Episode 83: Passive Income Investing Through Real Estate – Passive Income or Business Income?

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When you started turning your attention towards real estate as your passive income investing path, were you thinking that it wouldn’t be much work?

If you did, you’re wrong.

Unless you are a joint venture money partner, investor in a fund or REIT, you’re actually building a business rather than a passive income investment portfolio and that may or may not be a good thing for you.

In this episode, Jon and Kyle explore the intricate balance between building a passive income generating real estate investment portfolio and managing a thriving real estate property business. They share personal experiences and strategies that can help you understand where to store your wealth and how to navigate the complexities of managing both a business and a real estate empire. 

If you’ve ever pondered, dreamed, or even planned the outcome of growing a passive income real estate investment portfolio so you can live off the cashflow and not realize what is involved or what you have created, you may be in for a wake up call. 

Understanding the evolution of their real estate journey, Jon and Kyle reflect on how their initial investments have transformed into a full-fledged business, complete with its own set of responsibilities. They tackle the tough questions about treating a passive income property portfolio as a business and offer strategies for effective management and growth. This episode is a must-listen for anyone looking to refine their approach to real estate investing and business integration.

You’ll learn: 

• Gain clarity on whether to prioritize your passive income investments or your business ventures.
• Learn practical strategies for managing a growing passive income property portfolio as a business.
• Discover how to apply business thinking to real estate investment for long-term success.

We’ll explore why passive income investing through real estate is not really passive, how investing in real estate is more of an entrepreneurial business endeavour rather than a passive income investment, how the type of real estate investments you make should align more with who you are as an investor and entrepreneur rather than which investment property will give you the greatest return and more. As always, we incorporate some of the best parts of infinite banking for optimizing investments and creating multiple compounding investments that we call “money printing machines” through leveraging high cash value participating whole life insurance policies.

Tune into this episode now to uncover the secrets to balancing your real estate and business ambitions for optimal wealth growth.

Resources:

• Understanding Your Why with Simon Sinek
• Capital gains inclusion rate proposal should be delayed, if not scrapped altogether [Article]
• Dig into our Ultimate Investment Book List
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX.  

Looking for a new mortgage, renewal, refinance, or HELOC? Reach out to Jon to share some options.

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting corporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

By hopping on a discovery call with Kyle, he will review your specific personal and corporate financial situation in order to determine if there are some quick wins available for you to minimize taxes personally or corporately, provide ideas for how you can increase your personal cash flow, and ensure that the net worth of your estate continues to grow in tandem.

Watch Now!

Detailed Episode Summary 

Empire Building and Real Estate Strategies

Jon and Kyle discussed the concept of empire building, with a focus on real estate and entrepreneurship. Jon emphasized the importance of understanding why they make certain investments and where to store their wealth. He questioned whether Kyle desired to build an empire of real estate or an empire in his business, as he believed it might be difficult to do both. Kyle acknowledged the complexity of the decision and reflected on their previous discussions about real estate.

Discussing Real Estate Evolution and Business

Kyle and Jon discussed the evolution of their work and personal beliefs. They talked about their real estate business, which began as an investment but has grown into a business with its own set of responsibilities and challenges. Kyle recognized that he enjoys the process of acquiring properties more than the ongoing management and reporting required by the business. Jon questioned the distinction between a real estate investment and a real estate business, and whether they need to adopt a more business-like approach to their investments. Ultimately, Kyle and Jon are left to consider whether they want to continue growing their real estate business or remain in a more passive role.

Managing Large Property Portfolio as a Business

Jon and Kyle discussed the challenges and considerations of managing a large property portfolio as a business. Jon emphasized that as the portfolio grows, it becomes increasingly important to think about the six functions of a business, including vision, growth plans, marketing, and operations. He stressed the need for treating the portfolio as a business, rather than just a collection of assets, and highlighted the potential for hiring staff to manage different aspects. Kyle agreed, sharing his own experiences and observations from recent podcasts. Both acknowledged the importance of each individual deciding whether they want to commit to managing such a portfolio full-time.

Business Strategies and Real Estate Investment

Kyle and Jon discussed the challenges and strategies of running a successful business, with a focus on real estate investment. Kyle shared his insights about the importance of finding the right people, understanding one’s own strengths and weaknesses, and the need for ongoing learning and adaptation. They also discussed the concept of “rocks” from the book Traction, and how identifying and focusing on the most important tasks can lead to success. Jon agreed with Kyle’s approach, adding that it’s crucial to have the right people in the right seats and to constantly reassess and adjust the business strategy to achieve long-term goals.

Real Estate Portfolio Shift Strategy

Jon shared his plan to shift his real estate portfolio towards higher-quality properties over the next three years, aiming for a more balanced portfolio. Kyle emphasized the importance of considering real estate holdings as a business, removing emotion from decision-making and striving for profitability and equity growth. He also suggested that the focus of a real estate portfolio may shift over time, possibly moving from generating cash flow to acting as a store of value and wealth. Both agreed on the need to start thinking about these changes as a business strategy.

Evaluating Journeys and Applying Business Thinking

Kyle and Jon emphasized the importance of regularly evaluating one’s journey and goals, with Kyle encouraging listeners to analyze their motivation and path, while Jon highlighted the value of applying business thinking to decision-making. They both stressed that their goal was not to present themselves as full-time real estate investors, but to offer insights for those considering this path. They also requested feedback and inquiries from their listeners to improve their podcast and provide personalized guidance.

Transcript:

00:00:00:10 – 00:00:36:12
Jon Orr
Are you building a real estate side hustle portfolio or actually are you building a business empire? In this episode, we explore the intricate balance between building a real estate portfolio and managing a thriving business. We share personal experiences and strategies that you can understand. So where to store your wealth and also how to navigate the complexities of managing both the business and working towards an empire and realizing whether you want to be building an empire or whether you want to be just managing your portfolio.

00:00:36:13 – 00:00:55:10
Jon Orr
There is a difference. So if you’ve ever wondered or dreamed or pondered or even planned the outcome of growing a real estate portfolio so we can live off that cash flow and not realize what is involved or what you have created, you may be in store for a wake up call. You understanding the evolution of your real estate journey.

00:00:55:10 – 00:01:20:01
Jon Orr
And we did this ourselves. We’re going to reflect on how our initial investments have transformed into a full fledged business, complete with its own set of responsibilities. We’re going to tackle tough questions about treating a property portfolio as a business and offer strategies for effective management and growth. This episode is a must listen for you or anyone looking to refine your approach to real estate and business integration.

00:01:20:06 – 00:01:32:17
Jon Orr
Here we go.

00:01:32:19 – 00:01:37:18
Kyle Pearce
Welcome to the Canadian Wealth Secrets Podcast with Kyle Pierce and John Oliver.

00:01:37:20 – 00:01:51:15
Jon Orr
We are recovering high school mathematics teachers and education consultants whose entrepreneurial spirit led us to begin multiple businesses in real estate investing, digital courses and coaching and consulting after the bell rang at dismissal time.

00:01:51:18 – 00:02:12:04
Kyle Pearce
Fast forward a decade later where we’ve grown our portfolios and our time freedom to the point where we can now help entrepreneurs, business owners and investors to grow their wealth into a legacy that lasts generations through hidden investment and tax secrets. Your financial advisors won’t believe our true.

00:02:12:06 – 00:02:30:03
Jon Orr
All right. We’re going to let you in on a little secret here. Kyle and I just had we have conversations all the time. And, you know, later on, Kyle, I know that you were like, we should hit record or we should talking about this. And so what we want to do is we want to fill you in on a conversation that we’ve been having on and off.

00:02:30:03 – 00:02:56:11
Jon Orr
And it has to do with empire building. And really the question that’s going to come out in this in this, we’re going to spill the beans early on is really is going to come down to understanding our whys on our decisions in terms of investing or business or where you want to store your wealth. Like we continually talk about that mindset idea here on this podcast because it is extremely important.

00:02:56:12 – 00:03:22:14
Jon Orr
On making decisions, especially when you start and you start planning things out because Kyle, when we were talking, I think we were talking about we continually buy real estate and we’re making money in our operations, our business operations, much like our listener here, who is probably they have their day job or they own their own business or an entrepreneur, and they’re generating money inside that business or inside that corporation.

00:03:22:14 – 00:03:41:11
Jon Orr
And then they’re like, I want to put it somewhere. So people are trying decide, This is what we talk about here. How do I put it in a container so that I pay less tax? These are all the kinds of secrets we talk about, but now we’re zooming out. You kind of go, okay, let’s talk about some of the structures that are in place and some of the decisions about earning that money.

00:03:41:12 – 00:04:02:04
Jon Orr
What do we do with that money? Because what you said to me, when we think about us building our businesses is eventually you’re like, I’ve been building a business or I’ve been buying real estate, I’ve been becoming a real estate investor. But then you’re like, I don’t know if I want to build a real estate empire. That’s kind of like where this discussion went.

00:04:02:04 – 00:04:28:05
Jon Orr
And I’m like, Ha, you’re right. Like every time I buy a property, it goes into the pot of properties. And if you think about fast forwarding that, and if I keep doing that, eventually you will have to have an empire and it’s like, Do you want to have an empire? Because you have to run an empire. And if you’re doing this over here to generate your money, you’re now going to be competing with your empire that you’re trying to run.

00:04:28:10 – 00:04:42:07
Jon Orr
Which brings up the question of what is it that I really want and where do I really want to store the money? Do I want to build an empire real estate, or do I want to build an empire in my business? Because I don’t think I could do both.

00:04:42:09 – 00:05:03:08
Kyle Pearce
Right? Well, and I think that’s the part that really hit me because you sort of I said it. I talked about this idea of building an empire, and we are talking specifically about real estate and buying properties, and we’re just revisiting our personal beliefs work. And, you know, as we’ve said many times before, this is work and it changes and it evolves over time.

00:05:03:08 – 00:05:17:17
Kyle Pearce
So even if you think you nailed it and you’ve got it down, you’re like, I know exactly what I want. Well, guess what? Two years from now, that’s going to shift a little bit because you’re a little bit of a different person. You’re at a different point in your life. You’re at a different point in your business. You’re at a different point in your portfolio.

00:05:17:17 – 00:05:54:12
Kyle Pearce
And I had an epiphany because I realized in that moment we had a long discussion Prior to it, we were talking about all our businesses, including the real estate business, which again began as an investment, right? So like when Matt and I came together, we came together to invest in real estate together. And I don’t think at the time we would have ever articulated as a real estate business and what it has become is a real estate business and we have properties in that business, but we also have other businesses.

00:05:54:12 – 00:06:26:01
Kyle Pearce
You and I, John, specifically have two other active businesses happening, and Matt has his own active business happening for being a realtor and actually being involved in the transactions of real estate property. And you start to look and zoom out and go which business, if any, do you want to be an empire or an empire of? And I think it hit me that I don’t know if I’m getting the same joy out of growing the business of real estate.

00:06:26:01 – 00:06:31:11
Kyle Pearce
I love Stack in those properties. John Finding deals in stack and properties. I love that.

00:06:31:11 – 00:06:48:17
Jon Orr
It does feel good. It makes sense. You’re building assets. But let me ask you this What makes you think you have a real estate business? Because if I’m listening right now, I’m going like I’ve been investing in real estate. But how do I know? Do I have a business in real estate? Do I not? Or should I think of it as a business?

00:06:48:17 – 00:06:53:18
Jon Orr
What makes you think you have a business? Or you’ve neglected to think that you have a business?

00:06:53:22 – 00:07:12:20
Kyle Pearce
Well, here’s what I think I’m recognizing in recent times is that as we brought in a couple of JV partners and things like that, that I’m like not getting the joy out of the work, but it is work because then you’re actually you have to be very diligent in your reporting, right? So I’m every month sending out story.

00:07:12:20 – 00:07:15:01
Kyle Pearce
John I don’t do it for you because, you know, you’re like not.

00:07:15:02 – 00:07:16:10
Jon Orr
What do you don’t get every month.

00:07:16:10 – 00:07:36:21
Kyle Pearce
Either, John John gets every like every semiannually is when John gets his reports. But we have two other JVs that I’m picturing in my mind because I just did the reports recently. And these two individuals are people that we know but not as well, and we’re not in any other businesses together. So we do a monthly report for them.

00:07:36:21 – 00:07:53:17
Kyle Pearce
And as I’m doing this work and you look and you see a number is higher than usual, you go, wait a second, why is that? The expense is higher. You got to go and figure that out and go, Well, how do we do that better next time, soon as you start asking yourself those questions, when you go, how do we do that better?

00:07:53:19 – 00:08:19:11
Kyle Pearce
That’s a business thought right now. Up until we had joint venture partners, I would argue that we dealt with it as an investment and maybe too passively, meaning we were potentially leaving money on the table for ourselves simply because we weren’t committing the time and effort into managing the numbers, like not managing the properties but managing the numbers to go.

00:08:19:17 – 00:08:49:24
Kyle Pearce
Is this a profitable property from a cash flow perspective like the numbers when we bought it all makes sense. But ongoing, as we put more and more money into a property is at what point does it make sense for us to go, It’s time to move on from this? Like that’s what a business does, right? They go, We have this product that we’re going to sell, and then eventually it’s like maybe the margins get thin on it and you go, Wow, we’re we’re putting a lot of time and effort and energy into this particular product.

00:08:50:01 – 00:09:23:11
Kyle Pearce
Maybe it’s time for us to take that product off the shelf. And the same should be true for an investment portfolio or real estate investment portfolio. And I would argue that we, Matt and I specifically have not done that for ourselves, but we do that for our JV partners, and that’s the part where we start to now look back at ourselves and say, wait a second, we have a real estate business, and only when other investors come in to the picture does it seem like we’re running it like a business.

00:09:23:11 – 00:09:49:03
Kyle Pearce
But here’s the part that hurts my soul even more, John, is I don’t enjoy that part, which is probably why I wasn’t doing it for myself. I was looking at it as a passive investment and what will happen will happen, and I’ve been happy with the results so far. But when you have to report to quote unquote shareholders, right, a JV partner would be a shareholder in a way of that property or that business.

00:09:49:05 – 00:10:10:24
Kyle Pearce
You’re now starting to look at things a little differently. You start to realize where things are going really well and where things are not going so well. And then you start to run it like a business. And I don’t know John, I’m on the fence here as to whether, like, I really want to grow that side of the business or whether I’m just into stacking assets and sort of sitting back.

00:10:11:01 – 00:10:34:08
Jon Orr
Yeah, And that’s the question I think you have to answer, because you’re at the point where you are forced into the empire. You’re at a point where you have many, many properties that you’ve stacked over the years, many, many doors. And each of those doors take managing, even though and we talked about this in one of our earlier episodes about outlining your team, you know, having your team and part of that team was having a property manager.

00:10:34:10 – 00:10:58:08
Jon Orr
But we know that a property manager manages, say, the tenants, but the property manager oftentimes needs managing. And when you start continually or if you continually stack those assets, the more properties or the more doors you have, the more managing that the property manager needs. And now all of a sudden you’ve got like a part time job that I’m now organizing.

00:10:58:14 – 00:11:24:03
Jon Orr
Managing tracking follows up with the property manager and you’ve built this empire that you may or may not have wanted from the beginning. You’ve got no choice but to try to maintain. You’re probably just maintaining you’re not even growing the business because you’re not thinking about it as a business. But now you’re forced into thinking about a business because a long time ago you were just like, I’m in the stacks, I’m assets, but now you’re in a position.

00:11:24:03 – 00:11:43:17
Jon Orr
We’re like, okay, so if I want to continue stacking assets in this fund or this investment portfolio, as you originally called it, you now are actually forced into going, I have to treat this like a business, which means I now need to do the thinking that business people do like. I need to think about the six functions of businesses.

00:11:43:17 – 00:11:58:08
Jon Orr
I need to think about what is my vision, what do I want in terms of growth, What is my five year plan look like? What is my ten year plan look like? What are the marketing aspects I’m doing here in terms of marketing might be like, how do I generate leads and revenues and how do I find deals?

00:11:58:08 – 00:12:18:14
Jon Orr
Like these are seats that all have have to be filled. You love finding deals. That part is great for you, but the another seat that you need to build is like operations. We need an operations manager in a way they like, okay, I have a property manager, but they don’t care about my business. If I’m going to treat it like a business, I need someone who’s invested enough to go.

00:12:18:14 – 00:12:36:13
Jon Orr
I want to see growth in this business and therefore I’m going to make decisions based off that growth. A property manager won’t do that for you. They’ll just like figure out an easy solution, but they’re not going to think about how to what solution should I pick so that the growth of the business meets the goals of the business.

00:12:36:15 – 00:12:57:14
Jon Orr
And that’s just one of those seats. You’ve got financing, you’ve got many seats that all of a sudden have to kind of be filled. And if you’re not ready for that, it’s kind of like you’ve got this house of cards or this mess of portfolio that you’re just trying to like manage day to day. And here’s the real kicker is if you don’t like it every hour, you spend managing that.

00:12:57:16 – 00:13:15:19
Jon Orr
And especially because you’re a business owner in another field that makes your revenue and your income, your family income, and you’re trying to make that business grow every hour you spend over in this empire you built over here, even though you didn’t maybe want to build an empire, maybe you did, but you just didn’t think about that. You were building one at the time.

00:13:15:21 – 00:13:36:09
Jon Orr
Takes an hour away from this business, which probably fulfills you, makes you happy, and gives you a sense of purpose. And you can see growth over here. And now you’re left going, Oh my God, every hour over here is drudgery, but every hour, every is not so hot. What do I hire someone to fill my seat? Like? That’s what a business owner might do.

00:13:36:09 – 00:13:51:21
Jon Orr
They’ll figure out, How do I fill the seat to do the things that I don’t want to do? And then it leads me to do the things I do want to do. But again, you’re in an empire building, so now you have to go like, okay, well, if I fill that seat, I’m in this business building mode, but do I want to keep going in that?

00:13:51:21 – 00:14:09:02
Jon Orr
Like, is that where I want to spend? Do I want to build the empire? And that’s the original question is, do you want to keep going in that box? That’s what’s going to happen. If you fill the seat, you have to kind of think about it. So it’s like rewind to Kyle, who’s buying his first home in Florida, and Kyle’s like, I want to stack assets.

00:14:09:02 – 00:14:27:17
Jon Orr
I read Rich Dad, poor Dad, and I should be buying real estate. But you didn’t think probably down then is like eventually by following this pattern that I’m going to do, I’m going to have to own this business. That’s an empire, you know, a real estate empire now, because if you fast forward from where you are ten more years from now, you’re keep going this way.

00:14:27:22 – 00:14:30:10
Jon Orr
You’ve got a huge empire and that’s going to be your full time job.

00:14:30:12 – 00:14:53:12
Kyle Pearce
Totally, totally. And we’ve talked about it before. And I actually recently I’ve been on a couple different podcasts and they were asking, you know, and I’ve been kind of giving this sort of answer or at least throwing this out there to their audiences where I’ve been saying is like really trying to help yourself understand, do you want to leave your current job so you can take on a job in real estate investing?

00:14:53:12 – 00:14:54:08
Kyle Pearce
Because that might.

00:14:54:08 – 00:15:10:06
Jon Orr
Be similarly, that might be somebody like, I love to do that. We were at a real estate kind of get together a couple of months ago and we were talking with a couple at that and they had, I think had quit their job and they were managing properties and they sounded super happy, if that’s what you want and that’s what you want.

00:15:10:08 – 00:15:27:07
Kyle Pearce
Totally, totally. And I’m like, hey, to each their own. And this is I think the hardest part about the journey is that when I go all the way back to Rich dad, poor Dad, as you mention, and when I was going to buy that first property, I mean, it’s been a while since I read that book, but I’m going to guess inside there they probably said, You got to run this like a business, right?

00:15:27:07 – 00:15:43:11
Kyle Pearce
And I was probably like, Yeah, yeah, I’ll figure that out. What does that mean? And you’re going to have to learn this as you go. And I’m sure there’s some people listening who are in an interesting spot. And here’s what I think is most difficult. It’s like with any business, it doesn’t matter if every business there’s going to be parts of it.

00:15:43:11 – 00:16:07:02
Kyle Pearce
And I think about rocket fuel and I think about some of these books like the Gene Whitman books Traction and talking about iOS, and we had Ian Murray on recently for for an interview where he’s helps you through a coaching process to do all of this work. Every business has parts that you’re going to like and parts that you’re going to hate, and finding the right people is the key.

00:16:07:02 – 00:16:31:17
Kyle Pearce
It sounds so simple, but that is not simple. To find the people on your team to build any business. That is a really important thing that you have to work through. And one of the hardest parts, I think, is learning more about yourselves. And what I mean by this is way back then and even until recently, I knew certain things about myself, but I didn’t know everything about myself.

00:16:31:17 – 00:16:55:18
Kyle Pearce
So one thing that I’m noticing about myself is like, first of all, I like control. That’s part of why I like to own property myself instead of, say, putting money into a fund, right? Same asset class, but it’s different. I don’t get to go to the fund and say, Hey, I want to sell now, even though I’m not a big person that looks to sell and flip, it’s like I like to know that that option is available to me, right?

00:16:55:18 – 00:17:16:21
Kyle Pearce
Probably part of my financial security sort of primal question that I have. So that’s one of those things. But then another thing is I also don’t like the process of spending money, and I’ve said it on episodes before, like I’m not the type of person that goes out and buys a lot of things. And the reason why is because I don’t enjoy it.

00:17:16:21 – 00:17:44:07
Kyle Pearce
So something interesting about the portfolio that Matt and I sort of started building on was buying the ugly duckling properties that required capital to be put into them. That now looking back at it sounds like a really poor idea for a guy who doesn’t like the process of spending money, even if I could justify it on paper, like even if I put on paper that, Hey, if I put 20 grand into this, it’s going to be worth that.

00:17:44:07 – 00:18:01:18
Kyle Pearce
It’s like I still don’t like the process, especially when things start going. So right now we’ve got quotes in for Windows at one of the property. I’m looking at the quotes and I’m going, I don’t know how much windows cost, you know, like let’s get a couple of quotes and then you look at them and you’re like, I’m like, I don’t know, I install them.

00:18:01:23 – 00:18:29:08
Kyle Pearce
It’s like in my head, I’m going, Holy smokes, If I knew what I knew now about myself, I might start investing in different types of real estate, property, maybe property that won’t require as much work to be done to the property, even if it means that I would actually be building more equity in. So all this to say I have no regrets for how we got to where we got to now.

00:18:29:10 – 00:18:50:04
Kyle Pearce
But for those people who are either in the process, maybe you’re in it right now and you’re trying to figure out where am I, you might have these crazy thoughts of I either want to sell it all because something doesn’t feel right about it, or it’s like it’s you’re not sure or not certain. It could simply be because maybe I’m investing in the wrong properties.

00:18:50:09 – 00:19:18:15
Kyle Pearce
I don’t have to buy apartment buildings or multifamily or quad plexus. You get to decide what it is and then what’s going to bring you the end result, which isn’t just financial. And it’s not just return based, but it’s more or less is like what’s going to help you get closer to that longer term goal and what’s going to help you feel good about it throughout the process so that you don’t constantly feel like that energy is being sucked from you.

00:19:18:15 – 00:19:42:02
Kyle Pearce
Because I’ll be honest and say in the past six months or so as we’ve been scaling other businesses that I love working in and I spend all of my time working in, what ends up happening is I spend all my energy there because I love it and then I leave the managing stuff for our properties last. And then I’m like, Oh, and then it hurts even harder, right where it’s like, Now I got to deal with this thing.

00:19:42:02 – 00:20:20:15
Kyle Pearce
It’s like I saved it for last, which is probably the worst possible idea, but it’s kind of that’s why we procrastinate. I don’t want to deal with that stuff. So now it’s like, okay, what does that look like and sound like? How do we take what we have? Do we restructure? Do we maybe shift capital from certain types of properties to other types of properties, or maybe we look at different asset classes now that we’ve gained a certain amount of wealth through this asset class, Do we maybe slowly to accumulate some of these properties and put them into things that are just going to give you a steady Freddie return without much thought or effort

00:20:20:15 – 00:20:21:08
Kyle Pearce
involved?

00:20:21:09 – 00:20:48:13
Jon Orr
See what I like? What you’re saying right now is the fact that you’re trying to make those decisions is you’re actually because you just realized and it sounds funny that you’ve been doing this for a long time and it sounds like you’re just realizing that. And you said it here on this podcast today that you just realized that your investment portfolio needs to be a bit like you never really thought of it as a business, even though you had people that you had to report to.

00:20:48:13 – 00:21:10:08
Jon Orr
But I mean, that’s the way you’re thinking. I think as of today, in the future, because what you just said is what business owners do when they make their goals, their quarterly goals, their three year goals, their ten year goals. They’re trying to decide what do I want three years to look like in terms of my business, and then how do I reverse engineer that to make sure I get there?

00:21:10:13 – 00:21:24:15
Jon Orr
What quarterly goals, what annual goals do I need to make? So that I get there? And what are the quarterly goals? What am I rocs from traction, let’s say like what are the rocks that we need to do? And then what seats need to be filled? Do we even have the right seats filled to get to the goal that we want?

00:21:24:15 – 00:21:45:00
Jon Orr
In your goal that you just threw out there was like, I think I’m realizing that what got us here is not where I want to go, so I don’t want to do because I don’t maybe have the right people in the right seats. I then because I don’t want to do the managing and I want someone else to do the seats and either I fill the seat or I have to then fill the seat myself, which a lot of business owners do.

00:21:45:06 – 00:22:29:01
Jon Orr
You’re now going if I am going to sit in that seat, manage the property managers that how do I do less of that which is like, how do I shift the goals of my business to go? I’m now going to sacrifice, maybe potential gain on deals for easier management. And my next three year goal is going to be to slowly transfer the percentage of my portfolio from maybe you’re going to label dumps into nicer properties and you’re like saying, I look, I got these like two star properties and now I’m going to only buy four star properties or three star properties and my portfolio balance is going to change in the next three years.

00:22:29:05 – 00:23:01:24
Jon Orr
That’s what a business owner would decide to do. So you’re trying to make that decision now. It’s like, Well, now we just need to like think of this as a business. And so the takeaway that I’m having here, and maybe I want to leave for the listener right now is if you are, say, managing different businesses right now like we are and you have real estate as part of a portfolio, if you’re not yet thinking about it as a business start, because eventually the house of cards might come crashing down and you’re going to all of a sudden have to trade our for our in the business that you want to work in.

00:23:02:01 – 00:23:26:22
Jon Orr
And maybe I get like I said, maybe you have a T for job and your goal is actually to transfer to be that as your main business because that’s actually what Robert Kiyosaki says he wanted to do. That was his goal, was that remember, he said, no matter what business you’re in, your real business was his real business was real estate like he saw himself as the Empire Builder in real estate.

00:23:26:22 – 00:23:43:16
Jon Orr
He’s like, I’m going to transition. And that’s where my goal is going to be. But that’s not where your goal wants to be. So now you’re trying to think, How do I manage both? Because now I do have a business. But stepping into that world, if you’re like, I haven’t bought a real estate property, just know that if you are buying one, fine.

00:23:43:16 – 00:23:52:21
Jon Orr
But if you’re going to say like my strategy is to buy and dump my capital into real estate deals, you are running a business, so start thinking of it like one.

00:23:52:23 – 00:24:10:21
Kyle Pearce
I love it. I love it. Yeah. And it really what it requires. And here’s something interesting in the book that came to mind, because I think you said it, which is the title of the book. It says, What Got You Here Won’t Get You There by Marshall Goldsmith. And both you and I, John, read this book recently based on a suggestion from Todd, right.

00:24:10:21 – 00:24:49:00
Kyle Pearce
So from a business coach and fantastic book that highlights some challenges in business. But what’s interesting is that over time, if we think about things like a business and again, this is me sharing what I think I’m learning more recently, this isn’t me trying to be all like, I’m super wise and I’ve been doing this all along because I have and I’m sharing what I’m recognizing about myself and that I’m realizing that when you run and we’ll talk specifically about real estate, your portfolio like a business, you’re removing emotion from the decision making process, right?

00:24:49:00 – 00:25:18:07
Kyle Pearce
And what it requires you to also do. So while a business is for profit, right? So we want to gain profitability. We want it to cash flow and or we want equity to rise, right? We want those two things. The other thing that we have to go back to, we have to be okay with is that sometimes when you set out on a journey, when I set out for real estate, I wanted to grow my portfolio and grow more and more doors to grow wealth.

00:25:18:13 – 00:25:52:23
Kyle Pearce
That’s fine, but that should shift over time. And I think that’s the part to that. As you look at things through a business lens, you also have to zoom out and start to think about why did I do what I did? And when you said What got you here won’t get you there, is it possible that you could be a successful real estate investor and eventually get to a place where you shuffle part of your portfolio, where you completely sell your entire portfolio because it got you to where you wanted to get to and now you have a different end goal.

00:25:53:00 – 00:26:14:18
Kyle Pearce
Or maybe it’s a little bit of both. And I think what I’m starting to recognize about myself and I can’t speak for you, John, I can’t speak for Matt, but for myself, I think I’m always going to want to have real estate and owning property myself with maybe small group like we are here. I think I’m always going to want that.

00:26:14:20 – 00:26:42:13
Kyle Pearce
But now I’m shifting going like the type of property may look and sound really different. It might not be about the property generating the cash flow for my lifestyle, but rather having it as a store of value, a store of wealth, and maybe the property types not having as significant a return as, say, some of the properties that we used to get us to this place in the journey.

00:26:42:15 – 00:27:26:07
Kyle Pearce
So ultimately I share that with everyone listening to hopefully give you the permission, the grace, maybe just the thought of analyzing where you are, whether you’re beginning the journey in the middle of the journey, or maybe you’re feeling sort of like where I am right now, which is sort of like trying to get a better sense or better handle on why I’m doing what I’m doing and whether continuing on that same path is the right move or whether veering on that path a little bit like making adjustments and being okay with it because my goals have evolved over time, or maybe that I’ve hit a goal and now I’m ready to set a different or

00:27:26:07 – 00:27:55:24
Kyle Pearce
a new goal for the rest of the journey. Give yourself that permission to do that thinking so that you can feel good about the work that you’re doing. You don’t just look up one day, find yourself buried in all kinds of work and then go, Oh shoot, I didn’t realize that this was going to be quote unquote, so much work and that maybe that work, the new work that you’ve created for yourself, it may or may not bring you as much joy as the old work you used to do.

00:27:56:01 – 00:28:11:03
Kyle Pearce
And that’s something that I think we all need to be cognizant of, is that we all don’t need to be full time real estate investors in order to have success investing, be it in this asset class or any asset class.

00:28:11:05 – 00:28:33:17
Jon Orr
Yeah, I think you’re sharing the secrets that you now know or the, well, secret that you wish you knew. But I mean, the secret for me is thinking about that as what are the business decisions no matter And this is maybe the secret that I’ve learned over the years, that is, can I apply a business thinking to this situation?

00:28:33:19 – 00:29:02:09
Jon Orr
You may have got into real estate investing as a passive source of income or maybe your store of wealth, but if you’ve grown it so far, it’s like no matter where, whether it’s small or whether it’s big, whether it’s medium, can you apply business thinking to the situation? And I think that can help you make clear decisions like we talked about making or thinking about business decisions early in this particular podcast, especially when we talked about analyzing deals, we used to go in going like, you got to think like a business.

00:29:02:09 – 00:29:24:03
Jon Orr
You’ve got to think about profit loss, like treat it like a business. But that was our analyze deals and that was like thinking about how much you’re going to pay in terms of expenses for that property, which include property manager. But then there are other things that maybe you knew that over time weren’t expenses per deal. There’s expenses for all the deals in a way like your time.

00:29:24:05 – 00:29:42:10
Jon Orr
So no matter what situation you find yourself in, think of it as as a business. What are the goals? Resort back to the goal thinking and then whether you in a good position to do the work that needs to be done in that business. Or maybe you need to hire someone like think of it like a business. So I think that’s my kind of big secret.

00:29:42:10 – 00:30:04:21
Jon Orr
Well, secret here today is to think about if I do want to be an empire builder and if so, awesome, treat it like a business and go forward. Or maybe you don’t want to be an empire builder, but you have to kind of know what you’re stepping forward and stepping forward into. And then also just going, Hey, I no matter where I go, I can change my decision later in life or later in the year.

00:30:04:23 – 00:30:09:21
Jon Orr
But I should resort back to kind of business thinking when I go to make those choices.

00:30:09:23 – 00:30:31:16
Kyle Pearce
I love it. I love it. Hey, friends, if you find some value in these episodes in this podcast, please do us a favor. Head on over to Apple Podcasts or Spotify or wherever you’re listening from and leave us a rating and review. Be honest and open. But it does help us reach more wealth Secrets Seekers just like you.

00:30:31:18 – 00:31:06:21
Kyle Pearce
And remember, if you want to hop on a call and learn about your next best step to help you reach your own personal beliefs, reach out to us at Canadian while secrets dot com forward slash discovery and we’ll hop on a discovery call to figure out where you are along the journey. I always like to call it which patio stone you are hopping along or which fence post you are coming up to so that you can reassess where you are and start looking towards the straightest path to the next fence posts that you’re after in your Canadian wealth.

00:31:07:02 – 00:31:08:23
Kyle Pearce
Secret journey.

00:31:09:00 – 00:31:52:05
Jon Orr
All right. Continual secret seekers. We’ll see you next time. Just as a reminder, the information you heard here today is for informational purposes only, you should not construe any such information or other material as legal tax investment, financial or other advice, John. Or he’s a mortgage agent with Brick’s mortgage license number. m23006803. Carl Pierce is a licensed life and accident and sickness insurance agent and VP of Corporate Wealth Management with the Bancorp team, which includes corporate advisors and Pan Financial.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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