December 20, 2022

JF3029: Self-Management Tips from a Serial Entrepreneur ft. Melanie Bajrovic

Melanie Bajrovic is an entrepreneur, real estate investor, international best-selling author, speaker, and educator. She went from being a waitress to owning multiple investment properties, became a millionaire at the age of 27, and is the author of The Wealthy Barmaid: From Minimum Wage to Millionaire


In this episode, Melanie discusses why she loves to self-manage her properties, how her Airbnb became her most profitable investment, and the net income she receives from each of her properties versus the amount of time it takes to manage them. 

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Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Melanie Bajrovic. Melanie is a returning guest; she was also on episode 1351, titled "From bartender to Millionaire Real Estate Investor Entrepreneur." Her brand is The Wealthy Barmaid. She does all kinds of stuff outside of commercial real estate investing; her portfolio does include six long-term buy and holds, two commercial properties, and an Airbnb. Melanie, can you tell us a little bit more about your background and what you're currently focused on?

Melanie Bajrovic: Sure. I started in the real estate game really young. I was 22 years old, and I had saved up all that money because I started working in the bar industry really young. My parents were immigrants. They opened a bar, so I started working at 12 in the kitchen, and then that progressed to bussing, and hostessing, waitressing, bartending... I also lived in Toronto, and I bartended there for a while, even while I was still bartending at my parents place; so I saved up a lot of money early, and I was able to buy my first house... And I just used kind of the slow method, but I saved a bunch of money, bought a house, saved up a bunch of money, bought another house... It gets harder and harder to do that and get mortgages though, the more properties you get, because they don't love to see rental income on your T-1 statement; they use 30% of your rental income, so it's not that helpful. But I've used, you know, other types of financing; I've had to do VTBs, and things like that.

Currently, as you said, I have six long-term buy and holds, which is my favorite strategy, and two commercial properties, and an Airbnb, which are kind of the latest; one commercial property, one Airbnb and another two houses since I spoke on the show last time... And I manage them; I manage them myself. The Airbnb is like -- I didn't even plan on it. This is the best part about real estate. I didn't even plan on that Airbnb to become an Airbnb. I bought it because I wanted a lake house, and it's right on the beach, it's right on the lake... And for some reason, it was like, "Oh, let's try putting this up on Airbnb", and it was the most profitable thing I've ever experienced as of yet. That one Airbnb produces $150,000 a year. It's absurd. So that was really cool, to come into that. I live there for a little while, but now it's a full-time Airbnb, learning how successful and profitable it can be.

And my goal, I guess, where I'm at, what I'm trying to do is consistently grow my portfolio. I need a retirement plan, because I've been self-employed since -- I don't know, I was doing little entrepreneurial things since I was 16 years old, so I'm not going to have a pension, I'm not banking on it, getting a job, or banking on any type of pension... Or you know, they do the -- what's that called? Especially in the States, where you guys get 401-Ks, and stuff like that.

So I look at all these properties as cashflow, number one, but number two, they're going to help me in my golden years, and I'm trying to get as much as I can monthly, and try to get it to the point that I have envisioned, where I can do whatever I want, whenever I want, and travel whenever I want, and have the money, and I love going out for dinners, and things like that. So that's really my goal.

And then I kind of technically retired in the last, I don't know, three, four years. I don't have to work. I sold my bar business. That was -- last time on your show, I was still running that business at the time, but I sold the bar business, and I still own the building, so now I have a tenant... But I'm relieved, because I hated the bar industry. I had way too much time running and managing my parents' place, and then my own place... I did it for nine years. I did very well, I had a lot of cash flow, so it was great for buying more properties, but that is offloaded right now, and then I have a few other things, because I just can't sit still... So on top of the properties, and on top of managing it all myself and whatnot, I started a construction company last year. So we've got that, and then I created and produced, and I'm still running a show, like a Las Vegas style show. It's called The Champagne Show Girls. I've always wanted to do something in the showbiz style area, and it's just a fantastic, very Las Vegas style glitz and glam, whimsical kind of journey, with aerial arts, and all this kind of stuff... And that's been super-fun; I'm really enjoying doing that. So that's kind of in a nutshell where I'm at and what has happened since the last time Joe and I spoke on this podcast.

Slocomb Reed: Awesome. Melanie, you said that long-term buy and hold is your favorite strategy. Don't tell my parents, I don't have any pension or retirement plans either. I just have long-term buy and hold real estate as well, which has worked out pretty well the last few years. But I get where you're coming from there. Your two commercial properties - what kinds of properties were those?

Melanie Bajrovic: The first one is a 20,000 square foot property. The building itself is 5,000 square feet, it sits on 20,000 square feet of land that I bought when I was 27 years old. That was in 2013, and I started my own restaurant bar in that building. It doesn't have anything upstairs, unfortunately, no other units with it... But I ran my bar out of there for nine years, like I said, and then I just sold it in 2020... Which was also hugely -- like I had a horseshoe up my ass; excuse my language... Because COVID hit, and stuff, so [unintelligible 00:07:09.04] but I helped as much as I could, and I did anything I could to help get them going, and he's never been late on rent ever. It's been two and a half years now. So that's that property in St. Catharines, the first one that you just asked me about.

Slocomb Reed: Any other commercial property?

Melanie Bajrovic: The other one is even more profitable, because it also sits on 30,000 - 40,000 square feet. The building itself is 7,000 square feet, and it has a bar restaurant on the main floor, and four units upstairs. So two one-bedrooms and two two-bedrooms. And it's just much higher rent for the main floor. And then plus I get that extra from all the upstairs tenants as well.

Slocomb Reed: Did you also buy that one to owner-operate out of the first floor? Or was it always purely rental?

Melanie Bajrovic: No, it was not vacant. The bar was there when I purchased it, and it's still there, which is amazing. But in the event that that tenant left, or that I couldn't find another great tenant, I would jump in there, because that thing's a goldmine. This guy's making so much money. It's unbelievable. I'm very happy because he's my tenant, and obviously knows what he's doing. It's very difficult to find people who really know and understand the restaurant and bar industry. So he's going on 15-20 years I think running that bar. But like I said, I'm not afraid, because I would jump right in there, because that cash flow is absurd.

Slocomb Reed: I am an apartment owner-operator primarily in Cincinnati, Ohio. I also have a multi-tenant office building. I was looking for mixed-use space to invest in myself, and I don't have any business that I could profitably run out of the first floor of the mixed-use space that you're talking about, that I can fairly well envision already. Is that the reason you felt comfortable purchasing that property, the bar restaurant on the first floor with apartments above, because you knew you could fill in that retail space?

Melanie Bajrovic: To be honest, I'm not sure if that made me want to buy it even more or not. Maybe subconsciously it did. I just saw the numbers and the rent roll, and it was a really good freakin' deal. So I bought it. And it's also in another town closer to Toronto. Their population is absurd, yet they only have three bars, a couple of banks, and a few coffee shops, yet so many people from the GTA have moved into this little town... So I can sell for example a plate of fish and chips there for 30 bucks, whereas over here I can only do it for 12.99. So everything's higher there. It appreciates faster. People pay good money to go to bars or to rent, even in the upstairs... So that's really why I bought it. It was the cash flow.

Slocomb Reed: That's interesting, Melanie... And this kind of sounds humorous, but I mean it seriously - I had never thought about how much you can sell a plate of fish and chips for as a metric for rent growth and economic growth... But that makes so much sense, and it makes sense to be investing that way when you have insider insight into that industry, and what you're saying about you'd absolutely pounce on that location yourself if you couldn't get it lucratively rented. That makes a lot of sense.

I mentioned I'm in Cincinnati. I know the parts of Cincinnati right now where that's the case, that how much you can charge for a pretty simple dinner is going to go up in some places and not going to go up and others. I'm not a restaurant and retail investor, but that's a really interesting point that you make. First of all, I neglected to mention you're based in Niagara Falls?

Melanie Bajrovic: Yes.

Slocomb Reed: Is your entire portfolio local to you? Do you self-manage?

Melanie Bajrovic: I do. I self-manage everything. It is all fairly local, within the Niagara region, not just Niagara Falls. In our region; everything that I own is here within 55 minutes of anywhere. My Airbnb that's on the lake - that takes 50 to 55 minutes, and then the commercial properties, one takes 30 minutes, the other one takes 15 minutes to get to, and then all the other houses are Niagara Falls, so they're close.

Slocomb Reed: You mentioned earlier how much you love your Airbnb... $150,000 a year net, I believe is what you were saying. And it sounds like that's because you self manage... Or at least the net income that you're pulling off of that has something to do with self-managing, because a large chunk of that would be going to a management company. I have some experience with Airbnbs; I was a super-host, 100 Plus five star reviews... I decided to get out of it because of how much of a hassle the hustle was. What is it about Airbnb that appeals to you, given how much more work it is, by comparison to long-term rentals or to spaces like your commercial and your mixed-use properties?

Melanie Bajrovic: You're asking sort of what's the advantage, or why do I do it?

Slocomb Reed: Yes. Why is it that you are self-managing an Airbnb alongside everything else?

Melanie Bajrovic: Well, because I guess you could call it that's my job. I can't sit still and do nothing, and just hire property managers for everything. I love to work, I love to hustle... I'm just hungry for more. And why I don't have anyone at the [unintelligible 00:12:40.22] even though it's a lot of work, it's a lot of talking to people, a lot of making sure they're following all the rules, and the garbage, and keeping it up to shape, and making sure that I'm keeping it clean, looking amazing... And I can send you guys some photos of it, if it's relevant for the show. But it's the money; I love cashflow. And another reason is houses in that area, especially on the water - it's appreciating, it's unreal; it's gone up 30% every year since I bought it.

Slocomb Reed: When did you buy it?

Melanie Bajrovic: I bought it in 2020. It's gone up exponentially. So that's the big one - tons of equity, tons of cash flow... And I have no problem dealing with it. People message me at 10 o'clock at night, or 11 o'clock at night, or there's no batteries in the remote the TV, I get in the car and I go if we've got to fix anything or if they deal with any problems as they go. I always try to tell people -- people have rental homes, maybe Airbnbs as well, whatever, but they treat it like a hobby, and it drives me nuts, because you can't treat it as a hobby or it's gonna pay you like a hobby. You have to be on top of things.

I know people I hear from, even my choreographer for this show - she said whenever anything's happening, or there's a leak, or whatever the case, she can't get a hold of her landlord for days. And then he's like," Yeah, I'll do it. I'll do it" and it never gets done, so they do it themselves... And that's so absurd to me. When my tenants have an issue, someone is there within 30 to 45 minutes, all the time. There's just no playing around. You can't have your tenants having no heat, or something; when the seasons change, a lot of the furnaces need a bit of upgrading, because it's been off for so long...

So yeah, I forget what your question was... I went off on a tangent there. But treating whatever type of real estate, multifamily, long-term buy and hold, short-term, Airbnbs, you've got to treat it like a job. And that's why I do what I do, because I don't want to be bored, and I want to keep going. And that Airbnb, like I said, it's the appreciation and the cashflow. Total win. So I don't mind any of the work that I have to do.

Break: [00:14:55.17] to [00:16:55.28]

Slocomb Reed: Melanie, before we dive into the last segment of the show, the lightning round that you're already familiar with... Melanie, there's another host of the best ever podcasts named Ash Patel, who has been harping on residential real estate investors for a long time that there are higher cash flows available in real estate asset classes, including and especially mixed-use, because the demand for that - there just isn't that much competition to buy buildings like your restaurant retail on the first floor and apartments above. Ash, I hope you hear this when it airs... Can you give us a point of comparison about what your returns look like between your standard long-term rental residential rentals, your commercial and mixed-use space, and then your Airbnb? Can you give us a point of comparison for your cash flows on those three?

Melanie Bajrovic: Sure. Houses are all different rents per month, but it ranges between $2,500 to $3,500 a month, plus they pay all their bills. So it's like I'm netting roughly $150,000 on the long-term buying holds. But I'm netting $150,000 on one Airbnb, as we've discussed already. So that's a huge win. And then my two commercial properties - if you're looking for numbers, if that's where we're going with this, I'm netting about $60,000 on the one that does not have units above, and about $100,000 on the one that does have the units above. So in comparison - yes, long-term buy and holds are not as profitable as commercial properties, especially mixed-use, like you've said... And I've also noticed commercial property appreciates, especially here in Canada, much quicker than single family homes do.

But I started in single family homes, I still love them... I get these families and wonderful tenants, and I treat my tenants beautifully, and they're long-term, and they take care of my home, and they add value to it... They don't even ask me to pay for certain things. One we just redid the roof on a shed, and completely painted it and made a new, beautiful balcony on that the front deck... And things like that.

So the best part, it's diversifying your portfolio to see that I'm gonna have -- when I'm 66, or whatever, I'll have 10, 20, 30, 40 whatever it's going to be, long-term buying holds; everyone's always going to need a place to live. And the rental market is also gone up huge. You can barely get in anywhere right now to get into rental. So that's like a sure thing for me, especially for retirement and cash flow, because there's just such high demand. You're going to always need people who are going to need to rent a home, who cannot afford to buy a home, who can never come up with a down payment... And that's not a very realistic situation in today's day and age. I don't know how these kids now growing up are going to ever be able to afford it, because our prices have just gone through the roof.

So that's why I love those long-term buy and holds. But then I also love the commercial, because the net cash flow is through the roof, and it appreciates a lot more... The only thing, like you said, that's a bit of a downfall is that the pool of buyers on your commercial property is a lot smaller than on residential. Not only that, but they're savvy investors, for the most part. You don't just get people like homebuyers - they don't know what the hell's going on, really. They're just signing these papers on their mortgage. All they care about is the interest rate, and that's kind of it. Whereas when you're dealing with commercial property, for the most part, they're a lot more savvy, so you can't gouge them, prices can't be ridiculous, and you've got to show great numbers and great rent roll, that kind of stuff. And then finally, the Airbnb, for the reasons I mentioned before - incredible cashflow and incredible appreciation. It's almost doubled since I purchased it two years ago... So I hope that answers your question.

Slocomb Reed: It does. And I hope Ash especially hears the part where your residential renters are improving the property while also keeping it clean and a great place to live. Melanie, I'm going to use general numbers here - between your long-term rentals, your commercial and mixed-use property and your Airbnb, they're all on a net return, they're all netting about the same for you, those three categories. Is that incorrect?

Melanie Bajrovic: Well, the long-term buy and holds are netting me about $144,000; the Airbnb $150,000. The first commercial property, $60,000, and the commercial property with tenants above is $100,000.

Slocomb Reed: So if you combine the two commercial properties, you are within $10,000 of $150,000 a year income out of those three segments of your portfolio. Rank them in order of how much of your time it takes to run them.

Melanie Bajrovic: Airbnb is definitely top; top notch. Then I'd have to say the commercial property with the tenants upstairs - I don't love one bedroom, two bedroom apartments, because for the most part, people are transitional. So they're getting a divorce, or they just broke up with somebody, they need a place, they're going to school here, or something like that, but I noticed they're very transitional. So you go through tenants a lot more, so that requires more tenant screenings, and all that kind of stuff, signing contracts, and then fixing the place up after the last person left... So there's a lot of work to be done with that.

So the Airbnb takes up most of my time; the commercial property with tenants above would be next. And then my single family homes, I suppose, even though not much happens there, but the commercial property that does not have the units upstairs is the least -- other than in the very beginning, and me helping them out, and us getting insured, and liquor license transferred, and all that kind of stuff we had to do - that's like the least amount of time I spend on that property.

Slocomb Reed: That makes a lot of sense. It's time for us to move into the lightning round. Melanie, are you ready?

Melanie Bajrovic: Okay, let's do it.

Slocomb Reed: What is the best ever book you've recently read?

Melanie Bajrovic: Awaken the Giant Within, by Tony Robbins.

Slocomb Reed: That's a great one. What is your best ever way to get back?

Melanie Bajrovic: I work with a lot of charities; you already know about my first best-selling book, The Wealthy Barmaid. I created another one... COVID was really good to me, by the way; during COVID, I wrote and published, I became another, two-time now, international best-selling author. It's called "The most awesome money book ever." It's for children and youth, teaching them everything there is about financial literacy, and I've partnered up with a lot of not for profits, in which I not only give seminars, speeches, workshops with, but I also donated all my books to them, and my online programs. I made it animated, so that it's really cool for kids, so that they don't get bored.

So that is how I've been giving back. And I'm still talking to so many others... I'm already, through the current partners that I have, that I'm dealing with 3 million people, children and youth, are reading my books and using my programs in order to --

Slocomb Reed: That's awesome.

Melanie Bajrovic: Yeah, it's really cool. In order to elevate the financial literacy, which I think is just a huge problem and I'm extremely passionate about. So I would say that's what I'm giving back. And I plan to work with a lot more NGOs, not for profits, charities along the way, down the line.

Slocomb Reed: Thus far in your real estate investing, Melanie, what is the biggest mistake you've made, and the best ever lesson that resulted from it?

Melanie Bajrovic: I don't want to say that I haven't made any mistakes, because I never really lost money on a deal... But what I could say there is, I suppose - my Airbnb, I purchased it using VTB, with the sellers. I put down a 30% deposit, it was $675,000. I got it [unintelligible 00:25:13.14] which was great. So I purchased it VTB with them, with 30% down, for one year 4%, but interest only. So had I not done interest-only, and went with a bank sooner, the mortgage would have gone down about $10,000, versus staying the exact same when I went to a conventional mortgage after that. So can we call that a mistake? I don't know. It was the only way that I could get the property. I still think it's a win; like I told you, it's appreciated so much, and it cash-flows extremely well... So there's my 10 grand mistake.

Slocomb Reed: Melanie, the lesson here - how would you have done it differently, if you go back and do it again?

Melanie Bajrovic: I guess I would have tried harder to get a conventional mortgage, perhaps by getting a long-term tenant in there, and having that in my files and in my paperwork when I went to the bank. Or I could have perhaps used cosigners. But it was a quick deal, it happened very quickly, and I was just "Alright, 4%, interest-only. It's mine. I got it." I was still happy and proud that I pulled that deal off. But yeah, like I said, I could have used a cosigner, or like a long-term renter, and had a lease in place... I suppose that's how you could avoid that.

Slocomb Reed: Molly, what is your best ever advice?

Melanie Bajrovic: When it comes to real estate, not only knowing all the laws where you are, knowing all the things you can and cannot put in your leases, I would say my biggest best advice would be "Trust, but verify." I went through problems before where I just trusted everything they said, I didn't double-check anything, until I was already $6,000 in debt with them. But Joe and I spoke about this on the previous show that I was on.

So I would say definitely for trust people, absolutely, but verify. And another one could be when people - if they don't pay their rent on the first, you need to be there on the second, with paperwork in their mailbox immediately. And unfortunately, I have some tenants right now that that's happening. They've been late a solid 12 times in the last year and a half... Which they've always luckily paid, but you've got to be on the ball, because you'll lose time if you send them the paperwork on the third, fourth, fifth, sixth, whatever; you lose time there on when you could actually take them to court in the event that they don't pay you. So that would be my two pieces of advice. I've seen people let it go and just like "Oh, they'll pay, they'll pay", and then they end --

Slocomb Reed: That's never worked out for me either.

Melanie Bajrovic: Exactly. So getting out there immediately, on the second of the month, and verify; and doing really, really stringent screening of tenants.

Slocomb Reed: Last question, Melanie - where can our listeners get in touch with you?

Melanie Bajrovic: I am on social media, my handle is @thewealthybarmaid on Facebook and on Instagram. My website, YouTube, same thing, The wealthy barmaid. Or, but it's a lot easier to spell for most people,

Slocomb Reed: Awesome. Those links are in the show notes. Melanie, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show. Please also leave us a five-star review and share this episode with a friend you know we can add value to through our conversation today. Thank you, and have a best ever day.

Melanie Bajrovic: Thank you. You have a best ever day, too.

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