They'll probably kill us for calling them superheroes (figuratively speaking of course!).
They're very modest.
But let us explain why we think so highly of them...
We've known Gino and Matt for about four years or so.
And we'll never forget when we first met them.
They didn't talk that much, instead, they listened rather intently to what we had to say ... and then just got started.
Literally, they listened, ask a few questions and then just jumped in.
Which is just plain shocking.
Most people, think, analyze and "mull over" things for much too long.
Money, after all, is attracted to speed.
These two just made a decision to begin.
Gino has mentioned to us that they just "followed the system" that we had put in front of them.
But there's more to it than that.
This father and son team have a natural ability to get things done.
They hurdle over problems and deal with stress like Superman squishing a peanut.
We have the utmost respect for them.
And are grateful to have crossed paths with these two Canadian Superheroes.
Canadian Real Estate Wealth Magazine profiled them in this month's issue and has kindly given us permission to share the article here.
(We're waiting on the high-resolution images - the ones below are a little blurry but you can't make out the detail you need).
On to the the article....
Gino and Matt Spada adopted a unique strategy to build their property portfolio, by offering many of their tenants the option to buy each home down the road. With 12 properties valued at nearly $3 million and a five-figure monthly rental income, it's clearly paying off.
Sarah Megginson reports...
Father and son investing team Gino and Matt Spada have 12 properties in their portfolio, including eight “rent to own” investments and four standard residential rentals.
For Gino, his goal has always been to secure his financial freedom in retirement.
“I had several established, self-sustaining businesses, but I realized that these were only one part of creating long-term wealth; the other part was in owning real estate,” he explains.
“Also, to provide for a comfortable retirement, I wanted to create as much monthly cash flow as possible, which I know real estate could provide."
So, he decided to pair up with his son so that they could invest in property together, with a view to creating long-term wealth. Gino was already a successful property investor and Matt had read a number of books on investing and could see opportunities to create profit through real estate.
“I had seen my father start in real estate with commercial properties and several residential flips, and he began to do well out of it. I realized that it was a way I could achieve financial security for my future.” He says.
“I’ve always wanted to be able to have control over what I could do in my future, and I knew real estate could provide that.”
In 2008, the pair began combing local real estate listing in their hometown of Fort Erie, Ontario, and then jumped straight in, buying a single-family dwelling. They paid $81,000 for the five-bedroom, two-bathroom home. Today, it’s worth $125,000 and rents for $900 per month.
“That was the first of four properties that we bought in Fort Erie, and for all of those four houses in our hometown, we’ve used a buy and hold strategy,” Matt explains.
“We purchased all of these houses under market value and we rent them to regular tenants. They provide very good cash flow for our portfolio, but we’ve found that the appreciation in this area cannot justify a ‘rent to own’ type of model. But at the end of the day, we buy nice homes in nice areas. This way, we will always have demand for our properties."
Success with the ‘rent to own’ model
Outside of their hometown, however, the pair has found the ‘rent to own’ model to be very profitable. After settling their first property purchase, they immediately cast a wider net for their follow-up buy, looking northwest to the town of Stoney Creek. Here, they ramped up their budget and handed over $241,000 for a three-bedroom, two-bathroom home.
“Our strategy is primarily to use the ‘rent to own’ as it typically gets a higher than average rent, which yields us a higher monthly cash flow,” Gino explains. “But, we always purchased with a long-term strategy in mind. There is no guarantee that the tenants will buy the property, so we treat every property as if we have to keep it forever.”
This means each property has to stack up on its own merits, so that it remains attractive to others would-be purchasers if the tenant doesn’t follow through with the deal.
“Our goal is to find properties in areas that are close to major transportation routes, schools and other amenities. They also need to be in cities with a growing population, job growth and higher than average monthly incomes,” Matt says.
“We always go for single-detached homes, which are considered to be starter homes in their respective markets, as we believe that the starter home market consistently has the highest demand.”
Replicating the winning strategy
It was through the investment club Rock Star Real Estate’s Inner Circle that Matt and Gino were first introduced to the ‘rent-to-own’ strategy in 2008, and they haven’t looked back since.
“Rock Star taught us that the system works at its best when you buy houses in the starter home market in appreciating areas, with all of those features I’ve mentioned, like being close to major transportation routes, schools, and amenities, in cities with a growing population, jobs and income,” Matt says.
He points to their second property purchase on the Stoney Creek Mountain as being the investment the pair is most proud of, as it proved just how profitable their new strategy could be.
“It was the very first ‘rent-to-own’ that we did. We went through the process of buying the property, advertising and making appointments, showing the property and after only three weeks, we found a tenant-buyer who gave us $15,000 upfront option payment. That was an amazing experience,” Matt says.
“Since we purchased that property, the tenant buyers have also paved the driveway, built a fence, and put French doors in going out to the back deck that they built.”
The purchase was a winner from day one, and “proved to us that as long as we followed the system that Rock Star had taught us, everything would fall into place,” Matt adds.
Following this successful transaction, Gino and Matt continued sniffing out further opportunities to buy quality properties, with the intention of renting them out to would-be buyers.
“That first property ultimately led to us purchasing another seven ‘rent to own’ properties within a year-and-a-half,” Gino explains.
They also bought a further three properties in Fort Erie, including a double block that boasts two separate dwellings (one on the front and one on the back), bringing their combined portfolio to a neat dozen.
Dealing with tenant difficulties
With 12 properties to manage, it seems only natural that the Spadas would encounter problems with late-paying tenants and unexpected property damage, but Matt says they have not faced too many serious challenges to date.
“On one property, we had tenants move in and after three months they stopped paying their rent, due to some unfortunate circumstances,” Matt explains.
“We had to go through the entire eviction process, all the way to the sheriff coming over to the property to evict them.” The tenants were none too pleased to be unceremoniously turfed out and, as a farewell gift; they left the house in a complete mess. It took an entire weekend- and “the biggest dumpster you can get” – to completely clean the property, and a further month to attend to repairs and repaint where necessary.
“Even though it was unfortunate that this happened after only owning the property for three months, it was a great learning experience to go through the entire eviction process from start to finish,” Gino says.
“After the house was ready to rent again, we filled it with new tenants very quickly."
Matt believes their hands-on approach via their decision to act as owner-managers – which cuts out the property management middleman – has helped to secure good quality tenants who rarely cause any issues.
“We manage all of our properties ourselves because, when we’re using the ‘rent to own’ strategy, the tenants typically maintain the houses very well,” he says.
“The intention is for them to own this property one day, so they treat it as their own from day one and we always encourage them to look at it in this way.
“Our lease agreement stipulates that the tenants are responsible for a specified amount of monthly repairs as well – if anything were to come up – so we rarely get many phone calls for this sort of thing.”
Where to from here?
Their one negative tenant experience has done little to discourage Gino and Matt from continuing down their path toward property riches, and it’s clear to see why.
With a regular income stream of close to $17,000 pouring in each month and a property portfolio worth nearly $3 million, the pair could easily rest on their laurels, but they have bigger plans.
Gino also owns four commercial properties, of which three are standalone buildings that the Spadas run their own business out of.
The other is a mixed commercial/residential use space with two upper residential apartments.
“Currently, our annual return on investments is 52%. Going forward, we’d like to continue to grow our combined portfolio and increase our monthly cash flow, while building more equity in our properties,” Matt says.
His advice to would-be investors is to find an experienced mentor, and leverage off their knowledge and skills until you are qualified to take the reins yourself.”
“Have a team which you can rely on gives you the confidence to move forward, knowing you have access to people who have been where you want to go and can help you with any situation that may come up, “ he says.
“Being part of a like-minded people has really been a big advantage. Our membership to Rock Star Real Estate’s Inner Circle has been invaluable and we wouldn’t have been able to build the portfolio we did, in the amount of time we did, without them.”
There was a day where we were able to teach Gino and Matt a thing or two about investing.
At this point, we think they may be able to teach us a few things.
We are SO EXTREMELY GRATEFUL to get to work with amazing people like this dynamic duo and many, many others.
Thanks to all of you we stay motivated and excited about what we're doing!
Until next time ... Your Life! Your Terms!