Greg Eaton - Real Estate Investing Tips for Cranbrook, BC

In Episode 21 of The Property Mindset Podcast, host Phil Gadd sits down with Greg Eaton, a seasoned real estate investor based in Cranbrook, BC. Greg shares his journey from purchasing his first rental property in Calgary to building a successful real estate portfolio in Cranbrook. This episode is packed with valuable insights on real estate investing, generating passive income, and achieving financial freedom. Learn about effective property management, investment strategies, and the benefits of real estate investment. Whether you're a beginner or an experienced investor, Greg's tips and advice will help you navigate the challenges and maximize your real estate success.

Tune in to discover:

• Greg’s real estate investing journey
• Strategies for building a profitable real estate portfolio
• Tips for managing rental properties
• How to achieve financial freedom through real estate

Don't miss this insightful episode filled with practical advice and success stories from the world of real estate investing.

Show Sponsor: First Tracks Real Estate Group - eXp Luxury

Transcript

0:00

Welcome to the property mindset podcast. Where we dive deep into the journeys of successful individuals in the real estate industry. Our guests share personal experiences and valuable insights. Providing practical tips and tools for your own real estate journey. Whether you're an inspiring investor. A seasoned professional, or simply someone who loves real estate. This podcast is for you. So join us on an engaging and informative conversation with some of the brightest minds in the real estate industry.

phil-gadd_1_05-23-2024_123650: 0:33

So welcome back to the property mindset podcast with me, Phil Gadd. Today I'm joined by Greg Eaton, who is a local. Real estate investor based in Cranbrook and he's going to tell us about his story some strategies and successes and the benefits of real estate investing, and then at the end, some advice for aspiring investors. So without further ado welcome Greg.

greg-eaton_1_05-23-2024_123650: 0:59

Phil hi everybody. Thanks for being here inviting me to this podcast. I think it's great and I love just sharing my story and what I've been doing and so yeah, it's great. Looking forward to it.

phil-gadd_1_05-23-2024_123650: 1:09

That's awesome. So yeah just explain to everyone how you got started in real estate investing.

greg-eaton_1_05-23-2024_123650: 1:15

Sure. I guess it, it started, I was born and raised in Calgary and and I bought a little half duplex in Calgary and in not a great area, and had a basement suite and I rented it out. And and to me it just made sense. I didn't understand real estate investing or cap rates or cash flow. What. Pay my mortgage that to me resonated. And so I did that at 24. And then about a year later, somebody approached me and said, Hey, Greg, I got this other rental property I want to sell. Why don't you buy it? And I said I'm not making much money. I just bought my first rental property and I don't know what I'm doing. And but luckily the lending criteria at that time was A lot easier. And it wasn't that hard for me to get a mortgage and I bought this other place. And so I had a couple of rentals and just grinding away. And and I started to fall in love with real estate investing and the dream of a passive income and what it could mean for me. So the market went up a bit in Calgary and I decided that I wanted to cash out and move to the mountains and I wanted to live the Kootenai lifestyle. And so my criteria was I wanted to ski, bike, and buy houses. And so I didn't know which Town that was going to be and so I just traveled around to all the different communities. And at the end of the day, I settled on Cranbrook more probably because the economic fundamentals for real estate investing and maybe a little bit less. About the biking and skiing, but but I like the economics of Cranbrook and started building a bit of a portfolio and Made a bunch of mistakes. I didn't really know what the heck I was doing. And and this was so now we're getting into about 2008 ish. And as you may or may not recall, that was the financial crisis, the housing crisis that started in the states and and affected us quite, quite a bit up here in, in the Kootenays. And I had a couple of properties that weren't really performing very well. They weren't really cash flowing. But I liked real estate and I was like, boy, I need to start learning what the heck I'm doing if I want to actually do something with this. And so I started taking courses. Listening to podcasts, reading books and just understanding real estate investing. And took a bunch of course at UBC and and through all of that, I was like, yeah, I've got a new mindset now. I understand what a cap rate is and what cashflow is. And I sold the six plaques. I actually still own the three plaques to this day. But I just started rebuilding the portfolio and starting from scratch and buying smarter value add risk. Roll it into another property or whatever, and just started

phil-gadd_1_05-23-2024_123650: 4:19

That's awesome. I love that motto. Ski was it? Ski, bike, and buy houses. That really, yeah. That's awesome. That really resonates with me. Yeah. I think I might write that on my wall. Maybe let's unpack a little bit how you really started understanding how you could make a living or, do you now make a living from investing?

greg-eaton_1_05-23-2024_123650: 4:39

Yeah. The last regular job I had was it would have been probably let's see about 7 years ago. So I'm going to say about 2018. I I quit my job. And so essentially my wife and I sat down. She knew I loved real estate and want to be passionate about it. And we said, we've got this little nesting, this little nut is 50, 000. And I had my three plaques. I had our principal residence and we said, basically, you've got this money. Don't piss it away or you gotta go get a real job. And but that nut was for me to buy rental property with or do whatever I wanted. And and I'm still working with that same 50, 000 chunk. I've been able to multiply it a few times, but that was the catalyst and so about 20. And I bought a rough old fourplex that needed a pile of work and it was a smart deal. And it came on a triple lot. I was able to sell off one of the lots. I was able to fix up the building with sweat equity. I did most of the work myself. And we refinanced at one point and I think bought another property. Ultimately we sold it a few years ago, but. Yeah, that was a lot of the catalyst was for me to quit. My job was from that little old fourplex.

phil-gadd_1_05-23-2024_123650: 5:47

Yeah, that's cool. So let's maybe explain to people who are listening how you went from, educating yourself and then taking the plunge to actually make it work as a, as an actual income generating activity, plus also wealth building activity.

greg-eaton_1_05-23-2024_123650: 6:06

Yeah. So I think that road is going to be different for everybody. But I, I know for me, I just, I had this passion for real estate. I just really liked it. And architecture design history. And I just found it all fascinating from quite a young age. And but then it's how do you make that a career? And so do I want to be a realtor? Do I want to be a mortgage broker? And ultimately I tried a few things. I was a certified property manager for a while and, I didn't really love that, but a lot of it is just, Through, studying real estate and listening to some podcasts like this podcast, start reading some real estate books. Rich dad, poor dad is a very fundamental book that everyone should probably read. And and there's a lot of different ways you can be involved in real estate investing or invest in it passively.

phil-gadd_1_05-23-2024_123650: 6:50

It's a business like, like anything. It's a, but what would you say would be the highlights for you to actually really just get those wheels moving of the business and actually turning it into something that's profitable?

greg-eaton_1_05-23-2024_123650: 7:04

Yeah Phil, it's a good thing you mentioned that cause it is a business and I think a lot of people buy rental property thinking that, uh, it's not. A business, but it is and it can be a fairly passive business, but it needs to be treated like a legitimate business. But it's it's being professional about it, giving it the attention it needs, and then figuring out what your niche is going to be where you want to to focus your energy. I know for me, it was understanding what cap rates are and understanding what cashflow is. So whatever, say a duplex in in Fernie for sale. How do you know if that's a good opportunity or not? And maybe the cap rate says it's 5%. What does that really mean? And and are those numbers accurate? And so it's nice to be able to actually get those financials and read through it and understand it. And and if you don't know, if you're interested in real estate investing and don't know what a cap rate is, Research it, Google it. And and it's pretty easy to get that information, but you need to understand what what those terms are. And and then yeah, the big thing for me was understanding cashflow cap rates and and also value add and Buying properties that are distressed a little bit rougher, you get a little bit of a discount and then you force that appreciation and then you can either refinance or do some other things with it. That's one of the great things about real estate.

phil-gadd_1_05-23-2024_123650: 8:22

Yeah, no, that's cool. One book I actually, if people are interested, I've read just recently, real estate by numbers by Jay Scott. And Dave Meyer, I highly recommend that book. It starts off from the basic and it goes all the way through to some more complex scenarios when you're looking to try and ascertain whether. The property you're looking at is going to be a good investment or not.

greg-eaton_1_05-23-2024_123650: 8:46

Yeah. Yeah. And you can certainly go down some pretty deep rabbit holes with some of this stuff. And I think there's often a misconception that A 5 percent cap rate means your return on investment is going to be 5%. But that's not true. Your actual return on investment could be 0%. But typically your actual return on investment is going to be a lot higher than 5% once you factor in mortgage pay down, property appreciation and some tax savings

phil-gadd_1_05-23-2024_123650: 9:13

Obviously there's you know, good strategies. You've had some great successes by the sounds of it what are some of the bigger challenges and some of the setbacks you've had along the way

greg-eaton_1_05-23-2024_123650: 9:21

Yeah, yeah, I've certainly got my fair share of setbacks. I've made a bunch of mistakes along the path. It's been over 20 years now of investing in real estate. And obviously I mentioned earlier, not understanding cashflow and buying the sixplex that was losing money every month, that, that was not smart. And and That is something I change. I learned from that mistake, and I'm doing things differently. One of the things I've recently been understanding more is my time and my energy. And I've got limited capacity. I've got a a couple younger kids and a or a wife with a busy career. And I get pulled in a lot of different directions and so a lot of it for me is managing my time and my energy and making sure I start with the right amount of energy, taking care of my body. Physically and mentally, but then it's also, I get pulled in 50 different direction as a, as I'm sure you do too, Phil and which ones are the most important to me and and often I would get, somebody maybe present a deal and say, Hey, Greg, you should look at this opportunity. And, in reality, it doesn't. Align with what I want to do in my life at all, but I'll go down this rabbit hole and spend a bunch of time. And now I'm a lot more careful about that and just making sure I'm a lot more focused in on, on what I want to be doing, what I think I should be doing with my time and effort.

phil-gadd_1_05-23-2024_123650: 10:38

Yeah. I think that's incredibly important. Same. I have three kids, a wife who actually has joined me in real estate. I think, setting boundaries, definitely getting to a point or an age where, you want to work and you want to progress, but you also want to, have that balance. Going back to your motto, I love it. Ski, bike, buy houses. Yeah, everyone should do more of that for sure.

greg-eaton_1_05-23-2024_123650: 11:02

That was a good motto. And actually my motto now is shifted. That's why I came to Cranbrook. Now it's, owning and managing properties in a way that balances profitability with positive community impact and that's my new motto now where it's yeah, of course, I want to make a living. I want to make some money. But. It is. I also want to have an impact and I want to do the right thing and real estate is there's a way where we can really make a difference. We're housing providers and that's what I do. And we want to make sure we're providing safe places for people and obviously make a living at it too.

phil-gadd_1_05-23-2024_123650: 11:35

that's awesome, actually. So that kind of is really nice segue into my next kind of section that I wanted to discuss. And that is what are some of the benefits of real estate investment.

greg-eaton_1_05-23-2024_123650: 11:46

yeah, so some of it is just being a bit more mindful about how we are landlords and and how we manage our properties and just trying to be as fair and reasonable with people. Yeah, I think landlords often get a bad rep often for good reason. But there's most landlords are fantastic people and really care about people. Then it's also recognizing the needs in our community and they're different community to community, but pretty much Canada. Why? There's a housing shortage. And what are we doing about it? And I've got a unique ability to be able to to bring some housing to our community. And Recently, I bought a couple empty lots planning on building a couple four plexus there, and I think we've got a really smart plan there, and there's some meat on the bone. I'm going to make hopefully some profit there, but at the same time, this is exactly what our new housing needs study said that we need, and I'm going to build those exact units to help our community, too.

phil-gadd_1_05-23-2024_123650: 12:42

Question then, obviously real estate investing can definitely positively impact our local communities. What are the, how has it impacted you, your personal and professional? Growth over the last 20 years.

greg-eaton_1_05-23-2024_123650: 12:57

Yeah. It's been quite quite profound for me. It's it has been my career full time now for quite a while. And and it it's shaped our family. Our kids are nine and eight years old and they don't come collect rent with me typically, but I own a small hotel in Cranbrook and they're often hanging out at the hotel a little bit. And so yeah it's been quite a journey and I feel it's very much intertwined with sort of the fabric of who I am. My, my wife is a nurse. She's been a nurse for over 20 years and and she is very much a nurse that she just embodies that. And yeah. And I feel like I've got my career as a real estate investor and and I very much embody that.

phil-gadd_1_05-23-2024_123650: 13:35

Yeah, would you, what would you say Greg would be advice to listeners who are considering getting in to to start in real estate investing?

greg-eaton_1_05-23-2024_123650: 13:44

Yeah. The first thing is read a couple of books, get rich, dad, poor dad listen to some podcasts like this, like bigger pockets. There's so many resources out there that, that are free. Don't go to, some. 10, 000 guru weekend course. You don't need that. There's so much free information that's out there. Just get some of it, but then don't get that analysis paralysis where you never pulled the trigger. At some point, you're just going to have to jump in there and just do a deal and don't make a huge one, but pull the trigger, do a deal and see if you like it and and then maybe adjust and just keep moving forward. The other part of it though, is. Just because you get a good deal that's working out. Don't get too complacent. Don't go out and buy a Mercedes and and start leveling up your lifestyle. It's something that that I think I've been pretty careful about doing and has allowed me to grow maybe a little quicker is that I haven't I've still been living well within my means and and I think that's important too. And so I think if you're starting out, yeah. Understand the numbers live within your means and and just go for it.

phil-gadd_1_05-23-2024_123650: 14:45

I think that's one of the best pieces of advice anyone could give anyone. Awesome. So a couple of pitfalls, like the biggest things to avoid you mentioned one of them there, but is there anything specifically you would recommend that People don't do if they're trying to get into real estate investing.

greg-eaton_1_05-23-2024_123650: 15:02

I think it's good to understand yourself and what your skillset is. And certain properties are going to be more work than others. And if you're say, investing remotely or you've already got a busy life maybe like buying a house and renting it to college students by the bedroom, that, that's a pain in the butt. And I did that for a while. And that's a labor intensive project. Even short term rentals, the returns can be quite lucrative, but if you're managing those yourself that's a pain in the butt. And so just, I think starting with what your skills are and what you're good at is a good place to to go.

phil-gadd_1_05-23-2024_123650: 15:37

Fantastic. And I think I'd love to have you back where we could unpack numerous topics that we spoke about in much more depth. Like I said, I really appreciate your time, Greg. Good luck with everything. And yeah, hopefully we'll see you soon back here on the property mindset podcast.

greg-eaton_1_05-23-2024_123650: 15:52

Great. Thank you very much, Phil. It's a great great to be here. I look forward to maybe coming back someday.