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Show Summary
In this episode of the Real Estate Pros podcast, host Kristen interviews Nadine Lajoie, an international speaker, bestselling author, and real estate investor. Nadine shares her journey from being a financial planner to becoming a successful real estate investor, emphasizing the importance of tax strategies, understanding ROI, and taking actionable steps in real estate. She discusses common misconceptions in the industry, budgeting tips, and the tools she has developed to help others succeed in real estate investing.
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Investor Fuel Show Transcript:
Nadine Lajoie (00:00)
There are so many strategies. think there is like 18 strategies in real estate, but most people, just do fix and flip and buy and all. That’s what people know. And once you start to understand more about the tax lien or the tax deed or the lease option or the sandwich lease option, but it’s hard to grab everything at the same time. it’s why with my client, it’s all about how much time do you have? How much money do you have?how many people can lend you money. And from there, we choose a strategy to learn first. And after that, you learn a second strategy and a third strategy. But don’t try to learn everything at the same time. It’s kind of the bottom line.
Kristen (02:17)
Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Nadine Lajoie. She is an international speaker, number one bestselling author and real estate investor. She is a high performance coach, also known as the motorcycle racer who sings like an angel. ⁓ Thank you so much for being here, Nadine.Nadine Lajoie (02:33)
Hey, thank you so much for having me. It’s exciting for me.Kristen (02:37)
Yeah, I mean, I’m really excited to get into all of this and you also have such a full life. You’re into motorcycle racing and you have all these great analogies of how to, you know, put that into real estate. ⁓ How did you even get into real estate to begin with?Nadine Lajoie (02:50)
That’s a great question because I was a financial planner in Montreal for 20 years. when I sold my biggest tax shelter, it was a $10 million tax shelter for $1 million, completely legal, all by law and all that. I’m an actuary by trade. So I like complicated stuff. So all my rich clients, because I was in a bunch of multi-millionaire, and ⁓ one case got me like…$125,000 commission and another one 75 and 35 and 55. I’m like, how you guys made that money? So they all answer me either they bought real estate and they made their money in real estate or they kept real estate for tax strategies. So that’s why with my financial background, my actuarial science and my desire to learn, I decided when I came here in the U S in 2008,
Kristen (03:34)
andNadine Lajoie (03:46)
I went into different real estate investment classes. said, okay, now I need to learn about real estate because that’s how I will make money and I will save taxes.Kristen (03:58)
Absolutely, and I tax strategies is kind of the foundation of what you do and you have so many, you have a lot that you’ve compiled. What are some of your favorite tax strategies as you enter real estate?Nadine Lajoie (04:09)
One of the first strategies that I love is real estate has four different ⁓ aspects. And everybody look at the cash flow, right? You buy real estate, buy and hold or whatever you want cash flow, you want ROI, real return on investment, but it’s only one part of the real estate. The other three parts, that’s why with my background in finance, that’s what I focus the most. And the second one is the amortization, right?You borrow money, the other people money, the famous OPM that we all love. you have an amortization on your loan that goes down so you don’t use all your money. So that’s one of the things. The third thing is the capitalization because of the…
the way that real estate is done and you don’t pay a lot of taxes on it after all the depreciation and all that, you capitalize on your investment in your asset. And the fourth quadrant is appreciation.
Of course, we have good years, bad years, but in average in the US, I think we get pretty much steady at 3%, 4%. Some years 10, some years minus 20, but in average it’s about 3%.
I got ⁓ one of my mentors showed me one of that ⁓ Excel sheet that shows me those four quadrants, how to make 45 % with the $0 cash flow. That really brought my attention. That wasn’t one in my classes with the advanced tax strategy, advanced legal strategy at New Rouge. That’s how I started in 2010, but I already had it.
a duplex in Montreal since 2003. So it’s 22 years I’m kind of in the real estate. And if you add the real estate and the tax strategy together, even in the bad years that we are discouraged because the market is bad and all that, if you think about the other three parts of the real estate, that’s where you always make money in real estate, even if you lose in the cash flow.
Kristen (07:11)
Yeah, absolutely. And kind of on the other side, are there things that you see that people do that really gets in their own way? Are there things that people just should stop doing?Nadine Lajoie (07:23)
procrastinating, it’s one of the major thing. when I, even when I took my class, was trying to develop a network and all that. at the beginning, I got like four different teams in three different states and about like 14 deals, fix and flips in 18 months. And ⁓ of course, some of them didn’t work out well, but I kind of barely never lose money, like touch wood, even in the bad years.because when you get that network, but you realize that a lot of people, are just talk, talk, talk, and they don’t do a lot. So you kind of weed off a little bit the people who are really doer, they are making it. some, of the people, quit because they don’t take action. The paralysis analysis is what kills them. Most people in entrepreneurship and real estate, because I coach in entrepreneurship and real
And real estate, and it’s always the basis. Get a business plan, get a plan, get your dreams, but you need to take action one step at a time. And that’s where I like my motorcycle racing analogy. When you race, you are kind of in one corner at a time. Stop thinking about the finish line. What is my first step? Where do I put my knee on the ground? Where do I look?
So the one step at a time and you need to dance with your bike, to dance with the rent, to dance with real estate. You dance with the market, you adjust your strategies and that’s how you are able to survive and thrive in the real estate market, good or bad.
Kristen (09:06)
Yeah, absolutely. And do you find that people almost get overwhelmed when they try to zoom out too much because it just feels intangible?Nadine Lajoie (09:14)
Yes. And I think it’s maybe the fault of the market because everybody is thinking real estate is get rich quick. I don’t know where did they get that idea, but it’s way far from getting rich, get rich and quick. And they think, yeah, we will just do this, this, this and that like a teaching classes. Yeah. But the teaching and the reality is two different things. And that’s where the people get overwhelmed becauseKristen (09:26)
youNadine Lajoie (09:42)
There are so many strategies. think there is like 18 strategies in real estate, but most people, just do fix and flip and buy and all. That’s what people know. And once you start to understand more about the tax lien or the tax deed or the lease option or the sandwich lease option, but it’s hard to grab everything at the same time. it’s why with my client, it’s all about how much time do you have? How much money do you have?how many people can lend you money. And from there, we choose a strategy to learn first. And after that, you learn a second strategy and a third strategy. But don’t try to learn everything at the same time. It’s kind of the bottom line.
Kristen (11:03)
Definitely. Yeah, I mean you will overwhelm yourself and I mean, think you broke it down really well where you take everything piece by piece. ⁓ So I think another thing that you’re really good at is giving practical advice and giving tips so people feel comfortable to make that next step or make that jump into real estate. Calculating margin and ROI is something that a lot of people don’t really even know what it is or how to do. So what are your best tips for that?Nadine Lajoie (11:29)
Yeah, this is my favorite part because I was in finance, of course, and ⁓ I took a lot of advanced tax strategies and advanced ⁓ legal strategies and calculation and all that because everything is in the numbers. I remember the first duplex I wanted to buy. my God, it was so beautiful and I wanted it. And my mentor said, no, put that in your Excel sheet.If the numbers work, they work. they don’t, but the numbers didn’t work. But I still wanted to do it. But my mentor or my coach was telling me, no, it’s not a deal for you. And later on, really realized I really, I’m really glad I had that mentor and coach and listened to that person because the ROI and that is
There are so many complicated software out there and all that. Me, I’m a simple one page kind of girl, right? When I sold that $10 million tax strategies to that client, he said about 10 people explained to me that, but I never understood that at retirement, I will make 89 % more money with the tax free retirement account I was telling him. And my son will get $10 million to be able to buy my business.
So I’m a kind of a one page kind of girl. That’s what I did with all the real estate classes and software that I analyze. It’s too complicated. Me, I created an Excel sheet. You can analyze eight deals in two minutes. You enter your purchase price, your repairs, your rent, and maybe another number. It’s kind of a four lines. You do that and everything is calculating. And at
Of course, we all try to get 25 % ROI, but in California, it doesn’t exist. So stop looking the needle in a haystack. Is it the way you say it in English? Don’t, because I’m French, so sometimes I’m searching my expression. So that’s why the…
The ROI, so the page, you always need to know your DSCR, the debt service coverage ratio, because the bank will not lend you, or a lender, they will not lend you money if you are over 1.2 or 1.25. And now, because the margin is so low, that’s why the banks are asking, here in California, usually they’re asking 50 or 60 % cash down.
Remember like 10, 20 years ago, ⁓ you buy real estate with only 10 % cash down. It barely exists anymore because the DSCR ratio is not there. And the other number that is really important is your calculation of the total ROI. Remember when I talked to you about the four quadrant, the ROI, you can have the ROI
for your fix and flip strategy. And in my Excel sheet, you also have your ROI if you decide to keep as a buy and hold. So because we can analyze eight deals in two minutes and also that prints a package for the investor. So I kind of build that in an Excel sheet and it’s really easy to use. But when I went to get to
investors, I was saying, hey, I analyze 40 deals because it took me, I don’t know, 20 minutes to analyze 40 deals.
Here are the top five or six. Which one do you prefer? Depending if you are a buy and hold strategy or if you are ⁓ a fix and flip, but you always need your exit strategy. As you know, in real estate, you get
Plan A, Plan B, Plan C, Plan D, you always need an exit strategy so you don’t have to sell as a fire sale or your loan is recalled because now you are under the DSCR. So there are plenty of software out there. I think they are way too complicated. That’s why I created my own with my actuary class and my financial classes and all that. I was able to create that and now I’m helping clients to calculate that like really quickly.
Kristen (16:23)
Hmm.That’s incredible. That’s an incredible tool for people to have access to, especially when they’re starting out. ⁓ I know you said, you know, people expect a very high, like a 25 % return. What are some other misconceptions that you see people kind of go into the real estate market thinking in terms of margin ROI?
Nadine Lajoie (17:01)
The misconception here in California is ⁓ pretty, pretty bad. It’s like people are thinking they will buy a million dollar house and flip it for 1.5. And it’s the numbers are so thin here. another example of the number that that’s quick and easy. And I do that in my head all the time. Let’s say you got a condo for, I don’t know, 400,000 right here in California.You know the rule about the 1 % that means the rule of the 1 % is the best. It doesn’t work in California. We barely have the rule of half a percent here. But let’s say you buy in Indiana or whatever, the rule of 1%, if you buy something at 400,000, you need about $4,000 in rent. Here for $400,000 condo,
you will have probably 2000 in rent, maybe 2300, maybe 24. So it’s kind of an easy calculation. when you get, you’ll probably like me, you get bombarded every day by deals, deals, deals, deals. But when you really look at it and you put it in the Excel sheet, they are no deal. But once you get used to that rule of 1%,
you kind of know, hey, if I’m able to, let’s say you buy a 10 plex and it’s $2,000 per unit, so now you are at 20,000. So that means you can buy it at 2 million, maybe 4 million at the max. So you see it’s easy to have a little bit of ballpark, I would say, in your head to say, oh yeah, it’s worth my time to analyze and spend five, 10, 15.
minute two hours to do my due diligence or it doesn’t work my time at all.
Kristen (18:54)
Well, I mean, I think you broke that down really well for people. And I agree. think that that’s something people have a hard time wrapping their head around. When you talk about these deals with a small margin or maybe a micro flip, what are your best strategies for saving on the budget?Nadine Lajoie (19:12)
This is a great question and that’s what I love the most because as I said, I learned a lot. So I learned how to do epoxy because a couple of investors and mentors, told me, Nadine, you need to learn how to do epoxy. You will save $10,000, $20,000 on your fix, fix and flip on the kitchen countertop or the floor. Or lately I just did a full bathtub with bedrocks and wall.on the spot like a vertical wall epoxy. So that’s one thing because it costs maybe four or five thousand dollars instead of twenty. Doing a countertop for a full kitchen might cost I don’t know five hundred dollars in material plus my time. So this is one thing. The other thing too is there are too many fix and flips. There fix and flippers. are too many constriction people. There is too much competition.
Everybody is doing white and gray or white and beige and it’s just boring. Like me, I’m a little bit more extravagant. So I kind of create a little bit my signature here in California because when I put something on the market, some of the realtor that we had discussion before, we made a deal before, they call me directly. They say, Hey, is it yours? Because I do an accent wall like a red or blue, you know, like
makes make your ⁓ your listing stand out right i always choose also the the worst ⁓ the worst wall right with plenty of holes and you need to patch and there are not a lot of people who are good patcher and they can send and it it takes two three four five days and and coats and and drying so time is money right
If I have to fix a wall and it takes five days with the drying time and the sanding and the coating and the putty and all that, it takes a lot of my money from my pocket. So I take the worst wall and I have two different ⁓ 3D wallpaper that I discovered about them on Amazon. I tested a few at the beginning. They were not nice, but now I found two nice ones and I save a lot of time because I can do my
wallpaper by myself in one afternoon instead of waiting five days for handyman to do my my drywall in my putty. So just little details like that that makes a big difference. Fixtures, right? You can buy nice fixtures for 45 bucks, 50 bucks. You can buy a nice sink like a double sink at I don’t know 249 bucks with the faucet that’s 69 bucks. So I’m about 300 and I have
brand new sink with my epoxy that cost me less than a thousand bucks. Of course I need to pay somebody to do a lot of things that I don’t want to do or I’m not able to do but I learned to do my backsplash myself, my wallpaper, my accent wall. I’m really good at painting, doing the cuts because nobody can cut the paint. So instead of hiring somebody, a painter at 60 bucks an hour, I learned how to do my own cuts and I do it myself.
And I like it because it’s physical, but at the same time, it’s kind of taking my inspiration and my creativity side of my brain. always like to work with two sides of the brain. And that’s what I encourage people because if you hire everybody for every little single thing, your flip will cost you 50, 60 grand when if I do it, it will cost me 20.
So now I’m a good competitor because I know they will fix it for 60. I can fix it for 20, 25. I fixed a duplex for 37 in California when the plywood was 45 bucks a four by eight. So people were really impressed and the result is good because it’s different and it has some character, some boldness in it. And it’s really not just a cookie cutter kind of deal. That’s what I like.
Kristen (23:35)
Amazing. Wow. You have so many great tips for that. think, I mean, it’s very obvious why you’re such a great coach and mentor for people. Well, this is, I mean, you’ve given us a lot to work with here. Like tell everyone where to find you, how to work with you and how to access all of the tools you develop.Nadine Lajoie (23:53)
Yes, I created a website years ago, but it’s still up to date on how to calculate your ROI, how to, I even have an example, how to make 200 % ROI with zero money. Like it’s a sandwich lease option strategy. So I explained a few different strategies on that and also the out of state. And now California is really tight and my next deal probably will be in Florida or some somewhere else.I was able to do a few deals in the last couple of years, but this year I was not able to find anything. So how to diversify and how to adjust your strategy for what you need. And my website is winningwithnadine.com. I have a nice one hour free coaching there. And I’ll also talk a little bit about some stack strategies that can save you between 92 to 99 % of capital gain without the 1031 exchange, because most of the time,
Lately the 1031 exchange is too hard in California. There is too much competition. So you need to spread out a little bit and get other strategies to make you save taxes on your capital gains.
Kristen (25:05)
Incredible! Well, thank you so much for being here, Nadine.Nadine Lajoie (25:09)
Thank you so much for having me and see you soon.Kristen (25:13)
Yes, thank you everybody for listening. I hope you got a lot of great tips. ⁓ I think Nadine has a lot to offer, so definitely check out her website, check out the tools she has and those tax strategies as well. And we will see you back next time. Bye.
