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Life by Design is a podcast that shares the experiences and tools to help couples align their wealth goals and reclaim their time, enabling them to experience freedom, abundance, and a life by design.
Jessilyn Persson: [00:00:09] Welcome to the Life by Design Podcast. We are your hosts Jessilyn and Brian Persson. Are you and your partner looking to align your financial goals and build wealth together? Have you ever wondered what might be stopping you from confidently investing in real estate or growing your wealth as a couple? Or why it feels so hard to get on the same page financially?
Brian Persson: [00:00:30] That's exactly why we created this podcast and the 'Riches, Relationships, and Real Estate' program to help couples like you invest confidently and achieve both your financial and relationship goals. Are you curious to learn more? Head over to discoverlifebydesign.ca/wealth and download our free guide, 'The 3 Mistakes that Keep High Achieving Couples from Building their Wealth, Freedom & Living a Life they Love'. Let's start building the life you deserve, together.
Jessilyn Persson: [00:01:00] Today's topic, we are going to focus on the top three real estate investment pitfalls that we encountered.
Brian Persson: [00:01:07] Doesn't real estate come with a whole lot of pitfalls. This is like a trip down memory lane. The not so nice part of memory lane in some cases, but also a really good chance for us to help guide the audience out there. How you can start off, what you can avoid, how you can accelerate your real estate portfolio a lot faster. It's not going to sound like what you think.
Jessilyn Persson: [00:01:38] Every time there's a failure, there's a lesson in there. We've definitely had a few, few might be a light word, mistakes along our years of real estate investing and throughout our portfolio and our relationship, our communication. You name it, we've probably had areas we've had to work on and improve, but it was because of those lessons that we were able to grow the wealth the way we did, and able to help couples become aligned and start investing in real estate.
Brian Persson: [00:02:09] I think when people hear 'pitfalls of real estate', they hear 'I didn't analyze the numbers properly' or 'I bought the wrong property' or any number of variations on the technical.
Jessilyn Persson: [00:02:23] Or ' I had a really crappy tenant'. That's an infamous one we hear all the time.
Brian Persson: [00:02:28] I've heard that so much. Let's not forget that for later on in this podcast. It's actually a lot more fundamental than just analyzing the numbers. The technical aspects of real estate is just the how-to. You really got to sort yourself out first before you sort out how to invest in real estate. That's largely what we're going to talk about in this podcast, is the pitfalls of how we didn't sort ourselves out first and all the things that we needed to do to support us in order to actually invest confidently in real estate. The 'how' of it came later.
Jessilyn Persson: [00:03:07] Yeah, it did. To roll into the first pitfall that really got us, and that was the lack of knowledge and support we had when it came to investing in real estate. We were excited, we both had owned our own property we lived in, so it was not the same as having it as a business or renting it out, but that was probably the extent of our knowledge. When we decided to buy our first rental property together, it was like, this looks like a good idea, let's put an offer in. Let's see if we can get the down payment and get approved for a mortgage and boom, we're in, we're done, we bought it, yay! Now what?
Brian Persson: [00:03:51] Let's go through the mistakes there. It was the wrong type of property, we would have never bought that type of property nowadays.
Jessilyn Persson: [00:03:58] It was the wrong location.
Brian Persson: [00:04:01] There were so many different things wrong with it. It was the shiny object that was cheap enough that we figured it was a great entry into real estate.
Jessilyn Persson: [00:04:10] That was the first property we bought together, and we were co-owner also on that mortgage. Not until later we learned to separate that. That was a great lesson to learn from.
Brian Persson: [00:04:22] So why did we barrel headlong into that property? Because we had nobody telling us what to do. We had nobody around us who had done it. All of our friends, just like us, they panicked and struggled their way through their first mortgage and signing the documents with their lawyer, as most people do when they've never bought real estate. It's a daunting thing to deal with all that paperwork. That's where we were, we had done that, but that was the extent of our real estate and our friends and our family had only ever done that too. So where were the people around us that were investing in real estate, had already had some bumps and bruises, had made some of the mistakes that they could have guided us around? We didn't have anybody in our life like that.
Jessilyn Persson: [00:05:14] No, and we also didn't think to look outside of our circle to inquire and seek that kind of help and support.
Brian Persson: [00:05:21] So takeaway number one is the lack of knowledge and support, and that is the first place you should start is, go find your circle. There are piles of networking rooms in whatever city you're in. There's real estate everywhere, so there's real estate networking rooms. Go find that real estate investment networking room and get in there and start talking to people who have already done it.
Jessilyn Persson: [00:05:45] Knowledge is abundant, and I know we've mentioned this many times, there's podcasts, books, online webinars. Knowledge is great, but I would assert that finding your support is even better. People who have been there. There's so much out there that you can get inundated with knowledge and not sure which way to go. One book might tell you the best real estate game is X, and then another book tells you the best real estate game is Y, and now you're going, I don't know which one to do. You don't know which one is a fit for you. But if you can find people who have done those games, you can pick their brains and find out where their hardships lie and where their successes were. Then you can see if that's actually a fit for where you want to go to invest.
Brian Persson: [00:06:30] A book doesn't have a personality. That's one of the things that I found out when I first started going into networking rooms, is that you can read all the stuff you want, but how do you know that type of thing fits you? When you go into a networking room, you'll find people like you. They'll have personalities like you, they'll have similar characteristics like you, and they'll generally invest in a type of real estate of their personality characteristics. When you find the group of people who match your personality, you'll potentially have a better success at whatever real estate they're investing in, because it'll match your personality better.
Jessilyn Persson: [00:07:10] Absolutely, and they'll help you, ideally, avoid some of the mistakes that you will stumble upon yourself if you go it alone.
Brian Persson: [00:07:19] Yeah, and they can support you. What's happening if a tenant or a property deal is going wrong, are you going to run to a book and try and find the page that is going to solve your problem? No, you call your friend. So get into those networking groups, build those relationships, and have people around you. If I draw back to my first property in 2004 and think about what happened in 2007/2008 in Edmonton, where the property prices doubled. My condo that I bought, my townhouse, doubled in price and if I had had a group of people around me who had already been in real estate and done what I did, or done what I was doing at the moment, I could have used that property at such a higher level to invest in more real estate, to do more stuff with it, but I didn't know. My concern of the day was, how do I pay my mortgage? The fact that my property price doubled was lost on me, because I didn't have anybody around me to guide me and say, do you know what just happened? Your property price doubled, do you know what you can do with that? It would have been a totally different story.
Jessilyn Persson: [00:08:39] So for takeaway number two, you need to set boundaries. We need to learn to say no to unnecessary commitments or distractions. You want to protect your time by creating boundaries for work, family, and personal life. This comes back to the multitude of options you have in real estate. The first thing you want to do is, when you're going to invest in real estate, pick a lane and stick with it. There's so many shiny objects, in one hand you want to go do fix and flips, and then you want to do the BRRRR method, but no I want to own multifamily, wait, I've heard commercial's amazing. You can't learn it all, you're going to have so many more mistakes, so many more costs. Pick one and stick to it and say no to all the other options until you've tried and tested and proved whether what you like is actually working for you or not. Then maybe at that point you can decide to try another real estate investment option.
Brian Persson: [00:09:42] We largely stuck to single family homes with basement suites. The interesting thing is, when I got into some of the networking rooms, you hear so many different ideas. I probably blew two years just chasing down knowledge on all these different ideas that you hear about. Just like you were saying, if you can pick a lane that you think is going to work for you and stick with it and ignore all the other deals, then you will accelerate your real estate portfolio, whatever it looks like, significantly faster. We've been in the game now for 13, 14 years or more. More if you include our first properties and all the things we did with that. But only now are we even looking at multifamily, because we've stuck with the single family home with basement suites game for this period of time, and now it's starting to make sense to us to move over into multifamily, and that's going to be the next evolution of our real estate portfolio.
Jessilyn Persson: [00:10:45] When you're setting boundaries, you want to make sure you limit distractions. Create a distraction free environment by turning off notifications when you are analyzing whatever deals you're looking at or when you're reading about which real estate you want to invest in, and make sure that you're focused on whatever it is that you're deciding to focus on. If that means you put your kids in front of a movie for an hour so you can have that focused time. (Not ideal) but it works. Whatever works for you. I don't think it's a matter of ideal, our kids are watching a show as we record this podcast.
Brian Persson: [00:11:22] Yes, it works out. They know Mommy and Daddy are recording the podcast, we get an hour of TV.
Jessilyn Persson: [00:11:29] They're not thumping around upstairs. But it's very clear, and we're intentional. We're recording a podcast, the boys know what we're doing, they know what behaviors are allowed and aren't allowed so that we can focus, get it done. As opposed to being distracted and having to rerecord or takes an hour or two instead of 30 to 40 minutes. So again, it's in your boundaries, limit your distractions so you can focus on what you need to get done, get it done, and move on to whatever the next thing is in your calendar.
Brian Persson: [00:12:02] One of the important things with real estate is completion. Don't leave things hanging. When I see some other investors, they'll let things go for a while. To me, that's just a bad idea because if that, heaven forbid, anyone leaves something leaking, water damage in a property is the worst. You got to take care of that stuff. Even yesterday, I was dealing with a thing at a property, managing some of what was going on. I came home, and you guys are watching our Friday night movie, and I was like, I can go join you guys, or I can go finish the real estate stuff that I was doing. I went immediately into the office and cranked it out because otherwise it would have just become this uncomplete portion of work that was floating around. Now I would have to figure out how to get it back into my life, over a Thanksgiving weekend nonetheless, which is this one.
Jessilyn Persson: [00:13:03] That really rolls in well to the whole concept of task switching. You lose so much time. Say you decided to come watch the movie with us. Firstly, you're always going to have this weighing in the back of your mind, you're like, I got this real estate thing I need to finish. So there's that, and then when you decide to pick it up, secondly, you've now got to find time in your calendar or your schedule, when am I going to pick this up and finish it? Then when you actually get to it you're like, where was I? Have to recap, you need that extra 5, 10, 15 minutes to regroup yourself on what happened or what you had to do and find everything again, then you can lose so much time by not completing something the moment you're in it.
Brian Persson: [00:13:45] That's why when I got home, I knew I had to set a clear boundary between real estate and the family. There couldn't be this fuzzy boundary where real estate didn't quite finish, and then I wanted to spend time with the family a little bit more than I wanted to finish the real estate. It needed to be black and white, crystal clear. I needed to finish the real estate, get everything done. As most tasks do, it took me a little bit longer than I figured, but it was done. Even before you guys finished the movie, it was complete, it was out of the way, I never had to think about it again. The boundary was black on this side, white on the other side.
Jessilyn Persson: [00:14:21] You raise a good point, because I know one of the most common things I hear when people hear that we are real estate investors is all around tenants. That's people's biggest, I think, fear. They're always like, how do you ensure you have good tenants or, how do you screen your tenants or, what do you do with bad tenants? I keep it very high level because generally that's not why I'm at whatever event it is I'm meeting them. I said, we have a very clear process in place, and you have got to be on it. I said, for example, my husband, he's the one who manages all our tenants, but he has a very clear rule he lays out up front in the contract, that you pay on time. If you don't, he'll deliver an eviction notice. It doesn't mean you get automatically evicted, you get your X amount of days notice and then if they pay, they keep staying, there's no big deal. But if we waited, the first comes around, there's no payment, we're like, we'll give them a few days, it's the 3rd, the 5th. Before you know it, it's the 10th and you're delivering a letter. There's rules in place and laws on how much time you have to give, and it delays it and it causes consequences that people hear about when it comes to bad tenants and rules. But if you're, like you said, you're on it, you finish the task, whatever it is. If you know very clearly you're paid by this date, it's not paid, boom. You're delivered your letter. It's not an option, you just do it.
Brian Persson: [00:15:36] Surprisingly, I talk to a lot of investors out there that are a little bit lenient on that. I have long term tenants that, I've figured out, they have the odd little pattern in the year, and there will be a few days delay here and there. But I know these people very well, they keep the place immaculate, there's some history behind it. This is for all the people out there who already have properties or are about to have properties. The number one thing that you can say to a tenant, if you're going to manage your own properties. As they're moving in, say look, you need to be an adult moving into my property because the only method I have for any kind of recourse with you is eviction. When you carpet the whole relationship with this eviction above it, they understand that you're only going to act in one way. That is everything and anything they do, you're going to come with them from an eviction standpoint. When I say that to new tenants, they get this look in their face, as if am I serious? Look, it's the law. I can't come in and baby you into a better tenant, my only option is eviction. They get the seriousness of that, that starts the relationship with those tenants, and I never have a problem because that's where I started the relationship. I didn't start it as, I'm a nice guy and I want to be a good landlord, and here's a great property to live. All that stuff was a given. My tool, the only lever I pull, is eviction.
Jessilyn Persson: [00:17:23] It's about consistency. You're showing up, that's how you deliver it every time. It's no different, and you know how to react should you need to.
Brian Persson: [00:17:31] That sets a super clear boundary with your tenant as to what the relationship is. I see so many investors out there having that fuzzy little boundary between their tenants. Just make it clear right from the get go. Don't leave any room whatsoever.
Jessilyn Persson: [00:17:48] And on that note, takeaway number three, delegate and outsource. The reason I say 'on that note', because if that is not your personality to be able to deliver an eviction notice, I promise you there are companies out there who can help you with that.
Brian Persson: [00:18:07] Yeah, absolutely. There's companies out there that will support you, for sure.
Jessilyn Persson: [00:18:10] Delegating, you want to delegate tasks that others can handle and outsource where possible so it frees up time for your high value activities. On that note, you want to delegate tasks that you maybe don't enjoy because if you're doing a task you don't enjoy, it naturally takes you longer because you drag your feet, you procrastinate. Whatever those tasks are, that might be like, there's a leaky toilet and you're not a plumber by any sense, just hire a plumber. It will save you more time and money in the end, because you will fix it and it's still not fixed, now you've wasted this time, you bought these parts and you're still hiring a plumber.
Brian Persson: [00:18:48] The easiest way to figure out if you should be doing it or not is to value your time with dollars. Calculate what your hourly rate should be. If you're employed or if you're a contractor, it might not be exact. If you make $100 an hour as a contractor just to make things even, that might not be your exact what you value your time at. Do you value time with your family at $100 an hour? Probably not. We value our time at significantly more than that. You have to come up with a general measure of what your hour looks like. Let's just say $200 to be even. If you need to hire out an hour long task for $200 or less, you should give it over to the plumber. If it's going to be more and you can fix it in less time, go ahead and do it yourself. As long as you're earning more money doing it than you're spending with a contractor or outsourcing, it's worth it.
Jessilyn Persson: [00:19:55] Again, I'm going to come back to, providing you enjoy it. Because if you don't like it, it is never worth it.
Brian Persson: [00:20:02] When you run a business, there are some things you just have to do.
Jessilyn Persson: [00:20:09] Or it's called, your spouse.
Brian Persson: [00:20:11] Delegation can include your spouse. There are things we delegate between each other, there are things that I hate that you don't mind taking on at all, and there are things that you hate that I don't mind taking on.
Jessilyn Persson: [00:20:26] I know this summer we had an issue with wasps at one of our properties, and you were telling me you had to go fix it and take care of it. In my head I'm going, no I would never. Honestly, if it was up to me, I would have hired that out to pest control or someone because I'm like, I don't want to be dealing with those things. But you were okay with it, you've done it here for us, for the kids, taking care of wasp nests. So you knew what to get, how to do it, but I would have had to learn all that. I was just, hard no.
Brian Persson: [00:20:55] If I didn't know how stupidly expensive exterminators were, which they are, then I absolutely would not have dealt with it on my own. I had to go to the property anyway and do something else. Again, here we go, delegating and time blocking, outsourcing. Double up your tasks just like I did. I had to do a number of different things at that property. I went there, sprayed the wasp nest, did my other things. It all took 15 minutes total, and I was out. If I had hired an exterminator, I would have been out 500, 600 or more dollars, at least in this neighborhood, they cost a lot of money. So what's my time at for 15 minutes? That's a $2,000 hour. Not only that, it wasn't the only task that I was doing. You got to measure it. What is your hour worth and is it worth it for you to be doing that task?
Jessilyn Persson: [00:21:51] I know you touched on it, in the time blocking. You want to set specific blocks of time for focused work and try to avoid multitasking. Now, what you did, I wouldn't consider multitasking, you stacked activities in the same time block. Because you knew you have to spray a nest for X amount of time, they need a few minutes to die, so you can work on other things. You would have had to be there for that time anyways, so you fit something else in there. It wasn't like you were on your phone talking to a vendor while you're spraying the nest. Be clear on what you're multitasking versus what you're stacking for efficiency sake. Efficiency here would be, for example, it took you 15 minutes to do both tasks all in, the efficiency was, it's still a ten minute drive there and back, so it's 20 minutes, and if you had to do it, now that's 40 minutes if you didn't do both tasks at the same time frame. Just be conscious of your time and how you're spending it and where you can save, because let me tell you, 20 minutes here and there adds up pretty darn quickly to get you back more space for time with your family or whatever else it is that you want to fit into that time.
Brian Persson: [00:23:00] It can add up really quick, and that's why you should review and reflect on all of your tasks. We as humans love to get busy, and in getting busy we stop reflecting and we stop trying to figure out what we should be doing and shouldn't be doing. I know everybody's bad for it. I'm bad for it, everybody's bad for it. I try at least once a week to sit down and look at, I track my time quite carefully just because of all the different things that we have going on in life, and I try to look at that and say, what was absolutely necessary, what can I give to our VA, what can I create into a standard operating procedure and pass off to our assistant, things like that. It is so easy to get busy and not do that. I slip all the time because we're busy with family, busy with this, busy with everything else. I don't get that time to sit down and actually check it out. What did I do and what can we move on to somebody else?
Jessilyn Persson: [00:24:09] You're really great when it comes to operational side of business. Like you said, delegating to a VA, creating standard operating procedures. Whereas I'm like, I do it and redo it every time. Then finally I'm like, if I had this pasted somewhere, I wouldn't have to recreate the wheel every time. But I'm really good at seeing the big picture, I could look at all the tasks in a given moment and I'll know the priority, which isn't something you're as strong in. I can tell you, over the past few weeks I fell pretty hard because I got into that busy as you speak and my wheels were spinning and I knew, because I got overwhelmed, I got really stressed out. I was working ten hour days and then finally I'm like, whoa. I lost myself in not prioritizing and understanding the importance of what needs to be done now versus what can be done tomorrow versus what can be delegated. I think, like you said, it happens to all of us, and it's easy to fall into that trap of, I'll just get it done. But if you can find that space to review the importance of it, the time date, and whether you actually have to be the one to do it, you'll be in such a better space, a more peaceful, calm space to focus your energies where you're really needed. Which is building the business, making the money and having the vision and understanding where the company's got to go. You can outsource the other smaller tasks.
Brian Persson: [00:25:36] Just like you said, you got into it, and I usually depend on you to be the 'prioritizer'.
Jessilyn Persson: [00:25:45] So when I fell off the wagon, you got dragged behind that wagon.
Brian Persson: [00:25:49] I was managing perfectly fine, but there are cases where, your partner, you need to lean on them for that advice. You need to say, I'm in this position, I'm overwhelmed, I got all this stuff going on. I need to not think about this, because every time I do, it just turns into a big pile of goo in my head. Sometimes you just give it off to somebody else, and they bring it back to you in a nice ordered list, then you just start with number one. It's so much more peaceful on your brain to sometimes give it over to somebody else, so that it can come back to you nice and clean. Really important.
Jessilyn Persson: [00:26:31] I'm going to recap today's takeaways. First one is, we had a lack of knowledge and support when it came to building our real estate. Some of the pitfalls we hit is, in hindsight we wish we had reached out and found support and more knowledge before we jumped in head first. The second one is, set boundaries. You want to protect your time by creating clear boundaries for work, family, and personal life. Number three, delegate tasks that others can handle and outsource where possible. This frees up time for high value activities that actually need your time and attention. The next topic is going to be your first steps to shift from a scarcity to wealth mindset. Thanks so much for tuning in to this episode of the Life by Design Podcast. Before you go, don't forget to visit discoverlifebydesign.ca/wealth and grab your free download of 'The 3 Mistakes that Keep High Achieving Couples from Building their Wealth, Freedom & Living a Life they Love'.
Brian Persson: [00:27:31] We release new episodes every two weeks, so be sure to hit the subscribe button on your favorite podcast app and join us on this journey to create your life by design.
Jessilyn Persson: [00:27:41] Thanks again for listening, it's been a pleasure being with you today. We're Jessilyn and Brian, and we'll see you next time.