtor, real estate developer and author based in Victoria, BC. Rick grew up in and around Vancouver and his first career was in broadcasting.  After attending broadcasting school at BCIT, he worked at the CKVU Television station in the 1980’s. Eventually, Rick decided to leave the journalism field because there were certain aspects that he didn’t enjoy – chasing ambulances or interfering in people’s lives after they had recently suffered a tragedy. He decided to go travelling to Europe for a year or two and taught English in Barcelona, Spain. When Rick returned to Canada, he worked in the financial services field. He eventually got married and relocated to Victoria where he and his wife became interested in real estate investing. To be congruent with their real estate interests, he and his wife obtained their real estate licenses and became realtors. Eventually, this led to an opportunity to start developing purpose-build rental buildings in Victoria – one of Rick’s goals. Rick has written a book designed to help others achieve their goals.

On why he chose real estate:

He kind of fell into it while working as a financial planner. His wife is also a realtor. His wife was very interested in attending open houses on the weekends and she eventually found a condo she wanted to buy. They decided to purchase the condo as an investment property. Rick realized that real estate was such a great investment because of the concept of leverage. If you put $100K down in the stock market, and earn 10%, you get $10K. If you use the $100K to purchase a $500K property and that property goes up 10%, you get $50K. This moved Rick away from investing in the stock market and going all in on real estate.

On how he became an author:

In his 20’s, Rick was trying to be an author, trying to write books and movie screen plays. What he found was that he could come up with a good idea and start the writing process, but he would never finish the project. This forced him to look inwards and question why he wasn’t completing any of his books after toiling away for long periods of time.

He determined that although he thought he wanted to write books, he also subconsciously didn’t want to write books. He took out a piece of paper and wrote down all the reasons that he didn’t want to write books: I don’t want to fail, I don’t want to waste my time, I don’t want to be criticized, I don’t want the book to be criticized. He took these thoughts through an enquiry process to examine them. This allowed him to tackle his subconscious and keep the negative thoughts at bay. After this process was completed, he quickly wrote a book called “What is Stopping You?” in only a couple of days. It’s not that we want to do something or that we don’t want to do something, it is that we want to and we don’t want to at the same time. This is what’s happening when you are stuck at something you want to do.

Some people think they want to be real estate investors, but they also don’t. Reasons why they don’t may include: they don’t want to deal with tenants, they are afraid of debt, etc. These beliefs are in their blind spot and they need to be addressed before a person can move forward with something they want to do.

On the process in his book “What is Stopping You?”:

Let’s take an example that lots of people can relate to. Maybe you want to lose 15lbs, but you have been having a hard time accomplishing this goal. If you want to do something, you just do it – but, sometimes there are reasons that you don’t want to do something that is preventing you from moving forward. Think of this as a car with both the gas pedal and the break pedal engaged.

One reason that people do not want to lose 15lbs could be: “I want to eat potato chips”.

Ask yourself if this is true?

What happens if you continue to believe the thought: “I want to each potato chips”. You eat them.

Who would you be without the thought: “I want to eat potato chips”.  Someone who doesn’t eat potato chips.

Then turn it around, “I don’t want to eat potato chips”. Is there a genuine reason this to be true? Is there a genuine reason that you don’t want to eat potato chips? Be in that opposite for awhile and think of other genuine reasons why you don’t want to eat potato chips. Try to come up with 3-4 genuine reasons why you don’t want to eat potato chips.

Then, you go through every single reason why you don’t want to lose 15lbs and you blow them up using this process. At the end of the day, the break pedal in your mind starts to come off. The gas pedal is still down and the break now begins to come off and you start to move forward.

On how you actually get at all the reasons if they are in your subconscious:

It takes time and you must sit with yourself and think it through. It gets easier as you go. Some of the reasons that Rick gives in his book for why he didn’t want to write books: it has to be perfect, I don’t know if it will be perfect, it will be criticized, I will be criticized, I can’t guarantee that what I say will be right, I’m not a good writer, it needs to be a huge success, it won’t live up to my expectations, it will be a waste of time. He addressed all these things before he could complete his first book.

Using the process on the thought, “I want to become a real estate investor”:

Let’s look at the reasons why you don’t. The tendency is for people to focus on why they want to do something, but ignore the drag or the reasons why they don’t. Some fears to address may be: fear of debt, might lose money, too much work, I don’t know what I’m doing, I might have bad tenants, I won’t get enough tenants.

For Rick personally, he had a bunch of irrational fears that he needed to address before he could move forward and develop apartment buildings. He looked around and realized that every building on planet earth was built by someone using a similar process that he was about to undertake. This wasn’t an impossible task, in fact it was quite possible to accomplish!

On how he started developing purpose-built rental buildings:

Rick was a realtor working with a client that was a builder purchasing properties for development. Rick and his wife had been thinking about their retirement plans that included the possibility of purchasing a rental building. He discussed this possibility with his builder client who suggested that he could assist Rick in building an apartment complex from scratch and that this would be cheaper than purchasing an existing building. This was a huge step for Rick and although he knew this was something he wanted to do, he had to address all his irrational fears of why he didn’t want to develop a rental building. He used the process in his book to work this through, spending a couple of months thinking it through. The results have been amazing – now he has a 20-unit building, a 30-unit building, he is currently building a 63 unit building and he has 3 more undeveloped lots in the queue. He feels that it is bizarre that he was able to do this.

On how he approaches the things he can’t control – will the market work in his favor? will he get tenants? will he have enough income to service the debt?:

He is normally a conservative guy, but he examines these things to think reasonably about them. The big thing is that you must get comfortable with not knowing. When people don’t know something, they fill it in with imagined fears and consequences. The better way is to just say, “I don’t know” and get comfortable with it and accept it.

On the skills he has developed since he has removed the obstacles to accomplishing his goals:

His risk tolerance has gone up. He doesn’t get too uncomfortable about the thought of developing a property now, which would have caused him a lot of stress in the past. This might also be that his confidence has increased and that he is much more comfortable now that he has done these things before. He knows now that he will just figure it out!

He has also found that the more you have, the more you have to lose. This might work against your risk tolerance as you become more successful. People who have a lot are a bit more worried about what they have to lose vs what they have to gain, so as you get more successful, you start to question if you really want to make another big bet. Do I really want to build another apartment building? How much is enough?

On why he focuses on purpose built rental instead of condominiums:

The vacancy rate in Victoria is very low. When he started developing, the vacancy rate was 0.5%. Also, the builder he was working specialized in purpose-built rental. He was also looking for cash-flow in retirement and he believed that purpose-built rental was a better bet in terms of cash-flow vs a condo development. In the end, the cash-flow on purpose-built rental is not all that great, but it is enough to cover your costs and pay your mortgage – still a fantastic investment.

Right now, he is holding all the buildings but may sell some in the future. As the buildings get older, they will need repairs and upgrades that might be expensive for the owner. It might make sense to sell them in the future. Generally, costs of development are increasing, interest rates might be on the rise and the market has changed. It might be a bit more difficult to replicate what Rick has done now vs 5 years ago.

Final thoughts on the “What is Stopping You?” process:

It is an ongoing process but doesn’t always need to be onerous. He has used the process 2 times to great effect – writing books and developing purpose-built rental. He doesn’t need to focus on the process as heavily all the time, but he always has new fears. He is thinking of some other endeavors in the near future where he will have to undertake the process again. What he has realized about life is that you can’t please everyone and not everyone will like you. For example, not everyone liked his book and he shouldn’t have expected that it would speak to everyone. If everyone likes you, you might be doing something wrong. You find your audience and work for them.

On the Victoria market and the island:

The thing to remember about Victoria is that the market was flat from 2007 to 2015. The market took off in 2015 until the summer of 2017 when prices increased $250K-$300K for a single-family home, like 30%-40% in 2 years. In Vancouver, prices increased much more significantly during this period. Even though the BC market has now slowed, mainly due to the stress test and foreign buyer’s tax, the Victoria market still has some downside protection. Victoria is still ‘on-sale’ compared to Vancouver which suggests that prices shouldn’t decrease to much in Victoria. Inventory in Victoria is low because once people move to Victoria, they don’t leave. Victoria is a place people want to live, but not necessarily a place for investment. The lack of inventory also makes people weary about selling their home in Victoria to move into another place in the neighborhood because they might not find the place they want if inventory continues to be low.

The five-wire – Victoria version:

  1. Favorite neighbourhood in Victoria: Hill Side area in Victoria
  2. Favourite restaurant or bar: Pagliacci’s Restaurant in downtown Victoria
  3. Downtown penthouse or Oak Bay mansion: Oak Bay mansion
  4. First place he brings someone from out of town: Drive around Victoria – tour to James bay, Beach avenue, Dallas road. Victoria is fantastic.
  5. Something he’s bought for under $500 in the past year that impacted his life: Gadget to boil eggs. Puts a pin hole in the egg to make sure eggs don’t crack when boiling (see pictures!)

 

Find out more about Rick.

If you are interested in purchasing a copy of Rick’s book, email: choc1@shaw.ca

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