How HGTV’s Scott McGillivray Started a Real Estate Empire with No Job, No Money, and No Experience (Part 1)

Brandon:
This is the BiggerPockets Podcast show 434.

Speaker 2:
You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.

Brandon:
What’s going on everyone? It’s Brandon Turner, host of the BiggerPockets Podcast, here with another phenomenal episode with a real estate hero of mine. I use that word very seldom in my life, but I’m not kidding, our guest today, Scott McGillivray, hope I’m not butchering the last name too bad. We joked about that on the show about trying to pronounce that.
He was a guy that really got me into real estate heavily back in like, ’07, ’08, ’09 with a television show he had called Income Property. It was on for like 12 seasons. We talk about that a little bit today. But I’m pumped about that. David Greene, welcome to the show. I didn’t forget about you. I just couldn’t stop gushing about Scott. How you doing, man?

David:
I’m good. Hey, I wouldn’t blame you for gushing. We just got done recording him, and that was terrific. Whether you’re just starting off trying to figure out how do I get over the initial hurdles where I’m stuck, or you got a little momentum and you’re trying to figure out how do I get to the next step, or you’re one of those people that’s already done it and you listen to the podcast because you’re remembering stuff, and you still want to be pushed a little bit, I think that this one has something for everyone at every level.

ff:
100% agree. Yeah, I wrote down a couple of notes as we went through it, to make sure I bring up, his how he got to 25 units by 25 years old. Amazing. If you’re young, listen to that. What we call the Scotty Mc Method, or the Scotty Mc Method for getting your offer accepted. Totally a cool way to get your offers, increase the chance that your offer gets accepted, very cool strategy. He goes and talks about the economy later. I know that some people are like, “Well, that sounds boring.” Listen, his understanding of where the US economy and the world economy is headed over the next few years, could completely transform your business. I’m not kidding here, this could change your business forever. So, listen for that, plus a whole lot more. Plus it’s just the theme of growth, and what I call the stack. We didn’t talk about the terminology the stack today, but what he’s teaching today, throughout his entire journey is this concept that I have referred to on the show before as the stack, listen for that. Just life changing stuff, you’re going to love it.
But before we get to that, let’s get to today’s quick-

David:
Quick tip.

Brandon:
Today’s quick tip is brought to you by David Greene. David, what you got?

David:
All right, real quick tip for you, get around some other investors that are in the same boat you are. A big mistake people make is they look for somebody 10 steps ahead of where they’re at, and they get paralyzed by the problems that that person is having. Frankly, that person really doesn’t get much good advice for someone getting started. Scott did a great job on today’s podcast of taking you back to what it felt like to be in that boat where he’s literally getting the money for his down payment from the first and last month’s deposit of the tenants that he’s going to rent, the house too.
It reminded me of what it was like when I was scared to death, and I laid there all night long thinking I should have wait for prices to drop more, and what was I thinking? Now, that house has tripled in value. So, get around other people that are at the same level where you’re at, talk about your feelings, talk about your fears. Get that encouragement. A lot of times, just getting it out of you will help you realize that it’s not always reasonable, and make the path easier for yourself. Brandon, you say it all the time walking this journey with other investors is what it’s about.

Brandon:
Yeah. That’s a really good point. I never thought about that before about how people will listen to the problems that maybe I have or you have, and then they get all stressed out about it. But to borrow a phrase from, I know Keller Williams uses a lot, but most people… I’m not going to say most, but a lot of people, if you’re just new, especially, you’ve not earned the right to have the problems that I’m having, that David’s having, right? So, you don’t need to worry about them.
You don’t need to stress out, like how am I going to get 10 loans? Don’t bank shut you off after 10? You don’t need to worry about those things, you’ll have problems later on in life. Right now Your problem is like, how do I find that duplex or whatever. Maybe you’re farther along, maybe you’ve got way bigger problems than I do, and I have not earned the right to have your problems. There’s one piece of learning from mentors, and that’s been, listen to the big deals of the world. But there’s another piece that you just need to get around people who are at or just slightly above your level.

David:
There you go.

Brandon:
That’s what’s going to help you pull you to that level. That was a really good tip though.

David:
Absolutely.

Brandon:
Good job, David. I see you’re wearing you knew Follow the Fire t-shirt today. I like that, Follow the Fire.

David:
I’ve talked about it constantly. This is what we talk about on my team. This is what I talked about with people that come to me. A lot of the questions that new investors have when they get stuck have to do with the fact that they’re trying to solve a problem that is not their fire, and that’s why they’re stuck on it. I just want to encourage everybody who’s listening, you have a passion, you have skills, you have something that juices you up, run after that and then find other people, other products, other things to help you handle all this stuff that doesn’t juice you up.

Brandon:
Now, it is time to get in today’s show with Scott McGillivray. He told me it was like delivery, Scott McGillivray. I butcher it every time. Anyway, like I said, this guy was a huge impact on my life. I’m excited to introduce you to him today. He delivers an amazing, amazing interview, you’re going to love it.

David:
Putting the delivery in McGillivray.

Brandon:
All right, Scott, welcome to the BiggerPockets Podcast. I’m not going to say your last name, because I will screw it up, so, we’re just going to say, Scott, how you doing?

Scott:
I’m good. How are you, Brandon?

Brandon:
I am fantastic. This has been a long time coming. I got to say back 2000… I don’t know what it was, whenever I started the BiggerPockets Podcast with Josh, back in the day. First week, we said, who was our dream guest for the BiggerPockets Podcast? Who do you really want to have on the show? I’m pretty sure you were either in the top one or top two or three of guests we wanted to have. We kind of almost did it once, and then there was a tech problem, and so now here we are eight years later, and we finally nailed it down. I’m pumped.

Scott:
Eight years later, bro, and here we are. Well, listen, I’m flattered that I was on your list. I’m sorry that didn’t work… I actually remember, actually it was the first podcast I was asked to be interviewed on.

Brandon:
That’s funny.

Scott:
I was in New York, and my publicist was trying to get us connected. I was lined up for a whole media thing. I remember we were having tech issues, and they were like, “Oh, we’ll have to reschedule.” And it took us 12 years.

Brandon:
Pretty much. A little bit of background. My wife and I used to watch… You know this but we used to watch Income Property, which you were the host of for what, wasn’t it like 10 seasons you were on that show?

Scott:
We did 12 seasons, almost 200 episodes of Income Property. Yeah.

Brandon:
Your were house hacking before house hacking was a thing. You were talking about and teaching house hacking… That was the inspiration for so much of what we have built at BiggerPockets. You were like the foundation builder here of this is what… It just works. The idea of turning… Let me ask you, what was the show about? Let me make the show about you, not me, explaining about you, what was the show about? Why was Income Property so awesome?

Scott:
Well, thanks. But, actually I’ve been in real estate investing for 21 years, and I got started pretty early. But then a friend of mine who worked in television asked me to help on a show to do some construction. I was sort of in the background helping building a kitchen and then they’re like, “Oh, you were great on camera, can you do a few more?”
I did this part time construction in the background of these TV shows, while I was building my real estate portfolio in my 20s. At that point, someone at the network eventually approached me on set and said, “Listen, we’ve been watching these episodes, you do a great job, we think there might be an opportunity for you to do your own construction show.” They started asking me what I do, and I said, “Well, to be honest, I have my contractor’s license, I like construction, but I’m more of the real estate investor guy, to be honest, I invest in real estate. That’s what I do.”
We had this long conversation, and it really came to the point where they said, “You know what, it’s just too far… ” I think they said too left of center. They’re like, “It’s just too far from what we do on this network. If it was painting or design, or it was construction and building maybe, but real estate investing, it might be just too far outside the box. But I was able to somehow convince them that, there’s this huge untapped audience of people who want to be real estate investors.
Real estate’s not just about construction, and just about design, it’s a massive financial opportunity and investment for people, and I wanted to tackle that side of the spectrum. I remember when we were shooting the first episode of Income Property, it was in one of my properties, and everyone was completely oblivious. The producers were like, “You just go with this, because we have no idea. We’ve never done a show like this. We don’t know what we’re talking… What are these numbers? You’re talking about mortgage rates, you’re talking about rental rates, you’re talking about cash flow. They’re like, this isn’t going to fly with our audience.”
I was passionate, and I still am about real estate, and it was a bit of like an underground show when it launched, Income Property in… 2007, the show launched with zero publicity, and it was just sort of, fill some space with this show. We brought in this whole new audience of people who were like, yes, I want to know about real estate investing, and finally, somewhere to get credible information.
It really took off in an odd way. After the crash of 2008, I remember so many shows were canceled, and basically the president of the network at that time, was named in Time Magazine as one of the people to blame for the 2008 market crash. They said the only reason why we’re not naming him as number one is because he started putting shows on that look at the fundamentals of real estate like income property, instead of just telling people to spend absurd amounts of money fixing up their houses just because they want to.
This put our show right on the map. We came through the 2008 crash as a bit of a hero show. Literally, the audience built… I was just shocked. I remember when fans started coming up to me in the streets, and I said to my wife, I’m like, “I can’t believe I’ve been renovating basements by myself. Nobody’s ever come to look at me do this. Everyone’s like, “Yeah, yeah, he’s down there renovating the basement. You don’t want to see what’s going on.” As soon as we started filming it, everyone’s like, “Look at that. He’s fixing them up, and we want to see it.” Yeah, we ended up doing hundreds of episodes, literally. It was crazy.

Brandon:
Yeah, it was just such a cool show to be able to see, you could own a house and then turn the attic or the basement or whatever into another unit, and then it would pay your… Sometimes on the show, you’d be like, we actually decided to move into the basement, rent our upstairs out, and now we’re living for free. I was like, “That’s a thing?” That was so cool. So good, so good.

Scott:
We have lots of shows going on. We’re doing the vacation house rules show right now, which is all about people are dreaming about these dreams. People are dreaming about moving to Maui, bro.

Brandon:
Yep. I don’t know why.

Scott:
You wouldn’t know anything about that.

Brandon:
I would know nothing about that.

Scott:
Well, we show them how they can do it. We show them, here’s how you can have your dream property and keep your primary residence at the same time, and do a little bit of renting, everything. The world’s just changed, people are savvier, and there’s just way more information now.

Brandon:
It’s so true. Yeah, literally, I own a three unit in Maui with ocean view, pool, whatever, it’s an amazing house that if I wanted to, I could live for free here. I choose to leave one of the units empty out of the three, because I like having family and friends hang out with me. But you can live in Hawaii… I can live here cheaper than the people who are living down in the apartments down in the worst neighborhoods of Maui, just because I’m house hacking my dream vacation property. It’s crazy, bro.

Scott:
One of my biggest regrets is actually in Hawaii, believe it or not. The first time I was there, it was my honeymoon in 2008, I got married in 2008. The show had just launched, and was kicking. We were in Honolulu and I went to the launch of a condo, they were launching this brand new condo on the water. They could not move any of these units. They were just desperate to get rid of them.
I went to the bank there, and I was able to get approved for a mortgage in Hawaii there at the bank. I went in and I secured 11 condos. I had 11 condos under contract for about 150 grand a piece. My wife got upset. She’s like, “I can’t believe you spent one of the whole days of our honeymoon at the bank, and at a condo launch and you’re going to buy all these condos.” I’m like, “It just makes sense. You can rent these things out at like $130,000 to $160,000. These things seem really cheap.”
Then I backed out of the whole thing. I’m like, this is my honeymoon. What am I doing? This is crazy. This is crazy. I got out of there. We went back, I think we were there four or five years ago, and those condos were like $800,000. My wife’s like, “I can’t believe you let me talk you out of it.” I’m like, “How is it my fault both ways?”

David:
That highlights a great point, though, with investing is there’s always going to be people that say don’t do it, and many of them will turn around and say, “You really should have did that thing back in the day.” Where you get your advice from is pretty powerful.

Scott:
Dave, honestly, we joke about them, I can’t go back, I can’t go back to Honolulu. I can’t go back. It’s too much.

David:
The pain is too deep.

Brandon:
The pain.

Scott:
The pain it’s too real. It’s too real.

Brandon:
Though, it’s funny, it’s like, I just know in 30 years from now, 20 years from now we’ll be looking back like remember you could buy those condos for $800,000. Why did not buy 10 of them? They’re $4 million right now, $5 million.

David:
It’s such a good point. Because we all say, “I wish I could go back 20 years, I’d have bought them all.” But 20 years from now, they’re probably going to have gone up even more with the way that the US is spending money. So, please, if you’re listening to this, just remember that it always seems expensive at the time you’re buying it. Then later on, it always seems like they were giving it away.

Scott:
Yeah. Look, I always say to people, when I’m doing my events, I’m like, “Listen, if you’re interested in investing in real estate, the absolute best time to invest in real estate, you missed it, it was anytime before today. But the second best time is now and the worst thing you can do is delay your opportunity to make money in real estate. It’s not rocket science.

David:
Well, you also brought up a really good point, it was I’m buying these condos not because you just assumed they were going to appreciate, they likely will, but because you said that you can rent them out, they will pay for themselves. That’s really the key to the whole thing is buying something that can pay for itself or earn some money while you wait for it to appreciate.
I know you have a very cool story of a time when you were actually the tenant, and you went to drop off your rent check and you realized what was going on on the other side of the curtain. Do you mind sharing what that light bulb moment was for you and how it affected you?

Scott:
The fact that you know that story tells me you’ve been to one of my events, because I don’t often tell that story. But that was my light bulb moment. I was 19, 20 years old, I was away at school, and my friends and I were living further and further away from campus with more and more people to be able to afford something, and I had the worst landlord, that year was just the worst landlord, he was brutal. He literally showed up and was like whoever… There was all these groups that wanted to rent it, we’re all standing up front, he goes, “The first group that has cash for first and last month’s rent gets the house.”
We were desperate, so we gave him the cash. Then he wrote down on a piece of paper the bank and an account number and his name, and he basically said, “Make sure that on the 1st of every month, you put the money in this account, or I’m going to evict you guys.” We were like, “You don’t want checks?” He goes, “No.” He goes, “You take it to my bank and put it in my bank account.” Literally what this guy did, and we never saw him again. This guy was super lazy.
But I was pretty diligent about this. 1st of every month, I collected the checks from my friends, I’m like, I’m going to run out of the bank, put it in our landlord’s account. I went down to the bank, and I’m like, “I’m here to make a deposit.” Gave the girl. I’m like, “This is the account, da, da, da.” She’s like, “Would you like a receipt?” I’m like, “Yeah, I would love a receipt.” She said, “Would you like me to print a statement of the account?” I’m like, “Yes, please.”
But I guess she was a little naïve, and she thought it was my bank account, and she printed me off a statement that had the last 30 transactions or so. I remember looking at it, and I was like, “Okay, I just put $2,000 in this account, that’s what I need proof of my deposit.” Then I noticed on there, MTG, mortgage payment. It was like $1,400.
I remember thinking, this was the moment where I was like, wait a second, I thought for sure we were only contributing to part of the expense of this house, not covering the entire thing, and then making this guy money. Because this guy literally spent five minutes that entire year showing up to collect the cash from us and never worked again. I was like, this is it. If this slumlord can sit at home, sleeping on his couch and make money, this is a job for me.
That was it. I’m like, we’re not renting anymore, we’re going to find a house, and we’re going to figure out if our rent is actually more than enough to cover everything. That’s when I started looking for properties, and then I found one and all my roommates backed out. They’re like, “No, no, it’s too crazy. Can’t do it.” I’m like, “Well, will you guys pay me if I do it?” They’re like, “Absolutely.” So, I bought it. Bought it. I’m like, that’s it.
It sounds easier than it was, because I remember I talked to my mom and she’s like, “You can’t do this. You haven’t even graduated school. You don’t have a real job. You don’t even have a girlfriend, how are you going to have a house?” I had no money, I talked to my brother, he’s like, “My wife will never let me help you.” I used my student loan that year, I was like, okay, if I close right after I get my student loan, and it’s my primary residence, you could put 5% down as a primary residence at the time.
I basically just haggled with the seller a little bit and was able to just barely buy this place. I used first and last month’s rent from my roommates to cover all my closing costs. Skin of my teeth, bro. I was just able to do this. But the math was basically saying, at the end of this year, you’re going to have more money in your pocket than if you keep paying rent. So, I did it.

Brandon:
That’s so good. Hey, why do you think your friends… This is a bigger question, but I’ll pose it with your friends as the example, why did they back out? Why do so many people get excited about real estate? The idea of it. Logically, it might make sense to them, like, “Oh, yeah, this would make perfect sense.” But instead, they chose to pay you money and get no equity, and get no upside whatsoever. Why does that happen? Not just to your friends, but to everybody. But it’s a good example.

Scott:
Well, I think for most people, they’re scared. I look back, and a lot of people asked me this question like, why did you do this? Why didn’t anyone else do it? I think for me, that was a moment in my life where I was pretty desperate, I didn’t have options. A lot of my friends, their parents were paying their tuition, some of them had a car and mom and dad made the payments or covered the insurance. But basically I had no other option. To me, this was the only choice. I’m like, what else am I going to do? My parents aren’t helping me, they just can’t afford it. Not that they didn’t wanted, they just couldn’t afford it. I fend for myself anyway, so I don’t have anyone else to answer to.
But I realized at that moment when I was about to buy that property that I was just as scared to buy the property as I was to face the rest of my life without a solution. I need to try something. I don’t think my friends were just at that moment yet. They just didn’t have enough pressure in order to pull the trigger. I believe that people hesitate about doing something entrepreneurial, or starting their own business or investing in real estate, because they’re just a little bit too comfortable, maybe, they’re just a little too comfortable.
Then it’s not until the pressure hits, which I find for most people is realistically when they start actually realizing that retirement is on the horizon. They’re like 51 years old, and they’re like, hold on a second, I’m supposed to be rich, I’ve done everything right. I’ve been for 40 hours a week, for most of the year, and I’m just not reaching my financial goals. They start to have that slight crisis where they’re like, okay, I’ve spent 20 or 30 years proving that this doesn’t work, and now it’s time to try something a little more what they think is extreme, but realistically, it’s more calculated.
For my friends, they were too comfortable. They had an out. But the irony is now, they’re starting to hit that point where they’re like, man, the biggest regret in my life is that I wasn’t your business partner 21 years ago, and now you’re a mega millionaire, and I’m stuck in a job where if I were to lose my job, I’d be out of money in three months, which is insane to me.

Brandon:
I find it super interesting, this idea that there’s these two sides of our brain. There’s a logical side, where people get the logic of real estate, which is the math might make sense. But then it’s the bigger piece of it is the emotion side of it. There’s a book by Chip and Dan Heath called Switch, which talks about the rider and the elephant. The rider is the logical part, the elephant’s like the thing that actually controls our actions in life.
Our logic can try to dictate where the elephant goes, but the elephant, the emotional part of us, the fear and all that, that’s really what drives so much of our life. If you want to get anywhere amazing in life, you have to get both aligned up together. This is why I think shows like Income Property, and like all your stuff you’ve done since then are so important.
I would say media changes mindset. If you want your spouse on board, you want to get there… You can try to talk to them all day long logically why this makes sense, but until you get their elephant on board, it’s not going to happen. The more you can get the media to change your mindset, the shows you watch, the podcast you consume, the books that you read, that’s what changes the elephant, makes it go, oh yeah, of course, I’m going to do this, it just makes perfect sense.
I’m curious what came next for you? Now you got the elephant and the rider, you’re like real estate makes sense. You’ve taken action, you’re excited about it. How did you then build your portfolio? What did that first phase of your investing life look like?

Scott:
It was pretty low key, all things considered. I got that first property, and the first thing I recognized was pride of ownership. That’s something that was new to me. As a renter, when you’re off to college, or university, when you leave home for the first time and you rent a place. I fundamentally believe that you should do that. When you go to school, live in residence, party with your friends, get that out of your system before you make a commitment.
But once I did buy the property, all of a sudden… I think one of the things I tell people is, I remember the first thing happened after I bought the property and I went to the mall, which is where I got my mortgage, by the way, it’s at the mall. I remember I went to the mall, and I went to go see my mortgage broker and just make sure everything was cool. As I was walking through the mall, I was like holy smokes, there are three furniture stores here. When did those get… I had never noticed a furniture store in my life, and then I saw three of them in the mall that day.
I walked in, I’m like, yeah, maybe we need to buy a real couch, not one from the Salvation Army. I started getting a little bit excited about my property. Then I started to fix up the basement. I’m like this could be its own apartment down here. Maybe I could use a little more privacy. It’d be nice if I had my own bathroom. I mean, it is my house. It took me a year or so to slowly renovate it, being able to afford literally a dozen two by fours at a time, and doing most of the work myself.
I’d say over that first year, it was really about confirming that I had made a good decision. I was still really nervous. Every month, I’m like, okay, this worked again, all the checks went in the account and the mortgage got paid. It’s when my mortgage came up for renewal. Now, at the time, this was the year 2000, basically, a year after I bought it, it was the year 2000, and you could do short, to a lot of short term mortgages. This was a one year mortgage, and it was up for renewal.
I went in to talk to my broker about renewing it, and I remember how excited it was, I said, this was such a great decision. It worked out, the math was great, I’m so happy. I said, I just wish I had more properties, because not only do my four buddies want to re-rent this place, everyone now knows that I own it, and everybody’s asking me if anybody leaves, can I have a room? I have a list of 20 people that would rent rooms from me if I had them. I wish I had four or five more properties. That’s when the broker basically said, well, instead of just renewing, why don’t we refinance?
I was like, what’s this refinance you speak of? Well, your house’s value has gone up… I was just going crazy. I’m a Bachelor of Commerce, I’m taking a business degree. I remember going to my economics professor and saying, “Hey, listen, I have this house, and I’m now thinking about refinancing it, and what that does, and my amortization and my term. When are we going to learn about mortgages? I’m a third year university here.” He said, “You’ll learn about mortgages when you buy your first house.” I’m like, “I already bought my first house. Fuck, I’m in business. This is hundreds of thousands of dollars, you’re still giving me a lemonade stand example. I want to talk about real estate.”
All of a sudden, I realized that my attention was no longer on the micro of everything, it was on the macro. I wanted to understand the practical things that were going on in my life. Negotiating with sellers, how to shop around insurance. I’m like, nobody’s teaching me how to do all the things that all my money’s being spent on, and this is not what I signed up for.
So, I refinance that house, and now, I got some of the equity out, which was insane. I basically quadrupled my down payment. I put $7.500 down on that first house. That was nothing. Back then, that was everything, but that was like a bargain, obviously. Now, all of a sudden, I had 30 grand. I was like, 30 grand, I’m rich. Basically, I’m rich.

Brandon:
You’re set for life, retire.

Scott:
I’m rich, I’m retiring, I’m done. I still had to service that debt. I wasn’t completely oblivious to the fact this was borrowed money against the property that I still owned. I use that to buy two more properties. That’s when I realized that I found this system, and no one had really taught it to me, it was just really being desperate and meticulous about every dollar and being petrified of understanding if I was going to lose money, or make money, and I just kept cracking all these nuts. I’m like, wow, I’ve got cash flow coming in, I’m covering all my expenses, and then at the end of the day, I’m making a few hundred dollars.
My renters are paying down the principal balance on my mortgage. That’s something I didn’t even really think about. But I was like, wow, my mortgage went down. Now, I’ve got equity that I can pull out of this. I’m like, holy smokes, there’s even more nuggets in here than I could have imagined. That’s when I started doing what I consider flip to yourself, a lot of people call it the BRRRR Method. I had bought it, I had renovated the basement a little bit, it’d gone up in value, I refinanced, I repeated the process.
But then I really hit the gas. After three properties, you hit a lot of roadblocks, but I think what I call my 10… I was talking to Grant Cardone two weeks ago, I did a podcast with him, and I said, I remember my first 10X moment, it’s when I went from three properties to 11 properties in a day. It took me a couple of years to get to three properties, and then in one day, I bought eight more houses, because I went to my mortgage broker and he said, “Dude, the rules are changing, and getting financed is hard, all of a sudden. Now, they want bigger down payments.”
I’m like, oh my God, I’ve got this house I want to close on, you got to help me.” He’s like, “Okay.” He’s like, “I’m shopping around.” He’s like, “I don’t think I’m going to be able to get you more than one more loan with all these lenders. They’re all saying, just one more, just one more.” He showed me all the lenders. I’m like, “Oh my gosh.” I’m like, “You tried all of them?” He’s like, “These ones won’t even give you a loan, and these eight lenders would only give you one loan.” I’m like, “So, I can get eight loans one time?” He’s like, “Well, theoretically.” He’s like, “You’d have to basically close on all the properties on the same day so that they don’t show up on your credit report.” I’m like, “You’ve given me my instructions.”
I went out, and I bought… I basically lined up and went out and put offers on until I had eight accepted offers, all with the same closing day, and I bought eight properties, because the rules were changing, and I’m like, this has to be my life, I have to be a real estate investor, and I need to load up right now. That was it. After I was able to close on those properties, the irony is, within six months, all the lenders were very, very favorably looking at lending me more money, because now I had this… I used to have this Excel spreadsheet, that would have all my cash flow, all my equity, all my mortgage numbers, everything that was going on, and all of a sudden, in positive cash flow alone, at the end of that year, I was banking close to $200,000.
When you’re making $200,000 in income, and you have equity building into your properties, all of a sudden, the lenders are like, “Oh, no, no, we want to give you more loans.” I’m like, “Where were you when I needed them?”

Brandon:
Here’s what I love about this story, this picture that it paints is that it took you a number of years and a lot of work and effort to get those first few deals of one, two and three, right? I like to relate it to get a train up and going. A train moves very slowly in the beginning, and a lot of people give up during that phase. But in reality, what you’re during that time, nobody’s getting rich off their first two properties or three properties, most likely. It’s the knowledge and experience in networking and connections and confidence and all that, that gets you to the eight that you buy. Then the eight gets you to the next phase, which gets you to the apartment or the 50 houses or the whatever it is you buy next, and each builds upon itself. Did you see that in your own life as well?

Scott:
Definitely. When I’m teaching people, the same way when you guys are teaching people, it’s exciting to get people fired up about the opportunity, but you have to balance that with the reality of how much suck there is in those first few years. I remember 21, 22 long weekends in the summer, everybody’s going to the lake and partying and I’m like, I can’t, I have tenants moving in on Monday, and I’m not finished dry walling. I remember spending seven days a week, 10, 12 hour days racing around like a madman to try to get it set up.
When you’re in the weeds at the beginning, there’s a lot of suck. There’s like, why am I doing this? Why am I doing this? You have to be patient, and you have to continue to look at what’s the five year outcome of my efforts. Because, like I said, those first few years, it’s exciting. Everybody loves buying properties, but then it sucks when you’re trying to fix them all up, and you’re going over budget and you got bogus tenants over here, there’s a million things that happen as you’re learning. It’s hard to promote that to people. I’m always like, “You’re going to hate me for the first 18 months, and then in five years from now, you’re going to come back and hug me and love me and thank me.
Just be prepared for that part. That was really, really hard. Like you said, getting that train moving took more energy than I knew I had. I don’t forget it, I always try to sit down and say, okay, when I’m training people, all these people are excited, because they see the results, they see the wealth, they see the TV shows, they see the lifestyle and they’re like, that’s what I want. It’s not instant gratification, right?
Real estate is get rich slow, that’s the thing, there’s no such thing as get rich, quick, it’s hard work quick, get rich slow. The difference being there’s not a lot of things that are going to get you rich these days, and a job certainly isn’t one of them. You might as well put your hard work into something that’s going to get you to those results. I think by the time I got those eight properties, I was in way over my head at that point. It took me a year and a half to optimize them. I called it the optimization phase, and that’s when you’re renovating it, making it worth its most money and getting it rented out for a premium. That’s the optimization phase, which is really critical. A lot of people skip this, they buy one and then they close on it and they’re already looking for the next one. I’m like you have not finished optimizing, right? You’ve got to get it max performance.
I got those eight to max performance. I’m like, hey, I can now refinance them and get equity out. I’ve got tenants that love the place and are paying a premium. Then I needed a plan. I actually didn’t come up with a plan until I had all those properties. I’m like, where am I going with this? This has just been an experiment.
My first goal was to have 25 properties by the age of 25, which I did, and that was huge for me, because… Again, this was another moment where I’m like, “Am I crazy? 25 properties, I don’t even know anyone with 25 properties.” At one point, my parents had a cottage for a few years, and I was like, two properties, that’s gangster. For me to think of 25 properties, I’m like, that’s a goal that’s hard enough, that it’s going to make me bust my butt. But I’ve got 11, so it’s just doubling it in a bit, and I’ve got 2.5 years to do it, and I figured it out. I figured it out, and I started buying multiplexes.
All of a sudden, multi units became the flavor for me. It was no more single family, it was all had to be two, three or four units for me, just because the cash flow was high enough that it could support my goal of getting enough financing to get the next one, and the next one, and the next one.
After 25, interestingly enough, I bought 33 properties in a week, after hitting that goal. I was so pumped about it, I went to an auction in Ohio, and I was there and I had met this property manager who was preaching about these properties. So, I went to go see them. We went to an auction, and there was nobody there. It was like a ghost town. They were trying to sell all these properties, and I ended up negotiating with the auction house and the bank that had all these REOs, and I bought all 33 in one shot. I was like, this is it, this is how you’re going to do it.
25, 26 years old at that point. After that, I was really willing to try just about anything. I started doing a lot of wholesaling and flipping, because a lot of people gurus told me I should do it. That was a bit of a mistake, to be honest, I should have just stuck with the buy and hold. A lot of the properties that I flipped in 2008, 2009, they’ve doubled at this point, so I should have just kept them.
The first 10 years of investing was a rollercoaster. To go from zero to one was the hardest, from one to three was maybe half as hard, and then buying eight was not even as hard as buying the first one. Then buying 33 was easier than the first 25. It gets just exponentially simpler as you go along. You have more financing opportunities, you’ve got more confidence, you’re running the numbers like this, you become what I call a professional buyer.
A lot of people in real estate have no idea how to buy real estate, they think you just go, you make an offer, and that’s it. Meanwhile, I’m like, have you tried putting in a double offer? Have you tried putting in backup offers? When a house sells, when I’m going to see a house, and they’re like, “Oh, well, I’m sorry, we’ve accepted an offer.” I’m like, “Great. I hope it falls apart because I’m going to give you a backup offer. Not to be rude, but would you, if that deal fell apart, would you be interested in this?” They’re like, “Well, maybe if it fell apart.” I’m like, “Well, then let’s sign it as a backup offer. It automatically is accepted if your other offer falls apart.”
I’ve gotten tons of properties like that. Just becoming a bit of a ninja in the space and trying to figure out all these moves. Then people are like, “How’d you get that house? I thought it was sold?” I’m like, “It was sold?” Like, “How did you know a deal fell apart?” I’m like, “I put an offer in before the deal fell apart just in case it would. Just stuff that people didn’t even know you’re allowed to do.” Half of the agents I work with are like, “Are you allowed to do this?” I’m like, “Watch me. Let’s put in a double offer.” That’s one of my favorite is when you put in a double offer on a property.

Brandon:
What do you mean double offer?

Scott:
Have you done a double offer?

Brandon:
I don’t know. Tell me what it is, and I’ll tell you if I’ve done it. I don’t know the term.

Scott:
Probably. It’s one of my favorite thing. I did this a few years ago. There was a property that was listed for over 100 days, it was getting pretty old. I spoke to the listing agent and the listing agent was like, “No, they’re very specific and they only want this type of offer blah, blah, blah, blah.” I went home and I have all the documents and I started to fill out an offer. I was like, gosh, they want no conditions and obviously they want to be able to take certain fixtures.
They were very picky. I’m like, “Fine, here’s everything that the agent told me they want.” Then I reduced the price by like 20%. I was like, “Here’s everything you want, and here’s the price I want, basically.” Then I wrote the offer that I wanted, and I gave them asking price. I took both offers to the agent, and I said, “I have two offers.” They’re like, “Well, who’s the other one from?” I’m like, “They’re both from me.” They’re like, “I don’t understand.” I said, “Well, you should tell your client that they’re in a bidding war now, which is the most exciting thing ever for them, congratulations, it’s a bidding war. I’ve got two offers coming in at the same time. One is everything you want, it’s just 20% less than your asking price, and the other one has a few little terms and conditions that I tend to like and that I need to make it work for me, and it’s your asking price.”
Guess what, they took my offer.

Brandon:
I love it.

Scott:
It’s crazy, and these are people who couldn’t make a decision. She’s like, “Offers have come in, I haven’t made a decision.” I’m like, “Maybe they just need some pressure. Maybe they just need a decision where it’s not yes or no, but yes or no, increase my odds a little bit.”

Brandon:
I teach this stuff on webinars, occasionally. I did this webinar where I teach about my seven sneaky tricks for getting your offer accepted, and that’s exactly one of them. I like that term that I never had a phrase for it. We’re calling it the double offer from now on. Because yeah-

Scott:
Well, it’s Scott’s double offer.

Brandon:
It’s the Scott’s Double Offer TM. We’ll put a little TM on it. It’ll be great.

David:
Scotty Mc method.

Brandon:
The Scotty Mc method. Yeah, no, dude, it’s so good. Because when you offer people two options, I will say this, I say, you go to Starbucks, and they got the tall, the grande, and the venti. They do that, largely so you don’t remember 711 has the same cup of coffee for 79 cents. When you give people multiple options, they choose between the available options, not between external options. It’s exactly what you’re doing. This is going to sound excessive, and I don’t recommend this, but we literally put together an offer for a mobile home park recently, and we gave them 31 offers. 31 offers, now, that sounds ridiculous. It wasn’t to the seller or to the broker, but we basically laid out 31 different things to this broker of like, this is what we want to do, and they helped us take those 31 down to, I think it was we ended up with seven that we actually gave to the seller.
It was a huge complex deal. But we do that because we’re like we want to find the way. Again, that’s excessive and there was a very specific reason why that deal worked that way. But I love that, I love the Scotty Mc method. It’s great.

Scott:
The Scotty Mc method, I like it. It’s not like these things are pulled out of nowhere either. Obviously, with the amount of real estate investing you’ve done, and I’ve done, it’s strategic. There’s rationale behind all this. I don’t know if I told you this last time, but you would love a book about behavioral economics. Have you read any books about behavioral economics?

Brandon:
I doubt it.

Scott:
Yeah, dude, this is critical. Anyone who’s an entrepreneur, and especially if you’re in real estate, I tell people, you need to read a book about behavioral economics, which really helps you understand why people are motivated and what drives people to make decisions. There’s a great book by Robert Cialdini that you should read. He’s a genius when it comes to behavioral economics. I think it’s called Principles of Persuasion. But it changed the way-

Brandon:
I have a book by him right here, it’s a Pre-Suasion, is that the one, or… Is that it?

Scott:
Pre-Suasion is-

Brandon:
Okay, go ahead.

Scott:
Oh, no, no, here’s what you want.

Brandon:
Because you got a couple of them, right? I have not read this. It’s just sitting on my shelf.

Scott:
This is the one you want.

Brandon:
Oh, yeah, Influence. Yeah.

Scott:
Influence, it’s the one before that one.

Brandon:
Yes. this is like the sequel.

Scott:
I love the way we just pulled them all out pf our stack. I have that one as well. I haven’t read it yet.

Brandon:
Yeah, that’s funny. The one you’re holding right there, Influence, I did read that, and it was phenomenal. In fact, I use a lot of those things in my life. That was so good.

Scott:
All the behavioral economics. Influence, it’s so good. After reading that book, I actually changed the way I do my presentations and the way I explain things to people, I was able to strategize a lot of the things that I had found through trial and error. Even things like in 2000… Let’s say somewhere around 2005, a lot of my rental properties were student rental properties, and one of the big challenges of student rental properties is when you turn them over, it’s a mess. There’s garbage and leftover furniture and nobody returns their keys.
But I started giving gifts to my tenants when they moved in, and I started doing that, because I had asked some tenants to allow me to come in and show the property. It really asked a lot of them, and then I was like, I feel bad. I got to get them something. I got them a gift. Then they didn’t take the gift, it was a bottle of wine they had already moved out. I was like, I’ll give it to my next tenants. I left it there, and I’m sort of note, welcome to your new home.
It was amazing how much less work those tenants were when I started off the relationship using reciprocity, which is one of Cialdini’s persuasion techniques. There’s nothing sneaky about it, it’s really just being a good person and having some form of demonstration for it. Now, when any tenant moves into one of my properties, I give them a gift when they move in. I’m telling you, for the 30 or 40 bucks you spend on a gift, it saves you thousands of dollars in property managers coming to fix things. If they have a broken light bulb, they just change it. They’re like, you know what, my landlord is awesome, I’m just going to change the light bulb.
When they have a problem, they don’t want to bother you, because they’re like, “My landlord’s a nice person, they gave me a gift when I moved in.” When they leave, honest to goodness, half of them leave a gift when they leave, it’s crazy. I’m just blown away by this simple little thing. This is one tiny tip, throw this in your little sneaky pile over there, you’re going to have 12 sneaky ideas by the time we’re done. But, you add all these things together, like you said, and it starts to make a huge difference to your bottom line.

Brandon:
We had a seller recently, real quick, I’ll throw this story, we had a seller, we didn’t get the deal, I will say that. So, it didn’t work this time. But I still love this story, is in talking with them, they’re a motivated seller, they kept talking about how much they love shrimp burgers at this one restaurant that’s like four hours from their house, they never go there. We went and we found somebody to go there and get a physical gift certificate for… It was like $250 gift certificate for shrimp burgers at this restaurant, and we gave it to them with our offer.
Again, it didn’t work that time. At our real estate company, we do that kind of stuff all the time. Just little things that just make people go like I really like them. What a nice people.

Scott:
It’s amazing how many people are persuaded through emotion and things like that. So, genius. I love all of it.

David:
You did awesome. You’ve used a lot of strategies to scale this portfolio over time. You learn very quickly. Can I ask what are you doing now? What type of projects are you taking on, and how are you growing your portfolio?

Scott:
Sure. Well, the last eight months have been very interesting, not necessarily in a terrible way for real estate, for the world, yes. I was recently telling somebody, this is the third time I’ve seen a fairly major disruption in the world. The first time, was the tech bubble that burst in 1999, 2000, I was just buying my first property. But even that worried me, and I don’t know why, it was just in the news all the time. They’re like, oh, the tech bubble burst. I’m like, “Is this going to affect real estate?” which it did not. My real estate, it performed perfectly fine.
Then in 2008, here I am with almost 100 properties, probably at that point, and all of a sudden, the worst real estate crash in modern history. I really worried about that, too. I was like, oh, my goodness, what am I to do? The real estate market is going to be a disaster. But when I focused on the fundamentals, which are my tenants actually going anywhere? No. Am I still getting positive cash flow? Yes. I started to realize that the people who are losing money were the speculators. The real estate speculators are the one who buys something that they think is going to go up in value, and then they have no plan for in between.
It could be pre-construction, it could be vacant land, it could be anything, land bankers, all these people. I’ll buy 10 pre-construction houses, and as soon as they’re built, I’ll sell them and make money. That’s called gambling, right? That’s not an actual strategy that you can control. For me, I wasn’t doing a lot of that, I was mostly doing buy and hold rentals.
When the market crashed, I held, I sold nothing. In 2008, 2009, I sold zero properties, therefore lost $0. My renters didn’t go anywhere. In fact, what ended up happening and only people that were real estate investors through that period will be able to tell you the real magic was when interest rates came down. Because interest rates dropped, which is the largest expense you have as a buy and hold investor. Therefore, your cash flow goes up.
All of a sudden I was more profitable. Interest rates… I had mortgages that were prime minus 2.1. They were what were considered ARM, adjustable rate mortgages. In Canada, they call them variable rate mortgages, and I had a lot of both. That was my jam. I’m like, everything is variable, right? So, prime minus 2.1 was a good rate. Effectively, I was at like 5% when the interest rate was at 7%. But then prime went all the way to two, and I was locked in at prime minus 2.1. This is what nobody talks about is that I was in negative interest rate territory. People say it’s not possible, it happened.
Now, I’ll tell you what happens is you stop at zero. In the fine print, they don’t actually pay you to have a mortgage yet. I ended up at zero interest for two to three years as those mortgages came to expire. I’m like, Why isn’t anyone talking about this? I have a clip of me on CNN in 2008 having a debate when the host is saying it’s the worst time to be in real estate, and I’m saying this is the biggest opportunity in real estate in our lives, and I’m having this debate, and I’m talking about interest rates. And they’re like, “What does interest rates have to do with anything?” I’m like, “Has to do with everything in cash flow.”
But I’m like, “But people are losing their houses.” I said, “That has nothing to do with making money in real estate, that has to do with people’s homes, and there’s a lot of terrible things happening. But if you’re a real estate investor, don’t tell me this is a bad time. This is the most opportunistic moment in our lives.” I use that clip at my events, because that was the last time that there was a huge disruption, and now we are here. We’re here, there’s been a pandemic, tremendous amount of disruption, and this time, it’s global. There is no country that has escaped this disruption, which is unreal, unprecedented.
Six months ago, I changed my live events to virtual events, started running virtual events. Our first one, we had about 7000 people register, and the first thing I said was pay attention, because there’s going to be, again, a massive surge in real estate post-pandemic, as all of this stimulus, and all of this money printing hits the markets, it’s going to be crazy, and you’re going to look back on your life and say, what did I do about it during that pandemic? It goes to that saying, never let a tragedy go to waste. The whole world is in a tragedy, do not waste this opportunity to recognize that this disruption is going to create a massive transfer of wealth.
I know what side of that I want to be on every time. The whole world has been given an excuse to take a break, and to think about their lives, and to think about where they’re going and what they want to do and who they’re with and where they work. We’ve all been forced to take a breath. If you haven’t recognized in this moment that there are things that you want to pursue or that you want to do that you’re not trying now, you’re never going to do it. You’re never going to do it if you’re not doing it now.
That’s what this has taught me, what’s happening right now, I’m doubling down. That’s what I’m doing. I’m buying more properties in the last six months than almost in the last six years.

Brandon:
You’re doing a unique niche now. When I was on your show recently, we talked about that a little bit. I want to dive into that a little bit here. What are you buying, and why? Because it’s something we have not actually ever talked about here on the BiggerPockets Podcast.

Scott:
Yeah. Well, let me be the first to be a trendsetter then for you.

Brandon:
Yes, please.

Scott:
Because I love blazing new trails, and I’m always… My strategy is buy what everyone else isn’t looking at right now. Again, I pepper that in with buy what everyone else isn’t looking at right now, but you know has the potential on the horizon to be super important. I’m not buying swamp land or anything like that. But something that I’ve noticed that people have shied away from over the last… For 20 or 30 years now, people have been shying away from the smaller, mom and pop resorts. These are the Dirty Dancing style resorts of days past when people used to travel domestically and spend time with their family up at the lake or up at the cottage.
When everything started happening a few months ago with COVID, we realized that global travel lost its lax. All of a sudden, it’s like you got to stay somewhat local. Which put a lot of pressure on local vacations and vacation properties, lodges, cottages but not the big ones, not like the big hotels where you have too many people. I’m talking the ones where you have individual cabins and people have space. Right now, to try to buy waterfront property, it’s very difficult. In the last few months, it’s been a lot of pressure to buy these properties. But some of these properties that are in that sweet spot, they’re a little too big for the average individual to buy. You can’t just go out and buy a 20 cabin camp and say this is our new vacation home. But it’s not on the radar of the huge conglomerates who are looking to build 6000 hotel rooms and casinos. It lands in that sweet spot, it’s off the radar, and if you break it down price per square foot or price per cabin, or price per bedroom the way we do as investors, the discounts are phenomenal.
I bought two camps. I call them camps. One is a fishing resort, it’s got 12 cabins, six of them are right on the water, and then there’s a main lodge on the water, and then the other ones are all set back behind. But you’re talking several hundred feet of waterfront. If you were to buy the cottage next door, let’s say. Let’s say it was just on its own lot, you’d be paying hundreds of thousands of dollars just for that one. Versus for a million bucks, I can get 12 of them, or 1.5 million. It’s not a ton of money. When you think about it, I get 12 cottages, or I could just go buy two or three cottages over here.
With one of them right now, I’m actually severing it off into five waterfront properties, and then easement for the other cottages at the back to have their own shared waterfront. You’re talking about turning $2 million to $3 million investment into a $5 plus million return just on all the zoning changes and a little bit of upgrades here and there, you can make between $1 million and $2 million in a couple of months, as a side hustle. I’m not working on it full time, I have my team working on it.
So, I started to identify this, and I started to look at more of them. We just locked one up in the Catskills, which is an awesome, awesome resort on a beautiful body of water. Same thing, it’s like mom and pop, they’ve owned this thing for 30 years, they’re tired of running it. This year with COVID, they just shut the whole thing down, and they’re just like, “We’re done.” And I’m like, “Okey dokey, then. Let’s see what we can do with this.”
Because I don’t want to be buying [inaudible 00:57:18] or individual properties. I forbid myself to do it several years ago. I’m like, that’s it. I’m good at it. I like it, but it’s holding me back. You know when you see that property, you’re like, “Gosh, I used to do those all day long.” You’re like, “Don’t do it, man. Don’t spend your time over there. You got to push yourself.” I’m like, okay, push myself. 12 units is my minimum. I’m like, I don’t want to touch anything that’s less than 12 units because I’m not growing if I’m doing that. If I’m buying a duplex, it’s like I should be teaching someone else how to buy that property at this point, not trying to buy it myself, it doesn’t make sense.
I’ve been working on a couple of camps. Yeah, the cat’s out of the bag, and now I’m going to be competing with people who are listening to BiggerPockets on the next one.

Brandon:
Don’t do it, everybody. Just stay away. They’re terrible.

Scott:
It’s terrible, it’s awful. You have to spend your time by the lake, and then you can go swimming. Then you’re just basically on vacation while you’re working. It’s awful.

Brandon:
I say this with mobile home parks. I got into the mobile home parks, started talking about them, now I created my own competition. But people often think because Brandon from BiggerPockets went and did mobile home parks, that they’re the best investment. The truth is, they’re just one of hundreds of cool investments right now that could work, and I just picked one and you picked one as well, and David Greene here is picking one.
We’re picking these niche things because the things that maybe we got started with aren’t as easy, or maybe there’s just a lot of competition there. It’s cliche, but the riches are in the niches right now, and I think that’s-

Scott:
Te riches are in the niches, I like that. You know what, the other thing is, to be clear, and I know you know this, but the fundamentals don’t change, I’m still running a cash flow analysis, I’m still running a cash flow analysis. Even though the types of properties are changing, and to be honest, I think next year, I’m going to be looking at commercial space, I feel like commercial space is going to be this new opportunity, where there’s just too much vacancy. Once the pressure hits that market, I’m going to look at doing conversions of commercial into residential.
Some of the best pieces of real estate are right now dedicated to commercial, which, if you converted to residential could be a huge opportunity, especially in the cities.

Brandon:
Totally agree. I love it. Let me ask you one of our last questions here is where do you see the economy headed? Put your crystal ball on the desk real quick, where do you see the next year, year and a half, two years headed for real estate?

Scott:
For real estate, well, in general, there’s going to be volatility because right now there’s so much uncertainty, which means it’s a good time to be involved. You’ve got to get in while there’s uncertainty. Once everything is, let’s say normalized again, it’s too late. That’s coasting, that’s where you coast. For real estate right now, to be honest, the biggest things that I see influencing real estate, which is no secret is number one, interest rates. This weekend, I was able to secure a conventional mortgage for 0.99%.

Brandon:
Whoa.

Scott:
Under 1%.

Brandon:
Is that in Canada, or is that in the US?

Scott:
That is a Canadian product.

Brandon:
You guys got stuff going good. Wow. That’s like 2.5% here, but that’s amazing.

Scott:
Here’s the advantage of being someone that I spend part of my time in Florida and investing in the US, and I spend a little more time obviously, in Toronto, and I started investing in Canada. It’s really interesting to see the differences and to understand that sometimes things happen in the US first, and I get the inside scoop, I’m like, oh, here’s what’s happening in the US. Let me be the first to try that in Canada. Then Canada will come out with something, I’m like, ooh, this is interesting. Canada’s a little more like Europe, let’s put it that way, and America is a lot like America.
That’s the only way to look at it. Canada is halfway between America and Europe. We’re somewhere in between those two. Some things are happening in Canada right now that with a democratic government coming in, in the United States, it’s going to look a little bit more like Canada for the next four to eight years, to be honest.
When you guys have, what we would call a conservative government or Republican government, it starts to look a little foreign to us. We get it, but we’re just kind of like, let’s just see what happens. Interestingly enough, you’re probably going to see Biden taking more of a, dare I say it, Canadian or European global style of approach to the country. You’re going to see things that have been happening in Canada for the last few years, starting to show up in the United States, like lower interest rates. To me, I think the reality is North America is going to see sub 1% interest rates in the next few years.
You may already know this, but like in Denmark, you can get a mortgage for -1.5%.

Brandon:
Whoa.

Scott:
Yeah.

Brandon:
That’s crazy.

Scott:
That’s blowing your mind.

Brandon:
That’s blowing my mind.

Scott:
It took me a couple of weeks to figure out how that works exactly. But it’s true, even in Germany, you can get a sub zero mortgage. In Canada, we’re seeing sub 1%. I think in the US, you’re going to start to see some serious discounts, because there’s so much money that’s being printed. People just are putting it everywhere. There’s just too much money. So, there’s no interest to be paid. That’s the reality. That’s the reality of, after a huge crisis, the more aid we see, the more financial aid packages that go out, the lower your interest rates are going to be in the future. The lower interest rates are, the more real estate increases.
That’s something that the governments have a real problem with, when you have a democratic style government, which is trying to promote the average individual having the financial capability to service their debt, what happens as a repercussion, or a reaction to that is the lower interest rates means real estate goes up. So, it’s how do you do both? It’s really crazy.
I continue to see real estate prices going up as interest rates go down. That is the number one thing. Now, to also back that up what I see happening in the next few years, and this is going to be North America wide. I think this will be in the US. I already know it’s going to happen in Canada, Canada just launched its most aggressive immigration plan since the 1800s.
In over 120 years, we’ve never had a more aggressive immigration plan, meaning Canada’s looking to attract a million new Canadians next year. I see something similar happening in the United States, the last four or five years has been very domestic policy, it hasn’t been an international policy, it hasn’t been something that’s been super inviting for people to move to the United States. In fact, the interesting thing about being in Canada half the time and then looking in is, Canada had the most international students on record in 2018 and 2019, because almost half of the people who would have normally gone to college or university in the United States chose to go to Canada instead, and we couldn’t even bring them all in, there was almost a million students that showed up to our post secondary education institutions. So, rental rates in student housing went up about 30%, it was nuts.
Now, you’re going to see the opposite of that, you’re going to see a more inviting to the global market in the US. I think what we’re going to see is this, the lower interest rates, which is going to drive up housing prices. You’re going to see more immigration into the United States, which is going to push up housing prices, and you’re going to see international students returning to the US market without the fear of being deported or held up at the airport or not being able to go see their family.
You add those three things together, and there’s a tremendous amount of pressure. It’s not just a straight trajectory going up, you and I both know that. The next few months, if not the next year and a half, it’s going to be a bumpy ride to get there. But that’s the most interesting time to get in. You want to get in during the bumpy part, so that when it does start to coast, you’re already in and not trying to chase it. That would be my three to five year horizon. Anything after that, anyone who tries to tell you what’s going to happen after that is a liar, because you never know what’s going to happen. Nobody knows, no one knows what’s going to happen in the next election. Nobody knew there was a pandemic coming, nobody knows. Those are the things that are going to have the largest impact. It’s the unknowns.
It’s just if everything stays calm and follows the current path we’re on, this is what could happen. We all know, you and I all know that real estate will go up and down all the way up. As long as you’ve got a five to six year trajectory with your investing strategy, you’re pretty bulletproof.

Brandon:
That’s awesome, man. That was so good. Just your understanding of the global movements of people and money, I think was phenomenal. Actually, when we do our introduction at the beginning of the show, I’m going to call up that point and tell people they should go listen to this, for sure, because that was really, really good.
Well, we got to get you out of here right now. We got to close up shop here in a minute. I want to shift over to our last segment of our show, it’s called our Famous Four.

David:
Famous Four.

Brandon:
Question number one of the Famous Four, do you have a current favorite real estate or a lifetime favorite real estate specifically related book? Any book for real estate investors that you recommend?

Scott:
Boy? The one that comes to mind, Rich Dad, Poor Dad, everybody’s read that one. I think that’s the one that triggers a lot of people to get started in real estate investing. I would go with that one. That book has inspired more people than any other book that I can think of. If you haven’t read it yet, start there.

David:
All right. I know we discussed a couple but what is your favorite business book?

Scott:
My favorite business book… You know what book I like, is the E myth. I don’t know if you’ve read the E Myth?

Brandon:
I have. I love that book.

Scott:
That was very helpful for me about 10 years ago. It changed the way that I spent my time and what I decided to work on. Also, The Strength Finder. I’m going to give you two, I like the Strength Finder; simple, quick read, and it helps explain who you work well with. It’s something that for years at our office, we used to make all new employees read it, and then they would put up their strengths and see who they align the most within the company and then they would go out for lunch with that person on their first day on the job.

Brandon:
That’s cool. That’s smart. I love it.

David:
All right, what about some of your hobbies?

Scott:
Some of my hobbies.

David:
Making TV shows.

Scott:
I like making TV shows.

Brandon:
Weren’t you at some magazine for like, Sexiest Man? Weren’t you in something-

Scott:
Sexiest Man Alive, 2017, 2016.

Brandon:
All right. There you go.

Scott:
That’s not a hobby, by the way.

Brandon:
Being good looking is a hobby, a hobby that I’m not very good at, but working at it. Anyway-

Scott:
I would say I love swimming. I’m always spending time… Anything in the water, I love. I wish I got out surfing more like yourself. I’m not quite that dedicated, but anything to do with the water, I’m a huge fan. As a dad, I just love spending time with my kids. Pretty much being a dad is my favorite hobby.

Brandon:
All right. Well, my last question of the day, is what do you think separates successful real estate investors from all those who give up or they fail or they just never get started?

Scott:
Ugly people can’t do this.

Brandon:
I agree, 100%. Thanks for joining us today.

Scott:
I think starting is the thing that stops most people. Being able to get that first deal done. There’s a lot of people that look into this and do the research and they get caught in the what I call the education phase of real estate investing, which is great if you want to have an MBA in real estate, which doesn’t make you any money. It’s the people that buy properties. The thing that stops people, that separates successful people from non-successful people are the ones who realize you’ll never know everything about real estate, you just have to know enough to buy your first property.
Then that’s the difference. Some of the smartest people I know, are some of the people who struggle with their finances the most, because they outsmart themselves. It’s like they look into it too much, and they find a reason why it might not work after looking at 500 reasons why it could work. The difference is, once you find an opportunity… Okay, this is what I like to tell people, let’s narrow it down to this, once you identify an opportunity that is profitable in real estate, don’t ask any more questions, buy it. What are you waiting for? I always say, if you’ve been able to calculate that this is going to make me $200 a month, what the hell are you waiting for? Buy it? Don’t wait for the one that makes $250, buy that one as well, buy them all.

Brandon:
This goes back to we talked about earlier, when we talk about the first deal was so hard and the next one’s got a little easier, even though they’re bigger. Nobody looks back in their life, right now you have hundreds of units. You don’t look back and go, that first deal only cash flowed 11% return. I really wanted $12, I wish I wouldn’t have bought that. Nobody says that.

Scott:
Nobody says that.

Brandon:
It got you in the game. That’s the most important part.

Scott:
Absolutely.

David:
What it’s doing in year 10 is so vastly different from what it did in year one, that, that extra 1% or 2% that you thought was such a big deal is literally not even a factor in how that asset operates. That’s another thing I’ve seen.

Scott:
Not even a factor. You’ve got it, David.

David:
Very good advice there, Scott. This is awesome. Okay, for people who want to hear more of your sage wisdom, with your stunning good looks, where can they find out more about you?

Scott:
Well, definitely you can follow me on social media and on Instagram. You can check out my podcast, which is The Real Estate Rebel with Scott McGillivray. You want to check that out for sure, and just watch the shows, man. I got all new shows coming out on HGTV in the new year, and it’s always about real estate investing.

Brandon:
That’s awesome, man. I was on season two, episode eight of your podcast. So, go check out if you want to listen to me sharing my not as good of wisdom as Scotty Mc did. Go check it out.

Scott:
Dude, you were awesome. You were a fan favorite from that season. Come on.

Brandon:
Oh, good. All right. Well, appreciate you man. This has been phenomenal. Thank you so much. Love every second of it.

Scott:
Thanks so much, guys. Will see you soon.

David:
This is David Greene for Brandon BiggerPockets Sexiest Man Alive Turner signing off.

Speaker 2:
You’re listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing, without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.