Recreational Property Investing: Hundreds of ACRES, RV Sites, Even a Golf Course With Darvin Zurfluh

The market is a wild one, with interest rates really high. 

While many speculators out there are getting crushed, we checked our numbers: our clients who sold their investment properties in the last six months, after an average hold of 5.2 years, received an average of $313,000 price appreciation alone because they bought, renovated, rented the right way.

 
 
 
 
 
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The real estate market means many things to many people. Folks with houses on land in bigger markets are just fine. Prices are resilient and are near 2021’s peak, while pre-construction and cottages are in a buyers’ market.

Both will likely be fine in the mid to long term, but for now, especially if one is vacant, it’s going to be painful.

I was speaking to one Airbnb property manager in the Niagara Region who shared with me that more supply has come on the market via new construction owners as they can’t cash flow with long-term tenants on a single-family home who have turned to short-term and mid-term rentals. 

So short-term rentals for existing investors are not performing as well as they used to.  

A friend of mine who’s been operating Airbnbs for several years and was able to quit his job from the income 4-5 years ago shared with me his Airbnbs are not performing as well as they did pre-pandemic.

As for long-term rentals, our clients are doing just fine. 

They may be vacant a month or two while testing out record-high rent asking prices in markets like Kingston and Hamilton. E.g. Coach Steve Phillips in Kingston shared with me that our client signed for $2,600 for a 3 bedroom, main floor apartment in Kingston, and we have a client asking for $2,500 for a former garage they have since converted into a two-bedroom apartment in Hamilton.

On the other hand, small market and novice landlords appear to be struggling based on my conversations with investors reaching out for portfolio reviews or help.  

Small towns far from the GTA, which were the darlings of real estate in the early pandemic, are now correcting. 

Is this the new normal? 

Long-term, everything will hopefully be fine if they can find tenants. In the short term, we’re seeing great turnkey deals and deals in bigger markets. 

Why is that important? Bigger cities and turnkey mean lower risk.  

One mistake I find new investors make… well, maybe two is they believe what they see on HGTV and think money in real estate is fast and easy, which could not be further from the truth. 

The other is more work and effort means more returns.

For example, I mentioned earlier some of our clients are taking profits and paying down debts while rates are high. The best performing property was bought turnkey from a builder.  

I sat with the builder to design the house to be the perfect student rental, and it was. That house, and other similar houses, required no renovations and currently get the highest rents in the market.

After a 7-year hold, our client walked away with $489,000 in price appreciation alone. That’s nearly half a million dollars in profit from one stream of income.

My point is turnkey; small multifamily can be a viable option, so don’t discount it thinking one must buy an ugly property that requires months to years of renovations plus hundreds of thousands of dollars.

As a sophisticated investor, one should look at the variety of options available and make decisions holistically.  

I’ve had several calls with novice investors considering options four hours drive from home, each way. Or out of province. VS. I always tell clients it’s not that hard to make money closer to home. 

If you can’t make money closer to home, what makes folks think they can succeed in a market where they have no contacts or relationships?  

It’s obviously possible as past guests of this show, but not everyone is willing to put in that full-time effort.  Nor do they have a partner/spouse earning six figures at home to pay the bills and put food on the table.

In my experience of having worked with over 350 successful real estate investors, investing within an hour’s drive is world-class, profitable and can be done as a side hustle so folks can go back to living their lives.  

They didn’t do so by investing in pre-construction condos, no flipping, nor higher risk strategies that required private borrowing.

Trendy, fad investing can work. It just seems to take more savvy, deep pockets, risk and effort.  When keeping it simple, tried and proven works just fine.

The sad thing is that with housing prices so high, it will only be the rich who can afford deals in the current market and going forward.  

Even more sad is this situation will only worsen when the rate cuts begin sometime mid-next year as buyers get off the fence and push this sellers market further into sellers market.

TRREB released their July stats already, and of note, property days on the market is 24, prices held steady from June even with more listings hitting the market, and average prices are above last year’s.  

In Hamilton, we’re up 5.5% year over year.  That’s a wonderful amount of appreciation because even if you bought a cash-flow-neutral property last year and put down 25%, that’s a 22% return!  

With interest rates expected to come down sometime mid to late 2024, we should see prices climb, and we’ll be sharing how our clients continue to earn world-class returns via online monthly iWIN Meetings and MasterMind Tours, so don’t miss out! 

The best place to stay informed is our email newsletter, where we let folks know when new episodes are available and the scheduling of our events.  

Many of my wealthy friends are taking advantage of the opportunities presented by this market; find out how you can too. 

Sign up for our email newsletter at www.truthaboutrealestateinvesting.ca; enter your name and email address on the right side, and you’re set to become a well informed, sophisticated investor!

Speaking of simple, tried and proven, Cherry, the kids, and I just returned from a week-long vacation in Muskoka.  We didn’t stay in a luxurious cottage; we stayed at a family camp at the YMCA on a huge property with lots of greenery, a lakefront, and most importantly, camp councillors and kids programming.

Each day the kids would do all sorts of activities: tree top trekking, wall climbing, canoeing, kayaking, swimming, sailing, nature hikes, arts and crafts, and archery. 

As a family, we could participate in those same activities in the afternoons. We did them all.  Meals were provided. 

Our accommodation was a cabin with ten bunk beds, so very simple accommodations; the same cabin regular overnight campers used, so it had no frills, air conditioning, or bathroom.  

We had a blast! I mean, the beds could have been better for my back and sleep, but the kids had a blast. 

The camp councillors were amazing; we enjoyed the meals, campfires, and being disconnected from the city.

This was our 2nd visit to the YMCA family camp, our first since the pandemic, and we plan to be back next year.  A simple vacation, camping is tried and proven to be fun for kids, and it works 😊

Recreational Property Investing: Hundreds of ACRES, RV Sites, Even a Golf Course With Darvin Zurfluh

On to this week’s show!

We have my friend Darvin Zurfluh, who has a huge private equity brokerage called Pinnacle Wealth Brokers.  

If you’ve been around the investor community, you’ve likely seen them around at events, but today we have the founder of the company joining us from Calgary, Alberta.

If you’re not familiar with private equities, well, you need to be as good as private equities is part of the reason you’ll hear me say it’s better than ever to be rich as the options for investing have never been so good and available.

I was introduced to Darvin when I asked my own Pinnacle Wealth Broker representative Steve Blasiak for a large-scale podcast guest in the recreational investment space since so many of my listeners are interested in AirBnb.

Having been in the investment industry since 1997, starting out at the bank, Darvin has since progressed to owning a couple hundred acres, hundreds of RV sites, cabins, campgrounds, a hotel, and a golf course.  

Darvin details the story behind the purchase of the golf course, the analysis, and the value add strategy, which I find particularly fascinating.

This is a fascinating interview into entrepreneurship in the private equity real estate investing space at a large scale that is also available to middle-class investors to participate in passively.

Active or passive investors will appreciate this interview, and if you enjoy it, Darvin has been confirmed as a guest speaker at the online, November 21st, monthly iWIN Meeting. 

There Darvin will go into more detail about what private equity investments are, how to start one to raise capital, and the story behind starting his recreational properties investment fund, so make sure you’re on our email newsletter like the over 10,000 plus iWinningest investors in Canada at www.truthaboutrealestateinvesting.ca.

As we discuss securitized investments, please enjoy the show and this legal disclaimer as required by the iWIN Legal Department.

If you’d like to learn more about investing with Darvin’s company Pinnacle Wealth Brokers:

Steven Blasiak
Dealing Rep – Exempt Market
Pinnacle Wealth Brokers Inc.

7 Kingslea Gardens

Toronto, On M8Y2A7

Phone: 416 464 3085

Steven.Blasiak@PInnacleWealth.ca

Book an appointment with Steve – https://calendly.com/steven-blasiak/30min

www.pinnaclewealth.ca

Disclaimer:

The information and opinions expressed in this podcast are solely for educational and informational purposes and should not be considered as investment advice. The hosts and guests of this podcast are not licensed financial advisors, brokers, or registered investment advisors, and their comments should not be construed as recommendations or endorsements of any specific investment, security, or strategy.

Investing involves risks, including the possible loss of principal. Before making any investment decision, you should conduct your own research and consult with a licensed financial advisor to determine the suitability of any investment for your specific financial situation and investment goals.

The hosts and guests of this podcast make no representations or warranties as to the accuracy, completeness, or timeliness of any information discussed in this podcast. The podcast is not responsible for any errors or omissions, or for the results obtained from the use of this information.

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Please enjoy the show.

  

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

Erwin  

Hello, everyone. Welcome to the truth about real estate investing show we have an awesome episode, we’re gonna talk about recreational property investing. And we’re talking about a couple properties, four or five properties that and to give you an idea of the scale, we’re talking about hundreds of acres, hundreds of acres, hundreds of RV sites, even in a hotel and a restaurant in there and a golf course with Darvin Zurfluh, who is the owner and founder of Pinnacle wealth brokers. Before we get to that this is the truth about real estate investing show for Canadians. It is one of the top ranked podcasts on business and investing per iTunes. Since we’ve been around since 2016. Doing an episode a week. My name is Erwin Szeto, I’m a real estate investor since 2005. And we’ve been around for a long time podcasts been around a long time I’ve investing since for nearly two decades, I’ve coached over 250 clients, and among our clients, we have about 45 self made millionaire investor clients, this market is a wild one with interest rates being really high. And looking like we might have another increase, there’s a decent chance maybe one in five chance, it might be higher that we have another rate increase later this fall later this year, while there’s many speculators out there who were honestly feeling a lot of pain. And actually, I find that a lot of people are feeling various levels of pain. But it’s the speculators who are holding multiple negative cash flow properties that are really feeling it. We checked our own numbers. Our clients are taking profit as well. Our clients have been selling some properties over the last six months. And we checked. So just to give you some averages, the properties our clients are selling, they’ve held them for an average of 5.2 years. And among those properties, they receive an appreciation price appreciation alone of $313,000. So that’s how much in minimum profits they’re taking. These are all small multifamily detached homes. Yeah, so they’ve invested smart invest well, and they’re being rewarded with again, on a 5.2 year hold on average, average price appreciation alone is 313,000. Not bad. And we know what they paid for these properties. And because we helped them buy them and they bought and they bought right. The real estate market means many things to many people, folks with houses on land and bigger markets are just fine. For example, detached homes and Treb are actually higher than last this time last year, and the price in July. So Toronto real estate board, Toronto regional Real Estate Board Treb just released our August numbers, sorry, July numbers. And July prices are basically in line with June. So prices are holding, they’re being resilient, versus on the other side. But people who are really feeling it, where we see a buyers market is in the pre construction market and cottages. Those are complete buyers market because who has a lot of money sitting aside for a recreational property, a secondary property. And for folks who are in pre construction, I hear the demands from buyers are very high. You know, it was always dangerous in my opinion to be because the pre construction properties I would see that came through my email, the price per square foot was higher than the resale value on that day. So for example, I was seeing pre construction condos, the price per square foot would be $1,600 a square foot versus resale condos were going for like 1200 square foot. So in my opinion, it didn’t make sense to rift that much. In general, not condo investor in general, I like more control my properties. But again to buy new versus used it didn’t really seem to make sense. Here. It’s all these investment options are likely to be fine in the long term, but the long term but you know, if you’re vacant, it’s gonna be painful, especially when the rate increase and we have a new housing minister, our new federal housing minister was previously responsible for immigration. So I you know, I’m I’m a family I come from immigrants. So I believe in immigration, I believe in control the amount of immigration. I don’t know what the number is. But it seems like you know, the fact that we’ve I remember when Stephen Harper was in government, the number was more like 245,000 immigrants a year. Now we’re over half a million. So something may break along the way when you double your immigration anyways. So my point is that long term likely be fine housing market will likely be fine. But again, it’s all about weathering the storm. I was speaking to one Airbnb property manager in the Niagara region who shared with me that more supply has come on come online in the market. The new construction owners as they can’t cash. They know they can’t cashflow. These are single family homes. They’re buying but they know they can’t cash with long term tenants. So they’re choosing to do run an Airbnb. And they’re hiring these friends of mine to manage for them. So short term rentals. And I’m hearing from many sources that short term rentals for long time. Airbnb investors are not performing as well as they used to a friend of mine who has been operating Airbnb for several years and was able to quit his job from his Airbnb income four or five years ago. I’ll share it with me this his Airbnb ZZ are not performing nearly as well as they did pre pandemic and they are in very ideal vacation areas. That’s for long term rentals. Our clients are doing just fine. I was just talking to one of my coaches, our client that has a try plaques that are now rented for just over $7,000 a month. You know, our clients may be vacant for a month or two, while testing record high rents. That’s the commonality between my clients that are vacant for a month or two, my last vacancy, which was just two months ago, I had zero vacancy. When my tenant gave me notice, we immediately found a tenant to move in the first of the month. So anyways, the long term rent market is doing fantastic and the markets that we operate in like Kingston and Hamilton, speaking to Coach D Phillips on my team earlier this week, and he shared with me that how in Kingston, his client to sign a tenant for $2,600 for a three bedroom main floor apartment in Kingston, Ontario. And we have a client that just rented out, they’re close to signing a lease, and maybe I’ll hold on to that number, but they’re closest signing a lease for their brand new garden suite. This was the first of probably, it’s probably the first garden suite. Well, this is the first time suite to be rented among our clients in Hamilton. So I’ll wait until at least a sign to release that number. On the other hand, small market, novice and landlords appear to be struggling based on the conversations I’m having with investors who have been reaching out they’ve been taking us up on our portfolio review offer. Small towns that are far away from the GTA, which were darlings of real estate in the early pandemic, are not correcting. Is this not new, normal? Long term, everything will hopefully be fine. If they can find tenants. In the short term, we’re we put out that request for folks to send in their what they have for sale, because we do have some clients that are looking and writing offers. Still, of course, our clients are being very picky because they can, as you know, there’s a lot of motivated sellers out there. So if sellers aren’t that motivated, then our clients aren’t interested. But my point is that we are seeing some wonderful turnkey deals in bigger markets. So markets work, you know, over 150,000 population. Why is that important? bigger cities, and turnkey a moving ready small multifamily to me means lower risk. I think that means to everybody that means lower risk. One mistake I find new investors make or maybe two mistakes is that they believe that what they see on HGTV that money in real estate is fast and easy, which it isn’t. It can be further from the truth. The other is that more work and effort means more returns. For example, I mentioned earlier, some of our clients are taking profits and pay no deaths while rates are high. Well, the best performing property among those was a turnkey property we bought from a builder, I sat with that builder to design a house that would be the perfect student rental. And it was the house was built with safety in mind. We had a lot of building code requirements for duplex built into that property even though we had no second kitchen. Each of the basement bedrooms had egress windows, I had the builder do a lot of fire rated drywall and rocks on safe and sound. So there was a lot of fire separation and ceilings and mutual walls. And that house along with other similar houses that our clients owned, they got the highest rents in the market, and there are no renovations required. It was incredibly turnkey, it was just put up the rent for sign and rented out to students. That client after seven year hold, the client walked away with $489,000 in price appreciation alone 489,000 After seven year hold, that’s nearly half a million dollars from just one income stream and then good cash flow and cold good mortgage pay down. My point is that turnkey small multifamily can be a viable option. So don’t just count it. And thinking that you have to buy an ugly property that requires months to renovate plus hundreds of 1000s of dollars and renovation budget. And who knows how many permits or zoning change or use change or variances. Again, from my experience our clients experience you can make a lot of money just buying turnkey as a sophisticated investor. One should always look at all the variety of options available to you and make decisions holistically. I’ve had several calls with novice investors considering investment options as far as like four hours away, or they have to get on a plane. Because the property is out of province versus I tell clients all the time, it’s not that hard to make money closer to home. If you can’t make money in your own backyard, then what makes you think that someone can be successful in a market where they have no contacts and or no relationships. It’s obviously possible past guests of the show have done so. But not everyone is willing to put in that kind of full time effort. Nor do they have a partner or spouse earn six figures to pay the bills and put food on the table. Ember cashflow is important. In my experience, having worked with over 350 successful real estate investors, investing within our drivers is can return world class profits. And it can be done as a side hustle over 9% my clients, they still have their day job. They do real estate investing as a side hustle and they’re doing incredibly well with the real estate portfolios. They didn’t do so investing in pre construction condos, they don’t flip they don’t do any sort of these high high effort high risk strategies a provider that require private borrowing. That’s speaking to another investor recently who has a very successful Airbnb, but they cannot get a mortgage. They’re stuck paying 12% on a private mortgage. So yeah, there’s many options. Again, you should be using a spreadsheet to make your decisions Just to understand all your options 20 Fat investing can work, it just seems to take more savvy, the pockets, risk and effort when keeping it simple, tried and proven works just fine. In my experience, at least, the sad thing was with housing is that with prices so high, it’s only gonna be the rich are gonna afford deals in the current market and going forward. Even more sad as the situation will only get worse when the rate cuts begins sometime next year, based on what the bond market’s doing, because when you see that first rate cut, you’re gonna see all the rest of the buyers get off the fence and push this seller’s market into a further seller’s market. If you don’t believe me, it’s already sold market. The June Toronto real estate board Charl real regional Real Estate Board, their days on market was 24 days. It took an average of three and a half weeks to sell a property that to me screams seller’s market that’s also down from 29 days from a year ago, and not a very good market. You know, check out the stats for yourself, you know what to believe me necessarily. And then price wise in Hamilton were up 5.5% Average Price year over year. I understand that’s a wonderful amount of appreciation. Because if you bought right, and you cash flow at least neutral if you’re at least neutral in cash on cash flow this time last year. And so you put down 25% Right, that works out to a 22% return. That’s an incredible return. And again, what do you think is going to happen when interest rates come down as are expected to mid to late 2024. We should see prices climbing. And we’re gonna continue sharing how our clients continue to earn world class returns via our online monthly meetings and in person mastermind tours. So don’t miss out through mine. Our in person mastermind tours do sell out. We sold out our last one which was in Kitchener, Ontario. We have upcoming ones in Kingston, Ontario. And we’ll have one on the west west of the GTA as well you’ll either be held in Agra. So the best place to stay informed and be aware of when we have when we host these events is to be on our email newsletter, along with the 10,000 other high winning yes investors in Ontario in Canada. Many of my rich friends are taking advantage of the opportunities presented by this market. So find out how you can to sign up for our email newsletter at www dot truth about real estate investing.ca Let me slow down WWW dot truth about real estate investing.ca Enter your name and email address on the right side and you’re set to become a very well informed sophisticated investor. So speaking of simple tried and proven Cherry, the kids and I just returned from a week long vacation in Muskoka. No, we didn’t stay at some luxurious cottage, but rather we stayed at a family camp at the YMCA on this huge property that someone some lovely person donated to them to the YMCA 110 years ago, there was lots of greenery, an incredible amount of lakefront and most importantly, the camp counsellors were wonderful as they entertained our our kids via their programming. So each day, our kids would do all sorts of activities, treetop trekking while climbing, canoeing, kayaking, swimming, sailing, nature, walk hikes, arts and crafts, archery, all sorts of fun things that people do at camp. In the afternoons. We could do the same activities as a family. We pretty much did them all.

Erwin  

Is it arts and crafts, I usually like a little more excitement meals were provided which so we didn’t have to cook and clean our accommodation with a cabin with 10 bunk beds. So very simple accommodation, the same cabin that the overnight that the normal regular overnight campers, kids use. So it’s no frills, no air conditioning, no bathroom. The bed was not built for someone my size. We had a blast. The beds could have been better for my back in my sleep, but the kids had a blast. The camp counsellors were amazing. We enjoyed the meals, the campfires and the sick related singing and performances and just being disconnected from technology in the city. Now, this was our second visit to the YMCA family camp, our first since the pandemic and we plan to be there back there next year. A simple vacation. Camping is tried and proven to be fun for kids and it works. Now on to this week’s show. We have my friend Darvin zoo flew, who has a huge private equity brokerage, it’s actually in terms of the capital raised, they are the largest and they have the largest network of brokers as well as called Pinnacle wealth brokers. If you’ve been around the investor community, you’ve been attending events, you’ve likely seen them around. But today we have the founder of the company joining us from Calgary, Alberta. If you’re not familiar with private equities, all you need to be as a good private equity is part of the reason why you hear me say things like today’s time is the best time to be rich as the options for investing and never been so good and available. I was introduced to Darwin when I asked my own Pinnacle wealth broker representative, Steve Wozniak, I asked Steve for if you knew anyone who did large scale recreational properties to be a guest on my podcast. That’s how we can I got connected with Darwin. We’ve since become friends because we share so many things in common. His recreational properties are much bigger than mine. And also because I know so many of our listeners are interested in Airbnb and recreational cottage investing, he’s been in the investment industry since 1997, when he started up at the bank, and he since progressed to only a couple of 100 acres. Darvin shares how he recently purchased about four or five properties that total several 100 acres, including among those properties, there’s hundreds of recreational vehicle RV sites, dozens and dozens of cabins and campgrounds, and there’s even a hotel and a golf course in the mix. Darvin details the story behind that purchasing like golf course property, the analysis and the value add strategy that goes into it, which I think I find it particularly fascinating. So I hope you do too. In general, this is a fascinating interview into entrepreneurship in the private equity real estate investing space at a large scale. Again, Pinnacle wealth brokers has raised over a billion dollars in capital, Steve tells me it’s closer to like 1.6 or 1.7 website currently says 1.2. It’s one of those numbers they offer passive investments to middle class investors to participate in passively active or passive investors will appreciate this interview. And so if you do enjoy it Darvin is our confirmed desk for the online only November 21 monthly Iowan meeting. At that meeting, Darwin will go into more detail and also have slides and whatnot to show us what private investment equity investments are. He’ll go into the numbers behind the story and the numbers behind these recreational property purchases, hopefully, including the Golf Course. So if you’re on our newsletter that’s already received by over 10,000 of either winning US investors in Canada, then you’re set if you’re not on our email list, newsletter, go to www dot truth about real estate investing.ca and get on our newsletter. As we are discussing securitized investments, please enjoy the show, and the legal disclaimer to follow as required by the island legal department. If you do want to learn more about investing with Darwin’s company Pinnacle wealth brokers, Steve lazy acts, who is my own broker at Pinnacle wealth, his contact information is in the show notes. Please enjoy the show. Hi, Darren, what’s keeping you busy these days?

Darvin  

Quite a lot. Actually. You are busy in the fund investment world focused on real estate. I just got back from a trip to some of our RV resorts. So we had a charity weekend actually this weekend with the Starlight Children’s Foundation. So a really fun weekend hosting a bunch of families at all of our resorts. And yes, I just got back from there back in Calgary now in our home base and just just about to head back into the office for the next couple of weeks before we hit the road again.

Erwin  

So hang on, you hosted families via the starlight charity at your resorts. Yeah, the

Darvin  

Starlight Children’s Foundation, if familiar with them. No, I don’t know if they’re out this way. Yeah, they’re quite a large organisation that work, work with hospitals work with sick children, people from all different backgrounds. And we partnered with them to look for maybe children that don’t have the opportunity to get out into the county and kind of experience. So we hosted them and their families that are different resorts and just you know provided a food and activities and a bunch of laughter and then ultimately all of our staff at our resorts have had a great time as well. So it was a win win for everybody.

Erwin  

Amazing. Yeah. Your kids all this?

Darvin  

Yeah. Well, a couple of my kids were a little older, and they were working but yet my youngest son was there working hard, making the resort look good and hosting people on the boat. So my wife is there helping cook and we had a couple other staff at our resort. And then like I said, we were doing, we were doing six different resorts. So that was a great time.

Erwin  

Philosophers benefits, how you say Darwin is a bit of a big deal. But we’ll get into it, we’ll get into it. So backstory is how you got on the show was I asked my friend Steve, our mutual friend, I said, Hey, recreational properties or has a hot item, you know, like, who’s the best person who’s the best person to speak to recreational properties? You know, a lot of people are talking about short term rentals Airbnb ease, you know, so then he introduced me to you. And yeah, you know, I mentioned before we start recording, you’re the only person I know who’s who owns a golf course. But yeah, let’s let’s start from I don’t know, how did you start your career? Like, let’s start there. What was like your first job out of university?

Darvin  

My first job when he seven years ago working for one of the big banks, and my second job was working for one of the other big banks and then and then my third job going into work for one of the largest insurance companies. So yeah, I started my entire adult life working with investments and ultimately in the financial industry and my early years were kind of a training ground and took all the courses that I could take and tried to move my way up within the ranks and he’ll eventually went more independent and got into the business owner side of things, which was kind of what my aspirations can always worse. Since going to business school, that was my goal. So, yeah, I learned a lot about with banks and how they operate. And you know, how they make money and how they tell their advisors, you know, these are the different investments that make us make us the money. And this is your report card on how well how well you’re doing for making the bank money. Ultimately, I wanted to find other investments and other ways for people to make money than just what what the bank was providing. So I ended up moving more into the independent channel where I had a little more say, a little more choice than just searching for these investments or slogan at Pinnacle wealth has been, you know, continually seeking unique opportunities to find how to create wealth for investors. And by doing it on our own, and having our own team of people that look for these great opportunities, we have the freedom to choose what we believe is best not necessarily what a big corporation feels that we shouldn’t be pushing on investors. You know, that was that was the beginning of my career, though the banking world and looking at all the different products that the bank had. And then, you know, taking courses through the Securities Institute, and, and, you know, the fellow of the Canadian Securities Institute, and more I learned about investing in the public markets. The more I realised, though, this is not something that you can predict. And it doesn’t really matter how good I get, I have no, there’s no ceiling here where I can say, now I’ve know what I’m doing. And I can really make a tonne of money for myself and investors. Because really, the more I knew, the more I realise, I’ll never know, like, right, like Warren Buffett, you know, he’s by a great company that Hold on, don’t try and trade stuff, don’t think that you can beat the market because Because ultimately, you can’t. And so that was less challenging for me than when I realised I can’t become a guru in space. So that’s where I started to lean more towards the real estate side of things. Because I do think you can control you can control your own market a little bit better, you can predict where the markets going without it turning on a dime. Whereas in the public markets, it turns earlier, or an earlier, you know, before we hear about something happening in the public markets, the big money’s already moved out of it. Right. Like it’s it’s happening so fast now. And it’s so sophisticated, that there’s there’s really no no fun in it, right? There’s no because he can’t You can’t beat it. So yeah, coming into the private world and investing in private companies became my focus. The private companies don’t have that turning on a dime, you know, the news comes out and all of a sudden the share price as a as a massive change. Normally, the the valuations are dependent on what, what’s the income being generated for the company? What’s the outlook for growth in the company, and what’s the sector look like? And so, back to more normal investment fundamentals in the private side, and more specifically, in the real estate side, like I said, there’s a little bit more predictability. And I really, like hard assets. And so, you know, going into into the private side, we focused pretty heavily on hard assets. Just, you know, for reasons that you know, and I’m sure most of the listeners really liked about real estate.

Erwin  

So that’s my fault. Darren, thank you. So a good friend of mine was he worked for one of the big banks as a financial advisor. His clientele was like, I think 3 million and up and assets under management. So like he was decent, and one of his including he had a major real estate influencer client as well. Like, I mean, he says it’s private, obviously. And so I go I go, you’re like, Oh, that’s awesome. What kind of cool stuff can you offer? I’m like private stuff like stuff I can’t get. It’s like nothing. No private equity options, everything that you know, like 10 million assets under management guy, I can get all access to the same stuff. And it’s all you know, all stuff people are note were aware of GICs mutual funds ETFs like what do you guys do different than so what what was your experience like? Was there many hard asset options or real estate options for not working for public financial institutions?

Darvin  

Nothing at all back then. Yeah, like bank

Erwin  

offers I can buy gold from my bank but it’s really expensive. The fees they charge are ridiculous.

Darvin  

Yeah, there’s no options it was it was actually quite disappointing in what you can provide to clients so having to look for something something different you know, they’re they’ve missed out I think they missed out in a big way over the last 20 years. I think they realised that and today I think they’re still trying to figure out how do they do it? How do they get into space and so there’s there’s going to be a slow change over the number of years but right now the options are still very limited. That’s how I protect the wealth. Did

Erwin  

you did you buy it? Did you start it? Yeah, I

Darvin  

found it a pinnacle wealth. So like, like you were saying, the way it came to be founded was was Most by by accident, but when you talk about how you ask a broker, like, can you invest in real estate invest in private, there was no option. So I started doing that for my clients when I left the bank and the insurance company was looking for these private options as an independent, you know, and as a business owner didn’t intend to have brokers at the time, I just want to be able to offer Publix and privates to my client base. And what I found was a lot of my new clients were actually financial planners that worked at the banks, or they worked at a large mutual fund broker. And I’m like, why you guys, my guys buying your RSPs for me like it just like it just really clicked when I was driving on the road from a road trip, signing up a bunch of clients on flow through shares, you know, because flow through has a very short window of season when you get in to get your tax deductions. But again, most of these clients, again, were financial planners, they understood these investments, they couldn’t sell them to themselves. And ultimately, some of them were asking, Hey, can I work with you? Can I do what you do. And so ultimately, we had a broker network being formed. And back in 2009, we were raided by fast 50 Girls number one fast 50 growth company in Alberta, and, you know, continued on that path, and did some rebranding and ultimately went national with Pinnacle wealth brokers, in 2010. And it was a unique time in the marketplace, with regulations and a lot a lot of regulation changes kind of came into place. Because our regulators province by province, we’re seeing the demand and the change for for private investments and what they call

Erwin  

Jarvan. You’re having to be regulated under every province are regulated under that sounds like a pain in the butt versus like versus a single regulator. Wait, because I believe in the States is just one regulator. There’s one one national.

Darvin  

That’s right, one, one national regulator. So yeah, it’s something that’s a little disjointed in Canada having our provinces of 10 different provinces that pinnacle wealth brokers is regulated.

Erwin  

Felt like a lot more expensive, unnecessary. I obviously have to do it. They write the rules. So

Darvin  

our compliance department is their biggest department because you go from one insurance regulator, Canada, they do their routine reviews, and then the next province comes they all have the responsibility to oversee the activities happening in their province. And

Erwin  

the clients budget must be millions.

Darvin  

It’s expensive, it is expensive. The cost of doing business for sure.

Erwin  

Right. So not because it’s not a business you start overnight.

Darvin  

No know, it takes time to build for sure. And it’s not it’s not the easiest business to be in for sure.

Erwin  

So how I got introduced to pinnacle, I don’t think Brian Paulus was mine that I share was, this was years ago, so a friend of mine, Brian pulis, of course, investments, he was one that introduced me to pinnacle, because he was telling me how he wanted to be on the on the best, you wanted to work with the best. And that’s how he ended up with you guys. I know and I heard it was long process. You guys are just from what I hear you guys are not you guys are quite picky. The diligence period is long, like a couple of years. But yeah, but that’s that’s how I got it for sure. There’s just the pinnacle. And that was like, a long time ago.

Darvin  

Yeah, Brian and Poulos been one of the the REITs that we’ve been raising money for for for many years now. And, you know, they’ve they’ve done very well and been a successful investment for us as as most of our REITs have been. But we do get approached quite often. And so we do have to have a very detailed selection process that our corporate finance team goes through from, you know, the finance side, the legal side, the client side, and salability what’s unique about them and let them sell in a portfolio. So

Erwin  

because what I’ve heard is, you know, if you want to be bigger, raising capital is either a full time job for yourself, and that’s several others, or you can work with someone like Pinnacle wealth. So can you can you explain to listener what Pinnacle wealth brokers does?

Darvin  

Yeah, we we bring private investment opportunities to market to the retail channel across Canada. And we’d look at, we try to look at a wide variety of investments so that people are properly diversified. We have dealing reps and all the provinces in Canada are the main provinces. And so we’re coast to coast and those DNA reps are financial advisors, really advising on private investments. In Quebec, they’re also able to become mutual fund licence if they wish. And some of them are life insurance licence and so really there and they refer to portfolio managers on the public side, if they if they’re not offering that themselves. And so we’re a portfolio manager as well. So there’s different register duration categories, but we offer public investments. But our niche is really just bringing these private opportunities to market helping get the offering memorandums created, so that we can go raise capital in client manner. And then ultimately we we stay up to date on the investments that we’re raising capital for, and, and work with them if on the financial side and monitor the investments as as they grow. And, and ultimately, we see the benefit of them growing and becoming successful. investments like century and we brought to market through a company that we had acquired when they were new. And they’re they’re one of the largest REITs private REITs in Canada today and 2.6 billion, I think they’re gathered a few different funds. Now it’s adds up to about $6 billion. Right.

Erwin  

So that because the is it, the president or the owner, he has a wonderful newsletter. So for listeners, like if you’re interested in geeking, out on what someone consumes and thinks about real estate, who made that who manages 6 billion? Check it out, check out his newsletter. And so Pentacles quite large. Are you not like your national? I can’t imagine many EMTs or national? Yeah, we

Darvin  

I think we, we have more dealing reps. So more presence than anyone in Canada where we have about 7078 Dealing reps, from coast to coast right now raised about 1.3 billion in retail dollars into the exempt market products that we offer. And like I said, we’re growing growing on that side. And I’m also trying to reach out to the financial advisor network, they said the work in the public companies and then just show them like as part of our goal in the next five years to really show them that they can have access to because they can come and offer what we have to offer and what they can still offer what they have to offer so they can properly diversify their clients. Yes, proper diversification,

Erwin  

I think the key word there. And so for the newer listeners, or the smaller investors, from what I see is when when say like an apartment building investor wants to scale up. Generally, capital is their biggest issue, assuming but most of them are quite talented at finding good deals. But you know, you kind of need to focus on one thing, most of them seem to most will go to someone like you to try to raise the capital for them. So who so I imagine you get a lot of people asking you to do their capital raising for them? What do you think it is, like 10 to one, like asked to actually get on your shelf as an offering hundreds of one?

Darvin  

Yeah, I know, we used to track that a little bit better. It’s about one a day that approaches us. And lots of those don’t even have an offer. Yeah, they just have an idea. Some of them have a full operating memorandum already done. But we want to make changes. But yeah, we only had six to eight new kind of offerings, or maybe less than that maybe less than six offerings a year. Now. The ratio is certainly very, very challenging for an issuer to try and get onto the show got to have a track record, you got to really have a strong team behind you. You got to have really good corporate governance, and you got to be in the right sector, you got to be offering something unique, can’t just be raising capital so that you can buy something to grow for yourself. It has to be like how do you really provide extra opportunity for investors to provide that above average? So we’re looking, you know, and we look at risk adjusted return like So ultimately, that’s what it’s about, like if the risk can be higher return for investors has to be hired to

Erwin  

sadly, I find the understanding of risk adjusted returns is lost on many people. Like for example, I’ve seen like promissory notes for like 17% So unsecured loans for 17%. And then like, you know, the credit your credit card will want like 20 to 30% for that same kind of security risk that you’re taking on? Why would you give it away for 17%? Anyways, moving on. So how many products can you give us like a high level of number, give us listener a high level understanding of like, what kind of products you guys offer opportunity offer? Because I talked to Steve and it’s like it’s currently varied. You’re telling about like you have some like you have some like music one as well.

Darvin  

Yeah, we look for something like unique opportunities to increase wealth, right? That’s our mandate. And so a lot of stuff you’ll see will be a little bit different than what you find. So Steve mentioned music royalty fund. So through ICM, they they have the investment business and they have a REIT but they also accumulate the music royalty for I brought some talented people together to buy, you buy songs that have a long standing track record of being played and you get a royalty. When those songs are played, it goes into back to the owner of the of the song, what we like about it is it’s very diverse, it’s not correlated with your stocks or bonds or your real estate. And so, you know, just a very unique opportunity that provides a consistent return as the song could stop being played. Right? You look at the the friends soundtrack, or whatever that was on the TV show Friends, wherever that one went up for sale. And as long as it keeps getting played the there’s there’s royalties coming back.

Erwin  

And so that’s why you have ownership in the friend zone.

Darvin  

We didn’t know our fund didn’t buy that one. But people have like, they have different kinds of songs that you can buy, I thought that one went for like $300,000. And then you kind of own the royalty. So it’s not not super expensive. The goal for the for this music royalty fund is, is to buy ones that they believe will continue to be played, right or have an increased amount of what they’re being placed. So

Erwin  

I’m trying to time it, I would sell it for the seasons, the series is over.

Darvin  

Yeah, there’s a lot that goes into into their business, for sure. And the key again, good, great management team with that, understand what they’re doing and understand the business and very prudent on the financial side. It’s easy to get excited about something but you got to make sure it makes long term financial success.

Erwin  

And you mentioned you have Centurion which is incredibly boring apartment buildings. 6 billion, just apartment buildings.

Darvin  

Yeah, but some of the very best managers in the space. Right? So they’ve provided us double digit returns, you know, for a long time now. So last years,

Erwin  

we my mom’s invested in the the carwash fund.

Darvin  

Yeah. We thought, well, what’s the unique aspect where you can get into real estate, but maybe they can generate a little bit better return than than typical real estate? And so carwash, you have the business side, you got the real estate side. So we liked that asset class, and that was probably closer 2015. When we got into that, then after that it was storage facilities like can you consolidate or build storage facilities where there’s high demand, so that was nationwide that started doing it. And closer to that in Vancouver, you know, instead of going by cheap land where the storage is spread out, they thought, let’s go more vertical, and be more walkable and closer in proximity because there was high demand for that. So that’s just one other real estate kind of asset class. We have stuff. It’s not real estate at all. We built a fund we called Pinnacle institutional access fund, and it’s access to Blackrock as a money manager. And so they they invest into private companies that are much larger scale than other companies, you would see on the pinnacle wealth brokers shelf. So they’re investing in the United States and Europe and Asia. And so the only way that is one of the funds that is very unique to us, we chose not to use their real estate funds do we have lots of real estate, but they’re, they’re buying secondaries funds, funds in private companies that may be large investors need liquidity, so they might need to sell the private fund that they got into your five years ago. And so now they sell a pool of private investments and our institutional blackbrook fund those managers of Blackrock to money, largest money managers in the world, decide which ones they want to get into it and get out. So that performs very well. It makes up a good chunk of my registered plan portfolio than then. Yeah, we have lots of different kinds of unique opportunities that don’t without being out, but it gives you kind of a general scope of like, what we do a pinnacle wealth brokers.

Erwin  

That’s why when I explained to someone new to the space, I say, you know, this is the way I explain it, is the analogy I use is it’s like a mortgage broker who has access to many different types of mortgages and lending products. You guys are a broker of different investment opportunities in the private equity space.

Darvin  

As writer. Yeah, we exactly. That’s a really good way to explain what we do. Your job is to quarterback which we think is best for the client. And including diversify you can one can diversify across many funds. You don’t put all your eggs in one basket, that that’s key. Choose whatever, right? Yeah, you said it before, right? Diversification is key and it’s easy for anybody else. losses, investors might favour a sector, right? We might favour apartment buildings. And maybe you win on apartment buildings, or you have one on them, but you don’t know what the future holds. And that’s why financial planners always tell you to diversify. And that’s the job of our brokers is to make sure what’s an investment, what’s in your investment portfolio is suitable for you. Your timeframe matches your risk tolerance, and the diversified, you know, over concentrated just into one sector.

Erwin  

And I believe my mom’s returns on Polish was 14%. Last year, so she’s quite happy with that. Predict the future. This is not financial advice. Don’t sue anyone. Now, I want to ask about your own personal investing. Because if we started off the show, we’re talking about like recreational property. Yeah, please like, like you were talking about Warren Buffett, for example, like Warren Buffett, of course, correct. So along the way, like 10 years ago, did you ever think of you buying recreational property?

Darvin  

For me, like I have been in like, I’ve always had a bought a cottage at a young age, I grew up what are the competition water skier, and so our family was always on the lake. And so I like that space, we have a recreational property for 15 years in Honduras. And, and so I think a lot about it, I think both the pros and the cons. And ultimately, when I had some money coming back from some of our exit market products, I needed to deploy, redeploy. And I wanted to think of something that I can hold for the long term, like, what do I really believe in? What sector can I just, you know, have a 10 plus year time horizon that I can invest in. And ultimately, we thought the campground space hasn’t really been touched by big investors. So what you’ve seen happen with apartment buildings, or even office space has already happened in this space yet. And we happen to be living in Alberta, and we spend our time in British Columbia, those are the two best places in North America to invest in this space. So I made an investment with my own money to try it on the first fund, I call it and it worked out really well. And so we thought, well, let’s see if we can replicate this and do some other properties and start inviting investors in. So I although invested in all the properties that we have. There’s only two that was kind of myself and my business partner. That is just us. And now we’re doing a fund that is for everybody.

Erwin  

So before we’re recording, I mentioned that I think it’s I think it’s the right thing to do is to cut your teeth, your own money, if we will you and your business partner. But yeah, he was he was active on this, too. He has needed each other. I think it’s I think it’s the appropriate thing to do your own teeth with your own with your own money before going to use other people’s money to invest, especially especially when it’s something that hasn’t been done before. That’s how I was going with my next question. My next question is actually can you speak from your own experience the importance of using recreational property? Because like, you know, you went from, you know, university to owning a national nationwide poker network. I’m sure it wasn’t easy. didn’t happen overnight. Wasn’t a four hour workweek wasn’t

Darvin  

read the book, loved it. Great concept. But yeah, getting down to 40 Hour Workweek still still a goal. So yeah, how did they get to recreational space is your question.

Erwin  

Like, what’s your experience? Like? How important is recreational space to your to yourself? Because again, like your journey has not been easy. I’m sure there was your business building. You know, you had a startup. All right. I’m sure that’s stressful. If you have four kids, or kids, or kids yeah. Busy, busy.

Darvin  

Yeah, so I guess you know, from my family aspect, getting into the recreational space seemed like a good way to start finding balance. You know, it’s one of the slogans we use the pinnacle lifestyle, it’s, you know, finding balance. Getting out of the desk, for me was a big thing, spent a long days in front of a computer and eventually that catches up with your knees, your back your neck, you know, either your forearms, your typing. And so, health and fitness. I grew up being more athletic than I found myself as an adult because it wasn’t getting out enough. Playing enough sports. And so yeah, but this I realised that’s when you’re happy too is like after a workout usually feel better, right? After going to play hockey with your friends or going to do any kind of sport. You feel good getting out in nature. One of the things that really astounded me was an article that came out when we’re starting the pinnacle lifestyles as doctors now prescribing prescriptions to go for a walk in the park and it’s like, wow, that sounds so crazy. And the more you read into into nature, the more healing you realise that it does for you, and so in some cases, it can replace entities depressants, but ultimately it does. It does make you feel good releases endorphins to be out in nature and just hear the creek, the water running through the creek and the birds chirping. And just to get outside hiking and walking in the park is really good. So for me, it was a feel good thing. It was healthy for me looking for what’s healthier for me in the future. And, and how do you help others, we know that there’s a big problem with technology really consuming our time and our minds, especially kids. And that was a concern for me and my kids was, was seeing how these, you know, these all these new apps really have their attention and, and their mood, right their mood after spending time not to pick on anyone but Tiktok or Instagram or something for a couple hours, their moods not the same. Right? As you go you play baseball with your kids, and they see what their mood is after it’s just a night and day difference. And so I have a pretty big passion now of trying to encourage people just to get out and and to be more active and live that lifestyle. So yeah, it’s a bit of a feel good investment for sure.

Erwin  

This is I love where this conversation is going. Because I find many real estate investors. Like, you know, I never grew up thinking I wanted to be a landlord. And so what I find a lot investors are new and veteran, as they’re always trying to figure they’re trying to figure out where can they find their passion within real estate. And then you’re a living example that you’re doing exactly that. Right, you find your passion. So tell us more about about I don’t know, maybe the first two projects you got you started doing with recreational wise. Yeah,

Darvin  

well, we always look at investment fundamentals. I mean, we’re an investment brokerage, we looked at 1000s of opportunities. And so the one stat that came out that really, that Tom brought, to me who’s my business partner, was there’s 20, recreational vehicles or RVs, for every place to plug an RV into in British Columbia, and an 18 RVs for every place to plug an RV into in Alberta, then you go into Ontario, and it’s more like six to one, you know, and a lot of United States a lot lower. So it’s just a it’s out of balance. There’s not enough RVs especially service derbies, there’s some dry land count more dryland counting, probably than a lot of places where people can go that they don’t need any services. And so there is counting opportunities, but we know where the trends going. People want electricity, right? People want running water and services. So we look at that as a very solid investment fundamental to base our location of business on right because with real estate, its location, location, location. So when we get asked why we’re not in all these other places, I just go back to the number one fundamental that made me want to start this business and then we looked at it from from different angles, like how do we do better than what an average campground owner gets? Are they getting a cap or a 10 cap on their investment where you know, apartments or maybe going down and cap rates so you know, there is there is opportunity to take a campground and increase the revenues, I think we’re well over 40% in the first year of of our operational campgrounds that already have to service RV sites in there, and being able to increase the revenues from it. So there’s there’s lots of little things you can do as a company to be strategic to get more customers coming and take advantage of off season. Take a business it’s actually profitable in two months of the year because we’re in Canada, right like they these campgrounds make their money in July and August. You might have a long weekend or September long weekend, but you don’t make money typically in those months. And so from an investment side we go in and say is this something we can make money in and more than two months going forward. And so we’re looking for those ones like fishing resorts, while April May are really good fishing months in September and October really good fishing months, but they’re also on beautiful lakes. So you know, white lake fishing, we have a fishing Resort at White Lake and the shoe shops in British Columbia where it’s top 10 Rainbow Trout fishing lake and so it gets a much longer season and it’s just a great investment with consistent cash flow and people are spending more on fishing so we upgraded our old owners residents and making a fishing lodge and we’d like to keep evolving that into into providing more services to people that maybe want to have fishing guides the future so we’re not there yet, but we are seeing boats

Erwin  

I mean Oh that sounds awesome. I need a fishing guide. I don’t know anything. Yeah. I don’t like putting a worm on my hook. Hook beaver

Darvin  

fishing is a really cool thing. Again, it’s not a sport that’s getting your your your endorphins out as much as as most sport but when someone gets a like this weekend with the Starlight Children’s foundation we had a few kids to catch a fish for the first time in their life. You know, some of these kids are 1617 years old, you know a smile on their face is just priceless is a fun sport for people of all ages. And you know, something that I’ve grown to like more and more I did a lot when I was young and I hadn’t done it much less

Erwin  

you know, I can recall every memory of fishing with my kids. I’m sure you created some amazing memories with across your six resorts for those poor children.

Darvin  

Yeah, yeah, I mean they did they all had a good time. We got some positive reviews from I think all families, but even just our regular campers right like just it’s just one smile at a time right? That’s our goal for our staff and all the different resorts help great smiles.

Erwin  

So for the listeners benefit like me my benefit to how do you describe like six out of six resorts? Like how many campgrounds is that? How many RV? Do you can you host like how do you quantify that for somebody just so they can understand the scale?

Darvin  

Yeah, well, they’re all vary greatly in size. And so we have where I have my cabin and I bought it more just because it’s where I want it to be. It’s very small 1.4 acre campground 20 RV sites, five other cabins to rent out. And

Erwin  

that alone is pretty big for somebody. Five cabins 1.4 acre 20 RV sites. Okay, that’s that’s, that’s more than the mouthful. Okay, so that’s one.

Darvin  

We have one in Edson which is the first one that I bought with Tom and it was 143 fully serviced RV sites. We got a privately we got a couple suites like condo style suites and and a cabin on that one. And we have like 100 acres of expansion room. So we’ll keep building RV sites on properties like that. We have the Golf Resort Kokanee springs and coot nice, and that one is 432 acres. So it didn’t have any RV sites. We bought it and then we put on RV sites. So we just were just launching like I said beginning of June like 36 RV sites for for rent and then 26 RV sites for sale and we have nine new cabin lots that we’ve constructed on that property.

Erwin  

I’m sorry other cabins for gonna be for like Airbnb or your hotel or

Darvin  

it’ll be the it’ll be ownership. So if somebody wants to have their own cabin for ownership, and then Pinnacle lifestyles actually has a management company and it’s through our same investment fund that we manage will rent those out. So if you want to rent yours out, we’ll do all that work for them. We’ll advertise that we provide the cleaning and come in and get them rent ready for everybody in between customers. Amazing. And then going on to other resources may have Revelstoke and Sitka moose. Guests we have about 180 sites and our Revelstoke campground and I think it’s 86 sites and the second most campground we have gold that I did, that’s not one of our six campgrounds because it’s just it’s 200 acres of riverfront property that’s not developed yet. So it’s nice beautiful treed property actually on the Columbia River on both sides of the Columbia River and it actually owns on both sides of the way a bit Creek so there’s kind of a where two rivers can join we own all around this, this beautiful junction of of two gorgeous rivers. So again, fly fishing and, and the trails ATV trails and stuff from there are quite wonderful. One of the tights it’s right across the road from the staging area for sweaters and snowmobilers. So again, it’s one of those places that we can make a 12 month of the year season, close to the ski hill and golden and but beautiful summer and winter and fall and spring destination release. So that one we’ll put on a few 100 RV sites like we will with the coconut springs golfers or we’ll put a few on like three or 400 on each of those properties. So yeah, that kind of gives you an idea of the size of the properties but the investment horizon continually being able to develop more lots in a resort that is already popular and attractive, and then allowing people to either rent or allowing them to buy. We have both options. And I think we’re the probably the only unique company that does this in North America where you can come in and you can kind of do both can have multiple properties. So you can move around from from different locations if you wish. We were allowing people to invest, invest in a fund that owns all of these different resorts and we do have three different funds that own those ones that I mentioned. Fund three is the one we’re on now and everything going forward will be in this political lifestyle. It’s been three, but they own the management company so they own the rental revenues. They only golf course they’ll note we have a 62 room hotel that’s at that golf resort so they would own that And then so they get the they get the fees from the restaurant revenues, we have a marina at the White Lake fishing resort. So they would own part of the marina and the boat rentals and the gas, the only it’s only gas station on the lake. And so there’s multiple streams of income and what we have as one different investment, one investment, very unique Pinnacle wealth brokers to invest into the sector. And it’s a sector that I don’t think many people have in their in their investment portfolio, and it happens to be RRSP eligible. So, you know, if you want to buy with a TFSA, these are your registered plans, you can do that as well.

Erwin  

I mean, that was a mouthful. How much? How much did it cost to acquire all these properties? And over what period of time? Like, you know, one of them is one of those a personal property or cabin, unlike all the other ones that were bought strictly investment purposes?

Darvin  

Yeah, cool me the exact numbers, but we’re in for about 17 million on on the equity on these properties. Yeah,

Erwin  

over what period of time over the last three years. Okay, so on average of 6 million to deploying in every every year.

Darvin  

And that’s the reason we went to full investment offering for accredited investors to allow accredited investors to get in. But in order to, to get the velocity of building all the amenities and campsites and the cabin sites that we want, does require for a fairly high amount of equity. And then so we also use some debt, but we’re very low leverage and this time of higher interest rates. So we prefer equity for sure in this space.

Erwin  

So I can speak to the listener, like you’ve said, You’ve dropped many golden nuggets. Like for example, you mentioned you’re trying to extend beyond just the summer season because like, generally for Airbnb, this candidate generally Airbnb, for example. Most all our friends, even my own experience was the summer killed, Christmas killed, but then maybe Thanksgiving. But you know that there’s a lot more to the year than that. So you mentioned snowmobiles, if that’s the property snowmobile near SamMobile trails that will be popular emission fish, and that’s a new one for me is is hearing about like the fishing opportunities within for that property, make it more marketable as well it gets more rentals because I literally have friends who rent the entire winters. And like Muskoka, for example, to some old dealers, when normally you get nothing else like if you’re not if you’re a three season cottage, then you don’t get that business. But if you do, then if that’s available, right, every

Darvin  

property we have actually is close to fishing and every property has close to snowmobiling. And and I think all of them are not that far. It’s it would be the farthest from a ski hill right from a world class like ski destination in Revelstoke. We’re in the city of Revelstoke. And it’s the tallest vertical of any mountain in North America, right golden has one of the most popular ski hills and we got three that are about an hour drive from the Kokanee springs destinations, they’re all

Erwin  

ski so now, if you’re unsure, you’re in Blue Mountain, you’re telling

Darvin  

ya know, four of our properties are kind of in the Rocky Mountain area. So we’re, you know, golden being the heart of the national parks, you can go in all directions and find a national park within the Rocky Mountains and golden. And so from that standpoint, you see people coming from eastern Canada, you see people coming from Asia, you see people coming from Europe, because they want to go to the Rocky Mountains and they want to want to own a piece of that right. And so I think in the future, we’re gonna see a lot more people wanting to own, you know, in the national park close to the National Parks you can’t own in a national park like bath is the closest beautiful mountain destination for us in Calgary but you got to drive paths down and then you can go to Lake Louise and then Golden’s next so it’s one of the closer destinations we can actually have ownership to these

Erwin  

kinds of properties. Are you seeing much action from Americans in Kokanee we’re

Darvin  

starting to see them come back again for the Golf Resort. They through COVID that had slowed down a little bit but also increased in people that were more local. That didn’t have to travel as far so we’re seeing that we’re seeing and Revelstoke for sure we just have tourists because a lot of our properties around there and Highway One, you know Revelstoke and sick of moose and, and white lakes off highway one so you get a lot of people coming from the United States and also from Europe. A lot of people come from Europe and rent your campervan and they’ll stop it all these properties along the way between Vancouver and Calgary it’s a very public route if I don’t have a snowmobile can I rent one from you? Yeah, we don’t rent them but with knowing soon we work close with a company called stomping ground and so they do they do a TV show actually and they’ve done that filmed the TV show at all of our different resorts. And they’re big snowmobilers in ATV years and so they have all the fun toys and equipment and so I think it’s As part of their future will be opportunities to to get into solo deals and they do so. Yeah, that’s awesome. Pancho Yeah? Oh,

Erwin  

can you share the story of the how? Just for someone cuz I’m sure for the listener this sounds all massive it is because of this big. Can you share the story of how you bought the the golf course in Kokanee? Like what was the story behind that? How much can you share?

Darvin  

Yeah, that’s that’s good question that’s unique. It’s a Golf Resort, it’s been there for well over 50 years very mature trees in just a gorgeous property. It had different owners over the past and like most golf courses, would you build a golf course very expensive. And then you got to build a customer base, that’s hard. All the golf courses that we’ve really looked at, they’ve had a history of running out of money, because they spend so much money on building it developing it, and then they bring in new investors or a new group buys it. And then you know, that usually happens two or three times when a developer is being established. So I, I’ve always wanted to stay away from golf courses. But this one was quite special and unique. The last owner group, and this was nine different investors. And they’d been in it for about 30 years, and Done, done a great job with the resort itself. Like it’s nice as golf course that I’ve golf that like it’s just absolutely beautiful. They were all successful business owners in different regards. So you know, some real estate, some not real estate, some oil and gas, and they put a lot of money into this Golf Resort. And they’re all retired and that in that age, I think the youngest was 72 or 73. And, you know, the oldest was was well into their 80s. So it was just time for them to move on. They actually approached us because they said you know what this resort needs, it needs Pinnacle lifestyles, and it needs our unique 30s It needs cabin they wanted to create, it actually had the vision that we’re rolling out for Kokanee springs. And so you can see some beautiful pictures. Kochi springs.com, or Pinnacle lifestyles.ca. But it’s, it’s a gorgeous resort that just needed more people. It’s in the Kootenays, which is crossed from Nelson on that lake, the Kootenay Lake, beautiful lake again for fishing and boating, but six hour drive from Calgary a little bit more than that from Vancouver. And so in order to make the golf course really successful, we need people to come and stay longer. And to make the resorts successful, we need to be more than a golf resort. So we are building a small private lake on the Golf Resort. So people could swim and paddleboard and it’d be right in front of our restaurant and bar where we can play music. And, you know, Pinnacle lifestyle is all about creating community. So we want to bring the people in from their cabins and their v’s and get them out and then do fun activities. And we already have a beach just like that with the privately gather Edson property and get weekends going in our hot summer days. And it’s just it creates that community where they’re making new best friends and adults are doing the same thing. And being kids again. So they ultimately their vision sold us on like you right, this is this is a golf course I would consider it takes time to build that community. They have a long standing customer base, we come golf one or two or three times a year. But we want to figure out how to get them to stay there longer and how to increase the population in the area with 400 acres. We’ve got lots of room to develop on. So that’s a bit of the backstory to like, how we came about that that one resort.

Erwin  

I was talking to a friend of mine this morning about she she’s considering selling her house in Muskoka. And I was saying, you know, with climate change the way it’s not the direction it’s going is, you know, for example, I just saw a bunch of my friends just get back from Florida, because they do not want to be in Florida for the summer. Because it’s it’s already uncomfortably hot there. Right? And with climate change, they imagined swing and keep getting warmer southern states, even northern US states and I imagine more and more than will come to Canada, especially with the strength of the dollar, just to avoid the heat.

Darvin  

Yeah. I agree. And that’s another aspect of this space, right is that it gets people out into nature where they if you’re conscious about the environment, we’re super conscious about the environment and our resorts and use top tier septic systems because we’re not usually connected to city sewer conscious about the amount of water we use, but Cocconi springs itself is an inland rainforest, kind of only one of its kind in North America, is that that area around Kokanee and it’s people are attracted to that because they realise the amount of nature in there is increased like it’s a crazy amount of wildlife that you see, but it also just feels good to be in that slash rainforest type of a zone. So yeah, but I totally agree with that. lot of people will be coming, coming north and coming to beautiful nature properties right in the Rocky Mountains being one of them or like Muskoka. Those are popular places. And I think in the long term, those are going to climb up in value more than your typical city destination.

Erwin  

Hopefully, you guys have a whole host of investor events or something that discounted rates for investors.

Darvin  

We knew Yeah, investors get discounts so we have a concierge service, we’ll help them provide their tours to our different destinations. So yeah, and our big investors kind of get a golf for life that cocaine springs and but we do we do various investments online for people to see what’s provided in the lifestyle has been

Erwin  

amazing. Yeah, so that’s how you buy golf. I met need to share how much you paid for the golf

Darvin  

course. Yeah, you bet. It’s in our offering documents. So we we actually had I think was 11 point 4 million somewhere around there was the the actual tax assessment on it, but we only paid 5.4 million for the property. And the old owners did roll in 1.4 million. So we had to write a check for $4 million for for this property. And like I said, we got 62 room hotel, as well as the golf course and, and some other sweets and lots of equipment and golf carts and stuff that we’re seeing in the restaurant. Lots of extra acres to develop on. So fantastic buy. When you look at value investment there.

Erwin  

My timing might be off, but like golf course you bought it late pandemic, am I right?

Darvin  

Yeah, we bought it. Our possession date, I think was October, coming up on two years. Now, this year will be two years. So yeah, that would be the later middle pandemic.

Erwin  

Alright, so but at that point, like golf was on fire. Was there multiple offers, like was it a competition? Well, there was

Darvin  

there was lots of other people looking at it. And with different views of what they wanted to do with it, there would have been probably higher bidding on it if it had been like six closer to a mean centre. And that’s part of the reason why the price was was more favourable, but the owners also wanted to deal with us because they like the vision of where we were going to take it, they really care about this property and the whole neighbourhood around there because like I said, they spent last three years there, their friends are there. And they’ve been there, the biggest employer now were the biggest employer kind of that area. So it was important for them to see that area thrive and create more employment and so I believe they could have gone a little more selling it to somebody else, but I think they you know, they made a good decision and in partnering with

Erwin  

which is your favourite property?

Darvin  

Yeah, that’s a that’s a tough one. Like I said, coconut has been the place that the nicest golfers that have ever golf that they feel like you’re in a different world when you’re there, you’re it’s a total slow down laid back kind of community and rain forest that, you know, so it’s I think that is my favourite place just to be where my cabin is. And the second moose area, it’s houseboat capital, Canada, I grew up is like waterskiing. And so that’s my favourite Lake is where I’m Mara Lake, which is similar to White Lake, they’re close to each other. So those are my favourite lakes for sure. So I’m torn between the two. Like a good question. I like to spend time at both those destinations.

Erwin  

How does someone get to the golf course you mentioned, it’s far from our major centre.

Darvin  

You can fly into Creston. And it’s an hour drive from from Creston, British Columbia. So questions fairly close to the US border. So it is fairly so. And so that would be your nearest airport that you can fly into? Well, what else do you look for

Erwin  

when you got into this? This sector real estate, you mentioned that the complete imbalance in the demand, the number of RVs out there in places they can plug in one of the one of the things were you looking for, in terms of how to make money in the sector,

Darvin  

real estate in general location, right was big. So one of our other themes is just buying in World Class destinations. So there’s a lot of campgrounds out there, which campgrounds are going to do better if campgrounds aren’t doing well, you know, I think you got to be one of the nicer campgrounds, it’s got to be very beautiful. And it’s got to be accessible. And so like I said, Highway One is where a lot of our properties are, because it’s super accessible. But we look into like in the future where do people want to be and where will value go up and we think boating as well Harvey’s, the amount of sales from our V’s the amount of sales for boats have been on a pretty steady incline. And and so having lakefront access was another big thing that we looked for, and also having marinas because you can imagine the in today’s day and age how hard it is to go get a marina approved or how to get harder just to get any development approved on the Lake Park gas station. They find a way So we’re not, we’re not looking to buy stuff like that, where we have to go get approvals. We avoid that, right? That’s one of the things just stay away from because it’s pretty bureaucratic world out there when it comes to getting those kinds of approvals. And it could take years, you could spend millions of dollars, and you could never get there. And so we want stuff that has approvals or in like the golden situation where we’re golden property is, there is no zoning on there yet. And there’s so there’s no, there’s no body overseeing or restricting what we can do. And so we have the ability to develop a new campground just the way we want it. Based on today’s market demand, we’re looking at doing geodesic domes, just to create the buzz and getting people out there, right above the river and then continuing with the fly fishing that they do off in the river. But we can do that because there’s no restrictions. So we would avoid it if there was a need to get get a rezone on a property because that can be difficult to do.

Erwin  

I want to ask as a lot of beginners and like even veterans, they’re always looking for partnerships. Now I can tell you how to build their teams. So you came from a finance background, your company raises money for living. Who else did you need on your team to make this happen?

Darvin  

On the wealth broker side, like to raise

Erwin  

no on this record on this portfolio of six vacation recreational properties, you’re not doing this on your own?

Darvin  

Yeah, well, we have 25 full time staff that run like the headquarters and oversee everything from we need people in charge of marketing, we need people in charge of sales, we have a planning officer, we have a development officer. So you know, we have obviously a fairly large accounting team because we’re reading books for lots of different companies and destinations. So you know, there’s there’s human resource manager. So there’s quite a quite a large team that oversees all you can imagine we have a lot more staff in the summertime, we get busy, so you’re well over 100 100 people kind of running the resorts. So we started with the top, you know, getting a board of directors together that had experience in these areas, especially in development in real estate. And and that had capital and ran different businesses. So that’s the kind of the mature group has been through multiple recessions. And they know like how to plant and how to get through all different kinds of market environments. And then from the board level, we looked at the executive level. And again, people that can operate people that have the pisser vinegar to go out and actually the passion to work that the hours that it takes to work because it’s not, it’s not a business that runs itself, I haven’t found that yet, in any of the businesses that we’ve looked at, and it’s something that we’re building, we’re not buying to operate what was there, we’re buying to take it to a totally new level. So every property we buy, it’s got development on it, and it’s got more marketing, we’re bringing in more customers. And so buying or building the team is critical. And Pete finding the people with the passion to to run and operate, lots of times we get lucky because we buy a resort that has people that just love it and they don’t ever want to do anything else. And so we get to keep that the on site staff that are there and we’ve gotten really lucky with that and a couple of our resorts we have human resources to go out there and find people that are passionate about that to bring in all the different roles we need for seasonal stuff.

Erwin  

Now what about your business partner Tom? What What What’s his job in this and what is his experience or background?

Darvin  

All right, he’s good he’s a very talented young man that does Master’s in real estate so he his background, I would say is a combination of of real estate and investment banker so he’s worked for big investment banking shops, small investment banking shops, when you’re doing the different kinds of investment that we’re doing, you need that talent of somebody he was my head of corporate finance at Pinnacle wealth brokers. So he spent a couple years looking at all these different private investments and learning what makes them successful where are the risks and and what to avoid and so very talented man with a with a really bright mind and and understands that the numbers sides so he’s really trying to make this work as an investment and he does oversee the development and the operational team and he’s always making sure that the numbers make sense for everybody from an investment standpoint.

Erwin  

You mentioned numbers and where risk where the risk is like before recording I mentioned like there’s there’s investors going belly up over leveraged likely variable mortgages and rates have gone against them. I think guys mediate know how do you manage your risk?

Darvin  

Yeah, we mitigate risk. With a debt level. That’s that’s our biggest thing like we we will never go over 60% loan to value but in general, we’re we’re under like around a 40% loan to value and we want to keep that lower during times of uncertainty. And so we can because we have an investment dealer, like one of the biggest risks is like we start spending money on development. And if you don’t finish the development, you don’t have renter’s, you don’t have your customers coming in yet. And so we see that as a big risk in real estate. And we avoid that by being able to raise money, because we’re an investment dealer. So if we need more capital, we can raise more equity, we don’t believe we’re going to run out of the equity needed, but we also are avoiding too much leverage, especially because interest rates are higher. So the lower the interest rate, the more we’d be willing to do and will slide up the mountain leverage, as we’re putting in a whole bunch of new RV sites with intention that we’re only gonna put in what we think we can sell over the next 12 months. So that means that leverage is going to drop back down again, in the short term, we’re not leveraged over the long term, and our model has under 40%. Leverage.

Erwin  

And correct me if I’m wrong, when you’re raising capital, you’re raising equity. It’s not debt that you’re paying interest on.

Darvin  

That’s right. We’re raising equity only. Yeah, yeah, we do have we do have some financing and BDC finance, but two, we have a private lenders, finance been three that we hope to move over to some some, like bank financing next year. And so there’s debt that way, but we’re not raising capital for the debt side.

Erwin  

You mentioned that you’re you mentioned that everything that you touch has approvals, for example, already. So that’s a that’s a risk that novice investors miss out on is that its path of least resistance would be the beyond side with whatever government wants all levels. How is government for you that like fed municipal, provincial? Are they on board with what you’re doing?

Darvin  

I think they, they want it right. They want what we want as far as like getting people outdoors and when you’re creating jobs. You’re definitely creating jobs, a lot of jobs, and a lot of environmentally friendly development. But I can’t say I mean, they have a process to follow. So when you’re dealing at a municipal level, they have to they have to check all the boxes like they do for anybody, whether they like them or they don’t like them, it’s the same process. And, you know, we found with our Revelstoke project to be really slow in getting the ability to build a cellar are a lot and we get it, it’s just we waited a year and a half to kind of get the answer that we wanted and that was just just their process that they go through and they get opinions from everybody and and ultimately we got full support. So yeah, we were not stuck on anything on that level. Like I said, we were not asking for a lot we’re not asking for rezoning or we don’t need rezoning and second was we are asking for it. We don’t need it. We get it it’s even better for the project. But we don’t buy somewhere where we we need it because that would be that would be too risky for our investment mandate.

Erwin  

Firemen this has been a blast. I learned a lot. Oh, my lesson learned a lot. For anyone interested in following along or learning more about Pinnacle wealth, or these recreational funds, where can I get more information,

Darvin  

you can go to Pinnacle lifestyles.ca Pinnacle wealth.ca for other options that we have at Pinnacle wealth brokers, my emails, Durban at Pinnacle wealth.ca var vi n at Pinnacle wealth.ca

Erwin  

The internet is forever.

Darvin  

Give out a cell phone number of my my branch managers, your friend who introduced me to use Glazier. He’s one of our dealing representatives that if you’re looking at investing into a fund, he’d be happy to talk to you direct and I think he gave permission that hey, if you’re interested in the call so Steve, please Yaxha 416-464-3085 It is email Steve lazier get Pinnacle wealth.ca.

Erwin  

And for listening, I’ll have this on the show notes. So don’t worry if you’re driving or cooking or I don’t know what else people deal with and listen to podcasts sleeping already and thanks so much for doing this. I understand. I know you’re really busy got like $1.3 billion to manage and six properties of hundreds of acres to develop.

Darvin  

there and I appreciate the opportunity to be on your show and get in front of all your listeners. So yeah, appreciate it. And hope everyone has a great day.

Erwin  

And ah, sorry, I’ve had to always ask my guests like any final thoughts you want to share?

Darvin  

I just I thought it was super, super interesting. I love your podcast and I am starting to listen to it now. Especially your your Mexican fishermen one that you had sent me. I’ll be thinking because yeah, that’s That’s again like you knew that that was a connection that I’d have. It’s like a think about how to get to what you want in your life and be able to do what you want to do and it’s not always about money. It’s about being able to do what you want to do. So Chase the dollar raise a dime. The cool thing about like folks our age, just because we’re not at your level, but many of us who have been around for like 10 years like they’re all now having the Mexican fishermen conversation because they have enough now to for for now super retirement but a pretty good retirement. Yeah, yeah, exactly. Thanks, Sundar for doing this and I gotta run. Okay, thanks everyone have a great day

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. 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 me I love teaching and sharing this stuff.

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BEFORE YOU GO…

If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.

It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success. 

New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.

We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best.  In 2018, we again won the same award by the Real Estate Investment Network.

Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics.  The intersection of the two, talent and ethics is limited to a handful in each city or town.

Only work with the best is what my father always taught me.  If you’re interested, drop us an email at iwin@infinitywealth.ca.

I hope to meet you at one of our meetups soon.

Again that’s iwin@infinitywealth.ca

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Just imagine what winning in real estate could do for you.

If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

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Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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From Sales Exec to Debt-Free Living: Tim JP Collins’ Journey to $100k Passive Cash Flow and a Simpler Life

On Sundays, we’re often entertaining friends and family as Canadians do: BBQ and pool parties 🏊

As I find it fun, I like to research, plan, then smoke huge cuts of cheaper meat since steak is so darn expensive. 

Last weekend, I smoked a seven-pound pork belly – only $25, on Cherry’s pellet smoker for eight hours. I’ve been posting about this hobby on my social media.

 
 
 
 
 
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A post shared by Erwin Szeto (@erwinszeto)

The strategy is low cooking temperature for a long period of time. I do my research by watching YouTube videos of competition-level chefs and restaurant owners. They don’t give away their recipes, so I ask ChatGPT for rubs and bbq sauce recipes.  

I like my BBQ the way I like my investments. Boring, world-class returns and client satisfaction. Our guests, Cherry and the kids, loved it.

I served the pork belly burnt end style by tossing cubed cuts in homemade bbq sauce that I allowed to set by putting the goods back in the smoker.  We served the pork belly with ramen and some boiled Chinese broccoli, and it was awesome.

Next time, I lost a bet and owed a friend a fancy steak dinner, but I negotiated a Wagyu smoked brisket instead, which will save me a lot of money, so let’s see how well I handle some world-class meat :).  I’ll be sure to post pictures on my social media for those who enjoy following along.

Thank goodness there are world-class experts teaching on YouTube, or I’d be lost.  FYI, this show, The Truth About Real Estate Investing for Canadians, is also on YouTube, and I’m honoured that our followers and clients also achieve world-class results in their portfolios.

On the real estate front, with all the fear and negativity around real estate and interest rates, I do what I always do: I look at the data.

So I had my team pull for me the numbers for our last six months and what the results were for our clients who sold their income property. 

For context, with our clients, we focus on buying with the long-term in mind; we look for value and value add strategies which often means university student rentals and legal basement apartment conversions. 

When the timing is appropriate, many take out equity when their mortgage terms expire and get bigger mortgages made possible due to optimised rents.

With Rates higher than many expected, many having used home equity, some refinanced properties are negative cash flowing hence some are choosing to deleverage, take profits, and pay down debts.  I was curious as to how much money they were making.

For my analysis, I removed any property that was their primary residence and when we were not involved in the purchase. I only wanted properties we coached clients to acquire and helped them sell for maximum returns.

For simplicity, I assumed a 30% investment to cover the 20% down payment, closing and renovation costs, and a safe assumption that the rents covered all the operating expenses, so I’m assuming zero cash flow, leaving out mortgage paydown and disposition costs for simplicity and to be conservative.

The return on price appreciation alone was $313,000 or 280% ROI on an average hold of 5.2 years. That’s a straight average of 53.8% return on investment per year.  

Past, of course, does not predict the future; I doubt prices rise as fast as they did again during the pandemic, but my vision here at iWIN Real Estate was to always provide our clients with exceptional returns at an exceptional value. To set the standard for investment performance and client satisfaction.

280% return over 5.2 years. I believe we have accomplished that. As a side hustle.  

So when the market is feeling the pain of high-interest rates, my team of coaches and I sleep very well, knowing our clients’ portfolios have performed at world-class levels. 

We’ve invested through the financial crisis, the correction of 2017, and a pandemic, and we’ll survive this high-interest rate and thrive when the rate cuts happen whenever they happen.

Conversations with my clients are in stark contrast to the single-family home, pre-construction investors who reach out to us for advice.  

Their investments should be fine in the long-term if they can survive this high-interest rate environment, but unlikely they sleep as well as night, nor do their investments perform as well as my clients do.

We specialise in investing in small multi-family conversions real estate that’s on the ground, in high-demand areas, targeting the upper 20% of the market. We attract better tenants that way, our investment returns are phenomenal, and the strategy is systematic and repeatable.

The market has shifted. It’s still a seller’s market for high-quality, turnkey income properties. The relative advantage for buyers will not last long. 

We know rate cuts are coming, just not when but we know what’s going to happen when it does: buyers will get off the fence and return to buying as they did in the Spring when everyone thought the Bank of Canada would pause the rate increases.

We are recommending to all our clients between 1 and 100 properties a complimentary portfolio review to check on their cash flow situation and equity with one of my coaches to make sure their money is working as hard as it can for you and be well positioned for the next up swing when the rate cuts happen.  

For you, our loyal listener, I recommend the same in that you book a portfolio review with one of my coaches.

The harder your investments work for you, the less hard you have to work. If you’re interested, email us at iWIN@infinitywealth.ca and ask for a portfolio review.  

I would suggest booking us if you need a 2nd opinion on an income property you’re about to buy as well. I spoke to an investor yesterday who just went firm on a conversion project but doesn’t have all his ducks in order, and his renovation budget is way too low.

The market we are in right now, I’ve never seen so many legal, turnkey properties available. Several of you emailed or DM’d me really great properties you are selling.

 Why take on a major renovation project when the numbers would be the same for a turnkey property?  Plus, the town the investor bought in has a lot of vacancies for such a small town.

I had a call with another listener who asked my opinion of her converting her recently purchased turnkey, century home duplex into a triplex because her friend with a fiveplex said it was a good idea.  

I told her adding a garden suite would be cost-effective at around $200-$300,000 vs renovating inside the existing, over 100-year-old house that could cost over $500,000 and get less rent than my garden suite strategy.

Why accept vacancy, renovation, and less return on investment when better, less risk and grief options exist?  This is why experience matters.

Anyways, iwin@infinitywealth.ca for a well-timed portfolio review, cash flow & equity check or a 2nd set of eyes.

From Sales Exec to Debt-Free Living: Tim JP Collins’ Journey to $100k Passive Cash Flow and a Simpler Life

On to this week’s show!

Tim JP Collins is an old friend of ten years or so, one of our most successful clients and has achieved the cash flow goal almost every new investor has when we first meet with them – $100,000 or more passive cash flow per year, so they can vacation more, not worry about money, retire their spouse, etc.

Tim is back on the show to update us on his journey from high paid, high-stress Tech Sales Executive to being debt free, with over $10k cash flow per month from his stock portfolio, and being a full Realtor on his terms at REAL Broker.

Ever since I’ve known Tim, he’s done things differently…

He invested in himself heavily by hiring a coach, getting educated, taking massive action, buying student rentals, several with joint venture partners.  

As a Realtor at REAL Broker, it’s just him and his admin assistant. No team, no plans to build a team, so less moving parts and people to manage.  Tim likes making money and keeping his life simple, which I think we all want more of in our lives.

He’s a father of three boys, a husband, debt-free living in lovely Nanaimo, BC, a Brazilian Jiu Jitsu white belt and has much to teach us all.

If you enjoy the show, you’ll want to tune in when Tim is our guest speaker at our Tuesday, October 17th iWIN Meeting. 7:30 pm EST. 

I’ve asked Tim to present on how he built his 7 figure bankroll in real estate and what he now invests in to generate that $10,000+ cash flow per month. 

 He’ll also share his experience belonging to REAL Broker, including saving money on commission splits and their revenue-sharing program. 

So save the date! 7:30 pm EST, October 17th iWIN Meeting. Online only, as Tim will be joining from Nanaimo, BC. Got to love technology!

Please enjoy the show.

  

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Greetings, everyone. Welcome to the truth about real estate investing show. My name is Erwin Szeto and we are well over 300 episodes this podcasts been running since 2016. It is one of the oldest real estate investment focused podcasts out there. And for Canadians specifically for Canadians. And on Sundays, Cherry and I and my wife are often entertaining friends and family as teens do it this summer. So we barbecue and we host pool parties, and they don’t just barbecue I have this weird thing that I like to do. I like to research plan and then smoke huge cuts of cheaper cuts of meat. I specifically say cheaper cuts of meat because a big involve notice steak is really expensive. So instead I prefer to, you know, not expect so for example, last weekend, I smoked a seven pound pork belly. That’s right seven pounds, it’s quite large, and that only cost $25 from Costco. And I smoked it on. Cherry owns a pellet smoker that I bought her from Costco that she lets me use. I smoked pork belly for eight hours. And I’ve been posting about this hobby though, for the last couple weeks on my social media. The strategy is low cooking temperature for a long period of time. I want to smoke at 25 to 25 to 250 degrees Fahrenheit. I do my research by watching YouTube videos. I watch videos from competition level chefs and restaurant owners. And but unfortunately they don’t give away the recipes for like sauces, rubs and all the details of what they’re doing. So actually, I think of a chat GPT to inquire for recipes for rubs and barbecue sauces. I like my barbecue the way I like my investments like the boring world class returns client satisfaction. Yeah, our guests and cheering the kids love it. They love the food today, but a cook so it’s very rewarding. We actually serve the pork belly burnt end style if you’re familiar, which means you toss the candidate button cubes, and I tossed it in homemade barbecue sauce that I made. Again, I got the recipe from my church UBT that allowed that barbecue sauce is set by putting putting everything back into the smoker for like over an hour. We served that pork belly with ramen and some boiled Chinese Broccoli. Yeah, dinner was awesome. For next time, I actually lost a bet over golf. So I owed a friend fancy steak dinner. But I negotiated instead a WAG who smoked brisket instead, which will actually save me a lot of money. FYI, wagyu is like the hot most expensive beef out there other than Kobe. So even though this piece of me is gonna cost me like triple triple what a regular of what a triple A Ontario, Ontario triple A equivalent beef would cost. Yeah, it’s gonna cost me triple. But that’s still going to be less money than going to the steak restaurant that my friend suggested.

 

Erwin  

So I’m gonna stay low on money, which I love to do. I love saving money, love eating well, and yeah, we’ll see how I handle some world class meat. I’m sure I’ll post pictures on my social media for those who enjoy following along. And yeah, folks enjoy. I checked your likes and comments on my house. I smoked meat barbecuing posts that I do my real estate stuffs. So yeah, thank goodness, the results have been world class. And thank God that was world class teachers and experts teaching on YouTube, otherwise I’d be lost. FYI, this show the truth about real estate investing. We do have our own YouTube channel, we post shorter clips there. And I’m honoured that our followers and our clients achieve world class results in their real estate portfolios, which is actually where my real expertise is. Anyways, on the real estate front, with all the fear and negativity around the real estate market and interest rates actually funds this fact of the day. I pulled stats for the June stats for two markets that we operate in one in Kingston, Ontario, one in Hamilton, Ontario. And if you actually look at the June stats, they all still scream seller’s market. Of course, there’s differences between pre construction condos and cottages versus a high quality turnkey, small multifamily that our clients are always looking for the market for both. It’s extremely different, but prices are stable are going up. And the sales volume is pretty consistent with a year ago. So again, from what I’ve seen the stats it still looks to be very much a seller’s market. Hamilton, for example, less than 20 days on market, less than two months of inventory on the market. I bet still all scream seller’s market, there’s so I had my team pulled me the numbers, our own numbers for the last six months, I wanted to know what our clients how much money they were making when they sold their income property. So for context, we have our clients with our clients we focus on buying long term in mind, we look for value when we buy we use value add strategies, which often means conversions into student rentals or legal basement apartment and conversions. Now we’re doing more garden suites when the timing is appropriate. Our clients take equity out of their properties. Typically when the mortgages expire when the original mortgage expires, they get bigger mortgages, which is made possible by having optimised rents so with rates have been currently higher than expected going up faster than they would have expected. Many of our clients use Pretty much all of our clients use home equity lines of credit to finance these properties. So now some of the portfolio is negative cash flowing. Hence we some of our clients have chose to D leverage, which means selling an income property or to taking profits and paying down debts. So I was actually curious to see how much our clients were making, how much money were they walking away with. So for my analysis, I removed any property that was a primary residence, any property that where we were not involved in the purchase, there’s a massive difference between the returns between clients who use this for their purchase and clients who did not a massive difference, like hundreds of 1000s of dollars. Anyways, I digress, I only want to properties for this analysis where we coached the client to acquire the property and where we helped them sell the property for maximum returns. For simplicity, I assumed a 30% investment rate to cover the 20% down payment, closing costs and any registered renovation costs. And for a safe assumption, the rents covered all the operating expenses. So I’m assuming for the simple analysis, quick and dirty analysis, and assuming zero cash flow, and I’ve left out any mortgage pay down, which would easily cover any sort of disposition costs, realtor fees, legal costs, closing costs, in general, for simplicity, and keep to be conservative as well. So the return on appreciation alone for these properties that our clients sold over the last six months, the average was $313,000 $313,000, which works out to be about a assuming that 30% investment rate to an 80% return on investment on an average hold of 5.2 years. So our clients held those properties. Once they’re selling they’ve sold in the last six months, they’ve held those properties an average of 5.2 years, the average per year, the straight average per year, works at the 53.8 or turn on investment paths. Of course, it’s not predict the future. The data again comes from our own clients again, because their own clients, we know exactly what they paid for the property. And we know exactly what they sold them for. Yes, I doubt prices will ever rise as fast as again as it did during the pandemic. But my vision here that when real estate has always been to provide our clients with exceptional returns at exceptional value. Right? My team and I we are licenced realtors. And that’s how we get paid. And then we don’t charge beyond that. So our coaching services are included in our realtor commissions. Yeah, we’re here to set the standard for investment performance and client satisfaction, I think deserves repeating 280% return over 5.2 years, that works at a $313,000 per property our clients sold, I believe I’ve accomplished our vision and the short sets and the small sample and understand also that these clients are doing this as a side hustle. Right? Again, I don’t think we can return the same return do the same performance going forward. But I still plan on our clients having exceptional world class results. When the market is feeling the pain of high interest rates. My team of coaches and I we sleep very well, knowing our clients portfolios performed at World Class levels. You know, we have in myself, we’ve invested to the financial crisis of 2010 2008, as I should pretty easy, the housing correction of 2017, which wasn’t that bad, a pandemic, which was pretty ugly early on. And then we made a lot of money after that. And we’ll survive these high interest rates and then thrive when the rate cuts high eventually happen. We know they’re going to happen. We just don’t know when I’m going to conversation to my clients. So knowing what’s new now, you can understand why conversations with my clients are in stark contrast to the folks who request meetings with us that we are meeting for the first time who invested in single family homes or pre construction investors, especially if they bought after 2020 When they reach out to us for advice. Yeah, they’re in a very different situation than my clientele are. Their investments should be fine in the long term, if they can survive these high interest rate environment, you know, and to survive. That means you know, work overtime, get a second job drive Uber if you have to survive, right, but yeah, unlikely they sleep as well as my clients do, because their investments are I think you can guess if you bought after 2020 and you bought pre construction or single family, there’s basically no way you can cashflow unless you are heavily cash unless you put down humongous amounts of cash. I think someone messaged me, I think I think he’s still low. Someone messaged me on a webinar delivered saying that you need to be like 40% Down payment in cash in order to cash flow condo. I actually think that number is probably higher. Anyways, we specialise here on real estate investing in small multifamily conversions that’s on the ground, and we invest on land based real estate in demand areas and we target the upper 20% of the market. We attract better tenants that way. And our investment returns are phenomenal strategies systematic and repeatable the way I like it, I call it boring. I know it’s not boring for folks who are new to real estate, but to me, it’s systematic, therefore boring. Now understand the market has shifted. It’s still a seller’s market. It’s for anyone who’s holding a high quality turnkey income property that’s rented at market rates. But we’re currently at a relative advantage for buyers, but it won’t last long. Now we know rate returns are coming. We just thought we don’t know when it’s gonna happen. But when it does, you better believe buyers will get off the fence and return to buying like like they did in the spring, the spring of this year in March, April in May, because that was back when everyone thought the Bank of Canada would pause the right rate increases. Now, what do you think they’re going to do? And what do you think buyers will do? What do you think the buyer market will do when there’s cut? Right? We were recommending to all of our clients between we who have between one and 100 properties, are offering them a portfolio review to check their cash flow situation and their equity list conducted by one of my coaches to make sure that the money is working hard for them as it could be. And also to be well have a portfolio is well positioned for the next upswing. When those rate cuts do happen for you, our loyal listener, I recommend you do the same, it is the summer so we’re less busy, we have more capacity to take take on a couple more calls. And yeah, if you’re interested, if your investments can be working harder for you. Because understand if your investments are working hard for you, that means you can work less hard. Or we can retire sooner or retire more comfortably. Or you could just live more comfortably. So if you’re interested in just email us at iWin at infinity wealth.ca My email address is always in the shownotes as well. And just ask for a portfolio review. I suggest booking us if you need a second opinion on an income property that you’re about to buy as well. I spoke to an investor just yesterday, who went firm on a conversion project. They doesn’t have all those ducks in order. He’s new to this. He’s a novice and his renovation budget expectations is way too low, like 30 $60,000 too low based on my experience. Now, I don’t know what and understand I’m pretty experienced

 

Erwin  

versus this industry is not the market that we’re in right now. I’ve never seen so many legal turnkey properties available. Several of you have emailed me or DM me your great properties that you’re selling. So based on where the market is right now, why would anyone take on a major renovation project when the numbers would be exactly the same or better for turnkey property? Appreciate that turnkey property means no vacancy and no renovation risk. Right. Plus the town that this gentleman bought in has a lot of vacancies and it’s a small town so as a lot of vacancies in a small town. So per capita, they have an extreme number of vacancies. I had a call with another listener who asked my opinion on her converting her recently purchased turnkey, sentry home duplex. She wants to she’s getting quotes on converting into a triplex because her friend with a five Plex said it was a good idea. I told her that any garden suite would be more cost effective because that’s around two to $300,000 versus her renovation. Her renovation plans to renovate the insight of an existing over 100 year old house what costs probably over 500,000 and take two years to do. Also on the performance side as an investment it would likely get less rent to do her Tropics immersion the way she was thinking we’d get less rent than my gardens be strategy. So why except vacancy, renovation risk less return on investment when better less risk and grief options exist? This is why experience matters. Like I said I win at infinity wealth.ca Just email in if you’d like a well timed because the timing is perfect for this now. for Portfolio Review cash flow equity check off our second set of eyes. on to this week’s show. Tim JP Collins is an all friend of mine but for close to 10 years or more. He’s one of our more successful clients and has achieved a cashflow goal, the cashflow goal that almost every new investor has an income when they first meet with us $100,000 or more in passive cash flow per year so that they can vacation more not worry about money, retire their spouse, give more to charity almost just get things. It’s great goal to have, unfortunately, not many people get there. So yeah, I always think it’s a good thing to like this is perfect leverage learn from someone who’s done it. So Tim is back on the show to update us on his journey from his when I first met him, he was making a lot of money. But he had a very high stress tech sales executive job where he was commuting over an hour each way. And some kind of dangerous leak is you know, you live in Canada, you know, commuting over and driving over an hour and these Winters is not the safest thing to do. But So Tim’s actually now 10 years later, is now living debt free. He has zero significant debt to his name or companies like zero debt. He’s earning over 10,000 cash flow per month from his stock portfolio. And he’s also a full time realtor on his terms. You’ll hear from Tim, he runs a great business. And he’s he’s a real broker as well, just for you to know. Ever since I’ve known Tim he’s done things differently. He’s invested himself heavily by hiring a coach getting educated, taking massive action buying stuff, many student rentals with us. Several of them had joint venture partners. He is a REALTOR at the real broker. And it’s just him and his immune system. He has no team no other team he has no plans to build a team as he prefers having less moving parts and less people to manage. Tim likes making money in keeping his life simple, which I think we all want more of in our lives. He’s a father of three boys. He’s a husband, Stephanie is debt free living in the lovely Nanaimo BC is a Brazilian jujitsu white belt and as much more to teach us so if you do enjoy the show, you want to tune in when Tim is our guest speaker at our Tuesday, October 17. to our meeting 7:30pm Eastern Standard Time, Tim will be zooming in only from the Nymo. I’ve asked him to present on how he built his some bigger bankroll from his real estate. And now how he’s investing that seven figure bankroll to generate him that 10,000 plus cash flow per month, he’ll be going into more detail on how he does it also be sharing his experience belonging to real broker, including how he saves money on his commission splits and their revenue sharing plan. So again, save the date 7:30pm. Eastern Standard Time, October 17. When meeting online only because yeah, Tim is not flying to Oakville from an IMO for this. He’ll be joining us live on Zoom. One has to love technology. Please enjoy the show. Hi, Tim, what’s keeping you busy these days?

 

Tim  

Hi, Wayne, how are you? Nice to see you again. Lots of things keep me busy. I started learning Spanish in November last year. Which I can talk a bit more about not in Spanish. Probably not quite ready for that yet publicly. But yeah,

 

Erwin  

but we can do in Japanese because you were practising that and you’re just back. You just got back from Japan too. So

 

Tim  

yeah, my wife speaks Japanese, not me. But I was there. Yeah, I was there. I was good at eating the food. Qualified in that but yeah, having Yeah. So Bill on a nice trip. Got another trip coming up going to Spain in the summertime and England visit family. Real Estate Market has been pretty active in a traditional sort of spring way. So nice to see some action picking up they’re continuing to follow the passive investing style of dividend paying ETFs which is which is pretty passive. So I don’t really do a lot with that. But yeah, lots of stuff going on. And as I mentioned before we started recording I started doing jujitsu. I’m clearly a bit late to the game with this, but I started doing jujitsu about five weeks ago, six weeks ago, I saw you know, I just thought if like Mark Zuckerberg can do it. I really do. Uses Yeah, he did his first competition. Yeah. And one.

 

Erwin  

Yeah. Yeah. be kidding me. No. One. Yeah, one.

 

Tim  

I’m pretty sure he won. Yeah. No, gay. I think he was doing no gay. Yeah.

 

Erwin  

Even still, he won anything. That’s amazing.

 

Tim  

Yeah. All right. So it’s extremely unfair. For those of you who haven’t done jiu jitsu before, it’s extremely uncomfortable. It feels like jumping into a swimming pool without knowing how to swim and getting smothered at the same time, progressively day by day, week by week and get more used to it. So it’s very humbling, as you know, getting if you’re usually used to like being successful or winning at things, and I probably have like a reasonable sporting capability than most things. With this particular one. You just get beaten again and again, when you start because irrespective of being bigger or stronger, it doesn’t necessarily help you in a sport. It’s designed to give people an equal playing field irrespective of size. Right.

 

Erwin  

So it’s interesting, I was just listening to podcasts, which really just recounting a book, biographies, specifically Elan, Elan, and the author of the podcast horses who read the book and talking about he’s just talking about how what how much he admires. Elance tolerance for pain and suffering. Right and jujitsu will teach you pain and suffering. Yeah, not not tat, not bad pay Malik, injury, pain, but and also being a real estate investor or business owner, teach you a lot more about pain suffering than probably a job will. Actually, I probably, I’m probably getting ahead of myself, because you can speak to that. As your corporate job, even though you were an executive making big money still brought you levels of pain and suffering.

 

Tim  

Yeah, it was interesting. That part of my life, you know, which I’ve talked about publicly before, in terms of like it turning into stress and panic attacks, and all that sort of thing. Talked a lot about that. But But yeah, I just thought suffering was kind of part of the process. In that case, it was almost like a low level, I think in the corporate world, because you’ve got a job and you’re getting paid weekly, bi weekly, or monthly, or wherever you get paid. The pain isn’t enough for you to change, which sounds weird, but it’s like a low level drum of discontent. And like, you know, do I really want to spend eight to 10 hours in an office and have to travel and commute to and from work and but then, you know, they keep dropping money in your bank every couple of weeks, and it’s a decent amount of money. And you’re like, This is alright, and people tell you, you’re doing well. And you get Pat’s on the back and they print you new business cards with fancy titles. Like yeah, this is this is alright. It’ll be painful. But I think in the entrepreneurial world, when you have pain, it’s like more significant because it’s just you. So if you lose a deal or lose a client, or your business struggles, then it’s potentially more catastrophic than if you have a bad day in the office or lose a client and you work for a big company, then you probably just go back tomorrow and carry on so although there’s pain In that case, it took two decades of cumulative pain in order for me to change something about that situation because it wasn’t sort of very progressive. Until one day I snapped and just couldn’t take it anymore, right? But if you’d asked me like, a year before that, how’s it going? I would say it’s great. Everything’s fine. That was the start of interest in time for me before I then went off and did student rental stuff. Right.

 

Erwin  

So sorry, yeah, I was gonna ask you at what point were you like? Because when I met you, you were going full send real estate investing? Yeah. At what point when? Because I’m guessing the the job dissatisfaction or the pain and suffering, whatever you want to call it was was what triggered the investment journey?

 

Tim  

Yeah, for sure. So I kind of like sat in my corporate job and thought, I can’t do this anymore. Like I physically can’t do any more or have the will to carry on going in the office. And so I was thinking of, how can I replace my income using the knowledge I have, or sweat equity or working or whatever I can do to try and get a leg up. And, yeah, that time I came across you and your famous sessions used to run in Oakville, which were amazing. And a few other people in the kind of real estate space in this thought, yeah, I feel like I can make these numbers work, I could still qualify for some mortgages while I was employed, so I was very conscious of like, I need to sort of squeeze all the juice out of this lemon before I leave the lemon behind

 

Erwin  

your credit limit your credit ability, mortgage credibility, lemon.

 

Tim  

Yeah. So I had to, like, get all that done, which, again, through some sort of good advice, but that’s why I was so gung ho about investing was I was like, I need to do this in order to escape this other pain in my life. It wasn’t, I wasn’t like, Oh, this is something nice to do. Maybe on the weekends. I was like, No, this is for me. I’m doing it. I’m all in. Let’s go. And then real estate investing has its own pain. But it’s different. Different kinds of pain,

 

Erwin  

different kinds of pain. Yeah, I joke with people like I didn’t grow up wanting to be a landlord.

 

Tim  

No, no, I was just, it’s funny. I was having a Spanish lesson the other day, and we’re learning about Cucaracha, which are cockroaches, which reminded me of a time when I owned a house in Hamilton and I went walked in one day. And the students had left bags of rubbish in the middle of the floor, and it was leaking out some kind of weird oil stuff. And I saw cockroaches in the house. And I was like, Oh, my God, I’ve never seen was this take a picture of it. And suddenly the worst cockroach, you’ve obviously got, you’re in a humid country, or you’ve got lots of rubbish around as they must be the garbage all over the place. So yeah, things like that made me think like, and I had this conversation with the students and I was like, Look, all this garbage needs to go out on the specific days. Now I have to hire a cleaning lady and abatement company to come and get rid of the cockroaches. So make sure the kitchen the carpet is all gone. Take all your food out of the cupboards and the fridge because we’re going to clean everything out with bleach and get rid of all this stuff. Anyway, I came back famously came back like on the weekend as agreed to do the cleanup and all the food was still in the cupboards with open packages spilling into the cupboard shelves, and all the food was still in the fridge. So I grabbed you know, the cleaning lady I’d hired for the day and loads of Bin Bin liners and I just emptied all the food into the bins and went and put it in the truck to take it to the dump. And probably like 90% of the way through this process. Some of the students came out and like, what are you doing? That’s my food. And I was like I told you, like cockroaches gonna take care of this. So anyway, no exterminator

 

Erwin  

can no exterminator is that good that they can get rid of the cockroaches? When there’s food? Yeah, they were like desperately

 

Tim  

upset. I threw their feet away. And I was like I told you, like, I’ve got to do this. And there’s times like that, where it’s just like, oh, this is hard. And then based on good market timing of buying houses in 2010 or 2011, whenever we were getting super active, fast forward 10 years and you’re like, wow, buying a house for 270 grand a block away from Mohawk College. Turns out that was a good deal. Should have bought 10 of them. Should have bought more of them. But another 10 years. Yeah, exactly. But anyway, we used to talk about it then we used to say, you know, as Warren Buffett said the best time to buy a house was the years ago and the next best time is today. We used to say that in 2010. And it’s still true and probably always will be but

 

Erwin  

I’m just pausing there I actually just I I’ve been looking at I’ve been I’ve been wasting time wasting time looking at charts and whatnot. I like I was looking at the money supply chart that was 10 year chart. So I thought no money supply in Canada’s doubled in 10 years. So went back and checked where we were kind of overpaying for properties 10 years ago. So we’re in the two phase These St. Catherine’s are low 200. So yeah, like stuff we bought back then have tripled? Yeah. So it’s been okay.

 

Tim  

Yeah, it’s been okay. But you can see people, if you find somebody who’s like, pretty diligently, hard working for a period of time and patient, you can make a lot of money. I think like, it’s kind of like investing in stocks. I remember buying Apple shares, which is one of the few companies that just continues to do well, right. I remember buying Apple shares when the first iPhone came out, which I think was 2007, both iPhone came out. And I was like, hearing all this buzz about it in the news. And I was like, Blackberry was popular, then I love BlackBerry as a product. And I thought, but this other thing is just a screen. It’s gonna play videos, it’s way cooler, Steve Jobs doing these big announcements. So I went and bought some apple shirts. And then a year later, or two years, or whatever it was, they doubled in price, so I sold them for double your money. Great, right now, since then they’ve gone up like, I don’t know how many times 1,000x. But yeah, it’s just always that way. It’s always that trade off of like, you know, do you take profits now? Or do you wait? Long, long term, and real estate is one of the one of the cool things that it’s pretty hard to mess it up over a long enough time horizon, you have like, short term issues that we’ve gone through this inflationary period and high interest rates. And so prices went from an all time high, then dropped 15%, maybe in some areas. But we also know that like, at a macro level, there’s not enough houses in Canada, family, people want to live here. And that’s a big problem to solve a long term problem to solve, you know, it’s still people can still do well with it. It’s just, you know, where do you want to park your parking money, right. But yeah, that was that student rental period was was very difficult, but because of the bounty that it created years later, I look back on that with fondness and think, Well, you know, all of the problems I had, and all the student issues I had, and crazy stories that you and I share and talk about, it was worth it. You know, now, if the market had gone down for 10 years in a row, and they were all underwater, and you could now buy those places for 150 grand and it wouldn’t be quite as fun to talk about.

 

Erwin  

Think about my daughter’s house, for example, I’ve only had, there’s only I don’t do service calls, right? But there’s one time I couldn’t get anyone to my property. There’s a windstorm. The awning over the front door had blown off, but it’s aluminium. It’s heavy. My tenant has four kids, four young kids, anyone to take care of. So I went took care of it. And I wouldn’t have it’s weekend afternoon. Didn’t want to go but someone’s gotta go. So it took about two hours my time. Yeah. But then for them when you do the math, you know, hourly rates, all that matters, right? You know, you know, like that property makes me a couple $1,000 a month. It took two hours my time. So yeah, yeah, we always want to get back. None of us want to do this. But none of us want to go through pain and suffering. And the nuisance and time away from families. But the money the wealth that we get out of it makes it worthwhile. Yeah. Like to say,

 

Tim  

yeah, they still believe the same thing. I believe them, which was like if you’re listening to this podcast, and you’re new to investing, or you want to get into investing, and you’re like how, you know, bows are more expensive. Now how do I do it, things are changeable. There’s always opportunities. And there’s always people doing it. I think one of the big things I was so excited about was that there was resources, like the weekend session you ran in Oakville, which I think most of the time was free or was $5 to get in or something ridiculous to then be in a room of 20 or 30 or 50 people who were all doing the things that you wanted to do. And you could network with them and say, Hey, who’s your property manager, who’s your painter, who’s your contractor, and build this, this kind of book of contacts and then start to do things with these people. That’s how you do it, you start to build relationships with people who are having success, maybe you can tag along with them for a day or follow them around for a bit or offer some free service for some mentorship or something. But there’s lots of ways to get started. And you don’t necessarily need any money or resources to start building knowledge. There’s tonnes of books to read this podcast now to listen to which we didn’t really have in as much abundance back

 

Erwin  

then. But yeah, but I tend to learn. Yeah,

 

Tim  

exactly. And it’s now now I’ve gone through the same evolution with like, you know, dividend paying stocks and trying to understand how that works. Now I’m doing it with some of the stuff we might talk about later on in terms of as a realtor working with a company that also gives me a passive income stream. So I’m always like interested in things where I can learn more and grow and if I did start and do it all again, I will go back to like You know, for me, it’s kind of like how do you generate large amounts of capital to then deploy into things which can pay you passive amounts of income or dividends or royalties or something forever, right? Create a big amount of money as quick as you can invest it, and then chill. That’s always been like pretty good model. Right? I was listening to Derek servers, the entrepreneur or former entrepreneur, and now he writes books and does other things. But he famously sold his company CD Baby for 20 million. Yeah,

 

Erwin  

that’s awesome. On Tim Ferriss podcast, yeah, there’s

 

Tim  

a recent Tim Ferriss one, which is amazing. But he always talks about, he talks about this concept of like, you read a book by Felix Dennis, I think the guy’s name is who started Dennis publishing. But this guy basically said, like, in his book, how to get rich, if I could do all again, I would just put have made as much money as I could, by the time I was 35, and then stopped, basically, and then put it into something else. Because in his words, he’s like, people who get very wealthy and then just try and keep trying to get more and more like squirrels putting nuts in a tree, the the nuts are, like, overflowing out of the tree. And you when is enough, enough, right? I think people struggle with that. And he had a good analogy, which was like, if you give a very thirsty man, a glass of water, you know, it will fill his whole face will light up, it’ll start to hydrate itself, you give him a second glass of water. And you’ll probably really appreciate that, and as much as the first one, but on his hundreds glass of water that you give him, he probably won’t care anymore, because he’s no longer thirsty. Like, he doesn’t need it. And it’s just too much. So creating wealth comm in his analogy is a bit like that. It’s like, why is it necessary to continue trading your time for money? And that’s a good question to ask. Right? So I love all these different ways of like, how can you invest some time to create something which pays you back, even when you’re not doing it anymore? That’s really, all I think about as it relates to the business world is leveraging time into returns.

 

Erwin  

So that’s what I find interesting about your story. And because again, we’ve known each other for a really long time is it this way, like having you on the show is that you can, especially for the newer investor, you can share your journey so they can understand like what you went through? And so you were you were looking for ways to replace your income. But if I recall correctly, even though, how many properties did you get up to



the peak, maybe like 12, or 13.

 

Erwin  

Alright, so a good number of properties, student rentals, so lots of rent money coming in. And then but even though when you’ve left your executive position at a tech company, you can transition to another tech company, is that right? And in the middle of there was a there was a move across the country as well.

 

Tim  

Yeah, so I left a position on my tech company. Yeah, that was, you know, I was well, like there and it was fine. But I just couldn’t do it anymore. I couldn’t do the commute the time was too much. And they were very kind. Interestingly, when I left I said, like, you know, I don’t want to work here anymore, too stressful. And they said, well, we’ll keep me we can keep you on as a advisor of sorts for for some time, and keep paying you. And I was like, Oh, that’s cool. So if any of any of the companies that I’d signed up, for instance, wanted to ask for advice or contacts I’d developed then I could keep the MP for a while. So I always try and impart that bit of knowledge to people who have potentially been had long, 10 years at companies doesn’t have to be a tech company could be a bank, or somewhere else to say that like, now more than ever, particularly in the advent of like COVID, and remote work and stuff. It doesn’t have to be a binary like I work here or I quit situation, you have a lot of possibility, and with the most leverage of being prepared to walk away, right? Whoever needs it more is basically has less control. But you can these days walk into your boss or CEO and say, Look, I only want to work four days a week, or I’m going to work from home on Mondays and Fridays, or I’m never coming to the office again, you still want to keep me or in my case, I said I don’t want to work here anymore. But if you want to, if you want to keep my phone number and give it to people who just want to ask advice for things, and they may keep paying me for another six months, and I’ll do a gradual exit kind of thing. So lots of flexible ways to transition out of traditional employment. If you want to do more real estate investing, for instance, with something else, maybe you negotiate with your employer to work four days a week and you can work a couple days a week on building your next thing. People are always surprised when they ask difficult questions that they might get a positive response particularly if you’re a good employee, you’ve done well and you’re valued because people don’t want to lose valuable people. So and in my case, I will never do that you can never work from home you can never alright, I’m leaving. All right now you can work from home. And you know, so people change when when the cards are on the table, but I left that and started doing the real estate invest at the same time sharing some of my story around stress and anxiety and started that sort of podcast endeavour. And that’s when I moved to Vancouver Island where I am now, because I just came out to an IMO and sort of sort of mountains and oceans. And I was like, I could live anywhere in this country, it’d be fun to live somewhere else for a bit, moved out here, sold off some of the student rentals eventually sold all of them, but sold them off kind of gradually over time for tax reasons to not get smashed with massive tax bills. And then,

 

Erwin  

in just thrown in there, you kind of nailed the timing.

 

Tim  

Yeah, well, the timing was was fortuitous. And I’m grateful for that. But it’s kind of like, if we bought around 2010, then I did like five year commitments or mortgages, and then renew most of them for another five years. And so over the last few years, it’s been like, you know, chipping away at, let things go and selling them off. Which has been good, because the market was probably at a high when I did that. Yeah. And I found a little local technology company in the town, I’m in here, which was doing website design for realtors, and Google ads. And so technology and real estate, and I was like, this is kind of cool. This is like two of the things I have experienced. And I went to work for them as the sales director and worked for them for a few years. And through that journey, learn a lot about lead generation and turning in cold internet traffic into real estate clients, helping people buy and sell homes, which had been a consumer of in the past. And anyway, I was I had this epiphany one day, I was at this conference, and I was sat around this dining table, and it’s very fancy steak restaurant. And the guy opposite me he’s like, Yeah, I just ordered the new Ferrari. Fill in the blank. And the other guy’s like, oh, I went with a Maserati with the gold trim with diamonds on it, or something. I don’t know what they were saying. But when I started thinking, my job is like, pretty well, paying, but not in the same league as these guys. And I feel like I could do more. So I just decided, like, I’m gonna give it a go and try and be a realtor. So I left. This was a route right in the midst of COVID. So when I actually got my real estate licence, you couldn’t do any business. It was it was April 2020, or whatever it was, yeah, there’s nothing happened. Nobody was even showing houses, it was just dead. So I just spent all that time training and learning and attending online zoom trainings, and learning about sales and reading books and all that kind of stuff. So the when the market did reopen, I was like, fully prepared to go. And in my first full year, I think I did 50 transactions. Most of which, from cold internet traffic, Facebook leads, Facebook ads, Google leads, stuff like that implementing the things I’ve been teaching people and doing it, which is,

 

Erwin  

which is a lot. Yeah. A top performer, a top performer does like 30.

 

Tim  

Yeah, so I did, I did that and thought, yeah, this is kind of cool. So that’s been my most recent sort of labour of love in terms of learning something and really honing the skills around it. Yeah. And it’s kind of like, I like the speed of it. Because I now work from home all the time. I’m working for a broker called Real broker, which is like one of these virtual brokerages, they don’t necessarily have too many physical offices, but they have like an online, a very strong online presence. And it’s perfect for me, I get to work from home, sit every morning and do my three or four hours of cold calls and text messages and emails and how I generate business, basically. And then afternoons I’ll do showings or coffee meetings and stuff like that. But

 

Erwin  

Tim, I’m sorry, apologies, one party there, we will get to talk about real broker I just want to touch on because I want to I want the listener to understand like you have a lot of passive income things going on. Right? Is that because I imagined that allowed you, like gave you a lot of confidence and comfort and freedom to be able to leave your second tech career? Yeah. So can you touch on that? So like, so what did you do with the proceeds from the sale of all your properties?

 

Tim  

Yeah, so I started looking at well, through some basically through inspiration from your stuff, like looking at, I learned about derivatives, the fancy word for options trading, you know, spend some time reading, trying to decipher Lilo’s book on selling naked puts and spread the credit spreads and all these types of things, which was very interesting. But through that lens of options trading, I also then realised there’s actually like products out there, which kind of do the hard work for you because options trading in and of itself is quite like it’s very technical. To a layman. The very technical thing to do. You can get things important, important wrong quite easily. You could lose money you could buy instead of sell and all these intricate things. So I spent a year learning as I’ve fully understood it, but through that, through that journey, like a lot of things in life I came up with cross these ETF products, which are basically like ETFs, which hold companies in the s&p 500, or the NASDAQ, and they sell covered calls against indexes, in some cases, or in some cases they sell, they sell covered calls against them, one of the newer ones for instances is a Tesla ETF or Tesla seem DTF. And they sell covered calls and puts against Tesla stock, and then they pay a dividend off the back of that. So they’re doing the work for you. It didn’t work for you, and you pay a management fee for it. But the yield, if you will, the amount they pay out is net of the management fee. So you can kind of start to say, well, right, if I put in like 100 grand into this, how much could I expect to gain in terms of income. So if you’ve got 100 grand, and you can get 10 grand a year in dividend income, and then you start to look at that monthly, and you’re like, okay, so and just build up that methodology. And then there’s sort of like, you want to have sector diversity. So obviously, US banks, for instance, recently have got absolutely hammered. So, you know, following Warren Buffett’s advice, I’ve been buying US Bank ETFs pretty aggressively that year and lows or something. But there’s funds which hold just US banks, and they sell covered calls against US banks, and then they pay a dividend off the basis of that. So there’s, you know, Canadian financials, there’s energy, there’s tech ones, there’s gold ones that are all over the place, and you can build a portfolio around these, which is basically pretty set it and forget it, like once you’ve bought them.

 

Erwin  

It’s quite diversified. And yeah, just to clarify, folks, nonetheless, this is a conservative financial advice. Yeah, this is what Tim is doing.

 

Tim  

If I do, yeah, and I’ve done, you know, been doing that and trying to sort of find a good fit for me in terms of risk tolerance, I don’t really want to lose my money anymore. Not that I ever did. But I’m kind of definitely in a sort of medium risk profile, where I’m, you know, a lot of these, because of the way the markets been going down and sideways for a long time. A lot of the yields on these products are, let’s say in the range of like eight to 12%. And we know that the rule of seven means that if you get a 10% return, then your money doubles every seven years. So if you start with 100 grand today, and you get a 10% return, you don’t touch it, you just keep compound, reinvesting those returns, and after seven years, you’ll double your money. So you’ve got a million dollars, or $2 million, and so on, so forth. So yeah, that’s really all I look at every month. With these types of funds, you can either set it up on a drip, which is I think that stands for direct reinvestment programme, which essentially means that you get paid out your dividend money, let’s say 100 bucks, and I will take the 100 bucks and buy as many more shares in the same company as it can. And so that’s the kind of set it and forget it mentality, I do more of like a manual drip. So I get paid out the cash at this moment in time, it’s about 10 grand, give or take a month, sometimes 12 grand a month. And I’ll take that cash in my account. And I’ll look at like where I think the opportunity is in the market. And I’ll buy more shares in those companies.

 

Erwin  

So just him just just quickly to summarise for the for the listeners benefit, again, because I know your I know your journey better than most. Because you divested your portfolio, you have a large nest egg. And you’ve reinvested a lot of it into these ETFs. Yeah, and yeah, you’re generating between 10 and 12 grand a month, which is I would say, for many, many people that come to me for the first time, that certain rule. So you you’ve kind of have what they want. Yeah,

 

Tim  

that was my goal for a long time was I was like fucking to get 10 grand a month, then that would be where I want to be, you know,

 

Erwin  

it’s kind of like you’re not a landlord anymore.



So I don’t know, no one calls you

 

Erwin  

don’t have your phone.

 

Tim  

Does anybody in the house I live in? I don’t I don’t have any loans of any kind don’t have any credit card debt. I don’t have a car loan. Nothing. That was my goal was to have zero on the on the debt side.

 

Erwin  

How’s your leisure mental health compared to the past?

 

Tim  

Yeah, I mean, much better in terms of, you know, having been inspired by things like the four hour work we, and these types of like, time and money and location freedom scenarios, I always just wanted to have the ability to be to be free and not and to be able to do work for money but not have to do it and be able to pay the bills, even if I didn’t do that and live somewhere but not feel like I have to be tied to that particular location forever that I could move to a different area or or do something different. So that’s kind of like what I’ve been working towards and you know, there’s lots of things in my life which aren’t easy and and still still doable. Sometimes, but that one is one, which I’ve been able to like, you know, I’m very like conscious of the fortuitous timing of that whole series of events of buying properties when I did, and then exit. And when I did, but I didn’t buy a lottery ticket, I worked my butt off for years and years and years, you know, working with joint venture partners and finding properties and cleaning up people’s, you know, classes and plunging toilets, and doing all sorts of stuff. And it just worked out, you know, based on what was good timing, and I was good at. So I just did as much as I could, until it wasn’t necessary anymore. But yeah, now I like the fact that people talk about real estate investing is like passive, it’s not passive at all. Because you still have to, like, even if you’re not managing your property, you still have to manage the property manager, you still got to pay the property tax, and the bills come in, and you gotta log on and pay the gas and the electricity and stuff like that. It’s not really passive. And you still think about it, it’s still, you know, go back to like, my favourite lines from the Fight Club movie, which is what you own owns you. So if you own by businesses, or 20 houses, or those are all like taking up mental real estate, in your mind, wherever you own, whether you manage them or not, they do. And now I have this, like portfolio of ETFs, that takes up that takes up mental space, because I think about like, if I, you know, glance across CNBC, and it’s all red, I’m like, Oh, shit, do I need to look at my holdings and make sure everything’s okay. Because they’re pretty boring things and do well in sideways or down markets. Most of the time, it’s a non event, but, you know, there’s no free lunch with anything, right? It’s just like, what’s the way to minimise the most mental drag? And, and just be able to enjoy your life?

 

Erwin  

I guess you’re less mental drag more than 99% of Canadians? Yeah. I mean, and you choose to work when you choose to work. So that creates, obviously some mental drag, but you’re compensated? Well,

 

Tim  

yeah, to see. But there’s, there’s also like, I don’t feel bad anymore about saying like, that particular project isn’t for me, or, you know, I’m not going to drive from where I live for three hours to show house. Like, it’s just something where I can just refer it or saying, you know, not my cup of tea, and I’m kind of more of a believer on like, have, you know, a bunch of clients and just take really good care of the clients I’ve got, and integrate some new ones into it, but not try and be all things to all people. Because that comes at my own cost that’s trying to be everywhere, right. So yeah, I think financial peace of mind is really cool to have. But it’s kind of like anything else, you climb that mountain and you look around, you’re like, still have some other things to work on in my life, you know, relationships, and, you know, spending lots of time with kids and all the other things which are very important. So. But yeah, I think the investing journey has been one for me, where I’ve just been gradually trying to minimise the drag and get, as, you know, as close as possible to like just now where I’m at, where I invest in things, which are like, very steady, they provide good returns, there’s enough money in the account that it generates a decent income. And that’s cool. You know, that’s, I don’t know how I can get much more streamlined around that. Because it’s, you know, it’s about as safe as I think as I can get and still get a decent return from it.

 

Erwin  

Yeah, I’m pretty sure most would like your return. Real estate for growth, and then this passive investing for income, which is the kind of income that almost everyone got into real estate wanting? Yeah. So let’s talk about, let’s talk about being a real estate agent. Because many listeners of the show, either work with one r1 It’s funny, I had a reunion, target reunion golf thing last last week, and I was like, going through everyone like, wow, everyone became a realtor. Let’s talk about it. Let’s talk about it’s talking about why you chose to place who you are, and what your experience is like with it.

 

Tim  

In terms of becoming a realtor, I feel like I felt like there was a niche for something different. Having been a consumer real estate agent services, I found that I had some like really good experiences and some not I don’t know if I had any really bad experiences, but I just had some like non event experiences working with you. For instance, I got like this amazing, like, added value. Beyond being having a realtor. I kind of had somebody as a coach who would make suggestions. There’s nothing worse than working with a professional way you like tell me what you think. And they’re like, I don’t know. Like, what do you want to do? Like I like helping people with some opinion or some guidance. So that is really useful.

 

Erwin  

Always remember how when you Your potential JV partners wanted to be introduced to me. Do it.

 

Tim  

Don’t do that. You can’t speak to the man behind the curtain. The Wizard of Oz. But yeah, I think that and then other experiences I have with realtors in different places where, you know, the transaction would be over. I never hear from them again. That was the end. And I thought that was a wasted opportunity because I thought, well, you knew you, you knew me well enough that you could follow me up once every six months and say, How’s it going? You want to buy another house? I’ll probably Yeah, if you find the right kind of house I’d probably am interested in I did that many times. But yeah, I just found that the service side was lacking with some of the other realtors I came across. And I just thought I could think I could do a good job of this. And when I was working on my other company, I came across this sales methodology called ninja selling. And I saw the the gentleman who started ninja selling his name escapes me at the moment, but he was on stage speaking at an event I

 

Erwin  

was on, mostly Larry Kendall, Larry Kendall,

 

Tim  

I saw Larry Kendall speaking

 

Erwin  

at an event. Sorry, for the listener, I have the book in my hand.

 

Tim  

Just selling if you’re a realtor, it’s basically what I follow. But I saw Larry Kendall speak, and I just was like, I wasn’t a real theme. I had this amazing insight. He’s standing on stage and basically saying, like, if you just take care of the people you already have, you don’t need any more. You don’t need to go and get more people just take exceptionally good care of the people who you’ve already signed up as clients, phone them up, remember their birthdays, ask them how it’s going and send them text messages, and all these different follow up methodologies that he’s got. And I was just like, I imagine if you just got like, 100 clients and just took really good care of them. You’d be successful forever.

 

Erwin  

Just for the listeners benefit Larry Kendall, the author of ninja selling, recommend the book for anyone who’s in sales or business development. I believe he’s in the Hall of Fame for his state. Not for real estate, but for business. Yeah, that’s that’s an incredible accomplishment. Sorry.

 

Tim  

Yeah. And he’s very nice, very nice guy as well. But yeah, I just thought that was like, I don’t know what that blew my mind. It probably blew my mind because I was working for a company that did lead generation. So all we did was like Facebook ads and Google ads and people would like Googly would come in, you phoned them up. They’re interested in selling my house. Move on to the next one. It’s like, there’s transactional relationships that

 

Erwin  

people will have this treadmill of always, yeah,

 

Tim  

never ending. And the pole. Yeah, he was just like, No, he’s thrown up the phone and Babu your cell, how to last year and go out for a cup of tea and ask him how his family is and build real relationships with real people. And you’ll be you know, I just got an accepted offer on a property yesterday. And since I haven’t only been in real estate for three years, I’ve already helped this couple, sell their original house, then they bought another house they rented it sold that one enable a condo, now they’re selling their condos, I’ve done like five transactions in three years with the same people. And yeah, I told him all the time, and I liked them. They’re friends, I’m interested in their lives, I keep in touch with them. And that’s just become part of the practice. And so yeah, that was kind of where I saw an opportunity. And then the other thing kind of leading on to talk a bit about real broker. But when I looked at like, the traditional real estate brokerage model, and when I started interviewing with companies to work for I looked at sort of REMAX and Rola page and all these different companies, and I know lots of great people at all these different places. And I know also know that the model in terms of what I’m doing isn’t for everybody. If you love being in an office and high fiving and having pizza lunches and water cooler and chat and stuff, then traditional brokerages are really good for building that community in real life, right? For me, I’ve been in that corporate world for so long, I didn’t, I couldn’t think of anything worse than going into an office. And also I just find that I’m like, easily distracted by people who are walking by my desk and Stein drove by conversation. So I thought, right, I want to I want low cost fees, I want to be able to work remotely and run my own business. So anyway, I’m with real broker, which is currently the fastest growing real estate brokerage in North America. And people have you I’ve heard people use the analogy before the traditional brokerages are a bit like Blockbuster and real brokers a bit like Netflix in that it’s everything’s streamed to you so we have this go I’ve got this cool app on my iPhone and also I can use it on the desktop but it shows me like when am I getting paid commission and where my transactions are in the mix and how many deals I’ve done this year and I can look all the any of the resources and do all my transaction management and everything through one central place, which is so cool. compared to having to do lots of manual paperwork or different different locations for stuff. And so, yeah, that was kind of like my rationale for going that route was maximum flexibility. The fees are also kind of industry wise pretty aggressive. So it’s an 8515 split. For those of you in the know 85% of the money goes to the agent 15% to the brokerage. And then once you hit $12,000 in company contributions, which is about 80 grand in total commission, you don’t, you don’t pay anything anymore. So I really like that aggressive.

 

Erwin  

Just just for the listeners benefit the that’s that’s the the 12,000 company corporate contribution, and which we call a cap and the industry has extremely low.

 

Tim  

Yeah, yeah. And so they’ve gone down this route of having this model where it’s like 8515, split over 12k cap, if you will, no monthly fees is just very streamline that if you’re, if you’re at like a traditional brokerage, you might pay like 1520 grand just to have like a desk space and just to be there, in addition to paying caps and other things. So it’s it’s definitely like,

 

Erwin  

I’m sorry, for listeners benefit. Most places don’t have caps. So



yeah, you just keep paying forever.

 

Erwin  

That’s the truth. That’s the best selling. You know, I’ve been around for a while I’ve done my research. Yeah, you’ve been around for a bit, you know, many people even you know, many realtors. Research. Yeah,

 

Tim  

hundreds. Yeah, many of my clients when my last company were like, either in real life realtors, both in Canada and the United States, predominantly, the top agents and teams in North America. And they will have different models. And sometimes if you’re a luxury Realtor in Beverly Hills than working for the agency, or Sotheby’s or something that’s going to be important. The name carries huge amount of gravitas and is going to be very important.

 

Erwin  

Important. Yeah.

 

Tim  

That being said, these types of companies are attracting a lot of people. Because people are realising that the bloatware, the unnecessary peripherals of a real estate business are now important. It’s very collaborative. This way, it’s online. And a lot of these people are creative in terms of creating content and video and stuff. So that’s what I tried to meet. But, you know, putting into our overall compensation, the one of the biggest attractions for me is that they also have a passive income model. Right? So me with my passive income, ETF II as on somebody said, Oh, you can also earn passive income. I was like, really? Tell me more. So that was the passive income opportunity is another reason that I selected this brokerage to work with you. Can

 

Erwin  

you elaborate on that? How does the passive income model work on a real broker? Yeah, so

 

Tim  

essentially, that cap, we were talking about that 12k annual cap. If you basically, if you bring somebody onto the business, this is how it works. So instead of them advertising through like sponsoring sports arenas, or lots of online ads, and all that kind of stuff, all these different ways of advertising.

 

Erwin  

Recruiters make like, a lot. More commission.

 

Tim  

Yeah. So it’s just a word of mouth model, right. So they, on the basis that good people, no good people. So as soon as I started working with them, I was like, Who do I know this in real estate, and I like, and then I phoned them up and say, I got this cool opportunity, you should check it out. For that effort on my part of introducing people in my network into real broker, they pay me, which is cool. So out of that $12,000 annual contribution, instead of, you know, throwing a bunch of that into advertising. They just pay you as the agent for bringing somebody else on. And it’s really cool. So if somebody you know, I can tell you the actual numbers, so you know, but if I bring on somebody, and they contribute their 12k, which is, which is pretty normal than $4,000 out that 12k gets paid to me. So if you introduce 10 people to the business, you could get 40 grand a year coming to you paid monthly as transactions happen for just bringing your friends to the business. They don’t lose any money, they don’t pay any more money, it doesn’t affect them. It only comes out to the company, dollar side, if you will. But yeah, already haven’t only been there for a little while I already you know, I get emails once a month and I get an email saying hey, you this month you’re getting 1500 bucks, because so and so that you brought on as done a couple of deals, and it will be in your bank tomorrow kind of thing. And I’m like, wow, this is fun. It’s like another you know, in addition to like building my business, I get to like, work with more of my friends and and all the rest of it and build this other little passive income stream. And because of everything I’ve done historically with regards to training agents around lead generation and my old job, I like building this kind of virtual group of you People who are interested in learning more and getting better at their job and sharing ideas, basically. So yeah, it’s been good so far.

 

Erwin  

Now, what are the kind of real training resources are available to, to new agents or old agents?

 

Tim  

Yeah, so a lot of online stuff. So, obviously, being a virtual brokerage, if you will, every day, there’s like, hours and hours of different training with some of the top agents in Canada in the US. And they’ll be talking about lead generation, or generating referrals or how to stage the perfect open house, I have a create amazing listing videos, just a term that we use workplace in terms of a way to communicate on the back end. But there’s just tonnes of training every day, like more training that you could take every day on a variety of different topics. And then there’s kind of like beyond that, there’s a sort of informal network of like, people that I speak to who I know, inside the brokerage, and if I need help with something, I give them a call and, and off we go, in addition to the traditional, you know, I have a broker, I have a managing broker, if I need help with a paperwork, I’ve phoned them up and say, Hey, how do I do this? I’ve never done before, and he helps me out. But yeah, tonnes of training, a variety of like virtual events, and in person, annual conference type events as well. But yeah, I would say for anybody who wants to be remote, but connected, it’s kind of perfect, because I love being on a zoom call, sat home, looking out my window, I’m looking at the Pacific Ocean right now, you can’t see this, but I can have the Strait of Georgia, and I’m in my happy place. You know, like, that’s, that’s where I want to be. And if I believe in the business I’m in, and I’m happy to share it, and I get compensated for that, then, as far as long as that’s a true win, win, right?

 

Erwin  

Question, do you is there much value you think in networking with other agents that on a any sort of basis, because again, like you’ve known, you’ve known many through your, through your past career.

 

Tim  

I read this book once called Delivering Happiness, which is about the guy who started that company called Zappos. He’s no longer with us, unfortunately. But the company Zappos was eventually acquired by Amazon, but they were delivering shoes online, and they would take like, tremendous efforts to get the perfect shoes and deliver them fast and deliver them fast everybody else and exceptional customer service. I read something in his book, which struck me massively as a business person, but specifically as a realtor. And it said that, I don’t know what if it was a big point in the book or not. But he basically said, like, we treat everybody like our customers, we treat everybody like our customers. So we treat our partners, our business partners, our suppliers, our employees, our competition, we treat everybody like our customers, and give them exceptional service. And so I took that to heart and I thought, hang on a minute, all of the other agents in my local market and beyond, are my customers. Right. And I, you know, speaking openly, and candidly, I found that some realtors I come across weren’t very friendly. They’ve been doing it for a while, I send an offer and kind of get this very short response. And I was like, why aren’t people nicer? I don’t understand. But anyway, read the book. And I was like, I’m gonna be nice, because these people are all my customers. So now, when I communicate with other realtors, I always make a point of like, sending nice emails and giving good feedback and sending them videos and congratulating them and engaging in a really communicative way. Because guess what, when I show up to their listing with the offer for one of my buyer clients, I want them to think Tim’s great is easy to work with. It’s friendly. He goes above and beyond, if possible, you know, if all things being equal, I’m going to try and choose his offer because he’s great to work with. Right, all things being equal. So that’s the way that I operate. And so when I meet realtors in other geographies and other places, I have the same approach. They’re my customers, I want to be nice to them. I want to follow up with them and build relationships with them because then when they get referrals, the people who live in my town want to move to my town, or if they decide in the future, you know what I’ve been fill in the blank brokerage for 10 years and I’m not getting much value from it. And I want to join one of these cool virtual brokerages. Maybe I’ll give him a call and I can join his group and and understand a bit more about it. So that was like a key sort of core lesson for me to internalise around treating people exceptionally well in the business.

 

Erwin  

Sure. It’s not like a cultural thing. You can only do that in BC. It’s kind of tough here on the GTA.

 

Tim  

I think you can do it anywhere. Somebody’s got to lead. Somebody’s got to lead the way. But no, it’s like yeah, I mean, you know, I find that like sometimes people gravitate towards The, the environment you become part of it’s easy to send short messages and everything be very like brief. And we use a system where we’re asking if something’s available, people just write a V AI l question mark availe. Question mark? Like, is my listing available right back? Yes, it’s still available. But just like the pleasantries around, like, Hey, how’s your day going? You know, congratulations on your recent thing, or whatever. It’s just, you don’t have to, like make everything super basic and robotic transactionally you can add your personality and be different, and people will recognise that and that may be as part of my English upbringing to two with sort of politeness, but, but nothing is important to do. So, yeah,

 

Erwin  

I know what you mean. Like, I listed one of our own properties recently and the buying agent, he disappeared for a little bit more. No, we, like just stuff was slow to happen. I said everything okay. Versus like, even like, you know, some people just get mad. Yeah. I don’t know what happened. So I’m just like, is everything okay? And he said, you know, we took my dad to the hospital surgery, you know, probably hard stuff like serious stuff. Yeah. But, you know, I like people. I’m empathetic. And so like, every week, I’ve asked them, How’s your dad? Yeah. That’s it. Even just even just as part of a regular discussion around like, you know, whenever, like, Go, how’s your financing going? Or when you come from inspection, though? How’s your dad doing?

 

Tim  

Yeah, because you realise that in relationships, the relationship deepens by people sharing vulnerabilities about themselves. And those being reciprocated, if not reciprocated, at least listened to and heard, but that’s the human real human connection point. You know, if you’re talking to somebody and you’re not learning things about them, then it premiums You’re talking too much.

 

Erwin  

That’s not me on this podcast, and I barely talk.



Yeah, you’re very good interviewer.

 

Erwin  

I just naturally curious because there’s like, there’s way more I don’t know that. I know. So definitely jujitsu. Like actually, this is a good analogy. One of the black belts, I used to train under, you know, three straight black belt. Right? I think you said, I know. 50% of jujitsu. Yeah, like, Oh, boy. Am I too straight white belt? I don’t know what I am. Like, I don’t probably don’t know. 98%, then.

 

Tim  

Yeah, it’s scary from my point of view. But you know, more than somebody like I a good example. For me, it was like after a month of doing it, and a brand new, never been before white belt walked in the door. It’s 20 year old kid. And he borrows a ghee from behind the counter and gets on the mats and starts warming up and stuff. And then the instructor said, Tim, can you go with this guy said, Yeah, sure. Effortlessly, I could hold him off. While he’s running circles around me huffing and puffing and sweating and trying to jump over my knees and get into some kind of position. I was just like, wow, this is a great demonstration that even after a month of very basic rudimentary skill, learning stuff around protecting yourself, you’re already like miles apart somebody who’s never done it before. So then you extrapolate that over 10 years, the average time they say it takes to get a black belt is maybe 10 to 12 years,

 

Erwin  

if you’re diligent, of currently diligent, yeah, of course, somebody’s

 

Tim  

gonna, like, be able to do whatever they want with you, if you’re brand new, and they’ve been learning those skills for that long, it’s just a whole different, like, a different language, you know, so and

 

Erwin  

I think it’s a great analogy for many things, including, like, you know, that’s kind of the point of the show is, it’s a leverage point for many. If you’re new to investing or new to being a realtor, here’s Tim’s experience.

 

Tim  

And I was saying to you, before we started recording, but whenever possible, I like to roll, I like to spar with the people who are black belts, or brown belts, they beat me so easily. But for me, I’m kind of like, learning, I feel like I’m learning at a faster rate, because I’m, I see what they’re doing. I see the movies they’re making. And I just arrive I can last a little bit longer each time. And that’s for me, that’s very analogous to anything in business terms, like find people who are already doing it, and doing it successfully, and try and get some exposure to that, you know, train, don’t please them find people often say, Can I pick your brain? That’s the worst term learn to man, don’t ever ask anybody, if you can pick their brain for some way you can add value, or, you know, add support services and get some exposure to that, then that’s, that’s the way to do it. You know, if somebody when I was doing my stuff, some somebody come along and said, Hey, can I just come and chat to you for the day and I’ll help you carry stuff. And really, yeah, it’s cool, you know, chat and do things. And there’s lots of people who are at your events who could have asked that type of question to somebody was a little bit further down the path and then so there’s approach correctly. There’s always ways to learn more. And I think, you know, as we used to talk about, and Julie Broad who was one One of the, my real estate coaches by the start was kind of like, yeah, that’s the missing ingredient was always action. And I took that to heart as well and realise that like you can learn as much as you want about, it’s kind of like jujitsu, right, you can watch YouTube videos and be a big UFC fan and do all these things and to actually put on a game or not, and get on the mat, and start like, physically rolling with another human, you don’t know anything, you don’t even take an action, you’re not gonna develop skills is the same thing with investing until you go and look at houses and make offers and win or lose, and buy a house and screen tenants and do renovations and try and fix things up yourself, you know, you you can’t learn by. So you just try and learn as much as you can to give yourself a reasonable amount of protection, and then get going dive in.

 

Erwin  

And then again, as I reiterate, you know, many people who start out come to me and say they want to make like six figures cash flow. So and actually made the mistake of speaking to a gentleman from who’s investing in London, who is buying five plexes. But it doesn’t, it doesn’t have a lot of cash. So he’s gonna be highly leverage, you know, interest rates will allow you to have much cash flow. And in, you’ve been taking courses and so his goal was to make 10,000 a month. So six weeks make over 100 grand a year in cash flow. And I said, I don’t know anyone who’s done it, and I forgot about yourself. So just like, just like Tim said, I’ve always said to someone who has what you want, go learn from them. So and they don’t have a nest, they don’t necessarily bother you. Just listen to the show. That you mind, right? We’re gonna leave your cell phone number to get simply your cell phone number.

 

Tim  

Yeah. My cell phone number you’re gonna read out right now?

 

Erwin  

No, you’re gonna read mine.

 

Tim  

My email address is Tim at Tim Collins dot see a demo at Tim collins.ca. So if you have any questions, then you can email me about any of the stuff I talked about having to share.

 

Erwin  

So good. And that’ll be in the show notes again, of course, folks, always, as always, say you’re open to having conversations about anything if you’re interested in seeing it to seeing Hi, because I know many people will ask when you’re on the show, I heard many people reached out to say like, That’s awesome, man. Yeah,

 

Tim  

yeah. I’m always happy just to if you want to ask about like, you know, you’re in trouble about passive income investing in jujitsu. If you’re a realtor, and you’re interested in real broker, then obviously, that’s a big focus of mine at the moment. So we can talk about that.

 

Erwin  

And just just to just to highlight the part about, like, for realtors, like, again, like, I know, I know what the fees are not a lot of people are paying. And many people had a really tough flight last 12 months. I spoke to one person, because they’re working in luxury. Last year, their sales were down 70%. Yeah. Right. And then if your fees were still high. Yeah. And if you have to spend a lot of money. No, they don’t scale. No, no, there’s a whole bunch of fees that do not scale. There’s just fixed. Yeah, I haven’t heard of something cheaper. So yeah. There’s cheaper if you’re doing nothing.

 

Tim  

Yeah, I would say like, you know, price is one thing, but I think there’s a lot of other beneficial stuff going on as well. But it’s certainly nice to be lean in terms of these wise so that you can either not have to work as much or put more money towards growing your business or just have more money to put towards your passive investing portfolio. For instance, in my case, yeah.

 

Erwin  

Awesome. Alright, Tim, as we’re as we’re over time, as you do any final thoughts you’d like to share with the audience? No,

 

Tim  

I think that’s it. I mean, I think like anything I think it’s just like all these things. It’s you got to get started and start somewhere and resources like this a great wherever you can find to get going on your journey. Find other people are doing it and ask questions.

 

Erwin  

Ask them again. Tim at Tim collins.ca. Yes, Collins. That’s two L’s and an S. Thanks very much. Thanks, Tim. Thanks so much for doing this. Sorry about the construction noise in the background.

 

Tim  

Love it. Thanks, my friend. Appreciate you. The

 

Erwin  

before you go, if you’re interested in learning more about an alternative means of cash flowing by hundreds of other real estate investors have already then sign up for my newsletter. 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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UPCOMING EVENTS

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CLICK HERE to check out what’s coming up next.

 

BEFORE YOU GO…

If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.

It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success. 

New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.

We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best.  In 2018, we again won the same award by the Real Estate Investment Network.

Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics.  The intersection of the two, talent and ethics is limited to a handful in each city or town.

Only work with the best is what my father always taught me.  If you’re interested, drop us an email at iwin@infinitywealth.ca.

I hope to meet you at one of our meetups soon.

Again that’s iwin@infinitywealth.ca

Sponsored by:

Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.

Just imagine what winning in real estate could do for you.

If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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Replacing Executive Pay in Tech w/ Mixed Use Commercial/Res with Christian Szpilfogel

Would you like to know the truth about how one gets on the Truth About Real Estate Investing Show? 

One criterion is sharing a repeatable, systematic strategy for investing AND sharing what did NOT work and the lessons.

Some influencers are not entirely transparent and do not share about the losing deals or the breakdowns in partnerships, both personal and professional.  

There’s nothing wrong with that, but a mentor of mine shared with me how he doesn’t trust someone who’s never lost investing, gambling, or whatever.  

If someone is willing to withhold information on losses, what other information are they withholding?

 
 
 
 
 
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A post shared by Erwin Szeto (@erwinszeto)

“How you do anything is how you do everything” is a famous quote often repeated by T. Harv Ecker, so to me, how it applies to real estate investing is if someone is willing to lie, cheat, or steal in any area of life or business; they may be willing to lie, cheat, steal from you.

Hence in my business, one red flag is usually enough for me to stay away from anyone and their business associations.  

For example, this one real estate investing club that recently imploded… They’re being accused of many terrible things and have been for years; hence I’ve stayed away, and none of those involved ever guested on my show while they operated that club.

There are so many good people in the investing world; it’s actually hard to keep up with them all and take the time to get to know them and network/mastermind with them, so why spend time with folks with red flags?  

Life is short, and never losing money are guidelines I try to live by. I’ve lost plenty of money in my career and have been terrible at times with life balance, but the long-term trajectory looks pretty good.

Speaking of the long-term, from all the news and information I consume about economics, AI, and networking with real estate investors, the long-term view is… interesting. 

To me, at least as I find I geek out more than most, and my conclusions are still the same, owning quality income properties is the path to building one’s wealth; AI won’t stop that, but AI is already disrupting a ton of jobs and industries.  

One’s ideal window to buy investment properties is about 12 months till we see an interest rate cut. Today, Tuesday, July 25th, at 7:30 PM, I’ll be sharing an economic update at this month’s iWIN meeting via Zoom Webinar, my research in AI which will hopefully take the fear of AI away for most and Coach Tim Hong on my team will be sharing how he and investors with condos and single-family homes are navigating negative cash flow in this high-interest rate environment.

The link to register is in the show notes, which may mean your email or our website at www.truthaboutrealestateinvestings.ca.

To register: https://www.infinitywealth.ca/iwin-meeting-podcast.

The meeting is all virtual, no charge, AND if you prefer a more personal, smaller, tactical, hands-on experience, then you do not want to miss our iWIN MasterMind Tour in Kitchener on Sunday, July 30th, 10 AM, where we tour the insides and out of two income properties. 

Real estate investing is about owning physical assets, so this is where the rubber meets the road, and one does hands-on learning about how our clients earn world-class returns investing in income properties.

At the time of writing, we have only three spots left, which always sell out—the link to purchase tickets: https://www.eventbrite.ca/e/664013230447.

Replacing Executive Pay in Tech w/ Mixed Use Commercial/Res with Christian Szpilfogel

On to this week’s show!

Today we have a full-time real estate investor who’s really really smart. I’ve known Christian for a couple of years, but only in this interview did I better understand how he transitioned from an executive position in the tech industry into a full-time investor.

What’s especially interesting is how Christian originally capitalized his investing and found a bunch of cash flow, enough to replace his job income in mixed commercial/residential real estate.

If you’re a geek like me, you’ll enjoy this episode as I can’t think of anyone who’s as successful in mixed-use commercial/residential… the worst commercial, too: retail, yuck!

In my experience, financing is expensive when investing in mixed-use. Still, Christian has cracked that nut, so if you want to learn the truth about how someone replaced their job income with real estate cash flow from operations, you’ll want to take notes and listen to this episode more than once.

You can find Christian on the web: https://aliferous.ca/ or Instagram: https://www.instagram.com/aliferousproperties/, Facebook and LinkedIn @Aliferousproperties. 

FYI, Aliferous means to have wings. I’ll ask Christian to explain why he chose the name in part 2 of this interview, but I’m guessing if you want your retirement planning to have wings, then invest in real estate.

Please enjoy the show!

 

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Hello and welcome to the truth about real estate investing show. For those watching on YouTube. No reason to adjust your camera screen colour. I actually see myself and I’m pretty tan for just came back from the cottage been off for a week. And would you like to know what what it takes to be a guest on the truth about real estate investing show one criteria is that one has to share both a repeatable systematic strategy to investing and sharing what did not work, including the lessons. Our last episode was great one with Austin yay. And we’ve got some great feedback coming in already about what a great episode that was. Again, Austin is very successful right now. But he’s he’s quite frank about sharing the very rocky journey to get there a lot of things that has changed in his investment strategy. So have a listen to that episode. If you missed it. There are some influencers out there who are not completely transparent and do not share but they’re losing deals, or their breakdowns and business partnerships or personal relationships. There’s nothing wrong with that to his throne. But a mentor of mine shared with me how he does not trust anyone who’s never lost in investing, gambling or whatever. If someone’s willing to withhold information on losses, what other information are they willing to withhold, there’s the famous quote by T Harv. Eker. How you do anything is how you do everything. So to me how it applies to real estate investing is if someone’s willing to lie, cheat or steal in any area of life or business, they may be willing to lie, cheat or steal from you. Well As for me, hence my business. One red flag is usually enough for me to stay away from someone or in their business associations and Associates. Take for example, this one Real Estate Investing Club that just recently imploded, they were being accused of one of the founders, has been accused of many things and have been for many years. Hence, I’ve stayed away from members of that club, the owners of the club, as they’ve never guessed it on my show, while they were out there operating that club. There’s so many good people in the real estate investing world, that’s actually hard to keep up with all of them. Many friends who are better are excellent, excellent investors. But again, it’s hard to keep up with them to spend more time with them network mastermind, whatnot. So why spend time with folks with red flags, life is short and never losing money or guidelines that I try to live by. I’ve lost plenty of money in my career. Thankfully, I’ve made more. And I’ve been terrible at times with my work life balance, but the long term trajectory looks pretty good. Speaking of long term from all the news and information I continue to consume, but economics, artificial intelligence, networking with the real estate investors, you know, folks who own stuff on the ground, long term view is interesting. It’s always been interesting. I think now, as I’ve been saying this for for a very long time is an interesting times we live in, and we’re living through history right now. So to me, at least as I continue to geek out on more and more information, my conclusions are still the same. Owning quality income properties is still the path to building one’s wealth. That’s an incredibly efficient and time saving AI won’t stop that. But AI is already disrupting a lot of jobs and industries. I’ll be sharing about that in my presentation. One’s ideal window to buy investment properties. It’s about 12 months roughly till we see another interest rate cut. And that’s just a guess, no one knows for sure. So again, I’ll be sharing my research on Tuesday. So probably the day you’re listening to this, hopefully you listen to these Redway Tuesday, July 25 7:30pm. eastern standard time I’ll be sharing an economic update at this month’s I’m meeting via zoom webinar. So it’s all online. I’ll be at home. Hopefully you’re all at home enjoying yourselves and your families. My research and AI will hopefully take the fear out of AI away from most of more people understand Yeah, there are some fears that bit to have around it a more importantly the opportunities. And also coach Tim Hahn from my team will be sharing how he himself and other our restaurant clients with who own condos and single family homes, how they’re navigating negative cash flow in this high interest rate environment. It’s not something you want to miss the link to register is in the show notes, which may mean it’s in your email already. If you’re on our email newsletter, and if not, you can find it on our website at WWW dot truth about real estate investing.ca on the show episodes, in the show notes, you’ll see this link and yeah, you can find it at www dot truth about real estate investing that’s it, the meetings all virtual no charge and but if you do prefer personal and more personal, small or technical hands on experience in person, then you do not want to miss our island mastermind tour in Kitchener, Ontario on Saturday, July 30 10am, where we tour inside a note to income properties. Real estate investing is about owning physical assets. So this is an opportunity where the rubber meets the road. And when yourself can do hands on learning about how our clients earn world class returns, investing in income properties, quality income properties, so don’t forget that quality part time of writing we only have four spots left these tours they’ve always sold out. So again, the link to purchase tickets are in your email or you can find it on the web on our website in the show notes. The cost is nominal and All proceeds go to charity. onto this week’s show. Today we have a full time real estate investor who’s really really smart. I’ve known Christian Spil. Fogle. Yes, I can say his last name. It’s not the easiest to see or smell, and still phone call. I’ve known him for a couple of years, but only in this interview to actually get a better understanding of where he’s coming from, and how he actually transitioned out of his executive position in in big tech and how he became a full time real estate investor. What’s especially interesting so Christian originally, in metabolise investing, it’s not what I expected, and how he found a bunch of cash flow, enough to replace his job income in mixed commercial residential real estate. If you’re a geek like me, that might catch your attention. And you may enjoy this episode as I cannot think of anyone off the top of my head who is as successful in mixed use commercial residential, he’s got the worst kind of commercial to retail. Yak am I experiencing financing is expensive when investing in mixed use by Christian has cracked that nut. So if you want to learn the truth about how one can replace how he replaced his income, his job income and you make good income, you make really good income. He’s a tech executive for a big company. And he replaced it with real estate cash flow from operations. So you want to take notes, if you’re interested. Listen to this episode more than once. You can find Christian on the web at WWW dot att liveris.ca. Eliphaz means to have wings, Alec Christian explained that in part two of this interview, but I’m guessing if you want your retirement planning to have wings that invest in real estate, so again, a Lefort liveris.ca. And he can find them on Instagram, on Facebook, LinkedIn, all at Elif rehearse properties, please. And during the show. Hi, Christian, what’s keeping you busy these days? Oh, boy,

 

Christian  

lots and lots. A lot of what I’ve been doing over the last six months is refinancing the

 

Erwin  

portfolio at historically high rates. What do you think about? Well,

 

Christian  

if you think 3.85% is historically high rates than I guess they’re high,

 

Erwin  

it’s all a crying and screaming IECA out there. You think the world’s ending with the rates of the way they are?

 

Christian  

I think there’s a big difference. Because one of the things is, you know, I invest primarily in commercial type assets. So I’m not doing much if anything in the in the smaller

 

Erwin  

retail assets. Elaborate on commercial, what kind of commercial? Yeah, sure. So we cover

 

Christian  

about 60 70% of our holdings are in mid size multifamily buildings. So that’s basically anything five plus, most of our buildings these days are in the order of 10 to 20 units, we have some light industrial property, we have some mixed use buildings, we have a little bit of office and a little bit of retail. So it’s it’s a wide variety of things. And we got into those asset classes for completely different reasons. So you know, at one point, you know, when I quit my job, right, you know, that’s a whole other story we might want to talk about. But when I quit my job, the first thing I had to do was replace cash flow. So at the time light industrial, you could basically pick them up for in the order of 910, sometimes 11 caps, which meant that they were highly creative, as long as you keep them full. So lots of cash flow coming in. So that was a priority for me and why I focused on that particular asset class at the time. And so over time, asset classes become more or less popular, or they meet your specific needs or objectives at a particular time. And so I shift. So light industrial five, six years ago, was a cash flow machine. But through the pandemic, the cap rates came right down on those, the value of those buildings I hold, obviously, you know, really, yeah, they exploded, they did really well. I never planned for it. It’s just a great upside in that, but they generate great cash flow through the process, right, because you got them at a better price. Yeah, I got them now relative to now they looked like great prices at the time it met an objective which is cashflow. So you know, I had to replace income at the time. And then we’ve done lots of multifamily.

 

Erwin  

Sorry, before we move on to light industrial, like what are housing? Yeah, so let industry have a picture of what like what light industrial looks like? Yeah, it’s

 

Christian  

a good question, because I get asked this all the time. So our light industrial buildings typically look like big buildings with big garage bay doors on it. So it’s where the trades will typically set up their business, the electricians the fire, guys, like we have Winmar in there we have oh, in large disaster

 

Erwin  

renovation. Yeah,

 

Christian  

so the exact place so floods, fires, that kind of thing. So there were I think I want to say buildings we’ve got

 

Erwin  

they made lots of money. It must be a great tennis.

 

Christian  

Yeah, they’re they’re actually very professional, which is nice. So because they’re a larger operation, they’re very professional to deal with. We have capital appliance and repair in there as well, which is a firm that’s pretty much going national so they were Ottawa based. They started leasing some of our space and then more space and then more space, fantastic tenants and strong business. That’s their opening locations all across Canada. No, but yeah, it’s basically business. You know, businesses like that are the two Typical tenants,

 

Erwin  

they mainly just need to space, industrial zoning, current manufacturing anything. They’ve machinery robots. And I

 

Christian  

know that probably be what I’d call a heavier industrial. But it’s, we don’t do manufacturing facilities, this is for the trades. So they typically have their offices in there they have, you know, for example, their accounting staff, administrative staff, but they also store their materials, they might park their trucks in there, that’s why they have the big bay doors, so they can unload things, and put stuff in there, you know, and then we’ve got a bit of office space as well. So we’ve got, like the Alzheimer society is one of our tenants in there were a bunch of smaller telecommunication providers that are in those offices, and we’ve had some nonprofit government organisations in there, they’re actually really good tenants all the time, because they tend to be very well organised and professional. And they tend not to be highly demanding, either. So I find a lot of the tenants in the pure commercial space like that, once they’ve got their space, it’s their space to do with as they wish they’re managing their own fit UPS inside. So they tend to be very responsible about what’s going on. So the only time we hear from them is when there’s something significant happening, right, like a giant power outage in the area, or there’s a leak in the roof or something, something to do with the shell,

 

Erwin  

just the commercial act is way easier. And just the, I don’t know the culture of commercial, you know, it’s in your unit, you’re responsible for it, versus I hear residential,

 

Christian  

I hear that. And based on everything I just said, it sounds like that would be a true statement. But I find that it has a lot to do with tenant class as well. All right. And by that I, you know, just the quality of the of the place that’s being rented as well as the quality of the tenant. So Class A tenants tend to be relatively not too heavy maintenance, be them commercial, more residential. And you’ve seen some of our property. So we have a lot of what I would call a Class A or B plus tenants. And they tend to be relatively low maintenance as well, some you just never hear from at all. So when they, they keep the properties in good shape, and, and so on. So we like to focus on good quality tenants, good quality accommodations, because it actually reduces our operating costs and the distractions.

 

Erwin  

In my experience with our doctor tenants, they’re generally great. But they know their strength in the negotiation, and office space, if there’s massive vacancy. So they know where they’re that they have a lot of strength in negotiations. So they’re asking for a little bit more than you’d typically expect from a commercial tenant.

 

Christian  

Yeah, and that’s absolutely right. There are times when certain asset classes have higher vacancy rates. And so it’s a little harder to manage. Sometimes you can mitigate that if you have space that you can easily convert to other

 

Erwin  

purposes. Yeah, like light industrial and be nice.

 

Christian  

industrials, exactly right. You know, so, for example, some of the space was more lucrative for a while to do office space in it. So we just took some of the bays and just made office. In other cases we had, and I think I’ve mentioned this to you before, but we had, you know, a larger 2000 3000 square foot office space, that was impossible ease through the pandemic, but we had them already, in some cases converted to individual cubicles, or you know, but in closed offices. So we started renting the individual offices during the pandemic, when people were trying to get away from the spouse, the dog, the kids, you know, all the background noise, but they couldn’t go to the office. So we did really well, when we pivoted that way, in the pandemic, now, things are starting to shift back, right. So those are a little harder to fill again, as people are really kind of, even though everybody’s saying they’re not going back to the office, people appear to be going back to the office,

 

Erwin  

three days a week. Yeah, it’s much better than than what it used to be.

 

Christian  

So having flex space like that, so space that you can easily just pivot and change the tenant category that you have, gives you a bit more power to negotiate as well. That’s just sometimes luck in what you bought. Or sometimes it’s strategic and what you bought,

 

Erwin  

how is light industrial demand, and we’re just gonna spend some time on this topic because we don’t get many guests that can speak to this subject. Sure. How is the demand for light industrial,

 

Christian  

there’s a good reason why the cap rates are down.

 

Erwin  

They’re making so much money. Well, the cap rates are down,

 

Christian  

right? Because there’s a lot of demand. There’s just huge demand. And the pandemic kind of forced a bunch of things to happen. You know, it wasn’t just that the trades needed space. There was clearly a lot of demand for the trades through the pandemic, as we saw as we were trying to build stuff. But then also warehousing started to happen. So with everybody ordering at line, there was a whole video of storage, right? Yeah, and often light industrial and warehousing tend to be build on spec. So if Amazon comes into town, they’re not looking for space they’re building and a lot of time light industrial spaces relatively easy to build, right? Because you’re just putting a concrete pad down, you’re putting a shell around it, etc. So and by the land,

 

Erwin  

or did you see more businesses doing more eco commerce business. So the right term e business just like just like packing, delivering shipping. I know that was a big story in the GTA for industrial

 

Christian  

Well, yes is the simple answer, right, I was just taking a pause to think about it because every business was a little bit different. I saw all the retailers that we have, and some of them are in our enlightened industrial buildings, but they they definitely pivoted online. So for example, one of our tenants is kaboom comics. And these guys have some of the most amazing product that you’ll ever see, the guy’s a passionate collector, and I helped him consulted with him, during the pandemic, to help him save his business. He was almost ready to pack it in. And as I look at his business, right, and we’ll get back to it in a second, but it was it’s an interesting segue, because when I looked at his business, I realised his business was very similar to real estate. Right, what he had was his assets were books, instead of, you know, real estate itself. But the notion is the same. So he’s building equity. So every time he sold something, he made profit, he took a portion of that profit and reinvested it in building the collection and the asset base that he had. And we went through it and did an inventory. I said, Dave, do you realise how much what you’ve got here. And once I explained it to him, the light bulb went off for him, and he doubled down on his business. So instead of packing in, he grew it and continued to grow it. And then it was more a question of operational discipline in order to make sure that he had a good solid, cash flowing business he was going through. So Dave’s business has grown very well. And the reason I bring up that is because obviously, the comic book trade is largely their revenue comes from the event market. So they go to things like comic cons, and other forms of, you know, comic book events, etc. And during the pandemic, all of that gets shut down. That’s why he thought he was done. And he did pivot to online sales. So he found through recommendation as somebody else of doing these sorts of sales parties, if you will, or live party, so he would talk about comic books and so on, that were really very interesting that he had, and that would attract people to live views of this stuff, and people would buy during that session. And his profitability on those was higher than when he was actually at the event space. Yeah, he had virtually no overhead and the price per book was actually a lot higher than when he was at the event space. At the event space, all your competitors are there.

 

Erwin  

You’re competing with everybody. Yeah, all your competitors are there versus he’s the sole voice. That’s

 

Christian  

right. And not only that, but people are buying in the moment. And everybody loves a good story. Right. And so he’s a very good storyteller, and he would talk about the books. And because he’s an avid and passionate collector, he knows everything about it.

 

Erwin  

So he would, you know, guess the audience would would jive with him.

 

Christian  

Absolutely. And they’d be all in. And so yeah, like, and then you have a bunch of people now are interested in the book. Right? And he’s got one book to

 

Erwin  

sell, and then you raise the rents, right.

 

Christian  

Dave is on a good lease. He was. He was one of our early tenants. I brought him in probably in the very first year of that particular building. So he’s got a very, very good, right very,

 

Erwin  

for listeners benefit, who are who are newer to commercial leasing. What happens when the lease is up? Does it go month to month you write a new lease? Like what?

 

Christian  

So commercial leases are negotiated with the concept that the people involved are responsible adults that know what they’re doing?

 

Erwin  

That should be all contracts? Residential tenant leases, and yeah,

 

Christian  

you mean like residential leases? Yeah. Residential leases are a whole other ball of wax, but with commercial lease,

 

Erwin  

do freedom to you, I saw some posted somewhere like Twitter or something that all landlords had to take a course before becoming a landlord. I couldn’t agree more. And in turn, I think I think all tenants should also take a course on how to be a tenant as well. Like,

 

Christian  

I think there’s pros and cons to all that stuff, for sure. Potentially. Yeah. But yeah, at the end of the day, you know, being a landlord is a business in every way, shape, and form financially as well as customer relations and how you manage things. So that’s a whole other thing.

 

Erwin  

But a bigger topic. Let’s

 

Christian  

let’s get back to your question specifically and answer that. So commercial leases are relatively simple. In Ontario. They’re governed by the commercial Tenancies Act, which is separate from the Residential Tenancies Act. Whereas the Residential Tenancies Act, I forget exactly how many pages it is now it’s but it’s quite quite large if you were ever to print it out. The commercial Tenancies Act is quite short in comparison, and it’s just basic ground rules. So when it comes to law and covers

 

Erwin  

so much, you can’t be too specific. We’re talking about Office light industrial heavy industrial.

 

Christian  

Yeah, but it governs the You know, fair practices in business is really what it does. So it’s just making sure that people, you know, there’s a level of anti predatory behaviour, aspects that are in there that are just good practices that developed over hundreds of years. But it’s relatively lightweight and common sense. So when a lease ends, and it depends very much what’s written in the current lease. So some leases, for example, and we’ll use a typical framework, a lot of leases have milestones at the five year mark, they may be a renewal, they may be a continuation, they may be an interim point of changing certain terms, like the rent price, etc. But often the lease and the leases can be very flexible. So there’s no rent control, right? It’s what you contracted in the lease. So you might say it’s a fixed base price for your rent from now for the next five years. Or you might say that there are escalators, so that every year you might have a rent increase of a certain percentage or a table of some form. Because often what we do for the first year of operation is we’ll give it you know, brand new commercial operation, a bit of a discount, right to help them survive the first year. But then they go back to the regular rate. And other things we might do is if they’re doing fit ups, right, that’s typically at the end, fedup means that they’re doing all their internal renovations in their unit, it’s typically at their cost. But some tenants don’t have the capital to do it, but you know that they have long term viability. So what we’ll do is we’ll finance their capital work, so they might do their fit ups. And we might go on and say, a 5050. And we will take part of it, and we’ll finance it at a prescribed interest rate. And then we’ll just add it on top of the rent that they pay over the, say, the five year period.

 

Erwin  

So some big Phillips during the pandemic for Office.

 

Christian  

Yeah, we didn’t end up with a lot in that.

 

Erwin  

My point is, is what to negotiate and what the what the markets like a good friend that did very well. Office space, it was a really painful part of the pandemic. No, yeah. And so the landlord is very motivated,

 

Christian  

we were lucky that a lot of the office leases that we had were relatively fresh just before the pandemic. So we only had I think, maybe 3000 square feet come up for renewal during the pandemic, and it was early on. And those are the ones that we pivoted to the micro offices, but everybody else had commitments on the longer term and the because there were good quality tenants, right? It’s not like they were just gonna file for bankruptcy or disappear. So to close off in your question, when you get to the end of that lease, there’s a bunch of different options. It depends what’s written in the contract. So sometimes a lease is just the end of the lease. And if it’s the end of the lease, the next lease is that a brand new contract new terms, rent everything.

 

Erwin  

It’s, you’re discussing this in advance, usually a few months in advance of discussing what’s coming. Yeah, it’s

 

Christian  

three to six months, depending on what you write in the lease. But the other thing that can happen is you might give certain number of renewals on similar terms, or uncertain terms that are to be renegotiated on the renewal mark it because

 

Erwin  

the tenant will often want the right to reopen or re rent. Oh, no, I’ll be in the contract.

 

Christian  

Yeah. And they’ve rent, they’re running a business there. And it becomes part of their goodwill, if you will, because we’ve already renovated this space, not just a capital investment, but people know where to find them. Yeah, they’ve been going there for five years. So if you suddenly up sticks and move, now you risk losing some of your clients.

 

Erwin  

So I’ll just see if they like your car restaurant. Rental, your menus, for example, because you’re the address changes. Yep. And the like you mentioned goodwill, people will keep going to the location expecting you to be there. That’s right.

 

Christian  

And if you move to a different place in a different restaurant shows up their portion of your customers are going to this new restaurant. So the the location itself has some goodwill. So that’s why tenants that are a bit savvy commercial tenants will negotiate rights associated with their renewals, and

 

Erwin  

like my tenant do.

 

Christian  

Yeah, well, they’re smart, and they’re savvy, they’ve obviously not their first rental. So but they would do something like, you know, what’s very common is they will say, or want things like I want the right to renew either on similar terms, and the landlord is saying, Well, look, it’s five years, a lot can happen in five years. So we need to renegotiate what the rent is going to be because we don’t know what the market is going to look like,

 

Erwin  

especially today with inflation being so I see I have lots of the entrepreneur, business owner friends who are trying to negotiate maximum increases to rent like tap tap increases your rent, but a

 

Christian  

savvy tenant will then make sure right, and often we write this, probably about 30% of our leases have something like this is where the landlord and the tenant can’t agree on the new rent, you’d bring an arbitrator right and arbitrators so that, you know a fair third party person would come in and and help decide what that new rent is actually going to look like.

 

Erwin  

Interesting. That’s fine. comstice anything else? Yeah, yeah. See what the recent listings rented for. Yep, I even visited some of them ourselves.

 

Christian  

Yeah. Well, typically when I’m doing something I don’t, I don’t push people over the edge, right? So do is I’m gonna raise it to what I believe is fair market price that you really gotta raise. You know, I mean, you want goodwill with the, with the people that the tenant, so I’ve got a lot of Main Street retailers. And I always want to make sure one that they can run their business. So if they’re highly profitable, right, that’s one thing. But a lot of retailers are doing, okay, they’re doing all right. So but they’ve got a lot of operational expense. But I take a look to see what the current rents are on that street, right. And I go for what the current rents are there. And typically, what I’ll do is I’ll anticipate some inflation. So we’ll typically put a percentage increase every year to account for a level inflation, and then five years, we’ll do a reset again, based on what the real market is. So that’s the way we tend to manage it.

 

Erwin  

So before we were recording, we were talking about this interesting conversation because your investment journey has changed along the way. Yep. So actually, before we move on, like, are you not looking for light industrials things that you made a lot of money there?

 

Christian  

No, if we’re, we’re actually thinking of building so. So when the cap rates are low, like this, it becomes expensive to buy relative to the cash flow, you’re gonna get out of it. But light industrial is relatively inexpensive to build. Because you’re basically putting concrete pad you’re doing all the service things like water, power, etc, you’re doing the shell, and you’re doing a modest amount of fit ups on the inside of the building. But it’s in the land, it’s still expensive. Depends on where you are, if you’re in an industrial park, we’ve got some opportunities right next to one of our buildings where I could buy probably about four or five acres and build something reasonable. And it’s really funny, because, you know, my business partners is my wife, townie. So she’s when I first bought the light industrial, she she much prefer the residential side of things. And she looked at it and she said, I don’t really want to do this, right. And now she’s all in. And she said, When are we going to build some more of these things. But right now it makes sense to build them rather than to buy them. And that’s often a discussion in any asset classes. Sometimes you can’t buy it cheap enough to make any sense. But you could build it for maybe the same or less, and you get a new product, in that case, so. So that’s the way I look at it. And to be honest, building is probably one of the riskier things to do in in real estate. But sometimes it still makes more sense than buying, though, because buying something that’s I wouldn’t say overpriced. I think overpriced is the wrong word. But something where the business case just doesn’t hold very well, or there’s a lot of risk associated with the business case, is sometimes riskier than the other options such as building.

 

Erwin  

It’s a question it doesn’t sound like you make these business decisions based on your gut feeling.

 

Christian  

Yeah, you know me well now. So it’s

 

Erwin  

a you’re not buying based on a television personality telling you if something’s good, and you know, though, seems like you’re actually researching stuff.

 

Christian  

It’s so easy to get caught in that emotional hype isn’t as I’ll admit, I can get caught up in the hype, I can. And, you know, I, I look at it, and I get excited, emotionally excited about it. But I’ve got a discipline that I’ve developed over the years, when I’m putting money into something, I need to know how I’m getting money back out at I just prefer deterministic things. When I was younger, I used to do more stuff that people said, oh, you should do this, you should invest in that you should invest in this other thing. And in hindsight, I realised that a lot of what I was investing in was speculative. Right? So you’d invest in this because you expected it to go up in value. Well, why? Why would you?

 

Erwin  

Yeah, why invest in? Also, how does it go up here.

 

Christian  

And the one thing that I’ve learned over time is that there’s easier ways to make money. So if you take if you buy soybeans, the

 

Erwin  

magic words, easy money, I’m excited. I’m turning sound clip does that on their show? Easy. Money isn’t easy, but

 

Christian  

it’s easier money. Relative? So the thing that I’m looking for these days, okay. So, you know, I kind of recall a discussion I had with my father. Okay. And my father, you know, he was trying to top up his pension. And if you take a look what he invests in, now he invests in good dividend producing assets. Right? So Trans Canada pipeline is one of the things that he holds. That’s a

 

Erwin  

good one. Yeah, it’s so easy to make more pipelines in Canada,

 

Christian  

and the dividends so he focuses on the dividends because he’s retired and as long since retired, and he’s looking for cash flow out of those operations. And then when you really think about I didn’t think about it at the time when when dad was doing this, but I realised it later and now I can backcast and think about, you know, how clever My father actually was around these types of investments is if you can find an investment that has a good rate of return, you know, one that’s determined relatively deterministic. So whether it’s a dividend producing, you know, A stock, you know, with a high yield on it or whether it is real estate that generates a level of cash flow, those are good returns at the end of the day. And so you can have that as your base. And if you go back to why did I buy light industrial, for personal reasons I left my job at the time was by my older daughter had some mental health issues, right, which we talk commonly about. And you know, I had to make a decision at the time, so I had to focus on her. And so we had to pivot and restructure our portfolio and drive cash flow, and we looked for assets for cash flow, and that’s at the base of our operations. But if you really think about it from a business perspective, any successful business has to have effective cash flow management, you have to pay yourself, you have to pay your staff, you have to pay your operations, and then everything else is like that’s your foundation. That’s where you start. And then from there, you grow your business. And so the other thing you’ve pointed out is I’m doing mostly stuff in the commercial lending space, right, or the commercial, you know, we talk at commercial assets, right. But it really relates back to what the lenders look at in terms of the way that they’re loaning you products. So five plus multifamily residential, typically, it’s commercial loans. That’s why they’re called commercial

 

Erwin  

and can be very attractive lending to as well.

 

Christian  

Yeah, for sure. Right. But what’s nice about those is okay, now I’ve got my cash flow plan. So that’s my business and my foundation, now we can take a look at an asset purchase, and think about what am I going to do with this? So how am I going to improve it? So I could just buy the hold? And if it’s a creative, meaning that it adds cash flow to the business, then that can be fine, right? But we’re a bit more aggressive than that. So we’ll typically buy an asset and figure out how can we take its current value and increase its value. And the cool thing about commercial assets is it is primarily driven by the net operating income of that particular asset, revenue minus expenses, net operating income, if I can increase the net operating income, there’s a direct portion will increase in the value of the property with some puts and tastes. But generally, that’s the case. So if I can double the noi, I’ve generally doubled the value of the asset that I have. So to me, that’s a very deterministic thing. So if I improve

 

Erwin  

something, you can really control what’s on something you’ve lost control over? Yeah, it’s

 

Christian  

much more control. It’s much more deterministic. I can go from point A to point B control something that’s pretty quite predictable. Yeah. And if I can figure out how to do it, and usually that’s affecting the revenue line. So if I can do something to change the revenue, and I can maybe do a bit to improve the expenses. I’ve increased the value of the building.

 

Erwin  

But I do have to say, it took some hard work and talent to do this.

 

Christian  

I don’t know about that. To me, it’s relatively straightforward math. Alright.

 

Erwin  

So not everyone can do math. I mean, we know that.

 

Christian  

I believe we’ve seen evidence, so I didn’t balance

 

Erwin  

themselves. You know, that’s a that’s a very excellent lesson in math. The budget will balance itself. Budgets, budgets balance themselves. Yes. So if you apply that to all areas, fiscal policy, monetary policy, they balance themselves. So who needs math?

 

Christian  

Yeah, that’s great. Until you have to rely on it personally, right. And you don’t want to a financial crater where your life used to be. So

 

Erwin  

sadly, we know people that have that, but yeah, but my point is, is that you you can’t just walk into this, and it’s not quick and easy.

 

Christian  

No, no. And that’s the thing, I think. And also,

 

Erwin  

I think, for folks who don’t know, like you were very successful tech executive.

 

Christian  

Yeah, I was, but I didn’t make my money there. I’ll tell you that.

 

Erwin  

I’m gonna guess that you were before you quit your job. You probably had higher net worth and most people who are listening to the show,

 

Christian  

not to the extent that you think really, you know, who are poor, rich tech executives, something like that. Yeah, we’re single income family or expenditures were very high. You know, I’m not gonna lie about that. My daughters were in private school. They were in debt, you know, competitive dance. And any, any, any parent here who has daughters or sons that are in competitive dance, know how outrageously expensive that is. It makes private school look cheap.

 

Erwin  

You’re getting close to what is 8070 80,000 a year between private school and dance?

 

Christian  

Yeah, I would probably be getting up there. So we burned all the cash that I earned. I wasn’t really saving. And there was a period of time there where our home finances were cashflow negative. All right. I’ll be perfectly honest about that. So no wonder you have to quit. Yeah, I’ve made more in real estate than it ever did in tech. Dami.

 

Erwin  

That’s absolutely the case. In some projects bluff because you’ve worked for a lot of startups as well, like,

 

Christian  

No, I’ve never worked for startups. I’ve worked on larger firms where we did do IPOs and public offerings. And I’m on the board of a lot of tech startups to help from a tech perspective, because I love technology, right? I just you can’t get this done. So one of my mentors said, as a Christian, you said, you might be in real estate now. So but you’ll never get tech out of your blood. So you need to come and help me with some of these companies. I think it was a part of a sales pitch, but he’s not wrong. So, in fact that that gentleman, he said to me, because he’s a big tech entrepreneur,

 

Erwin  

we’re not naming names.

 

Christian  

I don’t think that’s fair to him. So, but he’s a big tech entrepreneur, you know who I’m talking? Yeah. So

 

Erwin  

and it’s a household name. Anyone falls on Canadian business?

 

Christian  

Yes, that’s right. So he said to me one time, because he was still trying to convince me to make sure that I stayed within the tech world. He said, he said, Where do you think, can I actually make my money? Right? And, and I know, he has a lot of hand off our land holdings. And I said, I’m guessing the real estate, so absolutely. So but I love technology. That’s where my passion is. And that’s why he stays in there.

 

Erwin  

That’s crazy, because he has like two or three tech companies that anyone who follows Canadian Tech was the name of That’s right.

 

Christian  

That’s where he made his money originally, but then he put it in the lamp. Okay, so he owns a tech Park. Right. So that’s

 

Erwin  

what started to do. So he owns the property that his businesses are in, I mean, the tech, just

 

Christian  

his but all the spin off businesses that came off him all the other companies that came in because he became sort of a centre of gravity for that particular area. And so a lot of tech companies that are unrelated to him would also leased property in that area. So he has, probably, if I was to guess, maybe 60 70%, of the largest tech Park in Canada. Yeah. And what’s kind of funny is that there’s a few competitors that were always a thorn in his side, you know, through his history, and they leased property that’s across the road. It’s just, it’s an amusing piece of it. But no, on the tech side, I mean, we were burning cash as fast as I was earning it, and for a few years burning cash faster than I was earning it. And that was at a point where I actually thought about how he’s gonna restructure the finances in our in our household is neither my wife or I had a pension plan at the time. And, and I really, I got very nervous about the whole situation, understandably. And I had to think about how we were going to fix this. So

 

Erwin  

it started what what year, did

 

Christian  

you quit your job? 2017.

 

Erwin  

So you’re 20 years old?

 

Christian  

No, I wish so I don’t know how to be probably 52. I

 

Erwin  

guess. So you didn’t you got started pretty late in the game? Well, no,

 

Christian  

sort of. So we had built some assets. We had the equity in our principal residence. Gorgeous home, by the way, thank you. But we trade it up, right. So my wife and I started with nothing, right. And I had no money to my name when I finished university, right? Like a lot of university grads start off cash negative, right, your net worth has a minus sign in it. My wife came from Hong Kong, she’s, and she came from very modest beans. So you know, when she came here, she didn’t bring any money either. So we built everything from scratch. But we made some smart decisions early on, we bought, remember, the very first real estate we bought was probably about 1989 or 1990. And we bought two and a half acres, it was a country estate lot. And we bought it off of a friend who had just done a subdivision. And we thought, okay, this is where we wanted to build our own home. And at the time, so the first thing so after we bought this, our friends were how much was that? Oh, yeah, it was. I think I paid 50,000 or 50. So

 

Erwin  

you tell someone today, the lots were 50,000 they got arriving because I think there’s something wrong with it.

 

Christian  

And it was just outside of Ottawa. So it’s technically still in Ottawa. Now. It’s fairly close to the city.

 

Erwin  

That’s your fun when even that loss worth now, just a lot, same lot that you bought,

 

Christian  

maybe just shy 200 For that lot. Might be more than that. I sold it four times for time. Well, I so I bought it. And so there’s a lot to the story alone, but so I bought this thing 55,000 Let’s say it’s 1990. And the first thing my friends said are actually it was my wife’s friend. She said, Because Chinese so okay, we will build a house there. And she said, Well, do you know what you want to house? The Chinese had always lived in a you know, a small apartment in Hong Kong. So she’s, well I I’m not sure it’s just Well, maybe you want to buy a house. Right? Figure out what you like and as and then build it on this lot. So what we did was we bought a house in a little community called Constance Bay just outside of Ottawa. But it was we bought, we didn’t over leverage ourselves at all. We bought Well, what we could afford at the time the house was we bought it for I think $120,000 And that house is probably worth 300 Now, I think no actually that’s it’s got to be more than that house probably 450 or 500. It’s actually reasonably well situated. That’s a good word. Turn. But yeah, but that’s a retail market part of that’s inflation part that’s housing supply. But we bought it. And it was far from town. We thought it was near the beach right now, I grew up near the beach in Nova Scotia. So I thought, okay, that’s where we want to live. And we found ourselves commuting five days a week, all the way to downtown Ottawa, and then maybe going to the beach on on a Saturday, maybe, right, but definitely not every weekend. And then it became clear that we had this wrong, and everybody who was living in Ottawa and coming out to to Constance Bay probably had the right idea. So at that point was okay, well, we gotta move closer into the city, we paid off because the mortgage was so small, and the value of the house was relatively small. We what we did was we lived on my salary, and anything Chowning made went into paying off the mortgage. So we slowly built up equity that way. And then we sold that house, we bought a house in a pn, which is a suburb of Ottawa, so you know, halfway to downtown from where we were, and then we, same strategy, we lived off my salary, and then my wife salary went to paying down the mortgage. And it was a very conscious decision, right? It was, we were not going to live the lifestyle of a two income family, we decided we were going to live in one one income style family, and just bank the cash effectively. And then the after the second home, I was out of town on a business trip in Washington, DC and I got a call Wednesday. It was really funny because a colleague of mine at the time was he was playing move, his wife was looking for a house and we were joking was going to come home and find a post it note on his door. Well, while we’re talking about this, I got a call from Chinese. She says, I bought a house. And I didn’t know what to say. So I just had said a nice house.

 

Erwin  

A nice house that she bought a shithole.

 

Christian  

Yeah. And that’s the house that you know where I live now. Yeah. So it was a bit of a fixer upper, we had a lot of work to do on it. Great views. Great. The view is we’re right on the canal. It’s a great location, and like house, but it was all part of our equity development. So there’s all kinds of I learned a lot about financing on that one, too, because there was no condition of selling our old house. Right. So I had to finance that entire thing. And we didn’t have enough. And the bank gave us a demand loan. They said, Look, I know you’re good for it. They gave us an extra 50 grand or something like that, to just make sure we could close it.

 

Erwin  

That’s sure how much what year and how much it costs that

 

Christian  

we bought that one for 430,000. I think in that insane? Yeah, the you. It felt like a stretch at the time. I’ll tell you, like the

 

Erwin  

poor kids today, for 30 felt like a bigger stretch. And you’re here you are a very successful tech executive. Yeah. Oh, yeah.

 

Christian  

It was a stretch. It was a stretch. There were some nicer houses in the area that I really wanted to buy, but it just looked like it was too much. And we always lived on the principle, like the mortgage we had on that house was no bigger than the mortgage we had on our first house. Right. So I think that’s worth emphasising right, we did not carry more and more debt. As we went through this process, we carry the same amount of debt on each step. And that enabled us to have a reasonable lifestyle on a single income family. Now we had children by that point. And at that point, the animal the kids were getting into all kinds of stuff. Chobani decided she was going to stay home and focus on the children and the children, which was great. It was mutual discussion. And we had that flexibility because we learn to live on one salary. So it wasn’t easy, but that’s why we get into that negative cash flow situation within our family. Now, even with all that going on, I took the equity that my house and I bought my first four Plex. And I think I’ve told you

 

Erwin  

this story before Home Equity Line use a home equity line or Yep, yeah, yeah,

 

Christian  

I just I put the HELOC together. And this was with TD Bank. They were really super helpful on this. But it was a purpose built four Plex right next to her house that came up for sale. And Tony and I had always thought about about buying rental property. And so it just felt like it was being handed to us. And we knew the owners well because they were just next door. And that was my first private deal that I’ve negotiated. So that was a first purchase but I that one because it was the first one. I spent a week doing financial risk management. I went through full analysis on this property figuring out what did I think it was worth knowing not what I know today. Okay, so I was I was an absolute amateur at this stuff, but I just used a lot of common sense to figure out well, how much could I afford to pay with carrying costs with the operating expenses, etc. Because I could not afford to have that being cashflow negative, I was already cashflow negative, but if I figured if I could find a way to make it cashflow positive and it would add to our family position So I modelled everything I modelled what happens if I have a vacancy for a period of time? What happens if I have two vacancies? What happens if interest rates go up and at the time interest rates were about five and a half percent. So I modelled at 7% and 10%. So, okay if that were to happen, how long could I sustain this before it became a serious problem. So, after a week of that analysis, I knew precisely what I could afford to pay. And I wasn’t going to pay more than that. It turned out that became a great position when I was negotiating with the seller, because I knew what my bound was. And I was simply wasn’t going to pay more than that. And in the end, we ended up at a price that was actually a little bit lower than what my upper bound was. And the seller guaranteed the rents for six months, as well, in order to make sure you call entities and so Oh, they have ever seen that before. Yeah, he was facilitating the sale. And he was very confident in the asset and his his abilities. And he was trying to make it easy for us. And I think he liked us. And I know his his wife was looking at us. And I think she wanted to they’re very good people, to be fair. So they’re they looked at us and saw us as a young couple, and we’re trying to help us get on the right path. So they kind of made it easy for us. Right. And that was great. So that set the base. So once I have that property, Keaton road paid for. Yeah, it was about 850, I believe,

 

Erwin  

Oh, and year 2005. And then when you think the rents were back then they were

 

Christian  

I know this because it’s one of my rules of thumb. So the rents were about $1,500 a month, spacious two bedroom apartments overlooking the canal. Oh, Luxury. Yeah, yeah. And so my rule of thumb at the time became for that $1,500 of rent, the value of per unit cost needed to be around $250,000. That’s what I needed at the time, right for to in order to make sure that there was at least cash flow neutral.

 

Erwin  

So what do you think it’s worth today, though? It’s

 

Christian  

probably worth, I know this, because we value our properties on a regular basis. So it’s just under 2 million. I think I have it valued at 1.9. or somewhere around there. Seems like a decent return. Well, we’ve only had two tenant turnovers. So I have a tenant in there that’s been there since 1993. And she’s paying. She’s paying, she just went over the $2,000 mark, but the value of those units now on the open market is probably about just shy of $3,000.

 

Erwin  

That much nado

 

Christian  

on the canal. Yeah, yeah. When there’s never a vacancy in that building, when we have had turnover. So it’s, we always have people interested in moving into that building. And the people that are there. I mean, there’s a psychiatrist, there’s a lady that used to work for the WHO there’s a lady that used to be the chief protocol officer of Ottawa, right, who is in there. So they’re very good quality tenants, and the units are tacular absolutely spectacular. The quality of the work that we do in the units is always high end. Right? So makes it easier to rent, get better quality tenants, you get a better value and better price for the for the product, would you call self manage? Yeah, we do. So we, we started self managing, but then by virtue of the kinds of things that we invest in, because we’re always trying to figure higher and better use, we’re trying to figure out how to increase the value of property. Remember that what I was saying about determinism. So cash flow is the operational base. And then we as we take an asset, and we improve it over a specific period of time, we’re fundamentally increasing the value of it, but we know precisely what’s coming out on the other side. So so that’s the deterministic piece of it. So the other lesson that came out of that, when we bought that asset is I now had an asset to be able to do some financial restructuring. So that’s when I started to figure out how to do a lot of managing the debt structures associated with this. You know, I applied at the time, a concept that’s now known as the Smith manoeuvre at the time. It wasn’t called Smith manoeuvre, it was just a practice that was accepted by accountants based on recent CRA rulings. And so I started to apply that principle and

 

Erwin  

can you explain it for the listeners benefit? In

 

Christian  

case they’re not familiar? Oh, yeah, sure. So debt that you have in your personal name, you cannot deduct the interest from as an expense against your income interest that you’re charged on. Things that are to derive an income later on. So an investment if you will, so carrying charges for investment purposes are tax deductible as an expense. So what is now called the Smith manoeuvre is effectively a process that allows you to transition, you know, personal debt to tax deductible debt. And usually what you do is you set up a HELOC to do that, where or you use the revenue associated with the rental property in order to pay down the personal debt, right the stuff that’s on the personal debt. And then you can re advance money on off of the HELOC in order to be used as an expense, or sorry to pay for the expenses associated with the rental property. So it’s a very fast way of getting that converted. There’s another concept called, I believe it’s called these days velocity banking, which has a similar type of concept. What it does is it says it’s similar to Smith manoeuvre in the sense that it takes advantage of the fact that interest is tax deductible when use for investment purposes. But what most people do, and the easiest way to explain velocity banking, because it can sound complicated, is that people typically take their paycheck, then they save it in a very low interest savings account. And then they pay their expenses through the month, and then they get a new paycheck, you know, two weeks later, or a month later. And then they repeat the process. Now that money is just sitting there earning nothing the other way, because a lot of people have personal debt that’s non tax deductible, what you can do in that scenario, is you start with a line of credit instead. So you get your paycheck, and you pay down your line of credit, and then you pay your expenses out of your line of credit. And since that interest is non personal tax deductible, you’re you’re basically saving the equivalent instead of earning, say, 6% on your savings, which you weren’t doing before, you’re now saving 6% on the money associated with your line of credit. And the compounding effect is is significant. So it’s just another approach to you know, a money hack, if you will, that a lot of people aren’t aware of, but things like that, or, or the Smith manoeuvre are very useful. By doing that I was able to convert by personal debt to tax deductible interest over the period of I can’t remember exactly maybe five years, and my personal cash flow situation completely changed, we finally got back into positive cash flow, the equity within my house and the four Plex that we bought, then was large enough that we bought our first six Plex. And that was my first commercial asset in 2010. And at that time, and it was it was funny, because I knew nothing about investing in commercial assets at the time. It’s I, I sound like I know what I’m doing now. And I do know what I’m doing now. But it was through the school of hard knocks. I figured out commercial and at the time, trying to figure out how to finance that. And I was dealing with TDs commercial thing, they were so patient with me, I have to say they were really very good about it. That was the first time I’ve ever heard of CMHC based financing at the time. And it was it was hilarious, because the guy that was doing the underwriting for TD, he was based in Toronto on Wellington Street guy Armstrong. So I’ll just name him up because he deserves a lot of credit. And guy was really patient with me. And he said, you might want to consider CMHC financing for this. And I said CMHC financing as well, my friend, he said, Well, you know, there’s certain events, so what does it cost? And he said, Oh, it’s probably about 4%. And my thought was because I was so naive, I thought an extra 4% on my interest cost, right and not realising this 4% premium on the actual loan amount. So I was like, Oh, God, that sounds terrible. I’m not interested in that. Then I thought about it later on or read up more about this guy. Maybe I will want to do that. So that was my first CMHC based financing that.

 

Erwin  

So in this, you know for listeners benefit. Nobody knows what they’re doing the first time. Yeah, yeah. The best learning is the first time. Oh, yeah. The analogy I always say is like just like the first kid. You know, nothing the first kid. No. Yeah, by the second one. It gets way easier.

 

Christian  

Yeah. The first kids bubble wrapped. The second kid is fend for yourself. Yeah.

 

Erwin  

The classic is so true. Like, I have a bajillion pictures of my daughter and my firstborn. Way less pictures of myself I signed. And then if there was a third Yeah. Just Yes. This declining? Yeah. So we’ve talked about a lot about some past real estate. What do you focus on today? Because I want the listener to understand where they should focus today isn’t because again, you know, I speak to novice investors all the time. What’s better? Industrial or vacant land? Yeah. And like, Okay, how much money do you have?

 

Christian  

Yeah, well, that’s right. Some of those asset classes are capital intensive, for sure.

 

Erwin  

And because I can say like she was Chinese or like, are you crazy rich Asian, because then you could afford these things. Yeah. You’re not these might be tough to get into yourself.

 

Christian  

It’s funny because a lot of the properties I bought I did not put a lot of money on them. I just figured out leverage really quickly. And to be fair, and I want to make sure that people understand we are not a high leverage portfolio. So My debt to asset ratio within the portfolio, I don’t allow it to go above 65%. Right. And it’s typically lower than that. So some people say, well, that’s highly inefficient. But for me, it’s part of my risk management strategy. But on an individual deal, I might put something in. Alright, so one deal that I’ve talked publicly about, I’ve done a session with Elizabeth Kelly, I’ve done another one with Delia Barsoom, where I talked about very specific examples of of transactions that have done and how I made the money on it, what the business case look like, etc, etc. So it goes through all the math. So one that I did, I ended up buying a building that had six residential units, a commercial unit, it was on a town’s main street. And I got a house thrown in like a piece of land and sort of a rundown house, its end of life. But I got thrown in to the deal, because it’s right adjacent to the property it was actually buying and the owner on that as well. And he wanted, he was trying to consolidate his portfolio. So I got that thrown in. I bought the whole thing for $850,000. But I had a 90% VTB, with a four and a half percent interest only loan on it. And so the cash that I had to put into it was about 85k. Right? So with legal fees, and everything is probably just under 100k. Because there were some puts and takes on the 85 based on closing dates. But at the end of the day, I put in less than $100,000. On that I turned that around, not even Well, yeah, just about a year later, I guess with a valuation just on that mixed use commercial portion of about 1.4 million. So I drew out a lot of extra equity out of that particular property. And that’s a process that I repeat quite frequently, so I might buy it high leverage, but I have a principal is like the building either has to cashflow, an acquisition or a line of sight to cashflow. And I knew when I bought it that there were some quick and easy things that I could do to make it more valuable. Again, going back to the commercial side of things, just figure out the NOI exercise. And so that’s how I make money on this stuff is they all end up cash flowing when I’m done, they add to our cash flow base. And then we increase the net worth of the value of the building in order to extract more working capital to do more projects. So it’s like a big flywheel

 

Erwin  

just goes fast. So what do you do this property to increase noi you’re now when I was a piece of cake

 

Christian  

is probably one of the easiest ones I’ve ever done, that generate a lot of cash fast, the fundamental promise that the seller had, although he was a sophisticated real estate investor, he had taken his eye off the market and the market had moved very quickly. So everything was under rent. He had, it was a complete renovation in 2015. So it was Paul brand new in there. And as of 2015, so I had no renovation work to do. The issue was that his rents were about half of the current market. Well, at the time, it was probably about 50 or 60%. Let me put this in the right context, say $900 a month in rent where the market was probably at the time about $1,400 in rent. By the time I finished my business case, the market had changed again to about $1,800 a month in rent. But my initial business case was on the 13 $1,400.

 

Erwin  

So as the sole losing money was always so motivated to let it go.

 

Christian  

No, it took nine months to negotiate

 

Erwin  

that deal. Not very motivated, then

 

Christian  

he was not motivated. And he asked originally for 1.2 million just for the mixed use building. But when it came down to it, so he and I negotiated over and over again. I’d met with him monthly until we finally hammered out a deal. And I had him help me with a valuation exercise. And he said, I understand why you believe it’s worth that. You said but I’ve got over a million dollars in these renovations, so I can’t afford to sell it for less than that. But eventually he sent me an unsolicited offer to sell. You know why? I think because he had just gotten tired of holding it had been on the market for over a year at that point and he was trying to consolidate why no one else wanted it. The reason it didn’t sell was that he did overpriced it so he had priced it right if the rents were at market value right. And I think he was thinking about that in his mind he said okay, well I’m seeing units go and selling for you know certain price and great but as rents roll and yeah his rent evaluations and makes sense based on current rent. It didn’t make sense. And at the time this was in a town called Carlton place. Carlton place at the time. I saw the potential that’s why I started buying in Carleton Place I go like I don’t understand why this town’s not on fire right now. Like honestly, it’s right at the end of the divided portion of highway seven on the Ottawa side. Alright, so just like you have the 407 here on in Ottawa highway seven is divided right up to Carleton Place. And you go there and you see Walmart Home Depot Canadian Tire. Rona Plaza has lots of new subdivision development going on. I want to go like, why isn’t this place going crazy in terms of real estate? So we got in there we bought tonnes of stuff. And just to understand and we’ll get back to this right but this was just at the period where I had left my job so before I left my job, I basically expanded my he locks to maximum extent I did refinances on the other buildings that we had while I still had a T for job. And then I made my transition that point because so it was all very planned, if you will. And then we started using that money to buy primarily cash flowing assets. That’s how I ended up in the light industrial, right. So we talked about that earlier. But when I looked at Carlin plays and go, Okay, well, this plays really should be doing well. And right now I can buy cash flowing assets like residential stuff on the main street I could buy so so you

 

Erwin  

had all these big box stores there Yeah. What was driving all that though?

 

Christian  

Because it’s so close to the city of Ottawa and divided highway right there so transportation was a piece of cake, how far then town as well. Like you have to go through Carleton Place if you want to go to Elmont or Perth or Smiths falls, etc. And from downtown. Okay, so I live downtown Ottawa, I can get to Carleton Place in about 35 minutes.

 

Erwin  

Oh, okay. Yeah. So very reasonable, right bedroom community. Absolutely. And then you

 

Christian  

see the City of Ottawa growing. And, you know, you and I talked about Canada and Stittsville before Stittsville having the highest per household income in in the country. And Stittsville is maybe, you know, Stittsville to Carleton places, maybe 1012 minutes. So the boundary between from Ottawa to Crowne Plaza. In fact, the physical boundary of the City of Ottawa is about two kilometres short of Carlton place. So, which also gave it an advantage because of, you know, the municipality, putting so many restrictions in development, all the developers were literally just going to the townships that are literally just outside the city boundary here. So we bought a bunch of stuff in Carlton place through 2017. And then probably by about 2019. Like, yeah, somewhere late 2019, everybody discovered Carlton place, and everything went up in value there, and the cap rates came right down in that town. And they’ve stayed there. So now it’s a popular, it’s basically become a new bedroom community. So that was that. So now let’s go back to that particular transaction. This was a just before all that stuff was really starting to take off, and he had put quite a bit in renovations. That’s why he didn’t want to sell it, it sat on the market for a long time, he had valued put it at 1.2 million. And, you know, I said, Well, it’s not worth anywhere close to 1.2. From my perspective, it’s worth maybe half that is the value at ascribed to it. And, but he was emotionally tied to getting that particular money out. And because it was priced too high to market, especially at the time, you know, if he’d waited another year, he probably would have gotten this price. Okay. But at the time that he was selling it, he couldn’t. And because it was overpriced relative to the market, nobody was putting an offer in, it was just there maybe putting other ridiculous offers, but he just wasn’t accepting it. But I kept that conversation going with him all the time. So every month, we would meet up and see if there was another way to structure this deal. And the I think the part that really got him over the hump was when I literally sat down, he and his wife is doing the bookkeeping. So we sat at his kitchen table, and we went through all the revenue, all the expenses. And then I asked us what what do you think the cap rate is in this particular area? I saw? I don’t know. I think it’s like maybe six or seven cap? And he said, so yeah, that sounds about right. So will they choose the lower that the sixth cabin, and as you know, based on the noi, this is what the value is? And he says, I understand and I know that but I’ve put a million dollars into this property already. So I just want to I need to be able to get that back out. So So I left it alone. And it was maybe three weeks later that he he sent me an unsolicited offer right to sell at 850 at the time, or sorry, 825 is what he offered which and I’d offered him 790 or 795. So we were close, right and we were figuring it out. And then so I called up the realtor that had originally been involved because his contract was up both the seller and I didn’t want to cut them out of the deal. So we brought the realtor back in. And the realtors name is Rob. So as Donna Rob, and he said, Well, he said now he wants to sell it at 850 As always, well somebody asked him a question about the property. So now he thinks there’s two of you, right potentially buy. I said, did the guy put in an offer? He said no, no, it’s just an inquiry. Actually Okay, so Okay, Rob, this is

 

Erwin  

the joys of working with sellers. Yes, yes.

 

Christian  

Well, yeah, you appreciate it far more than I do. But you know, here we’re at 50. And so I said, can you get them off the 50? Mark, and at least back to the 25. And it drops it? No, he’s absolutely fixated on 850. Now because he thinks he can sell it for at least 850. And I said, Okay, totally Well, at the time we had a 6%. Interest, p&i. So I said, Can we take that 6% VTB interest and convert it to four and a half percent interest? Only? I said, No. And then I’ll give him his 850. Rob said, he does private lending all day long at 12%. Why is he going to do it at four and a half? I said, is he fixated on the price, or is he fixated on the other terms, or he’s totally fixated on the price. So just ask him that. I’ll give him his 850. But this is what I want in return. And Rob called me back 10 minutes later, he says he’ll do it. He said, he said, I’ve already filled out the paperwork. I’m in the car driving to his house right now to get his signature. So he doesn’t change his mind again, that for Docusign. Yes. And then later on, Rob, and I had a coffee, right. And Rob said, Why did you agreed 850. I thought you weren’t gonna go above 800. And I said, Rob, what’s the difference between 6% and four and a half percent over five years? He did the math. He just he looked at me. He goes, Oh, right. Because it was about a $60,000 difference. And the way I like to explain it is, is that the seller got his price. And I got my price, which was a psychological number for him. Yeah. Yeah. And I get thrown in. It was a psychological barrier. That’s that’s actually really important.

 

Erwin  

Yeah. Yeah. Because those are real things.

 

Christian  

Yeah, right. Yeah. But it’s not always the price is the thing, right? Like you just find other terms. Well, okay, I’m gonna give up on this. Can I find another term that he doesn’t care about? That matters to me?

 

Erwin  

Well, my favourite stories was stuck in a number of selling my country property to city folk, as we call them, is a three acres of three acres and in a rural area, we were 10 for 10 grand apart. So you know, classic negotiation, make it about something else. I had a tractor of a 23 horsepower Kubota Tractor, okay, with a five foot five or six foot bed on it if mowing bed in a in a snow thrower, a five foot wide snow thrower, so I said, we’re going to take the tractor trackers working with Larry $5,000. He says I do it. I say 25,000. Yeah, he gets his 10 grand off.

 

Christian  

Yeah, the solar probably didn’t have a need for the tractor anyway. Oh, no,

 

Erwin  

he’s didn’t know his country by using a city folk. Didn’t you have an acre of grass? Yeah, yeah. You need a serious mower? Yeah, that’s roughly didn’t know. Yeah, yeah. Engineer budgets.

 

Christian  

Oh, there we go. fatal flaw, right. I

 

Erwin  

didn’t understand mindset.

 

Christian  

But you were talking about asset class. Right. So I thought it might be good to wrap that one up. Right. So what am I looking at right now?

 

Erwin  

Yes. Because I guess, you know, get some current times, especially people aren’t no new to the show new investing. Yeah. Like, what should they be looking at today? Like, what are you looking at today?

 

Christian  

So I’m looking at mixed use buildings today. And

 

Erwin  

interesting, typically tough to finance. No, they’re not,

 

Christian  

not if you do it, right. So it’ll give you the parameters so that it’s easy, but what I’m always looking for as I don’t follow the herd, okay, I look for what I can get under the parameters I’m looking for. And I’m not religious about an asset class. So I didn’t get into light industrial, because I knew anything about it. I just knew that it meant my parameters of what I needed as output. And then I was going to figure out how to make it work. So So I’ve do a lot on the residential side, as you know, in terms of the multifamily, and we’ve had a pattern, it’s really easy and so on, but if you’re, well, it’s practice. Alright, so but on the multifamily side of it, everybody seems to be teaching people to go after multifamily buildings that it’s, you know, generational wealth and all this kind of stuff. And, and so

 

Erwin  

you can, it’s good for a lot of reasons, but they have the caps are pretty low these days. Yeah, the caps are

 

Christian  

very low, especially relative to the interest rates. And if you really, truly believe that interest rates are going to come down, then you’re kind of hoping that that’s the case when you’re buying them at the cap rates today. I never count on that stuff ever. So do I still buy multifamily? Yeah, sure. But it has to be a screaming deal. And, interestingly enough, it’s the new developments where the screaming deals are coming in, right? Because the construction lenders are trying to get out of those deals right now and people can’t do the refinances to pay other construction loans. So that’s a whole other topic, but I’ve been looking at mixed use assets over the last couple of years because the multifamily chasers if you will, so yeah, there’s a lot of them and they’re not looking at mixed use for one they don’t know it’s one of these scary things. It’s got a commercial piece on it, right. They don’t think they know how to deal commercial leases and all and how to manage commercial She’ll tenants, they think vacancy rates are going to be super high relative to Residential Tenancies. If you buy wrong, that’s true. But I purposely

 

Erwin  

overpay, but yeah, I think everything will go wrong. Yeah, yeah, that’s right.

 

Christian  

There’s a lot of parameters, you can make mistakes on in anything. But the reason I like makes us one is I’m very familiar with commercial tenancies, right through my experience in the Residential Tenancies, and you’re saying, Okay, well, it’s difficult to finance. Well, at the very basic level, you can do conventional financing on it, and lots of lenders will do it, it’s not that big a deal. But if you buy strategically, you can get CMHC financing on it. So the parameter for CMHC is that the commercial component has to be 30% or less of the gross leasable area. And if that’s the case, then they will do CMHC. The underwriting is a little bit different, right? So you have to underwrite the commercial piece and the residential pieces to distinct entities. And you need to do that anyways, from a valuation perspective. So a lot of people say, well, what’s the cap rate on a mixed use? And I said, What’s the percentage gross leasable area that’s commercial. And really, what we do is we write, we underwrite the commercial portion, we underwrite the residential portion, and then you add the two valuations together. And that’s the value of the property, but they’re often overlooked. And what I do is I buy mixed use buildings on Main Streets, on towns that I believe have strong economic fundamentals. I don’t invest in towns that I can’t understand their economy. So if I understand it as solid economic fundamentals, then if I invest on streets that I know are going to be popular or nearly popular, that’s where I buy them. So that first mixed use building was on the main street in Carlton place, right? We have a great tenant, we have great commercial tenant in there. So that’s what I’ve been buying these days. And as it turns out, on a blended cap rate basis, you can get them to cashflow and acquisition if you do it right. And not only that, but just to accent the point a bit, is remember the whole feeding frenzy that was going on in the back end of 2021, early 2022, I bought a portfolio of these buildings in Elmont, just outside of Ottawa. And people know Elmont because it’s often featured in Hallmark movies, it’s really cute, pretty little town and my buildings are often in those Hallmark movies. So I bought those in the height of all that, you know, craziness that was going on. And it was cashflow on acquisition with tonnes of upside in the buildings. So I have a five year plan around that those properties. And they the business case, the internal rate of return is going to be I think a calculated out to be about 45% IRR right over a five year period. So which is outstanding, right by any measure. And it’s relatively straightforward, right? Some of the units are freshly renovated. Some are a little bit dated, so easy to update and there’s probably out of the whole portfolio, maybe four units that need like a complete gut.

 

Erwin  

Tell me about the tenant profile who are your commercial tenants and

 

Christian  

so on Main Streets, their retail. So for example, in Elmont, I’ll give you some example of the retailers in Alma, we have Ottawa Valley Coffee Company. It’s they’re a great little boutique coffee shop there. They’re always full, fantastic coffees, fantastic teas. And the place is always full.

 

Erwin  

Sorry, just to take a step back and you’re gonna do diligence period, you’re checking out all the retailers.

 

Christian  

Oh, yeah. Yeah, check everything out. Yeah. Like,

 

Erwin  

you went as a customer type thing or? Yeah,

 

Christian  

I went in, you know, like, get to understand what their clients look like, I want to understand their longevity. I want to know who’s backing after etcetera.

 

Erwin  

Right. So you didn’t just like, do this virtually or? No, no, I

 

Christian  

was on site. Okay. Yeah.

 

Erwin  

So yeah, you know, by like, in Saskatoon without ever seeing it. I’m sorry.

 

Christian  

What could you be alluding to? Or what? What could you be alluding to?

 

Erwin  

Point is that you’re active,

 

Christian  

very active, and there’s Intel oriented

 

Erwin  

boots on ground boots inside the property. You’re talking to influence seller?

 

Christian  

I’ve met every seller have bought a property from without exception. There’s I’ve never bought a property blind. I’ve always met the seller, even if a realtor was involved. Yeah, always, always always. It builds a connection when we’re doing the due diligence. I mean, clearly there’s inspection involved in my inspectors a pH, okay, so we’re looking at everything structural to the point where the seller was like, said, Holy cow, this guy’s good. And it enabled me to negotiate a 400 grand off of that deal. And the guy the seller was convinced that I was right in terms of negotiating that it was just was an arbitrary because the engineer was very thorough, and I told them exactly what their concerns were One of which manifested before close. So it’s another story. Right? So as real concerns, they were real concerns. Yeah. So I just thought, okay, that’s fine. I’m just going to some of it will absorb because the business case was solid and I could, but heck, I’m gonna negotiate that price down. Right. So and because I have a duty to do so. But yeah, then we go not just past the paperwork, diligence, but we take a look, we’re looking at the tenant profiles as well. So in Ontario, because of the Residential Tenancies Act, there’s one key thing that I don’t think a lot of politicians understand how negative and impact it is. rent control is one thing, but that two and a half percent rent cap that regardless of what inflation and CPI is, is really detrimental to long term tenants. And so when I’m going to buy a property, and I take a look at the demographics, if I see that the tenants have a profile that will typically be long term, I don’t buy the property. Because I know my rate of return is going to be too far. So we do have tenants, you know, so we’re looking at a percentage. So if there’s some people that are fit that profile, I don’t have a problem with that, necessarily, as long as the overall business case is gonna make sense. And I want to be clear, we never push tenants out. Okay, the only, I shouldn’t say never the only time we ever pushed in and out is where the building cannot be renovated or redone. With them in place. Okay. But if I’ve

 

Erwin  

been in the property it was because I don’t think the previous owner did everything with permits. Is that fair to say?

 

Christian  

I’m talking about the James Street project. Yeah, no, that building was just a disaster, right? We it was chopped up, it was structurally unsound. And we had structural engineers in there to double check everything. And it was very clear that there was just no way like, often what we’ll do is unit turns, right? We might can reconfigure units. So if a three bedroom comes available, we can make them to one bedrooms. That’s easy. We’ll just wait for that tenant to move. But, you know, if tenants are good tenants, and they’re just trying to lead a comfortable life, we won’t push them out? I’m sorry, I just I can’t, you know, I kind of look at it as like, what if I was living there? How would I want to be treated? So we don’t do that. Now, if a tenant has a real problem in their interface, that’s a whole different situation.

 

Erwin  

Oh, the tenant board does not like anyone infringing on tenants, including other tenants.

 

Christian  

They, they don’t, but I’ll be honest, it’s very much a process of retaining housing. So even if they’re interfering with other tenants. So we have a number of cases where we’ve dealt with this, we’ve always been able to negotiate it out before getting the LTV, but the reality is that it has to be egregious before the LSB would do it to the point where like, I’m sorry, but the way it’s set up is good tenants suffer at well, the bad tenants benefit.

 

Erwin  

Yeah, all right, is 20. Probably even smaller, but like 4% 96%,

 

Christian  

good tenants far far outnumber bad, you know, I put the ratio of 95% Good, right. 5% of problematic 2% in that 5% are truly problematic. So going back to where I was saying that is I’m looking at a demographic profile. So if I see that the tenants are typically let’s say, in their 20s and 30s, okay, then, that I know they have life events, I don’t need to do anything, I just wait for them. They’re getting together, right? Like boyfriend girlfriend, or they’re getting separated, or they’re getting married, or they’re having children, or they’re getting a divorce or the there’s just lots happened that get changes in jobs, life when you’re in your 20s and 30s. It’s highly dynamic. And so life events just naturally have them do turnover. So I can take a look at in that portfolio purchase. It was 80% of the people were in their 20s and 30s. So I know over a five year period of

 

Erwin  

community generally be the younger people, your families. Yeah, yeah.

 

Christian  

So when I was talking about unintended consequences on that two and a half percent cap, so you know, while I don’t ascribe this of the policy that we do, because we look at tenants on merit, I can absolutely see that there are some landlords that say, Do I want to take on a long term tenant? Because my expenses are absolutely going up faster than two and a half percent, which means that 510 years from now, I’m going to be underwater from a cash flow perspective. So I could see that there would be a bias. Oh, it’s an unfortunate thing. And that’s why, you know, things like that, while they sound good on the surface, I really would love to see them change, not for the benefit of the landlord. Right, but for the benefit of the tenants. Right? If the landlord’s benefit out of that as a you know, as a side effect, that’s great, but there are unintended consequences to a lot of these policies.

 

Erwin  

That’s what pushes people to Cash for Keys. As part of it. Yeah, for sure. Sorry, back to the parameters of what you’re looking for a mixed use. Yep. So you’re looking for a term profile. Sorry, you’re in an area that has The tenant profile of 2030 Somethings that will likely turn over.

 

Christian  

So let’s be crisp about it. Okay, so what I’m looking for is highly sought after area. So Main Street properties are almost always sought after from a retail and commercial perspective because everybody wants to get their sign on the main street. And so even with those ones in Elmont, we just had a unit turn. Like literally right now, I think we wrote up the lease last weekend. And we didn’t have to advertise. We already had like four tenants had already put in requests over the last nine months saying, if a unit comes free, can we have one?

 

Erwin  

No kidding. And this is retail. Yep. Because Because retails capturing headlines as a in general like, well, for example, when I go to the mall, I’m sure everyone’s seen it. There’s lots of vacancies and malls these days there is

 

Christian  

but main streets are different. Right? So people like to go to main streets because it’s a social thing as well. Right? It’s walkable, I go to a mall because I need to buy something I don’t wander around all but I’ll wander around a Main Street and Main Street like Elmont is, is really interesting because it’s highly picturesque. So James Naismith, founder of basketball, that’s his hometown, and there’s a statue of him there as well. And then the buildings all on Mill Street, which is the main street there are gorgeous, right, like the building that the post Dino’s restaurant is just a beautiful, it used to be the postal post office building and customs and revenue. And there’s lots of stone buildings right on the Mississippi River there, the waterfalls there, there’s a little power generating station, you know, I’ll show you some videos later. It’s just, it’s just gorgeous.

 

Erwin  

So it’s kinda like Niagara on the Lake.

 

Christian  

Yeah, it’s a little bit like that, but more condensed. So you don’t have to go far right? Like the the main streets, maybe three blocks long, maybe a little bit longer. But it’s all there. And there’s lots and lots of people there all the time, because it’s very photogenic. You can do you know, all your social media pictures to be seen there. And it’s one of the reasons it’s been featured in Hallmark movies so much is that it is so picturesque of Old Town in our living, Small Town Living and because it’s Hallmark features that also draws people in, but Alamanda is one of the most popular towns in Ontario to go from a visiting perspective. So it’s absolutely lovely.

 

Erwin  

Right? So heavy tourism. Yep. Just switches just for the local economy. Yeah, yeah. And get for Main Street. Yep. Fascinating.

 

Christian  

So I’m looking for Main Street, like where there’s lots of demand. So you could go off Main Street, but you have to be pretty convinced that there’s enough foot traffic to make sure that the retailers are going to get trade. But Main Street, I’m looking for commercial where the gross leasable area is 30% or less of the overall space so that way, I can get CMHC, you know, beneficial financing associated with it. I’m looking for good quality structured buildings there. I don’t mind if they need renovating, because that’s a specialisation that we have. So we’ll just do that. But by looking at that specific asset class it because no one is really chasing it. Like I said, that portfolio I bought, and it was a creative and purchase the clothes was a nightmare, but completely unrelated to the well, not because of the asset class. It was a couple of things. But that’s a whole other whole other story. Unless you want to dig into that.

 

Erwin  

I said that I think this whole thing leads into a joke is that maybe they’re not allowed people to look at from excuses. No one’s has a course teaching you yet. You’re looking for a business idea interest, if you want to be a core seller. Get rich quick, I’ve mixed use for real estate.

 

Christian  

There’s a lot of that stuff going on out there. Right. So I you and I talk about this at length, it’s it’s a bit of a scourge in the industry. I never understood this because I was doing all this investing relatively privately. And then at one point when I decided to go really kind of full time in 2017. So I should get to know this community, you know, other fellow investors network with others. For real, real estate investors organised. It’s where I started with and you know, I paid my $127 A year before nothing. Yeah, it’s a not for profit club, you know, just investors, helping investors. So I started there. And then I, I began to understand the network of everybody else that was involved in the industry. And then I began to understand the fact that people were coaching and teaching and stuff like that. And then I started really looking at their qualifications. And I was I was shocked. I was absolutely shocked by it. The industry is just, you say this all the time. And you’re absolutely right. You got to do your due diligence, not just on the properties, but on the people that are helping you with it. Right and the so called coaches and education programmes that are going on it’s it’s really quite troublesome, such as capitalism. It’s always been this way too. I came from a poor Rational Environment, right? So, you know, as we talked about, I came from the tech side of it. Most of the people there were, you know, engineers who have a ethical code of practice. I’m not an engineer, right? Not, I don’t have a ring, you know, so I’m not a piano or anything like that. So, but I was in that environment where it’s mostly engineering staff, it was, you know, corporate business professionals with certain ethical standards and so on. And I lived in what I now realised was a sheltered life. You know, I thought that’s the way everybody was, and that’s the world and when I came out of that world and started getting involved much more on the real estate side, I was a bit disappointed to see how many people are trying it, trying to take advantage of other people in capitalising on their hopes and dreams. And I just find that terrible.

 

Erwin  

There’s there’s all these courses on trying to raise money. And usually people trying to raise money have no money. Yeah. And so, you know, fake it till you make it. Yes, that means you lose other people’s money.

 

Christian  

Yeah, there’s a lot of that going on. You know, one of the things that we’ve seen you and I have recently over the last few years is just prom notes going bad. Oh, yeah.

 

Erwin  

The gentleman on the show that will never air 2.8 million prom notes, they’ll never get paid back. With due diligence, like, we should fully when it prominent means and understand that you may never see that money again. Yeah,

 

Christian  

a prom note virtually has no security. Right? And I listen to your show regularly. Actually, I do. I’m one of your 14 listeners. So a regular one. And you had a one with Elizabeth Kelly back a little while ago. And she mentioned me in terms of my underwriting practice, Elizabeth and I talk very regularly. And when I do write prom notes, okay, so I do them. But my criteria, like I understand the risk and underwrite them based on what’s the likelihood of getting back. Okay, so I’m not focused on the interest rate, right, I’m interested in getting my money back. So if it’s a very low risk, and I know that the money is going to come back, and I have almost absolute certainty, I’m going to be lenient on the interest rate, you know, within certain parameters, because you have to make a certain return. And of course, I’m covering myself, right. So it’s not a simple one page prom note. So if I do a promissory note to somebody, there’s probably about five or six documents involved that you got to sign off on including PPSA. Sorry, BSA is PPSA. What was it? What does it stand for? Personal property? I don’t remember. But what it is, is basically, it’s a note against your name. Okay. So if you then go on to your personal securing it, yes. personal security. That’s right. So it’s, yeah, private, personal property securities agreement, I think is what our PSA stands for. But basically, if you’re personally liable for Yeah, yeah. So if you go to try and get a car loan, for example, and you’ve got a big lien on a PPSA perspective, you probably won’t get your car loan.

 

Erwin  

Well, sorry. You can register this on their on their credit on their Equifax. Yeah,

 

Christian  

yeah. Yeah, I don’t know. It’s registered as a PPSA. Right. So there’s a separate registry. So I don’t think it sits on Equifax and TransUnion, that they had sets on another registry. So I just let my lawyer do that, right. But it’s something that we do. So we’ll take the entire amount, and we’ll just register it as a PPSA for a certain amount. But that’s just one of the documents that we do. So I’m interested in getting my money back. So if I’m lending to somebody who’s relatively high risk, and I will do some high risk loans, but then I’ll look at it like I have one guy who I know is risky, and that I loan money out to and I look at I’m gonna go okay. I think that if I were to write four loans, that type, I would only get three back. Okay, so are this okay, well, what interest rate do I need to earn on that in order to still make that a business case? So if I keep writing these and I know that one and four is gonna go bad, I still need to make a certain minimum return and so that’s just the cost of doing business so don’t get wound up. Remember what the return was the only charged on that one? It was 30% interest compounded daily.

 

Erwin  

All right, with a credit card return credit card rates. Yeah,

 

Christian  

I mean, I could go higher, right. But on that one, it was 30% and like loan sharking is 60% Okay, so just to put it plus whatever else yeah as the you know, some people don’t know what the loan sharking limits are. And they’re 30% Christian, you’re just another word no, no. 60% is actually the limit but 30%

 

Erwin  

like credit cards, do it all the time. All the time. And we’re not talking payday loans, no.

 

Christian  

Payday loans do that kind of stuff all the time to the difference is that the guy was boring as a sophisticated borrower. And I know he, he knows what to do. The thing that made him risky was he had a bankruptcy about five years earlier. And he has this tendency to take on too many projects. So there was always that risk. But at the same time, he is a finisher, like he’s determined he’s not a lazy investor by any stretch. He’s very active in what he does. So so, you know, there’s probably still a decent chance that I’ll get the money back. But I that’s the way I underwrite it. So if I lose the money, okay, I lost the money. But your return of risk adjusted its risk. That’s exactly right. Yeah. Which I find most retail lenders are do not know how to risk adjusted or whatever they’re doing. I’ve seen some of my clients, and I help people from time to time, take on a handful of people to kind of help guide them through some troubling situations. And I’ve had some clients come with me like, I’ve got this problem note, right. And they wrote it like 12% 12%, no security simple one page problem.

 

Erwin  

If the credit card company won’t give them money, then why should I? Yeah. Because they can no use their credit card 20 30% interest they could, right? So I want something similar?

 

Christian  

Yep. Yeah, well, it is. But again, like there’s other scenarios where, you know, I might lend money to somebody, and I know that they have the ability to pay back. I know that in some cases, there’s some people I’ve been loaned money to that have a reputation they have to maintain, like they would be devastated reputational, if, if they didn’t pay back, so you know, what? I know the risk was a lot lower in that scenario. So it’s not zero.

 

Erwin  

It’s actually funny that you mentioned that because there’s like, there’s actually some well known borrowers out there. If I know that they’re bad at paying back, I imagine other people know, but people still give the money they do, because they’re good marketers, good marketers. And also, I just find in general, not enough people are suing.

 

Christian  

Yeah. And I don’t know why that’s that’s the case. I mean, one is you might just say, well, it’s we can’t get blood from a stone and off. Oh,

 

Erwin  

the other thing is that they want to be the pawns that they keep going for in order to get for them to get paid out.

 

Christian  

Maybe it wouldn’t stop me I’ve sued people before. Right. And,

 

Erwin  

and we’ll name names right now.

 

Christian  

As it turns out, whenever you settle something, you’re often putting a nondisclosure, right. So, but I’ve sued people before, right? And because I’m no nonsense with this kind of stuff, so sometimes, it’ll mess up people’s money. Well, yeah, I can be very lenient with people who are very reasonable. Okay. But when people become jerks, right, I can be far I can be really tenacious about that. So if

 

Erwin  

I tell you, I’m not paying you. You’re not our sponsors are suing you. It’s not my

 

Christian  

natural response. My natural response is, okay, well, let’s figure out how we can work this arrow. Oh, no, I’ve

 

Erwin  

already told him that. Hey, you. Yeah. Well,

 

Christian  

if you’re coming back is, you know, the worst, I think, was one who said kept saying that they were gonna pay me back. And then every time we set a milestone, right, they didn’t pay? Yeah. I kept trying to drag it out. So look, at this stage, again, I’ve tried everything to work with you, and you are not helping your cause at all. So in which case, you know, the next step is, is we’re going to go to a suit, right? In which case, it was a she at the time, she said, Yeah, whatever. Alright, she was surprised when I actually sued her. And she ended up I got, my lawyers got most of the money to be fair, because it was a relatively small amount, but it was the principal of the situation. And I got as much as I would have gotten in, you know, if she had just settled with me, my lawyers basically made a lot of money on that at her expense. And she had to pay for her legal fees. So in the end, it costs her far more to defend this than to just work something out with me. She took

 

Erwin  

a bet, stick a tuck in it a bit. But she had

 

Christian  

an even when you’re in a lawsuit, there’s times you can negotiate out, but she was too stubborn

 

Erwin  

it but like I said, though, there’s always people who aren’t suing people who deserve to be sued. Oh, yeah. Yeah. Christian, we’re

 

Christian  

way overdue. As typical of us as typical, we didn’t even get into the macro. Early, we could have talked about the refi that we did, as well. But you know, obviously, maybe we’ll save that for another show. Yeah. It’s a really interesting set of lessons in that.

 

Erwin  

Because I think it’s important because I find a lot of beginner investors, they don’t really see the larger picture. Yeah. Canadians in general, because I believe the Canadians General saw the larger picture. They understand we’ve been problem. Yeah, sorry. No, I think every global citizen is interested in the world problems that we have, then naturally, you go towards trying to fix the problem. Yeah. And that’s why we both ended up and holding hard assets and real estate, right, we’re solving a problem.

 

Christian  

So right now, if the if you know, and we can discuss at length in a future so this will be the teaser right but right Right now, people should be holding hard assets. And I don’t care if it’s real estate or gold have a preference to real estate, but you gotta hold a hard asset and have liquidity have cash on hand. Okay, it’s lots can go wrong for the next few years. And you don’t want to be in a situation where you’re in a cash call situation, no matter what’s going on in your life. So have cash on hand, just in case. Maybe it’s a 20% issue or 15 percentage, but have cash on hand.

 

Erwin  

Don’t Don’t quit your day job. Just yet. have cash on hand till you’re Christian rich. Country, where can people follow? Follow you?

 

Christian  

I’m all over social media. You know, me I like to give back. You know, I do lots of give lots of resources to help educate people and stuff. So my website is a liveris.ca a l i f e r o u s.ca. I’m sure it’ll be in the show notes. I’m on social media under my name, as well as my company which is a live harus live press group. It’s registered. So it’s a very unique name. And I also encourage people to become members of the Ottawa real estate investors organisation that’s o r e i o.org. I’m a member to Yes, or wins or wins a member,

 

Erwin  

I hope to hope to make it to the June meeting. Yeah,

 

Christian  

I won’t be there for June. I’m at CFA, I’m presenting at CFA in Halifax

 

Erwin  

is that you’re a pilot what is the

 

Christian  

Canadian Federation of apartment associations? Because I’m on the board of the Eastern Ontario landlord organising which is a member of CFA and it’s the same chairman of both boards. So CFA is a an advocacy group for landlords at the federal level like Firpo is for the provincial level and yellow is for Eastern Ontario. And in Toronto, it is the GTA Greater Toronto Area apartments or association Apartment Association. Do not Airport Authority. Okay, good. No, no, no, no, there’s an extra a.

 

Erwin  

A Yeah. Okay. It’s great. Yeah, it’s

 

Christian  

the Greater Toronto Apartment Association GTA.

 

Erwin  

Yep. Let XJ Trishna. Thanks so much for doing this. All the way to audit from Ottawa just to do this show.

 

Christian  

Yeah, it’s actually I’m glad to finally do this in person. You and I always do this over zoom. So this is awesome.

 

Erwin  

We talk mostly during the pandemic, so yeah. All right. Thanks so much for doing this My pleasure.

 

Erwin  

Before you go if you’re interested in learning more about an alternative means of cash flowing by hundreds of other real estate investors have already then sign up for my newsletter. I know 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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UPCOMING EVENTS

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BEFORE YOU GO…

If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.

It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success. 

New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.

We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best.  In 2018, we again won the same award by the Real Estate Investment Network.

Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics.  The intersection of the two, talent and ethics is limited to a handful in each city or town.

Only work with the best is what my father always taught me.  If you’re interested, drop us an email at iwin@infinitywealth.ca.

I hope to meet you at one of our meetups soon.

Again that’s iwin@infinitywealth.ca

Sponsored by:

Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.

Just imagine what winning in real estate could do for you.

If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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Cash Flowing Windsor, Sudbury; Arson, Sleepless Nights, Quitting Corporate w/ 27 Y/O Austin Yeh

I’ve personally invested through many, many good times and never have I seen bad times like we are in today. 

Everyone’s experience is different, though: flippers and speculators are having the toughest time. Even those who bought pretty smart the last three years are having challenging times.  

Those who have invested the longest, for example, pre-2020, generally are faring the best I’ve spoken to listeners negative about $1,000 or more per month per pre-construction condo. 

Even BRRR investors who are negative cash flow post refinancing.  Many are selling to get their debt under control, and we’re happy to be able to help these folks out. 

We all got into real estate to gain freedom and control over our lives. When debt gets out of control, then we’ve lost control. Thankfully, many have lots of equity in their properties, sell and take profits plus the return on capital.

I put out a request for income properties, duplex or better, last week, and I’ve never received such a large response.  Numerous legal, small multi-family properties in top towns just outside the GTA: right in our sweet spot.

An interesting observation: none of the small multi-investors are overly motivated to sell. Why? Because they invested right. 

Those who invested purely for appreciation without an eye on cash flow? They’re having a tougher time. 

 I even spoke to an investor who is operating an Airbnb without a license in a town with strict Airbnb licensing and is having difficulty selling.  

No different than a non-legal duplex, triplex, etc., a property not in compliance with local by-laws will be a more difficult sale when there are fewer buyers in the market.  

This is why our clients focus on legal, small multi-family properties. 

When one focuses on cash flow, one can survive the tough times, AND when it’s time to sell, there are lots of buyers, especially since housing affordability continues to erode. Therefore, more and more buyers need more income in order to afford hence living in a house with tenants helping to pay the mortgage makes so much sense.

We are in the middle of summer as well, so both long-term rental and resale markets seasonally decline in the number of transactions, but with high interest rates, including last week’s raise of another 0.25% to bring the overnight rate to 5%, many investors are feeling the pinch. 

There’s a chance of another interest rate raise this fall, and there is no relief via a rate cut expected till June 2024.

Elevated rates will be here for a while, so it’s survival mode time. 

Even for Cherry and I, to improve cash flow, I had to fire our St. Catharines Property Manager as our rentals were underperforming due to poor maintenance, causing vacancy.  

As a discerning real estate investor, I hate vacancy. I use the word hate sparingly, but nothing ruins a real estate investment like vacancies.

After an onsite tour of our properties in May, where I took notes and pictures and spoke to tenants, I assigned maintenance work to my own regular handyman, who I trust.  

He referred me to a local leasing agent, and I’m happy to report we signed a lease for the final room in my student rental property.  

The previous Property Manager was either negligent or didn’t know what they were doing as my property experiencing vacancy, had burnt-out light bulbs, badly needed paint, one door was broken, and one bathroom had drywall damage.  

All minor things hence the previous students did not renew, nor would new tenants want to sign.

In the end, the work to repair the property was under $2,500, and we signed three students for close to $2,000 rent per month, near top-of-market rents and higher than what the previous PM was signing new tenants for.  

All of the existing tenants are happy with the change in management, I’m saving money and now making more money.

If you want to know how much of a landlord’s market it is in student rentals, the final room in my house, which is the smallest room that is under 10 ft by 10 ft, used to rent for $400 before the pandemic.  

We just signed the same room for $575. That’s an increase of almost 44% in just over three years.  

The lesson is not all real estate professionals, it’s not uncommon for things not to work out with a Property Manager; one just has to keep tabs and take action when necessary. 

We disagreed on management styles; to them, vacancy was acceptable in this market. For me, I know better. 

My clients own around 100 student rentals, and we all cater to the top 20% of the market. We here at iWIN Real Estate play to win!

Make sure everyone on your team is on board with playing to win in investing and knows how to achieve wonderful returns. 

If you are an investor and could use a 2nd opinion on how your existing portfolio is performing, maybe you have some properties with equity but negative cash flow, please reach out to iwin@infinitywealth.ca. 

The year is halfway over, and the value to you is to make sure each property is serving you, and if they’re not, we can suggest better uses for your investment capital.

Just like the stock market, things change frequently, several investment strategies no longer make sense. 

It’s time to review and reset to set your portfolio up for future success.  30 minutes, there’s no charge; just reach out to iwin@infinitywealth.ca, and one of my coaches will get back to you.

If you’re more information/education, we have an upcoming iWIN Meeting, all online via Zoom, where I’ll be sharing the latest market update AND the artificial intelligence, specifically AI tools we’re using today in our business. 

AI is going to cause massive disruption for the good of those who know how to use the tools to be more productive. 

I’ve already saved myself thousands of dollars, and I cannot wait to show you all how!

As always, I’m on a mission of truth seeking to find out what works and doesn’t work in my own business and portfolio of real estate properties.  

The iWIN Meeting is Tuesday, July 25th at 7:30 pm EST. My team, coach Tim Hong will be sharing how he and our clients are dealing with high-interest rates and rebalancing their portfolios. 

In these unprecedented times, as we navigate the uncertain terrain of a high-interest-rate environment, we understand that managing your investment properties may seem more like a burden than an opportunity. 

This is an opportune moment to rethink your strategies and seize the opportunities that these high-interest-rate times are currently yielding. 

Yes, that’s right, there is plenty of smart money who are being greedy while others are fearful.

In the face of change, knowledge is power. Embrace this opportunity to enhance your understanding, refine your strategies, and prepare for success. 

Your investment properties don’t have to be a source of worry in these high-interest-rate times. Instead, let them be a powerhouse for your wealth generation. 

Leverage my team and my vast experience. 

For those who enjoy an in-person experience, we are hosting an iWIN MasterMind Tour the following Sunday, July 30th, in Kitchener/Waterloo, where we tour two income properties and mastermind over lunch. 

There’s nothing better than learning hands-on, onsite, in person and hanging out with like-minded people, in my experience. 

Make sure you’re on my email newsletter to stay connected to all these best-in-class educational events.  

One can register on my website at https://www.truthaboutrealestateinvesting.ca/.  On the right side, give your name and email, and you’ll know about all our latest and greatest events.  

If you have friends and family who care about improving their financial futures, invite them along too.

 

Cash Flowing Windsor, Sudbury; Arson, Sleepless Nights, Quitting Corporate w/ 27 Y/O Austin Yeh

On this week’s show, we have a very real conversation with full-time professional investor Austin Yeh who does it all: wholesales, flips, BRRRs, negotiates his own cash for keys, podcaster, meetup host, and it’s not all pretty.

Austin shares how he’s had to rebalance his portfolio wholesaling market slow down, which are short-term problems as he successfully transitioned out of his corporate job in Feb 2022 to investing in Windsor, Sudbury, and even downtown Toronto.

Austin shares how he got started networking at local investor groups, connecting with locals to build out his teams.  

We walk through the numbers of a couple of deals, and Austin doesn’t candy coat the challenges that come with buying ugly properties, including a case of arson where his property was intentionally burnt down by criminals, the phone call his partner received from the police, the sleepless nights if the insurance would get paid out… How his target markets and properties have evolved over his career. 

This is a very real truth about real estate investing episode where problems are not always worth the profits.  

Hopefully, you, my friend, one of our 17 listeners, can takeaway how to improve upon your real estate business and leverage the lessons from this episode and the 300+ episodes before this one.

To follow Austin Yeh, you can find him on Instagram @AustinYeh6 or Austin’s podcast and meetup network @risenetworkevent.

Please enjoy the show!

 

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Hello, welcome to cash flowing Windsor, Sudbury arson, leading to sleepless nights, putting corporate with 27 year old Boston. Welcome to the truth about real estate investing show for Canadians. My name is Erwin Szeto and I’ve been a real estate investor since 2005. licenced real estate since 2010, full time realtor of the year to investors. So I’ve personally invested through many, many good times and never have I seen so many bad times such a bad time as we are in today. Everyone’s experience is different, though. You know, like our guests, Allison, he’s doing quite well, yes, he’s had some challenges, obviously. And we’ll get into that mantra view. But there’s a lot of flippers speculators out there who are having the toughest time, even those who pose who bought pretty smart over the last three years, even they’re having some challenges. But generally, anyone who invested the longest, for example, if you’ve bought before 2020, you’re generally faring quite well. I spoken to listeners who are negative $1,000 or more negative cash flow, a lot of them are having invested in pre construction condos. And then I’ve even spoken to some burr investors, folks who have renovated, done significant renovations and then they refinance those properties, taking a lot of money out. And now they’re negative cash flow. Many people are selling to get their debt under control. And thankfully, we have taken on new clients and we’re able to help these folks out. We all got into real estate investing to gain freedom and get more control over our lives, control our financial futures. Get ourselves Financial Peace. Unfortunately, when it gets out of control, then we’ve lost control. We’ve lost peace, we’ve lost freedom. But thankfully, many people who invest in REITs are invested for the long term. They’ve honestly have lots of equity in their properties. So our even our clients, they’re selling and they’re taking significant profits of six figure profits. And of course, they return their capital, and they get they reduced their debt. Then even last week, I put out a request for income properties, as we still do have some clients or are in the market for small multi families. So my request was specifically for duplexes are better last week, and I’ve never received such a large response. Numerous legally, small multifamily properties and top towns just outside the GTA, which are the ones that cash flow which fit the sweet spot for our clientele. One interesting observation. Almost none of these small investor small market multi investors are overly motivated to sell. Why? Because they invested right, those who invested purely for appreciation without an eye on cashflow. Those are the ones who are having a tougher time. I even spoke to an investor who is operating Airbnb, in licence in a town with very strict Airbnb licencing. The location is fantastic. It’s an area that that draws tonnes of tourism, but they are having difficulty selling it. Just know that anytime you’re going against the local bylaws, including if your property is not legal, it’s for example, if it’s not illegal duplexers Or you have units in the property that are not legal, then that will be a different one difficult property itself in this in this market, because the financing is more difficult. And honestly, buyers are just being pickier these days because they can be there’s a lot more property to choose from. But understand that’s only for the short term. Interest rates will not stay high for forever. And again, this is why here at Island real estate, we’ve always focused on legal small multifamily properties. Because one one focus is on cashflow one can survive these tough times. And when it’s time to sell, there’s more buyers for for quality properties. And also, as predicted, with housing affordability having having eroded over the years, people honestly need more income to qualify for property. So buying a property that has tenants that that pay rent, helps pay the property so people can afford more when they’re buying an income property, especially if they’re planning on living in it. Also understand we are in the middle of summer. So it’s called seasonality, where the long term rental market and the resale markets they just come down even for you know, thrive like myself. For anyone watching the YouTube I am recording this. We rented a cottage. We are technically not working this week, sort of working a little bit, but many people are on vacation. So a lot of people are not focused on buying or leasing right now. Add to that the bank you can raise interest rates another point two 5% last last week, bringing the overnight lending rate to 5%. I know many people are unhappy with that. But the markets did predict it. For anyone who follows the news, pretty much every bank predicted that that would happen. And also pretty much most of the smart money. Thanks. So there’s a chance of another increase later this year. I know some people who think there’ll be impossibly too. And also there will not be any interest or an interest rate relief until that as soon as June next year, June 2024. So elevated rates will be here for a while. So for many it’s survival mode. For others, they’re just for those who are honestly, it’s the ultra rich are just getting richer because they’re the ones who are still buying a property while others are fearful. For tonight, we’ve had some we had some issues with one of our portfolios in Catherine’s two. So in order to improve cash flow, I had to fire our St. Catharines property manager. As our rents were underperforming rents were coming in lower than expected leases were being signed for less than I expected. And also we have a vacancy. And as a discerning investor, like any investor, I personally hate vacancy. I think we all hate vacancy. Now, I don’t like to use the word hate often, I use it sparingly, but nothing ruins a real estate investment like vacancy, ask any flipper or burn investor. So after an onsite tour, they did back in May, I took notes, I took pictures, I spoke to the tenants, after the onsite tour with the property manager I knew that I can trust them to take to to continue working there. So I actually immediately assigned all the work to my handyman, who I trust who I’ve had working I’ve been working with for close to 10 years, he referred me to a local leasing agent. And I’m happy to report that we sent we signed a lease and our property will be fully tenanted by September. So the previous property manager was either negligent or didn’t know what they’re doing. Because my property was experiencing mace vacancy because it didn’t show well. I have burnt out light bulbs, and badly needed to paint job. One door was one bedroom door was broken. One bathroom had drywall damage, all generally minor things. Hence, the previous student tenants did not renew their leases. Nor did new tenants want to sign. I don’t blame them. In the end, the work to repair the property was under $2,500. And we signed three new students for close to $2,000 rent per month between the three of them. So we got near top of market rents higher than what the previous property manager was signing for. And all the existing tenants are happy with the change of management, I’m saving money. And now I’m making more money as well. If you want to get an under street understanding of how much of the landlord’s market it is in the student rental market, for those who follow the news, like you know, there’s a lot, there’s a lot more international students in Canada than ever. So the smallest bedroom in this house is just under 10 by 10 to 110 feet by 10 feet, which is normal for most in rentals, it’s just common that there’s always one small bedroom in every house. So this room used to fetch only $400 for the room before the pandemic $400 per month before the pandemic, we just signed the the tenant just signed for 575 For that very same bedroom. It’s the same bedroom, like we made a painted it, but nothing else is different about it, it’s still the same size, that’s an increase of just over 44% just over three years. 44% just over three years. So thankfully, that beats inflation. I’m very happy with this investment. But the lesson is that not all real estate professionals are are equal. It’s not uncommon for things to not work out with the property manager. I’ve been through about six property managers myself personally, one just needs to keep tabs on them and take action when necessary. We disagreed on management styles to them vacancy was acceptable in this market. For me, I don’t know if I know better. But I have clients that own about 100,000 rentals, and we all catered to the top 20% of the market, I was the only one experiencing vacancy. So I knew something was wrong. So here it I wouldn’t real estate we play to win. I enjoy winning, I enjoy cash flowing, I despise losing aka vacancy. So make sure everyone on your team is playing to win. And everyone’s rowing in the right the same direction both and that’s the way to go. Investing in make sure everyone on your team knows how to achieve those wonderful returns. If you are an investor and can use a second opinion on how your existing portfolio is performing, maybe you have some properties with equity in them, but they’re negative cash flowing, then feel free to reach out to us at I wouldn’t have any the wealth.ca The year is halfway over the value to you is to make sure that each property is serving. And if they’re not, we can suggest better uses for your investment capital. Just like the stock market, things change frequently, several investment strategies no longer makes sense. It’s time to review and reset your portfolio and set it up for future success. It’s a 30 minute call, there is no charge, just reach out to me the ball and one of my coaches will get back to you. If you’re more on the information education wave right now, we do have an upcoming upcoming meeting all online. It’s actually next week. This next coming Tuesday, Tuesday night at 7:30pm. It’s all online on Zoom, where I’ll be sharing the latest market update. I’ll be talking about interest rates, I’ll be showing the data on when we’ll see an interest rate cut. I’ll be also talking about something that’s a massive interest to myself, artificial intelligence, and I’ll be sharing specifically what AI tools that I’ve been using today in our business, AI is already causing massive disruption. And for those, in my experience has been for the good. It’s gonna be great for those who know how to use the tools in order to be more productive. I’ve already saved myself 1000s of dollars in using certain AI tools and I cannot wait to show you how. As always, I’m on a mission of truth seeking to find out what works best and what doesn’t work in my business and portfolio of real estate properties. The next I’m gonna meet again is Tuesday, July 25. At 7:30pm Eastern Standard Time, also from my team, Coach Tim Hahn will be sharing how he and other clients are dealing with high interest rates in rebalancing their portfolios. These unprecedented times as we navigate the uncertain terrain of high interest rate environment, we understand that managing your investment properties may seem more like a burden than an opportunity. This is an opportune moment to rethink your strategies seize these opportunities, these high interest rates are currently yielding. Yes, that’s right. The smart money is taking advantage. They’re being greedy right now. While those are beautiful, there are great opportunities now. Many sellers are being squeezed by high rates. So being a buyer as a winner is a winning strategy in this market, just make sure that you’re set up to be a buyer in this market. In the face of change. Knowledge is power. embrace this opportunity to enhance your understanding, refine your strategies, and prepare for success. Your investment properties don’t have to be a source of worry in these high interest rate times. Instead, let them be a powerhouse for your wealth generation. Leverage my team in my team and I have vast experience, close to enjoying in person experience. We are hosting an island match my tour the following Sunday, July 30. It’s a Sunday, the following Sunday, July 31, in Kitchener Waterloo where we will be touring to income properties, and there’ll be a lecture as well. There’s nothing better than learning hands on on site in person hanging out with like minded people. And that’s from my experience. Unfortunately, I won’t be any good their chairs Sign us up for our old family, family camp, a Family YMCA camp, so I won’t be in there at that event, but Tim Hahn will be so make sure you’re on my newsletter to stay connected with all of these all these best in class educational events. One can register on my website, www dot truth about real estate investing.ca On the right side, just give your name and email and you’ll know cuz then you’ll be registered to receive all the latest and greatest events information. And if you have friends and family who you care about who care about improving their financial futures then please invite them along to onto this week’s show. We have a very real conversation with full time professional investor awesome. Yeh, who does it all? He does wholesales, flips, burgers, negotiates his own Cash for Keys. He’s gotta get steroids share about that. Several good stories to share. He’s a podcaster and meetup host. And honestly, it’s not all not all pretty, which is why this is shows called The Truth about real estate investing. Austin shares how he’s had to rebalance his portfolio, how the wholesale market was down when his short term problems are because again, he’s very successful. But he does have short term problems, which, but his success has led him to be able to transition out of his corporate job. It’s only 27 years old as well. And also he started off investing in Windsor Sudbury, and now he’s even in downtown Toronto. His career has definitely changed a lot, which is what I really enjoy about this episode and learning about Austin’s journey. Again, he starts He also shares how he started learning at local local investor groups connecting with locals to build it as teams. We walked through the numbers of a couple of his deals often isn’t candy coated the challenges that come with buying ugly, ugly properties, including a case of arson, or as part of property was intentionally burnt down by criminals. The phone calls partner got in the police that’s how he found out about it must lead to sleep, sleepless nights with insurance we get paid out and how Austin’s the markets they targeted before the markets and properties he’s used to target how they’ve evolved over his career. This is a very real truth about real estate investing episode, where problems are not always worth the profits. However, hopefully, my friend one of you or 70 listeners can take away how to improve upon your real estate businesses. Leverage the lessons from this episode and the 300 Plus episodes before this one to follow Austin. You can find him on Instagram and Austin. Yeh. A U S. T I N Yeh Ye h six. Number six. Awesome, Yeh. If you want to follow Austin’s podcast and network meetup, check out him on Instagram at prize network event. All right, please enjoy the show.

 

Erwin  

Hello Austin, what’s keeping you busy these days?

 

Austin  

A lot is what is keeping me busy nowadays. We talked a lot offline but I guess we’ll dig deeper into it. I’m going through a couple of apprai bought a couple of properties last year, going through appraisals. That’s a little bit of a mess. I’m doing some fixing and flipping. I’m doing wholesaling, wholesaling has slowed down pretty tremendously despite the market picking up on the MLS doesn’t necessarily translate to to investor demand all the time. Yeah. So I mean, there’s a lot of things, buying properties, selling properties, selling a decent amount of my portfolio, a decent amount, but selling some of my portfolio where interest rates have gone up significantly non payment of rent with tenants dealing with that we can go on and on. But that is it in a nutshell.

 

Erwin  

Okay. Okay. Yes. For listeners benefit. I asked you before recording how many properties have come through your portfolio?

 

Austin  

Yeah, I would say about 30 to 33. I’ve owned 25 or 26 concurrently. Right now I’m probably at 17 ish or 18 ish. Now. I don’t always be tucked off. I don’t always keep track. I guess to my detriment, but that’s sort of mental math. I think that’s where I’m at right now. I sold a decent amount over the last couple of months for sure.

 

Erwin  

How do you decide whether or not you’re going to keep a property?

 

Austin  

Well over the last few months, that was pretty simple. The market decided for me right? Fortunately, I started investing at a good time, right where the market was was doing its thing prices were appreciating year, what year that was end of 2018. I got my first property I closed on a December 2018. And the market was doing obviously pretty well. A lot of my portfolio to begin with were single family houses, scaling up to duplexes, triplexes, five units, six units and eight units. A lot of the properties that became negative cash flow, were the single families because of obviously what interest rates did and so that was, for me, my thought process and selling it. I thought the market wasn’t going to recover very quickly would probably be sideways for a while. Obviously, I was proven wrong, but it was going to be sideways. I wasn’t gonna get appreciation these mortgages were with RBC. So I was paying interest only so not getting equity pay down and they were cashflow neutral. So what was the point of holding them? If I didn’t have faith in the market recovering at that time during it was like may ish, may ish around that period. So it was a pretty no brainer for me. The difficulty I faced they were all tenanted. Right. And so really the active buyers over the last few months were first time homebuyers or people end users. So I had to negotiate with the tenants Cash for Keys, get them out and then list the properties for sale. So the vast majority of my sales have been the smaller single family homes, but these multi families I have fortunately, I haven’t leveraged to 80% loan to value. I quit my full time job in February 2020. So I wasn’t able to leverage them anymore after February 2020. And we know the market roundup since then. So yeah, just got rid of the single families kept the Maltese for the most part.

 

Erwin  

So you’ve been through a lot. Yes. A lot. Five years. Yeah. What have you learned?

 

Austin  

I learned a tonne. So let’s get started with

 

Erwin  

the back. You invest. So you live in Toronto? Yes. Where do you invest?

 

Austin  

I invest in Windsor and Sudbury other tertiary markets. I’ve invested in like a small city an hour out from London. What’s called it’s called Stratford Ville.

 

Erwin  

Excuse me. Yeah,

 

Austin  

it’s like a population for Ville Yeah, not sure. Yeah, Stratford Ville. I know what you’re thinking and it’s not the same one. When I tried to send it out to my wholesale list, everyone was thinking about the other one too. I was like, no, no, this is Stratford bill. That was actually one of the tenants that actually stopped stopped paying recently that I had to deal with. Are they still alive? They’re still alive. I guess if we’re gonna get into that sooner to audience will know what that means.

 

Erwin  

Population of Stratford Ville that’s like 1000 2000

 

Austin  

Oh my god. Yeah, it’s very small. It’s about it’s about 25 minutes from St. Thomas. I want to see 45 minutes from London. But funny enough like I honestly don’t know what really drives the market there but the house prices there are quite expensive.

 

Erwin  

Ontario is messed up man. It’s more expensive

 

Austin  

than St. Thomas and some of these other bigger cities so like I don’t know what the appeal is exactly. But the court for me it was just like a burr it was a flip and I was gonna you know, I might as well keep it because it’s a duplex. I got it extraordinarily cheap. So sort of my investment philosophy and it’s changed since then was to just find deals that I can be in and out of very quickly. Get it at a make money on the buy, complete the renovations Burt refinance my money because I’m a wholesaler so I’m able to get great deals at pretty steep discounts. So for me, I wasn’t really market dependent. I would go wherever the deal was, and that has led to some headaches now. So I’ve definitely realised why being focused in a particular market is better than spreading your portfolio wide. But it’s also at the same time I’m not gonna say that it’s a completely bad thing because it’s helped my net worth tremendously as well. So like there’s been pros and cons of doing God.

 

Erwin  

How do you source property as a wholesaler? Yeah, as a wholesaler so

 

Austin  

I was an investor first, right? So I was buying properties and a lot of what I was doing was just networking with other investors in Windsor. That’s where I started off, then doing Kijiji before Kijiji, became super popular going on Kijiji every day, refreshing the page, being the first person to contact any new advertisement. They’re cold calling realtors, it was a popular one that I was doing that and now as well, right, just looking at expired listings and making those cold calls door knocking, doing low cost lead strategies is how I got started off with low cost high effort though low cost high effort, but I was an investor first and I wasn’t willing to you know, like as investors a lot of the money’s in like thrown out in the market a lot of the time so I didn’t have a lot to start off with. But I realised that obviously you can’t scale that way in the wholesaling business because the lead flow is inconsistent, especially when you’re doing it full time. You’re getting leads maybe once Are you getting deals maybe once every three or four months if you’re doing that good deals, but it’s just not consistent enough. So then we started moving over to like flyers we did bandit signs, which are those we buy houses, signs and just sticking them down in grasses in high traffic area, digital marketing SEOs, we did a little bit of everything. Everything works, you just got to obviously work it hard enough. And right now kind of what we’re seeing in wholesaling, we’re putting a lot more focus back into the high effort, low cost strategies, because what you’re seeing in wholesaling is your assignment fees are slipping out, right, just generally people are less willing to give 5060 $70,000 assignment fees were used to be or normality. If you didn’t get a 50k assignment fee, at least once every month, you are doing something wrong as a wholesaler, but your marketing costs is also increased as well. And your buyers had slowed down as well. So even if you get the deal dis Boeing is another story. Kind of what I was alluding to earlier, is is not the markets picking up but a lot of it is and users right, and your buys this is mostly consisted of investors. So how many cash buyers are really active. Now, there’s still a decent amount active but nearly not as much as what we’re seeing before. So as the margins are selecting expenses are increasing and wholesaling. We put a lot more emphasis back into high effort, low cost strategies to get us through sort of this downturn. That was a mouthful. Now, that was a mouthful,

 

Erwin  

when he came into the office asked you about how has the market gone for a wholesaler? Yes, because you’ve you’ve gone through, like the biggest downturn we’ve had, and in my recollection. So how did you fare in the downturn? And you’re saying, let’s start the downturn. The downturn?

 

Austin  

Yes. So here’s the thing everyone was live on. There were wholesalers everywhere, and everyone is living off the high of wholesaling, you could get deals under contract, that for me, were marginal deals. I was like, I wouldn’t do this. But you know, I’m not to tell people what their business plan is, if someone wants to buy it, sure. That’s your business plan, I trust that you run the numbers. So people were paying, you know, wholesalers market as is value, I’ve wholesale deals higher than my marketed as is value, right, because the market was just so crazy. And as a result of that, we pivot. So we’re doing a lot of very, we had a team where everyone was getting paid, or majority of people were getting paid variable, right, based on deal flow, they bring in so on and so forth. But when you’re bringing in the type of assignment fees that we were during a hot market, it made sense to start fixing your costs so you can keep more of the spread. So near the end of 2021, we started making hires or transitioning people to fix salary plus commission. So we were keeping more of the spread to ourselves. But that wasn’t necessarily prudent in a downturn market, right. Like we started our wholesaling business during a hot market. So I don’t think anyone saw what was going to happen in 2022. So that definitely impacted us drastically with deals that were getting under contract, it was impossible to find a buyer crickets, sometimes we’d have one people reach out, sometimes we wouldn’t have any people reach out. And that it was during that time where, you know, our fixed expenses were now high, we’re paying like 25 $30,000 a month and fixed expenses, bringing in zero costs, non zero cost bringing in $0 in revenue. So I mean, how long can you operate a business like that? And what was really worrying me is is that with wholesaling, advertising is what drives your revenue. If you don’t spend dollars in advertising, how are you going to get deals unless you do the high effort stuff, right? And so with your fixed expenses, really high, man, like you don’t want to spend $10,000 in advertising, right? It hurts. Yeah, and especially if there’s no buyers, which is what we’re seeing. So we’re in negotiating with people being like, hey, look like this is where the market is right now. Like, are you okay to go back to variable, but you can get a higher percentage of the variable assignment fee, right? So and have that go have a discussion go, obviously, like they knew what was happening in the market as well. So not well, so we did our best to try to pivot. So we’re like, okay, let’s bite the bullet and start advertising, start doing different things, start connecting with realtors directly taking advantage of a realtor as buyers list, we were able to move maybe a deal a month, but during that, like, super downturn, but that’s not enough to keep the lights on. And after a certain point, we did have, you know, lay some people off, change your business model, slow down and take a step back and rebuild it upwards. So we were impacted from it. But very fortunately, during the good of the market, we’ve made a lot of money. So we’re able to sort of sustain that downturn, but we didn’t want to just burn all that money. So we took a step back, took a look at our business and slowly agree sort of like rebuilding it to make it profit which it is profitable again, but taking things slower and steady now instead of just like, you know, trying to maximise margin without any regard to risk. So yeah, I mean, that’s a big learning lesson that we had there.

 

Erwin  

Right. So now we’re recording this in May. Yes. Everything looks like we’re well past the bottom. Yeah. Is that your feeling as well? We’re well past the bottom.

 

Austin  

Yeah, definitely. sentiment has picked back up again. A lot of it is end users I find so what we’re seeing on the AMA last year, anyone who goes on Twitter, they see Realtors consistently tweet out like Oh 20 offers 30 offers, which is not untrue. A lot of great listings are getting that but that doesn’t necessarily always translate into the off market world because think about it like we have a different clientele. Oh, we’re targeting investors and have numbers and proofer investors. Not necessarily if anything, they’ve gotten a little bit worse than that may try there. They’ve been a few more rate hikes and since May and no one was buying in May. So we’re finding that these multifamily properties that are cashflow negative on onset, there’s not much interest in and people want vacancies people have people want vendor take backs right to be able to cash flow a little bit during the transition phase. And with the single family homes, people want very large margins on it, understandably so because I’m doing flips as well. And on my flipping side, I’m sharp, right, I’m like low balling the numbers really need to make sense for me to get into these deals. So we are finding the market is picking up on wholesaling, definitely don’t get me wrong, but not nearly the extent of what we’re seeing on the market. Right. But that being said, there is good opportunity out there. I was speaking with another wholesaler who had a deal out there, no interest, no buyers. So the whole tale that they closed on it, cleaned it up, listed it and made close to six figures in profit. So they’re operating like you know, it’s investor psychology, there’s a deal that we marketed at $550,000 as his value for 470,000. No interest in it, we had one or two walkthroughs no one wanted it. So we had to let the deal go. And the seller listed on the market one week after we let the deal go is sold for over 550 K. So the numbers are on point, right? It’s just like, investor psychology, if someone was to negotiate us from 550, down to 470, they would buy it. But if we listed it out for 70, they want to negotiate us down to like 400. So there are opportunities out there in the market right now in my opinion, but you do not you do need to be a little bit wary of you know, you got to make sure you crunch your numbers and you have confidence in these deals.

 

Erwin  

It’s interesting because you’re we’re talking about buyer psychology, investor psychology, because I’ve spoken to many people like oh, we’re going to wait for the crash to buy gonna wait to the crash the VI word those people go

 

Austin  

Yeah, for sure. And for myself, speaking about investor psychology, I would consider myself a savvy investor. But sometimes it does, like you fall victim to it at times, right. So when I listed a single family home last year, it got appraise for like 330, or 340 K in 2021. Or like 2020, maybe, and I listed it on the market to D leverage wasn’t cashflow positive, like sort of the reasons I mentioned earlier in the podcast, and I got an offer at like 270. And I was like no, like, there’s no way the property is worth more. You know, I was talking myself into like, I’m not selling it at that price. Because it should be worth more than that, like people are just scared, so on and so forth. But that’s invested in the market dictates what it’s valued at, right. So like, after a few days, I took a step back, I was like I’m not going to get any better offers. And so we negotiated with that party and just ended up selling to them. So even a savvy investor can fall victim. And speaking of that, like I bought in a couple of properties in November 2022 and December 2022. Right, which were good deals, obviously, because markets picked back up since then. But going into those deals like knowing that the market was was in a downward trend, I was able to negotiate different things, but I still didn’t feel confident with 100% Anyone who says, Yeah, I’m buying this deal. And I’m going 100% confident like, you know, all the numbers, check out so on and so forth. You probably have probably maybe the same investors that if things change and the tides change, you’re gonna get caught again, like even for me what the numbers checked out, things are perfect. I was able to negotiate vacancies, all of that stuff. Still in the back of my head, there’s a voice What if the market corrects further? Right? It’s just that little voice in your head and that is investor psychology? 101. I tried. I almost talked myself out of those deals. I’m glad I didn’t. Because now with the market picking back up. All of those are, I mean, several, not several hundreds but 100,000 Plus and equity on several of those projects, right? But if I was to fall victim to the fear and that voice in my head, then I would have lost on all this opportunities.

 

Erwin  

So you’re connected with the wholesaler community as well. Yes, I’ve noticed love gone quiet. What have you noticed, um, like some, like well, including the organisations they learned from they’re gone. Yeah,

 

Austin  

a lot of the smaller players I think you’re referring to have definitely gone quiet, they either didn’t have the relationships with the buyers or they’ve never really had the skill set per se because at that time you lock up anything like even things close to market value, and you could still make a 10 or 15k fee, right? So those wholesalers or what have kind of came and went, but the wholesalers you really do treat it as a business or are still actively marketing deals I can name a couple off the top I’m not going to name names so that they name a couple top of my head that are still actively marketing we’re still actively moving deals right but they’re not probably obviously not making as much money that they would have been in the past but honestly it’s with any business right business moves in cycles the ground when when the pandemic hit all of these restaurant can I swear or no? Okay, all right, these restaurants ate shit, right? Like when the pandemic hit and they’re struggling now it’s it’s our turn to stop I got it right like and it’s our turn to show resiliency. Not every restaurant survive during the pennant. Same thing with wholesalers. Same thing with real estate investors, same thing fixing and flipping Right? Like, it’s our turn to eat shit and the resilient the risk mitigated, those will survive, right? So a lot of wholesalers are quiet, some are still moving deals, some have pivoted, their strategies are seeing all these different unique things. I’m seeing wholesalers say, take this like survey, and we’ve done it as well take the survey and you can win XYZ, because they want to see which active buyers are still buying. And you can make those phone calls what exactly you’re looking for what price I have this lead what prices need to be, and you work one on one with these buyers. I see other ones that say we have no price, throw an offer, just so they have an idea, which is kind of clever and kinda it’s risky, but it’s sort of clever, too, because people want to feel like they got a deal, right? And that person made like a 90k fee on that, right? They’re like, Okay, I’m gonna negotiate around this ballpark, boom, did it that person like you’re just, there’s no perfect answer. I think everyone’s kind of throwing stuff and seeing what sticks, which is the beauty and the risk of entrepreneurship, right? You just end times like this, you got to figure out what’s working for me, what I’ve been doing is I understand the markets picking back up. A lot of it is like, you know, end user so we’ve been cold calling a tonne of Realtors, we’ve been SMS blasting a tonne of Realtors, when we have a Hamilton deal, you’ll probably get an SMS blasts, too. It’s just like blasting like, hey, we have this off market deal. Bring your buyer client, here’s the buyer’s package. Let us know if you’re interested. Right. So we’ve been catering towards end users utilising Realtors because realtors, they want to commission you probably know a lot of realtors want to make a commission, right because they also are not making as much as they were before. So we’re kind of pivoting who we’re targeting to and that way it hasn’t worked yet once or twice. But, you know, that’s enough for me to build proof of concept and continue down that path. It just, there’s no perfect answer to this.

 

Erwin  

Let’s go back to early days. So can you give me an example from like the early days that you think was a good deal? Something you’re happy with? Yeah, pick a city.

 

Austin  

sure most of my portfolio was in Windsor.

 

Erwin  

What did you buy in Windsor?

 

Austin  

So for example, I bought a I bought a duplex off the market with a vacant land beside it. And this is when I was just doing all of the different sorts of high energy marketing strategies low cost. This was via Kijiji, I constantly refresh the page got in contact with the seller who just literally listened so I was the first viewer

 

Erwin  

on MLS. GG, GG GG also for sale by owner for sale

 

Austin  

by owner that was back when nowadays, Kijiji listings are worth more than what the MLS listings are. So times are a little bit different than what was the first person that spoke to them build rapport and then had my contractor through their go through their through an offer. So this one was a duplex vacant possession, which is amazing, vacant land beside it. I got it under contract for 250,000. And it was worth like we got it appraised by the bank. When we went through bank financing. It got appraised at 330,000 as is. So we did like very cosmetic renovations and then got it further appraised at 370. We refinanced that in February 2020, February 2020. And we haven’t refinanced that sense. So it’s probably worth closer to half a million now because of that vacant land because of what happened in the Windsor market. Right. But a more recent deal. I mean, I don’t know if you have any questions, or did you want me to go code?

 

Erwin  

Let’s finish off this example. How big was the law?

 

Austin  

The law was 65 feet by 100 and feet by 150 feet depth,

 

Erwin  

I believe. Where was the vacant lot? What was that?

 

Austin  

Yeah, so the vacant lot was 30 feet and then the duplex was 30 feet or 30 feet? Yeah. Okay. Yeah. So they’re just like a double wide lot. Yeah, exactly. So we haven’t severed it yet. It’s a long term thing we could plan to develop on it. If I choose to go down that route. I can sever and sell it off. But I’m just land banking right now because the refinance of the duplex paid for that lot. Pretty much

 

Erwin  

abuse areas. Good tenant profiles. Good. Yeah, it’s

 

Austin  

like a student rental area. So a lot of students are in transition tenants every year which, which I like so it’s a decent area for student rentals. Not so much for families, you

 

Erwin  

know, and so were you driving to Windsor to do this deal?

 

Austin  

No, no, no, no. So I never I’m a pretty lazy guy in terms of like driving well, it was a struggle for me to drive down here too. And it’s only a 35 minute drive. Windsor is what four or five hours four hours away yeah and even hold sway when we get deal with like they’re all Sudbury we got deals everywhere, right? Like I am a firm believer of hiring things out right and just hiring it to the right people. So

 

Erwin  

look, I’m not a concert or you never seen this house.

 

Austin  

I’ve seen it when I visited Windsor. Yes but during the entire burr process I don’t think maybe I went there once but even that I don’t remember even stepping foot there. I had just like referrals right like just when I was grinding away at Windsor when I was initially starting. I would visit there every week and meet Realtors meet investors meet contractors in Meet people. But once you have that team set up and reliable people, you don’t necessarily need to be there per se, right? You just need to have people that you can trust rely on your Power team. And so my contractor knows way more than I do. And so I’ll get him in there to look through what needs to be done. So on and so forth, get a home inspector in there, I usually get home inspections right before putting in a clean offer. I almost always like to get a home inspection or a contractor in there. And yeah, I mean, they know way more than I know. So there would be no value of me going there. Right, right. So yeah, I just I just trust the professionals to do it.

 

Erwin  

How did you build a reliable team? Like this? Is the winning early properties? Like yeah, you didn’t have much of a rep or relationship with these folks? How did you do it?

 

Austin  

Yeah, I go through because I’m all over the place. I kind of go through like a systematic approach. The first thing I do is to jump in these to these investor communities on Facebook and say, Hey, can I connect with an investor in Sudbury? can I connect with investors in Windsor? Few people message or I’ll use a search function, see who has asked that question before or has invested their D on them. Get on a call, ask them who their realtor is contractor, whatever they’re willing to share, right? Get on like three or four calls with these investors, and then call their power team. So if they shared realtors, I’ll get on three or four call with realtors, I’ll get an understanding of good and bad neighbourhoods, I’ll get referrals from realtors and contractors. If a realtor doesn’t know a contractor, I’m not even going to use them, right? You’re not investor oriented. So then my contractor list continues to build out right Property Management list starts building out because the investor share it and the realtor share property managers get on calls for separate property managers. Then ask them what are good and bad areas? What are the rent rolls up, like two bedrooms, three bedrooms, one bedrooms? And then ask the property managers do you know any contractors as well? So it’s almost like, what do you call it like a like a tree diagram where it starts off with a couple investors in the branches out to multiple realtors, branches out to multiple property managers, contractors, and just go down that list and, and get a feeling of at this point, I kind of use a gut instinct as well of of who I trust, who I don’t if they’ve been mentioned several times, things of that nature, right. And I go through the same thing in Sudbury and Windsor. It’s just following the same sort of systems. But I do go down there, at least a few times before decide to commit to invest there, right just to meet not only people on my Power team, but to meet the investors to build a relationship with these people. Because seeing and speaking to someone face to face is different than just over the phone. But once I have that all set up, I find I don’t need to step foot in those in those areas. Again, unless I’m doing Cash for Keys conversations. That’s the only time I would I would step foot in the cities.

 

Erwin  

Yeah. So we were talking about what is the work that’s high enough value for you to do personally and personally.

 

Austin  

So people love to say property management’s that $30 An hour tasks Yes, and no, it is when you’re just like your property is fully stabilised, and the collecting run getting snow grass removal and small tenant complaints, it becomes $1,000 An hour plus task when you’re dealing with tenant troubles because your property manager, no matter how good they are, and I’ve worked with so many different property managers, they’re not going to care to deal with the tenants in a similar situation as you they’re going to serve the notices. And that’s pretty much the extent of it. They’re going to go to the paralegal and all of that they’re not going to build their relationship with a tenant and why should they they’re managing 200 units, what makes your unit any more special than another investors unit? Nothing, right? They don’t have the time capacity or the resources to speak to every single tenant. And so I’ve had situations, like the most recent one in Stratford Ville, for example, one of the see you’re dying of laughter now, one of the one of the tenants. So I got an email from the property manager, it was an N five saying that the tenant upstairs threatened to kill the tenant downstairs and you know, all of that, then they miss me rent on top of that. So I got like two notices. Kudos to her for filing the paperwork. Obviously, that’s your job. But then I was like, Okay, I know how this goes. It could be a year long process nonpayment or it could be a year. If they got evicted, they’re definitely going to destroy the unit. Let me just pay them a few $1,000 Or like, negotiate with them, figure out what exactly is going on. And then have them and then hopefully get them to sign and 11 and transition at a landlord. We’ll see Oh, my God, a tenant don’t need to kill another tenant. This is not going to be an easy combo. And I knew that going in. So I got the phone number, call the tenant, I was like, hey, look, I got this notice from the landlord. They said XYZ. Like, honestly, there’s always two sides of every story. Like Was there something that the other tenant did? Like, you know, like, kind of figuring out their side of the story

 

Erwin  

to them? Let’s see here on the hair. Yeah, and like I know,

 

Austin  

it may they’re going to stretch scores, right sides, every story, all that matters is that you’re hearing them out and you gain the respect and trust so I heard their complaints and all of that, like look like and then obviously making it seem like leaving is the best option. I was like look like obviously you too, are going to have problems in the foreseeable future that it’s going to be constant bickering about and like man if this escalates any further, not saying that it will or won’t or then criminal record this that immediately No, like, it’s going to be huge issue for you. And honestly, like, I sincerely apologise that you’re going through all of this. And I know that moving is expensive for you. But what if we can work something out? Right? Because I don’t want this to escalate any further. It’s no way to live. So why don’t I give you some a few $100 for moving expenses in some time? Release? Yeah. And then they were just like, Sure, fine, thank you for understanding, so on and so forth. But do you think a property manager is going to do that you think a paralegal is gonna do that? No way, a paralegal just serves no, like here, take this money and leave, or their paper pushers, right or transactional. They’d be like, This is what you did, this is what it could lead to. But they would never sit down and spend an hour two hours of their time speaking with a tenant. And that is a task that will easily add 1000s of dollars will save you 1000s of dollars and a tonne of headaches. So all of that I do it myself. I tried to do it over the phone. But if I find over the phone is not working out over the first phone call. I’m like, Hey, how about we set some time and grab coffee with each other? And I hate doing that, because you’re driving, I haven’t found a way to systemize it

 

Erwin  

because you’re going to Sudbury or Windsor? That’s hilarious that you said that because I’ve talked to novices. When I raise issues of being a landlord, especially when you have a lot of tenants, your rough air and beverage and tertiary markets. Yes, there was an audience to just build systems around it how?

 

Austin  

Like yes and no, right. But because again, you’re dealing with these tasks are very high value. Most property managers don’t know how to do it, and most most paralegals don’t know how to it’s like almost like sales and negotiation. Yeah, exactly. So

 

Erwin  

a high value skill. Yeah, they’re usually held by high value people.

 

Austin  

Yeah, yeah. Like people, man like these negotiations when so left, when I first started them out. I was a complete novice, but I would try to do it myself. And I’ve learned from experience like how to, you know, navigate around these conversations, especially like with sellers and wholesaling as well. Same. A lot of them are the same profile as tenants, right? Motivated sellers. So you can outsource these out, but it’s not going to get the results that you want. Right. And that’s the troublesome part that I’ve been facing for sure.

 

Erwin  

And then, like I said, like just just throwing off often people just offering them, let them out of their lease is a big weight off their shoulders.

 

Austin  

Yeah, exact, but it’s like how you position it? Oh, like, I’m gonna let

 

Erwin  

you out and like, if you want to leave, it’s okay. Well, we can we can break the lease.

 

Austin  

Exactly. It is Oh, moving costs is expensive. I know how to act on it. Why don’t we give you some time? Right? Like, how about I helped me with it, let’s say it’s positioning a lot of the times, right. And it’s like trying to be a problem solver. Exactly. And the only way you solve a problem is is by spending the first 30 minutes building rapport and understanding, you know, like, their situation, because if you’re going there and trying to solve the problem without having that small talk or that understanding in the beginning, why would they trust you or be capable to solve their problem at all right, Mr. That’s something I’ve realised to

 

Erwin  

this conversation. I’ve I’ve attended the Oasis rent today. And she said that she’s behind his father passed. Yeah. So I or phone call today, because it’s due today, barring a senator Uber, an Uber gift card first. Because you can use it for Uber Eats. Yeah, I mean, yeah, here’s dinner on me. And then then I’ll call Yeah, did you get it? Cool? Are we are we are we good? today? We’re good for rent today.

 

Austin  

Or at least have an understanding. Is it? Oh, no. Okay, let’s figure it out. Right. Like people, as soon as a tenant doesn’t pay rent, it’s like, it’s D Day. It’s like, you served them with everything. Let’s get them. I was like, dude, like, these people have lives as well. Like, what if? What if they got let go? How are they going to pay rent, if they gotta let go with a job? You You almost have to cooperate with them to some extent, because you know, that the cards are heavily dealt in their hands with with the regulation, so you gotta get on the phone. Exactly, exactly. And understand, right? Because sometimes the more you understand, the more you realise that some times patience and cooperation with them, figuring out a payment plan goes a long way than just hitting them with all these notices. Because as soon as you do that, when you call and you think they’re going to pick up hell no, because they think they’re gonna get evicted. Right. So they start that’s when people start dodging and ignoring. So you got to go in with empathy or sympathy at the very least.

 

Erwin  

I’m sure there’s many times my show, I explained to my my team members, like contractor park managers, I say to them, you know, if you spend $10,000 a year at a restaurant, how do you expect to be treated? Right? My tenants all pay me over $10,000 a year. Yeah. So like, I need something I need some that that translate to them. Right? So yeah, so yeah, I’m not the I’m not the guy that immediately enforce. I usually exchange emails at least first.

 

Austin  

So I do serve and force first but I give them the heads up. I’m like, Hey, right. People just serve it and they don’t even speak on the cake. This is like, this is the process, but like, don’t worry about it. Like it goes away as soon as you pay. Yeah, exactly. Or like as soon as we figure it out quite like if you let me know what’s going to take you a few weeks to pay let’s figure that out sort of situation. I’m like don’t even worry about it. Right like

 

Erwin  

because she got back to us right away. Their father passed like we’re I’m gonna hold off. Yeah,

 

Austin  

yeah, yeah. And I think that’s reasonable. But like, you’d be, it sounds reasonable. Everyone would be like, Yeah, that makes sense. But like, how do you find that out? By having a good rapport with them? So most landlords will never find that info. Wow. Yeah, yeah. But

 

Erwin  

we’re small enough that we can we can have these relationships with our tenants. So actually, when I asked you like, you have a decent sized portfolio, yeah. Do you have anyone else on staff? Do you have like an operations person or assistant

 

Austin  

that is i? Yeah, so I find honestly, the most difficult part is like stabilising the asset, but once you stabilise it’s not, it’s not a whole tonne of moving parts for the most part, right? Like if you find a good quality tenant and all of that, like your property manager does handle the bulk of it, it’s just not the beginning where it’s a disaster, like, okay, like, let’s choose finishes, how are we going to add extra bedrooms, all of that stuff, that’s where it becomes a little bit busy. But I don’t take 5678 projects at a time now. Right? Like I take like one or two projects, Max, and once I stabilised then I’m on to the next one. So it’s not like I’m killing myself with my business as well. And the people who do do a great job when they buy tenanted this a lot of like big operators who crush it, that’s just not my business model. That’s just not who I am. That’s just not the scale I want to get to. So I’m totally cool with just doing things myself and want to stabilise then barely takes any of my time.

 

Erwin  

So I actually just had Calvert mortgages in yesterday. So because they’re private lenders they have I don’t want to spoil it. But they’ve had a number of power sales.

 

Austin  

I’ve gotten some of them that fell across my desk as well as Okay, you want to wholesale it.

 

Erwin  

Whereas going was we’ve covered at some of the show the commonalities between investors that that failed, not fail, but there’s bumps along the way. Everyone takes losses, right. So these power sales, what was common was, well, they’re borrowing from culverts, they’re paying, you’re paying the private money, it’s expensive, and also multiple projects, and buy multiple projects. That means renovation projects, significant renovations, so they have multiple vacant properties. Yeah. Right. So you mentioned that you use you’ve done as many as like, five, six at a time. Now you’re done more like one, two? Yeah, what happened? Yeah, so five, six, that means you make some big money.

 

Austin  

When I was starting off, it was like aggressive growth by any means, right? I was like many of the investors were like, oh, grow, grow, grow, grow gross. Yes, this is scale. As long as they count, it wasn’t flipping but sort of the same principle where you’re you have a tonne of renter’s going on. And I thought that was the way to one raise money and to that was the way to become rich quickly. Like I looked at real estate as as much as I never talked about I’m like, oh, long term like we say that to ourselves, but our actions say differently. Am I believe that real estate was a long term investment, but my actions clearly show I was doing something different. So it was I scaled aggressively right before the pandemic of 2020. So like, I had like four closings, right when the pandemic hit and I was like, this is where like, like being a tonne of trouble pulling up from a tonne of lines of credits. I’m not going to make it out from this like who knows, right? Fortunately, the market picked back up I did like even getting these deals at a discount like getting it at a discount in a falling market. You don’t know how far that you know, that night falls and you don’t know how how marketable or liquid your property is during a falling market. Right? There’s just almost went through the roof. Yeah, it was definitely really stressful my expenses really, and I was living at home with my parents. So that was a big plus. But it was not good, good for my mental health those couple of months. And so market recovered, ended up doing really well on the deals as with anyone who bought during that time, but I was very fortunate where I was almost given like a second chance, right? Like I, my ego, just I was humble. And I was like, alright, like, Let’s do slow and steady growth. And there’s been times where I stepped out of my comfort zone again. So we’re talking offline about So after doing slow and steady again, you kind of investor psychology, you see, like, people making money hand over fist and people who are newer investors like unsavoury that are just making so much more than some overly prudent investors right. And I fell to that camp of of overly prudent during that after COVID Right after that sort of scare I had and I was like, okay, like, let me let me get a six unit got it under market value, so it appraised higher than when I bought it out. And then I took out like the bank only gave me 50% loan to value data on a commercial loan. And I had to raise the rest through promissory notes. So I want 100% loan to value plus construction on it. And man like so the deal went, I could surface level I could say that it went perfectly in terms of turnover all the units I got a full burn all my money came out cash flowing like crazy now, but what people don’t realise during that time from when I closed it got all that private promissory notes to when I refi it was a man it was like beyond stressful. It was like if one thing went wrong, like how am I you know, like how am I gonna dig myself out of this situation? It’s the peace of mind is what I’ve realised is extremely important. So although that deal went through quickly. And again, if I was egotistical if I didn’t have that experience at the beginning of COVID, I would have continued doing that. I’m like, Oh, my God, full burn none of my own money, cash flow and multifamily. Let’s do this again, right. But now I don’t I don’t feel comfortable doing this again, right, like I want well, it’s almost like, you know how crypto borrows the portfolio. A lot of them then sell off, they just hold hold hold. You could say like, I like sold off. I was like, Oh, I got like, the strategy worked well, but I’m not doing it anymore. Right. So then I stopped myself early. And thank God, because if I continued on that path, like who knows, you know, like, who knows now, like, if I got a tonne of projects, I’m pretty sure, I would have been in trouble too. But I’ve learned, I’ve learned from my experience, my short four or five years, I’ve learned a lot from it. So raising

 

Erwin  

raising capital lessons. So how did you grow so quickly? Yeah, you’re independently wealthy?

 

Austin  

And no, no, no. So I did a lot of joint venture ships. I’m starting off. So at the beginning, everything was my own money. It was like scaling with my own money, then it hit a point where it’s only one project at a time with nothing wrong with that, right. But again, this is like before the the COVID. So I was like, alright, let’s, let’s try to do multiple projects at a time. And there’s only really two ways to do multiple projects at a time, right? Well, there’s a couple, you can get a VTB and stuff, but I wasn’t that experience where I went down that path. So it was like, I either take private money, or I raise capital through joint venture ship route. So I was like, let’s, let’s, let’s do some joint venture ships, right? So it’s 5050 5050. Partner, they carry the mortgage, the younger renovation money, they Yeah, 100% of the capital. Right. So that’s kind of how I was structuring it. And like the the joint venture ships went went really well. So what I will say is, is that I do I am pretty prudent when it comes to running my numbers. So like, fortunately, all of the deals worked out really well. But at the same time, like I did realise, I bought myself another job to some extent, like most of my partners are fantastic. But then of course, there’s like, times where they give input on things that they shouldn’t be giving input on because they haven’t done this. Like it’s like almost penny pinching, like, let’s try to Cash for Keys budget $2,000 listed like this would add like 5060 grand in value, like just let’s they want to get five grand, the tenants skim five grand like No, no, no. 2000 I’m like, alright, what you know, like, so there’s those sorts of feedback that I got, but for the most part, investors are frugal. Yeah. And I understand on the other side of things, I would, if you’re not the operator, and you don’t understand the full picture, you would think like, why not just negotiate lower, you’re the expert, but it doesn’t work like that.

 

Erwin  

We’ve seen Cash for Keys for like, between 515 1000 Yeah,

 

Austin  

I paid I paid 12 grand for Cash for Keys before like, and that instilled that as a perfect return on investment. Right. But

 

Erwin  

I need to find the example. But I remember several years ago, rent control building in New York, the developer writer bought it. Yeah, they’re gonna tear it down and put up something big, right? One tenant, one that one holdout your guests casualties for the very last tenant, they probably like 50, grand 40 grand, or a million. Wow, I find the article. That’s crazy. And I’m just gonna delete that. So no one gets that idea. Right, right. Yeah. Like, you know, someone was standing the wave of a large condo development, right. Yeah. But yeah, so yeah. So for yeah, that’s, that’s tough that you’re getting? You’re getting input from people who don’t have experience? Yeah,

 

Austin  

yeah. So I don’t want to phrase it such that like, it happens very commonly. It’s definitely happened a few times. But most of my journal, I think having jayvees was essential for my journey for my growth, for my confidence on social media as well. Like, of course, social media is all about like the number of vanity metrics, but it was essential for my journey. But the last couple of property actually, the last two properties were still joint ventures, one of them was myself and the last two bigger, Maltese are not bigger, like, like six, eight units. I did that myself, but one of my other business partners, like we’re both putting capital, but I figured, like, now control matters a lot more to me, and I’m okay with having like slower growth as a result of that. That being said, I still I still do joint venture ships with people that I have a good relationship with. I have done properties with me in the past. And I think that’s really, because people do JV successfully, a lot of people will like to shit on jayvees. But people do it successfully and grow a business with that. It’s just a matter of putting the processes in place. You want to work with people who are easy to work with, and do repeat business with her. So when I do jayvees, that’s the angle I look. I’ve turned down so many people, which I would have never done before or the capital. Yeah, let’s let’s partner now. No, it’s like, if you have capital, it doesn’t matter. Right. Like, I need to see a long term relationship with you. So yeah, a lot of the growth was that and then full bursts, full bursts plus some money out so leveraging off of that

 

Erwin  

it does seem like every partner who does take on partners Yeah, has a journey. Yes. And usually the first they within the first couple, there’s people they don’t get along with. Right so how many JV partners do you think have come through your world? Probably like a 10 a 10. And you currently still have

 

Austin  

I have four or five now. A couple of them most of them have been repeat like of those that Most have been repeat,

 

Erwin  

which is good. So what’s one of your lessons learned?

 

Austin  

qualifying people at the beginning, making sure their intentions are aligned, and then walking them through worst case scenario, almost selling them out of it, right? Like not like letting them know the realistic picture, right? So

 

Erwin  

just tell them it’s sunshine and rainbows. So

 

Austin  

right now recent JV combo I had like qualifying I was like, where’s your source of capital coming in a HELOC? I was like, Are you guys I gotta know, man, like 7% rates, like, what happens if I can’t pull a dime out until like, three or four years? Are you okay with that? Because, you know, like, that’s gonna be stressful for you. So that conversation, right, like walking them through, if they thought through the whole picture, because here’s the thing, like, I’m an investor, you’re an investor, most people that listen to this podcast are investors, you guys, when you’re injecting your own capital, you know, the things that are in consideration, in your mind, communicate all of that to the partner, as well as some people like to hide things with the partner. So being completely transparent in that sense, making sure it’s not every dime that they have, they need to have a decent amount of reserves that are not invested into real estate, that’s pretty important as well, stable, full time income, sort of the long term view looking three, four or five years out what their expectations are at the beginning, everyone’s expectation was I want a full burn. Now I set the expectation that that may not be possible, right. So a lot of it is just being realistic,

 

Erwin  

interesting. I’m enjoying this person listening during this, we’re joking around as well, because like your path has been very aggressive, tertiary markets, you don’t invest within four hours of where you

 

Austin  

basically, it needs to be at least four hours away.

 

Erwin  

And you mentioned that you want things to be easier. Yes. So you’re choosing easier properties, like less seems like you’re buying less disasters, got better markets,

 

Austin  

better markets, better neighbourhoods. So I do still see the value in tertiary markets, right, because there’s more information asymmetry there, there’s I find this usually better deals and the disparity between knowledge of like local, local investors or local realtors, and you know what’s and what the value is truly worth strategic Reno, I feel like that info is more, more people are savvy in these big cities. So it’s a little bit harder to operate the business model that I want. That being said, I’ve ran into so many troubles with with some of the less desirable properties that I’ve had, right where it’s like not good neighbourhoods, we talked about a property we talked about this offline, a property being burned down by an arsonist, and the worst hit one of the worst neighbourhoods in Windsor. And that was such a pain in the ass. So that was one thing, nonpayment of rent tenants losing their jobs and these are mostly concentrated and not the most desirable neighbourhoods. So if I am to invest in these tertiary markets and needs to be in high quality neighbourhoods, right and I am okay to sit with for five months vacancy to find the right tenant. So I just really adjusted my expectation on a lot of things. And even slowly moving my portfolio again to some of these like bigger cities, like I wouldn’t say I would come down to Toronto, you need big money and you need big financing to be able to make that work but like London, Ontario, right, that’s a more stable market, then then like Sudbury or something like and not to shit on Sudbury and all this more, I still invest there just has to fit my current my criteria has changed for sure. But

 

Erwin  

two hours drive instead of four. Yes,

 

Austin  

exactly. But I’m okay with that. Like, I’m not driving everywhere, right? So less headaches has been a priority for me, because I’ve had cases again, houses burning down tenant quality being crap, and I’m involved in all of that, and I just want less of that. You know, that’s not why I got into investing. I’ve built great skill sets doing those things, but I don’t want to exercise those skill sets anymore.

 

Erwin  

Julie Broad Grover wrote a great book called The more than cash flow. But there’s more to being an investor than just what what it looks like on a spreadsheet. Yeah, because they detail themselves about a multifamily. They bought in to happen that the property manager in a tenant got in a fistfight, and then the tenant actually got injured quite badly. Right. So there was lawsuits. Right? It probably wasn’t gonna get area. But yeah, it seems though there’s comic there’s, you know, Stan about areas Yeah, you have less trouble right because I’m sure it looked great on the spreadsheet,

 

Austin  

but I want the quantitative part looks great qualitative is diff I almost neglected qualitative a lot of the times for for quantitative and that I’m finding that balance of why both are so important.

 

Erwin  

Because we’re joking how I my clients are buying pretty lazy for offering it compared to what you’re doing a bit later, but I want to go on more about this this house that burned down what was it triplex or

 

Austin  

a four unit so we got it during COVID as well. So it was it was a really good good discount. It was the house that was filled with drug users. It was a drug house right bad neighbourhood drug house

 

Erwin  

with finances RBC

 

Austin  

finance Yeah, but they,

 

Erwin  

we would the appraiser say nothing. Letting go in right it’s COVID

 

Austin  

Yeah, I certain COVID. Yeah, okay. You know, things appear better and photos sometimes. But yeah, so I mean it was we got it financed and then served notices on different things got got everyone to agree to leave, they don’t really care. I mean, their mobile The house was kind of beat up as well. And so sorry, it wasn’t RBC with Scotia. But same thing. Same principle it was during COVID. So photos,

 

Erwin  

so photos No, no on site appraisal. Exactly.

 

Austin  

Yeah. And things weren’t going as planned to everyone. Everyone signed everyone agreed to move out, move out date no one moved out. LTB serve the eviction notice Sheriff eviction was scheduled. And then what happened during COVID? No evictions. Right. And so got the sheriff eviction notices but no Sheriff obviously came and so the people were just sitting there rent free, whatever. I didn’t think too much of it because I was like, Yeah, once they leave the upside was incredible. It was like a pretty big four unit now it’s vacant. It’s like I’m gonna make a lot of money on this thing. Sorry Jeff, a partner on this one as well. Yes, I had a partner on this. And they were chill. They’re cool. They’re chill. This was a great partner to work with. Yeah, the numbers are perfect. Everything was panning out as planned. Cash for cubes is only $1,000 A unit. So then what ended up happening is is that obviously we’re sitting we’re waiting until the sheriff comes or whatever they are able to come and the house went on fire got a call from my partner on night and I say love and pm I ignore it. It’s 11pm sleeping or whatever. Call them tomorrow then they call it again. If they call it twice a night picked it up they explained Hey, our house is on fire the police called me I was like oh my god Alright, so we told your partner because we’re on title or yeah and then and then they called me and so I mean it was like there’s nothing we could do there was very limited information house is on fire what can you do just fire department comes puts it out wait for the information tomorrow sleepless night and I don’t hear back from anyone the police anything I call the police no new information anything that they could share went on Google search for my property my property is on the on a bunch of news articles and then one person passed away from that fire. So now this becomes like a liability thing right is there because the house had not been to but the insurance was aware I was aware everyone was aware it’s not like we hid that from anyone right like oh my god it’s it’s a knob and tube thing like what? My mind is running a million miles per minute right? So I’m like, Oh my God, if it is like this is I could actually face like legal troubles because someone has passed away. So started speaking with lawyers and all of this stuff. And started making the drive down to Windsor. Right? The day after I spoke with the lawyer lawyers turned back around man don’t don’t make that drive Don’s like why he’s like, look, this is going to be police. They’re like, what if they pull you in for questioning is like why he’s like what like, what do you plan to get out of it? I was like, Look, my house went on fire treasonable. I want to see what’s happened if everyone’s okay. He’s like, Yeah, but like, what, what do you plan to get out of that? Like, what if they pulled you in for questioning? Like you don’t just just like, wait, wait and see how this sort of pans out? Then someone else passes away? None of these people have next and kin from their injuries from the part of the injuries? Yeah. And I was like, Oh my gosh, this is like a disaster situation. I cannot sleep. I feel terrible. My stomach is turning. And really like I had no one to help me out. I’ve asked for help, right from like, coaches, mentors, and they were just like, go go through insurance. And they’ve gone through a situation like that. I don’t think they’ve had anyone passed away. But they’re just like, just figure it out. And we didn’t even get on the phone with you. I mean, they left a voice note. Yeah, they left the voice. No, I left the voice. No, I received a voice note sort of thing. But yeah, no, not not much. No. So I was like, Okay, I guess I’m in this on my own.

 

Erwin  

So I know we’re gonna do it. But but this is a coach you’re paying for?

 

Austin  

Yes, this is this is a coach. Yeah, they wouldn’t get on the phone with you. Because you’re I got a message and that was about it. And it was basically like, Go run it through your insurance to figure everything out. So that’s it. All right. Yeah. I’m got to figure it out on my own now. So well, of course, I like speaking about this right now. I was telling you like it just it gets me a little bit upset. Right. So I don’t like to dive too deep into it a lot of the times because I do get a little bit. I get upset. I hope people understand why.

 

Erwin  

Especially at the move the forgive and forget. Yeah. So

 

Austin  

anyway, so I spoke with the insurance people, the lawyer so on and so forth. And about a week later, just sitting patiently waiting, find out that it was an arsonist, right. So it’s like, okay, like, really, it’s peace of mind that there’s nothing I could have done to not prevent this from happening. Who was one of my customers? How quickly did you find the day in a week?

 

Erwin  

That was pretty quick? Yeah, it

 

Austin  

was pretty quick. The Ontario Fire Marshal and everything’s everyone was there. Do you have any idea how they figured it out? No, I didn’t. You know, honestly, like when I found that out, I was like, I was like, Okay, great. Like, this is not something I could have done differently to prevent like, stop arson, bro. No, it’s just the person went to jail. And it was probably drug something drug related, because it is a known drug building. Right? But here’s the thing, had the sheriff been able to come in the evictions weren’t held up. Everyone’s life would be intact. Right and nothing like this is almost like I don’t even think I could have projected for something like this to happen, right? Like if everything went as it should. and all of these pandemics sort of rolls in come into place like, then no one’s lives would have been lost. And the deal would have went as planned. But yeah, that was that deal. And in a nutshell, so insurance tried to screw me over. So we had to hire a lawyer to be on there. But apparently, with insurance, insurance provider reuse, I’m not going in a name is what they said that like, our insurance broker was saying that after a year, if there’s no payout, then you can’t go after the money show. Right? Yeah. Or like become significantly harder. You have to go to court and all so they were they were winding down the shot clock, the insurance people, so they’re ignoring us. So we had to hire a lawyer on retainer to be on there. But was there any any reasoning given for the delay? Yeah, they were just like, we want to speak with your property manager and my property managers like dude, like, I have nothing to do with you know, obviously, I understand property managers like, dude, like, they’re going to try to blame something on me. Oh, it’s arson. Yeah, no, yeah, exactly. Exactly. It’s arson. So what they were still super worried. They’re like, Oh, they’re gonna say I didn’t visit the property enough this that whatever. So they were worried for hours. Yeah, I don’t know, man. Like there were a little bit worried. Eventually, we convinced them to do it. So they ended up doing it. We hired a lawyer for the property manager, which I think is responsible for the property match and want to have a combo with an adjuster with the lawyer. It’s good, right? Getting a lawyer doesn’t harm anything. So we paid and then they had the Convo and then the insurance company went MIA on us and for like eight months, and then following up. Yeah. And then the last day, the last day before the payout, our lawyer said we can register this sword. I don’t remember the technicality. We can register something that shows we’ve done everything we can and then we have to take out the cord after that, that last day, they paid us out. And it’s like, okay, hallelujah. Thank you. But it was it was

 

Erwin  

like they’re checking to make sure you’ve covered all your bases before they decide to pay you.

 

Austin  

Yeah, no, they were just trying to run down. Yeah, exactly. If we didn’t register that. I don’t remember what it is called lawyers, like you could get into a heap of trouble because a good insurance company said we are will pay you out by on a day to day last day. That is like you have to spend 3000 4000 to write this letter. It’s like, oh, no, he’s like, it’s up to you. I would suggest you do it. Austin. I was like, God, I have to spend another few 1000. Let’s do it. Because I don’t trust these guys anymore. But when we registered the letter, they ended up releasing the funds to us bad areas, bad neighbourhoods, right? These are unlimited measures. So what do you do with the property? Now it’s just vacant land at the moment, because by the time all this got settled out, it was near this near the peak of the market, right. And so the market interest rates started going up. So we didn’t decide to develop or do anything on it. We’re like, let’s just hold off on this. We own this land free and clear. Plus, we have an additional payout, we can explore developing it later. Clear. The insurance paid out large, so you have to pay pay out Scotia as well, because the property is not there. So we own the land free and clear. And we have like a payout as well. So we’re just sitting in just land banking at the moment. Vacant land is not really as saleable right now. Yeah, in that area. So

 

Erwin  

an area Exactly. Someone wants to build a custom home, we like really beautiful three 4000 square foot home and doing that.

 

Austin  

The other thing is zoning, the zoning, it was grandfathered in the four unit so it’s really illegal non conforming for Yeah, so now it’s like a get somebody’s going to be able to build a four probably not unless, you know committee of adjustments, and I doubt they will. Maybe there’s precedents there’s a lot of four units and six units, but all of them have been grandfathered in, but you’re chancing it. Yes, yes, yes, you’re you’re spending a lot more money and taking a lot more risk than you would have otherwise. But I don’t worry about that one too much now, because there’s really no there’s no risk. It’s just lad now. Right?

 

Erwin  

So when we talk to my realtor like Matt Bigley about it, in case, because a lot of cities have changed their their bylaws and zoning to allow for more units. Yeah, I would think Windsor is not far from that.

 

Austin  

Yeah, the lot size is quite small. It’s 30 frontage. Oh, and it’s but it’s deeper. Right. So the 14th, it was built really deep. And the parking was at the back. I just don’t think it would have the side offsets and all of that. But still, like, I’m not in a rush to do it. Bad area one because I know development. Like I don’t want to really develop in a bad area. Because I know there’s going to be break ins materials being stolen. Like I just can’t even I can’t even imagine the amount of headache it’s going to be so I’ll wait till the market recovers and sell it off. Because we’re not we’re not really losing anything by holding it right now.

 

Erwin  

Yeah, yeah. So just to not scare folks, my client at a different insurance company, like the same one I use, so they had to fire the tenants guests and properly dispose of a cigarette, right on the house. So like a bedroom was lost. But if you lose a bedroom, you lose a lot. Right? So like the she got a pretty much a brand new house out of it. But everything was quite smooth.

 

Austin  

Yeah, you gotta watch out with which insurance company that you use, right. And these are like learning lessons for me is like what’s the most affordable option because you don’t imagine a house is gonna go on fire. Arson. Yeah, homerun. Yeah. And so like now, I’m much more wary of that, right. Like I look through the insurance coverage or I’ll speak with my broker and it’s something The brokers fault because I like, you know, it’s ultimately an investor’s problem just to go get me the cheapest one. So it’s not his fault. It’s my fault. I’ve taken accountability for it. So I’ve learned from that as well.

 

Erwin  

Yeah, yeah. All right, this isn’t all scary, because you’ve done well for yourself.

 

Austin  

Yeah, I’ve done I would say, I’ve done really well for myself, where I’ve gotten to the position where I can definitely choose to work or not to work. Yeah, so I’m scaling in a much more responsible manner. I don’t feel rushed to do anything, I’ve hit my major goal of quitting my full time job, obviously, selecting entrepreneurship, but having the ability and the finances to be able to make that selection without being stressful, right like, because during the during where wholesaling was drying up, and you know, we’re putting a lot of money into or like we had savings and wholesaling, but the bank account and wholesaling was was was going down. I wasn’t trust, like I had my liquidity I’ve done well for myself, I participate in the bull market, I didn’t over leverage, again, the last time I refi, it wasn’t like when I quit my job, which is in 2021, in February. So all of these properties were below 80% loan to value. So yeah, I think I’ve definitely adjusted my portfolio accordingly. Since I’ve gotten started investing,

 

Erwin  

what would you tell a new investor? So that’s a question What would you tell a new investor today to do

 

Austin  

be irresponsible with your growth? Right, and, and realise that in social media, not not everything? Not all the answers are in social media, social media is like basically just a contest of who’s doing the biggest and best things. And you see a lot of people go quiet when when things hit the fan, right? So do things at your own pace, understand risk, right? Understand that mindset is important. But mindset isn’t necessarily an excuse for ignorance. I feel like that’s a lot of people’s downfall is mindset was number one. Were all mindset triumph, risk mitigation in their back of the voice in the back of your head can definitely hold you back. But it can also keep you’re responsible. Right. So understand that risk management is extremely important. In real estate, it’s a long term investment on slow and steady growth is the best way to go about it. Right. For most people, for most people.

 

Erwin  

It’s funny, because like, I have some friends who are like, very, very good entrepreneurs. Yeah. And one of them said to me, like mindset important. Or being a visionary, important? Yeah. But there’s lots of them. Yeah, it’s actually the execution that’s hard. You need both

 

Austin  

you need like almost like both. Either you have the skill set in both, or you need, like a partner who’s able to bring that other balance, because you could get out of control. Right, and then take on more, you know, people who have, everyone has probably known people in the community. Yeah, that’s gone. Well,

 

Erwin  

you’re you’re you’re in Yeah, certain communities are very aggressive. Yes. Right.

 

Austin  

Yeah. You know, like, some people make it out. Some people don’t. But we’re just crazy. It’s not supposed to be Yeah, but the people who make it out, you’re like, even me, like I was earlier. For me, it was 2020, where I’ve had that thing, like sorted down to but it was a split. I survived that. But that was enough as a for a wake up call for me where it’s like, let’s change the way that I approach things. But not everyone. Is that lucky?

 

Erwin  

So say, say Austin is beginner today. Yeah. What are you telling him to do? How are you telling him to invest? How am

 

Austin  

I telling them to invest? Yes. So in this current market that we’re in Sure, sure. Sure. Yeah, honestly, when I got started off at about $40,000 saved and I know I’m I kind of what I was talking about earlier is like, invest where there’s like a little bit of headache. But the reality is, when you’re capital constrained, it’s better to be in the market. That’s what led me to be successful, I was able to get in the market and just not participate at all. So I would find a market where you can stretch that $40,000 to make it work for you. Whether that be entry level fixer flips or entry level burrs to first, like understand the mechanics are real estate with relatively low capital risk, right? cash flowing assets, exploring the borrower partnering with someone who has capital, both the guys starting off investing and working together through that, and then slowly scaling your portfolio down that way. That’s one thing I feel like I’ve done right in my investing journey is that rather than complaining that which is a lot of people, oh, I can’t invest in Toronto, dadadada da, and we have this much, I didn’t do that I got off my ass, and I found an opportunity that I could take advantage of. And that’s what led to the majority of my wealth, how to not made that first step I wouldn’t be I wouldn’t be sort of where I am. And now I’m repositioning, right so I had to go through that headache, I had to learn those skill sets. I have to be willing to eat shit, for lack of better words, to be able to build something, sell things off and then be able to slowly pivot back in to some of these major markets, right? So it’s better to be in the market than not to be involved at all right? Because if you’re sitting with 40 or 50,000 and waiting to be invested in Toronto, Hamilton, London, Ontario, but you’re gonna be waiting forever.

 

Erwin  

Yeah. So say I want to start in Windsor, for example. How much do I need to start? Push capital a lot

 

Austin  

more, a lot more. So I think most single families are going for like 400,000. Now I would almost move it towards Northern Ontario. Honestly. Get to sort of started off and how far north Sudbury, Sudbury, right. Well, it sorry, it was a single single family home in Sudbury, Sudbury, it depends on which area I like you can get some the two hundreds, you can get some of that three hundreds, right. So you can make the numbers work there in Sudbury still. But again, like just understand that it may not be ideal, but it is a stepping stone because sometimes it is easier to get in the market. And he just did not participate at all right? Because you learn the most when you’re involved in these transactions. So yeah, I mean, I would look for a cash flow and market summer something that you can afford, whether that be turnkey, or whether that be a value add ideally value add to make your money sort of work for you. And if you don’t have enough for value add, find someone who’s new again and kind of partner up there and build a home base and scale from there. That’s exactly my blueprint in Windsor. And I’ve made mistakes like on how I’ve gotten about like how I’ve gone about like bad neighbourhoods, so on and so forth. But the general blueprint, I would do the exact same, maybe like some of those small decisions I made that were wrong. I would exchange but yeah, and then and then from there, again, you can reallocate your portfolio accordingly.

 

Erwin  

Right. But let’s restart our Austin. Yeah. What about modern day?

 

Austin  

Modern day Austin? Yeah, that is good neighbourhoods.

 

Erwin  

Because you said you have a house in Toronto that you’re working on? Yeah. So

 

Austin  

I would never I would never prior I would never, ever imagine Toronto, I was always a cash flow. Why would anyone do anything in Toronto? Yeah, so I got I got a deal in Toronto, 830k. And little Portugal, a semi detached house 92%. And vendor take back 3.2% interest rate, I can do a duplex conversion, I was looking at a couple of options. And architects said I could do a duplex conversion on a pretty decent budget there. I could do a single family flip. Or I can live in it myself. So you have multiple options. multiple options. Yeah. And here’s the big thing is I don’t mind living in it myself, if none of those things pan out. Right. So like fiance approval waiting, but yeah, no, no, she’s approved. She’s, she would love to live in a semi and near downtown Toronto. So yeah, I mean, that has multiple exit strategies. And also, I mean, you think about it like the VTB. Right, the VTP is 3.2%. So the carrying cost is not significant for a project like this. And again, like you’re talking about around less than a million dollars for a semi an a primary. So I feel like the risk is, is relatively low there. I would have to go back to 2017 2018 Prices for me to lose money on this deal.

 

Erwin  

Yeah, how’d you get through the BTB. On this week,

 

Austin  

the guy owned it out in cash, he was somebody nine years old. First, we’re doing everything traditional. And I was like, oh, man, the numbers aren’t gonna work as much. If I get private, too much risk, so on and so forth. I was like, Hey, do you own this in cash? She said, Yes, that’s it. Do you know what undertake pack is? No, then just explained it to him. And the guy was really cooperative, right? Not every seller is going to be super cooperative, but he was. And so he was, we started with 95%. And then he’s like, I’m okay. Then the lawyer is like, No, I don’t I don’t like 95% too much shots. Like, he’s like Austin, can you do any better? It’s like, 92. And he said, sure. Yeah, I’m not gonna sell myself short. So he said, 90? Yeah, it worked out. It worked out really well. This one isn’t really as much of a negotiation tip. The person who was just really easy to work with? Yeah, all good. No one can be like 92. Now, it just ended up being locked that the guy was super flexible.

 

Erwin  

What was it about the VTB that was attractive to the seller, he

 

Austin  

79 year old. So different sort of person, not not an investor with apartment buildings or anything like that very much an investor who has bought one or two properties at a time, sit on it for 10 years started to appreciate it’s a different sort of investor than you and I are right. So obviously, their priorities, their goals are a little bit different. The guy 79 years old, he’s like done holding properties. He’s done what he’s done in real estate. And so he just wanted to, I could tell that he just wanted to make sure that the next generation or whoever’s buying this to succeed, or almost like a mentorship, sort of role, and you can get that vibe from him. We sat on the porch, and we spoke for an hour just about random, this building rapport and all of that. And I could tell that he was like, he liked being that guidance figure. So he wanted to just make things work for me. Right? So it wasn’t about what’s appealing of a VTB. Surely there’s nothing appealing for him and a VTB right, like save on capital gains this that what who cares? The guy Sunday nine, right? Not a huge deal. And he’s made a lot of money in real estate already. So it was just more so I explained to him like, this is how I’m looking at things. He agreed with me through my thought process. I was like, This is what I need to make it work because it’s how it changes the numbers and he was just willing to give that right so it’s almost like knowing, I guess it is knowing who you’re negotiating with, right? Like I feel like elderly people who have had all the success in the world. Some they fall into two camps, one of them stubborn in prices. If you don’t meet my price, then doesn’t matter. I can just hold on to this thing. And the other one is they actually wants to get rid of the port. folio and doesn’t mind taking that sort of mentorship or guidance approach with the person who’s buying in next. And that’s where he fell into.

 

Erwin  

So how did you find the property? Yeah, this

 

Austin  

was from a bird dog, actually. So I have a couple of bird dogs and the wholesaling programme. And one of the things that we do is multiple things that we do is again, expired listing, Kijiji ads, door knocking, cold calling, so on and so forth. This is from DGI, we’re just one of the first ones to reach out. The guy was, first he didn’t want to negotiate on price at all, so 870, and that the numbers didn’t work out at 870. We had it under conditions for a month 30 Day inspection condition. By the end of the 30 days were like, look like we tried our best, whatever way we caught it, whatever quote, we get, the numbers aren’t going to work out. So by the end of the 30 days, we’re like we’re still interested, but it needs to be at this price has to change because it was under contract for 30 days. Let’s just get this to the finish line. First, he wasn’t negotiable. And so by waiving conditions and negotiating the price lower, we got the deal done. But again, we’re competing against another wholesaler on this deal, a really big and more experienced wholesaler as well. And same thing the guy was not willing to budge on pricing. I guess the other wholesaler tried to push too much on the pricing aspect. So we just took it down. Instead, we weren’t able to find a buyer and we weren’t able to do it ourselves. Not at the price. We got it under contract for somebody sounds pretty cheap. It is it is but it’s located on Dufferin. So right on the main road. So you do take it here on price. And you do take it here because on a busy road or main road. Yeah, so marketability is going to be something to consider 870 is still a good price. Don’t get me wrong, but its marketability this risk at that point, it’s not like a no brainer price, like you want to get it at the lower eight hundreds, right, especially when he wasn’t giving any VTB or anything. So private money and all of that you add that in your transaction costs before before doing anything in the property, land transfer tax all of that, like it’s probably like low, mid nine, hundreds, for touching anything. So it didn’t work out for a lot of people, including ourselves. But at the again, at the end of the condition. A lot of people if they dedicated that much time with you throughout the process, they would rather just work with you then start from square one again. So we had that advantage. 30 days passed and the markets picked up. So we started seeing recent comps, and we’re like, oh, these numbers are juicy. But let’s get it down to this price. And it all worked out.

 

Erwin  

Yeah. So deal made sense to you not done. Yeah, the deal made sense.

 

Austin  

Especially with like the past 30 days have been insanity. Right? So the column started showing as Alright, this is like we Yeah, yeah, I think I could, but you know, like a lot of that competition is the turnkey assets because its end users. Yeah.

 

Erwin  

Is there anything wrong with the property that?

 

Austin  

No, no, no, no, there’s nothing wrong with it. The other wholesaler who’s really experienced as well, we chatted through it after I waive condition. He’s like, Yeah, like, his his thought process was exactly aligned with mine. Right. And he’s seen probably five to 10 times more properties than I ever saw. So yeah, I mean, we both didn’t catch anything. And then how much this is renovation budget renovation budget is about 85 grand. Let’s see. No, not much at all. Yeah, like if I was to show you photos of it, it is not a garbage property. It is in decent condition. But not Toronto. good condition. Like you take this and you throw it in Windsor rentable, throw it in Sudbury rental, throw it in London, Ontario, probably rentable, it’s just not up the price optimising in our market, then when you think instal for initially I was hoping for 1.1 but now just the way that the market is going, I wouldn’t be surprised for 1.2

 

Erwin  

Fantastic. All right. Awesome. Thank you for being so generous with your time for sure. Any any final thoughts you want to share?

 

Austin  

Not necessarily I think real estate there I guess this is more of a shout out to you. I like the conversations that we have because not everything is just like you know all all roses and things are going well like things do happen in real estate investing and I feel like this is the the only podcast where I’ve been given the platform to not only share the successes but a lot of the struggles I’ve gone through it if you look on my Instagram, you can’t really maybe I share struggles here and there but you know like a lot of it’s on stories it gets lost or whatever the case is but investors who achieve big things have gone through their fair share of struggles right and I think people need to realise that I’m speak to many first time investors who get into like just one I was speaking to on Instagram don’t know names they got into investing with their first asset they thought things were gonna be great and then baseman leak they have to do exterior waterproofing. open work permit that the Lord and catch oh yeah, this is the reality of investing, right? Like not everything is all rosy. And if it’s your first property where you get caught offside, it could really deteriorate you from from moving forward. So really just make sure to do your due diligence and be slow. Hosts Yeah, title, or even then like I don’t think there was moisture or a significant audit. No, I wasn’t doing the due diligence there. But like these are things that can happen if you get too ahead of yourselves, right. So educate yourself. Take Action don’t get stuck in analysis paralysis, but that also is not an excuse for being stupid and just rushing into things.

 

Erwin  

Yeah. Crazy. Yeah. Inspect the house. Your novice inspected.

 

Austin  

Yeah, yeah. But it’s like I don’t I it’s hard to blame them as well like bad advice from a lot of people. Right? Oh, there’s

 

Erwin  

tonnes of bad advice out there. Yeah,

 

Austin  

I just feel for these people. When we have the conversations like, what can you do? It’s like, you gotta go through title insurance and just hope for the best. So you got to see if they’re going to buy the seller is going to give you any sort of reimbursement, which they’re not right. I highly doubt it. If it go to court, probably. Yeah. If the seller knew about this, and what are the chances is

 

Erwin  

one, like a Porsche,

 

Austin  

I don’t know what it is. I don’t know what it is. But even that it’s still even a small one is 1000s of dollars that it shouldn’t have have costs.

 

Erwin  

No, hopefully, it’s like, you know, in rail or something. You know, a few 100 bucks, right? Yeah. Yeah. It’s not like a, you know, like an addition on the house. Yeah, yeah. And awesome. Where can people follow your journey?

 

Austin  

Yeah, on Instagram at Austin 86 on Instagram, and then I have my link tree on there. And you can just take a look at everything. What’s the six, four? I don’t know. Since I was young. I just it was the only thing available my my email is the same thing. Austin needs six at Gmail dot everything’s just Austin J six.

 

Erwin  

Oh, just because there’s too many Austin news out there.

 

Austin  

This is what Google or Hotmail recommended a long time ago. And I just went with it. Cool, nothing creative about it. Well, you’re

 

Erwin  

in the sixth. So I guess it works out. Before we go, you’ve been trying to buy condos off market?

 

Austin  

So yes, yes, yes, I have.

 

Erwin  

I have assignments, I’ve been looking for new construction assignments. I’ve had success

 

Austin  

with it before in the pandemic, which is why I’m trying to repeat it again. You know, peak fear, people want to hoard liquidity. And condo assignments are something that require a lot of liquidity for people for you to pay out profit. Most of them are international buyers. So you got to put 30% So with my first condo,

 

Erwin  

especially if they’re not appraising they I come up with even more money to come in. A lot

 

Austin  

of them are like what the ones I’m looking for, they need to have a lot of juice in the deal, which there were quite a bit, but they require a lot of capital, like the first time I did it, which is the primary I live in right now. I got it for 600,000, march 2020 assignment deal, and 730 square feet in downtown Toronto pre con. Right. So I live in it now. And then we just sold it. So I was looking for another one now where it’s like, how can I get 150k equity on the buy, not compete with a lot of people because either people are fearful of that people are not actively looking or people just don’t want to throw the liquidity and not so I’ve been on the hunt, but I’m just not. It’s a little bit different than it was before. Before people were asking for a little bit more reasonable profit or breakeven, and then march 2020. Now, they’re still great prices, right, but they’re still asking for profit. And so the injection is 330 350k for the best deals, right? Because most people can’t afford that. I could do that. But it just limits my ability to make any sort of investment moves. And I’ve kind of abandoned in that. And that little Portugal fortunately I did because a little Portugal deal fell in my hand. And that’s an that’s an even even better deal. But you know, when everyone’s running away from from a strategy, it’s there might be opportunity there, especially if you’re looking for a primary. There may be opportunity there for you. Yeah, you just need the cash.

 

Erwin  

That’s super cool. Because we’re DM diva. That is super cool. And you’re posting like you’re doing station with folks. Yeah. What do you think a good price to pay isn’t per square foot.

 

Austin  

Really, like anything needs to be below 1000 square. So young and ag like the person was willing to do I think it was 920 per square feet. So it was a three bedroom, two bath. No parking, though. And I think they wanted 760 And it was 800 and something square feet. And I was like No thank you. I’m like Sara has to be below 900 square feet. And there are entertaining it. Then someone came and scooped it up, over negotiate. But that’s okay. Like I’m not that’s not my bread and butter strategy. If I get something that is too good to turn down. Yeah, I’ll do it. But if it is not too good to turn down, then I don’t care enough to do it. I’ll buy resale and then just work on getting leads that way.

 

Erwin  

I just love the I just love the idea that you’re trying to find a deal for a primary. Yeah. Because I’ve told people to do that you’re looking for a deal. Go find someone in the assignment market.

 

Austin  

But it is still a numbers game. You got to pick up the phone and call see he was negotiable, who’s not people who are signing 2019 deals. There’s not a tonne of meat on the bone 2020 Not like these are like 2017 2018 that are about to be completed this year or next year. That’s where there’s meat on the bone, right and I’m almost trying to convince them to take minimum profit, which has not been a very successful endeavour. But again, I’m not in any rush. So that’s okay. Awesome.

 

Erwin  

I think it’s a pretty good pro tip there. Yeah. All right. Thanks, Austin for coming in.

 

Austin  

Yeah, appreciate you for having me.

 

Erwin  

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BEFORE YOU GO…

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It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

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Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

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Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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Private Lending Update, Losses From A Downmarket With Calvert Mortgages

Have you stepped out of your comfort zone lately?  

I’ve discovered that those who fearlessly challenge the status quo are the ones I consider to be truly successful real estate investors. This is what sets my successful clients apart from the masses. 

 
 
 
 
 
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A post shared by Erwin Szeto (@erwinszeto)

Based on my experience, real estate investors are often middle-class homeowners with kids and great-paying jobs/businesses.

Yet they still want more out of life, and/or their parents did, as the truth about real estate is many, many investors get help from their parents.  

From significant financial gifts in the hundreds of thousands and/or guaranteeing or co-signing for mortgages.  

This is the truth about real estate investing, and you’ve probably already heard of stories from people you know who received inheritances from parents or grandparents who were mortgage-free homeowners.

It’s no coincidence that real estate is commonly the cause of intergenerational wealth. Will that change anytime soon in Canada? 

If immigration keeps on track creating excessive demand and worsening the supply of new housing being built, I’m still recommending quality, small multifamily properties to clients, especially if they can’t hang on to those negative $1,000+ per month “income” properties.

Speaking of getting out of their comfort zone, we have several new clients who are pivoting away from condos by selling them with our help, even in downtown Toronto, getting rid of the negative cash flow to rebalance their portfolio into a property that actually puts income into their pocket.

The idea of subsiding a tenant’s rent over $1,000 per month… I have better things to do with that money.

An example of why I’ve never been a fan of condos is because the options are so limited, condo fees rise faster than inflation, condo boards limit one’s control of the property…

On the other hand, my clients here at iWIN real estate own freehold houses on land. Those with a big enough lot can add a garden suite at better cap rates than any apartment building, and as a new build, the garden suite is not subject to rent control.

If you, too, would like to invest like one of our 45+ income property millionaire or multimillionaire real estate investors or need a real estate portfolio review, I highly recommend it, especially if you’re negative cash flow.  

Know that interest rates are going up again in July as June’s job reports came in 3X higher than expected. The economy is stronger than expected, so more high-interest rate pain is coming.

If you’re not ready for action and would just like to learn, we have an upcoming iWIN Meeting, all online via Zoom, where I’ll be sharing the latest market update AND the artificial intelligence, AI for short, tools we’re using today in our business. 

AI will cause massive disruption for the good of those who know how to use the tools to be more productive. 

As always, I’m on a mission of truth-seeking to discover what works and doesn’t work in my own business and portfolio or real estate properties.  

The iWIN Meeting is Tuesday, July 25th at 7:30 pm EST; my team will be breaking down the highest and best-use real estate investments our clients are executing right now that work in this elevated interest rate environment while the market is cool for the short-term. 

For those who enjoy an in-person experience, we are hosting an iWIN MasterMind Tour the following Sunday, July 30th, in Kitchener/Waterloo, where we meet for coffee, tour two income properties, and mastermind over lunch. 

There’s nothing better than learning hands-on, in person and hanging out with like-minded people, in my experience. 

Ensure you’re on my email newsletter to stay connected to all these best-in-class educational events.  

One can register on my website at https://www.truthaboutrealestateinvesting.ca/.  On the right side, give your name and email, and you’ll know about all our latest and greatest events.  

If you have friends and family who care about improving their financial futures, invite them along too 😊.

Speaking of being out of one’s comfort zone.  I’ve been displaying my terrible golf game, which I’m self-conscious of to other golfers. While I love the game and the networking, it’s painful to consistently slide my golf ball into the woods and regularly 3 putt, sometimes 4.

On the positive, the people I’m meeting or getting to know have been awesome. 

My new friend Susan is in the business of helping immigrants come to Canada. I asked, “How’s business?”  Her answer, “It’s been busy.” 

You know me, I have follow-up questions: “Busier than pre-pandemic?” Her answer is yes. I’m surprised and have more questions: “Don’t they know how expensive it is to live here?” She responds with a smile, “Yes, that’s why they’re moving to Hamilton.”

This type of macro and microeconomics information is gold for my clients and me. 

We, as real estate investors, have two businesses: 1. We rent to tenants, and 2. We sometimes sell.  

Hence I want to own what is in high demand from both tenants and buyers, and it continues to look like our clients, and I are investing in the right asset class and area as the immigrants are still coming.

Private Lending Update, Losses From A Downmarket With Calvert Mortgages

On to this week’s show!

This week we have our friends from Calvert Home Mortgage Investment Corporation back to give an update on the private lending/mortgage market, including lessons from the downturn: e.g. what did in-default real estate investors do wrong? What do they have in common? So you, the listener, my clients and I may avoid the same mistakes.

Please keep in mind real estate investing can easily be done wrong and less right.  Ask anyone who speculated on pre-construction and is negative cash flowing or does not have the means to close.  

Long-term that could be a fine investment, but most can’t handle today’s interest rates and strict lending guidelines.

Anyways, on today’s show, we have Garrett LaBarre, Underwriter at Calvert. He’s the guy who actually reviews mortgage applications from a risk perspective and determines if they’ll lend, and Jesse Bobrowski, who is Vice President of Calvert.

One of the magical things about real estate investing is the asset is so good that banks will lend me a lot of money which suits my objective of keeping the deal and equity to myself. 

This is why learning about all your financing options is key to being a successful investor, BUT debt is a double-edged sword as your risk is greater, as you’re about to hear about in this interview. Such is the truth about real estate investing.

Since Jesse and Garrett live and invest in Calgary, they share a market and economic update on Alberta, which I know is a hot topic for investors. 

You can check out Calvert at https://chmic.ca/.  

As we do discuss securitized investments, here comes the disclaimer.  Please enjoy the show!

 

The information and opinions expressed in this podcast are solely for educational and informational purposes and should not be considered investment advice. The hosts and guests of this podcast are not licensed financial advisors, brokers, or registered investment advisors, and their comments should not be construed as recommendations or endorsements of any specific investment, security, or strategy.

Investing involves risks, including the possible loss of principal. Before making any investment decision, you should conduct your own research and consult with a licensed financial advisor to determine the suitability of any investment for your specific financial situation and investment goals.

The hosts and guests of this podcast make no representations or warranties as to the accuracy, completeness, or timeliness of any information discussed in this podcast. The podcast is not responsible for any errors or omissions or for the results obtained from the use of this information.

Listeners are advised to use their own judgement and seek the advice of professionals before acting on any information provided in this podcast. The podcast shall not be liable for any damages, including but not limited to direct, indirect, special, or consequential damages arising out of or related to the use, inability to use, or reliance on any information provided in this podcast.

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Hello, everyone, and have you stepped out of your comfort zone lately? I find that those who are willing to challenge the status quo often, that often that’s what I see as successful real estate investors. I see it my clients, I see that’s what sets them apart from that assets. Real estate investors from my experience are often from the middle class. They’re homeowners, kids, are the children of homeowners. They have great paying jobs that businesses and they want more. And oftentimes, their parents wanted more adults as well. So that’s pretty much the investing is that many investors receive help from their parents, especially young ones. And when I mean help, I mean like significant financial gifts range of hundreds of 1000s of dollars, which can also include guaranteeing or cosigner mortgages. And you please read stories of folks who have received inheritances. One of our staff received a very sizable inheritance from their grandparents, grandfather’s passing away, leaving behind I think about like a $1.6 million free their house. So is left behind to two grandchildren. So yeah, massive transfer of intergenerational wealth, and the cause of it was real estate. Will that change anytime soon in Canada, as soon as immigration changes, we see immigration current numbers come down. Don’t forget when Harper was in office, and this isn’t a political thing, it’s more of like a dating. Well, over 10 years ago, when Harper was in government, he set a record of immigration that with 245,200 45,000 new immigrant Canadians during his office, and we’re now in 500,000. Immigrant rage now, at the same time, there’s articles this week that just came out about how massive labour labour shortages in construction and renovation. So add on that to the difficulty already building housing. Oh, it still seems like owning quality, small multifamily properties. Makes sense. And that’s the advice we’re giving to our clients. Now, we’ve spoken to some, we have some new audience members who are new to the value investing world, we have a lot of folks who were buying construction now listening, at least they’re not they’re now tuning into this show. And unfortunately, a lot of negative cash flow properties. Thankfully, some of them do have equity in their properties they’ve held they’ve had them long enough that they’re leasing equity, they are positive. And we have many clients in similar situation. They bought single family homes for value, like five 810 years ago with refinances. Now for anyone who’s done the burr method, you know, one of those R stands for refinance. So that means that someone took a new mortgage, to borrow more money on the existing property, making the mortgage payments bigger. Now, if interest rates, pretty uncomfortable rates pretty high. Even people who’ve owned property for a long time are negative cash flowing. We’ve had clients choose to divest them in order to pay down debts, or even turn that money over into properties that can potentially cash flow, like a duplex or a triplex. So this is getting people out of the comfort zone. Many of us got into real estate investing thinking that we would buy a property held like 510 15 years, pass it on down to family at times change. So we’re always happy to do a portfolio review and that can be checked with our listeners. And if that’s something that interests you, feel free to email us at Iwan real estate. Sorry, that’s Iwan wi n at infinity. Well, that’s, that’s iWin community wealth.ca. Again, we’re happy to do portfolio reviews to do an equity check how you’re doing, because again, many of our clients who are negative test positions that are positive on their equity returns are choosing to divest. If you want to have a conversation around that, we’re happy to help. Because, to me, I’ve spoken to some people, people who aren’t our clients, they tell me that they have negative cashflow. 1000 or more on generally the condos and I have better things to do with my money than to subsidise my tenants rent. That’s just me. So hopefully everyone out there is okay. Hopefully your equity positive. Again, we’re happy to have the conversation if you’re interested. Yeah, again, I’ve never been a fan of condos. I think I’ve been pretty obvious in the show. I’m happy to invest in the development of condos. I never want to be a holder of a condo because again, condo fees rise, typically faster than inflation. counterbores limit once control the property doing what you can do with the property. For example, if you wanted to run into short term rental, on the other hand, real estate our clients generally own freehold houses on land, and those with a big lot and add a garden suites and a better name. So just some loose rocks, not the numbers. You can build a garden suite for around $300,000 from from scratch some young land already. And then our client is renting out her property right now for $2,500 a month. So if she gets that, bless the management costs, maintenance costs, they can see costs, a cap rate works out 9.1% 10.1% Tap on the garden suite. So that pretty much beats almost any investment out there. Real Estate. Again, assuming that you already own plant, that’s the point, you need to own a property, not a condo in the sky. So if you would like to invest like one of our 45, plus Income Property millionaires or multi millionaire real estate investors, and you need a portfolio review, I highly recommend it. Especially if your cash flow negative. If you’re not ready for action, and you’re just ready to you’re interested in learning more, we do have an upcoming Iowan meeting online on Zoom, where I’ll be sharing the Live Smart market update. And I’ve been digging to artificial intelligence quite a bit in terms of the tools that are available for for my business, including being a landlord. So I’ll be sharing about the tools that we’re using today in our business, AI is going to be a massive disruption for the good for those who know how to use it. And the tools is getting better and better. I’m not easily impressed with what you can do already with these tools. As always audition for truth, seeking to find out what works and what doesn’t work. In my own business, my own portfolio. That island meeting is Tuesday, July 25, at 7:30pm. Eastern Standard Time, my team and I will be breaking down, my team will be joining us as well, Coach Chris and Steve will be showing you what the highest and best use shows the investments our clients are executing on right now. Properties that do actually cash flow, and they even work in this elevated interest rate environment. And the timing device actually is pretty strong. Because if assuming you’re one of those who saved and worked hard, save a much premium with their money, then there’s not a lot of buyers out there, all interest rates are high. And we’ll see more and more business owners come online as the interest rates the high for probably at least a year. For those who enjoy an in person experience. We do host I would mastermind tours in person. And our next one is Sunday, July 30. in Kitchener Waterloo, for me for coffee tour to income properties. So we go inside them. We have hand notes that the numbers potential numbers on their properties, and then we mastermind over lunch. To me there’s nothing better than learning hands on in person and hanging out with like minded people in my experience. Make sure you’re on my email newsletters stay connected to all these best in class educational events. I can register on my website at WWW dot truth about real estate investing.ca. Again, that’s www dot truth about real estate investing.ca. On the right side, enter your name and email. And you know that all of our latest events, if you have a friend or family member who cares about improving their financial future, feel free to come along. Now speaking of being in a display, business play my terrible golf game, for which I am self conscious to others. While I do love the game, and especially the networking, it’s painful for me to be consistently slicing my ball into the woods, and regular three, or sometimes four. If you’re new to golf for unaware this is these are. The positive, the people I’m meeting and getting to know has been awesome. My new friend Susan, for example, has been in the business for a very long time of helping immigrants come to Canada. I asked her How’s business? For answer? It’s been busy. And you know me, I always follow on questions busier than pre pandemic answers. Yes. To my surprise, I have more questions. Don’t they know how expensive it is to live here? She responds with a smile. Yes, that’s why they’re moving to Hamilton. This type of backroom of micro economic information to me is gold. Because it’s information that my clients that I need to know, we as real estate investors have two businesses. So therefore, as a real estate investor to business, you have one, you’re in the business of renting to tenants. And two, sometimes we do sell these businesses. Hence I want to own what’s in high demand for both tenants and buyers. And the way it’s going to do just look like we’re gonna have clients for both tenants and for resale. And as long as you’re messaging right asset class, in the right area, and as long as the immigrants keep coming, surely, that’s happening onto this week’s show. We have our friends returning from covered home mortgage investment corporation back to give an update on the private lending market, mortgage market dates, including lessons from the downturn. For example, what did in default real estate investors do wrong? What do they have in common? So that you the listener, this is leverage, right? So that the listener myself my clients can learn to avoid the same mistakes. So please keep in mind, the same essence can be easily done wrong. And there’s obviously less right ways to do it. Ask anyone who speculated on construction and its negative cash flow like a lot, and especially those who are close almost pre construction contracts. Long term, that can be a fine investment, but most can’t handle today’s interest rates in the work difficult lending guidelines. Anyways, on today’s show, we have Derek Lebar was an underwriter at Calvert. He’s the guy so an underwriter what they actually do is there’s one who reviews more mortgage applications from a risk perspective, both the applicant and the property and determine whether or not to let awesome we have to So I’m guessing Justin’s his boss. He’s the vice president.

 

Erwin  

He’s been on the show before. One of the things about real estate investing is that the asset is so good, the banks will lend me a lot of money versus my objective of keeping the deal and the equity to myself, I maintain full control of the asset. And all the upside and profits are mine. On flip side all the last week, as well. This is why learning financing options is absolutely key to becoming a successful investor. But debt is a double edged sword. As your risk is greater, as you’re, as you’re about to hear. In this interview, such as the truth about real estate investing. Some people got the wrong sort, since Garrettt, Jesse living invest in Calgary, the share market and economic update on Alberta, which I know is a hot topic for investors. As we do discuss securities investments, the disclaimer is coming. And you can check our Calvert at Ch hmic.ca Ch M ic.ca. Please enjoy the show.

 

AI  

Disclaimer. The Information and opinions expressed in this podcast are solely for educational and informational purposes, and should not be considered as investment advice. The hosts and guests of this podcast are not licenced financial advisors, brokers or registered investment advisors. And their comments should not be construed as recommendations or endorsements of any specific investment, security or strategy. investing involves risks, including the possible loss of principal. Before making any investment decision. You should conduct your own research and consult with a licenced financial advisor to determine the suitability of any investment for your specific financial situation and investment goals. The hosts and guests of this podcast make no representations or warranties as to the accuracy, completeness or timeliness of any information discussed in this podcast. The podcast is not responsible for any errors or omissions, or for the results obtained from the use of this information. listeners are advised to use their own judgement and seek the advice of professionals before acting on any information provided in this podcast. The podcast shall not be liable for any damages, including but not limited to direct, indirect, special or consequential damages arising out of or related to the use, inability to use or reliance on any information provided in this podcast.

 

Erwin  

Jesse, Garrett, what’s up guys busy these days?

 

Jesse  

Oh, fortunately getting to hang out with you.

 

Erwin  

But last time was over zoom. You guys are from Calgary. We’re here in the GTA today.

 

Jesse  

So yeah, we get to visit with yourself, we get to visit with some of our borrowers. While we’re here on this trip, we get to visit with some mortgage brokers that we get to do work with and then also some of our capital sources, bankers and shareholders.

 

Erwin  

Fantastic. So let’s jump right into it. Are your borrowers happy to see you hear from you?

 

Garrett  

Yeah, I think so. I mean, they’re always happy to hear from us. Like we were talking about earlier, we’re calling all our old clients who bought in that tough time between January and April. And just checking in to see how they’re doing making sure projects are coming along and seeing how we can help. We’re always solution based lender, so we want to do what’s best for our clients.

 

Erwin  

Fabulous. Sounds like you’re experienced better than mine. Because I’m chasing my property manager for my last month’s rent right now. No, no, it’s like it’s May 11. So it’s a little bit late.

 

Jesse  

Well, well, don’t get us wrong during our check in calls that we did to those borrowers who we lent to during peak times, there are some some issues, there are some people who are not going to make as much money as they thought or worse, lose money. But based on the fact that we saw property values dropped essentially 20% In six months, we as a fund are very happy with the results very happy with the performance of our borrowers, and their ability to be resilient through this time. So so it was it was a good exercise exercise. We’re really glad we did. And I think if you were to pull our borrowers in and exercise, they’re glad we did how many? How many banks reach out and say, Hey, or when everything okay, anything, anything we could do to to work with you on? Like, like, we literally took that approach and called hundreds of borrowers to see how they were doing.

 

Erwin  

How many did help, how many needed help? Well,

 

Garrett  

I mean, cost them needed help in the sense that the properties went down in value so

 

Erwin  

much, because I know lots of flippers are losing money. My friends aren’t losing that badly, because they were pretty smart. Yeah, no, I’m talking like 515 K on a property. Right? Not bad. Considering

 

Garrett  

Right, exactly. And I’d say that’s where the majority of our clients would stand if they lost money would be around that 1015 grand type of things in the world. Yeah. And then it’s just talking to them about like their future plans. Right. Let’s see. Let’s see if you want to continue this. Let’s you could take this as a learning experience. Or you could say it’s This isn’t for me because I lost on this one. So people have different mindsets. And it depends how long you’ve been in the real estate investor business to right if it’s your first flip and you lost be tough to come back from that.

 

Jesse  

Yeah. And even when you say, how many people did we help? Like? I’d say all of them, because in some instances, help was just somebody to talk to, like, you know, your plans got flipped up on their head? Is it to sell is it to refinance? What should I do? And, you know, we’re fortunate as a company in that we’ve been through multiple cycles. And we’ve seen what works and what doesn’t, and what doesn’t work is inaction. That’s where

 

Erwin  

things compound sit in your head, and

 

Jesse  

you’re paying our fund, high interest rate, things are getting worse. So something was just talking about action, what are the next steps and pointing them in directions and giving them options? So I’d say we helped everybody but some needed different types of health and others.

 

Garrett  

Clients always want to, I shouldn’t say always want it. But clients are sometimes nervous to call their lender and tell them hey, I’m having troubles. Like, that’s a tough conversation to have. But we welcome those. Yeah, yeah. We welcome those. And we were good with those conversations. So we’d like to talk about it, see what we can do to help. And, yeah, people just need to know like, it’s a good thing to call your lender and be in contact with them will work with you more,

 

Jesse  

at the end of the day, their success is our success. So to sit there in fear, and worry about that stuff. That’s that’s not going to be successful. So

 

Erwin  

there’s just a, you know, I’ll pause. So listener, because you and I already caught up last week, so I’ll tend them, I’ll likely miss some things. But one thing we discussed was, I actually found the shewbread. Within the last week, the national average for default, is something like point one, six, or point one, nine, so it’s crept up, but historically, it’s still extremely low. Right? What are you seeing in terms of your own portfolio?

 

Jesse  

So from a high level perspective, what we’ve seen and keep in mind that typically we’ll see defaults quicker than a traditional bank lender. And that’s because the bulk of our borrowers are typically in and out in a very short period of time. So it gives us

 

Erwin  

sorry, you can’t quantify that like six months, 18 months?

 

Jesse  

Well, in normal market conditions, our borrowers are exiting around every six and a half months. Yep. And these, again, are flippin bird clients. Today in on cheerio, she’s not has been, let’s say four months ago, in Ontario, we were seeing that push up to 910 months. But in Alberta, they’ve stayed around six months for us. But going back to defaults, we had seen an unprecedented time of low default, through to basically, let’s call it May of 22. And then from May of 22, to October of 22, we saw that really ramp up, but still well within historical averages. So our historical, we use a word of enforcement rate. So that would be people where we’re having to take legal steps on would be, I think it’s then and I might not get this number perfect. But I think we’re at like two and a half percent of our fund. So we use the bank’s Term versus our term are a bit different, we’re more liberal with with what we consider default. So we saw that increased significantly. And then over the last six months, we’ve saw that level off. And today, we’re on a downward trend with defaults. Again, keep in mind, most of the stuff that we lent on during peak is off of our books. So we’re lending on today’s values in today’s market. Yeah, we

 

Garrett  

think that a big part of that decline now. And that historical loss rate is based on those phone calls that we had with our clients. That was super proactive and beneficial for us to understand our book and see where we stand. Yeah, so now we’re seeing this decline. And now we’re, we’re doing deals now in a market that isn’t seeing the massive decrease in values.

 

Jesse  

And really, we you know, when we look at Ontario stats, things have levelled off for three months now in a row, which has us comfortable of deploying capital back into Ontario,

 

Erwin  

right. So you’re bullish again,

 

Jesse  

we’re happy with the stable statistics. We’re also happy with where inventory levels are. So even if there is further pain, we believe it’ll be muted because of the low inventory. There’s a lot of buyers that are out there. And I’m sure from the realtor point of view, you have people ready to buy, there’s just not much product.

 

Erwin  

Yeah, there’s way more buyers out there. When people need to understand is there’s a lot of smart money out there. So people that did not over leverage, and there were no pouncing right now. Yeah. And

 

Jesse  

that’s that’s who were like the clients that we’re lending to today in Ontario are that smart money?

 

Erwin  

Very good. I’m sorry. So you mentioned enforcement rate to 9% How many properties is that how many files is that like 1020?

 

Jesse  

Well, we have 800 mortgages. So what would that be? 1620 20 properties.

 

Erwin  

So for listeners benefit for context, I had my friend in here, saw Rob, who’s a Mississauga lawyer, one lawyer office. I don’t remember. I think I’ve 32 Power Cell fallacies working on. Well, so I’ve been concerned enforcement.



Yeah, yeah. Yeah, that would be so one lawyer

 

Erwin  

one office 30 Something files, and your your guys are under that?

 

Jesse  

Well, under that, like in Ontario during this period to date, I think we’ve had, because we have to keep in mind we have a few active, I think the number has been eight total power of sales, five of which we’ve sold. And it’s through that sale process, what we’ve seen it to Garrett’s point is, for the most part, our borrowers have lost very little, some have lost, the ones that have lost the most significant amount are the ones that were over leveraged, the ones that weren’t taking action. So we had to take properties over, or we had to force the sale of properties that were not finished. And that guys didn’t take action. And those are the ones where we saw losses,

 

Garrett  

it was typically clients with multiple projects on the go at once, and just being way too tight on their cash reserves or line of credit and stuff like that, and running those up. So over leverage, and then just really bad timing on that purchase.

 

Jesse  

Yeah, and which is, it’s tough to see those things happen. It’s something that we as a company now paid more attention to for like, like from the risk side we look at okay, what are the real contingencies this client has? What is their ability to project manage, we always ask ourselves that but even more acutely today than ever,

 

Erwin  

right? See, for myself, I’ve only ever bought one property at a time. I will not buy the next property until my vacancy until my property is full rents coming in stabilised everyone’s definition of stabilised, but by tenants in and getting rent. Now I will look for that next property, I only want to have one vacancy in my portfolio at a time. I can imagine people doing two three properties at a time.

 

Jesse  

And now keep in mind their model was flipping not boring. But yeah, you definitely have to have project management acumen and the ability to source trades, like the trouble you get in his young guy who knows what he’s doing. Doesn’t Well, let’s say he atletic see as a trade and he has a good team. But then when you stretch that team, yeah, cracks you up,

 

Garrett 

you got to make sure that cash reserves are there and the experience is there. But one of the big benefits about Calvert is the fact that we will lend almost all the purchase price, right? Like we do $20,000 down in Ontario, minimum. And then in Alberta, it’s 10,000. And our biggest client in Alberta, he’s got about 20 on the go right now. So yeah, so that’s a lot to manage. But you if you have the teams in place, it’s doable. And he’s been doing this. He’s been scaling with us for the last four years. I think so. And

 

Jesse  

he’s an interesting case, because he’s very, he’s much more cash rich than a lot of our borrowers, like a lot of our borrowers that use the 20 Grand down product. They’re just starting out, right. So so so their barrier to well, just starting out in that they’re doing what the barrier to entry, we’re reducing on the capital inside, but they have the experience. They have the acumen. So we support them. This gentleman with the 20 on the go. He’s built this over decades, and he’s putting 25 30% down per property really de risking us on that end.

 

Garrett 

Yeah, he’s started in the 90s. So like he probably would have started where all these others would have started at that $10,000 down or doing some sort of loan like that, and scaling to the point where we can do all these at a time. Yeah.

 

Erwin  

That’s investor and guess if we have 20 deals on the go, I’m guessing they have lots of staff.

 

Garrett 

Yeah, for contract teams that 14 for teams on payroll. I don’t know that I don’t get into that too much. And that’s not something he always wants to share. So it’s a bit



of a secret sauce.

 

Erwin  

Yeah, but I’m guessing he’s our biggest customer. So there’s a lot on payroll, or he’s probably like, over 80% of our business.

 

Jesse  

Yeah, I would be like, it would be like the contractors for builders, where, while they’re not on payroll, all their business is coming from the builder

 

Garrett 

or Yeah, so if he doesn’t have a property on the go, then they’re gonna go elsewhere. I think that’s the case. So he’s always got to keep moving and buy the next property to do so.

 

Erwin  

So sorry, you said when you said 90s, you said you’ve been doing this since the 90s. Yeah,

 

Garrett 

okay. He’s a real estate, investor business,

 

Jesse  

and all Calgary. So he’s seen what what we love about our Alberta clients is they really understand risk. Because in Alberta, yeah, they’ve seen it, we get slapped around every eight years typically, you know, market drops 1020 30%. So they understand how to manage their downside. Whereas here in Ontario, we have a generation of investors who haven’t seen that the although we just did witness it over the last year. Although I think like we’ve talked about it, it’s impressive how quickly it has bottomed and stabilised

 

Erwin  

which is really fast. Yeah, yeah. And I thought

 

Jesse  

Yeah, faster than we thought to we were really concerned that it would compound itself with with inventory issues and continue that slide down. But it all data indicates that we’ve found bottom, although data can be wrong.

 

Erwin  

It’s kind of the silver lining of rates going up so quickly. They went up quickly, so they stopped pretty quickly.

 

Jesse  

Yeah, we felt the pain quick. We rip the band aid off.

 

Erwin  

Yeah. Can’t wait for that stop. For example, I’ve shown the show like we Terry and I bought two duplexes in August 2021. And so we paid like low eight hundreds for them. And then with the downturn, we were under, like prices, a farm boy paid like, dammit, we screwed up shouldn’t have bought those. Yeah, I knew I didn’t have a good feeling about it. And now like, you know, our backup in our back in the black like, yeah, I didn’t sell those. Yeah,

 

Jesse  

like, like all the investors who say it’s ermine, it’s not timing the market. It’s time in the market.

 

Erwin  

I’m in the market. Timing is pretty nice right now.

 

Jesse  

It’s great to have timing, but you can’t rely on

 

Erwin  

Oh, no, no, my point is like, from what I’m seeing, we’re past the bottom. I’ve been saying on the show and into our clients for the properties that we transact on the bottom was August 2022. Yeah. And then since then, it’s just been price has been steadily creeping up. And then it just make just keep creeping up until I don’t know what well like,

 

Jesse  

until there’s inventory or less demand, which are we seeing neither of those happen. Look at the immigration numbers. Look at the employment numbers, like

 

Erwin  

in the I don’t know if you guys caught it a Toronto last night just passed. We got rid of single family zoning.

 

Jesse  

Yeah, we were. I read about it on the news this morning. But we were also talking with Rockstar real estate earlier about that. And it’ll be a really interesting trend to follow. Hopefully, we see a lot of opportunity for more density in the single family space in Toronto. And that’s the business we want to support. So hopefully, we see a good trend with that. Let’s get

 

Erwin  

into it. Because for example, I think it’ll turn we’ll set the trend. So for example, I invest a lot in Hamilton, we’re probably I’m gonna guess about two years behind. We have an NDP mayor. So I think she’s at this she’s probably like the on board with something similar as well. So I guess probably within two years, we might have something similar in Hamilton. But let’s get into it, for example, because I was talking with my investor friends, and we’re talking about what happened about the getting rid of single family zoning. So how do you actually invest? So specifically Toronto, you know, you might have to pay like 1.3 for disaster property, right, that you can convert into a four Plex? Yes. Right. So say I want to invest in me say I want to buy that. How can you help me? So

 

Jesse  

we want to focus on the renovation side. So if you’re truly tearing it down and constructing, we’re not the right lender?

 

Erwin  

No, my plan would be convert, because I want to do within the ability to love your plan. Right. So I want like, my perfect role would be two and a half storey. I need at least 3000 square feet. Ideally, a detached garage. Alright, go. I want a four Plex in the house. Let’s do

 

Jesse  

a tonne of those. Yeah, so we’ll support on the purchase. Because that’s a lot of money. Yeah. 1,000,003 We definitely aren’t going to do it at 20,000 down. Come on. I know I’m sorry.

 

Garrett 

Yeah. Anything over 800,000 We’re typically gonna want at least 10% down. Okay.

 

Erwin  

All right. 10%. Down, okay. 10% down,

 

Jesse  

show us that you have the capital to renovate, and the ability to renovate like,

 

Erwin  

because I’m probably gonna be like, five 600,000

 

Jesse  

Yeah, so that’s gonna be a trickier one. And we may have to take a good look at our product to try to support the construction side. Because the barrier to entry is huge on

 

Garrett 

that. What I’ve found, too, when people want to get into these bigger projects, or multifamily is they do have typically a portfolio of real estate too, that we can possibly tap into, as well. So we can blank in another property up to 70% 75% loan to value and use some of that equity to help with those renovations.

 

Jesse  

Yeah, very solutions focus. So you know, guy like, yourself might have a portfolio properties, let’s say on average, they’re leveraged with the bank at 60% will take them up to 75. to inject the cash into that property. We’re always looking for ways to get it done for

 

Garrett 

you exactly. We’ll look at your whole portfolio and see what’s the best solution for you give you options too, because some people will want to, they will want to tie in other properties. Let’s say I can bring on a partner or something and I’ve got this other cash so they want to do that way. But a lot of people will say hey, I’ve got this equity here doing nothing for me, so might as well tie that in.

 

Jesse  

Yeah, but today if you’re without that property, and you want to buy for one, three, and your cost is 500. It’s gonna be tough for us to get that deal done, unless you have the money. So like 10% Down 130 grand and then you have to have the four or 500 grand, so the cash preferably in cash Credit. We’ve seen good joint ventures happen, like, you know, or when’s uncle might be looking for yield, everybody’s looking for yield in this environment. Everyone’s got a great plan and he’s gonna back it. So we’ll allow that money to come in Absolutely. As long as we see the money’s actually there. You can’t just show us Hey, Uncle Joe’s lending me 500 grants, we’d say great, show us the bank statement, show us the agreement. Ideally, Uncle Joe flows the money into your account. Because what we’d hate to see happen is life event happens Uncle Joe and now the money’s not available. Now we’re in trouble on the project.

 

Erwin  

And just a reminder to the listener, like I’m talking about disaster property. So pretty much no one else is gonna touch or be like, like,

 

Garrett 

even I remember, my was probably my most recent multifamily, but it was an IT WAS AN Edmonton, and it had cockroach infestation. And and that’s my like, Well, no, it had like a bunch had health orders on title and stuff and boarded up and all this. So like, there’s certain ones like if

 

Jesse  

we see all the orders on title, you see opportunity. Yeah, in Alberta, we register our health orders on title. So we see opportunities with those get pretty

 

Erwin  

bad to get to that point. Yes, certainly, visibility government didn’t want to like register on title and belly of legal fees to Yeah, they gotta

 

Garrett 

provide a specific plan for us to be able to consider that like that’s an extreme case, this is not going to be most cases. But a lot of times it’s hoarders or just a property that just looks off on the inside that for a lot of people, a lot of people just shy away from just for the look. But there are opportunities there.

 

Erwin  

Right. But you guys love it.

 

Jesse  

We love it. That’s where we see opportunity. You don’t go on site. Yeah, we do. So we always send and we always do a site inspection, that will sometimes be our staff that hazmat suit that will sometimes be a third party. So we’re always walking the property and understanding not only the property, but its surroundings, because maybe the hazmat suit is the next door and they’re always looking to buy and where they grew. And it’s gonna be hard to rent this out for the market rents you think you’re gonna get when you have a crack house next. So we always we spend a lot of time understanding the property and its location, because that’s really how we manage risk is by doing good loans on marketable properties or soon to be marketable

 

Garrett 

properties.

 

Erwin  

Because this downturn like my friends and I we say like this downturn is the ultimate stress test for anyone’s business portfolio. Sounds like you did all right.



Oh, we’re really happy with what we do.

 

Garrett 

We feel very comfortable with how we did like I said, the big problems that we had, were those people that bought January, April. Other than that, we’ve been super comfortable with our book and and what we’ve done

 

Jesse  

so yeah, like we talked about the exercise that we did, where we literally went looking for problem files, which not a lot of banks do not a lot of mortgage lenders to. And we when we find a problem, we mark to market that problem. So it lives in our financials as here is the problem. And we our year end is February 28. So we just published our urine statements to our shareholders. And with all of that, in this terrible year, we were able to produce a plus 10% return to our shareholders. So yeah, we’re, we’re happy with how we manage the risk.

 

Erwin  

All right, many directions are gonna go. Let’s first talk about your outlook for Alberta. And a lot of people interests on Berta, whichever look for Alberta. Yes, the lending thing gonna fall apart. Do you care about oil prices?

 

Garrett 

We’re still excited about Alberta Oil. Yeah, there’s a lot of don’t go that far. But there’s tonnes of opportunity in Alberta, like oil is still here. We’re like, there’s still opportunities there. We’re building in the tech centre as well, like tech is becoming a big thing in Calgary as well. But just cost of living to like our properties are valued, on average, or benchmark prices in the 500,000 range, right? Whereas here, it’s a little more expensive. So but like we haven’t seen it, we didn’t see a big Yeah, just a little more. But we didn’t see the big drop off that that Ontario did, right. Like we stayed flat all the way through, we’ve been a steady market. So we’re really comfortable with Alberta. Oh, yeah.

 

Erwin  

Like Jesse said, what? 20%? Over 17 years.

 

Jesse  

Yeah, if you look at we had a peak in residential real estate in 2007, followed by the financial crisis, followed by a couple ups and downs. And then most recently, an upward trend and values are 20% higher than they were in 2007. And to Garrett’s point, all these great things you mentioned, because of that, we’re seeing unprecedented migration to our province,

 

Erwin  

your federal community for BC and Ontario. Yeah, and even

 

Jesse  

on the income side, like on an average basis Calgarians on earn more than Torontonians and real estate is half the cost. We have less income tax. We don’t have HST it’s just GST so fibre sent and the quality of life like you and I were talking or when earlier tomorrow morning, we have to go. We’re gonna stay in Hamilton tonight and we have to go downtown Toronto for breakfast at 10. And we’re worried about it’s probably going to take us two hours and probably be off for two for two hours and be a bit of a hassle. Whereas in Calgary, you can live 20k outside of Calgary, in let’s say Cochrane would be a good example. Cochrane is a town of I think Cochrane is 40 50,000 people. No, yeah, but that’s what we were, you know, we’re only $1.4 million dollar population base in Calgary. So 20k outside, you could be downtown Calgary in under 40 minutes during rush hour. So it’s very easy to live in Alberta. You get the mountains nearby. And you can see them



from everywhere. From everywhere. So anyhow, that’s the

 

Garrett 

other thing is we when we drove into vond, because that’s where we’re staying last night. Like what is around here? Like we didn’t see anything. But we’re close to Toronto. Like that’s the crazy part is there’s no interest like there’s there’s a couple couple of condo buildings as well of it

 

Jesse  

in saying all this we love on Yes, we do love to and we think Ontario has a bright future. But going back to Alberta, we’re very comfortable. With lending in Alberta. We’re very comfortable where our economy is. One thing we have to be wary of is that our economy does move with oil with energy prices. But the outlook on energy is is isn’t going to drop below $60 A barrel in the near future. The smartest people who say not likely so but also like Garrett said we’re we are finally diversifying our industries. There’s a lot of tech happening. There’s a lot of clean energy solutions.

 

Erwin  

There’s a lot of both Edmonton and Calgary diversification or mostly Calgary, Edmonton has

 

Jesse  

always been diversified more on the public sector. So that’s where our capital is. That’s where a lot of public sector activities are. But both cities also have a big education of a few universities, well regarded worldwide. So yeah, we’re both Edmonton and Calgary. We’re really confident and that’s where 90% of all our Alberta money is.

 

Erwin  

Do you notice your split between the cities? Yeah,

 

Jesse  

I might not get it perfect. I think it’s 7030 70% in Calgary, and now that’s because of Calgary is our backyard. So we understand a lot better. It’s a lot easier for us to deploy money.

 

Garrett 

Yeah. Also, I think the biggest brokerages mortgage brokerages are in Calgary as well.

 

Erwin  

Yeah, it matters. It really depends on where the opportunity is.

 

Garrett 

Sure. It’s just what they know. Like and it’s what we know. We know Calgary,

 

Erwin  

intimacy. Yeah. Yeah. So you’re still Calgary game like it’d be like 50 or 80,000 people just from Ontario last year.

 

Jesse  

It was a big number. Yeah, unprecedented migration.

 

Erwin  

Oh, yeah. You guys must think the prices here are nuts. Do you got we do early. Okay, so I live in Oakville, I think people know it’s not the cheapest. And a friend of mine had put it off our house in Canmore. Okay. She’s got a beautiful view. It’s like 3000 square foot four bedroom. And he’s told me it’s like 1.5.

 

Jesse  

And we think that’s wildly expensive, by the way, but like cameras and camera are expensive and more. Kenmore is the most expensive area within

 

Erwin  

GAVI. Right. Yeah. And it’s only that you want to be close to Banff. Isn’t that why you live in Canada?



You’re literally smack dab in the mountains are 10 Wars just

 

Garrett 

nights too, but I mean, it’s only 10,000 people. It was like 10,000 people and that price so



so so are you is your friend thinking that Canada is a good deal or an expensive deal? Oh, it

 

Erwin  

is expensive? I’m like I’m laugh. Because 1.5 Don’t get you much.



You don’t think that that’s that expensive? No, because of Euro

 

Erwin  

do not get a view at 1.5 and 10 in Ontario. Right?

 

Jesse  

Where is that? 1.5 You’re waking up smack dab in the mountains. In this world class city. We’re close to class. Yeah, yeah, yeah. But yeah, can more we’ve seen big growth like Mr. You drive around. And because it’s you’re an hour away from the Calgary International Airport. You have Europeans buying in Canada quite a bit, because it’s cheaper than buying in Zermatt and Switzerland and all that kind of stuff. And you can’t

 

Erwin  

find their freight. No. So it’s the next closest thing

 

Jesse  

you can if you live and work in Bath pricey if you don’t live in work in bath you cannot buy in Bath.

 

Erwin  

I’m guessing it’s pricey.



Yeah, similar we can Yeah.

 

Garrett 

But it’s mostly businesses. I feel like people who are buying in Bamford getting like Bed and Breakfast, that type of stuff. Airbnb, there’s a couple I don’t know. There’s not many. So

 

Jesse  

yeah, you’ll have like these millionaires that want to live in bamps a little by convenience store. Yeah, most.

 

Erwin  

Most will buy in. The bad part about living in tourist town is the tourists Yeah, festivals and weekends is nuts. To change it. You can’t get a table at your favourite restaurant,



not on weekend. It’s not in the summer.

 

Erwin  

Okay, so look for Ontario prices are nuts here. No one can afford anything. Yet they’re

 

Jesse  

somehow affording it. Yeah. Okay. But it is it is one of the things that we worry about is how stretched Canadians are, you know, we’re not seeing it as as bad in Alberta, because what we just talked about, but the debt burden is worrisome. Like, it’s tough to do the math on how people are surviving the average person with how much housing costs. So, but what we’re seeing again, as it relates to the micro economic data, is you got hardly only supply. You got a tonne of demand. And families and individuals are figuring out ways to make it work. They’re living multi generation, they’re staying with their parents longer. Parents are passing down wealth to children in order to buy housing. So we’re comfortable with the values, believe it or not, it’s just from a Calgarians perspective is like, how do you make it work? But they’re making it work? Yeah,

 

Garrett 

but we don’t do a lot of lending right in the GTA area. Like that’s not our main focus, some, but our main focus is those London, Hamilton, K, WC Euro, like all all these different places where the the average price point is not over that million dollar point,

 

Erwin  

but we’re still well above a Calgary price point. Yeah,

 

Jesse  

well, even those centres that we mentioned well above Calgary price point, when you’re

 

Erwin  

so you had yourself feeling comfortable. Yep.

 

Jesse  

Yeah. And again, we’re, we’re shorter term, right, like we can flow through our portfolio in a year. So we’re not saying, you know, bullish 10 years, 20 years out, but we’re very comfortable letting today’s Yeah.

 

Garrett 

And we pay close attention to the markets, though, like we do if you’re probably on our monthly economic reports, right. And so we send those out, and we analyse them internally as well. And we keep a close eye on what the markets doing. But since like you said, since that drop off, we’ve seen it really steady for the last few months. So we’re comfortable with Ontario. Yeah, it’s

 

Jesse  

a good point. And we stay really fluid with how we lend, like our chief risk, Officer Dale, is paying a lot of attention to the leading indicators. And if we’re seeing issues with supply, if we’re seeing values drop, if we’re seeing demand drop, we can lower our loan to value, that’s the easiest way we do it. So during this downturn, when we were comfortable with the market, we were letting up to 80% of the after repaired value. We brought that all the way down to 70. We’ve since brought it back up to 75. So we’re not as comfortable as two years ago, but we’re comfortable. So we have we have really good levers to look at the data and move our lending decisions around based off of that.

 

Erwin  

Now I want to talk about lending because it’s, it’s funny, as I’ve been saying to friends lately, it’s never been a better time never been a better time to be rich. Because the quality opportunities I’ve never seen so many last time I call it off opportunities. I’ve said on the show many times that I personally don’t private lend, right to me, it’s too much work. Too much risk. The worst case it does too much for me, as for example, worst case is I’ve had to take back the property. So this is so for the benefit of the listeners benefit, if worse comes to worse, if I need to take control the property, and I need to start making mortgage payments for the first mortgage, I’m generally not happy at all, like the intention of private lenders is for something passive. Now you went from extreme passive and to earn some positive cash flow. Now you’re nowhere near that once you’ve taken control of the property, a lot of work a lot of work, legal fees, I have to pay someone else’s mortgage. Right?

 

Garrett 

Yeah, like Jesse and I came from the same background, we both were at a syndicated mortgage lender to start, which is one off mortgages that you’re selling. So you get a mortgage and you have a bunch of different individual investors and you send out a whole summary of this mortgage to sell them and say, Hey, this is what we got. Are you interested in participating? So we’ve been on that side, but now being on the mix side.

 

Erwin  

Just want to elaborate on the syndicated deals you were doing. What kind of deal with is this a single family home was a retail,

 

Garrett 

it was all types of deals. Like we’d do just all typical stuff that a private would at that COVID is purchases debt consolidation, equity, takeout some construction to and we just sell those to individual investors.

 

Jesse  

But where you’re talking is it would be so for some context, that would be a form of private lending where you Erwin are going on title. But there’s a professional manager in between doing the due diligence, having disclosure and your best interests in mind where what I believe you’re talking about is you doing your own due diligence sourcing your own deal and going on title.

 

Erwin  

Yep. Or even just

 

Garrett 

working with a broker. But yeah, well, the Sure yeah. And that’s even more challenging because you have to do all your own administrative where call you or, like you said, so

 

Erwin  

your own collections? Yeah,

 

Garrett 

it’s a very tedious and it’s hard work

 

Jesse  

takes a lot of expertise to manage that risk. Like what I would consider if I was considering that is what is your expertise? How do you know how to underwrite risk? What does loan to value mean to you? What type of property Do you want to focus on? What type of market do you want to focus on? Ask yourself those questions. Also?

 

Erwin  

Well, the words are to diligence, due diligence. But with all these failures, we’re seeing, like we’re talking about, like Greg Martell, and MMAC, whatever it name is, MC is, we have a developer of 1000 houses that won’t get built, all the deposit money’s gone and cost a few in Ontario. My point is that everyone says due diligence. And then I generally think a lot of people are a little bit overconfident themselves in their ability to do due diligence. Yep. But we’ve there’s a lot of history out there that people cares.

 

Jesse  

Yeah, we’ve built a business based off of managing risk with 40 years of intelligence, and we still are learning. So to have an individual with no underwriting experience and risk experience, that’s a big task. And now, sure, you couldn’t do it and make it work for you. But I also even look at deal flow like, like the most important thing as a, as an investor is going to be given the right opportunity. And the way the market has evolved in Canada is your banks that are getting bank loans, they’re getting the top end of the credit curve, and you’re getting B lenders, let’s say they’re lending out a prime plus one plus two, they’re getting those type of deals, then you’re getting alternative lenders, private lenders, mix are part of that space mix make up 95% of that space. So you think to yourself, Why am I getting this deal? You’re getting the deal? Because it’s been kicked down the credit curve, to the point where you’re getting the opportunity, are you going to jump in? Are you the greater fool? Why would the MC not want to do this loan? Are you pricing it right? Are you managing it right? So there’s a tonne of questions to ask yourself. And

 

Erwin  

I asked a dealmaker to my desk and like, Why do all these other people pass it? Yeah,

 

Garrett 

exactly. And then you got to think worst case scenario, too. So you go do you want to manage a foreclosure or power of sale? Like that’s worst case. And that’s, that’s a full time job, takes a lot of work. And then the other part of the private lending, too, is if you’re doing it, and you do a deal, and so you get paid out in a year or whatever. You got to find the next deal to keep that that rate of return, where it should be like you think, okay, you’re getting paid 11% on this deal, interest, and you get paid out. Okay, now what you better find a deal quick to be able to keep up with returns that mix offer,

 

Jesse  

you have the money sits idle for three months, and you annualize that now your 11% is actually 8.75. So what have you really done, and you have to invest a lot of time and energy into properly underwriting so there’s a tonne to consider, and you know, if any of your listeners are thinking about it, we’re happy to discuss it. And it could work and we’re happy to give you underwriting tips and let you know how to kind of how we would think about it because we want to see our industry succeed. And if they’re being directed to the what’s the guy’s name in in Victoria, that’s being accused.

 

Erwin  

Yeah, so we’ve $58 million is missing. If the public is

 

Jesse  

being directed to the Greg Martel’s, then that’s not good for our market. That’s not good for Canadian so we’d rather give our information and guidance at no cost and then have it go to what is allegedly a fraudster and Greg Martell.

 

Garrett 

Our industry is scrutinised that much more after these things. Oh, yeah. So

 

Erwin  

there’s gonna be a reckoning. Yeah, for developers and for all of whoever else is going on under our private lenders are having massive issues. Yeah, we’ll

 

Jesse  

see the downturns in the market bring to light who’s swimming naked?

 

Erwin  

Yeah, it wasn’t always swimming naked though. Apparently. The receivers accusing him of also you know, having private jets and luxury condos in several cities and obviously supercars. And that seems to be a commonality that people who have that stuff, but you can wonder.

 

Jesse  

Whereas Garrett and I are here in Ontario over supercars, pinching every penny, we’re literally we literally decided for our shareholders benefit that we like each other so much that we’d roomed together for this weekend. So like, that’s how focused we are on the bottom line.

 

Erwin  

In the book, Good to Great by Jim Collins. It was actually mentioned several times. Great companies are quite frugal, right, like, my cousin works at Walmart. The Walmart head office in Mississauga went to visit them. They don’t have a cafeteria. It’s a Tim Hortons and it’s they pay rent, nothing subsidised. You want to have a meeting with someone So there’s so no frills, right? They truly are,



who they say they are. And that’s how you get the lowest cost.

 

Erwin  

Right? Yeah. That’s how they get to. Yeah, that’s how they keep their prices down. So damn, yeah, yeah, that’s it. That’s probably the truth for real estate investing. Most real estate investors are not flashy at all,

 

Jesse  

no, and most, most truly wealthy individuals are not flashy at all. When we mean get we’re mentioning on the flight here, like, I’m looking on Google LinkedIn, for some of our most successful clients. And there’s not much you know, there’s no pictures of them driving Ferraris, or stories of them living in villas in Hawaii there. They’ve got themselves to the place for a reason.

 

Erwin  

Yeah, lots of people are very quiet about their wealth. Because why would you want to be so public? What what benefit?



Is it? There’s no, yeah, just put a target on

 

Erwin  

your back. Yeah. Yep. So sorry, I cut you off. We’re talking about him getting mortgages. And then he has moved into a MC format. Well, no, we were

 

Garrett 

at a different company completely. And it’s funny, because Jesse actually hired me twice, I was hired to Cedar, he left two months. And I was very happy with him because he left me but but he left and then I joined over at Calvert, like five years later, and now been with Calvert for four years. And, and this is the MC model where we take in investor money and diversified across 800 mortgages in our portfolio. So there’s just that it’s still considered a high risk investment when you consider Calvert and a MC. But it’s diversified across 800 mortgages, instead of just being on one mortgage, and we’re managing everything. So when it comes to a power of sale, or foreclosure or whatnot, we’re gonna manage that. So you’re not you’re still hands off. And even though we had all these power of sales, and when not that many, we had eight, we return that 10.76 to you with no management, right? Do your masters Yeah. So

 

Erwin  

in how often is I paid annually, once a week, once a year, once you’re

 

Jesse  

paid annually, usually goes out honour before May 10. financial year end, February 28, auditors come in and review our books, we build our audited financial statements for board review board meets just before the end of May, and we push out our returns and our information commercial person. But from the standpoint of Garrett mentioned, high risk, from the Securities Commission standpoint, we’re considered a high risk investment reason is as a private company, we don’t have the same disclosure standards as pub coasts, and also the liquidity like we’re not publicly traded. So if you needed to access your money, you could only access it with us annually. So you would you would put it in a redemption request. And we would pay that out again, honour before that may 10. Every year, we also have a gate on the fund where we’ve seen some funds run into trouble is they don’t have gates. So the gate on the fund that we have is up to 10% of of the whole fund annually. Luckily, we’ve never hit that 10% We’ve been able to honour every redemption request we’ve we’ve ever gotten. But there is liquidity like to me, one of the bigger risks of investing in any private placement is liquidity. So you gotta be prepared to have your capital sit there for at least a year at a time, if not more,

 

Garrett 

we’re very transparent, like we have very detailed financials that we send out and you can see our entire portfolio and where we sit loan to value wise, which is at 59% right now, on average. So we where our money

 

Jesse  

is placed, like you can see the loan to values on the whole book, you get to see where we’re lending which communities what we’re lending on residential versus commercial, a lot of great detail which our analysts were are really sophisticated investors love that type of reporting. We try to report to a professional company to a sorry a public company standard and operate to publicly company centred as it relates to how are governed and an audited

 

Erwin  

today. So what what is your budget for reporting? Well, I think we’ve always had a staff or and they’re just doing a report

 

Jesse  

on on with with on our accounting team. Our accounting team is made up of CFO, Carl, we have a treasury manager DOM and then we have five staff accountants. Okay. And that’s that’s a lot and then also a comptroller Eric. So yeah, we’re a financial institution, we need to operate as such. So we’re happy to spend money where money shouldn’t be spent. And to us it’s it’s on reporting and managing our investors money.

 

Erwin  

So somewhere north of a million a year yeah. And salaries just in your counting to you. Yeah,

 

Jesse  

yeah. Oh, yeah. Keeping in mind we earned over 30 mil.

 

Erwin  

So obviously going for more, don’t tell them don’t tell them.

 

Jesse  

No, no, we like to strategically invest where it makes sense and to us. Risk is is a huge part of what we do. So So hiring the best underwriters and risk managers and accounting is our two big things for us.

 

Erwin  

So is this an MC? Is that the official term for each investment company, but just because you’re in Alberta, you’re regulated differently.

 

Jesse  

The securities regulators in Alberta regulate mortgages differently. So everything that is not one person on one title is considered a security.

 

Erwin  

Also, soon as this indicates no security Interesting. Yeah, so you don’t hear. So

 

Jesse  

what’s happening in Ontario and BC, is they don’t have that type of regulation, although I think they’re going that way. And I think this downturn will help them get that way. Because you’ll see, again, these private individuals who really didn’t appreciate risk and didn’t appreciate underwriting where it worked for them for 20 years, because the market is able to mask those mistakes when it’s going up 5678 9%, on average, whereas on the downturn, that’s where you learn, oh, shoot, I shouldn’t have been in that second mortgage at 85% loan to value on a $2 million house where I’ve lent 200 grand that 200 grand is gone. Now. Plus, I can’t I can’t even protect it, because I don’t have the means to pay up the first mortgage. So we’re regulated more closely in Alberta. And a big reason for that is the amount of private investing activity in Alberta, not real estate, like oil and gas, they start up to raise a lot of money through those means. So the security commission put a lot of good regulations around that. And in turn mortgage just got captured in that which, you know, 10 years ago, I remember it, we went through that process in 2010. So I guess, 13 years, dating myself, but at the time you look at it as a business operator, and you say all this red tape all this stuff, why do we have to do all this, but in retrospect, it really increased the level of professionalism in our industry, and truly did protect investors, which was their goal. So it worked out. Right, because don’t get me wrong. Red tape always doesn’t work out like that.

 

Erwin  

No, it doesn’t. But it might have prevented, like some of the massive losses we saw in Ontario like fortress. Yeah. Paramount equity. missing somebody. But yeah, yeah. Yeah, I know, lots of people personally, that are great lost money. And those things are not they’re hiding under the mortgage regulations. So that, to me, there were securities they were not, yeah, not not transparency, not enough

 

Jesse  

transparency, even how the business was being ran with, I’ll use fortress as an example. They were they were a development company that didn’t really know development. And they were raising money to lend to themselves. So it was a, it was not a good model for success.

 

Erwin  

I think if people if they were if they were more transparent, for example, like right away, because I got an idea what their marketing budget was, and I knew what they’re paying for commissions. And then like, then the investors caught home the risk for not a proper, to my opinion, a risk of proper risk adjusted return.

 

Garrett 

Yeah. And that’s the big benefit to Calvert. And something we always say is the fact that we’ve been in business for over 40 years. So a lot of these companies come up, and they’re newer, and you got to do your due diligence on their background and how they’ve done in the past. That’s a huge part of

 

Jesse  

how much money that principals have invested alongside you is important. Like our money, the bulk of our net worth is literally right alongside or, we’re prep shareholders, and so is you if you were to invest in us. But also, I like what you do, you’ve mentioned, marketing budget, which is something that we’ve done in a really another way we provided value to our shareholders to hit that those high returns, is we don’t really pay for capital. So our average cost to raise $1 is significantly less than the rest of the market. Garrett and I and our CEO do it mostly through relationships. And because we have had the ability to manage risk, have that long track record, and really transparent financials, we can go to sophisticated investors and raise money. So we’re not having to raise money from, you know, grandma with $50,000 TFSA, we can raise an average check size of significantly higher, so that makes us more efficient. And it also makes us a better company, because we’re getting to work for really sophisticated investors who challenge us and ask us good questions that make us better. Whereas, Granny with $50,000, God bless her is probably not asking those types of questions.

 

Erwin  

Can you share? What is the track record of return? How far back can you go? Well,

 

Garrett 

we can go all the way back. But I think the two most important numbers that we throw out to our investors is five year tenure. So 10 year, we’re at 10% and five year we’re right around 10.7%.

 

Jesse  

And we got to say that this year, and we got to say that past returns are not indicative of what the future holds. We’re not here to peddle our security. But yeah, that’s what our return has been. And what I love about the tenure is it includes the tail end of the financial crisis, because that was the last real big risk event. And through the financial crisis, we didn’t lose Any shareholder money, and we’re able to provide a positive return the lowest return gotcha was just under 5%.

 

Garrett 

Yeah, we see those averages. But whenever we’re talking to investors, we’re typically telling them that we expect between eight and 10. If we’re lower than eight, we’re doing something drastically wrong.



The market, something’s happened in the market, that’s happened.

 

Garrett 

But we’re all striving for over 10. Because like Jesse said, we’re all shareholders in this company, we want to see it grow and, and get those big returns for investors.

 

Erwin  

So then my question like, how member is asking, that’s trying to get a call to get on a call with you? So my question was, why would someone private land, willing to just be a shareholder of Calvert, and to be diversified across 800 mortgages

 

Jesse  

or advice, poor advice, maybe the brokers self motivated for them to lend their money, they make the commission. So poor advice, poor research, they haven’t understood all the opportunities, but also sometimes they’re like, for us, we don’t accept money from non accredited investors. So unless you have an income of over 200,000, or a million dollars, now, financial assets were not an opportunity for you. So unfortunately, you may, you may choose to go that route because of that, which is even worse, because those people don’t really have the financial means to be taking on that risk.

 

Erwin  

Most of the people I’m talking to are accredited, they’ve already exited a piece of real estate, they don’t have lots of money. Well, we



don’t have a marketing budget. So we’re not splashed all over either. Like it’s

 

Garrett 

not selling our investment much. But sometimes people just want that control to teach us what to do the work. There’s some people that just I don’t want to troll too, but I know my limitations. Some people just want to take it on themselves. They think they can do it and have outer. But yeah, it’s a good question. Because we offer similar returns with with no work self.

 

Erwin  

So I find that as an office investor, who’s looking to invest in Florida, right there Canadian, never done anything in Florida before. They’ll have trouble getting financing, they know. But then the suggestion came out, she came up with something that’s been suggested to her. It’s just borrow private money as her primary financing. But it’d be like 10%. And I’m like, in my experience, that’s expensive. And that’s for short term use. Yes. Right. And they’re like, oh, as long as the numbers make sense. And like, I don’t know what deal with that makes sense. Yeah. Because if that deal made sense, it should make sense to a lot of people. Right? But yeah, you gotta make money lending out. Yeah, even you think 10% is not something you do for long term.

 

Garrett 

It’s not sustainable. That’s why we want to be that short term option, we make sure there’s an exit. You don’t want

 

Erwin  

to lend for long term. You

 

Garrett 

know, we



want we love short as possible. Yeah, you’re

 

Erwin  

getting a great rate. You don’t even want it out there.

 

Garrett 

Yeah. And I think I think a lot of people know that we do a lot of financing for real estate investors. But we also love just any sort of short term stuff, like a bridge deal where the purchase and sale dates don’t line up. But there are other incidents,

 

Erwin  

actually, because I’m hearing a lot of bridge loans are needed these days. Yeah. And we’re happy

 

Garrett 

to do them like those are, those are great loans that are quick, and people just are in and out. So the interest rate is less relevant, right, when it’s a month bridge. But the other one, too, is is just

 

Erwin  

so how long does it take you to put together a bridge? It’s usually usually you’re finding out late or you can close the deal tomorrow?

 

Garrett 

Well, maybe not that quick in Ontario, but in Alberta,



in Alberta, tomorrow

 

Garrett 

48 hours right?

 

Erwin  

Late in the process. So we need to bridge

 

Jesse  

where’s the 11th and a half hour, my bank fell through here’s why

 

Garrett 

helped me. And there’s also when you’re saying the elevens and a half hour, it’s the same with when the bank has a bunch of conditions and we’re coming up on the on the date, they’re going to purchase a property and maybe the appraisal comes in and says the property’s fair condition or doesn’t look the way they want it. And they’ve got three days to close, like, what the heck do I do? So we’re that option that’s super quick for clients. We do our internal values, so we can turn it around really fast, fund it for you. You can maybe do whatever the bank needs you to do, and then jump right back to the banks and hold it long term. And maybe that’s their primary residence. They just couldn’t get the bank financing because they pulled it last minute or something like that. causes delays and closed happens all the time. Yeah, yes, we want to be that short term solution. But there are other things that we do. Other than real estate investor focus stuff like this, where it doesn’t have to be a big Reno or something. But we want to be that option for people new

 

Jesse  

like like new to Canada come with capital and the job but they don’t have the job history, or the credit history got to be a citizen, but you got to be a citizen. They see a house that they love. Good value. We see a clear line to them getting bank financing in four or five, six months. We want those loans So what you said is, yeah, we’re getting a great rate for our risk. But risk is the key thing there. And when we’re getting paid out, the risk goes to zero. So we love recycling our money. It benefits our shareholders benefits, our risk profile. So so that’s what we want to do see your friend who’s buying in Florida. Let’s say she was buying in Calgary.

 

Erwin  

And I mean, just the tour, just for the price point. And

 

Jesse  

there were a clear, let’s say she had to go, for whatever reason, new to Canada couldn’t close quick enough with the banks, whatever. But there’s a clear line for her to get bank financing. We want that loan, and then we’ll work we’ll coach her if needed. We’ll get her with the best mortgage broker, we’ll do whatever it takes to see her succeed and getting rid of us. That’s where we see successes when they exit the loan.

 

Garrett 

Yeah, like most people know us as the real estate investor focus, which we are like, we still love doing those deals with people who are flipping and burning, but we also do so much other stuff to be able to finance things short term. Yeah.

 

Erwin  

And then so what kind of investor deals are you looking for?



In terms of real estate investor,

 

Erwin  

real estate master deals? Well, it’s

 

Garrett 

like we talked about before, we’re we are focused, not as much on the GTA you typically houses that are $800,000. And last, but we still go above it. So we want to be in that sweet spot. And then we also want to make sure we’re in in around the urban centres. We don’t want to go too far out. So we’re not going wave rural Ontario,

 

Erwin  

what’s a population minimum floor, so 50,000, within,

 

Garrett 

within a city that has 10,000 people, we can land inside that city, so it can’t be outside that city. And then we do cities with 50,000 people within 10 kilometres of that. And then 100,000 People will go 25 kilometres outside of that. So it’s urban centres, we’re wanting to stay close to some sort of city.

 

Jesse  

Yeah, I was just looking in in our portfolio composition for Ontario. 82% of it is 100,000 population and within the 25k off. So that’s the bulk of what we’re doing. But really, yeah, who we want to support is firstly, real estate investors that we see them making money on residential projects, short term flip, or book,

 

Garrett 

or two main underwriting criteria for flipping houses, are they going to be successful? Like, are they going to be profitable? And do we think they are going to be via our valuation that we do internally by our internal evaluators? And then two is do they have the money to complete it. So that’s the downpayment, the renovation costs and the carrying costs. So seeing those two things, and then we obviously review the rest of it, AP credit, notice of assessment there, I feel expertise. And if they have a lot of expertise, we probably won’t have to dig in as much as we would new investor and make sure that they have a good plan in place to be successful. Because ultimately, this should be mutually beneficial. That should be okay, you’re coming to us short term, but you should also be making money on the back end, whether it be a burr or, or a flip.

 

Jesse  

Yeah, we want to work with these clients for life. And we’re not going to get the opportunity to do that if we don’t set them up for success. And then finally, mid floor half of the market, we don’t like high end stuff. Because what we’ve seen historically is when there is downturn, that high end stuff gets beat up the most. Also, there’s just less of a market for it, right? Like, there’s just more liquidity in the mid to lower half when economic turmoil hits a floor usually establishes for real estate, but the height usually gets compressed quite a bit. And there’s just less transactions in the high end space. So we love mid to lower. And for that reason, most of our investors are already looking at that. It’s not like we have to say no, don’t buy that $5 million house and renovate it, because they’re not considering that.

 

Erwin  

Yeah, very cottages. Is that something that? No, no. Yeah. Because the

 

Jesse  

because of what we just talked about, exactly. Like it’s great until it isn’t. And it’s amazing how many investors thought it was great over the last three years. And now that people are holding the bed struggling with with with really big payments, they’re letting go those cottages where their supply, it’s in some of the rural cottage areas, there’s no supply in urban centres where people are working and living. Right.

 

Erwin  

And also that seems a problem for him. For many people bookings are low on Airbnb, or maybe yeah, when

 

Jesse  

the economy struggles, those discretionary type income endeavours to get cut back and you always need a place to live for but you don’t need a place to vacation necessarily.

 

Erwin  

I do think part of is because our borders are completely open. So I think more people are leaving as well. They’re choosing other vacation. Yeah. Because my friend that went to like, where she goes she went to Italy in like October and Why’d you wait till October like your past your most past shoulder season? She said that Italy was sold out in September.



Yeah, a lot of pent up demand for travel. Wait. Yeah, there’s

 

Erwin  

still lots of money out there. Yeah, yeah. It’s an interesting world of haves and have nots. Yeah, folks need to make a decision which one they want to be part of? Yeah. All right. Where can people follow up with you, if they want to learn more about this

 

Garrett 

website, check out our website, ch mmic.ca. We have Instagram, Facebook, check those out, we have a lot of educational content that we post. Yeah. And our contact information is on the website to check that out.

 

Jesse  

Yeah. So everything you see on our website and social is going to be geared towards educating real estate investors and borrowers on how to make good decisions. If you are looking for investment information reach out to Garrett or I, we don’t publicly have that information available. Because we’re not allowed to or you know, for multiple, we could technically, we choose to for a few reasons, it does go into the grey area as it relates to securities rules. But also competitively, we don’t like to have it out there. And also, because of how relatively guarded we have our shareholders, we like to be relationship based. So we don’t want every person in the public calling us to be a shareholder. So we’re more than happy to share our information. Like we’ve said, we really take pride in our transparency. So you can reach out to Garrett or I, our emails are just our first names at ch fmic.ca.

 

Erwin  

And I don’t know if you notice, but what you just shared, right? They’re so different that people who are trying to raise capital on social media. Yeah, I guarantee you call me anytime of the day.

 

Garrett 

The disclosure was even thrown out there. So yeah, yeah, I hope it’s Yeah,

 

Erwin  

so So listener and trying to highlight the fact the difference between when your licence insecurities and how you present opportunity, versus how someone that took a weekend course reforms, that’s opportunities on social media. Thanks so much for doing this. Thanks for coming all this way, just for me.

 

Jesse  

It was just for you, or when. Thanks for having us. And thanks to your listeners, for hopefully, getting a little bit of education but we love we love what you do. We love your platform. We love the fact that your mission is education and something that we hold near and dear to ourselves.

 

Garrett 

Yeah. Yeah, we appreciate it. And thanks for having us.

 

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. 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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UPCOMING EVENTS

You are the average of the five people you spend the most time with! Build connections with empire builders and trailblazers at our iWIN events.
 
CLICK HERE to check out what’s coming up next.

 

BEFORE YOU GO…

If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.

It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success. 

New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.

We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best.  In 2018, we again won the same award by the Real Estate Investment Network.

Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics.  The intersection of the two, talent and ethics is limited to a handful in each city or town.

Only work with the best is what my father always taught me.  If you’re interested, drop us an email at iwin@infinitywealth.ca.

I hope to meet you at one of our meetups soon.

Again that’s iwin@infinitywealth.ca

Sponsored by:

Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.

Just imagine what winning in real estate could do for you.

If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

W: erwinszeto.com
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Rental Market Update; How To Find The Best Tenants With Rent Panda

At lunch last weekend at the sold-out iWIN MasterMind Tour in Hamilton, a Toronto condo investor shared with me that he is cash flow negative of $1,200 per month on his condo. 

Worse, he has a second condo negative, $1,000 per month. That’s negative $2,200 per month. I think golf is expensive at $80-100 per round.

Just to reiterate my stance on condo investing and negative cash flow investing in general. For the select few independent, top 1-2% income earners, or my good friend James “Money Baggs” Maggs, who has a portfolio of income properties flush with cash flow; sure, new construction condos can work.

For most Canadians, most of the time, it’s not an ideal investment, and unfortunately, I’m hearing about it a couple times per week from folks reaching out to me on what to do.

My view of selling is to only sell investments if I have better use of the money.  

There are many things I would rather do with $1,200 per month than write cheques each month to subsidize my tenant’s living.

My team is also finding amazing deals to invest in from Kingston to Niagara Falls, taking advantage of Bill 23 to add density to income properties to improve cash flow and the value of the property.  

Add to that, the smart money is expecting both Canada and the US to raise rates at least one more time, and the Bank of Canada seems committed to their 2% inflation target, so we’re looking at 12 months at these high rates.

This is hardly a market many buyers want to be getting into, AND summer is traditionally a low season for real estate. 

So if it were me, I’d sell the negative cash flow property and rotate the investment capital into a quality, small multi-family income property in a town with a diverse economy, a post-secondary school where tenant demand is high.  

That generally excludes small towns anywhere.

If you need help to invest like our 45+ self-made, investor millionaire clients, please do reach out. 

My team and I are licensed Realtors and are happy to consult with you on how to rebalance your investment portfolio to stop the bleeding and possibly set you up for future success. 

Email us at iWIN@infinitywealth.ca, and one of my licensed real estate agent coaches or I can assist. Again that’s iWIN@infinitywealth.ca.

Happy Canada Day, everyone!! 

Happy birthday to the greatest country in the world!!No, Canada’s not perfect, but we are generally making progress.
 
The people are honestly one of the best parts of Canada; compared to other parts of the world, we Canadians are incredibly accepting, multicultural, and low crime, and there’s a ton of opportunity for those who make investing a priority. 

My son was born hours after Canada Day on July 2nd. 

I literally watched fireworks from the hospital window eight years ago while Cherry was in labour in the hospital bed, so I had a weekend of celebration.

I may have fibbed to my son that the fireworks in our neighbourhood with a $4,000 budget were meant for him.  Speaking of multicultural, the organizers are my clients; one is Filipino, and the other is Indian. 

We all love making money, love our families, cry when the Leafs lose, and we love this country!

For four consecutive days, we had company coming over for pool and birthday parties, and to feed them, I smoked some chicken, wings, pulled pork, and a top sirloin cap called a picanha by Brazillians. It’s their favourite cut of steak after the rib eye.

Anyways, after the success of my 9 hours smoked brisket for Father’s Day, I decided that I was going to smoke a ten-pound picanha in my pellet smoker and see what happened. 

As someone who likes to research and do things right, I watched several YouTube on how to do this, and it was oddly fun for me.  I’ll post pictures to my social media afterwards.

If you too want to know how you may own a smoker, I can’t recommend enough that you buy one as a gift to your spouse.  

We got ours as a housewarming gift from me to Cherry, and she loves it and tells me so between eye rolls 😂

Rental Market Update; How To Find The Best Tenants With Rent Panda

On to this week’s show!

We have Hart Togman, owner, founder of Rent Panda who’s been helping our clients locate tenants for my clients’ investment properties.

How good is Rent Panda? Hart tells me they’ve had one non-payment of rent issue among 900 to 1,000 successful leases.  That’s pretty darn amazing so if you want to know how to be a successful landlord with paying tenants you will want to listen to this episode. 

Rent Panda also now offers Property Management Services and Hart shares step by step how to create a rental ad and how to automate as much as possible how to handle the deluge of responses because if you bought right like our 350+ clients, your property is in high demand.

Please enjoy the show!

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Last weekend at the sold out I went mastermind tour and Hilton at lunch a total condo investor shared with me that he’s negative $1,200 per month on his condo. What makes it worse is he has a second condo. It’s not as bad, but it’s still negative $1,000 per month. That’s negative $2,200 per month. You know, I think golf is expensive, we’re gonna have to pay 80 $100 per round. This is serious stuff. Welcome to the truth about real estate investing show. My name is Robin Seto. And I like to reiterate my stance on condo investing and negative cash flow investing in general for the select few who are independently wealthy, or in the top one 2% of income earners are my good friend James moneybags banks who has a portfolio of income properties flush with cash flow. Sure your construction is gonna work for most Canadians, most of the times a pre construction condo or single family home and more than recent market the last few years, it’s not an ideal investment. And unfortunately, I’m hearing about it now a couple times per week from folks reaching out to me on what to do, by general view on selling is personally I only sell and that’s a better use of the money, I have many things I’d rather be doing with the 1200 or $2,200 per month, rather than writing checks to subsidy subsidised my tenants living. So add to that, that my team is finding amazing deals to invest in from Kingston to Niagara Falls taking advantage of Bill 23 Ontario’s Bill 23 to add density and income properties to improve cash flow and add value to property at that the smart money is expecting both Canada and US to raise rates at least one more time, the US has committed to two more times at the Bank of Canada, it seems committed to their 2% inflation target. So we’re looking at at least 12 more months at these high rates. That’s currently what the bond markets pricing interest rates. So it’s not my advice. This is literally what the smart money is predicting. Yeah, so this is hardly a market that many buyers want to be getting into. And summer is traditionally a low season for real estate. This could be a quiet time for buyers for quite some time, except for those who saved maintain their credit. And we’re ready to get greedy while others are fearful. And there’s lots of fear out there. So if it were me, I’d sell negative cashflow properties, especially if they’re four figure cashflow negative, and it’s a single family. There’s nothing I can do to it to improve it. Like for example, I was speaking to a gentleman who has a townhouse in a semi detached, but they have the option to suite the basement. I said that’s what I would do and hang on to it. It was a single family home that I had no option to upgrade to create more cash flow, then I’m moving on. Again, I have better things to do with that cash for the money and the capital again, and now we rotate that money into a quality small multifamily income property and a town with a diverse economy, a post secondary school where tenant demand is high. That generally excludes small towns pretty much anywhere, including a favourite of some everything we’ve got right now serious if you need help to invest like our 45 Plus self made investor millionaire clients. So again, just to clarify, they made those millions or multi millions by only income property. Yes, they made money in their homes. But I exclude that from my calculation. So if you need help, if you need help to be a successful real estate investor, please do reach out you can just reach out to our team at Iwan at infinity wealth.ca My team and I are licenced realtors and happy to consult with you on how to rebalance your investment portfolio, stop the bleeding and possibly set you up for better success. Again, email us at Iwan wi n at infinity wealth.ca on my coaches or myself we are licenced real estate agents one of us can assist again as I win at infinity wealth.ca Happy candidate everyone Happy birthday to the greatest country in the world. No Canada we’re not perfect, but generally we’re making progress. The people are honestly one of the best parts of Canada then the nature like you know, the scope is beautiful. It’s beautiful country but I just got back from Victoria. Victoria is beautiful and Tofino beautiful compared to other parts of the world, we Canadians are incredibly accepting multicultural, low crime, there’s just there’s a tonne of opportunity for those who make investing a priority, not just real estate, Jerry was just at the collision conference in Toronto. And there’s tonnes of young people who are going to make a crazy difference in the world create value and likely create a lot of money for themselves and their families. And that’s my that’s why I’m in real estate. That means a lot more to my family. Because my son was born just after candidate Day. On July 2. I literally watched fireworks from the hospital window eight years ago while Jerry was in labour in the hospital bed. So we have a weekend to look forward to. You’re listening to this after the weekend. But yes, at the time of recording I have weekend celebration look forward to I may even fibbed to my son. I make really bad dad jokes my turn all the time, but I will likely tell him that the fireworks that our neighbourhood association is putting on with about a ridiculous budget of life. $4,000 I contribute to as well. Anyways, speaking of multicultural, the organisers just happen to be my client and we all live in the same neighbourhood. Once Filipino, the other Indian, my family’s Chinese. We all love making money. We love our families, we cry when the leafs lose and we love this country. So for four consecutive days coming up and including today, I have people coming over for pool and birthday parties and to feed them I plan on smoking some chicken, the whole chicken chicken wings are gonna make a pull pork. I think that’ll be the first time I’ve ever smoked pork. But yeah, we’re gonna do that too. It tops her line cap, which is the beef cut. It’s called picanha by Brazilians. It’s their favourite kind of steak after the ribeye. But it’s a lot cheaper than a ribeye. That’s why I’m getting it. Anyways, after the success of my knife, our smoked brisket for Father’s Day, kind of smoke a 10 pound pecan ha in my pellet smoker, and we’re gonna see what happens for myself, I actually enjoy doing research Jerry said like don’t why you being so ambitious and putting all this effort into like a 510 hour, cook, smoke, whatever, I enjoy doing these things I enjoy like doing the research, I’ve watched several YouTubes on how to do this, and we’re gonna eat this. And oddly, this is fun for me. I’ll post pictures up to my social media afterwards. If you want to know how to get your own smoker recommend enough that you buy one as a gift to your spouse. We got ours as a housewarming gift for me to Cherry, and she loves it and tells me so in between I rolls on to this week’s show. Today we have tockman, an owner and founder of rent panda who has been helping our clients locate tenants for our clients investment properties. How good is rent panda heart tells me that they’ve had only a one non payment of rent issue among 900 to 1000 successful leases. The non payment was not that bad either, as the tenant quickly left, so damage was limited. A lot of successful leases were written by these guys. That’s amazing. So if you want to know how to be a successful landlord with paying tenants, you will want to listen to this episode. Rent piano also offers Property Management Services, and Hart shares on the show step by step how to create a rental ad and how to automate as much as possible how to handle the delusion of responses that no one forgets. We are in the middle of a housing crisis. And like small town, Trenton, Ontario, but so if you bought correctly, like our 350 clients, your property is in high demand. So you need to be ready for the dilution of responses to your rental ad. If it’s threatened. You find Rent panda at their website, Rent panda.ca that on Facebook, Rent panda and Instagram. Guess what’s called Rent panda. Please enjoy the show. Happy Canada Day, everyone. I heard what’s keeping you busy these days?

 

Hart  

Well, you know, Rent panda life having a baby in three weeks. My first dealing with the rental industry and the ups and downs.

 

Erwin  

Oh, so you’re not busy at all? No, not at all. Lots of free time. Not at all. So explain what’s Rent panda? is Rent panda. Is a play still considered a startup? Is it not?

 

Hart  

Technically, we wouldn’t be considered a startup. But we still do we still act and operate as a startup. So it’s still a baby. Still a baby? Yeah, we we operated for a long while bootstrapping. And we managed to do that for a while, which we were proud of it was about three and a half, four years of bootstrapping. So that probably pushed out our startup life a little bit longer than normal. But now we’re stable. We’re out across Ontario. And I guess to back it up Rent panda was a business that I started with my brother, after we experienced the underserved nature of renting and landlording in Ontario. So my brother was up in Thunder Bay. He was a newly graduated PhD, and he had a tough time finding a rental. There wasn’t really a rental platform out there that served tier two markets. And he was talking to me and I was working in advertising at the time. And in Toronto, there was new at.ca. You know, they were in the incumbent for a very, very long time. Yeah,

 

Erwin  

they dominated the commercial apartment space. Yeah, and

 

Hart  

small residential as well. But they were the incumbent, you know, they were what everyone used. And we thought, you know, view a dossier was 15 year old technology at the time, and there was nothing up in Thunder Bay. So there was an opportunity to build technology and prop tech for landlords and, and tenants in Ontario. So we built a prop tech for three or four years. And then we started to expand as landlords fed into what they needed. So a lot of people said, great technology, but I don’t want to do it myself. You know, can you just find my tenant? So we started into the leasing business? Then landlord said, great, you found me my tenant, can you now just manage? So we started into the property management business? You know, then people said, Hey, can you take on my problem property? And so we needed a paralegal. So we have in house paralegal services. And through that journey, we just realised that there was a need for a brand in rental housing. You can think about brands and every other element every other aspect of life. But when it comes to renting, there’s not a lot of big brands out there. No one

 

Erwin  

dominates that space in terms of rental space. Actually, that’s a good question for the listener. Like think about it. If you’re looking to rent a place with the first brand that comes to your mind. Only because I know your name comes up first. Yeah, because we’ve recently have our clients. But yeah, quick question what was the first iteration was More of a screening online application process.

 

Hart  

No. So funny story in that I was presenting at a conference about a year and a half ago. And the topic was how we built Rent panda wrong. We did we built Rent panda wrong, because my brother and I had experienced the rental industry a little bit. And we sat down. And I come from a brand and product world. And so we started to design the best product out there. We said, Where does the landlord start, usually with the purchase of a property and what is every step along the way that they could possibly utilise a tool for or service for, and we built out the entire rental journey. And then we started to build it. And so the first iteration was a marketplace because you bought a property, you’ve got it ready to go, you need to list it somewhere. So we thought, There’s got to be a better rental marketplace than v1 dot ca, or this website in Thunder Bay, which was called Home Sweet Homes, where you had to eat transfer someone 20 bucks to get a list of all the listings in town for I think that week or that month. So it was backwards, it was totally backwards and the marketplace was the opportunity. But as we started to progress, we thought, let’s build everything. Let’s build it perfect. And, you know, three years later, we realised we had this behemoth of a piece of technology that no one was really using. You know, people were using the marketplace, they were using some screening tools. But we had lease builders, and we had repair and notice notification systems, we had notice building systems, and no one was using it because people just needed a marketplace and a screening tool, right. And so we built Rent panda wrong. We spent a lot of money unnecessarily, and flushed it down the drain and built it wrong. But it allowed us to learn that we need to listen to our audience, we need to listen to our landlords. And you know, in the chicken and egg situation of landlords and tenants, landlords come first because they have the supply. I mean, with the supply comes the demand. So we listen to our landlords, we still listen to our landlords all the time we do surveys, we do one on one coffees with landlords just to understand what their pain points are. And to constantly keep abreast as to what people are experiencing and where the new pain points may lie. Because the industry has changed vastly. In the seven years we’ve been in business. You know, Facebook marketplace wasn’t really doing rental listings back then. So we’ve pivoted many, many times. But we started as a marketplace, essentially, you some pretty full service now. Yes. Yeah. So the idea is that as a small landlord and small landlords, our bread and butter, usually like one to 25 units, we deal with larger landlords, you know, 100 units, 200 units. Some of the big guys, but not really the big property management companies. That’s not we’re gearing our servers you

 

Erwin  

have an in house trust would have an in house.

 

Hart  

Yeah, exactly. But for those small landlords, there’s different types of landlords, right? You have the landlords that want to do it all themselves, you know, they want to learn or they’re running a small portfolio, and they’re doing it well themselves, but they may just need a little bit of software, a little bit of technology to make things more efficient. You know, some other systems. Yeah, exactly. systems for rental success, we call it so we have do it yourself tools, right? Primarily they’re free. They’re lead generators for us for other pieces of business. But those tools on Rent panda.ca People can use, they can upgrade to premium products like screening tools like promotion, we have syndication to Facebook marketplace, all the basics. And that’s kind of the first section of landlords that we want to service. Then we have those who are in the middle. You know, they’re not fully passive with property management yet, but they have that innate fear of unpaid rent and tenant caused damage, let’s say. And that’s the fear that everyone has. That’s why every tech product has existed in the rental space to lower the risk and reduce that fear of unpaid rent and tenant caused damage. So we have a leasing service. And we have leasing specialists on our team across the province, from Thunder Bay in the north to Niagara in the south, from Windsor in the west, to Ottawa in the East. And we have teams on the ground that can find in place the best tenants and we work just like a real estate agent would with someone throughout the entire journey stewarding the process. So we’re going to educate you along the way we’re going to find the tenant, take professional photos, make sure we do the pre screening, make sure that we do all the showings ourselves. So no one can come through unaccompanied. We’re going to do all the post screening and we can talk about scaling later build leases with our paralegal in house and so we we cater to leasing as a singular service. And then we hand over that perfect tenant, that’s the perfect fit for your property. And you can self manage. And then for those landlords that want to do a little bit more of that passive investing, we do full service property management now with a little bit of a different model. So we’ve scaled the model to be across the province now and we centralise everything. So we have a 24/7 365 call centre, that triage is all of the needs of all of our tenants across the province. And in that way, we don’t need property managers in every city, and we can lower the cost. So we have very low flat rates essentially for property management. So we’re not charging you a percentage of monthly rent like most other property management companies, it’s flat rates per unit and It’s the no frills of property management, you know, when things are going great, when there’s a good tenant in there, when you’ve put money into the property to make sure it runs smoothly, there’s very little property management costs. But then when things need to be, you know, enhanced when we need to call out those trades when we need to step in, then the costs, you know, escalate like they do with any other service offering. So yeah, it’s it’s full service, we’re talking about fun development. So that, you know, we can get the truly passive investor who doesn’t even want to deal with property management management, you know, really, for us, it’s about stewarding the entire small landlord process, because what we found as small landlords ourselves was that it’s the Wild West, right? There’s a lot of focus on the world of investing. And there’s not a lot of focus on the world of landlording or execution. Yeah, exactly. And, you know, investing is sexy, right? It gets people jazz, people are open to educating themselves on investing, because they can make a lot of money and it sounds sexy. But renting is kind of the ugly duckling right. It’s the garbage man of the real estate space. But it’s so so important because your asset is so important, right? It’s the product that you’re selling. And the tenant is the client. And a lot of people don’t think about it that way. And maybe I’m biassed because I come from a world of brand advertising. But ultimately, you have a product and you have a customer, and that’s the home and the tenant, and you need to think about that as a business. So that’s what we’re trying to

 

Erwin  

push. And I haven’t mentioned in a while, but the way I frame my tenants to my team, so like my contractors, for example, my handyman, whatnot, is I say to them, if you were spending over $10,000 at a restaurant every year, how would you expect to be treated? Yeah. Right. What do you think my tenant pays? Almost all of them pay over? 10,000? A year? Yeah, for sure. So like, I want them treated with respect? Yeah,

 

Hart  

for sure. Right. And I think that a lot of people have a stigma with landlording, right? It’s a negative word. Or it’s, it’s built up a stigma as a negative word. And if we think about it wrong

 

Erwin  

for so long, yeah, for sure. And I’ve shared it on the show, like, for example, I belong to a network of over 130 entrepreneurs, business owners with seven figure businesses. And what I find is a lot of them are really keen on what it is they do to create value to make a difference in the world. versus real estate investors. There’s a good number of glitches in it for themselves. Right? And they don’t really care on who they step on. Yep. So then, yeah, I can see why landlording has not the best name. Yeah. And, you know, I’ve been to tribunal, I’ve seen both sides, assuming the tenant is terrible, you know, where a gentleman like, I want to smoke. So it disconnects the fire alarm in a 30 unit building. So everyone’s at risk. Right? And I’ve seen the other side. We’re like, terrible, terrible landlords, right? You do nothing, you know, don’t deal with cockroach problems and whatnot. And like, so yeah, I can see why landlords get a bad name. Yeah.

 

Hart  

But I think if we, if we think about ourselves, in our community as housing providers, it helps. Yeah, for sure, for sure.

 

Erwin  

Like, before, we’re talking about recording, like my own portfolio and where to track my clients is we are targeting, our rents are priced in the top 20% of the market, to because I want the top 20% tenants, right? Alright, so you better operate that way. You better maintain your properties. That way, you better show them that way. You better treat your tenant that way that the top fifth in the market. Yeah.

 

Hart  

And to that point, all of the other stakeholders in your business and all of the associated services that you’re hiring, need to be in that top 20%, too. You can’t be hiring the bad plumber out there who doesn’t treat your tenant with respect, right? You know, that leasing agent needs to know what they’re doing. They need to be up on current trends, they need to be able to find that top 20% Or, and they need to be in that top 20%.

 

Erwin  

Especially good question for you as a service provider for landlords. What kind of landlord you want to work with? You’d like working with the bottom 20% folks who have buildings in like, you know, the bottom 20% of the market?

 

Hart  

Yeah, it’s it’s interesting question, because we have worked with every type of landlord under the sun, you know, we’ve done everything from sublets of rooms, all the way up to, you know, full lease ups of pre con buildings. And a lot of the times where a landlord starts, the building may be in that bottom 20%, right, but they have the intent to move it under it. And the intent is really what it’s all about. You know, we have a lot of buildings that are being rehabbed, and we’re trying to fill units as they become vacant. But there’s still that hoarder in the the apartment next door, and there’s the rat problem, or there’s the age old tenants that have been there for 30 years who are smoking outside and kind of giving the building a bad vibe. But as long as the landlord is investing in their business, we’re happy to work with them. And we’re also not shying away from landlords who are new, who may not have the landlording education that they should or will get over the course of years, because part of our service offering is that we do this day in day out. And so we’re not just doing it for you as a client. We’re bringing you through the process we’re stewarding your journey as a landlord. And so a lot of first time landlords come to us because they’re very afraid of bad tenants. Right? The stigma there for tenants is even worse, you know, the inflammatory nature of the media is terrible, but we steward that process and walk them through it. So they get a natural education. While they’re paying us to place a tenant, so many landlords in the lease building process will go through with us and learn the 45 clauses that you should have in your standard lease appendix, you know, frankly, it’s it’s value add right there, you can go out and buy lease packages for 234 $100. Or you can get someone to write one for you walk you through it and add that value. So we’re not opposed to working with any style of landlord, as long as they have the intent to move forward in their business to educate themselves, either through us or other means and to invest in their property. What we won’t do is take on a property that needs rehab, but won’t be rehabbed. So we know that people are pinching pennies these days, which is fair interest rates are going up, it’s harder to get things done these days. But again, as long as the property is moving in the right direction, and we’re not selling something that’s going to be an illusion to a tenant, we’re happy to do the work. So you you’ve come across many

 

Erwin  

investors, I’ve pitched enough on the show about a lot of terrible education that goes on out there. What do you see in terms of when investors come to you? Are they well versed? To be? Absolutely they get some crappy ass training? Are they good quality tech clients? Hopefully, like Yeah, well, I refer you.

 

Hart  

So there’s different buckets, I would say. There’s not a lot of variation. But there’s a few key buckets. There’s a lot of people who have been laying out all work backwards. So there’s a lot of people that have been landlords for a very long time and have run successful real estate businesses. But they are still doing things the old school way, essentially. Right. And so things that they have in their lease, appendices, ways that they screen tenants, they’ve worked for a very long time, they may not be aligned with human rights issues that have popped up these days, their leases may not be enforceable or legal at all. But they

 

Erwin  

always have us go go on Kijiji, and go read some of them. Because you know, exactly, and we people like choose like sexes, like religions, like colour skin, people will literally do that,

 

Hart  

oh, and people are opening themselves up to a lot of risk. You know, if tenants were more educated on their rights, there would be a lot more lawsuits and human rights tribunals that are in inaction. So we see a lot of landlords in that camp. But they’ve come to us for a reason, right? They’re scaling their portfolios, or they know that they need to shift their worth educating through that process, because they’re hiring an expert for a reason. And that’s what we’ve realised, you know, we are brought in as experts, because people realise that they need help to take that step. So there’s a lot of those landlords, there’s also a lot of landlords who are coming in and have never been landlords, you know, they bought their first rental property, or maybe they’re moving out of their primary residence, and the markets not great. So they don’t want to sell. And they feel like holding on to that property is really good. Those people coming to us are also good clients to work with, because they know that they don’t know anything. And they’re open to again, hiring an expert to do the job, right. So we love working with those people. Again, it may be more of a hands on approach where we have to educate them a little bit more and make them comfortable with the RTA with the Ontario standard lease, they may have heard a lot of things or they’re part of Facebook groups, unfortunately. And there’s a lot of things that they think they know, but we can, you know, we can break down that that idea of what landlording is to them pretty easily. And they’re they’re really good clients to work with. There’s a middle pack, that’s difficult. And that middle pack. We’ve seen a lot of it lately, and I think it was to do with I’ll call it the fad of real estate investing, where interest rates were low. rents were very high rents were projected to increase infinitely and very quickly. So the greedy bunch. Yeah. And, you know, not to speak badly of real estate agents. But a lot of people saw dollar signs flashing right, both the investors and those agents. And one issue with the rental market that we’re trying to solve is a lack of transparent data, and accurate data. And so a lot of people were provided rent assessments that were way out of left field, they were blue sky rent assessments with no bearing, or they were completely based on MLS listings, which typically are in the top 10% of all rentals out there in terms of price, and oftentimes real estate agents will up bid amongst themselves to push prices higher. So those types of homework, the price of the rental, right? Oh, so when we’ve got two real estate agents doing leasing, oftentimes what you’ll see is bidding wars, where in the world of non real estate agent leasing there’s very rarely bidding worse, because you have two agents representing their clients. The clients are talking right landlord and tenant never talk. It’s agent agent, and there’s a bidding war because maybe it’s a good way to get your tenant in the door. And but it’s not always the financially smart decision for that tenant, and for a landlord. It’s not necessarily the best decision on quality of tenant to place, you know, the person who’s going to pay the most isn’t necessarily the best tenant because they can’t afford it. They’re doing exactly. I’ve seen lots and lots of credit checks. In the five hundreds, I’ve seen people with bankruptcies and collections, and the inability to pay rent offering six months up front nine months up front, a year up front. And they’re borrowing and begging and stealing to get into this place, knowing very well that after six months, they have no intent on paying rent, we are always wary of anyone who offers rent upfront who offers more than asking rent. So anyways, there’s that middle of the market where I started,

 

Erwin  

just pleasure, especially, you’ve always been a red flag for me, anyone who’s really desperate, that’s a red flag, for sure. If they require more diligence,

 

Hart  

then you know, we see new immigrants coming in. And in order to get in the door, they’re willing to pay three months up front, you know, they’re coming in with some money. That makes sense. But someone who off the bat is messaging you on Facebook saying I really love your home, I can pay you six months up front, that is number one red flag, because there’s a reason why they’re doing that they think they need that in order to get the place or they just have no intent on paying rent after that fact. But a lot of landlords have been led astray, are expecting really high market rents, and also are chasing the game of investing and not long term landlording. And you know this, you’ve held a stable portfolio for a very long time. A lot of people buy that standard bungalow, you know, they renovate it to be an uptown duplex, they put all the top end fit and finish in they spend way too much on that property with this idea of what they can get in market rent led by, you know, realtors who may have had good intent, but are over inflating what the rents may be. And then they need a certain amount in order to make things work, right. And they’ve bought property in welland, and they’ve been told that well into the cash flowing region. And so they need this property to cashflow. And when they come to us, we can’t dictate market rent, right, we can work hard and marketing and advertising and bringing in the right tenant magician, yeah, we can’t make magic. So when the landlord comes to us and says I need this amount in market rent, it’s the same thing with real estate. And if my house was worth a million and a half, and I said I remember 2 million, you can’t do it. And it’ll sit there for two months, three months, four months. And what the landlords don’t realise is that vacancy cost is eating into their bottom line. So those are the toughest clients to deal with. We still work with them. But that education upfront to move their viewpoint from an investor into a landlord, making them see the tenants point of view, making them realise that they have a product, right, they’ve bought an asset. And that asset is now a product on the market for the customer, the tenant to purchase or to rent. And that shift is very, very hard for a lot of investors, who are now landlords.

 

Erwin  

And just to add to that, I have challenges explained to clients. Because they just have they have HGTV on the mind, I don’t know what it is. They want their houses to be gorgeous. And so I do find investors to often over renovate, like for example, a client that bought a house that was moving ready, really nice, completely renovated in 2017. Right, including the basement, they renovated the basement, I said leave the house alone, only rented the garage, only do the garage conversion. And they disagreed with me. So that to tear apart that already renovated basement to put it in a suite. Versus if it was mine, I would have had the house rented right away, I would have rent money coming in day one, basically. And then and then I did get to take my time with the garage while getting that done. And then also I would be able to hang on to more cash for another project. Right?

 

Hart  

When when my wife and I bought our first house, which we currently live in, and we still house hack, we said the rule to purchase was we needed a basement unit. And it needed to be existing where you put it in. It needed to be livable, but with the idea that we could improve that basement unit. And so when we bought all that needs to be done was put a door on and we used our to pre closing showings or walkthroughs to actually rent out the place. And so we had the place rented, whether it’s legal or not, or whatever. But we had the place rented and lease signed before we moved in. And that was crucial to us because cash flow was so important. We bought in Toronto, we had to have that mortgage, or half the mortgage paid for. And a lot of people don’t think like that anymore. They don’t think about that cash flow equation. They let ego get involved in they want the nicest rental. They think that the night

 

Erwin  

alone, yeah, they want the whole they want to themselves,

 

Hart  

but even if it’s a standalone income property, they think they have to have the nicest renovation and we were talking about this beforehand, but there is a massive problem with the missing middle in a lot of these small towns right or smaller markets or tier two markets as we call them, you know? Well in St Catharines. Even cities like London or Belleville are Nappanee all of the market for the standard renter the family who is renting who may be renting their whole life for young family Who’s gonna rent until they’re in their late 20s. They have good income for the region, they have sustainable income, they can’t rent anything anymore. The inventory of that middle is gone. Because every rental has to have beautiful quartz countertops. And most you know, amazing high end appliances, dishwashers, right? dishwashers are great. But I rented for 15 years and never had a dishwasher. And those rentals with not top of the line, everything are missing. And so me as an investor, I’m super excited about looking at that middle rental, right taking that rental and making it livable, making it nice enough. But having coin laundry for that triplex having no dishwashers in the unit, but not charging top end market rent. And so we can get very stable tenants, we can get tenants who will pay rent who will stay two to four years, and then we can bump up the rents to market rent after that. That’s an exciting opportunity, because it’s just so missing in this market. Right?

 

Erwin  

So are you saying this cohort of tenants is the largest percentage of that market?

 

Hart  

It’s the largest percentage of underserved people in the murder. So, you know, a lot of people have jumped on the bandwagon of mid term rentals. Right. And it’s very sexy to think about having a top of the line rental and having that visiting doctor who’s there for six months on placement, living in that place.

 

Erwin  

And be ready for that level. Yeah, right. Exactly. Right interview for the top 1%. Right.

 

Hart  

And how many cardiologists are in Kingston? Living on six month contracts? Right. And so everyone thinks there’s

 

Erwin  

probably more that could very well be more midterm rentals and cardiologists. Exactly.

 

Hart  

Yeah. And so there’s a reason why there aren’t 45 luxury car brands out there, right, you’ve got your Rolls Royce and Ferrari and Lamborghini. But there’s, there’s no market for a tonne of that. And the middle markets are where all the money is. And profits can still be had cash flow can still be had. But it just needs to be done strategically. And from a an existential perspective, there’s a need, right, the housing need is not in that top 2%. In that top 5%. The housing need is in that middle America, middle Canada, it’s those middle renters who need affordable places. And that’s not affordable housing, it’s just affordable rentals based on the income coming through. One thing that we looked at, from day one with our rent reports, and we produce them quarterly now is affordability metrics. Because as a landlord, you probably have heard the 30% rule, right? Don’t spend more than 30% of your monthly income on rent. And that’s what landlords look for. That number is a thing of the past, right? If we look at Toronto, even as a household, the average household affordability is at 53 56%. These days, you know, for an individual, it’s not affordable to rent anything,

 

Erwin  

unless you have a cardiologist unless you’re a cardiologist, which is bigger on trees. Exactly.

 

Hart  

It’s something where every other business, every other industry looks at business opportunity and got it right. But as an investor, a lot of people will look at what they want to own right, not where the opportunity is. And those really smart investors are chasing opportunity and going after the client who is under serviced. And for me, you know, we’re looking at rental trends on a daily basis. It’s fun and exciting to be an investor who is also running a rental business because I can push my investments into those opportunities.

 

Erwin  

So I’ll just say that I’ve been pleading clients not to over renovate, because I know how much kitchen costs, it costs way more than used to be. And it’s tough to pay it off. It’s tough to justify that payback. Also, because you’re me vacant for at least an extra month because you’re going to do it if you’re doing the Renew. Yeah, so I plead my clients all the time is leave it sorry, just be like I’m talking to my daughter. Yeah, I literally spoke to a client just this week who over renovated, and now they’ve asked for a flip and luckily they broke even not including their time. But again clients all the time, like like you said they want to renovate to their vision, rather than renovate to how I look at it as part of a portfolio investing portfolio for sure.

 

Hart  

at the dog park this morning, I was talking to a friend who has a number of buildings and one of his buildings. He was talking about tenant turnover. And sometimes you know, they need a full renovation even if the places been trashed. He looks to spend three to $5,000 on a kitchen, right? Because he is catering to the middle renter in Toronto or Mississauga, Scarborough, but in the GTA, and he’s only spending three to $5,000 on a kitchen. If you talk to the average investor. No one is spending that little on a kitchen that people that we talked to.

 

Erwin  

You talked to the ones the landlords end up in the LTV, they probably spent nothing. Right, exactly.

 

Hart  

Yeah, they’re going on the side of the road and picking up whatever is there. But there is a way to renovate strategically to make sure that properties make sense. And if you’re looking at a long term, portfolio hold, it has to make sense, right? It’s not about the instant refi it’s not about you know, having the best property on the block. It’s about stability and you Her entire portfolio

 

Erwin  

and the real pros are picking up used kitchens on Kijiji and putting it in storage until they need it. Yeah, straight up. That’s what the real pros are doing. Yeah. Instead of the amateur often gonna pay full retail. Yep. So, yeah, these are pro tips, folks. Hopefully you’re taking notes. So Adam had some questions. What are your top three five questions for screening a tenant?

 

Hart  

So I will say I wasn’t going to tell him this beforehand. But it’s probably the most loaded question to ask a leasing specialist, or someone who runs a team of 18 leasing specialists, because the process of screening starts from when you post your property. So yes, there are questions that you should be asking people who are coming through the property, asking people in messages on Facebook or wherever your your listing. But the first thing to know is from point A of advertising your unit, you are already screening your tenants, you should be advertising a unit to attract the tenant that you want not to avoid the tenants that you don’t want. And we see a lot of this all the time, you know, no smoking, no pets, no families, no kids, even though it’s completely against human rights ethics. So building your advertisement to attract the tenant that you want is key. And that’s things like you know, mentioning, say your property is a three bedroom townhouse in Guelph, right, and it’s a family friendly neighbourhood and you want a young new family coming in, talk about the schools in the area, talk about the parks in the area, talk about the convenience to grocery stores, get professional photography to showcase that nursery or that primary bedroom or the beautiful kitchen, make sure that you are designing your ad to attract the tenant that you want. And already you’re screening by doing that you are screening from step one. Then in step two, it’s making sure that you are catering to the the way that tenants search for property. So a lot of people will say I post on Facebook marketplace, I get overwhelmed with it still available messages. I get so frustrated that I don’t respond to any of them. Well, you’re now ignoring well over 80% of all the messages that come through on Facebook, and you’re likely ignoring 20 30% quality tenants. Yes, there are some tenants who are not worth your time, who are just clicking that Is it still available button. But Facebook has taught tenants that clicking a button is the appropriate way to outreach to a landlord. So we’re penalising tenants for doing the behaviour that Facebook has taught them. As opposed to saying, as a landlord, as someone who’s advertising a product, I’m going to understand that that is the user experience. And I’m going to cater my process to that user experience. So have a canned message that asks them some basic questions, or use a pre screening tool that kicks them out to that pre screening tool to fill out a form. But we’re realising to my point about building Rent panda wrong, we built a pre screening tool, we said every single has a syllable message is going to go out to that pre screening tool. And we’re not going to talk to anyone who doesn’t fill it out. But we realised that the barrier to entry was just too high. You know, we were losing too many people, the conversion was too low. And so we built a process where we can respond to those Is it still available messages with auto texts on our phone with bots that we’re building on Facebook? Now we can respond to them all and ask the basic questions. You know, when are you looking to move in? How many people are you looking to live in your home? How many parking spots do you need? What are you looking for in a home some of these open ended questions that will allow people to start a conversation. And essentially, regardless of the answer, anyone who’s engaged with us, we can then take further into a pre screening tool, and then into showings. But a lot of people don’t want to jump off of Facebook, because again, Facebook has encouraged them to stay on platform, you know, if you’re a tenant searching for a property, and it’s hard to find one these days, you’re going through hundreds of properties a night bleary eyed, hitting is still available, man buttons, just trying to, you know, spray and pray and find something that works for you. So if as a landlord, you remove that frustration and realise tenants are frustrated too, I need to build a process that works for them, engage them in a conversation, and then you can hear more of that story. And once they realise that you’re actually going to respond, which most landlords don’t. And you’re a person that cares about them. Already, you started a good relationship at the start, which is part of the screening process. And then they may be more likely to fill out the very long and onerous form, which is essentially a pre application.

 

Erwin  

Oh, what is the pre application come before the see the property? Or?

 

Hart  

Yes, so that’s where we’ve engaged with them on Facebook, we’ve asked them some basic questions that would qualify them for a property, you know, if they have three cars, and there’s only one parking spot, probably not going to work, if they want to live there with 10 people and it’s a three bedroom home probably not going to work. So it’s a very basic criteria. And then once you’ve engaged them, you send them to the pre screening form that pre screening form. And we have one single key has one people use Google Forms. There’s lots out there So that is just a way to then call down into the top tenants that you want to show the property to, you know, do the income levels make sense? Does someone have a good track record of renting? Or have they been bouncing around between properties, all of the basic information about employment, you know, they can upload documents, they can input their landlord references and living situations, or even talking with Barwell about an early partnership to have tenant pulled basic credit reports that we can then add on, you know, the full long form hard checks. So there’s ways to use technology to streamline it. But then you go to a showing, and the showing for us started before

 

Erwin  

you go to showing for sure you asked for quite a few questions before they before they come before the property. Yeah. Where’s that line? Where do you draw that line? Do you ask for some number, for example?

 

Hart  

No. So we want to make it a barrier to entry that removes those people who aren’t actually serious, but is not intrusive, you know, a little bit big brother hurry at the start. So you know, we’re not going to ask for application fees as they are illegal, we’re not going to ask for information that would make someone feel uncomfortable providing because again, from a tenant perspective, you’re probably providing that to 1020 3040 people in your search for a property. And so if it’s too onerous, you may just drop off. But it also depends, right? If you if you have a property in Toronto, that’s at market rent, you’re going to be getting four or 500 messages, you can board. Yeah, you can be super, super onerous. And say, I’m only going to take the top 1%. But if you have a property in Belleville, that’s slightly above market rent, because you’ve tried to push it a little bit, you’re not going to have a flood of messages coming in. So you need to be open to engaging people working a little bit harder to find that perfect tenant. And so you can’t use the same process as someone in Toronto. And even on our team, you know, we deal with thunderbay down to Niagara we deal with the GTA. The process is different in each region. And for each property to do if you’ve got a property again, that’s below market rent, because you just need to rent it out right away. You can be a little bit more scrupulous with with your screening process.

 

Erwin  

I always call it hurdles, higher hurdle in front of people. Exactly.

 

Hart  

And so all of that basic information that is enabling transparency, but not big brother transparency, that happens before the showing. And then

 

Erwin  

if we get to the show instead, what percentage of inquiries Do you think make it fill up the application? The pre screen application?

 

Hart  

So let’s use Facebook marketplace as an example, because they bring in about 85 90% of our traffic these days. Yeah, I mean, for anyone who’s not on Facebook marketplace, landlords out there need to realise that tenants are searching on Facebook. And Facebook is investing heavily in the real estate marketplace sector.

 

Erwin  

Yeah, like visual marketplace. I bought my abroad bought a golf club author recently. I like the fact that I can I can keep who that person is I can go keep their personal profile for sure. And if they’re if they’re like, they’re really hidden. I’m not interested. I won’t do business with them. Yeah.

 

Hart  

And the reality is, is what was via.ca 10 years ago, and is Zillow, or Zumper in the States is Facebook marketplace. In Ontario, at least landlords need to realise that that’s where tenants are. And so if you want to know those tenants, you need to be on Facebook marketplace, because those people that just say, I’m only going to list on Kijiji, but just know that your that’s foolish, right? You’re only tapping into 3% of the population. Right? The same thing with and then people are more faceless going to GG, right. Yeah. But I mean, either way, I would challenge that by saying our screening process will be so onerous at the end of the process, that the transparency that Facebook gives with a personal profile is almost meaningless. It may give you some early indications, but we do full social media scrapes where we look at Twitter, LinkedIn, Instagram, Facebook, tick tock like we can look at an entire social media entity and the Facebook side of things is minimal. But it is an early indication. Oh, yeah.

 

Erwin  

$100 Golf Club. Grave, gonna be pretty late. So

 

Hart  

we were talking about you know, I flipped furniture on the side just for fun. And, you know, I liked the fact that I have a good seller profile, right? That’s it’s a point of pride. And it allows me to move products faster, whether they are rental homes, or they are, you know, pieces of antique furniture, right?

 

Erwin  

So sorry, are using a personal profile or a business profile for Facebook marketplace.

 

Hart  

So that’s a whole rant to Facebook, but we use personal profiles, some are created for the business. Some are actual personal profiles of our leasing specialists. Facebook algorithms are something that we play with. And Facebook will gravitate towards serving up your ad for your product, whatever it is, whether it’s a golf club, or a rental home, to more stable Facebook profiles, to better seller profiles, and to products that get more engagement. So this is something that we tell all of our landlords, even if you’re in a condo that says no pets allowed and you can and actually say no pets, we still advertise our properties as pet friendly, every single one. Because about 50% of renters these days have pets with old, which is wild, you know with the feed. Yes. And if you look at like a city like Guelph, that’s upwards of 70 75%.

 

Erwin  

So people like Petsmart I feel Hamilton’s high to

 

Hart  

probably, but if you are a landlord says, I want no pets, by creating an ad that says a big cops, no pets at the start, you are automatically removing, let’s call it 50% of those people who would engage with your ad. Even if it’s just clicking that his it’s still available button to Facebook, that’s engagement. And a lot of people think about rental ads as the old school right, you know, it could GG, it’s on the first page, and then it drops down and you relist your ad to be on the first page. That’s not how Facebook works, right? Facebook, whether you’re Nike, or you are or when posting a rental property. Facebook wants to serve products that are engaging, because they want engagement, they want more people clicking More things.

 

Erwin  

They want them to spend more time on Facebook.

 

Hart  

Yeah, so if your product engages people, and you can engage 50% More people by saying pet friendly, we can screen out Pet Pet owners versus non pet owners very easily. But if you get that engagement from day one, your ad gets naturally boosted up in the list in the theoretical list, more people see it, you get more impressions. And so we can play algorithms by getting higher engagement from day one. Other things like a lot of landlords don’t put dollars against their Facebook ads, right? They think I’m going to post it on Facebook marketplace, and 510 $20 can get you massive impressions. And again, Facebook algorithms, defer to the first 24 to 48 hours of engagement. And so you’ll see if your listing doesn’t get much because you’ve priced it too high. And then you drop the price down, you will naturally get less engagement and less impressions than if you had posted it lower earlier. Because Facebook goes on this thing. Isn’t that great? And we’re going to kind of bump it down a little bit. All right. So we want to play those Facebook algorithms to get the maximum amount of traction. And then the job is screening, right. So we want to start with a massive pool. And we have tools to efficiently narrow down. But if we’re starting with a small pool because a landlord says I’m only open to elderly people without pets who have dual income, that niche is so small and cardiologists Exactly yeah, who are both cardiologists and cardiologists. That niche is so small that you will never get the engagement that you need to actually find that person. But even if you’re trying to find that person, if you go out there and look at everyone, you will naturally then be able to call down to maybe something close to what you want to find at the end of the day. Do you do any paid paid ads and every single ad that we post for our leasing clientele is paid? Yeah, and it’s boosted. So, you know, we’re gonna boost it on Facebook marketplace. We’re not gonna put out like a full ad campaign with like banner ads and things like that. But we’re gonna, yeah,

 

Erwin  

I was in crisis. Yeah. And I used

 

Hart  

to work in advertising, right, Facebook will gladly take your money, we’ll gladly take your money. It turned out I was worried. But boosting on Facebook marketplace is incredibly effective. The other thing that people don’t realise is that Facebook marketplace is just a single stream. Facebook groups and localised Facebook groups are a massive, massive stream that a lot of people forget about. So if you’re living in Hamilton, and you’ve got a property out in Belleville, you’re probably posting it on Facebook marketplace, and then leaving it maybe you’re being smart enough to change your location to Belleville. So it actually gets posted in Belleville on Facebook marketplace. But a lot of people aren’t taking the time to join the 12 Belleville rental groups, and then pushing out that Facebook marketplace ad to those groups. And we get about half of the traction on Facebook comes from the group’s not native marketplace. So it’s all of these tactics where if you’re just doing it once a year or twice a year, you’re never going to have the time to not only understand what the latest and greatest is, but to really hone those skills in those strategies. And that’s where hiring an expert makes sense. We have you know, 40 5060 listings active at any period of time. And we can see the data coming through and go, Hey, you know, we need to pivot this strategy a little bit or to your point about brands versus personal pages. Facebook had a pilot programme for a while that allowed brand pages to post on Facebook marketplace. They opened it up to a select number of companies in Canada, then closed it down, but it was opened in the States. And so randomly I fell into a Facebook rabbit hole, where when I went to LA for a week, my IP obviously was picking up LA and I’ve tried this with a VPN and it doesn’t work Facebook closed that loop or closed that rabbit hole. But for a week I was able to post as a business on Facebook marketplace, I got 1000s of messages where I would normally get hundreds I got 1000s and 1000s of messages because Facebook was artificially boosting all of that brand traffic to push engagement as a test. And so we are at the whim of the giants and we realised very on to my point about building Rent panda wrong A marketplace was needed 10 years ago, eight years ago, even maybe six years ago when we built it, but Facebook marketplace is now dominating. Right? And it says if you go to the states and someone just says, Oh, I’m I’m going to ignore Zillow, right? I don’t need to be on Zillow. I don’t need to look at Zillow. Zillow is the giant, they’re the behemoth and Facebook marketplaces, too, you need to understand the trends and what’s happening, lean into it. So, you know, we stopped investing in building out our marketplace, we have a basic one now. But then we built syndication tools, because we realised posting on Rent panda and allowing you to push out to Facebook marketplace is actually the value add that solves the pain point. It’s about being on top of all these trends. But for landlords out there that are ignoring Facebook marketplace that that’s the pro tip is you need to be there, test Facebook, and if you’re not willing to or uncomfortable with it, hire an expert who will do that for you.

 

Erwin  

So yes, pro tips. Yeah, for listener, I hope you’re taking lots of notes. And also understand for listener, we do have transcriptions on our website. So if you want to check us out their truth about real estate investing.ca. So you said mouthful, that makes sense that Facebook’s investing this much. And then you’re paying because generally Facebook gives attention to whoever pays. Yeah, that’s my own experience as well on Facebook for like just seeing my business page versus personal page interaction. Really, really different. Personal obvious, does a lot better. I’m sure there’s people saying like Facebook’s dead, it’s for all people. You’re still seeing it working for across demographic. Yep. For ages. Yeah, 20 Somethings and you know, at some things, they’re all using Facebook. Yeah, it’s

 

Hart  

it’s not about Facebook as a social marketplace, right as social entity. It’s about Facebook marketplace as a rental marketplace. So we just have to realise that this is a marketplace that people are using. And a lot of to your point about keeping someone’s profiles, we see a lot of profiles that don’t have activity on there. Because people have joined Facebook again, or for the first time to get on marketplace. So

 

Erwin  

they never log in. Right. But they come in purposely for this

 

Hart  

exactly. And if you think about the cycle of a tenant, they may be very, very active on marketplace searching for a rental for a month, maybe two months. And then they don’t do anything that would require it for him to repeat it again. So very often we see people who you know, they’ve updated their profile picture once every two years. Because they’ve been using Facebook for marketplace and they’re

 

Erwin  

in their walls. It’s like all Happy Birthday friends messages, nothing else. But they didn’t post anything, no

 

Hart  

engagement whatsoever. But it’s just the nature of things. So yeah, we’re seeing everything from the 80 year old on Facebook or the 40 year old helping their 80 year olds get a rental unit on Facebook, down to 18 year old kids who are renting their first property

 

Erwin  

fascinating. I didn’t know Facebook with this dominant now I knew there are big but I remember when I started we were using forgetting everyone forget the name of the website was and then and then to Gigi was the big thing. And they’ve wiped out almost everybody. You’re telling me that I’ve could you just like what a small percentage of the market now?

 

Hart  

Yeah, from a rental perspective, Kijiji is a very, very small percentage of

 

Erwin  

pro tip folks. So if you’re if you need to spend on ads, you know where to spend because we used to spend a lot on Kijiji ads are at the top. Yep.

 

Hart  

And, you know, for those who don’t want to spend as much tailor your ad to the Facebook algorithms.

 

Erwin  

Okay. We were talking about students before all sorts of students, what are you seeing?

 

Hart  

The student rental market is one that for those who can stomach it is an amazing opportunity isn’t that bad? Sometimes it is bad. But there are a lot of student opportunities in a lot of these university and college markets, especially coming out of COVID. Universities are pushing enrollment, right. At the same time, the rental dynamics in the cities have changed, right prices have gone up, the supply has gone down, the demand is still there. And so it’s naturally harder for everyone to find rentals. And that’s exacerbated with students because a lot of people want to avoid the trouble of students, you know, managing students losing their keys coming home drunk and you know, stumbling and breaking the front step just the process of turnover is a little bit more onerous. Typically, you will have a little bit more in damage costs at turnover time. But students are willing to pay more. You know, when you look at rentals by the room or square footage, student rentals can demand a premium, because you have parents supporting them who are ready for their kid to get out of the house. And they are willing to pay for a good place to live that has good access to the university that’s safe that has a good landlord running it. Because there’s a lot of old school slumlord student rental landlords out there still, there’s been tonnes of them. Yeah, tonnes. And it’s the primary story that you hear. And a lot of landlords need to realise that when you rent to students, you’re not renting to first year frat boys, right? Everyone thinks about that frat house, and what it’s going to turn into?

 

Erwin  

Yes, this is not a Hollywood movie from Hollywood movies are not real.

 

Hart  

No. And these days, there are a lot of student populations that are there to work hard, study hard, you know, and you’re not looking at, again, the stereotypical Western Party City as a stigma. There’s a lot of markets that have very, very low sort of opportunities, and to provide good affordable housing for students. And we were talking about earlier, the international student population is absolutely massive. So we were talking to Lakehead, and Confederation College up in Thunder Bay, they were saying that a third of their new enrollment is from international students. And if you think about this as a business, like we like to think about landlording, universities went a few years with pretty bad revenues, right? They had low enrollment, they didn’t have students on campus. And now they’re trying to make up for those losses.

 

Erwin  

So people deferred, deferred their their year. Yeah, so they probably just play extra demand. And

 

Hart  

there’s a surplus for sure. But internationally, yes. But international students are typically paying up to 10 times the amount of a local student, right to go to U of T. As an international student. I don’t know the current numbers, but you’re probably paying between 30 and $40,000 a year, whereas a local student is paying six or six at most. So from a revenue perspective, universities are pushing international student programmes quite heavily. They’re advertising from places like India and China. Yeah, for sure. They’re recruiting you know, Confederation College in Thunder Bay has a good it programme. thunderbay student population is turning into students from India coming over and being in the tech sector, and then they migrate literally migrate down towards Toronto, we see people because we’re across the province, the same students graduating from conversion College, then moving down to Sioux Sainte Marie, then moving down to Sudbury, and then coming down to Toronto, they’re literally migrating from Northern Ontario south. And so as an investor being able to tap into that is a massive opportunity, because the student population, again, can provide lucrative cash flowing opportunities, especially in some of these secondary markets, if you can manage them appropriately. And you have the good systems in place are a really good property management system, or property manager who is versed in student rentals, you can make a very good business and provide much needed housing for the student or international student populations.

 

Erwin  

So can you give us an example let’s let’s use the golf duplex example. For context for listener. You rented out the main floor for 3000?

 

Hart  

Yeah, just over 3000 for a three bedroom main floor of a duplex

 

Erwin  

fully renovated. It was nice. Yep. It was the stuff that we talked about that people will renovate. Yes,

 

Hart  

these guys did it right. They over renovated a little bit, but the the numbers work, the property could handle it. And the basement was 2000 basements was about 1050 a room I believe. So just over 2000 for a two bedroom. There was also no living room in that basement

 

Erwin  

room, but small, right, because I needed a kitchen. And so it’s tough to find. Yeah, so we have common space when you have

 

Hart  

exactly so it was a kitchen with like a little Eden nook area. But these were smart investors and that they they built the basement specific to probably more mature students. The bedrooms are massive. Each bedroom had a beautiful big closet. And each bedroom had its own fully kitted washer, right. So you just stand up showers. Because if you think about a master’s students or PhD students, they don’t care about common spaces, they’re not having friends over, they’re working their butt off. And they want their own space that’s quiet. They want to be able to go to the bathroom at two o’clock in the morning when they’re pulling that all nighter and not bother their roommate who’s also working their tail off. And they want a nice little kitchen, parking, you know, a backyard to relax in. So these bathrooms did you have it was a two bedroom, two bathroom in the basement. Oh, the upstairs was again thought about. And it was a more typical three bedroom, one bathroom with a nice big living room and a nice big kitchen. Interesting. And the demographic hit right the upstairs was younger students. It was three girls that came in. We actually just turned them over this past month or two.

 

Erwin  

And we were designed for. So

 

Hart  

it was one sublet and one assignment of sorts. So there wasn’t a full switchover. And the landlord’s got good rent. And so they were like, You know what, let’s, let’s keep it we always say push that rent increase, but they wanted to keep it but the demographic of upstairs and downstairs was very different because of the way that they built it. So these were guys that were smart and said, I’m gonna build a product, knowing the type of customer that wants that product. And they weren’t crazy to think about. I’m just gonna go after that cardiologist. You know, they went after a student group that was large enough that could substantiate those rents. And we talked about

 

Erwin  

this but very unsexy, long term plan with enormous demand. Exactly.

 

Hart  

And they’ve got opportunity for it at you in the back. So there was a garage there that will likely be converted, and it’ll be a beautiful studio or one bedroom. That will probably bring in in Guelph. 14 1500. Easily.

 

Erwin  

At the time when we were talking about this back last fall. I think house would have been like 100 grand, yeah. And would have brought in five out over $5,100 in rent. Yeah.

 

Hart  

And they bought it even before that. So they were sitting on it for a little bit and I think they paid in the sixes for it.

 

Erwin  

So then what would this house run for? Two non students.

 

Hart  

So two non students if you look at the three bedroom upstairs It would probably go for, you know, maybe 2400 2500. And the downstairs is probably around like the 1600 mark 1700 Maybe. So it’s still a good opportunity. Yeah. But the student population will push that we didn’t push rents as much as we probably could have in a desperate moment. So I think we were talking about this way, but desperation time that when you rent it out, so we met a family that was commuting, driving their son to the University of Guelph from Collingwood every morning and afternoon. Oh, why, and, you know, as someone close to our wage way, and they were desperate to get their kid into school and have not be sitting in the car for four hours, that’s taxing to everyone? Student included, and it’s real money on gas. It’s real money. Yeah. And the depreciation on the car. Yeah. So, you know, you can feed off that desperation, and Jack rents even more, or you can make your numbers work as an investor and provide a desperate need. Get some goodwill out of it. Yeah, for sure. And get good tenants who appreciate where they’re at and are not, you know, feeling gouged for the entire time I live there.

 

Erwin  

Because I would tell my clients, like even if you don’t want to rent to students, I love the fact that they college or university creates rent supply pressure. Right. And that just pushes rents up. And also their major major employers for those areas. Yeah. So they have, they do have cardiologists that were typically work their teachers or whatever, for sure, they have lots of high paid people like university professors, whatnot and their families. And, again, they create pressure both on demand for both for for resale, and for rental, which I like, I like owning a product that has massive demand

 

Hart  

and demand for the foreseeable and non foreseeable future. I mean, it’s, it’s something that’s not going away, that soon population is not going to just disappear. And I think as a brand, we’re really excited about it. Because if we can be known as the brand for rentals, we already have partnerships with Lakehead University with Confederation College, we’ve worked on partnerships with the University of Guelph off campus divisions, we were looking at a project and getting like a seal of approval from Lakehead University, as designated, you know, non University run off campus student housing, which is incredibly valuable as a brand. And if we can leverage that brand and bring that value to our investors and our clientele, that’s massive. So there’s, there’s some really cool opportunities in student housing.

 

Erwin  

Do you do anything different for international students in terms of screening or rent requirements?

 

Hart  

Not really, obviously, we’re not going to pull credit checks, we’re not going to pull background checks, we typically do that directly. So we’ve seen way too many frauds and scams these days. So even if you pull your credit, so

 

Erwin  

Dave was right there, yeah, you kind of just glanced over the wealth of frauds out there. So listener, please understand, there’s lots of fraud going on. And I’ve mentioned before, you know, if you do not credit, check your tenant. To me that negligent?

 

Hart  

Yeah. And I think even to belabour, that point a little bit more, pull your own credit checks, if you see a credit check pulled by the tenant themselves, their realtor, their property manager, whatever it is, even if it’s a day old credit check, pull your own credit check today, because it is so easy these days with all of the digital tools out there for fraudulent documents. The same thing with employment information, like you have to do your due diligence, because there’s way too much like rent is so high, that fraud escalated exponentially. Same thing on the tenant side, there’s tonnes of scams out there. So for any tenants who are listening, you’ll never give anyone any money until you’ve met the landlord or property manager in person at the property. I like it’s the simplest thing and we see people day in day out providing deposits sight unseen to Reverend whoever who’s in the States taking care of his desperately ill family, and he’ll FedEx you the keys. Just don’t do it.

 

Erwin  

But remember to go to the house, but you need a locksmith forget him. Yeah,

 

Hart  

yeah. And it’s likely for sale because there’s real photos that they’ve pulled

 

Erwin  

or could be different. Because literally we’ve seen this happen. Yeah, for sure. Right? Someone’s just taking someone’s Kijiji pictures and put it up for rent for like a ridiculously cheap price, and dupes somebody into it. Yeah, I mean, we’re

 

Hart  

we stopped scammers still with our marketplace. We stopped scammers every single day, who try and post on the platform. So it’s just something that exists out there and people need to protect themselves. But for international students, the good thing is, is that very often, the university and government has almost pre screened them. So as an example, students from India coming over for specific programmes, they need to have $10,000 in a Canadian account in order to be able to enrol in that programme, and have stability with housing and paying that enrollment.

 

Erwin  

Is that the school’s requirement or is that part of the government’s

 

Hart  

visa requirement? Then these international students are on programmes. They’re paying a lot of money to be here. They’re working very hard. They’re typically working jobs as well as you know, having support from home and they don’t want to screw up and so I Having something like the ability to report non payment of rent to a credit bureau is incredible leverage for an international student who’s trying to build their future and most are moving towards PR status. So anything that gets in the way of that or risks it, they’re going to want to avoid, you know, astronomically. So they are a good cohort to rent to. But when screening them, you have to be realistic in the sense that, you know, a guarantor in India, or in China, or wherever they’re coming from is meaningless, right, you will never be able to go after that person, you need to be proactive about the way that you set up your rental property. And the way that you run your numbers knowing that, you know, typically, there are cultural differences, there may be more wear and tear on the home, maybe you want to have a full service operation where you provide fully furnished cleaning service cleaning services, yeah, you know, put your TVs in there, put your internet in there, have your cleaner come through every two weeks, build that into the cost, make it a premium, but know that that’s going to keep your property in better condition, or just build in the fact that every two years you will have a full repaint, you will have a full cleaning, you’ll have some floor damage, you’ll have some wall damage, and just build that into your numbers. So screening them is really about proving enrollment, proving those funds in that account, and making sure that you’ve met these people, because we didn’t talk about the showings and the qualitative, but meeting someone or having someone that you trust, get that gut check is so important. You know, we have all of our tools and all the the digital know how to get the quantitative, but the qualitative is really, really important. So meeting someone at the property and giving them a few pieces of instruction to follow, don’t park on the driveway, right? Call me when you get here, those things. So if someone parks on the driveway and comes whipping in, and then knocks on the door, those are two things that you’ve asked them to do that they haven’t done, right immediate yellow flag, I would say, you know, you walk in, you walk out to meet them, and you walk in the property and take off your shoes, don’t ask them to take off their shoes, watch to see if they take off their shoes based on your actions, right? People taking off their shoes in my books, when I when I was out, pounding pavement doing showings every single day, if someone didn’t take off their shoes, when I took off mine, that was almost an immediate, you are not getting this property in the back of my head. You know, maybe they could overcome it. But just those little elements of respect and qualitative feedback are so important. And then to Adams questions beforehand, we asked questions that are open ended at those showings, you know, where do you live? Now? Why are you looking to move to this area? What do you like, once they walk through the place, ask them what they like about the place, ask them you know how long they’ve been living at their last place. And if they like their landlord, you know, calling a pest landlord, whether they’re the actual reference or not, may give you some information. But open ended questions out of showing are so powerful to get, again, that qualitative nature of someone. And that’s how you really screen a lot of these students are international students, and separate them from each other. Because every international student is going to have that money in the bank, right? They’re not gonna have spent it yet. But you want to see whether there are going to be those people that spend it on the parties and the drugs and the alcohol and whatever, or they’re going to be spending it diligently. And maybe they all have part time jobs. And they’re going to treat your property with respect. So, you know, account for the worst case scenario, but screen for people who are going to treat your home like their home. Are you doing any reporting to the credit bureau, sometimes we do so we partner in a sense with front lobby, and we can kind of opt into their services for any of our leasing or property management clientele. Thankfully, we’ve never had to do that. Because we’ve talked about beforehand, but in about 900 to 1000 leases that we’ve done, we’ve had one non payment of rent. And thankfully we have a paralegal on staff so she swooped in and helped out on that front. But we can. We also have partnerships with people like single Ian Villar was here probably a few weeks ago talking but single, he has a really great rent guarantee programme, where for those landlords that want to pay into that, and have that extra insurance policy, we can provide that, you know, in partnership with single key so we focus more on the due diligence in placing a tenant to lower that risk profile. But some landlords just, you know, their risk tolerance is zero. And so for those those landlords that rent guarantee, is there. A common I’m guessing it’s not that common, but it is one where people have had bad experiences and they want to opt in to the insurance policy. And it’s an insurance policy like any other right, so it’s a smaller portion of the population that wants it. But it is there for those who do. And what we kind of promise is, no matter the tools that are coming to market and out there, we’ve built some of our own. But as a leasing team as a property management team. We’re always using the best out there. Right. And so we have, you know, screening providers with our credit checks and background checks. We do ID verification automatically with bass matching technology. We do income and expense verification through open bank checks, but we’re always on the hunt for the best screening tools out there so that we can bring that to our clientele. We don’t need to do ID verification on every single person, right, we can see their ID, we’ve met them in person, things match up. But you know, when you’re screening international students who haven’t come over yet, and you’re doing a video tour, you want to make sure that their visa documents are in order, we want to make sure that their ID is legitimate. So we have tools to screen, different subsets of the population. And we’re always gonna go out there and search the best one for our clientele.

 

Erwin  

Fabulous. So now I have a rental market question for you. So just like a quick pro tip for folks, I always ask property managers and leasing agents, what rents are, because often it’s their job to go get it. So I want them to tell me what it is. Because I’ve seen too many times where, like, honestly, commissioned salespeople have given incorrect information, often, usually it’s overstate is that whatever understated? Yeah, actually, okay. But generally, it’s their jersey on the over.

 

Hart  

It is, but we were actually doing an interesting analysis of our leasing jobs the other day. And we found that, like, the leases that we were writing, were two to 3%, over the initial impression of what our landlords could get for rent. So we were actually pushing rents above what they thought that was probably brought down by those landlords who thought that they had something that was worth a lot more, but yeah, most people are over inflating what they can get

 

Erwin  

both landlord and commission salespeople. Yeah, I’m licenced. So I can’t say certain things.

 

Hart  

Yes, for sure. For sure. I mean, there there have been people, unfortunately, that we’ve seen pushed into properties, that the numbers just didn’t make sense. But their numbers made sense when they put in that rent amount. Yeah.

 

Erwin  

So what are you seeing drotsky? paint some wide brush strokes on like, what are you seeing in terms of rental market? Like, for example, my team is saying that smaller markets, there’s there’s even more rental supply. So things are slower to rent, versus larger markets like a Toronto like a Hamilton, I don’t know, maybe even Kingston, we’re seeing much more demand also, because we we do a fair number of students as well. So it’s kind of a mixed bag in terms of demand. But so what are you seeing, like, does you cover quite a bit of geography? Yeah, negra to Ottawa, that the lobby up to Thunder Bay? Yeah,

 

Hart  

I’ll get the politician answer in that any broad stroke paintbrush that I that I use, is going to be inaccurate in the sense that even looking at a market like Sioux Sainte Marie, and painting it in the same light as Belleville or looking at you know, Thunder Bay in Guelph, right. They are the same population essentially, are what cow is that big? Yeah. And but they are light years apart in terms of rental market,

 

Erwin  

golf, proximity to Toronto is Yeah, tough to compete with for

 

Hart  

sure. Yeah. When blog to article came out two years ago, that’s, you know, Guelph was the best place to live outside of Toronto. And it blew up. It’s a pretty city. Yeah. But that broad stroke approach is difficult, because what we’ve seen is the nature of the investment education that happens primarily in southern Ontario and the Golden Horseshoe actually has a significant impact on some of the smaller markets. So yes, smaller markets have more supply. You know, Toronto, greatly skews big CMHC and census averages. And so if you look at CMHC data for purpose built apartments, obviously Toronto is going to skew those numbers Toronto, Vancouver, Montreal, and a market like welland is going to be forgotten about. And when people look at the rate of rent increases, you know, that skew, and that bias towards Toronto, and the GTA is going to negatively impact a wetland investor because rates aren’t growing as fast right supply is there, we saw in the last two quarters, a lot of markets actually had a drop in market rent. But all that being said is, even in Toronto, when you look at a certain product type, there can be micro challenges that are very real for landlords. And so one of the best examples is preconstruction, a group of investors will buy property in a building, let’s call it a 40 floor building in downtown Toronto, occupancy begins, and floors start opening up. And 80% of that building is investors. So those dozens and dozens and dozens of units hitting the market are going to depress rents in that specific building. And so a lot of these developers have contracts with leasing companies, and you know, as a buyer, you’re put into those contracts. And they’re gonna promise, let’s call it 3200 bucks for that two bedroom in Toronto. And all of the listings are going to start on MLS at 3200 bucks. And all of them are going to sit for a very long time, maybe one or two will be rented. And they’ll throw those up as you know hailing points of here’s what we got for that rent. And within two months, that rent price is down to 2500 bucks a month or 2550.

 

Erwin  

And a lot of investors pay occupancy exactly costs.

 

Hart  

So the developer is fine with that. The leasing company is fine with that because they’ve got their back pocket deals with the developer. And the people who are suffering are the ones who’ve been promised that rent and usually if you have like a guaranteed rent, it’s going to be down at the 2400 mark. cuz that’s more in line with what’s probably realistic. And we’ve actually taken over the leasing for a lot of these places. Because landlords are sitting on two months of vacancy. They’re bound by a contract. And they’re saying, Can you help me? What can we do to get out of this sorry,

 

Erwin  

hurt you, you’re saying you have inventory available for 2400 for two bedroom.

 

Hart  

So we recently rented out a very, very small two bedroom, but a two bedroom at the 401. And the Helen for 2450.

 

Erwin  

At this location, Yorkdale Mall? Yeah,

 

Hart  

right by the subway.

 

Erwin  

So if you’re looking for a rental call hard, I’ll put the cell phone number in the notes, donor, thank

 

Hart  

you. But there was equivalent units sitting still to this day, probably sitting on the market at 2900. And I would just want to go to all those investors and say, like, look at the the vacancy costs that you’re eating month after month after month, but it’s easy. Yeah. And

 

Erwin  

then how much do you think they paid for those units? Because I’m not sure 1600 grand for two bedroom? Yeah, we

 

Hart  

probably I mean, they were very small. You know, this two bedroom was 545 square feet. For a two bedroom, two bath air to the

 

Erwin  

golf property that was around the 100 Grand that generates 5100 in rent. Plus a lot of utilities to think I forgot that part. Yeah, they were covering all the patella it was covering all the utilities. Yeah. So condo fee.

 

Hart  

So when we look at markets, you know, if there’s a big investor event, and someone talks about Guelph, right, we will actually see movement in Guelph based on a small population of investors pumping money in there, you know, when Whelan got hot, a lot of money moved down to welland and we started to see, you know, the inventory get pushed towards that top 20% Because there was those rentals. So you have to look at those micro markets and that’s why we pride ourselves in having local leasing specialists. So we’re not hiring someone in Toronto, to go lease out a property in Kingston by posting on MLS and allowing your local agents to walk people through we’re hiring someone in Kingston to do the work the rent pan away, and they understand the Kingston market.

 

Erwin  

Alternatively as a pro forma for preconstruction James Street, Hamilton, condo, 350 square foot, the expected rent, according to this realtor from Toronto, was $2,036. Yeah, for 350 square feet. Good luck. Hey, they put it out there, though, yes,

 

Hart  

but it sounds good. And it’s got a little positive, they will get the investor who may eventually come to us and be disappointed by the rent assessment that we’re going to provide. But I will say like not to hawk our services, but we provide a rent assessment before starting any job. Because the worst jobs that we’ve done, are ones where we’ve naively said, Okay, let’s try and get that $2,000 for that 300 square foot studio in Hamilton. And we’ve convinced ourselves that we can do it right, we can make magic, and then a month and a half. We’re not magicians and so the clients disappointed, we’re disappointed. No one’s getting paid. And it’s uncomfortable.

 

Erwin  

So property is vacant. nesters bleeding money. Yeah, for sure. And

 

Hart  

we’re spending a tonne of time or like, if a property rents in a week or two. That’s good for us. That’s good for the investor business. Yeah, and everyone. Yeah, exactly. And you’re probably gonna go out and buy another property. It’s good for your realtor, too. So it really is good for everyone. But we always balanced this triangle of the time it takes to rent a property, the quality of the tenant and the price we can get. And you know, you can only have two or three, unless you’re willing to compromise and be somewhere right in the middle. And this, I mean, it came from my days of brand, you know, every client wants something good, cheap and fast. And you can only have two of those. So it’s the universal norm,

 

Erwin  

or way over time. So where can people find out more information about Rent panda, just go

 

Hart  

to Rent panda.ca. And you have some free tools available there. Yep. So all the DIY tools are free posts on the marketplace. You can message tenants book showings, you can get a basic profile. So like the pre screening is all free. You can build leases for free with basic lease addendum that are completely free. And then there’s some premium tools there. And if you fill out our form to contact us about any of the other services and not the digital products, you literally get a call from me every single time we pride ourselves on customer service and making sure that even in an introductory call, we’re still educating, we’re still being fully transparent with our process. And we’re going to help you at some point in your journey.

 

Erwin  

And it sounds like you have some cheap rentals available.

 

Hart  

Not necessarily cheap, but their market rent.

 

Erwin  

Sorry, what was that two bedroom North demo?

 

Hart  

Yeah. 2495 I rented for

 

Erwin  

let’s see, it was fantastic. Yeah. You’re still mobile or you’re on the subway. You’re there’s a GO train there to beat that location.

 

Hart  

Yeah. We’re seeing people when they were considering Vaughn or that location because now there’s a big development happening at the top of the line and in Vaughan. And places depends on where you work but yeah, but up in Vaughan it was the same price as down by Yorktown.

 

Erwin  

So you have access to cheap rental listings right now. For my market.

 

Hart  

Yeah, market rent.

 

Erwin  

That sounds cheap. Well, it’s

 

Hart  

what this place would rent for two good quality tenants, lots of people saying, I’ll give you six months upfront. And then we looked and they had, you know, 535 credit and seven things in collections. And they had 1490 day late payments, and they didn’t have any support systems. So it wasn’t the right fit, or right.

 

Erwin  

Because I felt like I heard lots of people getting that many, lots of people, lots of people are getting like 3200 for two bedrooms. Yeah,

 

Hart  

I mean, this was a small two bedroom I will say. So like that 3200 mark is probably closer to downtown and also upwards of 700 square foot two bedroom apartments, which to be fair is what a two bedroom apartment should be. But these were kind of little micro apartments. And, yeah, but great amenities. Right. You know, they had co working spaces, they had a great gym, it’s and we rented to young, international architecture students, all they want to do is work hard and have access to downtown. And you know, they were at Ryerson, right and then get there on the subway. Yeah, when’s working? Yeah. And the landlord was rational and great to work with. Yeah.

 

Erwin  

Any final thoughts? Because, for example, or coming out of a downturn, what would you tell a new new real estate investor,

 

Hart  

the one thing is, is everything that you’re investing in yourself from a investment, education perspective, and the time and money that you’re putting into investing in that asset. Make sure you invest in the latter half of your landlord experience, you’re doing it yourself, invest in your own education. Find your Power team that extends beyond your typical property manager or anything like that. And make sure you know what you’re doing and you consider it a business. So don’t go into any business uneducated. And if you don’t know what you’re doing, just call us or call someone that knows what they’re doing.

 

Erwin  

Yeah, but yeah, they can call you because we’re gonna give you about your cell phone number. Yeah, for sure. Oh, my God, Kingston in Belleville, what would you recommend? Yeah, I’m just hypothetical question for sure. Because, for example, the

 

Hart  

answer clearly, I liked although right now, but yeah,

 

Erwin  

yeah, we’re actually pushing people more towards Kingston because the rental demand is just as high especially because the university is their queens. They’re not personally not a fan of college rentals. Yeah. Awesome. Hart. Thanks so much for doing this. Thank you and goalies go.

 

Hart  

It’ll be a fun night.

 

Erwin  

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Real Estate Investor Impact: Olivia Chow’s Victory in Toronto’s Mayoral Election with Ming Lim

Ming Lim is a Toronto Real Estate Expert and head of Volition Properties’ Investment Realty Services. 

He has helped clients accumulate $200,000,000 worth of income properties in the City of Toronto, from condos to mid-size apartment buildings, specializing in small multifamily in top neighbourhoods.

Ming is here today to share valuable insights after Olivia Chow won the Mayoral race of Toronto and vows to build a more affordable city.

Please enjoy the show!

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

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To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

For those don’t know Ming Lin is old friend of mine. We’ve been together with investing in real estate for a long time. He works with clients and investment Realty Services role is to help clients build portfolios, if you add them all up together, it’s about $200 million. That’s a lot of money. And you specialised from condo to midsize apartment buildings. And you specialise in Toronto. We’ve recently had an election. Very exciting. Congratulations to Olivia Chow, very exciting, if not exciting for everyone. This is not a political statement. But there’s implications to the real estate investor like me, what are these some of these implications to the real estate investor in Toronto?

 

Ming  

Yeah, I mean, you know, that is mixed emotions, being a Asian immigrant, you know, you get to see some representation, then you’re like, hop on, I hate the platform. But, you know, politics aside, let’s just get into the policies themselves. And what the kind of impacts would would be for real estate investors in the city. So I think first, the right thing to frame is the effectiveness of all this, right, because, you know, she’s coming in, it’s a by election, she doesn’t have a full four year term, just kind of like a three year ish, right? She’s gonna get less time than your average mayor. And we’re talking about, like, for the most part policy changes that she’s hoping for, which will take a long time to actually have an effect. So I think in terms of positive or negative impacts, you have to temper are the reality in that, when do we ever work with anything that’s governmental that moves quickly? Right,

 

Erwin  

to her Queen Street is closed for four years?

 

Ming  

Right? Or, what is the Eglinton LRT? Like, how is that going? So anyway, so you know, kind of at the speed of government, so take everything that I think is promised and said have a bit of a grain of salt, let’s get first and to kind of her affordable housing platform. So that was really around making sure that there is housing for, you know, low income marginalised kind of at risk, folks, I actually think this is great. You know, they’re planning to build 25,000 new housing units, it’s going to be on city owned land. You know, the impact to investors, investors, though, especially if you know, volition, we kind of take a little more triplexes fourplexes. In higher end neighbourhoods in the city. This doesn’t really impact us, right? I think it’s a good thing. I’m kind of a liberal socialist, but fiscally conservative. And, you know, this makes that part of me happy and and from the investor side, I think it doesn’t have much of an impact to most people. And the only caveat I’d say is, as a taxpayer, and if you’re investing in Toronto, or Toronto taxpayer, how do you feel about the city getting into the development game? You know, we just mentioned the Eglinton Crosstown, how’s that gone? Is it to budget? It’s a long time. As a taxpayer, I’m a little annoyed. I don’t want them to become developers, but rather, there was some private partner, private public partnership, perhaps there might be better efficient ways to do this, but doesn’t really impact me as an investor.

 

Erwin  

That’d be nice to just fund a nonprofit, not for profit. That’s good at this.

 

Ming  

Yeah, you can come up with a lot of overhead when it’s government run. And it’s not their expertise. The city’s not developers. Anyway, that aside, I think the intention is good. They’re so generally happy about that. The other one was preventing renovations. I thought this was interesting, because, you know, as as the election was happening, is we on the platform was like, how do you actually do that? Because generally, the jurisdiction for these things is Ontario wide. Right? It’s not a Toronto specific thing. So I delve a bit deeper into her platform, and quite honestly still can’t figure out how she’s planning on effectively doing this. So the the ideas behind preventing run evictions are purchasing, repairing and transferring rental properties to government to the government. Basically, a first right of refusal. To me that reads, If a major landlord that runs apartment buildings, for example, is trying to renovate people that the government could step in and buy out apartment buildings. That’s how I’m interpreting a policy right now. That makes a little bit more sense. I see. I see your face are away. I’m on my, you know, more community housing. Great. I don’t think that is impactful, though, to the kind of real estate that we do. Like, you know, you and I were very much about providing quality housing. We don’t believe in things like rent eviction, so I don’t feel it directly applies to us and the kind of real estate that we invest in. And I don’t think it’s gonna apply to your average Mom and Pop investor either, right? Like, I don’t see the city coming down to like the triplex four Plex level saying, hey, you know, we don’t want you to run away. We want to be able to buy your triplex from you to provide low income housing at that level. Doesn’t seem very efficient. And I don’t believe that city’s getting into that low of a level of housing density. Anyway, there’s not a huge detail around this programme. But that’s how I interpret it when I read through the platform. And the other stuff is really around increasing social support programmes. So this may be as a way of preventing rent evictions. So it’s like investment in the I think it’s called Epic. It’s the eviction prevention programme. And actually, I didn’t know about this until her her campaigning, and she was talking about it. I was like, how come I never heard about it, because it’s not really the the tenants were targeting these, again, are low income people, or you know, people at risk lost their jobs. And this is a programme that helps, you know, with substituting somebody’s income for a temporary basis, let’s say they lost their job, they can’t pay rent anymore. So kind of being a backfill there or providing temporary housing for them until they are able to find another place. And, you know, we represent hundreds of hundreds of units across the city though. None of our tenants, none of our clients have run into somebody using this because it’s completely different demographic that we’re renting to, you know, rent safe, they’re putting more money into rent safe, great rent Safe is a programme that basically prevents slumlords from occurring, like, you know, places that needs repair. So I think it’s great that they’re putting more money into that, again, you know, you and I don’t do that kind of real estate, we are into quality, safe, you know, aboveboard. So we don’t need somebody knocking on our door, saying, you know, we’ve got, we’ve got problems with the place, I just can’t imagine that happening. Right.

 

Erwin  

So it’s like how sounds like the platform’s largely for the fringe of real estate as more of the outliers.

 

Ming  

I do think that the things that she’s going towards, are the people that need it the most, it is the kind of the marginalised folks, the people who are already at risk if people were potentially are facing eviction, for whatever reason,

 

Erwin  

but you and I, our clients don’t don’t have rentals for that market.

 

Ming  

Yeah, our clients don’t don’t really play in that area. I think I’ll get into this a little bit later. I think, though, that cost for this is being borne by middle class, because and, you know, inherit a fence. She hasn’t told us how it’s gonna get paid for.

 

Erwin  

Right, because the city’s broke, was very expensive. The TTC is running right and fun, expensive to run during a pandemic, when there’s no passengers.

 

Ming  

Absolutely. And now we’re getting into more costs coming down the line, more programmes. Great, but how’s this all gonna get paid for? Right? So anyway, so like they’re doing rent safe, there’s, they’re gonna have a seat at city council. So they’re establishing this Toronto renters Action Committee to have like renters representatives at city council. Awesome. But again, I don’t think it has a huge impact to us. Where I think it might impact our investors, though, is a kind of two places. So one, there is actually a legitimate time for rent eviction, right? Let’s say you have a house that you want to change the bedroom count on, right? It’s a very large one bedroom and you want to turn into two bedroom, that is a time he may legitimately want to evict so you can turn into a two bedroom unit. Because you’re not putting the same type of rental stock back on the market. I wouldn’t be doing this kind of thing. But there are some people who want to change their the layout of their property, right. There’s also a time that let’s say you want to convert to multiple units, right, you have a duplex and you want to turn it into a triplex and you want to use the word eviction process. I feel like that’s going to be a lot more challenging to do, maybe not because of law, but maybe because of sentiment that also will impact things on the purchase side. Right now, if you’re trying to buy a tenancy property, it’s already very challenging, right? Buyers are legitimately worried about inheriting tenants, worried about even their own right to get into a property using something like an n 12. So you’re going to see a big premium for vacant properties, vacant multifamily properties, just because people are going to get even more frightened of having tenants is taking over tenants. So I think that is probably where we’ll see some impact not necessarily directly from policy, but because awareness and sentiment, and maybe just, you know, maybe renters feel like it’s more worth a fight for them. So anyway, I think that’s probably where I’m seeing what impact. There’s a bit on the public transit side, Scarborough, who often gets the short end of the stick when it comes to anything public transit is getting at least dedicated bus lanes. That shock still they just took away the RT and the solution was buses for 10 years. At least they’re getting lanes for those buses now that I’m happy that’s happening. Yeah. And you know, kind of the other stuff that she she’s doing is again, more on the supporting the renter side, there’s increases in Toronto rent bank, again, that kind of helps marginalise people, low income support for through epic stuff like that those programmes are all good for low income folks, not as much for the kind of folks that we’re renting to right the young professionals and things like that. I think though, all of this Like I alluded to, he gets paid for through middle class taxes and called the middle and upper class because there’s a bit of luxury tax that’s coming in, but you have the luxury tax. And that’s, you know, not well established. The platform is basically saying, I graduated payment $3 million, not you’re gonna get an additional tax. What I think it’s not clear is, is it just going to be straight cost? Like if your property is $3 million, over $3 million going to get hit with tax? Or are they going to take a little bit more sophisticated approach? And I hope this is the case that if your housing, your borrowing or housing stock, let’s say it’s multifamily property over $3 million, are you still gonna hit luxury home tax? I would argue it’s not luxury home if you’re buying a, you know, $5 million multiplex. Right. Anyway. And that also contradicts some other programmes from CMHC. If you’re providing some affordable housing within that, how can you be getting a luxury tax on a property that you’re also providing affordable housing for? So I think the detail the devils in the details for the luxury tax,

 

Erwin  

sorry, that’s Toronto tax, the luxury tax,

 

Ming  

that’s a Toronto tax. Yeah, that would be Trump tax. So that’s within their jurisdiction. Right. Right. So this,

 

Erwin  

this only affects like people like yourself, and Matthew?

 

Ming  

Well, you know, any, anybody who’s out there spending big bucks on a multifamily property, it could potentially impact them. The other ones vacant home tax, so that, you know, she’s talking about moving it from 1% to 3%. You know, our, our old time buddy, Don Campbell would say that makes a great headline. All right, but what’s behind the curtain? And I think they can home tax increase, you know, that’s something that people can get riled up for. But in terms of actual effectiveness, you know, I think it does have an impact. The challenge is that has declining effectiveness over time. And, you know, in BC, I think is a perfect example, they were the first place to do this, they started with like, nine, I think, is like 9000 homes that were taxed. And then, you know, that dropped by 30%, in two years, and it’s continuing to drop, because people are just like, hey, I’m not going to pay my tax, and I don’t want to pay this huge tax, like 3% of the value of the home. So they’re going to either rent it out, which is great, like, you know, adding more rental stock, or they’re gonna sell their properties, they will leave in vacant. So I think the taxes it’s affected purpose in providing rental stock, but I think the tax is a poor place to look for ongoing funds, because that number should decrease and decrease and decrease over time, if it’s doing what it’s supposed to do, which is provide rental stock, or housing stock purchase housing stock to the city. Sorry,

 

Erwin  

you said there was 9000 vacant homes and vacant Vancouver.

 

Ming  

There are 9000 Charge, like, shouldn’t charge but like taxed in in BC. I don’t know if it’s an old BC, I think was all BC, you know, the big thing is, I think the drop, like it’s like 25 or 30% Drop in tax homes over a two year period. Right? Because people are going to wake up where they’re gonna get this huge tax bill, the bill? Well, I’m not gonna, I’m not going to do that I’m going to do something with that property. So you know, I wouldn’t say get the idea is not to get rid of the vacant home tax. But if you’re saying that this is how we’re going to pay for these additional social services, I don’t think that’s how you’re really doing it, because that tax should be shrinking and shrinking every year. Right. And then the last thing was, and I think this is real, the real Asterix in all this is the property tax increases. So she, you know, Olivia Chow has basically said that she is going to have a tax increase a moderate tax increase, but quote unquote, can’t give a number at this point. Fair enough. Take that, as you may, citizens of the city, we know there’s a big budget deficit, and we have all these plans to spend more money. It’s going to come from somewhere and you know, property tax increases. It’s generally your your middle class, it’s going to get hit right everybody whose property owner, the city’s gonna get hit by this. So yeah, but you know, that kind of leaves us where we are the actual impacts of the programmes. I think the sound like they will help the people who need them, you know, more marginalised, lower income folks. And don’t think it’s going to help your average person, though, who’s like paying 3000 bucks a month for a one bedroom condo downtown. Those rent prices are not going down, you know, a better solution. And some of her competitors will call them We’re campaigning on this is to allow for more types of housing and to make it easier for more types of housing. I mean, I challenge anybody on the who’s listening to this to try to figure out how to make a legal basement apartment in the city in five easy steps, like good luck. It is. So it’s unnecessarily complicated. There’s no resources from the city. You make that programme easy. You can get 1000s and 1000s of units on like people want to do it right. People want to do it legally, it’s safe. They don’t even know where to start.

 

Erwin  

So So my apologies like there’s nothing in ovo Charles platform to make things easier for the private industry to create more housing.

 

Ming  

I didn’t see I didn’t read anything along those lines, like that was very much, Anna and a bilateral and Brad Bradford. So the both of those guys sat on the housing committee and city council. So we’re both quite intimately familiar with how things work. And they both talked about, you know, easing of development, more types of properties, I think that’s the big thing, like, you know, if, if you want to build micro suites, we should be able to build micro suites. And that should be an easier thing to do. Some people don’t need a lot of space, but they would like their own safe box in the sky, or wherever that happens to be. So easier, more types, that would have been a big win. And you know, you and you and I, when we had our kind of pre chat about this, I think you you’re absolutely right, when you said maybe it’s a swing of the pendulum, right. And, you know, Toronto, traditionally, last eight years or so has been very progressive and forward on developments. I mean, allowing for places

 

Erwin  

there will be in the province, thirdly, in the province in terms of how progressive they were for development.

 

Ming  

Absolutely. And like, you know, I was happy to it took a long time. But I was really happy to see it. And I was actually a bit surprised it passed the way it did, which is, you know, obviously almost blank slate of you can build a four Plex as long as it’s two building code, any residential neighbourhood in the city now. Wow, that’s pretty awesome. Now we’re kind of in limbo, we’re just seeing that pen pendulum swing the other way people like no more of that. So

 

Erwin  

anyway, just fantastic news for existing property owners, which is not good for society.

 

Ming  

Yeah, you know, I don’t imagine some of these things that have come in to add supply to the city are going to go away. I think that would cause a bit of an uproar. I just don’t think that the campaign of providing more better housing is going to be for the middle class which I think is the one we’re really feeling it right now. And you know, part of the property tax increase I feel is really tone deaf is like, I’m sure you may every household in in the nation is feeling the inflation crunch like nobody’s looking at their bills right now and saying, Oh, this is less than I expected, right? Everybody’s really feeling this and then now to increase taxes on top of this. I’m very surprised that the city was like yep, you know what, that’s the right thing to do I you know, I want to I want to pay more taxes right now so

 

Erwin  

well, if I didn’t want people to know how much more it’s gonna cost I tell him I don’t know how much it’s gonna cost. Thank you so much for your time. It sounds like a lot of wait and see a lot of great things to help those at risk. But not much in terms of concrete that would help our your clientele or my clientele, except for maybe more property tax. as well. Absolutely. Man, where can people get more information from volition properties?

 

Ming  

Well, you can follow us on Instagram volition, prop prp.com. Or you can go to our website, volition properties.com. Or reach out to me and Erwin, wherever where to find us.

 

Erwin  

We’re not hard to find much for doing this. No problem.

 

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. Sign up for yourself with 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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UPCOMING EVENTS

You are the average of the five people you spend the most time with! Build connections with empire builders and trailblazers at our iWIN events.
 
CLICK HERE to check out what’s coming up next.

 

BEFORE YOU GO…

If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.

It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success. 

New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.

We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best.  In 2018, we again won the same award by the Real Estate Investment Network.

Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics.  The intersection of the two, talent and ethics is limited to a handful in each city or town.

Only work with the best is what my father always taught me.  If you’re interested, drop us an email at iwin@infinitywealth.ca.

I hope to meet you at one of our meetups soon.

Again that’s iwin@infinitywealth.ca

Sponsored by:

Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.

Just imagine what winning in real estate could do for you.

If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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Episode 300: From Flipping 1 House to 1,000+ Membership With Nick Karadza

300 Episodes 🥳🥳🥳 

That is one episode per week since March 2016 in what started as a six-episode experiment.  Each interview is about an hour long, and it would take 12.5 days to consume all 300 episodes to date!

 
 
 
 
 
View this post on Instagram
 
 
 
 
 
 
 
 
 
 
 

A post shared by Erwin Szeto (@erwinszeto)

Greetings, my fellow investors; this is The Truth About Real Estate Show For Canadians where we bring you the truth and nothing but the truth. 

We’re not interested in peddling get-rich-quick schemes or hyping up unrealistic dreams. Instead, we provide you authentic, successful investors and industry leaders with authentic insights, practical advice, and invaluable lessons from experts who have been through the ups and downs of the real estate industry.

This week is no different with our guest Nick Karadza who co-founded and co-owns Rock Star Real Estate Brokerage, Inc. with his brother Tom Karadza. 

Tom is, unfortunately, feeling under the weather, so we will rebook him separately for a later date, but the show must go on. 

Nick and Tom are both mentors to Cherry and me. Their businesses include running a real estate brokerage specializing in real estate investing to service their other business, the Rock Star Inner Circle, a real estate education business that offers amazing value to its members.  

The monthly fee is only $50 after a small initiation fee of $500.  However, my referrals do get 50% off the initiation fee using my discount code, all caps ERWIN.

Education is an investment; good value is good value, and all good investors comparison shop. 

Gym memberships cost more than the Rock Star Inner Circle Membership, let alone playing golf once a week or month, so get educated first on how to get rich slowly in real estate so you can afford that golf membership.

That is the dream, remember, that passive investing pays for the niceties in life and for living. I’ll never forget the first significant, nice thing Cherry and I bought for ourselves: a hot tub paid for when we refinanced a duplex we’d held for years. 

As a frugal investor, we generally don’t spend much on ourselves as we know what our returns can be invested in real estate.

If I look back at what our clients purchased in May of 2013, ten years ago, paying an average of under $300,000, those properties, on average, appreciated 260%, assuming 20% down and excluding cash flow and mortgage pay down.  

And these did cash flow as the highest and best use investment property in 2013 – Student rentals returned our clients an average of 800% over ten years.

With all the international students, colleges and universities recruiting, student rentals are better than ever.  

Note that our colleges and universities need international students as their tuition is not capped in price, unlike domestic undergraduate students.

The government should have seen this coming, but housing hasn’t kept up, so our investor clients benefitted from the complete imbalance of over-demand and under-supply.

The benefit of being a long-time investor is, time in the market is our friend. Same as cash flow which allows smart investors to weather times like today, elevated interest rates so they can weather this storm.

Unfortunately, there are many who overleveraged and/or speculated, so we’ll be seeing more listings hit the market over the next 12 months until we see an interest rate cut which is looking like mid/late 2024, next year.  

Once we see a cut, that will signal the market to get in, and we’ll see a flood of buyers pushing us from a balanced market to sellers market in the areas we target for investment.

From what we see on the streets, good quality investment properties that tick every check box still draw multiple offers. While smaller markets, showing traffic and offers is way off and will trail further off as we head into summer.

So what does that mean? 

If you have a property to sell, that’s bleeding you money and no longer serving you?  Get aggressive, as buyers are rightfully being picky.

For buyers who waited patiently and prepared for a fearful market, you have probably a 12-month window before the rate cut, and we flip back to seller’s market.

Long-term, quality income properties will be a winner.  Make sure you only own winning investment properties, and if you’re unsure, reach out, and I’ll let you know. 

That is if you want excellence in your real estate investment power team that delivers exceptional results.

In 2022, our clients sold for 19% higher than the average comparable properties. That indicates our clients bought right and renovated for return on investment.

You heard earlier that our clients from ten years ago achieved an 800% return on investment.  

Past does not predict the future, but there is a reason we have 50 – 5 star reviews on Google as we are here to set the standard for performance and client satisfaction at iWIN Real Estate. 

If any of that interests you, let’s get on a call, email us at iwin@infinitywealth.ca and let’s understand your goals and determine a strategy to get you there via the remarkable adventure in the world of real estate investing.

But enough about our clients, onto our 300th interview with Nick Karadza.

Episode 300: From Flipping 1 House to 1,000+ Membership With Nick Karadza

Nick Karadza is a real estate investor who discovered the power of leveraging real estate through “boot camps.”

Starting at 21, he bought, renovated, and flipped properties for profit but realized it wasn’t generating the desired cash flow to replace his job income, and it was a lot of work. 

Nick shifted to rental properties, achieving monthly cash flow and recouping his investment. Nick founded Rock Star Real Estate Brokerage Inc. and the Rock Star Inner Circle with his brother to assist real estate investors. 

Nick publishes a newsletter, shares online articles, teaches classes, holds events for their 1,000+ members, and co-hosts the Your Life, Your Terms podcast. 

Nick remains an active real estate investor, consumes endless economic news and collects some silver, gold and bitcoin.

Please enjoy the show!

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Welcome to the 300th episode of The Truth about real estate investing show. I am shocked if you’re new to the show, that is one episode per week since March 2016, we posted our very first episode, which was part of a six episode experiment, which is very long time ago feels seven years ago. Each interview is about an hour long and if you were to go back and try and consume all 300 episodes, that works out to about 12 and a half days but I do not recommend to consume all 300 episodes. I personally listen to almost everything audio on usually at least one and a half times so you can probably get through it faster than 12 and a half days Greetings my fellow investors This is the truth about real estate investing show for Canadians are you bringing you the truth and nothing but the truth? We’re not interested in peddling get rich quick schemes or hyping up unrealistic dreams. Instead, we provide you authentic, successful real estate investors, leaders of industry with authentic insights, practical advice and invaluable lessons from experts who’ve been through the ups and downs of real estate investing. This week is no different. Our guests in Nicaragua who co founder and CO owns Rockstar real estate brokerage with his brother Tom kharadze. Unfortunately, Tom is feeling under the weather he’s losing his voice. So we’ll rebook Tom for a separate date, but the show must go on. Both Nick and Tom are mentors of AI to charity. Their business includes running a real estate brokerage specialising in real estate investing to service other businesses and also service other businesses, which is like the Rockstar inner circle, a real estate education business that offers amazing value to its members. I know because I’ve been a member since about 2010 ish. The monthly fee is only $50 per month after a small initiation fee of $500. However, my referrals do get 50% off the initiation fee using my discount code, all caps, er w i n all caps. Education is an investment. Good value is good value and all good investors comparison shop. gym memberships cost more than the Rockstar inner circle membership, let alone playing golf once a week or once a month. So get educated first, so you can learn how to get rich slowly, in a very safe manner in real estate so you can afford that golf membership. Remember that that is the dream that passive investing pays for the niceties of life and for living. I’ll never forget the first significant nice thing Sherry and I bought for ourselves, which was a hot tub paid for when we refinanced the duplex that we’d held for several years. As a frugal investor, we definitely don’t spend much on ourselves. And because we know what kind of returns we can make when we reinvest money into our real estate portfolio. I look back at what our clients purchased in May 2013, which is just 10 years ago, again may 2013 10 years ago paying an average or classroom paying an average of under $300,000 For detached properties, houses and on average those houses appreciated if you’re sitting down, be sitting down those houses appreciated on average at 260%. So assuming a 20% down payment, and for simplicity of math, we’ll exclude cashflow and mortgage pay down these properties did cashflow as the highest best for that time in period in neighbourhood and town the highest best use for those investment properties back in 2013 Western rentals and those houses again, assuming 20% down our clients averaged a return over those 10 years of 800%. Yes, again, this is data from properties our clients bought, so we know exactly what to pay for and the addresses and everything. And because we’re active, we have a pretty good idea what those hazards are worth today with all the international students, the colleges and universities are recruiting student rental business has never been better. Note that our college and universities need international students as their tuition has not kept on like domestic undergraduate students. So for anyone reading the news, funny enough, a lot. The liberal media, which is generally the media leaves out the fact that prices are capped on domestic students hence like Guelph was in the news just recently, but they’re having trouble balancing their budget, even though they have a good number of international students. You know, the government should have seen this coming. So international students and yeah, those folks who are making up a humongous percentage of the people that live in Canada, most recently in housing has not kept up. So our investors are benefiting from the complete imbalance of over demand and under supply. The benefit of being a longtime investor is, you know, the market is our friend. Same as cash flow, which allows our smart investors to weather times like today where we have elevated interest rates, so they can weather the storm. And unfortunately that there are many who are over leveraged or who speculated so we’ll be seeing more listings hit the market over the next 12 months until we see an interest rate cut, which is looking like mid to late 2024 next year. Once we see a cut that will be a signal to the market to get in and we’ll likely see a whole bunch of people who’ve been sitting on the sidelines, get back into the market. I’m talking about specifically for buyers and pushing us for have a balanced market to a seller’s market. And I only generally observed the markets that we invest in for target, but we invest in for target investments. So that’s generally well east of the GTA and wild west of the GTA, where we can actually cash flow on property. From what we’re seeing on the streets, good quality income property still draw multiple offers, for example, a property in Hamilton, Ontario that ticked every box, that property still drew five offers, unfortunately, we lost on that one, while smaller markets such as like Niagara Falls, or Belleville, Ontario, and especially small market, really small market like Trenton, Ontario, the showing traffic and offers is way off as an dropping low. Same thing with the tenant applications. And so and based on seasonality, they’ll trail off further as we head into summer. So what does that mean? If you have a property sell, that’s bleeding your money and no longer serving you. If it’s my client, I’d be suggesting to them not suggesting I’d be advising them to get aggressive on their pricing. As buyers are rightfully being picky, buyers who waited patiently and prepared for a fearful market, you probably have a better 12 month window before that breakout happens maybe a little bit longer. And then we flip back into a seller’s market. And that’s the long term trend. Because we are in a housing crisis, nothing has changed long term quality income properties will still be a winner. So make sure you only own winning investment properties. And if you’re unsure, reach out to us and we’ll let you know, let you know that is if you want to work with if you want excellence on your real estate investment Power team that delivers exceptional results in last year in 2022. Our clients properties sold for 90% higher than the average comparable properties. Specifically, there’s a client’s properties that are we listed for our clients. I believe that’s an indication of that our clients bought right they renovated for a return on investment. And honestly, we believe in being excellent at what we do. You heard earlier that our clients from 10 years ago achieved 800% return on investment over 10 years. Of course past does not predict the future. I do not think the next 10 years will be nearly as profitable, but I do not see a better investment. And there’s also a reason for that we’ve we have 55 star reviews on Google as we are here to set the standard for performance and client satisfaction here at Iwan real estate. If any of that interests you, let’s get on a call. Email us at Island Anthony wealth.ca. And let’s understand your goals determine a strategy get you where you want to be revealed the remarkable venture that is the world of real estate investing. And we’re only talking about truths here. But enough about our clients. On to our 300th interview with Nick corretta. Nick is a real estate investor who discovered the power of leveraging real estate through boot camps starting at age 21. That was a long time ago. Nick’s an old friend so he is older than I am. So yeah, so 21 When age 21 was a long time ago, he bought renovated flip properties for profit, but realise that wasn’t generating the desired cash flow to replace his job income and it was a lot of work. A lot of work. To flip a property with your own hands is a lot of work. Nick shifted to rental properties achieving monthly cash flow and recouping his investment. Nick founded Rockstar real estate brokerage Inc. and the Rockstar inner circle with his brother to assist real estate investors. Nick publishes a newsletter shares, online articles teaches classes, hosts events for their 1000 Plus Rockstar inner circle members. That’s a paid membership. And also Nick co hosts with his brother that your life turns podcast, I’ll have links in the show notes for all of this, of course, Nick remains an active real estate investor, he consumes an endless amount of economic news and collects some silver Gulf of gold. Wow, Freudian slip, not golf, gold, and Bitcoin. Please enjoy the show. Hey, Nick, what’s keeping you busy these days?

 

Nick  

Oh, man, everything. We’re in a world where you have to be an economist to understand what’s going on to try to figure out what your next moves in life are so it’s like constant studying of, you know, different markets. We’re always asked what’s going on in real estate. Hey, what do you see what’s what do you think’s happening with interest rates? What do you think you know what’s happening with this? So that’s what keeps me busy and tied to maybe my phone looking at different articles and stats more than I want to but yeah, I mean, outside of that. We got family. We got the gym, we got a little bit everything. Try to balance things as best possible.

 

Erwin  

Yeah, you’re actually a lot. So I think the listener knows I’ve been a part of rock stars in 2010.

 

Nick  

Was it 2010? I remember man, I respected you. You came into the office. We didn’t know each other.

 

Erwin  

No. I knew you because I read up on you. I read your book, I read through your blogs, did you

 

Nick  

because we didn’t even know how much stuff we had out of that time. But I guess because we started a few years before that. So there would have been some stuff that we’ve written online quite a bit. But yeah, you brought up a Napoleon Hill book. I think. second meeting.

 

Erwin  

That is a big one. Yeah, it’s another one of his big Yeah.

 

Nick  

Yeah, good conversation. I didn’t want to just go along with it. Yeah, I was just like, he seems like a good guy. back then. I mean, it’s a weird barometer to use, right? If you’re like, oh, we should do something with this person. Like, are they they seem or you know, whatever, quote, unquote, normal is to you, right? And they seem like a good person. And that’s like the barometer these days. For me. That’s how I’m making a lot of decisions. And I don’t know if that says something about me or The society in general that you sometimes it’s harder to find good people than you would think, if that makes sense. But anyways, yeah, worked out.

 

Erwin  

Yeah. Worked out. I didn’t bust by accident or my mark. So, to me, it was important. But my average for the Korea course is to become a realtor for listeners benefit, like, think my average was like 96

 

Nick  

Oh, mine was like, the second exam. Well, did you were you open book or did you have like multiple choice? Multiple choice here? Oh, yeah. Okay. Oh, yeah. So we had short answer open bucks. So the first the first one I studied, and I did pretty well, I forget what I got, you know. And then the second one, you know, I was supposed to open book I mean, I’m not gonna study well, why am I gonna set this up? I’m gonna take 21. At this time, I’m just just getting it to bind somewhere on properties, right? So why am I gonna study so I just showed up with a textbook to write the test. And this one was way more. She was all about the real estate law and that type of stuff. I’m like, I don’t know any of this stuff. So then I was like, flipping through the pages. I’m trying to write this long paragraphs as possible, trying to get part marks like I was the like, Excuse me. You had to write paragraphs? Well, yeah, it was a little short answer and stuff. So I had to do that. And I remember that second exam, I think, I think at that time, the pass was 75. If I remember correctly, yeah. And I got the 75. Right off. So yeah, I’m not gonna compare marks with you.

 

Erwin  

Oh, no, after I realised, like, none of it really mattered. When I got into my articling. It just just passed. I was busy. I was busy with doing business doing. Sure. Do the article, game articling tests. Yeah, just pass the law one.

 

Nick  

Those ones where it’s like just just random stuff. But I didn’t. I don’t even know what the full process is now. So I know a couple of people in the office actually going through it. So I could probably ask them, but I haven’t gotten a chance to actually someone today is in the course. Actually, some of the office right now.

 

Erwin  

It’s a lot harder than it used to be. But yeah, it worked out. I always refer back to this picture from my first team event at Rockstar. Rock climbing. Yeah.

 

Nick  

We have one of those on the wall, I think yeah, we do. We do. We do. Oh, the rock climbing gym,

 

Erwin  

the rock climbing gym, repelling, but

 

Nick  

the rock climbing gym was we built a pyramid. Yeah, he wouldn’t pyramid. Yeah. Because we’re the team was small enough to do it. Yeah. Did we fall on each other? At the end of it? I

 

Erwin  

think we did. Okay, I think we couldn’t get the person at the very top. Okay, that’s sketchy. It got sketchy. But yeah, you know, I think that picture is a great analogy for my career at Roxxor. Because my knee is in Toms lower back. Pain is back. I was smart, though. Because I’m like, I looked at everyone around like, people are pretty fit. And I don’t want to be on the bottom row. So I was on the second one, the bottom row.

 

Nick  

It’s funny, we still get some people that were that have been with us since then. They’re like, man, you know, was so nice when it was just really small team stuff. And, and I agree, you know, there is something to be said for that. It was nice, right? But it’s nice now as well in a different way. But yeah, so depending on who you are as a person and what you’re like, you know, might be better or worse, depending on but, you know, we’re still a pretty close knit group. For the most part, we’re fortunate in that way. Which has been, which has been nice. As part of the process. I feel like, you know, from the outside, maybe the people working with us Don’t you know, won’t see it the same way. I don’t know what you think. But we’ve tried our best to keep make it feel like a more of a, you know, a real team, liquid of a family versus just like a bunch of faces and people coming and going.

 

Erwin  

Yeah, a true team, family culture versus people slap those terms on anything. Yeah, obviously, it’s harder for like, 1000 person organisation. But something that I’ve always admired about you in in Tom was that you were always not afraid to scale up. But you did as controlled as you wanted. And also, for example, like, you could have had multiple franchises outside of the office, but you chose not. Yeah. So it should have been a lot bigger, but you chose not to.

 

Nick  

Yeah, I mean, there’s something there’s a good aspect to that for sure. Right. We’ve have we left opportunity on the table. Yeah, for sure. We’ve been asked open franchises in different parts of Canada and things like that. But part of that would require management of those. And with young kids at home, now the kids have gotten a little bit older. But with young kids at home, we want to make sure we had time for the family. And we had already been travelling a lot to different conferences for to just enhance, you know, our own skills and marketing or investing whatever it might be, but to then manage things in different time zones and different areas. I don’t know if we wanted to take away from our personal lives in that in that capacity. And we’ve got we know, we gave up some opportunities for that, but think we’re comfortable with it. You know, the the flip side of that, too, is yeah, we give some opportunities, but we’ve saved ourselves a lot of stress, because at the same time, we would have had to find people to operate those for us. And it’s really not easy to find. Well, I mean, you and Sherry are both business owners. You guys get this like to find good people. It’s not easy. And you know, very often in real estate or in other professions where there’s a big financial incentive on a sale insurance comes to mind about picking on insurance people, but I know for some life insurance policies, there’s a hefty commission to be paid on depending on the size of the policy, right. So sometimes those incentives will cause people to force a sale where there might not be a sale to be made there. And I know You know, everyone’s heard the stereotypical horror stories about realtors. But you know, some people in real estate and again, other professions will chase Commission’s and we would never want someone under our name chasing a commission, anyone that’s part of the company it would bring all of us down because that’s not how we operate. And I guess that would be a concern for us, you know, so you always got to find good people. And I know you like over time, you know, how many times have you talked to investor out of buying a property because you felt that you could find them something better? Right? So this, but there’s a lot of people that be like, Oh, you want this one? Okay, no problem. Let’s bring up the offer. They just, they’re they’re chasing that commission, versus saying, Hey, okay, like, I know, this one seems good. I know, you’re interested in Oh, that’s cool. Let’s like back up for a minute, let’s not buy this one, I can get you something better. And you’re putting your word and your effort on the line to do it for them. And I think that, you know, that makes a difference. And it’s what’s allowed you to build your business certain way into to have have your client base around you for so long and loyalty because you kind of watch out for them. So it’s a similar principles that way, I think if you remember

 

Erwin  

Margaret, longtime Rockstar member Yeah, I exactly that we’re looking at properties, or I’m gonna ask her Yeah, and you know, like, there’s a lot of properties that Okasha our dog’s breakfast. Yeah. But for someone who’s new to that market, they don’t know. For example, my original portfolio. You know, I had a house that was built in like, 9018 80s. Yeah, right. So the foundation was logs. That literally law really,

 

Nick  

I haven’t actually seen that before ours, we have one that stone, it’s like crushed stone all put together, but not locks.

 

Erwin  

I had logged, every time it rained water went to the basement, and therefore anyway, my point was that I didn’t have much context what a good deal look like. Yeah. So for example, once I became went to join Rockstar, I would, before I was working with clients, I’d go once a week to go look at everything that fit my client’s profile. Right? And so like, for example, once someone sees 100 houses, now you kind of know what the top 20% looks like. Yeah, you get it? Yeah, you get it. Right. And so like, like, That’s my strategy. I want to own a top 20% property rent to the top 20% of tenants. So exactly with Margaret, I have exactly that conversation, like, would she be interested in a property like, No, we can do better. Like 20 problems, veterans are small, incited, a lot of houses are cited, there’s hiding problems, right. So I wanted something more, you know, less old, their home construction. So like, at least three times out two or three times? I was like, No, we can do better.

 

Nick  

Yeah. Yeah, we learned that the hard way. One of our early properties that Tom and I bought was McMaster and we just looked at the numbers. And the numbers looked good. Remember the 1%? Rule? Yeah, time when that was like a rule that hey, you know, you’re a student? Yeah, for sure. So the numbers looked good. And we’re like, oh, we should proceed with this property, not taking into account a lot of these other factors. Or once these tenants left, what it would have taken to get it up to par with the other properties in the area to maintain though that revenue stream and things like that. And yeah, she’s an early lesson for us, like we were blinded by the numbers. This was literally, I think, our second or third property. So it was very, very early. And we were, you know, so focused on the numbers that we just didn’t take other things into account. And I mean, we own that property. Until today, still, so it’s worked out very well for us. But at the time, we just feel like, oh, we overpaid for that property, we could have got a better property for the same same amount of money. But you know, we made it work. But it’s an early lesson, right? And remember the year the year that we bought it? Yeah, I would have been if it’s probably about 20 years ago, something like that. Yeah, I don’t know exactly how long we’ve

 

Erwin  

had it pretty much paid for roughly yet

 

Nick  

to want to say 250. I don’t think it was two, three, I think we ended up paying 250. And we should have paid probably 220 or 234. And it’s, you know, knowing what I know now. And that lesson that we learned we needed, we should have paid a little bit less for it. But yeah, it might have been 250 or 230. But the guy that we bought it from get this, he had owned it for a number of years, a decent amount of time, I forget how long but he had only ever put an interest only mortgage on it. So he had bought it for I think it was like 50 or 60,000 bucks. And he had only ever put an interest only mortgage and renting all this time. And then he cashed out. That was his that was his process. So it sounds funny, but it went up. It must have been more 50 grand because we pay 250 Because what we laughed about it saying over 60 grand and we paid almost 250 Because we said okay, so if his multiple went up four times, or roughly four times in this amount of time, we were joking, we were calling it the million dollar student rental. So this property’s gonna be where it could be worth a million dollars one day like we know it sounds ridiculous, but with what was happening with, you know, with what’s happening with rates and the financial system and money printing, they’re gonna inflate things away. This could be a million dollar property. We kind of all laughed about it. We were talking about in a team meetings. I remember back in when we were in the Burlington office, we would be laughing about the million dollar student rental. That property is not worth a million dollars today. But it’s not that far off. And if the last tenants have been there for a number of years now, because always a couple stay. And so we can’t raise the rents back to market because they’re always one or two this thing because we just don’t usually rent. We don’t raise. I know you can’t raise much. We don’t even raise our student properties if they stay because they’re only usually there for two or three years, but they keep backfilling with people. It’s easier for us but Then we haven’t raised the rents again. So I’m gonna want to be worth today. But it’s not quite a million, but we’re on our way there, like the joke that we made all those years ago is actually coming to fruition now.

 

Erwin  

How much do you understand about economics 20 years ago, like money printing and not much debt that the government goes into?

 

Nick  

Yeah. 2008 is when when we got serious about that, right? Because after the financial crisis, we looked around, and we said, What the heck just happened? What’s going on? And why do we have like no idea how this stuff works. And that’s when we got serious about trying to understand that financial system, it was weird when that financial crisis hit in the fall, we were in the US at a mastermind meeting. And Americans up to that point, whenever we’re in this part of this group, they’re very aggressive, you know, with their moves in real estate at that time, they were just, you know, everyone was just almost all in huge portfolio. Yeah. Like, they were very, almost, they were all brash, I mean that in a bad way, but they were just like, very confident, very just outgoing. Like, yeah, we’re gonna crush this, like, you know, it was nothing to stop them. There was no no barriers for them. Good. Lord. That sounds familiar. And then And then yeah, when that financial crisis hit, we were at this meeting, and I’ll never forget what what went down that one morning, I was like, Did you see what happened? You see what happened? And it’s just like, you’re in their faces. And we’re just like, what, what’s going on here right now, you know, so and that that was the start of of all that stuff. So that’s when we got serious that we had to try it out a little bit, understand this, and, you know, kind of go deep because it was starting to really impact our everyday lives. And we’re like, if this impacts our everyday lives and everything we do, why do we not understand it at all? So that’s when we saw 2008 was when we really got into it

 

Erwin  

for the listeners benefit. What happened to your associates in the US, who had large portfolio built up a large portfolios in the run up to 2000, rather

 

Nick  

than walk to had to walk away from them? Yeah, a lot of them have to walk away from they were they were very, very highly leveraged, no focus on cash flow. Oh, yeah, wholly focused on on appreciation and just acquisition as much as possible that put them in some bad situations, we do know some, some people that started to do some what they call strategic defaults. So they would, they would even hold on to the property for a period of time at that time, because they knew the bank was going to take a while to come and foreclose on them. So they weren’t paying the bank, but they were collecting rent. So they were using that as a stream of income. And then they were walking away from the property afterwards, when the bank came to foreclose on them finally, so because they were just like, we’re finished anyway. So this is what they’re going to do. And then they’ve, you know, they’ve since I mean, one guy that comes to mind, particularly since rebuilt, his portfolio changed a little bit, definitely focused on income and cash flow versus just kind of acquisition and appreciation and, you know, has looked back and been like, wow, I really kind of didn’t see didn’t understand what I was doing before. Now, I’m really kind of, you know, got a narrow focus on what I’m trying to build. So it’s changed for them. But I think it woke a lot of people up there was a lot of a lot of them went through some turbulence there for sure. dark times is probably a better term. Yeah, I don’t want to say turbulent, dark times better than turbulence. That was rough for them, for

 

Erwin  

sure. Because even the mutual friends of ours like they had I know, we’ve been Florida, they had like, 100 property portfolio in Florida, during 2008. Like the investment, really unhappy.

 

Nick  

Yeah. Because the you know, when there’s no income associated with it at all, and you’re not taking that into account, it gets really tough. What was interesting that happened on the flip side is some of even the heart the hardest hit places, rents almost didn’t move. Even as as property prices came down, you know, a lot in some areas, rents almost didn’t move. And in fact, even though they might have adjusted downward slightly, initially, they then ended up turning upwards, because from the amount of people lose their homes, they needed rentals afterwards. So the demand for rentals increased. So anyone that bought with, you know, certain kind of fundamentals in mind actually didn’t end up doing too poorly through that they were able to hold on to their assets and continue forward. So that’s, that was interesting to me. And it’s something that it’s a lesson that I’ve always taken back to our area, because we’re in a rent controlled area. So we don’t have rent control, we because of our rent controls, our rents are held artificially low, right? Overall, I know when you when people move out, they can we can put it to market rents, but overall, as a rental market as a whole, because we have some people that are well under market rents, there’s downward pressure on our rental amounts. And we’ve seen this at least in the past as well, that the rental market has held strong, even during times when things have kind of not looked good for the real estate market. So COVID is a good example, people were still paying the rent because that was one of the first things they had to pay rent, actually, the percentage of rent increases for a lot of REITs actually increased for the rent payments. So it’s something that we look at and we’re like, Yeah, I think that if that lesson holds true and I don’t know if it ever would or not, but if history is an example and using them as an example that it’s good to know that if you buy a property now and you can rent it out for X number of dollars, the chances that you can rent it out for X amount of dollars in the future is very, very, very strong. And you know, that might be your worst case scenario for the income they can generate. You know, and there’s other variables to that for sure. But But it’s good to know that you know, if you believe that and then you can basic calculations of that.

 

Erwin  

So having like, personally, even though it wasn’t your own portfolios getting decimated in the US in 2008, like you kind of lived it, you kind of live vicariously through others to go through that.

 

Nick  

Yeah, but we, from afar, we were sheltered. Yeah,

 

Erwin  

I know, that’s kind of where I’m trying to go to is that you had property, you own property in 1008. And you had clients, what was that? Like? What was your experience? Like? is back here in the GTA?

 

Nick  

Yeah, well, our clients at that time, many of them were able to pick up their property legally, in hindsight. Now, looking back what they were doing at that time, they were, they were taking advantage of the opportunity to be able to negotiate with builders even and ask for extra things they weren’t getting before or negotiate different deals or better terms on deals. So they were using that to their advantage. But the majority of our clients and the investments that we do, there are long term. So that was then an opportunity for people that had a certain timeframe of investing. Whereas I find when the market really starts to overheat or get get really hot, or it’s just real estate’s talk spoken about everywhere, the short term prices or whatever and focuses on but that wasn’t the focus for anyone. So it was it turned into a really good opportunity for them, because they weren’t worried about if they bought in February, they weren’t worried about what the property was going to be worth in May, they were worried about what the property was going to be worth, or what the numbers would look like, in three, five or 10 years from now. And that’s what interested to them. And that’s why they were what they were buying the property. So I think it was just a different a different mindset for the majority of people that we work with, whenever there’s a little bit of question marks or fear in the market. There’s also a segment of people also that are just like, I’m going to hold off, and they put their hands in their pockets. And they’re like, I’m just gonna wait and see what happens. And that’s fine, too, which is two different approaches.

 

Erwin  

So I’ve been talking about how, because of what the work I do, I speak to people from all different schools of thought around real estate investing, for example. And I think that, for example, I like rock stars a first place that explained to me why gold was a good term investment but savings plan. I don’t know what the right term for it is to explain the hardness and heartless for gold, and also the business case, why it made sense to hold some hard assets. And then if you believe in gold, you shouldn’t theory believe in owning real estate. But I think a lot that was actually a lot of groups don’t discuss that at all. So where I’m trying to go to is that also, yes, you and Tom do a heck of a lot of research into economic like governments sort of what central bank policies are, how bad they are, you mean how bad they are? Like, like the thing was Tom that first that first mentioned, like, what the next currency might be like, holy shit, where am I? But you guys very much behave like you have fiduciary duty to your 1000 Plus client numbers.

 

Nick  

Right? Yeah, real estate has always been a means to an end for us. So it’s never

 

Erwin  

we don’t enjoy just a home. We don’t love being a landlord.

 

Nick  

Yes, but look, I have a friend that he wakes up every day. And he goes on the Toronto real estate board and we’ll look at listings, like immediately. He’s like, Yeah, hey, laundry, my coffee the morning. I’m just looking at listings. Like he just he loves it. He loves it. This was even but he recently got his licence. This was before he got his licence, you know, he would he would be on just to put the public websites where you can get access some sold data with new listings, and he’d be all over it. I’m like, it’s just, he just loves it that way. That’s never nothing’s really spoken to me that way to where I want to do that every morning all the time. But it’s up to you. Yeah. Yeah, yeah. But you I slowly got to drag my butt to the gym. I’m happy once I get there. But somewhere in the middle of the winter, man, I’m driving to the gym and it’s cold and it’s dark. And like, why am I doing this this time in the morning again, and I’m so

 

Erwin  

happy hour type of gym time. So

 

Nick  

once I get there, I’m happy for them and watching the

 

Erwin  

YouTube like we do folks about YouTube. You’ll see Oh, Nick looks like he enjoys going

 

Nick  

to the gym six days a week. I love it. I love that five year. Yeah, no anymore. I will do a little bit later. Because what happened is that that 6am class got so full that I don’t do the class right to my own stuff. So I kind of get into 630 to start doing a little bit warm up to about seven and I start working on that. So I do sleep in later now.

 

Erwin  

But back to like your friend is passionate like crazy.

 

Nick  

Yeah, so real. estate’s always been a means to an end, right? So like our whole thing, which you know, right? But our whole thing is the reason it’s called Rockstar with mistakes people when we started the electrical would call their company name, Rockstar, you know, like some other real estate companies were like, well, I don’t know if you know the history of your name. But that doesn’t make sense to us. The history of our name so you understand it is just that it’s we believe you invest in real estate to live your life on your terms of record your rockstar life and that is whatever it is you want it we want to do. And so that’s the means to an end is for some flexibility, some freedom, some freedom of choice, financially, whatever it is, is to live life on your terms. And because of that, we feel that there’s more to that than just real estate. Now real estate has played a very effective part in that for us and many people that we’ve worked with, it’s played a very important role. So I’m definitely biassed towards real estate because of that, but we feel that real estate does an OP rate in a vacuum, there’s all these other factors that impact it now, right now is a great example like the interest rate rises that we’re seeing. That’s a really great example of something that impacts us. And it’s a great example of something that impacted us for the last 10 1215 years or so, when rates went super low, it was fuel onto the fire of real estate, and people that own properties, or assets, in general really benefit from those low rates. Now, we’re in this contraction phase. And then, you know, we see what happens in the future, but we have to understand that type of stuff. So no different than when we’re talking about central banks, and the financial policies and their fiscal policies, is that when you understand what’s happening with the value of our currency, or our purchasing power, and I know, you know, this, but I mean, you just realise you’re like, you know, is it really the price of real estate that’s going up the way it is? Or is it the value of your dollar that’s going down. And when you think about any sort of understanding that you’re like, you know what, the real estate’s not really going up the real estate, the real estate, it’s actually the value of your dollars going down. A great analogy to Tom use one of his newsletters that he wrote, He took our parents house and our parents house, they bought it for just under 100,000 bucks, we call it 100,000 bucks, right? And they bought that now, probably about 40 years ago or so, say put the $100,000 on the front lot. In $100 bills put 100 grand there, they have the property. That was 40 years ago, you could fast forward to today, that property now they haven’t done too much work to it as a lot of some of its original, but they have a new kitchen some stuff, right? But they you know, there’s a pool, so you know, four bedroom, home and Mississauga. So that property is worth about 1.5 or something called, you know, somewhere in that range. Who knows, we have the $100,000 on the lawn still. And we have the property over the last 40 years, what changed, the property didn’t change. It’s the value of that $100,000 of real change. That’s why it’s worth $1.5 million. Right? And when you start understanding that type of thing. It’s just like, holy crap, this changes the equation. And that’s why there’s a lot of people that invest in real estate theory and understand the problem. Yeah, it’s a defensive move for them. Now you understand the problem? Now go find a solution. Yeah, but they shouldn’t have to because we have this crappy currency. So if you have 100, shouldn’t have to, but we have. Exactly, it’s defensive, because otherwise you get robbed of your purchasing power. Right? It’s this weird dynamic that happens. But so anyway, once we started to understand that we felt it was very important, and we’re like, we need to share this with people. So they have an understanding of what’s happening. So that’s why we went down that path and when we understood it, and that’s why we share that stuff. Because people might disagree, maybe it’s not important to them, and they might be 100%. Right, we will be way off. But for us, it’s very important. And that’s why we share it because we think it’s part of a bigger picture,

 

Erwin  

right? Again, I don’t think most people know this problem. If everything and understand this problem. There’ll be more protests, they’re gonna be pissed.

 

Nick  

It’s not spoken about, you know, can they tell us like, I mean, their official inflation rates, you know, up until recently is hovered around 2%. But that mean, that’s not the case. It’s not the case. If you look, if you look at the things very simple, well look at your Cassville like anything, I’m gonna take it just take away the last 12 months, or 15 months, when inflation started going up, take those ones away. And take the years that you’ve been told inflation is roughly hovers around two to two and a half percent, maybe dips below two, a little bit of your expenses only gone up 2% a year. Let’s know it now. It hasn’t happened. We took the average Toronto real estate price, we went back to 19. I think it’s 1969. And Kyle in the office, grab these numbers. And this was up until September 2022. So about a year ago. So since then, the property prices probably went down a little bit and probably have come back. So we’ll probably have pretty close price levels. So they’re pretty accurate. But anyways, it’s not gonna be skewed much anyways. Because going back to 69, the average price is I believe it’s 7.06% is the average yearly increase. I should go look at it again. But it’s just it’s about 7% So inflation they’re saying is 2% but houses are going up 7% Right? Do you think the cost of oil I don’t have all the numbers in front of you, but I’m telling you like, the things that you really want in life haven’t gone up 2% A year that’s not the way these things I’ve worked

 

Erwin  

cars I’m gonna like that cell phones. Laptops, well, the equation they

 

Nick  

used you know, they use this remove replacement equation. So to do it so like so if they were using a T bone steak as an example or any steak isn’t say well, you know, we have for groceries, we have to include some protein sources. So we’ll include the state well, once the steak gets too expensive direct Well, the steaks expensive now, so we don’t need to include the steak anymore in our calculation of what it costs. We’re going to replace the state with protein so we’ll just make it hamburger. Right so now it’s now it’s a hamburger.

 

Erwin  

Well, it’s still beef. Well, yeah, but not steak. It’s

 

Nick  

good because two different things. So now what like what’s next, you know, isn’t hotdogs next? Because I mean, are those beef or beef hot dogs? Are the beef though? I don’t actually know all beef hot dogs. I say they are but I don’t know if they you know, they don’t have a cow. They don’t look like beef to me when I look at them. But yeah, you know, so that’s the type of thing that happens and it just

 

Erwin  

but this is what you do if trying to manipulate inflation numbers. Yeah. Now,

 

Nick  

if you understand that you’re like, okay, okay, so that’s the game. So now we understand the rules of the game. So if we understand the rules, we’re playing this game It’s very unlikely we’re going to be able to change the rules in short time ourselves or whatever the case may be. Right?

 

Erwin  

We don’t have enough votes, we always been failing so

 

Nick  

well, and you know, I mean, our leaders don’t think about models like monetary policy, they come on, say that like when? Right? Yeah, so they’re not going to go downtown, right. But anyway, so, but you understand the rules of the game. So then play within those rules, like, are you playing the game to win or not, because if you’re playing the game to win, well, then you got to play within those rules, and you got to exceed that, at least play to defend yourself. Totally. If we call real inflation, I’m just gonna say 5%. Just, you know, just for a simple number. If over the last 10 years, inflation has been 5%, that means if you’re not earning 5%, on your money, you fall behind, so and everyone that earns a 10% yield, which think is like 10%, as decent investment return for that people look for right? So especially when it is low interest rate environment. So 10%, you think you’re doing well, but if 5% of that is inflation, your real returns only 5%. So your hurdle rate is 5%, for everything you do? And if the inflation number was higher, you know, where do you go. So I don’t know that stuff becomes super important. And I think if you it doesn’t have to make the decision for you. But I feel really strongly that it should be taken into account with whatever financial decisions you’re making, because it’s not going away. It’s there. And we got to do something about

 

Erwin  

  1. I’m always looking for, like, how to take advantage of information. So for example, if real inflation is 5%, and for the longest time, we were able to borrow at two or 3%. That’s as bad. That just makes it makes sense. Yeah, to play the game of borrowing for cheap. And trying to make better returns.

 

Nick  

Yeah, until rates go up until rates go up. Right, that’s the downside. So you’re right one on 100%. Because they need negative rates to inflate away the debt. So negative real rates, which means that if inflation is five, and the boring cost is 2%, you take the two you minus five, you’re negative 3%. So that’s negative real rates. So you can arbitrage that. And that makes sense. But at the same time, when that flips like it has right now, carrying costs going up, you do need capital, you need enough liquid capital to get you through these times. Because if you over leverage, you’re in a bad situation.

 

Erwin  

Right? Which leads to something I was discussing before we were recording is, I feel I can be impartial on things. Like I observe many investors, like rock star members, or my own clients or rock star clients. Is it fair? Extremely well, in this downturn? Yeah. Overall,

 

Nick  

I mean, I mean, I don’t like the cashflow numbers have been really squeezed for some people. And it’s been harder for some people to carry the properties for sure. It’s hit them. But overall, it seems to have worked out quite well. I think one of the things is that there was different people to different things. But overall, overall, there was never a focus on any get rich, quick type strategies. And if you’re investing for, you know, that kind of principles, you’re taking some kind of core principles or fundamentals into account when you’re investing, it makes it easier to ride through some of these ways. Does it make it easy? No, I’m not saying makes it easy, because there’s some people that have, you know, a few properties, interest rates have spiked up variable rate mortgages with a bank that has adjust adjusting their payments, and their cash flow squeeze or their negative now where they were 1000s Positive before. So there you have to ride through these times. But it’d be far far cry if they didn’t have that cash flow early on. And they were just investing for appreciation or already negative thinking that real estate prices only go straight up and only go straight up forever. And then they’re in a much different situation. It also helps when you have assets that are relatively easy to liquidate, if you need to cash out. And we’re seeing some investors do that. They’re like, hey, look, the portfolio overall is doing pretty good. I just want some breathing room. So I’m going to take one of these properties, we’re going to cash this one out, gives me a little bit of profit, maybe that one was my least performing for a monthly cash flow standpoint. So it eases the burden there a little bit I can cash out some profit and I’m in a good spot. So received some investors that will just unload like a part of the portfolio usually it’s really just one property and then it gives them some breathing room so that they’re in a comfortable spot again, but I think that’s been the difference like it’s the quality of the asset matters. Yeah, some people like when the market of last few years was just kind of jumping you see people get into it investors and just regular homebuyers. They get FOMO and they’re just buying anything you know people will walk into a new home sales office and be like well here’s how many condos you got here give me three of these condos what are the closing I don’t know how we’re going to finance them I don’t know but are you just give me three because the price will go up I’ll flip them or something I’ll figure it out that and then they’re just in a bad situation after right it’s not uncommon

 

Erwin  

they’re probably in a lot of hurt right now.

 

Nick  

Yeah, well that whole market yeah, there’s there’s gonna be some pain I think there’s just challenges to close on properties like someone people are having problems with that right. also doesn’t help that some people are fed that like a guaranteed profit source. Well, I mean, the you know what happens? Right? So

 

Erwin  

it just never made sense to me buy a pre construction condo when I can buy the exact same thing used and pay a lot less. Never made sense to me. Yeah, unless that building exactly what you wanted no location. You want to 10 out of 10? Everything is up to you to pay for

 

Nick  

Yeah, but the difference is people always think it’s we joke that it’s like it’d be easier to sell people the magic code on the remote control that you can push into have money spinning on your TV than it is to, you know, teach them properly principle Based Investing, say this is like, this is the type of principle based stuff that’s worked for decades and decades, right? This is kind of like a path to follow. Yeah, there’s some work, there’s going to be work involved, there’s going to be some ups and downs to it. 100%, you know, but it’s, it’s believable, and it works, versus the remote control secret code doesn’t work. And it’s almost not believable. But I’m telling you, people will buy that, because that’s what they’re looking for. Everyone wants the easy button. They want the easy money, so they can get easily blinded by that message if they meet someone that they feel that they can trust that gives them that message. We’ve seen people do some really interesting things.

 

Erwin  

I know there’s lots of condo specialist investors who you know, have massive teams that this sell hundreds of condo is probably 30 condos or when the weekend whatnot. So I actually think there might be a glut of condo supply coming on the market

 

Nick  

thinks there’s going to be some challenges in closing, we’ll see how it gets absorbed. But yeah, there’s definitely that potential for sure. Yeah, I’m curious to see what happens

 

Erwin  

here. Like we have no skin in the game.

 

Nick  

I joke with everyone in my dorm was to account because I missed out on that Toronto condo boom for 10 years, 10 or 12 years that

 

Erwin  

existed, Madame trying to focus on cash flow. I know. I was so

 

Nick  

jaded. Like when I was young and Mississauga, they were growing, that’s when the square one area. While I mean, they’re they’re pumping buildings up there again. But initially, they had,

 

Erwin  

they have built a bunch of crazy, you have to keep pumping them out. So but

 

Nick  

that time when the market turned in the early 90s, there they some people that my family knew that own condos there, those prices didn’t rebound for a long, long time. And they weren’t in a good spot because of it. And I’ve just always been slightly jaded by condos, for whatever reason, I’m like, if the market turns, they get hit the hardest, usually the fastest, because you have the same unit as everyone else. So you know, it’s the same, you know, I mean, you can do small changes to it, but it’s just different floors is the primary differential. And so I’ve just always liked things that I control a little bit more. So if that’s why I’ve always kind of move towards that single family market on land on that, yeah, for sure. I didn’t, we didn’t see it at the time. But over time, it started to become very clear to us that buying these single family lots is kind of like a little bit of land grab now. No, because it’s a lot harder to get into grabbing land than it was 20 3040 years ago, because of the prices. When we had people coming here I remember I grew up in the Mississauga area. So a lot of European immigrants were coming in, and some of them ended up going up to these smaller areas at the time. So out to you know, the Georgetown, Milton, north of Milton or whatever. And they were buying land and they were kind of holding on to that land, because because they code at the time and it worked extremely well for them. Because now they’re developing on that land, things like that. So to buy those plots of land now is not nearly as easy a lot of institutional money, that’s, that’s buying that stuff up. So individual investors a lot of a way to land grab is that single family building lot because you can take a single family put the second suite in it, put the garden suite on it, all of a sudden, you’re now able to just increase the value of that thing. So we’re seeing kind of more of that. And then also like the single family. One thing that always stuck out with me is you know this, I don’t know if everyone knows this, but our family and was lost, like everything in that real estate crash in the kind of late 80s, early 90s. Our dad was flipping paper, he was literally getting a property out of the trailer theatre of these big fancy sales offices that they were selling the properties in like a trailer, and he was getting the contract and flipping in the parking lot. And he got stuck with the placement cyberwar, that container was the starter home. And at that time, it was a big luxury home in that area. And you got stuck with it for a long time couldn’t rent it out conventional for cash flow. Basically, the stress from that I think definitely contributed to our parents divorce, like it created a lot of a lot of problems with the family financially as well. It’s always stuck with us because we always thought that if we wanted assets, that would be important to have assets in real estate that are as liquid as possible. And in the starter home category, it doesn’t matter what the market if the market is super hot, if it’s cold, if it’s really expensive, it’s really cheap, whatever that entry level is in that market, that’s where the most amount of transactions are always happening. So it’s the the most people are looking to get in if you’re looking to get out. So it’s just the more illiquid market. So if I have an asset, if I’m building an asset base, just like the gold here, we’re talking about, there’s a demand for people to buy gold. I don’t want to build an asset base of glass balls because no one wants to buy my glass ball because they’re everywhere but I just know that if I if I have a liquid asset that people want in different markets, then that’s generally the ones that I want all so that’s why we’ve kind of always stuck with that market and gone down that path or it’s appealed to me a little bit more but at the same time like you said you missed on Macondo you’re crazy into I’ve missed out on it too. So take it with a grain of salt but I benefited from this one so you can have everything I’m okay with it.

 

Erwin  

Yeah, I’m okay yeah, okay. Yeah. So still still single family home. That’s the basis of your what you think investors should be going going forward? Because for example it before recording I know you don’t Keep tabs on social media when other people are promoting whatnot. But for example that’s probably why you’re mentally healthier than I am. I have more hair than I do. The more hair, I’m sure you guys have never really gone after any fad. Like, for example, apartment buildings are a really big fad right now. Airbnb, massive fad. Like Are any of these announcing their bad investments? I love staying Airbnb ease, or any of these you think core investments that you yourself would do or recommend to clients?

 

Nick  

Like I would 100%. You know, if I get the right property, what I do is on some short or medium term rental, yeah, probably we have that place up in Collingwood that we’ve got recently still got a big pile of dirt in the backyard, and there’s no grass or anything. So we couldn’t even really short term. I mean, we could short term renting, but it’s not very appealing, since he like just stay inside and don’t leave, because there’s dirt and mud everywhere. But we’ll be looking to do some midterm rental for that type of thing. During a season when we’re gone. Like the summer, we’re in Europe for a chunk of the summer, we’re not going to be here to use it when we look at that maybe we would. So I’m not opposed to it. But ultimately, to me, it’s the asset that matters the most. So I would look at the asset first. And then I would look at what strategy I can apply to that asset to make it successful. Whereas I think sometimes investors are looking to get into the market and they’re like, Well, I want to do Airbnb. So I’m just gonna go find a property that I can fit into that mould. And that’s great, that’s not a bad way to do it either. I just feel that if I get a good asset in a good place, then I can apply multiple different strategies to it. And that’s generally what I like with investing. So if you look at the solo, take one of the properties by the mountain Hamilton close to Mohawk, well, there’s a hospital up there. So you can rent it, you can rent it to some hospital stuff, right? So there’s, there’s always demand for that there’s a student, others Mohawk up there, so you can rent to the students that way, right now, it’s actually was a rent to own initially, then it turned into student property. Now it’s a long term rental, we’ve already used three different strategies on this property. You know, there’s we’re probably for that particular one, we’re not gonna use Airbnb, just location stuff, I don’t need to but I want the property first, I want the asset. And then I’ll look at strategy. So I think that’s really what’s appealed to us most. And maybe that’s why we’ve stayed in in that lane. And we’ve just never had a need to go and start using these other strategies. But if we had bought, decided to invest some vacation properties on lakes in the courses, well, obviously we’re gonna look at Airbnb as a much different strategy versus a long term rental, right, just because of the income that we can generate from it. So I’m not against that. You mentioned fads, you know, I’m not against them at all. It’s just, we’ve just had no need for them. But I still believe in the asset first is most important if I’m going to have to pay this thing off somehow. So if I’m boring to own it, and I’m going to rent it out, I want to make sure it’s the best possible asset that I can have that I have the most flexibility with.

 

Erwin  

Speaking of property first, when I first joined Rockstar, rent to own property first strategy was a massive strategy. And again, because you ignored everybody else, there’s a whole bunch of people saying, oh, tenant versus the beta go, yeah. And I think like a market like now is an example of why tenant firsts, for example of a tenant chose a property in a small market Ontario. And they left and now you’re dealing with a no,

 

Nick  

yeah, but I mean, see, I think, you know, as well as I do, like, there were some numbers were being thrown around early that the buyout rates on tenant first are very high and things like that. And I don’t know that that will ever came to fruition. I mean, I know what people told me, but then I also know this that realities, I was told a later time, that was never the case. And many people were left holding the bag on property.

 

Erwin  

Yeah, yeah. Well, the landlord, the tenant bailed exactly, they’re

 

Nick  

full of properties they didn’t want. So it’s the same thing. Like, you know, when we did that, we call them home hunters. You know, at the time, we did some of that it was a definitely a small fraction of versus the property first ones we did. But even when we did that, we told the tenant that we had to find a property that also fit the mould for the investor. And we couldn’t buy certain properties. But it goes back to what people are promised people were promised a solid return turnkey, no, you don’t have to do anything. You just buy this thing, you sit there, and they’re gonna buy it from you, and here’s all your return. And it becomes very appealing to people. Right? But then when they looked into it, or they got into a net, and lived through it, they’re like, oh, there’s a lot more to this than what we were told. Right? And I mean, I’m sure we’re not perfect for trying to explain all the ins and outs of investing but as best as possible through other classes and stuff, we try to give a real life situations like you know, here’s kind of what’s involved in it. It’s not buy a property, put someone in there, just sit on your couch and do nothing. Even if you have management even if you have a commercial properties with managers in place, you still need to manage those managers. You know, before we started where I was talking to you about the guy we know with 500,000 square feet commercial in Burlington, yeah, he’s gonna manage those properties. He’s looking for tenants, sometimes they have to do work, you know, upgrades to the properties. They’ll even have it not just for the tenants that are going in on new leases, but the common areas and things like that because when ticket To attract tenants, you got to make those things nice. So even that type of portfolio where you can look at him, him as like a full time investor, because really that is the business just owning and renting real estate. That is there’s work to be done, you know, so there is some effort to maintain all these properties. But it works out

 

Erwin  

just from knowing so many business owners, even though it does, it’s not completely passive, it takes some work. It’s been incredibly profitable, oh my God, because again, like, I know, lots of entrepreneurs, no different than yourself, you and Tom, you have to put in blood, sweat, and tears, yeah, seven days a week, how many hours you have to put into manage a portfolio,

 

Nick  

the number is so small, I don’t want to, I don’t even know. It’s once it’s up and running. And then there’s managers in place and the systems are in place. It’s a small number. But there are times that you’re doing some stuff that you don’t want to be doing like this sucks. And it’s like, you can let the emotions get the better of you. But I did do a one time it was the same property by chance it was the same property. The one by Mac that I mentioned earlier, I was sitting in that basement sucking up water, I had the vacuum between the bottom of the stairs and the laminate that was butted up against it because you know, there’s like a little seam there. So I could suck up the water there was underneath the laminate, I was just sitting there, I think dump out like, I don’t know, it’s probably like 10 buckets of a little a little wet vac. So I was going up and down sitting there running it. And I was like, am I sitting here on a Sunday afternoon, I just want to I was about to barbecue steak house, I just want to have that steak go home, you know, but while I was sitting there, I started doing math in my head about okay, what is this property worth? How much income is brought in? How many hours have really spent here. And I forget the numbers that I was running through my head. But at that time, I was like, holy cow. This is some of the most profitable time that I can be doing. Right? So I’m like, okay, I’d like I’m not so bad. So just sitting here holding this vacuum down here and walking up the stairs every now and again. You know, and I mean, usually it was Sunday afternoon. So I went down to handle that. But even during most things at that time, someone else can handle that stuff for you. Right. But it is it has been incredibly profitable. I’ve never looked at it on an hourly basis of for exactly that number. But on hourly basis, there’s it’s been quite profitable. Yeah.

 

Erwin  

Is there ever there was a period this before the pandemic where your typical house in Hamilton like was going up between $2,700 a month to $3,600 a month. So if that vacuuming costs you two hours, four hours, yeah, even at $2,700 an hour. Now I just buried myself because I’m not good at math. But that’s over $6 an hour. It’s not so bad.

 

Nick  

But it’s the emotional side. It’s the emotions, you’re feeling right at that moment. And that’s where it’s tough for investors, because you have to handle that emotional rollercoaster. Because the calls, there’s never a good time for a tenant to call you and say, Hey, like, you know, I just need this, this and this, you know, when do you ever want that call, you never want it? Right? But at the end of the day, it’s like such a minor issue. But if it comes at the wrong time, sometimes you can feel it’s a big issue. But that’s where systems and your systems guy, you get it. I mean, it’s all you know, you put the right systems in place, and things get handled. And it’s not, it’s not a big deal.

 

Erwin  

Also, the other way to just simply spin it like sucks. I’m gonna get called by a tenant. But thank God, I have tenants here new rent.

 

Nick  

Look, there’s no something to this day that I still like one thing from investing that I really kind of enjoy is when whenever I sign a new lease, and I’m just I’m driving home, and I’m just like, you know, I just feels good, because I just feel like, that’s just an income stream that I solidified for my family, whatever it is, oh my God, that’s, that’s pretty good. Like, that feels good. Sometimes during stream rental season, if you feel two or three properties in a day, which it has never really been hard to do. Now, during these days. It’s really not hard to do, right. But there’s been times when you know, if each one is bringing in, what’s that 40 to $50,000 a year call it or at least at that time, some of the ring and far more now. But that’s what if you just feel two or three or 100 $150,000 in income that you just kind of shored up for the year and that day, you’re like, Wow, that’s a pretty good feeling any salesperson be happy with that day? Yeah. And there’s expenses associated with that. That’s not all profit, of course, and that type of thing. But I mean, those are good days, you’ve earned them. You know, it’s over time that you earn those days as well. Right? I don’t know if someone listen to this just thinking it’s like, oh, yeah, it’s just greedy landlords. It’s not about that we’re providing a good place for people to be like, there’s a lot of not so good student properties that you were talking about earlier. They can be living out we’re providing a really good, safe, clean, large space for people to live in the market. Yeah, we’re giving them an opportunity. Right. So it’s, you deserve it.

 

Erwin  

So there’s some questions I need to get out of the way before we get going. What are you telling newer Rockstar members, clients of newer people to real estate investing? What should they be looking at right now? And it’s even now the right time to be buying?

 

Nick  

Yeah, I think it’s understand what they want. So what role is it that you think real estate is going to fill for you? You’re building a real estate portfolio for what objective? And once that objective is clear, then it makes sense to start looking at what type of investment strategies areas properties, whatever the case may be there then it makes sense to look at those and start building the portfolio that works for you specifically, this was again was an early lesson for me like I, one of my first, my very first investment property was a flip. I was investing, because I wanted enough passive income coming in, you know that time, you know that term passive was used loosely. But because that didn’t work. I wanted enough passive income coming in, by the time I was 30, to pay for my mortgage every month, that was my initial goal when I started investing. And then I went to flip the property. So the strategy I used got me 0%, closer to what I was actually trying to do, like 0%. So I’m like, why am I doing this? And that’s why I started looking at other strategies that aligned more. So there’s two things, there’s a financial side of things and understanding what your objectives are, and then going out and building the portfolio properly is going to match your objectives on the financial side, but there’s also the lifestyle component to it. Because what are you willing to commit to these properties, we have some people that come in, and they’re contractors, they’re like, hey, look, I want to be able to buy a property, I’ll give it a look, I want the lift I’m going to get by putting the second second suite in, and I’m gonna use that strategy. So I’ll get better cash flow and stuff. And but I’m gonna do the work, no problem. You know, I have the time I’m willing to do that if the context, there’s some other people that are like, look, I’m really busy. I’m not a contractor, you might have no skills in that regard, can’t do that stuff. I don’t want that I want a different strategy that doesn’t require that and they want something more turnkey, because they don’t want the time commitment. They’re so different people have, you know, a different amount of time, or a different lifestyle they want to lead and how their investments will fit into that where some people will self manage, versus some people will get management. And I think those are the important conversations to have when you’re starting out versus Well, I think real estate’s a good investment. So I just want a property, let’s go find one. What’s a good one? Right, I think that, you know, just a little bit of thought beforehand can kind of go a long way, when you’re building things out. And it makes a difference it like it almost that thought early on will compound the return over time. And when you look back in five or 10 years makes a big difference. Well, that’s

 

Erwin  

one market to look at some neighbourhoods or towns you like,

 

Nick  

I like any self sustaining area, I don’t like the bedroom communities as much. So usually the self sustaining areas, meaning there’s going to be like, you know, jobs in the area, and they don’t have to travel for everything they want good employment there. Obviously we like there’s other things like public transportation and infrastructure and population growth. There’s all that type of stuff too, but but in a nutshell, is a self sustaining area. So areas that have the employment, because that draws the other things generally. So, you know, for a long while, Milton was like, I’ve just a bedroom community of Mississauga, there is more jobs and things and more development stuff that has gone on there in recent years. But for that long while I would be less interested in investing in Milton versus a place like Mississauga, as I use the example or even like a Hamilton at that time Kitchener Waterloo, Kitchener Waterloo, Cambridge is right down the highway for one from their

 

Erwin  

way more jobs than Yeah, cuz they happen up in Melton,

 

Nick  

exactly. So those they’re self sustaining? will sometimes that gonna cost me more like, is it gonna cost me more to invest in Hamilton versus well, and yeah, I’m gonna pay a premium to invest in the Hamilton area. But I feel like I’m getting something for that premium. I’m not just paying more, because it’s in Hamilton, I’m buying every less risk. Yeah, I’m buying the economic activity of that area. So anything that really has a self sustaining what I consider ourselves thing, community that way, I’m more interested in having said that, I just might might, the one I have to close on in a few months is a is a new construction in Oakville that I don’t know what it’s like not the, you know, doesn’t really match that as well, you know, but that’s, that’s for my kid. That’s not for my kids to give to them. The idea with that was to buy this property close to home, because I’m going to drag my kids there to manage it, I want them there at the beginning picking blinds, I want them you know, meeting whatever other contract, we have to meet there for him to go meet the cable guy to set up the internet the first time I want them coming with me to see what’s involved with it, I want them meeting the tenants when we go to show the property. And the idea is that I just whether they decide to ever invest in real estate or not. I want them to understand the way it works. So they know how there’s just different opportunities in life. And then, the way I’m bribing them is I’m like guys, if you help me with this, and you’re involved in this process, they basically will get half that property. Because the way I look at that is that’s their foot in the market. So they’re nine and 12. So we’ve lots of time, but doesn’t matter if the market goes up, down or sideways. This is their foot in the market and then they can leverage that however they want. So if they have half a property that’s you know, pretty much paid off time they’re looking for their own property that property can they sell that take that half of their their cash and go and buy it on the property, they can leverage it keep it rented out by their own property, but that is their foot in the market today. That’s the way I’m looking at it. That’s how I’m trying to bribe them. I have no idea how it’s gonna go. It could be a disaster. It could be I could fall on my face with that one. But that’s it. That’s the idea sounded good at the time when I bought it. I’ve taken my kids to my Hamilton property. So yeah, I’ve taken my two but they just this one. I’m like, I want them there for everything. Oh, so that’s why I had to be close to home. So it’s like three blocks is less than is about a five minute drive. So there’s no real conditioning or no real complaints other than like, I just want to hang out with him. hands on with like your friends can wait for them to get there. To get there, meet someone and come back is like a 30 minute thing because there’s a Dairy Queen on the way. If I have to bother with Dairy Queen as well I can do that too. Whenever I whenever I need to do.

 

Erwin  

The funny thing is like if I have any listeners over the age of 30 they’re like I wish liquid adult me and make this my problem.

 

Nick  

Yeah. Oh, trust me, there’s other things that I don’t do so well, I’m sure.

 

Erwin  

Because you wouldn’t have mentioned this in our in our meetings long time ago, like I remember always you referenced like European cities, where anyone young, they don’t buy, they rent, there’s never an opportunity to buy unless you had family wealth flexing in the family wealth. And that’s kind of in a story here in the GTA Golden Horseshoe for the last decade or so. Yeah, especially now.

 

Nick  

Yeah. And then real estate is left to the family. Right. That’s, that’s how it works. And sometimes the family decides to sell it and they squander the money, or do you do something worthwhile with the money and then sometimes they decide to hold on to and they leverage it for future things. But I can’t find an argument that makes really good sense to not own assets in your life. Because I really feel strongly that I own the assets you’ve leveraged against the assets gives you much more opportunity. So you continue to build that asset base, versus cashing out. We’ve seen it time and time again, like that’s how you’re really able to, you know, you need a cash flow component, because you have to pay off that leverage. So you need cash flow to support the leverage that you’re getting on those assets. But if you have that data,

 

Erwin  

elaborate on where cash flow is coming from business, employment, yeah,

 

Nick  

anything, anything as long as you can pay for it. So like, so I won’t use a real estate example. But we’ll use a sock example. When I was actually Oracle this time to I was there just for a period of time, Tom spent more time there. But Larry Ellison was getting a big billionaire, right. And it was talking about his credit line that he was getting to do to do whatever he was doing. I don’t know if it was NetSuite and Salesforce at the time, wherever the case may be, why is this guy getting a credit line, like he’s got lots of capital, but he would use the stocks he had as collateral. And then instead of selling the stock and cashing out, he would then borrow against it, and then use it to generate other income, and then use that income to pay that that and now he had the new assets, any of the old assets sell. And I was like, holy cow, I think at that time, it was at that time was mind blowing to me. I’m like, Oh, my God, this is a guy that has bucket loads of money. But he doesn’t get rid of the asset, he keeps the asset, and you leverage the asset to do other stuff. And like, wow, that’s, to me, that was just mind blowing. I’m like, I get it. Like, I totally get it. And that’s why that’s the beautiful thing about any assets were this specifically because it’s very easy to leverage. But you need, whether it’s business income, rental income, employment income, you need that to pay back the leverage that you’re getting, right? So like, if you because of you over leverage, and you don’t have the income, then you’re in a bad situation. Right? So there is you got to be careful with that. I feel like it’s still gonna be a powerful strategy, even though rates are a little bit higher. They’re still low, historically. Right. So but but yeah, so that’s the way I look at things.

 

Erwin  

You mentioned the term we need, you need to be able to survive, you need the capital, cash, whatever to get through this. How long do you think this? Whatever in lasts until things change? Well, just for example, as a, Nick, things are rough on negative $200, on my on each of my five port properties, so I can weather it. Yeah, how long do I have to survive?

 

Nick  

Yeah, I mean, I don’t have a crystal. I feel really strongly that we’re in the eye of the storm, I think there’s going to be a little bit more pain to come not necessarily the risk to market in the economy. And I think that pain comes, I think comes this fall, I could be wrong, but I think it comes this fall early next year. And then I think there’s got to be a policy response to that, if they because of the amount of debt in the system. Now, if they allow that pain to be prolonged or too much for people, it’s not about your $200 a month and other people that are kind of having cash flow situations at home and more worried about going to the grocery store, they’re less worried about that more worship with the banks will have real problems, because the banks are so leveraged that if there’s real problems, paying back funds, or if real estate starts to change course, and in a large way, the government has to step in, because it just the whole system, basically is at risk. Because of the amount of debt. This isn’t a situation we were in in the past. Because some people will look at today’s mark and be like, Oh, it’s eerily similar to like, you know, the late 80s, early 90s. And the right in some ways, I don’t believe the right in some other ways. And some other ways are definitely not right, and the amount of debt that’s in the system. And I think that really impacts things with the amount of debt that’s been put in the system. So the amount of Felician that’s been happening has contributed to price levels as well hasn’t been really accounted for a lot of those arguments. So I think that that there’s a policy response that comes in and that’s where things get a little bit ridiculous. And I think a lot of that money that comes in to shore things up. I think it starts you start seeing asset prices. do strange things, I think he starts to see aggressive price moves upwards and asset prices, I’m not talking real estate I’m talking, there’s going to be like, there’s a lot of correlation with the amount of liquidity in the world. So that’s kind of like money creation and printing, there’s a lot of correlation with that, and asset prices. And when that those floodgates open, and that comes rushing in again, I think we see a spike. And then I think there’s got to be this policy response to start it tried to bring it back. And they try to draw that back down. And we kind of see things go up and down and teeter totter for a little bit. That’s kind of what I what I think based on some past history charts, and the different decades that we’ve seen environments like this shaping up, so but I really think there’s a little bit of pain coming. I know, I mean, it’s just want to prepare myself for because we’re trying, like, I’m just kind of staying more liquid, keeping more cash than would have typically got on the sidelines. So that if it needs to be deployed in certain places, it’s available, you have the business to worry about, we have payroll to worry about that, as a business owner, at least, I think you would feel the same way you feel some responsibility to that. So it can’t it’s not just us, like we have to kind of take the whole picture into account so we got to worry think about that stuff too. and plan accordingly.

 

Erwin  

Anything else besides being more liquid holding more cash? Gold, silver, Bitcoin? Aetherium Dogecoin whatever other

 

Nick  

look, I’m the worst trader in the world. So if you’re looking for anything, I’m assets, I’m the old school boring asset guy, buy a property, hold it for a long time and rent it out. ever buy another one? I like gold. I like Bitcoin, because you can own it. I know some people think that’s ridiculous. I’d like to find it

 

Erwin  

monotonous amount of bitcoin, no, nor gold, whatever you’re comfortable

 

Nick  

with, you know, whatever you’re comfortable with, I just think I would prefer to keep my savings in assets that I feel are an inflation hedge. So real estate has served it very well as an inflation hedge for me my life. Bitcoin has been far more volatile. Yes. But from when I got involved in in, you know, through some multiple purchases, it served very well as an inflation hedge. For me, gold has served well as an inflation hedge for me as well, you know, maybe not as exceeded it as much as like real estate has and things like that. But you know, is it getting ready for a movie, it could as well, but I just like those types of assets that I can hold. So anything that I feel is like that quality of an asset I’m willing to have. But yeah, I think you’ve just got to be a little bit more prudent. And maybe in the past, if you thought that you could invest for the shorter term, if you’re looking at shorter term things, because of what might happen in the economy, it might impact exit plans. So if we get liquidity events, meaning like when it dries up, so lending, it’s harder, and you think that you have a property that you’re going to be able to exit at a period of time, you might not be able to. So if you’re investing for the short term, you might want to also as a toddler, stay a little bit more liquid, expand your time horizon and case you can exit when or how you want to what’s the backup plan to that, I think it’s always important to have that backup plan and make sure that that’s suitable for you as well, during times when it’s like very likely that we’re going to be in a recessionary time. And, you know, there’ll be a little bit of fear, there’ll be less money sloshing around for a period of time.

 

Erwin  

And that would include getting into a different more difficult time in your finances than anything for sure.

 

Nick  

Yeah. 100%. Anything that applies to real estate really applies to a lot of stuff. I’m just a real estate guy, certainly well, but you can do that, like with other things as well. Like businesses are no different. Like you can buy business you can leverage against the income of business generates, buy another business, like there’s all sorts of things you can do. Just real estate seems to be the most accessible for people. And it’s it’s like a business in a box. Because you’re like, there very little marketing needed for the clientele to be attracted to the product that you have. Right? Especially, especially Yeah, for real estate, especially where we are right now. Right? Because we were like supply demand, something that

 

Erwin  

a whack. Throw up a Facebook marketplace ad and you’re flooded my gosh, it’s like unhealthy in its way. Right?

 

Nick  

Yeah, we don’t. I’m so sad for this generation. Yeah, we don’t we don’t want it there’s got to be a little more thought put into I’m not anti immigration at all. But I mean, at this point, like, there’s gotta be a little more thought into it like, hey, when you’re gonna do this immigration policies have what you think about roads and hospitals and housing? Don’t you think those should be part of the equation versus just some random number? It seems like you’re picking up out of the hat

 

Erwin  

in the international student number. But yeah, oh, yeah. Yeah. Yeah. The

 

Nick  

number of real numbers are are ridiculous. Ridiculous was basically that the universities if you think about it, and maybe we’ve already thought about like this, but the universities are dictating our immigration numbers. Right. So these are for profit universities, Kyle just did a chart you should see it. The average tuition, maybe he did it or share it. I don’t know if it was from someone else. But the average tuition for a Canadian student versus the international student, the international student has jumped by about over the last five or six years by 30 something percent, and the Canadian students have a state about level. Right, right. And not to mention the number. So we’re doing a little bit more research into the programmes they’re going into and stuff we’re gonna release a report about it. But the so the universities have their targets, they’re moving overseas. There’s no mandate for them to tell the government how many of these these nonprofit residents are bringing in, because there’s

 

Erwin  

no cap. They’re not regularly. We have many students, they can bring it over.

 

Nick  

They’re the ones dictating our immigration numbers. It’s not even the government. Those are just the permanent resident numbers. Like it just makes no sense at all. There’s no thought going by This at all?

 

Erwin  

Well, it was a provisional government that put the caps on to tuition for domestic students, though. Schools have no choice. Yeah, well, it’s worth it. Yeah. Then like, well, even just to survive, just like us, we’ve had rent caps implemented on us rent control. Yeah. How are we supposed to keep up?

 

Nick  

Yeah, you’re talking to an ex government worker that I saw, when you talk about the, the amount of budget being used and where it could be allocated? I’m a little bit jaded from my past life as a regional employee. Right? Because I think that, you know, through efficiencies, there’s there’s a lot of money that could be saved.

 

Erwin  

Good. So we can cap property taxes to the right,

 

Nick  

we could look, there’s a lot. I don’t know, find something the government got involved in this helped with prices and helped keep them down and there wasn’t a lot of waste put anywhere. It’s slippery slope, go down the slope, just trash them? No, I’m not saying there is no need to trash them. We all know what’s going on. But it’s nice when you think about it. Like it makes no sense.

 

Erwin  

It actually makes me really upset when you go down and like ask questions and dig and all that sort of stuff. It’s actually hard to maintain a healthy mindset.

 

Nick  

Have you seen the hiring chart? Over the last few years?

 

Erwin  

The Federal Yeah,

 

Nick  

let’s think about this. Right. So the central banks raising interest rates, one of the big things that they’re waiting for is the unemployment numbers go up. So first of all, just think about that this is your these are like, well, they’re not elected, but the elected officials kind of place them there. So this is like a kind of national institution that is saying that we want unemployment to go up. So just think if you’re someone that’s employed, you’re not gonna be great. So you’re looking for some of us to lose our jobs. Like that’s your stated goal. So if that’s not problematic enough, the federal government they’ve been on this hiring for they’re outpacing any anyone else and the Trudeau Government is far above any previous government and the number of people they’ve hired, right? So the Bank of Canada’s when you find employment, us to go up, but yet the federal government keeps hiring all these people keeping the unemployment number low. Like, isn’t this character like? It’s almost like they’re working against each

 

Erwin  

other? They’re stimulating the economy. It just makes no sense. That’s basic economics. You’re stimulating the economy by putting more money in the system. You’re trying to slow the economy down as you try to slow the economy with it by raising interest rates. It makes no sense. You’ve said it’ll but it’ll balance itself. Yeah, we’ll stay mentally healthier.

 

Nick  

I have more important things to think about in that arena. Okay. Did you remember to remember that that speech? You forgive me if I say that I’m not thinking about like monetary policy, I have more important things to think about. That was something like that. And I that wasn’t an exact quote, but it’s not far off at all.

 

Erwin  

We might be happier people if we accept that. So we’re not happy with what was great here because

 

Nick  

the prime minister can take the best selfie in the world. I’m convinced Okay,

 

Erwin  

damn it. I

 

Nick  

know. I know. So in look, at least we’re a global leaders in something. Are we ending on? I hope we’re not ending on No, we’re not even gonna say something. We gotta say something. Yes.

 

Erwin  

No, Kisan. Yeah, let’s get more upset. Nick, where can people follow along? Because I know you have a really popular podcast, I’ve been recommending the rock centre circle a while you know, like when I have like a novice investor that wants to learn about smart real estate, and evaluate just like I’m a value investor, I believe. I believe in only paying for valuable what I consider good value real estate training, for example. So I’ve recommended clients to Rockstar inner circle

 

Nick  

and we appreciate that for sure, but only if it’s a way for someone so if anyone just goes to Rockstar inner circle.com They can find all sorts of videos, articles or like anything they want there and podcasts is the your life your term show. So we cover real estate stuff and investing macro stuff. We just had a jeweller on the show today.

 

Erwin  

What do you say? What do you see?

 

Nick  

These are Kalani jewellers. You know, Kalani they do all the jewellery for a lot of the NBA guys and unless guys they’ve created like a kind of little like not little they’ve created pretty much like a global brand for themselves. A lot of the soccer guys fly to town to go see these guys. Very, very cool story. Very cool story. I mean, you see some of their pieces that I guess the point is sharing that as we do a variety of different things. It’s not just kind of we don’t just do real estate so we try to talk about a bunch of different stuff that just interests us in general so

 

Erwin  

I found with him with anything that anyone there’s something to learn from them also they deal with the high end market

 

Nick  

all these guys do their back room with all their custom pieces are just just outrageous. But a lot of the hip hop guys Raptors Blue Jays, a lot of NBA guys when they come into town, we’ll go there for their pieces. And some of the some of them they can share their names. Some of them they prefer to keep it quiet. But yeah, really cool story. Really cool. So but there’s always lessons. Yeah, I mean, these

 

Erwin  

are gonna guess they’re not really feeling a recession.

 

Nick  

So no, I mean, I think there’s everyone’s feeling it it just to different extents. So everyone’s feeling it a little bit. And then just the inflation numbers too, because they’re trying to open up other stores and different cities like don’t preface for my Okay, okay, there’s just just the same forces impact everyone

 

Erwin  

very, as business owners, I’m just more interested in like, how does your clientele feel at

 

Nick  

the very high end doesn’t feel that they’re not impacted? Right, but But I mean, when there’s more money in the system, there’s also more people going into a place like that, that’s they’re spending money that wouldn’t be spending money otherwise, they’re not buying the, you know, the 150,000 or $250,000 pieces, but they might be buying something worth, you know, five to 10,000 bucks that they wouldn’t be spending that five to 10,000 bucks. Now. Well,

 

Erwin  

again this like I always find there’s something to be learned from any right everyone versus I have a friend who works at spends time and maybe I should have named our jewellery company in square one. So I asked him his business and just to get a gauge for what the retail level was like, but it’s kind of funny still, because I remember him telling me like a one carat diamond rings a one carat diamond ring doesn’t matter what it costs the minute

 

Nick  

Yeah, if it’s an engagement ring. Yeah, I think

 

Erwin  

I think it’s fascinating human psychology. Yeah.

 

Nick  

Yeah. I don’t know if this is true or not. But I think the the other pieces if you’re looking to get married, you need an engagement ring. You’re gonna buy an engagement ring.

 

Erwin  

Doesn’t matter. That’s fascinating. But the other

 

Nick  

piece is, I don’t know. I think things might be like, maybe there’s less time. Branson’s gonna die.

 

Erwin  

I don’t know. That’s what he’s saying. The other pieces, there’s less less demand for Yeah, yeah. So just to give you again, I’m just looking for insight into how the market is for sure. I

 

Nick  

love talking. I’m always asking people in different industries, right. I haven’t spoken to a single person that isn’t saying on their everyday life. They’re seeing differences. Like the I feel like the recession has almost started already. It’s just we’re just seeing it on the on the streets. Now. We just lost the backwards looking data that the government’s looking for yet. You know, but everyone’s feeling I mean, how can you know, this is an historic pace of increase of interest rate increases? Never done this before. Everyone’s feeling it like there’s just no way not to.

 

Erwin  

Nick, thank you so much for doing this.

 

Nick  

I appreciate having me.

 

Erwin  

Thanks for so much for the honour. 300 episodes.

 

Nick  

Yeah, that’s something that’s consistency

 

Erwin  

that like you said, You always said it. You always said from the beginning back into 2010s beacons. But it’s the hardest thing to do. I think that’s I don’t think I’m just gonna start a podcast and start a podcast I forget the number is how many podcasts actually go beyond six episodes. Oh, I didn’t know. I didn’t know. But that is probably not a lot about your 80%. Don’t make it past six episodes. Well, we

 

Nick  

get a lot of people that will say like, Hey, I’m gonna start the weekly email, I’m gonna start the weekly, ama, hey, don’t start weekly, you can always ramp up to weekly because if you start we I mean, you can if you want, but when you start weekly, it’s it’s easy to fail, because the next week, it comes quick, you know? So you know, kudos to you, man. Congratulations on making it. Notice that really everything you’ve done to this point, you’ve always been an implementer you’ve always implemented a lot of different stuff. And you’ve always you know, so it’s kind of a testament to you for kind of doing all that stuff

 

Erwin  

haven’t been so good at sticking with CrossFit. Like you got me here, what you do. And I’d like to thank you and Dominic for the mentorship because you’ve given us a lot of great ideas that was backed by hard data. And so yeah, you know, without the coaching and mentorship would have gotten this Oh, cool,

 

Nick  

man, you ensure you’re awesome

 

Erwin  

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Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.

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If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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84 Units, Worth $14 million, No Partners, Still Grew Too Fast, Deleveraging With Kellan James

Greetings, my fellow Canadian real estate investors and Realtors!

Who knew a little podcast that started from the guest room/home office interviewing successful entrepreneurs in the real estate investment industry, asking them about their strategies, tips, tricks, what works and doesn’t work, getting into the details and numbers, telling it like it is, e.g. best deals often come from ugly properties or like today’s guest Kellan James, how’s there’s little to no operating cash flow even in apartment building investing.

We’re not here to candy-coat what a real estate investment business is and lie to you about the realities and challenges. But instead, to allow you, the listener, to leverage our collective experiences so you may learn from our guests’ and my experiences from operating a real estate investment business of buying, renovating, refinancing, repeating, and sometimes selling investment properties.

Today, our guest shares his experiences owning small apartment buildings in London, Ontario, growing the portfolio quickly without joint venture partners, outside capital, or credit.

But before we get to that, I want to say Happy Father’s Day to all the men who act like men and are good fathers to their children and grandchildren.  

Double shoutout to the single moms pulling double duty; you are amazing, and hope your children spoiled you.  

Shout out to my own dad, who I’ll forever be grateful to, for leaving the tropical climate of Hong Kong, China, for Toronto for better opportunities and a pretty great life for my brother and me. 

Being born Canadian is like winning the lottery! 

My daughter, our eldest child, made me a lovely card with an extremely thoughtful handwritten note. 

My son, the youngest, who unfortunately inherited many of my worst traits, is not the most thoughtful and didn’t get me anything, but he did join me at the driving range on Sunday morning so I could hit some balls. 

I find it hilarious that my daughter is thoughtful and helpful, like my wife, Cherry. My son only helps out around the house when asked to, and when he comes home from school leaves a trail from the door of his shoes, jacket, hat, backpack, lunch bag, water bottle, socks… etc. Again, he’s a lot like me; hence we need a nanny.  

Back to golf, my son is only 7, so he’s not patient enough to play nine holes, but I enjoy our time out in nature doing something fun together.

For the main event of Father’s Day, we hosted my brother’s family, my dad and my brothers’ in-law, for a pool party in our backyard, and I smoked a ridiculous amount of meat!

With steak prices through the roof and my love of smoked brisket, I finally tried smoking a whole 14-pound brisket from Costco. 

I made a homemade rub and smoked the brisket on low from 10 pm Saturday to about 7 am Sunday. I wrapped and baked it for another three hours, also on low, let it rest for 30 minutes and served. 

My dad and brother are foodies; they said the brisket was as good as any restaurant, and everyone was sent home with doggy bags, as 14 pounds of brisket goes a long way. Just guess what Cherry and I are having for lunch today :).

For those interested, I’ve included a link to the recipe in the show notes: https://www.traeger.com/recipes/traeger-brisket.

Also, shout out to all the dads and parents who invested or planning to invest in real estate so their kids may actually afford a house.  

This market is as I predicted years ago; only the children of homeowners will be able to afford a house in this market. Those with multiple, smart income properties have set themselves up for intergenerational wealth.

I say smart income properties, as we know, not all income properties are built equal. 

I gave a presentation on the weekend to some of Cherry’s Accounting clients on investment trends.  

One current trend is that interest rates are expected to remain high for 12 months. We’ll see more sellers due to higher renewal rates and investors divesting what they no longer want to hold.

Those holding pre-construction in small markets face the most challenges as demand is low for those areas. 

Many investors with single-family homes, including condos and preconstruction condos, are selling or considering selling due to negative cash flow. I know several condo investors who are bleeding over $1,000 per month per condo.  

Thankfully our clients own very few condos, so they’re in very good financial positions, and some are selling their single-family houses to pay down personal debts.

If you, one of our 17 listeners, are considering selling, please do consider my team and me to help. 

I’ve been a licensed real estate agent since 2010, our team has won Realtor of the Year four times, and in 2022 our listings sold for 19% more than comparable properties thanks to our commitment to excellence.  

Email us at iWIN@infinitywealth.ca and one of my coaches, or I will get back to you.

For those looking to begin their journey, the timing couldn’t be better. Motivated sellers are coming online, and we probably have a 12-month window until the first interest rate cut and all the buyers sitting on the sidelines will re-enter the market to start the next leg up in real estate prices.  

If you’re looking for a professional services provider who can help you maximize return on your investment, time and effort, we can show you how at our next Free Training webinar, iWIN MasterMind Tour or if you’re ready to take action, just reach out:  iWIN@infinitywealth.ca

Our track record speaks for itself!

For fun, I looked up what properties our clients invested in 10 years ago. Their returns averaged 800% return on investment.  

Past never predicts the future, but for the majority of our clients, we here at iWIN Real Estate have helped them create a portfolio of income properties that will help them retire comfortably more than any pension, RSP, or savings plan. 

Nothing could make me happier except to provide the same service to even more hard-working, kind people who enjoy working with professionals like our team who invest in real estate as a side hustle. Beginners are more than welcome.

That brings us to today’s guest Kellan James who was recommended for this podcast by my wife’s team at Real Estate Tax Tips. You see, Accountants know who is actually successful at making money, hence Kellen is our guest today. 

84 Units, Worth $14 million, No Partners, Still Grew Too Fast, Deleveraging With Kellan James

Kellan has successfully transitioned out of his corporate job. His explosive growth was well-timed, and his deals were profitable and well-executed, including his more recent deleveraging stage of consolidating his portfolio and paying off more expensive private mortgages to manage cash flow.

Kellan shares how his journey started, the importance of coaching early on, his group of 13 real estate friends, and how Kellan proceeded to grow his portfolio and coaching business too fast, leading to burnout.

I invited Kellan onto the show over a year ago, but I caught him during his social media blackout period, and he’s finally here today to share the ups and downs and realities of becoming a full-time real estate investor.

Please enjoy the show!

 

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Eighty fuor units, apartment units worth $14 million with no partners, no joint venture partners. Still, of course, that was some serious fast growth, leading to deleveraging having to get rid of some properties that had high mortgages high expensive mortgages with Kellan James Greetings my fellow Canadian real estate investors and realtors. This is the truth about real estate investing show for Canadians, the number 81 ranked pot business podcasts in the world per Apple iTunes, who knew a little podcasts that started from the guest room in my home office in my home interviewing successful entrepreneurs in the real estate investment industry, asking them about their strategies, tips, tricks, what works and didn’t work, getting to the details, the numbers telling it like it is, for example, best deals often come from like ugly properties, and especially today’s market. Today we have guest Colin James, he’s going to be sharing how, honestly how there’s very little operating cash flow in even in the apartment building investing space. We are not here to Candy Coat but real estate investing businesses are really like we’re not here to lie to you about the realities and challenges but rather than allow you the listener to leverage our collective experiences, so that you may learn from our guests and my own experiences from operating a real estate investment business of buying, renovating, refinancing repeating, sometimes it’s boring buy and hold. And eventually sometimes it’s selling income properties. Today, our guest is sharing his experiences and owning a portfolio of small apartment buildings in London, Ontario. Again, like I mentioned, he grew very quickly with our joint venture partners. So no outside capital or credit. But before we get into that, I want to say Happy Father’s Day to all the men out there who act like men and are good fathers to the children and grandchildren double Shut up to the single moms out there pulling double duty, you are amazing. And hope your children all spoiled you shout out to my own dad to will i will forever be grateful for for leaving the tropical climate of Hong Kong, where they’ve never seen snow. Hong Kong China, for those who don’t know, Hong Kong is very much like China these days. And I’m very thankful to have been raised in the Toronto area that pitch to my dad for coming to Canada coming to Toronto for a better opportunity. And which led to a pretty good great life for my brother and I being born Canadian is like winning the lottery. My daughter, our eldest child made me a lovely card with a handwritten note that was extremely thoughtful. My son, the youngest, who unfortunately inherited many of my worst traits, and he’s not the most thoughtful. He didn’t give me anything. It’s showing me at the driving range. His presence is present enough. He joined me at the driving range on Sunday morning, Father’s Day at 7am. So I get some balls he had some balls. I do find it hilarious how my daughter is extremely thoughtful and helpful. Just like my wife. My son only helps me around the house when asked to and when he comes home from school. When he enters the house. He leaves a trail from the door of in order you know one shoe and then the other shoe and a jacket and a hat, a backpack and lunch bag, water ball socks, etc. Again, he’s a lot like me, hence the reason we need a nanny actually golf thing. My son’s only seven so he’s not super patient, not patient enough to play nine holes with me with the old man. But we do enjoy our time together out in nature, doing something fun together. For the main event of Father’s Day. We hosted my brother’s family, my dad, my brothers in law’s for a pool party in our backyard and I smoked a ridiculous amount of meat. With Steve prices through the roof. And my love of smoked brisket. I finally tried smoking a whole 14 pound brisket from Costco. I made a homemade rub. I smoked the brisket on low from 10pm Saturday night till about 7am Sunday. I wrapped it and baked in another three hours on low. Let it rest for 30 minutes and served. My dad and brother are foodies. This is the brisket was as good as any restaurant and everyone was sent home with a doggie bag. Yeah, as you can guess 14 pounds of brisket goes a long way. Just guess what Jerry and I are having for lunch today. For those interested I’ve included a link in the show notes for a link to the recipe to how to smoke a brisket also share it to all the dads and parents who have invested or are planning to invest in real estate so their kids may actually afford a house. This market as I predicted years ago, maybe not predicted but I knew there was a risk of the risk that only the children of homeowners will be able to afford a home in this market. Preferably, you know, I think most parents want their kids to to buy a home near themselves. You know, quick story, one of my clients, their child, their partner is from the states and southern state and to ensure that that their child’s day local and that their grandchild would stay local. They bought them my house locally. That can only be done if you’ve you know made the right steps to prepare for this environment. Of course those with multiple smart income properties have set themselves up for properly for intergenerational wealth. I do say smart income properties as we know, not all income properties are built equally I give a presentation to some of Cherry’s accounting clients on the weekend on investment trends. One trend is with interest rates are currently high, based on like more recent history. It is I know on the big picture, they’re really not that high. But talk to some Canadians. I don’t think they’ll agree with that. They’re feeling the pain. So interest rates are expected to remain at these at the current rates for about 12 months or so. And we’ll see more sellers due to higher renewal rates, which, of course will be more expensive, and investors will be divesting what they no longer want to hold those holding preconstruction in small markets face the most challenges as demand in those markets are quite low. Many investors with single family homes including some condos and pre construction condos are selling or they’re considering selling due to negative cash flow. I know several condo investors who are bleeding over $1,000 a month per condo. Thankfully, our clients they own very, very few condos, I think I can count on both hands, how many condos my clients own for better income properties. So generally our clientele we do over 350 clients who generally the vast majority of our clients own houses on land, so they’re good, very good financial position. Some are even selling those single family homes to pay down personal debts, or even rotate that capital into something that can be a small multifamily. If you one of our 17 listeners is considering selling please do consider my team and I to help. I’ve been a licenced realtor since 2010. That’s a long time. I have all the grey hair to prove it. Our team has one realtor the year four times and 2022 our listings so the properties that we sold on represented our clients to sell. We sold them for 19% higher than comparable properties. largely thanks to a lot of hard work hustle and our commitment to excellence. If you’re interested email us at Iwan wi n at infinity Well, that’s ca again, it’s I went at infinity wealth.ca And one of my coaches or myself will get back to you. For those looking to begin their RESPA journey to invest need to own so the timing couldn’t be better to be a buyer. Motivated sellers are coming online. And we probably have about a 12 month window to that first interest rate cut, and all the buyers sitting on the sidelines. Well, you better believe an interest rate cut will trigger many of them to reenter the market, and then we’ll start seeing a more significant next leg up in the real estate prices. If you’re looking for a professional service provider who can help you maximise returns on your investments, time and effort. We can show you how at our next free training webinar, or one of our I would mastermind tours where we go on site, very hands on learning or if you’re ready to rotate. If you’re ready to take action, just simply email us I wouldn’t at infinity wealth.ca our track record speaks for itself. For fun. I did look up what our product what properties our clients were invested in 10 years ago, their returns averaged 800% 800 800% return on investment over those 10 years on the income properties that we help them acquire past never predicts the future. But for the majority of our clients. We hear it I win real estate have helped them create a portfolio of income properties that will help them retire comfortably and help them retire more than any other pension or RSP or savings plan. And nothing can make you happier. It’s providing the same service to even more hard working time people who enjoy working with professionals like our team and invest in real estate as a side hustle. To the beginners out there you are more than welcome to reach it. That brings us to today’s guests Kevin James, who has was recommended for this podcast by my wife’s team at real estate tax tips. You see accountants like my wife, cherry or they know who the successful real estate investors are. They know who’s actually making money. Hence Kellen is our guest today, talent has successfully transitioned out of his corporate job. His timing for explosive growth of his portfolio is extremely well timed. It deals were profitable and well executed, including his more recent deleveraging stage of his consult by consulting his portfolio paying off those more expensive private mortgages to manage cashflow, Kellan shares how his journey started, which was not that long ago. Tom’s been at this for I think about a decade or so again, that’s pretty good timing. Same with the timing of his deleveraging. He mentioned he talks about his story how I started the importance of coaching early on, he stays in touch with a group of 13 real estate friends to support one another. Kellan shares how he proceeded to grow both his portfolio and coaching business to fast leading unfortunately to burnout. Thank you to Kellan, for being so honest. I may tell him on the show over a year ago, but I caught him during his social media blackout period as the end he had burnt out. So he was in recovery mode. And also he was focusing on fixing his portfolio up and he’s here today to share the ups and downs the realities of becoming a full time real estate investor. You can follow Kellan at Kevin james.ca or on his Instagram Kellen dot James so please enjoy a truth about real estate investing show. John what’s keeping you busy these days? Hey, yeah,

 

Kellan  

just this last while I’ve been just in a stabilisation period with my portfolio so I’ve had like in 2021, I actually sold five buildings which was 15 units, and then I bought 51. So I kind of transitioned from some smaller multifamily is like two to four units. And I kind of got more into some of the apartment buildings. So you know this last while I’ve been doing a lot of turnovers and you know, stabilising the portfolio, you know, when you do that many acquisitions at the same time, there’s a lot to be. Yeah, there’s a lot to be stabilised at that point, a lot, a lot of units, the turnover and get rents up and just like kind of build that foundation, before I build the building any taller. You know,

 

Erwin  

can you give us an example of like a, can you walk us through some of the numbers on the recent acquisition?

 

Kellan  

Yeah, there was one that went really well, it ended up being one of my best burrs ever, probably my best. It was a just gonna be off the top of my head. But I bought an eight Plex, every so everything I own is in London, Ontario, at this point at 83 units solely owned no joint venture partners. And this eight Plex I picked up in late I think was late 2021. And it was a seller that I had been in contact with off market for six months trying to convince them to sell it to me off market, I bought another eight Plex off of them off market. Well, this is this could be public knowledge, really, this was the safe and family this is Ed group. So they owned tonnes of properties in London. So I was in touch with him off market trying to get deals done, I got one done off market with them. And they decided, well, they got in touch with the broker and the broker said, let’s let’s put all of this on the market and see what happens. So after a lot of back and forth, they decided they’re gonna hit the market, this eight Plex, they listed it extremely low. And yet, for some reason, while I know the reasons, but there was just not much interest in it, they listed that kind of flooded the market all at once with all these buildings. So anyone who was in that space, the medium size apartment buildings, you know, like six to 24 unit type stuff, they had already kind of picked through some of the other buildings, and this eight Plex was sitting there. And they didn’t have any photos. And it said bulk metering. So didn’t you didn’t think that there was any separate metres. And so I took a look at it, it was actually right across the street from one of the other triplexes. And they listed this eight Plex for 750, which in London is already an incredible price. But I put an offer in for 600. And they just accepted it, there was no back and forth. And it was actually because I’d already bought a couple other buildings from them. So they knew I was a legitimate buyer, they were kind of at their wit’s end with trying to sell something like 1000 units or something ridiculous in London. So this was one of the remaining ones they wanted to just get rid of. And for brokers like this, the legitimate buyer, let’s just take this deal, I worked directly with the listing agent. So maybe there was some, you know, double ending incentive there. And they accepted my offer for 600. So, you can imagine in London, you know, two and 1000 unit is not rare, you know, 200,000 plus a unit is quite common. So I bought it for you know, unwell under 100,000. And we actually ended up paying, so it came with two vacant units. It was all it was nine separate hydro metres, which none of the the listing didn’t have any of this information. And it’s a 100 foot by 200 foot lot pretty close to downtown. It’s in a rougher neighbourhood. It’s in Soho, in London material, but a huge lot with maybe some development potential as well. And I ended up getting all eight units vacant to the units were already vacant. And the other six we did Cash for Keys, I’d had to do quite a bit of Cash for Keys. Some of them I paid upwards of 10 grand, there was a couple of people I’d pay 10 grand, some of the others were a little bit less, but towards the end, you know, the people that are kind of sticking around for a while, paid a little more. And so we had all units vacant. We were only getting there we put them was a massive renovation, you know, probably upwards. It was well, I mean, we’ll see when my taxes are completed. I haven’t added it all up, but it’s something probably upwards of maybe 400,000 and Renault’s new metal roof and all the units renovated and they’re all one bedroom apartments. So we ended up getting them all fully rented at market rent. I think we got like 1250 For most of them and I think 1150 For the basement one beds, all plus hydro. And it reappraised at 1.75. So that was in Vermillion, and it got got to replace the 1.75. So I was super happy about that. And, you know, this was right in the middle of when interest rates and stuff were all getting really starting to get pretty high and loan devalues on refinances started to suck. But luckily, even with this one, I think I got a 55% loan to value on the refinance just because they’re just being so stingy with mortgages. And this is what the credit union and it’s still perfect for even a 55% loan to value. So I’m super happy with how that project worked out. Now it’s got you know, eight good tenants. And we’re actually in the process of doing a pre application with the city because this law is huge. There’s a it’s almost like a soccer field in the backyard says huge grass field. And we have a pre application into maybe build a 12 Plex on the grass on the land behind the property without having to tear down the eight Plex. So we’ll see all that goes, it’s an extremely early stages, but it could turn out to be my best deal ever. Especially with some decent sides to it, you know,

 

Erwin  

much to unpack. Yeah. Because culture is about real estate investing. So I have trouble with filtering myself, but sounds like the agent. Did you a favour? Seller?

 

Kellan  

Well, I mean, yeah, I worked with them quite a bit. Counter this took it, they just took it. Yeah, they were like, This is a legitimate buyer, you know, he’s bought a couple other buildings from you guys. Already, you guys should just take it. And I mean, I added it up. And I think the portfolio that I bought, like, I bought an eight unit 20, about two, eight plexes, a 24 unit and 11 unit all off of the same people, same broker, and I think it was, like 80 grand in commissions or something just from my, just the 2%, or whatever, you know, and that was when I went man, like, you know, should you call the listing agent? Should you use your own gate? You know, your own agent, should you get your realtor licence to get that $80,000 Check yourself for these acquisitions. Like, you know, it’s a bit of a debate back and forth. But, you know, sometimes it helps, I think, to work directly with the listing agent, but I know that’s a grey area. But luckily, I’m not a realtor, so I can talk about it.

 

Erwin  

That’s the thing as well, because being a realtor, you get really handcuffed a lot of things.

 

Kellan  

Yeah, yeah, exactly. I’ve specifically knocked my realtor licence over the years, you know, when you’re, when you’re trying to buy stuff off market having to disclose the realtor and people get all the stuff, oh, they’re going to take advantage and I like to just be a buyer, you know, oh, I’m looking to buy a house, you know, looking to buy an investment property. Like, they don’t feel like they’re being taken advantage of. Whereas if you’re a realtor, all of a sudden, they feel that way. So let’s get their backs up. Because yeah, yeah, exactly. I think

 

Erwin  

Realtors down there with used car salesmen in terms of in politicians, in terms of trust.

 

Kellan  

Yeah, yeah, exactly. Trust is not there. So that’s a huge part of it. You know, if I’m dealing with people, it’s nice to just say, I’m just a grassroots investor, like, you know, just trying to buy an investment property or whatever. And, you know, I was never big into wholesaling, I’ve done a couple of wholesales over the years, you know, when I find a deal, it’s just not for me pass it along to fellow investor. But same thing there, you know, like, your wholesaler, you know, that’s why you see a lot of wholesale company, or wholesale businesses are having a realtor on board, but not the one that’s doing the negotiations, necessarily, people getting in all sorts of grey areas, but I just like to, I like to not be a realtor as of now. Although, like, I look at my portfolio and go, Man, at some point, 20 years now, I’m probably going to sell this and kind of nice to get the commission checks on the sales of this entire portfolio, because my portfolio is over 13 million as of today. So the commission check would be, it’d be nice to pay myself.

 

Erwin  

Do you think you’ll actually divest your portfolio, and my plan is

 

Kellan  

to hold for 20 years, like, no one ever knows what 20 years holds? But yeah, I’ve never thought about the idea of passing it on to kids and stuff like that, who knows what that’ll look like? I really don’t think I can plan that far ahead. But I think that the reality is probably at some point, I would sell things off. I’ve seen what it looks like when people try to pass properties down the properties. The Zed group stuff was a decent example that I bought a lot of their stuff and, you know, the the original founders of the company, and like the son like they were running the business, and then it sort of, you know, once they passed away, things weren’t really being managed the way they should have been. And I don’t know, not really a lot to be said, for your legacy for your legacy. If it’s if things just get rundown once you’re once you’re gone, right. So I kind of like the idea of bringing buildings to their best use holding on to them maintaining Well, for a long time, and with the idea that at some point, probably I probably would let things go. You know, at that point, I’m sure there’d be millions dollars in capital gains tax to pay, but it’s, it’d be totally worth it. Because the exactly at that point, it’s irrelevant.

 

Erwin  

Just a pin VTV. And yeah, spread out.

 

Kellan  

Yeah, exactly. If I’m still well connected in the space 20 years from now, then there’s probably plenty of investors that could do some kind of creative financing with like that, and find some woodwinds. So, yeah, it’d

 

Erwin  

be funny. Like, I want to VTV whoever’s my turn. Yeah,

 

Kellan  

I’ve had sellers that I’ve tried to buy properties off of they’re like, I want to do a b2b. Like I explained it to them. Oh, that sounds good. Like, I definitely want to do that. And like you understand, like, they’re like, and I’ve had some like, we want it to be interest only, like, we want to know that every every penny of the payment is interest. Like, there’s no principal paid out and like, perfect. That’s what I want to write. Yeah.

 

Erwin  

What kind of terms have you seen for btvs.

 

Kellan  

So it’s funny, I’ve actually never done a VTB, which is kind of crazy, because I’ve negotiated quite a few and then just didn’t end up taking on the deals are passed along to somebody else. But so I’m not even too familiar recently. But I generally like to do interest only, like, if I was to do b2b, I’d want it to be interest only, I would want it to be with a lower down payment than what I’d get. If I were to go to a bank or credit union, those two things would be enough for me to justify, you know, going to the b2b versus going to the bank. But to be honest, like rarely have I found the b2b terms, at least in first position b2b terms for them to be better than what I’d get at a bank anyway, so a lot of times I just go with a bank, especially like the first 10 properties, so it’s just the I’m with Scotia Bank and the rates are super low. And it’s like, why would I go elsewhere you know, and then like, what second position stuff you can get pretty quickly. And like, as an investor, if you want, generally you can borrow as much money as you want, you can get as high leverage as you’d like to and, you know, we tend to glorify and, you know, a lot of people tend to glorify in the space, raising capital. But I feel like raising capital is something that is almost the default, and you kind of need to stop yourself from raising capital. So, you know, when it comes to like, getting a bunch of second position V TVs and things like that, like, you know, at some point, we need to say, like, how leveraged do we want to be and how exposed to the market do we want to be like, we all want to have some degree of exposure, and we want to, we want to ride the market as it goes up over the long term. But like, we have to understand that when market goes down, that we’re riding it all the same. And the more leveraged we are, the more we’re affected by in either direction. So I’d like to maintain somewhat reasonable loan devalues in my portfolio. And, you know, if I take on too many btvs, and second position stuff, and private loans, and too much of that you can get things can get out of hand pretty quickly.

 

Erwin  

Right? So for the dealer, we’re discussing, like you mentioned that the credit union give you 55% loan to value. So you have Are there any other types of this property?

 

Kellan  

No, I still just have it at 55% loan to value moved on. I mean, I could bring it to CMHC, or something, there’d be a tonne of capital to pull out if I were to do something like that. But I like to have some degree of like, safety net in my portfolio. I alluded to it earlier, but I liked the idea that, like if you’re building a tall building, you build the foundation differently. And so I’m really trying to build a large portfolio over a long period of time. And for me, I needed to have a nice solid foundation. So I could scale faster, but then end up with a Tippy build tipsy building. So that’s sort of been my mentality. It’s a lot of also I invest with no joint venture partners and, you know, just have full control over things I can choose when I want to, if I need to sell something, or what type of renovations I want to do. And, you know, I don’t ever feel like there’s no shotgun clauses or anything where all of a sudden, we need to, like, you need to buy it, or I need to buy it, or we need to sell it or I just I like to know that I can think long term with all of my decisions.

 

Erwin  

Yeah. That’s pretty cool. Because I literally spoke to an investor last week, who took a course in the course they were instructed to use their personal lines of credit to finance the renovations. Yeah, yeah. I mean, that’s like the opposite of what you’re talking about.

 

Kellan  

Like, I’ll be honest, I’ve done that myself. Like, I have personal lines of credit, you know, you get like a $20,000 line of credit with TD or Scotia. And like, you know, if you if you have some degree of predictability with the Burr and you see the ARV is there like, I don’t think personally, I’d be okay with leveraging, temporarily leveraging like that. But there has to be a very clear exit plan, you know, like, the plan isn’t ever isn’t to hold those lines of credit maxed out for years, right. So I’ve done a decent amount of that. And I mean, I’ve done like private loans and stuff, I’ve done the promissory note stuff, you know, but like, I’ve also learned a lot of lessons in that space, we’ve seen a lot of examples where that can get out of hand. And you know, about a year ago, even myself, I went, you know, like these loan devalues and getting on the reef eyes aren’t what I wanted them to be. So I don’t have as much as I’d expected to have had to pay out these private loans. And then I went, well, this doesn’t. This doesn’t play out Well, long term. And it doesn’t play out well at scale. I mean, actually, it could play a Well, long term, you know, you can always borrow more, borrow from Peter to pay Paul and that sort of thing, but, and ride it out and wait for the market to save you. But I’ve never been the type to do that. So, you know, that was why even myself the last this last year, I did all the refunds I could and then I sold a couple I sold a duplex and a triplex. And I took I don’t know, hundreds of 1000s and I just paid off private loans. And I just wanted to just be in a place where I’m never like, oh, the news came out, and it’s gonna affect how my life looks now. Like, no, I want to, I want to know that I’m in a place where things can happen. And I’m fine, you know. And so, this last while has been like Id leveraged and I’ve been stabilising, because I don’t know, I just I wasn’t comfortable with where, with how things look at 567 percent interest on these mortgages and additional private loans on top of it. So yeah, just like D leveraged and kind of got my myself back into a safe position, or what I consider to be safe. I’m a relatively conservative investor. So yeah,

 

Erwin  

seems that we’re there’s few of us out there. Yeah, at least what you see on social media.

 

Kellan  

Yeah, I mean, well, people see like myself, like, you know, in my first two and a half years, I went so I could tell my story, I guess from the beginning. So you know, I did computer science in school, paid my way through school myself. I lived at home, but I paid for my school. And then I worked for five years. I graduated in 2012. And then in 20, well, I guess, in 2016, late 2016, I bought my first duplex, I’d saved up 120,000 including my RRSPs and all that stuff and just live super frugally. I didn’t even I sold my car and walked to work and saved every penny I could and took the 120 Grand and I actually pulled money out of my RSP using the homebuyers plan, and I bought the place to 5% down and look for Free and then kind of moved on to the next birth project from there and everything after that was 20% down Scotiabank. And in two and a half years, they got to 10 properties, 32 units. So that was fast scaling, right. So a lot of people see that and want to sort of emulate that. But you have to get some unicorn deals to scale at that rate, especially without partners, things need to like, be really good birds, you’re getting all your money back and more things like that, you know, because otherwise you run out of money and, and then the only way to buy the next deal is to bring on a partner or borrow a bunch of money. And I didn’t want to do that. So I’ve always been focused on maintaining momentum of my own money. So everyone talks about your other people’s money, I like to talk about your own money, because I feel like that’s way to scale safely. And it kind of forces you to do better deals, because if the deals are good, then you get your own money, you get all your money out what why would you involve a partner and you know, it’s just going to be the same amount of work for half the result? Or are you going to do twice the number of deals for the exact same result. Or if you have two partners, you’re going to do three times the number of deals, you know, and like at this point, I’d rather own my 83 units than like 166 units with a partner 100 times over. And I’d rather have the situation I’ve built. So it’s just nice to know that, you know, if I have decisions to make in my portfolio that I don’t need to run them by anybody. And I can trust that, well, any of the results that I do get are my own and any mistakes that I make, I have to take the consequences. So it’s just full accountability. And you can sort of build in like that sense of partnership with your property management team, and with your GC and things like that I actually feel a lot of that good vibes that you get from partnerships are a good partnership without the equity stake, you know, I have that with my property managers, they want to turn units over to you know, and they want to get rents up, they’re gonna get paid more as well. And, you know, they’re in this for the long term with me, so it’s really just, yeah, exactly. For sure. Yeah. So these are the Phil less words. Yeah, I got a text from my property manager just yesterday, like, what do you buy in the next like, crazy building? Because I buy a lot of crappy buildings and make them nice, right? So it’s just like, it’s awesome to have that, like, you know, they’re on the same team, but they’re making money in their own way. And they don’t have to, it doesn’t have to be in the form of equity on my properties, you know?

 

Erwin  

So that’s what people need to remember. There’s partners that we can hire. Yeah, exactly. And pay a wage to we don’t have to give up equity necessarily. Exactly. Yeah, that’s what I say to my clients all the time, like, oh, JV with this person, like, you know, he can hire a really good property manager.

 

Kellan  

Yeah. Or like, oh, I have a friend, that’s a contractor. There’ll be my partner on this deal. So you can hire contractors.

 

Erwin  

Literally tell it to somebody, they’re really good. Hey, why not just hire them?

 

Kellan  

Well, they really like an equity stake in the building. I wonder why like, I was like, for my like, first few years before I like, kind of branded myself I suppose the guy who invested out partners because I did a talk at on Ria, Sean Allen’s event, Sean element, info drinks event? Well, some years back, Matthew Shay was there talking about building a portfolio joint venture partners. And then I went up and talked about building a portfolio without joint venture partners. And I was just I that was because I was like, Well, what am I going to talk with? It’s got to be something different than what everyone’s talking about. Everyone’s talking about burning. It’s like, well, I’m going to talk about this. And I realised it kind of stuck after that. And a lot of people resonated with the idea of it. I always thought it was the default, right? I always thought that’s how people build portfolios, isn’t it? But then, you know, I realised ended up becoming a niche, I suppose. I’d never would have considered building your own portfolio and each

 

Erwin  

have a question I’m gonna guess no one’s asked you. So that’s, no one gets our questions in advance. Because I didn’t know I was gonna ask you this. How many you’ve recorded properties you think you have in your portfolio pass?

 

Kellan  

It’s a good question. My second property I ever bought was a unicorn, I paid 127,000 for a duplex. And within four months, I had to replace the 250. I was only in for 150. And it was re appraised at 250. I have a six Plex that I bought for 365. This was years ago, as well. But even still, at the time, a six Plex would have been worth I don’t know, like, at least double that, you know, but it was a crack house. Like it really needed a lot of work. For lack of a better word. I mean, there were people like cooking on spoons on the stove. So

 

Erwin  

I’ll assume that’s crack. I have no idea. So basically, the listener can let us know if that was crack or not or something else.

 

Kellan  

Let me think this eight Plex, I think was a bit of a unicorn, I would say that I just did. Oh, yeah. I think that’d be varying degrees of what people consider a unicorn. Like, I would say that like 70% of my deals, if anyone saw them, they would have done like, so that’s probably a decent I don’t

 

Erwin  

know, I don’t know people. Many people could walk into a crack house and say I’m buying this.

 

Kellan  

Yeah, true. Maybe that one wouldn’t be Yeah, that one’s maybe not a good example, there was a triplex I bought for 147 and reappraised at 400. Not long after, but I’d put about 100 into that one. But I suppose if people saw what these properties could become, and what they are now, and they’re willing put the work in. Yeah, like, I think then at that point anyone would do it. Yeah, I’m trying to think like,

 

Erwin  

Let’s go stay on this triplex. What was the story there? What made it wasn’t an ugly property?

 

Kellan  

super ugly. It looks like a shack. They listed it for 150. And again, I don’t know how or no, sorry, they listed it. I don’t know one. I don’t remember maybe 170 or something like that. And I went in at one. I ended up getting for 147. I know people that walked through it. And then when they found out that I bought it for that price, they were like, oh my god, like That’s so cheap. I didn’t know that. can negotiate it like that. But it was it looked horrible from the outside. It had like wood siding, and I don’t know it was awful looking

 

Erwin  

at what side is not treated if not cared for. That would What does not do well over yours.

 

Kellan  

No, exactly. And it had like Joyce, like the Joyce. We’re all like bowing and stuff like it was it was really, really rough in the basement. And it didn’t have a lot of parking as well. It only had a couple of Pardons two parking spaces for three units, which isn’t ideal. But yeah, I went in, I asked the seller, can you provide vacant possession, they said no. But we can ask the tenants if they want to move. And they just put in a letter and said, you know, the new owner was asking if this unit can be vacant on the closing date. And it wasn’t like a landlord tenant form, or anything like that. It was just a request. And two of the units were vacant on closing. And then the third unit, the tenant was out a month later, because they were just in the process of moving. So I think that was a bit of a unicorn like I can’t believe I got it vacant without without any guarantee of it. So we put all new siding on it and a new roof and it looks really nice on the outside now and and I ended up buying the property across the street is the Plex I just referred to, it’s got all the parking in the world. So now we share parking with that building. So that was sort of a unicorn deal as well. I had a student rental once that I got a pretty good deal on it sat on the market for a while and think that it listed at like 300 or sorry, 300 at the time, and it was like it was a four bed and a four bed in the front and a Bachelor in the rear. And this was some years ago. So it wasn’t, it wasn’t like it was a pretty good price still. But I went in at 250. And then they were negotiating back and forth. And I just kept holding it to 50. And eventually they just accepted 250. And then I told people I got it for 250. And they went, how did you get that 250. It’s like, I negotiated on it. But it’s funny that property, they listed it I think at 275 250 and had a lot of people interested. And then they relisted it at 275 because they had too many people interested? And then no one was interested because they relisted too high. And then I still stuck at my 250 price. I think it’s something like that. Yeah.

 

Erwin  

So they’re gonna apologise to investors that were rehashing about the past that aren’t available today?

 

Kellan  

No, no. Yeah, I mean, if we can talk about, uh, you know, the Plex, again, I bought it late 2021. I mean, you know, a year, little, maybe a year and a half ago, it wasn’t that long. And that was 600 grand. So, like, there’s just been deals and deals over the years that, you know, people look back and they look at the price and go, That sounds completely ridiculous. But you can imagine, this eight Plex is a decent example of how I think anyone if they would have seen the potential in this property would have paid 600 grand for this eight Plex, you know, but it was sitting on the market staff for a month and no one bought it. I mean, I found unicorn deals both on and off market.

 

Erwin  

You asked me I was doing before this morning before this call. So I’ve already posted my new construction reconstruction. And of my portfolio I’ve only ever bought pre construction once. Yes, please. And this plays into the unicorn discussion. Right. I paid 275 for five bedroom student rental in Branford. Yeah, it does quite a few years ago now. And that property’s worth probably 600,000. No. Nice. Yeah, you know, I’m just thinking about my own portfolio. I think time has made a lot of my properties winners. I don’t know if anyone would call them everyone’s criteria for unicorn be different. But time has time has really helped out.

 

Kellan  

Oh 100%. I like to think of the unicorn deals of stuff that I got turned over and reappraised within four to 12 months, you know. So a lot of these like, like this second duplex took four months for me to bring it from the 127,000. I bought it at 25 in so I was in for a little over 150 and it retraced to 50. So that was four months. I’d like to think like for me, I’ve always focused on forcing appreciation. It’s the only thing we have control over. There’s a resonating theme in my portfolio, it’s all about everything that I’m trying to keep within my control, no partners and all that. So the unicorn deals that I liked are the ones that really made sense within four to 12 months, but everything turned into a unicorn when the market did what it did. But you know, it’s nice that like the market went up as much as it did in say 2020 And it’s dropped a decent amount this last file but nowhere near when it went up so well things are still extremely unaffordable for people trying to buy on paper people seem to be still doing alright, equity wise if they bought Well,

 

Erwin  

actually, it leads me to a good question. I think it’s a good question is I’m just naturally curious. Like to take the earplugs. For example. How did you find capitalise it. Like where the downpayment come from? We’re using, we’re using as a source of refi money as cash.

 

Kellan  

You know, at that time I bought the 51 units, right? So it was a combination of refinance funds and problem notes. You know, I borrowed some money that was my lesson learned is I got to leverage during that time. And that’s why I talked about the de leveraging stage that I went through. So good lesson. But yeah, a combination of refinance funds and some borrowed funds for those 51 units that I acquired, because I bought a 24 unit that was over a million dollars downpayment. So without a partner, that’s, that’s crazy, crazy to come up with, but bought it with libro credit union, actually, it was so 25% down, and I had no problem appraising, I think appraised immediately for seven or 750, when I bought it for 600, so a lot of money was made on the buy. And then it reappraised set at 1.75, but only got 55% loan to value. So I could probably bring it to their other lenders now that I’ve found that would give me a better loan to value but I locked into the half, I think it got a 4.9 or something on the interest rate. So I might hang on to just that loan for a while. But there’s a lot of equity to still be pulled out of that property. And I would feel half decent about putting a second on it. Because I could put a second on it and bring it up to say like 70% loan to value, it’s still not over leveraged, you know, but just trying to make sure that I maintain that lesson learned this last while you can leverage and D leverage at the same time. And so I’ve been in the de leveraging stage. And so therefore, I haven’t been in an acquisition phase quite as much. I’m expecting to reenter one in about six to eight months. If all goes well, we’re just still on a Cash for Keys blitz turning units over, I’ve probably turned 20 units over in the last year and a half some. So just paying a lot of people to leave and turn the news over again rents up because that’s the most valuable thing we can do as investors and I think there’s a very strong case for candidates to be a country of renters in the long run, and there’s going to be a lot of tenants that will never leave. There’s plenty of tenants in my portfolio that will probably not leave no matter how much I pay them. And I think that that decision will become easier and easier for them as the years go on. It’s locked in at the rates they’re locked in at and who knows what happens. I’m not gonna get into politics, but who knows what happens with all that. So while we have the option to do what we’re doing, I’m going to continue.

 

Erwin  

No, we’re not allowed to compensate your 10 for leaving. Yeah, exactly. Yeah. So horribly giving the money.

 

Kellan  

Yeah. Well, I mean, I just I saw an NTP NDP proposal about like units staying at the rent that they were with the previous tenant no matter what. And I just couldn’t believe that that was even a proposal, you’d end up with a country where people never renovate the units, because they have no reason to, like the reason the rents go up is because we make the units nicer, but otherwise, they just get rundown. One common

 

Erwin  

about them up is that they have challenges raising money, wonder why money don’t want to give you money.

 

Kellan  

And I honestly, I really, I don’t follow politics almost at all. I haven’t read a news article. And I don’t follow any news, the closest I come to following any news is just whatever, maybe you share on Instagram or like a few other people. Right. But like, that’s basically it. I just I focus on what I have control over. And, man, yeah, news. And I mean, that was a part of like this, I went on the social media blackout there for over a year. And that was another part of it, right? It’s just choosing what my inputs are, you know, we all like to think that we can control what we think about and but at the end of the day, sort of the you’re the average of the five, so the five people you’re around, but also the five news sources, or the five, you know, sources of information, I don’t know, I tried to be pretty cautious about what I expose myself to so same with books and things, right, you can read a book read like the 48 Laws of Power, or 48 Laws of Power zones, and, you know, crazy book, it’s all about, like manipulating people and stuff, you know, you got to be careful what you expose yourself to, but at the same time, like there’s some degree of like, mental resilience, understanding that like, Oh, this is this, people like that out there. And this way I understand it. So there’s some combination, I suppose of like, exposing yourself to things but still maintaining conviction in your own in your own beliefs. But then, but then also, yeah, not going too crazy with it, you know, choosing what you want to expose yourself to.

 

Erwin  

If you have the appetite for it. I’d read your book of Influence by Robert Cialdini. Okay, yeah. Which is I’m pretty sure every influencer has read it.

 

Kellan  

Oh, I haven’t. What’s it called?

 

Erwin  

The book of Influence by Robert god of influence. I’ll send you the link in the listener, I’d recommend you listen, watch it too. Because every politician, every marketer, advertiser, every good influencer that I see on social media, and like they’ve read it, or whoever they’re learning from his read it because I see I see people using that playbook very well. Good to know. Yeah, good to recognise these things. I recognise it all the time. Yeah.

 

Kellan  

I mean, I think it’s similar to like, you read books on negotiation, and you go, Oh, I’ve been using those things. Right. And I think that people who tend to manipulate read these books and all perfect like that’s how I manipulate Like, I don’t know, like for someone like myself, I read I read this man like, I didn’t understand that this is how people’s minds work like 40 Laws of Power is like don’t outshine the master and things like that, right? Like, you’re, you’re learning from someone, don’t make yourself sound better than them. Because then all of a sudden, they’ll recognise that you might take try to take over their power. And, you know, like, You got to be careful, like, as an influencer to like the people reaching out to you, why are they reaching out and friends that are trying to be friendly? Why are they trying to be friendly, right? Like, luckily, I’m pretty good judge of character met a lot of people over the years and networked with a lot of people and I generally know who is worth interacting with. And you know, who I can learn from and who’s a genuine person now you can kind of get a drift to that pretty well these days.

 

Erwin  

And you live in London, so there’s lots of opportunity to connect with people. Yeah, yeah. There’s a lot of people of your generation that invest in live in London. I don’t know

 

Kellan  

how much of that we had an influence on. So like Matt McKeever was a mentor of mine, and early days, and we started London On Fire. We have people coming from all over, not just Ontario, but like we have people coming from the states and flying in like Western Canada, like there was, you know, myself, Jeff, why Beau MicroSTAR there was like, a bunch of influencers that were really, you know, became a hub London of all places. And there were no other meetups, at that time. Really no other like grassroots, I suppose, like, types of just networking events meet up once a month, like, so people were coming from all sorts of cities. And I think it really spawned something. Now, every city has a meet up and this sort of stuff. But there’s something about that. And it all, it all came from some random posts on BiggerPockets. In 2016, we all had alerts set for our city, because that’s how it worked on bigger pockets at the time. You know, if anyone mentions London, Ontario, you know, get you’ll get an alert. And few of us got that alert, because we had it set. And we had a meet up with myself, Jeff, why beau, Matt McKeever and a few other guys. And we started around meetup and kinda, I don’t know, I’m not I’m never really sure how much of an influence that we had over things. But we still a couple 1000 people in that group. And we’d like 50 people coming out every month. So and just a lot of social media stuff spawned off that. So kind of cool to see, I don’t I don’t know how much of an influence we had. But

 

Erwin  

those guys, you mentioned going different directions. So you still connected with them regularly? Yeah.

 

Kellan  

So like, to some degree, I mean, Matt and I aren’t as in touch as much this last while he definitely went a different direction, like he was getting into NF Ts and Bitcoin and stuff like that, and a lot of politics. So it was it just wasn’t what I was doing. So I just like, so we’re in touch occasionally. But he’s kind of doing his thing. I’m still in the real estate space. So I’m doing that I have like a group of 13 friends, we have like, chat together, we tend to do a lot of our parties and group hangouts and stuff together. Most of us are basically all of us are real estate investors or business people of some kind. And I’ve kind of found we found in our tribe, I suppose. And it’s neat, actually, three of us, three of the couples in that group are getting married this year. So yeah, so it’s gonna be a crazy year. But yeah, it’s so important to get those to get those people in, I don’t know, to like, have people that you trust around you that that are like, excited when you’re doing things, but also like reeling you back in if you get too crazy with something and just finding that healthy balance,

 

Erwin  

right? Because you mentioned like, you know, social media blackout.

 

Kellan  

Yeah.

 

Erwin  

Was there anything else going on? During your deleveraging stage, we’re just trying to focus in on

 

Kellan  

your business. So I started a coaching business that got big, faster than I wanted it to. And so I took on too many students, I took on a lot of real estate deals, I got burnt out, that was at that point, like five years of just six year, you know, just like full pedal to the metal. And I went back because I got burnt out. So I find, I think it’d be really healthy if I just stepped off of social media for a month was the plan.

 

Erwin  

Because you are a content creator. You’re creating content like Yeah,

 

Kellan  

yeah, just like, Yeah, mostly Instagram. But yeah, like sharing a lot of that stuff. I had some YouTube going on. And I was doing a lot of coaching calls every week. And I just went, you know, I need to take a break from a lot of this stuff. I’m going to continue scaling my portfolio doing my thing, but it’s take break. So took a month off and then went out and really feel it coming back and turned into over a year. And during that time we we did a lot of travel. We travelled with some friends. We then went to Norway for a few weeks. We went to Australia for a month in New Zealand for a couple of weeks. Costa Rica, Dominican, we did a one month van trip, we have a sprinter van, and we took this van and drove out to the eastern Canada for a month. So he’s doing a lot of travel and that kind of that sort of stuff during that time. So and then I only really came back on social media this last, I don’t know a few months, it’s kind of want to get back into stuff again. So

 

Erwin  

alright, but you’re there to you’re there to share content. You’re not consuming so much.

 

Kellan  

Exactly. Exactly. Yeah. The only content I consume is generally not a lot of real estate content. It’s just like comedy and whatever, you know, like philosophy, that sort of stuff. Like I love stoicism and stuff like that. So yeah, like content wise when it comes to real estate. I mean, it’s a challenge at this point. It sounds ridiculous. It sounds cocky, I suppose. But it’s a challenge to find people I can learn from. They’re out there. I’m actively trying to find them. And I have found some But, you know, social media is not a place that I can go really to learn for the most part at this point. So it’s not really a useful use of my time. So it’s all wonderful clip

 

Erwin  

of ride day on. On the Late Show. He’s summarise stoicism beautifully. I’ll flip it to you over Instagram.

 

Kellan  

Yeah, Ryan Holiday, right, I’ve read a bunch of his books, egos the enemy still misses the key obstacles the way I still needed to read discipline, his destiny. These have become like core philosophies. For me at this point. I do something where on the background on my phone, I have like a phrase or something that I really want to drill in. And like, once it becomes a core philosophy of mine, I put it on a Google doc where I have a list of my core philosophies. And I look back at those and like all of those things I live. That’s how I live my life now, like one of them for a while. It was like, you know, Warren Buffett said the difference between successful people and very successful people. Is that very successful people say no to almost everything. Buffett says no to lots. Yeah, exactly. Yeah. I mean, Tim Ferriss has said stuff similar. No Bitcoin

 

Erwin  

no gold. Yeah. Tim Ferriss note almost every deal.

 

Kellan  

Yeah, you have to, you have to and like, man, there’s a lot of there’s a lot of stuff to say no to out there, a lot of distractions, a lot of things preventing people from maintaining focus. So that’s a core philosophy of mine now. And it wasn’t like always, but there’s been a few others that I’ve added to that list over the years. And Alistair Moses got some stuff I really liked. So trying to drill some of those philosophies in right now as well.

 

Erwin  

Like, like the simple one, two, or hell yes or no?

 

Kellan  

Yeah, yeah. The hell yes. Yeah, that’s a good one. That was a hard one. I didn’t I didn’t fully agree with it. I don’t know. But I get it. I get the spirit of it. For sure.

 

Erwin  

So someone like yourself, I’m sure you’ve invited way too much stuff. We invited to invest in too much stuff. Yeah. Have you done a hell? Yes.

 

Kellan  

Exactly. And I think it’s like, I think these come in waves. I think we have times where we’re very busy times were a little where things are slower. And I think when times are busy, it’s time to say no to more. And when times are slower. It’s time to say yes to more, you know, people who are like, depressed or whatever out there. Like they probably, well, if unless they’re depressed, because they’re overworked, they’re depressed, because they don’t have enough going on in their lives or whatever. They need to start saying yes to more they need to go out to groups, and they need to, like, do new things and learn new things. And you know, get out of the house and stuff

 

Erwin  

be more of service. Yeah, right. Yeah. And we’re going to find that opportunity. If you’re feeling depress, go be more of service. Yeah, go volunteer at a charity

 

Kellan  

now requires saying yes to a few things, even if it doesn’t feel like a hell yes. So I think that it’s everyone needs a different message. I think people who are overworking up here need to hear the hell yes or no thing. So

 

Erwin  

we’ve covered a lot of real estate porn, as I call it. Because the one thing you want listeners to understand is that the deals that you did, especially like the last one you wouldn’t have done without your reputation. By fair,

 

Kellan  

right, right. Yeah, I think confidence in my ability is a big one. And then cash on hand refund money on here. Yeah, exactly. I mean, when you have a decent sized portfolio, at some point, momentum gets built in, you know, if you have, you know, 10 buildings, you know, you refinance property number 10, you go back to property number one, and then property number two, like there’s always some availability of equity that you can take and put toward the next deal. So, once you’ve kind of got that portfolio momentum built in,

 

Erwin  

so I want to talk to the new investor. So you mentioned that you mentor, you may have a mentor investors one on one. So what do you tell a new investor today?

 

Kellan  

Yeah, so what I always focus on is people forcing appreciation, because it’s the only thing we have control over. So, you know, the goal for many years was build a high cash flow portfolio, which is very difficult to do with current interest rates in a city that, that I feel comfortable in long term, right? There’s plenty of like little towns or whatever you can invest in might have high cash flow, but I personally don’t have any interest in owning 100 units in some random town, you know. So I think right now the sweet spot for new investors is going to be first off, one of the best ways to structure your first deal is with 5% down and using a purchase less improvements mortgage, it allows you to get a building that might need some work, but still get it with only 5% down and still have an also get the renovation money put into that. And then house hack. So yeah, say a duplex with 5% down Purchase Plus Improvements, I think is the best way to start. It also means that the deal doesn’t have to be quite as good because you’re able to utilise some some leverage and get a get a quality building and just break the ice.

 

Erwin  

Also, these people can’t buy a nightmare like you’ve been buying. Exactly. will not touch it.

 

Kellan  

Know Exactly, exactly. I think the next deals need to be significant value add though. So at that point, ideally, something with some degree of predictability. So hopefully a unit or two is vacant, or at least seems like the tenants might be willing to accept Cash for Keys some kind of predictability and very clear ability to add value and a reasonable conservative ARV, so that if you’re able to refinance, you don’t have to leave too much money in the deal. But I think that people need to realise if you’re doing it without partners, you don’t need to scale as fast. You can do half the number of deals. So if that’s one property You’re great, you know, over the next five, seven years, you buy five, seven properties, you’re doing just fine, you know, and each of those a duplex or triplex, you know, meanwhile, you’re for the first while you’re living quite frugally, and trying to save as much as you can put all that money into reinvesting in your portfolio. You know, you don’t have to be frugal forever. But I think frugality in the early stages is really important because every dollar matters so much more. That’s when you’re starting to compound, the compounding. So the more you start with, the larger the compounding effect is in the long run. So those early stages of people’s investing journey, live frugally house hack, first one 5%, down Purchase Plus Improvements, and then the ones after that good value add properties, you know, in a decent town with a decent population that you feel good about owning property for over the long run, and an exit strategy if needed. So ideally, try to buy under market value so that if you need to sell it, you can

 

Erwin  

do this. Alright, cool. Can I know we started late, it’s my fault. No, no worries. Thank you so much for your time. If you want to come in next time, we can deftly do it in person, because I’m sure would like to say hi and shoot a YouTube with you.

 

Kellan  

I’d be happy to anytime that sounds great. Oh,

 

Erwin  

we haven’t mentioned on the show yet. You are currently doing a group coaching programme for eight weeks,

 

Kellan  

is it? Yeah, I’m doing like an eight week group coaching mastermind. So it starts on May 30 2023. And every Tuesday night at 7pm for a couple of hours. It’s all me, like, you know, I’m gonna have some outside speakers, but it’s gonna be myself hosting it, walking through all of the all of the steps for you know, not just basics of burning, there’s going to be like beginner, intermediate and some advanced stuff, you know, scaling your portfolio, strategic renovations, creative financing all of that stuff. So, yeah, eight weeks, it’s on my website, Kellan james.ca. And that’s where I also do one on one mentorship, one on one mentorship, I have to value my time. So it’s quite expensive. It’s mostly for intermediate to advanced investors who are looking to scale their portfolio and optimise it, it’s a lot easier to help people in that space, right? It’s when someone’s got a few properties under their belt, you can have one call with them and save them 10 grand easily if you’re just like, oh, I work with this lender or use this, use this structure instead or whatever. So you can really provide good value to people who have portfolios to work with. So

 

Erwin  

yeah, yeah, I was talking to a novice investor who’s trying to do a triplex conversion. Yeah, he’s gonna do a walkthrough of the contractor. I’m like, why don’t you just check with the designer first effect property can be turned into a triplex? Yeah. waste your time, your time, the contractors time.

 

Kellan  

Yep, exactly. And then maybe that saves them a couple of weeks of their time, and they can put that towards some kind of better use

 

Erwin  

respect to the contractor. Exactly. Because I wasted all these hours, my time for a project that can’t be done. Yeah.

 

Kellan  

No, I mean, like, we’ve learned so many of these lessons over the years that it’s so easy to just be like, here’s what you should do, you know, here’s the best use of your time right now. And oh, you’re looking to make that decision, that’s a good one, or that’s not a good decision, I’m going to suggest you not do that. And instead, go do this, you know, and if you compound that over, like my mentorship, six months, and then there’s extensions from there, so like, if you compound that over 612 plus months, like you get some serious results with with the right guidance, but you need an unbiased third party, right? There’s very few people out there that you can get advice from that’s going to be unbiased. But that’s the whole point what to do is to just, like, look at people’s situations and go what is the best thing you can work on right now? And and have it so that they never have any questions? Because that’s, that’s exactly what I wanted when I was investing in early days is, you know, oh, I’d rather than ruminate and sit on wonder about this question for the next two weeks. I could just ask someone, they can answer it, and I can move on, you know, get a lot more done. Things move a lot faster.

 

Erwin  

That’s the unbiased the qualified opinions as well. I have a friend with a bit of a nightmare situation. They bought a property that has a ground floor, commercial space triplex for commercial. Right. So the product was reviewed. The mistake they made was that no one knew the area that well. So in fact, when the proper vacancy rate, yeah, that came across my desk, I would have said, automatic is gonna be 50% vacancy rate. Yep, exactly. Right. And that would have killed the deal.

 

Kellan  

Yeah, exactly. I always for mixed use, I generally say that the residential portion of building needs to support the building and the commercial can be vacant 100% of the time, and still, it still works. And that that works. You know, maybe that’s overly conservative but and that’s probably what stopped me from buying any mixed use properties.

 

Erwin  

If I showed you the property you don’t need to completely agree you probably tell me just 80% vacancy rate

 

Kellan  

Yeah, I’m not not a huge fan of mixed use although I know investors that do quite well. My one of my good friends John, Kepler has quite a bit of mixed use stuff. No one’s down so it can be done well or should

 

Erwin  

be done. Tell me where the area got into high demand area. If it isn’t.

 

Kellan  

Yeah, exactly. Yeah. Maybe like a plaza where you can get some chiropractors in there with recurring revenue and that sort of stuff. Yeah.

 

Erwin  

Yeah. My family’s telling and then you have social medias as well world.

 

Kellan  

Yeah, Instagram Kellen James and my website talent jas.ca Fabulous.

 

Erwin  

And any any final words weren’t a bit of a tricky market right now. Any any final words for anyone that’s listening?

 

Kellan  

Well, people need to people need to be honest about how it’s harder to invest in the market right now. You know, you don’t want to be listening to people who are saying it’s, you know, it’s, it’s just the same, it’s all the same. Just Just keep buying and whatever. You know, it’s not about the rah rah mentality. It’s make sure that you’re buying solid deals, make sure you’re forcing appreciation. Make sure you have exit strategies. Don’t get crazy over leveraged. These are some good lessons to learn how you know when debts cheap, take on more debt and when debts expenses, maybe pay off some of that debt. It’s it sounds like common sense, but you’d be surprised how rare that is.

 

Erwin  

Yeah. common sensical with a window when there’s dollar signs. People

 

Kellan  

Yes, yeah, and the wrong India exactly the wrong incentives, getting advice to people with the wrong incentives.

 

Erwin  

Tom, thanks so much for doing this.

 

Kellan  

No problem everyone thank you

 

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. 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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Website: https://www.kellanjames.ca/

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UPCOMING EVENTS

You are the average of the five people you spend the most time with! Build connections with empire builders and trailblazers at our iWIN events.
 
CLICK HERE to check out what’s coming up next.

 

BEFORE YOU GO…

If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.

It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.

If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success. 

New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.

We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best.  In 2018, we again won the same award by the Real Estate Investment Network.

Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics.  The intersection of the two, talent and ethics is limited to a handful in each city or town.

Only work with the best is what my father always taught me.  If you’re interested, drop us an email at iwin@infinitywealth.ca.

I hope to meet you at one of our meetups soon.

Again that’s iwin@infinitywealth.ca

Sponsored by:

Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.

Just imagine what winning in real estate could do for you.

If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at iwin@infinitywealth.ca.

Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.

Till next time, just do it because I believe in you.

Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

W: erwinszeto.com
FB: https://www.facebook.com/erwin.szeto
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When Private Loans Go Bad & Bailing Them Out. Lessons from Managing $150 Million In a Downturn With Kyle Ford

Welcome to the Truth About Real Estate Show!

Thank you to all the kind listeners who leave five-star reviews on any platform, and shout out to all those listening on Spotify! 

I’m just returning from a retreat with my mastermind group and Entrepreneurs Organization’s conference in lovely Victoria, BC, where I met several successful, big-time real estate investors. 

Some do mid-sized development projects like removing the roof to add two units on top and digging and underpinning the basement to add two units to a fourplex to make it an eight-plex.

Another developer had hundreds of acres in the Niagara region, selling off pieces to builders.

Another builder, a developer from Mexico, does mid-rise mixed-use residential and assembles land for infill developments in Vancouver.

Another investor flipped hotels, bought them distressed from a bank in the US, turned them around and later sold them off. All big brand hotels you’ve used before.

One thing I really enjoy about connecting with investors from the Entrepreneurs Organization is how honest people are about the challenges they experience. That and there is a no-solicitation rule. 

Folks can do business together, but one party to a conversation must invite the other to pitch. Also, members must meet certain financial milestones signed off by their Accountant.

It’s not like those weekend workshops where a complete stranger asked me if I was interested in investing in their development project, their 2nd ever. 

I asked Demian, the Mexican Vancouver developer if he’d be a guest on this podcast. 

Naturally, he asks which podcast. He’s obviously not one of our 17 listeners. So I tell him it’s the Truth About Real Estate Investing Show for Canadians and Demian searches for us on Spotify.

To my pleasant surprise, our rating on Spotify is 4.9/5, with 49 reviews! 

All of a sudden, I’m feeling very confident, and Demian is honoured to be a future guest on this show!

So thank you to all who have left 5-star reviews on Apple Podcasts and Spotify. It does help me book excellent guests for this show so we may all continue to improve our collective skill at being world-class investors. 

We will learn from their mistakes, best practices, and what makes them tick.

Learning from successful doers is one of my favourite forms of leverage, and who knows what this recession will bring? 

From talking to big-time ballers, e.g. folks who’ve made over $10M in real estate. They’ve got their eyes open for opportunities and those who are leveraged. 

Well, these times are no fun. 

That’s just the real estate stuff, and there sure are many successful people in real estate investing, which should come as no surprise. 

Note this was an entrepreneur’s conference, so there were many expert speakers, including the founder of 1-800 Got Junk, who does over $700M US in revenues or the founder of Hootsuite sharing his story and what he’s doing with his venture capital fund, writing cheques and mentoring young Canadian tech entrepreneurs.

The most mind-blowing speaker is an AI expert who went viral as he was able to hack into his bank account in 5mins using an AI tool to fake his own voice to beat the voice recognition protocol. 

The CEO of the bank called Nicholas shortly after, asking for advice.  

I’ll also be inviting Nicholas onto the show and may mention how many wonderful listeners have given this show a 5-star review.  

AI in a real estate context is Nicholas showed us an awe-inspiring web page he designed for a real estate developer.  The content meaning the images and text took him 15 mins to create using a number of AI tools. 

This business model will dominate going forward; who can create a replicable business model using AI to save time and money.  

Whoever is successful will put the slower, more expensive companies out of business, so you better believe I’m looking at all our businesses, including property management, on how to implement AI better.

Personally, I’m always afraid of the future, which leads me to research and take action.  

Real estate investing makes a ton of sense to build wealth; it’s less hard to do than most ventures, and it’s the right solution for most Canadians, most of the time if done correctly.

Speaking of being afraid of the future, I’m always worried about my kids, particularly being bullied. 

From my experience, being bullied was not enjoyable; it really hurt my confidence and self-esteem growing up, and I wouldn’t wish it on anyone.  

Hence I’m hacking my kids’ self-defence but having them train the most efficient self-defence, Brazillian Jiu Jitsu. 

My kids are finally promoted from white belts to grey/white belts thanks to the delays caused by the pandemic, and I couldn’t have been more proud.

My son being only 7, shares just about everything with his classmates. He has no filter, including that time I tore the back of my shorts trying to do a bum drop on the trampoline in front of my kids and family friends. 

Thankfully I was wearing underwear…

My son even shared with the class bully who takes Karate that he’s in Brazilian Jiu Jitsu.  The bully’s response? He has no interest in messing with my son. Mission accomplished. Proud dad moment, check!

Speaking of mission accomplished, the Bank of Canada raised rates again by 0.25% to further slow the economy and real estate market. Just like they were slow to respond to all the government’s pandemic money flooding our economy, with inflation rates over 4% in 2021, the Bank of Canada looks to be overshooting on rates as we are now at 4.75% while inflation the last two months were below at 4.3 and 4.4%.

To me, it is what it is. The housing market’s recovery has been too fast. Some of my rich friends are having trouble accepting their offers in Toronto in the 2.8 to low 3 million dollar range.

The elevated rates should slow the recovery as financing gets more expensive, which means more tenants for us existing landlords. Not that we need any with the hundreds of thousands of international students coming each year. 

If you bought smart in a college or university town like we always do, you’re laughing.  

Speaking of buying smart, I would typically promote our iWIN Mastermind tour to Hamilton this June 24th, but it’s already sold out.  Stay tuned for next time! 

But our next virtual, online iWIN Meeting is Tuesday, June 25th, at 7:30 pm, where we will be sharing the highest and best use real estate investments for the beginner investor/developer to maximize returns while helping society: creating more homes and density.

Keep an eye out for the invite in our email newsletter. If you’re not on it, you’re welcome to join the over 10,000 hard-working Canadians already on it.  

Go to www.truthaboutrealestateinvesting.ca, enter your name and email address on the right, and you are all set!

When Private Loans Go Bad & Bailing Them Out. Lessons from Managing $150 Million In a Downturn With Kyle Ford

On to this week’s show!

You know about the downturn we just experienced, and like many of you, I was curious how private mortgage companies fared, so I reached out to Kyle Ford, whose company manages $150 in private mortgages.

Kyle tells it like it is; he shares how many mortgages went sideways, what the lessons were, how Kyle and his staff put time and money into taking over failed BRRRs and flips to finish projects and sell them off and make his clients whole.

Why? Because it’s the right thing to do. 

Treat other people’s money better than you treat your own. 

If you won’t invest your money into your project and can’t pay people back when deals go bad, don’t use other people’s money. 

If you don’t believe me, ask bankrupt investors how much those other people who invested in them hate them and want their money back.

Debt is the cheapest; like first mortgages, and VTBs, you don’t give up control; hence that should be one’s first option.

Back to Kyle’s interview, we journey back to when he was an alternative financing borrower investing in value-add real estate as his deals needed short-term money, taking courses on investing, including buying, renovating, renting out, and financing.  

Then the 2017 mortgage stress test happened, and Kyle had limited financing options but needed mortgage money.

As the saying goes, necessity is the mother of all invention. Kyle found other sources of private capital and started brokering his own deals, yada yada; Kyle will explain he now manages his fund with 150 million dollars under management.

As mentioned, it’s never all sunshine and rainbows; some borrowers went sideways, and Kyle shares how those deals went so we may all learn from Kyle’s lessons in a downturn.

Kyle also has a contrarian opinion of promissory notes, so you don’t want to miss this episode about the truth about being a private lender.

As we cover securitized investments, here comes the disclaimer I used AI to write and a separate AI tool to voice all for free.  It saves you all from hearing me stumble and mumble 🙂 

Please enjoy the show!

 

Disclaimer:

The information and opinions expressed in this podcast are solely for educational and informational purposes and should not be considered as investment advice. The hosts and guests of this podcast are not licensed financial advisors, brokers, or registered investment advisors, and their comments should not be construed as recommendations or endorsements of any specific investment, security, or strategy.

Investing involves risks, including the possible loss of principal. Before making any investment decision, you should conduct your own research and consult with a licensed financial advisor to determine the suitability of any investment for your specific financial situation and investment goals.

The hosts and guests of this podcast make no representations or warranties as to the accuracy, completeness, or timeliness of any information discussed in this podcast. The podcast is not responsible for any errors or omissions, or for the results obtained from the use of this information.

Listeners are advised to use their own judgement and seek the advice of professionals before acting on any information provided in this podcast. The podcast shall not be liable for any damages, including but not limited to direct, indirect, special, or consequential damages arising out of or related to the use, inability to use, or reliance on any information provided in this podcast.

 

This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class.  We will be back in person once legally allowed to do so, but for now, we are 100% virtual.

No need for you to reinvent the wheel; we have our system down pat. Again that’s  www.infinitywealth.ca/events and register for the FREE Online Training Class.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

 

Erwin  

Private loans go bad and bailing them out lessons for managing 150 million in a downturn with California that before we get to that Welcome to the truth better real estate investing show. Thank you too all the time listeners who leave five star reviews on any platform and shut up to all those listening on Spotify, emitting five star reviews, I’m just returning from a retreat with my mastermind group and entrepreneurs organisation conference in the lovely Victoria BC where I met several successful victim entrepreneur foreigners, including real estate investors. Some of them do midsize development projects, like for example of starting with a four Plex, and then they tear off the roof, and they add two more units on top and they dig and underpin the basement to add two more units to the basement. So they took what was a four Plex and made it an EIGHT Plex. So basically they’re gonna double the rent. They’re probably gonna do more than that though, another developer owned hundreds of acres in the Niagara region. And then they’ve since sold that off in pieces to builders. Another builder I met is happens to be from Mexico building develops in both Mexico and in Vancouver. He does midsize use large, not large but a mid size residential with commercial on the ground level in the symbols land. For example, he he shared how he bought a couple houses next to each other in Vancouver, which is going to develop another investor I met flipped hotels way back when he bought them distressed from a bank during a recession, paying very little pennies on the dollar. And then later turned them around and sold them off. And these were big brand hotels at the end product was a big brand new hotel that you’ve likely heard of before, likely stayed in before. One thing I really enjoy about being part of these events and entrepreneurs organisation is connecting with entrepreneurs and investors. And what’s great about them is is how honest they are we actually go to have to go through extensive training to belong to this group, which involves being vulnerable and speaking from experience. And yeah, we don’t small talk much. Instead, we go pretty quick. And because we’re all we all have many things in common, we cut most of the bullshit. And again, we go straight to the truth pretty often pretty quickly, which is what I enjoy. I enjoy learning and I enjoy hearing the truth. Also, there’s no solicitation rule and the network folks can’t do business together. But one party to a conversation must invite the other person to pitch there is no unsolicited pitching possible and members must meet a certain financial milestones and have be signed off by one’s accountant. So again, everyone at least has achieved a certain level of success to be part of the membership. It’s not like those weekends. You know, I’ve been to like those weekend real estate whatever’s and just the last one I was at as last by complete stranger. I was interested in investing in their development project, their second ever development project. Yeah.

 

Erwin  

Damian, I was originally from Mexico. He’s, again, he’s the Mexican Vancouver developer asked me if you would be a guest on this podcast. Naturally, he asked what podcast he’s obviously not one of our 17 listeners, like the vast majority of Canadians. So I tell him what’s called the truth about real estate investing show for Canadians. Damian then proceeds, he whips out his phone. And he asks, Are you on Spotify? So yeah, we’re on all major platforms. And I told the name of the show, we typed in the search. And to my pleasant surprise already on Spotify is 4.9 4.9 out of five with 49 Reviews. So there’s not nearly as many reviews compared to Apple podcasts. But the rating is higher. So all of a sudden, I’m feeling very confident in that Damien is honoured to be a featured guest of the show. So yeah, for all you listeners, I know we do have a lot of Ontario guests I know. And but you know, sit tight, we do have some folks coming from the west coast shortly. So thank you to all who have left a five star review on either Apple podcasts on Spotify, or wherever our platform releases on. It does help me book excellent guests of the show, you know, the more listeners we have, the more five star reviews we have, again, that helps me attract high quality talented people. And then by having better guests on the show that helps us improve that we all improve as a collective, and learning from how world class investors we will learn from their mistakes, their best practices, and what makes them tick. So that you make take it away, you may leverage the experience of others in order to bring you better success in your own business. And because who knows what the recession will bring. From talking to the big time ballers again, in the real estate side, I met several people who have made well over 2 million in real estate. So again, they’ve made over 10 million, write their own 10 million they made over 10 million. They got their eyes open for opportunities. No one really knows where things are going. But everyone’s got their these guys who are doing quite well for themselves. They get their eyes open and those who are leveraged. Well, those folks are not having any for sort of fun, but that’s just real estate stuff. There were other successful people outside of real estate investing. But before I get there, there should be no surprise. A lot of successful real estate entrepreneurs out there. That should come as no surprise but this wasn’t an entrepreneurs conference. So there are many other experts speaking including the owner of 100 got junk. I think I’m sure many of you have seen their trucks going around. I believe they are the largest junk removal company, at least in North America maybe the world, they do over $700 million in US revenues, some 100 million US and revenues a year. So he had some stories and lessons to share. I shared the sign an NDA. Before that speech, free speech was given after the we had the founder of HootSuite sharing his story, and what he’s doing with this venture capital fund. He’s ready $100,000 checks and mentoring young Canadian tech entrepreneurs. So very fascinating stuff. There’s many ways to make money, both morally and ethically. Well, yeah, again. So there was this mind blowing expert. My mind was mostly blown by the AI expert. This gentleman went viral as he was able to hack into his own bank account in five minutes using an AI tool to fake his own voice to beat the voice recognition protocol on his bank account, the CEO of the bank, called Nicholas has named the speakers named Nicholas, the CEO of that big column shortly after asking for advice. I’ll be inviting Nicholas onto the show. And I mentioned that we have many wonderful listeners who have given the show a five star review AI in the real estate context. However, Nicholas has shared how he designed and delivered a website, a very, very impressive website for real estate developers purposes. So it’s a gorgeous looking building, I think it might be Mason as a custom home builder. But anyways, the content so everything that went on the page, he said, It took him about 15 minutes to create using a number of AI tools. So he shared that this business model will dominate going forward, who can create a replicatable business model using AI to save time and money? The analogy he used this there is no staples, easy button, a human being will still need to put it all together and assemble it and review it for accuracy and quality. And whoever successful at this model will put the slower more expensive companies out of business. So you better believe me? I’m looking into all areas of our business, including property management, on how to better implement AI, then I’ll have I’ll do some later in the show. Actually. Personally, I’m always afraid of the future, which leads me to research and take action. Real Estate Investing makes a tonne of sense to build wealth. It’s it’s less difficult to do the most than most ventures, and it’s honestly the right solution for most Canadians most of the time, if done correctly. Speaking of being afraid of the future, I’m always worried about my kids. I am a hyper overprotective parent in particular, them being bullied from my experience of being bullied was not enjoyable at all. It really hurt my confidence growing up and self esteem and I wouldn’t wish it upon anyone. Hence I’m hacking my kids self defence by having them trained the most effective, efficient self defence martial art, which is Brazilian jujitsu. My kids got just last week, we’re finally promoted from wealthy white belt to grey slash white belt. I can’t expand on the belt system. But anyways, they got promoted, the delays were caused by the pandemic. And that wasn’t any fun, and I honestly couldn’t be more proud. My son being only seven. He shares almost everything to his classmates. He really has no filter, the happily shares a story of that time I tore the back of my shorts while trying to do what’s called a bomb drop on a trampoline in front of my kids and my family friends. Thankfully, I was wearing underwear my son even shared to the class bully. The class bully happens to take karate, and my son he takes Brazilian Jiu Jitsu, the bullies response, he has no interest in messing with my son. Mission accomplished proud dad moment check. Speaking a mission accomplished the head of the Bank of Canada raise rates again by point two 5% to further slow the economy and the real estate market just like they were slow to respond to all the government pandemic money flooding into the economy. inflation rates were well over 4% in 2021 debate, it looks to be overshooting on rates now, as we’re now at an overnight rate of 4.75%. While inflation over the last two months were 4.3 and 4.4. So yeah, we’ll see where things go. My prediction is inflation rates slow. So again, who knows what the candidate is gonna do. But to me, it is what it is I can control what the government does. I just read and react. The way I see things is the housing markets recovery. It’s been too fast in my opinion. After the downturn, the downturn went pretty quickly in terms of how aggressively it fell. And in my opinion, the recovery has been very aggressive and fast. And some of my rich friends out there, they’re having trouble getting their offers accepted in Toronto, and they’re they’re offering you know, hundreds of 1000s of dollars over asking, but yeah, these elevator rates should still the recovery as financing gets more expensive, which means more tenants for us existing landlords. Not that we need that much more help considering the hundreds of 1000s of international students coming each year. If you bought smart in a college or university town, just like our clients always do. Well. You’re laughing. Speaking of buying smart normally I wouldn’t be promoting one of our I would mastermind tours in Hamilton, which is coming up June 24. But it’s already sold out. So stay tuned for next time. Our next event is online, virtual and online. Via zoom. The iWin meeting is Tuesday, June 25. At 7:30pm. We will be sharing the highest and best use real estate investments for the beginner investor slash developer to maximise returns while helping society at the same time. Yes, you can make a great return and Do good for society, which includes creating more homes and density. Now, onto this week’s show, you know about the downturn, we just experienced, and like many of you has curious how the private mortgage companies fared. So I reached out to California whose company manages 150 million in private mortgages. That’s right. 150 million assets under management that they lend out to for alternative use. They’re not like a bank. Like the like the big banks. They are small 100 We’re dealing small compared to the big banks. It’s not small to me, though. Cow tells it like it is he shares how many mortgages went sideways during the downturn, what lessons we’re how Kyle and his staff put up time and money into taking over failed burr projects and flips, major renovation projects to finish projects and sell them off in order to make his clients whole. Why? Because it’s the right thing to do. Treat other people’s money better than you treat your own. If you want, invest your own money into your project, and you can pay people back when deals go bad, then don’t use other people’s money. If you don’t believe me, ask bankrupt investors, how they, you know, we’ve had bigger investors on the show, ask them how much other people hate their guts, people’s money, who they lost, and we can’t pay them back. So instead of using other people use debt pipelines, and I all use the deadly first mortgages, largely first mortgages and home equity lines. It’s cheap, and you don’t have to give up control the project. You don’t have to give up any equity in the project. And it should be everyone’s first option. If those things aren’t, were never available to you. I think you need to question let me move question. I think your priority is go make more money in your day job first, back to Carl’s interview, we journey back to when he was an alternative financing borrower because Carl was a was he was taking courses he’s doing value add projects, so he was buying, doing major renovations renting them out and then getting new mortgages. So he needed short term money to do those those sorts of projects. And then came 2017 When the more distressed has happened and Carl had limited financing options, but he needed mortgage money short term mortgage money in order to continue funding his value add real estate investment strategy in business as the saying goes necessity is the mother of all invention. Kyle found other sources of private capital then he started brokering his own deals. He comes from a financial planner background as well yada yada yada, I’ll I’ll explain. He now manages a fund. How’s that for yada yada? Chuck is going from a duplex triplex investor to managing $150 million fund in Cal limits just like we do on this show. It’s never all sunshine and rainbows as mentioned some borrowers of his went sideways and Cal shares how those deals went PostScript and how what happened when he had to take them over and also his lessons from the downturn. Child also has contrarian opinion of promissory notes as well. So you do not want to miss this episode about the truth about being a private lender. Now, as we are covering secured as investment here comes to the disclaimer. And I mentioned I looked at for you how to use AI more and more. So I used AI to write to write the disclaimer that’s coming up in a separate AI tool to voice the disclaimer and it’s did it all for free. So this also saves you all from having to hear me stumbling mumble. To reach out to Kyle and company website is cap gap and ft.com Again, it’s cap gap mft.com And his email is info at Kyle for mortgages.com. All of its in the show notes please enjoy the show.

 

AI  

Disclaimer. The Information and opinions expressed in this podcast are solely for educational and informational purposes and should not be considered as investment advice. The hosts and guests of this podcast are not licenced financial advisors brokers or registered investment advisors. And their comments should not be construed as recommendations or endorsements of any specific investment, security or strategy. investing involves risks, including the possible loss of principal. Before making any investment decision. You should conduct your own research and consult with a licenced financial advisor to determine the suitability of any investment for your specific financial situation and investment goals. The hosts and guests of this podcast make no representations or warranties as to the accuracy, completeness or timeliness of any information discussed in this podcast. The podcast is not responsible for any errors or omissions or for the results obtained from the use of this information. listeners are advised to use their own judgement and seek the advice of professionals before acting on any information provided in this podcast. The podcast shall not be liable for any damages, including but not limited to direct, indirect, special or consequential damages arising out of or related to the use or inability to use or reliance on any information provided in this podcast.

 

Erwin  

Hi, Kyle, what’s keeping you busy these days?

 

Kyle  

They are doing well keep him busy with real estate, the mortgage business, the new private mortgage fund and everything else. Family Friends, all that good stuff as well. So

 

Erwin  

I imagine you’re pretty busy like you do I have a good number of clients and a sizable team and you’re just starting new fund, which is probably a lot of money in it.

 

Kyle  

Yeah, it’s double digit number of corporations that I’m managing and operating right now. It’s all real estate base. But yeah, I feel like I’m pulled in a few directions. One of my goals in the new year is I’m trying to get a little more focused. Try not to, as you grow your real estate portfolio, some people, including myself, can be guilty of the shiny object syndrome. And I’ve heard that a little bit over the years pursuing different types of investments, but really trying to get focus. Now,

 

Erwin  

that’s actually an interesting point. Because like you’re at a scale that you’re quite large, and you push a weight around, including like, pretty large scale developments to how are you choosing to focus then going forward? You have lots of opportunity to look at the you know,

 

Kyle  

yeah, so you know, the personal stress is a big part of my new performance. What is this deal? What is my responsibility in the deal? What is my partner’s responsibility in the deal? How much investor capital do we have in the deal, and what’s the ultimate stress level that’s going to be put on the personal and the partnership in order to execute it, that’s a big factor that isn’t a normal line in a lot of people’s performance, but something that I take very seriously now. So we’ve done everything from small singles, triplexes, large, multi, large development, we’re definitely more focused on development deals, larger multifamily, and private lending. So those are kind of the three tiers. We are in the hospitality space with cottages and a hotel, and we’re gonna keep running with the hotel. But the cottage business is been great to us. I love it, we had over a dozen at our peak, but we’re definitely trying to lower that a little bit, just a handful of a couple of nice cottages that we liked, but not really trying to grow that business anymore.

 

Erwin  

So Kyle, when someone asks you to tell him about your business story. So for example, apartment building investors, real estate investors, they often talk about how many doors or may have properties they have. What do you tell people?

 

Kyle  

So a couple things. So first of all, I don’t talk in doors, I talk in AUM assets under management. So like between my private lending portfolio, the properties that I own, the properties I invest in, in terms of AUM, I’m well above 150 million in terms of assets under management. So that’s really the the language that I use, I stopped chasing doors a long time ago, when I do a deal. I’m more concerned about the lift, what am I buying it for? What am I spending on it? And what’s it worth when I’m done, I’m blessed to have a successful business that generates me lots of income. So I don’t need the cash flow from my properties to support my lifestyle. I’m not saying I don’t buy cash flow properties, because that’s, that’s still important. But I don’t actually need that money coming off the properties to support my lifestyle.

 

Erwin  

Right. So when then what do you do with the money within within the properties to continually

 

Kyle  

reinvest the cash flows coming in on those properties, reinvesting and buying more larger deals? Those type of things? Right, right. Right. Now, one of the things that I’m doing in my portfolio, when I talk about getting focused, is I’m selling a lot of the small stuff to allocate more towards my fun, which is private lending. So looking to get a little bit more passive. I’ve been in the grind for 10 plus years. And so it’s nice to try to direct a little bit of cash towards passive investments, we’ll get to

 

Erwin  

the fun in just a moment. But I want to say thank you for sharing that. That is your investment strategy in the apartment building space, because it always concerns me, I see a lot of marketing out there on like, current building multifamily about being a means to retire. Like to me, that means you only see a steady cash flow to retire. But you’re saying you’re reinvesting it all in versus like I fear for the novice that gets into it, if novice will often overpay, because that’s just the position they’re in, they don’t have those relationships to get a deal to come to them. And then the cash flow would not be sufficient to for them if they quit their job.

 

Kyle  

I see it all the time. And we use that novice example of they’re trying to find a money partner, and they’re gonna be like, the property is gonna cash for X amount every month. Yeah, but can we really take that out of the account? Can we really leave? I know, we have a repair maintenance budget, and we have vacancy budgeted and all those things. But can we really take that couple $1,000 a month out of the account and spend it in a lot of the deals that I’m looking at and I’m analysing the answer is no, that money needs to stay in that account unless both partners are prepared for cash calls later. But if we’re taking the money out to put it back in later, what’s the point? Right, yeah,

 

Erwin  

yeah. And then you see deals from both from your mortgage business and from your own whatever crosses your desk for your own portfolio, right? That’s right. So you see a lot. deal flow is not an issue. Right, right. Because your clients are bringing you deals as well to evaluate for them for financing purposes, right?

 

Kyle  

That’s right. Oftentimes asking if I know anyone who wants to put partners who are interested, we don’t broker partnerships. We broker private money, but people are often looking for partners looking around the deal by the coming to me saying how is this going to be Find out so I can project a performance to a partner, those type of questions.

 

Erwin  

So let’s talk about say someone brings you a deal and needs money. You said that you broker private money. What if you need a first mortgage on an apartment building? That’s not?

 

Kyle  

Yeah, of course. So we’re a full service mortgage team or brokerage. So we deal with the big banks, the big lenders, alternative credit unions mix, the entire spectrum of lenders, we deal with in other private so institutional privates, like mechs, we also have our own private money, we have our own fund money. So it’s based on what the client needs the best interest of the client, we can run them through the run them through the spectrum. What we’re seeing a lot now and this is I’ve been seeing this for a while, is a lot of the purchases aren’t being done with the eight rate lenders, they’re being done with an alternative lender to get in help stabilise the property. And then once the rents have been stabilised, utilities passed on, fixed up, etc, then the property’s more stabilised to go to a CMHC type lender to go to a big bank or credit union etc.

 

Erwin  

Interesting. What’s like the like the baseline for someone to go alternative versus a lender. Like, well, what point because I’m a novice to this area.

 

Kyle  

The biggest thing, the biggest thing that I see is, especially in today’s environment, with the higher interest rates, when they’re running an noi calculation, the amount of down payment required to go straight to a big bank right away on a multifamily type deal is pretty large. So and this is also going to go back to kind of the profile of who this person is and what they’re buying. If you’re buying a relatively turnkey apartment building. So maybe it’s not like top market rents and a beautiful condition, but the rents are decent, the income and expenses are okay. And you’re buying it on market, you’re probably looking at a 30 40% downpayment, just based on where the rates are today. That’s what we’re seeing on a on an average basis. Now, if you’re but what we specialise in is we finance a lot of the really dilapidated stuff. So buildings that are really low rents really rough condition are gonna go over a major overhaul,

 

Erwin  

right, evaluate strategy, the value

 

Kyle  

add strategy, so we’ll finance those at a higher loan to value because there’s going to be significant capital injected behind us. So those are the type of strategies we need more specialise in. But if you’re buying an A, the truth of the matter is, if you’re buying a a rate type deal and apartment building, that’s an eight rate deal, you’ve probably not got a great price on it, it’s probably been sold at a pretty fair market value. Most people who are going to sell a good building aren’t going to give it away. Most of the people who are giving selling an apartment building at a discount are because it’s in rough shape. So when you’re buying something at market rate, and you need traditional financing, it’s a pretty large down payment. So 30 40% Down payment that we’re seeing a lot, which is causing those borrowers to say, Hey, can I go with something a little bit more alternative to get into the deal, so I don’t have to put so much money down, it will impact my cash flow, but at least I have less money down upfront.

 

Erwin  

Because they need to preserve cash for the rent. Oh,

 

Kyle  

that’s right. So even though it’s good buildings that are in decent shape, there’s still some units that they want to try to turn over, there’s still certain things that they want to do so

 

Erwin  

right. So then in an alternative, I know that’s a broad topic, but then an alternative mortgage that alternative lenders situation, how much down does someone need them

 

Kyle  

alternative, so it really is gonna range they’re gonna consider an ROI, it can be as little as 20. Depending on the private deal we’re looking at, we fund private deals with as little as 15% down, that’s got to be a big value add though, we got to see a big lift on the property. But 20 25% in the alternative space, a lot of credit unions are still doing 25% Down 25 year rims. So the CMHC is the holy grail of this space. But the truth of the matter is a lot of deals aren’t actually going through a CMHC because it’s not quite working out the way it needs to to fit inside their box. So credit unions are picking up a lot of a lot of that slack. Right now. They’re doing a lot of 25 year AMS 25%, down a little bit higher rate, but gets you into those common sense type deals, and aren’t great cash flow to the gate, but it gets you into the property with a reasonable down payment and you can start doing improvements to management, expense reduction, turning over units when possible, getting rid of delinquent tenants, etc.

 

Erwin  

Fascinating and then much so bad and depends on the investor themselves on their ability to unbearable cities, their resume their background,

 

Kyle  

and that’s what I always call the investor profile. Is this a high net worth person just looking to park cash? Or is this a couple of who’s really trying to expedite their growth or a couple or an individual is really trying to expedite their growth and grow fast and use real estate as a means for retirement. So that high net worth Doctor Why are you just parking cash, they might not care. They’ll wait for the building to turn over that other profile might be looking for a more aggressive strategy to turn things over.

 

Erwin  

Right? Right, right. And imagine you met a lot of these hustlers. I’m sorry, I’ve worked on the word hustlers.

 

Kyle  

Yeah, I appreciate somebody with hustle. I appreciate with somebody who was willing to put their nose to the grindstone and get a deal done. Or I’m blessed to work on both sides of it, where I have, I have a lot of people who are willing to hustle and grow. And I have a lot of high net worth people who are just looking to park cash and deals. So it’s really been a blessing for me and growing my business. Right.

 

Erwin  

And then Colin, I want to talk about your private lending business. Can you start with where you started in the private lending business? And now where you are now? You’ve gone you’ve gone far?

 

Kyle  

Yeah, yeah, I’d love to. So I got my start. And I’ll tell you a little background. So some people might know me, some people may not. It’s 2023. Today, I started investing in 2013. So 10 years ago. Now, I feel like when I say I’ve been in the business for a decade, it makes me feel old. But I’ve been in the business for a decade. I started with my first couple of deals with pre construction condo, single family home, a triplex, and I came from the financial services space. So I was a financial advisor. So I was really into, you know, the cost savings and the the cost of the money. And for me, I started off with partners, so I partner with people, so we get a low cost mortgage. And in 2015, I went to a real estate education company, you know, an HGTV star from that is coming here town going to teach you about real estate. So I went to one of those and I learned a tonne. And I learned about the Burr and the flip to yourself strategies where you buy renovate, refinance, repeat. And I remember for the first three years after that, I would say all the time, I don’t know why anyone would do private money, just burn, just burn, just get your money back on. You don’t need private

 

Erwin  

parts of a lot cheaper back then though.

 

Kyle  

Well, 2018 happened in a hurry. And that was when the stress test came down the mortgage lending market tightened. And I still remember my first private deal the first time I’ve worked with private money, my lovely wife, and I Chelsea bought a property in 2017, right before the change, and she got the mortgage in her name. And we sold the property right into 2018. And we tried to port the mortgage and we had a new deal closing in a month. And they said no, sorry, miss you, you don’t qualify anymore. So we called her out. And we ended up finding our first private loan for a deal that we were going to do and we borrow that money

 

Erwin  

well from the subsidy.

 

Kyle  

And that’s when it kind of dawned on me, oh, maybe I can’t burr forever. And maybe I need to do something beyond the banks to accelerate. From there, a board a little bit more private money myself to fund my private, my own deals. And then about a year after that a lawyer that I work with still to this day, called me and said, Hey, Kyle, I know you have access to a lot of investors and stuff. Start telling people that you have access to private money. I said, Well, do I and who knows? Yeah, I have myself and my clients have a lot of capital. And we would love to finance the type of deals that we’ve been financing for you, your broker, your licence to talk about this stuff. Let people know that you have access to private money, we’re not guaranteeing anyone we’re financing their deal, just that we have access to him. Well, I would say that phone call pretty well changed my life, because I didn’t know any better. And I just started telling everybody. And what happens when you in this space start selling people that you have access to private money, and your phone rings, and it rings a lot. And we’ve been blessed to be able to develop over a relationship of a reputable private lender, we’re not the cheapest game in town. We’re not We’re not a discount private lender. But if I commit to a deal and say I can get it done I we get that deal done. So we’ve been a reliable source for a lot of investors to help grow and scale their portfolio. As I mentioned, I’m not the cheapest game in town. I’m not a discount private lender. We are a premium cost private lender. But when you need a deal done and you need a reliable lender you can count on and we commit to your deal. We’re gonna get that deal done. And the

 

Erwin  

industry has changed a lot because a friend of mine told me that privates are now have to be brokered, is that something that happened recently, last few years,

 

Kyle  

specifically with registered funds. So if you’re going to deal with the registered accounts, you have to have a broker and if you have more than five accounts, you need an administrator. So yeah, it’s absolutely it’s really best to have a broker involved. And I’m not, that’s not a broker bias. I will tell you, I deal with some of you in the real estate investor scene, if you will, the community of a lot of people that we see on social media doing with doing investing. I work with a lot of those people. And what a lot of them have discovered is our broker fee is 2%. We charge 2% to broker a deal. And what they realised is

 

Erwin  

just clarify, that’s the LEND amount of the total value of the property. My job as a realtor.

 

Kyle  

We’re like different 2% on a different amount. Exactly, yeah. So what a lot of these people found at first they they’re like, Well, it’s, you know, I could save that money if I raised some money myself. But what they realised quickly is if they don’t have to go through all the administration compliance, everything that we do to put the money together, they can focus on getting better deals, if they could do one or two more deals a year that make an X number of profit, paying me the 2%, to put the money together as a load off and actually more profitable for them. So as a newer investor, you have to learn how to raise money yourself, you have to be able to do it. But when you get to that pendulum of scale, it almost becomes less expensive to have a broker handle that side for you. And you just negotiate better deals. When you’re at the finish line of a deal negotiation. You’re like, I gotta get this 2% less, because I gotta cover paying Kyle on this deal. So that’s how a lot of the lookout,

 

Erwin  

I think many people need to understand like, how much stuff costs, like, for example, everything you need to do for your regulatory requirements. Yes, absolutely. We get to the fun and a bit, and you can tell me how much it costs you.

 

Kyle  

It’s a lot.

 

Erwin  

So this is awesome. So sorry, you mentioned that you’re working with a lawyer who had a tonne of money. Has the journey changed? Is that still the primary source of your capital? Your private money? Land? Yeah, no,

 

Kyle  

I like to call that my confidence was my confidence money. So it wasn’t out there. Just you know, I wasn’t full of it. Right? I was I was telling the truth, I did have access to private money. So it’s certainly a partner of mine and somebody that I still work a lot with to this day. But that also gave me the confidence to start talking to other private lenders, and start telling them that not only do I have other people who come to me to lend their money, but I now have borrowers coming to me because it got to the point where when I started telling everybody that that first layer couldn’t do all the deals anymore. So I saw that I call that my confidence conversation. That’s where I can put myself out there as a private lending broker. And not only did that attract a tonne of borrowers, it gave me the confidence to talk to other private lenders and say, hey, I can help you.

 

Erwin  

Okay, right. And you’ve raised a lot of money. You mentioned 150 assets under management, under 50 million, apparently is a lot of money out there. Is that your experience?

 

Kyle  

Yeah, there is. And you and I talked about this previously and one of the things that I’m really passionate about or it’s part of my core beliefs, there’s a lot of money out there, but there’s a lot of people that don’t respect the money and they treat OPM like a gimmick other people’s money yeah. Oh yeah. OPM, other people’s money like, Oh, I’m gonna get OPM, I’m gonna get OPM, they do big blurbs and videos, OPM, OPM, I don’t talk to people, I don’t talk to people about their OPM, I talk to people about their retirement account, about their children’s education fund, about their lifelong savings, about the equity that they’ve scraped together in their home. And when you start treating people like a gimmick, OPM, you’re going to struggle to raise money. But when you start treating people and their money and their hard earned savings with the respect it deserves, and bringing them secured lending opportunities, where they’re even owner in the property, or they have a registered mortgage position on title, you’re gonna find that the access to money expands very, very quickly, including referrals. People start telling, hey, I’m working with this guy, we lend your money. It’s a registered mortgage position. You know, this isn’t some fly by night operation. You’re lending your money as secured mortgage. Oh, really? What do you get a double digit return? Wow, tell me more. And they tell their friends and they tell their friends and high net worth people hanging out with high net worth people. And the high net worth communities. Talking about money is not a faux pas. It’s not bragging or boasting, it’s sharing and growing together. And so when you become a trusted source within those communities, your name travels fast.

 

Erwin  

So I’m naturally curious, who are your lenders have a high net worth individuals that are lending cash? Or are we even talking about like Mom and Pop who are lending like HELOC money?

 

Kyle  

Yeah, a little bit of everything, a little bit of everything. So certainly high net worth people with registered accounts. So RSP money TFSA money, definitely high net worth people into retirement. They paid off their house, they opened up a HELOC and they use that equity in their home to help service their retirement. And this isn’t a secret anymore. I give it I give it off pretty much every anytime somebody asked me about this, but I’ve got a great deal of capital from entrepreneurs who have holding companies and operating companies sitting on retained earnings. So maybe they own a manufacturing company. Maybe they’ll know windows and door companies. They’re our contractor. They were a plumber or a mechanic and they opened ran a business for years and retained a lot of money. In their corporations, they don’t know what to do with it. They don’t know what they can spend it on. And but people aren’t real estate investors, but they aren’t real estate investors. But they have invested in real estate, they have a shot that they own in some core area that’s worth a million bucks now and they paid 100 grand for it 20 years ago, the other house in the in the burbs that they paid 200 grand for, that’s worth 1.2 million. So they aren’t trained real estate investors, but they understand that real estate is a good investment, they made their money somewhere else, they don’t want to give you a landlord, and they’re sitting on these retained earnings. And that’s been a great source of capital for me, for those type of people who understand that real estate’s a good investment, their time is spent on their business, which is manufacturing or plastic park, but they want to put it into real estate without spending time or energy and private lending is a great spot for

 

Erwin  

them. Right? They want their net cash flow without putting the effort. That’s right. So Kyle, before we recording ends, we’re just gonna talk in general terms. So we’ve both done really well in real estate, a lot of people have done really well in real estate. Some people got it wrong, lost their shirts lost the other people’s money as well. So the loss of other people’s shirts, whereas private lending now and for example, before we were recording, I was gonna ask that I said someone’s gonna ask her opinion on promissory notes.

 

Kyle  

Yeah, so promissory note is a swear word to me, here’s, I’m gonna say about that. In terms of any type of scale business operations, promissory notes should not be part of that. Okay, so if you’re trying to be a serious real estate investor, and raise serious capital, and become an authority in the industry, and somebody that people can count on, as a place to invest in, and you’re doing promissory notes, I think there’s a shelf life on your business. Now, what I will say is, there can be a time and a place, if you have somebody you very much trust, and you have a long standing relationship. And there’s a small amount of money that you’re going to do for a very short term, 3060 days, clear exit strategy, and you really wanted to and you’re okay with doing that, I still would not condone that and think that’s a good investment. But that’s your call. But if you’re an investor, now, especially in today’s market, there was a time there a couple years ago, where the borrowers were almost calling the shots, there was almost more money than borrowers. So the borrowers were like, I don’t want to pay the legal fees to secure it. So the investors like, oh, I want to return, okay, I’ll do a promissory note. And it’s just crazy to me that people would spend more time researching their vacation than researching the security where they’re going to put hundreds of 1000s of dollars. So the answer is promissory notes. Don’t do them. It’s not a good investment for you, borrowers, your long term devaluing your brand. Lenders, you’re writing your money on a napkin, don’t do it. So secure your money, right, get a registered mortgage position, the way the market has changed recently. There’s a lot of demand for capital right now. Thanks, if lightened up mix and tightened up, the lenders have tightened up as a bond pa lender demand, demand, why not secure your money? Why not pay the lawyer to secure my money is my

 

Erwin  

money, it’s not that much money. That doesn’t cost much. It doesn’t cost?

 

Kyle  

And it’s funny, because I have people, some people will say to me, Hey, I saw that deal you just posted, Kyle. That’s a second word. I don’t know if I’m comfortable with that. And I would say didn’t you tell me you have $200,000 on a promissory note to somebody. I trust them. Okay, whether you trust them or not, register a second position charging charge the property. And I want to speak broadly about this. And this is specific about anything but in the event of a catastrophic failure of a company or business. The secured lenders get paid. First, the secured lenders can be released from the proceedings, and God the assets, take for them to deal with the unsecured lenders, sit and wait and wait for wires, professional fees, trustees, etc. All of these things, all of their fees come before your principal. And this is so important when everything’s rosy and happy and everything’s going well. And nobody thinks anything about a promissory note. But when crap hits the proverbial fan, the unsecured lenders are lucky to get pennies on the dollar. And that’s not an exaggeration are quote, pennies on the dollar. So secured lenders. However, if you’re a first position mortgage, what does that mean? You get paid first, you get paid first. If you’re a second position lender, after the first position lender, you get paid and you’re charged in that order. See You don’t have to wait for things to go through a big process. When the property is discharged, who’s in first they get paid first is their money leftover, you get paid second. So from a risk perspective, you want to be in first whenever possible. But if you have somebody you trusted, and you want to go along to them, say, Hey, I’m just gonna take your property with a second mortgage, just so I’m in line, just so there’s no question about where I am in line. If they say, Oh, well, can’t we just do it as an unsecured note? No, why is trying to flag that is a red flag. And why is it not important to you that my money is secured. And like I said, two years ago, there’s the market was in a weird spot where borrowers were calling the shots. If you’re a mon pa lender right now, and you got some money to put it into the market. This is my favourite line. And I’ve used this for years. It’s called the golden rule of lending. And the golden rule of lending is he or she, who has the gold makes the rules, they who have the gold, make the rules. So if you’re lending your money, and somebody says, I don’t want to do a promise, I want to do a promissory note. I want to pay legal fees. Thanks. Have a great day. Thank you in this market, secure money, get a registered position on property.

 

Erwin  

All right. I just wanna remind the listener, we had a lawyer on just like month or two ago, he’s a sole lawyer practice practice, and he’s working on 32 Power sales himself. So yeah, like, you can’t tell me it doesn’t hit the fan?

 

Kyle  

It does. It absolutely does. The people who are secured, but when shit hits the fan, the people who are secure, I’m not saying you’re not going to get have any stress in the scenario. But you’re going to be able to sleep at night. Your money is registered against something. There’s bricks and mortar tied to your money.

 

Erwin  

The reason why we invest in real estate, that’s why

 

Kyle  

your real estate, right, so if you’re unsecured, you’re not tied to anything. And I can assure you, you’re going to lose sleep at night.

 

Erwin  

That’s funny, like the promissory notes almost an analogy for fiat currency. When you’re out there hustling hard. Would you rather have something not secured by anything?

 

Kyle  

Yeah, I mean, I hear the odds are pretty good on blackjack and roulette. You know? And you laugh and everyone laughs when I say that. But that’s honestly what I believe when you’re doing a province or a no, go to the casino. Put it on block. Gamble. I don’t need either. I see all the time. I’m too financially literate to gamble. The odds don’t make sense. I can’t

 

Erwin  

I just don’t make sense. So Kyle, your name kept on coming up. So you can you can respond however you want. But your name kept coming up in the car like Thank you, Kyle, people are saying like, Thank God, Kyle should hit the fan. Thank God, Kyle was there to back it up. Can you elaborate on any any specific or general stories you want to share? Because shit does hit the fan, right? And then what?

 

Kyle  

In 2022, we were blessed to never have a default. Okay. In 2022, we had two different companies that went under, in total five properties. So three with one company and three with the other not going to get in any names or specifics or numbers or anything. But in my overall practice, we had five properties go into default over two companies. One of the value ads that I’ve always told my lenders is I’m an investor first. And if shit hits the fan, I will do whatever I can to, to help. And in these scenarios, the company’s the underlying companies that owned the properties that we lent money to went under. But the assets and the deals we lent on, were actually okay, like they were still decent deals. So the decision that I made along with my team, two agents on my team helped contributed some capital to me to help me get to recover these assets, we made the decision to buy all five properties from the power of sale process, we back paid our lenders the interest that they were owed for the months of the period, months of the power of sale period. So there was no loss, and they were out of the bankruptcy proceedings. And out of those five properties, it’s now this all happened in approximately September, we’re in April. Now, one of them has already sold, one of them is listed, and the other three are all being listed in the next two to six weeks. There’s some weather issues that we’ve been waiting on. For the exterior work to finish. In all five of those deals, all of my lenders will be receiving 100% of their capital back all interest, the only thing that they’ve had to do is had to stay in the deals a little bit longer than they want it to so I could get the construction done. But we were able to recover all the assets. And I’m not going to make any money on buying these properties. I should about breakeven, there’s two that I’m going to lose a little bit on two that I’m going to break even on and one that I should actually make a few bucks on to cover my other losses. So I hope to break even on the whole thing. And we made the decision as a team that if we You’re gonna take a loss by doing it, we wouldn’t have been able to do it. But we made the decision if we can at least break even to protect our lenders, I was willing to put the time and energy into doing that. And I will say this as a as a final thought on that, in no way is this a guarantee that I could do this every single time. But if I can, and if it makes financial sense for me to go in and step in and recover at the outset, I’m more than willing to do that, once again, we we earn a good income for what we do. And I want to make sure that I step up and take care of my people when a problem happens. So

 

Erwin  

that’s pretty impressive. Your own staff put in their own money, too.

 

Kyle  

So yes, they did. They lent the money to me to take secured off the properties just so that said, yeah, they put some money in, well, there were agents on my team, they had their clients and they wanted to make sure that they we want to step up, like I said, the companies that we lent to failed, the specific assets that we were secured to, were still decent deals, the companies went under for other factors, the specific deals that we were on weren’t the problem. So we made the decision, because of the properties in their condition at the time had we sold them, the lenders would have taken a hit. So for me to spend six months managing some construction projects. It’s been a lot of work, I’m not going to I shouldn’t sugarcoat it. It’s been a lot of work. But I said this earlier in the podcast, I didn’t know if you’re going to specifically bring this up. But this isn’t OPM. To me. This is people’s retirement, this is people’s children’s education funds. This is their home equity. And if something happens, it’s not like hey, sorry, new OPM, I’m gonna go get new money, we got to do whatever we can to help these people.

 

Erwin  

And to the novice investor, I think they should always whenever judge an investment or investor they’re partnering with, just simply ask yourself the question, will they shed a tear? If I lose my money? If the answer is no, Ron?

 

Kyle  

Ron, some of the criteria that I look at when I’m underwriting deals, is I want to know, if the deal goes bad, what will the Operator do? Will they go get a job at McDonald’s to help make this right? And by and large, I’m right, I when I when I underwrite a deal, and 2022, I missed on two. But in the grand scheme of my portfolio, that’s quite a small percentage. One other little tip of give people when it comes to lending money, and partnering with people, I don’t do this as much just for loans anymore. But I certainly do this with partners, if I’m going to partner with somebody. If we’re going to be a partner in a business, we’re going to go out for dinner. And we’re talking about religion and politics. And I hope we don’t agree. But can we have a cordial conversation? Can we agree to disagree? Because if you’re going to get into partnership with somebody for five or 10 years, you better be prepared to have difficult conversations. Yeah, right. So get marriage is a marriage. There’s benefits to a marriage that you don’t get in a real estate deal as well. So you better be able to have those tough conversations.

 

Erwin  

You’re getting married, you better talk politics and religion before you tie the knot.

 

Kyle  

And like I said, some people are like, Oh, well, what if? What if we don’t agree on it? Well, I hope we don’t. I hope we have a difference in opinion.

 

Erwin  

Let’s figure that out. Now, for later, before we have babies together. And

 

Kyle  

if there is a difference that we can overcome it, great, thank goodness, we had this conversation. And if you’re blue, and I’m red, or I’m red, your blue, or whatever that is, and we say, hey, that’s an interesting point. I’ve never heard somebody bring up that side. I’m gonna think about that more. I’m not gonna change my my votes. But I hear you, and thank you, or vice versa, Hey, I hear your side as well. That’s interesting. Maybe we’re not going to vote for the same team. But at least we’ve had a difficult conversation, and we’ve come to a reasonable understanding.

 

Erwin  

So just to add to that, you’re already going into a real estate relationship. So I’ll just throw in if you’re going to go into a personal relationship you should bring up real estate is about as well as the investor, I want to buy more real estate. Are you down with that, like me? I’m anti debt, and then like, you’re gonna have challenges.

 

Kyle  

I have a couple of things I want to say about that. Recently, a friend of mine posted on social media saying, What do I do if my spouse isn’t on board with real estate? And I responded with divorce. I’ve been in this business for a decade, and I’ve seen many people that I had a call with five years ago, call me back just recently saying I finally got rid of my spouse, I’m ready to buy real estate. And it sounds like a joke. But that became an issue for them. One person had this goal on this ambition, and the other one did. The other. The other thing I’ll say is you There can be boundaries that you put in if one person doesn’t want to sign debt, whatever. But

 

Erwin  

I have the clients too. I have those clients.

 

Kyle  

It’s a difference between not interested and not supportive. Right? If they’re just not interested, they don’t want to sign on all these mortgages. They don’t want to do the calls and evening and weekends, but Honey, do whatever you want, whatever you want to do whatever you want to sign for. Yeah. Don’t touch your house, don’t touch the house, do whatever else you want. So

 

Erwin  

alright, let’s talk about fund. Yeah. What are you thinking?

 

Kyle  

I’m thinking my lawyers and accountants did well, so far. We’re cheap. Yeah. We’re well into six figures and starting the fund and accounting and legal fees. It’s not for the faint of heart, guys. You’re gonna pay accountants and lawyers a lot of money and still be shocked at the amount of stuff they’re asking you.

 

Erwin  

Yeah. And ongoing fees, like ongoing Opportunity Fund exists, they’re gonna be ongoing fees.

 

Kyle  

That’s right. That’s right. And what I was shocked about, and I just want to say, because if they hear this, the team of people we hired were fantastic. They were amazing. I couldn’t have done it without them. But I was shocked at the amount of stuff that they still had to ask me, I get another bill for X amount of money. And I was like, but I still have to answer all this. So just be aware, if you’re going to do it that if you’re a newbie, don’t start a fund day one, you need to have some background and some stability underneath you before you start spending this level of capital on a phone. But I am a firm believer that the fund models are the future of investing in real estate. I think the classic JV splits, you go on title, you do the work, I think there’s a shelf life on that type of stuff, I think it needs to be done. And in the fund model in the future, for private lending, it makes life so much easier for not only the lenders, it’s much more passive for them, but also for the borrowers. When you’re dealing with an individual private lender, and something comes up on a deal, so you’re going to be 90 days delayed. Well, that private lender, even though they’re not supposed to, they’re not supposed to commit to anything until they get their money back. When buys a cottage and they need their money back instantly the terms up the borrower needed a 60 day extension, the lender needs their money, it just creates a lot of stress. So having the fun model eliminates a lot of that emotional and the trigger in that the fun can extend the fun can do more things without that individual emotion in the deal. Sorry,

 

Erwin  

because life happens to 100% Yeah, things happen. Like, you know, car accident injury, the big see things happen. Yeah, 100%. How does that change for the lender, or the borrower pick one place to start.

 

Kyle  

So for the lender, the benefit to the lender in investing in a fund is, first of all, there’s no more downtime between deals. So you don’t do a deal, get your money back, wait for a new deal, do a deal, get your money back. So it’s invested in a pool of mortgages, so it’s always out to work. It’s also more passive. In the current model, you have to go, you have to look at an eel ask your questions about the deal. I like to deal I sign the paperwork for the deal. I go to the bank and get the money for the deal. I go to the lawyers I signed for the deal. I wait for the deal to pay back. In the new model, you do your due diligence upfront, you ask your questions upfront, you deal with our end, you go through a declaration of trust and our om all upfront. Once that’s done, you put your money in the fund, set it and forget.

 

Erwin  

Right. So that’s the regular regulated under Ontario Securities Commission. Yeah, so it’s

 

Kyle  

getting as well. So and then you get a monthly distribution. So setting up again, if you’re lending with registered accounts, it’s substantially less fees to be doing a share purchase of a fun than doing self directed mortgages. It goes from about $500 a year to $75 one time, so it’s much less expensive to do the fun model. The other big benefit that this is gonna have for people is we can drip the returns now. So if you’re getting a monthly distribution, you don’t need that for lifestyle, you can reinvest in compound it, we have many clients who are sitting on a bunch of cash in registered accounts because they get their monthly payments. They can’t it’s too small to reinvest. So you have to wait for it to reinvest the other side of it too. And not that we’re still not attracting very high net worth people is the minimums are much less. So $10,000 is the minimum, we have an introductory rate of 3000 where people can get in a little bit less right now. But the standard minimum is 10,000. In the current private lending space, you really have to have like 50 to get in, but more realistically, it’s 100 to get in so much lower barrier to entry in the fund model.

 

Erwin  

Because I’ve heard even Some lenders don’t talk to you unless you have like 250. And my mom seems to keep going up.

 

Kyle  

In urban, it’s that I guess it’s the market, it’s real estate values. If you have a $500,000 deal, and you got 10 people putting in 50k apiece, have you ever tried to herd cats? I would say it’s easier than dealing with 10 lenders on a deal.

 

Erwin  

I think you should do an open house with novices and have them come into your offices and see how hard it is to do a raise. Good idea. Because I don’t think people don’t appreciate how much admin work goes into what you’re doing into brokering a deal. Because you have one side, you have the borrower and the other side to the lender. And then like you said, like there’s all these personal things always come into play, you know, I’m, I’m at the cottage, I can’t review documents until Monday, or all I’m going on vacation, I can read can this wait till Friday? borrower needs the money in 48 hours? Right. But I’m telling you, it’s it’s slowing me consolidated. So I have a quick question for the fund. And what kind of transparency do people have in terms of like, what they see going to what deals in terms of like, do they see anything about what kind of deal goes into into the fund,

 

Kyle  

or not lending on specific deals anymore. So we have a trustee model. So there’s four trustees in total, that oversee the lungs and the management of the money, we are bound by our om to only do secured lending. So whenever we lend money, there’s a registered mortgage position on the property. So no napkins, no IOUs handshakes, keynotes anything like that registered mortgage position, we are bound by certain loan to values depending on the tear of the or the share class that you invest in. But in terms of the specific deals, there is no say in terms of the lender perspective or the investor perspective. It’s a language I have to change job right now I deal with lenders in the fund I deal with investors. And there’s no saying what projects we’re investing in or lending on. Now, that being said, we are committed to a quarterly update, we’re probably going to do monthly, but we’re committing to a quarterly update of just what deals we’re currently and how are those deals are going more of a newsletter type model than a individual property thing. So and this is, and this is different strokes for different folks, we have some people who very much like knowing I’m lent on 123 Main Street, I’m in first position, I know what it’s worth, I drive by it every third Tuesday of the month. That’s okay. But we have many people who also more information isn’t necessarily a good thing for them. They get nervous when they get updates, they, they really do want something more passive, and where they’re incentive spread across a bunch of things. If there’s one problem at one property, they don’t know they don’t care, they’re not worried about it. So it can be a little bit different investor profile potentially.

 

Erwin  

So what’s gonna go into the fund in terms of deals that you’re gonna fund?

 

Kyle  

Yeah, so we are a income fund a mortgage trust. So I’ll give you a little little rundown on this are REITs. Many people are familiar with a REIT. A REIT is a real estate investment trust. So it’s basically a fund that buys real estate. The underlying legal structure of a REIT is an MFT, a mutual fund trust, that’s the legal structure they use underneath it, but it’s known as a REIT. It buys real estate. A mech is a mortgage investment corporation. So that’s what we started to build. That’s what we were going to do building MC, which likey REITs is a pool of investments. But instead of buying properties, you lend on mortgages. So the challenge with a MC though, is you can’t exceed 50% residential mortgages, which means a an apartment building a 10 Plex counts as a commercial mortgage. So we didn’t like that restriction. We love apartment buildings, we love lending our apartment buildings. So what we did is we created a, it’s almost a new class, there’s only a handful of other people in the country who are doing this. But it’s a mutual fund trust structure. But it’s designed to only lend on mortgages. So it’s designed to just lend on secured mortgages. Now the cool thing about our structure is in the event of either an individual disaster or a large scale disaster, like an economic downturn, our mortgage trust, because of the underlying structure that it’s built on, can own real estate. So we need to if a deal goes sideways, and we need to recover that asset and take it over, we can our structure allows us to do that. So we put a tonne of thought energy and accounting legal fees into building this structure that we believe is not only amazing for our investors in terms of lending and investing their money, but it allows us to protect the principal in the event Enter the disaster.

 

Erwin  

So you can take possession of the property and character you’ve done in the past is take possession, renovate it, whatever you need to do get ready for sale, maximise your exit price. Exactly. Why would you even do this? I know someone who did a sever and build on one, they had to take back and property. And it was like 50 foot lot, it actually made sense for them tear down the house and build build two semis. Yeah, that’s something you would do too. So complicated question.

 

Kyle  

I would say no, then this is what people have asked me many times. So our targeted returns within within the fund are 811 and 14. Disclaimer, you have to go through the EMD. It’s got to be suitable all of those things. But our targeted returns within the three funds are 811 and 14. Yeah, see SQL in Nevada legal advice, accounting advice? Absolutely. Should we expect more like are you going to exceed these returns? And the answer is we’re really, we’re not planning on it. We’re planning on consistently delivering them. And being a stable income fund. Right? We’re not an equity fund, we’re not going to do a deal that’s going to hit it out of the park and hit a way bigger return. Right. That’s not what we land, just above the rates that we’ve quoted, you apt to deliver those returns consistently. And we have a great stable of borrowers ready to do that. So to answer your question about what I sever and split and all those things, the answer is if we take over an asset within our plan is not to maximise the investment deal. It’s just to protect principle and get the money out. Now, if there’s ever an opportunity that comes into the fund that goes into recovery, on my answer is I would probably buy it outside of the fund. To get my make sure the principal within the fund is protected, the income has stabilised and if an opportunity came, I would look at purchasing outside of the fund. Because this is an Income Fund. This is about mortgages, or underlying structure on properties only to protect. It’s not a it’s not a way to generate higher returns within the fund,

 

Erwin  

I have spoken to some private lenders who had deals go bad, I’d imagine they someone would sleep better at night, if they’re in a fund that’s regulated under the Ontario Securities Commission versus having to go through the process of power of sale or whatever, or you taking control.

 

Kyle  

Then I mentioned this earlier, there’s many people who go through suitability and go through all of these things. And they come out as a very aggressive, you know, advanced investor, and that has a high risk tolerance. But when a deal goes bad, no matter how much how much you say you were comfortable with it, when it’s actually happening it, people get nervous, they get scared, it’s a lot. And all of the little updates can actually create some more stress for people. And in the fund model. They’re just they don’t see that stuff, as long as they’re getting their their return. Even if there’s challenges going on on specific loans within the fund. As long as we’re still able to maintain the yield. They don’t have to hear about all the nitty gritty little challenges that are causing the fund manager stress, as long as the yield is being delivered.

 

Erwin  

So Kyle, we always like to talk about what’s the worst case and the truth about real estate investing. We talked about earlier about what if someone just did individually, like one to one lender borrower? How bad can they get? So for example, a friend of mine lent a second mortgage on a house, she wanted to be passive. But of course, the borrower did not let the lender know that she was behind mortgage payments. And my friend and I find out until the bank had already started proceedings to take back the property. I believe the immediate cost to the homeowner and borrower was over $10,000 in legal fees that someone has to pay. Can you speak from your experience? Like what is it like for on if you’re on your own type thing? If someone’s trying to do a private land deal on their own? And then the deal goes sour? What’s the worst case? Yeah, because in my experience went to see with no different tenants, if they’re gonna miss rent, they usually don’t tell you not in front of the borrower, if they’re gonna miss them. If they’re gonna miss the payment, they usually won’t tell you. You’re already in trouble at that point, then,

 

Kyle  

yeah, as a second position lender, you are at risk of being fully wiped out and not getting any of your capital back. Okay, so that is a genuine risk that you have in second position, especially for the top of it, if you’re not on top of it, right. That’s interesting thing about deferred interest as well. If you have a deferred interest deal, you might not know that something’s going wrong, because you’re not getting paid until the end.

 

Erwin  

So you have even less chance of getting a red flag. Yeah.

 

Kyle  

So, in first position is very unlikely that you are going to take a major loss, is it possible that you take a 10 20% hit on principle in first position, it is possible, it’s possible to take more. But depending on your underwriting guidelines and what you’ve done, it’s possible that you take a 10 20% hit for his position, it is very unlikely that you lose a large portion of your principal lending a first position, you wouldn’t do what you brought up about lending a second position is absolutely true, you need to know who you’re behind. Because there’s a lot of MCs that won’t say anything to you. If you’re if you’re there in first position, and you’re in second. If that’s me, I just have a moral compass, if I’m in first position on a deal, and we’re going into power of sale or default, and I see that there’s a second position there, we’re going to do some work to find out who that person is, and let them know what’s going on. Whether I don’t have any obligation to that, but I’m going to do it, because I want them to know we’re taking action. So if you’re in second position, make sure you know who’s in first, if it’s some Joe Schmo, private and you don’t know them, you might want to do some due diligence on that, if it’s a bank, most banks are going to be pretty quick on it, and will serve notice to all charges. So if you’re charging, second position, they’ll serve notice, if you’re in first position, there’s a chance you’re not going to get your interest, there’s a chance you can take a small hit on principle, if you’re going to take a big hit on principle, either the markets completely crashed, or you’ve done something terribly wrong in your due diligence, there’s a good chance you shouldn’t take a big hit on principle, if you’re in second position. If you do your due diligence, you also shouldn’t take a big hit on principle. But it is possible. There is a chance though that you could be fully wiped out, there was a deal that one of the properties that I mentioned earlier, somebody was behind us, we tried to work with them. We tried to we offered let them buy it off us to get they didn’t want to, they said they were Tinker chances, I guess. And they were fully wiped out. Nothing we could do, we were in first position. My duty was to my first position lenders, my moral compass tried to, I tried to help the second person to they took their chances and they were right to zero.

 

Erwin  

So So in the case of stripe, my friend, she was looking for a passive investment. And then she had to buy the property. So automatically went from not passive at all. Having to pay the legal fee, having to discharge the first taking over the property property needed work. So people need to understand that with the worst case it does happen. And then you gotta have the ability to close on the property. If you have to lose all your money, or lose all your money,

 

Kyle  

your money, so good for her for stepping up and taking it over.

 

Erwin  

But not everyone’s capable of that she’s a high net worth individual.

 

Kyle  

And this is another example of I have heavily tightened up my lending area, because of what happened. We were lending all over Ontario, we’ve now tightened it up to within three to four hours in the GTA. And I got to recover this asset. I don’t need to go there every day, but I need to be able to go there. So if you’re going to lend money to people, and you are that high net worth person looking for passive investment, just in the back of your mind, where is the property, because if you need to protect your money and get involved more, you might need to go to it. So a lot of the gurus or gurus teach about investment where the return is best, which I am a believer of that, you know, investor, you get a great return, but invest close to home when possible. And understand the risk you’re taking by investing farther from all

 

Erwin  

aspect into a bankrupt investor that lived in London at properties and Muskoka and Hamilton. Like Good Lord, that would take you a long time to cover that kind of territory. So Kyle again. So back to that you are a mortgage professional. To give us a bit of the we partake in the current market. Are you seeing more buyers coming out? Or like are the things dead out there? What’s going on?

 

Kyle  

Yeah, so we’re end of April 2023 right now. So and I’d love your opinion on this too, or while we’re chatting. But I have seen a big uptick in consumer confidence here in southwestern Ontario. And looks like we’re getting a little bit of stability in the rates. The bond market has settled down. The BOC has settled down and it looks to be relatively at bay. When things were going up so quickly. What I noticed with a lot of people, it’s not that they couldn’t make their payments. They were okay. They were just holding back because they didn’t know how high it was gonna go. And now that that’s kind of settled in. A lot of people are like, okay, yeah, we’re good. Now we can make this payment. We locked it in a fix for two years. So we’re good now or we went to our boss and asked for a raise. So we’re going to know whatever that may be. So I’m definitely seeing the consumer confidence up to coming back. I’m seeing the pro investors that I deal with didn’t stop they were buying the entire time. I’ll call it semi pro, the three to five property owners. They definitely are inching back into the mark. Get looking for deals. Right now. The duplex triplex four Plex game is pretty tough to get cashflow. So I still think it’s a great start for a lot of people, but you’re not going to be getting big time cash flow coming from those. So you got to know your numbers. I think for people getting started in the business, they need to understand construction and value add, they need to understand how to appreciate properties, because that’s, that’s the major plane, I’m predicting a bit of a, you know, my crystal ball has never been that great. But I’m predicting a relatively flat market for a while I’m not expecting major appreciation, I’m not expecting a major decline, we have major immigration coming in to Canada. For anyone who’s opposed to that you’re wrong, we need it. Our labour force needs the immigration we need. We need people here to helping us grow our labour force, but we don’t have housing for them. That is a problem. And that’s something that needs to be addressed, which is going to create buoyancy in our market. So that’s, that’s my opinion on where I see things are going and what we need. So I’d love to hear what you’re seeing to her.

 

Erwin  

So what I’m seeing on the street is recoveries coming faster than I expected. A house very close to me sold not far from its peak price in one day. So I think because the baseline would be like what the peak was. So then there’s buyers out there who are capable of going somewhere between what I think is fair market, and what was peak. Because they as logical that believe that we’ll be back there within a few years. And we’re losing to lots of people who are buying for themselves. And those people are generally willing to punch harder than we are for pricing. In the end, it’s a broad spectrum in terms of like turnkey, and even disaster properties or having multiple offers that we operate most in the star category. The luxury market, I think is nice. I’ve heard some people say well, actually market never really slowed down, because a lot of those are cash buyers. So they don’t care about interest rates. But yeah, we’ll see where things go. I feel like, you know, my own pricing, you know, I’m thinking like one to 5% appreciation from here, not major, something along lines of inflation. Alright, because I’m not sure what you’re seeing in terms of construction costs, but my contractors not quoting me cheaper.

 

Kyle  

I’m right there with you. You know, I’ve been 3% guy on my performance forever. performers have always been at 3%. Because I thought that was a relatively inflation type number. So even when things were 20% on my performance, I was still three, because I knew at some point, if it was 2020 20, it was gonna have to be 10 minus 10. At some point, right. So I think that’s, and in terms of the construction costs, there, it has not gone down. I met with a couple of my contractors recently who give me good pricing. And they say they were reviewing things with their accountant, they really get into the bottom line of things and they have to charge more. Like they’re all their soft concert WSIB their their car insurance, their tools, their the equipment they,

 

Erwin  

like you mentioned, like people are asking for raises, asking for raises,

 

Kyle  

raises, they want benefits they want RSP matching, they want all of these things right?

 

Erwin  

In pension, even though they’re striking.

 

Kyle  

Is it stuck it into the irony of CRA striking tax season?

 

Erwin  

Yeah, you find you suspect the day, the government’s union instructed the remote workers to leave home and go to join the picket line. I thought that was hilarious. You may not virtually protest you must go protest in person. Wow. Kyle, thanks so much. This has been a blast. Any any final thoughts? Where can people follow along? Where can people learn more about your your, your mortgage fund working people? Yeah. You and your attorney? Yeah, cop

 

Kyle  

cop mft.com. info at COP cop mft.com for anything on the fun if you’re looking to get invested info at Kyle Ford mortgages if you’re looking for great mortgage brokers, full transparency with a lot of the viewers a lot of the mortgage brokering I have my team handling that now. I got incredible agents that will be available for you, Scott, Scott, Steve Oh, Chris lane, don’t eat Ariel ago. We have great great people on the team that can help with the mortgage side of things kept MFT for investing in the Fund and Kyle forwarded message on Instagram. I don’t really try to grow that but I should say I want to share more content there. So yeah, Google me I try to try to share my wealth whenever I can share my information whenever I can. So

 

Erwin  

I like the idea that you’re sharing your wealth but

 

Kyle  

share my information.

 

Erwin  

Kyle again, thanks so much for doing this. I had a blast. Hope you had fun. 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. 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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BEFORE YOU GO…

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Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment.  Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you. 

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Erwin

Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.

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