Interview #9 – Randy Molland from The Reinvestors

Today on the FI Garage The Mechanic and The Accountant speak with Randy Molland, of the Reinvestors. Randy and his partner Steve help people access their home equity and get into real estate investing. Randy and The Mechanic enjoy a Mill St Organic Lager while The Accountant tries to complete a dry month.

  • Who are the Reinvestors (2:15)
  • Networking in the local real estate community (8:00)
  • Using your dead equity (14:00)
  • Find people who have done what you want to do (20:00)
  • 3 ways to make money in real estate (22:25)
  • Keeping tenants happy (28:10)
  • Putting together a team to help you invest (30:10)
  • What’s the most important thing when starting out in real estate (35:10)
  • Should you get a property manager (41:00)

Episode Links

*The links to the books are affiliate links from Chrissy at EatsleepbreatheFI.com.

Rich Dad Poor Dad* – Robert Kiyosaki

How to Win Friends and Influence People* – Dale Carnegie

REIN

4 Comments

  1. Excellent interview. It is nice to have a fresh look at real estate investing in a paradigm where most of the investing discussion in the FIRE space is centered on index ETF investing.
    I am looking forward to getting involved with the group at the monthly meetings in Victoria and having a second look at real estate investing on the Island.

  2. I would be interested in hearing more about the challenges of perusing real estate investment, how often these come up and how real estate investors deal with them.

    From anecdotal stories and research I believe real estate investing can be a very time consuming and challenging way to invest. Buying individual properties, often concentrated in a single geographic region, leaves the investor exposed to a high degree of risk. I feel most discussions around real estate investing fail to cover these risks.

    Real estate investing is almost completely based on leverage. Most people are familiar and comfortable with having a mortgage so this doesn’t feel risky. Yet those same people would think it was crazy to borrow money to invest.

    An example that sticks in my head is from 2 people I met in 2019 at a financial conference. They had owned several properties in Fort McMurry and were on the path to FI. Between oil prices and the wild fires they went from being on the path to FI to ‘starting from 0’. I’m sure many people who invested in AB real estate, in general, could be in similar situations.

    A few other random points:
    1. Your guest mentioned real estate investing can have 15-20% returns. I would love to hear how that is achieved
    2. Your guest mentioned many people are sitting on RRSP’s earning 1%. That is also a highly suspicious claim.

    It would be great if some sort of support for these claims could be provided or if you could push back on these types of claims in future interviews so we can get more details from your guests.

    1. Hey Sean,

      Your first few comments are very true. It can be very time consuming if you are doing it all yourself, as Randy mentioned that’s what they are doing, taking the work out of it and providing a stable cash flow for your investment. Due diligence required of course! There is a lot of risk in location. Part of problem is people go chasing returns in secondary markets where there isn’t as much supporting the economy, Sask is another good example. Leverage is absolutely the key to RE investing. I guess because people can ‘see and touch’ a property they are more comfortable borrowing to invest in it. We all do need a place to live after all, and with less people that can afford to buy, rentals are increasing in HCOL markets.

      Random points: 1. RE generates returns from cash flow, mortgage paydown, appreciation, and forced appreciation. If you factor all of that into the numbers you should be seeing somewhere around 15-20% that’s not uncommon, it’s just not a cash on cash return. Monthly cash flow will likely be pretty small in HCOL markets. Good point though, we should have got him to illustrate where these claims come from. Check out this recent post from Freedom 35 in Vancouver http://www.freedomthirtyfiveblog.com/2020/03/vancouver-real-estate-investment-15-percent-return.html
      2. Yes, this is a very generalized claim and I think the point is ‘many’ people are not optimized in their investments and net of fees may not be earning much in their RRSPs. It’s pretty easy to use RRSP money to invest in RE and get really good returns. I finally used my RRSP for a 2nd mortgage lending opportunity and I am getting 12% for 1 year. There are ways to invest in RE other than just buying a single family home or condo on your own.

      You are right though, we need to have a little push back when we’re interviewing. Definitely as learned skill as an interviewer. Thanks for the thoughtful comments as always.
      Cheer, MM

Leave a Reply

Your email address will not be published. Required fields are marked *