Taking a business from an idea to great profit and success is challenging, especially if you’re in real estate. But Brent Ritchie took that challenge head-on. Now, he is the founder and President of EnRitch Investment Group Inc. He is a real estate investor from Canada that specializes in US Multifamily. Find out how he successfully did that transition. Join Ava Benesocky and August Biniaz as they talk to Brent Ritchie about his journey into US multifamily. Learn how to ditch the nine-to-five so you can start your own business. Find out why mentorship is important. And discover the difference between Canadian and US investors. Start finding success in your business today!
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About Brent Ritchie
Brent Ritchie is the founder and President of EnRitch Investment Group Inc. Brent has over 15 years of experience in engineering, construction and project management. His latest projects involve the ownership, management, operations and development of apartment buildings worth over $240MM.
As a professional engineer in Fortune 500 companies his award winning construction projects ranged from several hundred million to 3 billion internationally and are a major driver for operational excellence for all stakeholders. His design, construction and operational experience is be an invaluable asset in overseeing successful project executions.
From A Small Rural Town To Successful Real Estate Investor – Brent Ritchie
We are joined by Brent Ritchie.
I’m excited about this show because Brent and I have connected for a while here. He is a fellow Canadian who was a busy professional here in Canada who may make the switch to the US. I believe he’s physically moved to the US, but we will get into all of that. He’s very focused on US multifamily building a real estate investment firm. Also, he was a professional engineer, so he was involved in construction and construction-related things. For him to make that switch seems very interesting and affirms us leaving our careers to focus on US real estate and US multifamily. I’m excited to have him on.
Another thing, too, is that it’s always fun when we can relate to the guest speakers that come on our show. Brent, I know that you are from a small rural town. I’m actually from a small town myself. We are excited to get into the conversation. I will tell everybody a little bit about Brent, so they can know exactly who we are talking to. Brent Richie is the Founder and President of EnRitch Investment Group Inc. He has over fifteen years of experience in engineering, construction, and project management. His latest projects involve the ownership management, operations, and development of over $240 million in apartment buildings.
As a professional engineer in Fortune 500 companies, his award-winning construction projects range from several hundred million to $3 billion internationally and are major drive operational excellence for all stakeholders. His design construction and operational experience are invaluable assets in overseeing successful project execution. Welcome, Brent. Thank you for being here with us.
Thank you so much. I’m very excited to be on the show. It’s great connecting with you, folks, here on your platform.
Brent, why don’t we start? Can you talk to us about your background and then your start in real estate, please?
When we look at the journey, look at where you have been. In my mind, I still grew up on a small farm outside of Park Hill, about two hours outside of Toronto on a farm. It’s funny when my family reads this episode, and I have the privilege and the honor. I grew up there and had different aspirations of what I wanted to do with my life. That took me into the city and then, ultimately, doing structural engineering in the Western. From there, my career seemed to have the construction design phase.
The project is everywhere from British Columbia, Kelowna, British Columbia over the Okanagan, India, New York, and all over on that design journey that you are working for somebody and making decent money, but it’s not creating much of a future. This little purple book that’s ruined a lot of people’s mental thinking in a good way is what put the additional fire in my journey to figure out a path, getting from your 9:00 to 5:00, getting from your paychecks, getting from your inner rat race into a different life that’s possible. That’s what started me on that journey, looking at different businesses and side hustles. It was almost like, “What do I want my life to look like, and what do I want it to be?” I was like, “I could buy a franchise. I could own a business.”When you're working for somebody, you making decent money, but you're not really creating much of a future. Click To Tweet
I had a couple of startups on the side. It’s very challenging. Like a lot of entrepreneurial guests inspiring entrepreneurs will know that taking a business from an idea to great profit is challenging. That’s where I almost went through that a little bit and then looked at, “What if I buy a franchise? I don’t want to work something that’s 60 or 70 hours a week, buying a different job. I want to do life from anywhere. I want to own and operate a system that runs, and I’m not involved in the day-to-day.”
That’s what led me longest journey back in 2017, connected with another group based in Dallas, Texas. Here I am, outside of Toronto and then flying down, connecting with this other group, learning the rope on our first acquisition and getting into the multifamily space. We are going to dive into some of those topics. I won’t get much further ahead, but that’s the journey and maybe the why.
Let us ask you a question, and this is more for affirmation for us as our lives revolve around US multifamily. Can you tell us why US multifamily, and then what was it about this asset class that piqued your interest?
You are in the Vancouver area, and the Toronto area is very similar. Some of the fundamentals that we love to look at are business-friendly and landlord friendly. That struck out some of the options locally. From there, you also want cashflow. You want cashflow on your operations. We like to focus on a deal that can stand on its own legs without us having to bring it up, bring the NOI up. Unless, without us having to renovate and everything else to cashflow, we like, right off the bat, the deal can support itself and then all that our value add strategy that we are going to be doing and implementing is in addition to. Its bonus. That’s where a lot of the returns are generated, but we are very much business-friendly, landlord-friendly, and then a deal that can support itself with cashflow.
The US has one of the highest rental yields in the world. From the rent you collect, you can pay off all your expenses, mortgage, and taxes and still have enough third-party property managers and a surplus left over to have that beautiful cashflow real estate investors look for. I’m with you there, Brent. I’m excited to dive into the next topic here. In doing some research on you, we realized that at some point, you joined a mentorship program and decided to invest in the US. We want to focus on where the idea to look for a mentorship program came about. Where did that even come from? You joined Brad Sumrok’s mentorship program. You are in Vegas now at one of his events. Please talk to us about this.
Importantly, where did the idea come about? For example, myself, it was a difficult challenge for me as someone who had some success in construction, home building, and multifamily development from the ground up. It was difficult to pursue a mentor because I felt like I knew it all. The more I learn in life, the more I realize I don’t know much and how little I know. For you to pursue a mentor, a mentorship program, and a mastermind program, where did that idea even come from?
Maybe spinning off one of those comments too. When we are 16, 17 or 18, especially boys, we know everything, and then you can start university, school or education, you realize how much you don’t know. One was through a fantastic podcast. You have this wonderful show, and the audience can connect. They can learn and can learn from so many people that have been there before.
I was 1 of 4 kids, so I was the third, and I had the privilege of learning from my two older siblings. Mainly you learn what not to do and so you don’t repeat the same mistakes. That has been a lot of my philosophy in life, “I like to learn from other people’s mistakes so that I won’t repeat them myself.” Especially when you go into the larger multifamily space, you are closing deals from a small one, maybe $10 million, and you could be $120 million, $150 million or more.
You want to be with the people that have done it before, know the ropes and the pitfalls, have the experts, and especially the bigger scale you get. You have experts in their respective fields who are all part of your team. Very much, I am not the smartest person in my team in every single area. I have my securities attorney, that knows it way better than I do. I would say, “You know the Canadian Security is way better than I do.” It’s having people on your team that you can have great synergies and collaborate with that bring it all together. You almost become a little bit more of an air traffic controller of, “Here’s what we want to do our overarching business, goal or strategy.” You bring the pieces of the puzzle together to make that happen.
Tell me something about the mentorship program. A bunch of like-minded individuals is put in one room, which is an exciting concept because you can bounce ideas off of each other. Also, it’s said out there that by joining a mentorship program, you could possibly find partners in business as well. People that, as you said, figure out what you are good at, and then maybe you are not so good at asset management. Am I right about that when it comes to joining a mentorship program?
A hundred percent, and if you could break down our business into three parts, you almost have somebody that’s your investor and capital side. Maybe you got somebody that’s more on your financial side and then somebody on the operations side. There are a lot of categories and subcategories in there, but you can look at it almost in those three things. Each person brings different strengths and characteristics in that. A) You are learning from other people and trying to avoid those mistakes but B) You are having those synergies.
People fly in from all over the world and even other countries like Canada, Switzerland or Dubai. It’s pretty much a big think tank for inner space. We are always learning and constantly evolving and changing in the market. You are very much utilizing that strength, these synergies and what other people have learned and bringing it all together and being part of that.
You join a mentorship program. It’s going great, but you are going to still need three things. You are going to need access to equity. You are going to need deals and execute. Talk to us, maybe making an emphasis on your first couple of deals. How did you go about finding the equity? How did you go about finding the deals? How did you go about executing? For example, in the first deal that we did. We partnered with another group. It was a large $92 million deal. It was over a $30 million equity raise. It was a team sport. We became a part of the GP. As a co-GPM, we brought on a portion of the equity we were involved in asset management. Talk to us about how did you go about these three main things, finding equity, finding deals, and executing.
If you are starting, and when I started, you got to think of what you can bring to the table if it’s net worth liquidity that you need for a loan, if it’s experience in asset management or if it’s going to be some other roles. Maybe it’s your construction experience or maybe I don’t have those specific categories, but I got the drive, determination, sweat and blood, sweat and tears, and I’m going to make it happen. Come hell or high water. Maybe that’s where you are connecting with the brokers.
You are underwriting deals. You are going through a lot of opportunities to find the right ones that make sense, and then bringing the team together and assembling the team or maybe bringing somebody that’s more experience along together. That was my position. I was doing engineering, and it was very much okay. I’m still working 40 or 50 hours, and I have three kids, so it’s a busy time. In the morning, like an hour or two, and then maybe a little bit in the day, but mainly after the kids go to bed, that would be my time where I’m looking at deals, crunching and putting everything together.
On the equity portion of that, mine was going through, underwriting, and betting a lot of deals to find the ones that made sense which has been a home run of a deal. Back in Phoenix, we bought it. We can get into the specifics of that, but that one has been great. Being part of that ecosystem mentorship group was critical in finding investors and then finding all our systems and processes that we needed to go through those steps and take down the deal.
Was the first deal you closed on a co-GP structure?
That brings us to one of our last questions.
We are curious. Did you make a move to the US? Are you focused on connecting with US or Canadian investors? Talk to us about the move.
I did move to Florida. In my background, this is Clearwater Beach Pier 60. We, like a lot of fellow Canadians, love Florida. We love to escape winter and get to some beautiful places in Tampa Bay. I personally love British Columbia and Kelowna, Big White and all these amazing mountains. Aside from that, if you are going to do winter in Ontario, it would rather be winter in Florida. I did migrate the family down. There are a lot more strategies, incentives, and everything for syndicators living, doing active deals like we do and doing that in the US. With your question about equity, we did connect with several Canadians.
We went through the process with them setting up US entities for them to be able to invest in the US, going through the whole OSB, CSA, and this Canadian security side. That’s something that I haven’t ventured down on myself personally. We’ve explored that and then the regulations. I know you do a great deeper dive into that as well. With the regulations, the exemptions, and those loopholes, my equity was in the US. We were able to connect with it there. For the Canadian investors that wanted to have more of a longer-term strategy investing in the US, that’s where we connected with them, the experts, to set that up and get that going. It’s not for the faint at heart.If you're a Canadian investor that wants long-term strategy investing in the US, it's not for the faint of heart. Click To Tweet
It’s not. The Canadian Regulatory space is not as black and white as it is in the US. In the US, they have two main category exemptions. They use 506(b), which is for non-accredited investors. You got a certain limit of accredited investors, 35 accredited investors but the 506(c) allows you to advertise. It’s very clear and black and white. Whereas in Canada, you got multiple exemptions, each of which is opaque and what there can be with advertisement.
Everything is in a gray area. You must be very careful with how you go about doing things and everything else.
There are some similarities. We feel the pain points you are talking about as far as trying to service Canadian investors. Another thing we felt was researching other real estate private equity firms, their growth, and their trajectory. We noticed that early on, they might have started in Canada and raised a lot of equity from Canadian retail investors, but at some point, they switched to US investors, and that’s when they went hyperbolic. That’s something that we are contemplating here. The structures we put into place is that it took a lot of resources and time for us to put together. We want to keep those structures, but our focus is also going to be more focused on US investors. We are planning to make a move to the US as well.
Brent, we might be your neighbor at some point.
We are going to be in Tampa in early July 2023. It’s probably too hot at the time, but we are going to be there.
We will have to grab your number offline and make some plans.
I would definitely love to connect with you, guys. I will be back in Ontario in July 2023, visiting family. We will go end of June 2023, but I love to connect with you guys, regardless.
Are you ready for the next segment of our show, the ten Championship Rounds to Financial Freedom?
Let’s do it.
First question. Who is the most influential person in your life?
There have been many microcosms along the way. I must say, off the top of my head, the answer is my wife.
He’s in Vegas, and because her wife is not in Vegas with him, he better says his wife.
It’s Robert Kiyosaki. Weirdly, in my early mindset, shifting was very instrumental in getting things on or empowering that entrepreneurial mindset.
What is the number one book you would recommend?
Tim Ferriss, The 4-Hour Workweek is a fantastic book. It’s older, 2007 or ’08. A lot of the principles remain very true. I’m a huge fan of Tim and his style. He’s hilarious and a different guy.
I got to read that book badly. A couple of people mentioned it. If you had the opportunity to travel back in time, what advice would you give your younger self?
Start earlier. The one thing I wish I had done was to start earlier. The best time to invest was 20 years ago, the second best was 5 years ago, the next best is right now and very much started earlier.
What’s the best investment you’ve ever made?
The best investment I ever made was the first property that we bought in Phoenix. That one is hitting the market for sale. It’s going to be a ridiculous return on investment for us, the GPs but more importantly, for our investors. It has been fantastic. We bought it for $95-ish a door, and then it’s PoV-ed between $280 and $300 a door.
Tell us about the IRRs and put our 15% to 17% IRRs to shame. Give us an idea. What does the IRR look like?
It’s going to be ridiculous, and I don’t even want to set those expectations for any of our investors. We are going to be probably over a 5X in equity multiple in over three years. It’s going to be silly. That one has been the best investment.
When you hit the jackpot like that, you must tell your investors, and this is a weird thing to tell your investors, “You’ve done well. Don’t expect this on every deal. You understand the projection is much lower than this, but we’ve done a great job.” It is important for investors to understand that, and I’m sure they will.
You come out with your next deal, “I going to 2X your money,” and they are like, “What? I thought you were going to give me 5X again. What is this?”
You were like, “2X is amazing.”
What’s the worst investment you’ve ever made, and what lessons did you learn from it?
I always see everything as a great learning opportunity and a learning curve, so each has its pros and cons. There was a group to be a minor investment, but there was a multifamily group that came to Toronto, and I was connecting with people locally. That one didn’t translate anywhere or go anywhere. Back to who are you surrounding yourself with? Who are the people? Are they good people? Once you find great people, go down in that space.
Life literally starts happening when you surround yourself with the energy that is in that.
Everybody thinks you are the average of the five people you spend the most time with. You put yourself in a room where now net worth is $30 million is average, and everyone thinks differently. That’s a huge element.
This is a small-town background coming out in both of us because I always tell people that as well. Next question. How much would you need in the bank to retire now? What’s your number?
It’s probably closer to $10 million. It used to be back in the day growing up, maybe at the mill, and then inflation, cost of living, and everything else that is not going to last longer. Ten is the number, and I caveat that when you do what you love, you are retired already. I fell in love with this space and couldn’t imagine doing anything else.When you do what you love, you're kind of retired already. Click To Tweet
I would check your bank account when the deal closes in Arizona. The $10 million might already be there.
If you could have dinner with someone, dead or alive, who would it be?
Winston Churchill comes to mind off the top of my head. He’s such an interesting fellow. Probably it’s Winston Churchill or maybe Tony Robbins would be the live one.
If you weren’t doing what you are doing, what would you be doing now?
The hunting. When I was finishing high school, I thought I was going to do either whitewater rafting instructor obscure or engineering. If I were not doing something like that, I would probably be doing some extreme sports.
My favorite question. Is it book-smart or street smarts?
From a book-smart guy comes that end.
If you are in engineering or the university space, much theories and everything. The theory is great, but if it’s just in your head and never applied, it’s useless.
Last question. If you had $1 million in cash and you had to make one investment now, what would it be?
I would definitely start with my education. You are investing in yourself, and that’s the greatest investment that you can make. Case in point, me being here in Las Vegas as part of a mastermind that costs more than my entire four years of university combined. Investing in yourself would be a huge thing, probably investing in multifamily.
Brent, we appreciate you taking the time to be here with us. Thanks for sharing to us your journey with our audience. We look forward to meeting you. We look forward to seeing you grow in this space as a fellow Canadian. Like I mentioned earlier in the show, it affirms our enthusiasm all the time and all we’ve dedicated to this space, knowing that somebody else that came from the same place we came from has excelled in this space affirms everything and puts us in a great place.
If you could let everybody know what’s the best way that they can reach you.
Thank you again for being here, and we look forward to seeing you soon.
Thank you, guys.