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How To Be Successful Using Buy & Hold Investing With Roger Auger

Mitch Stephen|By September 17, 2020

Episode 412: How To Be Successful Using Buy & Hold Investing With Roger Auger

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REIS 412 | Buy & Hold Investing

There are so many paths to success. The only thing keeping you from achieving it is the way you stop yourself from taking that first move. In this episode, Mitch Stephen is joined by entrepreneur and author, Roger Auger, who will impart his knowledge and insights about becoming successful in real estate using buy and hold investing. He shares some of his strategies with us while also letting us in on what he has been up to. Sharing his book, No Excuses, Roger gives some inspiring advice or two on achieving whatever it is that you want in life. Follow him and Mitch in this conversation as they talk more about finding deals and achieving financial independence.

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I have Roger Auger on the show. He’s from Canada. He’s going to be talking to us about some buy and hold strategies, and tell us what he’s been up to. I would like to first pay homage to our sponsor TaxFreeFuture.com. If you do not have a tax-deferred or a tax-free account in which to grow your finances or your retirement, then you are missing a huge tool in your tool belt. Watch the 37 little video vignettes. My favorite is where you put a little bit of money in a tax-deferred fund and grow it to a whole lot of money. It is a little known tricks and strategies that are out there for you, but you got to learn. Roger, how are you doing?

I’m great. Thank you for asking.

Where are you sitting physically? What city, state or province?

I’m in Canada, in Hamilton, Ontario outside of Toronto.

Tell us a little bit about you and the strategies that you’ve been using to get ahead in the world.

I’m an entrepreneur by choice. I am a self-motivated working as entrepreneur. I buy real estate and stock options. I do buy and hold, flips and student rentals. I turn properties into multiple-family units and I do wholesaling.

You have done what I have done. How long have you been in the business?

For many years.

I want to point this out to the readers. He rattled off a lot of different strategies. In my humble opinion, you don’t jump off into all these strategies at one time. I’m going to guess that you honed one until you were an expert, and then you started learning other little strategies to add to your tool belt.

I started with student rentals. My first property was a student rental which is a university here. I had students living there. They were paying me a higher rent per room. I had several student rentals going and then I bought into a single-family home. I didn’t like the single-family home because the cashflow is very low. I then went into turning houses into duplexes where there are two-family homes in one unit. That’s my strategy now. When I see a property, because of my experience, I can either flip it, wholesale it or turn it into a student rental, duplex or triplex. It all depends on what the property wants me to do and what the area the property is in. I learned all this because I’ve done it many times. I didn’t just jump in and do all this at once. I’ve been doing this for many years and I’ve been working on different strategies every time. My best strategy now is buy and hold until I talk to you. I like your idea. It’s a lot better than mine because I don’t have to deal with LTB or the Landlord Tenant Board, which is hard to deal with here.

What are the things that you have going for you? I was a landlord before I shifted myself to seller financing. It helps that you have experienced the issues with being a landlord. That makes a difference when you’re trying to choose or decide to do a seller financing strategy. Until you know the pain of being a landlord, you’re not equipped to understand all the reasons and the benefits of a different strategy. You’re a long way down the road and I did the same. I had about 25 rentals and I wasn’t making any money. It could have been I was the worst landlord in the world.

It depends on the tenants. There’s are a lot of good tenants out there who were good people. They pay rent on time and take care of the property, but then there’s the oddball one that takes up all your time. They’re insane. Unfortunately, you have to deal with them because you rented to them. You have legal procedures to get them out if you want them out. At the end of the day, I still don’t mind rental units. I have good tenants and I keep my units empty until I find the perfect tenant for my units. A lot of landlords here just jump in the first person that gives application as a deposit. They let them have the property, where I had units that are empty 3 or 4 months before I found the perfect person I want in the house. That saved me a lot of aggravation.

Do not do charity with your real estate in your real estate business because it's hard to undo some things. Click To Tweet

We adopted the same philosophy in the seller financing strategy. Unless someone had at least 10% down and we liked them, we wait. Now, we have a 0.2% foreclosure rate and I’m collecting on hundreds of mortgages. I used to have a much higher foreclosure rate like 12% or 15% because I was only taking 3% or 4% down. There wasn’t enough glue to make them hold. One of the differences in the buy and hold and the seller financing strategy is I can get lucky if someone could give me 25% down on a $100,000 house. I could collect $25,000 the next day on any one of the houses I have for sale. It doesn’t happen every day but I have that chance.

I’m at least going to collect 10% or an average of $10,000 and that’s my money. It’s not a deposit. That’s one thing that never happens as a buy and hold guy. You never get anyone that gives you a $25,000 nonrefundable lease deposit. I wouldn’t imagine. I’ve had people give me 50% down. That makes it easy to decide to rent to them, but we still have regulations. We have to make sure that we have a reasonable reason to believe that they can pay. They passed that law so that you couldn’t collect 50% down on a house to someone you knew couldn’t even make the payment on the remaining balance because they worked at Walmart. They didn’t have the income. You know you’re going to foreclose on them eventually, but you want the $50,000 out of their pocket in years.

This is a bad business. We are probably from the same cloth. It’s got to be a win-win for everybody. The private lender, the guy that goes in the house got to get whatever he was supposed to get. We’ve got to get what we were supposed to get. The neighborhood should be better off. A lot of things should be better if we do our job right. You got to have a little bit of a higher reason than “I want the money.”

If everybody wins, everybody’s happy. It’s a smoother transaction. If you’re taking advantage of somebody, karma is a bitch. They’ll come back on you. I’ve seen it where if you do something evil or unethical, it comes back. Not me because I don’t do anything unethical with people all the time, but I’m a strong believer that win-win is the best scenario.

There was this book they wrote a long time ago that tells you how to do things. It was written about 2,000 years ago. It’s called The Bible. If you could live by those rules, your life will be as smooth as it can possibly be. That’s what we try to do. How prolific are you? Are you doing a house every quarter or every month?

I’m in a stage of renovating four of my properties. I’m turning them into duplex and triplex. Once they are done, I’m going to refinance them and then I’ll buy some more properties. I have cashed out up in that. I’ve done six wholesale deals and I purchased one for myself.

You’re an expert at finding deals, which is the key to the whole thing. There are 2 or 3 keys, finding it, funding it, and selling or converting it.

Sometimes when you find a good deal, you want to keep it for yourself. When you wholesale, you picked the best person you get along with the wholesaling because you want them to buy more properties. My last person, I found out he made $150,000 equity in this wholesaling deal after he renovated it. The value of the property is up to $150,000. The properties here in Canada are expensive. The average property here in Hamilton is $500,000 and above. When you make $150,000 on a property, you’re doing well.

Are you allowed to seller finance properties in Canada or do you know?

I don’t know. I’m going to find out though.

You still got to find some affordable houses. If you’re saying houses are $400,000 and $500,000, I don’t know if that strategy works as well when you start getting into that caliber of house.

What we do in Canada is we do those things called rent to own. It’s the same thing with what you’re doing. You buy a property let’s say for $400,000. You would sell it to the renter three years down the road at $480,000 because the value of the property has gone up that much. You get a deposit of $5,000 to $20,000 down. You have to hold a mortgage like myself will hold a mortgage. They will pay me the mortgage, property taxes, insurance and the premium above that. They’ll pay you $2,400 to $2,500 a month. They will have to buy a property in three years. If they don’t buy the property from you in three years, you can remove them from the property or you can redo another contract with them. It’s the same thing that you’re doing, but completely different. Your strategies are a lot better than ours because you have no money into it versus, we’re holding the mortgage here.

Buy & Hold Investing: The bigger down payment, the bigger the option fee that will work against you.

The problem I found with rent to own myself was twofold. One was most of the time, they would never exercise their option. When they moved into the house, it smells good and it had a new carpet. By the time it was time to refinance it, they had dog crap all over the carpet and the windows were broken. They didn’t like the house anymore. The romance had worn off the whole thing. When they were hot to have the house, that moment, the house is humdrum. The second thing, which I found disturbing, was it’s supposed to be a good day when you get $20,000, $30,000 down on a non-refundable option deposit. If they lawyer up when it’s time to move them out because they didn’t exercise their option, judges are hard on you when they’ve given you a lot of money.

That should have been a good day when you got a lot of money down. It can turn into a very bad day if you’ve got to go into court. These people gave you $50,000 down on a $300,000 house. They didn’t exercise their option and they want some of their money back so they lawyer it up. Judges and juries don’t like to see these “poor people” being taken advantage of by us, rich guys, because they can’t honor their word. It’s not fair. What we’re doing and what we ask or the consequences that happen are perfectly all in writing. When you get in front of a judge or a court, the bigger down payment or the bigger rent option fee works against you.

I did a couple of rent to owns but I didn’t ever have any problem with them. They bought them out afterwards.

Most of the time they probably won’t. I’m just saying there are those times. When you do enough volume, you will run into everything until you learn not to do it. I’m a big proponent of, “He checks this box, good. The down payment box, good. I called the work, it’s all good.” Tell me if you do the same thing, but the last thing I check in with is my gut. If my gut doesn’t like the guy, he’s out.

I go on my gut all the time. That’s why before I put somebody on my properties, I’ll keep it empty until I find a perfect person. I went against my gut and I got screwed many times because I felt bad for the person. I get emotionally attached to the person because of the situation they’re in and I don’t go to my gut anymore. I agree with you 100% there.

Here’s a lesson for the readers from two pros. He just said it, but I’ve been sued three times in my entire life over real estate over anything. These were three times and it was in the real estate setting. It was three people that I’ve bend over backward to help. They were damn near homeless or about to be homeless. I solved the problem and I got them SSI. I got them their checks coming in from the government and all their stuff coming in. All they have to do is pay me $400 a month to live in this mobile home, on this land or whatever. They didn’t pay me. I went to get them out because they weren’t paying it. I don’t know what else to do. If they go out and they go under a bridge again, then all their checks are going to stop because the federal government doesn’t mail checks to bridges.

They dig in like nobody’s business. They get a free attorney down at the office for poor people or legal aid. Here I am fighting these three people that I’ve bend over to help. I learned one very valuable lesson. If you want to do charity, get out your checkbook and write a check to the favorite charity of your choice. Get out and work with that charity or help Habitat for Humanity build a house or something. You do not do charity with your real estate business because it’s hard to undo some things.

We have the same laws here. We have legal aid for poor people. We have the Landlord and Tenants Board that protects them. When I went against my gut, they ended up staying for 6 to 7 months for free before I got them out. When I got them out, I was the evil guy. I was the trash guy. They trashed me. I was the bad guy. The rich man went after poor people, but I need to pay the mortgage on this property. I need the rents to pay for it. I can’t carry it and pay for my stuff and my own family, and pay for yours at the same time.

That was the same thing. I won all three of my cases. It costs me about $40,000 each to win. At the end of the day, they were mobile homes on some decent little places, but I didn’t have that much in them. I would have been far better off if I had given them the house. In my young youthfulness, I stood on principle and had to write $120,000 worth of checks and I won. Nowadays, we write checks to get people out fast, “Don’t go to court. Let me give you your down payment back and whatever. Just move along and let me get to the good stuff.”

Cash for Keys, that makes sense.

You find out in court fast that it becomes about anything and everything that it’s not. It’s not about they signed the paper and didn’t agree. It becomes about every little period and every little cross on a T. They’re trying to mess you up in some fine detail somewhere where you’re a crook or a bad guy. You would’ve thought I was Hitler when they finished crossing examining me. Did you see Judge Kavanaugh proceedings when they made him cry at the table? They bedded a federal judge here and they ripped him a new one. I was the same way. They were accusing me of such heinous things that I damn broke down in the process because no one’s ever said those things about me ever and never should they have been said. They come at you with such teeth and such vile that it’s disheartening. It was a good lesson though.

Because you have a lesson, you’re not going to do it again. You’re now learning a new strategy by getting Cash for Keys. It’s a lot easier and a lot faster. You don’t have to build it from scratch. You don’t have to deal with the insults and you don’t have to deal with the repercussions of legal issues.

You can be anything you want to be. You just have to get up and start doing what you want to do and become what you want to do. Click To Tweet

They always want trouble damages. Once they lawyer up, they’ll say, “We can get you $1 million out of this guy,” and then they won’t settle it by the time they lawyer up. The trick is you have to quail it before it ever gets to that far. Whatever the amount of check you need to do, just get it over with.

You’re going after a person that has nothing to lose so they don’t care.

We’re talking about all these horror stories, which is one thing I appreciate about shows that are honest. We could be up here painting a nice picture of Lamborghinis, big boats and good-looking girls in huge checks. That was one of the reasons I wrote my first book. Let me tell you what happens after the Get Rich seminar. Let me tell you about what they’re not telling you. I went into the success of it but I also said, “Here are the problems that you might run into. You’ll be much better off if you were at least aware of where the potholes are on this road as you’re going 100 miles an hour.” You wrote a book, what’s it called?

It’s called No Excuses. I deal with a lot of people that are successful in life. They always come up with ways of saying there’s an excuse for them not to get involved in real estate or anything that can help their cashflow. I might have grade 3 or 4 in reading and writing skills. For me to write a book is incredible and hard. I wrote a book because of the fact that I was given an excuse that I could not write a book because of my reading and writing skills. It took me almost two years to do it. I wrote a book and now it’s published and people are liking it.

It’s a small book. It’s a couple of hundred pages. It’s nothing big but it tells you a story about my life, what made me get into real estate, and a couple of real estate deals I’ve done. It’s more to help somebody that has a rough start and in a rough situation to give them a heads up and say, “If I can do it, you can do it. Just put your mind to it.” It gives you a way to set stuff to show yourself that you can do anything you want to if you put your mind to it.

Your book was to inspire people not to feel beat down. Get up. You can do it. You’ve got to get educated, find something to focus on and become an expert at.

It doesn’t have to be real estate. It doesn’t have to have stocks. It doesn’t have to be anything. You could be a carpenter, a plumber or a roofer. You can be anything you want to be. You just have to get up and say, “This is a new day. I’m going to start doing what I want to do.” Become what do you want to do and as long as you’re happy with it, then you’re doing good. Don’t let your emotions or your past issues hold you back if something happened to you because we’re all capable of doing something.

Your past does not define you. I’m always looking for this in my students, especially if they want to be at a higher level. I’m looking to see if I’ve had enough meters pegged in the red because that’s what it takes to get out of that cycle of work and paycheck. If they are, there’s enough angst here for this person to get off dead center. Let’s do something. They’re going to do something. I remember the day that I made that decision. I woke up one day and said, “I’m never going backwards again. I’m going to be worth at least $1 more tomorrow than I am today. I don’t care what it takes.” I readjusted my whole life to make sure that I never went backwards. My net worth grew from that day forward. It’s amazing how it starts to snowball. When you make that decision right, you’re setting parameters and rules that you don’t go back on anymore. These rules are designed for you to go forward and you don’t break those rules anymore.

You said it to yourself, one day you woke up and decided to change. Look at where you are. If you didn’t decide to change the situation you’re in, then you would not have a couple of thousand houses invested and storage units. It’s because you decide. That’s what the book is all about. It’s saying, “We all have shitty things that happen to us. We all had bad things that happened to our past or when we’re growing up. We need to stop thinking that person will ever hurt us. Stop it and start to live our life the way we want to.” It’s not having excuses and not having any non-determination saying, “I can’t do it because of this reason.” That’s bullshit. Get off your ass and make a goal. Break down the goal to daily and increase it.

It was a little chapter called Forgiveness and Move On. I’m glad you wrote this kind of book. You can never get too many of these kinds of books. One time when I was writing my book, I started to quit because I said, “I’m not saying anything new. I’m not inventing anything.” A very intelligent man sat me down and said, “It’s difficult to say anything new or to come up with anything new these days. A lot has been written and has been said by multitudes of people, but your voice may reach someone that someone else’s voice may not reach. The way that you phrase it or the way that you put it, your life experiences may connect more closely to theirs than some other person.” That’s why you do it. You keep going because your voice and your experiences are unique. They may tie closer to someone else. I don’t think there can ever be enough of those books because it’s always written from a different angle or someone else’s voice.

I’m hoping to help one person. I have a charity that I own and operate here in Hamilton. If one person can change from my book, then the book is completely worth it for me to take two years to write it. I see a lot of people in Canada, in my area that are struggling and not living their lives. When I do see my tenants or other people, I give my book to them and say, “Read it. Hopefully, you can turn a leaf.” We all need to come together and help each other to do this. Any man can do what they want to do if they believe in themselves.

Hats off to you because business is always better and always goes further when there’s a higher reason than just the money. It sounds like you have a higher reason.

I want to help as much as I can. I teach people here how to go into real estate and buy real estate. I don’t have any classes. They can just call me and I walk them through certain things like, “Don’t buy that house. Buy that house.” I want them to see the light too. If they succeed better, then their kids would be better off. I’m trying to do one step at a time. The book is to hopefully help people.

No Excuses: How Anyone Can Overcome a Rough Start

It’s not unusual for it to come back tenfold even when you’re not looking for it. Do you have anything that you might want to say to the up and comers out there?

If you’re going into real estate, find the one that you like doing. Don’t jump into twenty different avenues of real estate. Focus on one and get that one to be your prime, and then branch out to little ones. I’ve seen people who were my clients in the past that were doing multiple things and ended up losing their shirt. Do one investment, start that and get it going like a duplex, student rental or whatever is your method. Get that going and then branch off to other things. Don’t try to do everything at once. If you purchase my book, that’s great. Give it to somebody that can use it and hopefully, help change your life. That’s the point of that book. I don’t make money off the book because it took me two years to write it, but it’s to help others. That’s what I want the book to do.

Give us a little case study. You don’t have to be exact or anything, but tell us about your most successful deal.

My most successful deal was this property I bought by our stadium. We have the football stadium and I purchased it on a wholesale deal for $500,000. They’re expensive here. It was a single-family home, but it was laid out as a duplex and had room to turn to a triplex. I turn it into duplex right away. I have two families living there and they’re paying me $3,400 a month for rent for those two places. I turn into a triplex, which is another $1,500 a month. I’m now making $5,000 a month rental payments. We just had the property appraised and now the property is worth $900,000. I put a $100,000 worth of renovations in it.

You have $300,000 worth of equity there and a cashflow. How did you fund that house?

I did private lending first. I found a private lender that will lend me the money for the house. Because we refinancing, we’re going to big 3 or 5 banks here like CNBC or Scotia Bank that will finance it for us.

You will get a little more reasonable interest rate and the longer-term.

We’re looking at 3% and we’re probably going to be financing it for $750,000. I’ll pull out the down payment that I put in, plus the money I’ve put in, plus an extra $100,000. It will still cashflow for almost $100,000 a month after the payments. I’ll have no money in the property.

Not only you don’t have any money, but you also put $100,000 in your pocket. That’s a great plan.

That’s how I do it over and over again here. It just takes a little longer to do, then I take $100,000 and buy another property. That’s my strategy here now in having the monthly income from the rents. Having $1,000 cashflow is $12,000 a month a year. You times that by the twenty houses, that’s $20,000 a month, so it’s good.

I appreciate you taking the time. I want everyone to go to 1000houses.com/Auger and check out his book, No Excuses. I love it that you’re trying to help people. That’s what the whole point of this show is. I don’t care what strategy you go or if you buy my course or someone else’s course or you find a mentor somewhere. I’m trying to help people find where they belong so they can find their financial independence, so that they can become the person they’re meant to be. I love your philosophy and I love your book.

I like to thank TaxFreeFuture.com for sponsoring us. You won’t believe what your financial advisors are not telling you. We’re going to tell you what they’re not telling you. We’re going to tell you why they’re not telling you. You can do with it what you want, but you’re going to be impressed. Make sure you check out those 37 little video vignettes. They are eye-opening. There’s a reason why the rich get richer. There’s a reason why the rich pay less taxes than a lot of people. Those options are open to even the smallest player. The difference between the people that are complaining about the guys who don’t pay taxes, they’re not getting educated to find out that the rules are the same for everybody.

It doesn’t take just wealthy people to play those rules. You can play the rules and it’s even more important to use those rules when you’re broke and have little money. Being able to defer taxes or pass-on taxes completely during some circumstances is a real leg up. Those opportunities are given to people who are drivers, who will drive an economy. People who do this stuff create jobs, create movement of money and materials. They make truck rolls. They make manufacturers manufacture. There’s a reason why those incentives are out there for people who want to take the time to learn about them. Check one single avenue out at least to see what I’m talking about. Thanks a lot for stopping by to get you some Roger Auger and check out his book.