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In this episode, real estate expert Jesse Fragale shares his journey from Toronto to the US market, exploring multifamily investments, the challenges of international property buying, and insights into current market trends and long-term strategies.
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Jesse Fragale (00:00)
Yeah, so forus, what we’ve seen on the multi-res side, at least specifically in our markets here, the rental growth has kind of come off a cliff. We had good rental growth for a while. It’s come down and it’s stalled out. In our market, we are starting to see trades again, but the last three, four years, there’s been a lot of individuals staying on the sidelines. They don’t…
where they want to sell their pricing, what they could have got five, six years ago is not what they could get today.
Micah Johnson (02:00)
Hello everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Jesse Fragale, who’s been making some serious moves in real estate investing now for the last 16 years. Jesse, welcome in, man, glad to have you.Jesse Fragale (02:11)
Glad to be here, thanks.Micah Johnson (02:12)
Absolutely man, I’m excited for our call today. You’ve been based out of Toronto, but now you’re mixing it into some American markets out there in the commercial multifamily area. So I’m pumped for just getting your understanding of I like hearing about two different markets and what you’re going through, what led through your story here. So I’m excited to dig in. For those of us that are listening that aren’t familiar with you yet, man, tell us a little more about yourself and what your main focus is right now.Jesse Fragale (02:36)
Yeah, sure. So, um, yeah, it’s basically based in Toronto. I’ve been in a real estate investor now for, uh, it looks like it’s 16, 17 years now. And I’ve been in real estate brokerage for 11. Um, so in investing, um, started in student res, uh, got into real estate, uh, through the investing side and then eventually found my way into brokerage. So on the investing front, it’s predominantly, uh, multifamily real estate that we look at, um, for acquisitions. And then on the commercial side,What we do, my partner and I primarily is office leasing and acquisitions. So sales dispositions ⁓ as well as leasing. And that is almost exclusively done in Canada and more specifically in Toronto.
Micah Johnson (03:19)
Okay. And it’s interesting when I hear the investor to broker route. I hear a lot of times broker to investor side, but when I get that flip, tell me about that. What led to wanting to make the quote unquote career real estate? We get you own a business, but there’s that little subtle difference of you want your career in it too.Jesse Fragale (03:37)
Yeah,yeah, you know, for myself, was, well, I was in university. ⁓ I started investing in student housing. And ⁓ when I got out of university, actually started working for ⁓ Enbridge Oil and Gas Company. ⁓ And for a couple years, I was doing that. ⁓ And ⁓ it was actually my next door neighbor. I remember one time going out ⁓ and he happened just to be ⁓ one of the top guys at ⁓ an investment banking. ⁓
company in Canada and he was very close with the real estate division and he basically said to me, like, what are you doing? You obviously love real estate as an investor. Have you ever thought about brokerage? And I really didn’t at the time. I thought, you know, living at home right after university, working for kind of in finance for an oil and gas company, I was like, I’m making decent money and I’m living at home. And I didn’t realize at the time, you know, how much
opportunity there was on the commercial brokerage side. And specifically what I didn’t want to do is have that first year, like most brokerage firms, whether it’s Avis and Young, CBRE, you have that one year where you basically pour for the whole year because you got a really low base salary. And then the next few years, you basically only eat what you kill. ⁓ But I decided to ⁓ kind of bite the bullet, take his recommendation and yeah, I got into commercial brokerage and it’s funny now.
People used to say that the most secure job you’re gonna have is the one where it’s 100 % commission. And that has, at least for me, turned out to be true.
Micah Johnson (05:53)
Right. Right. There’s a, there’s a benefit to killing or eating what you kill. There’s a benefit to you doing those things because you have a lot more control than most people are willing to take on. That’s what I first learned my first 10 99. Like it has that is a little bit scary. Yeah. But if you like that feeling, then sky’s the limit, right? It’s a, quote Jack Nicklaus here a lot. He always talked about, I like golf, but he’d talk about, you know, before majors, I would get so nervous and thenI realized I fell in love with the feeling because only cool things made me feel that way. Right. Anytime I felt that way, awesome stuff would happen after. And I really got, I was like, wow, that’s fascinating. I feel that same thing in real estate, quite my version of it on obviously, but like that the butterflies, the intensity to it, the it’s not guaranteed, but if you’ll show up and get your work done and do well, there’s no competition in real estate. That’s what taught it to me said, like if you’ll just show up, answer your phone.
be good at it, sky’s the limit.
Jesse Fragale (06:50)
Yeah, there’s a really good book I’m reading right now. I can’t remember the author’s name, but it’s called Ultra Learning. And a lot of it goes into that feeling of ⁓ just being uncomfortable ⁓ and really like what’s going on in the brain when that’s happening, where you have to that balance of it not being so difficult that you give up on it, but not being so easy that you’re going through the motions. And then something happens physiologically where like that, know, Jack, Nicholas saying, you know, if I’m getting that feeling, something’s, something’s working.Micah Johnson (07:00)
No.Right. No, I love that. And it’s, it’s true. It’s true, man. And it’s, I want to hear, I want to who the author of that book is off to look that up because those are the, when you can realize that, that those aren’t the reasons not to real estate gets a lot simpler, right? Those kinds of feelings keep a lot of people on the sidelines in this industry where I haven’t met anybody this day that still doesn’t get the feeling when they’re writing an offer, right? Cause like you’re saying it, there’s a quote, reminded me of
Jesse Fragale (07:26)
Yeah, for sure.Micah Johnson (07:45)
by Virginia Satir, most people prefer the certainty of misery than the misery of uncertainty. And if you can deal well with that little unknown factor, it’s unending what you can pull off and real estate rewards it because it changes constantly. You got to be learning, rewards that person that loves to learn and problem solve more than anybody I’ve met in the industry for sure.Jesse Fragale (08:08)
Yeah, absolutely. And it’s Scott Young, if anybody’s interested.Micah Johnson (08:12)
Okay.Perfect, man. So Scott Young, ultra learning. That’s what it was called. Okay. Cool. Yeah. Let’s check that out. ⁓ all right. So you’re mainly focused in Toronto, but now you’re dipping down a little bit. You tested a town home down in Orlando. were talking about a little bit pre-recording. What’s led you down here into the U S market to start looking into investments.
Jesse Fragale (08:33)
mean, the obvious one from the Canadian perspective is just that ⁓ aside from maybe one province, we are politically ⁓ pretty much a blue state across the whole country, ⁓ which is no disrespect to any Democrats, but it’s just easier to transact from a landlord perspective in the States. And that’s not necessarily that it is.so pro-landlord that landlords are doing things that they shouldn’t. It’s just that we have rent destabilization, rent control, pretty much every province. It’s very, very challenging to move tenants out, even if they’re the end of their lease. that flexibility is one component. The other piece is we don’t have things that you have in the States like 1031 exchanges that doesn’t exist up here. So anytime that you sell an app or anytime you want to
make a move with an asset, you basically have to realize a tax event. ⁓ And part of it geographically is weather related. Obviously, we’ve got pretty intense winters. So in terms of looking at properties where the weather is not as aggressive. So that’s part of it. And then the reason I bought the townhouse in Orlando is it was more just buying a small scale.
buying on a small scale just to see how the process was in terms of being a foreign national, putting more percentage down, ⁓ how they would kind of look at myself ⁓ from a lender’s perspective. ⁓ And then ultimately you guys are 10 times approximately bigger than us in terms of the actual market itself. So just having the ability to buy one thing potentially in one state, ⁓ if you wanted to roll it into another property, you could go with.
fairly easily to another state. that’s kind of what what kicked it off. And a big thing being being how big the market is down there.
Micah Johnson (10:26)
of that man in that process of discovering what it’s like for foreign national to buy here for someone else that’s listening in that might be thinking about that same thing. What was what were some of the things you found that? Oh, this was simpler than I thought. And also, OK, this part was a little more difficult. I didn’t expect that.Jesse Fragale (11:16)
Yeah, I would just say leave yourself enough time to kind of understand how you get accepted for financing. So for instance, well, one recommendation, I went do it during, you know, four years ago when we were going through a lot of craziness in the world. So that was not very fun, especially with interest rates kind of bobbing around as high as they were. But ultimately, the lending’s a little bit different. I had to get a letter directly from a CPA, not just, you know, pulling credit.We don’t, I mean, most Canadians, unless they have properties or they have relationships in the U S don’t have a credit score. ⁓ you don’t, you don’t get an, ⁓ a social, you get an ITIN number, which is a tax identification number that doesn’t happen unless you do end up acquiring. So those little things of basically lender saying, who are you? We don’t know you. You, you have to come kind of prepared with documentation that shows, ⁓
you know, your income in Canada, ⁓ your tax history in Canada, and then have a CPA that’s willing to sign off on it and understand what the lenders are requiring, in terms of the actual actual acquisitions, that was the easy part. ⁓ ironically, it was like, here are the properties I’m interested in. Here’s what I want to, ⁓ you know, make an offer on. ⁓ and then I guess the only challenge with that, depending how you’re buying, if you’re buying it as an individual, ⁓ the requirement for a larger down payment on your first
could be as high as 30, 35%. So being prepared that, you know, for the first one at least, ⁓ that there’s going to be most likely ⁓ a fairly large down payment.
Micah Johnson (12:54)
Okay. Interesting, man. I love hearing the differences because there is, it’s not stuff I’ve had to think about and I haven’t invested internationally myself. So I haven’t gone through that process. And I always find that it’s more of the idea of something that scares us than the actual process. So I want folks to like hear like what you have to go through, what that real thing is, because if it’s something you want to do, it’s on the other side of hard no matter what, but getting folks to shine that light on, okay, pay attention here. Like the CPA part, how hard was it for you to find them?Jesse Fragale (12:59)
Yeah.That part wasn’t too hard. I spoke with a number of people. The lenders that I had were great about recommending different individuals. That’s one thing I would say too is part of the reason I did this test case of buying something smaller and then eventually hope the idea would be to buy larger apartment buildings was because if you’ve been doing real estate long enough, you know that your team doesn’t necessarily change too much. If you have a good
Micah Johnson (13:32)
Gotcha.Jesse Fragale (13:50)
insurance providers, CPA, whoever’s doing your property management if it’s in the same area. So what I wanted to do was set up those contacts in Orlando because I would most likely use them for larger purchases or at least those individuals would say, that’s kind of out of my wheelhouse, but I can recommend this person. the hard part to me was just the beginning setting up and connecting with people. But once you have that, you can almost take that to other investments that you’re looking at.Micah Johnson (14:18)
Man, if you’re listening or watching it, and he literally just explained the real estate hack on, yeah, I know we all want it to go fast and really do things, but this is a relationship business and relationships just don’t go fast. You can’t rush them, especially if you’re building them intentionally. I love how you were already thinking long-term, because you’re absolutely right. And once you get that team established around what you’re doing, unless you really leave the area, like really leave it, it’s pretty useful.especially lending world, most can lend all around, most can do things that you need to do. But the setup of it, that’s the part that keeps you awake at night, right? When you’re sitting there thinking, okay, who am I actually gonna call for this and this and that? And then once you take that time to build the relationships, life gets simpler. My mentor says it this way, know, if the solution to your problem is in your phone, you don’t have a problem, you have a phone call, right? Make the call.
Jesse Fragale (15:08)
ThanksMicah Johnson (15:10)
Just make it go out there and call them because that’s that whole point. And real estate rewards the people who build really good long-term relationships because that’s how you win at real estate is long-term thinking.Jesse Fragale (15:22)
Yeah, 100 % agree.Micah Johnson (16:04)
So what are you looking for then now in that American property? I want to dig in there. Is there a specific thing you say you’re saying a 30 to 60 unit, but what else? What’s that? That really does it for you for what you want to buy.Jesse Fragale (16:16)
Yeah, so for us, it’s going to be properties that are like, I like Florida, as long as it’s Looking at properties, probably even as low as 20 to 60. And the reason for that size is it’s something that we’ll likely have to raise capital for, but we don’t want it to go so small that you’re having, you know, if you have a few vacancies, you really get hammered by them. So having the scale and kind of looking in the market forvalue add properties, ⁓ not necessarily full on value add where there’s doing there’s a lot of construction work or sweet turnovers, but ones that are in terms of vacancy, a little bit lower in vacancy, not fully leased up where there’s some upside in the rents, and then coming in and kind of buying those type of properties. So the idea for us would also most likely would be to create ⁓ a partnership structure. ⁓
you know, you guys have certain tax structures that we don’t have up here. ⁓ LLC is not a thing up here. So it would be most, most likely an LP, ⁓ Canadian LP that invests in a US LP if we have ⁓ kind of that GP LP structure. But ultimately, it’s really about, ⁓ you know, talking with you before, it’s really about ⁓ the market kind of coming around where we’re comfortable at this interest rate ⁓ with the with these properties. And, you know, we forecast that the rent growth is going to be
Micah Johnson (17:14)
Gotcha.Jesse Fragale (17:38)
⁓ something that our investors and the partners themselves are willing to sign on for.Micah Johnson (17:46)
Let’s dig into that part for a second. So you’ve been watching this closely now. I you’ve been doing this for quite some time. So, eyes have been on what’s happening for the last five years especially. What are you noticing now? What are you sensing in 2026 that folks need to, could benefit from paying attention to?Jesse Fragale (18:04)
Yeah, so forus, what we’ve seen on the multi-res side, at least specifically in our markets here, the rental growth has kind of come off a cliff. We had good rental growth for a while. It’s come down and it’s stalled out. In our market, we are starting to see trades again, but the last three, four years, there’s been a lot of individuals staying on the sidelines. They don’t…
where they want to sell their pricing, what they could have got five, six years ago is not what they could get today.
So that price discovery ⁓ aspect is still a process. And that’s really what I mean by kind of waiting out to see how things go here. When we start getting more data points, we get more people that are putting properties on the market ⁓ and actually putting them on to where we think the market actually is right now. And even at more visual or obvious version of that is,
kind of the office leasing side or excuse me, the office ⁓ sale side. That’s a more extreme version of that. People do not want to put, unless they have to, do not want to take a cut to where their properties were valued at three, four years ago or even longer.
Micah Johnson (19:10)
And that gap is one of the harder places to be in real estate, especially when you’re coming off of one. Well, we can say this for sure. The one we came off in COVID, that has never happened. We’ve never had interest rates double in two weeks. That is a for sure black swan event that threw things into it. right while it was doing that, was prices were going in a sane world where sellers just get this picture in their head of this is what this is worth. This is how much it’s worth.That question is, it only matters right now. Like that is a purely present question. Something’s only worth what someone else is willing to pay for it. And the numbers only work at this point. And when you get that big spread, especially when you have that doubling of interest rates, it’s taken more time than usual. And I’ve only done this 14 years of watching things, how they move around, but that particularly created a big gap.
where people think of what it’s worth and then it got hammered by an interest rate, especially in the commercial multifamily world where it’s only a math problem. Like there’s very little emotion involved. That’s huge. Like it was a huge thing. And now hearing that start to come together. Cause like you said, interest rates now, at least the numbers aren’t bouncing around. We’re starting to feel some stability wherever they are, right? In the eighties, they were 20%. So like relatively speaking, they’re quote unquote cheap, but
locally in the now, that’s what we think we’re sensing here in America too, is people are just getting used to it. And there’s, that’s a big factor, especially when you come off a really good run. No one wants less rent. No one wants to sell for less. No one wants less. Like that’s just the reality, but the market does it. And so now getting to that point where I’m getting excited too, watching things change, watching folks get back involved. Cause I saw folks take a beating for a few years, man. It was pretty.
It was pretty Ruth. The old blood in the streets quote was coming out pretty heavy. ⁓ Right. That’s right. That’s right. I saw, I saw one the other day. That was really good. It was on a, if you’re not on real estate Twitter, X is real estate X is pretty good. I like what I find on there, but one of the guys said,
Jesse Fragale (21:07)
Yeah, 100%. Yeah, we love that one too. That’s a good ⁓ quote for a paper.Micah Johnson (21:25)
He goes, know, buy when they were fearful. goes, I didn’t realize how fearful I was going to be when I was buying it was fearful. This part’s harder than I thought. And I was like, that’s so good. Cause you, we, we forget that part that we’re in the middle of the hard too. Right? So you can hear all the investor cliches, but the reality is you’re living it out. Like I used to be at Berkshire as an agent. called him uncle Warren, likeUncle Warren may have seen 50 cycles by now and not care, but us younger folks, it’s still jolting when you have to deal with it. But the reality is again, what got you in keeps you in, keep that edge, read stuff like ultimate learning, your, or ultra learning. Those are the things that keep us sharp, keep us in the game. Cause like I said earlier, this is the best get rich, slow scheme that exists.
if you can just keep yourself in the game. Don’t take, there’s a reason Warren’s still in it. He didn’t take swings that would take him out, especially in markets that didn’t benefit the swing, right? Really be intentional there. So Jesse, man, I really appreciate your time today, your story. I love getting on with folks, learning about markets, seeing what’s going on out there. For folks that are listening in that would like to learn more about you, follow along with what you have going on. What’s the best way for them to find you?
Jesse Fragale (22:33)
Yeah, you can, whether it’s ⁓ YouTube, LinkedIn or Instagram, Jesse Fragale, F-R-A-G-A-L-E, my name, can jump on in there. And yeah, pretty much that’s all my socials there. And then Working Capital, the real estate podcast, wherever you listen to podcasts, you type in Working Capital and you’ll find it.Micah Johnson (22:52)
Love that, man. Thanks for sharing. So if you’re listening or watching in, check our show notes. We’ll have all of Jesse’s links there. Like I say constantly on this show, when we bring professionals on, go see what they’re about. Dealing with people who are active in the day-to-day real estate. That’s who you want to learn from. It’s too much of a changing game to hear what we were doing a couple of years ago. That ain’t helpful. So take advantage of that. Again, Jesse, thanks for being with us here today, man. Thanks everybody out there being with us. If you got value out of today’s episode,Please like this episode, share it with someone else you think you get value out of it. And if you’re not a subscriber yet, click that button. We appreciate every single one of you that follows along out here with us. We’ve got more conversation coming up with operators just like Jesse out there building a real business in the industry. Thanks for being with us. We’ll see y’all in the next episode.
