"Inspired to Invest" Podcast

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• Serena Holmes • Episode 72

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What does it take to break free from the constraints of living paycheck to paycheck, and transform into a successful real estate investor?

Welcome back to ep72 of "Inspired To Invest" with Adriana Ostapenko.

To watch rather than listen, click here.

Adriana, the founder of Ace Properties, joins us to share her remarkable story of tenacity and growth. From her early days as a pastor facing financial insecurities to building a diversified portfolio of multifamily properties, Adriana's journey is a testament to the power of persistence and education.

Throughout our conversation, she opens up about the strategic decisions that fueled her transition from single townhouse renovations to more scalable commercial properties, all while emphasizing the crucial role of leveraging industry connections.

In a candid discussion, Adriana reveals the challenges and triumphs faced along the way, including navigating the complexities of financing and assembling a reliable team. With a keen focus on building systems and seeking continuous mentorship, she explains how she overcame obstacles like CMHC's regulatory changes and property management hurdles.

Her insights on structuring a growing portfolio through holding corporations offer listeners a glimpse into managing real estate as a business. Whether you're an aspiring investor or a seasoned professional, Adriana's story is bound to inspire and provide valuable lessons for anyone on a similar path.

To connect with Adriana, go to @adriana.ostapenko or https://ace-properties.com/ on line. 

Thank you to Milena Cardinal from Cardinal Law for supporting this month’s episodes. To find out more about how her legal services can help you build your business and protect your assets, go to https://cardinallaw.ca.

“Inspired to Invest” is proud to support the Beyond Success Program, a not-for-profit financial literacy program for students, launched by More To Give & MAK Investments. Find out more at @more2give.ca.

Join us again on Nov. 13 to learn how to overcome intense personal challenges to create an abundance life by investing in real estate – and yourself!

Thank you for tuning into “Inspired To Invest”, hosted by @serenaholmesrealtor & remember, "when you invest in yourself, the sky's the limit!"

And, for everything related to real estate and real estate investing, please make sure you've subscribed to @serenaholmesrealtor on YouTube & other platforms.

We also have a page dedicated to this podcast on Instagram and Facebook @inspiredtoinvestpodcast where we preview guests each week, highlight their episodes, top takeaways, tips, quotes and more.


 
 

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Speaker 1:

Welcome to the Inspire to Invest podcast, where we're sharing stories from real estate investors and how investing has changed their lives. This episode of Inspire to Invest has been brought to you by Cardinal Law. Hey everybody, welcome to Inspire to Invest. I've got Adriana Ostapenko here with me and she is the founder of Ace Properties. That's an asset management company specializing in an diversified portfolio of well-performing multifamily properties. She co-owns, alongside her husband, a construction company in the GTA and, along with her incredible team, who's currently offering more than 100 units along with a couple of development projects in New Brunswick, the majority of which are in St John. She has two children and she's passionate about helping families build wealth using real estate and sharing her story to inspire, educate and motivate others to get started on their own path as investors. She also has extensive property management experience and has had her own property management company for more than eight years. So thank you for taking time out of your busy schedule. How are you?

Speaker 2:

I'm doing really well. It's so good to see you. Thanks for having me.

Speaker 1:

No, it's so good to see you as well. So obviously you have done a lot, and not overly a long period of time, but maybe you can take us back to the beginning and talk a little bit about what life looked like before real estate and how investing came into the picture, with you in this capacity.

Speaker 2:

Yeah, thanks for the question. So my first profession in life was as a pastor in a Christian church. I was there for quite a few years. Over time, I became way more spiritual than religious and jumped into helping my husband in his construction company. So we were, you know, know, starting from scratch and operating it, um, but we were pretty much living paycheck to paycheck. We had it had taken us a minute to save uh, a minute, as in seven years, so to save a down payment for our very first home. We had purchased a townhouse in Mississauga and had moved in and uh started having babies. So I had two little ones at home. They were very tiny when my mom went through a mental health crisis issue and moved in with us.

Speaker 2:

This was a three bedroom, one bathroom townhome and I moved my son's crib out of his bedroom, put it into my daughter's crib bedroom and moved in my mom into this tiny bedroom and something hit me. I thought how am I going to do this? Um, how do I build wealth that's going to overflow from my needed family to into others around me, including my mom, because clearly we are ourselves living paycheck to paycheck here. So how do people do? How do people build wealth. That was my original why.

Speaker 2:

So I went on Google and I searched how to build wealth in real estate. But actually I searched how to build wealth and that real estate came into my point of awareness because we had started working as a contractor to a couple that were doing high end flips in real estate and my husband had called me and said you got to come see this house in real estate. And my husband had called me and said you got to come see this house it's the most beautiful house I've ever been in. And I did go see the house and I talked to the owner and she was doing these high end flips and they had been building their portfolio and making quite a bit of profits.

Speaker 2:

So I thought, huh, there is wealth in real estate. That's when, you know, I googled and found an education company that I joined as my first starting point, and education has been one of the top things that I have invested in over and over and over again, because I see the value in, you know, learning and getting coaching from people that are trained and experienced in the thing that I'm trying to do. And we started, like, honestly, from scratch, doing you know one we did our basement renovation in our townhome. I duplexed that townhouse and then we did a single family to fourplex conversion in Hamilton and then we did, did another, one, another, one, another one until we were ready to move on to bigger buildings.

Speaker 1:

So then, how did the East Coast get on your radar? Because obviously that's really where you've focused, but maybe you can talk about what attracted you and how that process has gone, since it's obviously not, you know, a hop, skip and a jump away from you being here in.

Speaker 2:

Ontario. Yeah, so our first you know 20 units doing the four classes, was here in Ontario, in Hamilton. We were there every day. I really learned every part of the process, you know, from finding the deal to underwriting it, raising capital, bringing partners in project, managing it obviously, our construction company was doing the renovations and then property managing it, refinancing and doing it again. And so I had learned the BRRRR model from experience, using our own money and partnering with others as well. And then I felt ready to scale.

Speaker 2:

But I was pretty tapped out because I was doing as I listed everything. You know, this was my full-time focus and I'm like how do I? I'm at 20 units? And I'm tapped out because I was doing as I listed everything. You know, this was my full time focus and I'm like how do I'm at 20 units and I'm tapped out? How do I scale but do less?

Speaker 2:

And my idea was, like it always is I'm like who do I know that's been in real estate for a long time, who is a more veteran real estate investor and what is it that they're doing? So I literally started calling and emailing and messaging everybody that I knew that I knew had been doing for a while and asking them I'm like what strategy do you focus on? How has your journey been Like? What would you recommend to somebody like me? And I saw this common theme in multifamily and all of them had some way or shape or not. They've landed into multifamily. And all of them had some way or shape or not they've landed into multifamily investing. And I thought, okay, if this is the path and this is where I'm going to be in 20 years, I might as well learn and get started now. And once I started looking into the multifamily space, somebody had mentioned to me that there were landlord friendly provinces in Canada.

Speaker 2:

I didn't even know that was a thing. I'm like what there's landlord friendly provinces Like, tell me more. And Alberta and New Brunswick being the top two that people told me about. And I just started to look. I'm like, okay, let me check it out. And I started checking out New Brunswick specifically, and one of the ways of doing that was just talking to other investors who are investing out there, because I wanted to learn more about the markets. And that's when I met my business partner who you know, ben, and he had been investing, had a few properties out there, but no multifamilies. We started chatting and started looking at some opportunities together and bought our very first building.

Speaker 1:

Nice. So when you look at everything that you've done up until this point, it sounds like you've obviously done. You know a little bit of everything, almost. What would you say is something that you're most proud of or you look at as your biggest success?

Speaker 2:

My biggest success is the focus that we've implemented. So, as much as I have done all the different components, it is the one strategy I haven't jumped from strategy to strategy we've done, you know, the add value strategy to properties, starting with smaller multifamily and then scaling to larger multifamily. But it is the same process. Numbers change, the zeros at the end it changes, and commercial just was so much easier than I could have ever expected. In fact, by the time I got to commercial properties I'm like, oh my god, nobody told me that it was so much easier to you know, run and acquire and scale and manage and operate than it was the residential ones that we had been doing.

Speaker 2:

So definitely led into sweet spot. I have a you know strong skill set around building businesses and building you know systems and that's really what's allowed us to stay strong, even during tough times, because we build systems around everything that we do and it does take repetition for you to build a system. So, you know, we've been doing the same model for eight years. Although, like I said, it's scaled in the number of units and it's scaled in the amount of dollars, at the end it's still the same system. So we know really well how to do what we do, and that's really allows us to stay strong in operations.

Speaker 1:

So I have two questions. So for anyone that is listening or watching that may not be familiar with the differences between commercial and residential, can you talk a little bit about why that would be easier from the standpoint of economies of scale, financing things like that, so they understand why that's more favorable, as you're scaling, compared to smaller properties?

Speaker 2:

Yeah, gladly so, the biggest thing being, or the very first thing being, financing. As you may or may not know, especially for me, like we were, we had a construction company and then I went into full time real estate. We did not have T fours, nine to five, you know, steady income.

Speaker 2:

So, every time we were to qualify for residential property or we finance the residential properties we had just finished adding value to. It was tough and we had to jump through a lot of hoops. We were with B lenders the whole time, which, by the way, I don't B lenders are underrated, I think they were. They did us really well. But you know, it was definitely difficult to get financing on the residential side. When I went, moved over to commercial nobody's asking for my T4. They did. They still want to make sure that you're financially viable but the building qualifies for the financing. So it's also very simple math. But but right by now, every property we purchase and every property we refinance, we pretty much know what we're going to get.

Speaker 2:

Because, it's a formula versus residential real estate which is very heavily based on comparables.

Speaker 1:

Are you looking at properties that are off market or are you waiting till they're on sale?

Speaker 2:

Because I was curious to see if you're approaching building owners or what that part of the strategy looks like yeah, so we have never focused ourselves on like direct to owner, although we do work with wholesalers part of when we're in acquisition mode. I spread my net as wide as I can. So I do touch base with wholesalers and we have bought properties off of wholesal. If building owners which they have approached us in the past, we'll definitely, you know, do negotiations with them, although I do like to bring a realtor in always. That's my preference. Again, I focus on what I do the best. I'm not trying to do the realtor's job and the wholesaler's job and you know I'm not trying to do all the jobs because you know I can't focus and create systems around that. We focus on acquisitions and operations and that's really our bread and butter and that's what we're good at. So I go on the MLS I'd say like most of my properties I find on MLS and then secondarily through realtors.

Speaker 2:

We built a great network of realtors in New Brunswick. Everybody kind of knows us now because we've been acquiring there over the last few years. So whenever just recently, we currently have a property on the contract right now, but just recently we thought, okay, we're ready to start acquiring again. We took a good pause because we were finishing projects and operations on some other buildings. But we're like, okay, we're ready to go again. We've given investors all their money back over the last couple of years. So everybody's like what's next, what's your next deal? So we're like, okay, let's go. You know, look for another deal. We called all the realtors when you were in the area. I'm like we're acquiring. Do you have anything upcoming? Do you have anything on the market right now?

Speaker 1:

And they're really our greatest source of leads. Now, obviously it's not always sunshine and roses. Can you talk a little bit about any challenges or obstacles that you've faced over the last eight years as you have kind of diversified and going into this new market and going into larger properties?

Speaker 2:

Yeah, lots of different challenges. I'd say like the biggest ones when we were first starting out, there was really creating the team. My business partner honestly out of you know, on sites, construction, you know supervisors he brings so much value to the table. And when we were first starting investing out there, we just like everybody else, we hired a property management firm and we had purchased this was our second building was a 24 unit building. Within six months we still were running at six to seven units vacant at all times and I'm like what the heck is going on.

Speaker 2:

There's like very, very low vacancy rate out there. What's happening. And it's so unfortunate because he's like we're just whatever they're going to tell us, like it's, you know whatever excuses they come up with. So my business partner made a decision you know what I'm just going to take over property manager. I'm going to make sure these are tenanted, and he did, and that's made a massive difference in the performance of our portfolio because that that building, the 24 unit, has never had a vacancy since. Like I mean turnovers just on a clockwork here. So being able to and this is what this is what I'm going to tell everybody that's investing out there and looking for active partners.

Speaker 2:

you're looking for an operator, okay if you're going to put your money with somebody, put your money with an operator, somebody who's full time job in business, day in and day out, is to operate your assets. Yeah, because otherwise, like, how are you ensuring performance? And this is what my business partner and I do full time. He does, you know. Again, boots on the ground, property management, I do asset management and we're full time operating these, these our portfolio, and it really allowed us to scale. Now and this is the thing, once you have the scale, we've been able to continue to build that infrastructure around what we do. So we have Venus. We have been able to continue to build that infrastructure around what we do, so we have the maintenance. We have snow and lawn we have. We've been able to continuously build on the operation space that we already have in place construction teams because we're able to have the scale to do that.

Speaker 1:

Yeah, I mean it's surprising in a sense, because you think property managers usually earn based on a percentage of the rent that comes in, so you think they would want to see full vacancy, right. But on that note, we're just going to take a really brief break for word from our sponsors and we'll be right back. I value transparency, integrity and trust. If you choose to work with me, you can be assured that business will be conducted honestly and openly. Time is of the essence in this industry, so you can expect nothing short of quick, clear communication from me. I'll keep you informed every step of the way so you feel comfortable throughout this entire process. Our homes are where we eat, sleep, relax and play. My clients' best interests are at the heart of everything I do and, with this said, my service to you doesn't end when the transaction does. As your realtor, I'll not only help you buy and sell your property, I'll also educate and support you along the way. I want to help you fulfill your goal of homeownership and become your trusted real estate resource for life. I can't wait to share my passion for real estate with you. More importantly, find you the perfect house to turn into your home. Looking to buy, sell or invest in Durham Region or Toronto, let's chat.

Speaker 1:

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Speaker 1:

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Speaker 1:

Hey everybody, welcome back to Inspired to Invest. I've got Adriana Ostapenko here from Ace Properties and she's talking about how she's scaled her portfolio from smaller single-family homes in Ontario to multifamily properties in the East Coast and we're talking about some of the challenges that she experienced with property management companies and then how they've kind of taken that over. I guess one of the things I always like to ask people is what's the craziest thing you've experienced so far as a real estate investor?

Speaker 2:

Interesting. This could go in so many directions. I'd say last year, what hit us the hardest was CMHC rule changes. That was definitely, you know, something that we never predicted or could have expected. It's interesting because, although the interest rates had a massive impact on everybody and it did on us too it was not nearly as impactful to us and how we run our business model, uh as the chc rule change.

Speaker 1:

So you know we didn't get for anyone listening. Can you explain what that is? I'm aware of it because you've seen like the changes and they kind of change back and it's like think about how many people like literally that's destroyed, and then they just went back. So maybe you can talk about that in a little more detail.

Speaker 2:

Yeah, of course, and this was one of the things that I was going to mention earlier too that that differences between residential and commercial. I mean, with commercial, again, we're talking about scale. Here there is this product, know, obviously same. You see those residential as well, but same is really, um, you know the golden goose, I call it, of commercial real estate. They do offer the best. It's an insured product, uh, that offers, you know, the best rates and the best, um, lending terms. Uh, right now we're getting, you know, quoted at 3.3 percent on on, you know, every finance, which is fantastic, so, uh, they're really the greatest.

Speaker 2:

The challenge with simhc, just like any other, you know type of jurisdiction, you know services like this, is they change their rules often, uh, and, and it's quite tough because when we, you can be starting a project, which we did on this 52 unit building project with the same HC exit in mind and following their guidelines of point systems, by the time we were, you know, about 75% completed, they changed their regulations and they were no longer allowing us to use the same systems.

Speaker 2:

It was specifically around timelines. We had followed all the points and we had achieved all the points and targets that we were supposed to achieve. However, they had changed their timeline and said okay, even though you followed everything and you, you know you've been approved for everything you're not allowed to tap into the equity for another two years. And that was was a tough call. We did not have, you know, high interest loans to pay back, but we did have quite a bit of equity partnerships that had been projected to be paid out within two years, and now we were at the danger of having to wait an additional two years, which was obviously very tough conversations to have with all of our investors. Luckily, you know, they did accept our application within the timeline that we had originally projected to our investors, and we're just about 30 to 45 days away from closing that refinance and paying everybody out plus profits, which is exciting, but it was a tough. Go there and scare for a moment.

Speaker 1:

Yeah, I mean, I think it's one thing that really surprised me that you know that they changed these things with no notice, and you'd almost think that they'd put some sort of parameters on it, like for anyone that's within this six months or that started down a certain path, because I've known of other people that had developed plans based on the energy points and stuff like that. So by changing those points, like the projects are almost not even viable anymore, right, so you think that they would give at least some sort of bandwidth, like some leeway, for people that are kind of going down this path, because it is just really really destructive not only to the active investors, of course, to the passive and stuff as well. Now, for someone that is starting down this path, what would you say is some of the best advice that you could pass along to somebody that is just starting to get their feet wet?

Speaker 2:

In real estate in general. Yeah, yeah, I'd say, get some education. You know it is, there's a lot to learn. Make sure you find coaches, mentors, that are actively today doing the things that you're wanting to do, versus. You know, sometimes people put in experience but then they change careers altogether and they're coaching and they have some experience. But you know, having a coach that's actively doing what the work and the business that you want to run, look at as. Look at real estate as a business. It is a business. I think people miss that. A lot of people think of real estate as passive income and I have not had that experience. To me, real estate is not. It's the purchasing of just a pure passive income. Obviously, there is ways to in partnership, but even that is a business of its own. They need to be managing and proactive and have systems around to minimize losses, mitigate risks and ensure highest profits.

Speaker 1:

That was actually one of the other questions that I had in regards to the portfolio. So I think you know there's a lot of talk but, like a lot of teachers will talk, about either putting a certain value of your portfolio into different corps or like, depending on the size of the property, would all have their own corp. Can you talk about your corporate structure and how you set that up and how many companies you'd have, based on the number of units that you have, and how you've gone about?

Speaker 2:

structuring that, yes, so I can definitely talk about from my experience. I'm not a lawyer or corporate lawyer in any way, but I'll tell you what has worked and what hasn't too. So the way we have it structured is we do have a holding corp that owns shares in all of our real estate corporations. Every single building has its own corporation, and I would highly recommend that to be the case.

Speaker 1:

I mean, if you are and that's just the multifamily properties or all of them.

Speaker 2:

That's the multifamily properties that we. We have majorly gotten rid of our residential portfolio. I do have a couple of properties left in our portfolio. One of them isn't a corp. One of them is in our personal name. Here's a.

Speaker 2:

If you are doing smaller properties, here's something that I learned, and I only learned that from experience. Um, a couple of years back we did sell um, two, um fourplexes that we owned and sold them for a really good price, so quite a bit profit came in. One of them was in a corporation, one of them was in our personal name, and the one that was in the corporation just paid way significantly less tax than the one that was in our personal name. So I do do see value in corporations here.

Speaker 2:

Yes, there's a cost an annual cost to it, but it's worth it, just based on that comparison alone. So, really, like, every single building is its own corporation, although the shares that I own in each building comes from one company. The one company owns the shares, and the reason for that is you want to streamline the flow of cash. One company the one company owns the shares, and the reason for that is you want to streamline the flow of cash. So the moment that I get any you know cash flow payments and or equity payments from those buildings. They flow towards the one corporation that manages those funds.

Speaker 1:

Yeah, yeah, and I think that's smart. I think that's one of the things that I've seen with companies that have been in distress, like they're blurring a lot of the lines between personal and corporate expenses. For one, you know, just having properties that are, you know, put together, it gets really sticky and makes it complicated. And then to your point about selling like, even when I had my properties as well, like when I sold them in my corp, it was very little when it came to tax, just based on, I guess, the accountants working their magic and all the different benefits that come along with corporations. Now, obviously you have done a lot in the last eight years. What would you say is next for you? And when it comes to financial freedom, like, do you feel like you've attained that? Are you still working towards it when it comes to a certain number of doors or cash flow?

Speaker 2:

Yeah, great questions. What's next? I've been doing a lot of inner work, like focusing on next levels, not only in business and money, but just enjoy and peace and happiness and presence. And you know, I do feel like real estate changed my financial life and my family's. My mom now I told you my story in the beginning. She has a full secondary source of income that comes from our investments. She, you know, invests with us in multiple deals and that's one of my ways of deciding if I'm going to move forward with a deal or not. I asked myself would I invest my mom's money in this deal? If the answer is no, then I'm not investing anybody else's money in this deal.

Speaker 2:

It's really about sustainable growth for us. We do have a couple of development projects, so development is newer to me, but I'm excited to explore fully what that looks like. We are looking all the way to build and adding that and don't. I don't really like to speak of anything unless I've put full proof of concept. So we're still in the process here, but you know, by the time we get through one or two, if it works numbers wise and logistics and operations wise, then I can see us continue to focus on developing new multi-family apartment buildings. And what was your second question?

Speaker 1:

it it was in terms of financial freedom. Like, do you feel like there's something specific that you've been working towards in terms of cash flow or number of doors, or do you feel like you've reached it already?

Speaker 2:

Yeah, I honestly feel very blessed. I have a full like I have, you know a business that provides an active income, that's, you know, supports our lifestyle, which is amazing. And then I have all the passive you know long term equity projections as well from operating the assets plus the cash flow. So we have really, really changed our financial life. I think there's always new levels, though, and again, I don't mean that in like number of doors or a specific number of cash flow, but now I can tap into a place where I'm like what else can I, how else can I expand, you know, um myself in terms of who I am, but also in terms of, like, allowing abundance in different ways and levels. So I definitely see I mean, I'm still young, my kids wouldn't think that, but I'm still young and still lots to go. So I'm definitely excited to see what else comes down the pipeline.

Speaker 1:

Yeah, no, awesome. Now, for the name of the podcast is obviously Inspire to Invest. So I always like to ask people what's a quote that motivates or inspires them?

Speaker 2:

Yeah, that's a great question. Okay, I'm gonna go baseball on you. My daughter plays softball. Don't let the fear of striking out keep you from playing the game. I think you know a lot of us get paused and paralyzed by fear. There is obviously things to leverage fear to your advantage, but don't let it keep you from getting in there, because it can be truly life changing.

Speaker 1:

Yeah, no, I love that. So for anyone that does want to get in touch with you to learn more about your opportunities, what's the best ways for them to reach you?

Speaker 2:

Yeah, social media Instagram and Facebook. It's my name Adriana Ostapenko. Feel free to reach out on there and we can connect.

Speaker 1:

Great. Well, thank you for your time today and, of course, for anyone that is watching or listening. If you've enjoyed this episode, please make sure that you like, comment and subscribe below or leave a review. And, of course, remember, when you invest in yourself, the sky's the limit, Thanks again. Thanks again to Cardinal Law for bringing you this episode of Inspired to Invest. The views represented on this podcast are for general information only and does not constitute investment or other professional advice or an offering of securities. The host and guests featured on Inspired to Invest make no representations as to the performance of any particular investment. Should you decide to make an investment, you are responsible for conducting your own review and analysis. It is recommended that you obtain independent legal, accounting and tax advice from licensed professionals.