The 5 Questions Podcast
Join us as we unlock real estate and business insights, one question at a time.
The 5 Questions Podcast
Mastering Real Estate Investing with Michael Ponte: Strategies, Market Trends, and Resilience
Unlock the secrets of successful real estate investing with Michael Ponte, a veteran investor commanding a $30 million portfolio. In this episode, we promise to arm you with invaluable insights into the cyclical nature of the real estate market and the unchanging fundamentals that drive it. Michael sheds light on how to harness technology for transparent research and analysis while keeping your investment strategies straightforward to hit personal milestones like more family time. He dives into his rigorous approach to managing his vast portfolio, emphasizing the importance of thorough assessments and anticipating market shifts to safeguard your investments.
Listen as we navigate the complex landscape of real estate investing, touching on critical aspects like cash flow, economic trends, and market adaptability. We recount Michael's experiences during the 2016 Alberta recession and the COVID-19 pandemic, highlighting how staying attuned to economic trends and proactive decision-making can make or break your investment journey. We also discuss challenges like losing a longstanding property manager and the necessity of a strong, diverse investment team. Additionally, we explore current migration trends in Canada, future interest rates, and the lucrative opportunities that arise during market downturns. Throughout, Michael underscores the importance of persistence, continuous learning, and building a robust network, offering a wealth of knowledge for both new and seasoned investors.
For me. You know I've got a big portfolio in Alberta, the one of the worst recessions that they've had and it's not even going to come up in most Canadians radar.
Speaker 2:Welcome to the five questions podcast, where we unlock real estate and business insights one question at a time. Welcome to the show, everybody. Welcome to the 5 Questions podcast On today's show. I'm really excited about this guest. He's been investing for over 20 years, manages a portfolio of over $30 million and is the founder of Savvy Investor Learning Platform. Welcome, michael Ponte. Michael, thank you so much for being on the show with us today.
Speaker 1:Wow, what a great intro. Thank you for that, mario. It's my pleasure, really excited for you with this podcast and honored to be part of it, so thank you for inviting me to be part of this.
Speaker 2:Michael, the way the podcast works is really simple Five questions about real estate and business and we get straight to the point. You ready. I'm a little scared, but sure. All right, let's get started. You have a lot of experience. As I mentioned, you've been investing for over 20 years in real estate. How do you see the industry, or how have you seen the industry evolve and how have you adapted to these changes?
Speaker 1:That's a great question right off the bat with a good one. So evolved? Well, I think the first and foremost, has it evolved? Sure, it has probably a little bit from a technology side, but this one might be a little bit of a surprise for your listeners. I actually don't think it's really evolved that much.
Speaker 1:What's really been very clear to me is how cyclical the business is, is the real estate cycle, and how the real estate market actually tends to ebb and flow. For me, doing it as long as I have, it's become much more pronounced to me. So for individuals that are in the real estate investing space, that are relatively new for the last three, four, five years, I could totally understand how they say that things have evolved from being at an extremely active market you know, prices appreciating to maybe not so much, but it's not really an evolution as it is just a cycle. And so for me, doing this, for as long as I have and I've ridden a few cycles before the real estate market really hasn't changed. There's the same buyers, there's sellers, there's balanced markets, there's ups and downs. So from that, from my perspective, I don't think it really has changed too much. The premise of the business itself has stayed, always kind of stayed the same.
Speaker 1:But where maybe some of the evolution has changed is maybe like in the technological side of things. You know there's new technology, there's much more visibility, where in the past we were so dependent on realtors' information, where now it's really in the you know blink of an eye, you know quick, quick click, click of the mouse and we've got a plethora of information. So, even though I believe there's not a lot of evolution, maybe part of the evolution that I'm seeing is much more transparency, visibility and, I think, even more of an educational component of that as well because of technology. So how have I adapted? Is I started to use a lot of that technology to help kind of support clarity, clarity to my investment strategy, making sure things are working, research and analysis.
Speaker 1:But in the real estate market itself, I don't think it's really changed too much. To be honest with you. We still have the same buyers, same sellers. There's hot markets, there's down markets. Some markets are hot, some markets are not, but that's what's really been recognized. For me is that real estate is a very cyclical business, for sure.
Speaker 2:I agree with you 100%. I mean the technology, the access of information is much more easier now than it was before. But I guess maybe the adaptation part is knowing how to adapt where the market is on a high versus when it's on a down, and that's where you probably adapt yourself.
Speaker 1:You know, not as a yeah, I kind of agree with that, but I think, unfortunately for most investors, they don't take the time to actually do their assessment and analysis, and that's the unfortunate part. There was always detail, there was always information. It may just not be at the click of a mouse. There was always information that was available and I wish I could say that most investors take the time to do their analysis and due diligence and pay close attention to us. But unfortunately I don't think that's the case. But in this situation here, that's how people should be evolving. If there was an evolution, it's taking the time to actually do assessment and analysis.
Speaker 1:Look at what's going on right now in the market Like there's people struggling right now. People got over leveraged. That didn't necessarily need to be the case. In some cases and people may disagree with me as it's like well, it's because of interest rates and inflation. There was a lot of recognition or a lot of signs in advance of a lot of this stuff happening. So you have to be a little bit more forward looking in regards to some of the challenges that were in. Uh, that were coming up front, uh, coming upon us Right, so right.
Speaker 2:Well, that brings us to our second question. Um, so you have a lot of years of experience and now you manage a portfolio of over $30 million. Can you share with us some insights of your strategies of managing a portfolio and keep the growth going for a significant portfolio like yours?
Speaker 1:Yeah, that's a good question actually, and I think for me, my investment strategy was keeping things simple, stupid. To be honest with you, it was really what it is, and so, for most individuals, get clear with what your objectives are. What are you striving for? And for me, it was about getting time back in my life, spending more time with my kids and my family, and so for me, I wanted to make sure that my portfolio was keeping it relatively simple, relatively easy to manage, to support my goal, which is my time, and so there's some big things that I've learned over the years, but it's helped me during a lot of the cyclical times in the real estate market, and the first thing that I learned from the very beginning is that you make your money on the buy and a lot of people may disagree with me, and that's totally fine, but I'll tell you, it's provided me a great cushion when times really were challenging, and if you buy right from the very very beginning, it helps address the ebbs and flows that tend to happen in the real estate market. When the market's kind of like up here and you buy here, you've got yourself a little bit of a cushion to kind of protect yourself, if you know what I'm saying. So, if the market starts to decline, it takes a little bit of. You've got a little bit of a cushion just to help.
Speaker 1:Secondly, as part of our investment strategies, we've always bought with cashflow, always. It's always been the case. And have I missed opportunities? Like I'm based in Vancouver, mario, as you're well aware? Yeah, I did. I missed missed opportunities of appreciation. But who? That's all speculation play.
Speaker 1:And the one thing I've always believed in is, when you're buying real estate, you're buying a business, and nobody would buy a business that loses his money every single month, and that's something that has always been instilled in my brain and I'm like I don't want to buy a business that loses money. It doesn't make any sense. So buy properties that have good cash flow so then, at the end of the day, it's can weather any specific storm that's happening. Look at some of the challenges right now. Yeah, is my cash flow the same as it was two years ago? No, absolutely not, but I'm still cash flowing.
Speaker 1:I'm not putting, I'm not feeding the machine, if you understand what I'm saying. You're not drowning yet I'm not drowning. And then to add you know, to add some more aspects to what you're highlighting is how we've managed this. It was kind of part of our earlier discussion is stay very close to the economic trends that are happening to help make some quick decisions, like for me being very cognizant of what's going on in the economy, in the market, in rent regulations and government policies has helped me kind of deal with a lot of the challenges that happen that happens every single day proactively study the market, proactively studying the market and being proactive and making some quick decisions right.
Speaker 1:So for me you know I've got a big portfolio in Alberta. The one of the worst recessions that they've had and it's not even gonna come up in most Canadians' radar is 2016, horrible. It was probably one of the worst recessions that we had to deal with in Alberta Absolutely god-awful, right. But a year to two years prior to that, there was some signs, and so we had to assess in our company and say turbulent times is upon us, and so for us, we made some decisions we're going to sell this property, we're going to hold this property. What are we going to do? We're going to refinance this property and just kind of hunker down because the storm is coming, and that's, for me, is how we've kind of best manage this is.
Speaker 1:We didn't really get into position of over leveraging. We've always wanted to secure the capital that we've had invested in this deal. We wanted to protect our money partners also included with this. But the reasons why people work with me is because I'm staying close to the marketplace, and that's the reason why. So that's how we've been able to have success With all the turbulence and challenges and I'm not discounting some of the challenges people are dealing with right now. For me I'm sleeping well at night. I don't really have the same issues that most people have, thank God, very fortunate. I wish I could say it was because of my sophistication. Part of that is also being lucky, but I think part the biggest thing is because of the way our strategy is. It's helped kind of cover a lot of the challenges that are occurring right now.
Speaker 2:Well, talking about struggles, it brings us to our third question Managing a big portfolio. I'm sure you go through some challenges. Can you maybe tell our audience maybe one or two challenges that you faced in your investor career and how did you overcome them? Because that's what we want to learn. Yes, everybody goes through problems, but how do you overcome those problems? Want to learn yes, everybody goes through problems, but how do you overcome those problems?
Speaker 1:Such a good question and you know what. We could be here for about a couple of years. To be honest with you, with all the challenges and obstacles I've had to face right, and maybe I'll just talk to it from more of a common theme and I think the biggest obstacle I have to face and every investor has to face, no matter what is change Just what it is has to face, no matter what is change just what it is it's change of the market, change of your investment team. It's just dealing with uncertainty of what's happening, of the market. And so how do you adjust? And sometimes you are kind of adjusting and changing on the fly. Okay, so here's here's. Here's one that just happened this week long standing property manager that I've been working with for years is no longer going to be a property manager. I got that announcement on Tuesday. Okay, so that's a change. It's just like crap. That's a big change.
Speaker 2:That's a big change. You weren't expecting that.
Speaker 1:But this is not the first time I've had to deal with this and so how I've had to kind of address this. So this example here is experience, and so been through this before. Again, it's not going to be a big issue. We've expanded and built out our investment team. If I was so dependent on just one individual, that would have been a real problem, but because I've got a connection of multitude of different people, it's not gonna be such a big problem. In addition, I've also got multitude of those same individuals, like property managers and realtors and lawyers. So if one's no longer working out, I can always move to the next person as well. But when I first got started, I was dependent on one person, and when that one person was gone, chaos occurred.
Speaker 2:Right, but yeah, yeah having the possibility to shift in a you know, a split second. That's the important thing.
Speaker 1:Correct and then, at the same time, just changing of the market. You know when things are changing like you know, all of a sudden you're like, wow, look at all this cash flow, look at all this wonderful stuff. Then COVID hits Boom, just like that. How do I adjust Right? And that's part of the learning experience and you know this. This dealing with challenges and obstacles and I know a lot of people are dealing with this right now and and and certainty, you know, probably become a part of the discussion later on it's about just staying persistent. Those challenges back then and still today makes me a better investor and it's learning from those specific things. So I guess for everybody you asked how do I do this and what were some of the biggest challenges?
Speaker 1:Change is always the biggest challenge. It really is, and it can be in the markets, it can be in your team, and so it's always about better preparing and always being prepared for situations to happen. So, as I shared with you, with my property manager, it's not such a big issue because we're already planning for that. It's already in place just in case. What if the real estate market changes tomorrow? Do you have reserve funds? Do you have cash flow? Are you able to sustain a downturn? And if the answer is no, then these are some of the things that you want to be a little bit forward looking and dealing with obstacles before they actually happen.
Speaker 2:Aidan McCullen talking about adjustments. When you look ahead, which is our question number four already, wow, already it's a, it's a fast podcast, super fast yeah, straight to the point. Um, so, when you look ahead the trends that you foresee in the real estate markets, the real estate space, how should investor prepare for these changes?
Speaker 1:changes, or just future, the changes like real estate market yeah, you know, like's we were talking about.
Speaker 2:There's always new, new trends or new. You know the market's going to go up or down, or so how can? We talked a little bit on it, but it wasn't my official question, so now you, we have to go over it. How can an investor prepare for these changes? I know we talked about, you know, having multiple team members. If one leaves, then you're not stuck because you have two or three more in your back pocket. But else than that, what can investors look for to prepare themselves?
Speaker 1:Yeah, that's a great question and I think it's kind of a common theme that we're seeing in this part of this discussion is just stay ahead of the curve of what's happening in the economy and start to kind of predict. You know what is? Look at your crystal ball. Everybody can have their own crystal ball. Mario has a crystal ball, Mike Ponte has a crystal ball, and if we really think this thing through a little bit, we can almost envision what the opportunities or challenges are going to be coming ahead. So let's call a spade a spade right now.
Speaker 1:So some of the issues that we're seeing right now is we're seeing migration moving from one province to another. You know, one of the hottest provinces right now is Alberta, because of affordability. So if that's the case and people are moving from like Vancouver and Toronto, what's going to happen to the rental market? You know, and we're already seeing that today. So, try to have that little bit of a forward looking or forward thinking as you're kind of going through this process. Yes, look at what economists are saying, Make sure you're engaging with your fellow community as well, and so I think what investors could do right now is be aware, keep your finger on the pulse constantly of what's happening. In addition, if the question is, where do I think the market is going to go, I believe interest rates will come back down in the next year or two years. I'm expecting that to happen, Okay.
Speaker 1:With that being said, there'll be more demand for buyers. There's a lot of pent up demand. In addition, there is also a lot of motivated sellers right now. Okay, People were begging for this not that long ago, that you know what. There's a breather in the market. I don't have to go over asking price. I can actually put conditions on a purchase. What a concept, right? And there's motivated sellers to boot. Well, to me, that all sounds like opportunities to be very, very honest, right? So if I was an investor which I am, it's all about being prepared Start to not, you know, just because the market's in a downturn. That's actually when the opportunities present themselves to be honest, right?
Speaker 2:And it's like do not get comfortable with your investments. Be always ready to make a change, make a shift If the opportunity presents itself. 100%.
Speaker 1:You know, sometimes the opportunity is there, even in a down market, and so right now there's lots of is there, even in a down market, and so right now there's lots of opportunities out there in every single market. You just got to be very open and a little bit brave in some cases to go and jump at it. It's just got to make sense, and part of our strategy is buying properties below market value just to protect ourselves cash flow. It will provide support for you in the short term and also in the long term.
Speaker 2:Our fifth question is here. Michael, you're the founder of the Savvy Investor Learning Platform for real estate. You see a lot of students, a lot of people learning real estate. Now we all want to be successful. What are some common traits, or maybe actions, that you observed from some of your students that were successful compared to others that maybe were not? Because we want to follow the ones that are successful, right. So what are the common traits that you saw in some of your students that succeed?
Speaker 1:Yeah, that's a great question and there's lots, but there's just one keyword that keeps popping up into my head as you're asking me that, and this is the answer. It's actually not a lot of common traits, it's one, and it's persistence. That's really what it is Is they just keep pushing forward. You know, when things are bad they keep pushing forward. They just get much more. They just become much more entrenched to what they're doing this for. They want this bad, they want. Whatever their objective is bad, and nothing is going to stop them to achieve what they're trying to strive for.
Speaker 1:Those are the individuals that, for my students, have had the most success. They have expanded and built a great solid team strive for. Those are the individuals that are, for my students, have had the most success. They have expanded and built a great solid team. They've become very visible in the marketplace. You know. They're getting themselves recognized, getting themselves known. They're getting some communication. They're, you know, building out their brand.
Speaker 1:They're just not taking no for an answer when it comes to even capital raising. There's going to be people like it's hard to raise money right now, it's really tough, but they're not giving up. And it's so easy to give up, but they're not, because they know how bad they want this and they keep pushing forward and stay driven to accomplish what they're striving to do. In addition, they're always a continuous learner as well, to continue to push forward. So as obstacles, as challenges come up, they learn from the mistakes, they dust themselves off and they push forward. And all of my students sorry, all my students that I've seen that have had some of the biggest success. That's what's made them successful is persistence. They just will not take no for an answer. And for those of you guys that are listening to this or watching this today, it's the same thing for everybody. Everybody should be very persistent. Right now, it's so easy just to give up, especially when the chips are down, but this is what's going to make or break you as an investor in the long term.
Speaker 2:Absolutely. I don't remember who it was, but I was listening to someone and they said you know you might get 100 no's before you get your first yes. It's the truth. You keep on pushing, then you might get 90 no's and then a first yes, and then you keep on pushing and then you'll go to 80 and 70 for multiple reasons. First you get you know you get better at what you're doing but you get used to getting no's. After you got like 200 no's but you got two yeses who cares? You got two wins. Yep, you focus on the wins instead of the failures.
Speaker 1:You nailed it, buddy. That's why you're going to be successful, my friend.
Speaker 2:Well, michael, thank you so much for taking the time to be on the show with us today. Well, michael, thank you so much for taking the time to be on the show with us today. Lots, lots of knowledge from you and I hope everybody took a piece of your wisdom and take it on their journey. But thank you for being on the Five Questions podcast with us today and I hope to speak to you soon again. Perfect, appreciate it. Thanks for the opportunity. No problem, bye-bye. Thanks for tuning into the 5 Questions Podcast. If you enjoyed today's episode, don't forget to subscribe, like and hit the notification bell on our YouTube channel so you never miss an episode. Stay tuned for more insights and tips to transform your real estate and business game. See you next time.