Jules McKenzie: The Not so Easy Path to 22 Doors

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By Jules McKenzie

At the time I am writing this, my wife Ange, and I are in the process of consolidating and paying out co-venture investors on 22 homes. I did an assignment of eight of the homes in exchange for ownership on eight others.

Now I am trying to refinance these eight, and after much anticipation, I am waiting on a positive response from the real estate investor’s best friend, “The Bank!” This refinance will bring us up to eleven homes in this one complex.

We have an offer on our next personal residence which is a beautiful 3500 square foot home five years new in Orillia, Ontario’s Westridge area. During all this financing business, we’ve also had to be active property managers and renovate an apartment (compliments of challenging tenants). We also had six vacancies to fill.

So…do you really say to yourself, “Oh, they have 32 properties? I wish I was like them!”

Living in mainstream society is stressful enough with working full time jobs and raising a few kids. Why on earth would anyone do this to themselves?

To understand that we need to tell you about how we got involved in this crazy business. In 1998, we transferred to Orillia, Ontario. I was employed by the Ontario Provincial Police (OPP) and I was working in Rama coaching new recruits for the Rama Police Service. I was the local executive for our police association (union) and I was convinced that my future was to begin being promoted through the ranks so I could retire with a big pension and the brass ring. That was until one evening, when I came home from work and there were some well-dressed people so happy to meet me. They showed me “the plan.”

This was my introduction to network marketing. We didn’t make any money or build a down line of sales people, but I actually read the books, listened to the tapes, and went to seminars. They opened my mind to a whole world of personal growth and development that I didn’t even know existed. Then, when Ange dragged me out of that business and, after some spirited discussions, we both saw a television infomercial about real estate investing. So we did what we learned to do: we attended the seminars, bought and studied the materials, and took action. But we later realized that these materials were U.S. based and not really applicable in the Canadian real estate market. We bought two properties and didn’t really account for the cost of renovations. There was no room for equity growth because we bought them with no money down and were fully financed. We quickly got into financial trouble. We couldn’t cover the costs of renovations and couldn’t keep our customers satisfied without them; we became over extended and created a terrible financial mess. Then in August 2003, I was invited to see a talk by this guy from Calgary, Alberta, named .

I remember the day I was leaving to Toronto. Ange was less than enthusiastic. She said, “Don’t sign anything! Don’t buy anything! And leave the credit cards at home.” Well, I went to that seminar. I was broke, depressed, and had no hope of digging ourselves out of that downward spiral. That’s when I first heard the Ontario Top Towns list and when Don said that Barrie and Orillia were the number 1 areas to invest in, I freaked out and yelled and cheered! That was the first time I caught anyone’s attention. My hope had been restored.

Now we didn’t climb out of the hole right away after joining REIN. For me, it took time to grow and learn. Around 2004/2005, we acquired most of our real estate portfolio. I was enthusiastic, and I was excited. My co-venture investors bought into me and in a lot of cases we weren’t able to go onto mortgage or title. Our real estate lawyer showed us how we could protect our interests with a legally binding Co-Tenancy and Trust Agreement which outlines everything including beneficial ownership, who contributed what funds, and who’s going to manage the whole thing.

In 2004, right when we started building our portfolio, we had to propose a direct debt settlement with our creditors. This was a humbling and humiliating process. We finished that process in 2006, after which we had to re-establish ourselves. We continued to attend REIN meetings and they taught us how to correctly bundle our financial information. We learned how to build our sophisticated investor binder. And we were able to continue to invest in real estate income properties with our co-venture investors. Then, in and around 2008/2009, banks tightened up lending rules while at the same time lowering interest rates. This was a particularly interesting time in our real estate business. We had previously been borrowing at “B” lending rates and then started to qualify for chartered bank rates at emergency lows. Our cash flow improved significantly! This allowed us to finally reap the benefits of our hard work. We went on our very first trip together to the Bahamas!! All paid for with cash flow from our real estate investments.

I am still a police officer in Rama. We patrol the third largest commercial casino in Ontario. How cool is that! I know a lot of people are investing in real estate to quit their job, but I actually really like my job. And the message that I received about having a job and being in REIN is, yes invest in real estate, but while you’re at work, be the best employee you can be while you’re there. Besides, the job is required to continue to qualify mortgages on the residential side. Oh, and going back to my previous desire to climb the corporate ladder? Well, I’ve decided that focusing on building our real estate portfolio for the security of my family’s future is way more valuable.

So what’s next? We are endeavoring to conclude our consolidation and purchase our next personal residence purchase. I am excited to conclude Richard Dolan’s Real Estate Investor Entrepreneurship the Dragon’s Way Program, which is part of our REIN membership. I continue to engage in my REIN membership and I always follow the guidance that I received in those early days: Show Up On Time, Say Please and Thank You, and Do What You Say You’re Going To Do.  

My advice to you is this – share your successes as much as you seek advice on your struggles. There will be months you really need a REIN meeting, and there will be months that the REIN membership really needs you. 

I had the opportunity to share this story on the REIN stage at the Toronto ACRE event. I honestly didn’t know that it was going to be that emotional for me! It was an expression of gratitude for all that REIN and its Members have helped us achieve.  The week previous to that talk we received some bad news about my mother-in-law’s health. The thing about family struggles is that you find out how well your resources perform when you need them too. Thanks to our real estate investment choices, Ange can leave any time to go spend time with her mom and her fantastic family. Our real estate investments have afforded us the ability to show up for things and be there when we are needed. We continue to have amazing experiences with the ones we love.

During our trials and tribulations throughout the years we’ve learned so much and have grown tremendously! Along with our continued education through REIN and our hands on experience, we’re continuing to learn how to become better property managers and business owners. Our business has pushed us out of our comfort zone and stretched our minds to the possibilities well beyond just home ownership. We feel confident and excited for our future. We look forward to having more amazing experiences with our children, traveling to cool places, and doing cool things. We are excited about the possibilities for our children. They have been exposed to our real estate education, and watched us struggle, stretch, and grow while building our portfolio. Real estate investing has afforded us a lot, and REIN strategies and techniques continue to assist us to secure a great future. Thanks for reading our story!

Jules and Ange McKenzie are successful real estate entrepreneurs in the Barrie / Orillia areas of Central East Ontario. They currently own 34 properties, and are involved in 5 joint ventures. Their story is featured in the release, “51 Success Stories from Canadian Real Estate Investors.”

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