Achieving Financial Independence & Living The Life You Want W/ Mike Rosehart
This was an amazing episode. You see, a few months ago I was introduced to the idea of the FIRE movement by one of my former professors at Insead, and I found it such an amazing movement and idea. Financially Independent, Retired Early is a movement of people that are obsessed with finding out smarter ways to live and invest, so that they don't have to worry about money – which means that they can do whatever they want with the rest of their lives, whether that is being with family, volunteering, or running a business.
So, I talked to our past podcast guest Diana House, and I asked her about who do I want to talk to in the personal finance space that is a rockstar – and that's how I was introduced to today's guest.
His name is Mike Rosehart. Mike is a 26-year-old early retired, self-made millionaire, with a young family, who unlocked financial independence at the age of 24 through Real Estate investing and extreme frugality.
In fact, he bought his first property at the age of 19 (in 2012), while still in university studying business finance, and scaled up to build a 15 property portfolio in 2017 that cash-flowed over $12,000/month (net) in London, Ontario, Canada.
Now, here's the interesting thing. Mike did not come into the world with a silver spoon in his mouth. In fact, he was raised by a single parent, he was at the poverty line in his home country (Canada), and he had to work and grind to make all this happen for him.
How does someone go from being at the poverty line to being a multi-millionaire in just a few short years? Well in this episode we are going to learn about that, but more importantly, we are going to learn why Mike did all that, what does Mike work on, and why is he so invested in giving back.
And here's what I think is so cool about this episode and about Mike. He doesn't have anything to sell you – in fact, he doesn't care if he doesn't make a dollar off of you. He is able to do the things that he is passionate about, like come on the podcast and share his wisdom out of his own kindness, just because he is set for life.
I think that is so cool, and I wonder what the world would look like if more people could just do what they wanted, giving back to others, doing things of kindness, or just learning and improving and growing the world, just because they didn't have to worry about money.
Now, of course, I pitched Mike to create a course for all of you just because he has so much knowledge to offer! In the meantime, I have to say that I really enjoyed this episode, and I know you guys are really going to enjoy it as well.
In this episode, we discuss:
- How did Mike Rosehart get here? [6:00]
- The main idea of how you can achieve financial independence [7:30]
- How does Mike's life look right now? [8:40]
- How does Mike approach real estate investments? [11:10]
- What are some ways that you can get started with real estate? [13:05]
- How did Mike learn so much about real estate at such a young age? [17:45]
- Using frugality and acceleration to achieve success in real estate [22:15]
- The importance of rebalancing your portfolio [24:10]
- How come Mike is not diversifying in other locations? [28:20]
- What to do when you have no competitive advantage in a real estate market [30:30]
- How can you form a team to start with real estate? [31:45]
- What does retirement mean for Mike Rosehart? [36:00]
- The mindset & psychological hurdles that we face when we try to achieve financial independence [41:35]
- Does Mike think he'll ever go back in building something big? [45:50]
- What are some other things Mike does to perform at a high level? [49:40]
- Mike Rosehart's final takeaway message [51:00]
Resources Mentioned in This Episode:
Favorite Quotes from Mike Rosehart:
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I don't know about you guys onto Today's show you guys this was an amazing episode. You see a few months ago. I was introduced to the idea of the fire Movement by one of my former professors at insead and I thought this was just such an amazing movement and idea. Financially independent retired early as a movement of people who are obsessed with finding out smarter ways to live and invest so that they don't have to worry about money and then can work if they want to and not work if they don't want to just get the whole money thing out of the way so you can do whatever your life's purpose is whether that's be with family or volunteer or run a business if that's what you want to do.
So I talked to past podcast guest Diana house and I said, who do I need to talk to in the personal finance space who's a rock star and she introduced me to today's guest. His name is Michael rose heart. He's now 26 years old. He retired at 24. He was a self-made millionaire long before then. He has a young family.
And he unlocked his financial Independence through real estate investing and extreme frugality. He bought his first property at the age of 19 in 2012 while still in University studying business finance and he scaled up to build a 15 property portfolio in 2017 that cash flowed over $12,000 a month net.
Now. Here's the thing. Mike did not. Did not come into the world with a silver spoon in his mouth. In fact, he was raised by a single parent. He was at the poverty line in his home country of Canada and he had to work and grind to make this happen. Now. How does someone go from being at the poverty line?
Effectively from what I understood in my research to being a multi-millionaire in just a few years. Well in this episode we're going to learn about that but more importantly than learning how to make a whole bunch of money, which is a great topic. We're actually going to learn why why do it what does Mike work on?
Why does he do the things he does? Why is he so invested in giving back? And here's what I think is so cool about this episode and about Mike. Mike does not have anything to sell you. In fact, he doesn't care. If you meant never makes a dollar off of you he is able to do the things that he's passionate about like coming on this podcast and sharing his wisdom completely out of the goodness of his own heart because he's set for life and I think that's so cool.
And I wonder what the world would look like if more people could just do whatever they wanted giving back to others doing things of kindness or just. Learning and improving and growing the world because they didn't have to worry about money. Now, of course, I pitched Mike on creating an online course for all of you because I think he has so much more knowledge to offer than can be offered on a simple YouTube video or a simple podcast episode as you will see but I really enjoyed this episode.
I plan on making my a fast super friend of my own and I know you guys are really going to enjoy everything he has to say so without any further ado. Mike Rose heart.
this dirt Michael rose heart. Welcome to the show. How are you? Good good. Thanks for having me. You know what thanks for being here. I'm really excited to have this conversation and the timing is really really good. I have to admit my team approved this for me because. I know everything that I'm interested in and they're like you've been really obsessed with real estate lately and asking questions and learning about real estate investing and people have turned me on to this whole fire movement thing that you know, I'm behind the times apparently, so I'm really excited to learn more about it and hear your story.
Yeah, I'm excited to share it. Honestly. That's all reason. I'm on YouTube and on social media is because I'm trying to get that message out there about the fire movement. And you know, I think real estate is a great vehicle for getting extraordinary returns with the help of cheap debt and leverage.
So that's the real reason real estate. So attractive I think overall so before we kind of get too deep into all the real estate stuff. Tell me your story. I mean i s admittedly a little bit of a shorter story than our average guest. You're very young guy, but do tell yes. So the shortened shortened version.
I guess if I gave you my whole life story would be here for a few days. But I guess at 16 17, I discovered online this movement this early retirement movement. I found this guy Jacob on Fisker who had created this blog other Retirement Extreme. He was the first to kind of. Or at least one of the first I'd ever found back in 2009 2010 it was talking with this early retirement to movement.
And so when I was 17, I moved off on my own went off to University and is in my dorm room and I didn't grow up with a lot. We bounced around from house to house single. Mom Family household. We didn't have a lot of money. So for me. I saw you know Financial Security as you know, life security. I remember us going between paychecks and sometimes not having enough for food or even for you to enjoy our life.
So I thought fanjul stability was the secret to life. That was the reason I was, you know going to University in the first place to study business and so for me, that was a really I was fortunate that I found out so early because I don't really deep into the concept and found out that it's actually relatively simple and more psychological than it is.
You know Financial there's more that you have to do I think on the mental side than there is really to understand the math math pretty simple. If you can obtain 25 years or 25 times your annual spend and put that away. You can then if you re engineer that withdraw 4% from that portfolio leaving an inflation and never have to work another day in your life so you can architect such that you draw passive income.
And begin to do the things you want to do with your life because you don't need to work for money anymore. So you separate the need to work for money for the rest of your life. And if you're smart about it, you can do it in about five to seven years. I don't say smart smart strong word don't need to be smart to do this.
You need to be diligent if you're diligent about it and you follow the principles and the tenants of fire you will succeed. That's the thing. I love about it so much and that's why I share my YouTube channel about so much is that anyone can do this? You could be an ordinary person with an average full-time job.
And unlock fire. That's the beauty of it. It's not something like Amazon affiliate marketing where you know one and a hundred succeed 99 fail 100 of 100 succeed if they followed the formula and they can stay dedicated to spending less earning more and then maximizing the difference. So I want to get into that formula because I totally agree with everything you're saying but give us an idea of what your life looks like today.
I mean I saw in my research you have a seven-figure net worth. Do you work? What is the day look like for micros art? Okay, good question. Yeah. So today we is sort of different than last year even I had sold off a good portion of my real estate portfolio from I took a job at 21 working full time.
When I graduated after a four-year degree at the Richard Ivey School of Business when the top Business Schools in Canada. I took a job and figured that working for someone else wasn't for me yet. I slugged for three years. That was an analyst and a senior analyst than a manager the whole time. I was lugging money aside.
To buy real estate by my first property at 19 using summer job money and good part time job money. So I was in real estate relatively early on and 19 years years of age and I was house hacking. So basically living for free today, you know this kind of transition over time from just being interested in real estate to eventually it becoming my.
My everything and so I quit my job at 24 and retired early being one of the youngest retirees in in North America to do it with you know, I didn't necessarily creating a successful company. I just was a diligent saver and the smart investor and so basically it 24 quit my job and 26 today today. We have 55 buildings in Ontario, Canada.
What ends up happening was friends saw the kind of returns? We were getting through using cheap debt on real estate's. We were getting 25 50 percent return on people's investment. And so the money just kind of flooded in and now we've got about fifty five buildings minifigure portfolio and it's growing about a property a week at this point without you know, really even.
Putting gas in the fire at this point. I'm really actively trying to push that but it is definitely something now that I enjoy and it's something I do because you know, I love it I have my second daughter is going to be born very soon. So I'm fortunate to have be with my wife and we have a three-year-old daughter and again having second one join the family's awesome.
I have a mentee program. So my house is full of people all the time. We've got this I called this Firehouse. So this mentee house and it's a 9 bedroom 5 bath and we get to enjoy in the lower apartment. It's sort of a duplex living. I live upstairs my family and then there's a back commercial component sort of an office boardroom and then a basement apartment.
So I too enjoy a lot of energy around me and that helps keep me pumped up even in retirement when it's not necessarily about the money anymore. It's about what we can achieve what we can do and I just really enjoy having fun in real estate and. I have a good knack for that and I do that in social media.
So YouTube and stuff really cool. So you have a team of people helping you with these deals in this portfolio, correct? Yeah. I mean I work with one or two guys on the acquisition side. I do primarily all of the Acquisitions myself. Like I'm actively involved in every acquisition deal currently, that's because I love.
The hunt in the chase of finding a real estate deal and then unlocking the value. So I'm really good at going into a property and seeing exactly how the space should be transformed to optimize for cash flow and for value added. So that's been something I'm really good at and we leverage that to buy properties for say two hundred three hundred thousand and then have them be worth three 400,000 500,000 when we're done including a lot of upside and then we also focus on cash flow of a thousand to two thousand dollars a month profit per property and we use this method called a burr so you buy it.
You renovated you re rented out for higher you get better rents, and then you would go back to the bank and you refinance and you pull out the person's initial down payment. So there's no capital of anyone's in the projects and for the bank. So you end up with a hundred ten percent of the purchase price in the properties.
They almost pay you to own the deal at the end of the day and that's the beauty of real estate if you can add value to the project. So that's the magic Silver Bullet around real estate. I see real estate honestly as just. You know as part of this whole fire movement, I see real estate as the fastest vehicle to mock.
The highest returns at the lowest risk. And so, you know risk is proportional to return in most cases. I think with cheap debt, you know boring at three three and a half percent from the lender Banks against Real Estate you get a bit Arbitrage and you can also exploit Retail Arbitrage which is the idea that.
You can go and and use imperfect information to exploit the market. So for instance some real estate agent takes bad photography have a property or doesn't describe the property accurately and or its potential and we take advantage of that opportunity by going in and buying say a single family property as a single family property and then converting it to say a duplex where it's now two units and the rents are almost double what they were before and so that basically translates to a higher valuation using that operating income.
Wow, really really cool. So how do people get started here? I mean, I agree with you in everything that you're saying. I've actually I think now this has changed but for their longtime well into my business becoming a seven-figure business, I could legitimately look people in the face and say I've made more money accidentally in real estate than I have on podcasts.
Online courses books or even selling my last business again accidentally. So now I'm trying to actually do it intentionally, but how can people get started in real estate? I mean, I think a lot of people think you need tons of money to get into real estate. He does not necessarily the case. It's now about my first property at 19, right so I convinced a bank to give me a mortgage 80 percent loan to value which is something that you know, it's tough.
I think for for most people to grasp that a bank would lend you. Find say thirty thousand dollar a year salary and it's totally doable. You just have to learn how to architect a good case to the lender. So I call it a business business case or business proposal. So I'm going to putting those together to the lenders.
And so that was one thing that really helps. I think if you get started in real estate, there are probably three. At least a couple main paths one. You could do like a 5% down for you pay a good chunk of insurance to be able to put less down the property. Let's go private mortgage insurance and the bank will lend you basically 95% of the loan.
So you bought a 200,000 dollar purchase price, you could start with ten thousand dollars and invest in in a property. Theoretically the other way is putting 20% down which is the way I usually do it these days and that's. Using no private mortgage insurance and saves you quite a bit on the fees side, especially in Canada.
They're very expensive to get the private mortgage insurance. So that's another way. There are lots of creative ways though. This is things I didn't even know when I started investing in real estate. It was really important. I think that you can do better take backs. So better take back is the idea where you go to a private seller who owns their house outright or darn near and you say look I'll put you know, 5% down or 10% down with you and your look this person.
Theoretically who's doing the better take back would. Then be able to go and say okay. What am I do with this money when I sell this property? Well, I'm not sure I don't really trust the stock market, but I like this idea of proposing this vendor take back. We're basically I'm the mortgage holder.
So the seller becomes the mortgage holder and you basically make mortgage payments to the seller and you don't need any financing sis helps if you don't have a good job to obtain financing. And if you have bad credit or something to that effect you convince the seller to hold the mortgage for you for a five or ten year period sometimes that are really low interest rate.
I've seen people do vendor take-backs at three percent interest and if you default then the seller is joined to just take the property back from you, right because they're secured as a. A lender on the title of the property. So that's a good way to get into get into properties to the vendor. Take back scenario because again you get in there without having to go to the bank's without having to sometimes even save any down payment.
It's all I've seen people do vendor take back to the thousand dollars down and the rest is just the seller is going to hold a mortgage and they're like, wow I get this passive income. I sell my property. I don't the headaches of the tenant bothering me anymore. You're going to manage his whole property to your property.
And if you fail at this, I take the property back and you're going to get this property. So it's gonna be worth theoretically more than what even I sold it to you. So I stand not to lose a whole bunch. And so it's a good win-win scenario for the better. Take back. There's lots of other creative ideas.
You can come up with to finance your deals, but I think the biggest thing in getting the real estate. Honestly is just getting out there and looking at a lot of properties and getting a feel for your Market too many people I think look at one or two properties with an agent. I real estate agent and get pressured into buying something that isn't the right fit for them from a cash flow perspective or from a you know, Retail Arbitrage perspective and there's opportunities to exploit both those things and that's when you can really snowball your well if I did a video how anyone could buy 10 properties in three years.
About 17 personal properties before I did any partnering with people on convince Banks to lend me one after another I borrowed well into the seven figures from A lender Banks and that was because you know, I was buying property slightly under market value and adding value and then going back to the.
Two different bank or the same bag gain reappraised and pulling that Capital out. So it's the burger is really interesting. It's this this idea that you can basically recycle your capital in perpetuity. If you buy the right properties in that learn how to add value in a systematic way. And so that was basically how I sure I save maybe a quarter million dollars from my day job and just invest that astutely but the rest of my net worth.
Which young multi minor today? I'm 26 today, but you know, I just retired 24. It's a little over two years ago and I haven't looked back at all having left, you know my day job and the security of that it's because of these these tenants of fire that I know without a shadow of a doubt that I will never need to work again, because my passive income with my portfolio is double or triple what I need to live and so that's that's right.
Take you no comfort in that. Totally and that's an incredible story and that's why I'm so passionate about this. I mean one question that I have and I've invested in real estate as I said and and Noah Fair bit about real estate, but there's so much information out there and not all of it is good information.
How did you learn so much about this at such a young age and in you know, such a short timeline? Yeah, it's a great question. I think part of it was my eye lot of passion for this topic. Right? So I was spending a lot of time on more time than most people. I didn't honestly have a good Mentor. I wish I could say that it was just like a 17 I found this great mentor by 99 my first property.
It just wasn't the case websites like BiggerPockets.com are fantastic resources. I got really really deep into their podcast and then their website they share a ton about real estate investing. I don't know exactly when they were founded but. I think I found them when I had four or five properties already and I realized a lot of things I've been doing wrong through.
You know, I was just trying it's just trial and error I happen to have a finance degree from I be so that there's a little bit of study there about finances and accounting. And so that gave me a little bit of an edge I think but the end of the day for me the biggest thing that resonated was I was reading an article like 2011.
2012 I bought my first house in 2012. So in 2012, I was reading this article. I remembered hearing half isn't like CBC or one of these big sites and it was saying that the average leather makes $28 an hour. And the point was that the Atlanta is don't make that much money, but I'm reading that as a 19 year old kid thinking I can make 28 or 30 dollars an hour as a landlord.
That's a great part time job. And so I was looking at it not from the passive income perspective. But hey, I've got a whole bunch of time on my hands. I can work a hundred hours in a week. I have that capability within me. I'm right now working, you know, 30 or 40 hours of school and then 10 or 15 and a part-time job.
I've got so much capacity here if I could just put that time. Towards real estate that I could make this this money that would help me reach fire faster because I really couldn't find anything that I enjoyed. I did a bit of accounting and Consulting work and I just didn't really enjoy working for other people and having to do the eight to six grind it would just wasn't for me.
So I was like, you know, what's the fastest way I can accelerate this and how do I become you know, the first person who this someone could do this at 32? Why couldn't I do it at 24 and it's just I work the math. I was like, wow, I need to work like two full-time jobs. To do it that quickly and thankfully things snowball really quick.
So once you've planted this, you know ten seeds it begins to accelerate accelerate with the power of compound interest. So the earlier you start the better you are if you start saving at 20 years old a Dollar by 65 is for $64. So you save a thousand dollars when you're 20 years old and do nothing.
It's $64,000. It's that concept for me was was huge. I think if you just wow, I can save a hundred thousand dollars now and it my young 20s that's worth, you know. Like 64 million dollars when I'm 65 so that the power of starting young is so it just compounds so quickly and every every year you do it sooner, you know take action today.
You can't change the past but you can take action today. Don't put it off till tomorrow. So I was always just continually taking action and to your point. You know, what kind of got me there just trial and error my first property. I didn't buy it under market value. I spent a lot of money renovating it probably more than I should have and I lived in that to make it.
Okay, you know I kind of house active or renting out of their rooms to cover the mortgage. I was living for free through school, but I mean best of a bad situation. I've got tricked into buying a bad deal. I need to trick me into buying the wrong property at 19. I didn't know any better and through that failure.
I learn how to fail quickly recover from that and then I moved forward from it and said I'm not going to make this mistake the second time. I'm going to get better and the second time. I had to put 25% down in the property the last minute because the bank pulled their financing on me. And so that was another mistake.
I learned about financing and getting a second backup approval. So it was up to approvals when I was closing a deal and little things like that. I just learned and I sort of accidentally discovered the bird before it was being talked about online when I went back to the bank. And this isn't a time I Market was very flat.
There was no appreciation from Real Estate in my markets over three year span. There was like one percent appreciation. So if you weren't adding value to your property, there was no gain. No upside. So you couldn't accidentally make money in real estate for a while in my market now you can I mean, it's really good.
Thankfully I market we've done very very well. But in that time there was very flat and that was a great opportunity for me because then I could separate you know, what was the value adverse? What was just Market appreciation and I was where I really honed in on I renovated a property added some bedrooms increase the rent brought an appraiser through and he explained to me.
This is your rent. Is your net operating income. This basically makes your property worth why and I'm like, oh really? So all I have to do is just add some bedrooms and extra unit get more rent. And then the properties way more valuable only cost me $10,000 to do and I just added 80,000 dollars in value to this property.
He's like, yeah, that's how it works. I'm like, wow, this is like. Okay. Now I need to do this again. So I bought a third property of fourth property and I saved all the rental income that I received from the first four properties plus a hundred percent of my day job and come we lived on half of my wife's income because I'm one of my superhuman abilities is frugality.
I can make dollars stretch so far. I'm good at just deal hunting. So I just living in really I'm very very little and just saving everything. So I was able to save a down payment for my day job is making about $55,000 a year Canadian. And I was just saving basically all of that and I tax credits for my education that made me pay almost no taxes.
I was just a hundred percent tax free saving for three years my day job and comment buying properties and it accelerates. So it takes maybe a year to save your first down payment. But then your rental income from that property plus the rest of your portfolio and you're still saving send it takes like 10 months to save it down payment and then takes eight months to save a down payment and takes you six months because you have the rental income from the first floor.
And then we have the fifth one gets rental income from that coming in to help you save a down payment that much faster and it just got to a point where I was like I can save a down payment in like 3 to 4 months with my day job income and all my rental property rental income profit. And so it just got to a point where like, wow.
I'm making double from that. Then I am at my day job. I should probably focus on this real estate gig a little more intensely. And yeah, it's just I'm really fortunate that things have worked out. I've uncovered the secret relatively early on in the game age has definitely been. Being so young has been a really good thing and it also has incredible.
There's been times where it's been tough. Right eight you walk in it just like we're your parents you walk into a property and they're like it. Well, where are your parents? Are you seriously gonna make an offer on this and so having a baby face obviously didn't help in the young days when I was in my young 20s doing this people just didn't, you know tenants will come in and be like, so you renting this place for your dad or so a lot of that being young, you know, but there's obviously some advantages to starting Young.
Totally. Yeah, I mean the starting young is really really powerful take away from people if they're fortunate enough to use it. I mean and also just that you've doubled down on this because I think my mistake is I have two properties and one of them I bought when I was 22, which was a long time ago.
And I've just sat on that property and it's gone up a ton because it's in California and that's all wonderful. But and I sold it real leverage sold it we leveraged I would be in a way better position and I could have taken advantage of a 250 thousand dollar tax credit because I used to live in that house.
For a period of time so just being lazy or complacent or too busy. I guess would be a better example to busy building. My business is too busy serving my customers too busy flying around the world to actually sit down and do this work sell real average redeploy. Capital has probably cost me many millions of dollars.
Exactly. It's just about being efficient at one thing. I really love when I get talking to some seniors in the real estate business people be doing this a long time. We've got 10 or 20 properties and those guys hold on their properties forever and it's got this emotional old school mentality and I got debating with one of them about the real estate rebalance.
So no one talks about this in real estate that you should rebalance your portfolio. The question I have to ask yourself is what I buy this at market value today. Would I buy this property if the answer is no you shouldn't hold that property any longer. And there's a lot of properties in my own portfolio that we're you know, I bought them for 200,000.
They rent it for two grand a month now rents have gone up to say 3,000 a month and the property is worth 500,000. It doesn't make sense to hold that property in my portfolio. I look for the 1% rule. That's quick math. I use so if a property is 300,000 dollar valuation needs to run for 3000 a month.
It's worth a million bucks needs are over 10,000 a month. That's roughly the rule of thumb I use and so property is after I renovate them tend to be worth a lot more than what they were before. And the markets change certain areas and segments in the city change and areas you own real estate before you necessarily shouldn't it's the same as if you had a stock portfolio if you own shares of apple and it 10x and it was 80 percent of your portfolio.
You should probably sell some of that and rebalance. So you have a good asset allocation. That's that's fair and true to your original. Goals of your stock portfolio the same thing is true in real estate and people just get emotional about their properties. They have lived in the property before or they just like the property or their complacent.
Like you said, there's too busy and they don't go back and rebalance the real estate portfolio and it really is a smart prudent thing to do and you'll have. Over your whole lifetime 10x more wealth. If you did that sort of strategy. Oh man is guilty. So guilty. Like I'm not getting anywhere near 1% on any of my stuff and it's that like and the second you said what I buy this it hell.
No, I would never pay what my house is worth not in a million years. So are you on it? Yeah, exactly. Well, I own it because I need your help 1031 into something, but we can talk about that offline. All right at this point I want to pause and take a moment to thank our sponsor for Sig Matic who's making it easy for everyday people to unlock the incredible health benefits of mushrooms originally learned about for Sig Matic when I met their founder at a conference in 2015, and I have been pretty much obsessed with their products ever since personally I use the reishi mushroom tea.
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We've actually teamed up with four Sig Matic to bring you an incredible 15% discount to take advantage of that. Just visit for Sig Matic.com / superhuman today. All right back to the show. You said something that raised the flag for me you said in my market? How come you're not investing in other markets?
How come you're not diversifying across the country? It's a great question and you know, and honestly I should be for me right now. It's just been we have a strategic advantage and this Market. I've got a list of like a hundred trade. And so here in Ontario Canada in London, Ontario specifically Reich a half million population city.
So relatively small we're in about an hour and a half south of Toronto. So Toronto's, you know, 5 million population, but the thing I think that I like about the on the market is that we're in a Sweet Spot 25% of our population of students. We have a huge university huge college relatively recession-proof me of a multitude of different businesses.
I like that London was like the underappreciated. No one was looking at London Ontario. That was like this this special place in London were there was no large Capital coming in like you get really good deals on properties and great cash flow. That's why I chose. To invest heavily in London. And the reason I'm still here now is because I live here.
I know the market really well all the wholesalers in town. Either know me really well or bring me the off-market deals. A lot of the agents will call me with pocket listings. So pocket listing is an off-market deal means that no one else has seen in a non realtor.ca are the MLS system that gives me a huge Advantage because I'm not competing and so because I have those ingrained approaches.
I have a competitive advantage. And so in a new market, which we actually are exploring three new markets right now. We've got people there. We're sort of developing some trade relationships and some Property Management relationships and that sort of thing as some wholesale and realtor relationships, but you need all of those relationships deeply ingrained before you move into a market to have that competitive.
Edger competitive Advantage, right? And so I think the you need that competitive Advantage for you might as well just invest in someone else in that market doing that. So if I'm going to go to say Florida and I had no Advantage there other than my in-laws have a trailer there your Disney but I've been there a few times.
I have no Advantage. I'm better off finding someone there who's an expert in partnering with them because they've got an edge they can buy 80 cents on the dollar because they know the market they know the people. The other trades to get the work done. If you don't know any of the trades to get the work done, you'll end up paying those astronomical contractor prices to people pay who don't have the supply to the sub-trades.
So these have to hire a GC. So then what I say is is this if you don't have a competitive Advantage you might be better off buying a Reit. So Real Estate Investment Trust SEC same thing basically invest with someone who does what I do on a bigger scale, they're supposed to have economies of scale that net of fees make them more efficient than the small guys.
So in theory the real estate investment trusts can pay, you know, 1% per month. So twelve percent annualized return plus some appreciation on the portfolio that they hold so a residential read. Whether its private or publicly traded should in theory if you have no competitive advantages perform equally well now there are obviously some reads can't leverage as well as individuals can so for instance.
They can only think clever like if but 35% down the properties that they're buying because they're so large and so they don't get the same leverage return that we do or the same cheap debt because they're getting more commercial debt, but at the end of the day if you have no competitive Advantage it might make more sense to just buy into a really good private.
Real estate investment trusts and get similar type returns to Outsourcing everything in a market where you have no competitive advantages. And so that's been my answer is when I have developed a competitive advantage in the market. I'm happy to go there and to do something there I can add real value, but if I can add real value.
Then I'm just investing their diversify and if I want to really diversify just buy a Reit, they don't shares in many different countries of all the different properties while very smart now, that's another thing. I wanted to ask you about team. I mean if people want to start this out, they need people that they can trust and I think that's the biggest hurdle.
I want to invest in Phoenix. I potentially want to invest in, New Jersey. I don't have any people on the ground tell me about that that process of forming that team who needs to be in that team. Should I form that team or should I invest in a reed? I mean, what would you recommend for people who are either starting out or maybe have one or two properties and and are trying to just get serious about this.
It's a great question. I think that it depends on your goals at the end of the day. Each person is going to have slightly different goals and slightly different motivations. I think that if you have one or two properties, You're probably better to double down in that market. Do you already have properties in because you likely have a competitive advantage in that market you've developed relationships with sub-trades and things like that.
But if you did want to Branch out and go to a different market for whatever reason I think you're probably at the question is what is your time worth? So someone like yourself your time is extremely valuable. I don't know that it's worth it for you to be flying down and developing relationships with sub-trades and real estate agents and in the like the probably better going down and find someone like myself.
Who's in that market already who's an expert maybe their real estate agent who's really connected? Maybe they're someone who does this for a living their real estate investor full-time and they do joint venture Partnerships and you could provide some value from there's basically three components to real estate, right?
There's money. Management and deal so money management deal is the whole thing. If you have two of the three the third one comes on its own. So if you have all the money in the world and you have an unlimited flow of really good quality deals under Market deals. The money just comes I just put that out there on social media and the money would just pour in because I've got deals under market value which no one can find and I have the management on lockdown which means I've all the sub-trades to management of the properties data Property Management sub trade management all of those pieces put together if you've got those and then experience.
The money just comes if you don't have any money and you master the management. You can Master a deal flow, you know, like it just the one of the three you just need two of the three and so basically just getting those three pieces of the real estate deal the triangle together. And then you've got basically Mastery over that market.
It really comes down. It's tough to answer for yourself. I think your time is really valuable similar to to someone who yeah, let's get one or two properties though. It might be worth your time. It might be worth it to go down there and develop those relationships. The way I would go about doing that is I would call out to 10 or 20 real estate agents and that market identify the top, you know, real estate investing agents not single family homes dollars, but.
The guys who specialize in understand cap rates. First question I ask is do you know what cap rate is how do you calculate it? And if they can understand had a they shouldn't be selling real estate to investors if they don't understand how cap rate works or how nly net operating income works and you'd be surprised probably three-quarters of Agents don't understand what that is.
Is that eliminates the bat eaten straight away you get to the agents who understand the math. That's a good place to start get the five of those agents go fly down there and go look at properties with all five of those agents find out if those agents you're getting under Market pocket listings that they can sell you and then those agents all will know trades.
So that's been a good way to start as you talked. All those agents who likely no trades and then through trades you meet more. Dr. Electrician, I'm like hey, do you know a good plumber? Basically, I know to Plumbers who are decent. Can you send me references and so that sort of how you build the network and through trial and error.
I always give a contractor a small job to start. Okay. Could you just come over and put a new vanity and or just, you know paint this this area here or you know build a small wall and then I can test them from there. If you're far away not in a market need to have them be taking really good pictures to and then basically sending you all that documenting it it's ideal to have two people.
So I would have like a one trade who's independent of the other and have the two of them send me separate pictures and tell me exactly what's going on. That way you can have like sort of cross training or send your agent in to come take a look at the property once a week for you and they can give you sort of an independent opinion to make sure you're not being screwed.
When you're away like when I'm on vacation, I'm traveling the world and I'm not here in London. I've got people going into cross-reference and check in to make sure the projects are going smoothly and no contractors are playing any games. I mean, I've been to the I have a good group of guys so I can trust them really well, but still, you know, it's good to have that second check.
So I'm confused and I'm understanding that gear term for retired is different from my term from retired and most because I think most people's term for retired is just sitting on their ass but you're actually a pretty busy guy. You're flying around your blogging. You've got a ton of projects you have this whole portfolio.
So what is retired mean to you? Yes, that's a good question. The term financially independent retired early of fire movement is this idea that you're financially independent? So that means you have 25 years of living expenses set aside desired living expenses. So you pick you see how much is my desired life going to cost me?
Could the life I want to live. What does that cost me for the year and then if you can multiply that annual spend by 25, then you can withdraw again 4% from that portfolio, right? And you'd be financially independent so Biometrics, I'm 2%. Safe withdrawal rate so I can withdraw 2% for my portfolio and covers all my living expenses for my desired lifestyle what that means is that there's no chance I ever have to work another day of rest of my life.
So long as I'm you know invested in, you know, say 90% equities 10% bonds assuming I sold my entire real estate portfolio and just put it in the stock market theoretically using past data. It would say that I would you have a point zero zero one percent chance of ever depleting any principle. So I've just been living on interest growth what that means is that our work is optional and so when I consider retirement as doing whatever you want to do with your life for the rest of your life, that's when you're retired that said, I spent maybe nine months actually retired when I was 24 and it was extremely boring for me.
Like I so love in my personal properties off. I raised a million dollars cash and went to put it in stock market and thought I'm going to be done. I'm not getting going to worry about having to manage the manager for my real estate portfolio. So I've sold everything. I was off down to four properties.
These are like my favorite for properties. They were really well optimized and I had the tenants there were so handy. They could take care of the property for me and we just had really relationships. So I just went on a trip across Canada I went up to. Basically the Yukon when all the way west to Vancouver and then up to the Yukon and visit some family and had some fun came back and did a bit of gaming I used to be a pretty big gamer.
So I played games like League of Legends and things like that and did video gaming hung with a lot of friends that I've been putting off because I used to work like 15 hour days and then got really depressed. I was like, what am I supposed to do with my life? I'm 24 years old. I'm you know, well, I'm the seven-figure net worth.
My wife and I she was like doing the spent time with her daughter and I'd do that too. But they're Jay-Z and more for me like the intersection of Mastery autonomy and purpose is the key right? You want to have full autonomy over what it is you're doing you want to control how you do what you do?
You want to be good at whatever it is that you're doing and I think it needs to be fulfilling for you. So you need to find a value in that and that's when I started my blog 25 and free, which I rarely blog on anymore, but it turned into the YouTube channel about seven eight months ago, and I've got a ton of.
I just love I love doing that and I'm having so much fun giving value out there and just sharing with the world. So for me, that's what my retirement looks like is I don't have any course to sell. My YouTube channel is completely free people just watch it. And listen to it. I go live for the wise will show 7 p.m.
On Wednesdays and I have a lot of fun with those those 200 people are so tune in every week and a couple hundred of watch the playbacks. I just I don't know for me. That's a good retirement is one where I'm actively engaged. And what I want to do, so I'm getting value from. Whatever it is that I'm spending my time doing but at the same time not like I have to work like this morning.
I got a bit of a tickle in my throat. You maybe can hear it a bit. My nose is a bit stuffed up and I actually woke up this morning was like you want to go back to bed. So it's 1:40 p.m. My time where I am here Eastern Standard Time. I'm on like New York Toronto time. And that's the beauty I get up this morning.
I don't have to go do anything in cancelled by day and clear it up or did Sun comes out on a Friday and I'm like my wife's like let's go for a hike or for a walk. Okay, I'll just cancel what I've got. Are y'all get someone to fill in for that and away I go if I was an entrepreneur that didn't have that flexibility of having the in though.
I have like 50 years of living expenses set aside. Then I would feel like I was trapped and forced by the finances to continue to grind. So that's that's something that's really nice. I think about peeing I use air quotes now retired. You can't see the air quotes, but that's definitely what I'm doing because I move very Loosely retired and a lot of people would Define me as just an entrepreneur.
That is doing what he loves. I think things are going to change. What is good now might not be good later. You may find that the industry changes may be real estate changes entirely and I derive no pleasure from it. And thankfully if that happens I can. It's okay, you know, I don't need that don't need to Pivot into a new industry for work.
Don't need to go find a job in a recession. I'm okay. I've got those levels of resiliency built-in. And so that's what Financial Independence is all about. And I think like less than 1% of the world has that way less than 1% of the world has that capability. So I'm extremely blessed and thankful that I've been able to find this information early on and get on the fire movement then again, I just kind of want to share that with the world cuz I think everyone should have that.
Flexibility and that freedom of choice. That's what we're tired. It means to me. I don't know any retirees. Who are satisfied sitting on a beach 365 days a year, you need to find something to engage yourself. Sometimes that's volunteer work. Sometimes that's volunteer work mixed with a part-time job.
Sometimes this is just getting on you know, social media or spending time with friends are traveling. Everyone has a different goal. I like to mix all those things together and so my retirement is an active one, but that's because I'm 26 years old and I've got a lot of energy and I've got a young family.
So I'm going to keep doing things that I love and that's going to seem like work to some people. But it doesn't seem like work all of the time for me because it's a choice and I don't have to do it. I'm glad I asked that question. Now you mentioned at the very beginning is the memory expert in me.
That the psychological hurdles are the biggest one and I definitely resonate with that because I'm hearing you and I so admire the your mindset like I have by all measures more money than I would ever need and I'm very blessed in that regard and yet I'm still very much in that like we need to build bigger things.
To help more people to make more money to help more people to make more money like in this rat race of just building more and more and more when really if I stopped took a couple weeks off figured out how to move my chips around. I would never have to think about money again, and I probably don't talk to me about the mindset hurdles and how you overcame that how your followers overcome that.
Yeah, it's tough one. The mindset is the toughest part. I said it before and I'll say it again. I saw the fire movement the whole, you know Finding finding your stride of fire is I would say 20% math. So just understanding, you know, how you learn to spend less and crankier and come up with side hustles.
And then how do you basically maximize those returns by investing them astutely that math is pretty simple. Let's talk about the psychological because. You're going counterculture. So all of my co-workers at work thought I was crazy. I thought it was impossible when I talk about this retiring early in my 20s.
They said that's not possible. I've been working 25 years. I had bosses who are VPS who made a hundred eighty thousand two hundred thousand dollars a year who said they could never retire not in a million years, that's because they were consumed rests and living paycheck to paycheck. So you're going Counter Culture and that 95% of people save less than five percent of their income.
Ninety-five percent of people say less than five percent of their income. So you're going against the culture you're going against the societal Norm. That's hard. We as humans like to we like to blend in we like to feel part of society and when you're going against the grain when you're you know, for instance what I introduce myself at a social networking event, and I say I'm retired and if I'm at a you know an event that's more corporately natured.
All the people in The Rim immediately. They think themselves like where do I put this guy? He's giving me no value just as retired guy. So people are often one of like two or three different types of personas one that networking events are there to extract value and so they don't know how to extract value from a retired guy.
So instantly they discount that the other thing that can happen is they kind of look at you in there like I'm jealous. You know, I wish I was on this bandwagon. So there's this jealousy this anger automatically instantly soon as they meet you like what this this kids are tired. Like I don't like him and then the third is just like ignorance.
They just don't understand and so you get a lot of societal pressure. Your coworkers are going to say that's a dumb idea shouldn't do that come out to lunch with us right now. Let's go spend 50 bucks. Let's go to the club tonight. Let's go on this this big trip. Let's spend spend spend you don't need to retire at least there's a lot of that pressure.
You have to fight. I think that's the toughest part. There's some other hurdles to a family and friends you're going to have people reach out to you and especially once you start making something of yourself and they're going to drag you down to their level. You're gonna have family that's going to denounce you.
I had a screaming match with family member of ours and one they thought it was impossible and to they thought it was selfish that we were focusing on this financial Independence. So you get a lot of different emotional responses to it because you're going Counter Culture. It's very difficult. I now introduce myself as an entrepreneur.
You know I say, I'm an entrepreneur. I'm a real estate investor people resonate with that really. Well when I say I'm retired or Canada's youngest retiree or North America's youngest early retiree self-made through frugality people just like what it just they can understand it or it just makes them jealous or angry or they just don't see any either that or they think like what a waste of your potential and so it's just weird yet all these mixed reactions they have to deal with and I think fire is an amazing thing.
I want it for the world because. If they understood what fire really was just the choice, it's just the freedom to have choice in your life and do what you want to do with your life and and add value how you want to be adding value. I think everyone should have that option but it is again a very psychologically demanding ask of yourself every day to go counterculture to do what everyone else isn't doing and it's not easy, but I think it is definitely worth it.
Wow, really inspiring I mean incredible stuff Mike and I so agree with you. Do you think you'll ever hang up your retiree hat and actually go back to working your ass off to build something big whether that's contributing to the fire and movement or you know building a non-profit you think you'll ever go back and do it.
Yeah, well, I'm sort of doing it now with our company Right Way management. I've got a few mentees who have joined the cause full-time and I've been mentoring them and in return for them helping me build something cool. I'm working with them to help them get some properties and get them financially independent.
So I my side projects that I have I have like six individuals that I work with. Every day helping them become fastly independent and then I've got you know why my last videos like 50 60 thousand people who are interested in becoming financially independent. So those folks who I work with that are there's the people in the first Inner Circle and those guys.
I'm actually trying to get them financially independent because it's hard on a like a Monday at 2 p.m. When none of your friends. Can hang out there all working and so you just want to make your circle around you financially independent as well. So you guys can go play a game of Risk or something 2 p.m.
That's a sort of side mission. I have I love making people financially independent. I love it. It's my thing helping people optimize their their finances. So in some ways in like a financial planner and and I am actively. You know sort of working in air quotes, but it's doing things that I love and I think I'm going to continue to work on the social media specifically my YouTube channel.
I love giving back there. I'm going to keep making videos twice a week going live with people and sharing that I think is gonna get bigger and bigger as people catch on to the fire movement and they want to learn more about real estate investing and and how to basically Master their personal finances.
I think that's going to continue to grow. And I don't know whether I take it you said, you know, you mentioned a little bit about really giving back to the fire Community. I think that's my way of giving back. I spent about 15 20 hours a week just on editing videos and putting that out there on YouTube and I spent a lot of time in the comments.
I respond to comments than an hour. And so I've done like 20,000 comments now, I think on YouTube in total across all my videos, so I spend a lot of time interacting with people and that's my way of giving back right? It's my way of sharing this far movement. I think that I'm one of the people who's kind of helps get that out there.
So it's really exciting that I get to do that. So I'm yes. I'm going to continue to do that. It isn't necessarily about the money for me. That's why I don't do any Partnerships on my Channel or anything like that get a little bit ad Revenue. But again, it's like less than thousand a month. It's really again just about giving back.
I believe truly. If you give value people ask me. What's the best way to kind of succeed in life and I say if you throw value out there, it's continue to throw out there every single day. Don't ask anything in return you'll be showered in value. So if you just throw value out there every single day and you know this you put in podcast episodes out there and YouTube videos.
If you throw that out there people call you and ask you for help and you respond back and give them help that will come back to you in Spades. And so I just believe that I like just throw value out there if you have a mentor that you want. Do you want to be a mentee for you go there and you throw some value to them say hey, could I do all your financials?
What can I do to help you? There's something I could do to help you. Maybe I could follow you around and just get your coffees. Whatever that is. If you throw value at that person, they will then feel like they need to provide value back to you. And so that's been something I've always done is just throwing a ton of value to people and then in response, like wow, this guy is throwing me so much value.
How can I pay them back? And so that's this human nature when you give someone value they want to give you value back and say that's the grace advice right there. Just continue to throw by you out there. And so my retirement is going to be and I'm not really actively retired right now. I'm I would say I'm more actively and entrepreneur that I am retired.
Maybe I'll tone it down a little bit do some more traveling in the near future. But yeah, I think it's you gotta have that purpose. You gotta be doing something that's going to get you that self-actualization that makes you feel like. You're doing what you're meant to do on this Earth, which I had a cleaner answer for you.
Now, that's fantastic and I see we've come up on time. I didn't ask you any of our kind of standard questions, but are there any other things that you do to no? No, by all means. It just means you are two interesting for me to get to them. Are there any other kind of things that you do to keep yourself at high performance on a day-to-day basis?
Yeah procrastination is a big one for me. I get stuck procrastinating. So the way that I kind of motivate myself is I don't know what goal setting is a big one. I do a lot of journaling and goal setting. Hmm. So I find if I do that in the morning or I do that, you know later at night after I put my daughter to bed.
I'll go down to do some journaling or some goal setting and that helps get me motivated when I get into this space of setting goals for myself and thinking through that. Are planning my day out, you know, the following day guy just keeps me on track and keeps me accountable. That's been a big one to keep me on goal.
Really awesome. I wish I had something easier, but that's it. That's a great one. Where should we send people if they want to get in touch with you and learn more we will obviously link them to your YouTube channel, but I imagine that there's other places you'd want people to check out. Instagrams a great place at Mike Rose higher higher Spondylitis DMS there and I do you know stories five six times a day.
So that's a place if you want to check out what I'm up to that's the place to get a hold of me. Awesome Mike. This has been such a blast such a pleasure. I want to thank you, but first I want to ask you if people remember one message from this episode and they carry it with them for the rest of their lives.
What would you hope for that to be? That's a tough ask. Hmm at the end of every YouTube video. I say the secret to unlocking a wealthier you is to spend less earn more and maximize the returns. So that's I think those are the three leverage to mastering fire. And so if they can take away one thing I would say understanding those three levers and then respecting the hell out of them because a lot of people understand it and then don't take action on that.
They don't stay diligent and dedicated to that to that goal. So stay true to yourself and stay true to your goals. Fantastic, Mike and absolute pleasure. Thank you for being on the show. Thanks for having me on. All right Super Friends. That is all we have for you today. But I hope you guys really enjoyed the show and I hope you learned a ton of actionable information tips advice that will help you go out there and overcome the impossible if you've enjoyed the show, please take a moment.
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