00:00.85

wongga

Okay, welcome to the podcast investors. My name is Garret Wong your host and today I have the pleasure of speaking with Mike Schroeder Mike how are you doing? Okay, we're shooting this or I guess recording this in the.

00:13.30

Mike

Um, doing well with yourself.

00:19.69

wongga

Dead of winter a couple days before Christmas and I'm excited to hear what you have Mike is our ah a mortgage broker here in Winnipeg and ah I personally have used him and very excited to hear what he has to say. Ah, Mike why don't you just start out by telling us a little bit about yourself and your storing your background.

00:42.60

Mike

Sure so in March this year I'll have been license morge broker for 10 years started off part time but said ten years ago went full time about two year two and a half years after that and then right now I've ah achieved an for accreditation. So I'm out. Both my Apc designation through work professionals Canada I'm working on my pmpc designation and I also have a course I'm working on with Equifax that would give me accreditation for help people prepare the credit. So. It's a. Always trying to get extra skills to make sure I can give the most value to my clients.

01:15.29

wongga

Nice and what so what were you before Mortgage broker.

01:20.76

Mike

So I was actually management at enterprise renter car I was working my way up to corporate ladder actually moved out to Regina for the company made it to branch manager and then decided that id change.

01:35.81

wongga

Okay, and why why mortgage brokering I mean I'm I'm just always interested in people's stories as you know I have a ah varied past as well in science and now I'm in real estate. So I love hearing these these types of transitions.

01:53.21

Mike

Like many other great stories. It started off by logging on Facebook one day I had taken some time off when my third child was born um loging to Facebook 1 more I saw a friend talking about mortgage rates and like I had looked into mortgage broke years ago I knew I needed a change of some type of didn't know what I wanted. And what I figured out after chatttting with him that I liked was I liked working 1 ne-on-one with people so I didn't like managing large groups. But I love that one- on one connection and I love problem solving I love being given a ah puzzle and be told to crack the puzzle so to speak while Mortage's rules are becoming increasingly complex. So. I fell and really fell in love with helping clients get approved and not just for the mortgage. But for the best product to match their needs. So um, with the tangent. There was a great quote I saw from ah Warren Buffett years ago. That said that business is a puzzle to be solved and it always kind of rang true with me of. Really enjoyed that problem solving side of this That's how I got into it.

02:49.85

wongga

Nice, Okay, you know I've used you several times for my own personal investment properties. My personal home. Um, and I know that ah you're very very very very well known in the you know Investor Community. So I Mean. It's not too much of a stretch for me to say that you seem to provide or specialize is in in investors was that intentional.

03:16.42

Mike

Um, ah, no, it actually happened very organically so um, kind of 2 events kind of conspired together to get me on that path. The first was um, my second year into it I'm so struggling to figure out. Well, what do I want to do go on Canada do I want to work with first time home buyers I want to go. Finances and a friend of mine. He was an insurance sales he said hey why don't you come and check out this real estate investor event. It's for a group that's no longer around anymore. But I went into the event and I really fell in love with people what they're trying to do and then by accident I ended up at a mortgage brokerage. That did their own in-house private lending. So at the same time I both ended up at a brokerage that specialized in private lending and I was connected with a group of people who needed private lending and so it seemed like a natural fit to fit together. Um. I don't mentioned Facebook before but to bring that up again. I found that a lot of real estate investors are very plugged in through with Facebook groups and messengers and different chats all online and I imagine connect with some those people earlier on and I get a lot of my business through connecting through those groups. So it's kind of those 3 things kind of working together. Of going to an in-person event being at the right brokeridge and meeting the right people online really dug me into that niche.

04:35.92

wongga

Okay, what would you say is ah unique to an investor in trying to those unique challenges on on those files is it a bit different than a first time home buyer.

04:45.95

Mike

So the the major things that come to mind are number 1 you're trying to often buy a property that the major banks don't want to touch. Usually you need the condition of the property where the source of du pin is coming from or the client's credit. Those things can conspire to make it that a bank doesn't want to lend on it so that we need to find the appropriate private institution that wants to invest in that deal with the first time home buyer really as long as you have. A certain level of credit through level of income and a good down payment I can send your deal to tvsco so I can really send it anywhere. Um, investors off to really need ah a niche product where well yes, we you want to buy a property that maybe has novel to wiring or aluminum wiring or has an issue with title or an issue issue of foundation. It's really about customizing a solution with the right lender at the best rates and terms.

05:41.61

wongga

Okay, so that is a very good segue. Um, you mentioned terms rates. You know this? This is an investment podcast. Um, and we do want our audience to Learn. Um. Have a very servicing knowledge about fixed and variable rate mortgages. But I'd like to hear from you. Maybe you could educate our audience. What So What are the differences between fixed and variable rate mortgages.

06:08.57

Mike

Sure and I'll actually have to add a third termin there as it all and that is adjustable mortgages so um media sources often misuse the word variable. So let me break it down fixed rate fairly straightforward. The rate is set. The length of the term that you're committing to steal with the lender for the average canadian about 75% take a 5 year turn. So people usually taking a 5 year fixed rates. You were committing to see that lender for 5 years on that no law people don't realize you can often get a better deal by taking a 2 or 3 year fixed rate. But. That's something else's going to talk about later on a variable rate mortgage is a mortgage where the interest rate can fluctuate based on the bank of Canada based on the prime rate. But heres the key thing. The lot will miss. Most people would understand an adjustable rate mortgage meaning if the prime rate goes up payment goes up if the prime rate goes down your payment goes down fairly straightforward, but that's justable, not variable. What a variable rate means you're payment a set at the interest rate on day one if the prime rate goes up instead of you paying more per month. A little bit less your payment goes towards principal and a little bit more of your payment goes towards interest if the prime rate goes down a little that more of your payment goes towards paying that in principle and little less you will towards interest so I'll ask my clients. What's more important to you.

07:37.10

Mike

Would you rather get your mortgage paid off faster and build equity in your home or would you rather manage your monthly cash flow those are 2 very different concerns based on an individual's needs.

07:45.74

wongga

Interesting I actually did not know that I have been throwing around terms like fixed and variable like most people do So what you're saying then is most.

07:58.52

Mike

Um, and don't feel bad because I've seen lenders who misuse those terms as well. So you're you're not alone the other day I saw a certain bank I won't name who it was talking about their baary Mortars I'm like ah no, that isn' an adjustable rate mortgage. Please use the right terminology.

08:10.38

wongga

Interesting, No well. This is my podcast and I'm taking notes so that's that's great I'm learning as well. Okay, so really, what we're talking about mainly is a fixed or adjustable rate. That's what most people would probably have in their minds. The variable rate then locks in that payment assuming that you can get that.

08:16.46

Mike

Today.

08:30.90

wongga

And that's I guess the best for cash flow then right if if you're coming from a rental property perspective.

08:37.53

Mike

It can be now it causes its own problems. So one of the issues. So one of the biggest lenders in Canada to have a true variable product is Tv can trust I placed a lot of mortgages with them. But the problem they ran into is is that. As you as the amount beinging against principals going down as the rates have gone up. There are many clients who've reached a point where their payment isn't covering their interest anymore now Tv has had to call his clients and say hey you've basically gotten a free ride for last eight to nine months but his repayment hasn't changed. You easily need to. Lock into a fixed rate make a lump sum against your mortgage to keep the principal line or you need to convert to a fixed rate. So. It's each product carries its own risk. There's no such thing as a risk-free mortgage product.

09:24.12

wongga

Okay, yeah, that makes sense I mean I guess if you're looking for ultimate cash flow maybe fixed would be best or is it I Guess every situation is different for for every investor.

09:38.87

Mike

Well, if you really want to maximize cash flow you would actually go with an interest only product where you're not paying down the principal at all. But then you're to the issue of not building the equity on the property and so that's really a conversation to have with your account then well, what are your goals if your goal is to be mortgage free. You want to pay that down but the part about a fix rate that everyone forgets is the penalty I see this time and time and time again the most egregious case this one still may be mad this client had gone to a mortgage broker to get a mortgage for a flip. The house is in good condition. We will replace it with a major bank. No problem and the mortgage broker put their client into a 5 year fixed rate mortgage knowing that the client was going to sell a house of 6 to eight months that client paid a penalty called an I r d interest rate differential. Basically it's the return policy for the bank. Penalty you work up to being 6% the mortage balance most of profits were gone the highest penalty I've seen was 8% for mortgage balance. So when I'm sitting down talking to clients. It's not just that at the lowest rate it's asking them. Okay.

10:36.44

wongga

Wow.

10:51.79

Mike

On a scale to 1 to 10 one being. It's not going to happen and 10 being can happen tomorrow. What are the odds of you breaking your mortage in the next five years so if you're a firsttime homebuyer I don't want to put you anywhere nearified your fix rate now if you say that what you want? Oh please you with what you're asking for. But first time homebuyers chances are. Your marital status will change. You may change have you decide have kids your job may change. You may move. You're at a phase in life where there's a lot of change about to happen when you're a little more established like or you have a long-term rental property different story. Um, but you really have to wear those mortgage penalties a banks make a significant amount of prop. Among the profit from these penalties and understanding when these penalties trigger and how much of penalties going to be is a big decision.

11:37.50

wongga

I see yeah I see what you're saying because a first time homebuyer might need to expand move refinance. There's a whole bunch of different things that that come with that brand new venture for them.

11:51.36

Mike

Exactly.

11:53.50

wongga

Okay, well maybe you could start out by just giving us a history over the past I don't know let's say 3 to 5 years of how the 2 products I guess fixed and variable or adjustable rates have have varied over the last five years Three To 5 years

12:10.41

Mike

Sure so it's it's interesting. So as a general rule it's not the case now but as a general rule variable adjustable rates I'll just say variable from now on to make it simple variable rates are typically less than fixed rates and the spread is usually somewhere between. Point 6 and point seven up to one percentage point right now I've seen a spread as much as one of the half percent between a fixed rate and variable rate and we're in a situation right now where variable rates are actually higher than fixed. But if you look back over especially over seventy two hundred years of data people who take the variable rate. Will pay less interest over the life of their mortgage but you will keep the fixed but that's the important caveat there. The life of the mortgage. So the the worth of that ismorization. How many years will'll take to pay off your mortgage so over 25 years you'll pay less if you take the variable adjustable rate. Doesn't mean that there won't be any terms in there. You will pay more but it means over the big picture. You do save money. The question is can you afford the weather. The storms of a variable rate being so high at the tugs that we have wrong, you.

13:21.73

wongga

Okay, and maybe I'll throw another thing into the mix there in your I Guess professional experience. How many people actually make it through to paying off ah like an entire amortization period like does that I mean I sell properties. I Don't know the I don't I've yeah I've never had a property that I've taken through to completion I've always either sold it or or something has happened to it.

13:47.14

Mike

And for the most part we don't I don't have data on over the entire organization I can tell you that for the average canadian over their 5 ive-year term about 2 thirdds of canadians break their mortgage at about 3 years that that's kind of the midpoint. It's either your. Moving. You're going through divorce you have kids you may need to refinance to do renovations but usually it's about 3 um rental properties of course be a lot longer because most people aren't buying rental for a short term but that does happen occasional.

14:19.11

wongga

Interesting. Yeah, the um, very neat to be able to see that that subset of of data just on rental properties for investors. Um I mean what is one to do? How do you? How do you counsel somebody to for which product.

14:35.96

wongga

From an investment perspective.

14:39.62

Mike

So we're going to talk about investors. So in particular to go that are buying rental properties. The hard part I really see right now is that with the higher rates at the moment. It's the issue of cash flowing the property. So let's pick on the big gritney bank tv for a second year um 5 year fix rate today for rental property is about 5.3% take um Tv will do up to a 30 year amorization lower that payment for you. So my first question to a client is can your property cash flow at 5.3% right now the variable rates higher actually right now is's at about five point Eight five point nine per by-year variable. Um, so that's the first question can you qualify can you cash the property at the higher rate. The second question is are you buying the property under value. So for some people. Their strategy is. Buy a property undervalu renovate it refinance it pull equity out of it put a renter in place I send shorten to the first strategy I'm not going to put you to a fixed rate if you want to burn the property within a year leave sent sure a penalty. So maybe a combination of. Ah, variable rate or an open mortgage to get you into the property get the renovation work done and then refinance it to a fixed rate depending on what your long-term strategy is I'd say as well I think this is a question you may be able to answer if you're a first time buyer of a rental property not of a primary Rez if you're buying rent for the first time.

16:09.15

Mike

You might try it for 1 or 2 years and then say yourself. Why do they get myself into this I want to get out of this to sell a house. Well if you're locked into a 5 year fixed rate. You don't have the option to get out. You're going to pay a penalty just to get out of it if you're buying rental for the first time you may want to do it to a 3 year fix to give you an exit strategy in case, it doesn't work out for you. It's that exit that triggers so much extra money I forget saving point 2 or point three on the rate it's that penalty that mailspeople every you talk.

16:36.40

wongga

Yeah that's a good point. Um, you know we probably have close to 400 um property management clients in in upper edge and the majority of them only own you know one property and out of those I would say. 25 or 30% are purposely buying their first rental property rather than just hey I have a house I'm going into my now dream house I'm going to keep my old one as a rental so I don't know obviously I don't get into their finances but it'd be very interesting to know what they're. Term that they chose on a first rental property would be out of that subset of that 25 or 30%

17:18.67

Mike

Um, is 1 thing that my mentor in the industry top years ago he had a shorten to of short phrase. Life is variable. Your mortgage should be 2 and I think there's something to be said and I can't predict the future. But. Want to make sure I'm flexible enough to have a mortgage product that allows me the flexibility to change. So for example on our first home we bought here. We bought it with an adjustable ratee mortgage. We then refinanced the home and due to a ratethrough at the time we decided to go with a one year fix because. I like the one here fixed was a better rate than the variable area at the time and it gives us that flexibility to assess, we're at a year later and go when we refinance it. Do we want to stands house for a longer period of time or do we want to get out of than sell notturn penalties.

18:00.62

wongga

So there are penalties on variable rate mortgages though aren't they aren't those considered closed and open to.

18:08.28

Mike

So they're closed, but it's only a three month interest penalty. So the shorthand for that. It usually works out to being something like point four percent of the large balance. So it's there is a penalty but it's a minimal penalty.

18:17.47

wongga

Okay.

18:24.86

Mike

But a fixed rate you're triggering what's called interest rate differential now on that note I don't want get too much in the leads. But the thing that you keep in mind is that the big banks have a convotive formula. They use to calculate your worry penalty based on a discount off the posted rate that like I said I don't I don't want to go down my rabbit trail. But. Banks tend to have penalties that are often 2 to 3 times higher than credit unions or monoline lenders. So if you absolutely want a fix rate mortgage make sure you're not with a lender that's going to penalize you for breaking that mortgage higher than they have to. And actually on that front though there is one bank I'd like to call out in fbciccic often pushes for people to take the cash back but what they don't tell people is that you break that mortgage early. You have to repay the cash back. So if you get say 3% cash or close you have a $400000 mortgage hey greenish about $12000 yeah well what if you have to you know, cancel that mortgage in 3 years you have to pay that money back. That's a pretty steep penalty for getting extra for cash because nothing is free.

19:28.33

wongga

Yeah Wow I did not know that so buyer beware.

19:32.63

Mike

Now I'm not against cashback mortgages like I'm I'm not against them they are They are a very good tool especially if you have a credit card balance and you only get that paid off with the purchase of the house where you can pay off the credit card with pay a higher mortgage range. But there's always a cost. The rent always comes due so to speak.

19:49.14

wongga

Wow! So what are the current I think you just briefly touched on that. But what are the current rate differences I guess today between a fixed and variable rate mortgage and. I say today because I know that I've seen some some information where it's it's changing almost on a daily basis.

20:09.87

Mike

Um, so this also depends on the lender types and on the mortgage type. So if I can kind of break it down to if we're talking rental properties. You're looking at rentals in kind of that five point two five point three range on a 5 year fix to give or take. Um, on a 5 year variable you're looking at closer to 6% right? If it's an owner occupied house I've seen fixed rates today as low as four point seven four point eight that actually gotten quite low. Um. And on that note, if you want to try to track rates a bit better. It's important to understand the right terminology. So I see a lot of online news sources saying you know misleading headlines because like well interest rates are going up or fixed rates going up or variable rates going. They are not the same thing so on that node. Variable and adjustable rates. Go up when the bank of Canada announced that the overnight rate is cheap. They ended every year the bank Canada gives the next ten dates in which they will be making their their clear announcements. So the next one is the third Wednesday in January. So. That's the next time that fixed this variable or just rate can go up fixed rates are based on either the bond yield or they're based on gics depending on what you're using. So I track the bond market every day. Well.

21:34.77

Mike

The bond market has collapsed in the last month or so it has falling drastically which is lyy fixed rates drop but the variable rates have not.

21:45.53

wongga

Okay, no wow. Yeah, it's ah it's very interesting I mean I if I were buying a property today. What would you recommend to do.

21:58.33

Mike

So one of the questions I like to ask clients comes down to just says if you saw the news tonight that interest rates were going up. It doesn't I forget if you can afford it or not if you saw on the news tonight. The interest rates are going up would you lose sleep over that. What is your level of risk tolerance at the end of the day I don't care if you save a couple thousand dollars over the year if you save money on a variable mortgage. But you're going to lose sleep it't cause unnecessary stress in your life. What is that worth to you. So if you don't have a good tolerance for stress to get fixed. But. You'll have to take a 5 year fix you can take a 2 3 or 4 year you can take a one year you can take a six month um now here's where I'm going to bash morerss brokers a bit spoiler alert. We get paid a higher commission to lock a client for 5 years and we do want a 2 or 3 so if someone just pushes a 5 year fixed rate to you asks them. Wells are a 2 or 3 year option that's better I've placed a number of clients in 2 or 3 year fixed mortars right now because there's a a very high possibility rates to fall in the next couple of years now as I guarantee course not but I'm trying to give my clients flexibility. Doesn't matter if it pays me a loan commission. It's the right product to put people to a 3 or 3 or fixed so before you just sign the dog line make sure that you actually want to be locked in for 5 years I think we're your life for that five years ago do you think how many changes that happen of 5 years Do you really want to make that kind of commitment to 1 lender for that time.

23:24.17

wongga

So if somebody's buying a rental property today and the variable rate happens to be higher than the fixed and you have risk tolerance you have to kind of if you're choosing variable I guess you. Putting words into your mouth. But do you have to sort of have that faith and hope that it will readjust and start to outpace the fixed.

23:50.80

Mike

You do and and you also have to ask yourself how many times would bank Canadada have to raise rates until this property is no longer profitable. You know if you have a wide margin there and you can afford to cover that you will pay less interest of the like the mortgage by. Taking that variable rate. But if your strategy is where you relied on that cash flow to fund maybe a different business or other projects you may have to settle for a product. You don't like in order to maximize that cash flow now I'm not sure I've mentioned this before but there is a third option and that's seeking out.

24:18.79

wongga

Here.

24:27.28

Mike

Ah, mortgage is a homemacly line of credit instead. Um, you don't do that for the rate rates that are quite high at the moment but you would do that because you could make interest only payments on it. So if you don't want to pay down the mortgage at all, but our mortgage products out there. You can just pay the interest on it. But then you're writing the issue if you're not building any equity. What happens if the value of property goes down. You could be in trouble later I'm down the road. Yes I know it's heresy to say that property values can go down in Thattoba. Um, but I've seen several deals this month fall apart because of due do new construction that started two years ago and the values now are not winding up the values from 2 years that we're not apprais. So if you're maxing out at the height of l to be possible. You're not pinged up principal enough. You can be create creating a different problem for yourself down road.

25:14.58

wongga

I see okay, let's so let's transition a little bit um to more of an opinion I know that you've been fairly active on Facebook and I seen me remember you being you know in in recent months last year let's say being the champion of variable rate mortgages. Has the current interest rate climate changed your opinion at all.

25:40.50

Mike

It's reminded me that once in a lifetime once in a generation events happen more often than you think they will I can show you all the data over decades that show that variable is superior to fixed and people will throw my face the rate to the current race this year and my retort that would be yes, you're right in the last nine months you've even better off if you took the fixed but what happens 5 years from now we morgs the fruit need to get fixed to get. Do you see by that time or the term after that or the term after that it's like people who try to time the market. The stock market purchases. Yes. You may occasionally succeed and beat the market. But you're not going to beat the market year over year decade over decade I'm still a believer in the variable mortgage as long as you have the risk tolerance for it I believe the data does back that up. But you also have to have the right personality type and you have to understand the risk that's going into it because a fixed rate of mortage is a different risk you are locking in that property for long term and and taking out a risk of penalty as long as you understand the risks you can make the lawyer decision you want to but I want to sure you understand the risks.

26:36.84

wongga

Um, that's fair.

26:49.80

wongga

Yeah, no, and I think what I'm learning to hear today is there's no right or wrong answer. Um I'm also a champion and a believer of using history for my for my predictions on what I want to do yes, some people can get lucky and you can take any slice of time. And turn it into you know whatever you want it to look like to your benefit or disadvantage. Um, you know what would you say the long game looks like for fix versus variable variable rates. Um. And how long would an investor need to hang onto a property in order to realize any advantage.

27:26.80

Mike

So the the real concern of this next year is the instability with political instability in the world right now I'll point in particular to the crisis between Russia and Ukraine I want to avoid the politics on that and focus on. If that situation were to intensify that will affect 2 key things that will affect commodity prices and that will affect supply chain issues either of those things that will actually need backtrack. But 1 thing we didn't cover was. Why are variable just keep on going up. Well the reason why they keep on going up is that the bank of Canada believes that one of its key missions is to keep inflation in check and tip back when the head of the bank ca says they want to bring inflation back down to their goal which is 2% now the inflation numbers october were 6.9 the inflation numbers in November were 6.8% but not coming down by much they do not want to see entrenched inflation. They have said repeatedly we will raise rates until inflation is that can lie what can affect inflation. The prices supply chain issues. We could all see the issue where our wages don't come down wages right now are actually increasing a lot to demand in the the labor market if those issues don't for coming down. We don't see inflation coming down. Thank a hand if you keep out haverick on the point of raising rates now.

29:00.90

Mike

Remember as well that when those variable rates go up. It doesn't just affect your mortgage can affect your credit card affects your line of credit affects your home equity line of credit affects your student loans anything relates to the variable rate and so. If we don't see inflation come down. We're going to see the bank can it keep on raising those rates until it does and all it takes is 1 black swat event to really push that further. Could we see research and so covid lockdowns again next year there are so many unknowns that. I need one of the prediction rates here to be at this next year now the government could go too far and they could induce a recession which of course the way you cure recession is by lower rates right. Economist Benjamin Toll from ciac recently said that if you look at every recession over the last forty years they're all caused by federal government monetary policy. So the federal government is very aware. They have the power cause a recession. A recession isn't actually the slave that thing for the real estate market. It can bring rates up quite a bit and can they get a bargain time to buy a house if not a great time for refinance that can be great time to buy. Ah sorry that was a little off top. There.

30:14.57

wongga

No, no, you know, ah it kind of segues into the next question I was planning on asking you you know real estate investors are really the majority of them that come to me are all about cash Flow. Um I have my personal opinion on whether that's a correct ah thing or not. But. You know what is your advice in the current climate for a real estate rental is it still worth it to hold a rental even at a neutral or negative Cash Flow What? What would you say to them.

30:45.34

Mike

Real estate over the long haul is still a good investment. It's like asking if ah, post secondary education is a good investment. You may not see the return on it for a number of years or even a decade but the return over your lifetime is still there holding real estate. Is still one of the greatest ways of building wealth in Canada I am a big league way even just holding a primary residence is a fantastic way to build wealth in Canada Manatoba has 1 of the most stable real estate markets in all of canada unless if there's one that's more stable than 1 thing I don't know what that will be. And so over the long run should you hold real estate manantoba. Yes, yes, you should hold real estate Manitoba. Do you have to weather some bad terms here and there absolutely um, but it is still a good investment.

31:32.16

wongga

I would agree. Um like I was like I was just saying I see a lot of people that um you know they might have a hot water tank for twelve hundred bucks I'm talking about my clients know in property management and they get stressed about it. Oh this is going to kill my cash flow but you know i. I counsel them because when you look at the principal paydown what the market is doing at the end of that year whether you're getting one hundred bucks worth of cash flow on a single family or a few hundred dollars on ah on a duplex I think that really pales in comparison to what you're talking about which is property investment I mean if you want. $2400 out under your cash flow and a duplex for the entire year There's a lot easier ways to make $2400 in an entire year right instead of twenty thirty forty thousand dollars on on a typical investment that you that you hold for that time. Period.

32:24.13

Mike

Well one of the things I wish I had done differently im 41 almost forty two years old um I look at young people today who are looking you have to flip houses or build a real estate portfolio and my first thought is buy a duplex a 5% down live a oneside rent up the other side buy a triplex 10% down live on one side or up the other side and then after you live there for six months to a year save off my for now payment and move into another duplex of triples at five or ten percent down there's nothing sexy about it. There's nothing glamorous about it. But it's that slow steady accumulation of that putting in the properties that you get. You move through property to property at five or ten percent down rather than trying to save over 20% down period for real property. Um a lot a little of a digression I see far too many people, especially young people are getting 7 eight nine hundred dollars month card payments and then asking why they can't afford a house.

33:18.80

Mike

So you want to invest in real estate own a cheaper car move into a smaller starter home plan to move out in a short period of time to rent it out. Don't over live in your twenty s and start investing in real estate for the long haul.

33:33.90

wongga

Yeah, no I'm I have a 20 year old at home and um for several years now. He's been saving up trying to save up that 5% he's in university now. But yeah, he wants to buy duplex and do the house hack because that is the best way to have that other that other unit. Pay for your mortgage pay for all your expenses you can live for free and still build equity. So. It's definitely ah, a great plan for young people. So I love I love speaking of business and entrepreneurship. Um kind of wanted to transition there because um, when I first met you.

33:57.50

Mike

Um, absolutely.

34:10.81

wongga

Ah, remember you were just starting to go to the gym. This is a few years ago and now I've seen some pretty inspiring things on social media. Um, if you're willing to talk about it. Um, so my question for you now is as an entrepreneur. What is your view on healthy living.

34:27.00

Mike

Oh oh you here's a pat on this topic. Um Richard Branson the the billionaires once asked, what's the best business advice he would give he'd say exercise six days a week see hands down. That's the best business advice you can ever give. Um. Three and a half years ago I had a doctor tell me? Well, you've got high blood pressure. You're prediabetic so you can either work out and lose weight or you can die up I chose the path of exercise and. Ah, very thankful like on that habit before covid because honestly it helped me survive the stress of lockdowns and covid.

35:02.75

wongga

Yeah, so I couldn't agree with you more Um I try ah you know and stay healthy I have to admit like most people I'm not as not as good as I want to be but maybe could you describe for the audience. Some of the different accomplishments that you've achieved over the past few years

35:20.85

Mike

Yeah, so I started with a personal trader but three and a half years ago and then a friend of mine. She was trading for a couch to five k program like okay five k I I can do that so I did I bought this app on the itune or on the I google play store brands. $2 whatever it was to to get you from sitting on the couch to jogging 5 k oh what What should I do next? Oh well, how about a ten k so I was lifting weights and I said yeah, let's go to train for a ten k well I hit that then a 15 k and then a half marathon and. I could have set my eyes on on a full marathon. So to me. It took me almost three years but I ran my first full marathon this year um and in that year with the the crossfit trading. So I increased my bench press I can bench over two hundred and fifteen pounds I can do a back squad over 315 I've got a deadli all £400 um, so it's this next year my the goal I curie training for him could be doing a half marathon but in february so it's called a hyper through half and then I'd like to focus on some potential prospect competitions on the next year or 2.

36:29.46

wongga

Amazing. Yeah, and that's all three and a half years ago being told hey you have to start exercising to this. that's that's incredible

36:39.38

Mike

Well I may have a bit of a bit of intensity to my personality so you definitely don't have to go the path that I went but I'll tell people all the time do not overthink exercise if all you did was walk for half an hour to an hour a day and some body weight exercises. Pushups squats. That's it you would be ahead of 90% of the population. It really doesn't take much to hold a base level of fitness running is terrible for you. I'm not going to pretend otherwise it is terrible for your body if you walked every day. And did body weight workouts. You would be ahead of everyone.

37:19.67

wongga

Yeah, so um, how would you then say that exercise has impacted your business.

37:26.92

Mike

I Have become a goal setter where I actually have a physical journal I read up my goals and there's nothing quite like starting the day off with a wind and so when you start off your work Day. You've already had a win and that win could be even to me a crappy workout is still a win it means I woke up early. I went and I did it and starting off I think people take the mindset thing too far. Um, you can you can take any good idea too far but when you're starting off your day going I have accomplished something good already. It prepares you to go and find success in a business for that day.

38:05.37

wongga

I Would agree. Um you know I do a lot of reading as well. Successful ceos business people entrepreneurs. Um, they all seem to have a morning routine. Um, do you have a morning routine and can you share it with our audience.

38:20.58

Mike

Um, sure. So ah, I'm an early riser I get up at 5 a m so I get up let me cup a coffee I have some overnight oats I sit down I read I journal kind of prepare myself the next half hour or so and then I work out from 6 and 7 a m. My office is currently at home and so I my gyms about 5 minutes away so I'll go there trade in the morning come home from 7 till about seven forty five I'm showering changing getting breakfast hanging ready for day see my kids and then I'm rolling into my office quarterly.

38:55.99

wongga

Nice, nice and that's fairly steady. Would you say like you that's kind of you would would you call it a routine.

38:56.27

Mike

And a clock or so and get started from there.

39:07.77

Mike

It is I had an injury but a month and a half ago and so that kind of the injury happened the same time I was six so I've missed about a week week and half working out. Um, but otherwise I'm very consistent at at 5 to 6 days a week of working out Saturdays I usually don't wake with five on saturdays. Wake up at 6 or 7 and and then Sundays I try to keep as either rest day or active recovery the mini estate and or toboing snowshoeing just try snow last week and actually really enjoy that.

39:37.60

wongga

Yeah I yeah I just bought a set of snowshoes myself last week or two weeks ago so I'm waiting for the temperature I'm not not waiting for the temperature I'm waiting for some time to be able to try that but speaking of time as ah. A lot of entrepreneurs. Don't tend to do this. Do you schedule regular time off.

40:00.57

Mike

It's difficult for my business to take off multiple dates so it's more so I schedule time for myself within the day. So for example, there's a coffee shop here in town also lock off an hour by time I'll leave my cell phone at home and go there with a book and pen and paper.

40:18.52

Mike

A big believer in things are tactile I like my record collection I like my physical books I like my journal my physical journal and so I'll take time to go there. Refresh um next week. For example I've got time booked at a sauna studio one a peg so we'll work out in the morning thennna go sit ma sauna for 40 minutes do a stretching routine in there. And my next habit I'm trying to get into is a meditation habit but trying now for about 2 years hasn't stuck you yet. But I'm that's one of the things imnna focus on this next year's building and an afternoon 20 minute meditation habit.

40:48.13

wongga

Nice though I I try to get away a little bit but I guess you you kind of alluded to that I guess I wasn't really Asking. Do you go on vacation but blocking time off for connections for things that matter to you like you say reflection So That's great. But has that impacted your business in a positive way.

41:11.59

Mike

It is so um, about ten years ago a friend of mine got into back country camping and hiking and so in the summertime that's something I like disappearing into the woods for a day or 2 and just.

41:24.10

Mike

It's nice when you go to a place with no cell phone receptions. Even then you don't have to worry about turning your phone off, you're just you the woods and I've gotten my kids into that as well. So this last year I got my my 2 youngest we hiked in about five kilometers got completely swarmed by mosquitoes. Set up camp overnight and this is after driving 3 hours riding about national park so it was a hard day but the boys got out of it that yeah, it's hard but we can do hard things and that's the main thing. My boys learned is that we can learn to do hard things. Well i'm. Set it up for whatever they consider to be successful. Life.

42:00.96

wongga

Yeah, no, ah, I really value friends friendship family. Um, so important. Um, as we're ending the year of the podcast here. Um I I always ask every guest this question and I'd love to hear what you have to say. So this is the win podcast as you know how do you define success and what does winning look like for you.

42:26.77

Mike

I'm really trying to bring it down to every day. Um, ah what? what would a win be for me today and thatctor be connecting with my kids that can be connected with my wife. Um it could be winning something for a client.

42:41.71

Mike

$10 look for the big picture I kind of focus on each and visual day of okay, what am I gonna get my workout in today am I gonna get some reendant today. Am I gonna connect with my wife and kids today when I got to serve my community today and when I'm journaling in the morning kind of saying well what? what would I what would today? What would a win look like for me today. And then I write out what that win today would be so one day it could be um, okay well today I really spend an hour prospecting to clients a win would be not as a gang in your client but it could be an hour spent on the phone cold calling putting the time know those distractions that's a win. So it's it's setting. It's defining that wind for every single day if you get 1 % better every day over lifetime you're going to see massive improvement I don't try to go for big massive change in my life I try to go for just to 1% improvement in a different area every day.

43:35.15

wongga

Nice. Well I can I can see how much you've improved over the last three and a half years just ah, following you a little bit and those 1% add up, don't they.

43:45.18

Mike

They do and it's in praise of incrementalism I see it every year for for year's resolutions I'm gonna change everything. No, you're not, you're not going to change her change. 1 thing. Decide. Don't decide to try to work out five days a week if you're not even doing it no times work out twice a week do them for a up then try it three days a week don't try to read up I hear some you say well my goal is read a book a day. You're not clear. No. I don't care what any business owner Ceo says no one actually reads a book of it. You're reading an executive summar. That's all you doing, but you might say a goal is oh if you're not a reader can to read a book come up. What is a goal you could actually accomplish and then once you actually accomplish Jack goal and onto it I didn't set up trying to marathon instead of trying a five k I just. Slowly incrementally hand on that goal which I achieve what I want to.

44:44.36

wongga

Excellent, well that is a great place to stop Mike I'd love to thank you for um for spending some time with me today and sharing with the audience your insight and expertise and we will definitely see around thanks for coming.

44:53.87

Mike

Um, it.

44:57.35

Mike

Um, thank you.

44:59.98

wongga

All right take care.