TGCI 203: Toronto Police Officer Retired Early after investing in real estate

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Episode 203: Toronto Police Officer Retired Early after investing in real estate

Copy of EP #18 - 2 Guests (1)

Summary

In today’s show, Pancham interviews Adrian Pannozzo – founder and co-owner of Executive Properties Inc, founder of Investors Edge Construction Management, and founder of Executive Properties Capital Inc.

Adrian was getting ready to retire after 30 years in the police force industry. What he didn’t expect was being able to retire 9 years early. How is that possible? By investing in real estate! Fast forward to today, he is now dedicated to providing everything from A to Z and letting their partners have a hands-free, hassle-free investing experience!

 

In this episode, discover how you can retire earlier than expected as he shares the benefits and freedom you can achieve in real estate investing. He’ll also share how the BRRRR strategy and joint venture partnerships have enabled him to scale up his business and his investment portfolio so don’t miss this episode!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2022-08-09 at 11.50.13 AM
Adrian Pannozzo

Tune in to this show and enjoy!

Timestamped Shownotes:

Copy of Quote #00 - 1 Guest
  • 0:44 – Pancham introduces Adrian to the show
  • 2:02 – Changing lifestyles from police officer to real estate investor
  • 11:08 – Producing infinite returns through the BRRRR strategy
  • 16:28 – On syndicating deals through joint venture partnerships
  • 18:13 – How investing gave him financial, time, and geographical freedom
  • 21:38 – On answering emails and working out to start off his day
  • 25:29 – Taking the Leap Round
  • 25:29 – Rental property as his first investment outside of Wall Street
  • 25:49 – Overcoming his fears and worries when he first invested
  • 28:37 – Unforeseen circumstances on his property investments
  • 29:34 – Why you should need to invest with a professional mentor
  • 31:27 – How you can connect and reach out to Adrian

3 Key Points:

  1. Real estate investing is a good source of income when you’re planning to retire early as the investment properties would produce monthly positive cash flow.
  2. The BRRRR strategy helps you circulate your own invested money and could help grow your own investment portfolio.
  3. The value of real estate properties could either go up or down. But it is still the safest investment as it is for the long-term and the market will come back up.

Get in Touch:

Read Full Transcript

(intro)

Welcome to the Gold Collar Investor Podcast, with your host Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host, Pancham Gupta.

 

Well, hi there. I’m Robert Helms, host of The Real Estate Guys Radio Program. If you want to have better results in your life, you got to put better ideas in your mind. You’re in the right place. You’re at the Gold Collar Investor Podcast.

 

(interview)

 

Pancham Gupta 

Welcome to the Gold Collar Investor Podcast. This is your host Pancham. I really appreciate you for tuning in today. My guest is Adrian Pannozzo on the podcast. He was a former detective with the police force in the Greater Toronto Area, also known as GTA, for 21 years and retired early in 2017, as a result of the choices he made in real estate investing. Fast forward to today, he is the founder and CEO of Executive Properties Capital, which is a real estate investing firm that provides a full-service in-house investing experience from start to finish. He built his portfolio in less than a decade, which consists of 74 investment properties ranging from 4-unit properties to 45-unit apartment buildings. This is equal into 360 units in his portfolio. Hey, Adrian, welcome to the show.

 

Adrian Pannozzo

Thank you so much for having me on your show. It’s great to be here.

 

Pancham Gupta

I see that you’re sitting in the countryside, in your cabin, somewhere up north. I see the nice sunlight there, so it must be really nice. Before we get started, are you ready to fire up my listeners, break out of Wall Street investments?

Adrian Pannozzo

Absolutely. Let’s do it.

 

Pancham Gupta

Let’s do it. Adrian, tell us about your background, how you got into this business where you are right now, and more importantly, the person behind that background.

 

Adrian Pannozzo

Yeah, for sure. My name is Adrian Pannozzo, obviously. I was a police officer. I got hired with the police department here in Canada, at a young age of 23 years old. It was probably 10 years into my career that I started thinking, okay, when I retire from the force, what am I going to do? How am I going to sustain the same lifestyle, income, given I’ll be on a pension, and I’ll have a reduced income? But yet, how can I still maybe raise that income and/or live life comfortably even though I’m on a pension. My mind shifted, and I started thinking about real estate investing — buying rental properties as such. I thought, okay, if I can buy one or two rental properties before I retire, and those properties produce monthly positive cash flow, then I can subsidize my income—even though I’ll be on a pension when I do retire—with the cash flow coming in from my one or two rental properties, potentially. I don’t have to worry that I won’t be making as much as I do as a full-time police officer.

 

So, fast forward, we decided to take the plunge and get involved in this. We started with a home equity line of credit. We borrowed. We didn’t have money in the bank. My wife and I, we didn’t have any money in the bank, but we had equity in our home. Our home had increased in value substantially. As a result of that, we were able to start with — I want to say it was around 200,000 on a line of credit. We borrowed every single piece of equity we had in our home to do this. Obviously, somewhat intimidating. But we started, give or take, around 200,000. We used that 200,000 line of credit to purchase our first three—one turned into to two, two turned into three—properties utilizing our line of credit. Things were going well. We had great tenants, great properties, so on and so forth. But we came to a plateau where the bank has basically said, “Okay. Based on your income and your wife’s income and your debt ratios, you’re no longer qualified for a traditional A tight financing, because you’re at a max.” So, we had three rentals and our primary residence. We had four mortgages on the go. Ultimately, that’s when we hit a wall. We then thought, okay — again, all along, I’m managing my three properties, my three rentals, dealing with my own tenants, doing everything while I was still a police officer. That went well.

 

Then ultimately, it wasn’t until maybe the fifth or sixth year in real estate investing, where we hit that wall and we couldn’t qualify anymore, that we started to join venture. We started to partner with like-minded investors out there. We started to partner with them and buy properties together. Long story short, that took off and went in the right direction. Essentially, it enabled me to actually retire early. Typically, a police officer puts in his 30 years, and then retires, and is on a decent pension. Because of scaling this business of real estate investing myself and my joint venture partners, I was able to retire after 21 years. I retired, essentially, left the force nine years early. It was really because of the choices I made and the investments I did in real estate that gave me that freedom to leave early.

 

Ultimately, fast forward, 10 years into real estate investing, I had accumulated enough wealth in real estate to leave the police department. After 10 years of investing in real estate, we grew our portfolio to over 70 houses that we now own in partnership with our joint venture partners, which is equivalent to about 370 doors, 370 units that we own in partnership. You know what they say? Most people overestimate what they can achieve in one year but underestimate what they can achieve in five.

 

Pancham Gupta

Correct.

 

Adrian Pannozzo

Well, if you were to ask me back 10 years ago, “did you think you’d own a real estate empire of 70 houses in 10 years,” I’d say you’re absolutely dreaming. There’s no way that that would happen. I anticipated being a police officer for my entire career, 30 years. I didn’t know I’d turn into with this happened. Then from there, obviously, we focused on the buy, renovate, refinance, and rent strategy with our properties, which is also known as the BRRRR, the acronym BRRRR. Basically, what that means is, we buy distressed properties. We renovate those properties. We force appreciation. We rent those properties, and then we hold them. We don’t sell them. We produce. Our properties produce positive monthly cash flow each and every month.

 

Our strategy enables us to dump a bunch of capital in a property. When the renovations are completed, then now we have a brand new, inside the house, brand new top to bottom. Our strategy then enables us to extract that money we put in through forcing that appreciation, refinancing the property, pulling that money back out, that capital back out, and then circulating that to another project, and another property and so on.

 

Essentially, that strategy has enabled us to grow that size of our portfolio, because we rinse and repeat capital from one property to the next, to the next, to the next. So, we now have our in-house construction company that does all our renovations. We also have our in-house property management company that takes care of all the properties. All the partners we work with, essentially, we do everything. Our companies do everything from A to Zed. They, essentially, have an experience of hands-free, hassle-free investing. They never lift a finger. They never talk to a tenant. They do zero, but reap the rewards alongside of us.

 

And here we are today. We’re just shy of 11 years now. Obviously, things have been great. The market has been great up until recent. It has allowed us to grow exponentially. Obviously, like I said, over 70 houses we own now. It’s great. So, that’s it in a nutshell if I could give you the really condensed version of my last 10 years of my life.

 

Pancham Gupta

Well, that’s pretty awesome. You mentioned you were a police officer. People who don’t know, Adrian is based out of Canada. He was in Toronto as a police officer for a very long time. Now you’re still in Toronto, like you live there?

Adrian Pannozzo

Yeah, I’m still in the GTA. I invest throughout the GTA, in the Greater Toronto Area of Canada. Our typical investments are producing anywhere between, I’d say, on the low end, 80% ROI, 80% return on investment up to 100% return on investment. Just considering after, again, that acquisition is renovated and we refinance, we’re pulling out almost if not all of that initial capital we injected into that project. And yet, we’re still cash flowing with very little money left in the deal. So, yes, it’s been great.

 

Pancham Gupta 

And all of these 70 properties that you have, they’re all based in GTA?

 

Adrian Pannozzo

Yeah.

 

Pancham Gupta

All right. To anyone listening who is from Canada, I do know listeners from that area, too. This strategy, the BRRRR strategy, that Adrian is talking about is not just — it works even in Canada, right? People who live in Canada, I know your loan structures are different than what they are in the U.S. — the interest rates and all that. In terms of like you said 80% return of capital, can you give us an example of before you actually rehab a house, when you actually go and buy your house? Let’s talk about your first house, or maybe the last one that you just did. When you buy the house, how much typically is the house worth, and how much rent it can fetch? This is also for me. I’m trying to compare it to the U.S. What kind of financing you can get on that? This is before you do BRRRR, right?

 

Adrian Pannozzo

You just had a purchase.

 

Pancham Gupta

Yeah.

 

Adrian Pannozzo

Again, we’re purchasing distressed. We’re purchasing stuff that’s 80 years old, and there hasn’t been a thing done to this house on the inside.

 

Pancham Gupta

All of the houses that you’ve done, they are of similar nature? You buy distressed. Oh, I see. Got it.

 

Adrian Pannozzo

We want to buy it low. We want to then renovate it to a very high standard and force the value of the house through those renovations. So, we’re looking for stuff. We’re looking for deals, obviously. We’re looking for stuff that needs a ton of work. That’s our bread and butter — stuff that needs a lot of renovations. So, we can force that appreciation, force the value of the house.

 

Pancham Gupta

Can you give us an example of your last deal or any deal this year? How much you bought it for, roughly?

 

Adrian Pannozzo

Can I give you on average?

 

Pancham Gupta

Yeah.

 

Adrian Pannozzo

A lot of our deals are on our website, too, that we’ve taken part in and how they’ve played out. For anybody that wants to go to our website, it’s www.investwithepc.com. But I’ll give you on average. We’re buying properties, give or take, for 650,000, 700,000. These are three- to four-unit properties. So, three to four self-contained apartments within the property, so 650,000. I’d say on average, we’re pumping in 200,000. So, you’re into it for —

 

Pancham Gupta

850?

 

Adrian Pannozzo

850

 

Pancham Gupta

Four unit, four apartments, right?

 

Adrian Pannozzo

Right. 650 with a 200. So, you’re into it for 850. Let’s call it 225, even a buffer. You’re into it for 875. Now you have a brand new, renovated, top to bottom property that has, let’s say, four units within it, four self-contained apartments. Our last refinance, we refinanced that property 1.1 million. What does that mean? Here in Canada, the banks will give you 80% loan to value on the home. So, at 1.1 million 80% loan to value, that’s 880,000. Now we have a new mortgage of 880,000. Now remember, we’re into the deal for 875. What does that mean? It’s simple math. We got all of the money we put in out, plus $5,000 which, ultimately, when you think about it, when you have an acquisition, you have this house and your down payment, your renovations, your carrying costs, your closing costs — we’ve been able to extract all that money out. Yet we still have positive cash flow. What is your rate of return? Your rate of return is infinite. Because you don’t have any money left in the deal. We’ve got it all out.

Those are the kinds of deals we take part in. Those are the kind of opportunities we are looking for day in and day out. Because our strategy and the way you circulate that money is, we have to focus on deals that we have very little to no money in on the deal, on the exit, on the refinance — which produces infinite return because you’ve got all your money out. Now you take that capital, and you rinse and repeat. Rinse and repeat. That’s how you build an empire of real estate, in my opinion. It has allowed me to, again, scale to over 70 houses by rinsing and repeating the money.

 

Pancham Gupta

Yeah, true. The example that you gave where you bought the house at 650, put in 200 eventually, refinanced at $1.1 million valuation, how much is a per unit rent in that average?

 

Adrian Pannozzo

That house is going to generate almost 6,000 gross.

 

Pancham Gupta

Per month? For all, total to all units?

 

Adrian Pannozzo

Per month, the entire property.

 

Pancham Gupta

All units. Okay.

 

Adrian Pannozzo

Let’s round it off to 6,000 a month.



Pancham Gupta

Got it. That’s pretty cool. All right. That’s awesome. Are you, at this point — Canada is different than the U.S. — do you take investor capital, or do you put in your own money? How are you doing it? Do you syndicate these deals?

 

Adrian Pannozzo

No, we entered what we call a joint venture partnership. Typically, the investors bring in the capital, most of the capital. We are executing everything from A to Zed. So, we’re finding the property. We’re running a proper analysis on the property. We are conducting all the renovations, dealing with contractors that we have to sub out something or if we’re going to permits, dealing with city officials, architects, permit processes. Then right to the very end, there were the refinance and working with the mortgage brokers. We do it all from A to Zed. The investor, essentially, can be anywhere in this world and still take part. Because, again, we do it all from A to Zed and offer that hands-free, hassle-free experience.

 

Pancham Gupta

Got it. Great. That’s a great strategy. We do the similar thing, but we do it in block pins. I’ve done the BRRRR strategy on two houses. Actually, three total. That worked out great. Definitely, something that works very well if you can manage all the things that you mentioned — the tenants, the rehab, and finding the deal, and working with city and all that. Then it’s just works out pretty awesome.

 

Adrian, this is just out of curiosity. You retired nine years sooner than what you initially had hoped for, right? 30 years you will spend in police force, and now you retired after 21 years. I’m sure your colleagues or your friends, family, everyone must be asking you questions, why did you retire? Why are you leaving? I don’t know if there’s any difference between leaving after 21 years or 30 years. Do you get cut in pension?

 

Adrian Pannozzo

I did take, obviously, a hit on my pension because I didn’t complete my 30 years. But my answer would be simple. Real estate investing gave me the financial freedom, gave me time freedom, and gave me geographical freedom. Financially, I was able to leave a decent paying job, with benefits and all that stuff. Financially, I was able to do it. Time freedom — real estate gives you time freedom. Basically, living life on your terms. Geographical freedom — I can invest in real estate. We have people on the ground headhunting for these properties for me which enables me for example, today, I’m working at the cottage. I have that geographical freedom. I don’t have to go to the office to do a job. I can do my job and analyze deals and put together great opportunities for investors anywhere in this world. Because I have people on the ground here that are headhunting these deals for me and bringing these deals to my, I guess, forefront. I then network the deals and bring them to potential joint venture partners to get involved together.

 

Pancham Gupta

Got it. My follow up there, this is more about psychology here. Given that you’ve done great and people ask you these questions, and you answer them with what you just answered here, do you see a lot of people asking you, “Can you teach me how to do this?” Do you see a lot of police officers living and doing this? Are they just happy doing what they’re doing, and they don’t want to spend time learning what you’re doing?

 

Adrian Pannozzo

I get a lot of calls. Obviously, they want to take part. I’m not a coach per se. I don’t coach or really mentor investors. I partner with investors. I bring a great opportunity, a great deal, to investors out there who are interested in investing in real estate but don’t have the time, don’t have the knowledge, don’t have the capabilities, for one reason or another, or they want to learn and partner with somebody with the kind of experience we have. Then we enter into a partnership, and we do that. As far as mentoring and coaching, we really haven’t gone that direction. It’s more so, “Hey, this is what we do. If you’re attracted to our results, I’m more than willing to talk about getting into business together,” as opposed to me mentoring you which is not what we do.

Pancham Gupta

Got it. Well, this has been great, Adrian. One last question before we move on to the next section of the show, which I call Taking the Leap Round. Do you have a morning routine that you follow? If so, what is it? Do you think that attributes to your success?

 

Adrian Pannozzo

I’m an early to bed and early to rise kind of guy. I try to get up at—I try most of the time to get up without my alarm—anywhere between 5 and 6 AM, probably closer to 5:30 in the morning. My bad habit in the morning is, I check my emails and respond to anything that’s come in overnight right away. Because I believe that no client of ours will ever go unanswered in an email or a phone call within 12 hours. You will receive a response, and that’s the level of service we pride ourselves on. It’s always returning emails, calls, texts, whatever it may be within 12 hours on a business forefront. I usually do that right away. Then from there, I head to the gym, and I have a workout. I think physical activity helps mind, helps body. Obviously, studies showed it reduces stress or it helps to relieve stress. I have a workout and really sweat it out, so to speak. From there, it really depends on the day. Am I working from the cottage? Am I working from Bahamas? Am I working from wherever the case may be? Am I going to the office? Am I meeting clients? Am I going to check out a property and check out the deal? So, it really depends. But every morning, that’s my routine — 5:30 AM, emails, work out, and then we’re off.

 

Pancham Gupta

Got it. Awesome. This has been great. We’ll be back after this message and move on to the second part of the show.

 

(commercial)



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(interview)

 

Pancham Gupta

Adrian, let’s talk about the second part of the show, which is Taking the Leap Round. I ask these four questions to every guest on my show. My first question for you is, when was the first time you invested outside of Wall Street? Was it that first house you bought?

 

Adrian Pannozzo

Yeah, that would have been my answer. It would be 11 years ago, just shy of 11 years ago, the very first rental property we bought while I was still a police officer.

 

Pancham Gupta

Got it. Did you have any fears that you had to overcome when you bought that?

 

Adrian Pannozzo

I did, obviously. Like I mentioned, we started with a line of credit. So, I leveraged everything I had in my home. That’s the only money we had; it was the equity in my home. I leveraged it all to get started. Being my first rodeo, obviously, it is a little bit stressful for sure. But it worked out. You know what they say. You can’t move forward if you don’t do anything different in your life, right?

 

Pancham Gupta

Yeah, exactly.

 

Adrian Pannozzo

If I stayed as being a police officer and nothing more, nothing less, I’d still be a police officer today. I’d still only have probably one house today. Maybe it would be paid for, maybe it wouldn’t. But I wouldn’t have the lifestyle that I have right now and the freedom I have right now.

 

Pancham Gupta

Let me ask you this, which I should have asked you in the beginning when you explained your story. You got HELOC and took out all this money, right? It’s a pretty bold move. How did you get attracted towards real estate? What was it that told you eventually, “Oh, you know what? Let me just take out this money and buy a house?”

 

Adrian Pannozzo

Well, I did a lot of research and reading. I spoke to other people. I was contemplating. Again, my mindset was, I need to create some kind of secondary income, because I want to live the same lifestyle when I retire as I’m doing today when I was a cop. I wanted some secondary income. I wanted to invest in something. For me, real estate is one of the safest. In my opinion, it’s one of the safest places to put your money. Because real estate goes in waves. It goes up, it comes down, plateaus, up, down, plateaus, and so on.

 

At the end of the day, even if the market takes a bit of a dip, we hold our properties long-term. We don’t flip them. Like I say to all our investors, we ride the wave. We ride the wave until the market comes back up. We still cash flow. The tenants still pay their rent. You’ll always have that bricks and mortar. If I invest in the stock market and that stock goes belly up, then it’s gone. It’s gone. But with real estate, even if the market takes a dip, no problem. Ride the wave. You still have the house. You still have the house. The house ain’t going anywhere. You still have cashflow. Tenants are still paying down your principal on your mortgage even if the markets down $50,000. No problem. I hold properties for 15, 20 years. The market will come back up.

 

Pancham Gupta

Yeah, exactly. Cool. My third question for you is, can you share with us one investment that did not go as expected?

 

Adrian Pannozzo

Last year, we had a property that we thought we would have all the capital out. We ended up leaving 25,000 in the property. Not the end of the world. It was still 75% return on investment, which not too many investment plays out there. I’m going to give you 75%, 80%, 90% return. That was the only one. We encountered additional costs in renovations that were unforeseen. But we still have that property today. It’s doing well. We refinanced it again, and we’ve pulled out the additional income. Overall, it was a bit of a blip in the radar, so to speak, but we still came out very, very nicely.




Pancham Gupta

Awesome. Great. My last question for you Adrian is, what one piece of advice would you give to someone who’s thinking of investing in Main Street that is outside of Wall Street in hard assets?

 

Adrian Pannozzo

Obviously, I’m a fan favorite of real estate investing. I am such a believer and supporter of it. The only advice — it could definitely change your life. It definitely changed my life for the better that is. My advice would be, if you’re planning on getting involved in real estate investing and whatnot for maybe the first project you do, maybe the second purchase, or maybe just the first buy you do, do your research, partner with a professional. If not, hire yourself a mentor. Pay the money. Hire yourself a coach—someone who’s experienced, who’s been in the trenches, who knows the market, who’s been in the trenches, good and bad—to help you through that. Because the last thing you want to do is decide to make that investment and then guess at everything, make a pile of mistakes that are going to cost you money and time, and really, maybe leave you with a sour taste in your mouth.

 

Real estate investing in my book is number one. Hire yourself a professional to help you, or partner with you for that matter so you can avoid making all the mistakes. Because I made mistakes. I made mistakes when I started. I never had a mentor or coach. It took me, like I said, 10 years to build what I built. Now, who knows? If I did hire a partner, or a mentor, or a coach when I started, maybe I could have accelerated that, and it would have only taken me six years or saved me from making all the mistakes I made. But I learned from my mistakes, so I’m not overly regretful about them. But that would be my answer.

 

Pancham Gupta

Got it. Great. Thank you, Adrian. How can listeners connect with you if they want to reach out and find out more on what you’re doing?




Adrian Pannozzo

Yeah, for sure. I mentioned our website www.investwithepc.com or shoot me an email, adrian@investwithepc.com. Shoot me an email. Like I said, I answer my emails right away. We can have a conversation and go from there.

 

Pancham Gupta

Great. Thank you, Adrian, for your time here.

 

Adrian Pannozzo

Thank you so much.

 

Pancham Gupta

Thank you for tuning in today. You got some perspective from someone who doesn’t even live in the U.S. — in Canada. They were able to replicate the same strategies, the same principles in Canada. He was able to retire nine years sooner than he had expected from the police force in Toronto area. So with that, I would sign off. If you have any questions, email them to me at p@thegoldcollarinvestor.com. Again, p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

 

(outro)

 

Thank you for listening to the Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests (1)

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