Building Wealth Through Mixed-Use Properties and Smart Financing

In this episode of The WealthGenius Podcast, Alfonso sits down with Jan Carmanico-Reeves, a seasoned entrepreneur turned real estate investor. Jan shares her remarkable journey of entering the real estate market at 55 and building a successful portfolio through creative financing. She discusses the challenges and triumphs of managing mixed-use properties, the importance of vetting commercial tenants, and the power of a positive mindset. Jan’s infectious enthusiasm and wealth of knowledge make this episode a must-listen for aspiring and seasoned investors alike.

About Jan Carmanico-Reeves 

Meet Jan, a creative financing expert with 40 years of combined business and real estate investing experience. Jan is on a mission to make real estate investing fun, easy, and profitable. She takes pride in being the mother of two inspiring professional young women. When not exploring innovative real estate strategies, you'll find Jan nurturing gardens or enjoying a rejuvenating hot yoga session. Having mastered the art of pivoting, Jan empowers others to achieve financial freedom through strategic investment methods. With a passion for creative financing, she guides clients from the overwhelming responsibilities of property management to the serene shores of passive income. Join her journey to explore the exciting world of real estate financing, and let's unlock a future filled with prosperity and opportunity. Together, we'll transform your investments and build a life well-lived, one strategic move at a time!

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Transcript

SPEAKERS

Carl Richards, Jan Carmanico-Reeves, Alfonso Cuadra

Carl Richards  00:05

WelcomeWelcome to The WealthGenius Podcast brought to you by the Expand Wealth Real Estate Fund. Expand your wealth by investing in apartment buildings. Go to Expandwealthfund.com to book your info session. The WealthGenius Podcast, strategies for multifamily real estate investing, mindset, community, success. 

The WealthGenius Podcast with your host, The Godfather of Real Estate, Alfonso Cuadra, who has expansive experience in business and massive success as a real estate investor. The WealthGenius Podcast, let's dive into today's episode.

 Alfonso Cuadra  00:41

Jan!

Jan Carmanico-Reeves  00:41

Alfonso!

Alfonso Cuadra  00:41

I- I don't know if I told you this, but I remember you coming to one of my events, and first thing in the morning, I'm saying one of my best jokes, and your laugh in the room. I was like, I love this person.

Jan Carmanico-Reeves  01:01

I don't want to laugh because I'm so loud when I laugh!

Alfonso Cuadra  01:04

Oh my God! It's so infectious and fun. And, you know, it's like people talk about dance like no one's watching?

Jan Carmanico-Reeves  01:14

Yeah.

Alfonso Cuadra  01:14

Laugh like no one's watching. And, you know, you just let out this laugh. And I'm like, Okay, we're gonna be really good friends.

Jan Carmanico-Reeves  01:22

I've been known for my laugh like forever. People always say, you know, it could be a full auditorium. Oh, Jan's here, I hear her laughing over there. And it's not- it's just very genuine. 

Alfonso Cuadra  01:33

Yeah, it is it, is it? It's endearing. And the second I met you, it's like, we were connected, right? And I love it. I love it's like, it's someone that just kind of lets loose, right? Because there's, you know, there's people that are in a setting, like a workshop, like we're an event. You don't know people in the room, you know people kind of a little bit more reserved, but you just let it out. I love it. I love it. 

And we've known each other for a while. You're a huge part of our community. You're a community leader in Windsor, and you're doing a lot of amazing things, and you have an amazing story. So I want to go back. I want to go back to that story of how, how you got here, how did you become, you know, this real estate investor, you know, properties vendor, take backs, trade financing, all the things that you do, because it's not normal for everyone, right? So you know, how did you get here?

Jan Carmanico-Reeves  02:26

Well, business owner, self employed all my life. So financing has always been a challenge for me. Being self employed.

Alfonso Cuadra  02:34

Have you been in business all your life? 

Jan Carmanico-Reeves  02:35

All my life.

Alfonso Cuadra  02:36

So never had a job?

Jan Carmanico-Reeves  02:38

Uh- 

Alfonso Cuadra  02:38

Something when you're a kid.

Jan Carmanico-Reeves  02:40

When I was 10, I started with a paper route, you know what I mean? 

Alfonso Cuadra  02:46

Yeah.

Jan Carmanico-Reeves  02:46

So, so I liked having my own money, and, you know, like giving good service, get better tips, you know. 

Alfonso Cuadra  02:52

So when you were young, did you feel that you were wanting you were going to have your own business? Is that what you wanted to do? 

Jan Carmanico-Reeves  02:59

Well, I didn't realize it, but yeah, I guess I did. Funny story, I had a conversation with my dad on the weekend, and he had a 12 unit building when I was young teenager, and we were talking about he sold it when he moved. And I said, "Well, Dad, you know, you could have had a property manager and kept it and, you know-", so he told me. 

He said, "You know, when I bought it, one of my friends said to me, Al, not big enough." Because it was 12 units. You need to go 20 or larger, right? Which we learned. And I thought, How did he know? And then another funny story, when he sold it, he gave the guy a vendor take back second mortgage, because his lawyer friend said to him, "you know, to make this deal happen..." I'm like, "you knew about all that stuff back then?"

Alfonso Cuadra  03:44

You didn't tell me! 

Jan Carmanico-Reeves  03:46

Right? So, and I mean, he didn't belong to any groups like this. He just had that kind of mindset, right? And so I guess maybe he's passed that on to me. 

Alfonso Cuadra  03:56

Yeah. 

Jan Carmanico-Reeves  03:56

So he planted the seed. 

Alfonso Cuadra  03:57

So this was happening all around you. You were maybe aware of it, but not aware of it, but at some point in the back of your mind, you said to yourself, you know, like, this is interesting to have, like, a property or be a business owner, right? 

Jan Carmanico-Reeves  04:11

Right!

Alfonso Cuadra  04:11

Yeah.

Jan Carmanico-Reeves  04:11

Right. So I was always a business owner, single mom, so it's, you know, busy raising my kids and getting them, you know, to their activities and giving them life opportunities.

Alfonso Cuadra  04:22

So they don't lose an arm or a leg or something. 

Jan Carmanico-Reeves  04:25

Yeah, we did go skydiving together, but no, so then finally, my youngest just graduated eight years of university, but I wanted to give them the opportunities. But then it was the realization of, "oh, like, I need some kind of secondary income source." So I bought my first rental property at I was 55 when I bought it. 

Alfonso Cuadra  04:53

And so like last year.

Jan Carmanico-Reeves  04:56

Oh no, that's five years in the future. Yeah, so-

Alfonso Cuadra  05:01

God bless you. You look Great! I wouldn't have given- um like in the 40s, like, you know?

Jan Carmanico-Reeves  05:08

Well, thank you, yeah, no, most people don't think- and I don't think I'm my age. It's a mindset thing, right? 

Alfonso Cuadra  05:14

And when you laugh that hard, it means that you're enjoying life. And then when you enjoy life, that keeps you young.

Jan Carmanico-Reeves  05:21

Absolutely, absolutely. Life's a party every day. So yeah, and I bought that with creative financing, got a private mortgage, used a line of credit, not a HELOC, just a regular line of credit investment card with, you know, 0% as the down payment. 

Alfonso Cuadra  05:38

So you did a vendor take back? 

Jan Carmanico-Reeves  05:40

No, it wasn't that was a private mortgage. 

Alfonso Cuadra  05:42

Ok, ok yeah, yeah!

Jan Carmanico-Reeves  05:42

On the first one was a private mortgage, yeah, and so essentially, use none of my own money, and then covid happened. 

Alfonso Cuadra  05:50

Wow.

Jan Carmanico-Reeves  05:52

SoI'm a salon owner, right? Covid was not good for salon owners, and being the only income earner in the house, like it was pretty tough. However, I took the opportunity at that time I had a lot of time to be able to learn, join investor groups and really dive into, how am I going to scale this? You know, I need to learn from the masters to shorten, shorten time.

Alfonso Cuadra  06:22

Compress time.

Jan Carmanico-Reeves  06:23

Compressed time. Yes, yes. So, so then, so Now, fast forward three years. I refinanced my first property that I bought for 285, pulled out 350 3 years later. So paid out the private mortgage and paid back everything, right? So now I've got 350 I found on Kijiji off market, a mixed use commercial and negotiated a vendor, take back. 

Alfonso Cuadra  06:54

Beautiful. 

Jan Carmanico-Reeves  06:54

Yeah, 75% vendor, take back. And I was using the-

Alfonso Cuadra  06:59

Have you ever asked this before. 

Jan Carmanico-Reeves  07:00

What's that? 

Alfonso Cuadra  07:01

Like a Vendor? Take back it was. I mean, you might have heard about it before. You said your dad was had done it before.

Jan Carmanico-Reeves  07:06

Yeah, but I didn't even know that. I knew about it. I loved this strategy, and I knew the guys that were selling it like money wasn't an issue for them. So I thought, I'll negotiate it, right? But I also knew I wanted to do a major renovation on it. So I wanted to add a secondary or another suite. 

Part of it was a four bedroom house. I I completely gut renoed, separated, you know, water utilities, everything and like, two new kitchens, like, everything's brand new. So added another unit. So I wanted some time to stabilize it, so I asked for two years interest only beautiful. So I've got five years- 

Alfonso Cuadra  07:49

So theres cash flow coming? There's more cash flow.

Jan Carmanico-Reeves  07:52

Oh, my goodness! Yes! Yeah, well, because I knew for part of the time- 

Alfonso Cuadra  07:56

You wanted to renovate it, you get you-

Jan Carmanico-Reeves  07:58

It was going to be vacant- 

Alfonso Cuadra  08:00

It was going to be bleeding a little bit.

Jan Carmanico-Reeves  08:01

Exactly, exactly, so I could easily cover the cost. So I'm just over a year, and have hugely increased the NOI brought up the value of the building. I just did some calculations, $552,000 so yeah. So now I have the choice, because I still have almost a full year at interest only payments. So yeah, I have the choice whether I want to refi, and then I've got another three years with principal and interest at 4% so just depends on on how I want to float it. Right? 

Alfonso Cuadra  08:35

Beautiful, yeah, now for someone that's listening to this podcast, and you know, we're talking about seller financing, VTB. Sounds exciting to a lot of people, right? So from your perspective, when you're approaching a situation where you were about to offer a VTB, what are like some tips that you can offer someone to look out for? What are things to look out for? How- how do you approach- approach the subject matter, with the with the seller? 

Jan Carmanico-Reeves  09:03

Well, you have to ask a lot of questions. See, this was off market, right? So these negotiations went on for about six months before the actual offer was in place. So there was several meetings. So you get to know them. You get to know their pain points. Like, you know, what- what- I knew money was not an issue for these guys, like they weren't trying to make a quick buck or anything like that. 

So, yeah, I just, you know, slowly started introducing this situation. They had done a vendor take back mortgage before, and ironically. I was the one that told them that they could defer their capital gains, and they didn't believe me. It says, Oh no, you know they had their little Italian accountant. Didn't even, didn't even know about it. And I'm like pulling it up on Google. I'm like, "No, you need to go back and talk to him." 

And they're like, "No, the last time we did it, like we had to write a check right on closing." And I'm like "okay, like you're-", you know, but so, yeah, started giving them a little bit of information, and they thought I was crazy when I told them what I was going to do with the reno. They're like, "Jan uh, you know, how long will it take you to, you know, get that money back to that you're putting into that?" And so very smart men, one's an oral surgeon, another one's a dentist, and third one's a teacher. So they're very smart, but they're not investor savvy, right? Like they don't know how to- 

Alfonso Cuadra  10:37

And this was privately that- right? There was no agent involved?

Jan Carmanico-Reeves  10:40

no agent involved. So these were just one on one conversations, which is the best way to do it, because, yeah, you don't play that telephone game, right, where agent to agent to seller. So it was, yeah, it really worked out well. 

Alfonso Cuadra  10:55

And so when you created the terms, how did you come up with the terms? And you know, what type of negotiations did you do? Did they accept it right away?

Jan Carmanico-Reeves  11:04

No, there was, there was some back and forth for sure.

Alfonso Cuadra  11:07

And what were some of the terms? 

Jan Carmanico-Reeves  11:09

Initially? 

Alfonso Cuadra  11:10

Yeah, what was the ultimate concluded terms? What did you guys accept, agree on? 

Jan Carmanico-Reeves  11:15

So, five years, 75% vendor, take back at 4% interest, and I negotiated two of the five years to be interest only payments.

Alfonso Cuadra  11:26

Beautiful. And then at the end of the five years, does it renew?

Jan Carmanico-Reeves  11:29

I could, yeah.

Alfonso Cuadra  11:31

So there's a renewal- 

Jan Carmanico-Reeves  11:32

Clause in there. 

Alfonso Cuadra  11:33

It's so important because you don't know what's going to happen.

Jan Carmanico-Reeves  11:35

Exactly, exactly. 

Alfonso Cuadra  11:36

Right? You might need to renew it, extend it, for whatever reason. Rules change this and that the other right? So it's great that you have that renewal in there. It's great. What is the exit for you? Refi?

Jan Carmanico-Reeves  11:49

Yeah, to refi. Yeah, totally. To refi. Yeah, buy and hold. So now it's five residential, two commercial. But, oh, I should tell you the story about the commercial tenants too.

Alfonso Cuadra  12:00

Well I was going to get to that because this property has two commercial spaces right? 

Jan Carmanico-Reeves  12:05

Correct.

Alfonso Cuadra  12:05

At the bottom, so it's mixed use and the top. You got residential-

Jan Carmanico-Reeves  12:08

In behind, actually, yeah. 

Alfonso Cuadra  12:10

So we don't often talk about it. And people ask me the question, and I will say, "well, commercial is another game, another story." So what I was going to ask you is, what have you learned? You know now that you own these two commercial spots with not a tenant, but you have a tenant business owner, which is completely different. 

Jan Carmanico-Reeves  12:27

Right, right. So when I acquired the property now the house, they had just evicted those tenants. These guys were awful at vetting tenants, I'm not gonna lie. So I asked that they leave it vacant so that I could do the renovations. Right? Actually, it was delayed a little bit again the closing, because another tenant was had an eviction notice, and they were waiting for the sheriff, and it was so then it was put off a few days. 

Alfonso Cuadra  12:55

So these guys were just, they've had it with this property.

Jan Carmanico-Reeves  12:58

Yeah, yeah. They were just putting bodies in there so that, I think they could sell it. I'm not really sure. But anyways, they weren't, I know they had some other properties and not good tenant stories. So the commercial, same guy renting both. One was a smaller, little kind of ice cream coffee shop. The other one was a restaurant, no business plan whatsoever. 

Nice guy, you know, I'd stop in there and give him suggestions of how to run his business, because he's not, he's, you know, "I got great-" I'm like, "You got to put the blue-" anyways, talking to him all the time. So he stops paying his rent like he's not bringing any money in. So I give him an eviction notice, and then, you know, he comes up with the money, and then he pays me for a couple of months, and then stops paying me. 

Now, essentially, since I closed on the property, he's got these businesses up for sale. So he's really just trying to get his money back of you know what he's put into it. So one sale is going to go through, falls through at the last minute, so technically, he should have been evicted. He had another buyer on the table, so I'm weighing it, and I'm thinking, What can I do about this? So I had my paralegal drop minutes of settlement, send it to his lawyer, so that on the closing of the sale, I got all the arrears that he owed me, paid the legal cost.

Alfonso Cuadra  14:22

Or he wouldn't have been able to sell the business..

Jan Carmanico-Reeves  14:23

Yeah, yeah, I would have evicted him and and not signed a new lease. So I had a new lease drafted because the old lease was ridiculous, like it was handwritten. So I had a new official lease drafted and increased the rent. I said, I'm not, you know, letting you sublet that. I'm sorry, but it's not happening. So on closing, I got all the arrears, I got all my legal costs paid, plus some extra little things, and I got first and last month's rent from the new tenants and zero downtime.

Alfonso Cuadra  14:55

Wow. 

Jan Carmanico-Reeves  14:56

And I vetted the new tenant, right? So somebody coming in, you know, he owns a large trucking company. He's just setting these up for his brothers, so a lot of money behind him, so it's not going to be an issue, you know. And he has a business sense and a business background. So, yeah.

Alfonso Cuadra  15:12

So what? What are the things that you want people to watch out for when they're entering commercial, retail kind of real estate. It's a little bit different than the tenants, like regular-

Jan Carmanico-Reeves  15:24

Yeah, yeah, right! 

Alfonso Cuadra  15:25

-Regular residential real estate, you know. So what would you say now that you have this experience, what would you- what advice would you give people? 

Jan Carmanico-Reeves  15:32

To interview them, ask what their business plan is. I have a business background, right? So, yeah, ask what their business plan is. Ask what the resources are. 

Alfonso Cuadra  15:41

Well, I'm talking more in terms of buying an asset like this.

Jan Carmanico-Reeves  15:45

Oh, buying an asset!

Alfonso Cuadra  15:46

What should someone know going into it now that you have this experience? 

Jan Carmanico-Reeves  15:51

Yeah, right. Check out the leases that are in place number one, yeah, and learn about the commercial tenants that are in there. Because, you know, commercial tenants are a whole different animal, right? And they come and they go, and the businesses close, and what's the national averages of businesses making beyond the first five years? It's like very low, right?

Alfonso Cuadra  16:13

Especially, like I would say the location. 

Jan Carmanico-Reeves  16:16

Absolutely! 

Alfonso Cuadra  16:17

Should be like a public loca-, or like a high traffic location.

Jan Carmanico-Reeves  16:20

Yeah, yeah, yeah. 

Alfonso Cuadra  16:22

So what would you do differently? 

Jan Carmanico-Reeves  16:24

Than what I did? 

Alfonso Cuadra  16:25

Well, in terms of next time, if you were to ever look at a building with with a commercial element or a retail element to it?

Jan Carmanico-Reeves  16:32

I don't know if I would go mix use again, right? 

Alfonso Cuadra  16:35

This is like a one and done.

Jan Carmanico-Reeves  16:36

I think so. I think so, because now I have more knowledge, right? 

Alfonso Cuadra  16:40

Yeah, there is some benefits, you know, like the triple net rents that always intrigued me, right? 

Jan Carmanico-Reeves  16:46

Yeah.

Alfonso Cuadra  16:46

It's like, what? 

Jan Carmanico-Reeves  16:47

Yeah.

Alfonso Cuadra  16:48

You're not responsible for anything, right? Those are things that are that are exciting. On the downside, I would say that the vacancy can be challenging, because if a unit, a commercial unit, becomes vacant, we don't know if someone's going to be there right away, because ultimately, at the end of the day, when it comes to residential real estate, someone will always have to live somewhere-

Jan Carmanico-Reeves  17:09

Right!

Alfonso Cuadra  17:09

People don't always need brick and mortar to start a business. 

Jan Carmanico-Reeves  17:12

Well, and especially now. 

Alfonso Cuadra  17:14

Yeah.

Jan Carmanico-Reeves  17:14

Right? Yeah.

Alfonso Cuadra  17:15

So those are interesting perspectives, but I'm glad it's, it's working out, and I'm glad you got good, solid tenants, and you know, you've done incredibly well, and you've mastered this creative financing, and you just, you know how to get in there, right you ask the right questions and the proper discoveries. And it's just incredible. What inspires you?

Jan Carmanico-Reeves  17:37

Learning inspires me.

Alfonso Cuadra  17:39

Love it. 

Jan Carmanico-Reeves  17:40

Yeah, I just always love to expand my mind. Being around like-minded, right? Really inspires me. I get so much energy from it, yeah, I just, I'm creative, right? That's my background, you know, thinking outside the box, but balance and flow and texture and all those kind of things from, you know, doing hair background. So I bring that into real estate investing as well.

Alfonso Cuadra  17:40

I love it, Iove it, I love it. You know, and you're definitely passionate about that. And I could see you kind of, you know, getting crazy about the colors and-

Jan Carmanico-Reeves  18:15

Yeah. 

Alfonso Cuadra  18:16

-You know, renovations and stuff. So did you do your own renovations? 

Jan Carmanico-Reeves  18:19

Well, I designed them. 

Alfonso Cuadra  18:21

Okay, yeah, you designed them. Do you like that part of it? 

Jan Carmanico-Reeves  18:24

Oh, I love it, yeah, yeah. Like, I can go in and see the flow and see, you know, and I understand the electrical and the plumbing. And I used to do a lot more hands on myself, but now I'm just like, No, I don't want-, you know, but yeah, I picked the colors. I picked the the lights, and, you know, knock out this wall and do that and and all those kind of things. Like, I really have a good eye for it.

Alfonso Cuadra  18:47

Jan, thank you so much for coming on the show. They're gonna find all your information on the show notes down below, what is a quote that you live by? 

Jan Carmanico-Reeves  18:57

Couple. So as I was raising my daughters, I always told them, there's no such thing as can't, right. The word can't wasn't allowed in our house. And one of my favorite sayings, I guess there's a picture and I posted every once in a while and repost it every once in a while on my social media. And it's a little girl saying, you know, she's got wings on, and it says, What if I fall? And the response is, but what if you fly?

Alfonso Cuadra  19:28

Whoo! I love it, I love it! Beautiful show, Motivational Mondays. By the way, I've been a guest on it. So-

Jan Carmanico-Reeves  19:28

Yes, yes, you were just uploaded to YouTube. Yeah!

Alfonso Cuadra  19:39

Let's give them the YouTube channel. How can they find you? 

Jan Carmanico-Reeves  19:42

Investing With Jan. 

Alfonso Cuadra  19:43

Investing With Jan? 

Jan Carmanico-Reeves  19:44

Yeah. 

Alfonso Cuadra  19:44

Love the title. They'll be able to find all your information down below. Thank you so much. Love you and love your laugh and you know our audience are gonna learn a lot from your from this episode, guys, thank you so much. That's the show. Alfonso loves you. And we'll see you all at the top! Whoo!

Carl Richards  20:08

Thanks for listening to The WealthGenius Podcast, presented in part by Expand Investor Conference, December 13 to 15th at Western Harbor Castle, Toronto. Get your tickets now at wealthgenius.ai/expand. 

If you have a question or comment about something you heard today, reach out to The Godfather via social media or email him anytime. All that information is in the show notes, and of course, don't forget to subscribe so you never miss an episode of The WealthGenius Podcast, The WealthGenius Podcast, until next time see you at the top!