Scott McGillivray: The ROI maker

When Scott McGillivray isn't hosting his hit TV show Income Property, he's busy looking for properties to add to his already impressive portfolio. Sometimes, he says, he'll look at as many as 10 homes throughout the Greater Toronto Area (GTA) in a week, searching for at least one with the potential to add value to it.

Obviously, this wasn't always the case, he says, since cash-flow positive homes were a lot easier to find in Ontario before the boom of 2007 and the following surge in the first half of 2010.

But as rising prices continue to widen the gap between rental rates and home values, McGillivray says, investors are left with only two options if they want to continue buying properties in southern Ontario: find homes that others have overlooked or invest outside of the GTA altogether.

"You can't make money on something obvious. You have to be able to look beyond the obvious and be able to create wealth in properties," he says. "It's almost impossible to find anything that's turnkey right now in the GTA.

So you have to be able to modify, rezone, convert and you need to have some skills and some insight into what can be done with a house to turn it into something that can cash-flow properly."

Starting out

McGillivray, 32, developed his knack for seeing a home's full potential despite its apparent flaws, while studying business at the University of Guelph. In 2000, McGillivray, then 21 years old, made his first move to become a real estate investor.

At the time, he couldn't find a place he'd like to spend his final year in, so he enlisted the help of a Realtor. After looking at a few properties to rent, he soon learned from his Realtor that buying a house would work out to be virtually the same amount of money, except, of course, he'd own a property.

"That kind of triggered something in my head," he recalls. "So I started doing some math ... and the numbers worked, and they worked really well despite all of the advice from friends and family not to go ahead and buy a rental property."

In addition, McGillivray had plenty of potential tenants since many of his university friends were also looking for a place to live.

"So I figured that I can't lose. And not only does buying a property make sense, it makes money," he adds. McGillivray scrounged together a down payment and purchased a singlefamily home near his university, which he then went to work on, using his home-reno skills to create an additional bedroom for added cash flow.

Gettin' in the biz

In 2001, after graduating from the University of Guelph with a bachelor of commerce honours degree, McGillivray started applying for jobs in sales and marketing.

It wasn't long until he received a call from Johnson and Johnson, requesting that he come in for an interview for a regional sales representative. The job paid good money, and made sense considering his educational background, but after two weeks of on-the-job training, McGillivray knew it just wasn't the right fit.

"I sat down and I was looking at my job opportunity, and I was excited about the idea but not the territory I had to cover because it was a very large area (from Pickering to Ottawa). And I would be driving around all of the time selling these medicines I didn't know anything about," he says.

Looking at the money he was already making from his real estate portfolio, which included three student rental properties at the time, and the salary he'd receive working for Johnson and Johnson, he decided to turn the job down.

"I said to myself, 'I'll make just as much money if I pick up two more properties than I would at this job, but I would be doing one-tenth of the work and I would be doing something that I love," he says.

At 23, McGillivray refinanced his first two properties and bought five more single-family homes in Guelph over the span of six weeks.

To learn Scott's insider investment tips, download a copy of our March 2011 issue.

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