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(00:00) unfiltered the real challenges and triumphs of a full-time investor with Adam kitchener greeting friends this is the truth BR real estate investing uh and I’d like to say thank you to everyone who attended the the how to invest in the USA Workshop this past Saturday the recording will go out in about a date or two uh with the research I prepared on the best places to invest in the USA for 2024 along with my tracking of uh 23 at present 23 new manufacturing facilities I’m laughing because I add about two
(00:29) every week as I as I find more my in my continued research again 23 uh new manufacturing facilities being built uh I’m setting my criteria at a billion dollars investment or a thousand uh job potentials being created uh so let’s a combin right now that list com is a combined $224 billion invested that’s US dollars for a potential job creation of 69,800 now compare that that’s a big number yeah so now let’s compare that to stellantis the former Chrysler in Volkswagen investments in Windsor
(01:02) Ontario and St Thomas in Ontario respectively for a combined 7.8 billion us or and 5,500 potential jobs um to summarize the US population is 8.6 times bigger than Canada I know everyone thinks it’s 10 times bigger shout out Antonio but with historic immigration over the last few years uh it’s now 8.
(01:28) 6 times uh uh anyways to summarize my research for every new manufacturing job created in Canada the Americans create 1.47 jobs so almost 50% more job creation um per American uh for every sorry per per job created for every dollar invested into new and Manufacturing in Canada $334 is invested in the USA so the Americans are investing about three times as much as we are in New Manufacturing and that’s important because uh every new manufacturing job usually has spin off of four to five jobs that’s per Elon Musk who has a
(02:08) little experience in that area uh and just ask any politician they all want jobs for their areas because that means um that means a growing economy it means more jobs it means higher growing incomes and that generally makes people happier when they have growing incomes uh so the divide in productivity in between the economies uh between Canada and the US it continues to grow it’s actually quite well documented by our media they’ve done a really good job in doing so I posted an article from from better dwell in Canada the headline
(02:42) is Canada’s economy falling behind us growing 10 times faster per capita yes it’s bad news uh I’ve got I’ve got um images from the uh article and I’ll I’ll post a show link as I’ll post a link in the show notes as well uh on a personal front the flights are booked for Cherry I for our post tax season ration in Atlanta and Savannah Georgia um we’re going there specifically because uh Georgia is getting a ton of investment tons and tons and tons specifically Savannah where I’d like to buy a property they
(03:13) are getting a new a new hyand plan so H the world’s third largest manufacturer in the world I believe they’re actually the largest company in in South Korea as well correct me if I’m wrong anyways they’re probably top three we’re splitting hairs here anyway the tiande and and the government of the USA in Georgia are making a $7.
(03:34) 6 billion investment for a potential job creation of $88,500 and uh Savannah is not that very big town so I got to imagine that this will put a lot of pressure on rents and prices hence I want to get in there before uh before their doors open and all the and the floodgates open for new employees who will make an average of high $50,000 per year plus benefits so if you do the math uh like 56 ,000 American is about roughly getting close to 70 getting close to 80,000 American sorry Canadian sorry 58,000 56,000 American is getting close to uh 880,000
(04:12) Canadian our dollar is uh not doing very well these days thanks to the uh Divergence in economies anyways uh the average employee at uh at many of these manufacturing plants they will make more than the average household in Canada so that’s a good sign of uh attractiveness for people where people should be moving anyways uh we’ booked ourselves in for an entrepreneurs organization uh Atlanta event as well they have a they actually have a networking learning session going on on the subject of hospitality uh
(04:45) cherry and I’d love to learn and we will be meeting fellow seven figure entrepreneurs from the Atlanta area hopefully I’ll get to meet some Real Estate Investors as well uh quick market update I think I shared last week but I’ll share it again from my experience in the markets that I Monitor and operate in from basically from Toronto to nagar Falls kwc Windsor uh single family houses that are not tenanted repeat not tenanted houses that are on land are in are fully into sellers Market mode we’re seeing multiple offers
(05:14) on duplexes again which is great news for my clients and I as that’s what we primarily hold uh I’ll be sell one on my own in June as my ts are moving out so I’m currently monitoring prices closely so that I may strategize on what Renovations I need to do in order to maximize my return on investment and of course give that same advice to my clients uh the rest of my Hamilton Properties I’ll hang on to one or two more years a cmhc uh La last week or week two weeks ago now predicts that we’ll be back at Peak prices uh by 2026
(05:44) uh so then I’ll sell then I’ll sell my houses to the highest bidder typically those are owners who will occupy the house as that’s my experience as they typically will owe bid investors and sadly Rental Supply will be removed from the market uh this is only natural since our governments do so much to deter real estate investment rent control rental licensing Hamilton’s anti- renov eviction bylaw and the point about rental control I’ll include a link as well um in case anyone missed it back in
(06:12) 2022 both the provincial liberals and NDP have both said they would return rent control to how it was previous to 2018 so what happened in 2018 Doug Ford created that rent exemption uh where new construction anything built after 2018 would no longer have rent control uh again the NP and liberals uh for Ontario have promised to remove that uh and uh sorry to Doug forward um you well not really sorry no politician lasts forever so at some point we’ll no longer be under provincial um sorry under PC party in Ontario and yeah who whichever party
(06:53) will in likely NDP at liberals will remove said rank control so uh back to the market update new construction and the further you are you are away from Toronto uh they are facing slower markets except for Windsor Windsor’s being is an exception because of all the all the investment going on uh I feel sorry for all those struggling with properties uh in condo’s new construction and further away from torono and I feel bad for the Realtors Who Sold those properties keep in mind if a new construction condo does not
(07:22) close the realtor who sold it has to return their commission typically that to return their commission and typically commissions are paid uh they get 2% commission after the price the purchase goes firm and another 2% after closing that’s a lot of money by the way uh that’s tough times for many and of course I feel especially bad for condo investors who are returning their units which is happening more often than people suspect so again reminder uh in my experience I’ve got a lot of experience as well uh to avoid tough times avoid
(07:54) over leverage keep in mind like everyone who’s going bankrupt these days or gone bankrupt previously was typically because they couldn’t handle the cost of their debt so it would make sense to avoid over-leverage and expensive debt invest only using best practices where economic fundamentals make sense if you’re not sure how or where I’ve Consolidated uh my research I’ve done a lot of research uh into our pivot into the us for our investing uh I I prepared a report called best places to invest in
(08:25) the USA for 2024 including that list of 23 new manufacturing plants being built by the likes of you know these small companies you never heard of Honda GM Ford Toyota Intel Samsung tsmc the world’s largest private manufacturer of microchips Texas Instruments LG hyand the list goes on and on uh if you’re interested in investing in areas with the future thanks to billions of dollars of investment to create thousands of potential jobs my report’s a great place for you to start your research and I had
(08:59) a really difficult time compiling a list of all the manufacturing that’s been going on in the states chat gbt and Google failed me is more like a peace meal project to do with get this research done uh so to receive the report for free just simply go to my website www. truthout real estate investing.
(09:29) con CA uh and again it’s a free report I am a big fan of Education being as affordable as as affordable or even free as possible so please enjoy on to this week’s show we have my friend Adam kiter back on the show and we get along well because he keeps it real if you couldn’t tell I I I prefer to have conversations around the truth through real estate investing uh there’s no pictures of him on a private plane or luxury vehicle or luxury watches well he actually does have a picture of himself on a private plane but it’s obviously photoshopped
(09:57) and he’s poking fun at the phonies that are out there don’t get me wrong luxury stuffs are great I personally love it when people celebrate their success success and reward themselves and things that they’re passionate about keep in mind though most successful people in my experience don’t brag about their wealth if you don’t believe me read The Millionaire Next Door uh and the book describes 99% of my millionaire clients exactly why would anyone brag publicly about their cars or watches or gold
(10:27) chains on social media that simply makes them a target for for robbery and imagine your tenants see that how would that work out in a good conversation when you’re trying to collect rent or they’re behind on rent um so Adam actually rips people pretty regularly who do such things who and those people tend to turn out to be frauds on social media on today’s show Adam recounts his trials and tribulations of being a full-time active investor he shares how his finan how he finances deals including private money the numbers on
(10:57) the deals he’s done why he considers them deals where his things haven’t always gone well how cash flow And Timely execution is Paramount to survival and he pulls those punches it’s not sexy uh it’s actually downright nasty at times he’s been assaulted he’s been harassed by tenants tenants have complained about him to the police and he’s been arrested uh he’s bought houses with backyards littered with used syringes from drug dealers uh investment wise he’s done excellent and he’s well
(11:26) set up for the future but it’s far from sunshine and Rain bones if you can’t tell from this introduction Adam is a very a kind guy and so do feel free to reach out to him on social media he’s happy to take a question or two from anyone who needs a second opinion on anything real estate related I’ve given uh you can find Adam Kitchener on Instagram and Facebook uh I’ve G I’ve got Show links in the show notes please enjoy the [Music] show e would you meet with your tenants witht I
(12:57) meet with a delinquent tenant yeah it sounds like i’ mentioned that as well delinquent tenant like once the tenant’s out of my building I do not want them back at the property I’ll just have my lawyers send them paperwork so no I think there are still existing tenants right oh maybe that’s why okay so cuz like if they’re if she’s talking about having them fix damages I’m like that sounds like a past tenant one why would they even agree to show up like if you’re damaging the unit
(13:24) what incentive is it for you to go back and visit the office so you can get served like so it makes sense from that respect you know some people are stupid a lot of people are stupid yeah how’s Adam’s Mike they bring it closer to you people who invest in Ontario Real Estate are stupid that’s what I’m saying like you’re aist uh uh yeah like like so many people in our community are getting away from long-term like maybe not exiting but they’re at least their next property is away from long-term tenants and and and
(13:54) that’s something I want to talk about because that’s only going to make from from an out like from all right save for the show yeah ready Adam yeah hello Adam what’s keeping you busy these days the Ontario real estate market yeah but that’s always keeping you busy what about it specifically uh I mean the the downfall of you know Ontario real estate investing I mean we’ve seen uh some big names drop out of uh out of you know in the newspaper we’re seeing all these uh investment groups going under even large
(14:25) developments uh like billion dollar companies yeah the as project Toronto the one project right he’s got another one in in trouble now with the Hazelton 129 Hazelton there’s a demand letter there um so we’re seeing large players and small players and then somewhere in the middle those other you got yeah you’ve got the small guys who have gone down some small Capital companies uh and then we’ve got some large the large Northern investor in in Ontario is going under and then you got the billionaires
(14:51) going down too all in this Ontario real estate market uh so it’s it’s been interesting for me to kind of navigate this and watch and see what’s going on and even myself I’ve seen myself you know like I’m definitely not uh doing very well in this economy either right so um I don’t think any investors enjoying this period I think if anyone is saying that they’re doing well in this economy they’re lying unless they’re you know a seasoned landlord and they’ve owned their properties for you
(15:15) know north of 15 years maybe 10 15 years everyone’s struggling every single landlord in this province is there’s shades of it yeah it’s going to depend it’s going to be varying degrees of struggling um some are very much underwater if you’re uh highly leveraged in condos or things like that I think you’re probably looking for some sort of windfall or big sale or something like that um if you’re into long-term multif family and you’re not overly leveraged you’re you’re doing okay yeah you’re
(15:41) doing okay but you’re you’re probably you’re probably annoyed with the how long it takes for like your refinances to happen exactly that’s like that is you know I think 90% of Ontario landlords would would love to have that as their worst problem yeah I I mean what refinances at this point I I mean it is incredibly hard to uh to refinance you know right now especially if you have private debt cuz they’re looking at that private debt saying oh you can’t afford that it’s like oh yeah if you
(16:09) refinance it then I can afford it right but the the banks don’t look like that I mean I think the interest especially CMC doesn’t look doesn’t approve many lenders correct right I think the biggest thing too is um a lot of landlords think to themselves it it the problem is it’s kind of like in good times it’s great because if you can sell a property you can refinance a property but in this economy you can’t sell it which means the bank doesn’t refinance the banks always win they don’t want to
(16:34) be in a position where they’re stuck with your property that’s how Canadian banking laws are created which is also why I didn’t think things would get as bad as we are because we’re seeing a lot of delinquency we’re seeing a lot of foreclosures and I I honestly thought that the Canadian banking system was built to not have those problems if you look at America you’ve got you know in 2008 500 Banks went under you know hundreds of millions of dollars was lost and people lost millions of their homes
(16:59) where in Canada we’ve never seen that sort of drastic thing because of the laws and the way they’re built socialist not since like the late 80s correct and that’s it’s been a really long time we’re socialists right and in that respect that’s kind of a good thing because the banks and that’s what our banking laws are built that way I mean you can get 10% down on a single family home because Banks know that your your house isn’t going to drop more than 10% usually you know uh multi they’re
(17:24) holding the mortgages to and they’re holding the mortgages it’s totally different than the states and they know they can also sell their sell your house right so they they’ve built in a buffer they’ve built in their protection so that they never end up at a loss on your house um which is I think the mindset that I went into 2020 too cuz I mean the banks uh the the Canadian economy was going for and I’m and and they’re like well we’re going to start raising rates okay well it’s 2% the the the
(17:49) stress test is 5.6 we’re not going to go past that because that’s the stress test that was my thinking because it’s like if you go past that every Canadian Mort holder is going to get WIP start getting wiped out we don’t do that in Canada we want people to hold their mortgages even even the banks want Canadians to pay their mortgages they don’t want your house we do not want to see what happened in Alberta where people just walked away from their mortgages so yeah people are underwater a lot of people
(18:15) were underwater and the 0708 right oil crashed yeah so that’s where I thought I’m like okay we’re going to we’re going to tighten the strings we’re going to make people feel it but we’re not going to go past that 5.6 so yeah that’s kind of where I I kind of thought about the buffer that’s where I was like okay so we might get to five and I could survive that I mean I’m not going to be happy about going from 2.
(18:35) 5 to 5 but I certainly don’t think we’re going to go to to seven especially when the Bank of Canada came out and said we’re not going to raise interest rates we’re certainly not going to do it 10 times in the next you know year um and I think that that mindset is why I was still somewhat less bullish but a little bit bullish on Ontario Real Estate knowing that um you know you ride the wave you keep going um you might not be able to do as much as used to but you just kind of adjust for that um and then obviously a lot of
(19:02) other investors thought the same thing and also bet uh bet on appreciation I never bet on appreciation you know I bet on cash flow that’s that’s all you can guarantee um anyone who bet on cash uh on appreciation these days is is probably in in trouble and that’s where what you’re seeing in Ontario right now so now Adam you’re you’re younger you sure your age 31 how long you been investing for um I mean I grew up in in in real estate I bought my first property 2017 so I think it was 25 then
(19:31) yeah yeah okay so like all these folks that we mentioned at least on the uh not not not the Mahi project obviously but everyone else that that we know of that has having had significant public bankruptcy creditor protection issues they were all generally younger yes and they all had started around the same time you did yes so I think it’s important that like um how would you describe where you are right now is it survival mode like for example I I’ve talked I talked to many investors yeah like there’s a saying
(20:00) within the community survive till 2025 yeah right like 2024 2023 for many of the smart money was about preservation of capital yes not return on Capital yeah right versus we see some people that were still raising money hard and and actually want to say something like I don’t know why we got away from the term but you know 5 years ago we used to call private money hard money hard money loans yes yeah right we got away from that somehow CU promis that’s a promise no one breaks promises no one breaks promises but it’s a hard
(20:36) money loan yes right and then when because you know the connotation is with a hard money loan if you don’t make payments someone’s coming to break your thumbs exactly exactly so we we painted very bad branding I mean that’s that’s why we don’t call ourselves landlords we call ourselves housing providers home service provider I like right home service provider because uh freeloading parasite just sounds terrible you know um so I want want to get into how do you how have you defended your portfolio
(21:02) because you are on the aggressive side yeah right uh from from where I from the outside looking in I would consider you on the more aggressive side you’re in some ter you’re in some secondary you’re in some tertiary markets uh you take on private money as well yeah how have can you explain your strategy and how have you survived so uh well I’m going to I’m going to make sure that the iWin logo is always facing the camera just for promotion period um you can send me the five later um so the I’m aggressive but
(21:31) I’m also very conservative in how I look at my numbers right so I’ve never bet on appreciation and in terti area markets that’s that’s a good thing right um and I’m always looking at the cash flow so I’ve always looked at properties and thought to myself okay so what’s the closest market to me so I I would look at a place like Simco and that’s 20 minutes outside of Brandford when I bought in Simco I was buying a fourplex for say you know $3 $400,000 but in Brandford that same
(21:57) fourplex would be selling for $600,000 so I’m buying at a lower price point but if you’re looking at the rents they’re comparable I’m getting 80% you know in some cases I’m buying real estate at 50% and still getting 75 to 80% so my cash flow is significantly better on those Investments right um so I’m always preparing for the worst I think that 2023 and 2022 I underestimated what my worst would be I’m taking um but I always knew that the market was never going to be the same you know I
(22:27) especially in 2020 and 20 20 21 I was like this these Glory Days of easy refinancing are going to come to an end when I don’t know but I always had that in the back of my mind so um I was able to uh continue to push forward and be aggressive because the market allowed me so but I always thought to myself what happens if this stops right what happens if I can’t um buy as aggressively as I as I used to and and and at this point that’s the case I can’t buy like I did in 2020 21 um so I think that’s kind of
(23:02) what’s kept me afloat uh the other thing too is um up until I think basically pretty much 2022 I was aggressive um in the respect that I looked for deals and I didn’t care what that deal was I live you know I live in Hamilton I’ve got properties in Branford Simco wab bashen Romera Port curn ingersol Woodstock like the the Johnny Cash song I’ve Been Everywhere that was my Investment Portfolio I want to be able to sing the song I’ve Been Everywhere by Johnny Cash but using only portfolio uh uh cities in
(23:34) my portfolio and and and up until now that served me very well because I find a deal and if there’s money to be made or if there’s appreciation to be created I did that um now that this Market has shifted I’ve also um re-evaluated my investments and looked at myself long term also because also the this manag M of property so far away from each other is is not realistic and I don’t I don’t necessarily I don’t regret any of my investments and I don’t care if my investments two hours away I
(24:08) still you know it’s still a good investment it did what it needed to do I did a a fantastic uh project up in Gravenhurst and the numbers performed very well it did what it needed to do now as a long-term hold doesn’t make sense for me to hold a property that’s 2 hours and 20 minutes away no right so my uh my thing going forward is I’m going to sell the one in Gravenhurst and replace those four units with four units in Branford right something that’s closer to home um and staying in those
(24:37) markets so I’m looking at Branford I’m looking at Simco I’m looking at Woodstock those are going to be my investment regions right if I it’s all within 45 minutes drive for you exactly I mean I more reasonable yeah um and also well the other thing too is my my contractors too I’m starting to consider them as well for me to find contractors in all these little markets is incredibly difficult so most often I would end up taking my Hamilton contractor and dragging him all across Ontario um right which is you know and I
(25:08) mean when you’re doing a large renovation if you’re renovating four units all at once you put them up in a hotel Airbnb and and you get the thing done in two months cool but what happens when the tap is leaking then you got to find a local plumber and all that sort of stuff so that’s where the maintenance side of things start to uh become a little bit more of a Time consumption and pain in the butt to to deal with um and for me to send my Hamilton plumber to go and deal with a tap two hours away
(25:32) doesn’t make sense does he won’t do it no he’s not gonna do will will two hours exactly but it’s not it’s a poor use of his time it’s a poor use of his you know uh his his um value as well so so sorry Adam I want to pause you for a sec because I want to I want to drill home some of the different um CU whenever there’s significant loss in in uh in real estate businesses I study it yes because you know the old saying those who fail to learn from history are doomed to repeat it y right so I need to
(26:00) understand what they did in their business models that that cost them I’m not looking for like celebrate people’s losses or anything I just want to understand what went wrong so then I can you know learn from history protect my clients interests make sure they stay safe yeah now for example like the Ontario the the Northern Ontario landlords they had vacancy over over 30% structural vacancy so from from the outside looking in it looks like they weren’t even advertising units for rent cuz these places needed renovation still
(26:29) so they were you know it wasn’t just like 10 and turnover that they had 30% vacancy no exactly they weren’t even like ready to be rented well a lot of that was probably Force turnover they got very aggressive on the force turnover that you don’t get 30% naturally there well there’s there’s probably one of two things the properties were in such a state of disrepair that they weren’t even rented when they bought the places um and there was probably a significant reason why they weren’t rented right well this was
(26:54) a this was a bur model an ideal bur model typically is you you buy a really underpriced property because there’s something really wrong with it exactly the bank won’t touch it that’s why you’re using private money preferably your own cash then you take a lot of risk out now like you do the same though you you take on you take on ugly properties that the bank won’t touch y so let’s let’s get into the basics like tell us about a past property that was pretty ugly I think the I mean the one big
(27:20) difference between me and them too is is also the scale and size of which they were trying to do so and it’s a lot more um difficult it it’s you know if you have one flip on the go and you went into 2022 as it slowed down you were probably able to sell that what happens if you’re six and seven or 20 flips in you know like there’s a lot of people who are like mid projects halfway through on a lot of different projects it’s like if you’ve got to exit out of one property or you have to carry one uh
(27:48) small percentage of your portfolio because it’s just lagging you’re going to be able to survive that but I think a lot of these guys kind of went uh way past that point and got themselves into a position where yeah you’re 30% vacant and you you can’t sustain that um where you know I typically would do one project at a time now there was you know even last year they started to pile up because I wasn’t able to uh refinance them into preferred uh lending terms or I was but I wasn’t able to pay out all
(28:18) of the capital that I had invested into it so uh the model was always you know you go in you fix up the roughest building like I I I tried to find the roughest building that I could find right dump 200,000 into it pest picture of the roughest property what what what made it so rough what made it so that the bank wouldn’t touch it I mean you’re you’re looking at you know bad Plumbing bad apartment designs just rough I mean even like you know the exterior needs to get done I mean I’m looking PL Alan would would not qualify
(28:49) you for insurance no exactly I mean you Insurance there’s no there’s no mortgage exactly um outdated electrical systems like that say same thing you you’re not getting Insurance you’re not getting a mortgage you know so like I’ll buy a place with knob and tube I’ll buy a place with one meter where there should be four um and I’ll deal with Hydro One and split the systems up and so when I go into and then how are the tenants are they like doctors and lawyers are lovely like callor six figure earning people
(29:16) absolutely so they’re usually um this isn’t a social media ad the the one guy is uh you know he’s a doctor he’s dealing uh drugs fentanyl sorry uh he’s prescribing fanol fol he’s prescribing fentanyl to of the the individuals in the neighborhood um so I actually anyone doesn’t tell you can’t tell we’re being sarcastic fentel I believe is a is a medication that can be prescribed but in excessive doses it’s obviously dangerous yeah so I had a guy who was dealing fat andol in one of the properties that I
(29:44) had Acquired and uh even the cops were just like the the neighborhood was basically like hey you know we’re living next to this drug head and the cops are like what do you want us to do and they’re like get rid of him and he’s like landl tenant board you know like the cops are there to keep the peace they don’t they don’t do anything uh meanwhile in the backyard he’s got needles everywhere like there’s there’s there’s a there’s a there’s a new immigrant family living on the first
(30:06) floor wait wait wonderful this isn’t a what is this Triplex fourplex what fourplex forx forx and he’s got needles all in the backyard in common area yeah yeah in common area there’s needles in the backyard and the and the and the new family on the main floor uh new to Canada family is is living on the main floor and they’re terrified to live below this guy literally living below this guy and uh and do you think the kids can enjoy the backyard no no they can’t do that the the guy who bought the
(30:31) house next door he moves in from Toronto and he’s like oh look this is a nice little town moves in right next to the drug dealer and he’s like I’m going to sell my million dollar property in in Toronto buy something a quarter of the price live here you know gentrification all that fun stuff and ends up living next to the drug drug head so I ended up trying to deal with him well just drug dealer so there’s there’s regular traffic of people coming to buy drugs yeah which yeah which is what you want
(30:58) in your neighborhood with and when I bought the property the cop looks at me he goes well you just want to get him up because you want to raise the rent I like actually I don’t actually I mean to be honest he was paying relatively close to Market rent I mean he wasn’t actually paying his rent but had he been paying his rent he would have been pretty damn close to Market rent um the reason I want him out is because the neighborhood wants him out I’m doing a s this is a safety thing you like I’m not trying to
(31:24) excuse me the cops aren’t building a case against a drug dealer well he had an active Criminal charge it was in the it was published he was caught with dealing fat and all he had weapons charges and all thatu ja not yet we got to wait for for cases to be heard before a judge so he’s just out and about enjoying his life and a we he’s still in the property he’s still on the property how long you owned it for why I had bought the the property with him being the problem so the the previous owner
(31:48) must have dealt with him for years so so let’s take a step back you got imagine you got a pretty good discount cuz nobody wants to take this on correct um and I mean and that’s part of the problem with the system too I mean that’s that’s another landlord who basically exited the industry he’s like screw this I’m not dealing with this yeah he’ll never be a landlord again what’s he what’s he doing he’s trying to go through the land ten board so they’re two years we’re waiting for him to go to
(32:09) jail that’s two years you know like two years for an active drug dealer to go to jail it’s going to take time to go to court I mean it takes a long time from charge to to hearing it to actually like get stuff done I don’t know from the criminal side you know um I’ve never had to go to jail for uh you know any reason really so you know um but uh got close there almost no the tenant was just off by a little bit um and so um so you’re still dealing with this no he’s gone now he’s gone yeah the the tenant has now
(32:41) found his way um ended up giving him some money cash for keys Arrangement because it’s the quickest and easiest way to remove a problem from the building now I’ve got neighbors who are happy with me that building has now got uh is going to have four brand new families happy to live there you know um in a needle free backyard in a needle-free backyard exactly you’re an awful awful person I I I got rid of a drug head out of my building and yes I’m a I’m an awful person because I I have now you collect rent for you’re hoarding
(33:12) properties for for hoarding properties exactly and that was the landlord’s that was the the officer’s look to me he’s like oh you’re only doing this because you want to raise the rent I was like no buddy I’m doing your job you know um and I I mean say what you will I mean I mean him some people are going to some uh no sympathy for I’m trying to look at it from an empathetic view I mean that guy doesn’t can’t be in the private Market he needs to have rep around Services he needs to be in rehab he needs to be in
(33:38) halfway house he needs he needs access to services that he’s clearly not getting he should go to jail first he should go to jail and then when he’s released he can’t be released into the private housing market he needs to go to take those necessary steps right and and get off the drugs and deal what he’s deal dealing with and all that but as a landlord that’s not my job yeah you’re a private citizen I’m a private and I’m a housing provider as is every other Ontario landlord is we are not
(34:03) housing providers we are psychologists we are caretakers we are babysitters we are taking care of full grown adults but are we given resources no I’m not I don’t have a degree in social work or psychology or anything like that I’m not even given tools I mean if he’s dealing drugs in the backyard can I stop them no the cops can’t even stop them what do they expect me to do right so and this is the the sentiment that’s heard across all of Ontario we have you have one problem tenant in your property and it
(34:35) affects the other tenants because the other tenants all move out they move out and it’s not fair to the tenant have massive vacancy you have massive and what are you going to do rerent it good luck anyone who walks through the building is going to see what’s going on so you have to remove the problem you wait till snows and covers up all the needles exactly yeah you wait till the winter and you know um don’t build any snowman you know so um instead of a carrot nose it’s a needle nose oh my God
(35:01) you went there so how how is the building now it’s getting renovated yeah so I’m just I’m renovating it top to bottom brand new floors kitchens bathrooms the whole nine yards um given the the fun interest rates that we’re paying I’m not doing as as extensive a REO as I would like uh there’s a lot of you know things I’d like to do move layouts around change uh make them more efficient but um we’re living in an environment where it doesn’t actually even make Financial sense to be
(35:28) landlords so I’m just doing it to get the cash flow rather than having a building empty sitting empty right so so so the scope of the projects come down because substantially yeah how are you financing the renovations it’s still private money yeah can you elaborate on that is that a second is that a promiser note is that yeah so I don’t I don’t do promiser notes uh I don’t do OPM other people money I have never gone out onto the internet and been like hey you should invest with me cuz I’m a
(35:55) brilliant dude no I go through a a um mic mortgage broker type person uh they get the cash flow together and I mean it is most likely investors or someone’s private personal money um but the way I get it it’s secured through a mortgage broker and it’s secured against my other assets right so I have a a portfolio of properties uh some are underleveraged uh so we use that you know if I have a mortgage that’s 40% loan to value we’ll bump it up another 20 30% to get the private money to pay for the renovation
(36:28) I’m doing and at some point I refinance and pay back that private money what are the terms these days like what kind of terms are you looking at 12% for our second yeah second second marage yeah um yeah it’s about 12% that’s about Market yeah so uh and then the lender fees there’s usually lender fees with these yeah it’s about 1% lender fees I mean it’s not too bad to be honest I could have hired an employee like the amount of uh private I I I went the private money the private money that I like paid
(36:57) in fees oh I I could have like a full-time employee paying a very good salary and all you know and and same thing with legal fees I’m I’m almost at a point where I’m like I should just have a lawyer on staff I mean it doesn’t really actually save costs because when you when you borrow private money you also have to pay their legal fees um and some of the legal fees that the private money charge I’m like how are you three times the cost of my lawyer my lawyer can close a deal you know for a couple
(37:23) thousand bucks and they’re like four five $6,000 I’m like you’re not doing any more more work than my lawyer they can be fancy Bas Street lawyers yeah rent’s expensive so feel bad for the landlords the lawyers I feel sorry for the the lawyers you know that they got all that high rent and those degrees to pay off some of them are dealing with messes I was talking to a lawyer yesterday who’s got a lot of a lot of people coming out of the woodwork who have uh mortgages related to those landlords up north yes yeah the
(37:52) foreclosures and the mess of that um it’s it’s kind of uh oh sorry let’s let’s finish off this fourplex for example though what will the rents be when you’re done uh we’re going to be looking at400 for the one bedrooms and uh 2,000 for the three bedroom I have uh three one bedrooms and one three bedroom so it’s going to make about $6,000 a month and and what did you pay for it uh I bought the building for 600 what city is it Simco and then what’s your arv your after repair value what’s uh it should be
(38:32) worth 950 based on other Simco properties I’ve I’ve bought and revalued so yeah what was your renovation budget 100,000 it’s pretty good uplift yeah so just to just to summarize 600 by 100k with a whole lot of headaches y so you didn’t factor in your grief correct we haven’t factored in your T and your grief but but at 950 after after sounds like yeah so sounds like you’ll be pretty well off well I mean I know that right now based on current lending like I’ve spoken to Brokers and
(39:07) they’re like we’re going to get maybe 640 on uh on a reappraise like on a on a mortgage value so I’m still going to be in the property for you know a substantial amount did you go down the road of commercial financing yet I know we chatted yeah so I’m I’m currently talking to a uh a broker right now about an exit strategy for the property but it’s not going to be a clean um like I’m still going to have Renovations into the property it’s not going to be eaten up into the mortgage so I’ll be having my
(39:33) my mortgage and then the the renovation budget still ongoing so right because you’re still ongoing yeah uh but is there the opportunity to do commercial refinance like to do uh based on a cap rate yeah yeah no oh that’s that’s what I mean is so they they’ve looked at the numbers right so they’re looking at the rent and they’re looking at the what the mortgage uh the the largest mortgage they could put on the property and based on today’s rates it’s going to be 640 6645 that’s the mortgage or the the
(40:00) mortgage oh okay okay so even if the property is’s worth 950 I could get a an appraisal at 1 million I could get 1.2 and and whatever they said the the max you’re going to get is 640 mortgage yeah but that’s great yeah that well no I bought the place for 600 and I put 100 into it so I’m I’m into this property for 700 so I’m going to you borrow all the money for the buy well no but I mean technically you know like the it’s not uh it’s not a a full full refinance right so yeah but if it’s worth 950 and
(40:30) your mortgage will be 640 close yeah I a so glad yeah it’s it’s not bad I mean in in the past we were able to do better um better turns around these are R return of capital times yeah yeah these are not return you’re getting return you’re getting almost all your Capital out almost almost yeah I I I I will have some money still invested in the property so um and some grief yeah and some grief exactly um this is the TR about real estate investing it’s the truth about real estate that’s the thing is like well and
(41:01) that’s the thing is too is everyone back in the good days was like oh I made 200 I made 300,000 on that it’s like no you didn’t you just made your mortgage bigger like and I you still owe the money you still owe the money you the money isn’t yours until the property is sold and you paid your capital gains and whatever’s left over after that number that’s what you made on the property um oh there’s so many places we can go there’s oh boy but the and and and the problem with that too is that when these
(41:27) people did these things they went on you know all the the YouTube Sor before we go on that let’s finish off this this example property because you and I were discussing how uh because not everyone knows like fourplex uh I believe it’s RBC that will still qualify as a commercial property so they will use the traditional cap rate cash flow model versus comparable model yeah right which is what almost every lender does is comparable model y right so it’s advantageous again they generally Focus just on the property is that is that
(41:56) what your experience is here they’re the the lenders focusing just on the property correct yeah I mean the building is owned as a corporation right so it’s also I can literally put that in as a building of itself so it’s self- Su standing they’re not looking at other properties they’re not looking at other variables and that’s that’s exactly that’s why buy properties as corporations individual corporations but this is a fourplex it will fall under commercial lending correct right yeah uh
(42:19) and then that way you’re able to much better much easier to scale using commercial lending correct which is one thing why I like the states cuz it’s all for even single family homes it’s all commercial lending it’s all commercial yeah yeah and then then you can scale they don’t even look at your own personal credit they do look at it but like they just looking to make sure there’s no red flag exactly exactly right like you still pay your own mortgage you pay your rent your your credits like you’re not you know you
(42:40) don’t have all these outstanding bills on your credit correct right but basically it’s more like a check box like he’s okay this isn’t this guy doesn’t owe a bunch of people a lot of money exactly yeah they’re looking for delinquencies they’re looking for claims and you know unpaid Child Care exact you know what I mean and they haven’t caught up to me yet I haven’t acknowledged the children yet so but we should take you should mention you’re not married no kids no no marriage no kids yeah which
(43:04) is why you can take you have more time available to you for these for their commute properties Y and you’re active full-time into it yep right because I believe that context matters yes right for the gentleman who you know lives in Miss Saga communes to Toronto for their big pay job 95 9 to5 well we say 9 to5 but reality at the commute they’re generally working more than 9 to5 right for them to do your investment strategy it doesn’t work you’ll break yeah you’ll be divorced pretty quick your kids will
(43:33) hate you well that’s and that’s the thing so like the the thing is like I’ve always I I I know I’m living I I’ve created more balance in the last couple years especially because um up until now I was very very aggressive up until 2022 I was very aggressive the last time I was on your show and I’ve kind of slowed down and it’s it’s hard to believe a lot of people like you slowed down um but I’m adding a little bit more I’m still yeah I’m still going um but I mean before I had all of my buildings I was
(44:00) buying aggressively I had a property management company I had 10 employees I was all over the place I was spreading myself really really thin you were living in a building that you’re managing correct that was not the easiest exactly you’re tough boss big building luxury so stand so standard standard is are high exactly um so I’ve walked away from a lot of different things to focus only on my real estate yeah um but I still understand that like you know it’s it’s I’m still not living
(44:25) a life of Perfect Balance I mean the key to a perfect life is to have a life of balance and that means everything from Fitness mental family friends business and pleasure right um I’m still lacking in a lot of those areas I’m very aware of it right um but those are things that you can’t really sacrifice the if you look at the most successful people of of society in terms of like business or even music or or you know billionaires multi-millionaires I’ve met you know dragons I’ve met billionaires I’ve met
(44:55) musicians and and and they’re extreme ex successful because one of the most successful developers in Hamilton yeah um and and so when you look at those people yes they’re successful in one area if you look at every other aspect of their lives complete mess oh je divorced don’t talk to children don’t uh you know um poor health you know poor health maybe you know because everything is about that one thing and and and there is a part of the entrepreneurial journey is to do that you have to do that if you want to be the best soccer
(45:26) player in all of the football league whatever you have to stop seeing friends you have to play 24/7 you have to focus only on your health focus on your Fitness and just be that person that means every other aspect of your life is going to fall apart right and if you truly want Tiger Woods he’s number one where’s the rest of his life complete mess why because he let his marriage fall apart he started having Affairs and all this sort of stuff but he’s the best damn golf player but not anymore not anymore cuz he can’t cuz he’s he’s got
(45:56) balance and now which is great great for his life but he probably won’t dominate ever again no exactly and and and so that’s the thing is so not even win ever again there’s a phase where you have to have a lack of balance and acknowledge that um and I’m okay with that because I don’t have the inserts yes um so I’m never going to be worth hundreds of millions of dollars or billions of dollars I want I don’t have an interest in it either um there’s only so much real estate investing that I’m
(46:24) actually interested in doing I don’t want employees I don’t want a full-time you know I don’t want to be working in an office currently working on returns and it’s all about life balance for me right so um cuz I guess see you settling down not settling down but like finding some sort of stability within the next few years correct and then you can you can really get some more balance and that’s exactly and that’s when I’m going to start you know I you’ve seen I’ve started to travel a little bit more I
(46:50) don’t like I don’t like winter and and so I like to disappear when the snow falls um and that’s kind of also my way of achieving some more balance too so probably yeah in the next 2 years I’m going to be done real estate investing I’m going to have enough a nice little portfolio you’re just going to hold not so much grow stage correct correct I mean maintaining my existing stuff once the building is stabilized um I’m dealing with the tenants which if I’ve placed them they’re very well behaved
(47:17) they take care of the place nothing’s going to go wrong everything’s new it’s been done in the last 5 10 years right so um you know I’m going to deal with the day-to-day tenant calls but uh yeah probably in the next two years I’ll be done investing in real estate and uh my efforts are going to be in different areas I’m you know I’m definitely going to be looking at different streams of income a lot of that’s probably going to be passive uh through you know investing through different various mortgage
(47:40) groups uhing private lending uh private lending is very interesting to me especially going to to learning about the last couple years I mean the one thing that landlords forget is that we don’t actually own anything I don’t own any property my bank owns property I just have to name own the majority of it right you know um until but they don’t take any of the equity they don’t take any of the equity exactly the equity is all mine the profits are all yours uh and and so is all the they own right now
(48:06) there there’s no equity um but yeah so I mean you’re you’re every landlord is owned by their tenants their lenders their mortgage you know like so if if your tenant doesn’t pay rent you’re still obligated to pay that mortgage you know um your your tenant is is your customer and they kind of they can control you based on how you how the the building is how your relationship is with that tenant and then same thing with the banks they always put themselves in a position where they’re in the winning seat you know so if if
(48:34) you and me started a business tomorrow and said hey let’s both put in $100,000 the business fails and we sell it for 150 we both eat that 50% loss of the $50,000 but if me and the bank go in and buy an apartment building and the building goes down in value they say oh no no you still owe us what we put in you know so I eat the loss you and that’s what every L you can lose beyond your investment and you can lose beyond that exactly um and that’s what a lot of you know landlords are really feeling the heat
(49:01) because a lot of also private money they’re in a position where they’re saying we want our money back and there’s there’s no money to give back so a lot of lenders who are overleveraged uh or a lot of landlords who are overleveraged the the secondary lenders are are getting antsy and they want their funds back well the promis people are especially promis notes sorry but before we get into that let’s finish off with your own portfolio can can you give us uh can you quantify how big your portfolio is like how many doors do you
(49:28) have how many properties I never answer that question never no never okay how’s another way like what is your target cash flow say two like you said like two years from now you think you’ll slow down like what is your target cash flow from your portfolio like what what number will make you happy um well I mean my intention is never actually to cash flow from my portfolio I want to I want to be able to leverage my portfolio to invest in other areas and cash flow from that so you know if I’ve got um you
(49:57) know 20 25 buildings let’s say and I go to the bank and I say I want to borrow a couple hundred, I can take that and go private lend it I can go invested in a uh in a mutual fund or something like that and whatever those Dividends are that’s what I cash flow that’s that’s my personal cash flow right so your cash flow be the Delta between what you can lend for versus what you’re you’re paying on on what you owe um my buildings have always seen pretty aggressive it’s a very aggressive
(50:22) strategy but it’s also very also conservative because I don’t want to be relying on cash flow from properties I’ve always taken my properties and reinvested any dividends that’s from them I mean if you if you really think about it too also I mean if you’re buying a premium top-of-the-line brand new property it doesn’t cash flow so you I buy old buildings but they always need something to be done I always need to do a roof a Windows EO and it’s always it’s and over the next 5 to 10 years some one
(50:50) of those items has to be get kicked off the board that means I need about 15 grand every year to like a roof is 15 you know say 10 15 grand E’s 15 grand to redo siding it’s 20 grand to do parking lots 10 so it’s all gone up it’s all it’s it’s only going up from there so you’re going to say to me okay Adam I got to pay you got to pay your mortgage your insurance all utility bills oh and then also have $115,000 left over for renovations and cash flow on top of that it’s not happening it’s never happened
(51:20) it’s even in the greatest uh of times you’ve never had that much cash flow to actually continuously upgrade your property and use the cash flow and have some in your pockets you know and I’m have to say this is highly fascinating I don’t know if you find that’s fascinating too is that like you’re an aggressive investor hope you don’t mind me saying that but at least you’re watching it closely you don’t have structural vacancy in your portfolio not like you have vacancy but you’re
(51:46) actively attacking it correct right like CU like like before we recording I said vacancy is poison yes right negative cash flow is a form of is a smaller version of poison versus vacc your bad debt exactly right um but yeah like where did you learn this strategy cuz sorry cuz again like I’m I’m a little bit older than you I’m 13 years older than you so back in the day in 2005 we could cash flow with a single family home it was it was really different back then I mean yeah I I think that I mean it’s it’s really just
(52:18) the realities of the market if you look at your properties right now and you think to yourself you know you probably need to do the roof in the next 5 years well there’s 10 grand are you getting that from your cash flow then it’s not really cash flow now is it that’s that’s capital expenditure that you have to put into your property and then if you have to do the East drops in the next 10 years that’s another 15 grand you know so I can’t convince you come to the states CU cuz I I understand
(52:41) where you’re going from while you’re while you’re strategy structured the way it is yeah because that’s the H you’re dealt in Ontario yes correct right yeah versus like if I go uh what I learned part of my when I was one of my time in Texas when I Learned was I actually got to I went to into um into show a show House yeah that was a Builder building like 150 houses and that and and in the show in the show House the construction managers actually there so I said hey do you mind to ask you some questions yeah
(53:08) I don’t mind you know because I’m look I’m potential client right I go like how long does a roof actually last here he goes 30 years like no no no I know Roes are rated for 30 years how long do they actually ask he’s like 30 years I’m like I’m sorry I’m a Canadian and we’re not used to these things well yeah like I have 40e shingles I doubt they’re going to last 4 years I mean cuz the cold the cold the snow the ice actually depreciates them a lot faster than exact wor is I thought the Texas Sun would
(53:34) beat the crap out of the roof but no apparently not apparently not and I Chach PT it as well to like verify cuz you know I’m going to sure like he could be selling me something so I need to verify I verify everything but yeah and so getting going down that path as well is like everything in the house on the exterior depreciates faster in Toronto for let’s use Toronto as an example Windows Doors brick exterior roof everything depreciates faster in Toronto versus a property in in Dallas Texas okay based on my research yeah I can’t
(54:03) convince you to come to the states cuz like I was joking before you before we recording is like man you’re a sadist I I I know because because a lot of the smart people a lot of the smart people which I consider you categorize you as smart because you’re invol you’re you’re actively engaged in your portfolio you’re attacking vacancy you’re doing the best that you can to optimize your portfolio y there’s so many people who do not want another long-term tenant property in their portfolio yeah uh
(54:28) especially in Ontario just because of the way the landlord tenant board is right and you’re very familiar with it very familiar with it you’re very familiar with the land attendant board Y and you’re you’re like you just dealt with this this Justice situation where a drug dealer Y is in your property terrorizing y your neighbors and that matter don’t have Justice ironically enough I I haven’t been to the landlord tenant board since 2018 that is impressive impressive but you know how did you vot it though
(54:56) because you know you have to negotiate negotiating moving expenses expenses from time to time moving expenses and to compensate you for your grief of moving exactly exactly I don’t like the other term the the so the the only reason I’m still in Ontario is because um like I said I’m I’m very calculated in in what I plan to do and like I said my investment time in Ontario is almost at its end in the next honestly it should have been done by now in 2024 I should have been done you know um but this re
(55:27) inflation you know whatever than promised yeah um so my intention was to kind of tail end and wrap everything up and start uh you know solidifying what’s going to be my long-term Ontario holds um and that was going to be in the next year and and now it’s looking at in the next year or two what’s going to happen after that is that’s when I start looking to the different Avenues and one of those is private lending one of those is to put it into a very secure mutual fund or stock portfolio and then also looking
(55:56) other areas like investing in in the states so something incredibly passive yes correct with no long-term tenants in Ontario exactly I still intend on keeping my long-term Ontario holds but just as I said they like they appreciate well because they appreciate and they hold their value my my Ontario Real Estate the way I see it is it’s my net worth Builder it’s never a c i i buy buildings for cash flow but I don’t use the cash flow for my own personal gain it’s always I use the cash flow to get
(56:24) mortgages to buy more property to increase my net like I said you can’t cash flow in Ontario and have the funds to continue to do the capital upgrades on Ontario as as we’ve seen partly because you’re you’re quite a leverage it’s quite a leverage uh strategy correct you’re not putting a ton cash into it correct so you’re either overleveraged and you’re maximizing because like I said I mean if I was to go in buy these crap properties dump $400,000 into them okay yeah sure I can get the mortgage to to cover but
(56:50) then I’m not cash flowing right um so if one tenant doesn’t pay now I’m underwater so that’s why I do these projects in stages focus on the inside get them rented then focus on the outside what’s the first thing that you need to get done make sure that the roof is not leaking then you work on all of these and every year I do a different project on my property based on its lifespan and based on that model there’s never going to be cash flow at the end of it if I’m always reinvesting into my
(57:16) properties but it is increasing my net worth and I and I appreciate you sharing all this yeah because there’s all those folks who are with like hundreds of thousands of Instagram followers are not sharing ing the entire model by the time the mortgage is paid the the the interest is paid the insurance is paid the water bills utilities all these bills are paid and then you actually factor in properly your Capital expenditures you’re not cash flowing you’re not living off of this income and you probably never will until the
(57:43) mortgage is paid off which is 25 years I’ll be north of 50 so my thinking is my Ontario is my net worth Builder and I’m still trying to build my net worth once I get which done really well for a lot of people which is done really well a lot of people once I get my net worth to where I need it to be and my building’s at a point where it’s it’s large enough that I can still maintain it relatively passively without outside help that’s when I’m going to start looking for different Avenues which is
(58:07) more aggressive uh markets like the USA but the USA I would say is more volatile in terms of value and and whatnot than Ontario you put a house in if you buy a house in Ontario you’re not going to see it go down in value long term you know we’re you know in in the 80s you could buy a property for $100,000 we’re never going back there you know yes uh if you bought a property in 2021 versus now your property went down but if you if you were smart and and you can ride the wave it’ll come back it will come back
(58:37) and it will only go north from now we’re not going to see the skyrocketing of prices I some say yes some say no some but I don’t think we’re going to start seeing the massive hundred $200,000 increases that we saw in 20 there’s no reason for emergency interest rates again all this foreign buyer stuff is is uh is place um I I mean we need to bring that back to be honest if we think we’re going to get over this housing crisis we need to bring foreign buyers back the condo developments are being cancelled
(59:05) because they don’t have foreign buyers foreign buyers prop up new Bild developments that’s a fact you know if they buy up all the condos they no because condos need 60% of their condos sold before they even get funding it varies some as high as 90 yeah so if they can’t find pre-sales in the Ontario Market because people are buying houses to live in are not looking at pre-sales no one’s going you know what I need a place to live in about 3 years we’re going to be stuck where like local buyers won’t buy and
(59:36) then Builders won’t build because they can’t sell correct so then we’re we’re in a rock in a hard place yeah we still we still have like a million new people in the country so if we really actually want to get condo developers to start building again and start building in Mass we need to open the floodgates to to foreign buyers that’s a whole another story for another episode but I want to talk about your own story y because this is the trth real estate and investing show you’ve shared it you shared it more
(59:58) recently uh publicly y about like you’ve been assaulted by your tenants yes and harass yeah yeah um and I still can’t convince you to come to America I uh I try to I mean you were very detailed in in graphic about it yes on on your on your like folks can go to your Facebook Mr Adam Kitchener yeah right like it’s so I mean I always like to say he’s not my tenant I I never put him in there I bought the building with him as the issue Fair yeah so um and I knew I was buying an is uh the property with an issue I you know the previous
(1:00:33) landlord to me was kind of like he’s a bit of a problem um I think that’s the understatement of the century um because I’ve bought properties where they’re like oh this guy’s a pain in the butt and this guy’s a you know my and it’s like yeah whatever it was blame other guy yeah and and so like you know people when they’re selling their properties they probably have an issue problem with the tenant and that’s why they’re offloading the property so that’s you’re get the deal
(1:00:56) that’s why I’m getting a deal and so I’ve never but sorry but this is a property you’re you were managing no this no I bought the property okay so the the landlord’s like this this guy is a bit of an issue and not the Fel dug dealer this is a different property this is a different property and like I said it was an understatement cuz you know maybe it was a bit of you know me being uh cocky overconfident too because you know like I said I mean i’ I’ve bought properties and people have been like oh
(1:01:19) yeah he’s my problem tenant it’s like okay well I talk to him for 20 minutes he’s not a problem you know it’s um a lot of landlords also don’t know how not a landlord right you know throw a landlord poor communication poor communication not doing the bare minimum like you know not maintaining the property bare Bare Basics exactly most tenants are are most tenants and and that’s why I try to say you know most landlords are good most tenants same thing you know most of them are good you
(1:01:43) know it’s it the problem is the disproportionate power that bad tenants have over they can ruin you they can really really ruin them right they can ruin you they can ruin the property they can ruin ruin everyone’s experience inside that building exactly and they can wipe landlords out out of the market and really and that’s what we’re dealing with that’s part of the why the housing crisis is so bad is because the 2% the 3% of tenants who are taking advantage of a bad system there’s also 3% of
(1:02:07) landlords who are taking advantage I mean you know the the guy in br br Bron with with 25 people in a basement yeah that that that’s that’s taking advantage of a bad situation you know that that’s like best case you have a 4,000 square foot basement 25 people 25 people like that’s that’s wrong you know and you wonder why Brandon forcing out licensing the problem with that and and now people like oh yeah licensing that’ll let’s get back to your property let’s get back to your property yes you
(1:02:35) you inherited a tenant I inherited a ten how much of a discount did you get on the property I didn’t no wa no you must have got it some sort of discount no at least no one was competing against you no one was competing but I still paid a very good price I actually ended up losing on that property I sold the property at $130,000 discount I lost $130,000 on that property the tenant was still there when you were selling y oh man well I mean a I I was the guy selling it at the discount because um you overpaid I I overpaid
(1:03:06) yeah um I underestimated the situation significantly um and that might have been a little bit still too bullish on the market and a little bit of cocky because again he’s like he’s a bit of a pain in the butt it was an understatement didn’t really give me the full picture the seller understated how how bad the tenant was exactly I mean legally not really he he didn’t have to even say anything he because you T is fine I mean he pays his he paid his rent yeah you know um being a nuisances you know you don’t really have to disclose
(1:03:37) if your T you know if there’s active lawsuits or cases or things like that you have to disclose those but I mean but this is buyer but people I think the listen need understand buyer beware exactly like you don’t know you don’t know um and it was a case of buyers beware and beware was you know I I I was not beware of what I bought right so there was a reason there was no other offers correct right and so um I bought the property I ended up selling it at $130,000 loss so you got no return on your grief I had no return on my grief
(1:04:07) well there is some some uh light at the end of the tunnel so I mean if anyone’s ever read that journey I don’t want to you know rehash the whole thing um too much but let’s rehash a little bit in case people are too busy and don’t have Facebook profiles and stuff right um unless it’s uncomfortable for you no no no I mean it’s it’s done actually it’s done actually now so um I basically gave him an eviction notice an n12 notice what did you do what did you what did he do to deserve it so I int I fully
(1:04:35) intended to move into that property yes um I was out of a long-term relationship I needed a place to live yes so I I served him an eviction notice and unfortunately the n12 is notoriously misused and um it’s all over the news legal evictions are are rampant so people are lying saying they’re moving in just to evict tenants correct for renov and arguably he looked at me and thought this guy’s not moving to the basement you know I I a quick Google search he knows I’ve got property he knows I’ve got Investments he’s like you
(1:05:05) dress well you take care of yourself you drive a nice car I drive a nice car you shouldn’t drive a nice car when you see ten in exactly go rent the beater so you know it it it’s uh when I actually it has its advantages and its disadvantages so uh when I was you know there there’s a story of the old landlord where what he would do is he would show up on day in his uh in his Plymouth his K car you know whatever it is and he’d be like oh you know time to pay your rent they’d look out the window they’d see his you
(1:05:34) know piece of crap and then on N4 day he would show up in his Mercedes and be like here’s your N4 here’s your N4 because it’s all about that power Dynamic that he wanted to to portray is you know he’s poor on rent day and not poor on on rent uh eviction day so you know um but I don’t it’s still a bad idea it’s so cuz they’ll no fight it right um so I mean there there’s still a lot of legs for for landlords to to Really force uh rent collection I mean essentially it is it’s rent stuff it’s
(1:06:07) it’s it’s the reason why so many landlords are getting out of sorry go back to this go back to this tenant though this wasn’t about rent this wasn’t about a rent eviction it wasn’t a wrongful eviction you need I needed a place to live and you own the property I own the property it’s a basement apartment I’m a pretty simple dude I mean I’m not I’m not you want to house hack I want a house hack I mean yes I have a nice car but that’s that’s a small thing like I don’t have a fancy
(1:06:29) watch I don’t take fancy vacations you know I you don’t have to justify it it’s your home you need a place to live correct um so anyways I I said to him I was like I fully intend to move here he says no you’re not I says here’s here’s the I’m I’m a landlord I like educating tents on their rights and obligations oh great so I said to him I says look if you think I’m lying and you don’t think I’m moving into this unit that is a fine for me of $100,000 oh used to be 10 okay
(1:06:54) yeah I I think they bumped it I think it’s 50 $50,000 $100,000 so I said if I’m lying it’s it’s a $50,000 F it’s very easy for you to catch me so here’s what you do you move this this de tell for listener cuz if you’re moving in you have to occupy it for atast 12 months at least you can’t advertise it for rental or anything else it cannot be used for anything else it has to be only exclusively your use exact or or your family member or a family member I said so call my bluff and if not very easy
(1:07:22) for them to file a complaint you’re fined exactly I get a fine and I got to pay the rent difference between your new rent and your old rent yeah the risk reward is horrific horrific so I’m like call my bluff on May the 2nd if I’m not into this unit take me to landlord ten board I will have no defense his reaction to that was not to actually go that’s a good idea Adam I should call you on your bluff because it’s an easy win I would have to pay him tens of thousands of dollars and be find the the
(1:07:51) lambo 10p or he can just extort you you know it’s 100 Grand just pay me 50 exactly it could have been a very easy way for him to extort me instead he decided to assault me say get out of my apartment and you know physically assaulted me uh his dog bit me it was a whole thing cops got involved uh bylaws got involved all this stuff started happening and from that point forward I was like all right well I guess we’re going to go to landlord ten Port you know um nine times out of 10 to is you know if he had been cordial and said
(1:08:23) okay Adam I’ll give up possession but I need some moving cost I would have thrown him some moving costs I would have thrown him a couple dollars to help him whatever it is you know compensate him for compensate him accordingly um but unfortunately the situation basically very much grew out of hand um and I basically became from that point forward uh the subject of his abuse the the so this is the other reason why landlords shouldn’t go showboating and bragging about their Investments because he saw me and and I don’t necessarily
(1:08:53) think that I go on you know these podcasts and say say I’m a millionaire people have always said you know oh you’re Milli no I’m not I owe millions of dollars of debt you know I’m not living a fancy high life I’m not showboating I’m not pushing uh Guru courses or anything like that I’m a pretty down-to-earth dude or I I like to think that I am and I think most people would agree um but he basically looked at me and said you’re a multi-millionaire uh land hording piece of and I’m going to take advantage
(1:09:19) of that I want you to pay me to move out and I want $100,000 he asked you for $100,000 he wanted $100,000 to move out so he’s extorting you he’s extorting me and it’s even like all you would do is want place to live exactly your own home correct it’s like well why would I do that I would just if I have $100,000 to give to you I would just buy a house and move into it yeah I’m not giving you $100,000 so I can move into a basement apartment um so especially even the the the financial incentive for me to illegally evict him
(1:09:50) wasn’t there I mean he was paying low rent but it was also a basement apartment in a in a relatively small all town the most I could have got was maybe 4 500 bucks what town was it inol okay and I mean even after I you know I could have maybe got $400 in rent more and that’s after I redid the entire apartment with brand new floors and kitchens and I I would have had to put like 20 30 $4,000 into that basement to get that extra 400 it’s a poor investment I had zero intention of fixing that basement and renting it on
(1:10:20) the free market but this guy just saw enemy this guy saw me and thought here’s a Payday and and so that’s the other reason why we you know landlords need to you know stop bragging about these profits that they’re not making um because tant see that and they look at you as a Target the minute you have money people look at you as a Target um because for the for the listener I I think they need to appreciate that uh like if I I recommend the book many times The Millionaire Next Door the milliona next door is generally a very
(1:10:46) private person yes like n out of 10 times are private they don’t they do do not drive brand new luxury Vehicles correct uh I have some clients that do but it’s rare and it’s because they’re really really successful yeah right but they don’t post about on their social media correct right so anyone who does typically they’re they’re marketing something they’re selling something so that would be the path I would recommend for most landlords is you remain you remain quite private or
(1:11:12) at least keep your profiles private yes right only share with your friends yeah don’t let your attendance see what you have correct because it won’t it could you could end up like you yep right and that’s the thing so like short of my car which I’ll add I bought as a pre-owned car I paid the equivalent of a brand new Kia for that car right but the big fancy badge on the front tells people that I must be you know doing very well no I bought a pre-owned car on on a brand that has a really hard depreciation
(1:11:39) curve uh and so I I won on that you know um and you generally dress well and and you you always well your hair is done your your Beard’s always trimmed like you look you look you look very presentable yes but I’m not in a I’m not in a suit and I’m not wearing a big Rolex watch and whatnot he made all these assumptions about you but he’s made a lot of assumptions about me so you know I my my my Instagram and my Facebook and all that sort of stuff is private I don’t post a lot um you know I
(1:12:06) try to because you have to you’re maner have to I was just on your Instagram and you’re very again you’re very private about it which I I I understand why you have to be um you know and it’s uh because I said LinkedIn right I was on your LinkedIn and you’re very private about it which I I can understand why you need to be yeah um you know and and but most Lords especially early on in the business they feel like they have to be influencers it’s like we’re not influencers they’re doing that to raise
(1:12:31) money though they’re doing it to raise money right and there’s probably a little bit of there’s nothing wrong with it associ it can be done right it can be done well yeah like lots of people have lots of there’s some influencers are really good at raising money and have good businesses correct right um they don’t have but they don’t have structural vacancy in their portfolio exe to 30% a lot of but yeah I mean I think a lot of people go into the industry and they want to be grand Cardone you’re not going to be Grant
(1:12:56) Cardone like he he posts every day on his Jet and His Lamborghini and all that sort of stuff you can fake a jet you can fake a Lamborghini I was like yeah I faked both and I made a post about it um you know you can rent a j you can fake the post yeah but you know I’m like a lightning raw for Grant Cardone because for some reason if someone doesn’t like gr it always ends up comes to me so behind the scenes when I went when I went down to Miami to meet with Grant I was down there for a couple days to meet with his team and hang out
(1:13:26) in his office and meet Grant and his family whatnot when the camer when the camera’s on we we we all know what what like what he’s like with the camera on when the camera is not on complete Southern gentleman yeah very kind complimentary generous with his time you talk to his employees I spent quite I spent a couple days with one of his VPS one of his early top one of his first employees yeah and the general the general Vibe is everyone really likes Grant yeah right and his investors like him yeah because he makes them money
(1:13:56) yeah and that and then people like anyone who wants to become a influencer understand you make people money they will like you yes you lose them money you are a villain y right yeah so do not lose people’s money yeah so end of the day people might not like Grant social media I can get that I totally appreciate that but the people that matter the most really like him yeah and that’s way more important it than being likable on social media and losing people’s money correct well and that’s the thing so look at his social media
(1:14:26) and they try to copy that yeah well fake it till you make it you fake it till you make it and also well your tenants are going to see that I mean look at the backlash that you know the the tenants and Hamilton had against the northern Ontario group because you know you go out into the world and you’re saying I’m a wonderful investment person and I’m making so much money and the people who live in your building going these yachts and these private jets you know doing bottle service at VIP plever hosting
(1:14:52) large conferences and saying look at how wonderful I am I’m making hand over on on these investors well I guess he wasn’t right but also these your building doesn’t have water exactly you going to have haters you’re going to have a lot of haters but you’re also inviting the haters in yeah you know I’m not making hand over fist on my my tenants and if they see my content I don’t want them to be saying hey I’m paying Adam $1,500 in rent and he’s telling this guy on the internet
(1:15:18) that he’s making tens of thousands of dollars flying away on to the career being on a private jet like and then I wonder why you know and then they wonder why their delinquency is so high or why they’re getting hate mail it’s like you invited it if you’re going to go out and tell the world that you’re a wonderful millionaire and then meanwhile you’re crushing and you’re you’re taking advantage of these poor attendants it’s it’s it’s kind of handin hand like you you you you brought it on yourself um so
(1:15:43) you know no we I’m very private you know I I’m very vocal I’m I’ve told you straight up I’m not making money on my portfolio yeah like I appreciate being so transparent and and I believe that most landlords are in the same boat you can f you’re Ontario if you’re in Ontario you can fudge your numbers I can sit here and be like yeah my building in Simco cash flow is $6,000 and you go oh that’s really good you get a lot of them they have no way to verify there’s no way to verify it well yeah no it does it
(1:16:08) makes $6,000 mon which is part of the the this fake teamm formula people can’t like there’s so many things that people are saying you can’t verify you can’t verify right and I mean it is true my building makes $6,000 a month my expenses are 5,000 6 you know like these folks are these folks like make like people on these yachts and jets they’re probably rented and also they’re probably financed by other people’s money yeah yeah what they’ve lent them money they’ borrowed and and
(1:16:37) the IR that back at one point the ironic thing is the biggest people who have fallen are also the big are the biggest people who took other people’s money but well also the living the biggest you know the ones that aren’t falling the ones who are holding their together never once did all of the braggadocious stuff you know if if if you saw someone in a the people who were posting about eating in fancy restaurants and sitting in private jets and doing all you know eating their fancy steaks and and posting about that stuff those are the
(1:17:09) people that are in trouble right now yeah those are those are usually red flags for me those are the red flags and those are the people who borrowed all the other people’s money the people who are like me and the other people who are still going to make it and get through this I have never once posted about me eating a a wagu steak or you know sitting in a private jet or flying first class whatever you know um I also think they’re poor wastes of money anyways like I you know I never once going to pay for first class flight you know
(1:17:40) there’s a time place for it like if for example if your Investments are paying people dividends for example it’s really hard to fake cash flow yes like you are actually money’s going out the door regular because like classic Warren Buffet dividend paying strategy right yeah you you buy stock in a company that’s been paying dividends for 30 years that is next to impossible to fake yeah no right you’re like that if your people are all paid and getting their regular money go ahead andjoy AO St i’ I’d be
(1:18:05) happy for you right because that means all your bills are paid everyone’s happy with you that’s awesome go enjoy yourself all those people have less than 10 years in Investments uh in into Investments if you’re eating Wu steak and you’re north of 10 years I’ll give it to you right but all the people that are following now all the people who are doing all those posting they have never gone through their first they been through cycle right um it’s very easy to make money in 20202 you know there was a
(1:18:32) lot of investors like I bought it a month ago and I made 50 Grand it’s like that wasn’t you that wasn’t your your smart Brilliance that’s just the market moving forward you know um so the people all these accidental millionaires yeah that that was what it was the the the peak of the market people became accidental millionaires now the Smart Ones like no one projected this yeah no one projected we’d have all these accidental like people put their money in the way of what they thought would you know we
(1:18:59) have appreciation all the sorts of things but yeah no one in their Wildest Dreams thought the market would have gone up this much no and and that’s why when people were saying oh you know Adam you’re doing really well it’s like no no no no hold the phone no we’re we’re in a we’re in an isolated environment I’m going to make money while the Sun’s shining absolutely I’m going to try and flip these properties over as much much as I can you know and and so that way I can get to a a a stable point but at no
(1:19:20) point was I like oh I must be so smart you know I’m looking at the prices I know the rent’s going going up I know the the mortgages are going up like that’s not me I’m not doing that I’m not I didn’t suddenly come uh figure out a hack into making millions of dollars in real estate the formula’s never changed the market changes but the formula never changes buy real estate wait you know and and you you put a lot more work into that than just wait there’s obviously a lot of steps in
(1:19:47) between but it’s not wait six months and it wasn’t easy yes and you had a lot of grief it’s not wait 6 months it’s not wait 3 years it’s wait 10 years you know if you haven’t got 10 years into this business you haven’t you haven’t done it yet you know there’s this there’s the thing in the entrepreneur world that if your business has business hasn’t survive a cycle you can’t consider yourself successful correct and so when I say I’m done in 10 years or in two
(1:20:09) years in about two years time that’ll be the 10 year mark for me I’ll be at that 10 year mark been through C where I’ve been through the cycle you survived that’s that’s something you should pet yourself on the back on exactly so I’ve done my 10 years and so then it’s like okay in 10 years time if I want to go out and eat a fancy steak sure I’m going to go do it and I’m with refine money with my own with my yeah with my refine money it’s not going to be other people’s money well it’s not going to be
(1:20:33) my refi money I’ve never spent my refi money on my own personal stuff because that’s borrowed funds you have to pay it back at some point you have to pay it back so if I go buy I could have taken my refine money and bought a beautiful brand new Top ofthe Line car but now I’m now paying for that car the next 25 years not even an asset you know so no you take your refi money and you put it into something else that generates cash flow and that’s what you live off of that’s how you survive so generates more
(1:21:00) cash flow than the interest you’re paying exactly so I’m going to take my refin man in two years invest it in as many different vehicles that I can maybe buy a small business you know invest in a small operator invest in some private mortgages buy some stuff in the states and whatever that generates that’s that’s my stake buying money you know but uh also when I do that until then you’re eating ground beef I’m eating ground beef yeah you know um um and and and that’s that’s how this business is
(1:21:28) that’s how business is done that’s how you survive and that’s how you don’t lose $400 Million worth of investor funds and $8 million and $50 million and 200 million to scatch one money like that’s how you do it 10 years in the business and whatever you got at the end of the 10 years now now you’re you’re ready to go because I’ve studied lost so much I I see other red flags that I didn’t previously think about red flags but we can talk about it offline innocent till proven guilty not here to
(1:21:53) gossip Adam uh want to thank you so much for making the trip out I know you hit some significant traffic it’s as if the real estate Gods didn’t want you to be on the show today they never want me to yeah because because you call the people’s out I do but so this is the part where in the show I we like to give my guest free Runway anything you’d like to share in general um I know we talked about lot of the scary things about real estate investing for example is real estate bad I don’t know no I think uh I think real
(1:22:27) estate is kind of right now I mean I think real estate is uh I wouldn’t say it’s bad but uh you know it it it’s it’s in a cycle everything comes in Cycles we’re all we’re just at the bottom of the cycle so I wouldn’t say you know today is probably not the best day to invest maybe wait a little bit longer I wouldn’t wait too long it’s you know it’s a timing of the market thing it might be something for a real realtive more say I’m I’m not currently buying at the moment because I’m still trying to
(1:22:52) clean up some loose ends um I think I think the time to buy decision uh is heavily based on how much cash you have and that how much debt free cash do you have to invest because if you have lots I don’t know why you’re not snapping up stuff yeah if you’re sitting on cash yes you should be snapping up some property and there’s lots of people in pain out there there’s a lot and there’s a lot Ontario I’m totally kidding yeah there’s about uh 400 houses up in Tim that are just going on9 199
(1:23:22) and then over 100 in Su St Murray and the the point is you have to look at the market that you’re buying in currently and right now that market is bad now is there deals absolutely there’s going to be someone who’s willing to sell their property at a loss or a break even or whatever it is but you have to factor in it’s like your mortgage is going to be six and a half 7% it’s almost impossible to cash flow on anything these days without aggressive like like yourself turn aggressive repositioning they call
(1:23:48) it or just heavy Renovations like basement Suites Garden suites converting units yeah but yeah there basically is no cashless you’re aggressive so if you’re willing to go in with that mindset yeah then you’ll do well yeah yeah yeah but if you think you’re going to go and buy a place in cash flow no you you’ve got to think about it’s the same thing it’s survive 2025 right um so invest to survive to 2025 because and and yeah if it was me buy something today at a at whatever the interest rate
(1:24:15) is lock in for two years and then hope that in 2025 I I would hedge my bets that the rent uh the the interest rates are going to go down by then they’re not going up anymore than they are but they might hold them for a very long time and I think that’s probably a year it gives everybody more time to buy exactly so by now with your high interest rates refinance in two years um you’ll have even a bit of principal paid down not much but you know um and that’s that’s the only way to do it and and uh if you
(1:24:43) think you’re going to be doing the same strategy we did in 2021 it’s not going to happen it’s going to take longer it’s going to take a lot longer to move properties along yeah we play normalize we play normalize was which still which could be like 5% appreciation year which is wonderful which is wonderful because the thing is real estate has never been a get-rich quick scheme no it’s a get rich slowly but guaranteed way not guaranteed high probability high probability high probability if you hold prop you’re for
(1:25:11) 10 years you’ll probably do quite fine exactly you know you hold a property you pay off that Mortgage in 25 years you’re fine you likely did quite well you did very exactly that’s that’s people have been betting on that our parents did that they buy your family home you retire and 30 years your mortgage is paid off your kidss moved out you rent a small apartment and you’ve got a windfall of cash from your home sale that’s not tax too high probability but you still have to be smart about your
(1:25:34) Market correct right um so that’s that’s the way it is and that’s honestly it’s kind of the way it’s supposed to be um so if any Guru or anybody comes to you says hey I’ve got a fast way to make cash it’s like run probably not no um if they’re they’re promising you know you know stability and slow there there’s some truth to that you know um but just listen just take hear lots of pitches exactly just like my beginner advice for example is like you know look at 100 properties and then
(1:26:03) you know what the top 20% are like right you also know what the better bottom 20% are like and then based on your strategy you may want the bottom 20 like kind of like you do yeah yeah I like the top 20 but again like once you have enough data to CH once you have um like comparison shop I don’t see why more people don’t comparison shop right well the other thing too is like I like to take wisdom as a as a grain of sand because eventually it starts to gain weight if there’s actual truth to it you
(1:26:31) know if one person tells me you should do this okay that’s one grain and the meanwhile if everyone else is saying this this one starts to you know get a little bit heavier so everybody gets one grain of sand and if if I start to see that the that the P the sand is piling up in One Direction it’s probably means that there’s some truth to it right which is typically like longterm 10 25 year exactly I don’t know anyone who would disagree with that and old school wisdom usually also you know everyone
(1:26:59) knows old school cliche wisdom that’s why it’s it sticks around good good advice sticks around and so if enough people tell you the same thing that probably means that there’s some grain of truth to it um but yeah the first guy coming out of the the gates saying I figured out real estate I got a new way to do it okay we we’ll see we’ll see we you know talk to old people too talk to old investors everyone’s talking to to the young punks the the gurus are never young I’m a young guy exactly but I mean
(1:27:31) you know the the the people who come out of the gate saying come and invest with me it’s always 20-y olds and I mean I aggress I I appreciate the hustle they’re young they’re hungry they want to make something of themselves but go listen to the old people ask some dude who’s like 60 years old and has own property for 30 years tell him you know I want to invest in real estate how do I do it whatever he tells you probably is the truth and and and one because he has no reason to lie he’s retired
(1:27:55) he’s got free wisdom to share he’s not selling you a course he’s not making money off of you he’s also not threatened you know if you go to uh uh someone who’s who’s Young and Hungry they’re trying to steal as much as they can for themselves you know so they have no incentive in helping you build wealth but no old guy I’m good you know I’m retired I got my boat I got my house or whatever I spend Florida six months or whatever go talk to that guy because he wants you to make money he doesn’t care
(1:28:19) if you make money or not but he he doesn’t lose anything from it and that’s the same thing with me it’s like people call me they’re like do you do you have advice it’s like no I’ll give free advice I’ll tell you what I think because also I I also believe that landlords need to help each other if you buy the investment property next to me and you run it like hell well it’s it’s it’s just like the guy with the with the crack uh head in his building it’s like every other building on that street was
(1:28:42) affected because that guy ran his building poorly I want landlords to be smart I want them to be knowledgeable I want to get rid of slumlords I hate bad landlords I want people to do their maintenance I want people to have no excuse to hate landlord yeah you know so I’ll gladly share free advice because I don’t I’m not here to steal your property I got my own I got my own stuff going on um how don’t where can people reach you uh they can send a request to Instagram because it is private and uh
(1:29:11) and follow me there I do share a lot of uh interesting stories about real estate and uh oh you’re it’s yeah very you and my buddy Tim Hong have some hilarious posts with your interactions with tenants prospective tenant people responding to your your your rent ads well that’s the thing cuz yeah everyone’s going to get the hate it’s like are my rents expense yeah that’s that’s how rent is and they show greed this this is housing inflation this is housing didn’t cause it I didn’t cause it um but you don’t
(1:29:42) control monetary Supply correct you didn’t you don’t control how many immigrants come to the country or International students wasn’t you don’t control my interest rate either like you know so like I I personally would love to lower my rents I’ve been saying this for months the rent is too expensive yeah I want to lower my rents I want to give I would love to lower my rents $300 yeah but you’ll go bankrupt if you do I I can’t do it right um but that means that’s $300 back into my tenants Pockets
(1:30:07) go to the movies go to dinner save that go on a vacation enjoy your life every tenant in this country is stuck in their Apartments because their entire salary goes to rent and food yeah that’s sad that’s sad what does that do it creates a bitterness it creates an anger and where are they pointing it at yeah the food companies gayen Weston and landlords right um so structurally they they just some them just cannot afford to pay your rent ex exactly and then you’re stuck nine months for hearing for
(1:30:39) me if I could if I could get the interest rates down if I could get all my expenses down 30% or whatever it is I need to do I would gladly give my rent right my tenants a rent discount put more money in their pocket but there’s going to be more inflation exactly um so and and I purely squarely point the finger at government the the the re the government is the reason for all of this there’re also the solution unfortunately the only way we’re going to get out of it is through government getting out of
(1:31:08) our pockets which could be a whole other subject for a show yeah Adam thank you so much for coming in no worries thanks for having me thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.
(1:31:43) com below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real estate investing from a professional investor register for our next virtual class that’s at investor training.com YouTube thanks again for watching see you in the next video

** Transcript Auto-Generated**

(00:00) welcome to the truth B real estate investing show my name is Erwin Szeto I am the host since 2016 we have well over 300 episodes of this show and guess what what topic keeps coming up in my DMs you are 17 listeners who’ve been dming me would like to hear from a litigator a lawyer that specializes in suing people to guest on my podcast you ask and you shall receive I had uh three in have introduced to three lawyers who are interested in coming on the show and interested in taking on clients to uh to sue borrow
(00:31) to repes well probably willing to represent both sides anyways so I’m working on a few and that’s just the State of Affairs right now in the in the community though I should note the problems are generally isolated in certain groups unlike rain and Rockstar hence we just had CEO of of REIN Patrick Francy on the show and co-founder of Rockstar Tom carazza on the show Tom was just on Nick was on about roughly about a year ago as our to celebrate our 300th episode respectfully I keep hearing news about Investors within the community
(01:03) declaring bankruptcy or bankruptcy protection where investment strategy where the investment strategy was on the challenging side including major Renovations like basement sweding or Garden sweding or trapx conversions or whatever in small towns with small economies some of these towns even lack the basics of real estate investing like a growing population like Tim Ontario where the pop population actually shrank according to stats Canada pop like real estate investing works best in growing areas so where areas have growing incomes because
(01:40) growing incomes typically attract more people to move into the area which pushes rents and prices up again to pick on Tim Ontario I’m sure it’s lovely over there home of sh Twain the population actually shrank uh I’ve included uh the um in in the show notes I’ve included a screen capture from stats Canada between 2016 2021 they actually shrank by a couple hundred people point is most of Ontario did not shrink most of BC did not shrink why would anyone consider investing in a place where people where the population
(02:14) is shrinking sadly I heard news that uh this earlier this week or last week that one of the past guests of the show had declared bankruptcy I don’t know any of the details other than she was sanctioned also by her local Securities Commission uh but I haven’t heard about anyong doing so I’ll leave names out and the episode will will at Le stay up until I have more information I do want to warn and remind our 17 listeners that this is a recession that we’re going through uh I don’t know if You’ want it
(02:42) seems like a recession real GDP has been declining for like six quarters the economic picture for Canada is not that great right now uh and partly due to historically High interest rates that we’re in right now so there were so should be no surprise that we’re seeing bankrupcy es among those who speculated or they risked excessively or they overleveraged there was tons of lessons from the 2008 financial crisis where those who went bankrupt could not make payments on their debt hence it would make sense to not over
(03:15) leverage which is kind of wild because private mortgagees seems to be all to rage in in certain circles versus back in my day oh listen to me I just turned 45 and I’m talking about back in my day um prior to I don’t know about 2018 most Jun Venture deals most OPM other people’s money deals were for Equity not for debt so at least with Equity yes you you give up half of the ownership but you don’t have interest payments that could potentially bankrupt you so anyways I do have an ask for you my
(03:52) 17 listeners if you do want to help people uh that you care about then please share the show with them in my newsletter we do vet guests on this show and I’ve repeated it many times on this show I do not lend money privately I’ve never found retail opportunities to lend to be worth the risk in the worst case scenario Visa Mastercard collect 26 to 29% interest on unsecured loans why would I accept 15 to 70% on a promisory note the investment in oneself in one’s own properties maintaining direct ownership and control still remain
(04:25) undefeated as the best investment in my experience and I have I have over 45 clients to prove that mult millionaire multi-millionaire clients to prove that boring investing works perfectly quite well Terry and I are headed to Savannah Georgia for our next stage of portfolio building if you have any vacation or real estate tips I am all ears onto this week’s show we have returning to the show my friend Seth Ferguson and I want to thank him for hosting the biggest real estate investment uh real estate invent of the Year May 24th to 26th the
(04:56) Friday is more of a 101 for beginners then the main course is the Saturday and Sunday and I’m excited to see all my friends there from the community there hopefully our 17 listeners and and will be there i’ love to see you uh please stop by say hi if you see me I’ll stand up like a sore of thumb I promise you that and also I’m excited to see Wolf of Wall Street Jordan bord speak I don’t know his full story outside of the Leonardo DiCaprio movie I know he did go to jail for doing awful awful things
(05:23) with people’s monies uh but I do know he’s got some great great lessons to share from his loss uh and how if he could do it all over again if he just played the long game and been more honest he would have been like like 10 times more successful hopefully he shares that story because I love to see it in person Robert hyck of dragon dead and Shark Tank is the other keynote speaker along with SE the secret guest Seth will reveal on this show uh Seth’s pretty awesome too uh I enjoy interviews done by Seth and I enjoy seeing Seth
(05:55) speak uh I don’t know if he mentions it on the on the show but he actually the feedback on Seth’s talks is usually among the highest among his guests uh so on today’s show Seth shares the journey to the third multif Family Conference how and why he chose these speakers how this year will be drastically different than the year’s past much uh new and improved if you will we’ll discuss why Seth from Milton Ontario owns no income properties in Canada and focuses his efforts exclusively on uh the southern
(06:23) USA along with some of the numbers so you may want to have a pen and pencil ready to take notes and uh yeah please enjoy the show also multifamily conference.com Toronto Convention Center is the location May 20 Friday May 24th to 26 yeah please enjoy the [Music] show hi Seth sorry what’s keeping you busy these days oh a whole lot a whole lot nothing uh well a whole lot of nothing really we got like conference coming we got real estate we got all sorts of stuff yeah yeah nothing e nothing like everything has a seven fig budget I don’t know what
(07:14) everyone calls that nothing oh man yeah it is uh yeah it’s just uh yeah just trying to fill out uh figure out how to fill up my time and uh you know take myself away from uh the family as much as possible no I’m just joking just crazy just crazy which is hilarious cuz you coached your child’s hockey team not busy enough yeah I I added on the coaching so we’re on the ice a whole bunch and uh yeah what else am I oh I’m writing a book like all this kind of stuff so you’re writing a book too oh yeah well the huge history
(07:45) nerd kind of stuff right so history of what oh uh yeah buildings what no no no no no so it’s uh I’m I’m writing uh I’m doing a book on the eth regimen of foot during war of 1812 so I’m basically covering uh the regiment from 1810 to 1816 uh so it’s a very it’s a very geeky non-fiction like historical type of study okay hang on refresh my memory it’s been a long time since grade 10 high school history what was the War of 1812 yeah so the War of 1812 uh you know it was fought between Great Britain and
(08:18) the US so it really stem like brost and tea party stuff well yeah well that was like more of the American Revolution so fast forward uh to you know 1810 1811 there was a lot of tension and terms of the uh you know just trade with uh France who Great Britain was at War uh with at the time and uh the impressment of American Sailors boarding us ships there was a whole lot of stuff uh so uh the US declared war in Great Britain and then there was a you know three year and a bit War fought over that only three years they lucky yeah well a lot of
(08:51) stuff happened with it but you look in Southwestern Ontario so you’ve got you know Fort Erie Fort Georgia niagar on the lake you’ve got Fort Niagra you know Lundy’s Lane everybody know shopping well that shopping center is part of it built over um a battlefield uh so that that was one of the bloodiest battles of the war that was fought there oh okay yeah so cuz you’re not busy enough exactly not busy enough wait how wait just to give folks some context like how how many people attended the multif
(09:20) Family Conference of uh last year yeah so last year we had 2500 people 2500 well 2500 and change yeah that’s a lot yeah it was a lot of people yeah and we’re going even bigger than here so it’s going to be insane wait you have a bigger room how you going to make this bigger you already had a humongous room we did but we added some more square feet so you you’ll appreciate this with knocked down a wall yeah so you’ll appreciate this with with your uh your conference so we have about 180,000 Square ft just on the main floor
(09:50) and then we have all the rooms underneath so we’re so you like double that essentially in terms of uh space so yeah we’re really big wait wait wait are you doing two states no no still the main stage uh but in terms of the room in terms of uh and how we configured it like we can we can definitely add another thousand people right right right yeah yeah what what’s okay so actually let’s revisit so uh like last year was the first year you did a whole Friday segment just for like 101 investment training yeah yeah for
(10:21) for sure yeah so uh for context in our first year we ran uh the Saturday Sunday uh so two days mainten stage it was great mhm and during just out of the lockdown yeah man that must been so stressful oh so stressful for so for for history lesson just a few years ago you were the first big conference out of out of Co we were yeah and the interesting thing so in terms of venue shopping everybody was kept asking me hey why did you run it in a hockey arena and just convert it well the truth is those guys were the only people who snuck Us in
(10:54) during the lockdowns all the other venues wouldn’t let us in the building but um the ca Center let snuck Us in and we did our site tours and all the planning even though everything was locked down and that’s the only reason we were able to get in there and and actually run the run the event um but what I found the first year was We attracted a you know a decent number of people who were who were new to apartment buildings so maybe they were doing fix and flaps or some other type of real estate and they didn’t
(11:21) understand apartment buildings so when you know first year we had Joe Fess i’ say now he’s at like 3 billion in AUM um when he was on stage yeah so his portfolio he manages a portfolio of 3 billion oh yeah insane right so but when he’s on stage and talking those newer people weren’t able to absorb as much as he was giving out because they they didn’t have that foundation so last year we added a Friday workshop for beginners so this is where you know we we’re going to hey just give you all the basic
(11:48) foundational stuff so that way when you know Grant Cardone last year or Alex Rodriguez was on stage talking about their portfolios you’d be able to follow along a lot better um and that was crazy we thought we’d have like 300 people we maxed out room capacity at 500 and something we couldn’t fit more people in uh so this year we’re splitting it so we have our beginner Workshop just the same uh and then we have an advanced investor Workshop where it’s more focused on scaling uh Team growth uh brand building
(12:16) at scale like lead gen at scale that that type of stuff so you know if you’re an experienced operator we have a full day workshop just for you on the Friday and then if you’re kind of new to apartment buildings full day workshop that’s going to bring you up to speed you can be like 10 steps ahead of everybody else uh By the time Saturday and Sunday rolls around I love how like how how the conference has evolved oh yeah to yeah because you yeah you you always need information you need data you do send up surveys and you need
(12:43) information on how to improve yeah and then to see you delivering on the improvements that’s so cool oh yeah well like that’s the thing with with uh with any any type of product right you you talk with people face to face you know your good friends will tell you the the truth like right off the bat but a lot of people they they won’t give you the the real things that you need to know about so that’s why we always survey and then you know we read through and I read through every single one like the team does too
(13:09) but like I I read make sure I read through each one and we actually take it to heart like it’s like oh okay well we have a decent group of people saying this well how can we change it to make it better and because I want to as we scale this conference like we’re scaling this to be the real estate event anybody goes to and uh to do that we have to be the best so we’re always looking to improve CU I thought the first conference was incredible yeah it it was it was good um but like it’s first time with anything
(13:39) right like like there’s always things that that you want to improve on and and as you scale so like a thousand people versus you know 3,000 people there there has to be changes behind the scenes in terms of the framework to to allow you to scale to that size so and that’s that’s what kind of what we’re focused on right now is hey how do we deliver the the the top uh the best in class experience but also be able to impact thousands and thousands of people at one time uh because you know when you start
(14:07) adding a lot of people uh there’s the logistical stuff you want to make sure everybody feels included that that type of stuff yeah more things can break and oh man yeah well last year um our registration system um crashed on the day of so you know like we pay so we pay a lot of money for our registration stuff like it’s not just like we’re not using event braer like we pay a lot of money for this stuff and you know I didn’t even notice oh yeah well speaking of things go wrong behind the scenes so our team was incredible
(14:41) but we had the one thing I wasn’t happy with was people came and we had like the lineup was was pretty big like we had a lot of people but the reason is our whole registration system was down and um the conversations after the fact were not good in terms of us for in in that system because hey like we paid you guys a lot of money to perform and your system did not perform at all and and so that just tweaks and and making sure now this year because it happened last year it’s like okay well we’re running with a
(15:10) different company but hey what happens if this crashes what’s our plan B and last year we didn’t have the plan B so now it’s just like adding in different systems and and operations to make sure everything’s Flawless you know again as an observer like I didn’t know it was down and I know the lineup was long but they got processed pretty quickly yeah yeah but but like this is like I’m a perfectionist right so which is hard when you’re when you’re dealing size of quantities yeah like it
(15:37) was great and like our event is an amazing event but I like that that’s my personality I always want to make it better the next year so it’s like okay like generally it was good but where can we nitpick things to really bring you up to the next level and and that’s what uh that’s what we are ruthlessly doing um so yeah like like this year we we’ll we’ll have some changes in terms of how things run but it’s just to make things better right right yeah for sure and talking about trying to make better you
(16:04) had Mr 10x last time we did yeah you had M you had the Alex Rodriguez who I think uh I’m sure many people underestimated him myself included because I didn’t know his story and his and everything yeah yeah well actually let’s touch on that for a second because I got so much um so many messages on Facebook Instagram or emails about hey why are you bringing Alex like he’s just a baseball guy it’s like oh I got better certain people were like oh didn’t he date he used to date JLo right that’s how they knew him so they didn’t
(16:39) know he was a baseball player well well even Darcy was like who cares about A-Rod I just wanted to see JLo and uh but but who’s married to Ben Affleck now I think I think I don’t follow these things but yeah I think yeah I’m not I’m not sure but but yeah so but I was so excited to have him on stage because I knew what he was doing like with A-Rod Corp like he’s a sharp guy he knows what he’s doing he has a great team he has a great portfolio and so on stage I thought like my personal I thought he
(17:08) knocked it out of the park to use a baseball ter right like he was great and a lot of people came up to me after or shot me messages being like hey like I had no idea yeah no idea um and and that was you know I I was really excited for that cuz I could just kind of tell everybody kind of knows A-Rod but they didn’t really understand who he was as a business person he was playing in the miners and he got his first duplex so like he’s been in the investing game for a long time and I I think he surprised a
(17:37) lot of people which is great I love that everybody knows Grant Cardone but in terms of A-Rod like he was he was great yeah yeah actually had some Insider information I just my coach shared with me how how she knew many people and who who knew a rod already knew he was legit yeah so I was actually got the benefit of going in knowing he was incredibly legit yeah yeah and now again talking about passing trying to beat last year which is tough when you have Grant yeah you have three speakers coming up for this year yeah we got three big guns
(18:08) coming out yeah um and so we’ve announced well we’ve announced two should use the word guns because they are Americans three we have three headline speakers yeah yeah yeah so Grant and Alex were exceptional um and uh one of the things we wanted to make sure that we’re doing is keeping it fresh right like a lot of people said hey bring Grant back you know maybe we we’ll look at it next year but uh we want to keep it fresh and deliver different perspectives um and I think the lineup we have this year is going to
(18:36) be a lot of fun um so we’ve got uh Robert herc you know longtime uh you know Canadian uh immigrant uh longtime um you know star on drag stad Shark Tank he’s now executive producer of Shark Tank um and he’s seen a lot of pitches so uh you know one of the things with with our audience is a lot of people want to learn how they can improve their Capital raising skills so Kevin ol was our first Speaker the first year he was awesome he was great he was great um did the audience like him oh yeah we really
(19:09) enjoyed him yeah yeah Kevin scored really really well and this is the thing with like marketing like we get hate mail all the time uh dep no matter who we like bring in as a speaker we got hate about Kevin oier we got hate about Grant Cardone we got hate about uh A-Rod and this year we’re getting hate to so it doesn’t really matter right but but we want to keep it fresh so Robert can bring that perspective um in terms of the capital raising the scaling the team um that kind of thing um and then we’ve
(19:36) got the Wolf of Wall Street himself Jordan bfor uh coming in and in terms of like running you know like we run sales teams and stuff in terms of tone and how you can present opportunities and stuff I don’t think there’s a better guy uh so I I’m really looking forward to uh Jordan and he and we’ve got him set up so he’s going to be running a workshop just for our VIP so he’s on the main stage but he’s run a workshop just for our VIP VIP attendees in terms of how they can structure their Capital raising
(20:05) pitches and their presentations and and how they can uh just interact and Converse with possible investors uh better I think that’s going to be worth the price of admission in itself so so really excited because uh for anyone who’s followed Jordan Belford’s career they know like if he just stayed clean yes not in his maybe both both in his substance abuse in his business yeah for sure like he he had um what Steve Madden shoes lined up oh yeah yeah like he could have ipoed that yeah 100% And he I
(20:38) don’t know I don’t know how many hundreds of millions he’d be worth oh huge and and you just look at the the sales team he built he was able to take people who were just regular lay people like lay men and bring them in teach them how to sell and they were incredibly successful you know yeah things went off the rails 100% right um and yeah like he did his time but in like if you look past it and look at hey like what’s he actually saying like what what value can he bring like we’ve learned so much in terms of how we run
(21:10) our sales team from from um from what what he’s done so I I’m really excited to have him come in for sure and plus he’s got a couple good stories too so are you going to ask the cliche is he going to do the cliche uh s me this pen no no no is that a l is he sick of it well like yeah like like we we’re going to take it from to a totally different like place with it and yeah what well well say Inn so if somebody asks you sell me this pen what’s the right answerin sell me this pen what what’s
(21:41) the right answer there give me you have a pen I don’t have a pen supply and demand yeah exactly which I stole from the movie well well the the best answer is well how long have you been in the market for a pen yeah yeah right so like you go into Discovery so I Ed up with a question do you have a pen 100% I got this 100% like so many people are like oh yeah this Pen’s amazing blah blah you don’t even know cell yeah you don’t even know if the person wants the pen or not yeah yeah that’s super cool
(22:15) um I think I think the lesson out of Jordan B for was is at least to me is that if you just if you just keep it clean and play the long game yep you’ll be you’ll be like he like I’m I’m a guy I I own Steve Madden shoes I like the product and he could have taken that he could have been the company that took it public 100% Y and if he kept some stock like I don’t even know how many hundreds of millions he’d be worth 100% And and like you just look at you know in in terms of the even just
(22:44) the sales training side like he has so much to offer in terms of how you structure or pitch how tone and how you can influence people and all that kind of stuff like sale like you’re selling every day like what if you go on a date you’re selling if you talk with your kids you’re selling if you talk with your spouse you’re selling you talk with a prospect you’re selling uh so that goes such a long way he sold people on his script in his book oh yeah 100% 100% so like like there’s I’m I’m really
(23:12) excited uh not only have Robert coming but also Jordan I think they’re going to be fantastic and then the third speaker at this time we have’t announced but by the time this comes out so we’ve got uh Grant’s wife Elena Cardone coming and uh you know she she is bringing so much to the conference this year because you know most people don’t know this grant touched on it a little bit last year in the VIP room um but Elena was the person who pushed them to go big with everything and start raising money uh so
(23:40) we’re getting the the brains behind the operation so to speak and um she brings so much in terms of how couples can work together to build an Empire um and what and her roles in in the company and what she’s doing so really excited to have a really strong woman on stage and uh and yeah so she she is the third yeah I saw her speak at 10x conference back in Miami and she’s excellent and I think she has an important story to share yeah um like not every entrepreneur partner in the couple needs to be the person
(24:10) that’s out in front the face yeah right they’re like every you you agreed to we talk about loss but for example the gentleman who have the that that portfolio of Northern Ontario that’s failing is didn’t have anyone watching the business business closely to make sure everything was like running properly yeah yeah that and that’s so important and and quite honestly like the person behind the scenes is I I you could argue more important than the face right like you know even with our organization I’m the
(24:39) face but you know we you need to have really solid people in the background making sure that that person’s supported and they have everything they need right yeah like Batman has the Oracle like you know every everyone needs that person in the chair who spends most of their time in the chair to make sure everything’s okay yeah 100% so I think it’s going to be a really unique person perspective um that Elena is bring and you you can notice like each one of our Keynotes this year is has something different
(25:05) like a different spin or a different angle um because you know we want to make sure people are getting uh not just like the same message all the all the way through like everybody has something unique they can offer and depending on where you’re at in terms of scaling your portfolio or where you’re at um you can get something else uh from everybody so want to touch on your own your own investment Journey yeah this is I forget how many times you’ve been on the show now so anyone was U I don’t want to
(25:31) spend too much time on stuff you’ve already spoken about for example I believe the first episode we did together was I think like 2019 it was a while ago it was a while ago and the title was worst joint venture ever so folks wanted to see listen to that um yeah just just could you just give us like the 30 second version of yeah yeah so uh went through a a messy uh separation and basically lost uh everything and uh was the shittiest time of my life and uh started from complete scratch so you know we were kind of
(26:04) talking off air about um you know challenges when people have and how it actually like helps them perform better 100% so I kind of went through the ringer and uh a lot of really bad stuff happened but I survived out the other side and uh I would not be doing what I’m doing today if that hadn’t have happened had hadn’t have happened so in one way it was It was kind of good uh because it uh gave me a different perspective perspective on um on life and how things work and um quite I I tell everybody now they’re like oh that
(26:35) like aren’t you scared like running the conference and doing all this big stuff I’m like I really don’t give a anymore because if I survive that I can survive basically anything at this point right yeah and so to get some more context in history you had a portfolio of properties inario yeah yeah so so we did like lots of like we were doing like residential stuff um and then that kind of all blow up so listen to that podcast for all the the nitt nitty-gritty details um but yeah it was just a bad situation and uh that was uh liquidated
(27:08) and then uh basically started from square one so when you start from square one yeah I noticed you didn’t do anything else in Canada in terms of investing yeah yeah can you can you elaborate on the decision why not to do Ontario and I have all these Alberta Bulls tell me they why you to do Alberta yeah for sure so when when when that happened I already knew I wanted to do multif family and apartment buildings that that’s really where I was where they have those in Canada you know sth I don’t know if
(27:40) anyone told you they do but I I think and this is kind of what I found and you know when we’re raising cap like interest little bit of um a tangent here but when we’re raising money for a deal we found that an American investor will make a decision quicker and invest more money a Canadian so like we yeah we’ve got and even like even with the conference like we track all this stuff a Canadian will take usually two weeks longer from becoming a lead before they purchase than an American so like very
(28:14) different um outlooks and um you know personalities like obviously it’s a generality but um but that that’s that’s on on the whole it’s not the first I heard generally Americans are more entrepreneurial they more risks 100% including their government will take more risks as well 100% so you know when I started looking for people to help me and teach me the apartment building investing side um I went I went to the states um a couple reasons number one I I didn’t really know or I I didn’t know
(28:44) of any larger person um in Canada doing it at at a large scale obviously there are people doing it but I didn’t know at the time um and a lot of them are buying in the states anyway yeah exactly exactly and I remember I won’t mention but I I bought this like apartment building investing course uh from a very well-known organization and I got a binder in the mail so it was this huge thick binder and it it was like I think 1,500 bucks or something like that and I was like are you kidding me I just paid
(29:14) ,500 bucks for this binder I was like there’s got to be a better way so um I I found a couple uh people who were doing it at scale in the US and uh I never really looked back so all of the the kind of the training stuff the the side kind of scoop I I’ve got was always us focused and to me it makes a lot of sense you look at Canada versus the us we are a drop in the bucket just population size GDP like there is no comparison a and um you know so so if you’re looking to uh you know build a sizable portfolio and you know raise a
(29:51) lot of capital yeah you can do it in Canada but like we just want to go to the bigger market and it made a lot of sense and and just add to that making more sense like you mentioned GDP so then I’ll just go further like GDP per capita oh for sure meaning per person 100% And then you add to that each American generally costs less than a Canadian as well yes for example uh you probably like what is the minimum wage for Florida so for example minimum wage in Texas is 725 an hour very different from Ontario which is about $10 versus
(30:21) what is in Ontario 16 oh maybe even 16 and change I’m so yeah end of the day well yeah so a minimum wage a Canadian is in Ontario is 60% more costs more oh 100% like our labor is more expensive our we can argue that our government policy makes the cost of living more expensive like we can that’s a totally different episode but yeah 100% and other add to that like I think most people are familiar with um where immigration comes from in in the States and it’s generally it’s generally lower end yeah and while people I’m not going
(30:53) to get political yeah let’s just straight talk straight economics an economy Ben benefits from lower end like so for example to Canada our our our our skill level is quite ubiquitous it’s quite even we don’t have that lower end y but we need we need it though we need it right I don’t need someone with a University degree to make my burger yeah right I you know someone who has that who’s worth 725 an hour should have that job yep right and equivalent would be $10 an hour in here someone should have
(31:25) that job and then the economy all moves better yeah 100% % and the Americans are full have plenty of that oh 100% And and then you just like this is the thing that really like when you when you uh when you’re looking for a visual pull up a list of all the Canadian major metros with over a million people yeah it’s a short list yeah you especially if it’s two yeah 100% there only three there’s only three cities which is insane then you look at uh pull up the US list major metros over a million people insane and
(31:56) and and that just shows you how small we really are um so and you look at and it’s not just like in real estate in business like as soon as you can and if a Canadian company can enter the US market the potential is so much greater let’s just give a quick example we were talking before we’re recording yeah so I want a question to The Listener to our 17 listeners which city do you think is bigger in terms of like Greater Vancouver Greater Vancouver I’m going to talk to the camera okay all right which
(32:23) city is bigger Greater Vancouver or greater Tampa Bay Florida put it in the chat before we give the answer put it in put it in so for the listener I want you to like think about it like so which one do you think is bigger but the fact that I’m asking I’m pretty sure I’m going to guess which one’s bigger yeah so what remind me what was Tampa what was Tampa again Tampa is what 2.
(32:43) 3 million I think oh no 3.2 I think you said 3.2 before recording before recording and then I CU I think I messed you up cuz uh cuz Vancouver is about 2.7 that that’s right yeah and then uh I I me uh and then DFW was 7.6 Lord is that big yeah 7.6 for the for the MSA yeah so that that’s Dallas Fort Worth and Arlington that’s see that’s big than great Toronto area oh huge right so like that’s that’s just like that’s just one city yeah our economic capital yeah of Canada is smaller than Dallas Fort Worth Texas
(33:16) yeah and and you look at um and then you want compare GDP it’s not but you look at just the State of Florida right so it’s it’s insane so you know with us and obviously you know we have big aspirations right and and so um for for all of those reasons it makes more sense for us to help Canadians move their Capital to the States because there’s a a large interest in that and then if your priority is to maximize your return reduce your risk it makes a lot of sense oh for sure like like we’re
(33:47) talking about real estate yeah why not invest in the largest capitalistic Juggernaut there is in the world the USA right yeah and then like you I’ve talked about this many times like Texas is they have like I forget like they’re bringing like 6,000 jobs on just in record ship manufacturing might be eight and just and so the amount of job growth just in Texas alone is just ridiculous yeah yeah and and and you look at those types of States you know people are kind of fleeing the coast uh because of you know
(34:14) policy and affordability so if you have a family and natural disasters yeah and and natural disasters yeah so you know like like you’re looking for you’re looking for work you’re looking for an affordable place to raise a family you’re looking for you know a good community um yeah so like there’s so much opportunity um in those States and you know we look at Canada then we can talk about you know the whole rent control thing so in Ontario BC like you know you’ve got provincewide rent control in
(34:43) the states you’ve got rent control in California but rent control in California isn’t as onerous as rent control in Ontario really every everybody complains about rent control in California yeah well they don’t know that in Ontario it’s it’s even worse right so um you know just on the the what is rank control in California um so rank control in California um I don’t want to misspeak here but I’m pretty sure it is tied uh to some type of index um you know I’m going to say something wrong here because we don’t
(35:18) even look in California but but in terms of like the comparison when I went through step by step it’s like oh um like Ontario um is a lot more onerous in terms of like the restrictions and everything so I don’t want to misspeak but that’s okay yeah for sure cuz rent control is also a broad term just like rental licensing it’s it’s it’s every every municipality does it differently for example there’s one state in this in the US I don’t remember the name of it but the rent control is you may not go
(35:43) over 10% rent increase exactly which is okay that’s pretty good yeah yeah so and then then we can look at the history of rent control right so we have to go all the way back to World War I when rank control was instituted on a massive scale but that was because we were re bu Europe was rebuilding from World War I like it was destroyed we have rent control government steps in and government stepped in in terms of many different uh produce Industries and everything too um but that’s really where it started um and then it’s a good
(36:13) talking point with in the elections it sounds good but if you look like there’s a number of studies that show that I’ve looked at it a a market without rent control rents are actually more affordable and you have a better product uh because you have more incentive for people to to reinvest so yeah we can go on that tangent forever uh I I want to go more tactical cuz you’re actually living it CU your your properties in the states I imagine because you’re talking about Sun Belt yeah for sure Sun Bel is
(36:40) from what I’m reading on Twitter uh shout out Jordan Jordan Parson sorry uh shout out Jason Parson’s on Twitter who who’s in the space his tweets are excellent there there wonderful reports he puts out there from what I’m reading is that there’s because um just like the pendulum swings when when the Sun Belt stat got really hot a lot of Builder developers were building building these properties whatnot and so they right now they’re at a point of overbuilt yep and so rents have come down and there’s no rent control but I
(37:10) just said rents have come down yeah the the market takes care of itself like like that and and yeah so depending you know you look at places like Orlando you’ve got over supply for sure um but you know the market that’s the E and flow yeah um and and that’s what creates opportunities um no matter which state of the cycle you’re in like there’s opportunity as long as you’re in it for the long the long term right yeah so can you share What markets are focused in and why yeah so we’re we are really hot
(37:38) on Tampa right like we are trying so hard um to to get into Tampa uh right now uh we feel there’s a lot of Runway left we like the markets um we we like we like the area we like what’s going on in terms of the economy we we like the policy in place um so we are fighting tooth and nail um to get to Tampa so we we should have a uh an announcement to make pretty soon on that but like we are working so hard uh to get to get in there imagine you’re not the only ones like Tampa Tampa’s been growing like
(38:10) crazy oh for for sure yeah there there is a a fair amount of competition for sure like it’s like any market right any any Market that has uh a lot of Runway left like you’re going to be competing there uh so Paul our Acquisitions director he’s been working really hard um and you know he’s he looks at like every deal there is um also like we we we’ll look at at a number of other different markets in around Florida um but yeah we we are trying so hard to get our first one in Tampa what what kind of property are you
(38:41) looking for in Tampa yeah so our buy box is uh to Value ad Class B type of asset um and we’ll look at anything from 100 units to about 300 units uh give or take um and uh and that that’s a range where we feel really confident in so we’re able to do the there uh that that’s within our skill sets and uh we’re looking for that traditional value ad so we’re we can come in uh depending on some of the deals uh that we’ve been looking at um it’s either an operational play or there’s a fiscal Improvement
(39:11) side oftentimes the combination of uh of both but we’re we’re looking for a place where we can acquire the asset you know add some give something back to the to the community uh make it better um and and improve it for everybody so uh not only for us and our investors but also the people living there right we’re giving them safer better housing can you elaborate what a b-class property is oh for for sure so when we’re talking about uh commercial real estate and in multif family specifically you’ll hear all
(39:41) sorts of um you know ways of describing things but generally speaking you’ll have uh class ablea which is going to be the best location in a major Metropolitan uh City Center like the best location there ever is that that’s the class ablea brand new asset then you have a class A asset generally you’re going to be within 10 years old uh topof thee line amenities uh you know everything’s like topnotch like it’s a great location great building top quality you can probably attract doctors and lawyers as for sure yeah yeah you
(40:14) that that’s that’s you’re going to have your higher income people there that’s where depending on the market you’ll have like your granite countertops like really nice stuff Class B is going to be you know let’s call it you know that 20 year old year old type of um type of range uh it used to be a Class A but now it’s just older uh you won’t have the same modern amenities because it’s you know 20 years removed uh but still solid property good location it’s just a little bit older you have a little bit
(40:40) of deferred maintenance there that you have to go in and that’s that’s really what we’re looking for that good quality asset where we can come in and proof it bring it up maybe it’s got the last time the kitchens were done was you know 2005 so we can come in and uh and improve it do the kitchen Rena you know change Landscaping bring it back uh to life that type of thing then you have class C and class D Class C you have more deferred maintenance like you can tell when you see it it’s like ah it needs
(41:08) some love uh amenities are very few because it is older um and then class D like you’ve got it’s it’s really rough at that point yeah so so those are the different classes so we really like to live in that class b space you know good quality assets uh stable assets we’re not acquiring a place where there’s like 20% occupancy where you have to go in with a bulletproof vest or anything like that but uh but yeah good quality assets and good locations something went very wrong if you’re only at 20% vacas something is
(41:41) very wrong like City housing were or like sometimes you have a flyers rip through like a bunch of buildings and stuff and roof is leaked or massive infestation of some sort yeah and and those are heavy lifts and that that’s that’s not Power by box at all like there’s people who will take those on and uh that’s all the power to them but that’s not kind of what we’re box is the corporate lingo for this these are our field posts buy within it yeah for sure because when we’re uh meeting with um a
(42:13) new potential relationship in terms of on the on the brokerage side or a lender they usually ask hey what’s your buy box basically they’re saying hey what are you looking for and to talk like a pro you need to know the lingo yeah yeah you kind of throw the lingo around but yeah it’s just uh looking for that 100 to 300 unit range Class B traditional value ad that that’s really our uh bread and butter any amenities you’re adding and and ke you share what they are would be yeah yeah right so um like adding a gym
(42:41) perfect right because especially when you have markets where you have a younger demographic moving in you know people work out now like like you need a gym and that one treadmill in the corner doesn’t cut it so uh at a gym uh you can uh replace you know tennis courts are you know kind of P so take out the tennis court put pickle ball yeah pickle ball yeah pickle ball uh I’m just joking is that really a thing well actually there have been some properties um where they have uh they’ve put the pickle ball
(43:13) on the tennis court so nobody plays tennis anymore so that that is true um and then you know you can take out those tennis courts uh you can add a playround if you have lots of families on site or you can add a barbecue pit you know I love the barbecue like I love barbecue so do you I I see all the briskets you do so well especially if you’re in Texas or Florida florians love barbecue too they do I so I’m I’m heading to Miami on Thursday and we’re hitting up a new barbecue place for the entire trip so um
(43:42) yeah so B basically you want to look at your tenant profile and really understand hey like what do these people need like what’s going to attract them and if it’s not a tennis court well what types of people are living here are they f are their families well yeah well throw in a splash pad throw in thrown a playground you know make it a community people want to live um that type of stuff yeah yeah I like the barbecue I enjoy it and also all my guests love it oh for sure Barbecue Pit so you know let’s say you know you have a younger
(44:12) demographic um you know like in their late 20s and 30s you you got some families but throw in a couple barbecue pits make it really nice add some pergolas some seating around the family can come down you can cook on the grill you can have a little party it’s great for Community appreciation nights so you can bring in a couple chefs they’ll cook food for all the residents there like you can make it good right yeah uh is there more to a buy box like is there a price per unit is there a cap rate you want to get in at then what you want to
(44:44) uh your arv all those sort of things yeah good good question so we don’t really look at cap rate um that’s not really we’re going to offend some people well yeah all about the C oh man so and generally so all the most I’ve been very fortunate in that I’ve been able to build relationships with some very successful uh multif family investors are very very successful and I don’t ever hear them talk about cap rate so there must be something to that uh they’re looking for hey how can I create
(45:16) value in the deal that’s what they’re focus on and what can I control because we can’t control interest rates we can’t control government policy but what you can control is what you buy the property at what Renovations you do when you do the renovations like your business plan your marketing you can control that stuff so that’s what they focus on so you know price per unit again like that’s so subjective because you know price per unit you could have uh you know a B+ versus a B minus asset the price per
(45:47) unit is going to be different so you have to look at a number of different metrics right you have to look at your irr for the deal internal rate of return uh you have to look at your cash on cash cuz that’s going to give your you your annual uh return and then you want to look at your Equity multiples like we attack it from price per square foot we look at you attack it from all sorts of different ways because each metric will give you a tell you the same story in a different way yes um so yeah we we don’t
(46:14) look at cap like need SLE data points to make a decision 100% it’s not like oh yeah we we only buy at a six cap well but why though like like what what does that mean um so yeah so B basically what we’re looking for is we’re looking for a good quality asset and a good location maybe there’s been some mismanagement maybe it’s part of a greater portfolio and it wasn’t getting the love and attention it needed you know maybe uh maybe we see an angle where we can improve the marketing maybe we see a
(46:44) trend in the area where you know that asset hasn’t caught on to it so hey if we make these changes we can attract this huge demographic that’s now moving in so it’s really like any business like what’s your SWAT analysis like what can offer um and what what changes can you make in the deal that other people aren’t necessarily seeing all right slat strengths weaknesses opportunities uh threats yeah 100% right so and you know if you’re acquiring an asset and across the street is a brand new you know 450
(47:14) unit class doublea asset and you’re you’re looking to take your B+ asset to an a you know that’s going to be a huge threat so you probably don’t want to do that but if you have a class you know a Class A ass across the street and you’re in that class B totally different markets and you’ll actually get business from the class a asset when you when they price people out they’ll come over so you have to you have to look at everything together so it’s hard to say yeah you know I only buy at a eight cap
(47:43) well like that’s not a I would argue that’s not a sophisticated way of looking at real estate like you’re pigeon holding yourself on one metric and and you’re missing out on what’s really going on right yeah and we talk about loss we talk about lost before recording during this as well like for example the folks who are you know losing their shirts up in Northern Ontario like I don’t think they probably understood their irr nor nor their internal rate of return nor their cash on cash yeah because if you’re sitting
(48:12) vacant there ain’t no cash on cash no there a negative cash on cash yeah and like even irr so like a lot of investors um on the lp side so you know passive investors you know one of the first questions they’ll ask is hey like what’s the irr what’s the Equity multiple in the deal but like irr tells such an important story because it tells you the time value of money for like you know how the money’s locked into the deal right so you know I I always use examples where hey like here’s deal a
(48:40) you get x amount per year or he’s here’s deal B you get a slightly larger Chunk in year two and then you make a little bit less money while the irr is actually higher because you have more Capital being returned sooner and then there’s opportunity costs you can invest in different opportunities and all that kind of stuff so um yeah so whenever we’re speaking with people it you have to tell the whole story so you’re looking at many many different things I hope all investors appreciate irr
(49:05) internal rate return is incredibly important when whenever you’re going to whenever your investment plan has includes a refinance 100% some return of capital 100% because like a straight return on investment calculation do you are you doing the return on calculation based on today or after refinance yeah well and and that’s that’s the thing too so what we found is cuz as markets get tighter um like our rule of thumb is we never never never promise a refinance in a deal ever because it may or may not
(49:36) happen we just saw this the past couple years so if your deal uh like lives or dies based on a refinance that’s not a good deal right because that refi may not be happening so when you’re looking at your irr you want to look at irr without the refi and then you have your best case scenario hey if we do refinancing your three this is what your irr will look at at that point uh but you never never never want to bank on having the refi refinance cuz it it may not happen MH yeah so we’re talking a lot about us investing right now and you
(50:08) actually have data to back that up like for example before we’re recording you mentioned uh 70% of your audience wants to hear about us investing oh yeah yeah with the conference huge huge appetite huge appetite and and this is majority of Canadians you’re surveying as well yeah yeah yeah yeah that’s how Canadian audience so I’ll apologize I know that I know this is a Canadian real estate show but a like 90% of my audience wants to hear about us investing and you have 70% want to hear about us investing huge
(50:36) topic so apologies we’re not talking about Canada right now we’re talking about Canadians investing in the US yeah and you look at you know content we produce and everything every time we talk about us investing for Canadians it pops every single time so there is a huge demand for for that knowledge and quite honestly I I think it’s a number of things number one obviously the lies and all that kind of stuff but also the um there’s not a lot if you’re a Canadian looking to invest in the US
(51:04) there’s not a a lot of good material there to help you because 99.9% of stuff is made for a US audience so if you’re Canadian it NE it doesn’t necessarily line up with what’s best for a Canadian investing in the US so if we’re able to produce top quality content like you know you do a lot of stuff like we pump out a lot of stuff too if we’re able to deliver quality content geared towards Canadians I I think that’s a a missing link or a missing piece right now in the marketplace and I we mentioned GDP
(51:36) earlier the GDP of Texas is actually very close to the country of Canada oh yeah pretty much and that’s one state that’s is one state the population of Texas is around 30 million yeah and the population of Canada is almost 40 million it’s over 40 million now but Bas the GDP numbers are a little bit older so I’m trying to match up population yeah so again the the Americans have like 25% less population than us in the same GDP state of Texas alone yeah it’s like it’s insane like the research all
(52:07) points to One Direction really oh 100% 100% the only thing the only biggest benefit we have is the biggest benefit to a Canadian investor especially Ontario or BC is that we can’t build for whatever reason we can’t build fast enough so then a for that restricts Supply artificially restricts Supply hence we have uh you have a demine supply balance which drives prices up for for sure and you know there we can go even deeper in that but like it’s not like the the housing crisis isn’t just reserved for Canadians like there’s a
(52:39) housing CR like you look in the states like there are markets where it’s hard to get a home like it is a challenge it’s a North American challenge right and Grant’s Grant’s been Grant in his uh his 2024 review was like he said like we’re really short on building oh huge and this year’s and this year is just just we have we have Americans have similar problems that we do because rates are high they’re not investing they’re not building Y and this will C this will bite them on the butt oh for
(53:03) for sure like we have such a housing deficit right now in ter in terms of like starts that have to happen and and this is a problem that’s going to be around for the next hundred years like it’s not going away it’s not going to get better either because the Americans have trouble Staffing builds as well no different than us yep yeah we need trades we need qual we need competent people who who are trained 100% yeah but the Americans have an advantage in recruiting trades over us well they do 100% 100% um and like that’s and we can
(53:32) talk about like how um how governments are angling in terms of who they want to attract and everything but uh yeah for sure so I want to bring it I know you’re you know you’re big and fancy buying 100 300 units at a time I want to we have a lot of young listeners like who are like you know under even under age of 30 nice so say you were 25 years old what would what would be the first property you buy oh man yeah so if I could go in a time machine yeah I would erase the first like 10 years of me in real estate um
(54:02) and so if I could go back and here’s Seth like reading books trying to learn about real estate investing I would slap myself a little bit and say don’t worry about a house buy an apartment building like first first deal and like this is a little bit like controversial but a lot of people say oh well I want to start with something small because it’s safer I argue the bigger deal is safer than the smaller one so hear me out if if you’re listening right now and you’re like oh that’s crazy give me a minute to
(54:30) explain so what a lot of people do they’ll buy their first investment property maybe it’s a single family home a duplex uh they have to qualify for the loan on their own right because it’s based on their income the bank doesn’t really care about the income produced by the property the cash flow is going to be so tight number one it doesn’t give you much wiggle room but also um like you’re not able to afford Real Property Management because you have to self-manage because the property doesn’t
(54:54) produce enough uh cash flow and there’s a good chance you’re screwed up exactly right so so right off and then if like a duplex one tenant moves out there goes 50% of your Revenue yeah so for all those reasons like yeah sure the purchase price is smaller but you’re doing a loan you have no idea what you’re doing you’re going to mess up and then you have no like wiggle room like you’re screwed if you make a mistake like I I remember with one duplex you know we had an $88,000 repair bill
(55:20) because of the drain out to the Sewer the a tree route like busted through it 8 Grand that was like three years of cash flow on this property gone yeah right now you go on an apartment building it doesn’t have to be huge maybe it’s a 25 unit building much stronger cash flow different types of debt you can get on there right you’re able to have Professional Management because there’s enough money to pay the person so even if you’re new you have a manager who’s probably managed 10,000 units they can
(55:47) guide you and help you out and plus because the deal is bigger there’s probably enough meet on bone to partner with somebody who’s done at least a couple deals and you guys can do the deal together and everybody’s better off it’s more stable you have you have better cash like all those reasons so for now like if I could go back in time I would push myself hey get educated about this world of real estate like understand how it works and then go do a big deal right off the bat like 100% What markets are
(56:17) we looking at for this example hypothetical 25 unit building it doesn’t matter like the the markets irrelevant um you know I have friends who are crushing it and California I have friends crushing it in you know the Tennessee like the Market’s not important it’s more the market will impact your business plan and and what you place important like what’s important to you if you’re a cash flow person and like you don’t really care too much about appreciation you can go in into you know some Midwestern Market
(56:49) well the mid Midwest is is pretty hot but like you have to find out what’s important to you what your goals are for investing and then you want to find a market that that kind of fits that right um I think most people are more interested in cash flow these days of rates being so high for sure well cashow probably not so California is likely off the table well cash flow is the lifeblood of a real estate deal you need the cash flow um so but you want to look at a market that can support itself that is diverse in terms of its economy you
(57:16) don’t you just don’t want an agricultural based economy there there’s not diversity there or you just don’t want oil and gas like you need a mix uh you need a a growth in uh in terms of the population in the right demographic so if it’s the over 55 age group maybe you might want to think twice unless you’re in senior living right but you want to have those young workers who are in the prime working years of Their Lives who are going to have the families like who are going to contribute to the
(57:43) economy like they’re moving there to work so you want to have good government policy in terms of uh job creation and how they treat business uh preferably you have a city or an area that is actively trying to recruit businesses to move uh you get lots of incentives like that that’s the type of stuff you’re looking for um because if if you’re talking with an investor and saying hey Mr Mrs investor you know I have this deal it’s in this market this is what it looks like but oh like the the market we
(58:13) losing 5% of people every year like bad Market yeah like like you want to have some Sizzle in there oh yeah like our Market is has been in the top 10 for growth in the entire country for the past 5 years state of Texas 100% right like like like you want a growing economy and that’s what’s going to push um push your deal um give you that extra like push uh behind your sales so that was a long very long answer but I think most people can appreciate like where would a young family or young person want to want to move to yeah 100% right
(58:45) yeah and then generally those they want opportunity they want to pay less tax they want lifestyle yep so generally that means includes good weather great nature good schools those are the yeah 100% right so it’s not that hard no there’s honestly like there’s there’s like 20 Fant there’s at least 20 fantastic cities we would we’d both invest in oh for for sure like and like I I’m in that demographic now well I’m almost 40 almost there but it’s like where would I want to live like with my
(59:14) family it makes it really easy I wouldn’t want to move to California no no definitely not but but like you just ask yourself so if you’re 25 like do the market research and and the the thing I I’ve kind of learned the longer I I’m involved in this is like it’s not rocket science you you just have to be that much better than everybody else so a lot of people getting involved in real estate they’re like oh well you know like I’ll just kind of learn no like like really understand what how money is
(59:43) made in real estate understand the markets like what drives real estate what are the top investors what are they doing how do they look at properties if you’re 25 and you can nail that like you have such an advantage over over the 80% it’s that 8020 per principle all those poor people buying preconstruction condos like you have such an advantage and then if you’re able to have um you know a a an investor conversation with somebody and you’re able to follow that and deliver value to that person and and
(1:00:14) present things in the right way and have and and demonstrate your confidence and your knowledge it goes such a long way that’s oh so you mentioned like if when you find the pro the deal you want in Tampa for example yeah you’re going to raise the capital can you elaborate on what is a right mix of uh cash versus U mortgage oh yeah yeah so um it’s going to depend on the deal itself because there’s there’s wiggle room there but generally speaking we’re looking at you know a 7030 a 6040 uh so what I mean by that is we
(1:00:51) have a 60% debt 40% Equity or 70% debt 30% Equity um at no time do we like you hear people online talking talking about oh yeah I can get a 90% LTV through whatever program well yeah but that doesn’t really insulate yourself uh so you have to protect the deal and you need that Equity buffer um let’s just elaborate on that because some folks missed the missed that point with the the poor folks with the all the vacant properties in Northern Ontario and it’s not just them there’s other there’s
(1:01:24) other issues out there uh but I just want to elaborate on those deals specifically because those are 100% loan to value yeah there’s a for First Mortgage I don’t know what the rates are I’m going to guess six yep which is still expensive the seconds are like eight which bring you up to I don’t even know I think that brings up doesn’t matter and then there’s promissary notes that are paying like 177% y right so there’s no equity in these deals so just elaborate how Equity gives you buffer is
(1:01:52) you don’t you’re not paying any interest on the equity piece exactly which keeps payments lower yeah 100% And depending on depending on how you structure the deal like you’ll have returns that get paid own and everything but it’s a split on the profits of the deal and and really at the end of the day people get themselves in trouble with lenders because the lender wants to make sure that their money comes back to them so and that’s why lenders look for a debt service coverage ratio of like one and a
(1:02:16) quarter and what I mean by debt service coverage ratio is hey like how much Surplus does the property produce in excess of your debt service requirements so mortgage payments so A lender is going to want about a buck and a quarter one and a qu so that way on the day of acquisition that they yeah wow so so that that way um like they have that that wiggle room so in case like something happens with the property occupancy drop something like that they know they have a buffer because if you’re going in at let’s say 90% debt
(1:02:49) that buffer is so small so all it takes is a a dip in the market now the lender scared and now you start uh the ugly legal stuff that nobody wants uh so you need to have that uh that buffer there cuz at the end of the day let’s say worst case scenario you’re planning to to exit in year five and the market is the worst Market we have ever seen you have Equity built up in the deal like you can you can weather that storm um the last thing you want is that gun to your head which is where a lot of operators are um or got into last year
(1:03:21) where you have short-term debt expensive debt Market shifted now they can’t get out of that into conventional and you’re stuck it’s either you sell out a loss or you’re like taken to the cleaners so um yeah so so you want to make sure you’re you’re being safe with it and again no one went bankrupt for having too much Equity no no for for sure right and and so that that should be a red flag if you’re looking at an investment opportunity and they’re telling you oh yeah we’ve got 90% debt yeah maybe the
(1:03:48) numbers look good on a spreadsheet but in real life that’s not really how it works so this is likely the challenge both of you and I are running into as well because there’s a lot of marketing out there courses that are like heavy heavy debt oh yeah investment strategies so like I get people asking me like because my I’m like my plan is to put like 30 30 4 to 30 to 45% down on properties in cash yeah and people are saying why so high like what do you mean High I’m trying to at least Break Even
(1:04:14) yeah how low can you go yeah exactly and and it’s you know you always have to assume like what’s the worst case scenario and this is where Paul on our team like he’s really good at this kind of stuff like we we have our model and we try and break it so we have our underrating model hey this is our forecast for the next five years for the for the asset well now like how can we break this and make the deal fall apart and then we want to shore up those weaknesses and so yeah going in with high debt is really good if everything’s
(1:04:41) great but if if everything’s going to be perfect right like but like nothing ever like uh goes perfectly so you have to expect some choppy waterers in there and what happens like right yeah yeah yeah be a little weather storms yeah and everyone who had the storms usually have heavy heavy Equity or massive cash reserves or on the small scale people still have their day jobs and their six figure jobs so money’s still coming in yep 100% all right uh Seth you’ve been so generous with your time where can people
(1:05:12) learn more about uh multif Family Conference yeah the best way about the conference is just go to multifamily sen new speakers and uh yeah it’s May 24th to 26th in Toronto so it’s coming up pretty soon fantastic I can’t wait to be there it’s like a reunion it is yeah yeah it’s unfortunately like you’re just mad bit everyone wants your time that day but uh for the for the Schmo like me just it’s just nice to see all my friends there well you’re a celebrity so no no hardly not like not like the
(1:05:49) folks on your stage and uh your podcast is restarting yeah yeah so we’ve uh we ran for like 450 episodes before yeah yeah it it ran for a long time and then it just yeah so we totally knew uh we’re taking a different angle on it and it’s called the cool podcast so because you know one of the things before is we were we were just real estate and I I didn’t think it uh I didn’t feel it gave me the leeway to talk with some really interesting people who I wanted to speak with so now we’re uh talking with people
(1:06:21) who are pushing boundaries in their niches and in their spaces real estate but also you know we just interviewed um a a really cool musical artist um about kind of how the music industry works and how she’s uh making Headway there so like that’s really cool stuff to me so um it’s more General business and that aligns well with all the stuff we’re doing on on my end too yeah it was in the news that Rod Stewart estimate no one knows like these are private deals but Rod Stewart sold his uh his his song
(1:06:52) catalog for 100 million it’s it’s insane and actually we were just golfing at the golf simulator with with a guy who who on his shelf he has like music rights like it’s a fund and I think that’s so cool um and and so yeah we can talk with people about that and uh I just want to speak with people who are doing really cool in in their space yeah who are making money like yeah making money is to me to me nothing nothing more fun than making money yeah Seth thanks very much for doing this oh I always want to
(1:07:23) give my guest a final chance a final like the final a word any final thoughts like we’re like we’re recording this February 20th y a lot of turmoil right now actually inflation I don’t know if you probably I don’t know if you caught this morning um Canada’s inflation rate came in well below expected 2.
(1:07:40) 9 oh no I did not see that it it just broke this morning from Scotts can so uh yeah things might be picking up real soon yeah well we um like it was kind of interesting so uh like Grant and Alex last year at the conference uh both of them had really big targets for the next you know 12 18 months like Grant wants to double his portfolio and I I think you know the opportunity presenting itself now uh I think we’re setting ourselves up if you take some action now you know two three years from now I I think you’re in a really really good
(1:08:12) spot yeah yeah I know you didn’t have this dragon or sorry shark Barbara corkran was saying that the American Market’s going to bounce back as soon as we have Cuts yeah which are expected for pretty soon that’s actually weird because we Canada cut first sorry Canada increase rates first yeah and like everyone was expecting the Canada to cut before the Americans but right now it’s looking like the Americans might cut before we yeah and then depending on election results too like uh you know depending on who gets in like you can I
(1:08:37) I would expect some pretty aggressive policy if uh if the Donald gets in there to kick poli’s already aggressive well yeah but like it’s the Donald like he’ll go in and one more can you do and yeah and if because long-term forecast already for the I promise you the last words I don’t know if you what your research is showing me but my research for the Canadian dollar is it is expected to perform poorly against the US dollar yeah yeah and that’s you know over the long term yeah yeah and like all the
(1:09:10) like we talk with people who are way smarter than like I’m like down here we’ like we talk with really smart people and they they concur with exactly what you’re saying cuz like so how Canada benefits from the US growth is you know we build our pipelines we we get our and we mine our minerals yeah like we’re still the the heers of the land and the Sea like we’re not we’re not investing we’re not building anything no we’re just harvesting what we got in the ground I I want my money in USD 100% yeah yeah yeah
(1:09:41) cuz like yeah I promise you the last word but it’s all good but like I was playing with the we were playing with Google’s uh AI tool um I forget the name of it it used to be called Bard it’s they renamed it like genesis or something like that whatever but it’s like wow this is pretty impressive and I was already like over the top of chat gbt and like yeah and then and then open AI came out with the stop me if you heard this before open AI just released that that they can now do text to video
(1:10:08) did you see video yes I saw that yeah they had um they had two pirate ship sailing in a coffee cup and um yeah yeah that that’s really cool so it was absolutely insane did you see the one where like the text promp was like a drone video of gold brush California no I didn’t see that that one no it was absolutely insane yeah it was like your drone video going over the river and on each sides of the river is like housing and people dressed in that era yeah like and all in the prompt was just a few words yeah it’s like it’s incredible
(1:10:42) what’s going to happen over the next 10 years like I don’t think we’ll be able to recognize like marketing and creation of Assets in 10 years from now it’s going to be insane yeah and so where I’m going with this is like I’m not smart enough to build anything with AI or an AI tool or nothing like that yeah but what I do know is I saw an article that Sam Alman himself the president CEO whatever leader of CH open AI he’s trying to raise 10 billion to build microchip manufacturing because he still
(1:11:07) sees there’s going to be a shortage yeah we need our own microchips even though the Americans going to be building microchips like crazy yeah so I’m not smart enough to do like get make money out the microchip stuff and the AI stuff and all this sort of stuff but I’m smart enough to buy a house near one of these manufacturing facilities right so that you know these really smart people working at these places can rent from me or buy my house yeah exactly y I’m not going to over complicate anything yeah just keep it simple and
(1:11:35) collect the rent checks that’s all you have to do forget about it yeah I don’t to overthink this s thanks so much for doing this thanks for coming in thanks for having me and that that H uh looks really good so oh yeah for the folks who are listening Seth brought in swag so you know to encourage people to bring more wear swag I’m wearing swag while on the show thank you s sweet thanks everyone thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to
(1:12:01) use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.com below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real estate investing from a professional investor register for our next virtual class that’s at investor trining doca youout thanks again for watching see you in the next video

** Transcript Auto-Generated**
(00:00) hello and welcome to the truth about real estate investing show my name is Erwin Szeto and I want to say Happy Belated International women’s day oddly enough uh International history of women’s month is celebrated in October in Canada versus uh the west of Russell World celebrates it in March so happy in happy women’s History Month to everyone not from Canada anyways I want to shout out all the lady investors especially the moms and even more so the single moms out there uh I believe the women of real estate are incredibly awesome I
(00:33) happen to be married to one and I wrote a poem on the subject uh from from my own experience of working with uh I’ve shared before about half my clients are women including the married couple uh half the time the wife is the driving partner of that relationship so for the first time ever on the truth about real estate investing show I’m going to read you a poem in the Realms of brick and motor where dreams are built and sold a story of empowerment encourage dozen fold on International women’s day we raise our
(01:03) voice in cheer the women leading boldly year after Valiant year among my clients women shine their Vision clear and bright during Investments forward driving Investments forward with insight and foresight husbands too in Whispers confess their admiration pure their growth of our net worth they say her genius did ensure to the wives and pillars strong upon which Futures stand with who with a Keen Eye for Value navigate the land their wisdom in selecting the right property to seize shapes the fabric of success with
(01:35) remarkable ease and let us not forget the Single mother’s might juggling life’s many roles through through day and night the resilience of astounding a beacon so profound in them a well of strength and love abundantly is found so here’s to you the women in real estate who Thrive your influence is boundless helping dreams to come alive on this International women’s day your Praises we sing loud for the dance of progress you stand both strong and proud your freedom with these heroes in transactions large and small reveals the
(02:07) true essence of empowerment of all to Every Woman navigating the path of wealth and home may you always be celebrated and never feel alone again shout out to to uh all the women in real estate investing on a personal note U my family and I including my Superstar wife Cherry we spent the week of March break up north skiing sort of uh Cherry’s got a banged at me so she worked in the Chalet pretty much the whole time while I skied half the time as the ski the ski hill it’s a it’s huntsville’s uh Hidden Valley
(02:39) Highland ski uh so it’s bit on the smaller side but it’s perfect for kids I want to shout out to uh again Hidden Valley Highland ski camp for entertaining my kids and for training them I can’t recommend it enough for any parent who wants their kids to to learn how to ski so we’ve been doing this about at least three years now where our kids spend both the Christmas holiday break and March break in ski Camp uh we do live in Canada hence I believe the life skills for a Canadian include swimming skating and skiing intermediate
(03:12) levels are just fine I just want my level kids to be safe when they’re playing with their friends uh our family friends uh their teenagers actually had their ski school day cut short as too many kids were getting concussions from crashing into fences or trees so that’s not for what I want for my kids hence uh I’m planning ahead speaking of planning I have enough clients with adult kids where their kids want nothing to do with the family business or the real estate portfolio versus what kid would say no
(03:42) to an inheritance of stock like apple or or Microsoft my point is to increase the probability of my kids wanting to learn to and be investors the need something a bit more easy a bit more passive than what Real Estate Investors are going through uh locally to manage their own port uh take Airbnb for example earlier this week cherry and I had our worst experience with the property that we booked through Airbnb uh when we showed up this is this is for our March break so when we showed up the heat was off so we when we arrived the house was
(04:14) freezing and the thermostats weren’t doing anything not a good first impression uh there was no welcome email with instructions on how to operate the house no manuals inside the house either uh so we called and I spoke to the owner’s father and he was able to walk me through how to turn the propane furnace on that was outside the house so that was the first for me I’ve never seen a furnace outside the house before but even with the heat on uh the radiators on the main floor and in the main floor bedrooms they weren’t heating
(04:41) up and that’s where I was sleeping so that’s concerning to me uh there was also a fluorescent light in the basement that was a ceiling light that was loose and it was drooping down from its Mount I’ve never seen that before uh half the closet doors were off the railings the wood fireplace hadn’t been cleaned uh the owner and the cleaner who came by to clean it up after we reported it they didn’t know how to operate it or how how to open the flu so we had no plan B either then at bedtime as we were
(05:09) getting ready to go to bed uh we actually looked at the beds and we found two bed pillows that uh the kind that you’re supposed to you know rest your head on when you’re sleeping they smell like bad body odor pretty gross some of the best then so then we looked closer pulled back some of the sheets and then we found we pulled back some blankets and we found some bed sheets that had old blood stains on them uh my pillow was wet to the touch uh so I just tossed it on the floor I wasn’t so lucky even when I went to go
(05:41) find a clean pillowcase as the next one I found was yellow U this is hardly a good experience the neglect of the short-term rental is as bad as I’ve seen the worst in my experience and uh how are how is anyone expected to relax with these sort of problems going on uh the owner did come by to check on us in the afternoon uh in her standards for operating a short-term rental with prices at $500 per night are well below my own uh and who do I criticize apparently she’s making the money hangover our fist um anyways we decided
(06:12) to cut our losses short we didn’t feel comfortable uh once Airbnb agreed agreed to cancel the remainder of our reservation uh but unfortunately we only got 30% reduction on that terrible terrible first day uh that that was the decision of the owner I don’t believe that was airbnb’s call to make anyways we pack up the house and uh mind you when I when we showed up at the house when we first checked in when the heat was off it was only 15 degrees inside according to the thermostats which seemed accurate and when we when we
(06:42) arrived to pack up the house it was 26 degrees it was only 24 only 24 hours that passed the owner had warned us there was no way to control the temperature inside the house and I’d gone through and and set the temperature at like 21 22 degrees on all the thermostats I could find yet yeah yet the uh the furnace was just on a runaway was running away I don’t know what would happen if we stayed any longer so no surprise the previous guests before us who left it before who left before we arrived that’s why they
(07:14) shut off the furnace and the owner instructed me to regulate the temperature inside the house was by opening Windows in the middle of early March there’s still it’s it’s a warm March but it’s still like cold outside what a waste of propane and lack of client care anyways so we packed up the house while the kids were in ski Camp uh a cleaner showed up and gave us grief for not leaving earlier uh like it was our fault the house is gross and that’s why we’re leaving and it was also too hot uh we
(07:43) drove 15 sorry 10 minutes down the road as we booked another airBNB uh and we were greeted with a beautiful custom home Mansion uh well there’s probably 4,000 I think it was about 4,000 square feet on a massive lot backing onto a pond it was even better than the pictures uh we had a wonderful remainder of our March break after our very bumpy start uh we honestly can’t wait to go Wai in next year uh while my kids are my kids are old enough now they don’t need to be in Camp anymore so yeah we hit the
(08:15) jackpot with that property uh with an added bonus we saved $1,700 for making the switch though I still think that first night’s day at that crap hole should have been free uh my point is I couldn’t do what the Airbnb owner did have to deal with customer complaint calls and deal with Airbnb uh and again the owner is likely making really good money um and her experience was that you know lack of Maintenance was perfectly fine she’s still making money hand over fist U she actually said she couldn’t take
(08:45) care of Maintenance because the place was always booked she never thought to you know block off some time so you can get some work done no um but to operate a business like that and not care about customer experience and argue with customers and be fine with being a SL Lord of short-term rentals uh I know my kids wouldn’t do it and I wouldn’t I definitely wouldn’t do it either hence I choose to Outsource all my management on my real estate Investments going forward uh all the heavy lifting it all the heavy lifting
(09:15) that I have to do for investing in in the states is my my due diligence and honestly I’ve had a blast doing it because I’m a real estate geek and I enjoy travel so I can’t wait to travel with cherry to Atlanta and Nashville and in between and uh yeah oh and then also recently I I stumbled upon uh trion’s website the rental listings as well so so they’re one of the largest reads larger reads in the states so again uh I’m enjoying what I what’s called in the in the in the industry any industry uh
(09:51) R&D you know most people understand R&D as being uh research and development uh I I Al it’s also known as ripoff duplicate so I have the rental listings of Trion which is uh and they own 36 or 38,000 single family homes in the states so I have the rental listings I have their addresses and pictures so I can look up what they paid for and when so anyways combine that with public knowledge of the billion dollar Investments being made by Intel Samsung T Texas Instruments LG Honda Toyota hyundai Tesla all in
(10:29) business friend friend L landlord uh landlord business landlord friendly Southern USA and it’s actually nicknamed the battery belt for their green electric and Battery manufacturing Investments all the locations are just outside major centers like Columbus Ohio Atlanta Georgia I know Columbus is a little bit on the Northern side but they’re they’re one of the anomalies of being landlord friendly in the north uh Rally North Carolina Dallas and Austin Texas these are all CI cities with growing population and growing economies
(11:00) and identified as among the best cities for investment in the USA so my plan is very simple I’m going to buy hoses in between these major centers and the new manufacturing companies being built that will employ thousands of manufacturing employees anyways I’ve mapped the new major employers out on Google Maps uh I know my target neighborhoods my investment criteria and I’ve partnered with share the asset manager to be my One-Stop shop to you know find me deals manage the managers Al all sorts of
(11:30) things uh I’ll pay them their fees and they get to do all the landlord duties while I get to keep 100% control and 100% of the equity this is the best joint venture setup I’ve personally ever seen if you two would like to learn how cherry and cherry my clients and I are investing in the USA we are hosting a how to invest in the USA Workshop Saturday morning April 13th we have experts in all areas including accounting accounting legal structures financing Acquisitions and of course management note that we are keeping our
(12:01) investing simple and boring and only discussing single family homes in at the workshop because they’re affordable at the 100 100,000 to $350,000 range and I can get cap rates between 5 and 7% which pretty much beat anything here in Canada when adjusted for risk uh links in the show notes on to this week’s show on today’s show we have one of my mentors in broker uh Tom Tom crit is the broker and Co under Rockstar real estate brokerage where I belong and have been since 2010 uh in my experience they are the best leaders and
(12:36) influencers in the community uh if results are what matters to you like they do for me Rockstar members uh their thousand plus members are very well educated and more importantly they are very successful especially when you adjust for risk no get- rich quick schemes at Rockstar and on today’s show Tom Tom discusses how Rockstar members have weathered the current storm uh spoiler alert it’s been pretty good we talk about how the pandemic ruined my Bitcoin gains while Tom has accumulated more than he will he’s willing to share and
(13:11) he’s laughing all the way to the bank and I I as I say that I I know the R I don’t know if that saying works when you’re talking about Bitcoin and Bank you know what I mean anyways Tom and his brother Nick kader are hosting the next your lifee terms event live and in person Saturday April thir April 6th at the international center near Pearson Airport this is likely the largest room uh a thousand plus attendees are expected uh and and these will be successful action takers uh and uh the talk is always the talks always fresh
(13:46) for example there’s speakers there speakers that they have out that they’ve never had before there’s no repeating content allowed uh cherio will have a brand new presentation and she’ll have a booth there as well I’ll be there of course networking I’ll be wearing my USA hockey jersey if you’re a client of mine uh and I do know someone who knows someone so I can save you the couple hundred bucks on tickets uh and for everyone else I have Link in the I have link and details and the link to
(14:15) register is in the show notes uh URL Fe if you have a pen handy it’s www.yourlifeyourtermsevent.com please enjoy the show hi Tom what’s keeping you busy these days I was just thinking about when I first met you and you decided you were going to get into real estate and for whatever reason I think it was a Greek restaurant in Burlington we had lunch was that where it was and uh Nick was saying something to me like you know we got to sit down with this guy Irwin he’s thinking of leaving his job and going
(14:52) into real estate and real estate investing full-time I’m like okay you know let’s go and uh Greek food I love so that wasn’t easy sell and I remember sitting down across and and I thought okay this guy’s pretty crazy like us so he kind of fits because uh he wants to quit his job I remember it was a decent job what was it I I worked for a company that was acquired by IBM okay yeah so you were you like a data analyst or something I was in product management so it was it was a nice position for me
(15:21) because uh my workers highly respected I worked between like clients and internal clients to help design product that would deliver what they wanted so I kind of like that intermediary between clients internal clients in our development staff and why what was what had gotten into you why did you want to quit again I forget I I always want to get rich in life it was always my always in me that just my nature I always want to be rich and after reading Rich Dad Poor Dad I realized it was not going to happen while working a job got it and you
(15:50) wanted to be rich and how do you define that rich in time rich in money Rich money I was young more money than marrier got it I was not even a point where like I didn’t want kids because they just getting the way of having makeing more money that was my mindset back then got it got it um I think I just watched is it true I watched something it was like a a Chinese comedian sing for New Year’s yeah I was talking to Tim about this briefly and is this is this a real thing so you don’t say Happy New Year to you
(16:22) know in on the Chinese New Year it’s not customed to say Happy New Year you say I hope you get rich it’s it’s it’s it’s it’s a loaded thing but it’s also rich in what though money Health okay so it means I wish you wealth in all facets of wealth yes okay okay he’s he’s taking the Liberty but yes but you know but again like generally Asians priority is money yeah yeah you get it like it’s po it was a historically very poor culture sure so like you know no money no eating
(16:51) right so you know you know you know croatians are have similar background as well you don’t have money you don’t you’re not eating yeah yeah I remember just the way my family I think would try to show wealth would be they had nothing so if you went to visit and this would be my family in Croatia they would put any P they had any cheese they had out any bread in an abundant way to kind of show that they were welcoming you to the house and to show you that they had something to offer you and they had no
(17:19) real Financial wealth but that was the way they kind of tried to show that they were welcoming you you know putting some food on the table Yeah weird times lots of different cultures have different ways to express that but I remember you you told us you were going to quit your job and then you went and did that took a lot of balls man do you looking back at that moment do you are you happy that you did that do you regret doing that uh so I don’t know if you remember it was a long time ago was 2010 we’re talking about I
(17:48) actually went on sabatical for 30 days okay and that’s and I had my license at that point so I give it a go so I give it a go and then I was doing all right right I think I did two or three Deals in that month and then if I extrapolated then that would be more money than I was getting paid at the job and I was enjoying what I was doing I knew that this would help me become a better investor as well so then there was more there’s more wins and also I could keep local right I was living in Burlington at the time so go train downtown you
(18:17) know and it was yeah hard Jam in there everybody was reading the newspaper yeah everyone’s reading the newspaper it’s and especially the ride home is packed like you I almost almost never got a seat so you for that’s usually me cuz I play basketball at work I was that guy but yeah like that was you know a key part of the journey and you know and it’s weird cuz I’ve only ever been at Rockstar I’ve been a realtor for since 2010 only ever been at Rockstar so this is my only context yeah wow and before we’re recording like like
(18:54) we’re we’re recording this on February 15th like there’s been all this turmoil in the industry uh like just just last week there was big news in the CBC and the globe mail a certain group with like 8 600 units in like Northern Ontario mostly like they’re Grant bankruptcy protection and digging into it it’s it’s it’s bad I don’t know how much you dug into it not much I just know that there was a bunch of stuff lent out on promisory notes and that’s really all I know the houses were
(19:23) up north somewhere well the the bigger issue well that’s a big issue part of the issue as well is like there’s 200 units that are sitting vacant that are not that are not habitable wow right and I was thinking like how far is this from Rockstar theory for how to invest oh jeez right cuz I’ll go OG on you uh cuz you always share your family story of back in the uh late ‘ 80s mid 80s late ‘ 80s and the early ‘ 90s yep can you share that story yeah I think maybe that’s what defines how we think about
(19:55) real estate over the last 15 years was that era our father was running a drywall company and then he started flipping properties on the side just like everyone starts flipping properties on the side in the late ‘ 80s it was in uh Moga just north of square one off Eglington and kind of Highway 10 and those subdivisions up there were going up in the late 80s yeah that’s gorgeous area beautiful area he started flipping properties and he did really well on a couple flips new construction bought them sold them and then 1990 hit and he
(20:22) was holding this one new construction again that he bought off paper on assignment so like it was a trailer on a gravel parking lot guy walks out buying the house my dad buys the paper from him and it was a 4,400 ft house house enormous pretty big three-car garage and back then he bought it for 750,000 and with the hopes that it would go up like like all real estate was going up and instead of it going up four months after he bought it um TD raised rates I mean the Bank of Canada raised rates but in this one month interest
(20:53) rates went up and if memory serves it was 2.9% in 30 days so it was like a 3% raise in 30 days and that absolutely decimated the real estate market and not only the real estate market it really ripped apart the highend or what I would call the luxury Market yeah 40 44 qualify yeah so that house we were looking to see if we could sell it and we would we would sell it for like 450 we thought and at the time we couldn’t afford to sell it for $450 we would lose so much that our family home in Miss Saga would be in Jeopardy so uh my Dad
(21:28) decided to hold on to it I became the property manager because my English was stronger than my father’s and we rented it out and even renting it out I remember roughly it was about $1,000 a month negative so my dad’s drywall or our dad’s drywall company was struggling because it was a recessionary time and we had this property that was sucking $1,000 and the price of it was under under what we purchased it for and then the the tenant skipped out on rent um and uh I remember going to the house and
(21:58) it was vacant at first I remember going to the house and them telling me hey just come back in a couple days and we’ll get you the rent I used to go pick up the rent I remember being inside the house when they told me this beautiful carpets baby grand piano like I remember being impressed with this house and just the way it was furnished and everything so when they said to come back I didn’t really think of it I used to cut the grass on that house and stuff and uh full service product management yeah
(22:23) what I was doing yeah I was like my old Thunderbird like I stuck in a lawnmower and I went to go cut the grass and do all kinds ofd who knows what more in a Thunderbird okay I got the image in my head yeah two car girl two car sorry two door Thunderbird with light covers and a bra on the front with a lawnmower in the back going a cut grass and uh i’ cut the I went back and the neighbors are like hey they let they moved out in the middle of the night and I’m like what they’re like yeah the house is vacant
(22:49) we’ve looked through the windows and then I went and the house was vacant they skipped out on one month’s rent and at the time one month’s rent for our family was absolutely massive like we needed that money do you remember what the rent was I don’t I just remember the negative I remember the negative was like roughly a thousand and uh I had to tell my father which was also that was just brutal had to rent the house out and renting out a larger house when times are tough took forever it was basically just us
(23:14) Executives who would rent out that house and even renting it out again in a recession not easy it was not easy no I don’t know how many months um I was in university then uh but I remember being vacant for quite a few months because I would have my friends over for some parties and I remember one of my friends jumped off the twoot sorry jumped off the garage roof he jumped off the garage roof of that house and landed on his chest on the grass and he didn’t die I remember seeing him bounce off the grass
(23:45) um so yeah we had some kind of crazy parties in that house and stuff but we eventually rented it out and uh that just taught me that you know going through that experience was really really tough and it just taught me that um when when we looked back there were some real estate or some properties that really um were the most liquid if you needed to rent them out if you needed to sell them in bad times if you needed to refinance them and it was starter homes it wasn’t these luxury properties starter homes always had a bit of a bit
(24:15) or a bit of demand M and I just always stuck with Nick and myself we like huh starter homes always seem to be like the most liquid real estate so if you’re going to get into real estate probably should just get starter homes and you should probably not do um reconstruction like our father had done because by the time you sign the paper or the time between you sign the papers and taking possession a lot can change it can kill you it the market can change it can change greatly Fin and I know that’s very conservative thinking and I know
(24:42) tons of people have made amazing money on preconstruction and I’m not denying that’s it’s like absolutely fantastic for them this is just our family story and what works for us so we always then steered Nick andai to starter homes that were resale because we thought oh well if they’re resale we know what the rent’s going to be and if it’s a starter home we can we know we can rent it out to a family regular rent we know we could do a rent to own strategy on it if it’s close to a college or university we
(25:05) know we could change it into a student rental which we had done we have a property that we ran as a rent owned that particular one didn’t get bought out we changed it to a student rental for a few years now it’s back to a single family rental so this the starter homes just have a lot of opportunity a lot of you know options there’s options flexibility to it if you want to throw a credit line on a starter home the banks are typically willing to do that so it’s just easy so it sounds pretty boring but
(25:33) we’ve just always thought resale and single family homes and when I say single family I should qualify that like we mean fully detached but you know if it’s a semi- detached town home like those kinds of properties ideally single family if we can and that just became like our our thing we would just buy resale and um yeah that’s what we learned in real estate and then when we when when we went off to start Rockstar it was really just because we had no more money to buy properties ourselves so we thought okay well we
(26:03) have these real estate licenses that we got to bypass Realtors MH and uh why don’t we just use this license to try to help other investors because this is going to sound crazy irin but in 2006 and 2007 there weren’t a lot of Realtors who worked with investors yeah I remember those days yeah there you couldn’t find anyone so most books most books taught to not work not yeah don’t even yeah yeah if it was a real estate book it was like investors asked too many questions you don’t want to deal
(26:28) with them and The Brokerage that we first went to in Oakville they didn’t they told us we were going to fail when we told them we were going to work with investors they didn’t think we were going to succeed at all well because also add to that most investor books that were training investors like write a 100 offers yeah and that was the books I WR I used to do that I used to write all those offers and I used to piss off all these Realtors to win one yeah and and I would say things like legally I know you must present my offer I know
(26:55) you must present it I legal legally I know you must present this and then I flipped and I got my license and then I dealt with these investors and I’m like oh God yeah you don’t realize the politics of of real estate is that you’re trying to keep relationships with other real estate agents so you don’t want to piss them all off with your crappy offer yeah exactly someone off they may not ever talk to you again I’ll never forget I found a single family home in Burlington that I couldn’t buy
(27:18) Nick and I didn’t have the money but it was it was a single family home in Burlington for it was I I want to say like 283 285 if you could believe it 283,000 and remember telling this investor oh my gosh I found the property it’s it this is the price and here’s what you’re going to get and rent on this property this thing is a winner and he had read some real estate investing book where he had taken the purchase price of the home and divided it by the property tax and the ratio that he was came up with he said yeah he said in the
(27:47) book that if the ratio of purchase price to property tax was this that it wasn’t a good purchase and I remember it just finally hit me I’m like wow some investors just speak with cra crazy you know some crazy ideas and then I thought oh my gosh was that me like back in the day cuz I probably said some things to realtors that just sound the 1% rule or yeah yeah well the 1% rule if you could get the 1% rule that was like that was crazy that’s what got us into student rentals because they were hitting the 1%
(28:16) and we’re like holy smokes back in the day yeah yeah yeah but anyway that’s so yeah so our personal journey is heavily influenced by the early 1990s and that real estate crash lasted property prices went down for six years so um that heavily influenced us and just guided us to starter homes the resale Market super boring and over the years people have come to our faces and told us you guys don’t really know how to make money in real estate you have some those people yeah you have to be doing this we’re now
(28:44) bankrupt oh really yeah and it just never even phased us cuz I always just thought like well this is my journey that’s your journey this is what’s working for me I’m doing the math on these things I like what this you know does and we’re going to stick with it and our accountant really early he’s since passed away but he was a mentor to us I’ll never forget he said that when he was younger him and his accounting buddies would look at businesses and as businesses would grow some of them would
(29:06) grow almost exponentially and they would always admire those people and those businesses but you know now later in his life as he reflected back with his accounting buddies they realized that it was the turtle who wins the race that a lot of the businesses that really ramped up some revenues that wasn’t really a sustainable thing it was like either they you know a got lucky or B were not doing something appropriate and they the revenues really Skyrock rocked but the business itself wasn’t built on a bed a
(29:35) Bedrock of a solid foundation and they came to learn that like oh the people who just do things at a steady Pace just year over year over year at the end of the day tend to win most often and that also stuck with us and we’re like you know what these little starter homes they’re the turtles yeah they just you know day in day out they kind of work away for you and at the end of the day they’re not the most exciting but they’re likely going to you’re likely going to survive the journey MH I was
(30:01) just reading an article about looking back on GE and that actually fits into that as well when Jack wal was like he was like the go he was he was like the Elon Musk time I remember right and then then I I remember I remember when GE Capital started and this is exactly what you’re talking about GE Capital started to finance their customers to buy more of their product yeah was that what it was yeah so it’s like inflated so like yeah we’re number one or number two in this in this and it was vertical but
(30:30) we’re we’re feeding it yeah yeah yeah yeah yeah it’s like they had control of the Monopoly board and the bank so they just threw in more money into the board sounds sounds familiar it yeah that’s that’s oh sorry I want to touch back go back to your the the the property your your father bought what is it worth today just yeah I haven’t looked I haven’t looked that in in years I guess it if I have to guess it’s at Miss Saga Road in Eglington in missa over 3 million somewhere yeah it’s probably
(30:59) something like that yeah yeah four maybe yeah I should go look years ago I kind of like blocked it out of my mind for so long because it was such a scar in our family but um yeah and the turtle would have won eventually if you could hang on yeah if you just held on and that’s the thing like if you can handle the leverage the whole key to getting ahead financially is use to me is in the existing Financial system is to use leverage and then be able to you know smartly manage leverage and if you can’t handle the leverage it’s the market
(31:30) telling you oh you weren’t too good at this game and we’re kicking you out but if you can manage The Leverage you’re likely going to get ahead I mean you know I always look at real estate I’m like a real estate as an investor you put 20% down historically in the Toronto area real estate will appreciate at 7% a year 7% on a 20% down payment it’s 35% return and it’s a good way to financially outpace the currency depac in this country and it’s a good way to get ahead financially but if you overextend yourself with that
(32:00) leverage and you can’t manage it you get kicked out of the game mhm it’s like a reboot so it’s much tougher market today I was actually talking to a a Toronto agent friend of mine he was like he’s he’s he’s doing the math in his head he’s an engineer by trade but he’s real practice as a realtor he was telling me to cash flow on a downtown Toronto condo you need to put down 50 to 55% just to cover the hard costs so mortgage taxes Insurance condo fee I’m like that’s a lot of money to put down mhm and then
(32:28) other things happen tenant turnover lease fees bad debt right repairs and maintenance Property Management all those things happen property tax and Toronto’s increasing what 10.6 10.9% or something I think with the threat of 16% if the feds don’t kick in some money yeah what could happen yeah it’s an election year yeah they probably W yeah they’ll probably pay it’s election coming soon they’ll probably pay so so what what should investor do today based on your based on Rock philosophies I think I’ve just heard
(32:57) that story like I’m 51 years old now I’ve heard that story since about 1998 like in 1998 property prices had gone up um for two or three years and somebody told me oh my gosh like you got to be careful with the real estate you know property prices have gone up now two or three years they always go down because if you grew up in the90s you were used to property prices going down then I remember in the tech boom of the early 2000s people were like oh tech stocks are where the money is real estates way
(33:22) too hard and I was buying student rentals then and you couldn’t convince anybody to buy student rentals everybody was like you know Cisco Nell pets.com like that was the that was the era.com yeah that that was the era then that kind of crashes down greenpan lowers interest rates real estate catches a bit of a bid and then 2008 hits and people in this country were convinced real estate was going to crash we started RockStar at that time and people were telling us oh my gosh are you seeing what’s going on in the in the US it’s
(33:54) going to collapse here in Canada and then in 2017 similar things you know prices came down and right now interest rates are High um so it makes it quote unquote more difficult than in the year 2001 when interest rates were lower so I guess my message to anybody listening that’s going to go into this is you have to understand that real estate and our money game now is very cyclical cyclical every three or four years there’s a big amount of debt in the world that’s getting refinanced and and in between
(34:24) those times things get a little wonky so a lot of new debt came out in the pandemic our interest rates were really low um to kind of create a little bit’s under selling yeah a lot to create a lot create a lot of debt and then inflation gets hot interest rates go up everything gets a little kind of scary and then we’re hitting a Time whereas if I had to be a you know if I had to place a bet on where I think interest rates head in the next year it’s going to come down and it’s going to take some pressure off
(34:51) things to make that condo example that you were saying to make it cash flow a little easier because interest rates are going to come down and have no crystal ball I have no guarantee to that I just mean over the last 20 years this is what I’ve seen it’s like interest rates kind of trend up like in 200 2008 interest rates no one remembers but interest rates we were getting some mortgages in the high fives close to yeah close close to 6% and people were telling us Tom these purchase prices I’ll never forget
(35:17) this Hamilton property at $225,000 no more cash flow no more cash flow game’s over and interest rates come down prices go up and you know the party kind of rages on so I don’t know if this is the end of real estate for the Toronto condo or for the resale Market in Toronto I just think we’re in one of those Cycles where rates are high and if your formative years in real estate are 2008 onward all you know is cheap money cu the Cycles have been so so high with debt and so low with rates that that’s
(35:51) all you know and we’re finally coming to a place that’s kind of outside of the you know the recent norm and it makes it difficult for people if the numbers don’t work and you can’t handle it then I wouldn’t buy but I don’t expect that to be the case for the next 10 years there’s just too much debt in the world for rates to not come down so I got to think things are going to get a little easier again MH on the same side my friend that was telling about the condo he he Al telling also telling me that in
(36:20) downtown Toronto duplexes are on absolute fire sure right CU people are want and these are these are house hackers these are these are folks who are planning on living in one of the units and they need the income from the other unit to live and like oh God thank goodness my duplexes have taken a haircut in the last few years yeah yeah yeah yeah I think it’s just everything goes up and down like Nick and I don’t look at real estate like any property we’ve ever looked at we thought would we would we buy this if we had to hold it
(36:49) for 10 years at a minimum right even if we were doing rent to own stuff which we were ideally selling to a tenant buyer at the end of 3 years um which didn’t happen but we had to plan that it if it did we were going to be okay with it and if it didn’t we kept the property so we’re going to be okay with it so the way we look at it is like do the numbers work for us in our lives right now could we hold it for 10 years because when we were younger I needed the cash flow so the numbers that we’re talking about the
(37:16) Toronto condo and different properties around Toronto right now if they don’t cash flow it’s not really appealing it wouldn’t be appealing to the Tom that was in his 20s but as your financial situation changes someone might might want to buy a Toronto right now doesn’t matter if it’s 40% down 50% down because they might want a condo for their family for their son for their daughter for some reason they’re in a different Financial place and the number is not a big deal so I think you have to match
(37:40) the finan the conditions of the real estate market to your current situation are you in are you young willing to take on a lot lot of Leverage and a lot of risk or are you a little older and you’ve accumulated some assets and now you’re at a different place in life so it’s just there’s just no one answer but I do but I do know any investor who looks back always says it’s harder today yeah like I’ve never met the investor there still harder today it’s still harder today never even when price is
(38:08) down it’s still harder today the banks change their rules the down payment rules change the qualification changes but things always change I’ll give you an example in London Ontario where we have a lot of investors who buy student rental properties around Western they’re about to change the bylaw as we speak right now to go from five bedrooms up to allowing seven oh great so now we were in a situation where people were like oh well the numbers don’t really work yeah five bedrooms I can’t earn enough even
(38:33) though uh per room up there it’s common to get a th000 we’ve seen $1,200 a month um in student rentals but now if you can add two more bedrooms we we know a bunch of investors who have unfinished basements that weren’t finished because they couldn’t legally add two bedrooms now they can legally add two bedrooms and it’ll get another $2,000 a month on that property what’s that going to do to the opportunity there probably increase it so I just think you can’t take a moment in time and make a definitive
(38:56) answer that this is how it’s going to be forever real estate’s like a changing game so is is uh I want to get to I want the listener to know what what properties they should be looking at is the London student rental an ideal for anyone to get into yeah okay so also another thing want to clarify as well is like a high amount of Leverage is different for different people to me like to me a high amount of Leverage was 20% down cash maybe even he in a schedule in a schedule A Bank mortgage for cheap that was high leverage for me
(39:29) versus we see all these people out there with first private first private private first for 6% private second for 12% oh God yeah promisory note for like 15 177% yeah right and also I want to throw in I’ve been saying this on the show a couple times now we used to call these hard money loans we got away from it it’s true yeah we don’t use that language as much yeah because I remember a good friend of mutual friend of ours like he would use the term when he when he was building his Mansions when he’s
(39:57) he I have hard money loans versus people like BR I priv private I private borrow yeah like no it’s it’s hard these are hard money loans that’s sorry I can I digress back to uh what is a best practice investment in today’s market um so on okay so first you just give me a flashback I remember when Jim flarey the Finance Minister in Canada briefly allowed 0% down payment and 5% down I don’t know if you remember four investors for declared rental properties the cmhc fee was like astronomical but I
(40:28) can’t crap on what you just said too hard because when that came out Nick and I were like all over that we were like wait a second you can do 0% down and if the numbers worked and some numbers still did work at 0% down your cmhc fee was astronomical but anyway you just I couldn’t qualify because already had properties so they would never give that to me it it was tough yeah yep and um I I tried though yeah of course why not yeah 0% down it’s like an infinite return even five yeah um but for today
(40:57) for for I mean it’s it’s a tough question to answer today because you you know whatever answer I give has to be mapped to somebody’s short-term objectives and their long-term goals like look at your all of our short-term objectives mine and yours like look at yours right now you’re making a change in your portfolio like it always is kind of Shifting but if somebody I’m a different age and different yeah you have different things bother you in a different way at this age and at this stage of life than it did a few years
(41:21) ago so you want to adapt accordingly and you know to each their own of course but I would say that um to anyone looking at the Ontario market right now what has been popular if let me answer it that way right now has been student rentals because student rental demand is always strong and I’m not talking about the the recent massive influx of international students the big universities always have demand so McMaster Western Queens these places always have strong strong weth to yeah like Western has like last time I
(41:54) checked was 37 38 39,000 students if you add in faculty in the hospital there we’re talking at like 40,000 50,000 people and they have a college in town too to put more pressure on that market yeah Fen Shaw’s there as well you’re right so um if you can buy a property around Western in good Economic Times or in bad Economic Times there’s always students and uh those properties make a lot of sense because you also get to go to market rent quite frequently so if you rent out to a group of students
(42:23) after 3 years usually that group is moving on you know within 2 years 3 years four years usually you’re moving on to get a new group of students when that happens you can take your rent back to whatever Market rent is and as a as a way of an example my son is just leaving Western this year he rented out what I would call a slummy house we don’t own this particular house uh for $615 a month utilities included three groups of students came out for next year just a couple weeks ago they took it on the first day for 925 a room plus
(42:53) utilities 925 a room plus utilities he was renting just a few years ago we signed that leasee or he signed it at 615 utilities included right so like 50% increase over 3 years it’s massive so student rentals are interesting and now if they’re changing some bylaws and you can add more bedrooms legally in there you can do it properly and I mean making like safe clean functional properties so student rentals can be really interesting and and I would say to anyone looking at real estate that could be a way that you want to look at it or
(43:23) you want to buy a property where you can add a duplex a second second unit or a single family home on a lot that in the future you could drop in a g Garden Suite a laneway suite or change the structure of that house because going forward like look what you said about Toronto with like duplexes being on fire I think we all know there’s going to be a continued housing shortage in this area so that if you can add on to the property and add out their income streams those are huge so you know if you can go to the Niagara area right now
(43:51) and find a property where you can duplex it legally and then potentially even add a third unit on the property m at some point to me those are gold because if you look at the population growth in Canada as much as Canada has problems I don’t think we can deny like Canada has problems has government problems Canada has There’s real estate problems there’s government problem there’s problems at all levels in in Canada and all over the world too all over the world China like us us with their issue in Texas the
(44:18) whole world we’re we’re going through a moment here for sure but it’s crazy times it’s crazy it’s yeah bitcoin’s over 50,000 again these are historic times man yeah ride Bitcoin down to 16,000 or whatever it was and come back has been been a journey but on the real estate PR keep me focused here don’t don’t throw dangle at the Bitcoin topic there um the the Niagara region like if you just look at fundamentals like the population growth of Canada is going to continue whether one way or
(44:44) another through International students legal illegal whatever it is you know we’re getting more people in this in this country no way dips below half a million ever again yeah yes we’re going to have yeah so the population growth a big percentage of population growth in can of the legal immigration that I track 44% comes to Ontario so we get like a huge amount in Ontario within Ontario a huge amount of that comes to the Golden Horseshoe Niagara happens to be positioned against you know the biggest economy in the world um the
(45:12) population growth is going to expand they’re going to put a new casino in Niagara there’s two new factories going up Welland is getting a battery Factory from I believe it’s a South Korean uh company don’t hold me to to to that but there’s a new battery plant going to go in and well and there’s another new Factory that I’m forgetting the name of that um plans in thoral there’s a new golf course I believe being built in the Niagara region so you could just see like that area is going to just continue
(45:36) to expand continue to pill in population growth so if you didn’t want a student rental I would say hey check out the outskirt areas of Toronto specifically the nigar area would be an interesting way to uh to get into real estate for sure I’d throw in as well like a basement apartment strategy Garden suet strategy would be wonderful near a university as well yeah that would be great those are really hard like in my my experience those are really hard to find a lot that can handle that or a property that can handle that but man
(46:03) you got a you got basically an Ontario Golden Horseshoe unicorn if you can do that oh my gosh and I know some people who have built like nine unit student rentals by these universities as triplexes so they can convert it to like a proper Triplex or they can rent it out as three three-bedroom student rentals and with a lot big enough if they wanted to they could put something else in the back so you’re right yeah that’s a unicorn if you can find that kind of thing and the bank loves it they’ll Finance it properly yeah like versus my
(46:29) student rentals yeah well back in the day get the best back in the day yeah student rentals were not like this back in the day like especially around McMaster like do you remember going into some student rental a friend of mine had a room when I was in university we went to visit him to get to his room you went past the furnace and there was like a curtain hung off like I guess from the HVAC ducks that you kind of pushed to the side and now looking back at that time we didn’t even think anything of it but now looking back I’m like oh my gosh
(46:56) this guy’s room yeah he was on the back side of the furnace room just with some carpet and a mattress on the floor that was his room that he was renting out so McMaster area was wild it’s better now it’s come a long way I’m sure there’s some of those properties still out there I remember seeing like Bas and bedrooms with no windows yeah people had just a room there was no windows like like that’s wild wow and that was not that uncommon and the low ceiling like 6 yeah I remember the low ceilings I remember
(47:26) one bedroom in a basement that we were looking to buy this property we went into the basement and the bedroom um I think it had a window but you’re making me think maybe it didn’t but it had this little kind of doorway that was maybe only 4T tall and the ceiling was slightly crooked like it wasn’t a proper doorway and and it was maybe 4T long so it’s was 4T tall and about 4 ft long and you just kind of look down and it and you there was no door it was just this little weird hallway thing off the
(47:49) bedroom and you walk through and on the other side was a bathroom and like how did this like how is this bathroom here how does this exist exist so uh and you wonder why we have rental licensing coming fromon area yeah yeah by the way we we we dug up one of Nick’s houses by McMaster because we didn’t have the money or he didn’t have the money I wasn’t involved in this house to pay for like a Waterproofing Company so we dug it up by hand he got like six of us out there and we dug it up by hand and then uh he
(48:20) sealed it all up and we threw back all the dirt and uh you know he sealed the cracks but in one area where they punched a pipe through for something to do in the basement maybe they’re adding a kitchen somewhere or something they forgot to seal around the pipe no so a couple weeks later there was still a water leak and they had to redig back down anyway we’ve seen a lot of stuff do you guys still have that hose yeah Nick still has it yeah yeah so speaking of Nick famous quote from Nick is uh what is it those who deal with the most [ __ ]
(48:52) what is it win win thank you thank you cuz we were talking about like stages of career you talked about the you know our neighbor to the South is world superpower and i’ I’d actually argue the superpower by far with with we don’t even know how bad the evergr issue is and not just evergr anyone who’s behind evergr as well who is the number two three four building biggest Builders how many vacant homes are there in China we don’t know how bad this situation is so I think I think things are I don’t know
(49:20) all this you you read the brick talks stuff stuff too I don’t know how much you believe like bricks will actually catch up and actually be a significant thing like China has so many cracks in their economy it’s just nuts but anyways anyways end of the day not that much is going to change with the US there’s still going to be even if someone passes them there’s still going to be an incredible world superpower lots of jobs sure and so like everything combined I’ve done I’m done with dealing with
(49:44) [ __ ] right I’ve got I’ve got a B officer I got call back because she’s because she’s calling me because I have a I have a duplex that’s close to Mohawk College okay so I fall within land uh landord licensing okay got it I’m like I so I have at least I have three properties in Hamilton that will qualify into the current pilot for for rental licensing so and that’s just not worth it to me I’m I’m tapping out why do you is there a lot of work you have to do on that property no this is why I’m partly
(50:14) pissed these are legal duplexes like my my Hamilton Mountain property so why is she calling you CU because rental licensing if you’re in the W if you’re in that Ward you you have to go get rental licensing okay got it you don’t have to invest in the property you should have to I may have to do some okay got it uh but again though these my basements were done with with permits City’s already City’s already signed off on everything right I why do I need an HVAC inspection in Esa I haven’t done
(50:40) anything right and all the just all these extra costs I don’t want right so I’m done I’m done just I read too much news so I’m I’m done dealing with [ __ ] and we know where you’re going you’re wearing the Hat of where you’re going yeah yeah cuz oh man I loved it I’ve never been to Texas before you’ve been you’ve been you used had to travel a lot especially when your corporate work uh yeah y Dallas San Antonio Austin yeah I loved it my trip to San Antonio and Austin I just loved it I had no idea
(51:07) pulling up to a gas station we were just talking about this pulling up to a gas station having brisket just ready at the gas station there with picnic tables outside and going getting some fresh meat and eating it there amazing I remember being the whole the whole foods whereever Whole Foods is originally out of Austin or San Antonio I forget I think it’s Austin I don’t know but I went to whole see a lot I didn’t see a lot of presents from Whole Foods okay well we went to the Whole Foods like flagship store and their Hot Table had
(51:29) this like fresh barbecue and you know they were just selling it by the pound so you could walk up there and just say how many pounds you wanted you would wrap it in paper and you could just go outside and eat it it was like oh my gosh this is amazing yeah it was sunny and warm and uh it would be nice on a day like today it would be yeah seemed they seemed like a great place I could I could definitely see the attraction yeah cuz we’re just talking my single family homes before recording I just got an email u a property I I’d liked on
(51:56) realtor.com so that gave me a price update they just dropped their price by 25,000 from 300 down to 275 oh North atin only for 275 in Ontario not even Tim actually maybe Tim’s Ontario 275 and I think I can rent it for I may have to fix it up a little bit but I think I can rent for 1900 like these are the old these are these this is like Hamilton Mountain 10 go numbers it’d be interesting to look at the appreciation in those areas just to see and what you personally expect I think we get a strong appreciation in Canada
(52:30) because of the concentration of population around a few major centers whereas the US you just have a lot of choices even in Texas you have a lot of choices but then you can choose Florida and have a lot of choices so we’ll get to Florida in a minute yeah but it’s just I’m I’m curious to what happens to the appreciation in those areas just because we don’t get the concentr you don’t get the concentration of population like you do here um not that that’s good or bad and that might not be
(52:53) important to you but it would be something to look at like historically what happens in those areas around appreciation because one of the things I like specifically why I targeted Austin was because the prices have already come down at least 20% and realtor.com picked Austin to come down the most of the country so I’m looking at like Warren Buffett style like Austin pretty much is on almost every top 10 list Texas is obviously on every top 10 list right so this is capital tons of jobs prices are come I’ll probably get
(53:23) something from from like I’ll probably get the house if I bought something today i’ probably get like at least 30% off the peak I’m surprised to hear the prices have been coming down recently with just all the demand of people moving into Texas so what what is driving the is it just a interest rate moves there that have made affordable I think just went up too much went up too much too fast okay so it’s a bit of a correction yes this is a correction so I think okay so over 10 years it’s up just
(53:45) recently it’s down oh yeah just like about 2021 is is when the decline started yeah so probably declined in 2008 during the financial crisis came surpassed the 2007 High awesome yeah’s there’s there you been com mother sh no that’s R’s com love it it’s highly offensive as long as you like offensive comedy I love offensive comedy especially Asian jokes I just die just bring on come pick on me anyways uh but I’m uh again just I I completely agree with your point because America like
(54:19) there’s so just like greyber talks about like in the states like there’s so many cities with a population of 2 million or more in the states not like Canada shocking yeah there’s so many options for to move around to where to get a good job which is why uh the property I’m talking about that’s 275 it’s in uh Round Rock which is it’s the neighborhood North North Austin and it’s kind of Northeastern and so about 15 minutes down the road is where the Samsung plant is being built to build microchips oh
(54:48) awesome yeah so it’s a it’s a 4 billion dollar $4 billion investment they’ll have 2,000 full-time manufacturing jobs wow and Sam you know being a Korean company they’re back in Korea still recruiting suppliers to come back to come to Texas and support their bill awesome so that’s how I’m trying to defend and try to be offensive and defense at the same time makes sense so that’s and then that’s my thesis for the entire States as well so for example like Phoenix I’m looking at as well
(55:13) because that’s where Taiwan semiconductor manufacturing compan is open right the world’s largest microchip manufacturing they make for Apple you and I were both Apple people right so then that’s how yeah that’s how I’m defending mine and and and but I’m not I’m kind of preaching to the here about there’s us there’s advantages to the USA investing cuz I know you you you well before I was looking at the US you’ve been looking at the US yeah I think the way to me the biggest thing it’s the
(55:37) everyone’s going to be different to me the US presents a currency play because the US dollar to me is going to hold its value like I mean we’re just seeing it around the world that Fiat currencies are losing value one after another they’re losing them faster and faster the Euro last 10 years has been terrible the Yen oh my God the yen yeah wow for anyone wanted to go on vacation get a cheap vacation go to Japan cuz the Yen’s on sale it’s so cheap yeah I was just telling Nigel he’s got to take me um but
(56:06) uh the uh we were just there to go yeah yeah cool I would love to go um so to me it’s just a currency thing like if you look at the Canadian dollar if you have just Canadian dollar exposure and you don’t have any US dollar exposure and that’s important yeah you may want to consider especially if there’s another generation in your family that’s going to hold real estate you may want to consider getting some us exposure to some property just for the the US dollar exposure if it’s just that um there’s
(56:33) all kinds of other things you need to take into account um but to me that’s just the big picture way to look at it that if you just have Canadian dollar exposure in your life um getting a property in the US would be one way to get US dollar exposure and I think that’s a probably a really good financial decision over the next few years I’m also a Bitcoin guy as you know so to me Bitcoin is the apex predator in the room and everyone should have exposure to bitcoin but that’s a big leap for a lot of people so for them on
(57:02) their own Financial education and financial Journey if they want to get exposure to something beyond the Canadian dollar then at least consider getting us exposure and for Canadians getting an investment property in the US is like a pretty straightforward way to get it MH and I know rockar is a big fan of the build to rent model in in Florida I think we’re more a fan of the people we know like real estate to me yeah team is incredibly important yeah like again we were talking like there’s all these groups and they built poor teams and
(57:31) they’re bankrupt now it’s just completely sad yeah yeah and I think over the years people have asked us for specifically Florida just because so many Canadians vacation there um so much warmer than everywhere else yeah even especially important in the winter that nowhere else in America really is that warm yeah yeah yeah I was just down in Naples and uh nice it’s it was really yeah it makes you question what hey what am I doing up here in Toronto in the winter but anyway um the uh you get the US dollar exposure
(57:59) and uh I forgot what I was going to say there oh the team um the reason that we like Florida is we just know this you know we’ve known Jim now for 15 years we didn’t know the full scale of what he’s doing down there and uh they’re building brand new homes every year in the scale of five six 7 800 and they’re building per year and they’re building them with a tenants in mind so they’re building them so that they know they’re going to rent them out so that the property management can be the easiest thing on
(58:27) them so they’re building them with certain kitchen cabinets and certain counters and certain floors and you know they’re building them with uh roofs that have the proper tie-ins for hurricanes they’re building them at the right elevations so for a Canadian with a lot of variables to deal with when you go into Florida um this is one are a lot of variables what people expect yeah oh yeah for sure this is a a team of people that we feel we can hand off people to that are building the home they’re
(58:51) property managing the home they are handling the maintenance on the home so you’re you’re kind of covered right there’s still risk of course um but that’s what finally got us into Florida it’s like oh we finally found the team that we can say hey irn you want to go down there all right here’s the guy we trust go see him his whole team is going to take care of it they’re managing like 2200 units they got it all figured out now we went down and did a tour to check it out firsthand ourselves multiple
(59:14) times n and I have been down and uh yeah it’s been great and just to when I first saw uh the number of homes they build a year I thought it was a typo I thought there was an extra zero yeah yeah cuz they’re a home builder they’re like a home Builder that used to build subdivision homes they’ve just dispersed to do rental properties in different communities around Florida cuz to give context they would be a top 10 builder in Ontario based on their volume maybe top three yeah I don’t really know I
(59:39) guess maybe they would yeah well just think like mamy can’t build 800 c a year could they I don’t know don’t put anything past mam I don’t know I drove I drove through a madamey subdivision in Florida oh cool and they’re Canadian company yeah I didn’t know they had no idea they expanded right right right unless I miss saww but I’m pretty sure it was the same logo with the same company name on there and these are houses I removed the condo thing cuz it’s way easier to build a verticle like
(1:00:05) to like H these are house builders like that’s an incredible volume yeah building uh the vast majority are infill lots so they’re getting infill lots in existing communities and building brand new homes in there yeah because my context is Steve Ford we know a rockstar member like he builds 100 houses in the season his the Builder they works for right and that’s a whole season like so for to do hundreds hundreds yeah it’s kind of was the appeal to us is that these guys are like the real deal they’re not just building one home
(1:00:34) a year and selling it to an investor they are really doing this for that’s their livelihood that they’re in this business right yeah incredibly end to end yeah right here’s a product we’ll manage it you know it’s brand new yeah yeah yeah and then Canadians get some US dollar exposure I don’t know we’ll see how it goes I don’t know I’m question no LTB right now there’s no rent control I mean real estate you always have to like the the successful real estate investor just has to roll with the punches like
(1:01:02) as you see it with bylaw officers calling you and stuff you just you don’t know what’s coming um so yeah no rec controls the property manager we were speaking down there she was shocked when we talked about our landlord board up here she basically at one point said oh you’re California and we’re like oh is that what you would think of us and uh she said there 45 days and their cash for keys there was like $200 which shocked us but the reason it’s so low is because the tenants know they’re going to be out they don’t like
(1:01:30) to stand on so yeah they you don’t have to pay much to get a tenant out who’s not you know giving you trouble or not paying you can just go up to them and say hey I’ll give you 200 bucks and you’re they they leave so yeah just a very different Market different culture yeah the relationship between tenants I’m pretty sure I don’t know if I remember this accurately I’m pretty sure like the tenant board there like you’re going to the proper Courthouse yeah there is no tenant board you’re going to
(1:01:54) like Court same law law system as everyone else yeah and then um you know yeah there’s still stuff to learn different areas different counties and you know there’s always there’s always new things as an investor uh to learn about and the different rules down there but the 45 days um was really interesting to us and when she told us that to for a tenant to renew she had to give them a letter allowing them to renew the lease and that to me was shocking because you know here if someone goes beond Le goes to month to month and
(1:02:26) there it was directly the opposite so you know I thought that was shocking yeah cuz here as as a commercial landlord like the tenants usually like like pushing you to resign a new lease yeah right versus tenants residential like I month to month automatically yeah I I I suggest all Canadian investors speak to an American investor see the compare differences for sure right yeah cuz like Florida Texas Arizona there Georgia there always going to be the Carol it’s different there is no separate division of government or or or
(1:02:57) laws that are specific to protect tenants and as I learned more even within the state different counties can have different rules for rental property so yeah you just need an experienced team yes you do and even hear within within like Georgia for example certain counties are are they’re more backed up than others or for tenant landlord issues so yeah it’s it’s still it’s still very area specific for sure yeah yeah so can we talk about Bitcoin sure I PEX predator in the room cuz I remember when I first met you
(1:03:30) you were the first person to introduce gold to me as an as the as a a store of value not as an investment I think people need to always understand that like like is that’s how is that still how you position Gold store of value I it’s losing it to me but yeah that’s what it was it’s losing it well if you just look at the ETFs that just came out the the gold ETFs are getting uh they’re losing um investment if you look at just the amount invested in Gold ETFs as the Bitcoin ETF that were’re just five or
(1:03:57) six weeks in they’re coming down in in uh the amount of Investments they’re holding and the Bitcoin one’s like exploding right so is that just partly a shift people are like to raise money for the Bitcoin they want to divest some gold I think so like a lot of investors to me if they were investing in gold they were probably in the store of value Camp because why else would you have gold unless you thought maybe it stores your value and then there’s a to me what’s a better store of value Bitcoin
(1:04:25) comes out and now I can buy as an ETF within my 401k if I’m in the US which I couldn’t until this year just a few weeks ago I’ll reallocate like I’ve seen the you know you look at the comand annual growth rate of of Bitcoin and as January 28th 2024 this year if you go back four years it’s 46% compound annual growth rate like that’s that’s you can’t deny that that’s an incredible growth rate so like if you a sophisticated investor just looking at numbers and you had your gold and you
(1:04:56) had it as a store of value and you consider Bitcoin a new store of value you’d probably want to reallocate some of your gold into Bitcoin and I was a big gold guy because of the store of value thing for sure um but the store of value like the history of money is that to me technology is constantly changing what money is and we are at this weird point in history where technology is in the middle of changing what a good money is again and most people won’t see it until 20 or 30 years pass and they’ll
(1:05:28) look back on this moment going oh my gosh like I guess Bitcoin really did do something interesting so business case is there for it now it does seem like we’re you know since came out in 2009 we’re now 2024 I remember I thought it was a tulip and it was going to die I remember when it went yeah I thought I would dismiss I’m like what is this garbage like I’m I’ll come out with the Rockstar coin how about that you know I just didn’t understand the characteristics of Bitcoin at all I didn’t understand that there was an
(1:05:55) asset a digital asset and that it was a network so I didn’t understand that Bitcoin was really two things in one um and I just dismissed it and then in 2020 is when I went down the rabbit hole and I freaked out and I realized I was wrong and uh started paying very close to it attention to it and now I can’t stop thinking about it because I I do believe it’s the Apex monetary predator and I do believe that it’s going to be a network that sucks in a lot of value and when Network effects begin they are very difficult to stop so by
(1:06:29) way of example I would share with you Voiceover IP Voiceover IP came across with tcpip or the internet and it almost destroyed the phone companies the phone companies as they exist today the mobile phone companies only exist because they sell data they’re not selling anymore like Bell’s not selling landlines anymore so this new network came in and uh destroyed an ex existing model and those businesses all had to change like dominant businesses with with all you’re talking about Bell Canada Rogers these
(1:07:03) companies all had freak out moments that had to change and um I just see it now happening on the monetary side that there’s a network an open- Source protocol it’s permissionless The Ledger on it is immutable um it’s changing things again where now the banking system is going to have its freakout moment as more and more monetary value gets sucked into to this network and to me it seems inevitable I know for many people that would sound like it’s crazy but to me it seems inevitable and that’s
(1:07:33) why it’s kind of captured my interest and then if you look at compound annual growth rates now with some history it’s just remarkable like it’s it’s kind of it it it makes you question like what are you investing in like why aren’t you paying more attention to this thing you know the whole Jour my own journey is like your life your terms you know we talked about Rockstar and stuff but really like I just want to live my life on my own terms and leave me alone mhm and that’s what got me into real estate
(1:07:59) now there’s this other thing that’s just kind of got my attention and you can’t stop thinking about it once you kind of go down the rabbit hole or when it’s dangerous it is dangerous suck you in it’s a Time suck yeah I don’t know you’re pretty you’re pretty good defending your time but that one’s that one’s probably a tough one that one’s tough especially now cuz I must be yeah like I must be thousands of hours in now so so yeah it’s it’s a tough one it’s a
(1:08:22) tough one yeah it’s actually one of the it’s sounds stupid I say it this way it’s one of my biggest disappointments of Co because the lockdowns meant that we couldn’t all be in the gym together yeah and then when I got back in the gym you guys were already like like a couple thousand dollar ahead of me on bitcoin I’m like I’m like f i i loost i i had all this opportunity cost I I could have made so much more money if not for Co I remember when I had my moment I was sitting in the office because our office
(1:08:54) was open but it was on lockdowns but we were legally allowed to be open and it was me and Nick and one other person the three of us and I had the moment where it all just made sense for me and I ran to Nick’s office and I’m like I was so wrong on bitcoin we have to get into this and you’re right it was just at that moment where none of us were hanging out together um and so I didn’t see you to like I was so when you had that moment it probably like I was like four months behind like in back corner
(1:09:18) had gone around yeah that was a pretty important four months yeah damn it so damn you okay it’s got a lot more to go every you’re good you’re good uh where can where was where’s a good starting point for anyone to learn about Bitcoin CU I you were the one that got me to read the Bitcoin standard by yeah I guess it just depends what your background is like yeah if you are into economics and money and you have a little bit of History um reading about that stuff the Bitcoin standard by safine amuse is probably the best start
(1:09:46) the first four chapters or 72 pages of that book laid down in a beautiful case uh for it if you want a shorter thing there’s uh a medium article by VJ boyapati and it’s called the bullish case for Bitcoin so if you just Google like the bullish case for Bitcoin VJ um you will find that Medium article he actually turned it into a book now as well but it’s it’s originally a medium article that is an easy read that lays out a wonderful description of what Bitcoin is both the digital asset and the network component of it and how to
(1:10:17) think about it so I think that would be like a really really good entry point into it and then of course Jeff Boo’s book really kind of connected the thoughts for me because he doesn’t talk about Bitcoin but in his book the price of tomorrow he starts outlining um technology productivity gains and how that works in a Fiat based debt-based money system and once you read that book it really connects a lot of things together and uh that that to me is if you’re not into the money side of Bitcoin but you just want to understand
(1:10:48) what’s going on in the world with technology yeah with technology Tech yeah that that would be a good read so if you’re a tech guy yeah me too but again it’s it’s more of like a macro book in general yeah totally y I think he us word this is why we get along yeah yeah for sure yeah macro understand macro you read this I think that’s why I like Bitcoin so much is like there’s just so many layers to it it just uh yeah it’s a remarkable thing like I really feel like fortunate to be able to be here at this moment in
(1:11:18) time for sure and Bitcoin standard I thought was a wonderful history lesson of nothing else even if you don’t like the Bitcoin orrect just history of money yeah it gives you like a context or a framework of how to think about things seashells yeah uh copper coins Stones silver how silver got killed by gold yeah stock to flow ratios how do they work yeah how and the the ultimate like you know there can only be one yeah there’s a line in that book it’s page the the top sentence on page 34 is this your Bible you have like all highlighted
(1:11:46) and yeah probably yeah I’ve read it a few times the top the top uh I think it’s there’s a new edition so it might not be page 34 anymore but page 34 the top sentence on that page basically the sentence uh the you know the idea behind the sentence is you can ignore Bitcoin but it’s at your own Peril because the hardest form of money always wins yeah so it’s like you can why I said there can only be one yeah so like you can choose to ignore Bitcoin and laugh it off but just know that your purchasing power in Bitcoin
(1:12:19) terms is dying over time so you can ignore it but you’re doing yourself an injustice at this to IGN it and we’re not saying load up no you should have some exposure yes everyone should have a little exposure yes you’re laughing you’re smiling at me yeah what whatever’s right for you have 2% 5% something I don’t know it’s just everyone’s different like like we said it’s like real estate everyone’s different what’s right for me is not right for you it’s not right for
(1:12:46) whoever’s listening it’s just you’re everyone’s on their own path you know so yeah yeah I’m I’m yeah I’m a I’m a bitcoiner now can we talk about marketing sure because part so again I told I told you I I like I study both how to make money and how people lose money so I I I dig into how these like recent bankruptcies I dig into I I research like what happened what did they do how did they raise all this money sorts of things so for example like the the folks who are in Northern Ontario who recently uh going
(1:13:23) through bankruptcy credit bankruptcy protection uh like for example it’s quite obvious just actually just a little bit of clicking that they for example they bought hundreds of thousands of Instagram followers oh jeez right okay so stuff like that and like to me like I’ve been around long enough to know when someone’s bought just when they have absurd numbers of of whatever followers I guess or or yeah or some even if someone even old old school is someone that had like an enormous email database but they didn’t build it
(1:13:53) themselves I know I know they bought it right this no different but you know ever since I’ve known you and then you introduced the world the world of Dan Kennedy to me which I greatly appreciate someone just recently complemented my Marketing Systems which awesome which I largely borrowed from yeah from yourself and and this fits into the whole your whole abundance mindset I don’t know if I said on the recording yet did I say on the recording yet like dreams so big that everyone else’s dream can fit
(1:14:19) within yours right because yeah you and Nick are incredibly transparent and everything you do is basically available to we try to be yeah yeah yeah and where was I going oh yes so I’ll just say like you guys seem to have done everything the right way you only have 20,000 Instagram followers yeah yeah I know how hard you have to worked for it you didn’t buy that no no and that’s largely my son who’s taking our content and doing stuff with it but yeah yeah no we didn’t buy it no and I don’t want too much too much attention
(1:14:53) on Instagram cuz just from my own experience my email database is what converts sure for sure yeah can we talk about that is that is that still where things are is that still is still building the email database is that still a priority or is it should you focus on your Tik Tok okay so when it comes to marketing the way I think about it is remember my life’s kind of motto is your life your terms I want to live my life in the way I want to live it and marketing so why we talk about real estate and that I’m a
(1:15:22) Believer in real estate is because the leverage of real estate gets me Financial gains that are enough that are going to allow me to live life or help me at least live life on my turns the reason we talked about Bitcoin is similar reasons the reason I like marketing so much is because if you understand marketing you can build a life on your terms because I found in business very few people know how to get a new customer they have an idea they can rent a place they can create letterhead they can create a website so
(1:15:52) if you understand the principles of marketing you are like going to do what really well in whatever business you’re going to open whether it’s a car wash a restaurant or real estate investor and the principles of a marketing are to your email question to build a database of people that have in some way shape or form raised their hand and identified themselves as someone that’s kind of sort of interested in you and what you have to offer and the best way for me to get people to raise their hand and
(1:16:20) identify themselves is by getting them to share their email address with you so yeah to answer your question email is still amazing because you own the email address on Instagram Twitter Youtube Tik Tok those companies control the users that are subscribed or are following you whereas an email you own that email address so you get to email it you have to might be fight with a CRM system to like get your email out and there’s like spam complaints and different things if you’re doing it incorrectly But
(1:16:49) ultimately you own the email that’s a very powerful thing to me in business the relationship that you have have with your database is the most valuable thing you can have because there’s going to be some people who love Irwin and what Irwin talks about so much that it doesn’t matter if irn goes and starts a business that’s you know you can go start a restaurant tomorrow but you’ve established a relationship with the people they trust you and if you’re going to start a restaurant they’re
(1:17:15) going to come and eat at your restaurant because of who you are and what you represent to them so the a business owner’s relationship with their database is the number one asset that they can have it’s not the office space they’re in it’s not the name of their company it’s that and so few people understand that and an email address is the best way to build it then you can layer in physical mailing addresses phone numbers if you want to start texting people you can start doing all these weird weird
(1:17:40) and wonderful things but email is an absolutely critical way it is the best thing to be building because if you get shut down of Instagram you’re still going to have your email addresses or when uh musically when that went down I remember that was a huge such not a music guy but sure okay I believe you was but then was was what was Tik Tok before musically was sorry was Tik Tok musically before I think that’s what happened I think what that but then all these influencers they’ve lost their million subscribers or whatever yeah and
(1:18:11) then it’s on you once you have a database the onus is on you to prove to prove that you are sharing valuable information like if everyone just sped out to your email list garbage people are eventually just going to unsubscribe and you’re gone so like now I like that relationship share part it’s like oh the onus is on me the business owner to share such good value that people are going to keep interest in me and then every once in a while you’re going to ask to do business and because you consistently offer good value people are
(1:18:38) eventually going to come to trust you and with trust they’re going to come to like you and when you make an offer to do business with you some people are going to raise their hands and say I’ll take the next step and I’ll proceed to do business with you and it’s just to me the most wonderful way to do business is that build a database of people who are in your topic or area of expertise offer a lot of value follow up consistent consistently with that comes trust and the uh the person who’s reading your
(1:19:05) information or following you they’re going to like you then the ultimate sale is easier so it’s it’s just like a beautiful thing and to me marketing once you understand the principles of marketing you can go to Texas tomorrow use the exact same principles that you’re doing Irwin here in Ontario to build what you want to do in Texas and it’s going to work M just like real estate has principles to it marketing is going to have principles to it so it’s total freedom like it’s it’s it’s the
(1:19:31) biggest thing and nobody believes me and understands it and it seems like in the real estate World everyone just runs around on Instagram trying to get followers and everyone just yeah it it just seems like everybody you know what I guess the way to look at it is there are principles to anything there are strategies and tactics and in the marketing world everybody plays with the tactics everybody does like the quick new thing on Instagram that’s a tactic the quick new thing on Tik Tok that’s a tactic the quick new thing on Twitter
(1:19:59) it’s a tactic very few people have a strategy around their marketing and very few people understand the principles of what they’re doing and I think what Nick and I have done over the years is we tried to understand the principles of what works in marketing then Implement a strategy for it and only then choose the tactics we’re going to use in that strategic implementation I think the I think that where people most fail is like anything we like we call it the content treadmill yeah like the regular communication with your email
(1:20:29) database minimum a week yeah uh I think we’re two I think you guys are like three times a week and that’s that is the content trial you have to keep MH keep in touch with your database and then some some of these people you call as well so like oh that’s work like yes it is work but this is how you get results yeah it’s called sales yeah if you have a business like if I had a Subway sandwich shop that was next to subway station that was was really busy I probably didn’t have to do the content
(1:20:57) Triad Mill because people are going to be walking by every day and some of them are going to be hungry and they’re going to sell them a sub that’s something corporate has done your marketing for you yeah there’s that there’s that to yeah so but let me but even if I wasn’t to go to the corporate level if I was just a noname sandwich shop in front of a busy place I’m going to get some business but when you’re a service-based c uh company and you don’t have potential customers walking by your
(1:21:20) physical location well then you better be doing something to get attention and that’s why you have to produce content so you do a really good job at this you’re putting out emails and podcast I know you are in videos and you’re hosting class and you’re doing all these wonderful things and that’s how you get people to see what you’re doing so it is a Content treadmill in business especially service based businesses but there’s no really other way to get people to kind of walk by your store
(1:21:45) unless you’re putting out content if you’re putting out content you have people kind of walking by your store just virtually mhm you know so yeah it’s tough but I mean the opportunity for anyone listening who does the content is incredible because no one’s really doing it yeah everyone’s just kind of like half people can’t stay with this no like how many podcasters we know just even our in our friends group who haven’t made it past a year yeah let alone six months yeah yeah are there a bunch yeah
(1:22:14) I don’t even track yeah yeah but I guess that makes sense people start and then kind of give up on it yeah and that’s where there’s a there’s a time and place for giving up but those who can or just even just keep like keep shifting like for example no no different than my my investment Journey like it started with single families did some non-conforming multies and then the city was cracking down so then we went to student rental because we could get it done pretty easily and we can conform with all with
(1:22:39) all bylaws and whatnot and then duplexes CU like oh because student rentals the financing was difficult so then legal duplexes oh completely clean for financing then do that and then like oh do is cash flow enough oh we got a garden Suite now right so but again sticking with you got to roll with the punches yes yeah and then but I’ve been punched too hard so I’m going going south yeah yeah well you’re just changing your approach and I’m sure there’s listen there’s going to be punches for you in Texas
(1:23:05) let’s face it it’s like real estate like there’s always punches I mean no worse guns yeah yeah yeah I never really thought about that we were talking about it earlier yeah I don’t know I’m not too scared of the guns you brought up the guns in Texas I don’t know I’ve researched it too much you dig into Vic I dig into my personal safety okay I do have to admit the last time I was in Florida I Hon the horn at somebody and I just then I remembered I was in Florida I’m like holy [ __ ] duck I don’t know
(1:23:30) what’s going to happen but uh they have a gun in their cuz when I was in Texas like I did not see anyone carrying a gun law enforcement so I was thinking I was thinking about it like if it was me it be such a hindrance to like to like wake up every morning and Holster up or whatever and then like there’s all these private businesses that don’t allow open carry right so you can’t you’re not supposed to carry the gun and so so yeah I guess everyone’s gun is in their glove box I guess I remember going into a
(1:23:55) restaurant long time ago at a marketing conference in Scottsdale Arizona and the restaurant said I I don’t know if that’s a conceal in K State or whatever you call it but the restaurant the entrance said this is a like a No Gun Zone please leave your guns like in the car or at home or not in the restaurant and I’m like this is wild I’ve never seen this kind of sign as you enter a restaurant before so uh I guess I guess in that state maybe you can have concealed weapons on you um recently I was
(1:24:23) somewhere was it last year I was in Arizona maybe it was in Arizona I saw somebody holstering a gun walking around but uh yeah different uh we we need to talk about the conference your sorry your member event it’s not even really a member event because you do allow Outsiders yeah we kind of usually have like about 50 to 100 tickets for people who aren’t clients of ours so not many no yeah no um so it’s uh yeah it sounds like a lot to some people but there’s sometimes over a thousand people yeah
(1:24:49) last time was our biggest one we hit 1100 people um this started you like this started with our account you know how this like started with our accountant who would come out and just talk about like a tax tips for Real Estate Investors and someone was like can you do that again and it just rolled um so it started with 50 or 60 people at the Holiday Inn in the basement of the Holiday Inn at Bronte in qw in Oakville but anyway uh yeah Saturday April 6 will be the next one we haven’t released the the um speakers yet but um there’s going
(1:25:15) to be a thousand people there and the sponsors are always uh great people and uh yeah because you don’t let anyone sponsor I know yeah yeah yeah yeah it’s it’s yeah we kind of are a bit chosy on that and uh yeah it’s fun so the next one’s Saturday April 6th and if you’re following us in any capacity you’ll hear about it because we make a big uh Big Show about it um and yeah we’re excited for it it’s nice to get everyone together it’s like you know how it is with Real Estate Investors we don’t all
(1:25:40) get together it’s not like going to the gym every day where you cross path with people or the your favorite restaurant you see the it’s a bit of a reunion where we can all sometimes just commiserate like about interest rates and like the tenant board and sometimes it’s like a support network you know when things are going great you’re cheering and when things aren’t going the best you’re kind of just supporting each other so to me it’s an important event and uh we have fun with it you know last time we had Jeff Booth
(1:26:05) out there that was a really good talk and uh this time I I think we have some great people and uh I’m just not going to share just because we haven’t put it out yet but yeah Saturday April 6th you’ll hear about it yeah if anyone enjoyed this podcast for example like what we just talked about today you’ll do basically in a longer format that day we’ll talk about macro I’m sure we’re going to talk about Bitcoin yeah we’re going to talk about development or like yeah we’re going to dive into the
(1:26:28) Ontario Market pretty deep this time yeah and also very micro level you’re talking about specific markets correct like what specific rental properties are doing correct right you get you know go from the again you go from like the global all the way down to the property right yeah numbers profile neighborhood yeah right yeah and I think we like to have fun with it I think this this this time the theme is going to be Indiana Jones last time Matrix is it I haven’t seen anything yet I can’t wait not yet
(1:26:52) we haven’t released anything but Anthony on the team has an old motorcycle that kind of remind us of an Indiana Jones kind of motorcycle so we think we’re going to try and tell the hall that it’s not operating even though it totally is and it’s just a prop we’re going to try and bring the motorcycle to the event I want to see you Nick crack the whip on stage I want to hear it from the back of the room like oh my God yeah yeah yeah we’ll have some fun with we are ordering some whips and some Indiana Jones hats for
(1:27:17) those are toy ones I want to see a real I don’t know is it a bull whip I I want to hear it I want to see someone crack it on stage even better if you have a Target to hit with like a oh man and everyone I just want to thank you like thank you for supporting us and being part of this you know Journey you’ve uh you know you you came on um and have done your own thing in an incredible way so it’s been awesome for us to watch what you’ve done as well so congratulations on everything you’ve done and it’ll be uh when you’re the
(1:27:45) mayor of Austin or San Antonio or whatever you’re going to have to let us know I don’t want to get shot at but you guys took a flyer on me because I don’t think I’ve mentioned that in a long time cuz uh at the time I was the only person to join the team who was not a member mhm yeah yeah wow really was that the case and I think I’m the only one that’s worked out yeah maybe anyone else is it CU actually it’s a rule it’s a rule now you may not join the team unless you’re a member yeah we
(1:28:09) have some people on the team that have been friends of mine uh that have joined Rockstar now over the years that’s different you didn’t know me yeah no we didn’t yeah yeah yeah you’re right you might be the only one irn yeah set the president set yeah cuz again like many people didn’t stay I think almost nobody stayed so yeah I probably G gave the wrong expectation let’s let everybody else in oh my God this is terrible it’s not a numbers game no yeah yeah y yeah we’re kind of choosy who we yeah we’re not a
(1:28:42) bro Rockstar is not a brokerage that is looking to attract a lot of Agents we’re kind of consider ourselves a boutique place that’s doing a pretty specific activity and um yeah and certain people fit into it and certain people don’t but we’re not trying to get like a million real estate agents that’s like the last thing we want right we’re really trying to work with investors and and you know build something and we’re not just trying to talk about real estate we’re trying to talk about all aspects of Life how to
(1:29:09) make it all work yeah and it’s a complicated business and there’s lots of rules and stuff we have to follow I can’t imagine having to hurt all these cats and lots of personalities yeah lot personality Tom I like to give my guess always the final word like anything in general you want to say anything anything don’t e just don’t say don’t eat the ell you know what you saying that you you mentioned something about dreaming big and stuff earlier I somebody had a big impact on me once I was a author and then I I um and I
(1:29:39) forget the name of the book and uh in the book it basically said if you want to have a big impact in your life then you need to impact your community and if you want to have a big impact on your community you need to have an impact on your Province and if you want to have an impact on your Province you need to have an impact on the whole country basically saying that like if you really wanted to leave a lasting impact of what you’re doing you have to think bigger and Beyond yourself one level higher and
(1:30:16) it’s kind of always stuck with me like what can we do as a business or in life with my relationships where I can impact people Beyond me directly and it’s just something we try to live by by doing different little things and it might sound cheesy but to me it’s like you know we’re trying to impact people and we’re trying to do it at a level that’s beyond us and it’s forcing us to think a little bit big in our small little business we are trying to think big you know so it’s something that stuck with
(1:30:46) me yeah I think you had a lot of impact yeah you probably have a couple hundred million years in your among your clientele like so that’s that’s like how many people can say that yeah yeah yeah but thanks everyn appreciate it man thank you thank you thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.com my guests and if you’re
(1:31:25) just starting out feel free to ask questions and comment below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real estate investing from a professional investor register for our next virtual class that’s at investor tr.com

** Transcript Auto-Generated**

(00:00) greetings everyone I just returned from a trip to Calgary to meet up with some clients real estate investor friends Cal mortgages and attend a friends wedding in Calgary and Canmore Alberta welcome to the truth about real estate investing show for Canadians my name is Irwin I am a Canadian host and producer of this show since 2016 300 plus episodes that’s and they’re all over an hour long over 440 million in investment real estate transactions uh as I my team and I are the four time real for the year two
(00:30) investors in Ontario Real Estate presently I have 45 millionaire clients U that’s millionaire and multi-millionaire real estate investor clients and I’d like to get that number up to 200 within 10 years I’d also like to have dozens and dozens of clients who cash flow over six figures a year uh again I just recently returned and canmore and B are so beautiful Lake Louise Shad out Lake Louise if I couldn’t live in BCR or Ontario like like most Canadians I’d probably end up in Calgary as I like the vibe the mountain views
(01:02) are they’re always there and they’re incredible people are nice world class G is only two hours away uh now apologies to my uh Edmonton bull friends and Edmonton edmontonians admittedly I’ve never been uh but uh you Edmonton bullish people need to really talk to your friends in Calgary as they don’t seem to have many nice things to say about about the about living in Edmonton maybe it’s a hockey rival rivalry thing uh apologies for their ignorance I just Google mapped it I had no idea that M
(01:34) antonians have to drive through Calgary to get to banned for Lake Louise or Canmore uh investment wise no I’m not interested in Calgary Edmonton uh the stuff is pricey holy cow and then forget camore where where I met with an old friend who is a city counselor in Canmore and he he informed me that the average house price in camar is $1.
(01:55) 4 million Canadian uh and also I was speaking to a Garian and Ryan day of Calbert home mortgages uh when we compare numbers uh he was sharing how he recently uh acquired a duplex with the gar detach garage and his combined rent uh the rent to price ratio uh is the same as I can get in the US on a single family home so I have less tenants and again I have the same rent to price ratio um and also for for those who already own multi Family Properties like including duplexes or triplexes ask any one of those investors if you don’t ask
(02:33) anyone of those in any one of those investors uh because aside from how expensive it can be to renovate a base a basement apartment uh I heard from a GTA contractor just yesterday who came into Rockstar real estate to uh to share about his Services the estimate uh including the permit time and the execution of the renovation you’re looking at 5 to 7 months so you’re 5 to 7 months with the V vacant uh assuming everything goes on time and uh the budget should be around $130,000 just for the renovation that doesn’t does not
(03:04) include carrying costs and again that’s assuming everything goes smoothly and we’re also talking about a house that’s probably at least 70 years old uh in my experience uh tenants so again I’ve done a lot of duplexes I have a good number of them in my own portfolio so in my experience tenants do fight uh that’s natural this this human behavior there’s noise transfer there’s smell transfer I had this one tenant complain about uh every time the basement tenant was smoking weed in the backyard now the
(03:35) tenant has a right to smoke in has a right to smoke weed he was actually smoking weed in the shed in the backyard yet my main floor tenant always complained about it anyways I’m looking to simplify I’m on a different Journey the most which is totally cool everyone has to go on their own Journey I’m looking to earn US dollars because US dollars are better than Canadian dollars if you don’t believe me just look at the amount of debt our country is taking on compared to the Americans Americans take
(03:58) on lots of debt too the Canadians are just especially good at it in terms I’m talking about government anyways I’m looking to make my investment more passive and as passive as possible with as little risk as possible I’m also making plans to fly out to Atlanta with cherry to Vacation post tax season we’re going to check out some properties we’re going to make it make this road trip we’re going to drive up to through Chattanooga through the lookout mountains we’re going to make a stop in
(04:22) Nashville of course uh and continue on our way to Memphis along the way we’re going to hit some serious iconic attractions like look up Mountain that I mentioned which is in Chattanooga which is on the border of Tennessee and Georgia we’re going to visit the Coca-Cola Museum and of course you know when you’re when in Rome the whole thing we’re going to visit graceand Jerry and I aren’t Elvis fans but again when in Rome you got to check out the the the home of Elvis Presley anyways tax season
(04:50) ends April 30th and that’s when I that’s when I joking jokingly say I get my wife back we sold uh we sold one of our student rentals which closes May 6 hence we’ll be shopping in May for a new income property or two while on our trip I had have I I’ve had or have three listings of income properties at the moment all the different stages and we’ll I’ll update you next week on what I’m seeing in the market on the ground and uh it’ll likely surprise you on to this week’s show someone who’s polar
(05:21) opposite to myself I like lazy investing we have uh a fully involved active investing investor uh including having executed on 150 or some deals in 2023 so 150 deals so that’s like almost that’s almost a deal every other day basically and that includes 50 flips that’s 5- Z and this is this is luk Luke boy wrong who is as far as everyone knows is legit he’s not one of these uh fake gurus out there Luke lives in Ottawa yet he has flips as far as way a far as away far away as Vancouver and while flips are sexy
(05:58) people love to watch them on TV or take coures on Flipping well I’m sorry I’m I’m sorry not sorry that we have Luke to share the behind the scenes on why he’s flipping and it’s not what you expect Luke is the founder of bliss realy former lawyer he also has his NBA smart dude obviously one of he’s one of Canada’s leading investors he has a massive team around 30 people and he has an even more massive advertising budget but don’t worry L going to tell you how he would start how he would start uh his
(06:29) business over if he was a brand new investor today so again he’s a legit investor and he even has some stories about fake it to make it investors who failed to close on buying wholesale deals from him so listeners never forget the community is a very small one we all talk we know who is who is fake it till you make it and we know which uh we know who the gurus are who are fake it till you make it and where they learn those strategies from so as the Warren Buffett says it takes 20 years to build a reputation and five minutes to ruin it
(07:00) if you think about that you’ll do things differently Luke also recently launched his podcast the selfwealth real estate podcast available on Apple podcast and my favorite platform Spotify again it’s called self wealth real estate podcast please enjoy the show Hi l what’s keeping you busy these days uh a lot of flipping houses a lot of Renovations going on that’s what’s keeping me busy that’s interesting because uh from what I know of you is uh you do a lot of wholesaling and now sounds like your mark business has done
(07:36) a pivot yes yeah uh basically our buyers a lot of our buyers stopped buying flips so we started buying them ourselves if they made sense to flip and started flipping them ourselves um you know we had about 35 employees in the business and if we were just relying on the wholesaling we would have had to drastically shink uh shrink our company and get rid of a bunch of people and we didn’t want to do that we have a really good team so we kept uh we kept our team and decided to Pivot switch into flipping and now we’re he we’re flipping
(08:06) heavily um we’re still wholesaling I think uh I think 2023 we did something a little over 150 deals in the year um sorry just wholesaling or flips combined so about 50 something flips I think I don’t have the exact numbers in front of me but I thought it was more 5050 but I guess I guess what really happens the wholesale deals are also much smaller deal smaller assignment fees um whereas the flips are well some of them take a lot more time uh bigger projects for sure fascinating and but like your staff
(08:42) though like wholesaling and flipping are really different businesses like did your fli your your St your in office staff now got strap on tool belts and start hanging drywall like what no no I mean and when I say 30-some plays that’s without contractors we actually have in our Ottawa brand we have two contractors and a construction manager and Ottawa is like our best flipping Market we flip a lot in Ottawa um and that’s partially because we have the team here and I also live in Ottawa now so I go see the job sites and
(09:14) things like that and the price point makes a lot of sense for flips so we flip a lot in Ottawa and uh yeah and then a couple other people who had different roles like one of our we call them closing concers like a transaction coordinator became a project manager for us so um the way the way I run the flips is I have my construction manager in Ottawa and then I have two project managers that are kind of like assistants to me and so they coordinate with all the contractors and and the details they know the finishes we want to use and any
(09:42) questions they have from contractors they they either Loop me into the call or they relay the questions to me to get answered and then uh so they’re kind of extensions of me to get these Renos done and and that’s how we we manage about 20 flips at a time yeah in different phases uh how many of those those are local versus across the country um I would say a a little less than half are in Ottawa probably about a third are local uh 30 40% and then a good amount in um in the greater Toronto area but that that range is a decent
(10:18) amount I mean we’ve done when I say Toronto for us it’s everywhere from you know Hamilton Niagara region Kitchener uh Stratford North Bay Midland aelia these are all flips we’ve done this year Peter bro Lindsay so those are uh Bowmanville those are all stuff we’ve done this year so it’s a pretty wide area that we cover that way um and then we have uh a few flips going on in Vancouver um and occasionally stuff out in Montreal as well those are I find it much harder to do the stuff in Vancouver in Montreal
(10:54) just um Vancouver in particular we just aren’t set up well for the flips and the distance makes it too hard for for us to check out easily we have you know a couple on the ground team for our acquisition like for a wholesaling business but it’s we’re not set up to flip well there so um I would say our Renos took way too long on the last couple projects there and the next ones we do we’re going to do much only focus on ones that are smaller Renos just the difficulty to manage Renos at a distance
(11:22) can sometimes be a little too hard so it’s more the distance than say like learning curve or like mature m maturing of the team there’s um an accountability aspect that if you’re not showing up regularly makes it harder in Ottawa and this might be Overkill but our construction manager basically drives from job to job all day so um you know he’ll he’ll visit every job site at least a couple times a week that we have ongoing in the auto area and that kind of keeps accountability going it also allows you
(11:54) to catch stuff ahead of time and um and this is it it’s a bit of a management error I would say on our side but there’s also an element where it’s kind of out of sight out of mind if you’re not I don’t know for some reason both myself and the project manager in charge of it it doesn’t we don’t prioritize it mentally as much the Vancouver job sites and so we’re not as on top of the contractor to make sure they’re showing up every day and everything’s happening the way it should
(12:22) so I would say other people could manage at a distance better than we did um especially because we do have some two people locally who can check in on the job site if we wanted them to um plus we have a really great realtor we work with in Vancouver um who obviously lists all of our properties and also we’ll check in on them whenever we ask her so um I think we could do a better job of it but we haven’t been so um kind of acknowledging we have some weaknesses and instead of trying to fix them where we’re not uh it’s more balancing how we
(12:56) operate to make sure they’re not going to be it’s not going to be it’s not going to affect us negatively in the future so thank you for raising that uh sharing your experience and and doing heavy construction like maybe that’s not return but active construction whatever it is because my advice to my clients is if you’re doing a major Rena even if it’s like a kitchen redo bathroom floor like that’s going to be a couple weeks and I’m sure it’s faster for you but like for example like a basement
(13:27) apartment that can be that can be months for example and so my advice my clients is someone needs to show up at least once a week and almost all my clients resist but your experience is the more often you show up the better absolutely at least once a week on an active because I’ve seen basement apartments take a year two years right it’s uh you get excuses from a contractor you’re waiting on you know I don’t know the architect hasn’t done the drawings they’re dragging things out you need to
(13:55) find a new architect you bring in this contractor they’re blaming delay on the plumber etc etc and just time disappears and time is money especially if you’re carrying something on like a private mortgage to get those Renos done really costs money so you have to be really on the ball with your Renos and I mean one of the nice things is if you’re showing up several times a week to the job site and the contractor is not there you f figure out pretty quick you need to fire them and move on to the next one right
(14:21) like they’re not there once like oh yeah well I gave you a heads up that we were going to be off this week for this reason okay perfect so you’re there all of next week great show up next week they’re there hey what’s going on Cu uh this isn’t working because they will not volunteer information that they’re not there yeah and it helps to put up cameras too um we’re not religious with doing this very well but we we use uh a combination of wise cams which are pretty cheap you can put in the memory
(14:45) card in them um so you can watch the playback without subscribing um with uh I mean on a longer Renault it’s actually worth paying for internet but we often use like SIM card internets with I think it’s called a rocket Hub or something like that so it’s a wireless mod we put a tablet SIM card in it and then um it’s enough data you know four to 10 gigs a month it’s enough data to uh to be able to put up a camera or two on the job site so it helps for you know protection of tools and break-ins and
(15:14) things like that but it also you know you’re pointing at the driveway you know when the contractor shows up right yeah yeah I have friends who would uh they they pay a neighbor to be able to put a camera on their property steal borrow their internet to put train the put the camera on their yeah absolutely and then um and then they they catch people stealing materials from their site for example y so yeah good good Pro good Pro tip for the listeners benefit uh now Luke before we’re recording um like you’re probably one of the biggest in
(15:47) wholesaling definitely wholesaling for sure in in Canada um and and before we’re recording I asked you how’s business can can you share how how’s business we’re recording in January by the way 2024 yeah um I mean it’s uh I think everyone’s hurting in the industry we we like I was saying earlier we have a big team we’re basically flipping to pay the bills and stay in the black we’re not we’re not trying to make uh make a bunch of money uh though I am optimistic we’re we should be making
(16:17) money in 2024 um but uh it’s nothing like obviously 2022 2021 it’s nothing like those years where the market was crazy hot um because we have the overhead we have plus uh buyers aren’t buying the wholesale deals so our margins get thinner we sell fewer of the deals and then we need to flip which takes a lot longer um to uh to get the money out of a deal right so to carry these properties now too yes absolutely and then you know obviously there’s a reason why we were wholesaling instead of flipping was you know you
(16:51) don’t have all the transaction costs uh on the front and back end of the deal so uh the flips have to make a lot of sense so you know your property tax bill must be enormous sorry your your like you mentioned Toronto Toronto has double double the land transfer tax yeah land transfer yeah every time um actually a little does Vancouver have anything like that yes they do oh God no but it’s not sorry it’s not I don’t think it’s double I’m trying to think I don’t think it’s double uh which is good actually I I
(17:23) interrupted you sorry no no no and well I was going to say one of the nice things Vancouver is they have a different structure for realtors and the way they price things um again you know typic whatever you expect is typical but they typically charge something like 7% on the first $100,000 sale price and then two and a half% thereafter total this is for both sides so it’s it kind of makes them you know hey we have to fill out the paperwork we have to create the listing we get you know more early on in at the for the just for creating
(17:56) the listing we get more on the first 100 000 so if you’re listing a $200,000 house versus you know whatever like it it doesn’t make as big of a difference in the sale price so when you’re listing Vancouver is an expensive Market when you’re listing a house for you know a million and a half um it actually costs a lot less of commission than it would in the GTA and I’ll just add to that though like people are free to negotiate I do believe that structure is legal in Ontario as well I’m not a lawyer I
(18:22) haven’t looked that I know you’re a lawyer but I I should probably look that up after this show if if because I’m pretty sure that that commission structure is legal in Ontario as well yes the question is how do you offer it to because the other in in Ontario depending on the city you’re in the buyer side agent’s expecting between two and two and a half percent whatever’s the norm in the market you try to undercut that they may not even show the property I know that’s the reality of
(18:48) the market yeah the reality is they may not even show it so I always pay the buyer agent whatever going rate is in that market and there are some markets where it’s 2% there somewh it’s two and a quar normal some two and a half so we pay whatever is normal in the market but um that means in Vancouver it means we’re paying about three and a half on the first 100,000 and about one and a quarter on the next on everything thereafter to the buyer side which is a just an interesting structure and I didn’t realize that you know uh going
(19:17) into that market in the first place which is nice and uh yeah I just add to that that comment it’s a with technology and I think we have like 70 or 90,000 registered agents on the Toronto real estate board alone like you would think prices would come down like commission like total the commission total commission number would come down so you would think but the result is instead the marketing spend for realtor goes up right Realtors just instead of bringing their commission down they spend more on marketing is what I
(19:52) usually see because they make so much when you do get a good client right or or get a full a listing with a full commission you do make um such a large amount that instead of cutting down what you’re going to make you just find more I find you typically Realtors find more clients but a good realtor is worth their weight in gold and from someone who does a lot of volume thank you for the kind words now I want to move on to um we’re like you mentioned how it’s tough times for many people and you and I were
(20:22) discussing before we started recording how uh there’s a lot of people who are talented and are having a tough time and uh just like yourself uh I don’t think you’re having as tough time as many a lot of people we know uh but I was saying how um like if you’re talented and you’re hardworking survive this period and you will Thrive over the long term what what what do you think about that oh absolutely and you know what the biggest difficulty for my company if we’re talking about that is just the size
(20:54) right I have 35 employees of overhead to pay we have you know High marketing budget Systems Technology we have big overhead to pay if it was just me then I would just do fewer deals but you know i’ make a little less money but you’re not worried about I I would say kind of um making sure you’re not losing money right overall or not losing a lot if you’re you can cherry pick right now you can be a lot more cautious as an individual investor but you can still do deals there’s still ways like there’s still opportunities I
(21:26) mean with Bill 23 with three units going in some cities allowing four or more um I find there’s still opportunities in this market to even get into the rental space right now um I just got final occupancy on a Triplex conversion in Ottawa um you know I built I finished a Coach House in 2023 as well in Ottawa so there’s definitely ways to I think uh to continue getting good properties now because you don’t have the same competition I mean we were almost almost exclusively wholesaling for a while there and then when the market shifted
(22:02) we started buying not only our own deals to flip we started flipping other wholesalers deals because we’re like hey if people aren’t buying our deals then they’re not buying anyone else’s deals either so there’s good deals out there let me go buy them to flip and we started doing that um and we bought off the MLS in this market a lot of stuff still sells well on the MLS but there’s still opportunities on the MLS to buy um more than there was before because the difference was I found it was very very hard let’s
(22:32) say at the beginning of 2022 to find a deal that made sense to flip on the MLS because there’s so much competition there was so much interest you were really really looking for an absolute needle in a hyack now properties are sitting a little more you have more opportunities to negotiate to find better deals um it still takes work but you know there’s always when I started flipping when I started my business my first couple deals I would say were listed poorly or incorrectly and I bought them off the MLS and that’s where I made uh that’s
(23:03) where I started off with flipping so I think there’s more opportunity to do that now than there has been in a long time so yeah I think there’s a lot of opportunity out there right now but it makes sense to be cautious as you do it and if you’re just an individual or you have one assistant or something like that you don’t have this big overhead to worry about so you can wait for the right opportunity you’re not rushing out there to uh you don’t have to be a Rive right now and I think that is also a strength which
(23:31) means you’ll have your reserves you’ll be in a good position as the market recovers which I really think it is going to be recovering well in 2024 right that actually going be my next question is you’re seeing opportunity now how do you think it’s going to play for the rest of the year I’m I’m seeing a I think there’s a lot of this comes down to buyer sentiment both on the investor side and the retail side um I used to sell all of my flips in multiple offers but with buyer sentiment changing buyers don’t
(23:59) want to compete and um and so it didn’t make sense to sell things in multiple offers and it hasn’t for you know a year and a half now um or more than a year and a half now but uh you’re starting to see a lot of people who think the spring market so we’re we’re recording this in beginning mid January of 2024 we’re we’re starting to see a lot of people thinking that the spring Market’s going to pick up and some people are thinking well if the Market’s going to pick up now is the
(24:29) time to buy so I just listed a property three days ago um in Ottawa in a very good area of Ottawa that I ended up spending this was a fire damaged house or smoke damaged there was a a fire that started in the basement smoke went everywhere so I did quite a bit of renovations to this house like extensive and it’s really beautiful um if anyone’s seen it on on my my Instagram it’s the one where like I took uh these vintage uh I I like the design stuff it excites me I took these vintage um National Geographic Magazines that I found in
(25:04) another flip and I cut out like all the interesting bright colorful pictures from them and I glued them onto the wall as an accent wall in a powder room um so that one that one’s uh oh wait you did it personally no uh I was there with my construction manager and his girlfriend we all went like select it yeah I Instagram uh Luke self wealth that’s right yes l Sor L I’m it’s right in front of me but I said spel it wrong Luke luk is Lu there’s no um I don’t know how else you spell Luke oh LK
(25:41) is the other popular yeah yeah it’s the French way of spelling Luke my family’s French so there you go um but so we did a beautiful Renault to it and it’s in a very desirable area of Ottawa with not much like there’s actually only one other listing in that neighborhood and it’s sold conditional so there’s nothing on the market I would like to to get into the eights and so I said well let’s be a little aggressive with this let’s see what happens and we listed for 500,000 three days ago and I’ve have 111
(26:11) showings booked so far in three days that’s wonderful yeah in this market right so who knows I’ve gotten a few was 111 showings show us that there’s buyers out there for the right product in the right area there’s buyers out there I have some rural listings right now I wouldn’t put those in mult and try to do multiple offers in a rural listing they they need the right exposure one’s on 10 acres one’s on Seven Acres they need the right exposure on the market it takes longer but the right product in
(26:46) the right area I’m seeing that there’s clearly demand for that product and as people are worried that prices are going to go up this spring you’re starting to see buyers coming into the market now let me snap this up before prices jump this spring so I’m optimistic things go are going to go well we’ll see how uh how inflation holds and how that affects interest rates but um people are optimistic that we’re going to see some interest rate Cuts this year and if that start happening I think the Market’s
(27:17) going to recover well enough I mean we’re not we’re not talking early 2022 kind of craziness but um I’m expecting to see some positive people craw coming back to the market slowly that because people have really been sitting on the sidelines especially investors as they see the opportunity okay interest rates are starting to fall if I buy a bur now I can get a good price on the product when I refinance I’m gonna rates are going to be lower so if they’re judging the market right that can be a
(27:45) good opportunity to get in sooner and uh and then um do better than you’d expect if you were buying when the Market’s already recovered you’re going to be paying a lot more MH yeah with the bond market coming down already we’re receiving cheaper fix rates right uh and the good friend of mine who is an agent downtown Toronto he told me it’s nuts for houses in downtown Toronto not condos because uh good I’m doing a flip in downtown Toronto right now so and you so you pay the double land transfer tax your buy be
(28:18) the double land transfer tax so he was telling me about a property it was listed way low 750 and it drew 25 offers and it ended up selling for almost 300,000 over uh so my money is on you getting at least a dozen offers um I’m hoping so I’m thinking and that’s the thing if I get a dozen offers I’m taking an offer um there’s no way that I get a dozen offers and I think oh I Can Do Better waiting there’s no way if I get two offers and I don’t like the best offer then I may you know cancel and
(28:52) realist at at around where I want to be but if I get you know 10 12 offers on offer day there’s no way that that’s not the best I’m going to do so I will be taking whatever the best is at that point now again as a professional investor would you get this many showings if your property was tenanted no as nice as it is my poor tenants I mean we’re talking this is backtack showings constantly they’re double booking uh time blocks and stuff like that so the poor tenants would be driven insane yeah
(29:28) yeah I I just want to throw in there that the it’s almost as if it if a property is tenanted it’s almost a stigma against the property yeah and then like I would say where a lot of my rentals are when I’m you know and I’m talking like bungalows in Ottawa or things like that or condo tow houses um I would expect them to sell for almost 50,000 less tenanted I would expect that because the unless it’s a very sorry unless it’s like made for investors as a product then at that point the fact that it’s
(29:57) it’s a rental is fine but if even as a duplex your best buyer and it may not be a full 50,000 discount on a duplex for tenanted but your best buyer may be someone who wants to live upstairs and rent at the basement right so having the upstairs vacant would be and and honestly getting good rent in the basement with the upstairs vacant is probably the best way to sell a duplex of um in my opinion but yeah if it’s just a single family rental some of mine are uh yeah you’re GNA do way worse with a tenant in there a friend of mine bought
(30:33) a a duplex in downtown Toronto and he asked me what should do what should you do with the basement he’s going to live in the main floor he’s going to house hack I said absolutely don’t rent it to a long-term tenant you’re living in it you were allowed to short ter rental so that way you you know you avoid the RTA the LTB right yeah and in some ways it’s almost better to not have bought a legal duplex in that way because then you’re renting just part of your house um from because you’re living upstairs if it’s
(31:01) uh an in-law suite yeah even if it has a separate entrance you you’re essentially renting part of your house and now it’s you know you’re not you’re not having issues with the Airbnb rules in Toronto yeah I would think yeah I don’t have any in Toronto I don’t either I just don’t have enough friends who’ve had nightmare stories with could you just imagine like you’re renting at the basement of your home say you live there and you rent at the basement of your home and the Tenant
(31:25) doesn’t pay you rent now that they Park their car in your driveway there’s no way you’re not seeing them right and they’re in your home and not paying rent so this is why to my friend I would not do long-term tenant in your house you know he doesn’t need the money you know just do short-term rental hire someone to manage it and I would think even if you do longterm in your house if you can I would try to get a property manager or someone else to manage it just pretend you’re a tenant as well because if
(31:52) they’re angry at let’s say the landlord you don’t want them taking it out on you while you live there right it’s a good Pro tip it’s a good Pro tip uh but you know with affordability the way things are like almost everyone is trying to avoid long-term tenants right because it it’s almost impossible to cash flow anything in Canada long-term rentals especially are the problem we’re hoarding houses and making it other people can’t afford to live in them okay I hope no one I hope
(32:19) no one clips that because you have a lot more property of most people quing Luke Luke just told us what everyone’s problem is we need to we need to vote these people one of my favorite things to do when we’re building or renovating is actually adding units because I feel like I’m adding to the housing stock I actually take personal pride in that when I build a coach house it’s a new rental when I do a duplex now two families can live in that home um my uh property in Welland it was a 12 unit purpose buil apartment building I
(32:48) converted it to 17 units so I added five new units to the building um that that kind of I don’t know it gives me a pride that I I’m creating more housing uh when we have such a shortage of it and if someone gives me [ __ ] about you know oh you’re taking housing away I’m like I’ve added housing to the housing stock what have you done I agree that’s why that’s why I really like the model versus like pure like buying apartment building and renov vict and stuff like that like you know
(33:17) versus when you’re creating when you’re creating housing units you are benefiting Society yes absolutely right Supply is what we are lacking we can’t control demand we can control Supply though so let’s let’s do the the right thing and there’s so much more the government could be doing to incentivize Supply instead so both provincial Federal and all so many municipalities they just put up so many roadblocks that make it so much harder than it needs to be um and they’re letting it all so much
(33:44) Im so many immigrants so we’re g to have such an issue with housing and uh I don’t know I think it’s going to get more and more combative between people you know blaming landlords when realistically I think um it doesn’t make sense people blame landlords because they’re like they’re taking hous out of the housing stock like no they’re not leaving the house empty somebody’s living there it’s in the housing stock even the Airbnb rules are in my opinion really dumb because if you take um first
(34:10) of all if I’m visiting another city and I have my a family with me and I have a dog it makes way more sense for me to stay in a house rather than a hotel but on top of that if you have enough airbnbs operating that they replace hotels instead of building new hotels they’re going to be building new condo buildings or apartment buildings or if they don’t need more because there’s airbnbs significantly replaced it you’re going to have see hotels converted into long-term housing so if you let the free
(34:34) market decide too many airbnbs hotels aren’t busy perfect now these hotels are being turned into apartments that might join up two rooms and you know and make it an apartment so you you’ve seen like around the world it exists where hotels motels eventually get converted into long-term residences M you would see the same thing except you know you see fairbnb come into Toronto they um they write all these articles they they get interviewed on all these articles about how airbnb’s ruining the housing stock
(35:05) guess what the founder of fairbnb is a municipal lobbyist who was paid by the hotel industry to write all these articles and interviewed they did a really good job at lobbying the government and changing public perception to make Airbnb the issue it’s yeah which is dumb because if you look at the source problem like just look at Zoning for downtown Tor for example you can you can you’ll get full full support to build a office building which you can’t which nobody wants you want to build a condo Tower
(35:37) everyone’s going to fight you true and then it’s going to be rent control I know I know it’s not rent control right now but when Doug for leads office which you will eventually do you does anyone think the 2018 rental exemption rental control exemption stays right if we get an NDP or liberal government which is likely because duck for can’t stay in office forever yeah but I and that’s that’s why I don’t actually think the the rent control the removing rent control actually helped that much uh in
(36:06) building new housing stock Because by the way that they removed it um like when Kathleen win removed rent control um and Doug for put it back he didn’t put it back like retroactively so it basically means oh okay so if I build something new takes me five years Doug Ford’s out of office by then no now I’m no longer getting exempt from rent control control and why did I you know build this like it didn’t help the idea that I was going to be able to um keep R along with Market kind of thing yeah because things change so
(36:37) if Doug for had retroactively said okay no no we’re going back anything built after was it 91 96 something like that uh that Kathleen went had got rid of there was a it was somewhere in the 90s um that if they went back to those rules then you like okay so I may temporarily lose the ability to increase rents but then as another conservative government comes back in eventually they’ll retroactively make the same rule so I might as well I can build I can build I know at some point you know it’s not
(37:04) like it’ll be 20 or straight where I can’t increase rents above you know the cap two and a half percent or whatever or lower all right Luke we can talk about the subject forever I’d love to over drinks but I think a what I what our lessener would really benefit from would be for example if you were to start everything over again uh so say you’re say you’re brand new uh what are what are your first steps as as a brand new wholesaler in this market wholesaler flipper um I think the big thing is uh
(37:35) not spending a ton on marketing cost so I’d probably be looking for um I mean assuming I’m starting with not a lot of money um and I’m just doing it on my own I’m looking for uh I’m looking for deals on the MLS right and now those are hard to wholesale but if you find a good deal you can flip it so I’m going to networking events and I’m finding a partner who’s willing to fund a good flip someone who knows what they’re doing and they say okay you’re right these numbers look good let’s do this
(38:04) deal um so they’ll fund it so they can get a share of that profit and then um yeah I’d be looking on the MLS um the the like I said my first two flips when I started doing this whole full-time in 2016 um and I already I I bought my first rental in 2007 so I already knew how real estate worked so I was fortunate in that way but my first two flips that I bought in 16 um when I went into a fulltime one was listed low but on um outside of Toronto board and it it was right before the Thanksgiving long weekend so it didn’t
(38:40) hit treb until the Tuesday but I saw it on the public realtor.ca because it had showed up I think it was a Fergus board or something somewhere near GF so that’s why it showed up on realtor it’s a nice place but it didn’t but the property was in Bron so it didn’t show up on treb yet because it hadn’t they’ listed it on the Friday but they hadn’t managed to cross list before the weekend so it didn’t show up on all of the alerts for all of the local Realtors and yet the price was
(39:06) right so I went in I managed to see it on the Sunday we got a deal signed on the Monday before it hit the market to everyone else on Tuesday and it was a really good price um I think it was a semi I ended up making 80 grand on that um in a good market and then another one was listed uh impac had his four bedroom but they and three three to four bedrooms can depending on the area they may or may not be worth more as a three bed or a four bed in this case in Brampton in that area it was in more bedrooms tends to be better so they’ taken down a wall
(39:39) they listed it as a three-bedroom because they wanted a bigger Master listed it as a three-bedroom impac still had it as a four-bedroom so I did some renos to this but the biggest thing I did was I put the wall back up so now I’m selling a four-bedroom in an area where four bedrooms self for more and uh I actually bought that one I think there was five offers on it I bought it in competition and then I flipped it and I made like 75 grand um and the wall doesn’t cost that much money to put up no no very little
(40:05) wall way worse we refinished it we put new uh I think courts counters in like I still I think it was ended up being a 40 Grand Renault and with the way prices are right now on Renovations it’ probably be a 60 or 70 grand Rena these days but um it wasn’t like a crazy Rena I didn’t have to redo everything the upstairs bathroom was already good I kept the cabinets there was a lot I could keep MH uh so yeah it turned out quite nice made a good profit and that was buying it in competition on the MLS because I saw
(40:32) something the other buyers didn’t see that four bedrooms in the area sold for a good amount more than a three-bedroom and uh yeah I was able to find a buyer that way that’s want go deeper into that hack you did with the with the MLS uh for the listeners benefit uh for example I if I’m listing a property in Hamilton I list it both on Toronto board and Hamilton board now there’s lots of RA lazy agents if they’re an out Town agent they’ll list it on the Toronto board only and then that way the Hamilton
(41:00) board agents do get do not get notified so then if you’re if you’re trying to buy that property you’re not competing now with the local market which is significantly generally significantly bigger than the outside of Hamilton Market yes so so that is that’s a for us that’s been a regular opportunity because again now you’re dealing with notown agent who doesn’t know the market well they probably don’t even want to make the drive they just want to gone they don’t know the market
(41:26) Market they don’t want to come out right so they just want usually generally they want it they they just want to get the deal done and you know what this agent was going to list it on toron board it just didn’t get cross-listed in time but I guess what I’d say about that is if you’re looking for opportunities you’ll find it a kind of stupid quote that I I like is uh you can’t get hit by the money truck if you’re not standing in the street so if you put yourself in a position where you’re regularly looking
(41:52) for opportunities you’ll find them but you have to be putting yourself in a position to look for those opportunities now as a source for for deals you we were we were talking about like you’ve had not so great experiences with uh V inv investors who are not that experienced yet yet their social media profile tells tells you that they’re done 50 deals in the last two years or something can you without naming names because you know we innocent till proven guilty we’re not interested in getting sued by anyone uh
(42:26) I’ll the term you I don’t think you mind the term you used was fake it to you make it and and I’ll I’ll elaborate on that just for the listeners benefit because we’ve seen that through history like for example Elon Musk even though my I’m a fan of Tesla I own a Tesla Drive Tesla the very first Tesla that was on the stage that they used to pitch and raise money for Tesla did not drive right they had you they had to push that car on the stage it did not it did not go anywhere right yet he
(42:55) he was able to raise millions of dollars so so fake toam make it has been big through history um and unfortunately you’ve had to deal with these people and real business transactions yeah so you know one example one thing that I look at is um and you see this from dealing with investors it’s having a a good eye for this some investors are really good at doing real estate and either aren’t good at or don’t put much work into raising money some investors are really good at raising money they’re not particularly
(43:27) good operators of real estate and if I had a choice I would invest with someone who’s a good operator of real estate every time over someone who’s good at raising money I can’t agree more um and you may even get you know they may even be offering better returns let alone you know the result will be better but they may be offering better terms because they’re not focused on raising money so they’re not as um they don’t have as many people offering them money which means you know a lot of
(43:54) people don’t like some people don’t like raising money I don’t particularly like raising money I’d rather not have to do it when I do it um because I’d rather just focus on real estate I love real EST yeah let’s just drill it down down a little bit so I’m the same way I don’t want I don’t want another person wanting to hold me accountable to something I don’t want to be answerable to someone else that’s why I became an entrepreneur right so I don’t want to be answerable to an
(44:17) employer so that’s that’s personally why cherry and I do not have Partners in our investment property so sorry continue yeah and I also find like I don’t like the idea of losing someone else’s money so I’m basically let’s say if it’s an equity deal um I’m going to protect your downside but then also sharing the upside and it’s like well why am I doing that yeah same yeah I I’m like I’m doing all this work you’re not doing any work I value work over capit and credit right like you know like help
(44:46) like that’s that’s that’s my personality as well I prefer people to help then I prefer like gifts or anything like that yeah sorry continue and and yeah and just a quick my first few flips I did with someone else’s money and I would partner with someone and they would get half of the profit for putting in the capital for down payment and Renovations and carrying costs so they’d put in all the money I would do all the work find the deal manage the renovation sell it Etc and then they would get half the
(45:11) profit so um that actually can be very very good return for someone but for you know they were taking a chance on me as well so they made really good returns uh and I didn’t need the capital so it’s a way for people to get in but obviously you don’t want to be losing someone else’s money but yeah back to the fake tell you make it so I’ve seen some of these people who are kind of more about raising money than they are about operating and one example is someone who’s kind of wellknown as an investor
(45:38) has a lot of Partners or raises a lot of money um they called us up for one of our wholesale deals this maybe a couple years ago now um and they had um a JV partner that they brought in that was going to buy the deal on paper or actually buy the deal right because that’s the way the JB partnership works so they’re going to be the owner they’re going to finance it they’re going to put up the money exactly yeah so this investor asked us oh can we push the closing back uh you know a couple weeks
(46:08) and you know we spoke to the seller and the seller said no we can’t we’re buying something else we come to the week of closing the JV partner can’t reach the investor hasn’t heard anything from them they’re very frustrating this JB frustrated this JB partner passive partner can’t reach their part their investment expert partner exactly supposed to be putting in all the work and so we get to like the day before closing finally hear back from the investor and they’re like no we need
(46:34) that extension we asked about we’re like okay now we have no choice obviously you know we go back to the seller with eggot our face basically saying we can’t this isn’t going to close we can’t close you know tomorrow we have to push back puts them in a bad position makes us look bad we managed the deal does end up closing but uh there was a lot of frustration on everyone’s part just lack of responsiveness probably taking on too much at once for this investor doing too many things at once MH um but that
(47:02) that’s a really bad business model to not communicate with everyone going on and um yeah so it it was it was not a great experience another one we’ve had is uh a group kind of a training group that some heard of sorry A Tribe if you will yep um there was a lot of more I would say instead of focusing on the fundamentals of real estate how to invest they focused on mindset which mindset can be really important if mindset is your issue but you can’t also get out from the fundamentals so we ended up being I can’t mind myself mind
(47:41) set myself to be Elon and then build an electric car um I have my shortcomings in the engineering space sorry uh so it it becomes more uh difficult we we ended up to the point where we almost wouldn’t work with people who were associated with this because this happens to us several times they would essentially lie to us we’d be like okay so you have your financing in order um you know you’re pre pre-qualified or you have a private lender you have the cash available like oh yes we have it I have lots of cash no problem we won’t have
(48:18) any issues paying your assignment fee and closing on time etc etc this happened with several at least three that I can think of people associated with this group that um they buy the deal from us promise all these things give us a deposit and then we see them on social media trying to raise money for the deal and then they can’t illegal well and they’re firm on the deal at that point oh my God the risk yeah they’re firm on the deal and then they can’t raise money they all like this is all like you
(48:49) know like burn the bridge burn the ship we’re going to make this work strategy yeah and I mean we hate that because we’re you know we’re a lot of our sellers are in positions where they need this to close like we’re trying to help them out and if one of our buyers can’t close our contract typically has relieved of liability but that doesn’t matter in the same way as like this is screwing over the seller yeah if you can’t because these are human beings right yeah um so you know we’ve had to
(49:19) negotiate some extensions and I think in all three of those cases I we had to find another buyer kind a last minute and we are able to so you know we might be double the work for you now well and we might be walking away from an assignment fee just to get the deal to close um L income too you’re working for free now yes yeah um and so it’s we typically don’t ask you know our buyers to prove uh that they have the money but that’s something you know sometimes we may have to uh if they can’t show that they’ve had experience
(49:50) and know what they’re doing because buying from a wholesaler for your first deal ever I don’t High I don’t recommend it highly unless you you really you know have done your research and you know what you’re doing because construction background like that those things will help you absolutely there there’s just more complexity to it in terms not complexity but you’re typically not able to finance the assignment fee except with some mix like uh one I work with closely is Calvert out in Alberta and
(50:15) they’ll Finance the assignment fees as well as long as the deal makes sense and they they run the numbers on the deal as well um to make sure they agree that it makes sense um but a lot of a lot of banks won’t lend on the assignment fee we’ve seen it happen a few times um but typically they won’t lend so what I mean by that is if you buy a house for uh we buy the house for 500 you’re buying from us for 520,000 the bank will look at okay we’re going to lend you 80% of 500 not 80% of 520 so you have to pay the
(50:42) 20% of 500 which is 100 Grand plus the 20K in cash so you need 120 instead of uh 80% of 520 would be uh 416 so you need 104 instead of 120 right so you’re you’re you’re funding more out of pocket and cash um so that’s one thing and then it just um yeah a little bit you’re buying a property that needs work or the seller’s in distress so you need to be willing and able to accommodate a little more M and then there’s usually have a pretty decent Siz project scope size ahead of you in order
(51:18) to execute and get your money out often but we we also have TurnKey situations because we we look for a combination of seller distress and property distress one or the other or both the typically the best deals are going to be ones where there’s both but sometimes you have situations where it’s kind of seller distress but the property is not in particularly bad shape um so it’s more sometimes it’s the ease for the seller sometimes it’s speed that they’re looking for um and you know sometimes the property is in good shape
(51:46) for example but they’re um going to go into power of sale and they need to sell really quickly because the sheriff’s coming kind of thing and they want to sell quickly so that might a situation where the property may not be in bad shape you know it’s always going to need at least some paint and things like that but it’s not in bad shape um but they need speed uh to make it happen and yeah so and that’s the importance of being able to close on time yes yes so I’ll just add that there’s U like your
(52:15) experience with with that one group that was focused on buying with no money down and all sorts of things like there’s several groups out there and I’ve heard the same story from many vendors not and other groups as well how they will turn down that business they i’ I’ve heard from even like mortgage brokerage groups who refuse business from certain groups the training groups like please don’t send us anyone don’t tell them you know us that’s us red flag when you see enough people of it it becomes a pattern where
(52:46) they must have been told to lie it’s not just that that’s almost the difference between fake it till you make it and like lie about it I think think that’s push I don’t know um I think it’s pushing it past just like trying to give the perception that you know what you’re doing versus fullon lying oh yeah no I have the money lined up I have it all you know we’re all good and then they don’t you know that’s a bit of a different situation to be and I feel like that particular group was teaching
(53:11) people to lie which is not a group I’d want to be part of and now the consequence is there’s all these people declaring bankruptcy and uh and they’ve got and they owe money to people they owe money to friends and family like it’s I’ve never seen it this bad before and I was I was in the community investor Community back in 2008 when we had the financial crisis when we had a real it wasn’t that bad right yeah this this period now is way worse than anything I’ve seen in my career in terms
(53:40) of like Financial like U disaster yeah I just had one property of Ruby house back in 2007 2008 so it wasn’t you know if anything I don’t know I feel like it almost helped me because uh I was I had an RBC mortgage on it and my payment was it was a variable mortgage but my payment stayed the same so I think I was four years into the mortgage of a 25 year uh amortization and I think I had 11 years left on it after four years on a 25 year right because I was paying down so much more in principle because the interest fell
(54:13) by so much um but yeah I mean so if anything it kind of helped me out at the time but it’s different now and I mean some of the people some there’s a balance between taking enough risk and not and taking too much risk and I think I understand people taking a lot of risk early on when they’re just getting started they don’t have much yet your first when when they’re single no kids yes and your first and they have job they have job income coming in to to you know to balance out the risk yes
(54:43) well and I understand why some people do like uh they might do an in-law suite instead of a legal duplex right on your first deal but once you reach a certain scale you know like you or I I don’t want an illegal unit in my portfolio it’s too risky for me if something happens what if insurance doesn’t cover it Etc so you’re you’re you can take a little bit more risks in your first deals but as you build more you have more to protect and that yeah that becomes scarier so I don’t want illegal
(55:09) units I don’t want things that I know aren’t up to code I’m not willing to take that kind of risk at my portfolio anymore um yeah yeah I saw a talk by uh these uh Reit owners very famous story out of guf two brothers and their friend I think everyone knows what I’m talking about if you know if you’re in the if you’re in the industry you know what I’m talking about but I remember them saying uh you can only live in so many houses so we had to uh scale up into commercial properties because they were doing they
(55:36) had like they had over like 50 student rentals in guol right so they’re making lots of money but again like you you can’t you can you can’t live in 50 properties yeah very hard to mortgage and everything right yeah oh can I just show I just want to show you this quick chart and I’ll talk about to The Listener benefit so this is the overnight so this is a benefit for anyone who’s watching on YouTube like this is the over Bank of Canada overnight lending rate you and I were just talking about uh back in like
(56:03) 07 yeah the rates were almost just as high right I don’t know if you remember but I was doing like 25% down and 5% mortgages back in 2007 right so like and then we’re pretty much at the same level interest overnight uh interest rate wise but people were not screaming and crying about like going people weren’t going bankrupt in the community back then and my comment is about like how hyper overleveraged our community is and and Canadians are in general when when we have seen rates at this level before
(56:37) yeah and I feel I feel bad for the people who I think were doing it relatively right but there’s there’s times in my journey as well where if I was caught at the wrong time it could have caused me bankruptcy as well luckily I’m established enough I’ve been through enough and I’ve built my portfolio enough that I have a lot more reserves and protection and I’ve been doing it longer but if I had kind of decided to scale up and bought my first you know unit that needed a lot of renovations right at the wrong time and
(57:04) that was like you know my second or third deal or a few deals in and I’m I’m making this one big jump into the next property and at the wrong time as everything went wrong with you know rates and construction expenses and you know that could have there could have been times when it would have put me in a bad position and I feel bad for people who are like that then there’s others that I feel less bad about because it’s you know you had um you had a long time to build this but instead you didn’t
(57:31) structure your business in a way that was you made the assumption that the market would always be going up and that’s a really bad way to run a business if you take that risk for one deal that makes sense you have a portfolio and you take you know you have a portfolio of 10 properties and one is a risk that can be okay because you have everything else as a protection everything else is stable and protected but if you buy 10 deals and they’re all kind of dependent on the market you’re putting yourself in a really bad
(57:56) position um and you know where you can’t do your other deals without getting the right refinance on your other ones and they’re all variable and you know and you’re not going to qualify if they’re at too high of a rate you’re putting yourself in a position where you’re risking your portfolio continually all the time that’s bad decision making yeah I saw a young gentleman buy two properties first for first two deals ever bought them at the same time in Trenton Ontario two duplex conversions and his plan was to use his
(58:28) personal line of credit for the renovation money to do two basement conversions I hope you had a lot of room personal line how big can a personal line be well if you’re pretty rich you you have bring personal lines but I’ve seen doctors with big personal lines but otherwise this was no doctor yeah H that’s risk I mean I don’t know about you I see a lot of duplex conversions coming in at like 200 Grand yeah if like the I’m seeing ret retail retail for just the basement alone usually around 160 and then you
(58:58) know the main floor often needs work so yeah you can get so the total budget will get over 200 yeah and it depends what you have to do right do you also have to do the driveway are you you know are you digging a lot of uh window wells right to the footing you know that kind of thing it a really big property then yeah the basement’s going to be more yes exactly fantastic all right Luke thank you so much for being generous with your time you we’re way over any final thoughts you want to share like first of
(59:24) all um like do you have a book coming out you have a speaking engagement like what are you up to uh well uh I am going to be interviewing you on my podcast shortly so we have the selfwealth real estate podcast which you can find on all the podcast platforms um follow me on social media as well Luke self wealth I’ve been posting a lot more content about real estate flips I’ve going on my rentals Etc um and yeah that’s about it just uh follow me on socials follow listen to the podcast and uh my my last advice is
(59:54) like like if you’re not in the market now start looking and make sure you know how to recognize an opportunity because I think there’s opportunities coming this year thanks so much Luke and I’ll for listeners benefit I’ll have all the links in the show notes and then like Luke like like we like we were touched on earlier like the people who got burnt in this period like if they stay with it won’t they be fine learn from the mistakes first of all learn for your mistakes yes yeah exactly like if you’re if you were able
(1:00:24) to through this this was one of the worst times for a lot of investors nowadays and I mean this wasn’t like the 08 recession in the US we weren’t hit nothing this was bad but it was bad because like you said there was a lot of Leverage that got expensive and that affected a lot of people um but things are going to get better and uh I’m not saying it’s going to explode like it was but things are going to be getting better so if you able to get through what is kind of the worst time and keep restructuring your stuff working on what
(1:00:49) you’re doing there’s going to be a you’re going to be rewarded going forward and even if that just comes down to holding your long-term rentals longterm too many immigrants coming in not enough housing being built I don’t see any way real estate doesn’t get more expensive and that you don’t do well holding your your portfolio that’s a great place to end it thank you so much Luke thanks everyone thank you for watching if you want to learn how to invest in real estate from scratch my team teaches
(1:01:13) beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.com destion as well I publish at least two to three videos a week here so subscribe if you want to keep learning from seasoned investors like myself my guests and if you’re just starting out feel free to ask questions and comment below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real
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