The BRRRR Strategy for Ontario Landlords, Explained

Introduction to CRESI’s Ontario Landlord Series

Hey everybody, welcome to another episode of CRESI’s Ontario Landlord Series podcast. We’re here to educate, inform, and make sure landlords are understanding things that they may not know about, or things that they definitely do need to know about. Today I’m joined by a friend and colleague, Monika Jazyk. She owns and operates a real estate education platform for investors, teaching how to acquire properties and maximize that investment.

The company’s called RPI Education, which stands for Real Property Investments Education. And we’re going to talk to her today about how they help landlords, whether you’re new to becoming a landlord or looking to diversify or grow your portfolio, and more importantly, one of the best investment strategies out there. We’re going to dive into the BRRRR strategy — buy something, renovate it, rent it out, and refinance it. So without further ado, Monika, thanks for joining us. How are you today? I’m great, thank you so much for having me.

RPI Education: Real-world investor education

Why don’t you share a little bit about RPI? I know you’ve been in business for about 15 years and helping out landlords all across the GTA. But why don’t you tell us a little bit more about yourself and RPI?

Sure. So RPI Education kind of came out of my husband and I — we’ve been full-time real estate investors for over 15 years, and we put a lot into our own education. We went through a lot of trials and tribulations as beginner, novice real estate investors, and we really put a lot of that into our first book that we actually wrote, Real Estate Mistakes. It talks about how we made over a million dollars of mistakes in our first few years as real estate investors. And we really just always love to share with other investors what we sort of learned through our trials and tribulations, through real estate investing. Because we were able to do that, a lot of people were coming to us for advice, which is how we started our consulting company, RPI Education.

Million-dollar mistakes to avoid in real estate

Excellent. Why don’t you share with us really quickly what you would say was the biggest mistake you made when you were starting out. The biggest mistake we made when we were starting out was lack of focus. We were just so obsessed and enthralled in real estate investing itself, because originally I just wanted to be a stay-at-home mom. That was my goal. But we just wanted to get better returns on investments because we realized at that point, traditional investing does not work. So we decided to give real estate investing a go, and we started off with three properties.

But when we started getting on this journey, we were so excited about what we were doing, we over-invested in our education, which exposed us to all sorts of different strategies. And we completed over a hundred deals in our first year as real estate investors. We kept up that pace for years two and three, and we thought we were doing great. But what we didn’t realize is, while we were making so much money, we were losing even more — partially because we were so unfocused, doing so many different strategies over so many different areas.

And we were on this quest to have a hundred homes — a hundred doors — which we achieved. And that seems to be what investors I’ve seen over the years are always going for: I need a hundred doors, that will make me a true real estate investor. And this lack of focus is really what destroys people, because believe me, you don’t want a hundred properties. Having a hundred properties is like having a hundred kids. I have four kids, that’s enough. And you don’t want that many, and just because you’re active constantly in so many markets and you think you’re such a big shot, that does not mean that you are doing well.

Real estate is such a powerful investment tool. We have now done a total 180 in our approach to real estate investing, and now take a total less-is-more strategy, and this is very good for landlords, because every Canadian should have real estate in their portfolio, even if you’re not a full-time investor like me. Every Canadian needs their personal residence and one to three investment properties in their portfolio to help them solve those money problems, and at that point you are a landlord. So why not keep it simple and get a real estate model that fits with your life, rather than having a multitude of properties in different areas that fights with your life.

And using the BRRRR strategy, you can have all your doors in one property, which is super exciting. And that one property can help you create a multi-million-dollar retirement, it can make you more money every month, and it can also help your kids out — pay for their education, as well as help them become homeowners.

Why every Canadian needs investment properties

Yes, definitely — and things are constantly getting more expensive, which means our kids’ lives are going to be more expensive. Buying something in advance and trying to set our kids up as well for ourselves to enjoy later years is a big thing about real estate investing. You mentioned everybody should own one to three properties as well — right now, more than 33% of Canadians are paying rent. So there are a lot of possible tenants out there. I know a lot of bad news is what gets shared around the landlord industry — why do I want an income property where I’m going to have a tenant that’s not going to pay me rent, or all these negative things that are floating around. But as I just said, one third of Canada pays rent, so there are lots of tenants out there.

It’s about the due diligence and the selection of those tenants. When you’re talking about having those all being in one property, you’re talking about the BRRRR strategy, you’re talking about a renovation, you’re talking about something not everybody is ready to take on with that bigger renovation. Is there something you would suggest a new landlord start out with — maybe something easier, smaller? Or how would you talk to somebody that’s just getting started?

BRRRR strategy for beginners: Starting with second suites

Well, the BRRRR strategy — usually we take single-family homes and add two to four units. We either convert it to a duplex up to a fourplex, sometimes even more. So a more beginner investor, maybe even your first investment could be adding a second suite in your own house, in your primary residence, if you wanted to really get started, and then using strategic leverage from that renovation, as well as the extra rent, to then perhaps get another income property if you choose. So it doesn’t have to be complex.

And that’s what our company, RPI Education, does as well — we have full teams in each one of these areas that will do it for you. So if you wanted to do a BRRRR, say in Hamilton or Toronto, St. Catharines, even Calgary or British Columbia, we have those teams out there, and we’ve figured out exactly what works, what we need to buy the property for, what the renovation costs are going to be, how to make money when you buy the property, and have the contractors in play to do all the renovations for you. And the best part is, you know exactly what your return on investment is going to be after you use that strategic refinance and are able to pull a huge chunk of your investment back out — you can do another property, or you can even keep that money to do something else for your wealth-building journey, or even to help your kids out.

Building your professional support team

I like what you said about having the team and the support around you. I think that’s something a lot of people don’t have, especially when they’re getting started. So a lot of them think they’re going to have to do all this work themselves, or some of them even really think they want to do all this work themselves.

Where I’m talking about educating landlords about having it be a more passive investment — where they can have somebody do that work for them, so they don’t have to go to that property on their weekends after their day job to make sure they’re finishing floors or doing whatever. Hiring that out is an expense, but it’s a write-off, and by having somebody do it, you’re having professionals put it together — you’re not going to have shoddy workmanship, and you know the numbers up front because they’ve already told you what that renovation cost is going to be. Piece-mealing your own systems together would be a huge mistake, because the renovation teams have done this like a cookie-cutter model over and over again, and they’re able to work with us and work with the budget, because we never let them deviate from it. Quite often when people try to do this on their own, things cost more, run wild, and then they’re out of pocket and not able to maximize their recoup on the refinance.

And there’s actually somebody that we both know who had something similar happen — she had a great idea with a really poor plan and a really poor support system. Life happened, things didn’t get completed, money got wasted here, money got wasted there. And now, when it’s come time to sell, in the current market, she’s not going to lose, but she’s not going to walk away with what she thought she was going to walk away with. So having a plan is great, right?

The power of proven systems vs. DIY approaches

There’s no need to do it on your own or try to reinvent the wheel when you have that support and people who have already mastered that system. It doesn’t mean you don’t have to be involved — if you want to go check on your job site every single day, go for it, take videos, it’s exciting. But don’t think that you’re alone and need to come up with all the ideas, because these are extensive renovation projects. It would be like me going into their workplace full-time and being expected to do their job without any background or experience. So in real estate investing, why do people feel they can go and all of a sudden take on the role of a full-time investor who’s done it several times? We’re all experts in different areas, and one key to success is really to utilize your experts properly.

BRRRR strategy breakdown: The complete process

One of the best parts about our property management company is that we have connections with everybody everywhere, and we’re able to bring in those professionals thanks to our RE/MAX connections across the province and across Canada. So let’s dive into a little bit of this BRRRR strategy so people understand it, because I really think this is one of the best investment strategies out there to get people started, to get people to grow at a faster pace, because you get to pull that money right back out.

So let’s say, hey, I’m Kevin, your new client at RPI, and I’m looking to buy a single-family home and just turn it into a duplex, because I don’t want to take on anything too crazy. But I like the idea of having multiple income streams coming from that same property. What are we looking for? How do we get started? Let’s not worry about budget, because everyone has a different budget and this strategy can be done in all sorts of different areas at different price points.

Finding below-market properties: The first step

Well, the only time budget comes into play is that we don’t want to take you shopping for homes in areas you can’t afford. So we like to recreate our model only in high-growth, A-plus areas across Canada — we don’t do cheap markets or cheap properties, unless you live there and specifically want to do something in your own backyard. The first step in BRRRR is to buy the home — but we’re not just going to buy the home for fair market value. We’re going to buy it for below fair market value. We’re able to access a lot of off-market opportunities, or we’re just able to spot great deals — we teach people how to spot great deals in our real estate one-on-one bundle. Most of our real estate agents are able to find these great deals and bring us unlisted properties.

So I don’t really pay attention to a percentage rule or any of these fancy rules that come out — 70% of value or the 1% rule. I do a very common-sense approach where I measure it in accordance with everything else on the street. We really want to make sure they’re making money when they buy, because that’s going to be their cushion, and it heightens the chance of being able to strategically refinance, and it protects them from any unexpected market drops. So we buy and make money when we buy. Then we renovate the property, looking again at the best and highest use for that area.

Strategic renovations by location: What works where

If it’s an area where the value actually increases from adding these different units, that’s amazing — not all areas do. Toronto will definitely increase. Oshawa and Durham will definitely increase. Hamilton will definitely increase. St. Catharines will definitely increase. Markham will not. Richmond Hill, not so much. Mississauga, not really, maybe a little more. But there are a lot of areas where it won’t increase. It’s really important to know before doing this strategy which areas will increase and which won’t, and then renovate the one that fits best.

So an easy one is just a basic basement renovation. Usually we like to do between two to four units added to a house — sometimes just the basement reno, and we’ll add an ADU as a third unit, sometimes a laneway home or coach house. Ideally in Toronto, we’re aiming for four units, because there are no development charges in Toronto for properties on four units or more. So it also depends on the municipality — Mississauga has different rules than Brampton, then Hamilton, then St. Catharines, Burlington, Oakville. Some municipalities are easier to work with than others.

Then the product you bought is going to have new construction units, which is beautiful, because now you can get new and shiny tenants and command a really great rent.

Basement apartments: The perfect entry point

Monika, speaking of basement apartments, we’ve actually recorded four different episodes about basement apartments and put together a super episode combining all four into one. Check it out on our podcast channel — it’s a great way to get started as a landlord, just by renting out the basement of your own primary residence.

Overcoming tenant concerns with proper management

I am terrified of tenants, because I’m an Ontario landlord and they scare me. And if it wasn’t for great property management companies like CRESI, I’d be even more terrified. I’ve had a lot of issues with tenants before, but you have to ask yourself this question, because you said earlier a lot of people do not invest in real estate simply because they’re scared of tenants. Are you more scared of a tenant not paying rent — which I could give you a clue on how to handle — or are you more scared of not being able to afford to retire, working past 65 because you never have enough money, and putting your kids into a life of financial distress? That’s a certainty if you’re not doing things to build wealth, where bad tenants are just a possibility.

One solution I do is midterm rentals. If you really want to amp the rent up more, I fully furnish our units and do midterm rentals — say three months upwards — and then we can avoid the new Airbnb lock, because not everyone wants to be locked into a 12-month lease. And the tenants we like to rent to don’t necessarily want a 12-month lease, because they don’t plan to keep being renters — medical professionals, or people just visiting the area for work, executive rental type things. But that income is still going to help you qualify for the new mortgage, and if you’ve done it properly according to the comps in the area, the refinance amount is going to increase the value of the property drastically.

Mid-term rentals: A strategic alternative

You can’t buy a house for $800,000, put $200,000 of renovations into it, and now have a million-dollar property — that’s not what BRRRR is. So the BRRRR would be: you buy it for $600,000 even though it’s an $800,000 value, and then you put $200,000 into it for repairs, and now the value could be up around $1.7 million. That’s the nice juicy equity part there that you can do a strategic refinance on, get a new mortgage at 70%, or just get a HELOC against it and pull out the majority of that money. The unicorn BRRRR is when you can pull your down payment and your construction costs out, and maybe even have money left over — that’s called an infinite return. I’ve done it before a few times, but it’s really hard to do, so sometimes you have to make a choice — sometimes you just pull the down payment, sometimes you’re able to pull construction too, but we pre-plan that with you.

The refinance process: Pulling out your investment

You’re left with this brand-new investment property that’s going to help you do those three things — create a multi-million-dollar retirement, bring you more money every month, and help your kids out. Because five years later, you could do the whole thing over again, as long as you’re in a good area and take advantage of natural appreciation. Five years later, we’re not talking about pulling out a little bit of money — we’re talking about pulling out a quarter of a million to half a million dollars out of these renovations, and you could do it again five years later and still keep your asset.

Tax benefits most investors miss

Just to touch on that too — when you’re taking that money out, because it’s getting refinanced into that mortgage, whether it’s through a HELOC or the full mortgage itself, the money’s actually coming back to you tax-free. So you don’t have to pay any tax on that — you’re able to turn around and reuse it however you wish, reinvest it. And whether it’s the HELOC or the refinance, that interest you’re paying on your investment property is also a write-off, a business expense. Again, I’m not an accountant — I am not someone you should be taking all this type of advice from a hundred percent, you do want to talk to your accountant to make sure everything is exact and specific for you and your situation. But you’re spot on there — it is a very tax-efficient move. You’re not going to get taxed on the refinance, which is very powerful. And we talk about that in module six, the taxes module of our Wealth Immersion program as well. A lot of people think, is this like a flip, do I just get all this money and then get taxed on my personal income and lose it in tax anyway — and no, it’s an amazing tax-free strategy.

Getting started: How to connect with experts

There’s no sale involved, right? You’re technically flipping to yourself — you’re able to pull that money back out, that would be the profit if you sold it, but you’re not selling it. Therefore, there’s no commission to realtors as well, but you are just keeping yourself and being able to roll it over and do something else again. So RPI Education, you guys do networking events and different types of things where people can get together, coaching programs where people can get together one-on-one or in a group. If somebody wanted to get started, they’re a new landlord, what should they do?

Of course, you can always reach out to us and we’ll connect you with Monika for sure. But Monika, how do they get connected with you? You can go to our website and just book a discovery call, and we can get in touch and have a chat about what you’re trying to achieve, and we can match you up to the right program. We have a lot of courses, a lot of curriculum, but we have some great different membership levels as well, as well as bi-weekly group coaching, which is always super exciting.

Finding your personal investment strategy

I think you said something else really right there that I agree with a hundred percent — talking to somebody and figuring out what’s right for them. If you’ve listened to this podcast before, you must have heard me say we are as individual as our fingerprints as investors — some want to do this, some don’t want to do this. So it’s about figuring out what makes sense to you, what you’re trying to do, and the speed you’re wanting to grow at. We talk to some people who say, I just want one investment property, that’s going to be my retirement fund. We speak to people who say, like we said earlier, I want a hundred doors, I want to be a full-time real estate investor. And other people are just saying, I want to be able to have one to ten properties. Everybody’s different — everybody’s going to want this multifamily, single family, however they’re wanting to do it. So it’s having that conversation to figure out exactly what makes sense to you, and then how you can execute what makes the most sense for you.

I love that — you’re probably one of the only communities that really personalizes it, and it’s really for the investor. If they just want to go to networking events, maybe education and events is best for them, but if they want to really purchase that property — the average time it takes to transact a client in an acquisition of a rental property, if they go through the personal group coaching and follow our advice, is 12 weeks. Obviously they’d stay on because they want to manage their property and tenant it.

Execution: The missing piece for most investors

I go to a lot of networking groups, real estate investment events, and there are people you see all the time — they’re all gung-ho, but afterwards it’s just put in the desk, whether it’s real estate training or something they learn, and it’s about executing it. It’s about making sure you have a plan moving forward. Taking in information is great, there are tons of ways to get real estate investment guidance, but it’s about having somebody that you connect with, that you can work alongside. Because a lot of what stops real estate investors is the fear of the unknown. By working with a team, working with people who have done this before, with a system you can rinse and repeat, is what you want. We all have mentors, we all have coaches, whether it’s sports, work, or personal life — they see from a different set of eyes and help guide you so you can do things you wouldn’t be able to do as confidently on your own.

Why now is the ideal time to invest in real estate

So one piece of advice I’d love to leave people with is — I know we’re dealing with very uncertain times, thank God we at least have a decision from the election now, we don’t know what’s going on with tariffs, we’re still worried about the economy, interest rates are still in flux. These have all presented reasons for people not to invest and not to move forward. But while you’re waiting on the sidelines, you have to remember wealth building never stops. And there has not been a better time to invest in real estate since 2008. Now is the time — it’s not a time for novices, but it is the time to get going. Warren Buffett’s famous quote is that when other people are greedy, you should be fearful, and when others are fearful, you should be greedy. This is the time to buy — there’s lots of stuff on sale, lots of opportunities out there, and it is a good market to get involved. If you’re just starting out, build that team around you, whether you’re leveraging money from your own property or however you’re getting it — there are different ways to get started so that you’re best using the money for your highest and greatest return.

This is thanks for doing this today, Monika. As always, if you’re unfamiliar, CRESI is an acronym for Complete Real Estate Solutions and Investments, and it’s about being your complete solution for all of your real estate and investment needs, whether it’s with us here at the CRESI team, or CRESI Property Management, or, like what we’re doing today, with Monika and her team over at RPI. Thanks so much for listening, and thanks so much, Monika, for joining us. We’ll talk to you all soon. Bye for now.

Please remember, while we are professionals, this podcast is for informational and entertainment purposes only. The advice shared may not apply to your unique situation. Always seek personalized advice from a qualified professional before making any investment decisions.

Hey, everybody, thanks so much for joining us this week. I hope you enjoyed the episode. If you’re finding it informative and useful, make sure to like, subscribe, share with a friend so that we can keep getting the information out there to Ontario landlords, and keep on joining us. We’ll see you next time.