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AJ Hazzi

Become a millionaire in 7 years...this time

We all know someone who became a first generation millionaire during the last market cycle from 2001 through 2008. It doesn’t take impeccable timing, mountains of cash, or any uncanny business acumen. All it takes is a simple plan to follow and the discipline and guts to see the plan through. That’s it, there’s no magic here. Thousands of millionaires will be made right here in the valley in the next seven years, so let's make sure we’re on that list! So how do we ensure we aren’t on the sidelines this time around the merry-go-round?

The real estate market isn’t nearly as complex as we make it out to be. It does the same thing over and over, it goes Slump-Recovery-Boom! And then Slump-Recovery-Boom! And around and around we go. It’s also not hard to determine where we are in the cycle because we know what has already transpired. For example, we know that Kelowna Real Estate was in a slump from 2008 until 2013. We have all read the headlines by now that sales are up, inventory is down, and prices have started to head upwards. So what do you think might happen next?

So here is the plan, it involves purchasing five very ordinary houses in good areas that have legal suites. The suites are important, as without one, a house will rarely cover itself, let alone cash flow. The ideal property is three beds up and two down as these rent typically for $1500 up and $1,000 down in good areas bringing in a total of $2,500. The common two up, two down will work, it will just bring in about $2,100. Mortgage payments on a house like this will be $1,514 with 20% down, $1,703 with 10% down, and $1,798 with 5%. Each of these assumes a 25-year amortization and an interest rate of prime. As you can see, no matter how you finance these typical Okanagan homes, they will cover themselves and then some.

The additional cash-flow can be spent at your whim, used to pay down additional mortgage principal, or my favorite, wisely invested into the property to raise its value even more. I'm talking about new floors, paint, bathrooms, kitchens, this kind of thing. These little additional bonuses are not even considered in the chart below, neither are rental increases, but I don’t want to be too technical. So let's now take a look at a simple grid that shows what happens to our investments as we move through this next seven year recovery-boom phase.

So now it’s the year 2022, we’ve had a good run, factor in the down payments invested, we have a net worth in real estate in excess of 1.5 million. We could sell everything, pay some capital gains tax and be left with a little over a million dollars. Then we could sit on the sidelines and wait for a market correction, pick up great deals when no one else is buying, and put this whole plan on steroids when the market goes Slump-Recovery- Boom all over again. It would have been like having a million dollars cash back in 2009 and wisely buying up all the fire sales that were popping up all around you. Could you imagine what you would have done with a million in cash during the last big correction? Literally a fortune at your feet!

This article isn’t about hindsight however, it’s about foresight. Those that have it will be a millionaire seven years from now and a multi-millionaire 15-20 years from now. And all it takes is the first step.

If you’re a first time buyer, good news - you can start building your portfolio with 5 or 10% down. Those of you that are little more established will need 20% down. For this there are many options; borrow against your primary residence, or bring on a money partner, private mortgage, vendor take backs, the list goes on.

Now as an important side note, it’s crucial to choose a bank that will use rental income offsetting, so that each property you add to the portfolio doesn’t make the next more difficult to finance. I have found that TD is currently the most favorable to the investor when taking rental income into account.

I want to conclude this by noting that what you’ve just read is not inherently risky, anyone you know who has ever lost money in real estate, including myself, has done so by speculating on real estate. We are not speculators! We are investors, and we are hunting cash flow. It is this cash flow that recession proofs any portfolio, so that even if you decide not to sell off at the end of the next cycle, your investments will continue to be paid down and yield a return. I am speaking from experience on this.  I followed this simple plan to create a seven figure net holdings in real estate the last time around, and I’m excited to do it all over again this time. It’s an exciting ride, I recommend being on it.

Cash flow or flipper?

People lately have been asking me what the best place to put their investment capital and energy is now that the real estate market is showing signs of becoming a bull market again. This question is a challenging one to answer because there are so many variables. Not the least of which is a person’s risk tolerance.

A good flipper can hit 30-35% return on their cash invested and turn two or three properties a year, for annualized returns of up to 100%. However, this requires a lot of time, skill, and a fairly high tolerance for risk. In a flip there are just so many un-known factors to be considered low risk.

A person with cash-flow property goals can follow a simple 10 times rent multiplier rule and see returns of 20% on their equity. This is playing the long game. Cash flow is only one part of the equation as I’ve shared many times in previous articles. The true returns will never be known until it comes time to sell and you factor in your mortgage pay down (none of which came from you) and your market appreciation. A five year hold often produces overall returns that would rival the best flipper and the risk is much lower. It’s also far less effort to manage a duplex then it is to manage multiple, successful flips per year.

Now it may sound like I am steering you towards cash flow properties over flippers but in actuality I recommend a healthy mix of both. In my own real estate journey I’ve always tried to use the capital from one to fund the other. This can work in either direction because both require adding value to the property whether it be to flip, or to hold.

My previous article about how far 100k could take an investor seemed to resonate with a lot of people, so consider this a continuation of that train of thought. 100k invested into a duplex around 450,000 in need of some renovations, would be a great place to start.

*Bring its value up to $550,000 by finishing basements or upgrades and re-capture your 80k on a line of credit.

80% of 550,000 = $440,000

Current Mortgage $360,000

Available Equity = $ 80,000


Now take this 80k and buy a 250k townhouse and put 20k into it to create a nice, 320k resale property. When the smoke clears you will have your 100k back in the till and should be looking to add another holding property to the portfolio.

This system will work until the banks decide that they won't give you any more mortgages, which will happen at about the five properties in your name level. This makes absolutely no sense, but banks seem to prefer rookie investors to professional ones - go figure. At that stage it's time to go multi family (5 units or more) and then you deal with the commercial department of a bank and it’s a whole new ball game. More on that in my next article!

So for now if you are stuck and want to know where to start, feel free to reach out, I’m always happy to help people gain control of their finances and income through the exciting world of real estate investing. There truly is nothing like it in the world. Show me another investment or stock that you can choose to add value to whenever you want, you can live in it, you create a home for someone else. You can borrow against it, subdivide it, farm it and on an on it goes. It really is in a league of its own and that is why I live, breath eat and sleep this stuff.

The power of 10

Do you want the secret for how I find such amazing positive cash flow rental properties? Well this month’s article is all about one shockingly simple formula that once you're tuned into, things become almost ridiculously simple.

The simple rule I am referring to is the 10 times rent-multiplier. The best part of this formula is how easy it is to do in your head, which allows you to instantly analyze the positive cash flow potential of any Kelowna property for sale, anywhere. I will share 10 great examples of properties that fit this formula to eliminate any doubts that you may have.

First let me explain the formula;

Take the annual rental revenue for a Kelowna investment property for sale, and then multiply it by ten. That’s it, the entire formula! The number you now have is what you want the property price to be equal to or awfully close to if you are considering it as an investment property. For many people especially ones that have rental property that falls way outside this rule of 10 don’t leave me just yet, please allow me to show you some real world examples:


1.  5-plex in Enderby listed at $369,000

  • rents are 36,000/year
  • $36,000 x 10 = $360,000
  • Net cash flow = $ 1004 /mo





2.  5 bed House with legal suite purchased at $312,000

  • rents $31,000/yr
  • $31,000 x 10 = $310,000
  • Net cash flow = $ 981 /mo





3.  Condo at Discovery Bay listed 339,000

  • Rent $35,000/yr
  • $35,000 x 10 = $350,000
  • Net Cash-flow = $1083 /mo





4.  Half Duplex with in-law suite purchased $240,000

  • rents are $24,000
  • $24,000 x 10 = $240,000
  • Net cash flow = $810/mo





5.  2 bed Condo in Alexis Park Purchased $70,000

  • rents are $7,200
  • $7,200 x 10 = $72,000
  • Net cash flow $318/mo





6.  Side by Side duplex with in-law suites purchased $484,000

  • Rents $48,000/yr
  • $48,000 x 10 = $480,000
  • Net Cash flow $1398/mo





7.  Side by side duplex in Rutland purchased $360,000

  • rents are $36,000
  • 36,000 x 10 = $360,000
  • Net Cash flow $1107/mo





8.  House in Phoenix Arizona purchased for $160,000

  • rents $16,500
  • $16,500 x 10 = $165,000
  • Net cash flow $527/mo





9.  Condo in Scottsdale purchased for $118,000

  • rents $12,000
  • $12,000 x 10 = $120,000
  • Net Cash flow $ 456/mo





10.  House in Fort Mac Murray listed for $750,000

  • rents $72,000
  • $72,000 x 10 = $720,000
  • Net cash flow $2065/mo





The last few I included to illustrate the point that things fall into this factor of ten in all the hottest markets you've been hearing about, up north or down south. Most people are led to believe that these fabulous positive cash flowing investments are only if you are brave enough to invest someplace far far away. I’m here to tell you that the above examples are all real, and there are dozens more I could share with you. The bottom line is, they exist and with bank rates now under 3% for fixed term mortgages, the cash flow picture keeps getting sweeter. Let me illustrate for the fellow number geeks out there:


$360,000 Purchase price

$288,000 mortgaged

$ 72,000 invested in cash


$36,000 rent

$14,400 mortgage

$ 2,400 taxes

$ 1,400 insurance

$ 1,440 Vacancy (4%)

$ 2,160 Maintenance (0.6%)


$ 14,200 Net cash flow

$ 6,000 mortgage pay down

$ 20,200 per year in profit


Buy and hold this property for 5 years and let's see what we get for results:

  • Mortgage reduction $32,084
  • Positive Cash-flow $72,000
  • Total gain $104,084
  • Gain is 70% without factoring in any property appreciation.


Now this is obviously an overly simplified way of valuating a rental property, the long handed way of doing it, is to take the net operating income and divide it by prevailing market CAP rates at the time. This requires a thorough analysis from your professional Kelowna Realtor once you’ve decided to pursue the property.

For an updated list of Kelowna real estate for sale that cash flow well from day one please don’t hesitate to reach out us at any time.

5 Deadly mistakes house flippers make

Renovating and reselling a property for profit is alive and well in Kelowna’s accelerating market. It is by far one of the most profitable short term strategies an investor can employ, offering returns over 30% per project in many cases. With that said, I want to shed some light on where "flippers" go wrong. Here are the most common, often costly mistakes made by amateur home flippers.


1. Renovate to their tastes

Most people start with the idea that they have great taste, therefore people will want what they create.  Usually this starts with someone who has tastefully decorated their own home and has spent years perfecting their sophisticated style and friends constantly affirm what they know to be true; they’ve got great taste.

The problem with this is that when you start to look at your renovation project as an extension of your personal style, you start making the wrong kind of decisions.  Impulsive buys on $300 vessel sinks, and $1500 vanity sets are fair game in your own home but chances are you will never know what percentage of that you will recoup should you sell.  In a flip however, these kinds of things only add up to a blown budget.  You don’t get to simply raise the price because the fixtures budget was blown by $3000.  

The same person will find it hard to put down laminate flooring in their reno project because they would never settle for this at home, again the ego creates a costly mistake.  A tasteful and cost effective laminate flooring will translate to the same eventual sales price as the much higher priced hardwood.  The huge savings is in the labor as many people can lay the click together laminate themselves or pay a handy person a few hundred bucks for a day's labor installing them for you.  This is much more cost effective than paying a professional flooring installer three dollars per foot to install your exotic planks.  

The key is to keep perspective.  The idea is to rescue an outdated home and make it shine like new. Its neighbourhood and price range should dictate the finishing.  The only time you should venture into luxuries, is when you find them on sale for prices that are as good or better than the perfectly adequate supplies you can get from Costco or Home Depot.


2. Lose track of time

The old saying that time is money is a truism you cannot lose sight of in this current market.  In 2007 you could take forever and the consequence would only be that the market went up another 10% while you doddled along. Bring that same lack of urgency to a present day project and you will find that mounting carry costs like interest, insurance, utilities and property taxes gobble up your profit making you nothing more than a pro bono contractor for your future buyer.  Cosmetic renovations should take 3-6 weeks depending on square footage.  This will be the difference between doing one reno per year with a marginal profit and three efficient flips per year netting you a six figure profit. The latter is something you could do full time, the former is something you will likely only do once and write off as an “experience”.


3. Blow the budget

A blown budget is by far the single biggest reason for failed flips.  There are many ways this can happen from misguided spending as suggested in number one, over estimating one's abilities to DYI. Many amateur flippers think that they will be doing all the work themselves and then the reality of their limited time, talent and tools leads them to hire a contractor that was never budgeted for. 

The other big reason for blown budgets is a lack of due diligence prior to purchase.  Things like having to replace plumbing and electrical when it wasn't expected can be devastating. Sewage systems and mechanical also add to costs without the opportunity to recoup the money when you sell.  Simply put, the 5k spent on replacing the aluminum wiring won't translate into a 5k higher sale price.  Getting a thorough professional inspection and sending your realtor to city hall to check on permits are ways to safe guard yourself against buying a money pit.  You don't have to run from properties that need these things done, just make sure that the purchase price reflects the costs.


4. Too much DIY

I love the satisfaction of a job done on my own. It’s a proud moment when you step back and see what you’ve accomplished. These feelings are wonderful, but if we are to treat this like a business we must take a good, hard look at the facts. Firstly; how long did the job take us? The time spent on YouTube watching how-to videos, the days of prep, the unforeseen hurdles to jump mid project, and the seemingly endless finishing touches. When you factor time into the equation, the six weeks it took to do your own drywall might outweigh any savings you found by not calling a professional. Secondly, how was the finished product? Was it “really good for someone who isn’t a dry waller?” or was it perfect, professional craftsmanship? Obvious “DIY” jobs give buyers that uneasy feeling and will often cause you to lose thousands on your sale price.

When you factor in time and quality of work, having a team of skilled trades that can finish a job in a couple of days and do it perfectly, is rarely more expensive than going it alone.

One quick tip; I always ask a contractor how long the job will take them. Then we establish the best hourly rate -  say 30/hr. With this I now have their “day rate”.

If they say they can have all the tile work done in three days then you now have a price $240/day x 3 = $720.00. How long would all of that tile take you? And let’s be honest, would it look as good?


5. Approach the venture backwards (without the secret formula)

This is the cardinal sin of flipping.  It goes something like this.  A person buys a fixer upper because they were told it was a deal.  All sorts of ideas came flooding in on how they could rehabilitate this home to its former glory and with their knack for picking colors and materials, someone was sure to love their finished product.  So off they go doing their best to control costs and work quickly, but a couple of complications came up that led them to take a little longer than predicted. Oh well, this is normal right?  They spent a little more than they'd originally estimated on a napkin the night they closed the deal. Obviously they couldn't say no to that stunning fireplace insert that ran them a pretty penny.  The flipper believes that their finished product looks great and works through this common process to arrive at a price to market the property to the public.

They start with what they paid, and then add up all the costs. “Wow did we really spend that much?”

$250,000 purchase

$  41,000 renovations

$  13,000 selling costs

$    6,000 interest payments

$    3,000 utility bills

$    3,000 ppt

$    1,500 property tax

$    1,500 legal fees

$319,000 total costs+ Desired Profit

= Sales price


Then based on how they feel about all the hard work over the months, as well as the risk and stress they’ve had to take on, they add a profit that feels "worth it".

“I’d like to make at least 30k” they often say.

Adding the profit to the cost they select a list price of $349,000. Their realtor obliges, hopeful at first, but they soon become frustrated as the property sits for three months with few showings, while comparable homes sell for $325,000 around them. “Well they're not as nice,” the amateur says while they wait…

This is the wrong way, in fact it's completely backwards. The good news is there is a secret formula that you must use BEFORE you buy your reno project. It’s simple and it looks like this.


Start with the eventual price and work backwards from there:

$325,000 Eventual Sale price (Comparable avg less 5% quick sale factor).


Subtract the following:

$ 30,000 Profit margin (10% of the value of property)

$ 40,000 Renovation Costs ( budget plus 10% )

$  9,000 Carry Costs (Monthly interest + monthly bills x projected timeline)

$ 15,000 Professional fees (Realtor+Lawyer+Accountant)

$   3,000 Property Transfer Tax (1% on first 200k, 2% on balance)

= $228,000 Buy it now price


This buy it now price tells you exactly what the most is that you can pay for the property to protect your pre-determined profit margin.


Follow this strategy and you take most of the guess work out of flipping. This is the formula I have followed on dozens of successful flips and the exact formula I consult my clients on today. Avoid all of the costly mistakes above and the world of flipping can be an exciting and rewarding business. It’s not as hard as one might think as long as you have the right information and a team of great professionals behind you that specialize in this kind of thing. Happy flipping!


For more details or to reach AJ Hazzi, please visit:
Contact: [email protected]
Cell: 250.864.6433 


Read more Investment Real Estate articles


About the Author

AJ is the owner of Kelowna’s downtown boutique firm, Vantage West Realty. The firm prides itself in breaking the mold when it comes to how they practice real estate. Taking a consultants approach rather than the tired, old-fashioned sales approach of selling kitchens and baths, they pride themselves in having a level of expertise not found in a class room.

Having been a student of real estate through 2 market cycles, AJ has come to realize the absence of truly qualified professionals specializing in investment real estate. This has become AJ’s role within the firm and the community, to consult clients on Foreclosure sales, Flipping, Positive cash-flow, the benefits of lease option and other creative avenues that most agents completely ignore.

AJ is a firm believer that the current market is rich with opportunity and that there is a real need for a consultant who “speaks the language" of the investor large and small, and understands their wants and needs. For example, many realtors would squirm from having to make low-ball offers, worried about insulting sellers and tarnishing their own reputation. AJ consults his clients to make the offer that makes sense to them based on their goals; if it’s a flip then the mathematics on the firm’s handy “profitable project work sheet” sets the max dollar. The same for cash-flow, if a client has a rate of return in mind, then that dictates the price!

With a well-deserved reputation as a real estate renegade, Hazzi is definitely an out of the box thinker; a proactive agent willing to get creative and produce a solution during challenging transactions. He is very excited about the market we will see in the next 10 years and feels that it will lend itself very well to his unconventional style.

AJ is an agent who practices what he preaches. He has built his own real estate portfolio up to include development property, resort property, rentals, fix and flips and cash flow properties. Arming his clients with the knowledge and confidence to invest has enabled many of them to build impressive net worth and passive income. His goal is to impart on people especially of the the X and Y generation, that depending on RRSP’s and Government Pension Plans to look after us down the road is risky business. Most people don't realize that as little as 1 or 2 properties added to your real estate portfolio now can provide a safe, cushy retirement in the future and the sky really is the limit.

AJ's past clients and business relationships are his largest asset. His business has been grown almost exclusively by referral. To hear what AJ Hazzi's clients have to say about his service view the testimonials.

For more details or to reach AJ Hazzi, please visit
Contact: [email protected]
cell: 250.864.6433


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet presents its columns "as is" and does not warrant the contents.

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