Aurelien started his real estate journey in 2013 after getting inspired by David Azrieli, a Canadian real estate mogul. He picked up some books on the topic and started by acquiring a fourplex. A couple of years ago, he got interested in mobile parks and pursued that market. Now he has properties in both Canada and the US.
We discussed the differences between managing a mobile park and regular multifamily properties. We also talked about the value of strong personal relationships and rapport when working in the real estate business.
Aurelien Bonin Real Estate Background:
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“Rapport is key in our industry” – Aurelien Bonin.
Joe Fairless: Best Ever listeners, how are you doing? Welcome to The Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever. We don’t get into any fluffy stuff. With us today, Aurelien Bonin. How are you doing Aurelien?
Aurelien Bonin: I’m great. Thanks for having me, Joe.
Joe Fairless: Well, I’m glad to hear that. It’s my pleasure. A little bit more about Aurelien. He’s the founder of The Mindful Investor. Seven years of real estate experience. He’s got a portfolio that consists of 60 units in Canada, from single-family to an eightplex. He’s got an 11 pad mobile home park in Arizona. Based in, Ontario. So with that being said, do you want to give the Best Ever listeners a little bit more about your background and your current focus?
Aurelien Bonin: Absolutely. I’m originally from France and came to Northern America, to Canada to be precise, in 2007. I used to be a teacher in France. I worked for a not-for-profit in Canada when I came. And this not for profit, the money for the operation came from real estate. The founder was a real estate mogul who developed malls in Northern America. That was a source of inspiration for me. I really admired what he did, and how he grew his portfolio with malls all across the country, and how he was able to create a foundation and give back to the communities with different projects… One dedicated to the second world war and memoirs of Holocaust survivors… And they were constantly making donations to different charities or scientific research. So that was very inspiring.
In 2013, I decided that I would try to walk in his steps. His name is David Azrieli. I went to the library, got myself educated, bought some books about real estate investing, and learned the basics. So you want to invest [unintelligible [00:04:45].05] growth and communication, in terms of access, like a highway or whatever, so that people can get around… And I started looking around for opportunities. I started very small with a fourplex, and worked my way up slowly but surely. Along the way, I got interested in mobile home parks a few years back. Same thing, same modus operandi – educated myself and then started to look in the US, and actually in Canada as well, and purchased a park with a partner in Arizona.
Joe Fairless: Well, you make it sound so easy. [laughter] Was it?
Aurelien Bonin: Funny you would say that, because being trained as a teacher, I like to make things seem accessible and easy… So that’s part of my training I guess.
Joe Fairless: [laughs] Mission accomplished.
Aurelien Bonin: Yeah, thank you. Some deals were more challenging than others. I had to deal with some tenants. I do a lot of property management myself, and I would inherit some difficult tenants sometimes. But thankfully, the location I invested in was rather pro-landlords, which made my life easy. The interactions were not that great, but at least I could evict the tenants quite fast, actually, in 16 days, and then screen my own tenants and bring my own tenants in. In the process, I was able to reposition the asset by rehabbing the units and increasing the rent.
Joe Fairless: Well, there’s a lot we can talk about. I’m curious first to hear about the 11-pad mobile home park in Arizona. Where in Arizona is it?
Aurelien Bonin: It’s in Tucson.
Joe Fairless: What can you tell us about that deal?
Aurelien Bonin: When I was looking to invest in a mobile home park, I started looking at people specializing in smaller parks, because that was what my budget allowed me for. I discovered a realtor, that was his specialty. And he was specializing in Tucson. I did some due diligence. I liked that county; it had a million inhabitants, the economy was quite diversified… Then I told him, “Listen, I’m looking for a park, this is my budget. Can you find something?” He made it happen.
He was able to find me a seller carry at 80% loan-to-value, which is quite rare… Got the deal under contract, and the deal came with a property manager, so that made things easy for rent collection and to deal with the tenants. I pay her $50 a month to receive all the phone calls, so I don’t have to do it myself. We’ve been slowly increasing the rents. We have one of our tenants – now he’s a Section 8, so the money comes directly into our account every month. It’s been fairly simple.
Joe Fairless: Wow. I wouldn’t think an 11-pad mobile home park would be simple. You have a good manager who you pay $50 a month?
Aurelien Bonin: Just to take the phone calls, and then just the 5%…
Joe Fairless: Yeah, take the phone calls. Sorry, 5% of what?
Aurelien Bonin: The rent.
Joe Fairless: Okay. Have you visited that property?
Aurelien Bonin: Absolutely. I tried to go visit every year for at least a week.
Joe Fairless: What do you do when you’re there?
Aurelien Bonin: I try to talk to all the tenants. I spend a lot of time with the property manager, because she’s my boots on the ground, so it’s important I nurture this relationship. I call her every month, we have a check-in every month. Also when there are emergencies, we have phone conversations.
When I’m there, I spend a lot of time with the property manager, she’s key, and it’s important to nurture this relationship. I also see this realtor that I mentioned earlier, so I spend some time with him, we walk through properties. I’ve been quiet so far, I haven’t pursued any other deal, but I just keep my eyes open for potential other opportunities.
Joe Fairless: When you have those monthly calls with a property manager, can you tell us how those calls go and what you ask?
Aurelien Bonin: I make sure to talk about herself, how she’s doing, and her family… Because rapport is our key in our industry. And then we go through what’s going on in the park. If we have somebody moving out, how are we going to proceed about the repairs, what needs to get done, and we try to budget, and then we discuss maintenance mainly, and talk about her and her family.
Joe Fairless: Okay. What’s been a maintenance challenge?
Aurelien Bonin: We brought an RV to the park to increase the cash flow, and I know that we got a tenant, and I let my property manager do the screening of the tenants… And I think we could have done a better job on that one, because the person was really difficult to deal with, always contacting her at different hours of the day. They ended up leaving without giving us any notice recently. So we have this RV site for rent now. That’s an example of a challenge when we don’t do enough a good job of screening tenants.
Joe Fairless: Do you prefer, say, an 11-unit mobile home park or 11-unit multifamily property better?
Aurelien Bonin: I have another mobile home park in Canada where it’s all tenant-owned homes and it’s beautiful. It’s really hands-off. I’ve had only one repair, the plumbing system once. So that’s very hands-off, that’s the beauty of it. But what I like about multifamily and particularly residential units is that loan to value or refinancing.
We have something in Canada called CMHC (Canadian Mortgage Housing Corporation) and they’re going to ensure the mortgage up to 85% loan to value. So if you buy it right and you have a good business plan in place and you’re able to refinance, you can hit a home run in apartment buildings better than with mobile home parks.
Joe Fairless: When you take a look at your portfolio that you have now, what property… Maybe it’s not even in your portfolio now. What property have you lost the most amount of money on?
Aurelien Bonin: It’s not in my portfolio. It was initially when I was quite new to real estate investing. I was looking at buying a house and I lost my deposit on it, because I had to walk away, but didn’t schedule it properly so that I lost… It was only $500 but I learned my lesson.
Joe Fairless: That’s nothing.
Aurelien Bonin: Yes, knock on wood.
Joe Fairless: Yes, I’ll knock on wood for you. Because I don’t want to jinx you. I don’t want you to come after me. It’s like, “I was doing great until that interview with Joe.” [laughter] Alright, then on the flip side, what deal have you made the most money on to date?
Aurelien Bonin: It was an apartment building. I was able to pull it off without putting any money down, except for the lawyer’s fees. A few years later, I refinanced and was able to pull out quite a chunk of change.
Joe Fairless: Where is the property at?
Aurelien Bonin: In Canada.
Joe Fairless: Okay. How much do you buy it for?
Aurelien Bonin: Oh, these are small numbers. I believe the purchase price was around $213,000.
Joe Fairless: That’s not small. $213,000 for what? A duplex?
Aurelien Bonin: Eight-unit.
Joe Fairless: Eight-unit?
Aurelien Bonin: Yeah.
Joe Fairless: That’s cheap for an eight-unit. Right?
Aurelien Bonin: Yeah, the market is changing now.
Joe Fairless: When was that? What year?
Aurelien Bonin: 2015.
Joe Fairless: Wow. Okay. So $27,000 a door? What did you do to negotiate so that you did not have to put money into the deal?
Aurelien Bonin: I negotiated with the seller. I have a friend that helped me initially, be the bank with me. When the bank started saying no, I was able to find a private lender, and the private lender helped me.
Joe Fairless: Who was responsible for you not having to put money in the deal? Was it, I guess, the private lender?
Aurelien Bonin: Yeah.
Joe Fairless: Okay. If you’re the private lender, let’s pretend you’re that person. Why would you allow someone to get into the deal with no money? What would be their answer to that?
Aurelien Bonin: It’s rapport and a good interest rate.
Joe Fairless: Okay, what was the interest rate?
Aurelien Bonin: 12.
Joe Fairless: 12%. Okay. And I imagine the property was worth a lot more than $218,000. So if they had to take the property back, then they’d come out ahead.
Aurelien Bonin: Yeah. And I repositioned the property, bringing the rents to the current market.
Joe Fairless: How long did it take to then refinance out of that initial loan?
Aurelien Bonin: Three years.
Joe Fairless: Okay. What did it appraise for, or what was the value after three years?
Aurelien Bonin: 300,000.
Joe Fairless: 300k? Wow. Okay. Then you’re able to get some cash out of it?
Aurelien Bonin: Yep.
Joe Fairless: Nice work on that.
Aurelien Bonin: Thank you.
Joe Fairless: What’s something that you learned through the repositioning process on that deal?
Aurelien Bonin: I learned that if you want to buy smart buy, buy where value can be added. It’s essential to buy deals where you can add value, especially when the rents are low. That was the main lesson from this deal.
Joe Fairless: When you take a look at your portfolio and the lessons that you’ve learned? What is your best real estate investing advice ever?
Aurelien Bonin: One advice that I really like is to listen. Price is one element of the negotiation. When you have the opportunity to negotiate with the seller and you can understand where they’re coming from, what exactly are they looking for, there are other conditions to a deal that can make it attractive for them. They might be interested in having some money on closing, but not all of it. They might be interested in carrying a vendor take back because it helps with capital gains tax, to spread them over time, and also because it’s a little bit of a payment every month after closing.
Joe Fairless: That said, I’m sure you will admit that you have a competitive advantage because you have a French accent. [laughter] Who can turn down a French accent…?
So when you have those conversations with sellers – and maybe this isn’t absolutism, but I think that a lot of real estate investors will want to have as little money out of their own pocket to acquire a cash-flowing asset as possible. People think differently regarding leverage and how much debt you want to have. But generally, most people want as little out of their pocket to acquire a cash-flowing property. So that is the goal for a lot of investors. But a lot of investors go the traditional route and just go based off of the price. So are there any questions or any type of approach that you take with a potential seller, whether you ask a sequence of questions, or whether you just make sure you do X and Y during the conversation? Anything like that you can think of?
Aurelien Bonin: It’s quite simple. When you make an offer, you see with what they counter, and you try to see, “Okay, that’s their counter, and what’s behind it? What is moving them? Why are they asking me this?” Usually, you can tell. Do they want a fast sell? Do they want to make sure they sell? There is lot you can tell from what people are saying. That’s usually how I do it. I let people talk, I’m not afraid of silence. You can tell a lot by what people say.
Joe Fairless: So the way that really works is if you’re the one speaking to the seller directly. I could see that break down a bit if you each have agents involved. Let’s say it’s a residential transaction. So how do you do that when you have agents involved, to make sure you’re trying to pick up on those nuances?
Aurelien Bonin: I have to say it’s a bit more difficult, because it’s relayed, and you don’t have access directly to the seller. But I like some simple questions, like why are they selling and what’s important to them? What’s their time horizon?
Joe Fairless: Okay. That’s helpful. Just to make sure we’re asking those questions to try to extract the motivations, especially even before we make an offer. Because once you make an offer, you’re kind of putting yourself out there. But if you can know that in advance, that’d be helpful. Do you ever do multiple offers for the first offer? Like one owner-financing, one all-cash, one finance?
Aurelien Bonin: Yes. I like to offer two options. Because basically, psychologically you’re making them say, “Yes, I’m going to sell to you. I just need to pick between those two options.” So I think it’s a good way to do it. Then it’s a good start for a conversation when you give two options. Obviously, with a higher purchase price – the asking price when there is take back involved, and a lower price when it’s all cash. I like bringing options to people, because then you get them involved in the choice, it’s no longer a yes or no to an offer. It’s yes, but which one? Which one am I going to choose? If I was to sell, I think I would appreciate something like that and I want people to do that. They’ve put some effort into their offer.
Joe Fairless: You’re self-managing your own units. You said some are more challenging than others. You mentioned it’s a lot of tenant issues where you inherited tenants… Anything not related to tenants that have been challenging as a self-manager?
Aurelien Bonin: A part of my properties are in a tertiary market, so sometimes it can be tricky. You can’t go after a company and say, “You provided me with poor customer service.” You have to just accept it, because it might be the only service provider in the area. So you have to be extremely careful not to rub anybody the wrong way. So that’s one of the challenges I find in a tertiary market when there are not so many service providers, not so much competition. It’s been a learning curve, I’ve learned a lot about properties. That I owe from doing it myself. I am talking to the contractors, I’ve developed some sort of expertise thanks to doing that, in terms of it takes more now to scare me than initially, obviously. That’s because I’ve acquired knowledge. Knowledge has replaced fear, so to speak.
Joe Fairless: We’re going to do a lightning round. Are you ready for the Best Ever lightning round?
Aurelien Bonin: Absolutely.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Alright, best ever book you’ve recently read?
Aurelien Bonin: The book by Jim Randel called the Confessions of a Real Estate Investor. He’s a true entrepreneur, and it’s filled with ideas and it’s a pleasure to read.
Joe Fairless: Will you say the author’s name again?
Aurelien Bonin: Jim Randel. It’s an older book. And your book, Joe, is a reference for syndicating. It’s because I read your book that now I’m on the board of a not-for-profit in my town here.
Joe Fairless: Oh, wow. That’s the first cause and effect that I’ve seen from the book. First cause and effect to a nonprofit I should say that I’ve seen from the book, so that’s great.
Aurelien Bonin: I find that to honor someone’s advice, you just take it and apply it. So I did.
Joe Fairless: Amen. What’s been the Best Ever way you like to give back to the community?
Aurelien Bonin: Being on that board is very meaningful to me. Some of my tenants, I know sometimes — I know one in particular, she has an autistic son. When she’s struggling, I’ve been helping her, with COVID and the government programs, I’ve helped a little bit, understanding what was available. I accommodated with the rents when she needs more time.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Aurelien Bonin: Themindfulinvestor.net.
Joe Fairless: Easy enough, and that is going to be linked in the show notes. Thank you so much for being on the show, talking about your 11-pad mobile home park, how you manage it, the questions that you ask, the property manager, the compensation the property manager receives… And your worst deal, which is not a bad deal at all, clearly, with the $500. Hopefully, we’ll continue with that. Then the best deal was an eight-unit?
Aurelien Bonin: Yup.
Joe Fairless: Eight unit. Yeah, the eight-unit, the $218,000 to $300,000 increase valuation in – what did you say, three years?
Aurelien Bonin: Yeah.
Joe Fairless: I wasn’t taking physical notes during that part of it, but…
Aurelien Bonin: I’m impressed.
Joe Fairless: …it sounds like I remembered everything. Okay. Great. Well, I enjoyed our conversation. I hope you have a Best Ever day and talk to you again soon.
Aurelien Bonin: Thank you so much, Joe. I appreciate it.
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