Transcription of Episode
Welcome to Investing Across Borders with Lauren Cohen. Every week she will share valuable information that you need to know in order to successfully invest in real estate and other business endeavors in North America. We believe in helping clients invest, live, work, and play across borders. And now, your host, Lauren Cohen.
Lauren Cohen 0:27
Good morning, everybody from sunny and warm South Florida, Boca Raton, Florida to be exact. I am Lauren Cohen, the host of Investing Across Borders, and an international legal and real estate investment expert. And I am very proud to say that our podcast is sponsored by Lendai, a company that Michael should know about, who’s our guest today, which funds non-owner-occupied real estate investments for foreign investors from Canada, the UK, Australia, and Israel at this point. And it’s super cool because as Michael knows, working with so many Canadians as he does, it’s always challenging for Canadians to get money from domestic investors in the US for their real estate investment. So this is a great option. So anyway, just to bring that to your attention, Michael. So I’m here today with my friend, Michael Ditton. And we’ve actually worked together, we’ve considered investments together, we are in many of the same groups. We work with many of the same people. And we originally met through my good friend Mike Wolfe, who was here in Florida complaining with me about how cold it was last week, on a Tuesday night, it was probably in the 60s and we were both freezing to death, these two Canadian wimps, as we called ourselves. And we were proud of it. You know, in any event, Michael has graced us with his presence. He’s a super cool, lifestyle oriented, real estate investor who’s been investing since he was 20. And just continues to make a difference in the world. His specialty is multifamily. And I go to him when I have a multifamily deal to review. He is just a great guy. He is always very, very helpful. I’ve asked him questions about different opportunities and questions about different groups. And, you know, we share ideas, because at the end of the day, collaboration is the key. And we want to know who are the good people, and who are the not so good people, and we want to stick around the good people. And Michael is one of those. Michael, why don’t you do us a favor instead of me preaching your virtues. Why don’t you tell us a little about yourself and Helius capital, which I believe I was involved in helping set up right?
Michael Ditton 2:31
Absolutely. Our Florida Corporation for investments. Yeah, and very nice, warm welcome. Thank you very much. And you’re right, it is. It’s about relationships and partnerships. And you know, the more of those that you have, the more opportunities that are out there and available for not only you but for your clients and for the people that we serve, buyers and sellers alike. So it’s been great over the past year or so getting to know you as well.
Lauren Cohen 2:58
I feel like it’s so much longer, but COVID has made odd friendships. I mean, even Carolyn, who we also are very connected through. Carolyn now Gallardo, formerly Shorty. She and I met probably month three of this pandemic, and became fast friends. I mean, just like BFFs, right. And I never met her. And about three weeks ago, look at that my Canadian accent just came out. My brother was here, he just left this morning. So my Canadian accent is a little stronger. So about three weeks ago, she was in town, and we met and it was like love at first sight. And that’s what happens through this pandemic. Because as you’re building those relationships, and you’re building them on Zoom, which is a strange, strange medium, or at least it sure was. And I’ll tell you something really funny. At the beginning of this pandemic, I was running events, as you probably remember, getting people money from the SBA. And at the very beginning, I had a zoom bomber. And it was really awful. I had a whole bunch of lawyers on this call. And these guys came in and were doing pornographic things on the screen writing these disgusting messages. And my good friend Mae Dean Heights, a fellow immigration attorney, also originally from Toronto, who’s here in South Florida, she just sent me a thing there’s a class action going on, about exactly this, because a lot of people’s businesses were heavily impacted by this and I just say that because fortunately, thank God, zoom, fixed all of that. But at the beginning, it was definitely I mean, nobody anticipated you know, we thought it’d be a week, two weeks, not two years. And and here we are with yet another strain going on. But fortunately here in the US, and particularly where we’re both located, we’re able to travel Michael was just in Florida, and he does a lot of investing in Texas. Tell us a little bit about your background, what got you into it, and what got you into the multifamily space if you would.
Michael Ditton 4:50
Ya I’d be happy to. Yeah, as you said, I started at 20, but back then I didn’t think about you know, lifetime investor or anything. I just knew it was a smart choice to make for a young family to have a place that they can actually call home. You know, fast forward a few years, life created a whole bunch of challenges for a major on Operation Desert Storm. It started as Desert Shield Desert Storm. I did seven months active duty. And when I returned home from there I was mentally, and financially bankrupt, divorced, I lost everything. I didn’t have a job when I came back, couldn’t find a job. In fact, I filed for unemployment, and a service member coming off of active duty for seven months, I was denied. So yeah.
Lauren Cohen 5:33
That’s awful! You’ve just done given service to your country, and you can’t even get benefits.
Michael Ditton 5:39
Yep, yep. So it was kind of the bottom of the barrel for me. Fortunately, at an early age, I knew how to set you know, dreams and goals and stuff like that, I didn’t really know how to put the plan in motion because I was still pretty young as in my 20s, early 20s. But pulling those things off the shelf and kind of remembering them gave me that drive to continue on. And I pretty much say it saved my life. And through that process, I started to rebuild and develop, you know, some new relationships moved back out to California where I had some existing relationships. And shortly after getting there, I was in a position where I could buy property again. Because, you know, through all that downturn, I lost, you know, I’d lost a lot of stuff and bankruptcy and stuff. So when I went to a buddy of mine in real estate, I said, hey, Ron, I know you’re peddling real estate, now. I’m ready to buy a house. Can you hook me up? And he goes, Sure, Mike says, but what do you want the house to do for you? And I said, what do you mean, I just wanna buy a house, he goes, Well, you going to live in it for the rest of your life, you going to live in it for a while and sell it? You going to live in it while and rent it out. You want to earn money while you’re in it. He just started rattling on all this stuff and go whoa, wait a minute, I just I just want to buy a house. Well, long story short, he educated me. And through that education as a veteran, and using my VA loan, I was able to buy a four unit complex. I lived in one, rented the other three out and actually earned money while living in my residence.
Lauren Cohen 7:04
And also you were leveraging your loan at the same time. Using other people’s money.
Michael Ditton 7:09
Yep, 75% of the income off those other three units, I was actually applied to my income to help me qualify for that as well. So through that education, and the new desire to get into real estate, I wanted to start to build a portfolio. And the owner of that property at that time was the local century 21 broker who I had become friends with during this process. And he asked me, he knew I was in sales. He said, Hey, Mike, you want to come to work for me. He says, you would do really good. And I said, No, I’m cool. Thank you very much. But right after I moved in, I started thinking, Man, if I had a real estate license, I could like have a foot in the door and get all these deals before anybody else. So next thing I knew, I was a licensed real estate agent, I hung my hat at Century 21. This was back in 1997, where I still hold a real estate license in California today. And I started to grow my portfolio. So I bought another four unit complex, a five unit complex, I bought a HUD repo, re-did that one, bought property down the street, did a California remodel on that. Bought a couple of condos in the harbor.
Lauren Cohen 8:08
You sound like that guy who told you all the different options to do with your house. And you’re like I did blahblahblah, and now it’s you. It’s no longer the guy that said that you were like, wow.
Michael Ditton 8:16
Yep. And along that process of building a portfolio, I was also helping a lot of other people in their real estate needs. Whether it was a single person, family investor, what have you and I did it. And I was successful at it because I educated them. I could have slam dunked them into a property, whether it was fit for them, and just filled out a contract. But quite honestly, I was able to be creative in contracts and get people really what they wanted both sellers and buyers didn’t matter what side it was on, everybody it was a win-win situation. So I had a very successful career. I did a lot I ended up getting to a point though, where I was ready to live life a little bit because by 2003, 2004 not only did I have a full-blown real estate career, but I owned four other companies as well. So I was working, working, working and I decided life was too short. I wanted to go you know, live it a little bit. So in 2007 I sold everything, all my real estate, all my businesses, and I jumped on my sailboat and I disappeared for about 10 years, and primarily sailed up and down the Pacific Coast of Mexico and enjoyed life. While I was out there, wrote my book Dreams, Goals and Adventure. And I wrote that to inspire people never to lose sight of their dreams. And in this process, in 2015 had another life changing event and had to kind of step back and regroup in that. And ended up after 23 years of a great marriage, or 22 years of great marriage, last year wasn’t so great. But my then wife decided that she needed to go find yourself and chose to do it without me. Today though, we’re still friends because 22 of the 23 years were a great experience. It’s part of who I am today. And my current wife is very grateful for that as well because that whole period of my life was part of my growth and part of my experience, part who I am. So a new wife, I met Crystal, who you know, energy worker, healer, she is now a certified health and nutrition coach. The two of us, you know, we’re just all about helping and serving and it creates its own level of success when you put others first and you provide and help for them. So she’s doing it on one end I’m doing on the other, we actually created a company called infinite activation, which we co-created it and do collectively. So she does her thing. I do my real estate. And then we have Infinite Activation. And we were doing that from Hawaii and loving life in Hawaii, and then my father got ill, we ended up moving back to the mainland, San Diego, and he’s since passed. And now I’m in Southeast Texas. And the reason I’m here is because a little over a year ago, I got full-blown back into real estate investment. October of the year before. And it’s about the time I met you and our buddy Mike and Carolyn and all these others. And I was so blessed to have fallen in such a great group of people because it’s what I truly needed after coming off that 12-year journey to get back into it. And this year, it’s just It’s been phenomenal. Yes. COVID has been around for that time. But also the opportunities, not just in real estate, but the opportunities for Crystal and I actually to serve other people whose life was a big question mark, because of the events that COVID had dealt them and we were able to create some programs to help people through these difficult times as well. So, you know, here we are in Southeast Texas, my real estate partner and I, we acquired some property, a big complex here and we’re acquiring some other properties and serving people as coaches, helping others acquire properties, working with investors. And Heelys capital was developed and born to this whole process, because I do have a partner that I do a lot of stuff with, but I do a lot of stuff on my own. So you know, the world is just evolving around us, you know, there’s a lot of wild, crazy stuff that’s going on out there. But it is also what we make of it. And I’m one of those positive guys. I’m not going to let the negative things that are going on out there influence my life. And even if it comes knocking at the door, I’m gonna drown it with as much positive stuff as I possibly can. And I hope that’s infectious and spreads out throughout the community that I deal with. So that’s kind of where I’m at.
So, a few months ago, when you were kind of embarking on your first big deal and raising money from others. Tell us about that. 118 units was it?
This one’s 98 units. So Mike and I, my partner, we had tried to secure a couple other deals and things just didn’t work out. But the opportunity came about with this one. And this is kind of one of the things that we coach is persistence, keep in touch with people networking, what have you. Somebody, a broker that we had been working with probably October or November of the year before, I’d stayed in touch with, and an opportunity came up for an off-market deal that was going on to the market, but there was a lag time, and he brought it to our attention. And it was definitely worth pouncing on. So Mike and I wrote an offer on it immediately. And so now we’ve secured this property, but we had to raise the funds like he said. Mike’s got his investor pool, I got my investor pool and we have groups that we go out, we work within to raise additional capital. We had to raise 1.74 million for this particular investment. And we were able to do so in 10 days, just because of the relationships and partnerships that we have developed. Mike’s been doing it, you know, for several years as well. So, you know, we were able to get into that. That was a nice healthy cap raise as well, for a renovation of part of this project. 8 of the units had been vacant for over a decade. And in fact, the old owners when they bought it, the units were vacant. And we knew that by just upgrading or redoing these complete units, we’re gonna add another 70-$75,000 annual income to it which you know, creates forced appreciation, which is, you know, what everybody’s looking at when you get into, you know, commercial type properties like this. But beefing up property value, probably a little over a million dollars. So, we got into it. And it was a it was a great deal up front. We knew it had value add to it. We wrote the offer in March, we actually closed at the end of June, within probably 30 to 60 days, we started the renovation process, and we’re hoping to be complete with that phase of it by the end of this month. And we’ll have a couple other phases to fully stabilize this property.
Lauren Cohen 14:31
Oh, well, this is exciting stuff. I mean, it’s all really great stuff. Now the beauty of it, or one of the beautiful things that Mike brings to the table is the fact that he works with, you know, my podcast is called Investing Across Borders. And I happen to be Canadian and I happen to be the Canadian whisperer and I happen to work with lots of the Canadians that Mike works with and help them set up their structure and perhaps look at visas. And one of the beautiful synergies between us is that a lot of my investors, Michael’s investors, not to be confused with Mike Wolfe. Same name. But anyway, so a lot of Michael’s investors are Canadian, and almost, you know, almost weekly if not, if not bi-weekly, I get some email from him introducing me to another Canadian that wants to invest in one of the projects that he’s building out or renovating or rehabbing. And they need help because they are in Canada and don’t have the infrastructure yet. So that comes from connecting with the Mike Wolf’s and the Carolyn Ricciardi/Galardones of the world and figuring out how to pull all those pieces together and knowing that you can, you know, Canadians are hungry, they have some capital and they don’t want to, or they can’t invest in Canada for obvious reasons. One of which is the cost is so high, the second of which is cap rates are low. And so they come looking. Texas is a big place, Florida, another one. Now in Texas, I know I’m doing a deal in Texas right now for a client. And in Texas, it’s one of the few states wherein a commercial transaction, a commercial realtor cannot represent a client if they’re from another state. So in other words, as a Florida commercial realtor, I can’t represent my client investing in Texas commercial real estate, whereas if they were investing in Arizona commercial real estate, I could or Louisiana. So Texas is a little bit of an anomaly. It’s a challenging state to work with in terms of all of the bags and stuff around being a realtor and having the license. And, you know, the lawyer being involved in all the structuring, but it’s a great place to invest with great opportunity. You know, a lot of upside and cash flow. Unlike Ohio, which is a lot of cash flow, but there’s not a lot of upside, because your appreciation is low. And Georgia is like Texas in terms of there’s upside, as well as cashflow. So sometimes you give up one in favor of the other. But it’s beautiful. It’s a beautiful thing, because now Mike is there, and he’s able to actually visit properties live and in person, you know, check them out, do the due diligence that needs to be done, and handle and look at the numbers. And you know, with that experience in his background, it really brings a lot to the table. So why don’t you just give me a little bit of a feeling for what prompted you to was it just circumstance? Or did you actually pursue Canadian investors?
Michael Ditton 17:23
I guess you could say, Yeah, I did pursue them. But I pursued them only because I pursue anybody that’s looking for those opportunities. And when I met Canadian investors that were looking for opportunities across the border, where they knew that they could get decent returns on their investments and everything else, we started talking about it. And of course, when I first started doing it, I knew that there was going to be I’ll call them challenges even though they’re really not as long as you have the right team in place. But I knew because I didn’t know there would be some challenges that I needed to get my team together, which is where you and I came in. Because, you know, even though we’re friends and partners, I consider you a part of my team, because when I have a Canadian investor, I know that they need to have certain things in order before they can start investing on this side. You know, Canada, and entities are different than they are in the States. You know, accounting is different, but we’ll make sure that we protect them tax wise and everything else. I’m not the expert in those things. You want to talk multifamily I can talk multifamily. But I want to make sure that they’re able to protect themselves take advantage of the systems that are in place out there best that they can. And that’s where professionals like yourself come in.
Lauren Cohen 18:36
It’s true, but so many Canadians, so many don’t do that. And then, I don’t know if you’ve seen it in your experience yet, but you will. Unfortunately, because there are, like you were saying is that you happen to fall in with the right people. But there are a lot of not so right people. Or a lot of not so right groups, coaching professionals out there large, large, large American driven coaching programs that you know, appeal to Canadians, they offer great upside, they offer great cash flow, they offer great training, but they don’t offer anything related to cross border, and they really don’t care. Because all they care about is Oh, you’re investing in America, you’re gonna make money. Great. I made money now I made $10,000. I’m gonna give it all to the Canada Revenue Agency. That’s where it comes in. Because Michael, who has never lived in Canada, but just knows that it’s unique. It’s not like you’re dealing with Americans. It’s not one size fits all, as I say in my 10 issues to avoid. But it’s important to really set up your structure properly and follow a path. You’re not just doing it like, oh, I want to set up a limited liability company. Do you know that that’s what you want to do? No. Can you do it? Yes, go online. It’s 300 bucks, you’re done. End. But that’s not the way it works. And even when Michael was setting up his limited liability company, he goes to a professional, because you need to know what is involved. It’s not just like set up your LLC, and you’re done. So we have to be very cognizant of the differences that do come into play when you are going across borders as it does become more complicated.
Michael Ditton 20:17
Well, I’ll tell you, you know I’ve been doing this for a long time, since 1997. And I’ll tell you, having the right people on your team will not only help you from making huge mistakes, but it’s just going to save you a ton. You know, I can probably say, I’ve saved hundreds of thousands of dollars by having a CPA that knows how to handle my real estate stuff.
Lauren Cohen 20:40
Michael Ditton 20:40
Could I do my own taxes? Probably so. Will I ever do as well as he does? No, because that’s his profession. You know, if I have legal questions, I want to make sure that I’m talking to somebody that is in a legal arena. If I want brain surgery, I’m going to go to a brain surgeon.
Lauren Cohen 20:56
Exactly. You’re not going to an ear, nose and throat doctor.
Michael Ditton 20:59
No, no. So you know, proper members on your team are key no matter what level they’re playing. It was just like you said I am here, boots on the ground. But you know what, I don’t have to be boots on the ground, because I have a team here. You know, my property management company here has 25 staff. And if I need something, I can assure you, they can handle it, or they have the connections, networks and contracts with other people that can. So that’s part of our team here. So, I mean, the value there is worth way more than its weight in gold.
Lauren Cohen 21:06
Thank you. It’s true. And every time somebody says, Well, why should they pay this now? Because you don’t want to pay it three times, four times, six times as much later. And paying that money to the IRS, or any revenue agency. I mean, I don’t want to do it, I’d rather put it in my pocket, or my kids pockets or give it to charity, don’t give it to the IRS if you don’t need to. So Michael, what’s your number one tip to people that are starting out in investing in real estate?
Michael Ditton 21:59
I think the biggest thing I see if somebody’s just getting new in into real estate, it can be overwhelming with the opportunities and different options that they have. So I think ultimately, what you want to do is you want to pick a lane and stay in it. But I’m not saying pick it without gaining a little bit of knowledge. Test the waters, talk to people, join groups, have some mentors, find out, you know, which direction you want to go into. And make sure you’re talking to people that you know, like and trust. And, you know, once you figure that out, then stick in that lane until you’re comfortable, and it feels real good. And then if you want to expand from there, because I do see a lot of people that are, you know, grass is greener on the other side, and they haven’t given one thing an opportunity in order to start building that foundation to grow on. So as a new investor, you know, find a coach or mentor or group that you’re really comfortable with, and then figure out what it is you truly want. And then really dive in a little bit. Now, that doesn’t mean you have to have the same expertise and level of experience that that person does. But you’ve tapped into that support. So if that is the direction you’re going, you have that support there. And that’s another part of the team. And you know, I have so many coaches and mentors. I got Mike, I got Mike, I got Carolyn, I got you. You know, and I wouldn’t try to do any of this without my coaches, mentors, and team.
Lauren Cohen 23:28
That’s because you’ve done it, you probably hit a few walls and you know better and you’ve learned from mistakes, right? Everybody has made, including me, some mistakes. And then we figure it out, and we try again. If at first you don’t succeed, what do they say? Try again? And also, you’re seasoned enough to know that you can’t do it all alone. And you do need that team. And it’s a very important element like without the team, you won’t be able to grow and you’ll never be able to scale. And I noticed in one of the questions, your answer was open communication, which is a key to any successful relationship, including with your coach, with your team, with your investors, with anybody. Open communication is going to drive the best and most successful results every day, no matter what else you have. Communication is always going to be a key. And I’m sure working with Crystal, as you know, on the mindset side, and you building out this mindset driven real estate investment portfolio and strategy makes a huge difference. And I love the fact that you build that foundation, and then you grow from there. And so many clients want to run and they’re like, Oh, let me just invest in this. And unless it’s turnkey, you don’t want to do that and even turnkey that may not be the best option for you because you’re still deploying capital. So you have to be careful about how you do it and make sure that you have a strategy that you can implement, and implement successfully and then scale. Michael, how do people reach you?
Michael Ditton 24:58
You know, my name is Michael Ditton, you can use Michaelditton@yahoo.com Helius Capital Investments is my website. You can find either one of those on Facebook pretty readily available. If you’d like to read, I do have a book called Dreams, Goals and Adventure. So Google any of that, and you find me. But yeah, you can email me direct, and then I’ll respond back. And then you’ll have some additional means to communicate phone numbers, or we can do zooms or whatever.
Lauren Cohen 25:23
Thank you, and remind me again, I know but what does Helius mean?
Michael Ditton 25:28
Helius is actually, it comes from more or less, the god of light. And when I thought of Helius, I actually had another corporation called Healers many, many moons ago. Because I developed a fiber optic marine lighting system. And Helius, the god of light was the corporator, and spectrum lighting was the the other entity. And I wanted to use that name, again, Helius Capital Investments because I truly like shedding light on the multifamily or real estate investment side. So it’s kind of working.
Lauren Cohen 26:02
And bringing light to your investments is really important. Being transparent. Opening doors, open communication is what this is all about. Michael, I thank you for your time today, it’s always a pleasure to hang out and spend some time with you. I’m Lauren Cohen, and I invite you to subscribe to this podcast. And please give us five stars, we are on every major channel. And also please do subscribe to my YouTube channel Investing Across Borders, where you can find all of the podcasts with the audio and video, as well as all kinds of my webinars and learning about these Orlando projects that we’re promoting. And I want to once again, thank my sponsor, Lendai if you are looking for cross border for an investor, foreign investor funding for your investments in us real estate non owner occupied up to four units, you know, and you have an LLC or a corp and we can set that up for you. You can qualify for funding through Lendai, it’s a great option reasonable and takes five minutes to apply. So thank you again, Michael, please take care. Send my regards to your wife, I’m sorry for her loss. And we’ll be in touch very soon. I’m actually going to send you a message now about something that you made me think about while we were on this call.
Michael Ditton 27:11
Well thank you very much for the opportunity.
Lauren Cohen 27:13
My pleasure. Thank you. Bye for now.
Thanks for listening to Investing Across Borders with Lauren Cohen. Make sure to check the show notes for any links and for guests contact information. If you have questions for Lauren, please reach out to her at FOUNDER@ecouncilglobal.com. If you enjoyed today’s episode, please subscribe, rate, review, and share the podcast with a friend.
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