Adrian was a police officer when he started investing in real estate. Originally, he wanted to subside his pension and create a stream of passive income. Half a decade later, he had his lending power leveraged to its full extent, and that’s when he started branching out. He started creating joint ventures and partnerships with other like-minded investors.
Now Adrian is a full-time realtor and investor with a portfolio consisting of 2 commercial and 54 residential properties. Thanks to his decade-long real estate experience, he managed to retire early from the police force, and he now focuses on creating joint ventures and attracting new capital.
Adrian Pannozzo Real Estate Background:
- Full-time realtor and investor
- 10 years of real estate experience
- Portfolio consists of 54 properties totaling 210 units and 2 commercial properties
- Based in Ontario, Canada
- Say hi to him at: www.investwithepc.com
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Best Ever Tweet:
“Think abundance, first and foremost” – Adrian Pannozzo.
Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today, we’ll be speaking with Adrian Pannozzo.
Adrian, how are you doing today?
Adrian Pannozzo: Awesome, Theo. Thanks for having me on.
Theo Hicks: Thank you for joining us. Looking forward to our conversation and learning more about you and what you’ve been up to. So Adrian is a full-time realtor and investor with 10 years of experience. His portfolio consists of 54 properties, totaling 212 units, and he also has two commercial properties. He is based in Ontario, Canada, and his website is https://www.investwithepc.com/.
So Adrian, do you mind telling us some more about your background and what you’re focused on today?
Adrian Pannozzo: Yes, so 10 years ago, I started buying rental properties because I wanted to subsidize my pension. I was a police officer here in Canada, and just as I hit my 10-year mark, I was starting to think, “Well, when I retire, what am I going to do to subsidize my pension and try and live the same lifestyle I’m living with a full salary or police salary at the time?”
So I started to think steps ahead and thought, “Okay, well, you know what, investing in real estate seems like a pretty good way to create some passive income…” Not only for when I started, but obviously, my goal was to retire after I put my 30 years in on the police department and then have my passive income from my rental properties, maybe one or two, to kind of live the same lifestyle. So ultimately, I started buying them 10 years into my career, and it got quite addictive, and things went well for us.
So we started out with a home equity line of credit here in Canada, is what we call it. So we borrowed on the equity in our home and we used that line of credit to start to purchase our rental properties. And about 5-6 years in, we were leveraged to the max with respect to our lending power. And as a result of that, we started to branch out and joint venture partnerships with other like-minded investors in order to continue to grow our portfolio of properties. All of this was happening behind the scenes of me going to work every day, being a police officer. Nonetheless, just (like I said) a short time into real estate investing, 10 years had passed by and I was able to retire early from the police department, and just focus on continuing to build our portfolio and create joint venture partnerships with other investors, and obviously, cash-flow through various rental properties, and so on and so on.
And like you mentioned in the introduction there, Theo, what started out as a thought of, “Well, I’ll have one or two rental properties” essentially, plateaued or became very lucrative, and like you mentioned, we have 54 properties and over 200 units, all here in Canada, currently. So it kind of spiraled to where I never thought it would, and that was just obviously making the right choices in the power of real estate. And how that helped me retire at a young age from the police force.
Theo Hicks: Thank you so much for sharing that. A couple of things that I want to focus on would be the retiring early aspect and the transitioning from doing the deals on your own to doing them with partners. But before that, do you mind just kind of walking us through in a little bit more detail what your business plan is? And then I guess that’s assuming it’s been the same thing, and if not, maybe how your business plan has evolved? And not like how you’re buying them, but what you’re buying and what you’re doing after you buy.
Adrian Pannozzo: So our business model is to create joint venture partnerships and buy distressed multifamily apartment buildings – six units, eight units, 10 units, purpose-built buildings here in Canada, that need a lot of work. We incorporate the well-known BRRR strategy; the buy, renovate, refinance and rent strategy here in Canada with our business model, and we’ve been very successful in essentially getting our joint venture business partners 80 plus percent return on their money… Because we extract most, if not all of the initial capital invested in the project through the refinance process, once we’re in a position and we’ve turned that building around after renovations, putting in the new tenants, the new rents, so on and so forth, as the BRRR strategy works – we’re successful in creating those kinds of returns because we’re getting most if not all that capital out on the backend.
Theo Hicks: Maybe walk us through, if you can, what the thought process was like when you decided to transition from the HELOC strategy to partnering. Was it something where it’s like, “Well, I don’t have a choice, I have to start partnering with people?” Or, “I can’t buy any more deals.” And I guess why specifically, did you sign a JV? Why not raise money or go hard money or something? Why did you decide to go with JVs?
Adrian Pannozzo: I built this knowledge up in the real estate market in the industry when I was on the police department, and networking, obviously, with colleagues in the police department. They were showing a lot of interest to get involved in real estate, and a lot of them didn’t have the knowledge to do that. And then segueing from after retiring and being on various different podcasts and shows or whatnot, and networking with like-minded investors, we built a system in Canada where we have everything under our roof to achieve these results. So we decided to just go in that direction and share our knowledge in the industry and how we’re getting these results and bringing other people on board to do that. Does that kind of answer your question?
Theo Hicks: Yes, a 100%. So what types of qualifications do you have before you JV with someone? Is it just anyone, as long as they have the money, you’re good to go? Or is there a little bit more to that than just having the money or having the knowledge that you need? Are you looking for a particular personality type? Are you doing an interview process? What does that look like?
Adrian Pannozzo: So we’re looking for people that are more long-term hold kind of investors, as opposed to flippers, where they want to flip a property within six months; we’re more of long-term hold, so generational wealth, if you will. So we’re looking for investors that are committed to at least a minimum of a five-year hold. That being said, typically, we’re turning these buildings around after a year. So we’re buying these buildings, we’re renovating them, refinancing them anywhere between a year to a year and a half, and we’re extracting our capital and we’re moving on to the next acquisition. And then we’re holding those buildings; we’re obviously tenanting them and we’re holding them, like I said, for a minimum of five. We’re still cash flowing and we’re still obviously getting those great returns because we have very little capital on these deals whatsoever.
So a minimum typically, money out within a year and a year and a half, and then a minimum of a five-year hold is what we’re looking to achieve.
Theo Hicks: Do people who invest in your deals—you said there’s an 80% returns; do they get their capital back, but they continue to get a return ongoingly? Or I guess, how do people get paid to invest in your deal? How’s the compensation structure set up?
Adrian Pannozzo: So we’re forcing out equity through the refinance, through the rentals and whatnot, and then the refinance, you’re getting your capital back. And then above and beyond that, the property is still cash-flowing; we obviously have debt paid down because the tenants are paying down our principal on our debt, on our loan, on our mortgage. And historically, here in Canada, a lot of the cities we’re investing in, they’re passively appreciating in value, the cities themselves. The real estate in those cities are passively appreciating anywhere between 10%, 15% or 20% per annum. So when you factor in, you have very little to no capital in the deal. You have debt paid down, you have passive appreciation on that acquisition. It’s rinse and repeat over the term that you’re holding that property. Does that make sense?
Theo Hicks: Yes. So say I invest $100,000 into a deal, and then after year one, I get $100,000 back. And then you’re saying that you’re continuously refinancing and distributing more capital to people?
Adrian Pannozzo: No, you got all your capital out. You got all your capital out, so now you have no money in this deal. You still own the house or the building, for example, you’re still cash flowing, you still have debt paid down, you still have passive appreciation year after year after year, and you have no funds in the acquisition. So essentially, when you look at it like that, it’s almost equivalent to infinite return on your investment, because you have very little to no money left in the deal…
Theo Hicks: Yes.
Adrian Pannozzo: …and yet all these things are still happening behind the scenes, with very little to no capital left in the deal.
Theo Hicks: So I get my money back, right? I have no money to deal whatsoever. These extra things you’re talking about – the cash flow that’s happening, the profits from sale, how is that distributed? Is it 50/50 between you and the JV?
Adrian Pannozzo: Yes, that’s 50/50.
Theo Hicks: Okay. 50/50. Okay, perfect. So then the other thing I wanted to talk about was retiring early, right? So a lot of people get into real estate because they want to leave their full-time job, they want to retire early and either live off of the passive income or make real estate a full-time job. So you’ve obviously did that, you were able to retire early. You said you kind of didn’t expect to, but it ended up working out for you. So what advice would you have to people who want to do what you did? …that want to get into real estate, and either through passive income or through creating an active business, they can retire, what advice do you have for them?
Adrian Pannozzo: Think abundance, first and foremost. I kind of flipped it off, but I would definitely say mindset, first off; it is a very powerful tool. Secondly, surround yourself with a very strong power team. When you’re getting into these bigger deals and the BRRR strategy and whatnot, people that you surround yourself that are on your team I think are super, super, important. Because that could save you not only hundreds of thousands of dollars, but a lot of time as well, because you can bank on the fact that they have the experience, obviously, that you don’t have; they’ve made the mistakes and can save you from making some of those mistakes potentially, and expedite the process a bit. Think abundance and a very, very strong power to use, right from your realtor, to your contractor, to your real estate agent, to your business partner or your JV partner – those people all on that circle are huge factors and will help towards your success.
Theo Hicks: Hopefully, I didn’t get ahead of myself and you didn’t just answer the money question. If you did, that’s okay. But what is your best real estate investing advice ever?
Adrian Pannozzo: We kind of touched on it, but yes, a strong, strong, strong power team that you’re getting into business with; everybody’s got to bring something to the table that can help achieve those results and the success. And again, I’m a big fan, and my best advice – I love the BRRR strategy. In my opinion, if you have the knowledge, your market center that you’re investing in and you have the right people in your corner, the BRRR strategy – it’s a no-brainer. If you can buy a property, renovate that property, refinance that property, rent it and have zero to very, very little capital gain, it’s a no-brainer, your return is almost endless at the end of the day. So strategy-wise, BRRR strategy all day long for us.
Theo Hicks: What’s really cool about that BRRR strategy is that someone could technically, as you kind of said, rinse and repeat the same capital indefinitely.
Adrian Pannozzo: Right.
Theo Hicks: Right? Like, I can grind, save up 50 grand and then do the BRRR strategy once, pull that 50 grand out again, but still have the property, and then do the exact same thing over and over and over again. That’s what I thought was really cool about that, is that it’s very low barrier of entry.
Okay, Adrian, are you ready for the best ever lightning round?
Adrian Pannozzo: Absolutely.
Theo Hicks: Okay. But first, a quick word from our sponsor.
Theo Hicks: Okay, Adrian, what is the best ever book you’ve recently read?
Adrian Pannozzo: Grant Cardone, Be Obsessed Or Be Average.
Theo Hicks: If your business were to collapse today, what would you do next?
Adrian Pannozzo: I’d get on a plane and go to the Caribbean and “Livin’ la Vida Loca”.
Theo Hicks: Tell us about a time you lost money on one of your deals, how much you lost and what lesson you learned.
Adrian Pannozzo: It was a buy-renovate-refinance project; it was one of the very first ones we did five years ago, so I didn’t have much knowledge… And everybody’s got a horror story about a general contractor on construction. We hired the wrong contractor, who essentially never showed up. When he did show up, he only came for one day, he kept squeezing us for more money. And we ended up probably losing around $30,000, which isn’t much at the end of the day, but back then when we started, it was a lot more than it is now. But yes, we lost $30,000. We had to hire another contractor, bring them in, pick up where we left off, and all this jazz. So was a little bit of a frustrating and not a good experience.
Theo Hicks: On the flip side, tells us about the best ever deal you’ve done.
Adrian Pannozzo: About eight months ago, we refinanced one of our fourplexes here in Canada, and we were able to extract all of our money, plus we had a surplus over and above extracting all of our money of $80,000.
Theo Hicks: Nice.
Adrian Pannozzo: So ultimately, we got a paycheck for 80 grand to essentially own a multifamily fourplex.
Theo Hicks: What is the best ever way you like to give back?
Adrian Pannozzo: Education and giving advice to people in the investment world, in the real estate world. I’ve been fortunate to be successful in it. It’s not brain science, but if I can help people just by giving them some bits of advice and then maybe steer them down the right direction… I think that speaks to my character too, obviously, being a former police officer and just being out there on the street, helping people in times of crisis; it just speaks to my overall character.
Theo Hicks: I’m going to add in an extra question. What’s more exciting; being a police officer or investing in real estate?
Adrian Pannozzo: Two completely different types of excitement. There was a lot of adrenaline rushes with policing; you’re up and you’re down, and you’re running into doing search warrants on different properties and whatnot. That’s all kind of excitement. And then the excitement of grabbing an amazing deal and an amazing refinance and an amazing property and coming out with an $80,000 surplus, and taking a trip on a vacation and not worrying about anything, because you just cashed in huge on that last deal, and you can just go crazy – that’s pretty exciting, too. So that’s a tough question. Both equally exciting, depending on what stage you are in your career, I would say.
Theo Hicks: Sure. Adrian, where can the Best Ever listeners learn more about you and get in contact with you?
Adrian Pannozzo: We have a website, https://www.investwithepc.com/ or shoot me an email; my email address is firstname.lastname@example.org. I’d love to hear from you, shoot me an email.
Theo Hicks: All right, Adrian. Well, thank you so much for joining us today and providing us with your best ever advice. We talked about your business plan, the BRRR strategy and how you were able to buy distressed multifamily properties with joint venture partners, and ultimately, get around an 80% return to those JVs because of the refinances.
Then the other benefits you talked about, of the debt paydown, plus a natural appreciation in the market and an ongoing cash flow, of course. We talked about how you select your JV partners and we also talked about some tips on how to retire early.
And then your best ever advice was that strong team, making sure everyone on the team brings something to the table, and these include your realtor, your contractor and your JV partners. Everyone on the team needs to be strong and needs to bring something to the table.
And then obviously, your best ever advice was also that the BRRR strategy. We heard about your best deal, where you essentially got paid 80 grand for a fourplex. So I like the way that you positioned it.
Adrian, thank you again so much for joining us. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.
Adrian Pannozzo: Thank you.
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