Erwin  

Hello everyone welcome to another episode The Truth About Real Estate investing Show. My name is Erwin Szeto and this episode is brought to you by Cherry and I’s wealth hacker conference the all day in person no zoom option conference this November 12 2022 as well as this year. It’s been three years in the making since we hosted over 1500 investors and entrepreneurs to the conference of the year headlined by Grant Cardone back in 2019. This year our keynote speaker is to see us sir, and he will be sharing his secrets on how to build a life resume to be proud of think of it is when your time on this planet is up. You look back, are you proud of the accomplishments and relationships that are most important to you? We’ve learned about Jesse Itzler and I actually attended the 10x growth conference in Miami. We were actually there to scout it with Grant Cardone before we hired him for our collarbone conference. And Jesse was one of the speakers that day, he gave a fantastic talk about a lot of wild stuff he’s done. He’s a Jewish guy from New York. He’s written Emmy award winning rap song. He’s been a successful transporter, and that’s how he’s made all his hundreds of millions of dollars in funding businesses. For example, one of them was he’s co founder and basically the Uber of private jets private jet sharing, and he later sold that company to Warren Buffett’s net jets. He also spotted a trend in energy drinks being more naturalised so he partnered with Zico, coconut water, if you’re a Costco shopper like Guy, you’ve probably hadn’t been bought it before. This company is eco water. He later sold it to Coca Cola. He’s courted and married Sara Blakely, Jessie and I have something in common that we have very famous spouses. Sara Blakely being the founder and billionaires of Spanx. Together, they have four kids, and they are a family to be admired in terms of the experiences that they share. And as Jesse is highly present in his kids lives, he has a lot of freedom in his life. Thanks to his business ventures and investments in music great parent. Jesse’s also happens to be in New York Times bestselling author of one of my favourite books, living with a seal. That seal happened to be the incredible David Goggins and the story of David living with and trading Jesse for 31 days. Jesse being a middle aged band, father of young kids, he’s a vegan and a marathon runner. The story is absolutely insane. I won’t want to give away too much, but I personally found the book hilarious, inspiring and educational. Again, one of my favourite books ever, I can’t recommend it enough. My opinion, my experience, the audio book is even better, because Jesse reads the book himself. And even better to see Jessie speak in live and in person on November 12 2022. 

 

Erwin  

On to this week’s show, we have a veteran investor with us who has been investing for over a decade and has accumulated 25 properties, including several joint venture JV for short joint venture with friends and family. Justin is one of our longtime clients. And as time in real estate, you know, that term, time in the markets more important than timing the market? Well, Justin done quite well, again, he’s been investing for over 10 years, and that type of served as well. He’s invested largely in cash flowing properties in places like Edmonton, Alberta, Waterloo, Ontario, and Hamilton, Ontario. My business my team and I, we helped him out in Hamilton, of course, and those Hamilton properties alone have allowed Justin to join our exclusive seven figure club. Now with seven figure Club. Well, there’s stages to being an investor. Owning a million dollars in real estate isn’t too hard these days, earning a million dollars in return million dollars or more is pretty significant. And Justin has done that, along with many more clients. On today’s episode Justin’s shares how he got started, we dig into the numbers of some of his properties, including the first his first property student rental of Waterloo. What motivated him to invest what got that fire going, and what got him was to start a podcast for parents to teach kids about money. Justin will also be part of a panel of joint venture experts on June Saturday 18th that the morning event starts at 9am to 12pm. At our next iWIN real estate meetup live and in person only, there will be no online option. There’ll be no recording either. Justin will be joined by longtime friend of Iwin, Jules McKenzie who has done over 50 joint venture properties in his three years as a police officer. Also Gillian Irving, an expert in joint ventures, student rentals and mortgage professional from Lend city mortgages will round down in our panel. So there’s a link to register in the show notes. And for those of you on our email list, you’ll get that as well. You’re likely already getting emails to register for the event. Again, link is available in the show notes that you want to attend. For non clients. It’s only like 20 bucks, and that all the profits go to charity. So yeah, hope to see you there. June 18. And more importantly, November 12, for the wealth hacker conference, wealth hacker.ca. For details, please enjoy the show. 

 

Erwin  

Hey, Justin

 

Justin  

Erwin, how you doing?

 

Erwin  

I’m excellent. What’s keeping you busy these days?

 

Justin  

Well, I would say my podcast is keeping busy so I was on launched that back in on April the 12th. It’s podcast, it’s called Money dad podcast, and it’s dedicated to helping parents raise money smart kids. So I’ve released eight episodes now. And that’s that’s keeping me busy.

 

Erwin  

Right. I’m going to share with where we’re recording it. So let’s share it now where she hosting. Spirit of math has a money education partner. So we actually heard them privately in case you want to bring on one. Okay to join us. I think it’s in the summer. But yeah, but we got half price because we provide the facility. Yeah, we’ll talk about it after. Yeah. So our kids are doing it and a bunch of other kids are doing it from the office. Cool. We get nothing for just sharing. What am I trying to do? Me want to sit in? Maybe? Yeah, cool. Yeah, that’s cool. The podcast? 

 

Justin  

Yeah, it’s one of those things where I started it, I thought about, I’ve been thinking about it for a while in terms of starting it, and it took your finger for a while. Yeah. For me, it’s like, I’ve always wanted to, I mean, for me, financial education is so important, right? Like, I think back to when I was a kid, and I didn’t necessarily get any formal financial education. But my dad, you know, talked about, we talked about money all the time, in terms of a lot of times the lack of it, or how to hustle for it. And so that’s sort of ingrained in me from the time that I was young. And what I found was, you know, as I was thinking about how I can serve, or better help people today, I thought, okay, what can I talk about? And what do I want to do. And so starting a podcast, helping parents raise money, smart kids, so that they have a better shot, or their financial future just seemed to resonate with me. And I think that’s something like right now, there’s just not a lot of resources, I think, that are dedicated to helping kids be more financially literate. And so I just want to put something out there and be a resource to people to help further their education.

 

Erwin  

I just finished reading the psychology of money. And I brought up a good point, it’s American, so like, whatever they’re called down on their 401 K, I meant to look it up. So I don’t even know how old RSPs are, for example, but they’re not that old. They’ve only haven’t been around that long. So savings hasn’t really been something that it’s been around for multiple generations, right? Yes. So it’s a really it’s a newer subject. Yeah. Like your experience is very similar to many of my clients. And many people who are listening to this was that maybe their parents knew a little bit about money, but likely the generation before, like, knew even less around savings and investing.

 

Justin  

Well, if you think about the generation before our parents, that was I guess, the Great Depression, and back then were, you know, it was they saw a lot of their savings go away. It’s like money was scarce. I mean, it’s it was scarce, probably for a lot of people. So I would say like, you know, our parents generation, like my parents were immigrants coming into the country, they came to Canada with like, nothing, right, like very little education. Like my mom, I think my mom finished, or she Yeah, she was in high school. I think she finished high school. My dad was, I think he almost fell or he finished elementary school. So they didn’t really have a lot of education itself. But they had the desire. And I give him a lot of credit, like being able to like pick up and go to another country and start from scratch, basically, not speak the language. Yeah, not Well, yeah. I mean, they spoke the language like my, my mom, her primary language is Chinese, Cantonese. She spoke some English. And then my dad, he spoke English. He was so he was from Jamaica, and came to Canada. And you know, in search of a better life, like he, his dad was basically the owner of a general store in Jamaica. And that’s what my dad helped him run. And so my dad told me stories of, you know, when they were sleeping at night, they would lock up the shop, and there will be people that would be breaking in to the store to try to, you know, get things and he was like, You know what, I don’t want to live like this. I don’t want to live here. And so he met my mom, and they decided to come to Canada. I think it was my mom’s aunt or someone that lived in Montreal. And so that’s where we ultimately ended up settling. That’s where I was born. And then we we moved around to Toronto and other places growing up, but um, yeah, I think it was one of those things where I just saw how hard my parents worked. And especially my dad, like, he didn’t have a steady job. You know, he was a realtor, residential, real estate realtor, and he would, you know, he would take me with him and my brother, while he was on business, taking a look at houses and previewing them. And he did that he did a wholesaling business for a while, like so importing, you know, whatever, dry goods and then delivering them to people. He was a big talker, he was hustling, like, he was basically trying to figure out a way to put food on the table for the family. And so my mom was helping take care of my brother and I and, and then later on, she, you know, she ended up working like, I think she worked at a travel agency for a little bit or a retail store. But, you know, it was really up to my dad to sort of, you know, he’s the main breadwinner and just bring make money to survive, really.

 

Erwin  

Their survival was the thing. It wasn’t about saving. 

 

Justin  

It wasn’t a savings investment. It was really about surviving. So it definitely was not about investing. It wasn’t until actually probably when he was a little bit when I was a little bit older. That’s when he started to, I think focus on investing where we were more grown up and he would, he would hone in on me and say, Look, you gotta get an investment property, you gotta get investment property. And so at the time, I think I was I wasn’t necessarily that receptive to it. I didn’t really brush it off, but I wasn’t keen on it. And it wasn’t until Oh, so the year before I got married, so I proposed to my wife or girlfriend now wife, wife, and it was like, Okay, there’s gonna be this big to me, in my mind, like this big wedding expense coming up. So I’m like, okay, you know what that motivated me to say, before I spend all this money on a wedding, I need to put money into an investment property. And so that was when it clicked in like, Okay, I should get an investment property and divert some resources to it, I didn’t even necessarily have money at the time. But it focused my attention to getting an investment property. And so I ended up buying a student rental property in Waterloo, off market. And I bought Yeah, so I bought it, you know, and I borrowed money from my dad, my dad lent me $40,000 to use as the down payment, charge me, you know, interest rate market rate of interest on it. And I managed properly myself for the year. And what happened for me was like in terms of when it all clicked, and in terms of real estate like and what you could do with it, and how you can use it as a wealth creation vehicle, was in that the end of that first year, I ended up, refinancing it and buying a second student rental property from the same person that I bought, the first one, he was actually a university professor who was looking to retire. And so I ended up reaching back out to him again, off market and saying, Look, I’m interested in buying more property, you know, are you still interested in potentially selling some of your other ones that you’re looking to get rid of before you retire? And he, he said yes. And you know, we negotiated the deal. But again, I didn’t even have a down payment, I broke the mortgage refinance, didn’t pull the additional proceeds from the first student rental and use it to buy the second one. And so for me, like, that’s when the light bulb clicked on for me, and it was like, Oh, you can actually buy real estate, without any of your own cash, you can add and grow your grow your portfolio and your net worth that way. So that was, yeah, that’s, that’s when it started. For me.

 

Erwin  

That’s pretty cool. Did your parents really invest in property before? 

 

Justin  

You know what my parents owned, when we live, there’s a time where he lived in Etobicoke, near Humber College. And actually, we ended up renting a room in our basement out to a person from who went to Humber College. And so that was part of I mean, that, you know, they earned some rental income that way, they also had a rental property. I mean, this is back in the 80s, though, when the interest rates are so high, and I think they actually lost money on that deal, to be honest with you. So they bought the property, I think they ended up taking, yeah, they bought it, they were renting it for a while, and then they ended up selling it. And when they sold it, there was a VTB on it, that they had to take back vendor take back mortgage. So I don’t know if that necessarily that deal was profitable for them. But I know always like my dad, especially like from high school onward. He was always, you know, I think he just harped on getting an investment property, getting investment property. And I should have done it. In hindsight, I wanted to do it when I was in university, like it was crazy, because I would see, you’d rent for whatever, X amount per room with your friends. And I remember hearing about one landlord who owned a number of properties on a certain street in Waterloo. And I was like, he must have had, like, he must have so many different properties here. But it never clicked into me that, oh, maybe I should try to get a property and then live in it with my friends while I was in university. Because then I mean, whatever. In hindsight, everyone’s like, Oh, I wish I bought more.

 

Erwin  

Right. But most people are listening. So they don’t see me rolling my eyes. But sorry, how long ago was this first property you bought?

 

Justin  

So the first property that bought in terms of a rental property was 2007.

 

Erwin  

Okay, so good time to buy. Okay, so I always harp on that folks are going to listen and learn from someone they should learn from someone who has what you want. Right. So you have a sizable portfolio. Can you share about that?

 

Justin  

Yeah. So yeah, I have, I mean, so between myself and other joint venture partners that I’ve brought on, you know, I have an ownership interest in 25, mainly single family residential properties, some student rentals, some single family, some small, like Maltese. And I’ve been doing it, you know, so I started actually, the first one I bought was not even a rental was actually my own condo that I bought after I graduated from university. So that was back in 2002. That was pre construction. 2002 And then I, you know, it took them two years to build it, and, and I moved in 2004 So I’ve been investing in real estate since 2004. And just, you know, in the beginning, it was more like buying a property a year. So, you know, my first rental was 2007 and then I bought another one 2008 That same one from that same professor, and then I bought another one 2009 And then it wasn’t until I guess, 2011 when I met you actually, as well, but I joined rain, which is a great, great group at the time in terms of the Real Estate Investment Network and, and it was really a way to For me to like level up, and I wanted to get more focused on real estate, and I wanted to be around people who were doing what I wanted to do in terms of investing in growing their portfolio. And so that’s when I joined rain. In 2011. I met you. And that’s when it sort of took off. Like I think I bought, yeah, so I bought another one. It was a single family and Hamilton in 2011. And then what happened was, so my mom, she passed away, basically, in 2012, January of 2012. And up until that point, I guess, you know, so it’s really not until you lose someone that you really realise, like how precious like life is and how short and how not guaranteed it is. And so, when she died, it was really like it hit me hard. And that basically, like I was angry at the fact that, you know, she she passed, and the fact that I wasn’t able to spend as much time with her as I wanted to while she was in the hospital. So she had an illness. And she had to have surgery to basically remove some stuff in her spine, which ended up which they got out, but in a paralysing her from the waist down. So it was tough, it was hard, it was really tough time. And then when she passed, it sort of basically unleashed all this fuel in me that I said, Okay, you know, what, I’m not guaranteed to have you know, a life long into the future, who knows, when my time is up, I want to make sure that I get to a point where I’m, you know, I can make a decision in terms of my time, and I don’t have to like work, I can basically build a real estate portfolio that generates, you know, cash flow and passive income and, and do all the things that we love about real estate in terms of appreciation, so that I can get to a point where I don’t need to work, if I don’t want to, and then I can spend the time the way I want to do it. And so that really hurt, I would say her passing just provided the fuel to grow my portfolio from that point on. So I bought a bunch of property in 2012 and 2013 a lot in Hamilton, you know, with your help and, and then I started to move out to Alberta and bought a bunch there as well, again, not just with myself, but for myself and other joint venture partners who had brought on, you know, a lot of family and friends that I just, you know, they saw what I was doing, they were interested in what I was doing, and they wanted to get involved in the real estate market. And so, you know, I thought, Okay, I’m doing this, I enjoy real estate, love buying real estate, and so I ended up buying as well for them as well, in conjunction with myself, so

 

Erwin  

I laughingly enjoy buying because I showed you some scary stuff. Here,

 

Justin  

I remember there was stuff we would see. I was it was I mean, I loved the the West harbour area. Hamilton near the GO train station, and you know, Jane Street North and all the great things happening around the harbour as well. And I, there’s some stuff that you took me through, I remember there’s one on John Street 100 of you remember, but it was like, The floors were uneven, like it was tilted. So that it was like a bowling alley pretty much. But it was one of those places where, you know, there was a lot of work to be done, or it was a fixer upper.

 

Erwin  

There were lots of those in the area. There were lots of most.

 

Justin  

Like I bought, you know, so the first property that you helped me buy.

 

Erwin  

Okay, this is do this is whiteboard it. I do want to actually, can we start with the first the first Waterloo Student rental? All right, so we’re doing this for the first time, I’m going to whiteboard. Right? I want the lesson listeners to know, I think numbers are good. I think it’s just healthy that I keep telling people, everything’s relative. Right? But if you have no data, no context, and you don’t even know relative to what Yeah, right. And also just a bit of a history lesson. Okay, so we’re talking…

 

Justin  

And I would say like, yeah, so we can go through these numbers. And, you know, a lot of people are gonna listen, say, Oh, I can’t get those numbers these days, obviously, because I bought 15 years ago. But the main thing for me was, you know, in today’s context, you can look at today’s numbers, they’re gonna be a lot higher than obviously 10 or 15 years ago, but you can still make the numbers work in terms of positive cash flow. So you know, so we can definitely go through these numbers. They’re gonna they’re gonna sound like ridiculous, because they’re so low in terms of how much I bought it for but, but this is what that’s about real estate. But keep that in mind for like today’s dollars. It still works.

 

Erwin  

All right. Waterloo, and you’ve lived in Toronto. 

 

Justin  

I lived in Toronto.

 

Erwin  

You drove closer an hour? Yeah.

 

Justin  

Yeah, it’s been a little over an hour hour and yeah, or 15 minutes or 15. Yeah, that’s important. Yeah. And the reason why so I started off when I was, you know, so again, before I bought that first one, I was super motivated to buy something and I started looking initially in Toronto, but what I found was, so at the time, Toronto was IX, quote, unquote, X Red zip. And I couldn’t make the numbers work. So I decided okay, you know what? I know Waterloo I lived there for four years while I was in school. So invest in what’s new. Yeah. And so I ended up buying a student rentals. And this is back in 2007. I bought it for, I think it was like 240,000. Something like that.

 

Erwin  

What do you think it’s worth today? You can ask me that because I don’t.

 

Justin  

Well, you know what happened? I so I ended up selling that one. Back in 20. Oh, it must have been 2016. I think 2016 2017 Where what happened was sort of the where the location was, it was on a major street close to university, like within a walking distance to both Waterloo and Laurier. And the person who approached me about buying it was a developer who had been basically assembling land part like land parcels because he wants to build a big guy. Yeah. So I ended up sitting down at a coffee shop with him. And we negotiated or hammered out a deal. Yeah, so I sold it. I’ve sold it, but I sold it for basically, at the time, I wanted more than a million dollars. So I sold it for like, 1.1 2017. Yeah, because for me, it was like I knew at the time that…

 

Erwin  

We didn’t even talk about this. This was 1.1. Yeah. This is appropriately.

 

Justin  

So he I knew at the time that so he had already picked up other properties. And it was actually the planner. So the city planner that got in touch with me saying, oh, like basically there’s this planning application going through. And you know, you may want to think about selling because this developer basically is looking for land. And I know he needed it because if he didn’t get it, he would have had to build an underground underground parking. Oh, love is really expensive, which is super expensive at the time. Yeah. So. So for me, it was like, Okay, I knew that, you know, in terms of leverage I had, and I saw I had in my mind what I wanted, in terms of a price and he met that price. So you know, back when I bought it for 240. Like I put down I put down $48,000.

 

Erwin  

And then renovations?

 

Justin  

Renovations wise, I didn’t have to do much. It was like it was basically a five bedroom student rental property. There was no upfront renovations. I inherited the tenants. And then, you know, over the years, I remember spending some money to renovate. You know, do some put some new flooring in the kitchen. I mean, think I did work in a bathroom really like in terms of a major renovation at the time. It was it was more money necessarily. Yeah, it was maintenance. Okay.

 

Erwin  

And what did you rent it for? 

 

Justin  

Well, back then. I mean, this is probably I probably rent it was like, I don’t know how to save 400 a month. 350 a month. Okay, back. five bedrooms.

 

Erwin  

So four times 400, 2 grand. So it’s two grand rent, and then curiosity market rent today.

 

Justin  

Well, so I still Yeah, I own other rental properties, still rentals in Waterloo. And I would say like the last one that I rented. So I bought a place last year off market as well. And I rented it for 620 room. That’s really good. Yeah.

 

Erwin  

Even with all the competition.

 

Justin  

Yeah. You know what I found? I found that. So in Waterloo for exam, for example, there was a lot of people building these multiplexes. And so there’s the big ones. Big ones. Yeah. Big ones. Huge high rise. High Rise.

 

Erwin  

Yeah, like 30 Storey, how big are they?

 

Justin  

I don’t really, I’d say like 15 stories, maybe 10-15 stories. So big water supply? Yeah, lots of supply. And there was a time where I was like, oh, you know what, like, are people going to want to be in houses. But what I found was that a lot of people that live students, they actually still love houses, they want houses, because if you live in these big multiplexes, you know you’re sharing your space really with like, a tonne of other people, you don’t really get there smaller as well, like in terms of the size. So you don’t really get as far as the bedrooms are smaller the bedrooms, and even the units themselves, right, the units are still probably again, for five people, but the units are smaller than on the backyard. Really. It’s just really not a space that they can call home home. So I found that the demand for houses was still quite strong, even when all these most

 

Erwin  

of them are very strong. Yep. Fascinating. All right. What do you think you cashfloat When you originally there’s a fantastic rents for this purchase price?

 

Justin  

Yeah. So what did I cashflow? I couldn’t I mean, it’s been a while and I sold it. 

 

Erwin  

Ballpark. So 100 bucksa month, or just how much trouble 100 bucks a month? Maybe. 

 

Justin  

It’s probably more than that. It’s probably one that based on like, and that’s one of the reasons why I decided to just do rentals as well, because of the better cash flow. And I mean, yes, you know, a lot of people are gonna say, Well, this, it’s definitely more maintenance. And it can be in terms of like, more wear and tear on the property right? Students are not going to necessarily take care of their property, as well as let’s say, a family or a couple or whatever. But, and what I’ve learned over the years is that I think it’s super important to obviously screen and make sure that you put in a group that you think is going to be responsible. And so I would say, I’ve gotten better at that. We Yeah, like at the time. I mean, you have there probably was more maintenance wise, like it was like five guys living in this house. So we probably cashed a lot about three to 500 a month. 

 

Erwin  

What do you think it’s worth today? If it still existed, and it wasn’t a development property?

 

Justin  

Today, in today’s dollars, I would say, like, so I have another five bedroom student rental, not too far from it. And I think the value on that one’s about, you know, I’d say like, 657 Easy,

 

Erwin  

And you’re dealing with rental licencing, or you’re not? 

 

Justin  

Yeah, and Waterloo, thereis a rental licencing programme that kicked in, I can’t remember how long ago but yeah, there is. So it’s basically, you need to go through a couple of different hoops every year to get that renewed. It’s not that big of a deal. You know, there’s it’s to me, it’s like it’s a it’s a cost of doing business, the city. I mean, they don’t even it’s funny, like they don’t even it used to be before the current licencing requirements, you would have to get a whole bunch of other things done, including, let’s say, your so yeah, and this sorry, as part of the current rental licencing requirements, they you know, they want you to do so like your gas fueled appliances, they want you to get that check your furnace and your I guess your hot water tank, fair. Fair, fair. Obviously, they want to make sure that are you attest to doing smoke detector checks every year, which I do things like that. So it’s it’s really to me it’s it’s a way for the municipality, I guess to control the lace, like what housing is going in, but I just see it as its cost of doing business.

 

Erwin  

It’s coming to Hamilton. And already through the pandemic, a lot of people already sold law landlords already sold or they rented out to families. And then you know how families are they don’t they stay there, they lease the renting under a year or two year old rent, they’re probably stay, I don’t know how long, they’re gonna stay for a while. And then what I’m seeing in Hamilton is that’s causing a lot of pressure, because the demand is back to pre pandemic level supply is way down of housing. And then licencing is being rolled out in Hamilton around the student areas, and they’ll cause more landlords to sell. So that like, I’ll be the only game in town, not the only but yeah, and then I maybe I can see 620 rents per room, which would be like more than a 10% increase substitute students.

 

Justin  

But it’s still relatively cheap compared to what even some of the condos or multiplexes around the university are charging, like, on the newer stuff they’re getting, they’re easily, you know, charging 750 $800 a room. And a lot of that I think is tailored towards, let’s say international students that are coming in, and you know, and, and they have like international parents, they’ve got money, they’re sending their kids to school, or whatever. But so I would say like, you know, I’ve been trying to keep it as close to there as possible. But at the same time, there’s a bit of a gap, because it’s not as luxurious, let’s say as, as a high res.

 

Erwin  

So if you’re a cashier three to 500, a month before, you would increase by 1100 or so. Based if you kept the house yeah, if I kept the cash flow would be ridiculous. Yeah. Right. And then just some quick math, you know, assume you sold it today for market value. Let’s use 650. Let’s be conservative, I like being conservative with all my numbers, you paid 240 for it. That’s a gain of a capital gain of 410. You only put down 48,000. Yeah, that’s eight and a half times on your money. Eight and a half times return on your money. Nothing was a good idea to buy this one. Alright, so let’s do another one. Let’s talk about a Hamilton property share. Which one do you want to REIN or…

 

Justin  

Do you wanna talk about? Awesome? Sure. Or yeah, why don’t we talk about showing the auto railway if you want.

 

Erwin  

I like them all, but just kind of funny because you and I met at rain. And then we went looking for properties. And actually, I don’t even know how we came to the decision that we would look at West Harbour.

 

Justin  

Well, you know what I remember. So when we started looking together, you were showing me stuff on the mountain. And then I mean, in hindsight, that would have probably been goodbye as well, because of, well, they’re all good. They’re all good. But I mean, at the time, I It’s funny, like I wanted, I didn’t even at the time. I wasn’t necessarily convinced that, you know, suburbs family. Yeah, the suburbs was the way to go. So I was more focused on downtown. That’s why we decided to look downtown where like the West harbour area. And there’s a lot of different things that were

 

Erwin  

Very up and coming is very up and coming. Had a long way to go though. Leslie fair.

 

Justin  

Gentrifying

 

Erwin  

Gentrifying, which means it was pretty ghetto.

 

Justin  

It was like it was like you can see there’s pockets of like, I don’t know is yeah, there’s good. There’s good and bad area. But you could tell us on the rise. We’re talking to 2011 this is 2011

 

Erwin  

And this is Hamilton West Harbour. Yeah, that’s So for those who don’t know what, Hamilton West harbour, we’re just northwest of downtown along the shoreline, which probably want to talk about to talk about railway or race Street. 

 

Justin  

Sure. Yeah. Yeah. So let’s talk about Ray,

 

Erwin  

Because that is the first one I helped you with. Yes. The very first one. So let’s let’s paint a picture. It was a power sale. Yes, it was a power of sale. That means so for the listeners benefit, the bank is selling it. Yeah. So someone failed on a mortgage. The bank is selling it. We don’t see those many. We don’t see that much these days. With such a strong economy and housing prices so strong. So yeah, in the house was rough. I swear there were bugs during the inspection.

 

Justin  

I don’t remember the bugs. I wouldn’t be surprised. I remember in the basement, there was some water. There are some water issues in terms of like getting up the drywall and so we had to replace you know, rip that out. But it was rough. Like it needed some work. So I bought it for around 150. Yeah, it was about 1/5 the 156. And then I had to spend Kohut about 25,000 to get it ready. So I think part of it was doing some electrical work. I think it had some knob and tube. It was doing some work on the kitchen. It was doing some work in the basement where like, basically created like, put it down your flooring, framed out the bedroom, I think.

 

Erwin  

In the basement, I believe so. Yeah. You haven’t been back in a while. I don’t know. downpayment 20%. Yeah, that’s been 20%. Now what were you thinking? Like, how did this compare to the other stuff you bought? Because this was not like a condition property at all. And I know what 25,000 doesn’t sound like much today. We were joking before we were recording. That’s a kitchen as a rental kitchen. Not even nice kitchen. Right? Well, this rental today would be a while ago. Electrical alone is usually around 10,000 In these days alone. Yeah. And you’d have flooring pulling out or five. You put up some walls pulling over five. Did you do some bathrooms and kitchens this whole nother place neither work.

 

Justin  

You know what the main the main bathroom, which was on the second floor? needed? You know, it was okay. It was not bad. I didn’t have to do I didn’t have to do too much in there in the main bathroom. In the basement bathroom. It was it was in the basement bathroom. It was I had to do a little bit of work. Not much again.

 

Erwin  

Your two bathrooms not common for this area. 

 

Justin  

Not very common. No. I mean, the basement bathroom was wasn’t the greatest. But it was a bit it was a second bathroom. Which again, was not very common. Like I’ve got which is a big bonus, which is huge bonus.

 

Erwin  

And then what’s your rent for? What do you remember your original run?

 

Justin  

I don’t remember the rent

 

Erwin  

1300. I’m gonna guess. 1300?

 

Justin  

Yeah, I would say the original rent. I can’t remember. Like it’s up to call it 1700. Now. Oh, which is still in the market?

 

Erwin  

What do you think market is?

 

Justin  

I don’t know. I just know it’s under market.

 

Erwin  

It’s over two, three, markets should be over too great. For the listeners benefit because because the rental housing markets cooled with interest rates going up the rental markets heating up. So yeah, so that’s current rent. And you could probably get three $400 more. How long’s the tenant been there?

 

Justin  

There was a turnover, probably in the last like five years.

 

Erwin  

Five Year Old rent. Right. And we think it’s worth today.

 

Justin  

I think it’s probably worth about two we talked about this, I think before, but I think it’s probably worth about at least probably similar. Probably similar. Yeah. 650.

 

Erwin  

That’s just that’s similar. It’s not even similar. Very similar last year. Waterloo property. Yeah, 650 in the spring and target and a lot more. Yeah. But you’re not going to cry if you sell for 650. And so sorry, I’m laughing because I look at these numbers. So you have a 650. You paid 156. You also paid for a Renault? 25,000. Right. So you return on your. So we add together? Sorry, 650, less 156. That’s almost four. That’s almost 500,000. All right. I don’t need to go much further to notice there’s a rocking investment. Add together your Reno plus your down payment is 56,000. Your return is 8.8 times.

 

Justin  

Well, you know, and that’s the thing. Like I think that’s the beauty of real estate, right? Like, what if you think about how, if you imagine, you know, house prices, at least doubling over a 10 year period, let’s say so, it’s not a matter of necessarily trying to time the market of Oh, like, it’s really, you know, yeah, that’s the phrase, right? It’s not timing the market. It’s time in the market. So putting your money to work for you, so that you can allow allow the market to do what it’s done. And you know, if you think about what’s happened recently, over the last couple years, I mean, it’s kind of it’s stupid, it’s unsustainable, how much prices have gone up, and things are going to correct a bit. But that’s okay. I mean, if you hold it for the long term, and for me, it’s like, it’s always been a long term hold. Like, I wasn’t necessarily interested in flipping houses. 

 

Erwin  

Thats a lot of work. It’s this is already a lot of work. Yeah, yeah.

 

Justin  

It’s a lot of work. And I would say like, for me, it’s like, it’s so hard to buy. Right? All right. So why am I selling? You’re never gonna find this again? No, you’re not. And I think even today, like even the stuff, you know, I get, like, if you’re trying to create income, that you you flip, so I get that if you need the income. But for me, it’s like at the time, like I, you know, I was working full time job, I didn’t necessarily need to liquidate or sell these properties to get cash flow. But it’s there when I went in. If I ever want to sell I can I can sell it. And whenever lock in the gains.

 

Erwin  

What do you think your parents would think about all these properties we got now? 

 

Justin  

I think they would probably I mean, I think my dad, would, I think you’d be happy. Obviously, I think he feel he was a big influence in it. And when he was in terms of developing that mindset to getting property and building it, so I think they’d be I’d be happy to see it. They probably they probably think like, Well, okay, like, how are you doing all this? But But I think they’d be happy.

 

Erwin  

Or we probably want to invest some more money with you. Oh, another property? I was talking about Balsom.

 

Justin  

Sure. Yeah. So that one is 

 

Erwin  

This is the truth about real estate investing its not all sunshine and rainbows.

 

Justin  

Like anything, these are the types of properties where it can scare a lot of people away. So this property is a triplex that they helped me buy it so we bought it in and I bought it with a partner, JV partner, so a friend or family or family. Yep. So I bought that it was a we bought that in 2012 for

 

Erwin  

Legal Triplex.

 

Justin  

We got legal while legal nonconforming trademark before we try blogs. Bar for 243,000. Oh, no, this is not in the West Harbour. This is away from us harbour but

 

Erwin  

This is east. Lower city east end. Yeah. 

 

Justin  

And so I spent about 35,000. To do but do a bunch of work.

 

Erwin  

It was a triplex. Yeah. Three kitchens, three bathrooms. Yeah.

 

Justin  

And so I think I mean, I don’t know if we necessarily want to run through all the numbers, but like, the this is a property I would say, was probably in terms of terms of like horror stories of like, what could go wrong? This was one of them. So, you know, when I bought it, it was it’s fine, it’s good. But there’s a period of time where probably about five years after I bought it, I thought about selling it, because there’s so many different things going on at the property at will. And it sort of all hit at once. That it’s like, I just thought that this property is just a big headache. But so what happened was, you know, in 2017, and I had a property manager, you know, manage managing these properties and Hamilton

 

Erwin  

Over all your property history. Yeah. Even your Waterloo ones?

 

Justin  

Waterloo ones I still I still take on myself. But at Hamilton yet, there’s an I’ve got a fantastic property manager and Hamilton who deals with that now. But what happened was in 2017, I had another previous property manager. So this particular property, like there’s so much stuff going on, like where what happened was, I think the tenant in the first ground floor unit, stopped paying rent, we had to evict them, they ended up and I and that took a while to do that. While we were trying to do that the and so this is a tenant actually where they had like, so we found that after the fact once they were eventually evicted, they had like 15 cats in the place. So we you know, whatever, department manager to call him like SPCA, there’s so much like crap and junk left at the property. It’s funny, I was looking back at some pictures that were sent to me from my property manager. And it was like, this place is like it was their hoarders. hoarder. They had a tonne of cats, right. Was this inherited tenants or? No, these are tenants that were put in? Oh, crap. So I would say, you know that. 

 

Erwin  

Sorry, how long were they there for?

 

Justin  

How long were the tenancy for in terms of before we got them out?

 

Erwin  

Yeah. Or even before they started causing problems.

 

Justin  

I mean, it’s been a while but like they were there for? It’s been too long, but it probably like a number of months before they start causing problems.

 

Erwin  

Okay, so you can didn’t have much notice that they were hoarders and cat people. 

 

Justin  

And then what happened was, once we got them out, there was so apparently, there were these unauthorised occupants that were also living in the place at the time with so they were not with them. They were not on the lease. And so again, it was a process of trying to get those people out even though they were not on board. He’s, no one is paying rent, obviously. Then when we eventually got those people out, there were some squatters that broke into the place, and damaged windows and damaged things. And they started living there for a while as well. The same people are, this is a new group, I can’t remember it was the same people like the same unauthorised people or if it was just I think people who just broke in a garden. So that was all going on in the ground floor.

 

Erwin  

This is the east side of the lower city.

 

Justin  

The second, there’s a period of time where I think what happened was the unit became vacant. I don’t know if it was issues with the ground floor because people were not getting along, or they decide to move out. I can’t remember, but…

 

Erwin  

 They were dog people not cat people.

 

Justin  

Maybe. And so that was vacant, and there was a bedbug issue. So there was a bedbug issue that was trying to, you know, that we’re trying to get resolved. So while the you know, this is all going on the ground floor, the second floor was vacant as well. And there was only one other tenant living on the attic, I guess, the third floor. So that was all going on, we eventually did get rid of the you know, the people on the ground floor. And then there had to be some work done to renovate the place to get it up into like, cleared all the junk, renovate the kitchen, kitchen, in the bathroom, as well. And what happened was through the towards the end of that year, I got sued at the same property because what happened was there was some sort of incident where I guess someone fell off like this, the staircase, the exterior staircase, and they got injured. But what happened was I got served this, whatever Statement of Claim, but it was for an incident that happened like two years prior to that. And so they sued me. And so like all this was happening around the same time. And so what happened was I eventually ended up terminating the property manager and took over the property, basically, during the Christmas holidays in 2017. Get over yourself, I took it over myself home, because I wanted to really deal with it myself and just see I mean, so I’m not I’m not a person that is scared away from kind of this stuff. Like, I just see this as it’s an opportunity to grow. And so I was I took it over with the whole intent to just try to stabilise the property myself, before transitioning it to another property manager who like my current current property manager, who takes great care of it now.

 

Erwin  

So who’s your current pm? Just the first name because we don’t share.

 

Justin  

The current one is the same one. I think it’s a former police officer.

 

Erwin  

Yeah, let’s stop there. Because we don’t want anything to get out. We save it for ourselves and for our clients. Right, we need to prioritise. Yeah.

 

Justin  

So yeah, so to stabilise the property, wash, you know, so what happened was I ended up finding a tenant to rent out the second floor, they were actually an issue. So I even though I screwed up, did everything like that, but they ended up moving out, I think within six months after the fact because they eventually stopped paying, but my current property manager dealt with all that. Anyways, so that was I would say like, stuff like this happens when you buy rental properties and and things can go wrong. It’s not all unicorns and rainbows like people think, oh, yeah, like, you see, like great appreciation or great cash flow? Well, that’s the good part of it, there can be the bad parts of it. And so there was a period of time where I thought about selling. I’m glad I didn’t, because I look at the value of the property today. And the fact that, you know, has great tenants in place today. And it’s very stable property. But it made me realise like, I think until you go through it, there’s that inclination people get the urge to like when things start to go wrong. Like your first instinct could be to Oh, my God, like, I want to exit get rid of this, right? Because you kind of want to get rid of the pain. It’s painful, like you’re not bringing it in come the property, you’re still carrying it with a mortgage, you’re still having to deal with issues in terms of like, whatever can pop up. And yeah, so but ultimately ended up staying the course and resisted my urge to sell. And yeah, thankfully I did.

 

Erwin  

I remember you telling me you’re getting sued and stuff. We talked about this, right? And I’m imagining I made the introduction to yes to the property manager. Yeah. Yep. Got it. So as soon as the game ahead, should we sell the property? Should it be listed? Or should we be listing it it would be all sunshine and rainbows? Because at the ask, what is it rented for now? What is your rent paid to 43 you rent out for 35,000 And then so what are the current rents?

 

Justin  

Yeah, current rents today our current say are three $300.

 

Erwin  

How old is that rent?

 

Justin  

That is Yeah, so what’s which pay for Good lord? Yeah, so I would say the know the person on the third floor. So they are way under market moving original. They’re the original 

 

Erwin  

Your inherited them? Oh, who’ve been there forever.

 

Justin  

Yeah. They’re just what they gave notice to their move again. Oh, no way. And so I’m going to be spending some money to renovate the place.

 

Erwin  

Like 35,000 to the original budget. I laugh because the inflation on renovations is just insane. Right? What was the attic paying?

 

Justin  

What were they paying? So it was a bachelor suite they’re paying is like six or $700?

 

Erwin  

Oh my god would charge for a bedroom. And then what do you think that market will be after that?

 

Justin  

I think it’ll be about 1400. Or sorry, no, you don’t know. It’s a bit less than that. It’s a bachelor suites not very large. I think I’m expecting 12 1200.

 

Erwin  

Double. Are you glad you didn’t sell? Yeah. Yeah. I don’t remember that. The conversation we had at a time. But usually my conversation is not not to sell. Right. Tenants are temporary. Even though it feels like it’s forever. The property is nearly forever. It’ll burn down at some point. Nothing lasts forever. But it’s sold break. It’s century home and last for a while. Yeah. Hello, lieutenants. It’ll likely outlive us. 

 

Justin  

Yeah, yeah, I think that’s the thing like and especially for me anyway, like, my mindset is always been more long term in terms of real estate investing. So I was able to see past those current troubles, but I’ll admit, like, there was times where I was just like, I just want to throw in the towel and just get rid of it. I just want to get rid of this problem.

 

Erwin  

What do you think this house is worth? Now? Let’s legal nonconforming triplex.

 

Justin  

I think it’s probably about 650s. That’s it. Although we did talk about this, like a few months ago, maybe a little bit more.

 

Erwin  

Maybe a little more duplexes, sulphur, a million these days, legal duplexes. But this is the centre, it’s a fair amount of income. Yeah, but Yeah, but you’re in no hurry to sell. So you’re onto it for a while.

 

Justin  

Yeah. And that’s the thing, like I think, you know, especially with the market where it’s going, yeah, there’s a bit of softening. But now, but it’s going to, in the long term, the long term fundamentals of the market are strong, right? There’s still tonnes of immigration into, you know, not only Canada, but into the GTA area. And people need a place to live in, they’re not building enough supply. They’re not, there’s not enough homes to support the amount of the people population growing in the immigration coming into the country. And so I just think like, that just bodes well for the long term fundamentals of the market in the GTA. And so yeah, expected to continue to grow with belly.

 

Erwin  

And you’re not just like a regular Kool Aid drinker, like your work actually gives you access to a lot of data, does it not? In terms of like, what the community economy is like?

 

Justin  

Yeah, like we? Yeah, I’d say we see a lot of, I would say data, I would say data in terms of rents, like we see strengthening of rents across the country, like, in different provinces. You know, there’s some pockets that were things are not as strong.

 

Erwin  

Can you share that where that’s not strong? 

 

Justin  

Yeah. So I would say like parts of, you know, let’s say Edmonton downtown is not as strong but like, so I have property out in Alberta, myself, where in suburbs, like things are going really well, like, we’ve been able to

 

Erwin  

Sorry summarise with which city? Oh, sorry. Sorry, sorry. I cut you off. Sorry.

 

Justin  

Yeah, it debited. So what we’re seeing is that, I mean, I would say in the Alberta economy can go up and down. I mean, it’s, it’s still tied to resources, oil and gas. And what we’re seeing is that in, let’s say, in Calgary, things are very strong there. And we know that there’s typically a lag 12 to 18 month lag between what we see in Calgary to what we see in Edmonton, but at the same time, we’re seeing, you know, some growth in Edmonton suburbs, in terms of rents, like on some my properties, while on properties, where we’ve been able to on renewals, increase the rents by, you know, between 50 and 75 bucks. And we haven’t seen that years, like it’s been relatively flat. So it’s a nice thing to see. And the good thing about, let’s say, Alberta, in general, is that, in contrast, Ontario, Alberta doesn’t have rent control. So you can rent, raise the rents, you know, to anything you want, basically, once every 12 months. Whereas the material you’re capped at your read guideline, increase, The urge is puny,

 

Erwin  

Just need the government to maintain because before we’re recording, we’re talking about New Brunswick, for example, where their government implemented rent control for the first time for 12 months, and then my money is they’re gonna extend it. That’s, that’s what that’s how I bet.

 

Justin  

Well, I think, I think in general, like a lot of, I mean, a lot of governments are succumbing. But like, there’s a lot of pressure, I think, you know, you think about all the headlines these days in terms of real estate, like how housing is unaffordable, and a lot of people a lot of politicians think that the way to solve that is to on the demand side, not necessarily the supply side, they’re not really to me, in my mind, like addressing real issues on the supply side fast enough. You know, they make all these promises, but, you know, in reality, it’s not happening. And so you know, One easy way to appease to your voters is to say, oh, yeah, we’re gonna put in rent control, because we’re going to keep a cap on what we can, you know what landlords can raise their rents for. But in the end that ends up happening, like hurting your supply side, because then you’re not even, you know, let’s say even developers are not even as motivated, they still have to make their numbers work, they still have to make their performance work. And so by putting that in place, you are artificially suppressing the returns and therefore causing supply, like to decrease to decrease like you’re not adding to new supply. So it’s just shorts.

 

Erwin  

Because at a minimum landlords want spend on maintenance, they’re gonna look to work, they can cut costs, if they can’t raise rents. So because the Yeah, inflation is not real, right?

 

Justin  

Yeah. It’s only like six or 7%, right?

 

Erwin  

Walmart, Walmart, in their earnings report, they reported that their food costs, Walmart’s looking, you know, even like, largest retailer in the world, I believe, at least in the States for sure. Like their food costs are up 10%. Right. 

 

Justin  

Yeah. And I wouldn’t be surprised to see, like, in terms of food inflation, like you’re gonna see that continue, because I think I mean, what’s happening with, let’s say, in Ukraine and Russia, that’s gonna create an issue with, you know, the fact that I think Ukraine is a huge exporter of let’s say, wheat and other other commodities. So that’s going to work its way through the system. The thing gas prices like so gas prices are at I have an electric car. So I don’t even feel that pain. But it’s, you know, gas prices are through the roof. And that’s going to feed its way through the system in terms of, you know, it’s it costs more for trucks to transport goods across the country. So that’s going to work its way through this.

 

Erwin  

Our very farming equipment. It’s an everything. And then in India, recently, they stopped exporting their own meat. So I will work its way through this system. Can you tell us more about the Edmonton properties? What year did you buy?

 

Justin  

Yeah, so I started I bought basically, some of those I mentioned properties in 2012 and 2013. That’s when the bulk of it happened. Oh, you’re busy. Beaver. I told you. Yeah. 2012 is basically, you know, after my mom passed, it was just it unleashed the theory.

 

Erwin  

What did you buy? What kind of properties were these?

 

Justin  

You know, what I found? So my strategy in Edmonton was really, it was different than it wasn’t Hamilton, let’s say. So in Edmonton and surrounding areas. Basically, what I did was I went to pick up newer properties, not necessarily the ones that are older, like in Hamilton. Yeah, there’s century homes, there’s a lot more in terms of maintenance. So in Edmonton and Leduc, and other surrounding areas, what I did was I wanted, like, cookie cutter, like starter homes, so that were newer, that basically were built within the last, you know, five to 10 years. So very, not as much maintenance from that perspective. So at the time, yes, I would have bought a lot of them, basically, they were like 2017 to 2020 10, like year builds, or sorry, 2007 to 2010 year builds, then they would be the semi detached homes that I would pick up for less than 300,000. And that I would, right, I mean, this was before the oil crash, but I would rent for anywhere from, you know, 1600 to 1900. That was sort of the feel of how they were one. That’s that’s how I did it. I just said, Okay, I bought the first one. And I remember so the first one, I ended up flying out to visit Edmonton on civic, it was a civic holiday weekend. And so I ended up meeting up with a realtor who helped me in buying a lot of these places out there. But I met with a number of Realtors at the time, met with a number of property managers, so I could try to get comfortable with the market and the rents and you know, the areas to go the neighbourhoods that I want to be in. And, you know, I bought, I think I ended up putting up offer pretty much not too long after that visit, and then ended up just buying more from there. Because that was pretty much I wanted to replicate a system that I felt comfortable with. And so it was like, okay, semi detached, less than $300,000 rent for you know, 1600 to $1,900 it cash flow well. So the cash flow is probably anywhere from 100 to 300 hours after you know, your operating expenses and after your financing. And, again, yeah, I did this either on my own or with JV partners.

 

Erwin  

And then fast forward today. What would be semies be worth and what’s the rent today?

 

Justin  

So the thing is, I would say a lot of these semis haven’t even appreciated too much from the time that I bought them. Oh, so the good thing in Ontario is that we’ve seen like all this run up in prices, and the values just take off in Alberta or Edmonton. Let’s say I’d say you know, we went through when I bought 2012 2013 It was like pre oil crash.

 

Erwin  

So you’re bought just before a previous crash though. I bought before a financial crisis you bought before starting the financial crisis.

 

Justin  

But I would say like knowing the lead up to the oil when oil was like 100 dollars barrel like prices were had gone up. And then I bought, and then they kind of came down after the oil crash. And then I think they were working with its way back up. And then the pandemic hit. And then it’s, you know, it came back down. And then now so I would say like they’re not, you know, what I would estimate these places to be? They’re not even more they’re marginally up from what I bought them for. So maybe they’re high, two hundreds to low three, hundreds, nothing.

 

Erwin  

So almost even, it’s almost enough. So after with all this inflation.

 

Justin  

Yeah, which so that’s, I would say in terms of, I wish things took off there the way it did hear. So that’s the one thing I would say in Alberta. It hasn’t been like from, you know, the reality is like, appreciation has not been the way it has in Ontario. And so even though cash was good mortgage pay downs, good. Depreciation hasn’t been there. But that’s fine. Again, because I’m not looking to sell these, or I’m looking to hold these long term. And even if it doesn’t, even if it doesn’t appreciate, it’s fine. At the end of the day.

 

Erwin  

Do you know if builders are selling for around the same price now?

 

Justin  

I don’t that I don’t know. I don’t know. I would I would think you know, it’d be one of those. It’s funny because like, I find inadvertent like when a ver like just these new like subdivision just pop up like anything like they’re like mushrooms, they’re just all around the Ring Road area. And it’s always because it almost doesn’t seem as though like in the GTA here, we’re kind of land constrained in that we’ve got the greenbelt and protected areas. In evident. It’s just, it just proliferates like it just there’s more housing that just grows and grows. And there’s nothing to really constrain it interesting, which is maybe one of the reasons why.

 

Erwin  

They had to still do infrastructure, infrastructure restraints. Yeah, they do. But it’s just roads, hospitals, schools. sewer.

 

Justin  

But we just haven’t seen I don’t think that like you look at it just doesn’t have doesn’t seem to have the same land constraints that maybe would support or higher growth,

 

Erwin  

But just kind of magic product magic here in the GTA, or Golden Horseshoe. Yeah, we’re also the lake on the west side we can’t build on Right. Right. Those are fascinating stuff. Justin, thank you for being so open. Anything I’m leaving out that you want to that we want to cover? Oh, yes. To talk about the R word. We’ve had discussions around not needing to work anymore.

 

Justin  

Well, I think you know what, for me, it’s always been one of those things where, like, yes, starting 10-15 years ago, my view has always been, I want to build a real estate portfolio that generates, you know, passive income. And we all know that real estate,

 

Erwin  

Not completely, not necessarily passive, but it was a great story to show it’s not.

 

Justin  

It’s not, but at the same time is generating cash flow, or an appreciation, appreciating in value. So that my whole thing was like I want to be able to at a point in time, be able to be financially free that I can make the decision of if I want to continue working or not. And so, you know, I can’t see myself like in terms of like attritional retirement, where it’s like, oh, you’re gonna sit around and do nothing all day, and, you know, the lounge on a beach or whatever. But I’ve always made sure that my long term mindset was okay, I want to get to a point where I can make that decision. And, and I have the freedom and choice to make that decision. And think that’s ultimately where I see. I mean, even the young people today, it’s funny, like, I’ve talked to a number of young people where recently, like, they’re looking to get their, their first investment properties, right. And I say to them, like, you just have to get started with one. And even though prices are like where they are today, compared to where they were, like, 1015 years ago, you can’t even look at that, that’s, it’s all relative, right? If you can make the numbers work today, you get it, and then you, you know, 10 years from now, you’re gonna look back, you’re gonna be like, Oh, I wish I bought more or that was cheap at the time. So it’s ultimately trying to put yourself in a position where you can have full control over your time, which is our most valuable resource. Like, it doesn’t matter. Like, you know, everyone’s hung up on like chasing dollars or money. Time is your most valuable resource. And you can’t get that back. So, you know, in terms of the R word, I think it’s really getting myself to position which I think I’m, I am in where I can choose to continue doing what I do. And as long as I love what I’m doing, I’m gonna keep doing it. And that’s ultimately what you should be doing, like people. I’ve always found, like, you meet people where they’re in their jobs or roles where they don’t enjoy what they’re doing, and they’re doing it. You know, if you’re working somewhere where you’re not enjoying what you’re doing, like why do something that you love to do, and find if you have to make sacrifices along the way where you’re not necessarily enjoying what you’re doing. Make sure you get like hard assets or income producing assets where you can generate, you know, that additional stream of income and build that up so that one day you can, you know, walk away from that job that you don’t like or whatever so, but as long as I continue to love, you know, to love what I’m doing, I’m gonna keep doing it and and ultimately that’s That’s my goal

 

Erwin  

in your corporate job. How’s, Are you working from home more now?

 

Justin  

It’s a hybrid model. Yeah. So I’m working from home three days a week and working in the office twice a week. And what was it before the pandemic? pre pre pandemic? is full time in the office?

 

Erwin  

Oh, yeah. So you actually have way more freedom than you had before?

 

Justin  

Yeah, I would say in terms of light, and I love it. Like, I love the fact I think the hybrid model is the way things are gonna go for a lot of different industries. I mean, it’s not gonna work for everything, but the flexibility, I think, it’s funny pre pandemic, you know, the expectation was, like, you know, it has to be in the offence, like, that’s where it’s all done, the pandemic forced people to pivot immediately. And, or for a moment, it still works, like, and so I think, you know, more and more businesses are going to continue using this hybrid model want to, you know, retain their people and, or to, to attract their people, because I think a lot of people are going to be expecting, you know, these hybrid type of arrangements. And I think it makes sense. Like, I love you know, there’s times of the office where yeah, there’s absolutely a need to have like face to face conversations and, and be the office I think, there’s definitely a place for that. But there’s also definitely a place to, you know, it’s okay to work from home, you can still get you know, all you need to get done at home. And this thing is you can I love the fact that you know, I’m home for there’s no commute that I can be home for dinner with my kids and, and family. It’s nice. It’s nice.

 

Erwin  

Yeah, you can almost argue work is life is better than ever. There is a virus out there that’s trying to kill us all. But I’m joking, and it’s not trying to kill us off kills doesn’t feel that many people these days. But yeah, even your triplex you were probably talking about eight times return on your money, maybe worth all the trouble. Now after I got past it, yeah. At the time. Justin, thanks so much for doing this. Any final words? where can folks on the podcast?

 

Justin  

Yeah, so I would encourage parents who are listening who are looking for a resource to raise money, smart kids, they can go to money, dad, podcast.com. And they can find me there. Basically, the podcast is really meant to help you have those conversations with your kids, I bring on different guests every week, whether they’re educators, authors, small business owners, people that are that are out there really trying to have conversations about money with their kids. So whether that’s normalising conversations, I think a lot of people are not necessarily having enough conversations with their kids about it, whether or not it’s because money is still a taboo subject in the home, or they don’t feel comfortable talking about money with their kids. It’s one of those things where, you know, the sooner that you have those conversations, the better. So I think first level is really having or developing that financial literacy amongst kids. And the best time to start is when they’re young, right? Like, there’s a tonne of adults and people that are just getting to it once they graduate, or once they’re starting to work or whatever. And to be I mean, I think that’s good. But I think the better option is to start them when they’re young, when they have time on their hands when they you know, learn the power of compound interest and what you can do in terms of records of time and time to mark its time in the market. Right. And so I think the other thing is, like, even just from a compounding perspective, if you teach kids early about whether that’s, let’s say investing, they that changes also their outlook on consumption, like if they think about, okay, I can invest my money and earn a return on my money, then the, you know, maybe consumption or having the toys and all this stuff is not that dissimilar that important to that, right. So I think building habits at an early ages is super important. And you know, that’s one thing that I’m trying to do with my kids. And one thing that I’m just trying to help other parents do for their kids as well. So So yeah, so people can look me up on money, dad, podcast.com. And, you know, encourage everyone to subscribe to the podcast, spread the word talk, you know, if you like you enjoy the episodes, talk to your friends and share with them and just get the word out. I think, you know, people, kids will be in a better place and set up for a better financial future by having those conversations and learning about money.

 

Erwin  

Amazing. Probably stop it there. Thank you, Justin. Thanks for coming on the show. For coming out. 

 

Justin  

Thanks for having me. And yeah, it’s fun.

 

Erwin  

Before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already, then sign up for my newsletter and you’ll learn of the next free demonstration webinar I’ll be delivering on the subject of stock hacking. It’s much improved demonstration over the one that I gave to my cousin chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow, but with the rising costs to operate a rental business, it’s just not the same as it was five to 10 years ago when I started there were forget the cash flow reduces your risk. The more you have, the more lumps you can absorb. And if you have none are limited cash flow you’re going to be paying out your pocket like I did on a recent basement flood at my student rental in St. Catharines. Ontario. If you’re interested in learning more about secure for free for my newsletter at www dot truth about real estate investing.ca Enter your name and email address on the right side. We’ll include in the newsletter when we announce our next free stock hacker demonstration. Find out for yourself but so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell I love teaching and sharing this stuff.

 

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Youtube: https://youtu.be/inEsfIsAWzc

 

Erwin  

Greetings, everyone. Welcome to the Truth About Real Estate Investing show. This intro is a little bit different in Vancouver, British Columbia right now and Have you travelled yet? I’m writing this from, like I said, thank Hoover. We’re just packing up our hotel, getting ready to board a plane with the kids to go back to lovely Toronto. This is our first camping trip since March 2020. Somehow we miraculously we were in Florida for our wedding in Florida. Lovely wedding. We were at Disney. And we flew home in March 2020. Before COVID shut everything down. It was absolutely crazy. Because back then when we flew into the airport, like when we arrived, like the border staff, me be 30% or more mass, Bob more gloves. There was no plastic barriers or nothing. That didn’t even save any of a COVID. There’s no pamphlets and nothing. There’s no like screaming. It was crazy. They asked if we were from China, or if we came from China or Hong Kong. How does that? Little did they know that most of the cases came from the US or across the US borders. We have a pile of unused Aeroplan miles since there’s no travelling to be done, so if not for points, I don’t know if we would have chosen to do this vacation with gas prices the way they are. Anyway, the plan was we executed on the plan was to explore the city. The kids have shorter legs so we didn’t do anything crazy. I guess a couple of days or days I did my Apple Watch Tilbury walk 10,000 steps, so nothing too crazy. Yep, be the last sushi. We hosted a meetup of real estate investors and stock investors. Shout out to Kenny from Interactive Brokers, who came along as well should address Wescott who made the hour long trip show to call him who took an hour long flight, an hour long flight into visit us in downtown Vancouver, showing several competitors that was really cool to meet up with some investors from the west coast. A lot of them are investors love and morpc investors, almost all of them are talking to us just as cool. So it’s super cool to be chatting with them. And just, you know, get to know people meeting some new people brought my kids along. So thanks for everyone who was cool with me having my kids along. Yeah, when this inflation thing going on. Just to provide some context is I think context is so important. Everyone talks about supply chain issues. So a neighbour might do work for a large multinational consumer products company. And I asked him about the challenges his company faces. And he shared that part of the problem is just the massive swings in the game, in terms of what products people are buying during the pandemic. So this is what he’s taught me. During the pandemic pregnancy tests were in heavy demand. And now the pendulum has swung the other way. So what’s the opposite of pregnancy test? He tells me condoms are now in high demand as people are travelling, people are socialising, again, in anti nausea drugs, because again, people are you know, they’re travelling, so they need anti nausea pills, such as gravel, for air, sea sickness, travel, travel sickness. Yeah, because the world’s opening up again. And so you know, if you’ve never run a business like this, I’m sure you can imagine this, how it’s not easy to be planning for these sorts of things when manufacturing decisions have to be made, like six, nine months in advance. And this is on top of, you know, COVID, shutting down manufacturing facilities like China, the war in Ukraine, and fingers crossed that things move on the real estate side, income property is a potential income properties are still moving. If you have a quality property, for example, all legal duplexes are still selling all of cheryan is properties fit in quality income properties by design. For example, I shared with my buddies, there was a house that sold for $4 million in Toronto, it was a three storey semi gorgeous looking house. So $5 million 5.1 by 5.1, in September last year, and then just recently sold for just just over $4 million, so over four over 20% loss in value. And that could have very well been that person’s down payment, right? If someone potentially 5% Well, that’s the amount they would have lost on that property. So that’s why this isn’t stuff with the very best. And we’ll talk more about that down meeting how largely law this was, I predicted how we could potentially see something similar to 2017. So price action that we’re seeing right now is not that dissimilar to 2017. When we recover, I don’t know, in a nutshell, for our investment strategy is that we’ve optimised all our properties for rental income. So we either switch to the basement, or we did student rental. And these properties often have gardens with potential and even if you don’t rent these properties out, say my student rentals for example, they’re very great locations for other demographics for families for see in yours, because we chosen properties that have fantastic location, right? I love properties with options, had their prices declined from the peak of like February of 2020. Absolutely. But we have no plans to sell our properties, cash flow, and instead of actually trying to refinance right now, things are gonna slow at the bank. Our appraisals were ordered completed months ago, hopefully not too long ago. The appraisals are still good. But for example, we bought two properties, we bought them in mid 2017. so late 2017. So after the prices were coming down, we probably didn’t catch the bottom, we caught them on the way down on the way to the bottom. But you know what, no one can time the market. Those properties cash flow nicely, I’ve converted both into duplexes, and they doubled in value in just the last five years. Our plan is possibly divided up again, we’ll see how things go. Lately further refinance. And for those who are like my professional investor, friends, like I’m a developer client, he’s bought three properties in just this month alone. These are properties that were all listed listed on MLS, so anyone could have bought them, the plan for those are to be severed. So these are the white lots divided in half. And we’re going to build on the half that has no property on it. So for professional investors out there, this is like Christmas. And while some others are sitting on the sidelines, totally cool. It’s just used to make that choice, because no one knows what’s going to happen. Everyone’s asking, Will this market keep going down, likely, as I predict to more interest rate increases, at least. But as I shared with one knops investor, if your plan is to buy more than one property during this day, you may want to book something soon before the market starts rocking. And everyone starts rushing back to back in and booking contractors because contractors are on stream short supply these days with the hiring difficulties. And the great resignation. Also, when the market goes up is largely determined by the date the data is the question that I asked them, many people are asking is how much of the load sacrifice the economy versus controlling inflation? No one really has any answer. How bad will job losses be? I don’t know. But what I do know is that interest rates will fall again, when some of the supply chain in over demand issues work themselves out. Many economists Kevin O’Leary even thinks a lobby that will be q4 of this year. So we’re talking about October, November, December. And then the bigger challenge for governments and central banks is they need to control their interest expenses on their debts, because they’re all running on really deficits, and it’s the only way to grow exports is to keep the dollar cheap. 

 

Erwin  

Anyways, onto this week’s show. We have Emily, I’m not sure if I’m supposed to share her last name but she goes by red glasses Emily and we have coach DiTomaso on the show as well. Tammy coaches Emily on my team. Emily is a newer investor. She already has three properties under her belt in just under two years. Emily’s early journey includes more involved renovations, pretty fair sized renovations all six figure renovation she inherited a tenant who was in jail for adult, and this the show is the truth about real estate investing. So yes, it’s not all sunshine and rainbows. We talked about rent arbitrage, which is a strategies that she’s pulling off in her newer property. The first property is a new middle term rental. And more importantly, she’s experienced a lot of things. As even with this downturn market, she’s doing very well. So that’s why we’re glad to have her on to share that story. My policy is always there for people who are successful to learn from people who are consistently losing money. FYI, middle term rentals fall between short term and long term rentals. So it’s not a few it’s very common, it would be a couple of weeks or 30 days or more. But these are not long term rentals. So this particular strategy works well in markets where short term rentals are paid, such as vacation areas, that kind of Hornell certain condo buildings. And we happen to also have a very nice job at one of the big Canadian banks in HR. So I asked her to share about what skills what the markets like for jobs. What positions that are megabucks, including pensions benefits, work from home that it is working from home is huge for real estate investors. Some of my most successful clients have a lot of flexibility in the work schedule and I’m talking about years ago, right because they can get to do lists faster, and therefore they’re easier to offer and win more deals. As mentioned on the show is also Tammy coaches, Emily, she has been online team of investor focused realtors, we are the fourth time Realtors of the year since 2015. She’s also known as the duplex queen so she’s helped a couple of dozen investors renovate rent, buy hold more duplexes with the GTA than likely anyone and her knowledge of local zoning is second to none. Please enjoy this show. 

 

Erwin  

Hi Emily, Hi Tammy!

 

Tammy  

Hi!

 

Emily  

Hello, how’s it going?

 

Erwin  

Great. Let’s start with you Emily. 

 

Emily  

Sure. 

 

Erwin  

What’s keeping you busy these days?

 

Emily  

What’s keeping me busy? Life? Yeah, I’m, I’m busier than I have been ever in my life right now. Okay, but, but I like it. So, yeah, I think I’m doing the good busy stuff versus the not good busy stuff.

 

Erwin  

Because you mentioned that you had burnout not that long ago, is usually a function of being busy.

 

Emily  

You know what that kind of, I think the I was busying myself with things that weren’t filling the void that I realised that I had. So I was filling it with stuff. And I was keeping myself busy, but it was just, you know, nonsensical, just regular stuff that wasn’t adding to my life. 

 

Erwin  

So it was the good stuff and was the bad stuff.

 

Emily  

Good stuff, man. Good stuff. So I was at the family things like I have two young kids. You know, I had a great job. We were renovating our house. I love renovating. I’m in real estate now. Yeah, what was I doing? I don’t know what I was doing. Actually, when I look back, like, I wasn’t really that busy comparatively. Like, I’m busy now. Like, I feel very busy now. But back then, like, I don’t know what I was doing. Just yeah, I don’t know. Not a good answer. Yeah. And I feel more fulfilled now than I was and, and what I realise now looking back, and I was just kind of, I was just spinning my wheels on things. You know, I had anxiety, I still have anxiety, but it’s more managed now. And yeah, just not not spending the time doing things that really propelled me or grew me or developed me. But now I’m spending a lot more time doing those things. And I’m getting a lot more out of it. And I’m feeling a lot more fulfilled because of it.

 

Tammy  

 I don’t know you before but no, no, you now you’re so focused. So even if you’re busy, but your focus were before you knew you want to go but like you said, spin your wheels. Yeah, got that goal in mind. So you’re just knowing this where I want that we’re gonna go what do we do? Try and try and try and trying and then once you, you know, yeah, and it’s like, busy, but then more focused.

 

Emily  

Yeah. And that’s what it is like, I’m more I’m more mindful about what I’m spending my time with these days. Whereas before it was just, you know, I didn’t like sitting down I didn’t like having nothing to do on a weekend or didn’t like having nothing to do on a on a weeknight and I would just, you know, go shopping, or I would, I would start to paint things that didn’t need painting. Or your, you know, research things on Pinterest. Hey, maybe we should rip our basement out just for fun, like, like, stuff like that, like that was just, it was just I think me just kind of run away from things or trying to find things to do that kept my mind off why I was miserable, to be honest. So yeah, if that makes sense. 

 

Erwin  

You can comment on my phone number one real estate investors is you know, when people go to like, you know, Mexico and do like the resort vacation, and I find almost every real estate real estate investor says I can’t sit there for that long. Yeah, yeah. Yeah. And that this is

 

Emily  

definitely me. Yeah, I’m gonna go go go person, you know, but I’m finding I’m better at I hopefully better with how I’m I’m doing those gogogo things and what I’m doing with those things than I was before. All right, so she found

 

Erwin  

something that was productive. Yes. Droid. Yeah. Are you just enjoy being productive?

 

Emily  

Yeah, I definitely like being productive. For sure. Yeah, I found more of a purpose. I think that’s kind of what I was really struggling with for a long, long time. You know, I did all the things that someone was supposed to do, right? I fit I went to school. I did. I did some travelling I you know, I lived in South Korea for a year, I got a got a job, I got a husband. You know, I planned a wedding for you know, a year and a half, you know, had had two kids like I was doing all the things that you’re quote unquote, supposed to do with your life, right. But once those things were all done, then I just was like, so bored with my life. Like, I just wasn’t really, I wasn’t happy, even though I had all the things right, had all the things that someone could possibly want, right? But I was just miserable. Like, there was something inside me that I wanted more out of my life. What am I doing with my life? What am I doing with my time, and that’s why it’s because, and I was and that’s why I think I was just kind of filling my time with all these random things that made no difference in my life. It’s just kind of keeping me busy and keeping my mind busy. But like, at the end of the day, if I would ever sit still, I’d be like, none of this is working. This is not working for me anywhere like I what am I doing? And you know, and work was really stressful at the time. Like I was not enjoying work at all and very stressed. And I think during the pandemic as well, like I you know, we just weren’t seeing people as much my health, like, I was gaining a lot of weight, like I wasn’t eating properly. I wasn’t taking care of myself, like things were just going downhill, you know, and I was very unhappy.

 

Erwin  

That’s interesting, because I only know you from recently and I mean, never normally are unhealthy.

 

Emily  

Yeah, and I’m still struggling with that. So yeah, and you know, it got to the point where I just, there’s a picture of myself that I took, we went to a park, I think it was like, middle of February in 2021. And we were taking selfies and I just I knew at that moment that I had to change, or else things were gonna get way worse for me. And if I didn’t change things, something bad was gonna happen. So that was really the the week that I talked to a doctor and we’re like, I need a break, I need to just kind of reset, I need to figure out what the heck I’m supposed to do with myself. And, yeah, so she put me on leave. And then I went on leave for about 10 weeks from work. It was such an amazing time for me, I had to just stop everything, like stop the madness, stop all these busy things that I was that was filling my void with, you know, just reset. And then I sought out a coach and, and she was amazing. And she kind of just helped me sort of just put everything on the table like what you know, what’s wrong? What’s going on? What do you want to do? What makes you happy? What makes you tick? What do you like about yourself? How do we find more about that person? So that was really helpful to kind of dig into that. And the first time you did an exercise? Yes, it was the first time is first time I did any kind of mindset work. First time that I really slowed myself down enough to actually start to listen to myself. And I think that was what I was missing for a long, long time. I was not listening to myself and not really even know what I was trying to listen for either. Right? Like I didn’t have any idea what I was listening for. 

 

Erwin  

And yeah, despise your family. Yeah. Because listen to you some young, can you share how old you were when you when you did this mindset work? 3830 years old, took 30 years to do? Yeah. No, sorry. Ask yourself, what do you like to do? Exactly.

 

Emily  

Exactly. Exactly. And yeah, man, I wish I had started that way before. Right. But I just couldn’t I guess there that that question wasn’t there, you know, and they were maybe I didn’t give myself the space or the opportunity to ask myself until that point. Yeah,

 

Erwin  

I think we’re all guilty of it. Doing what we think we’re supposed to do. Yeah, I did a lot of what my think my parents would be make them happy. Yeah. But I’ve been I’ve been partly selfish, too, and doing a lot of things I enjoy. So do you share what you do for a living? Or how long you’ve had the previous job?

 

Emily  

Yeah. So yeah, so I worked at, so I’ve been to HR for about 16 years, at a major FYI, in Toronto.

 

Erwin  

But everybody knows.

 

Emily  

Everybody knows. Yep. Yeah. And that was really my first job at a university. And I have a geography degree. And somehow, I’m an HR at a bank. So that that right there new almost tells you, I don’t really know why I work at a bank, you know, if I have a geography degree, but that’s what happens, right? You just kind of get a job and hope for the best and then it just sort of just moves on from there.

 

Erwin  

When did the job thing get bad? Um, is it always bad or it’s more, you know, it’s,

 

Emily  

it’s funny, because like, me and my husband, he’s very stable, stable guy, right? He, you know, he’s very content with his job. He and I met at work, right. So we, we met there, and we’ve had similar jobs. And he and I function very differently in those jobs. You know, he’s able to do a nine to five and shut up and just, you know, shut it off at five, no problem, I’m not able to do that. I, yeah. He’s able to do that he’s able to just compartmentalise and just, you know, segregate his his work and his personal life, I am just mentally not, I can’t do that, like, I will think about work forever, you know, I will break I will bring it home with me, I will stress about it at night, I will lose sleep over it. Like I’m just, that’s just how I function. Right. So, and I think that’s just how I am in these roles. So these these are some of the roles I’ve had or have been very, very difficult. They’ve been very stressful, you know, I, I’ve managed a lot of money during my jobs, and it take on a lot personally, even though I should just really shut off. It’s just a job, you know, this is not your life. But for some reason, it started to define me, and defined how I thought about myself, you know, so if I, if I had made a mistake, that means that I am a mistake, just myself, I’m you know, or it just became me, right. And there was no separation between work and who I was as a person so that those lines got really blurred pretty early on. And I think that’s where things started to kind of get really hard for me. Yeah, I don’t want to blame the job. But I think is just me how I reacted and how I functioned in those roles. And I was a high achiever, like, I want awards at work, and I’ve got lots of great bonuses, but it’s just what I’ve maybe allowed work to do to me, 

 

Erwin  

Or you saying that you’re dropping your husband.

 

Emily  

You know, at one point I thought I was and you know, maybe he’s Yeah, he’s he’s actually who’s more senior than I am, you know, he gets paid a lot more than I do. And and he’s very, he’s very stable with it. So I think, you know, he’s calm, cool and collected or as I can just, you know, fly off the handle and freak out and get really stressed out and so like, I don’t know, I don’t know, I don’t know what’s better, but from a mental and mental health perspective. He’s, he’s much healthier than I am that standpoint. So yeah.

 

Erwin  

So the point of the show is not just talk about real estate, which we’ll get to our poor listener. Sorry, guys. Part of the show is also understanding, easier, faster, better paths to making money. Yeah. So you have HR experience. Yeah. So I’m picking on you specifically compensation. Yeah. So I’m picking on you because because I find this fascinating before we were recording actually wish we recorded a bunch of it, because I’m probably gonna miss some of the questions. But you mentioned something that caught my attention was that multiple offers on people, on people you’re trying to hire is a problem in your industry? Yes. Does it get better or worse? In the last few years,

 

Emily  

I’ve seen it get worse for sure. Like, there are some critical roles and skills that are an hot hot demand. And those seem to be getting more apparent. So technology is such a huge, huge skill set, you know, specific skills, and then Technology Operations, diverse employees, you know, 

 

Erwin  

if you’re diverse, you get a unit pay bomb.

 

Emily  

Well, you’re you’re you are, you’re on the list. But companies are looking for this. So yeah, I mean, like a candidate who is who has the skill set that a company is looking for, you will likely be in a multiple offer positions and why? Well, there are two houses. Yeah. And you can literally choose your employer, whoever has the best offer whoever’s the best culture, whatever, whatever you’re looking for in an employer is, and you’re in a position to, you know, and play them off one another. Hey, you know, this company is offering me you know, a $50,000 signing bonus. What are you offering me?

 

Erwin  

This is fine. I find this fascinating. Like, Tim, you know, as we’ve talked about, we’ve talked about all the time investing yourself. Yeah. Never really thought as an individual as an investment. I always thought of people as like a business because, you know, people are the CEO of themselves. And, you know, are you a good CEO? Because if you’re a good CEO, you’re like, you’re gonna make more money and stuff like that, but never thought of in the job. Yeah, job. Yeah. Oh, yeah. Yeah. That’s wild. Because again, I don’t care what it is, if you can make money efficiently, morally, ethically repeatable, yeah, then I think I’m all for it. And with many things that are falling off, like, I’ve seen lots of issues with private lending market collapses, African lions, for example. You know, in this market, I don’t think anyone really wants to be private lending in it. Generally, I’m sure there’s lots of good private lending deals that are out there. But generally, this is playing out the market getting into, and I see all these people getting out of E commerce, which is selling on Amazon as an example. We see stocks Shopify student killed, and that’s a reflection of something Amazon’s getting killed, as well as the stock price. So then, what are people’s avenues to make money? Right, real estate stocks, whatever. Yeah. Right. And I find myself saying job more often than not, more often than ever before. Yeah. Because isn’t that to me? It seems like, I don’t I’m not nearly as close to this as you are. But and what I feel, in my opinion, is that this is the best time ever to be looking for a job. Yeah, yeah. Is this the best time ever?

 

Emily  

I think it is. Yeah, there’s a war on talent. We say it all the time in the biz. Do you want to call it that, but we were talking about it all the time? You know, people are flagged as flight risk. Yes. Yes. That’s on your profile? And yeah, and then we have to put retention strategies around you. And that could be a million different things. Sorry.

 

Erwin  

Okay. Okay. How does someone passively make themselves get flagged as a flight risk? I’m trying to help the listener here. Because, you know, potentially, you know, be offered more niceties, you’re probably

 

Emily  

going to be, you’re probably going to be going to your people manager and be like, Hey, let’s talk about my salary. Hey, let’s talk about some benefits that I hear my friends have down the street. Hey, let’s talk about work life balance. You know, I want to be you know, you in a couple years, how can that, you know, how can we get there? Oh, well, this company seems to be offering me this, oh, hey, this company just called me the other day. And they’re offering me this when you guys can offer me to stay.

 

Erwin  

So in the old days, like, I worked in corporate long time ago, some of those things would be seen as because there’s different market then. Because if you look like you’re a flight risk to like jump to someone else, then you might be a come a target of getting asked if when when layoffs came knock now. I mean, if sorry, was my was my observation correct back then. Or didn’t really matter? I don’t know. I mean, showing ambition is completely different. I can Yeah, I think that’s the best thing you can do. Yeah.

 

Tammy  

I think it depends how you’re, you know,

 

Erwin  

I want to be manager, I want to be great. They

 

Emily  

love to see that. If you have capabilities for that. If they also see you with that potential, then yeah, you’re on you’re on a great track. They’ll want to keep you they love you, you know, especially if you want to stay with the company and they can see you as someone in a leadership position and helpful years. Yeah, they’re gonna do everything they can to keep you

 

Erwin  

and just to clarify, leadership is a valuable job skill is compensated. Yes, it is. Yes. Just make sure if leadership capabilities So, yes, make sure everyone understands that.

 

Emily  

Yes, yes. Right. Yeah, that is a skill, a capability. You can have it. You’re someone who’s just born with it. Sometimes you can actually you can grow and you can learn it, you know if necessary, but some people just have it as a hard skill to find, especially in the in the higher echelons of of a company. And you can use it right.

 

Erwin  

All right. Any books you recommend? I’d like to I’d like the Simon cynics leaders eat last

 

Emily  

called no bucks. Really? I don’t know. Persuasion. I thought that was kind of neat. Oh, she’ll be Yeah. Yeah, there’s that. Yeah. There’s some really neat things out there. Yeah.

 

Erwin  

Good. Great. I think they were great was great. Yep. Yeah.

 

Emily  

I’m reading who not how I know people talk about all the time. But it’s one of the books that we’re chatting about now. Tomic habits. We’re all talking about at work, actually, to both those were talking about at work. And it was really, it was really popular. People always talk about those wins. But we’ve had a couple of speakers at my new company talk about both of those. Kind of neat, so

 

Erwin  

yeah. Cool. And then can you talk about pensions? I know very

 

Emily  

little about pensions. But I have one. I know.

 

Erwin  

Crazy. So just to clarify, you have a pension? You don’t work for government? Correct? Which is yes. not common. Oh,

 

Emily  

yeah. Because I mean, I’ve been in the corporate world, really just two companies at this point. But yeah, pension such a huge, huge thing. And that’s always something that new recruits will always ask about. So in the FIA World, being a pension, or having a pension is is something that we always were very aware of. We know what the forecast is, when we retire. We know you know, the consequences if we retire early. So we’re always we’re always kind of up to speed with, with what a pension looks like. So that’s it’s a very common thing for everyone to know and understand.

 

Erwin  

So you’re pretty financially secure. Yeah. You still want to be a landlord.

 

Tammy  

Yeah, why? Why did was wrong with me? I’m pretty manager. I’ll take care of

 

Emily  

Yeah, I do a property manager. Yeah, I do try to outsource literally everything I can. Yeah. Who

 

Erwin  

the hell? Yes,

 

Emily  

exactly. Exactly. So

 

Erwin  

yeah. Dave. We won’t share his full name. No, I

 

Emily  

use my contractors company. Oh, actually. Yeah. So that’s worked out? Pretty well. Awesome. Yeah.

 

Tammy  

I think he only does his clients. Yes. Properties for property.

 

Erwin  

Management. Correct. Yeah. Understand? You bought a lot of property recently. You bought a lot? A couple million dollars.

 

Emily  

I want it to be more.

 

Erwin  

What’s your mind value?

 

Emily  

after repair value?

 

Erwin  

Sure. Gosh, over 3 million.

 

Emily  

Um, yeah. Were you ever probably close to 3 million? Yeah.

 

Erwin  

It’s been not even a year. Seven months? Yeah. Seven months. $3 million in property. They’re all done in terms of they’re all after reporting.

 

Emily  

What is done? What is done? One is almost done. Two are almost done. We just had some hiccups. But yeah, we’re almost up. And what’s the strategy? Couple different strategies. So the strategies kind of have kind of changed. Also, just as time has passed, I’ve I’ve gotten more ideas and talk to people. So the first one, what is or what is I guess it duplex conversion on the Hamilton mountain? So that was the first one that was in September 2021. And, yeah, that was that one was fun. So we finished that one contractor that we have, he wanted to do something a bit special, just to kind of showcase his skills and use it more of a showcase for his company to kind of show other investors in the neighbourhood. And you know, what they can do and stuff like that. So he threw in a bunch of free things. So that worked out in my favour, obviously. And so the upper unit

 

Tammy  

for him versus to me, he did it for us. You wanted to be part of our team

 

Emily  

know exactly what he did. Exactly. So he wanted to show it off for you guys and impress you guys. So this is Lee. Yeah. Yeah. So yeah, so

 

Erwin  

great. Just to pause you there. We intentionally don’t share full names. Because we’re not sure not sharing we keep we keep the best for our clients. So

 

Emily  

yes, yeah. So he he went all out in the upper unit just all out. We did vaulted ceilings. We did feature Well, it was

 

Erwin  

it wasn’t a vaulted ceiling before No Oh, yeah, it was a solid vaulted ceiling. Oh, yeah. Actually, they’re already there. We find out

 

Emily  

that was part of this renovation. Okay. So all of obviously you know, wainscotting trim work all sorts of cool stuff. So yeah, so that was upper unit lower unit you know, basic to two bedroom one bath, you know, legal of course illegal unit. Really nice. You know, it’s yeah, it’s good looking. It’s actually a really spacious quite, you know, giant, giant bedrooms. We separated almost everything we could so I have two hot water heaters have two water metres. Split the hydro, obviously Yeah, yeah. So we did have a plans upstairs change, and then the plans upstairs change. So, you know, obviously the going in strategy was to just do you know, to long term tenants on in each unit. But there was just something not something but it was just in my gut, I was like, why, you know, this upper unit deserves more long term investment long term is bad, but, but like it just, I was not going to get the returns from it with just a long term. And so, you know, I talked a few people about this whole idea of midterm rentals. And I was like, Yeah, that’s it. That’s cool idea. Like that could this could work, you know, and but I’d have to furnish it. You know, something like, oh, man, I have time for that.

 

Tammy  

It’s really tough on your head. I want to be busy personnel. Yes,

 

Emily  

it did. And, and of course, my, my family was like, You’re crazy. What are you doing? But I loved it and got connected with a great designer. And she, you know, she met me on a Saturday, we had the thing furnished and designed within four weeks. And it was it was awesome. So she did really the whole thing. I did all the kitchen stuff on the bathroom stuff, but she did. Living room, all the bedrooms, and just the look and feel of the place. Yeah, so then I and then I put it on Airbnb, myself really had no idea what I was doing, to be honest. But I muddled through it. And within 24 hours, I had two bookings until mid July. Like it was craziness I hadn’t I just did not. I had no really sorry.

 

Erwin  

timelines, when you put it on what was roughly what was the date when you put it on Airbnb? Why

 

Emily  

did he put it probably mid March? I think mid March, I put on Airbnb. And then end of April. Yeah. And then my first guests wanted to come in April 23. It was still not totally finished. Like I put it on Airbnb before it was finished. Like I knew that I still had some work to do, but I wanted to just see what the demand was like and any questions stuff. So like, I knew that, you know, I blocked the the calendar for Airbnb, because can do that can block dates and stuff. So I blocked it until like, early, early April. And yeah, she messaged me, and she’s like, Can I come in for a month and a half? I was like, Sure. Yeah, let’s do it. So she, she just moved in on the weekend on April 23. So and she’s gonna be there until June 18.

 

Erwin  

How did you advertise it on Airbnb when it wasn’t done.

 

Emily  

I had I had some pictures like I had some of the rooms finished so so my designer had finished the living room. And I had finished the kitchen and the bathroom was was pretty much finished. So we just didn’t have the bedrooms finished. So I had kind of just showed her like the the unfurnished bedrooms, just the sizes of it all. I’d also put it up for a fairly good price too. So when she had messaged me, she’s like, she’s like, you know, I usually don’t message anyone with no reviews. Me. And you know, your price just seems too good to be true. And that was like, in my head. I was like, really? Sure. Like, I’m making a lot of money doing this. And and you know, yes. That was high. Yeah.

 

Erwin  

And when you say your price, I thought high. And then we said no, that was giving.

 

Emily  

I know so got me thinking I’m like, maybe I don’t know what I’m doing here. But, you know, she obviously wanted to pounce on it, because obviously, it was a crazy deal, which I now know. And now no more now. And so she was a bit sketched out. She’s like, you know, I’ve been burned in the past, you know, can we maybe do maybe a virtual tour just to make sure you’re not lying. And these aren’t fake pictures. And so and so I showed her some more pictures and things and and she’s like, Hey, let’s just do it. Let’s get booked. I’m like, Cool. So so she booked it for a month and a half through Airbnb to Airbnb. Yep. Okay. Yep.

 

Erwin  

All right. Awesome. detailed questions. Oh, yeah. Can you share what you’re charging?

 

Emily  

Yeah, um, it’s changed since then. So I have to remember what I so for her stay for a month and a half. I got $5,200

 

Erwin  

Sounds good. Yeah, I’d be good. You’re good. Not her good.

 

Tammy  

But apparently to her that was like good. So yeah, okay,

 

Erwin  

let’s work it then. Well,

 

Emily  

this is what I’m learning now. I’ve actually now passed over the my Airbnb management to Airbnb property management because when I did

 

Erwin  

Yes, your share or should we keep a secret I

 

Emily  

could share there on Instagram. Crumpton, Crompton elite property so I think that’s what they call themselves I can I can we can put on the show notes later. But yeah, so I chatted with them because I you know, it was it was a good experience to kind of go through the whole Airbnb setup. Like I learned a lot during that, you know, it was good for me to had a lot of inquiries too. So she’s the one who who booked first but I had a bunch of people just messaged me, hey, you know, can we book for a month can we book for three days can we book for you know, that kind of thing? And I was like I didn’t I didn’t really want to do the short stay didn’t I just wasn’t prepared for that. I didn’t have my system set up yet. I I didn’t have a cleaner. I didn’t have a handyman. I didn’t have any of that. But in my head. I was like, what if I had a longer term? Room guest for like a month and a half a midterm idea, I can kind of work on that, as you know, get prepared for that a bit more and a little faster. And so that’s kind of what I had in my head. So I was like, I’m going to just figure this out as I as I kind of go through this. So that’s why I spent more attention with her and kind of answered her questions. And I kind of, you know, I talked to the other guests coming in with the increase, but you know, they didn’t work out for for whatever reason, but she worked out and she liked it. But, ya know, so back to the, I guess the property manager question, I think, yeah, it was good experience. But I but it’s just so much work. It’s just an incredible, incredible amount of work, you know? Yes, exactly. And, and I think you’ll appreciate how

 

Erwin  

many inquiries many? Yeah, and they’re all random,

 

Emily  

random questions about the room? Yeah, like, I see the room. I have four dogs, and I have four. I have four cars. And I’m like, Oh, well, that’s not gonna work. Thanks for coming. But here’s this is what I’m offering. I don’t think it’s maybe gonna work out.

 

Erwin  

It’s been a long read, you know, they

 

Emily  

spent hours with this. Like, oh, please read the listing. I spent a lot of time doing this.

 

Erwin  

Are you in Kitchener? For a question.

 

Emily  

I know, just random stuff. So it was just taking up a lot of my time. And that’s, you know, it’s good experience. And I learned a lot doing it. But I’m like, I don’t want to do this anymore. I don’t want to manage these people. I don’t, I don’t have restaurant suggestions. Like, I’m like, oh, there’s a piece of pizza down the street. You know, like, that’s not what they’re looking for. Right? And so I’m just what I just wasn’t,

 

Erwin  

yeah. Did you like the cost of everything?

 

Emily  

Once the Jazz Festival, I have no idea. Is there a jazz festival? Like there’s exactly, exactly. So I’m like, I’m just not meant for this. Like, I’m just not doing I’m good. But like design, I love designing it. I love setting it up. I love all that kind of stuff. But I’m like, I just don’t have that the rest of it. I just, I just not get it. So. So then I outsource that. And I talked to them about it. We did I took them on a tour of the property and showed them my listing. They’re just like, whoa, you were undercharging girl. So it was just you know, from my experience with my first

 

Erwin  

pay that even though the pay them? Yes, they raised your price.

 

Emily  

Yes, exactly. Exactly. They’re gonna market it better. They’re gonna do better photos. They’re gonna do pricing strategies that I’ve never even thought were a thing. So teachers pay them for their when they book Yes. Yeah, exactly. So they so we do an 8020 split. I think that’s negotiated. So you know, that might not be the case for everybody. But that’s that’s what we had agreed upon.

 

Erwin  

And that’s off the top. That’s sorry, is that after earpiece? But after every one Airbnb gets?

 

Emily  

Yeah, it would be after. I don’t actually to be honest. But that’s, I think the revenue we’ve decided that’s an 8020 split for the revenue. So that helps.

 

Erwin  

No, I love the I love the Airbnb model, because you have their credit card. Yeah, even if they want to stay like you’re still collecting a good rate.

 

Emily  

Yeah, so I mean, yeah, so this is just my my first venture into it. I have my my guests seeing right now. So she’s there until June. And then they have another guest coming right after her for about for about 10 days. And that one snuck in because I was I was I was messing around with the settings, you know, on Airbnb, and somehow it went live. And then of course, this guy comes in, and you can’t cancel an Airbnb, right? That’s like a thing you cannot do, right? Because you can lose, you can lose your super host status, you can even get penalties like Bill is just an awful consequence. So this guy snuck in and he’s in he’s there over the July 1 weekend. Like me, you gotta get you got a good rate, they got a crazy rate. So anyway, so then, and then that was really what sold me on that I’m not I’m not good at this. This is not my thing. So I blocked the rest of the summer into I think I’ve blocked until October actually. And so between, between my two guests, there’s a week gap. And that’s when my property manager is going to come in, do their reset, figure out what else I need. And then they’re going to start turning on my Airbnb bookings with their management in place. So

 

Erwin  

yeah, the property managers split does that include like housekeeping for example? Or is that on top

 

Emily  

that’d be on top? Well sometimes you can charge the guest housekeeping slightly so um, that’s one things that I have learned you can you can charge extra things you can charge for extra guests you can charge for pets you can charge a cleaning fee so that’s all true

 

Erwin  

pets of course we can as long term

 

Emily  

people can do pretty much whatever you want you know obviously they have to agree to it but that’s what you’re offering as the price and they see and that’s in the book it or they don’t book it that’s that’s how it works.

 

Erwin  

That it’s an operating a puppy mill in my back condition from my other tenant nuts, of course, por tener Nice.

 

Emily  

Yeah, so um, yeah, but anything, you know, repairs, anything, you know, obviously, you know, product maintenance, that’s all on top, that’d be Debbie obviously paying for all that. They would just bill me for all that kind of stuff. Is the basement rent base but is rented yes to a long term tenant a couple actually 1850 Plus utilities ticket number. Yep.

 

Erwin  

Is it bigger? How come you got so much?

 

Emily  

It’s a good size. It’s really good size.

 

Tammy  

Usually we’re seeing about 1800. So it’s West mountain plus mountain a little bit more, maybe. We’re starting to see between 18 to 19. So she, you know, she just beat the numbers there. But that’s gonna be pretty normal. What you’re to see now. You’re just getting, you’re just getting it first.

 

Emily  

Yeah, I had higher expectations. So, of course, I was like, 15 Tommy’s, like, Uh, huh. Yeah. Okay, good luck.

 

Tammy  

Did you try starting at 93?

 

Emily  

We tried 9095 which is actually to listen and it was crickets. So yeah. Which, which is fine. Even so my, my property manager for that one who threw the contractor? You know, she’s like, Okay, we’ll try it. Obviously. Sure. See anyone bites. You know, we’ll see what happens. But she’s like, Emily, no one’s no one’s messaged me. It’s been a couple of weeks. Some like

 

Erwin  

000 inquiries. Yeah, not even weird one. Nope. I’ve got four dogs and four cars.

 

Emily  

To be honest, there might have been he just didn’t necessarily. She probably just filter them out immediately. Yeah. Well, you

 

Erwin  

take 1000 Well,

 

Emily  

we had we had Tim Yeah, right. Yeah. And on our team, we did have some lowball offers to actually we had a couple of guys wanted 1800. And I was like, you know, no, I’m gonna say no to that guy. You know? They’re like, Yeah, your best friends wouldn’t get other parents house for the first time. I was like, Oh, this is gonna be cute. Do this be so fun. And then last, and they tried to lowball me. So I’m like, No, yeah, sorry. So yeah, 1850. We got a couple of really great tenants. So

 

Erwin  

tell us about the tenants that you’re getting that you’re attracting for middle term? What is their motivation?

 

Emily  

Yeah. And that was interesting, because that’s, that was one of the first questions I had with you know, if I, you know, if I do this short term midterm idea, who exactly is my profile here, it was my avatar, you know, I guess it’s a new name for it. And so when I chatted with people who have done midterm and are doing midterm, you know, there was a woman that I talked to she does midterms in Burlington, and and that she’s helped a couple of people also do midterms and other I think Niagara area, and she said, you know, typically the demographic, you’re you’re looking for our travelling professionals, people that are between houses, for whatever reason, you know, the closing dates. Yeah. closing dates or closing dates Exactly. sold their home. Exactly. Yeah.

 

Tammy  

Divorced. Yeah, please feel they. Yep. Very true. Very sure. Yep.

 

Erwin  

I’m pretty sure everyone knows that, like a lot of construction things are being delayed. Yeah, exactly. It’s, for example, they’ve already sold their home section

 

Tammy  

stays, they don’t want to live in the dust insurance stays there. Their house burned down. There’s a flood. You know, there’s there’s many different reasons that my guests that came in, because my guest, her son is going to McMaster I guess for some kind of summer course or something. So she wanted to she’s from Sioux Sainte Marie, I think she told me, so she’s coming down to help them with that. I don’t know. There’s some kind of story there. So he’s with her. He I think is with her. Yeah, there’s the two of them. There’s a family of four. Okay, from what I understand the bedroom. Yeah, exactly. Three bedrooms that are six beds. So

 

Erwin  

yeah. So it’s a segment of the market that’s not addressed. Well, correct. Yeah.

 

Emily  

And they need, like the fact that I had had it up on Airbnb for 24 hours, and I had her instantly come in, I had five inquiries of just random questions like, hey, you know, we’re, we’re travelling Canada, and we need to stay somewhere and Hamilton is on our list. Can we stay there for a month? Like, there’s just random things right that people need, they don’t want to stay in hotel. They? This is a cool option for

 

Erwin  

doing the math like 5200 divided by 45 days. Yeah, that’s 115. And 115. is not usually like, two three star hotel at best. Yeah, right. Right. Versus you get right.

 

Emily  

And that’s, that’s me way under charge. So apparently should have been closer to do under various because we’re doing the math are 175 a day at minimum, apparently,

 

Tammy  

because we’re comparing it to if you were to rent it to a family. Yeah, for a month. Yeah, they would be paying 2000 Yeah. 2100 to rent that floor. Exactly. And

 

Emily  

that’s what I then that’s what I was using, like, that was my, that was my basis for this. And maybe that’s that’s just a that was a wrong way of kind of looking at it. Like I was like, you know, if I was getting a long term tenant in my upper unit, I’d be like, you know, I think Max I probably get 20 to 23 Max, you know, plus utilities, but I was like if I can get more than that. Hey, cool. Like that was that was my mentality going through it? Right? And that’s maybe why I was just under charging. I was like, if I could make a couple $100 You know, cash flow in a month cool. Like I’m in the money but that was just like the wrong way of thinking about and I can I could have just made way more money on this. So yeah, cuz I

 

Erwin  

think I’m 185 for two bedroom two bath in Ottawa. quick plug. I’m going to be in Ottawa June 7 for a meet up for anyone who’s Ottawa, Ottawa anyways, but yeah, see at 185 versus you’re charging 115 Right place looks a lot nicer Right? Exactly. One bathroom.

 

Emily  

Yeah, one bath. Yeah, it’s gorgeous. Yeah. And so yeah, I did the whole air DNA thing I looked at my competitors you know and I just even on on Airbnb and VRBO like I, I looked as as a guest Hey, like, you know if I can you know, punch in my day today I want to I want to stay for 45 days or whatever, what am I? What are my options? And then I looked at mine looked at all the competitors. I’d like

 

Erwin  

to introduce you to Betty. I think I think she has three of the top 10 VRBO isn’t on in Hamilton. Oh, whatever properties usually competes for one or two.

 

Emily  

Use my competitor then. So, so yeah, that’s cool.

 

Erwin  

She’s not in your area though, either. It wasn’t a big city, right. Can you share some numbers? Well, what the house cost you? Yeah.

 

Emily  

721 on the buy.

 

Erwin  

Oh my god.

 

Tammy  

Okay, can I just add that that was not an OH MY GOD, though. At the moment. Well, we paid market

 

Erwin  

that’s cheap. It is market was cheaper. Back?

 

Emily  

Yeah. At the time. I was like, oh, man, it’s a lot of money. You know, but that’s just what it was.

 

Erwin  

It’s 75 Branford. Cheap. Okay. You got cheap on the market. Fine. Okay.

 

Emily  

It was 10 offers. I won.

 

Erwin  

Well, majors when the winning offer

 

Emily  

price, I wrote a letter. I wrote a letter to my delight on the letter. But yeah, letter.

 

Tammy  

I had nothing to do with that. That was all my idea. But yeah, if you wrote a letter it was

 

Erwin  

well, the individual can do whatever they want. As licenced professionals can’t do everybody.

 

Emily  

Yeah, that was I was only those things

 

Tammy  

change. That’s change. But yeah, no letter. Was this the house that had the pencil sharpener? Yeah. And the two we often talk about yes, indeed, Korean talks about that when you see a house that has one of those pencil sharpeners that are on the wall. Yeah. So Susan Sandler like our pencil sharpener.

 

Emily  

And it’s that means that it’s in good condition, because the the owner took care of it. And that was very evident. The place was in such great shape. And it was,

 

Tammy  

it’s actually pretty an accurate, accurate and straight. Yes. Yeah, it’s amazing. Like a workshop must

 

Tammy  

have been a working person that truly care. And they took the time to have the pencil sharpener. Exactly. Yeah,

 

Erwin  

exactly. Sorry. Because when I think pencil sharpener, I think of elementary school.

 

Emily  

Is one of those. Yeah, one of those brown ones from the 80s or whatever. Yeah. And then profile

 

Erwin  

who has that is someone who’s usually good with their hands? Exactly.

 

Emily  

Like they’re, they’re a handyman, they’re a woodworker. Whatever. Yeah, their skill is but there and that was evident. I mean, the house was in such amazing shape. So

 

Erwin  

yeah, how about cosmetically because something’s gonna deal

 

Tammy  

old old everything old

 

Erwin  

bones just cosmetic Correct. Cosmetics needed?

 

Tammy  

Yeah, just outdated. Yeah.

 

Erwin  

Okay, so what would the retail value of the renovation be to bring this up to date and this week the basement without the deal? I mean, sure. Yes, but that the deal would retail because I need to set real expectations because that drives me bonkers for example, if like there’s certain TV shows they give you heavily discounted prices Yeah, but you their price that’s not reality. You can’t do it yourself. You can’t scale it

 

Emily  

Yeah, cuz I had to do the full conversion rates I had to do the and the upper so I really wasn’t going to do too much in the upper unit. I clearly was not going to do a vaulted ceiling or feature film or a feature wall early or any kind of you know, woodwork or anything like that like I was I was trying to keep the floors you know, I was trying to keep all the trim like I was trying to keep as much as they possibly could come

 

Tammy  

in they’re like we gotta change the trend like we don’t have to do this or like I’m always on it because I don’t need a contractor coming in and saying you have to change yeah, when there’s certain things I know aren’t going to change your rent because that was offensive but I was like an architect

 

Erwin  

comes and looks at our properties like you should do this. Yeah, I’m quiet bay window that won’t get me any more round Exactly.

 

Emily  

Of course like that. And that was that was my mindset going in it was just going to be long term up long term debt like nothing special, which is going to be cool duplex conversion project, you know, in and out, whatever kind of simple thing but but it morphed into something different, obviously, because of various decisions, whatever. So

 

Erwin  

just to clarify, your future was very different than my future walls. It might just be a different paint colour. Woodworking to custom woodwork, very different features, very different feature walls.

 

Emily  

Very different. But I think like, you know, as the renovation when what actually happened. We probably should have been closer to 30. Probably. Right. But I only paid actually no more than that. It would probably illegal duplex. Yeah. Yeah, it’d be closer to 250 I think probably if I actually paid 250 Yeah, but it didn’t pay that. I paid. I paid my legislator. But I think all in with all the taxes with all I did to run a bunch of Free, not free stuff, but a bunch of extra things that I wanted to do. I think I paid close to two to, I think, yeah to say probably about $50,000 with other deals that I got.

 

Erwin  

Yeah, even if you paid for retail, you’re still under a million. And everything’s even appraisers for reifies are appraising duplexes for a million. Can you share your appraisal?

 

Emily  

Yeah, that’s a story. So yeah, so I was working with directly with a bank. I wasn’t working with a broker at this point. So I was working directly with your employer or my employer, yeah, at the time, and just a mortgage broker that I had been familiar with, because he had helped us with our primary residence. So I just went back to him. And because we’re getting we’re getting deals, because we’re gonna get an employee discounts.

 

Erwin  

Can you share what the employee discount is? Um,

 

Emily  

I don’t know what the what the what the discount is. But like we was our rate on that one. I think we got 1.31. Was there? What was their interest rate when we when we bought it? Variable? 30 years? Five year term? Yeah, I think was 1.31.

 

Erwin  

Did anyone get anything less than 1.6? Ever? I don’t think so. Okay, then what your rate is now?

 

Emily  

Yeah, it’s got a couple times, hasn’t it?

 

Erwin  

Yeah. So in other words, you should start with this house. Trying to save you, Emily.

 

Emily  

Right. Right. Right. What are we now? Yeah, it’s gone up about point seven, five. Right. Since then. Just under two, I think we’re at 1.9. Something I think last time it looked. Yeah.

 

Erwin  

Further plugs for working for the bank. Exactly. Process imagined easier to they know your employer and they have all your files is that Oh, yeah. No,

 

Emily  

it definitely helped. Because like, all of our investments are there, you know that that helps. Because they have access to everything, right? They just pull it by name. And they’re there and all this right. So it’s a lot easier

 

Erwin  

to do that easily. Yeah, there’s no privacy. I’m sure you sign something, I’m sure you signed some

 

Emily  

stuff. And I sign anything. I don’t know, if they didn’t send anything. I mean, it just I did send them some other things. Like we have an employee share ownership programme, I decided that I’d send them that kind of stuff, because they don’t have access to that stuff. But like any of my like, my end of my account, or maybe my investment accounts, all my you know, loan products, credit cards, they had access to all of that stuff. So that was just, they just pull up my name. There it all is. Yeah. So that that part was quite easy. Actually.

 

Erwin  

Everything was easy, even though it was like we’re talking about refired talking about talking about

 

Emily  

it was not that easy. So from from that standpoint, it was easy, just like the the information but what I what I really struggled with with them is that they weren’t investors. Like, and they were like, speaking Greek to them. Yeah, totally. And I, man, and that was I was just, I was upskilling, my mortgage broker, like, like, as the process, you know, went on, right. And, you know, he had some exposure with with investing. He’s like, you know, you know, for friends, you know, it was my group of five friends and I, we invested in a property and I think it was, I think it was actually Hamilton, it was like, we had the worst tenants, we had to sell that place. It was an awful experience. So like, Are you sure you want to do this? Like, you know, this is what you want to do? And he was like, Yes, this is what I want to do. This is this is my thing now. And he was like, you know, that’s a lot of debt you’re taking on, you know? Really? Yeah. Oh, yeah. And this is, this is mortgage

 

Erwin  

brokers,

 

Emily  

Keystone, financial, financial advisor who has who can do mortgage stuff. So that’s, that’s what but I, I consider him a mortgage broker, but he was more of a financial advisor. advisor

 

Erwin  

doesn’t like debt, that funds investment. Yes. It’s hard. I

 

Emily  

didn’t see that as good debt. He saw it as just bad debt.

 

Erwin  

At least he believes in whatever you’re selling it, you

 

Emily  

know, he was repealed. He was looking out for me. He’s like, Are you sure you want to do this? You know, I’m like, Uh, huh. Yep. And he said, Okay, so what are you doing with the property? And I’m like, Well, I’m converting it into two units. It’s like, okay, okay. How much is that going to cost us? Like, yeah, we got it covered. Like, that’s, that’s just how it works. This is the process, but you know, I’ve crunched the numbers, I know what I’m likely going to get for the, the rents and you know, what we’re expecting the refi is going to be at that point, the refi we thought was going to be close to like, high eights, maybe like low nines. We wait. Yeah,

 

Tammy  

we do the math to cover, you know, a procedure that’s going to be covering the renovations. Yeah. And, you know, knowing what we’re seeing for refi numbers then the purchase place. So inefficiencies,

 

Emily  

like I went in knowing that I was probably going to leave quite a bit of money in the deal. And that’s just that was just what we knew was gonna happen. Yeah. And then at some point, we would refi maybe five, you know, four years down the road, five years, maybe refi that out, but I knew that I was gonna probably carry it a fairly good balance and I was using my HELOC for all of this too. Anyway, so yeah, so I really had to kind of just push forward even though he was you know, just he was just waving the red flags everywhere. You know, it’s just like are you sure you want to do this and this is a lot of money and you’re using your HELOC guy, you know, and but I was very confident and because I was like, No, I’ve listened to that podcast. I’ve talked to a lot of people like I have an investor focus realtor like I, this is what people do. And I’m going to also do it. So my,

 

Erwin  

your financial advisor would not like me, you’re probably not. I’ve mentioned it on this podcast of our 17 listeners, none of them was taking me up on this challenge. If you’re an A financial advisor, I would gladly stack my client performance against yours. Yeah. And I tell people, I’m not an expert, and our financial advisor actually got offended once when someone called me a financial advisor. Score and they’re not all bad, like, you know, like, yeah, like, my friend Kathleen’s, a financial advisor. She’s an excellent financial advisor. But, you know, please Don’t compare me to someone at the bank. Yeah, right. Selling mutual funds. Right. Exactly. That’s exactly what they do actually make my clients a lot of money.

 

Emily  

Yeah. Mine. Yeah, mine doesn’t. He tries to not make me any money, or just very stable, very safe. Nothing wrong with it, you retire when you’re 65. And you make, you know, whatever you make,

 

Tammy  

kind of might be based on his own experiences. It’s cool. Right?

 

Emily  

That is what happened. So yeah. But yeah, the the refi process was a nightmare with my bank. Oh, my gosh, it’s horrible. So, you know, like, we hear all these regular process to get an appraisal? Yes, I know. I know. And it took them. It’s a

 

Erwin  

third party appraiser that you blindly picked, like, not blindly but the bank has approved users. Yes. Right. That they trust. Yes. Right. They choose randomly. Which one? Yes, exactly. Most controls in place, which I agree with,

 

Emily  

and the process works right for them. From the bank’s standpoint. Yeah, that process works. And I get it, I work at a bank, I get processes, I get what needs to happen. Like,

 

Erwin  

I get this from financial collapse, like the Americans. It’s very

 

Emily  

safe, it’s very secure, whatever. But, you know, I had in the market and has just exploded at this point, right? We, you know, we’re we’re seeing I was refiling. February, right. So like, the, the numbers, the numbers are just like, ludicrous. Right? And, and so, you know, every, every week I would chat with Tani be like, hey, like, what are people getting? At this point? What are things selling for, and we would just see these listings coming in, like 1.2, like, 1.1, where we’re just like, you know, and my, my expected refi was close to more like, when we were doing this, you know, back in November and December, I like high eights, you know, you know, low nines, cool. And then we’re just seeing all these crazy numbers coming in. And we’re like, and I, you know, I was like, holy moly, this can really work out for me, right. And so, of course, that and so, I decided to put together a five page appraisal packet for my appraiser. So I put together prepared this, this whole Canva thing you did

 

Erwin  

on Canva. To see Yeah,

 

Emily  

yeah. So I had a really fun time with it. I really enjoyed doing it. So yeah, I did the whole thing.

 

Erwin  

We see it. Of course, they produce for them.

 

Emily  

I put a video of it on Instagram. Yes. But I can as

 

Tammy  

it shared the team, or when I guess

 

Erwin  

Instagram, so just just simply mentioning, red glasses. Rei. Glasses are Yeah. Okay. So continue. Yeah.

 

Emily  

And so and then I was I was so I put in, you know, in the last page, I put in what my expected rents were going to be and I had put in comparables in the neighbourhood. And then I put what I expected, the refi should be, it was like, This is what I want. So I put in 1.15 was my goal. And I know that it was a delicious and I know it was a bit crazy. But I’m like, I’m going to try, you know, what’s the worst that can happen? And then they came back at 925. And I was like, man, I was just so disappointed. And I’d waited. It took them forever to do it. Like my big. They just couldn’t get their act together the appraiser. Like you didn’t like me to didn’t they didn’t want to listen to me. Like I had emailed them this thing. I was very nice to them. And I tried to give them everything they could possibly want. You know, they had the place themselves. There’s there was no one there. Like it was just an empty property. And it was so I mean, I mean, I tried to make it super simple as possible. Whatever, and I get their processes to like I get I get the whole works. But yeah, mine 25. I was just like, Oh, I’m like no, like, there’s just no way it’s 925. There’s no way it’s February at this point. It’s just like, what are you going? What do you be comparing it to like, it would just be it like an unrenovated single family home? What this is a legal duplex. It’s stunning. You sometimes. Yeah, like so just really disappointed. So then I’m like, Nope, we’re appealing this immediately. Wrong person. Yeah, yeah, I need a new person. And just the wrong person a mess with me. Yeah. I was like, no, no, it’s not happening. And I just wouldn’t there was just no way I was gonna accept that and I was I was then done now talking to other other financial institutions at this point. I was like, Maybe I should talk to and I was getting and then I had I was starting not know starting to talk to other mortgage brokers. Maybe I should talk to Scotia about this. Maybe I should talk to you know, maybe I don’t be lender, like, you know, I need my I need this refi like, there’s no way I’m gonna accept when I’m 25. So I was just I was, you know, maybe a bit French.

 

Erwin  

Point is end of the day. It’s still human being that does that does that? Yeah. Oh, yeah. My experience. I literally had someone from Mississauga come to Hamilton. He knew everything. And he’s talking to me about how to invest in Hamilton. And he was telling me that I forget, please. He didn’t recognise that I had a zoning verification from the city to indicate my properties were illegal. He said that was not good enough. What I know Yeah, but he’s in Mississauga. He knows everything. He knows everything. So I think he pays my duplexes at 600 in the sixes, right. And that was just a year ago. Oh, and ever since then, he has been taken off the list or the bank. Yeah. Because I have no one. No one. But the bank respects me, and it took them off their list. So it’s really gonna hurt that guy’s business. Really smart. No

 

Tammy  

problem. We had an appraiser to where he didn’t know he did ask for the zoning for K verification. He wanted that that great. But his comps were against other duplexes and a second he walked in the door. He said, I hate these duplexes. Oh, like, yeah, you’re just gonna go grey? Yeah. Yeah. That’s exactly what he said. I

 

Erwin  

was so easy to find them though. Your search criteria

 

Tammy  

sounded jealous to me. But yeah, yeah, there’s something there. That’s for sure. Beard.

 

Tammy  

And it affected the number that came in. Yeah. So we did another one in Quebec. But what so you go on? Yeah,

 

Emily  

same I do. And so so that came in? And they’re like, Okay, yeah, 925? Are you? Are you good with that? I was like, no, like, did you not read my appraisal packet? Like, I’m not good at this. This is very low. And I’m like, No, I’m not gonna accept it. Let’s appeal it immediately. And they’re like, Okay, so I’m not entirely sure what happened behind the scenes, but it took, but apparently what the story that I got was that it was a junior appraiser at the company that had handled that first appraisal. And my appeal was heard, I resent the the candidate documents and, and apparently it was hit, it was handed to a more senior appraiser at about the same company. And I got 1.13 4.1.

 

Erwin  

So almost a million dollar Delta. A million, almost a million dollar delta between the appraisal prices 100 100 to 200. Sorry, yeah, that’s how good my math is.

 

Emily  

Like your wife is, uh,

 

Erwin  

yeah, that’s why she does that.

 

Emily  

Let me do the math quickly. Here.

 

Erwin  

Also, I have I’ve seen another appraiser appraisal 209,000. That’s a lot more. Yep. I’ve seen another appraisal on one of my clients that had that property in the Maritimes. And the appraiser actually use an oceanfront property to compare against an interior property. Great. And then so her appraisal was completely over inflated and she overpaid for it. So yeah. Wow. Trust no one.

 

Tammy  

Trust no one. trust

 

Tammy  

their own homework verify, please, at least fair surround yourself, people I know they’re doing.

 

Erwin  

Here’s part of the challenge, though, is that we even though we pay for the appraisal, we don’t often see the comparables used. Yeah, this was only found out because there was a lawsuit.

 

Emily  

Oh, interesting. Yeah. Yeah. Yeah. So like, I don’t know what they use. But hopefully they used I mean, they clearly use something more comparable than the first I use

 

Erwin  

Junior than they probably use the wrong comparables. They probably just use regular single family home. Yeah, exactly. Yeah. But I made a lot mistake. So even those

 

Tammy  

those are selling single family homes with two kitchens.

 

Emily  

It makes no sense. It makes no sense. I don’t know what the guy was.

 

Erwin  

February, we saw we were seeing stuff for like, 1.3.

 

Tammy  

Yeah, we’ve seen 1.1 1.2 1.3 for legal duplexes

 

Erwin  

for actual transactions. We’re not gonna see that for appraisal. Yeah, yes. Sorry. Yeah, exactly. So

 

Tammy  

we weren’t there. People get coming in around that million dollar mark on an appraisal. Yeah. So when you just came back at that, it was like, There’s no way did you not see the feature? Why not?

 

Tammy  

Look at the property. What exactly?

 

Erwin  

You know, what a vaulted ceiling is?

 

Emily  

engineer do this. Yeah.

 

Erwin  

So then how much of your money were you able to take out?

 

Emily  

So I only I think I have about 85,000 left in the property. So I think I calculated at I pulled out 80% of my capital. I think that’s what the my spreadsheet told me or told me.

 

Erwin  

And then what are your projected rents?

 

Emily  

For Airbnb?

 

Erwin  

What was it on the Canva? Was it an honest,

 

Emily  

what did I put on my camera? That’s good question. I think I had a good question. Actually. I can remember what it probably a little higher. Yeah, it’s probably I probably put in like 2400 Plus utilities for the upper unit and they probably put in like 1900 Probably for the lower unit. I think that’s what I what I put

 

Tammy  

Yeah, maybe you put 2000 You were trying for 2000 GG or wherever.

 

Erwin  

Yeah. Oh, and then who’s insuring your Airbnb? Because we don’t have any clients doing this.

 

Emily  

Yeah. But it’s just my so I told them that I was doing an Airbnb. I told them the strategy for both I’m doing the long term in the basement and then an Airbnb in the in the upper unit. And my insurance was actually the same, like they really wasn’t that different at all. So as deja Den is my insurance company, I have a great contract. I’ve sent many people to her. She’s great. So yeah, they didn’t seem to have any issues with it.

 

Erwin  

So what is market rent? Then? What would I know?

 

Emily  

What’s the upper unit?

 

Erwin  

Sure. Let’s try that.

 

Emily  

I don’t know. I don’t know. I never tried. So 2022. So yeah.

 

Erwin  

22 If it was a regular rental,

 

Tammy  

so we’re pretty much running our numbers right now at 22. Up. We have started to see higher than that. And 18 down for sure. Right. But you got 1850 Yeah, we start to see a little higher on that, too. So

 

Erwin  

for Kieran Yeah. And then what do you think you’re gonna get? For the upstairs as Yeah. As a midterm? Yeah.

 

Emily  

It’s so now I’m worried converting it into an actual short term. No longer midterm anymore? Oh, yeah. So because? Because I’ve hired this property management company. Yeah. I think we’ll still maybe accept the long term, like more mid term, but they have to pay

 

Erwin  

the price. It’s just harder for them to book isn’t it? The navigate all the weekends and holidays? Yeah, exactly. It’s

 

Emily  

exactly. And we want to make sure that we’re that we’re strategically pricing those weekends, especially those long, those long weekend weekends. And that’s really that’s what’s key. So, yeah, I mean, we’re looking like, we should be closer to $200 a night at this point. So sure, lower tenant

 

Tammy  

know your what you’re doing upstairs, was there any issues with

 

Emily  

so this is the other thing that’s so funny. It was actually the reverse, but I was worried about to be honest, I was worried about my my Airbnb not being happy with my lower unit. Because the lower unit has two dogs. Oh, exactly. And when they first moved in, the dogs were unsettled, unsettled, as we say. So quite noisy. And you know, it’s older home, their age back, it was just like the dogs were sitting beside you, when you were sitting in the upper unit, I was that loud. And so that’s what I was really worried about. I’m like, if I’m reading this short term upstairs, this people are paying a lot of money, you know, per night, and they’re going to be listening to these review dogs. I was quite stressed. So we’ve dealt with that. The lower unit tenants do understand that, you know, there might be an issue there and but but apparently is because you know that dogs just moved into a brand new home there. You know, they were alone. During those couple of times that I was there and they were they were unhappy so they’re working on it. And I think the dogs are happier now and and ourselves.

 

Erwin  

So any tips is I have a situation where my properties? Yeah.

 

Emily  

the only the only thing that I heard is that they were trying CBD oil with the with the dogs for anxiety, dog version of that.

 

Erwin  

I don’t know. We’re not that’s folks. We’re not recommending.

 

Tammy  

That’s what I was told. So I don’t know if that’s working. But that is what I was told was happening there.

 

Erwin  

So yeah. Why are you doing all this?

 

Emily  

Real estate you mean?

 

Erwin  

Sure anything?

 

Emily  

Um,

 

Erwin  

get yourself a promotion as well. Like, I’m sure all these things kind of tie together. Yeah.

 

Emily  

Yeah, I know. It’s funny. Um,

 

Tammy  

she likes working with me. Do you like Right? Yeah.

 

Emily  

I talked to Tammy where that I talked to my mom. So you know,

 

Erwin  

oh, another person to call you, Mom?

 

Emily  

Oh, boy. I want to be work optional, I think. Yeah. I think it’s what I want. I want more control of my life.

 

Erwin  

All right. You pheromone too. Because before we were recording, we’re talking about working from home, pre pandemic, how much were you allowed to work from home?

 

Emily  

Maybe once a week, and that had to be approved.

 

Erwin  

So that in reality half injection work from home then you have two kids like

 

Emily  

I was working. I was I got I got the one approved one day approved before pandemic so

 

Erwin  

so like flat approval every week. I can work from home one day. Yeah. Yeah, exactly.

 

Emily  

And then now and then now. Now the question is like, I have to get approved even go into the office now. Just very strange.

 

Erwin  

That’s weird.

 

Emily  

Yeah, there’s just yeah, there’s timing. Long story. There’s a lot of red tape. But June is when they expect us to go. Well, I shouldn’t say that. They invite us to go back starting June. And they would like to see us twice a week wording

 

Erwin  

because I remember I remember Tim Ferriss, she wrote about that and four hour workweek was to try to negotiate working from home. So that you could do you could have more time to you know, so you don’t have to commute. You have other things so you can actually have time to focus on whatever it is you’re interested in. Yeah. And Rui, one of our longtime clients. What made him successful was because he was he was mobile it and most of his work didn’t start till after 5pm Because you just wait for the company to employees to be gone so they can mess with it. Yeah. So he was always free during the day to go look at properties with us. So he was always there first thing, right? Yeah, he had that advantage over everyone else when a nine to five he was was there first when a property was listed and we get properties? Oh, wow. Right, because we were the first offer and then back then like the rule that rule old rule of thumb was first offers your best offer. Here’s your first offer. We’re here. And then we got so many properties that way. I remember one agent said on the on the following Monday, she said, I wish to take your offer and so many showings. So many so many people trying to book showings this

 

Tammy  

when they stopped holding offers were like vultures, vultures. 

 

Emily

That’s how I got the St. Catharines. Property.

 

Erwin  

Yeah, got it. So but my point is that, you know, again, there’s always been all this rhetoric out there, like Be your own boss, be your own boss. Yeah. Now you have all this flexibility now?

 

Emily  

Yeah, I certainly do have flexibility, historic levels of flexibility, flexibility 

 

Erwin  

100% and all invited back.

 

Emily  

Back. Exactly. But you know, yeah, it’s one of those things. It’s like, you know, I don’t I don’t want to fail at everything kind of thing. Like, like, I really I do have to budget my time properly, you know, to for me to do a good job at work. I have to I have to be mentally there. I can’t I can’t be on the phone. I can’t be looking at properties. Like I’ll try to really compartmentalise my time and structure my time where I’m you know, you know, at lunch, I tried to go to the gym now, you know, you know, maybe we’ll take one or two calls, you know, very quick calls for contractors or talk to Tammy or whatever, but I, but for me, to, for me to do what I feel I need to do at work, I really have to be mentally at work. You know, regardless of where my physical body is, like, I have to, you know, whether it’s I’m at home, or I’m at the work, I have to mentally be there. So, yes, I have flexibility. But I still have to have rules for myself, I guess. 

 

Erwin  

Yeah, I did a little bit differently. Because we had core hours at work. You had to be you’re supposed to be in the office 10 to three. So and then if again, if I didn’t have an appointment, a meeting or something like that, I would do real estate stuff, but I track my time. And then I’d make up that time later in the day or during that week. Yep. All right. To me, again, morally and ethically. You’re paying for my time I’m here. Yeah, right. Right. I will use your fax machine. Yeah, and print some stuff on your printer.

 

Emily  

I had to buy a printer during the pandemic, sadly. So I never, that was my real adult moment.

 

Erwin  

I worked in paper.

 

Emily  

No, we were not allowed to print anything at home from work. 

 

Erwin  

That makes sense. 

 

Emily  

Yeah. Yeah, it’s payment, but it’s a huge pain. Oh, yeah. Everything? No, there is our paper bill has I mean, it’s almost non existent now at work. Because no one prints anything. Which is great. 

 

Erwin  

Actually, it’s great for the trees, from the eyes, talks about the other investment properties, and we’re close to running out of time.

 

Emily  

Okay, so the second property that we bought after that the big one was another duplex, right. That wasn’t text seven or something like that. No, no. Yeah. Yeah. So we did a another bought another conversion. single family home on Hamilton. 

 

Tammy  

And that street actually. Same Street. Mountain ones West Street, second Mohawk project. Yes.

 

Erwin  

And two minute drive to each other.

 

Tammy  

Well, yeah. It’s just funny that yeah, we got to keep her property straight since we’re on the same Yeah.

 

Emily  

Really quick Mohawk. Oh, yeah. That’s the last one. Yeah. You know, it’s tough problem to have been. That one I actually said problem. Yeah, exactly. It’s not first world problem. Yeah, you’re right. Yeah, it’s not preserved. Exactly. But that one, I actually got my parents to buy. So I’m the active partner. So we’re kind of doing a JV although we haven’t signed any JV papers X. I have to figure that out. But, but I got them in the game. And I’m very happy that we did. So I so yeah, they’re the they’re the money partners. And they’re 100% they 100% mortgage 100%, Reno, 100%. Everything. And I have just managed the entire thing. Right? So another conversion project. But we had this one. And this one was just sitting on the market. It was sitting there for like 20 days. 25 days off. Sorry, that’s an eternity. Hey, no, especially for a very beautiful, beautiful home. Huge lot. 50 by 150. 

 

Tammy  

Whichyou know why it was sitting? Yeah, because they had the bedrooms, the way they had it all set up. We’re all in the basement. So I think that was part of Yeah, see, when you went in there was the living room and a dining room and a kitchen, a bathroom and an office. Yeah, it could have been a bedroom. 

 

Erwin  

Okay, but let’s that didn’t stage it properly.

 

Emily  

No. No. Because they had renovated it that way. 

 

Tammy  

It was slipped like that. They remember we thought it was so nice.

 

Erwin  

Especially renovated for maximum sold price. Yeah. 

 

Tammy  

All in the basement. So four bedrooms in the basement and bathroom. And I we think that maybe people can wrap their head around for some reason. Yeah. 

 

Erwin  

So that they are on them. Usually I would have bought that all day. So dummies.

 

Emily  

So so that so not investor looked at that. And we’re just like, that’s, you know, but I actually know

 

Tammy  

some investors that looked at it. Yeah, that’s true. I don’t know. 

 

Emily  

Why didn’t you? Oh, yeah. I did that. And yeah, so some people looked at it, and we looked at it and went like, cool, it’s a beautiful, beautiful home. I mean, it was like turnkey. It’s stunning, right giant property. Garden suite potential. We’re putting in a one inch waterline actually just for future garden suite.

 

Tammy  

I drool over turnkey. Yeah. It was funny with this one. And we didn’t know at the time, but when they were ready to start the renovation, we found out that the basement ceiling was all fire rated drywall or like what what? Yes, it was like they knew that. They didn’t, we didn’t know. 

 

Emily  

And it was insulated to So Japan fire rated very well and insulated.

 

Erwin  

We didn’t even tell you that when they were selling the house.

 

Tammy  

No, I don’t know if they knew

 

Emily  

they didn’t think that that was important. Before. Terrible marketers. Yeah, it’s not good. Yeah. So we pounce on that one. So we paid 784 for that one. Deal. Yep. And so it’s going to be to have that wasn’t

 

Tammy  

that was yeah, we’ve got it down in price a bit. Yeah, we did. And yeah. You have to imagine that’s when the prices will start to go up. Sorry.

 

Emily  

About that in November. 

 

Erwin  

I think well, you’re the only offer. It’s 20 days on market at that point. Yeah. Yeah. Really? Yep. This is what month is this? November? Yep. November. And there’s no other offers no. Weird. Yep. So if people can’t find deals on the room,

 

Emily  

Some people can’t. So yeah, so that’s another conversion. We’re almost done that one. We had a couple of delays. Alexa, can I say yeah, Elektra, Elektra has kind of pushed us out a bit. And then we’re trying to get the city has has cause a bit of delay, because we’re trying to get the one inch water service, because we want to do a garden suite in the future. So that has caused a bit of delay as well. And then the window the egress window. Hopefully that they do, I think that was supposed to be in this week. So hopefully, that I had to check in with supply chain issue. I do labour issues. All of the above the above, probably. So there’s there’s a few delays with that one, but we’re arbitraging that one. So that’s the kind of cool thing with this. So my same Airbnb company that I’m using for my faux hawk. To manage my my Airbnb, we’re going to rent these two units out to them at market rents. And then they’re going to put Airbnbs and both of the units. Oh, cool. Yeah. So it’s pretty neat.

 

Erwin  

So they go there. They’re going to pay market rent. Yes. For the duplex. Yes. Free individual units. Yes. And they’re going to rent them out. Correct? Yep. And they’re gonna cover the maintenance.

 

Emily  

Correct. Everything that covers snow, grass, there’s no property management fee. There’s no tenant placement fee. 

 

Erwin  

They pay all the utilities can be posted up. This goes. Yeah. That’s exciting. Interesting. It’s really cool. 

 

Emily  

That’s a cool model. Yeah. So my parents love the idea of it. They’re like, ooh, this sounds great. And the place gets cleaned all the time. Right, which is really cool. 

 

Tammy  

So, third one sounds boring. Now. I know. Third one. Yeah. 

 

Tammy  

My think happens when that was a cool story really is very interesting story. Yeah, that’s cool story.

 

Emily  

So tell the quick, but yes, yes. So super quick. had been on the market on an offer for a little while. The upper unit? Sorry. So at St. Catharines. It’s illegal duplex in St. Catharines. It was owner tenant occupied. So the tenant, we found out was in jail.

 

Tammy  

And currently at that moment when we were looking at the house,

 

Emily  

yeah, currently in jail. The owner, the tenant, tenant was in jail. He had signed in and 11 though. And so so the owner was okay, great time to sell. And I think I think there might have been a split slash divorce I think also happening just from what I some things that I gathered, so great opportunity, CSI. Yeah, I did some investigating. And anyways, so that that scared some people off that this whole jail concept. Right. You know, who knows that this comes back? Yeah. In case comes back, he doesn’t move out and kiss you. Because so we had bought it also November. Remember? It was pretty close. Yep. Yeah. So his, an 11 said his his move date was December 31. And that’s when he was supposed to, that’s when his tendency was supposed to end. And so this is a serious criminal or I looked him up, also. And I think it was, I shouldn’t say just a DUI, but it was a DUI. That’s it? Well, I think it was a multiple offence. So situation. 

 

Erwin  

So this isn’t like violent criminal or so. Well, exactly.

 

Emily  

But I had to google that. And the terrible thing is terrible thing. And but that malicious people and the property was in the property wasn’t involved, which is what my main concern was, you know, if there was some kind of crime on the property, you know, that’s a different strategy. I’ve just noticed volved DUI. Well, yeah, but I didn’t know what it was DUI until the until that point, but you know, it’s but that’s when I found out as DUI I was like, Okay, this guy’s he made some poor choices, obviously. But you know, he signed it an 11 It was cool. We’re good. I think I’m gonna I think there’s no issue here. So we we bought it with a condition I wanted to do an inspection to so heat the so we offered about five grand over asking it Put in the condition to put it financing. I think we had all conditions we had financing we had only offer there was someone coming in, but there they were scared away by the jail thing. 

 

Erwin  

So we looked like bloody gloves around the property

 

Emily  

Or some property was the property was in rough shape to I’ll say that too. So I needed a lot of work. And it was. So yeah, so we Yeah, had the inspector in Spectre found a few things that weren’t weren’t super duper. 

Tammy  

And then during that conditional period, you were talking a lot with the paralegal. Yes, I was talking to apparently because we that was our that was our opportunity to do some extra. Yeah, homework.

 

Emily  

Exactly. And I just wanted to double check, like, what do I need to do here? Do we need to file the n 11? You know, what we actually found actually, with an 11 was done, incorrectly incorrectly. So we hadn’t we had a wrong and 11 when they put the wrong unit number on the 11, which I’m like, how is that even possible? But they did the owner did it? Yes. And maybe the paralegal they used I don’t know what happened. And so we identified that during due diligence, were like, you know, we can’t accept this. Obviously, we don’t have we don’t have a valid and 11. So they went back to the jail and got a new and 11 with the right unit number. Right? Yep, yep. 

 

Tammy  

And then we changed our when we were going to firm up and remove our conditions, got a price reduction and decided we wanted to just make it fake it. So we locked it in originally, that we were going to take the tenant that was never going to actually be there, because they were going to be out of jail and have moved out. But we were taking that on.

 

Emily  

Yeah, because they originally wanted like at any a November close or December close. And this was, you know, and then so I’m like, okay, you know, I could probably deal with that, you know, if I want I wanted the deal, right? And like, I can probably take that on he mean, he’s in jail, we have an n 11. He’s probably not gonna be a problem. But then because we had the N 11 issue that we found. And we had some of the issues that came up on the inspection. We’re like, no, and we’re in a power position at this point, because I had accepted our offer. And I was like, No, we shaved off 15,000 offer off our price that we had offered. And we pushed out the offer the closing date to June 6, which is when he was supposed to be

 

Tammy  

We were gone that he was going to meet they were going to come back and say maybe he signed that under duress when he was in jail too. So we didn’t want to have any issues. So yeah, so we gotta

 

Erwin  

Wait. You got you haven’t tied up. You haven’t closed yet?

 

Emily  

No, no, close and close. June January. Sorry. They say June. Jan six. Sorry, John. I’m sorry.

 

Erwin  

Yeah. They stopped.

 

Emily  

And it was theirs. So we were just in a position of power there. And and clearly this guy this owner wanted out of this property. Yep. So here 9490. Haley. So he accepted that 490 Yeah, with illegal duplex and St. Catharines. Which is, you know, work. We made it work.

 

Erwin  

And we want one of these 490.

 

Emily  

And so we’re actually just basically gutting it this probably spent a bit more than I should have maybe the renovations to be honest now that I kind of think about it. I think it’d be probably kept should have kept some of it. But the stuff I said to keep this stuff you said the tapes, I should have listened to me. And so I am likely going to flip it. I think at this point, I think so we are little 

 

Tammy  

Selfish plugs.

 

Emily  

Yeah, that’s a listing on Yeah. Yeah. So we’re gonna

 

Tammy  

It’s gonna be beautiful. Yeah. Also maybe musical duplex and St. Catharines with newly renovated

 

Erwin  

Not convict tenants,

 

Emily  

Ya know? And yeah, and we all knew plumbing all New electrical, like the thing is like, I mean, the mic is just awesome. It’s a really good unit get commitment property. So we’re going to be probably doing that maybe exclusively. Maybe we’ll think about it. The best strategies for that one.

 

Erwin  

Yeah. So we friends of ours. Steel,

 

Tammy  

Maybe these podcast listeners,

 

Emily  

If you want it. It’s gonna come in about a month or so. Well, it depends when this airs, but nobody listens to this. Nobody listens. I might listen to my accent. I won’t listen to this. No, no way.

 

Erwin  

So Emily, you jumped in with two feet? Yeah. $12 million. With the properties. Massive renovations? Yeah. That’s not easy for any people. I have trouble convincing lots of people to invest in anything. Anything even like investing $25,000 into like a into a into a passive land development deal. You’ve been pouring in. Can I add some money for renovations?

 

Tammy  

When I first had our conversation, our first conversation she had reached out to Mike Ferreira said I see Tammy on your Instagram. What’s it like working with her? So she called me

 

Erwin  

And she was actually did you know Mike at this time? No,

 

Emily  

No, I just on Instagram. I don’t know how I found him. But I just found him through the network. I think he squeezes way. He’s everywhere.

 

Tammy  

And you had called me and we had the best conversation. I love talking to you. She was so driven, so focused, so ready your energy. She’s like I’ve been pre approved. I went to this broker. I’m all ready to go on They’re super excited to go out. But she was currently out looking and talking with another realtor. So we had to cut her ties in a sense. And I said, you know, that’s good for you to explore that and so on and went out and then when you you ended up you actually didn’t call me at first you ended up just breaking those ties with her all the rage channels then called Zed kit that’s completely done so we can move forward. And I remember when I found out your person was so just because I’m like, You’re exactly who I was. I your energy just made me so excited. You were ready and focused right from the beginning and you have not stopped since continue to sleep in like that. So super excited to work with you too. Yeah.

 

Erwin  

Well, I have a realtor. They’re so so sad for them. You’re Homewrecker to me.

 

Emily  

They were also investor focused, but not not the focus. I needed.

 

Erwin  

Everyone’s investor focus these days. Yeah. When I started in 2010, there was no one investor focus.

 

Tammy  

But some people just connect and you know, because I’m not, you know, maybe I’m not well connect with everybody there, you know, and it just me, but it was you. So when you were talking about how she is. That’s how I knew right from the very beginning. The connections

 

Erwin  

Are nice and all, but I’m a pragmatic purpose person. I want talent on my team. Yeah. All right. Well, you you work in HR. No, no, you don’t work in HR. But you know, you find looking for talented people on my team. I don’t care if we don’t jive on religion or something or politics. I could care less. Yeah. If you’re talented, and you can help me make money. We’re best friends.

 

Emily  

People are your biggest asset. You know, for an employer, your people are people will run your business. If you don’t have the right people. Your business is not is going to suffer.

 

Erwin  

That’s a good place to end it. My stomach growling the client? Yeah, so yeah,

 

Emily  

We have how many properties? Five? Yeah,

 

Tammy  

I’m gonna go check that smaller properties. Yeah.

 

Erwin  

What are the chances? Any good ones? I’ll dumpers.

 

Emily  

There’s one. Interesting one.

 

Erwin  

Five to see.

 

Tammy  

I hope they’re bad. We’ll go.

 

Erwin  

These are different companies are finding excited. Yeah. So different is a actually it gives some context. Today’s April 29. Yeah. And, you know, three months ago, were there 3.5 properties to see No,

 

Tammy  

No. Yeah. beginning of this year. Yeah, there were, I think four to choose from in one of my searches. And two of them, and I’m looking at them for duplex conversions. And two of them one work. Yeah, right. Well, these two are Yeah, so there was two

 

Erwin  

Wow, five properties of Il for that could be duplex conversions.

 

Tammy  

There was four at the time and two of them weren’t good. Now what I mean, by properties,

 

Emily  

Changed my strategy. I think a little I’m not looking for duplex conversions anymore. I need I need more units to make money. Looking at Maltese. Now we’re looking at Maltese,

 

Erwin  

How big three.

 

Emily  

I eventually eventually we’ll get to the higher ones. But at this point, I want to try to test out the three and the four if we can.

 

Erwin  

Fabulous. Okay, I’m gonna keep you from it. Thank you Emily, thank you Tammy.

 

Tammy 

Thanks. 

 

Erwin

Thanks for coming on.

 

Emily

Thanks for having me. 

 

Erwin 

Before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already, then sign up for my newsletter and you’ll learn of the next free demonstration webinar I’ll be delivering on the subject of stock hacking. It’s much improved demonstration over the one that I gave to my cousin chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow. But with the rising costs to operate a rental business, it’s just not the same as it was five to 10 years ago when I started there. Forget the cash flow reduces your risk. The more you have, the more lumps you can absorb. And if you have none, or limited cash flow, you’re going to be paying out of your pocket like I did on a recent basement flood at my student rental in St. Catharines. Ontario. If you’re interested in learning more, but stir for free for my newsletter at www dot truth about real estate investing.ca. Enter your name and email address on the right side. We’ll include in the newsletter when we announce our next free stock hacker demonstration. Find out for yourself what so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell I love teaching and sharing this stuff.

 

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Erwin  

Hello, everyone. Welcome to the truth about real estate investing show. I hope you all had a great weekend. My name is Erwin Szeto for those who don’t know, I guess some people didn’t know. I hope you all had a great weekend. I know I did assess Seth Ferguson’s multifamily conference. And it was a huge ordeal for him being the first big real estate Conference coming out of the pandemic, that was live and in person only get nothing out of this. But I’d recommend you buy the recordings. If you missed it. The speakers are great, every one of them. I took notes from pretty much all of them. I did miss some speakers because I was just enjoying myself so much in the hallway. A lot of people I haven’t seen this since 2019. So literally some people I haven’t seen since my own conference in 2019 at the wealth hacker conference, so it was great to just see people and teenagers hugs and smiles and no mas. Kevin O’Leary was was especially excellent. I thought, I know he rubs some people the wrong way, he actually led off and explained it, that something his mother taught him to never tell lies. So you don’t have to track what lie you told who then Kevin takes a step further, he actually tells people what he thinks, even if they don’t want to hear it. And see gives people his opinion on their business or investment, whether they’re good or bad, right versus other sharks or dragons will only just say they’re not interested in investing. And let’s leave it at that. Versus Kevin will tell you if he thinks you have a bad business and you should stop, stop investing in it. So a share some Kevin’s values. My journey is a little bit different. The show’s entirely been about true seeking. In the real estate investment space, we do make mistakes. And we course correct when we do have taken down at least two episodes maybe more when we had a bad sponsor, or we mentioned a company that didn’t do good things. A Paramount’s the name of that company, but I was years ago. That’s quite a while ago now. Yeah, the founders can’t be found and the cops can’t find them. And so terrible, terrible things. Anyways. So along that line, as you’d expect with capitalism, there are many bad investments or many bad people out there. Just this week, just as last week, I’ve been chatting with investors, I chat with investors all the time, that’s chatting with one who had invested quite a bit of money into a growth tech stock that uses artificial intelligence, you’ve asked a bit of money on that another investor with three private mortgages, from just a couple of years back from a company that most of us know the name of only one only on one of those private mortgages, has the capital been returned, getting the rest back is unlikely. I’m hearing from sources that some REITs out there are in trouble, newer, REITs, newer REITs None that I’ve invested in and no one I’ve had on this show. Thankfully, my due diligence has kept me out of trouble. And I’ve developed my screening process from just simply reviewing what makes deals go bad, even pre pandemic. You know, anytime a condo, a big condo development goes bad. I read into it, I want to understand what went wrong so that I can avoid problems like this going forward. So quick, Coles notes, I’ve noticed some commonalities among field developers, and some of them are, they’re paying interest to practice or debt financed, as in the acquisition of the land is that financed. So just imagine if you’re like a condo developer, for example, it’s yours, it’s gonna be years before you actually have any money coming in. So if you’re paying interest on that piece of property that doesn’t have money coming in, that’s a risk. And another big risk is if it’s a less experienced developer, again, a commonality was, often it was the developers first big project that then you throw in a pandemic historical inflation on labour materials, and you just have a formula for failure. And I don’t fault people for deals going bad, but it’s not something I’m gonna put my money into. Dielectric, let’s start with crypto crypto investors like myself, I only have a small amount. When I learned about one. I like to call myself educated. When I started reading more about it and talking to more people about Bitcoin and ethereum. For example, they’re both way down. But when I started looking into it and putting some money in, I knew the prices were high. So I was looking for a dip to get in. So yeah, we’re dipping now. I spoke to a successful apartment building investor just on the weekend. We’ve known each other for quite a while. I know he made a killing on Boeing shares Boeing, you know, they make planes jets, and they have lots of government defence contracts. He made a killing after the pandemic crash, just owning that stock. And he managed to give it all back on cryptocurrency I do believe in Kryptos I don’t know that much. Hence, I’m focused mainly on just on Bitcoin and Ethereum mining even a large amount. My theory is that Bitcoin will likely to come back. But that’s hardly a guarantee year to date. as I record this, we’re about mid May, mid late May, year to date 2022. As I speak, almost everything is down including real estate, from what I’m seeing in real estate that I follow, like I personally invest in, we’re back to the summer prices at least maybe even November from last year. So therefore we are down on the year, even though February in January, just tremendous months, again, grateful for my clients who took action on that information and sold at the peak. The only things that are up this year in 2022 so far is oil and the US dollar. Even gold is down on the year, gold down or even last I checked it was down just barely, just barely down. So basically it’s even in this inflationary environment. Who would have imagined that what’s working though is boring investing investment properties with positive cash flow, as in like, you know, tenants are paying your rent. That’s performed extremely well. And they’ve not gone down unlike Well, the investors can hang on to them. Unlike people who speculatively bought single family detached homes in the GTA, for example, that will never cash flow, or like a pre construction condo. On the bridge construction condo side I’m hearing some are having trouble qualifying for financing. I’m hearing this from mortgage people and from lawyer friends of mine. So yeah, some people are out there are having trouble qualifying for financing. I’m not even sure if they ever planned on closing, there’s got to be some people whose exit plan was to assign it had no intention of ever closing, which would include getting financing, let alone becoming a landlord and rent up the apartment. So I’m sure we’ll see some softness in the areas that have the greatest speculation without cash flow, kinda like we saw in the stock market. On the stock side, generally, stocks that pay dividends have fared significantly better than their speculative counterparts, like high flying tech companies that don’t actually make any money. For those who understand stock options. A disciplined approach to selling far from the money in using insurance has performed better than those who were who are less conservative, slow and steady wins the race, like Warren Buffett has, hence will continue to teach defensive investing both in my real estate business and our stock hacker Academy. Anyways, that’s what I’m trying to say. What I’m trying to say is that gains are easy to make, keeping it as another matter slow and steady like economically, fundamentally sound assets like that cashflow has time and time again, are proven to be a winning strategy. Add to that time in the market. That’s why Warren Buffett is the most successful investor out there. Yeah, I’m a value investor myself, I’ll be looking to buy this dip. But to focus on quality, speaking quality. I mentioned earlier Kevin O’Leary’s presentation, and especially his q&a revealed a tonne of great information. Unfortunately, Kevin wasn’t allowed to do any sort of fan interaction, I was supposed to have my picture taken with him as part of as part of being a VIP for the event, as disappointed. But then after seeing the q&a, I was like, that’s awesome.

 

Erwin  

I got way more value from Kevin’s thoughts during the q&a than I would from getting a picture with him. And I’ll share my takeaways at Cherry and I’s real estate meetup, as Kevin shared his thoughts on the crypto market, on the economy, if there’s gonna be a recession, all those sorts of things I took notes, took lots of notes, I’d record a part of it. And I need all this sort of information form part of my presentation on investing through a recession. And also at that meeting, my team will award winning coaches will be sharing on the latest they’re seeing on the streets in terms of real estate rental prices and resale prices. And our keynote, our long presentation will be around garden suites garden Suites is for most folks returning what was a single family home now into a triplex. And it’s what I consider the final major value add strategy for the vast majority of real estate investors. So it’s something you don’t want to miss. If you’re in it for the long term. We’ll talk about renovation strategies to maximise rent return on investment, of course, financing and building codes zoning, this is a very new strategy. So we’re going to give you an update on where we are in each of those areas. Because you need to know if you want to get on on this on the ground floor. So you don’t want to miss it. Saturday, May 28, same time place 8:30am offices that I have in real estate, if you’re on my email list, you get all the information to register already, we’re doing in person only that way there’s tonnes of great networking to be done. I don’t know how folks network over zoom, you know, when only one person can talk at a time, this is much better. And yeah, I’m really enjoying the in person events again. And again, only for those who feel safe to do so. You’re more than welcome to attend. Oh, yeah. And then of course, the networking has been fantastic in my events. We’re not like we’re not like other events out there. Because naturally, many of my clients attend and they’ve done really well. They’re really nice people. We’re having more than more, more and more folks retire. And my policy has always to be to learn from people who have what I want. So we’ll have some for recent retirees from real estate investing in the room, so you don’t want to miss it. 

 

Erwin  

So onto this week’s show, Yes, Christian, give me a second Szpilfogel. He’s one smart guy with a difficult to say last name. He’s a former tech executive who worked closely with Canadian tech billionaire Sir Terry Matthews. For those who don’t know, Sir Terry, I believe he’s still a top 10 richest Canadian. Anyways, Christian has implemented several uses a highly analytical approach it technology based strategies to maximise returns on his multifamily investments. Christian detailed the top 10 like apps and devices for ROI on a past podcast, so check that out if you haven’t already, the water metre monitor cuts alone can save you 1000s of dollars via early detection of water leak. Christians smart on the EQ side as well as his ability to communicate his renovation and develop plans with the neighbours has enabled him to obtain their assigned to support that he can go to the city and get his variances and permits approved. He shares how he’s finding deals getting offers accepted and multiple offer situations and even having sellers call him directly. Terry and I will be videoing in Turin will be touring and videoing some Christians properties in early June as part of our audible tour. We’re in town just for tonight’s we’re even hosting a casual meetup in centre town on June 7 at 6pm. And on June 8 is the day after Sherry will be the guest speaker at Oreo. The big Ottawa networking group at the Infinity convention centre, there’s a link to register in the show notes on our website at truth about real estate investing.ca. If you’re on the email, you get the show notes, it’s wise to be on our email list, you get some quality information in a timely manner. And it’s all free goes right to your inbox. Just go to my website, www dot truth about real estate investing.ca. Put in your name and email on the right side. And you’ll start getting notifications on when we’re hosting events when we have new podcast episodes. And of course, the show notes. So you can register for great events like Oreo on June 8, because charity will be there speaking. Christian is a good guy. And he’s not here to sell anything this projects or he sell funds his own projects with his own capital. And please enjoy the show. 

 

Erwin  

Hello, Christian. 

 

Christian  

Hey, Erwin. Good to see again.

 

Erwin  

What’s keeping you busy these days? 

 

Christian  

You always love that question. So and you know me, I’m always really busy. 

 

Erwin  

So it’s we’ve had a busier from what we discussed before we start recording, but go ahead.

 

Christian  

It has been busy in our portfolio continues to grow. We’re still doing acquisitions. You know, it’s interesting, I was having a discussion with a local realtor yesterday over lunch. And he was saying, you know that the housing market, there’s a lot of people starting to put listings on I think they’re they’re kind of worried that they’re going to miss the cycle, the boom cycle for sellers. And so he’s seeing a lot of people putting listings on getting off the fence about it. So I thought that was interesting. But the other thing we talked about was that, you know, I’ve always said that just because the markets hot doesn’t mean you don’t buy right you stick to your principles, and your decision criteria for purchase. And then figure out well, you want to have certain certain criteria, but you can find what you need to find even in a hot market. It’s just that when the markets hot, they’re just harder to find when the market is soft. They’re just a lot easier to find and meet your criteria. And so we have done acquisitions, even over the past year since we last talked, we bought another building that’s going to be a repositioning project in downtown Ottawa in the centre of town area. We bought a portfolio in a town called Elmont, right, which is literally just outside the Ottawa border, the City of Ottawa border, very near Carleton Place, which everybody bought in there about five years ago. And now everybody recognises that it’s really doing very well. It’s a very interesting town that’s really growing Elmont, I think is going to be probably the next one. It’s just five minutes away from Carleton Place. So we bought a portfolio there. I was talking to just before we went on air that one, you know, people say you can’t find cash flow properties in a market like this. Well, this was a portfolio of mixed use buildings that I ended up buying at six cap. That’s what it worked out to. And that’s with full conservative underwriting so that as soon as for example 5% 5% 5%. So property management, maintenance, as well as capital reserves are built into that underwriting. And then the the other key piece in there is the rents are about 35% under market. So it’s there’s lots of upside in this property as well. So yeah, it’s still possible to turn over the right stones. So were the stones on ice axe, or were they were these stones that you’re turning over? How do you find the deal? So that’s a really good one. So so this one we found, let’s say the deal found us? No, so I didn’t go looking for this deal. The deal came to us mainly because we’re really very active in certain markets. And so we were known and a realtor actually had this under contract for himself. He had done a decent job of underwriting not perfect, so we cleaned it up and adjusted the price accordingly. But he had it for himself but he wasn’t confident in being able to execute on the long term project. So he called us up and said, Would you be interested in this? And we were literally his first call. And I did. So sure. Send me the numbers, I’ll take a look at what you’ve got. I did a quick Proform on it. I was like, Yeah, we need to take a look at this, right? Because if the numbers are right, this is either an amazing deal, or this is a disaster of, you know, of a portfolio. So we arranged to see it, the next day went out met, the seller met the realtor. And the buildings were in great shape, I say, but half the units were already bought, actually three quarters of the units were reasonably recently renovated. And then a quarter were in really rough shape, like they’re going to be total renovations break back to the studs, renovations for those units. And then they had good quality commercial tenants on the in the commercial units, with decent, triple net leases, properly structured, the leases was weird, but you know, because the seller was a bit naive and kind of new to this stuff. But he hadn’t done a bad job of structuring the financials with it. And then a number of those commercial leases are coming up shortly as well. So there’s chance to reset those prices have already done one actually. So that’s kind of how the deal came to us. And then the whole process of the acquisition was interesting, there was a bit challenging because the seller, this is the only portfolio he’s ever owned, and he’s only owned it for five years. He, I think, in hindsight, he got in over his head. And I think he just needed stress relief, which was the reason he was fundamentally selling it. And so because he was naive, of course, a lot of the normal due diligence process was was difficult, you know, simple things. Like, I need to instal balls for the commercial tenants, I need acknowledgement, the tenant from the residential tenant that he said, you know, and I was just getting tonnes and tonnes of pushback on this stuff. And I had to keep explaining to him why we were doing the things that we were doing through the due diligence process. So that was a bit painful.

 

Erwin  

However, the seller on this building, they inherited, like

 

Christian  

he was an engineer who had some money and thought real estate would be a good thing to own. And he picked up three of these buildings, you know, on his own. He’s a clever guy, in reality, but I think the stress of managing tenants was too much for him the human aspect or what, because they there was like tenant issues, like, can pay rent or something like that, or there’s always tenant issues, right? You know, in a portfolio that says there’s going to be dealing with tenant issues.

 

Erwin  

Let’s back that up. How many tenants are there? 

 

Christian  

Oh, there’s total of 27 units in the portfolio. And it’s about there six commercial, and then the rest are sort of 21 residentials.

 

Erwin  

That’s a lot of relationships. It is just trying to remember that many names.

 

Christian  

Well, for a new person, that it’s a bit overwhelming, right. So fortunately, we’ve got processes to handle this. He also had some challenging tenants that he’s worked through. There’s still a couple of challenging tenants in the building. But he did a lot of the cleanup to be fair, but I think it really picked the stuffing out of them.

 

Erwin  

Right. Gentleman, the three quarter of the units that were renovated that was this gentleman?

 

Christian  

No, he did a little bit, but most of it was done just prior to his acquisition of the buildings.

 

Erwin  

And how long ago was that was the sellers acquisition.

 

Christian  

We bought it about five years ago. So no doubt he was selling it as soon as his fixed rate mortgages were coming up.

 

Erwin  

That’s tough, too. Because do you know what what their financing was? Like? Because this is mix? This is mixed use?

 

Christian  

Yeah, no, it is mixed use. But the commercial space is literally just under the 30%. Mark, I think it works out to about 27% On average of the gross leasable area, which gives you a lot of flexibility. So I was able to finance this with CMHC backing it. And that’s a whole other thing to CMHC it seems to have turned a corner. So let me put it to you this way. Or when I’m going to ask it. If you’re doing CMHC on a commercial building, how long does it normally take for them to get back to you on that underwriting? How much do you have to provision for in your agreement of purchase and sale?

 

Erwin  

I haven’t personally done commercial with CMHC. We’ve been doing our deals with BDC. And at least two months.

 

Christian  

Yeah, that’s right. So most people if you’re doing CMHC on a commercial, multifamily.

 

Erwin  

This is back there for the listener. You don’t know if you have financing until that time has passed. You’re in limbo for that long for financing. Alright, sorry, Krishna continue. 

 

Christian  

Well, so with commercial residential buildings, so that’s anything five units or more for residential, and you can include mixed use as long as the commercial space is less than 30% of the The total gross leasable area, so CMHC. So just for our newbie friends listening, and when you have CMHC financing, it does a few things. One, it technically allows you to buy it at a higher loan to value then you could get up to 85% loan to value if CMHC is insuring your mortgage, it almost always results in at least a full point discount on the interest rate versus not having an insured and you can get longer amortisations. I’ve had one building, for example, where it’s a 40 year amortisation insured by CMHC. But the downside with CMHC, historically has been the very long lead time, typically 10 weeks is what we would budget for in our purchase and sale right to put in place. I heard somebody had CMHC funding or not funding the CMHC approval in about a week. Somebody mentioned that. Yeah, somebody that Kingston mentioned that to me in December, I was like, Okay, I went back to the lender, I challenged them, right. So hey, let’s see if we can do this in a week. Let’s get all the paperwork lined up everything done. So that we put it in in the way that we expected CMHC wanted to see it, you know how fast the approval was? four business days?

 

Erwin  

No way.

 

Christian  

I have never never seen this in my life.

 

Erwin  

Consumers See, allocate some resources to the LTB.

 

Christian  

There’s hope maybe on that side, but I do believe CMHC increased the size of their underwriting team, which I think is part of it. Or are we just lucky? 

 

Erwin  

Can we have some of them for like adjudicators to cross train these people? Sorry, Krishna, just a backup for folks not familiar with commercial financing. So you mentioned that you had 10 weeks that you allocate 10 weeks for financing approval? Is that in your offer, as in like your conditional period? Yes.

 

Christian  

Yeah. So that’s actually quite normal for commercial processes, if especially doing CMHC even. So we did a building a year ago, and I had a short conditional period, even though there was 15 offers on the building that I ultimately bought. Yeah, multifamily is are in rare supply. And that’s a whole other discussion outside but in that when I still put a conditional period, but I had the advantage of being a highly credible investor, right, so I had enough of a reputation with the real estate agents that they knew that I was going to be able to execute on this deal. And my conditions were really very simple for that one, it wasn’t inspection and insurance. So and really, that was just a buy a couple of weeks to make sure we had some time from a due diligence period. And on that one, I knew I didn’t need CMHC underwriting. But even if I did, all it happens in the deal is if you underwrite it with the assumption, you don’t need CMHC. So you’re going to just do conventional financing 75% loan to value with prevailing bond rates, which is how the the interest rates are set in a standard amortisation, then the CMHC is simply upside. Right. So in a competitive situation, I’ll put it in with a lender, right on the assumption that I’m not going to get CMHC. And I could make assumptions about that, right. But I don’t want to I don’t want my business case to rely on it. So then you’ll still go ahead with the CMHC application and everything your business case just gets better if you have it. So it was four days to on that. So we advanced our clothes on that purchase by about two months. And I wanted it because it was a creative, as I said it was it was effectively a six cap based on rents that were 35% below market. So it was a creative to the portfolio and I didn’t want to wait. So we moved up the close by about two months. And then the big issue we had prior to close was was insurance. So the age of the buildings. This again, this is on the main street of Alma. And for people who don’t know, Elmont, you’ll know it for one of two reasons. The founder of basketball James Naismith, right, that’s his hometown, and actually his statues right in front of one of these buildings, which is kind of cool. And then the other reason people might know it is anybody who’s a Hallmark movie fan. A lot of Hallmark movies, especially Christmas movies are shot in Elmont on Mill Street because it’s very picturesque. And these buildings are featured prominently in the backdrop.

 

Erwin  

How far is is Alma sort of like a suburb for Ottawa? Is that how it works economically, fundamentally, as an investment town,

 

Christian  

It pretty pretty much I mean, Ahmad is a power generating town. There’s a power station there right on the Mississippi River. And it’s beautiful, very picturesque in that area with the waterfalls and so on. But it is fundamentally a suburb of Ottawa at this stage just like Carleton places. So as you know, I live in downtown Ottawa. The Glebe To be precise, which is inside the canal limits, and I can get from my house to these properties in downtown Elmont in about 35 minutes. Is there a close?

 

Erwin  

Or what doesn’t seem like everything seems pretty close. Like what’s downtown to the airport drive? So I am jealous.

 

Christian  

Yeah, it will. You’ll be jealous because you live in Toronto, right? Yeah, ridiculousness. So, so Metro Ottawa, if you will. So I’m going to include Gatineau. That’s about one and a half million people. The Ottawa side is just over a million people. But the way the city is structured is it’s structured along the river, that’s the primary growth area east and west. So you can go you know, edge to edge in Ottawa, we take you just over an hour of driving with no traffic. North South is a lot faster. So the city is kind of long and skinny. So if you’re downtown Ottawa out to the Ottawa airport, it’s about 20 minutes, 20 minute drive, and it’s a very scenic drive to you’ll just go up if you’re in downtown Ottawa, you’ll just follow the the Rideau Canal all the way up till you get to the airport Parkway.

 

Erwin  

So we just stay in the Glebe when we come visit,

 

Christian  

There’s no hotels in the Glebe. You have to stay in Senator town. Closest and still be nice.

 

Erwin  

So you live somewhat close to where the protests were somewhat close. Oh, we could hear them. Yeah. Oh, well, you hear what I heard was peaceful. Yeah, sure. Did you hear I have a bail said it was peaceful.

 

Christian  

Yeah. Bunch of buildings in centre town. Right. So I had to go and check my tenants down there. Were a bit concerned. I’d say they were very close to it. Okay. Oh, yeah. Yeah, my mill is so the, you’ve got the parliament district, right with the Parlin precinct which is very narrow set of streets, and then you have centre town. And then you have the Glebe. So that’s the communities between Parliament and the canal. And these protests were primarily on Wellington Street. And to be fair, it was reasonably peaceful on Wellington Street. I think everybody, it was just a big party that was going on. And that’s like, the issues that we’re seeing, we’re mostly off of Wellington Street. The and the biggest issue? Well, there’s two issues, I say, one was, there are people that had air horns on their truck, and some of them were like, effectively, like a Via Rail train, you know, horn going off. And that was really disruptive, you could hear that for many, many kilometres. But for the people that were literally living, you know, within a block or two of that, those horns were going off regularly, like for about 20 minutes of every hour at all times of the day, in the night. So that was, you know, really problematic. And I think that was one of the key things that really upset people downtown. And then you get sort of secondary people, people who use any protest as cover and it doesn’t matter whether it’s a, you know, the trucker protest, or any other type of protest

 

Erwin  

G seven D 20. They’re, they’re just BLM, they’re there to hide in the crowd and cause damage.

 

Christian  

Yep, that’s exactly right. So you had people who were certainly doing that, right, people were trying to set fire to buildings and stuff like that. But you know, and then there was a little bit of harassment as well, which really didn’t, didn’t help. So for example, there were people that be walking with masks on so waiters, for example, going to do their shift might have their masks on as they’re walking to work right and be harassed about wearing their masks. And I think they were just intimidated more than anything. I’m not sure that there were many there were some assaults that certainly made the news, but I don’t think there was a tonne of it going on. But it was just the whole environment just wasn’t felt very peaceful. And I think a lot of people just didn’t feel safe. But the air horns were the worst, honestly.

 

Erwin  

But they’re peaceful. I’m sure you know, it’s funny because I associate indentify for attendant and there’s no quiet enjoyment of property. So I know what my tenants opinion is of quiet enjoyment is, it seems all these people don’t they believe that air horns are still considered peaceful?

 

Christian  

Well, you know, I was fantasising about maybe taking an air horn on a vehicle parked outside of one of their houses and just blasting the air horn 1am 2am 3am et cetera. We’ll see how peaceful they think I am at that point.

 

Erwin  

And get it I don’t get it the whole peaceful thing I just I’ll drop it after this point. But if that was my tenant was hearing that they’d call me and say this is not peaceful. Alright, so it’s not just me.

 

Christian  

We were dealing with that. I mean, we were getting calls most most of it though, is they recognise there’s nothing we could do about it per se. Totally but the we had tenants just making sure that security in our buildings was good, right and making sure doors properly latched that our intercom systems were working properly. And we have cameras on a lot of our buildings, right? So the tenants were thankful about that, as well. I had so many queries of saying these cameras work, right.

 

Erwin  

That’s funny, they waited for this moment to actually ask and think work. We were talking about this before, before we started recording, how to prepare for inflation.

 

Christian  

No boy.

 

Erwin  

And you’re smart. So like, like, I like asking you because I’m crazy. I have all these crazy ideas. You know, I dabble in some bitcoin.

 

Christian  

You know, it’s funny, because, you know, as I was saying to some people, when it comes to predictions around anything in the economy, you know, even the best of us, I think, are only a little more accurate than random chance. The economy is just so complicated. There’s so many moving parts. And for us to oversimplify it, I think it’s just a mistake. You know, we can see the effects of supply chain, we know what that’s doing in terms of driving inflation right now, which, which is interesting. You know, because I think most economists will tell you that in a real GDP sense, the economy is probably going to grow by about 2% this year, and we’re running at about 2%. But I don’t think they’ve taken into account all the inflation that we’re actually seeing, because you can see, we’re completely blowing the doors off of the actual inflation rate versus what the predictions were, which leads you to believe that the real GDP may actually be in a contraction period, we may not actually see 2% growth this year, we might actually see a contraction.

 

Erwin  

It’s so weird, though. Anyone who wants a job has a job, it seems, or anyone who wants

 

Christian  

but on the demand side of it, you know, and that’s always the thing, right? When we’re talking about inflation, it’s what’s driving it. Classically, in the past, it was demand side, inflation. And that results, certainly in wage increases, etc. Back in the 70s. It was it was averaging, what about 5% inflation over that, that period of time? Now we’re seeing it’s more like about in terms of GDP growth. Sorry, that wasn’t inflation to 5%. That was GDP growth. So now our GDP growth is nominally 2%. But our inflation rate is really very high.

 

Erwin  

I think March was 6.7%. And that was the biggest factor was gas prices.

 

Christian  

Yeah, absolutely. But it points to the fact that inflation is supply chain driven, right. And it’s supply side as opposed to demand side. This is why a lot of people and a lot of economists think it’s going to be transient in nature. And I really hope it will. And my suspicion is it probably will. And then I think we’re going to get a very confused state with the Bank of Canada. And, you know, in the US central bank, as well, Bank of England, because they’re going to have this quandary, you’ve got inflation going in one direction, which they feel they have to address. And they’ve already announced, you know, lots of rate increases. And we’ve seen the bond market respond over the last month and a half as well, where you see rates anywheres, up to five years went up very quickly. So you’ve got that on that side. But if the real GDP is actually contracting, then the government is going to start to think carefully about, Well, are we moving into a recession? Right, and this is sort of a classic stagflation, stagflation type situation. So now, you’ve got to think, Okay, what’s the central bank going to be doing in this type of environment? Are they going to prioritise inflation? Or are they gonna prioritise economic growth? Right, and I think in the end, they’re going to cave and they’re going to support economic growth, which means then that interest rates would be probably coming back down towards the end of the year. And we were talking about the supply chain issues earlier, you’ve pinned one, which is oil, right? That everything is driven by energy. Energy is an input to just about everything that we do. So if energy costs go up, it doesn’t matter. What part of the economy you’re looking at, it’s dependent on energy, right? Even food is a big issue, right? Because energy goes into the production of food, everything from fertiliser to harvesting, and we’ve seen lots of increases on that side of it. You and I were talking a little bit before before our session here and one thing that I just came to realise more recently was the dominance that Canada has in potash we have probably about 40% of the world’s supply of gas. It’s about 15 million metric tonnes, but the second biggest producer of potash in the world Is Russia with Bella routes. And that’s about sorry. So Canada is about 14 million metric tonnes, Russia is about 15 million metric tonnes, right, Russia and Belarus. And of course with the sanctions that supplies kind of held off and put it into context, the third largest producer of potash is China with about 5 million metric tonnes. So we’re effectively cutting off about 40% of the potash supply. And that is going to have secondary effects, I think towards the back end of this year. So you’ve got energy on one side, right, and then we get the sanctions that are happening in Russia in the Ukraine. And if those don’t lift in a reasonable amount of time, then we’re going to start to see impacts on on food supply as well. So all this stuff is just going to make for some really turbulent times coming up over the next couple of years, at least, you know, where the bank is going to be a bit confused about which way to do things. But I think at the end of the day, they’re going to double down on getting the economy, you know, right and stable, even at the risk that inflation

 

Erwin  

And with all this new spending that’s in the federal budget in our provincial budget, I need cheap interest rates.

 

Christian  

Well, yeah, but you know, some would argue that the federal government should have backed off and a lot of that stimulus, you know, as early as the middle of 2021. And I would tend to agree with that. And it’s kind of weird, because you’ve got the Bank of Canada, of course, increasing inflation, right. But then at the same time, you’ve got the federal government in particular, putting more money into the economy, which of course, helps to fuel inflation. So they’re kind of fighting a little bit against each other. And then you saw to, right, everybody thinks about the Bank of Canada and the overnight rate, and how that’s gonna affect the variable rate. But the other thing that the Bank of Canada did, at the same time at that announcement, is they shifted from quantitative easing to quantitative tightening. And that basically means, you know, where the quantitative easing, you know, some people would just think of it as printing money, right, which it sorta is, but really isn’t. Quantitative tightening is effectively not renewing the bonds that they did buy at that period of time, which means that there’s going to be some upward pressure on the bond market, it is an indirect effect of, you know, affecting the fixed rates, if you will, because it affects the bond markets, the yields go up. And that’s one of the reasons that I think we saw the short term yields go up and why fixed rates went up recently.

 

Erwin  

Probably seeing I see it on Twitter, I think we’re probably going to see like 4.5, soon on five year fixed,

 

Christian  

it wouldn’t surprise me. So I locked in that portfolio that I bought in Elmont, I was actually getting a bit nervous about it, because my underwriting at the time with CMHC required me to have a total interest rate of no higher than 3.45. And when I first started this, I, it wasn’t really much of a risk, I think my interest was gonna end up being around two and a half percent. And then when Russia invaded the Ukraine, there was actually a demand in the bond market, which resulted in a drop in the yield. So my interest rates actually drop by a quarter point. And I thought, Okay, well, at least I might be able to get, you know, some advantage out of this situation, but then within about a week or two, it went the other way, right. And then people got nervous and the, you know, in terms of what it was going to do in terms of inflation in the economy, and then the yields started going up. And then when the Bank of Canada added fuel to the fire, it didn’t help. So ended up having to do a buy down on the interest rate, in order to guarantee the interest rate of 3.45. But I had to put money into it at the close. 

 

Erwin  

In order toget that done. As a percentage, how much mortgage have to put in?

 

Christian  

It wasn’t much, it was about 1%, right, of the total loan value. You know, that was where the spread difference was about point one, two, right between what I was contracted with with CMHC versus what the bond yields actually were. So for people who aren’t familiar with this, when you get an underwriting with, say, CMHC, and they say that they’re going to guarantee the underwriting or the insurance for your loan up until you get to a certain interest rates. But when you’re doing a commercial fixed rate, it’s not something you can pre negotiate, you can negotiate the spread, but it is completely dependent on when you buy the bond in the bond market. And so if the bond yields are going up, then that affects what your interest rates are going to be. So usually about a week ahead, or even sometimes a day or two ahead of the actual close on the purchase. You have to do what’s called a rate lock. And the rate lock is basically where the lender goes to the bond market buys the underlying bond. And then you’ve got that particular yield. And if anybody’s ever been through this, it’s about The seven to 10 minute window. So they literally say you have to be on standby. So what they’re going to do is go to the bond market, they get a quote that’s live for 10 minutes. So you have to confirm whether you’re going to accept that particular interest rate. And you’ve got, you know, by the time it gets to you, you literally have five to seven minutes to make that final decision. So it’s, it’s an interesting process, and then that once that rate lock is in, you’re done.

 

Erwin  

So is this like a zoom call? Like, what are you actually you’re together on the floor? The trading floor?

 

Christian  

It’s done via email, right? But yeah, it’s literally done by email, but you’re on standby. You’re sitting there there, say, Look, we’re gonna go to the bond market at 10:30am. Make sure because we’re going to have probably about seven minutes for you to confirm in total, fascinating. 

 

Erwin  

Wow, what was it like the first time you did this? It doesn’t have to be a little, like, I don’t like that word, throw it back there catching on?

 

Christian  

Well, you can do that, actually. So you can go and you said, No, I don’t want that. Right. But most of the time, things are not so volatile, what you’re getting is the rate for the day, right. And it might go up through the afternoon. But if you don’t like that, when they’re probably just go back to the market the next day. But usually, what you’re you’re hard pressed against is your close date. So your close date, you don’t really it’s hard to move in a lot of cases. And then you have at most in most cases, 10 days before the close date where you can do your rate lock. But you don’t want to heat up that buffer because there’s the other side of it, which is let’s say I do a rate lock 10 days before my clothes, I have to now close on that date. If I don’t close on that date, I have to start doing buy downs on that that bond. So it costs me like it costs a lot of money. Think of like 1% per day kind of penalties associated with that.

 

Erwin  

So who walked you through this process the first time?

 

Christian  

Oh, I was totally naive the first time.

 

Erwin  

That’s the best way to do it. Right? 

 

Christian  

That’s just just on a roller coaster ride. But first, I had no idea what was going on.

 

Erwin  

By your email, okay.

 

Christian  

Yeah, it’d be fair, the lenders are really very good at managing all of this. So it’s not like I’m trying to work as straight the lenders just tell me what’s happening. And like I said, the bond yield rates, they don’t fluctuate that much in a day. Recently, I’ve seen them fluctuate by a full quarter point. But most times, they don’t, most of the times, they’re really pretty stable and that fluctuate by, you know, maybe five or 10 basis points at the very, very most. So it’s not normally it’s not that unnerving. But it wasn’t nerving this time only because the bond yields were actually fluctuating. Well, when I say fluctuate, they were going up, and they were going up fast. And you’d see like quarter jumps easily each day. Right? Yeah, so it’s not a pretty process when the markets are really volatile. But you know, the vast majority of situations that because I really don’t want to scare people either, right? It’s just the vast majority of situations, I would say, literally every other deal besides this one, it’s a very simple normal process, you’ll do your rate lock, everything’s gonna go fine, and really not going to worry about it. But this time, it was a bit harrowing, just because the yields had gone up by almost two full points, right? 

 

Erwin  

In the span of a few weeks, and then crashing, you just like us, like piles of cash waiting around for foreign deals are available. 

 

Christian  

So what I did in this case was I was starting to stockpile cash because I’ve got a major repositioning project that I’m doing. So I’ve set aside credit, I’ve set aside cash, I’ve got refinances that are happening all the time. So all this cash was just kind of coming in. But you’re you have other partners involved or No, no, no, this is just our money. We don’t take external investors. So we don’t take any external equity investors at all. But we’ve got enough of a portfolio now that there’s always a refinance going on in some property. So we’re extracting new capital, all the time that we can use towards new projects. So a good chunk of this was capital that was going towards a repositioning project that I have, but this deal was just too too good to pass up. It was highly accretive that portfolio. I mean, we advanced the clothes I think I mentioned by two months. And the reason was that it adds cash flow to our portfolio as soon as we close and it was substantial cash flow. So you don’t want to pass those things up. And the so I didn’t and but we have probably three or four other reifies coming up at the back end of this year, where we’ll be able to take them to more cash for projects that we have to go. So we kind of entered this discussion. I think a little bit about what’s happening with the economy. 

 

Erwin  

And more specific more about what are you planning to do with inflation? Oh, I actually had to add a comment to that totally agree with your point. No one really knows that idea about the economy. He’s going, one thing we can predict is the central banks will in generally they will, there will, there will be more money supply. So that’s what I predicted. 

 

Christian  

I think you’re absolutely right. And that’s kind of where I was going before, when if the bank decides to prioritise the economy, over fighting inflation, we’re gonna see loosening things like quantitative easing is going to start to happen again, which kind of increases the money supply, interest rates will probably come back down, or at least be moderated. So that stuff can all happen. But what I don’t do is rely on that, right? Because I just don’t know what’s going to happen. There might be another war, there might be, God forbid, another pandemic, right? It’s, anything can happen. And we just don’t know. So I really look at things on a risk management basis. So I take look, so I look at things on a risk managed basis. And when I take a look at things like interest rates, inflation is something that I kind of like, you know, in the context of it makes my debt cheaper. Right, and that’s the way I look at it, I don’t think about it, as you know, it makes my assets worth more, because there’s nothing that’s fundamentally changed about the assets, their intrinsic value is the same, you don’t think that change was the value of the currency that you use to buy it, but my debt is tied to that currency. So with rapid inflation, so for example, 6.7%, you know, year over year inflation you were talking about earlier? Well, my debt just got cheaper by probably about 6% as a result. So that’s great. Right now, the side effect, of course, is interest rates. And that’s where you need to decide, how are you going to mitigate that particular risk. So a lot of people are in variable rates, I have no issue with variable rates. And if you believe that you can weather and you know, when interest rates storm, right, in that the variable rates probably make the most sense for a lot of reasons. But in my business, you know, there’s such a huge debt and asset value that a significant fluctuation in the interest rates could affect my operational budget. So I like to have predictability on that. And so for me, I look more at fixed rates that match the duration of a particular project or objective. And it’s not unusual for even my larger competitors, if you will, some of the bigger companies like hazel view, or Memento or homestead, they won’t even look at just a five year lock, they’ll be looking at a seven or even a 10, depending on how much they need to weather a particular storm, you know, so in my view, predictability of cash flow trumps any potential gain I might have from a variable rate. Now, there is the other thing too, that when you’re dealing with commercial loans, you know, almost every product is a fixed rate because it goes to the bond market. So it’s not like, you know, I have to make a lot of these hard decisions. But some of my smaller mortgages have a choice of being between variable and fixed. So I run it at about a ratio of, I would say, 75% of my mortgages are fixed products, and then the rest are some form of variable, whether it’s line of credit, or traditional, very tight mortgages.

 

Erwin  

And then how do you hedge for like, all the renovations that you have planned, because that’s like, I was talking my handyman just on Friday. And he was telling me, he couldn’t find any ABS plumbing materials, you went to like six different retail stores like Home Depot, Lowe’s, no ABS,

 

Christian  

you have to, you have to buy, you have to buy well ahead and a lot of these things. So we’ve always had a process when we’re doing our renovation projects, or reposition more specifically in the repositioning projects, we know the timeline that that’s going to work to and then what we’ve typically done is buy the supplies when they’re discounted. So if we know that we’re going to be doing, you know, full electrical overhaul of the building, or we’re doing a lot of plumbing work, or we’re going to be buying, you know, doing hardware floors, or H vac systems, then when there’s a price break, we’ll buy it, then we’ll store it. So that’s that’s the way we typically deal with it. And certainly for retail stuff, you just watch for discounts everyone else, everybody’s got a discount, maybe once a quarter, once every six months, where you might be able to get like a 20 or 30% discount on something. And they’re storing it. Yeah, we store it. So we’ll we’ll pay for the storage cost, right. But that’s, you know, it’s a lot less than if we have to buy it on demand. But right now, like if we’re, I’m looking at heat pumps on a repositioning project. That’s a 12 unit building that we’re doing. That’s a conversion of a seven unit to a 12 unit building and my age back guys told me that they need about six to seven months lead time to guarantee that they’ll have the equipment.

 

Erwin  

So is that timeline work for you? Oh, yeah,

 

Christian  

no, it’s because I mean site plan, control and re train. And you know, the city, alright, it’ll probably take six or seven months. So as soon as my site plan, I get it, I get a thumbs up that it’s going to go through the process. So I’m just waiting for feedback on that. As soon as I get the thumbs up on that, we’ll put the order in for the equipment, so we’ll have to pre buy all that stuff.

 

Erwin  

What about the properties in Elmont? Like, don’t those renters need to be done sooner than later? 

 

Christian  

Well, we have to wait for tenant turnover, right. So we store so sorry,

 

Erwin  

apologies, because you mentioned like after about a quarter of them need to go back to the stud. There’s people living there.

 

Christian  

Okay, got it. But I don’t want the tenants are going to move out. But we some of the harder things to get or appliances, for example. So we just we’ve been hoarding appliances, we usually buy them on a secondhand market anyway. So when we see stuff that we think we might need, we we literally just go buy it, pick it up, and we store it, right. So literally, when somebody needs a new stove or a new fridge, right, we get one to them the same day, we don’t go out and try to source it and buy it. We usually have them on hand.

 

Erwin  

Christian for the for the novice, can you explain like, do you have staff or you and your wife are going out with a truck and picking up stoves and washers.

 

Christian  

I’m getting too old for this shift. My wife still tries to get me to try and move the stove and I will in a pinch. Right. But you know, I didn’t want to be lugging these things upstairs. I’m just not built for this. And you know, so we have people that will do that. And we do have some amount of staff, although it’s been a bit more challenging through the pandemic, but then we also have subs as well. So we’ve got we’ve got a team of people that will do stuff like that for us.

 

Erwin  

Can you share how many staff you have?

 

Christian  

Yeah, sure. We have five people all told combination of T four and T four A’s. Got it? And then we can as well. 

 

Erwin  

So again, for the more novice like what would you recommend me first hire a bookkeeper, bookkeeper. And then after that, when you say bookkeeper or the T four, they have a sub contract. 

 

Christian  

Now, there’s especially when you’re first starting out, right. But that’s a mistake I think a lot of people make right off the bat is, is you really do need a bookkeeper to keep your book straight. Because most people really don’t know how to do their books properly. I think I know what I’m doing with the books, but even I won’t touch them, right? My bookkeeper is still 10 times better than I’ll ever be, and much more efficient. And it sure makes tax time a lot less expensive. 

 

Erwin  

My wife appreciates those things. And then can Sorry, could you go through what positions do you hire for versus which ones do you sell out?

 

Christian  

That’s what you’re doing really. But I would definitely get a somebody who can do some basic maintenance, right? Not necessarily a full handyman, but you’re going to need yard work done, you’re going to need someone to take out the garbage, you’re going to need somebody who can do some basic painting and drywall repairs. So we have a maintenance guy that does all of that stuff for us. And then we also have a column. We kind of refer to him as a man, but he’s really a builder, right? So he’s a builder. He does framing he can basically do everything is a bit of a jack of all trades. And he literally moves from renovation project to renovation project, and then they supplement so when we’re doing full repositioning that we’re going to hire out, the crew will supervise the crew, right, but we’ll have somebody who acts as a foreman. They’ll be under contract for that period of time. And we’ll bring in people that we need. Our plumber is a contractor. They’re always handy to have. I can do plumbing, I can do a lot of things right. But I don’t really want to do it.

 

Erwin  

Any job. So yeah,

 

Christian  

literally the times. But it’s funny to our plumber, he only does work for us. And his main gig is actually real estate. So he’s a real estate entrepreneur. Now. He also has a an appliance rental business. And he’s he’s just a natural entrepreneur, but he still likes to do the plumbing and he only does the plumbing for himself and for us. And he can fix appliances. Now he doesn’t fix the appliance now. Okay. He has a an appliance rental business. So in Quebec, it’s typical that you get an apartment that doesn’t have appliances. That’s the norm. And so it’s quite an industry on that side where there’s rent appliance rental business. So tenants can either buy their appliance or they can rent their appliances. And so he has a business that literally just does that. But for the rental appliance business, his MO on that is he’ll buy new appliances, he’ll put them in and then when they come off rental, he just sell them on the US market. He doesn’t try and redeploy them at all. And then he just buys more new stuff. Cool. Good. Yeah, the markets are all really dynamic, right?

 

Erwin  

Christian Did you share? Well, at what point do you go to outsourcing to a crew? Again, you know, not everyone forget that the term you use was does the positioning and repositioning yeah Oh, okay. 

 

Christian  

Yeah, so it’ll completely depend on the nature of the project, right. So normally, what you want is for tea for staff, it’s where you’ve got a very steady amount of work, right. So if you’ve got work, it’s just routine. Again, you know, for the next few years, you’re always going to have this kind of work, you might as well hire them on as T for, right if you’ve got work that can fluctuate, right, so you might have demand in one year, but it may not be there the next year, then you want temporary staff that fall under a T for it, there’s still contractors, if you will, but they really just work for you or predominantly for you. And so you’re supposed to give them a effectively a T for a, so it gives you a bit of flex. And then you’ll have also subcontractors, which are job specific contractors, and, you know, they’re invoicing you that kind of thing. So that’s sort of a third tier. So when it comes to that third tier, it’s literally project by project for me. So we don’t do secondary suites, but a lot of your listeners will do secondary suites. And if you’re doing a second, the single secondary suite, you’re gonna go, you’re gonna get a bunch of quotes from a bunch of different contractors in terms of how it’s going to get done. And then you’re going to pay them a contracted price. Or you could go time and materials as well. But it’s, it’s going to be for a fixed period of time, and the project’s done, and they move on, and they go do another job somewhere else. So our projects are similar to just Baker. Right, so we’re doing a 12 unit repositioning project. So in that case, we’re going to have to hire a crew of people, right to do the work. And it’s always an interesting discussion with my accountant, right? Because on one side, you could just say they’re regular contractors and other cases, you do have the issue of default rates, depending on the nature of the relationship, right. And, you know, Terry would be a better better person to speak to that than me. But depending on the nature of the relationship, right again, and almost irrespective of the nature of the relationship, it just allows you to flex so I’m not constantly doing repositioning projects, you know, I have them, they get it done, right. And then I might have another one like a year later, right? Or six months later, or two years later. So I’ll just take a crude one specifically do that. And then when they’re done, they move on to their other projects.

 

Erwin  

I don’t know Krishnan sounds like you’re pretty busy.

 

Christian  

That’s why That’s why we have a builder on staff. Right. 

 

Erwin  

So we can keep in one builder. But your projects you’ve taken on a couple disaster projects,

 

Christian  

you but like I said a lot of those disaster projects. 

 

Erwin  

So the builder bases, their disaster before you set foot on them, that you created the disaster. 

 

Christian  

To clarify, maybe we could do like an HGTV show on this kind of stuff. But in and I’ve certainly talked about them before, so we won’t recap them here.

 

Erwin  

For folks who have been listening Christian when he was on previous episodes. The last one in September some crazy stories with break ins and cops and cameras and yeah, yeah, cops the leading to evictions. And it’s actually a great argument for why you need tech in your in your buildings. 

 

Christian  

Sorry, there’s a continued podcast to go with it. We talked about one of my buildings had, you know, had all kinds of problems. I had a, it was an acquisition where it was basically a 10 unit building where we had two hoarders we had a drug dealer, we had a guy that just liked to beat other people up, we have one good tenant and three vacant units. And that building is beautiful. Now it’s performing incredibly well. But the reason we have a builder and staff is he’s typically doing all the turnovers. Right? So he’s isn’t more of a jack of all trades, he can do everything, right. So when we have a unit that needs refreshing, he’ll do that it’ll take it all the way back to the studs if that’s what’s required. And then when we’re doing a repositioning project, that’s typically a different crew that we’ll hire out. So he’s not tied to that. Or if we have peak demand work, then we’ll just add contractors into the mix. Right. So we did one of our office buildings with you know, there’s obviously issues with respect to renting out larger square footage of space for office use during the pandemic. So we’ve completely reconfigured them into individual offices and rented those out, increase the revenue by about worked out to roughly 50% increase in the revenue per square foot for the same space. But in order to do that, we have to hire a crew and to come in and rebuild all this stuff. So you’re often flexing up and down on on these types of projects.

 

Erwin  

And then you need before recording you’re even though you’re restoring you’re improving these properties a lot. Some of that doesn’t. So you have three vacant units in a very, I’m sure you’ve had he’s been cases in Ottawa just as well. And you’re saying he had a building with three vacant units. I’m guessing there was something wrong with the building.

 

Christian  

That was we talked about that in a former podcast. I think but it was we did that acquisition back in 2017.

 

Erwin  

All right, but even your current your current downtown property that you bought, that’s hard to track all these things.

 

Christian  

So we bought a seven unit, roughly a year ago, that project we’re repositioning the building into a 12 unit building.

 

Erwin  

Do you try to paint us a picture with the seven unit building is like, is it like a three story or four stories that purpose built? What does it look like?

 

Christian  

Yeah, it’s, it’s in centre town. So it’s it’s right downtown Ottawa. It’s in a, you know, Premier area, if you will. But this building was built in 1901. Secure home. Yeah, exactly. Now, interestingly, it’s just outside the Heritage Overlay district. So I don’t have heritage requirements. But I’m making it as part of my proposition for site plan control, that we’re going to beautify the building and preserve the heritage nonetheless. And well, I’m doing that because I need a favour, right. I need some concessions from them.

 

Erwin  

They’ll play ball they will like this is they will negotiate on stuff like this.

 

Christian  

Yeah, yeah, they’re not unreasonable. You know, I think the city gets a bad rap at that time, I usually find that they are willing to be reasonable about things like this. But on something like this. So another building, which I never told you about, we have another centre town building. I was at Heritage Committee a few weeks ago, it pleasantly surprised as part of the heritage strategy, as you know, as a secondary effect of the new official plan. They feature two of our properties as examples of what developers should be doing to preserve heritage within the centre town district. And we had two counsellors, including a counsellor I’m going to need support from for my new project, she was on the call, as well. So it was kind of a you know, at call it out. And as well, I really, thank you very much, I appreciate the fact that you’ve featured a couple of our buildings. So in the site plan control, I’m just referring back to that as well. Right. And so my, you know, going in compromise, if you will, is to look, I’m going to do this because we like beautiful buildings, okay, I’ll be perfectly honest. So we’re not beautifying these buildings, because the city is making us do it. Right, the city will give us incentives to do it. But we like to be proud of the buildings that we own. So with this building, the one that I’m talking about the seventh unit that we’re going to convert to 12, it has a lot of heritage value, and can add a lot of character and the rest of the street has beautiful homes, there period homes, but the owners of all lovingly restored most of them, right, so it’s really very nice. So that’s what we’re going to do with this building. So it is three storey building, it’s in what’s called an R four UD zone, which gives us an awful lot of latitude in terms of what we can do even including height. So you have to respect things like transition between houses or between buildings. You need to respect what’s called massing as well. So how much of a presence it has on the street. And in the city, you basically asked us to do other things. They say, Well, can you do something to prevent tenants from parking on the front lawn? Right? So yeah, we’ll put that design feature in, that’s fine.

 

Erwin  

But that’d be like rocks or like a fence or

 

Christian  

No, what we typically do in our properties is we’ll put some sort of artwork in the front. So we’ll we’ll create some sort of stonework from a perimeter and will create sort of a nicely landscaped interior to it. And then we put some some amount of artwork in the front as well.

 

Erwin  

Is there an address you can share as I can do a Google Streetview? 

 

Christian  

Sure, I’ll give you two addresses if you want to take a look at that. So one of the properties that was featured in the centre town heritage plan is 314 Frank Street, in in Ottawa. And even if you do a Street View, I think it’s fairly current in terms of what it looks like. And then an example of our work that we also did was, this was a project we did back a few years ago, on 442 McLeod Street, and that’s a six Plex. So it’s a little one, but you’ll get an idea of the kind of artwork that that we might put there.

 

Erwin  

Right, Frank shooting looks a little overgrown, even while you’re transitioning it. That’s a nice like a building.

 

Christian  

It’s beautiful that you’ll take a look at the all of the detailing on the front, we will restore all of that millwork.

 

Erwin  

Wow, that’s doesn’t look cheap, and I don’t really see much of this stuff. 

 

Christian  

I’ll send you some pictures of what the gardens look like because the gardens are absolutely beautiful. Now they’re on your Instagram, they’re on our Instagram and they’ll also be on on our Facebook page. If people go to a live first group on Facebook. You’ll certainly see all the pictures there we post them regularly.

 

Erwin  

So did the city people like you? They don’t like more landlords? Oh, not in my experience.

 

Christian  

Like is a relative term?

 

Erwin  

Oh. Oh, McLeod, look at that. Oh, wow. Yeah. Hopefully no one parks on that. No, it would be painful for their vehicle if they did. Oh, yeah, that’s, that’s by design. Right.

 

Christian  

Exactly. So that’s the kind of stuff that that they asked us to do. So So yeah, that’s no problem. So we put that into into our design. So we kind of show that we’re compromising. So what ends up happening behind the scenes in a site plan controller later on in the committee of adjustments, if anybody’s ever been to a committee of adjustments, is basically set up where the committee is an elected committee. And then you go in to put your case forward. And if somebody wants to oppose, they can come and give a counterpoint to the committee to say why you shouldn’t get those variances. But before all that happens, they also look to city staff to say, You know what their opinion is. And so if you work well with the city staff, and you’ve shown that you’re willing to accommodate what they want, and you’re not trying to just bully everything the way you want, then the city staff will say, Look, we support what they’re doing, they’ve done everything they can in order to not ask for these kinds of variances, and they’ve made concessions and other areas in order to enable this, then you’ve got the backing of city staff, which helps. And then the other thing we do with things like committee of adjustment is I’ll shop these plants to the neighbours, you know, the 10 closest neighbours, I’ll just shop it with them. And, and I will also shop it to key influencers on the street, and tell them what the project is about why it’s going to enhance the neighbourhood. And I’ll ask them to sign off on a letter of support. And then I submit those letters of support with my application in a committee of adjustments, and it usually turns into a non event. And I kind of in one scenario, we had someone who was objecting. Right. And that took a little bit more time in the committee of adjustments. But in that scenario, because we had overwhelming support, the Committee of adjustments went in our favour without having to go with appeal.

 

Erwin  

In Hamilton, we have overwhelming on support of our garden suites.

 

Christian  

Different projects have different acceptance by the community to look at it as a as a democracy, if you will. So if I’m putting in a project into a neighbourhood that doesn’t really fit the character of the neighbourhood and isn’t going to garner support of the neighbours, then, you know, I probably wouldn’t go ahead with it anyway.

 

Erwin  

Right. Well, look what Frank street McCloskey for example, did you reposition them? Did you add suites? Did you add stories, additions, anything like that?

 

Christian  

You have Frank Street was easy. So Frank Street, that was a it was a six unit building early.

 

Erwin  

 And telephone. It was sorry, Frank. Sure. You can tell you. 

 

Christian  

Right Street was a six unit building that we converted tonight. Okay. And we did that back probably about seven years ago.

 

Erwin  

Okay, what were the extra units come from? Walls?

 

Christian  

Kinda, yeah. So, on the second floor, there was a very large three bedroom unit, it had two bathrooms in it already. And it was the previous owner was living there. So it was very spacious. And renting out three bedroom apartments is actually pretty tough. Meaning it is so you know, uncommon, well, the city would say they’d like to have families move in there. But in our experience, you know, I’d say 25% of the time it was families. And then the other times, it was people who, you know, usually students who wanted to rent an apartment, and then each of them would use a bedroom. So we didn’t really want to do it as student housing. And then the other issue was that the revenue per square foot of a three bedroom is a lot less than the revenue per square foot of a one bedroom. So what we did was we took that unit, and we split it in half created two very nice luxury one bedroom units. But even on you know, as is basis, the revenue per square foot went up by about 50%. Right off the bat for that same floor space. And then there was unused room in the basement. So we expanded there and we added two new basement micro suites in there. 

 

Erwin  

So the previous owner just left unused space.

 

Christian  

He did because there’s another problem in Ontario. If you go above six units, then you get into the the MER tax rate, the nil rate there in the mill rate in Ottawa. So residential mill rate is about 1.0 1.05, somewhere around there. But as soon as you go above six units into your seventh unit, you’re now in the MER class network class has a nil rate of about 1.4. So your time taxes go up about 40% of your property taxes go up by 40% by adding a seventh unit. So that’s where I say, Look, if you’re going to redevelop or reposition, you know a product like that, and you’re going to take it above six units, unit seven, and eight is kind of the valley of death. Right? Like, there’s literally no point to do it, because you have that seventh unit, and all the revenue you get from it just goes to pay property taxes. So and then the city wonders, why don’t we have more people doing seven and adding a couple more units on the six plexes you guys taught, you know, basically, you’re telling us through the tax system not to do it. So that’s why you need to really jump to about 10 units before the business case starts to hold together and some would suggest up to 12 units. And so the McLeod Street property that I showed you there that one was originally a triplex and we did talk about this in a previous show, so I won’t get into into the details on that one. But that was a troubled building, but it had a lot of square footage space on it and we turned it from a triplex with one illegal unit and converted it to a six Plex. A modern six Plex that’s a beautiful building.

 

Erwin  

And it was time to see some of these places when I when I come visit you.

 

Christian  

Yeah, for sure. Yeah, we’ll we’ll do that we’ll do we’ll go take a look. At least the Ottawa some of the Ottawa properties for sure. 

 

Erwin  

Alright, so to talk about that, actually, no, yeah, so June 8. When we come in to visit you I can share charitably speaking and Oreo.

 

Christian  

We’re gonna have June 8, that Oreo 7pm. So we’re going to have both cherry Chan and that’s Irwin’s better half. And Elizabeth Kelly, will be there as well. So we’re gonna have both of them speaking that evening.

 

Erwin  

Fantastic. And Oreos, the largest real estate organisation in Ottawa and not

 

Christian  

Yeah, we refer to it as a club. Yeah, it’s the largest, the organisations and the most active, certainly within the city, we have about 400 full time members, and they don’t all show up all meetings, but they’re always there. And we’ve also done an association with Eastern Ontario’s landlord organisation, which represents all landlords. And what we did, there was a an alliance where they do our lobbying. So particularly with the municipal governments, we’ve had some great outcomes on that side, which we can certainly talk about as well.

 

Erwin  

So we’re running out of time on that part.

 

Christian  

On the boreal piece, though, we went back to live and hybrid two meetings ago starting in March so we do our meetings in person at the Infinity centre, and then we also remote members or members that aren’t quite comfortable coming in person yet come in through zoom, and it’s an interactive discussion so people on Zoom can still participate with what’s going on on stage as well and q&a still work etc. And members that are presenting while they’re on Zoom calls, it’s all seen from within the Infinity centre so it’s a real cool setup that we’ve got on the go. So we’re still going through a few teething pains on it, but it’s pretty neat.

 

Erwin  

Where can people find out more about Oreo and I want to attend the event is to…

 

Christian  

Go to our website oreo.org So let’s spell the Ottawa real estate investors organisation so our e io.org. And they can always reach out to me if they get lost and where can they reach you can reach me any number of ways Christians still Szpilfogel on Facebook is an easy way or via email Christian at

 

Erwin  

All positive there this is internet this is for life, you should wash your email well if your website and the contact us page

 

Christian  

i don’t know i don’t get too much spam. The most spam I get these days is purely from people trying to tell me why I shouldn’t be trading Bitcoin.

 

Erwin  

Trading Bitcoin. Do you do any bitcoin any gold, silver Bitcoin?

 

Christian  

I don’t I focus on real estate. And you know, that discussion we had earlier we were talking about the economy is that the punch line through that whole thing is the smart money right now is putting their money in hard assets, right? Whether it’s real estate, whether it’s certain precious metals, I’ve seen Bitcoin now described as a hard asset, although I’m still struggling to get my head around that. And trust me, I’m a technology guy. Okay, so I’m not shying away from Bitcoin because I don’t fully understand it. And I think it’s an interesting area to investigate. Right? But it’s not the technology that scares me.

 

Erwin  

Well, what are your friends from the tech world thing? Are they divided?

 

Christian  

Yeah, I say that tech investors, so people who are technology background, and our investors, most of them, I would say have thought about Bitcoin more in the context of experimental hobby and not necessary really as a serious investment vehicle, and I’ll admit, I do get worried when everybody is talking about any specific investment class when I go and get my hair cut, right, and the barber is talking to me about bitcoin and how he’s trading, when the Uber driver starts talking to me about bitcoin trading, when I get approached endlessly on Facebook with people who want to be my friends, but only really just want to sell me bitcoin trading stuff, I get nervous about that, it makes me think that there’s something not quite right.

 

Erwin  

Right. They’re all trading, none of them are holding. 

 

Christian  

No other trading, people are trading. That’s what I’m typically seeing. People aren’t necessarily holding your trading. Even my 86 year old father was asking me, How do I get into Bitcoin? It’s always Dad, is this just for play money, right? Or are you doing serious investing? Because I think you really need to do a lot of studying on this. But if you just want to, if it’s play money, and you don’t mind losing it, that’s fine. Right? I can help you with it. But that’s kind of where it stops.

 

Erwin  

You remember me time people talked about trading gold?

 

Christian  

Well, exactly. And I think that’s because a lot of people don’t fundamentally understand what crypto really is. And when we take a look at something like Bitcoin, to me, the equivalency is gold. You know, it’s a storage of value, right. But what a lot of people are doing? Well, no, that’s right. Yeah, there’s a lot of speculation as to where they think it can go. But it’s just that speculation. But what a lot of people are doing is trading on the volatility, right, and just like people do in the stock market, their technical traders, so there’s that piece going on Ethereum is really kind of interesting, because it’s more of a platform, where other things can be built on top. So I’m kind of curious to see the companies and the business opportunities that emerge on that platform, because that could be interesting. But personally, I prefer assets that generate some form of a dividend, right? Real estate is a great way to do it. And when we talked about earlier, it’s effectively a storage of value in an inflationary times. It’s one of your best hedges, for sure. Because regardless of what the market does, you’re still getting an income stream out of it. 

 

Erwin  

Yeah, the price of two by fours go up. I got lots of two by fours in my house. So my house is actually worth more. Right. So hopefully, no one goes breaks into my house and steals by two by fours.

 

Christian  

Just go back one podcast to hear about those stories.

 

Erwin  

And you can’t, it’s not the two by fours.

 

Christian  

 It’s the copper.

 

Erwin  

That’s not enough copper, my property steel, hopefully knock on wood.

 

Christian  

Don’t go into the walls.

 

Erwin  

Thankfully, we’re only places all tenanted so hopefully they’ll defend my copper. Garage, Christian, this has been a blast. I know we could go on for another hour or three. Thank you so much for your time. Any any final words you want to share? Could you imagine if people are still not convinced to own art assets?

 

Christian  

No. I mean, it’s become so obvious after a while, right. And sometimes I think it takes wisdom of time, right to kind of be able to see the history for yourself, right? I got into real estate in 2005. And in terms of, you know, picking up rental assets, if you will, right, obviously, I had my house, I had done some land stuff before that, but it was never really serious. And now I look back and think I really should have started a lot earlier. Because at the end of the day, they’re not making any more land, you know, cities are still continuously growing rural to urban migration is a real thing. And then even if you’re not in the high growth area, at the very least, it’s a storage of value that generates cash for you. So it’s an asset class that I think everybody needs to hold. And the only recommendation beyond that is that I think people shouldn’t just buy willy nilly, I think people really do need to get some level of training, some level of education, maybe some level of coaching or mentoring to make sure that they go about it in the right way. But it’s one of those asset classes that even if you do the wrong thing, time will forgive it. Right. Time cures a lot of mistakes. Yeah, real estate time for the central banks to create more money, because they create more money. Again, I will say it again, when they start printing money, your debt fundamentally gets cheaper, protect yourself against the interest rate hikes, you know, if that’s what you feel you need to do, but your debt gets cheaper relative to the asset itself.

 

Erwin  

And that same time your savings go down in value. That’s right, your cash savings.

 

Christian  

Yeah, only hold the cash you need for reserves. Right. And if you can hold it as credit, that’s better. But yeah, I mean, just think about the price of the house that your parents bought, right? What did they pay? What was their loan value? Right then if you just did it as an interest only loan from that period of time, so we’ll talk about the cumulative carrying costs. But if You had to pay off that mortgage now you’d be whipping out your Visa card. That’s ridiculous. Well, I don’t know my parents bought in the 60s. So they would be whipping out a Visa card.

 

Erwin  

Yeah, mine might have three mark, my parents had three mortgages on their first house. Visa card, maybe all my credit cards. But yeah. That’s pretty insane thing to think about. And then you’d own a house free and clear from my parents would be Scarborough and that house is probably worth I can’t imagine it can’t be worth 900 grand.

 

Christian  

So just just one other mentioned, I guess is for contact. So we, you know, I’m on Facebook. I’m on Instagram as well. Our company Liveris, right, Al, I F, E R O U. S, we have a presence on Facebook Live first group, we’re on Instagram. And then of course, there’s our website live for us.ca. And I have a bunch of resources there for investors as well. We call it the investor hub. And that’s where I write my articles. And they’re practical things. So I tend to write things that are going to be useful to people. It’s not market speak, it’s not, you know, market fluff. I have nothing to gain by that. Because I’m not really trying to attract people to my website, unless your tenants but for really, it’s just a resource that I like to create and share.

 

Erwin  

You share a lot. Is it just for fun?

 

Christian  

Yeah, yeah, I just I like to I like to help others. I like to give back to the community. You know, I don’t really have any commercial interest in in the sharing that I do. It’s really more about educating and helping others. I just want them I like people, and I like to see them be successful, quite frankly. But no, I mean, I don’t take external investors. So I’m not doing that. Right. And my target market is primarily tenants. But helping landlords doesn’t necessarily get more tenants.

 

Erwin  

There’s plenty of tenants. So it’s not something we need to necessarily repeat over. But you also volunteers, the Vice President of Oreo. That’s right. Yeah. That take much of your time.

 

Christian  

More than my wife would like me to contribute Sure. Right. Yeah, it’s a little bit of time. But it’s it’s hard commitments. Two evenings a month. And then there’s some work in between. But myself, Victor Menashe, Michael Chan, but that Turner, Jacob Homer and Brad car K, we just volunteer our time to do this. Unpaid? Volunteer? Yeah, it’s absolutely volunteer. And we do it. It’s just, you know, our obligations. Were just members of the club that volunteer our time to do it. And then eventually, we’ll tire out and somebody else will want to come in and basically do it. So, you know, people within the Oriole club, each case, you know, a lot of them have taken a turn to running the club. So this isn’t my club. It’s not Victor’s club. It’s the club, right? And we each volunteer for these positions and get elected in. Cool. So we had an election in May, actually. So when you do come down in June, right, we’ll see if I still have a board position. Cool. See, if we’re still invited. You won’t change a thing, right? So it’s all locked in there.

 

Erwin  

Christian great catching up with you. I’m impressed how much you’re up to. I don’t know how you do it. And still, like, make the time to volunteer and talk to all your neighbours.

 

Christian  

It’s fun. That’s why amazing in the new tech job. 

 

Erwin  

Yeah, you know, more fun than your tech job. 

 

Christian  

Oh, I had a lot of fun in tech. I really did. And in anything I do, it’s not a job, right? It’s focused. It’s a hobby. It’s what I live in, breathe. So I can’t do stuff halfway. It’s just not the way I’m wired. in tech, you know, I was one of these people that work all the hours of the day, it really didn’t matter. But I enjoyed it. And we built some really cool stuff over the years. And now that I’m full time in real estate, and I’ve been full time in real estate since 2017. And it’s it’s the same way and I think I mentioned to you my younger daughter joined our business almost two years ago, and she’s coming up through the ropes and you know, that excites me as well. I kind of want to see her eventually take over the reins. That would be wonderful. Cool. I could stop now. Honestly, I could stop that could have stopped maybe two years ago but I just have fun with this all the time. And as long as I have fun we’ll keep doing it.

 

Erwin  

Amazing. All right graduation tradition on all your success and I’ll see you June 8

 

Christian  

Yeah, hopefully in your nice shiny new Tesla

 

Erwin  

And we’ll see you no idea when it’s showing up that just like oh just like to say goodbye to these gas bills. Like your brain like crack the crazy this morning and I need to fill my car like you know that’s one of the use cases for having an electric vehicle. You know, when I leave the driveway, it’ll be full. The fuel tank will be full. I don’t pump gas in the cold or rain ever again.

 

Christian  

Well, there’s definitely not I mean, there’s no need to charge up unless you’re doing a long haul trip. Right. But I think so electric. And I know we should probably wrap this up, but I’ll tell you electrical vehicles, electric vehicles are going to be really interesting in terms of not just what they do, including the autonomous vehicle. So but think about the innovation, that’s going to start to happen related to the electrical grid. Right? Because you’ve got all these cars that are there, and their batteries are all full, I think about what happens when you’ve got, you know, basically load sharing that has to happen, you’re not relying completely on the generating site. So you know, to spin up a, you know, a nuclear station in terms of turning the the electricity up on that is, you know, takes a long time. That’s why they still have some natural gas generating stations. And then when you’re taking a look at wind or solar, right, there’s fluctuations and variance that happens there. But if you’ve got these batteries spread out all over the grid, you know, if you’re an electrical engineer, you’d understand the concept of click capacitance. But basically, what happens is, you’re basically buffering all this electricity. But if you need to, you can kind of feed back to the grid, all right, at times where there’s a bit more demand on the grid. So it actually will be an interesting enhancement to the electrical grid over time. Now, this is going to take probably 20 years, at least for this job, because you gotta get smart technology to do it. Right, because the system is largely wired to feed demand, as opposed to being able to go back the other way. But with the feed in tariff programmes, you know, with the people doing local solar generation, people already have the constant being able to feed back to the grid, this just adds another interesting dynamic to the overall next, it’ll be fun.

 

Erwin  

I haven’t really interested in seeing what happens with full self drive, which I think will happen before 20 years. And you can essentially, have your car be its own Uber taxi, you can basically have a built in designated driver, think about what that’s going to do to public transit, or smoke it.

 

Christian  

Yeah, I’ve seen some towns already, instead of getting their own buses, right. They’re literally just contracted with Uber to be their their public transportation. I think Ingersoll Ontario was is one city that did this probably four or five years ago. And there’s a few other cities, I have to confirm that right, because I’m just doing this from memory. But I thought that was an interesting shift. Now if you go to autonomous vehicles, then that becomes much more feasible even in larger, larger urban centres think about it as a feed into a main transit. So if you’ve got light rail that is part of your main corridor, where you could have these autonomous vehicles bring people to those stations, or at least main transit points, it gets really interesting.

 

Erwin  

And it gets cheap. Transportation gets really cheap. When you don’t have humans involved, we get to see this in

 

Christian  

Ottawa. Irwin, right? Because Ottawa is one of the few level five self driving tracks test tracks in the world because of our climate. So auto was a hub for, you know, the illusion of autonomous vehicles

 

Erwin  

On the streets of Ottawa

 

Christian  

There’s a track you mean, some of the streets in Canada north, so in the major tech park there, so on a Hertzberg, and like it drive, and Terry Fox drive, that area, that loop, if you just stand there are some days you’ll see some autonomous vehicles driving around. So that’s cool. It’s becoming more and more common. Originally, it was a special event, and everybody would come out to see it, but you’ll still see them testing. And then they’ve got even the traffic lights, and so on have special transmitters in order to enhance some of the autonomous vehicle. Things that we’re working on, that our test track is actually not far from the Infinity centre, it’s probably about a 10 minute drive from there. And it’s a really neat little track there. But autonomous vehicles, you know, you talked about within 20 years, I think most people are predicting it’ll probably be about 20 years before the technology is really in what’s called level five, full automation. And then there’s going to be another period of 10 years where there’s a transition of those vehicles as well into the marketplace. That’s a long time. Yeah, I’ll send you an article that kind of describes the timeframe in the evolution app. Okay. Crazy. Yeah.

 

Erwin  

Cool. All right. I’ll make sure not to buy FSD for my Tesla. Did you buy it?

 

Christian  

Yeah, I did for sure. Absolutely. I did. Just love that feature. When you know, I was just imagining right I like to always tell my friends so think about when you’re in in a mall, right? It’s raining can’t Have some dogs, your arms are full of things that you just bought. And normally you’d have to try and run through the rain get to your car, put the stuff in, or you’d have to have somebody wait with your stuff while you go get the car. But with the full self driving, you can summon your car to come and pick you up. What’s not to love

 

Erwin  

This order all my stuff on Amazon and Costco delivery.

 

Christian  

Kit lineup, right. So the good thing is I paid it, you know, I’ve locked in a January of 2021 prices. Right? We’ll see when I actually get the car.

 

Erwin  

So there’s you still bought the full self drive? That’s awesome. Amazing. Yeah, that’d be a fun toy. That’s like a fun trick. Question again. Thanks so much for doing this. And I’ll see you June 8. Right.

 

Christian  

See, well, we’ll probably see you in May. Right at the multifamily.

 

Erwin  

Yeah, that’s right. less than less than a month. You’re crazy. But we’ll see you there. And then we’ll see you in June. Yeah.

 

Christian  

Amazing. All right.

 

Erwin  

Thank you, Christian. Well,

 

Christian  

Well, thank you for having the early season.

 

Erwin  

Before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already, then sign up for my newsletter and you’ll learn of the next free demonstration webinar I’ll be delivering on the subject of stock hacking. It’s much improved demonstration over the one that I gave to my cousin chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow. But with the rising costs to operate a rental business, it’s just not the same as it was five to 10 years ago when I started there are forget the cash flow reduces your risk. The more you have, the more lumps you can absorb. And if you have none, or limited cash flow, you’re going to be paying out your pocket like it did on a recent basement flood at my student rental in St. Catharines. Ontario. If you’re interested in learning more but secure for free for my newsletter at www dot truth about real estate investing.ca. Enter your name and email address on the right side. We’ll include in the newsletter when we announce our next free stock hacker demonstration. Find out for yourself what so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell I love teaching and sharing this stuff.

 

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Erwin  

Greetings real estate investors and friends. Welcome to another episode The truth about real estate investing show this is Erwin Szeto. Small confession. I really like researching stocks and real estate. I personally love it. I got to the office early and make coffee. And as diving right in this stuff. I don’t know why. And I’m not always narrowly focused actually like to look, ever since I got into stocks and stock hacking. I’ve been looking at the world more in terms of economics, and I’m reading a bit around history of money and economic cycles, which goes back beyond past 300 years. I’m even reading about Chinese history and their economic cycles, because my plan is to learn from history. So should it repeat itself, I will be prepared. And along the way of in the middle of researching muscle taking action. Some may call me a conspiracy theorist, you know, all this talk about resets. It’s not new to me now. Again, some people might call me a conspiracy theorist, or I’m just overly anxious, but I like being prepared. Am I always right? No. But when I’m wrong, I’ll take responsibility. Learn from it, of course correct. But I do prefer to be over prepared. It’s actually benefited my family, my clients quite well. What I read recently, I found particularly disturbing is that only further further feeds my overprotectiveness of my daughter, as reported by Globe and Mail, nearly one in three students in a 2018 survey from my alma mater. So where I went to university, it was called The University of Western Ontario back then now it’s called Western University, I believe. Anyways, when three reported just under one with one and three were reported they were sexually assaulted. And that statistic is 10% higher than the Ontario university average. I’m obviously a bit disappointed. Again, being a productive father of a daughter, my imagination runs.

 

Erwin  

Usain Bolt was a hamster on a hamster wheel. That’s how my That’s how fast my brain runs. When on stuff, I tend to consume information and then I take action from it. Or I completely ignore it because I can’t change everything in the world. But I’ll action and what I can do so yesterday, so the same day, yesterday, while after reading the article, I was driving my kids and myself to kickboxing class, I take kickboxing class as well. I was explaining to them how, how many people have been touched inappropriately at university. And that’s part of the reason why I take my kids to keep martial arts. So I’m explained to them. People University, good number of them are touched inappropriately. And that’s part of the reason why they’re my kids are going into martial arts four times a week. That’s some questions. I tell them if someone bullies them, which include inappropriate touching, I tell them, No, you tell them loudly. No, don’t touch me. Try to get away. Running is the best defence, tell an adult or a teacher that they can’t get away or find help give one final warning, and then to exercise their training. I’m not giving you advice. I’m just what I’m telling my kids. And I fully support whatever repercussions come. My kids are friendly people. They don’t want to hurt people, but they will have to defend themselves. Because I won’t always be there. That’s why they’re doing all this training. There are other real problems in the world, including one’s ability to retire. I was reading an article that was talking about a CIBC they just published results results. And those survey results shared that 52% of Canadians are confident in their financial security to retire only 2%. Only half. So if that’s a problem for any of you out there. Thankfully, that’s our specialty here at i o in real estate, thanks to the most recent run up in prices. I’ve been having more and more conversations with our clients regarding their imminent retirement or they’ve actually already retired, retiring from their day jobs. Some have already retired in the last six months. And I have a couple more coming this week this year. You know, some of them took my advice, some of them were playing to sell. And one of my clients actually nailed the time perfectly. Based on our advice. I was based on the readings that was available out there. My suggestion to her was to sell in early in the year if her plan was to sell in the next year or two. I told her you should sell early in 2022. She did. And then I texted her yesterday, if she were to sell that same house today, that has to be worth about $100,000 less. So my client pocketed an extra 100 100,000 She’s of course very happy, so as to mention so along that same line of thought the market is currently dipping as expected. And the timing can be better for anyone who’s looking to learn DMS and real estate or get started or even just buy the dip and I’m no financial adviser, but I have dozens and dozens of clients who have increased their net worth by millions and millions of dollars buying, renovating, renting and holding cashflow, real estate, cash flowing Real Estate and we’re always looking for more hardworking Canadians to help understand all so that we introduce all our clients to the same people that we work with, to make their investing experience as easy as possible, including property management. So folks can get back to their day job and their families, which is really their priorities. Real estate investing to me is largely a side hustle. And I believe that’s appropriate for most people, all the power to people who want to do it full time. It’s just in reality, that’s a small, very small population. So as such, we’re back to in person for many of our networking and training opportunities, training events, most are free, and those who subscribe to our email newsletter will be informed when registrations available, which they tend to fill up quickly, especially for in person, right, so we can’t have unlimited numbers like virtual to get on our email list. Simply go to www truth about real estate investing.ca, fill in your name and email on the right side of the web on the website. And you’re good to go. Also, you’ll find there on our website in our show notes. So for example of our of our guests, we have our contact their contact information there, and you’ll get them in your email as well. Once we have your email address, please enjoy. onto this week’s show. We have Ryan Poole back with us and who is not your average Florida realtor. He’s got 24 years experience. He’s on the show today to share his experience during the housing bubble crisis. What wasn’t a crisis at the time when the prices just went up like crazy, and then the eventual financial credit crisis of 2000 2008. So he shares his experience about the run up and also during the crash, including when they’re buying portfolios of distressed properties for cents on the dollar. Of course, I asked him, does he see the same thing happening right now? And he’ll share the answer to that he shares also what typical investments are for those and also who aren’t for the buyers beyond Canadians, which make up a certain percent of buyers in Florida, we actually have the majority. So Ryan actually shares his experience and the splits between who’s buying in Florida. We talked about local amenities weather, hurricane preparedness, foreign buyer financing. Can you tell? I’m curious, that’s why I’m asking all these questions.

 

Erwin  

That’s right. Oh, yeah. Again, foreign buyer and financing. Ryan says he’s got access to that you can make introductions. Because now as Canadians we turn the tables we are now the evil foreign buyers this time. Haha. As mentioned, Ryan is not your typical realtor. He’s an owner of a tech startup as well called Real trade.io. Both sorry, that’s the that’s the URL as well, real trade.io which is a marketplace for realtors and real estate. That’s kind of like a combination of Facebook and realtor MLS in one, but it’s owned and operated by Realtors meant for realtors. So it’s a lot more friendly that way. I’ll let Ryan explain it. He’ll explain it better than I will. Anyways, Ryan’s a good guy. And I learned a tonne about investing in Florida from a local 24 year veteran of real estate. I hope you enjoy it just as much as I did. Please enjoy the show. Hey, Ryan.

 

Ryan  

Good. Is that clear? Can you hear me better on this one? I think so. Hopefully stays good. You know, we’re working on this awesome. I don’t know if real trade went through this pretty amazing tech accelerator. There’s this community called 1909 here in South Florida. It’s like an incubator accelerator. And I went through the accelerator and then I actually worked out of the space here. It’s pretty exciting.

 

Erwin  

Oh, I was wondering what the space behind you is, it looks for, ya

 

Ryan  

know, it’s it’s like this, you know, accelerator incubator, a bunch of cool tech companies coming out of it, you know, so let me some really successful ones. There’s some companies here that already have like, you know, 20 to $50 million valuations. So, pretty cool to watch it all happen.

 

Erwin  

Can you show it real trades evaluation is?

 

Ryan  

Well, we’ve we’re working on some investment, but we’ve got it in the millions, you know, we got in the millions valuation right now. So, you know, it’s pretty exciting, you know, with everything that’s going on, but we’re just trying to build it, you know, build it up more, you know, to mean to, you know, take out still

 

Ryan  

started going, I mean, we got a whole different business model than they have. It’s like, which people really are gravitating, especially the agents, you know, because obviously a lot of agents don’t like Zillow, the way that their business model is set up. You know, they use the agents data’s against themselves. They make the agents you know, they just work hard to get those listings, take those photos, get the property for sale, and Zillow takes that data then then they make the agents bet against one another for the leads off their own listing.

 

Erwin  

Zillow is not big here, but I see like the Instagram social media posts where you can tell agents don’t like them.

 

Ryan  

Yeah, and while there well the worst part is like Zillow is now like becoming like a broker. So they’re literally like starting to cannibalise. They’re basically content creators, which are the agents, right, which are their listing agents. So it’s like, yeah, it’s nuts.

 

Erwin  

It’s the thing that I’ve seen in many businesses, for example, Costco where I shop a lot, you know, I see the Haagen Dazs ice cream bar for like, you know, 10 bucks, whatever it is. And then you see like the Kirkland ice cream bars for like six bucks. Right, exactly. And that’s where it’s intentional. Oh,

 

Ryan  

no, yeah, no, of course it is. I mean, they’re, you know, they’re over here. There’s people there I buy our programme, you know, basically blew up. But you know, they’re they’re trying to basically become the whole thing, right? Broker, they’re the title company, the mortgage company, they basically try to take over everything which you’re in real estate, real estate’s very local, you need that local knowledge boots on the ground, right to help facilitate the sale. So yeah, and that’s what we do real tribe, we really concentrate on the local agents and the local service providers, you know, allow them a chance to network with one another, you know, help facilitate the sale.

 

Erwin  

Yeah, so like a real estate commercial. They’re selling mortgages, they said entirely, it’s so it’s such a so easy, it’s entirely online. And I’m like, if I’m a first time homebuyer or a first time real estate investor, I’m probably pretty nervous. And I can use someone who knows what they’re talking about on the side of the conversation. Buttons and feel confident in my decisions.

 

Ryan  

Exactly. No, you do you need to have a pro right? Especially like the first couple times, like you said, so it’s still it’s still when you go to sell a home. I mean, you know, you didn’t you know, Miss value an asset or you do something wrong. I mean, it could cost you 10s of 1000s, or not hundreds of 1000s of dollars, you know, so it’s crazy. You definitely have a pro on your side for sure.

 

Erwin  

Yeah, we won’t get into that. There’s other things more interesting. So right, right. And when I asked you to come back on the show was twofold. You’re a fan of cryptocurrency, we’ll get into that later, we will get to that stuff. But before we were recording, I mentioned how there’s a whole bunch Canadians who are looking to diversify by vacation property somewhere warmer than Canada, because it is cold. Whatever people say it is colder than Florida. They don’t think anyone can. It’s cooler than Florida. I don’t think anyone can argue with me on that. some neat things that I like about Florida specifically for is, it seems like Miami may become like the Bitcoin capital of the world, potentially, maybe at least for America, I don’t know, you tell me better, because you’re least American, I don’t really know. I’m just a Canadian. But I just find it weird that I see a lot of Canadians who don’t have much more experience in real estate in Florida, by law in the US. And now they’re touting themselves as experts. So I thought I’d reach out to someone who actually, you know, have spent more than 18 months in Florida to tell me what it’s like to invest in Florida.

 

Ryan  

Yeah, just so you know, you know, my, over my 24 year career in real estate, you know, when the market crashed last time, you know, in Oh, eight, you know, I started a boutique asset management company called rsis. On management, where we basically help hedge funds and, you know, basically acquire assets from regional banks, they were buying non performing loans and distressed assets. So far as the investment side. Yeah, I’ve seen it all really helped these funds that make some of the biggest money I’ve ever seen being made in real estate was from like, oh, nine to 12 or 13. credible? Do they were buying these loans? Like they were buying distressed, distressed debt, you know, they’re buying non performing loans for like, 10 cents on the dollar, to do keep some of these for yourself? Yeah, I was able bobbum was the way that these things were set up, was like to even bid on those loan pools from these regional banks, like you needed to have like, you know, proof of funds of like, 20 to $50 for the bid on them. And they wouldn’t they would bid them all in one portfolio. Like one tranche. Do you know what I mean? Now that the cool thing about the fund that I had, like they would buy them, and then they spin them off, obviously, you know, ones and twos, but their goal is to maximise the returns. So they would usually they would see the property, you know, get the property back through deed lieu of foreclosure, if it was a note, they just go to the borrowers and go, Hey, you know, we’ll make this whole thing disappear. Like it never happened, you’re in foreclosure you’ll have on you know, you owe more than your house is worth, you know, worth half of what you bought it for, will forgive this whole debt and things like this purchase never happened. You just signed over the property to us. And that’s what they did.

 

Erwin  

The parallels between the run up now compared to Oh, 708. Yeah, so

 

Ryan  

I went through that whole I went through all of that, right. So no, it’s totally different, at least here in Florida. I don’t know how it is in other markets, obviously. But you know, here in Florida, the buyers that are buying here, I majority of them are cash. Right. So they have no mortgages. I mean, I mean, seriously,

 

Erwin  

the opposite of what it was before then. Got property?

 

Ryan  

Exactly. It was like I remember vividly, like, like I said about, oh, 708 You know, when teachers school teachers in Florida, were buying second investment properties, not their first their second one, you know, and then I was like, with no money down. No money down stated loans. That’s when I knew I was like, Man, this is crazy. And the developers at that time, they were giving cash back incentives. So the people would actually buy the house make money when they bought the house. Put no money down the you know, Were an interest only arm loan, negative and loan. And they were like, you know, cashflow positive. But of course, everything’s getting paid down to the backside of the house. The property. I was like, Man, this, this is crazy. I don’t know how long this can last literally, like, a few months later, but four months later, right, the peak of the, you know, the craziness is one that was that the negative amlaw. Like, I think that was like literally like the crater like you know the grenade that blew everything

 

Erwin  

1. So I can explain negatively I’m alone. So basically,

Ryan  

you’re just paying, you’re going negative every single month. So your pain was set up a negative amortisation loan that like you never paid, the principal got added, kept increasing over the length of the loan. But you know, people were betting, so your payments were very, very low. But people were betting that the payments were like hardly anything, actually, then people were just betting that you know that the market was going to continue to go up, they could rent it out for six months to a year and have a good cash flow. And then to sell it in a year, right and then pay off their loan and still make this money. That to me was like, like I said, the grenade pretty much blew up the

 

Erwin  

market here. It’s like the investment on multiple levels of steroids. Yeah.

 

Ryan  

Yeah. And wouldn’t wouldn’t do and like I said, like doing the loan with no money down. So it’s just like, you know, and then they were buying

 

Erwin  

zero skin in the game. No skin in the game. cost you nothing.

 

Ryan  

The developer was going. Okay, so you’re buying this, this condo for $250,000? Right? With no money down. Okay, great. You’re gonna rent it out for 1500 $2,000 a month great. Your, your negative and loan is only, like 500 600 bucks. Your taxes are this, you’re gonna cashflow this, and then the developer would come in and go, hey, you need to furnish your place, right? Like you gotta you want to rent it out furnished, that’s where you’re gonna make the most, and then they would give them what’s called, you know, a decorator credit. And they’ve given $40,000 at closing back, dude, see them saying they would give him $40,000 Back at closing to decorate their unit to decorate their unit.

 

Erwin  

So everyone knew this was coming in short the market, right?

 

Ryan  

Yeah, I mean, that’s funny, every but people were piling on. I mean, I remember guys, like, I mean, I watched guys like five, five or six units like this, right? I mean, it was, it was crazy. That was at the very like, at the very peak that was like at the very peak, like that last six months to the developer started like, because they wanted to move all that inventory, right? They probably they probably saw it common. They probably saw something common. They’re like, we need to spin these units out.

 

Erwin  

Because someone’s buying this debt. So then what happened to these investors? Like what happened to the gentleman who had five, six units?

 

Ryan  

Yeah, so this is exactly what happens. The hedge fund guys in case so ironically, the guys that basically originated those loans, right? These guys were like Bear Stearns, guys, and, you know, those kind of guys that came up with these crafty way

 

Erwin  

we can bash them since they’re gone. So

 

Ryan  

they are they are gone, right? They’re the ones that like, created these instruments for them to do those loans. Ironically, when the market crashed those guys a lot of laughter Bear Stearns blew up, they went and then formed these other vulture funds that went and bought back the loan lenders at 10 cents on the dollar.

 

Erwin  

were way up and they made money on the way down. Yep.

 

Ryan  

They made it both ways. I know. It’s crazy. And

 

Erwin  

planning from the beginning.

 

Ryan  

was like, yeah, no, believe me, I got to see the inner workings of real estate just through this whole process. So like, you know, I’m trying to like learn from what I can hear, but I have my own, like reasons what I think the real estate market hears happening. And, you know, obviously, Florida is very hot, people want to move here. But there’s, there’s inflation happening, which is getting pushed into assets too. And it’s not so much like, oh, the prices of real estate are going up so much too. It’s like the price of the US dollar, you know, the value of the US dollar is coming down. And I mean, that’s happening too, as well.

 

Erwin  

So Serena, and some people don’t understand what happened after like, for example, so say someone had five, six properties, because, you know, ignorant Canadian here, there’s something about the state, you can just hand back your keys or like the situation you gave, they just walked away from their property. Like yeah, how was their credit affected?

 

Ryan  

See, that was the good thing is like the crazy thing is like these all these units needed to get moved out, right. So that’s why they got you know, they got gold at 10 cents on the dollar to these hedge funds, or we’re just buying up at huge bulk and that hedge funds didn’t want to foreclose on him. You know, they didn’t want to foreclose on the units because it costs more monies and attorneys fees to close to foreclose on them. So this is how these units got worked through. They would go to the borrowers and just be like, listen, just sign over the property to us. You know what I mean? Just sign it up. We won’t foreclose on you. You’ll won’t have any foreclosure on your record. You will have no deficiency judgement and just They literally like this purchase didn’t happen. Because, you know, they’re let’s do that 250 contest and the people have 250 you’re on the hook for 250,000, the condo is now worth 100 grand, the hedge funds bought that that $250,000 loan for 25 grand. So they’re still got like, they’re tripling their money, they’re like, you know, they’re tripling the money. So they’re going, okay, just sign it over to us. Matter of fact, and this is this is literally what happened most deals because I was doing this was they would go to the bar and go, Okay, we’re gonna give you five grand for you to sign over the property give you cash for keys, and they would give them five grand. So the borrower now like, they get five grand, and they hand over the property to the hedge fund, they have no foreclosure, the credits not crushed. And you know, they’ve made a mistake, right. And now the hedge funds now got the property now. So they brought they paid 25 into another into it for 30. Right, it’s worth let’s say it’s worth 100 They would go in putting some paint and carpet in the unit, right? Put it on the market for 100 grand. And now they’re, you know, like I said, like tripling their money today. Let’s see two deaths. What happened, man, that’s how everything got worked through down here in Florida, I think it was it was like the foreclosure capital, if you remember, oh, eight, or nine or 10

 

Erwin  

plots of places in the States.

 

Ryan  

But it was like, No, South Florida was a big one because a lot of people bought him as investment property. Yeah, that was investment property. So this time around, it’s not like that, like, you know, this time around, these people are like paying cash.

 

Erwin  

Who are these people, these Americans, these Canadians, these Mexican law,

 

Ryan  

a lot of people from the northeast, so you have a lot of people from New York, New Jersey, which you know, their real estate prices have done well. And they’re just like, you see, you’re seeing this, this mass migration are going, okay. My house in New York’s gone up in value right now I have a hump house, you know, I’m sitting on a million dollars in equity on this house in New Jersey. And, you know, we want to move to Florida because now you know, Florida has no state income tax. There was some really big political reasons, obviously, with DeSantis, you know, being never shutting down because of COVID, right, and all these things that were in place. And you have, so they’re selling the real estate up there and buying it down here. Oh, they’re moving. They’re moving. They’re moving their whole businesses down here. So just so you know, the last two years, the amount of businesses that have moved to South Florida has never been higher. I mean, literally, as I speak here, I’m looking over here at a class A office building, Goldman Sachs just took a whole floor of it. That fund that I told you that I worked for back in 2009. Two years ago, they took their whole fund from Greenwich, Connecticut, and moved it down here to West Palm Beach. So you’re you’re having a lot of big, you know, businesses now headquarters in south in Florida, instals. For asbestos, specifically, why? Because we don’t have any state income tax, the weather’s nicer, right. And they’re pro business, right? It’s really pro business state as far especially with DeSantis in the political arena down here. So they’re just like, they see a lot less risk here. And I mean, just so you know, like, I’ve had clients move down from the Northeast, and they’ve told me like, Ryan, me, headquartered in my business here. Now moving into Florida, the money that I’m saving from my past state, my state, Connecticut, or New Jersey, the income tax that I’m saving literally pays for my whole cost of living here in Florida. Like, what do you mean, they’re like, yeah, the money I’m saving literally, like, I’m living for free in Florida. So it’s like a no brainer for him.

 

Erwin  

Right? All these boys been like that, or sorry, the least the tax environments, always man attack

 

Ryan  

the tax environments, always been there. But I think there was just a political, you know, environment, too, that really accelerated it and just, you know, opened the eyes to a lot of people, and just, you know, just like anything else, once, you know, you’re working at a company, and you’re seeing, you know, the other company moved to Florida, and their, you know, their employees are happier, and they’re making great money. And it’s like, why am I sitting here, up here in New Jersey paying these huge taxes, you know, in doing that, so, that I think, was a big reason as

 

Erwin  

I hope our government listens to this podcast, and they understand what happens when you overburden businesses, or vilify them.

 

Ryan  

I mean, you look like something’s people in New York, New York, like we had so many people from New York City moved out, and hey, you know, another thing too, that’s, that’s really changed of like, why these businesses should move to Florida is, you know, say what you want, but COVID really accelerated, you know, like we’re doing now and it’s zum zum generation, right, where you can work from anywhere, right? So if you’re a business and most employees aren’t coming to an office anyway, like why the heck would you live in haven’t headquartered in Jersey, you know, or New York or wherever, you know, where you’re paying these taxes. So it’s just like, this remote work culture is accelerated course, all those remote workers that are sitting there all over the United States get on well do I want to live in Wisconsin and work remotely or should I live here in Florida where I could still buy a condo you know, for 300 grand and be less than a mile from the beach? If you don’t, I can do my Zoom meetings in my condo, a mile from the beach and then I can go bike to the beach or walk to the beach after my call.

 

Erwin  

Alright, so Ryan, you probably picked up people’s interests. Tell us more about the 300,000 Are

 

Ryan  

you guys I mean, I’m still very very bullish. Like I call this to like, I really watched the single family home market like last year just really accelerated. I was watching the condo market. I’m like, Wow, it’s so undervalued did the condo market has gone up, but there’s still you can buy condos here, like I said, within a mile or two of the beach, and still get a decent condo for three, four or 500 grand, you know, and have a place here in South Florida. You know, you can rent it out, you know, some of these places down here that I’ve helped with investors over the years, you can rent out monthly. So you could be down here for a couple of months and rent it out the rest of the time. And

 

Erwin  

so Ryan, let me just pause you there. Let’s, let’s restart the conversation. So we met a good friend of mine, a friend of yours to introduce to us because you helped them buy a Canadian. My friend Charles, Canadian, you helped him as his family purchased property in Florida. So So when when when you talk to a Canadian debate tell you, you tell them that

 

Ryan  

no, I’m from South East Florida. There’s a lot of reasons. There are a number of different reasons why, you know, I’m bullish, I’m really bullish on you know, Palm Beach County. Miami is a whole different world. I always tell people think of Miami, literally, it’s a different state. That was almost a different country. It’s a whole different animal down there. Fort Lauderdale.

 

Erwin  

And if you just spend a day there and versus like Fort Lauderdale, it’s not the same place.

 

Ryan  

It is it is and then, you know, and then Fort Lauderdale is very busy. But then you have beautiful West Palm Beach, which is, you know, almost like, compared to like if Miami was New York City, you know, Palm Beach, West Palm Beach is like the Greenwich Connecticut, right. This is where all the wealth is, you know, obviously Palm Beach Island, everybody knows that. That’s where Donald Trump lives. And you know, 33% of the nation’s wealth is a piece of property there. But the cool thing is here, what’s awesome about West Palm, I think it’s a great investment Palm Beach County, is you now have the bright line, okay, which you can take to Miami, which is a high speed train less than an hour, okay, you can be Miami. And number two, it’s just not as populated. So you have, you know, bigger yards, bigger condos, get more bang for your buck, if you will, on buying real estate here versus you know, Fort Lauderdale, Miami, you just it just there’s just more space, you know, you’re not in a parking lot, where everything’s like super close, there’s just more space so you can actually, you know, have a better quality of life. In West Palm weathers the same in West Palm area as it is in Fort Lauderdale in Miami. And then it’s just you know, to me, it’s just a great environment. The other big thing is I’m a big outdoorsman, as you know are one big fisherman. The fish is incredible West Palm it’s actually the closest place kind of on the United States where the Gulf Stream comes to shore. So if you’re an offshore fisherman like catching like, tuna, wahoo, sailfish, Marlin. It’s like, well, this is the top spot for it to be. And then of course, if you have a boat and you’d like to go in and big adventures, the Bahamas are only two hours away. So I like literally take my boat over there on the weekends. go diving fishing in the Bahamas, you know, it’s got all those really nice aspects here of West Palm Beach versus Miami or Fort Lauderdale.

 

Erwin  

Okay, so how about some of the most common Canadian questions, so feel free to throw some in? Because I’m sure hurricanes and financing come up often?

 

Ryan  

Yeah, yeah, people are, you know, obviously Canadians just like anything, you know, say my parents, I’m originally from Minnesota, and just so you know, but I’ve been down here for over like, 25 years, but yeah, the hurricanes, you know, they’re there, they come to Florida, they’ve been, you know, I’ve been through a couple of them. The good thing is, you know, the technology of where it was even five or 10 years ago has come so far, especially the quality of building building materials, they now build these homes, and you can put them in if they don’t have called hurricane impact windows, which are like these high tensile strength windows that are really great. They’re also very energy efficient, too. So that’s big. And of course the technology they know where they’re coming right and a lot more accurate, they know where they’re gonna hit now better than ever, when they’re coming. So those kinds of things are great to know for for hurricanes, you know, as far as like the financial aspects, the finances down here, Florida. I mean, it is you know, for some people that concern you know, as far as like the regulations I mean, would be deregulation here for some people might be concerned but I don’t see it as like a quality of life issue here. I see some really benefits to what they’ve done so far. And that’s just someone that’s pretty middle thrown out of politics, but you know, it’s it’s pretty good there.

 

Erwin  

What are your paying customers doing for for mortgages? Yeah, so

 

Ryan  

I’ve actually had a great lender here that does foreign nationals here out of Miami, they’ve done tonnes

 

Erwin  

so here we’re being called foreign nationals. Foreign nationals are used to pay other people that brush?

 

Ryan  

Exactly. You know, I mean, obviously, you have to put more money down right on the loan, you know, is to a foreign national loan, you might have to put, you know, 30% 30 Yeah, 30% down. And you know, there might be a little bit more you no paperwork involved and stuff like that. But I’ve gotten deals done. I mean, I’ve just just did a foreign national deal with a buyer from Australia. They’re coming to the comment here in South Florida. It’s crazy. Like, it is. It is. Yeah. Now South Florida is, I mean, used to be never to we never got buyers from California, like hardly ever like, but now there’s buyers there people moving here from California. Now we’re getting buyers from California, obviously, Northeast is always that, but we’ve always had Canadian buyers, you know, but now we’re getting people even from the West Coast of the United States by

 

Erwin  

and then rates pot rate wise, what are you seeing what kind of range?

 

Ryan  

Yeah, I mean, you’re gonna be like, in that, you know, for too low fives range. It’s not too bad. Yeah,

 

Erwin  

that’s pretty good. I thought this is a lot better than I thought it would be.

 

Ryan  

I know, I just went through this with, you know, another buyer literally, like just now. So we had none, the rates are pretty good, meaning, you know, having to put 30% down, you know,

 

Erwin  

I have to do my best some of my investment properties, because the bank doesn’t like me. Yeah. And people can do this just personally, or they have to, like start opening a company or something like that, or?

 

Ryan  

Yeah, no, they, it depends. Some lenders, you can do it, dude, personally, some, they want you to open up like an LLC, right? And purchase it that way as well. So it kind of depends.

 

Erwin  

Cool. This isn’t so bad. That’s the nice thing I’d like, you know, to be objective. Like I had this perception. I thought almost everyone had to buy cash unless you’re willing to do like, buy a company, for example. And like, a lot of us kind of wait, like, like, way too much work, real company, and like, make money in it. And then you can qualify for a mortgage. But this doesn’t sound so bad.

 

Ryan  

Yeah, no, it is. I mean, that means still you’re putting 30% down. So the risk for the lender, you know, if you’re

 

Erwin  

right understanding are like a lot of our investment properties are start over 700,000 and then 30%. Down. So we’ve talked about your undergrad condo, I know it’s US dollars. But yeah, that’s I

 

Ryan  

mean, it’s a great opportunity, even like, you know, like our mutual friend that they bought that property, I’d actually just looked at the values on there, they’ve done really well, since they bought it like two years ago, like the price is trumped up very considerably. So I’m sure they’re happy with that. So then usually, you know, if you’re if you’re financing 70%, with the rents the way they are here, like let’s say you didn’t buy like the three or $400,000 condo, you’d still be in a positive cash flow situation. Right. But then of course, your big plays the equity play right. bullish on Florida, you’re bullish on people moving inflation. That’s what I said. I mean, I just read, I don’t know, you can concur with me on this. But it’s like they figure might be like 7%, this year seven or 8%? Inflation? Probably who knows? That’s what they’re saying.

 

Erwin  

We need that terrible war to end in Eastern Europe. You mentioned rents. So like an example $300,000 condo, what would that rent for?

 

Ryan  

Yeah, I mean, if you can do the short term rental, remember, not all condos, can you do the shorter term monthly rentals, but, you know, you’re looking to you could get like, you know, two to $3,000 a month, you know, to rent those out at a short term rental basis. 2020 500 a month, you know, 2000 annual basis. It depends sometimes in the winter, obviously, when you’re doing the short term, it’s even more like I know, here in downtown West Palm Beach to two condos, you know, during the winter furnished, obviously, you know, they’re going as high as, you know, five or $6,000 a month. So it really depends exactly what pocket you’re, you know, if you furnish it or you know, what your strategy is?

 

Erwin  

What about just a vanilla long term rental, unfurnished?

 

Ryan  

Yeah, to to kinda like a $300,000 condo, I mean, you can easily get, you know, to 2020 500 a month. You know, I mean, if it’s decent inside, you know, it has tile floors, stainless steel appliances, that kind of stuff.

 

Erwin  

What are your clients mostly doing? Like, how would you split up what they’re doing? How many are buying for personal or recreational use and how many buying for for investment purposes?

 

Ryan  

There’s a lot of people that are buying here to live obviously, you know, I would probably say 70% to live and then another 30% are investors, you know, that are looking, you know, but they’re like their long term investment plays like I just saw one last week the condo I’ll use this. They’re from New Jersey. You know, this guy’s you know, in his late 50s. Him and his wife in his late 50s They bought a condo on the beach and Jensen Beach, which is great locations just north of Palm Beach County here. Great rental, that they’re getting So on the beach, they bought it. They bought it for like 450,000 you can rent it monthly there during the season furnished rental about 5500 a month off season about 3500 a month, right? That’s what they got. And they’re like, Brian, we’re going to buy this. We’re going to rent it out here for the next about three or four years, get a good return. And then, you know, when I retire, we got a place to go to down in Florida whenever we want. And, you know, I could you know, and I can use it. So that’s happening a lot.

 

Erwin  

Yeah, my wife and I’ve been talking we should hedge and half a property outside this country. Yeah.

 

Ryan  

Well, I’m here to help you, you know, I can definitely help you. I’ve been nice thing. You know, we haven’t even got into my, you know, as you know, I’ve been an agent for a long time. That’s what I’ve done for years and years years. But I started a tech company that we launched, obviously, last summer about called Real trade, which is a social media platform and marketplace for real estate. So it’s just got some amazing features. I tell everybody, it’s a marketplace. So think of it like Zillow, okay, mixed with LinkedIn, but just for real estate. So

 

Erwin  

sorry, Ryan, just for people. Zillow doesn’t have much of a presence here. Yet to explain to a Canadian what Zillow was like maybe another analogy, is it like Amazon, I don’t even know. Yeah, it

 

Ryan  

would be like Zillow, Zillow, or what we are is we’re just an online marketplace for real estate. So we basically in United States, I’m not sure how it works in Canada, but we have these MLS bores that basically agents join, and then they pick their listings and put them on to these MLS boards, which allows another agent to see him that they’re for sale. Other agents could see but then they also take that data and they push it out to these large portals, which are like Zillow, that then take the that data and aggregate it for a place for the consumer to see. So it’s like the consumer, you know, the concern, consumer facing data. So that’s, in essence, what real trade is, it’s like a consumer facing data, where the they can see all the properties for selling in South Florida, like we have all South Florida covered. You know, real trade does. And yeah, so we have a lot of people using it to search for sell the nice The cool thing about about real trade that’s different than like these other online marketplaces like Zillow is, seller can do a lot of good due diligence on not only on the property to getting all the data there directly from the MLS from the source, but they can actually contact the listing agent directly. So they’re not like sold as a lead on Zillow. Got it, I know it’s a different system can but they can go directly to the listing agent get questions answered, they can still use a buyer’s agent, you know, to help them buy but like if they have quick questions themselves, they can, they can get them answered. And then also we have a social aspect where they can actually see on a social feed deals being posted, like coming soon that aren’t even on them quite on the market yet that the agents are sharing to the real trade market. And they can network with other agents. And actually, we’re building an arm right now as we speak service providers. So if they need a good lender, they need a good title company or an inspector, you know, all these types of people to that they can contact those people directly to Unreal trade as well. That’s handy. Yeah, Mark points, things like find good agents, you know, agents that are active right, that you feel comfortable with. You can research them on their, like LinkedIn, you know, but for, you know, for real estate, so we’re getting a lot of traction here. We have hundreds of over 560 agents from 80 Different brokerages on there now. And then we have 1000s of buyers and sellers using the platform.

 

Erwin  

And then there’s blockchain involvement. Well,

 

Ryan  

here’s what we have. So let me tell you this, the blockchain this Believe me, I’m very bullish on blockchain, too. I love talking about it. We have a point system. Before we had our own token on the 1.0 version, we took so far that lived on the blockchain. And now we have what’s called a point system, where basically we track the agents if they add value to the real trade network, which was posting their content, inviting referrals to the network, they gain points, the more points that they have, the more exposure they get on the platform. So we have like suggested pros that properties go up into the, you know, when people are searching for properties or properties go higher up in the results, you know, that kind of stuff. So, you know, the essence, you know, blockchain and what I really liked about it is the way that basically it’s a decentralised system, you know, that incentivize the network as it grows, right to run a transaction, right? That’s the big thing about Bitcoin, a lot of others. So the things they have these miners that are getting rewarded for running the network, right, and doing these transactions, and we have similar that too. We reward the network, the more they help add value to network and make it grow. And as some people’s eyes glassed over when they start hearing about blockchain and how everything works, but it’s pretty exciting, really the possibilities

 

Erwin  

of it. You know, for someone I deal with an old city so for example, if I needed a document pulled on my property, someone literally has to go into like the bowels of the building. To pull off, pull a paper file away. So people who don’t know how it is, maybe they would glaze over. For me it’s worth what why are we there already? Why isn’t this all digitally based?

 

Ryan  

Yeah, exactly. No.

 

Erwin  

I’d be excited for any sort of advancement.

 

Ryan  

I mean, Florida, like we have a good, you know, system here. But then we just so you know, there’s like a startup here, which I actually know the founder. Well, Talia, she started Proppy. And they just sold two properties here in South Florida on NFT tokens.

 

Erwin  

Any tokens? One token,

 

Ryan  

one token, I can I can get in the weeds how this works. Actually, I researched because I’m very, you know, obviously interested. Basically, there’s an LLC that owns the property. Okay. And that’s recorded in the in the county records, right in the state records that owns it. But basically, what they did is they allowed the LLC that owns the property to be put on an NF T tokens. So you’re actually just buying the LLC, you’re not actually buying the property. But that LLC then is transferred ownership to you through the NFT token.

 

Erwin  

Interesting. So why did this individual do it that way?

 

Ryan  

I think it’s like right now, it’s so nice, since I think it’s more like a marketing gimmick, but they they just did two of them. So there’s their two for two, there’s like the only place and I think the world that’s doing it, and it’s happening in Florida. So yeah, I mean, obviously real trade, you know, idea of one time we want to obviously be a marketplace and help facilitate

 

Erwin  

FTEs or any sort of any kind of real estate where there’s no tokenize real estate,

 

Ryan  

fractionalized, tokenize real estate and if T tokens regular real estate, you know, just like traditional regular regular still gonna play a big role.

 

Erwin  

I love the idea of like a fractionalized ownership, and we can use tokens to identify ownership. It has to happen fractionalized ownership of real estate has to happen. Oh, it’s

 

Ryan  

happening. No, it is happening. There’s actually even like, basically, you can take your tokens I just there’s a new startup here in South Florida is working on this and actually collateralize your tokens and borrow against your tokens. That’s a whole nother game. Thanks.

 

Erwin  

Time right. People glazed over like

 

Ryan  

that’s the thing about for this, you know, this is why I’m so bullish guys at Ford. There’s so much innovation happening here. There’s so much exciting things in real estate that are happening here. Obviously people love the weather and all these things. So if I’m if I was a Canadian looking down here at Florida, I think it would be you know, I would be like wow, what a great place to own a second home just joy but much less than investment. That’s great.

 

Erwin  

Before we were recording, for example, the Bitcoin Conference was in Miami in Miami. I don’t know it just keeps coming up and also partly because the the mayor of Miami is such a Bitcoin adopt early adopter, I believe correct me if I’m wrong, I believe the city of Miami already has Bitcoin on their on their balance sheet. Yep. And they’re accepting it as a currency so you can pay your taxes I believe in Bitcoin. And I’m not sure if that exists anywhere else and anywhere. Yeah. So it basically Florida is open for business for cryptocurrency versus, you know, many politicians, many governments, you know, China for example, they they banned a lot of miband miners, and any sort of businesses that are surrounded that whose underlying businesses cryptocurrency and versus like us and especially, especially, especially like Nevada and Florida have been like, we’ll take you all Yeah, yeah. And so So then, you know, you told me because you’re closer to this and then even like Ray Dalio for example said like the greatest threat to cryptocurrency is governments banning it. But then you see like the US government like here come all you all you miners come here, and I Okay, but they turn about and kick them out now.

 

Ryan  

Yeah. Well, that’s to me your what will happen? I mean, this is because this United States, right, so we have the states have some jurisdiction, right of what we can individually so the these other states or the US, you know, says oh, you can’t do that one state I’ll pop up and go yeah, you can. Right. And then everybody will just gravitate towards that state. It look what happened with the COVID. Right. Everybody was like shutting down and everybody’s like, you know, hurting businesses and There comes one state, which gotta give it to DeSantis. He put put himself on the line bucked the trend, but look what a difference it made it down here in Florida. Just there was this huge discovery of all these businesses now just flocking and it just like this like a faucet, right if people wanting to come down here. So I think the same thing point being the same thing would happen if the government shut down Bitcoin there’d be a couple states that be like now, Florida’s very pro crypto same with Wyoming if you do some regulate look into Wyoming.

 

Erwin  

That’s fascinating because there’s a couple of precedents come to mind. Like for example, like for example, cannabis is legal in several states, but federally, it’s not legal. But yeah, unions, for example, you have certain states in the US where unions are not legal. You may not you may not open a union in certain states. Hence, that’s where businesses tend to flock. Exactly. Right. I don’t know if Keynes and again, no politician listens to this podcast, but that’s a reality. If a business unionised is in Canada, that business owner may just relocate to a right to work state in the US exactly like that people need to understand like, you know, make your decision in a wider context zoom out who exactly and decision on that don’t just like, hey, you know, with fight for all rights for their employees, like, but then the next month, they’re all out of jobs? I mean, like, zoom out, look at the bigger picture negotiate from there rather than Yeah,

 

Ryan  

it is. It’s a perfect example, you have to look at look at all different angles. And this political angle is a big one. I actually, honestly until this last couple years that I realised like how much political, you know, arena can have on business. I mean, just incredible. You know, I mean, you know, how much he influenced into, you know, and I honestly didn’t agree with the DeSantis some of his viewpoints, but after having seen and gone through it and seeing what happened here to Florida. Wow. You know, it does make a difference.

 

Erwin  

No one’s perfect. I think, first off, everyone needs to appreciate that. Nobody’s perfect. Nobody gets it. 100%, right.

 

Ryan  

I know. But I’m a I’m a big believer, like, let the market like let the free market dictate as much as we can. discovery of what works and what doesn’t work. As long as you’re not stifling the free market and like businesses, these solutions will come into play. Like I said, I that’s why I think I’ve just so big on Florida, like we’re big on free markets, and we’re big on innovation. We’re like, some good things. I mean, I have a tech company. I’m headquartered in Florida, I went through this accelerator, literally the whole reason my business got built, I went through this accelerator that literally is funded by the City of West Palm Beach. Like they’re a big sponsor for 1909, which is just accelerator incubator here, which allows me as an entrepreneur to come in here and have really affordable space, right to be an entrepreneur and not have to rent rent real expensive office space, and, you know, things like that, like I that’s what I’m trying to tell people like it’s things like that, that’s where people can, you know, it makes a big difference. And that innovation,

 

Erwin  

and that’s a big problem here in Canada is our real estate’s way too expensive if we’re just going to scare away investment. Yeah. And people just think investment means dollars, like no, will scare away people, they can’t afford to live here. Yep. Right. Those

 

Ryan  

entrepreneurs, like those entrepreneurs are so important because they’re the ones are gonna be starting new, best fresh business coming from different angles. Like there’s so many crypto businesses down here that are starting that are so exciting. Like I had a 1.0 version, like I said, But I’m looking at all these other ones. I mean, it’s just, it’s incredible. What’s happening, just take a couple of one or two, you know, that could be the next Microsoft or the next, you know, Apple or whoever it is, you know, I mean, it’s, that’s what’s exciting.

 

Erwin  

And then okay, I don’t know what are the details? What does the Canadians ask you when they first get in touch with you? What else what am I missing? What else do they ask you?

 

Ryan  

Yeah, that’d be they want to you know, a lot of them want to like you know, especially they want to come here and you know, they want to know is it safe in Florida

 

Erwin  

is a crime like the crime like that’s the crime like

 

Ryan  

that’s another thing too I like West Palm Beach is obviously Miami and as we know is different. There’s just more people there there’s like a you know, different you know, like I said almost like a different country so the crime rate is higher there obviously, than Fort Lauderdale and Fort Lauderdale is higher than West Palm, you know, West Palm has a lower if you look to statistics, Palm Beach County has a very low crime rate. So it’s, it’s really, really good here. As far as that lies. Another thing that I want to know like I said about the weather, the weather’s the same. It’s always that you know, it’s almost amazing or it’s like come late November, but mid to end in November. It’s like someone takes a light switch and turns it off. And the humidity is gone. And it’s just nicer than from November, December, January, February, March. And even April, we’ve had beautiful weather all through April now pretty much you know, maybe it starts to get a little bit hot, but like, you know, the only unbearable month I will tell Canadians or anybody here. It is very hot, very muggy in August September, you know, so those are the months that I would say, you know, go travel go do somewhere else. It can get banned in Canada. August is a great like, you know, Want to be up north? Right, September’s beautiful you can come in to start getting in the fall and other fall colours and stuff. So and then like I said, October, you know, starts to cool down and then by November It’s beautiful here. So

 

Erwin  

let me see what else the kids asked and even bring kids with them. They even asked about schools.

 

Ryan  

Yeah, well, I mean, that’s another thing too. Palm Beach County has incredible schools here. Like we have some of the best rated schools of anywhere in the state, both private and public, really good schools here. On the side, he has a lot of activities here. Like I said, they all like Ryan, what about the golf? Tell me about the golf and I’d be like, Okay, do you know where Tiger Woods lives? You live here in Palm Beach County. I’ve been Jupiter by her diet golfer called Jack Nicklaus lives in North Palm Beach. Right? There’s actually more PGA golfers living here in Palm Beach County than anywhere else in the United States.

 

Erwin  

As a golf affordable. Yeah, that’s the thing too.

 

Ryan  

There’s so many courses here. There’s tonnes of courses here. Like you know, there’s so many I think there’s like over 100 different courses here within like a 20 mile radius of West Palm Beach. So you know, there’s tonnes of golf to be had, you know, as far as entertainment. Oh, another big thing here so forth. We love to eat out the restaurants are fabulous. That’s another thing with Mauna Kea exactly what about the you know the dining seafood restaurants incredible very competitive here on this you know, because obviously a lot of people come here vacation they wanted didn’t want to cook so to eat out. So the restaurants here are just another level. And then obviously the fishing the diving big like we have the clearest water because that gulf stream comes so close. So it’s really good diving we get actually oh sorry, explained the Gulf Stream. So the Gulf Stream is like a warm river of currently ocean actually starts down in the Caribbean goes up between Cuba and Hispaniola and through the Bahamas channel and it comes up and then goes skirts through the Straits of Florida and goes right along the coast of Florida. Well, if you look at the map, Palm Beach County bumps out of Florida a little bit so that Gulf Stream literally brushes right through the right at Palm Beach County right at singer island so that water is crystal clear. Like there’s days here or when we have if you’re a diver, we have days where we have 150 foot of visibility. So if you can imagine you’re in 150 feet of water you can see the bottom easy. I know so I’m a big free diver like and I like a set of fishermen so for me like you’re getting all these days of the year like almost 300 days a year but yeah, beautiful this you can feel the fish feel a lifetime there which is great. So the activity wise you know as far as like sports teams, I’m seeing West Palm line of professional sports teams here but again, we have the bright line brings your right downtown to Brickell Miami, you’re literally right across from the what used to be called the American Airlines Arena. You know where the the professional basketball team plays the Miami Heat. Of course, you got the Miami Dolphins, Florida panthers from the I know these Canadians are hockey fans.

 

Erwin  

Were the furloughed Panthers. How far how far to how far we need to adopt a hockey team. Yeah, Tampa is out here is good. Florida is actually playing extremely well this year. Florida.

 

Ryan  

Panthers aren’t they’re like right on the edge of Fort Lauderdale and Miami. A little bit further west. So it’s not far from here like West Palm. I could be in the Panthers arena. You know, like 40 minutes.

 

Erwin  

That’s it? Yeah. fraction of the cost to Yeah, it’s like 30 plus 30 cents of the dollar compared to what we pay here,

 

Ryan  

sir. Well, you guys are awesome. Canadian Canadians are awesome hockey fans. You guys. drive up the price.

 

Erwin  

overpaying hockey fans.

 

Ryan  

Yeah. I grew up like us. I grew up in northern Minnesota. So I grew up playing hockey. Geez.

 

Erwin  

Alright, yeah, your phone’s gonna break when this podcast drops.

 

Ryan  

I’m excited. I mean, like I said, it’s the timings good. Like if I’m an investor looking at like, gosh, these condos and stuff are still affordable. Like you know, they’re still not like crazy yet. And I just I see what’s happening you know, here in South Florida, just so many like I said people coming here what’s happening? And I’m just you know, I’ve been lucky I’ve just had a great I mean for 24 years I’ve had a great life so I’ve met it you know, I know a lot of fun things to do people to meet you know, people have their investors I have you know, my own company like I said real trade can help and then you know, I mean I just just had actually a zoom call with this awesome startup called future state here in South Florida. They literally just headquarter from New York down to here and they help basically short term investors manage their ad, their Airbnb VRBO is everything all from one place? One location, really great software that they have developed?

 

Erwin  

You know, I’m sure hurricane would like to hear well, it’s

 

Ryan  

called Future stay. I’m good friends with the founder. They actually work out of the 99 space here.

 

Erwin  

We’re gonna zoom call with him. You said Yeah, right. Right

 

Ryan  

before this. I was just literally like on a call with them just before this before we jumped on. Yeah. So yeah, because they obviously love, you know, real trade, they want it like, wow, they, they want to go to the network because there’s all these real estate agents that can refer them business right with their investors. You know, because I’m telling the short term investment thing, guys is an awesome way to go. The returns are great. And it’s just like, you know, it’s exciting, it’s exciting, you can make great returns, and you’re getting into the ladder of the real estate market here in South Florida. So,

 

Erwin  

it’s a great way to go. How many buildings allow it versus not allow it? Allow?

 

Ryan  

Yeah, no, I know, the ones that allow there’s not a like, most of them will allow you to do to, to rent most condos will allow you to do, you know, two rentals a year, right. So you can do one short term rental, and then another, another rental over the summer. The ones that are obviously you know, real desirable like that I see right now these ones that can you can do the monthly rentals, you know, where you can rent them out monthly, which are great. And now in Miami, which I have a great contact literally one of the developers is my good friends they built now. And there’s a couple that they’re selling pre construction that are set up for Airbnb nightly rentals. So they’re building the units, right. And they’re literally like, there’s no rental restrictions. You can rent them out nightly for you, they’ll man and they’ll help you manage it, obviously doing the cleaning and everything like that, of course you can put them on the other platforms, whatever you want to put onto that Airbnb or VRBO could partner up with future stay, obviously, they can can help you there as well. You know, make it pretty turnkey for these investors to be able to do that. And obviously, if you get a foreign national loan and put 30% And you know, you have a little bit of cash flow, you got a place to come to Florida, rent it out, you know, nightly, that’s pretty advantageous.

 

Erwin  

That’s pretty awesome. Nice to meet, you put me in touch with one of your clients that has one of these places to rent. Clean to

 

Ryan  

Yeah, no, I did one, actually, that most of they get rented out like that. But that one client that just bought that one and veero He’s just getting ready to put on the market. So there will be some time after that. He just he just closed on the last week.

 

Erwin  

So when the challenges of short term rentals is it’s easier if you live there. Well, your investors are not local at all. What are they doing in terms of like cleaning and stuff like that?

 

Ryan  

Yeah, so I have some great partnerships that I have with some management companies that’ll manage it, you know, the cleaning and everything for you of course they take a percentage

 

Erwin  

deserve it.

 

Ryan  

It’s a Yeah, they do. It’s a lot lot of them will manage even even the all the Airbnb accounts and everything, all the posts, even bookings, like, you don’t have to do anything, they’re gonna end, they will do it and including the cleaning to, they’re gonna range anywhere from you know, they’re gonna want anywhere from like, 20 to 30%

 

Erwin  

Oh, that’s worth it for your peace of mind. Yeah, exactly. Exactly. How did you manage like managing more than two?

 

Ryan  

I know. Yeah. Like you said, if you’re here, you can, you know, you can do you could have a cleaning lady that you go goes in there once, you know, once a month or whatever cleans if you’re doing the monthly rental. Remember single family homes you can do most places here like in Palm Beach County nightly as well. But, you know, obviously that’s more detail. Yeah, there’s companies out there that I got even relationships with and again, that’s through you know, real trade, they’re gonna be able to network with people on the platform. It’s literally like a wire built it

 

Erwin  

running out of time, for right before the long weekend. And surprise you booked it for now, because I’m pretty sure you have more fun things to do.

 

Ryan  

I love it. I do. Remember last time we did with it was so much fun. And, you know, it’s just, I mean, look what happened since the last one we had and then and, like what’s happened two years. COVID like this, like, you know, the real estate market getting crazy. Just like everywhere. So it’s, it’s great.

 

Erwin  

When things busy performed the pandemic to they were

 

Ryan  

Yeah, now you’re starting to see things that just this pandemic, this sped everything up, like I tell you and I just I really don’t see this, you know, remote work going away, like I see it even accelerating, even without the pandemic, right. I mean, you know, without, with without it, I just see people like, you know, wow, I can do all this work from home, and then they’re just gonna be like, Why am I living in Iowa? Like, what am I? What am I doing? You know, like, like I said, and so you’re just getting so many people like that, that are moving here

 

Erwin  

to parties, right. And that’s by commercial at all, how is office space compared to like New Jersey, New York? Yeah, so

 

Ryan  

the office space here, you know, is getting more expensive, obviously. But that’s why this these these concepts like I’m at like 99 are becoming so popular, which are great. And it is like you get the benefits of these co working spaces of obviously having an office but then you’re meeting like I met my developer here, right? I met like my marketing team. All these people you may be great con. It’s seriously it’s like I really think is the future of work is these co working incubators, accelerators. Such a cool thing. And there’s enough co working spaces here so you can get well as co working spaces have your own office. You know, for like, 1000, you know, 1000 bucks a month. Have your own office space and everything right there. So, for example,

 

Erwin  

like Goldman Sachs, you mentioned who bought got a floor, like you’re paying less more?

 

Ryan  

Oh, yeah, another pain, they’re paid less, they’re definitely paying less than they would work or anything like that. A lot less, quite a bit less. Yeah, quite a bit less, I would say probably 2020 or 30% less than they’re paying a lot of different places.

 

Erwin  

And people are probably lining up to take, I’ll move, I’ll move. I’ll stop. I’ll stop paying for my bachelor. What’s a bachelor in New York City like 4000 a month or something?

 

Ryan  

1000 a month for like a studio. Which they could come down here and get like, you know, it’s still like, you know, a good like, two bedroom. Like I said, you know, three grand a month 25. Two to 3000 a month, so it’s less right. But then you’re like I said, You’re a mile from the beach. I mean, you’re right here less than a mile from beach. So yeah,

 

Erwin  

crazy. All right. And it was Thursday, but essentially, it’s Friday. Happy Easter, Ryan, you too. Thanks. Thanks so much for doing this. I got a bike Charles. We figured the date. Season so there’s no way I was gonna I was leaving. Charles invited me to Florida but there’s no way I was allowed to leave because we’re in the middle of tax season.

 

Ryan  

I know. We were supposed to get together. We were gonna get together when he was here. Of course. I got so busy too. And I do have a five year old son. But I told him next time He comes for sure.

 

Erwin  

Yeah, it was disappointed camping. Right golf clubs. It’s like a thing. We don’t travel there golf clubs. Well,

 

Ryan  

there’s actually a there’s a there’s a company where you can ship them this you can ship them down here. A lot of people do that. They just ship their golf clubs down. It’s cheaper that way rather than flying with them on the plane, but you might have really nice clubs. I don’t know. And you might not trust somebody.

 

Erwin  

Awesome. Right. Thanks so much for doing this. Congratulations on your success. Sounds like you had a blast through COVID At least you at least business is probably booming through all COVID

 

Ryan  

There was no it was good. It was good. It was crazy. And it still is. But ya know, I enjoy it. Thanks for having me on again. And let’s keep doing it.

 

Erwin  

Oh yeah. How can people connect with you? First, start with the Start with your realtor business. Where can people connect? Where can people follow?

 

Ryan  

Yeah, so the best way is actually you can connect with me is through real trade. You can go on there and we’ll trade real trade.io As a buyer or seller, you can create a profile for free. Okay, and then I want to suggest the pros there so you can connect with me there and follow me and then we can be in contact that way. Another another way just simply email me you know my email is lost or

 

Erwin  

new this is this is the internet it’s forever

 

Ryan  

Yeah, that’s not that’s no problem. So they’re obviously trade a profound real trade. You can follow me there and obviously search for properties use that which is awesome. But then you can email me too. It’s my name Ryan pool. Ry A N P O L E at real trade.io. Excellent. Yep. Real trade dot i

 

Erwin  

o the I O mean something.

 

Ryan  

Yeah, that’s like a real blockchain tech forward. You know, you are. Yeah, you are. It actually means Indian Ocean. But a lot of the developers blockchain guys said input output, which is like a big developer kind of an URL. So it’s actually a lot of startups use that. I got I cool.

 

Erwin  

I might use it for something. Yeah, learn something new every day. Right? This has been a blast. Information overload for the flippin Good. Fantastic. I love the whole foreign nation national mortgages. And yeah, congrats on your success. Thanks again for doing this.

 

Ryan  

Yep, we’ll hope to see you down here soon in Florida.

 

Erwin  

Before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already signed up for my newsletter and you’ll learn of the next free demonstration webinar I’ll be delivering on the subject of stock hacking. It’s much improved demonstration over the one that I gave to my cousin chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow. But with the rising costs to operate a rental business, it’s just not the same as it was five to 10 years ago when I started there. Forget the cash flow reduces your risk. The more you have, the more lumps you can absorb. And if you have none are limited cash flow, you’re going to be paying out your pocket like I did on a recent basement flood at my student rental in St. Catharines. Ontario. If you’re interested in learning more, but it’s true for free for my newsletter at www dot truth about real estate investing.ca. Enter your name and email address on the right side. We’ll include in the newsletter when we announce our next free stock hacker demonstration. Find out for yourself what so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell I love teaching and sharing this stuff.

 

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