**Transcripts are auto-generated.

Erwin  

Welcome to the truth about real estate investing show for Canadians. My name is Erwin Szeto a full time real estate professional since 2010. And I split time between being an investor specific realtor and bigger portfolio real estate investor. More important than this has anyone’s portfolio. It’s all about financial peace in my wife and I have it. And that’s what I want for all of our investor clients and our listeners of the show. My strategy is value investing through renovation and maximising rents through densification. You know, often that means basement suites, I have student rentals as well. And that’s one of the strategies we teach our clients that is called Student rentals. And I know a lot of people have their ideas when a student rental is I like to write my rent my investments like a business. So what surprised me view that we sold a townhouse in third Ontario again, that’s the world Ontario we sold a townhouse for $804,000 Just last weekend $804,000 for for a townhouse. Where’s Thorold Ontario, you ask? It’s actually very close to Brock University and Brock University’s love living in newer construction homes, which is what my clients property was in, in that area. What makes these houses special is that they’re they’re less they’re only eight years young. I have worked directly with the builder on the design of these units so that the builder delivered to my client, a six or seven bedrooms student rental house. What made us two rental houses that we had noise cancelling and fire retardant insulation in any of the shared walls and ceilings. The basement was finished with two bedrooms featuring in each bedroom featured an egress window, which means it’s a fire code compliant window for a person to climb out of in case of a fire. We admitted closet doors which save our clients money. And it’s also one less thing to break in. In my experience. A lot of students don’t like closet doors, they ended up being used as coffee tables. So that’s not something I want to be paying 457 $100 per coffee table. Since the builder was delivering to our clients a finished product, our clients were able to finance everything, pretty much everything so there’s almost no renovation to come in out of pocket for our clients were paying around 315,000 for these purpose built student rental townhouses which rented out for at the time 2700 A month again 2700 Rent a month for a $315,000 personal instrumental townhouse fast for today, market rent is closer to 4900 per month as we’re in the middle of a housing crisis. It’s even worse for students. And as mentioned, we listed and sold the house for so it’s sold for over asking it sold for 804,000 firm for what was about 1500 square foot townhouse. The return on appreciation alone because it’s easy math again bought for 315,000 Assume a 25% downpayment. So for 804,000 return is $490,000 as a return on investment that’s over 620% over eight years, via a very simple, boring buy and hold real estate strategy. Never forget that making money is the objective. And also before I continue on, in my experience, university students do not end up in the landlord tenant board. So in my opinion, depending on where you operate, but a lot of student rentals, a lot of students as tenants are lower risk than regular tenants. Because again, in my experience, my clients don’t end up in in the landlord tenant board battling their tenant for like non payment of rent or anything like that. So again, never forget that the objective is making money. Now how many doors do you have or what the current fad is, whatever it is right now, or how many Instagram followers one has, it’s all about making money in here my client did so successfully. So congratulations to them and many others who and I have many other clients who continue to hold these properties. They’re hoping that we get back to peak which is the over 900,000 So again, it’s a nice boring, no renovation property in a massive demand area for both buyers and tenants. Again, we’re in the housing crisis. So tenants are scrambling still that’s why the rents are so high they’re scrambling to find property and in turn parents are looking for property to buy because I would do the same thing I wouldn’t pay these pay these are tortures rents. So I prefer my preference would be to buy and there’s many parents out there looking to buy again in my experience this is a winning investment. I think everyone would agree this is a winning investment Good luck making these returns in any other fat investment out there. So this means your investment criteria please let us know and reach out or email or social media DM me we’re everything basically gets back to us. So but it is not all sunshine and rainbows this week. I personally prepared an end for it and eighth for my tenant who missed April’s rent and is persistently late. So those are the those are the forms that one has to fill out respectively and it foreign aid both are related to non payment of rent. I’m getting involved as I’m operating with whoever personal assistant right now who’s no longer is no longer with us. She’s okay she’s not here at the company anymore. But I do also think that’s important for managers to get into the details from time to time. And honestly it gives me something to talk about. Talk about and it refreshes my Maria on how to do these things. The tenant is very apologetic. I’m not too worried about not getting rent, as I have her mother as a guarantor who has a great job and pays rent on time. I know because the mom is also my tenant. The mom is also my tenant. And also I’ve noticed since I got involved with the tenants tone is in her communication with me is very different than how she communicated with her assistant. My tenants memories tend to be very different. Her recollection of her payment history and history of being on time is very different than, yeah, her tone is different with me. It is not fun having to threaten tenants with eviction, because that’s essentially what these forms are for. That’s what they do. Like, you know, this is a notice for eviction for not paying rent. All right, but if tenants are not held accountable to the terms of the lease, just no different than if I’m not held accountable to the terms of my lease, you know, we run a really tight business, I handy people are basically on call to all my tenants, should they ever need anything? Yeah, if they’re not held accountable, and they don’t pay rent on time, then this is what happens. Also my tenants rent is about for this specific tenant that’s late. It’s her rent is about 30% under market. So she really should not be putting her cheap rent at risk either. I know some of us, some of you out there listening are asking why don’t we automate what we used to. But when money wasn’t in our account, is there was a lot of NSF charges going on. So yeah, honestly, we’re being a little too nice. But she has a single mom, so we’re tolerating it for now, though, it had been a few years. This has also happened to me at my daughter’s house. For those who don’t know, I bought property smoke chair and I’ve already bought properties. We’ve earmarked properties as our RSP for each kid retirement our real estate savings plan. So one day it will it will be my daughter’s job will become the landlord and one day so she’ll have to take over this and take it off my plate. Speaking of my daughter, she recently came third place in her competitive speaking class. My son unfortunately didn’t win anything. Again, unfortunately, he’s inherited my habit of mumbling. But yay, daughter. Cheering myself and our families are all shy people, especially growing up are all introverted. I think we’re all pretty much all introverted as well. And I think everyone knows that public speaking and public presentation skills, verbal communication skills are all important. Hence, our kids are three years into public speaking classes. Only last year, they got into competitive and the results have been awesome. I’ll see my kids holding conversations with adults and with adults at social events, either family or work related events and they’re not shy like sharing our at our at our age, our experiences has been a good one. So if your kids are feeling shy, I’d recommend public speaking as well. Speaking of public speaking, my team and I have presentations to give at the upcoming iWin meeting online only meeting will be given the same awesome economic and market updates investors need to know both east and west the GTA and we’re just about to confirm our guest speaker. It will either be a multifamily investor speak expert who has retired thanks to their portfolio, they have somewhere north of 300 doors I believe. So this is someone who is extremely legit. And also when Brian does zero work, as in he is truly retired. It’s not like some of these invest these some of these folks out there who are saying they’re retired but they have a full time job. Or it’s either gonna be Brian who is the agenda has hundreds of doors very successful makes lots of money, or we have a senior living slash retirement home investor with over 20 years experience and they have a fund as well. So it’s gonna be either senior care investing, someone who also has a fund or a someone who has a REIT, sorry, in the apartment building space, whomever we have, it will be excellent. As these folks are serious veterans of the industry. They’re a lot older than I am as well.

Erwin  

So they’ve got lots of time and experience in the market. And as always, this will be an excellent I win real estate meeting. And as that is always the standard here. As I mentioned, this will be an online event only the meeting will take place at 730 on Tuesday, April 18. Via zoom, hopefully everyone knows how to use Zoom. If live and in person networking is more your thing. Saturday morning, April 22 will be we will be hosting the island mastermind tour. Again, that’s called the island mastermind tour, which consists of we’re going to meet it for coffee, we’re going to meet this one’s in Hamilton. So we’ll be meeting at Hamilton’s number one ranked coffee shop by the way the croissants are to die for. Once we’re all gathered, we’ll head out for a tour, both inside and outside and an income property or to sell sometimes it’ll be owned by my clients. So these are actually real investment properties, followed by a mastermind lunch. Our last our mastermind tour sold out the one we did in Oshawa just a few weeks ago. It’s sold out in four days. So do not delay. The education and networking is excellent. If you haven’t been on one of these tours before. Again, we’re meeting for coffee we’re gonna be inside doing tours inside and outside of income property and mastermind lunch. So there’s lots of opportunities to network with like minded people that costs only $20 plus taxes and fees, all profits go to charity. So if you’re not on my email list, then you and I don’t know why there’s already over 10,000 Hardworking Canadians on our email newsletter. And all you need to go do is go to this, this podcasts website, www dot truth about real estate investing.ca and put your name and email in on the right side and then you’ll start getting our email newsletters. You’ll get informed when these new episodes come out. When we host events costs are, again are nominal for almost all our events, our island meeting this online is free. So we’re giving away a whole tonne of quality education that actually makes people money. So yeah, so get on my email newsletter. If you’re already getting our emails, then you’re just gonna check it out. You’ll be informed when your first chance to register. So yeah, so do not delay for the island mastermind tour because again, the last one sold out in four days. So and there was a lot of disappointment afterwards. So please do not delay onto this week’s show. This week we have Matthew Varga who together with his wife, Nicole have a several six figures ventures so several six figure businesses in different categories. They have a YouTube channel called it’s called Health Net nutrition Inc. And it almost has a million subscribers from which they generate ad revenue or from YouTube. They also have show sponsors and because they have an engaged audience and they have a brand, they able to market their followers, their e commerce Store. So they have they make money. So there’s multiple revenue streams stemming from this successful YouTube channel. They have a growing portfolio of real estate investment properties. Some are buy and hold and some are buying holds the Airbnb in Matthews doing what’s called Airbnb arbitrage, which means that he that he is the long term tenant so he’s renting from other landlords and then he furnishes that property and operates an Airbnb business instead of rental property to make money to pay both pay the rent, and then Matthew just keep any remaining profits. Airbnb arbitrage can be a great way for newer investors to break into the market, but it’s not without risk. Well, if you don’t make enough, then you’re on the hook for the rent. Right? Right. But Matthew was kind enough to detail his wish list for features in order to command and rent the great rental rates before he would consider taking on any or Airbnb arbitrage opportunity. Matthew also recently returned from Florida as he now spends winters there in Florida to both avoid our cold winters and go looking for real estate opportunities. He also shares how he’s able to do so like logistically with visas and investments and whatnot. So Adam, our product, Podcast Producer, you know, he’s off camera, he’s Off mic. But he said that this is one of the best interviews we’ve ever done. It’s really interesting. It’s an interesting interview because a lot of people talked about doing YouTube and ecommerce stores and therapy Bill arbitrage is Matthew actually does it does. It’s quite successful. So for me, I have no idea what I’m doing here. You’re stuck at 17 listeners, but Matthew is legitimately young and successful. So I can’t recommend enough that you have a listen and take notes. Please enjoy the show. Is it Matthew? Man

Matthew  

Now like most of us say Matthew, I don’t have a preference people I know for a long time call me Matt. Newer people usually say Matthew, I usually introduce myself as Matthew, but it doesn’t matter. Someone calls me Matt or Matthew. Okay,

Erwin  

my mistake leads us both. Yeah. What’s keeping you busy these days?

Matthew  

Yeah, so what’s keeping us busy these days is probably like our biggest newest project is like our Airbnb arbitrage business. So that’s something that we started up just over a year ago. And we’ve built that up to about 15 properties. Now. That’s a mixture of mostly Airbnb arbitrage. But there are some of our own units that were long term that we’ve converted into Airbnb s. And then we also manage some people’s Airbnb s for them. So we’ve had people reaching out and asking me to manage their properties for them, because they’ve just been underperforming. But yeah, so we’ve been doing that for just over a year now 15 properties, I think our gross revenue over the last year on that is about 350k. And probably by next year, we’ll have that up to about a million I think as we add more properties and more more investors. So that’s sort of what we’re, we’re looking to do. And like I said, that’s like the Airbnb arbitrage model. So we can sort of talk about what that is, and break that down. And then on top of that, we also run our YouTube channel, as we were just talking about a little bit earlier. So we have our main YouTube channel that’s more focused on health, wellness, family stuff, since we had our, our daughter two and a half years ago. So our content shifted a little bit to more family content, and that we’re just gonna hit a million subscribers this year. So that’s a big milestone for us. We’ve been running that for a while. Now. We have our ecommerce store that we’ve that we’ve been running for the last couple of years, we’ve been making some shifts there on on what we’re offering to people. We have our natural skincare line that we we started a few years ago, but it’s sort of dropped off a little bit but we’re looking to like really build that up this year and really put a lot more effort into into that line of business. That sounds like a lot already, doesn’t it? But yeah, we have all that going on. And then we have our long term rentals that we manage We’ve been testing out some different businesses that I’ve that I’ve been interested in so like Turo, renting out cars on Turo, I think that can be very complementary to like the Airbnb business. Yeah. And then recently this year I got seasons tickets for the Toronto Raptors. So I’ve been, I’ve been sort of using just trying that out too. And that’s been actually like a pretty good a good thing when it comes to like, I think I made about roughly like profit on the season’s tickets this year, which is a whole other thing we can go into, but like roughly like 5k for the year in profit on like, selling like tickets with like a bit of markup to people. And I didn’t know you could do. Yeah, so that’s like, just something I got into this year. And I see you’re wearing a Toronto Raptors shirt. I have to go to a game right to take you to a game and so

Erwin  

you know, funny thing about me is like, I just like to see the Raptors win. So we can go see Detroit Pistons. Magic, the ones that nobody wants. Yeah, exactly. Nothing bums me over. They suck on the Raptors lose.

Matthew  

Ya know, it’s a very different vibe when you’re there and like, you know, they’re winning, compared to when they’re losing. So I think like, I think this year, they’re their team’s not the best. He started out really well. But he sort of dropped off this year. But like, I think because we have the only team in Canada, like the demand for tickets is still really strong. And you can do a pretty healthy profit margin. Yeah, yeah. No idea gets very interesting. All right.

Erwin  

I thought introducing myself was difficult. This is pretty bad. There’s a lot the size of the boat full. Okay, let’s start with our Airbnb arbitrage. What does that mean? So Sam, I’m a grade five. Explain to me what’s Airbnb arbitrage. Okay,

Matthew  

so Airbnb arbitrage is where you rent a home from a traditional investor landlord, someone like yourself, or any of the clients that you work with. And basically, you rent the home, you’re paying normal market rents to them, and you’re turning around furnishing that property. And then you put it up on Airbnb. And the profit that you make is the difference between what you’re paying in your expenses to that landlord, utilities and other costs and what you’re making on Airbnb. So this is something that we just started doing, like I said, just over a year ago, and I think it’s just probably one of the best business models that I’ve seen, especially for like new investors, or anyone who’s just looking for something that has a really good cash on cash return and high cash flow margins. So we typically tend to work with real estate investors who own multiple properties. And they’re looking for someone that they can rent their property to have less headaches and long term tenants. So that’s how we actually got into in the first place, because we had some friends of ours who were into Airbnb arbitrage that introduced us to the model. And because we own long term properties ourselves, we have long term tenants we understand like the frustrations can kind of come with it when you get people who don’t pay rent on time, don’t pay rent at all. As we know in Ontario, it can be difficult to evict people or recoup funds that you lose. So when we sort of heard about this business model, it made sense for us as like landlords to be like, Oh, I can see why we want to want to rent to someone who’s doing this model, because you have it professionally cleaned multiple times a month they take care of so we take care of any maintenance issues on site, you know, so it was a great win win to be able to offer this to investors and other landlords. And the profit margin that you can make well, putting it up on Airbnb is actually like really good. If you want to give you an example of like our most recent project, our most recent project, we’re renting a triplex from an investor in Windsor. It’s three units, it’s got two one bedroom units, and then a three bedroom unit. So we rent this whole property from the investor. And we’re paying him 4000 A month, which is you know, good market rent. So he’s happy because he’s making what he would have gotten if it was a long term tenant, three different long term tenants renting all those properties. So he’s making his cash flow that he’s happy with. And then we furnish the property, I think our total cost of service

Erwin  

who pays for furnishing, we pay for furnishing? Oh, boy, yeah. So well, it’s actually you

Matthew  

know, so to furnish this and we tend to go more on the higher end, not higher end, but just like better quality furniture because I just found a lot of other people who do this business or who set up Airbnb, they try to do the cheapest route they can and I’ve just found like, yeah, you kind of you attract certain clientele. You can’t really charge premium rates. So we tend to go for a higher quality furniture, higher quality decorations and other things. So for us to furnish that property we spent about $30,000.30 to 35,000 bucks for the whole triplex that’s five bedrooms, two different living rooms, so couches, rugs, you know, all this stuff for the kitchen. So yeah, we spend about 30 35,000 To furnish the whole place. And with that landlord, we were able to negotiate two months free rent because he had a few things that he was working on. And in those two months we were actually able to generate on Airbnb $11,000 of revenue, which went right into our pocket. it. So right off the bat, we made 11,000 profit in those first two months, which basically pays for almost half the furniture, a third of the furniture. And now that we’re paying over, like we’re paying our normal rent, so we’re paying him $4,000 A month, our total cost to run the property with utilities and internet is about 4300, give or take. And for this month, March, we brought in 6800 in revenue on Airbnb, so we made a profit of about 2500 for this month, and it’s one of the slower months. So I’m fairly confident that we’re already starting to get bookings for May, June, July, I feel like we’re probably going to bring in closer to like 9000 in revenue in those summer months when people really start travelling more. Yeah, so we’ll probably make about five to six grand profit off that one property. So you know, kind of do the math, you start to do a couple of these. And you can really like one or two of these a person could leave their nine to five job if they wanted to. Which is a big motivator for a lot of people these days.

Erwin  

This sounds fantastic. Now, I think you know what, I think we all know I personally like really like Airbnb, but doesn’t work on every property. What are you looking for in a property that you would take on because remember you actually met you DM me asking me your fact checking someone who pitched you said that the rents for this I’m like no they’re not Yeah.

Matthew  

Yeah duplex in Hamilton. Yeah, so normally what we look for in a property is we look for a property renovated looks nice, you know nearly done white kitchen you know, granite countertops, we tend only want to deal with like a higher end property that we can get good clientele on there. People are willing to spend more than just sort of the average nightly rate on Airbnb. We look for cities that have regulations that are favourable to us. Hamilton used to be pretty favourable, but it’s from what I was pretty terrible now it’s yeah, it’s really changed. It’s very anti air b&b. I mean, it’s good if you’re if you own the property and you’re just renting out your basement on Airbnb, I feel like you can still do that there no problem,

Erwin  

but you’re probably killing the new bylaws.

Matthew  

Because it’s probably taken a lot of the corporate people who were doing it out of the picture made them had to adjust more mid term rentals. But we look for like newer properties, nicer properties, duplexes are great because we can rent out the basement and the upstairs. Now we kind of focus more on Kitchener, Waterloo, Barry, St. Catharines Windsor, so you know any investors who have properties in those areas, if they’re looking to, you know, talk more about this sort of model and see if it’s a good fit, like feel free to reach out to me and we can talk about that, really, we’re looking for awesome properties that have usually like like a nice backyard space that we can do up because I find the high season for air b&b in Canada is obviously summer the summer months. So we’d like to be able to offer like a nice outdoor setting. I usually like a little firepits and Muskoka chairs barbecue. I feel like that just helps us bring in more bookings in our competition. Really, any property that’s in a city that has like good rules and regulations, it’s up to date looks good, has like a backyard that we can utilise and do something with it has the potential to do well on Airbnb,

Erwin  

what about amenities? What amenities are important when you’re looking for an air b&b that will perform?

Matthew  

Like I said, I think just like a nice backyard space and like upgraded interior open about like, what I

Erwin  

mean, like like walkability. Does it be close to hospital? Employment? Restaurants?

Matthew  

Yeah, I mean, for some cities, it is good. It depends on like, who you’re looking to target. So I find like those amenities make more sense if you’re doing the midterm rental sort of anything over like the 28 days, because then you might be targeting more like students who want to who are like so for example, in the Windsor property, some of the people we have booking with us, their students go into the University of Windsor, they’re international. So then proximity is a useful thing. But I find that if you’re like so for example, we have some Airbnbs. And Barry, like people aren’t really concerned about the proximity to hospitals or grocery stores or anything like that. And the wintertime, people are asking, like how close we are to the ski hills because we’re getting a lot more like, you know, people who are booking for, you know, ski vacations right now and Horseshoe Valley and Blue Mountains and that so that I find is but as long as you’re within like 15 to 20 minutes of that it hasn’t really impacted our ability to get bookings. But yeah, I would just say unless you’re looking to target more midterm rentals in a lot of the cities of Barry, I find like some of those amenities aren’t as important because most people who are staying with us are driving up anyway. So they have the ability to, you know, drive to like grocery stores or anything that they need.

Erwin  

Right. So see me parking then as well, I guess. Yeah, definitely need

Matthew  

parking, unless you’re doing it more in like, the core of the city. But in general, yeah. If you have parking, I found that to be really important because most people are driving up to stay with us. Yeah, that’s definitely something and then also usually for rules and regulations. They tend to have certain requirements for a number of parking spots and things like that. I

Erwin  

remember Adam and I were staying in an Airbnb in a duplex in Ottawa. That said they had to parking for two but they didn’t want street parking. And there was street parking was only for three hours. Oh, yeah. So we weren’t happy campers. But it’s funny because Airbnb can be a bit of it’s not consistent, right? Because every operator is different. That was probably one of my most favourite experiences. But you know, I still like staying in Airbnb is because there’s always a common area. Yeah, which don’t get no hotels.

Matthew  

And I think like for us, like we have a young daughter and like staying in a hotel with with kids in my mind is just so you get there a bit younger and they maybe they still take naps or they go to bed early. Once you put them down here, you’re stuck in the room. Right? So I find like Airbnb is a really good for families and people travelling and like you said, having an outdoor space. You’re right, like, sometimes the consistency of bookings isn’t there. But you know, we’ve recently converted, we’ve been converting a lot of our long term rentals into like Airbnb is as people move out. And even with lower occupancy during the winter months, at some of our barre properties, I found that I’m still bringing in more than I would with a long term tenant. And I have someone who in like, it’s filled half the month. So there’s less wear and tear and less this and I’m still able to bring in the same or more as I would if I had rented it long term. So like the benefits kind of outweigh the cost, right? I find for us in a lot of those properties.

Erwin  

How are you managing though, because Airbnb is much more transactional than a long term long term relationship with long term tenants. You know, I’ve one property yet on here for the tenant. I hear for the tenant, maybe twice a year, maybe? Yeah, right? Oh, sure to hear from you get way more than that for for an Airbnb customer. Yeah,

Matthew  

I sound like so a lot of things on Airbnb can be automated. So all your messaging can be automated, you can have everything sort of set up where you have your sequence of messages that gets sent out to guests, when they’re checking in. So like they get there, after they book, they sort of get their welcome, thank you for booking with us message, then they get their check in message like an hour before their check in time to kind of list everything that they need to know about the property, their door code Wi Fi information. And then we usually have sort of a day after they, they check in just sort of touch point being like, okay, you know, like everything going good, you need anything, and then we have our night before checkout, just sort of letting them know hope like you’re checking out tomorrow, don’t forget, you have to check out by this time, here’s sort of, you know, what we’d like to see if you could make sure your dishes are clean, and this and that sort of what we expect for our checkout. And then after they check out, we just have like a follow up, it just says thank you for staying with us. If you have any feedback, let us know, trying to get them to give us you know, like five star rating or good rating. So a lot of the stuff with Airbnb that you would think would be time consuming can really be automated now. And I found to be honest, like even over the summertime, when we have guests after guests, after guests and in our properties, like the amount of communication from people, as long as everything’s really laid out and clear for them. I hardly hear from people. Because you think to yourself when you go booking Airbnb, unless there’s something that you can’t find, or you like something that’s missing that you were expecting, like you don’t reach out to the guests, you just want to go there, enjoy your vacation. And I have no interest in reaching out to people like the hosts on Airbnb to talk to them, right. It’s like, as long as everything’s there and setup for me and I understand like, how to use everything. And then I don’t hear from anybody

Erwin  

just want to have a lot of Airbnb use experience we just got back from one in Huntsville and their labels everywhere. And I loved it. Yeah,

Matthew  

I think like you can really, you can really take a lot of the work out of Airbnb, you can have your electronic electronic locks can have electronic locks that sync up to like your Airbnb platform. So it’ll change the codes and send those to to the guest. There’s really like, I would say probably like 80, or 90% of the work can be done up front and automated. So you don’t have to worry about it ever again. Like there’s a lot of work to like, get everything set up and like understand the platform and how it works. And if there’s any damage or anything like that, like having your systems in place and make sure that you get reimbursed for that and that you don’t get sort of left covering the cost of that.

Erwin  

Has that ever happened? How many claims have you had made?

Matthew  

Not that many? Not that many, but yeah, we have had some damage, even just the other day, I had a guest who’s staying at one of our properties and like they broke the couch leg, you know, so it’s like, oh, they’re just like, oh, the leg broke. And I’m like, It’s a brand new couch like two months old. So I don’t know if they were flopping around on it or who knows what they were doing. You know, but in the end, it’s like okay, well we have we have our our process and our procedures that we follow. We have our photos that our cleaners take after they clean a property to show that everything’s in good condition that way you can’t have a guest try to say oh, it was like that when I got here because we have our photo evidence that shows everything’s clean and everything’s intact and in shape. And then you know, as long as we have that evidence and then when the guest checks out, we take our our follow up photos after they check out that just shows and documents anything so for that couch will be able to, you know, basically, if we can’t get a part to repair it like we’ll get it fully covered Airbnb will pay for that couch for us to buy brand new one. Oh, yeah, sir experience has

Erwin  

been pretty good.

Matthew  

So far. Yeah, as long as I think people that I’ve talked to have had bad experience or been unable to get reimbursed is because they didn’t understand the system, they didn’t have a process in place. I was talking to a guy the other day who didn’t get reimbursed for stuff, but he didn’t have any photos. Like, from his cleaner, like before the guests checked in afterwards clean. So they were sending in photos up from their listing, you know, an Airbnb is like, well, these are like listing photos could have been taken months ago. Right? So as long as you sort of understand what Airbnb is looking for, and you follow that to a tee, there’s really not much they can say, because like they offer that insurance, and they offer to cover it for you. And if the guest isn’t willing to pay for which a lot of times they they won’t, then Airbnb has to cover it.

Erwin  

So house insurance work, like you imagine you have your own insurance. What insurance of the the investor have oh, like the owner of the home? Yeah, the the real estate investor who is in sorry, in an IRB minute arbitrage opportunity. Basically, you’re the property manager, just that your intention with the strategy is a short term rental on Airbnb platform. So what kind of insurance would the owner of the property have?

Matthew  

Usually the owner of the property would just have their standard house insurance that they would have? We have a we have you know, Airbnb has its $2 million air cover policy that protects us some landlords like us to have our own, like 10 insurance that we are happy to get so that we have that coverage. And then we also have our own, you know, corporate business insurance that covers us under the Airbnb platform for our Airbnb business. So, you know, you have really four different touch points of insurance. So it kind of provides ample coverage, that people really don’t need to worry about anything, right?

Erwin  

Do some investors insist on having like to do they will get their air b&b insurance.

Matthew  

I’ve never met anyone that has like that has asked to get that or has that. I mean, because really, they’re renting.

Erwin  

That wasn’t cheap, as well over 200 a month.

Matthew  

Yeah, I mean, because most of the time, like when a when a landlord is renting to us or renting to us. It’s just like a regular long term tenant, like we’re signing the lease under our company name, you know, and then we just have an addendum that allows us to do you know, Airbnb arbitrage to sublease it. So from what I’ve seen, no one’s ever had to get any extra insurance because they’re renting to us as a long term tenant. And we’re the ones running the business. So we provide the insurance on our end to protect the property and damage and everything else. So

Erwin  

in my case, I was the I was still the owner, and I had a hired property manager. Okay, so it wasn’t an arbitrage. I wasn’t renting to them there. There were a service provider to me. But yeah,

Matthew  

you own that you were you just had a property manager, running it for you, right,

Erwin  

running an Airbnb business. Yeah, like, so I was paying like 20%, my rents of the Airbnb Ryan. And he was dealing with an all basically nice house experience. So I’ve shared it before, my location was not the right location. And also it wasn’t a duplex, it was a single family home just didn’t make enough. It didn’t work for us. Because again, for my clients, like for example, I wasn’t doing nearly as well as my clients were. Right. So for example, my clients are are in like much more walkable areas closer to like restaurants and like the convention centre and stuff like that, they got much more walking traffic. So I was hoping for more performance like that. I didn’t get it. So you know, I just sold and bought another house instead. Yeah,

Matthew  

makes sense. Do I mean, I find like, even for a lot of investors now I think like if you like said, if you’re in a city that allows Airbnb to be done, like, I think it’s a really viable option for you know, investors to try to look at that if it makes sense for them to do that, instead of a long term tenant. Like I said, we’ve converted and been converting our long term rentals into like Airbnb, just because the numbers I find the numbers are so difficult on a long term tenants to like, really, and these are properties that we bought five years ago, you know, and even then you’re still like, oh, it just the numbers aren’t that strong. So I mean, I don’t know you’re more involved in in like that side of things now, but like, I just when I’m seeing like properties going for, like 850,000 for a duplex, and I’m looking at like the rents of, you know, say, I don’t know 2800 upstairs or whatever. And 1500 1700 downstairs. I don’t know how people are pulling this off and like generating cash flow. Like I’m not sure what you’re seeing on.

Erwin  

Definitely tough for anyone getting in anyone who’s younger. Anyone who doesn’t have cash, fortunately, do have some clients who have cash, so they’re all winning. It’s really sad. Yeah, it’s really sad. It is like the rich are getting richer. Yeah, like they have all the advantages. For example, they can do large cash down payments and not have not had to pay HELOC interest on that money for down payments and when and whatever renovations you’re gonna do. Right, but the reality is who needs the most help? Who needs to do The most for themselves financially? Yes, not the rich people

Matthew  

know exactly. When I see like my sister in law and other people are in their, like, early 20s. I just think she’s like, What are you going to do? Like, I feel like at least for my daughter, I’m like, Okay, well, you’re gonna benefit from decisions that we made, but people who don’t have that luxury, as tough. And that’s why I do and I think that’s why you’re seeing such an uprise in like Airbnb arbitrage and that sort of model on like, social media and, and, and stuff because it is a way for people who, who don’t have the capital to get into like a real estate investment to profit and generate income from real estate, like I was, in my example of like, the Windsor property, like I was saying, it’s like we’re making this month, like 2500 bucks a month, in cash flow, sure, there’s more work involved than if it was a long term, you know, a lot of money, you know, but you’re like, that would be five really good long term properties, if you were able to generate 500 bucks a month, cash flow off, like long term rental, and which is, which is still like a bit of a stretch, I would say now, but like, that’s like five good properties, you know, and if you’re looking more like a 200 to $300 a month, sort of cash flow numbers, you’re talking like, you know, eight properties that you would have to have to be able to generate the same amount of cash flows that we do have one and we don’t have to worry about, you know, roof or H vac or anything like that, like so we take care of all maintenance on a property if there’s any damage done by like a guest like we would obviously have that bear and painted freshened up and the places kept in like immaculate condition, which is like why landlords like to work with us because their property just they would get their property back in the exact same condition that they gave it to us in which a lot of times is you know, when you have a long term tenant,

Erwin  

they lose turnover, I know your turnover costs. I

Matthew  

mean, we had a great tenant, he moved out, he was with us for five years. And like, even though he was an amazing, tenant kept the place good, like treated like his own home, it’s like, it still cost us like $1,500 to turn it over to get it sort of just rent ready again, with paint and other things just to make it look new again to put on the market. Like that chews up a lot of your your cash flow in the midst. So I think that’s like one of the benefits of why you’re seeing, like, we get reached out all the time by investors who want us to do the same model, like rent their property. That’s why I was asking you about Hamilton, because I was like, oh, yeah, we hadn’t been in that market yet. So just seeing what the rent rates are. But we’re seeing a lot more investors wanting to go that route just because of the peace of mind of not having to worry about professional tenants damage people leaving the place dirty. Yeah. So it’s definitely like a growing side of like the real estate industry, which I think is pretty exciting.

Erwin  

So I think it’s for a young person who wants to start in our airbeam arbitrage. And it’s a wonderful way to learn the business. If you don’t have the capital, yeah, right. You’ll learn a lot of but a home construction, learn a lot about like, working with tenants and managing people and managing real estate. And then when you go on a property, it’ll be a lot easier.

Matthew  

Yeah, no, that’s very true. And then like, if you’re able to generate that kind of cash flow, like it gives people the advantage of hopefully being able to, like put that aside, save it up and actually get into their own. It’s hard to generate that kind of cash flow or income per month. Of like, with anything, right? Yeah. Especially with the cost of living and stuff going up. So yeah, I’m definitely seeing a lot more people reaching out. I’m getting a lot of people asking if I do like coaching for them and like people just trying to like get into the model because it’s you know, there’s a bit of a learning curve, but I think like anyone can do it just once you learn the systems and that it’s, it’s definitely a really cool strategy. And I think like a great way for people to get into real estate, especially younger people, or people who just don’t have a capital of their own to, you know, buy something. So

Erwin  

hang on. Well, you were still doing a lot of this from Florida. Yeah. Yeah, yeah. Sure, not local for a while,

Matthew  

that’s a good thing is like you don’t need to be local for it. So we were in Florida for over six months. Last year, we were actually we went down to Florida to really look at the real estate market down there, because as we’re kind of talking about, like numbers have just been pinched a little bit up here, we found it to be difficult to difficult to justify spending the amount of money we’d have to spend on a down payment to get the cash so that we can get off the properties we’re seeing here that that fit our sort of model of what we were looking for. So that’s why we went down to Florida and we’re looking there and I mean, seems like a lot of Canadian investors that that are pretty well known have been going down to to the states sort of take advantage of the opportunities down there. And especially now like when we went down early last year I found like the numbers were good but like the bidding wars on properties like last January and stuff when we were in Florida and we were looking at stuff it was like we were putting offers on properties in like Orlando and like everything was going above multiple offers, you know, like sight unseen so we it just like we weren’t able to actually like secure anything because just

Erwin  

Just what months were these what month we were you know making offers

Matthew  

so we yeah, we were down there from because as a correction early started, you know, like we were down there in November to May

Erwin  

right so you’re full on like rates are going up. Well, this is last year sorry. Yeah, right, sir. Break something going up since what February I’m sorry. Like,

Matthew  

when I say last year I forget we’re in 20. So that was like 2220 2120 22 started going up. But yeah, before we started going up, sorry about that. Sorry for the confusion. Yeah, so there was still like before rates were going up. And there was, you know, like, obviously, like, huge demand for everything. So yeah, that was, say, January 2022,

Erwin  

you’re probably lucky, you didn’t get anything accepted.

Matthew  

You know, like, the only benefit would have been getting like the low interest rates on mortgages. But now we’re seeing a now when I’m like looking at stuff. So we’re actively looking at, you know, Airbnbs in, in the US. So we’re looking at Orlando, Fort Lauderdale, like all areas of Florida, Smoky Mountains, which is like in Tennessee, Nashville. So we’re looking at the Phoenix like all these markets that have like really great opportunity for Airbnb. And we’re seeing now that because the markets have slowed down so much like the thing that I like about the US market is the ability to do like more creative financing. That’s a bit more of a viable option here. Like here in Canada, you can do vendor take backs and and other things. But I find like, in the States, just because there’s so much supply of stuff and such like a bigger market, doing like creative financing, and seller financing now that the market slowed down is his lot easier, like because people need to be creative to be able to unload these properties now with the interest rates of what they are.

Erwin  

Because I remember when I was in I was in Fort Lauderdale before the pandemic, back then it was standard for 30 days financing conditions. Yeah. Because the market and I looked at a property on the water. And it had been on the market for like seven months already. Right. In today’s market. I don’t load especially with like the last like two years ago, probably a year ago

Matthew  

probably disappeared. And yeah, we were like I said, and we were

Erwin  

already days for conditions. Yeah, we’re here, right? Yeah, you can’t even deliver on Ontario.

Matthew  

If you didn’t have like a cash offer. Or it was hard to get something like we were fighting now in Orlando there was like, Oh, we were interested in a lot of like Airbnb ease around Disney. And we just felt like things were going quick. like it’d be up a couple of days. And that’s it. Whereas now we’re looking at it’s like, we’re seeing things on the market for six months, you know, multiple mines, you’re seeing like price drops, dramatic price drops, like we’re seeing stuff in Fort Lauderdale that January last year were listed at like 1.5. And now we’re seeing they’re going for 899. So like huge, huge price drops. I mean, granted, like I would say what they were trying to list it at last year was quite an inflated number. But you’re starting to see a lot more opportunity and a lot more people willing to get creative and do different things like seller financing is, you know, like for talking to a lot of sellers. They are open to that. You know, it’s

Erwin  

almost unheard of in residential here.

Matthew  

It’s hard. It’s difficult, right? It

Erwin  

seems Jaisalmer finance you get a lot of

Matthew  

gurus here will kind of tell you like, oh, yeah, Finnur takeback in this but I just don’t think it is well. It’s just not something that’s done so much here, I found

Erwin  

what’s usually more like complicated properties, like apartment buildings and large commercial. Yeah, not in a single family home.

Matthew  

They’re in single family, like you can just go on Zillow, and you can like type in seller financing and sort of filter through like people were saying, open the crate, because they’ve had it listed for like six months. And a lot of these people they random is Airbnbs. And they’re not able to generate the revenue that they they want anymore. So they’re just trying to like unload these properties. But a lot of times like they bought them less than two years ago, I’d say 550 And now they’re selling them for 750. So I’m sure they’re happy with the capital gains they’ve got but yeah, so we’re seeing a lot of opportunity in the States right now.

Erwin  

Like the dollars like 73 cents right now. So we’re just crazy because a year ago it was like 80 cents. Yeah, that does not seem to affect you like because I know you have your other businesses I’m gonna guess you’re earning money in US dollars. Yeah,

Matthew  

so we are earning US dollars which shall be just keeping us and we’ll use that for our investing but even when I look at the numbers, when you’re looking at like what it would convert to from like Canadian to us and based on the cash flow that you can get so for example, like we’re looking at a property in Orlando right now with a partner, and we’d be getting this for 700,000 It’s six bedrooms, five bath 3500 square feet pool in the back and like a lot of times in in Florida and other places when you’re buying Airbnb by him but fully furnished. So we’re getting like, you know, 40k where the furniture already in there now are carrying costs on it with with 20% down I think like the monthly carrying cost is about five grand when we included like HOA fees and property tax and you know, lawn care and pool maintenance is about five grand

Erwin  

and mortgages more than that carry on.

Matthew  

So like total, okay, yeah. I don’t know, I don’t live in a 3500 square foot home with a pool in the bathroom legs. So yeah, so you’re all in annual carrying costs about $60,000 us for that property, conservative estimate err DNA and doing our research on it, like we pull in over 100,000 us on that property. You know, and that’s like a conservative 65% occupancy, you know, so we’d be able to generate almost like 40 grand conservatively in revenue, like in cash flow on that property, right? So when you kind of look at the numbers are like, well, that’s what you’d be bringing in on on that property there. So even with the conversion, if you do even convert it back, like some people, usually a better strategy is to keep it in us keep it in like your S corp or whatever, and then just use it to purchase more properties and sort of grow and expand that. But even if you were to convert it back, like I think like the numbers really weren’t for themselves. And like I said that that like conservative estimate. So because of our other business, like the social media and stuff, like we utilise that business to help us fill our occupancy up. So we’re marketing our Airbnb properties, you know, to our audience, where it’s like, especially like Disney, because we have a lot of families that follow us and follow our content. So like being able to market these family friendly areas and properties to you know, a million people online allows us to have a much higher occupancy rate. And you know, that 65% Because we’re able to market to them. And we can even set up our own like direct booking site, and like sort of take out the 3% middleman that we would have with Airbnb only 3%. Airbnb charges 3% to the host. So that’s like our profit margin that cuts out but like it’s also like, Oh, now the person booking with you directly doesn’t have to pay the Airbnb fees on Airbnb ZAN. So you’re sort of saving not only you’re making a bit more profit on your end, because you’re not paying Airbnb, the 3% but also the person booking with you directly is saving quite a chunk. I don’t even know what Airbnb is fee is on the guessing but usually seems pretty high when I’m if I’m looking at Airbnb, and I see Airbnb services, I’m like, oh, it’s quite, you know, quite a lot. So sorry, what

Erwin  

was the asking? What was the asking that are not Orlando hosts? That was 770,000.

Matthew  

Us? Yeah. And it was like, sorry, you can build it for that. Yeah, I mean, and we’re seeing that those kinds of numbers like really all over the US like when we’re like when all over but like all the areas that we’re looking on that we know have a good amount of tourism and people coming in. So that Fort Lauderdale, same thing, we’re looking at properties in Fort Lauderdale that are you know, 800,000, same thing, we can generate 110,000 in revenue off Airbnb conservatively. So we’re still able to generate anywhere between like 30 to 50,000 us cash flow on top of like what you’re paying, and then you’re getting mortgage paid down. And that if you’re not doing the arbitrage model, which is something that we’re looking at down there as well and getting opportunities presented to us for that. So I just find with the US there’s just like a lot of ways to make money. And then I think like if you’re creative with Airbnb, you can also make revenue on different things. So part of the reason why I got into Turo and doing like, you know, sort of renting out like our Tesla, and that is, is because I was like testing that business out to see because I just saw an opportunity when we were in Florida is like, oh, like, what our plan is, is to like, you know, purchase these Airbnbs in Orlando and other cities. And then we’re also going to have vehicles that we have that we would offer to our guests to be able to like double dip. So you know, a lot of times when people are planning a vacation, they’re booking their stay first, and then they’re getting their vehicle. So like when we booked our place in Orlando, it’s like, oh, we book our house. And then we look at like, Okay, now we need to get a car to rent so we can get around. So what we’re going to do is that we offer vehicles to our guests who are booking with us, like, hey, you’d like to book with us, we have, you know, a van SUV, whatever, we’ll give you like, you know, a great rate cheaper than what they would get it for if they rented it, you know, through a car rental agency. And it sort of all built into their, into their bookings. So you can sort of take advantage of a lot of different revenue streams if you kind of get creative with it. Because we were paying like we were renting when we went down to Florida, we didn’t drive down, we flew down. And then we were renting a vehicle and I mean, like to rent a van for for a month in Florida was costing us like, I don’t know, 1500 USD for like a month. And that’s like booking it for a month. Right? So it was Yeah, much to it. Yeah. And that’s just like through and that’s a month like you get a booking, like if you were to rent that for like a week, you’d probably be paying more like 900 bucks for the week. So yeah, so there’s just like a lot of opportunity I find in in the states just because of the amount of tourism coming in to some of those key areas where it’s like, oh, people need a vehicle in Florida. Usually like a lot of Airbnbs like people charge you pool heating, you know you want to heat your pool it’s 30 bucks a day, or you want to barbecue 25 bucks a day you can rent that too. So you just see so many ways that people are making additional revenue on top of just their listing that I just find it a lot of opportunity

Erwin  

right can you sell me Disney tickets for cheap

Matthew  

that I don’t think you can but I’m like I’m sure you could like you could get creative and maybe like offer people I don’t know, gift baskets or something like that to you know like going Aliexpress or Alibaba and order a bunch of like Disney stuff for cheap and sort of give it to guess is like a welcome gift for free.

Erwin  

So I want the listener understand like most people are not this vertically integrated Have your own traffic to your property.

Matthew  

If you didn’t, I mean, like I said, like the numbers that I was stating were really more like what you see when you go to like air DNA and you do your research and sort of see like what, you know, an air DNA is just like a research tool you can use and it’s pulling historical data based on other people who also don’t have your following. So those are numbers that you’re seeing based on, you know, someone who doesn’t have the ability to market to other people still taking data

Erwin  

from Airbnb, VRBO. Home, I don’t see what’s what’s the sort of one that’s

Matthew  

a big one. Okay, but I don’t I don’t want to pull data from there. I know, it’s like, majority of the data that you pull will be from Airbnb, right? Yeah, no, so you’re getting a relatively accurate

Erwin  

sort of just for listeners benefit that the data is representing someone who’s paying for traffic via Airbnb versus you can drive your own truck some of your own traffic as well.

Matthew  

Yeah. So when you’re using air DNA to like run your numbers, it like air DNase using historical data from let’s just say Airbnb to be like, Okay, well, we know similar properties to this that have four bedrooms, two baths over the last year, they’ve been able to generate, you know, $100,000 in revenue at an average rate of $400 a night 65% occupancy. So

Erwin  

they’re in the show, even though even the listings in your area, so you can

Matthew  

pay extra I mean, you don’t even need to pay extra you can use like their rental laser tool for free and get like at least that base knowledge. But then yeah, you’re right. If you want to pay a little bit extra for like city specific data or state specific data, you can do that and get even more granular with their numbers.

Erwin  

I think it was paying like 40 bucks a month. It’s been a while. Yeah,

Matthew  

they can, they can be pricey. I found like, they really I mean, I only use a free, I use a free option to give me like a base idea. Like, okay, give me a broad general overview, like okay, how much can I potentially generate? And then I dive deeper by just using Airbnb itself to sort of see what other bookings are, are there and other listings and competition to kind of get a better idea of what other calendars look like, for the next few months. And you can really do a lot of this stuff for free. You don’t need to necessarily pay for that extra information if you don’t want to.

Erwin  

And how was your experience with traffic Airbnb wise, because we’re in the middle of a recession? It’s funny because I often joke like, like, for example, where was I? I was skiing. This is full Blue Mountain or something? No, I was I was a blue mount a few weeks ago. Oh, yeah. Summer session. We’re having places packed on a Monday. Yeah, not a holiday. Yeah. People are dropping 100 bucks. 120 bucks on the lift ticket.

Matthew  

Oh, man. I mean, we were just in the Bahamas for for a week. And same thing. I was like, it’s full. Everyone’s there. And there’s like a Palm Desert isn’t the cheapest place to to travel to and like you’re just like, man, like, I don’t know. Yeah, it sounds like you’re going to these resorts or ski hills in this just empty because someone’s going out. So like, there’s a recession. Obviously, it is impacting people, unfortunately. But there’s a huge sector of people who aren’t impacted and like they don’t care. They want to have fun. They want to live their life and enjoy themselves. And, you know, we live in a world of instant gratification. So I think like the days of not doing things to hold off, because it’s like the best financial choice. I feel like maybe the generation coming up isn’t as inclined to do that as like maybe our parents generation when they’re a bit more willing to make those sacrifices. I feel like now people are more inclined to be like, Wow, just put on a credit card now figured out lame. Hence my credit card debt site had an all time high. I think right now, too, right?

Erwin  

Interesting. Not the people I roll with, but I will send you a low I roll with are generally much more well off than their parents were. Yes. There’s that too, as well. So one observation I made was, so I see the same place Christmas holidays in March Break, March Break this past March Break with not nearly as busy. So as I was talking to one of the staff a ski place and like it’s not that busy. She was yeah, my friend at the bank, though, says that people are just taking out money and all these different currencies. And that’s where we’re just guessing people were going so people went took a bigger expense to go travel overseas than to go ski so for small, my small observation is people are spending even more money now than they were during Christmas holidays. Yeah, I can’t believe it. I think like is that what you’re seeing that like you must see some of this in your Airbnb information in terms of your bookings or whatnot? Like I imagine you’re busy.

Matthew  

Yeah. So I mean, I found like, March has been a bit of a slower month but I think it’s just because of the weather’s been you know, it’s not like it’s just all yourself, though. It’s all Canadian based right now. Yeah. So for

Erwin  

Florida bookings have been crazy. Yeah,

Matthew  

right now like all the properties that I’m looking at and when doing my research like most of them are 100% occupied for these months. You know, you’re still getting like the snowbirds going down to Florida. They just have no interest in staying up here for the winter so they’re going down regardless every year but even with our berry properties like I’m always amazed at the I’m always like blown away by the amount of money that people will pay for like an air b&b and Barry I mean like this is a four bedroom, two bath bungalow. We did like a renovations. It looks great inside. We did like a little you know, nice like media room downstairs. 75 inch TV a few aims. And when I was initially setting this up, which would have been the last summer I was setting this up to sort of test it out to see how it would do. I was thinking like my max rates during peak season would be maybe like, three 350 At night type thing. And like we’ve had people no word of a lie pay is $800 a night for me like we allow up to like 10 people’s, we allow bigger groups because we have, you know, it’s a four bedroom house, but like we’ve had people pay upwards of $800 A Night to like, stay at a house and bury so like the numbers blow my mind. Sometimes I’m like, What’s the

Erwin  

occasion? Was there an event or no, like, like a pop concert or?

Matthew  

No, I mean, if it’s like there’s Boots and Hearts, which is like a country festival there that we have had people pay pretty good rates. But these are like on a like on the normal weekend. Like a normal weekend, people coming up because they’re like, oh, summer Christmas, like, but over Christmas time, we had family staying with us. And they were paying pretty good rates, probably about like 600 Nights 700 night, but even just like in February, for like a two day weekend, people who booked they had a group of 10 of them as a group of friends going up there for like skiing. And because we charge additional rates for any guests over five people, it helps gives us like a night nice extra boost. So they’re paying I think 400 bucks a night regularly. But then with the extra guests on top 50 bucks a poppy tonight, it ended up increasing our rate to about 800 bucks a night interest. So when you kind of divide it by 10 people, it really ends up not being that much per person, I’m sure when they broke it down by I think just for us like we like I said we’d like to put in higher quality furniture, we like to do different things that just make our property stand out. Like Like I said, 75 inch TV instead of 55. Like a lot of people do create a nice media room, and we got a foosball table and a ping pong table. So kind of gives people a little bit more to do that makes us stand out. So people are willing to pay a little bit extra for that.

Erwin  

And then just naturally, you don’t have to provide it you just provide the venue for the greater experience to happen. Yeah, right. Because you don’t you don’t get that when you’re on like five hotel rooms.

Matthew  

Yeah, exactly. Exactly. So I think like when you get larger groups, because we can do that. It’s like when someone wants to break it down. Like if you were to book five hotel rooms, like how much is a hotel room at night, probably like 200 bucks. 250. I don’t even know if 300. So you probably get like, a significantly higher cost. If you were to stay in hotels. And if you were to just book one place, and then you can all stay there, cook your own food, have a community have TVs in the living room to like lounge in. So it’s different experience.

Erwin  

Totally different. I’d much prefer to really enjoying it. Now. We’re running a time I need to ask for the YouTube business. Okay. Because you’ve been you guys have been out for a long time. Yeah. How long?

Matthew  

We’ve been doing YouTube? I think roughly it’s probably been about 10 years now.

Erwin  

So what’s it called so people can look it up? Yeah,

Matthew  

so our main channel is Health Nut Nutrition. That’s the one that’s run mostly by my my wife. And then I have my own channel. It’s a smaller one. I just started the other. The other year. It’s just my name, Matthew Varga, mine’s more focused on finance, Airbnb, real estate investing. So that’s obviously my focus. And then my wife’s one is more on healthy food, cooking healthy lifestyle, childcare stuff, like parenting stuff. So, so we’ve been doing that for 10 years, we originally started YouTube. 10 years ago, we moved to Australia for two years, we went and live there backpack travelled Southeast Asia and Australia. And we were doing YouTube just to really mostly for our family just sort of like documenting our travels. So they because at the time, there really wasn’t vlogging or, you know, people were making a living on YouTube. That’s how we kind of got into it originally. And then my wife sort of kept going with it. And she started doing more like the recipes and healthy lifestyle stuff. And then just over the years just exploded and in grown into what it is, you know, today, we’re like I said, we’re hitting a million subscribers, I think we’re somewhere like, I don’t know, 100 million views or, or more. So we’ve really, you know, like, created a community online, which is just like a really cool, cool thing that we were able to, you know, not only like, make a living doing that, but we’re also able to, like provide value to people all over the world. And you know, it’s pretty cool the world we live in now.

Erwin  

So I’m assuming you monitor that YouTube pays you for like your content. Yeah. What kind of rates do they pay? I don’t know if you know, yeah. So I want to ask you what you get paid. But what kind of, because I think like most people have no idea. Yeah, first of all, I don’t think a lot of people know that YouTube will pay content providers.

Matthew  

Yes. I always find like one of the first questions like when we like you tell someone what you do. It’s like, oh, what do you do? It’s like, well, like we do YouTube people always ask like, we get paid for that. So like yeah, and then the next question they asked I think it’s like the only job in the world where people can be like, well how much do you make? So they asked like people always ask that I find like you would never ask someone else that like when you first meet them but I think because of the nature of it. Yeah, so like

Erwin  

what you guys are your lives are out there on the internet.

Matthew  

Exactly. And like because we’ve been doing for so long in the sighs I mean, like we get spotted all over so it’s like, become a really cool thing. But so with YouTube, we have different ways that you can like make money from it. Obviously we have like AdSense revenue, which As the ads to get put up on our channel, like before you watch it as I’m sure we’ve all, you know, click the skip ads button many times before but so that’s why pay so I don’t even see them. Oh, so you pay? Yeah, so we get, we get ads through that, that brings in five figures a month off of just ad revenue. Yeah. And then we work with brands. So we’ve worked with it. We’ve worked with Amazon, Walmart, Target Sobeys, like, you know, big multinational companies on lots of different like campaigns and different things.

Erwin  

Like brand ambassadors for for large businesses.

Matthew  

Yeah, usually, it’s sort of, they’re paying to be like, hey, like, we want to, you know, either new product came out or just market awareness. And they’re paying us to be mentioned in a video, one of our videos where we’re talking about either the product, so a product review, yeah, sometimes it’s like food, where it’s like, oh, we work with Sobeys. And we create, like a recipe, using their food products. So they are getting market exposure that way. And I mean, like, that’s also like, that side of the business brings in multi six figures as well working with these large companies. So definitely, social media is a lot more, I think, a lot more lucrative than like, you know, people would probably anticipate maybe not so much. Now, I think people have no idea going into going into No, we were just doing it at that point. Like, we were making nothing like I think we Nicole was really doing it for a number of years making no money at all, I think like the first thing we ever got was like a free straw one day. They ever going back like six years or something like that. But it was like, literally, it was like, here’s a free glass straw. And we felt like, whoa, like we, we just got like, if someone gave us a free product, just to like show it on our channel is mind blowing to us. And then, you know, when we were able to monetize, I mean, back then there wasn’t as much revenue being made from it. But I remember like, when we made like, our first dollar on, like YouTube ads, and you’re just like, wow, and then you just started like to see the snowball just gradually over time being like, oh, and now I mean, people make millions doing, doing YouTube and doing all that stuff. So it’s a cool question.

Erwin  

How does anyone price say, say I want you to, you know, feature my, my water bottle and on your show, just sort of do a product review? Whatever. How does one price that I remember falling Tim Ferriss and how he was trying to price promoting anything on his stuff? It’s not easy. No, it’s all pretty. This is all still pretty new area. Yeah. Not not completely new area anymore. But it’d be based on like views, and I don’t know what else?

Matthew  

Yeah, so I think like, a few years ago, I would say like companies and agencies were maybe a little less knowledgeable and stuff. So like, they were paying more based on how much of a following your hat. So if you had a million subscribers, they were paying more based on just the total viewership that you had, and the size of your channel. But now they’ve gotten smarter. And they’ve realised that like, just because you have a big channel, like, you know, we know people with, you know, multimillionaires on it, but like they have zero engagement. So now, like companies are a bit more wise, where it’s like, doesn’t matter for for eyeballs and whatnot. But it comes down to like, what, what’s the engagement? Like, you know, like, how much are people interacting with your content, leaving comments, you know, like, normally, when someone’s paying you to show a product or show something, it’s like, usually, there’s a link involved to like, go to their go to their website, and like, check it out, or go to their social and follow. So now it’s like, those are things I’ve tracked, where it’s like, okay, where are people actually clicking on what you’re recommending to them a link to buy my water bottle? Yeah, exactly. Right. So it’s like, but if you’re paying someone 10s of 1000s of dollars to show your product, and then like, no one’s clicking on it, or buying it. And it’s just wasted.

Erwin  

Right, much more sophisticated now, much more sophisticated. Now, compared to what Tim Ferriss was talking about, because he was all based on how many listeners he had downloads he had, and that’s how he would price it.

Matthew  

Yeah. And that’s, like I said, that’s how it was done for the longest time. But I think now, there’s a lot better ways to track things, there’s a lot better ways to really see like, well, what value are you using during

Erwin  

benefit? Yeah,

Matthew  

yeah. So normally, it’s like, the more engagement that you can get, the more you can prove that to clients more you have examples of like companies that you’ve worked before, like, the higher that you can higher rate that you can charge based on that, right. And then it also depends on like, you know, there’s upsells and there’s bundles, like, Okay, you on YouTube and Instagram and Tiktok, you know, like, wanted

Erwin  

me on Airbnb, on product placement in my room, maybe,

Matthew  

you know, like, it’s like, oh, like, okay, like, we can do it for this. But, you know, like, we’ve worked with mattress companies, say, for example, and it’s like, okay, well, we can do it like this, but, you know, maybe we can work out a deal where you give us like mattresses that cost where we can buy them at cost, we can supply our Airbnbs for more affordable price. You know, so there’s different ways that you can like work with companies, you know, and like sort of figure out different things but yeah, you know, and then there’s other ways to obviously make revenue from like social media, like you know, creating your own products selling your own stuff online courses. Like I said before, we have like her own e commerce stores. So that’s another avenue that we

Erwin  

direct people to it’s your stores or is it on Amazon?

Matthew  

It’s our own store. So we do have Amazon affiliate, so you can make money through like affiliate links like Amazon or you know, other people’s products. But then we also created our own store that at first we started selling mostly like wholesale items. So because we were doing a lot of food stuff, so we have like a published cookbook. So we had a lot of food products on our store. So it’s like Oxo, you know, Oxyelite, the company on the big hand ergonomic handle. Yeah, so we were selling a lot of these products more like buying it from a wholesaler, you know, and then selling it online, typically with like a 50% margin. So we’d buy it for $10 sell it for 20. But then when you account for people packaging and the packaging supplies, we just found that the margins weren’t as strong as we wanted. So then we started reaching out to companies on through Alibaba and AliExpress. And like getting our own products made through them. So like silicone baking mats, glass straws, like different things like branded your Yeah, we’d have a branded with our logo on it’s

Erwin  

so sorry, isn’t deposited there. Because I think that’s really, really key is I believe it’s successful ecommerce business has to be have a strong brand.

Matthew  

I agree. Yeah, if you have a strong brand, then you can, like I said, if you’re just selling, like when we’re just selling other companies, products and brands, the margins were slim, like we’re maybe making 10% margin or something when you account for all the costs and everything else. And so your rip you off easily. Yeah, someone could. And then like once we started shifting, like, oh, we focused on like, well, we have our own brand, let’s start to like, make our own products with our own logo and our own like label on it. That sort of fit our model of what we’re looking for, like silicone baking mats, you know, eco friendly bento boxes and different stuff. Well, now it’s like, we’re buying them from, you know, China, say $3, you know, and you’re able to sell it at 20 $25. Right, so like, your margins drastically increase and like we’re not over, we’re not charging more than the market is for that type of product. But just because once we started going through, getting rid of the wholesaler in the middle ground and kind of reaching out and getting our own stuff made, like the margin has drastically increased, right?

Erwin  

Because I know a lot of unknown a lot of people approached ecommerce from from the product and did not develop a brand. So while those seem to have gotten out of the market, like a lot of people who started like the last five years, people who didn’t get enough get in early enough and folks who do not have a brand Yeah, they might have a logo and crap and stuff but like, they don’t have an audience to show it to.

Matthew  

There’s a big difference between like, yeah, having a logo and having like a brand and a presence and where people are like, oh, I want to buy your stuff specifically because I I trust you and I believe in what you’re saying and I know you’re creating good quality stuff. But yeah, I think because like over the last five years, there’s a huge push for like FBA, like fulfilment by Amazon and like all the Guru’s talk about how you can make, you know, millions doing that. So there’s a lot or see those ads anymore. No, you don’t want to see it that much. I feel like now it’s the Airbnb arbitrage model you’re starting to see a lot more of but like I do think that that’s, you know, it’s obviously very different than you know, fulfilment by Amazon. But that was like a such a push for so long. dropshipping and that, that I think a lot of people thought that was a way to, you know, make their millions and like you said, by not having a brand and actually like a holistic ecosystem where people want to like actually purchase your stuff. It’s like they eventually faded away, because once the market gets flooded with the same product at cheaper prices, eventually people get priced out.

Erwin  

And almost say, like your brain is also as a you and your wife, Nicole. Yeah, you are the brand. We are the brand you are. It’s a I don’t know, if you want to call it influencer marketing. I think it’s the label. It is. Yeah, it’s not a corporate brand. No, exactly. It’s just unfortunately, what a lot of people who are out of the business now it was just, to me, it was a generic name that we’ll never see again.

Matthew  

Yeah, yeah, I think because we do a lot of, we do vlogs and more personal content, too. So a lot of people who are watching us, like they feel like they’re part of our family and feel like they’re part of us. So when we are selective with what we offer promoted to people very selective because you need to be I feel like, that’s one way that like, if you try to promote everyone’s product, just to make a buck, you can lose credibility really quick. So we’re very selective about what we do. But when we do actually like something and promote it, you know, people trust us because they’ve been watching us for so long and feel like they’re part of our family. So it makes a big difference. Putting in that work ahead of time doing like social media and building a brand and a following. You know, you just have to be prepared to do a lot of work for no recognition for for a long time. I think that’s you know, the key is just being consistent in doing it. A lot that people don’t like about like social media is that it does take a lot of work upfront for some work yeah, like you were doing for search for so long, right? Like how long have you been doing it for you like you guys are? It takes a long time it’s like a slow steady grind by like, you know, it pays off dividends because I’m sure like, people you work with in your your industry, like your company and stuff. It’s like people buy like even myself like I followed you for a long time before I never actually met you We’re went to any of your events, right? If it’s like, oh, I have to watch someone for years seeing with like, anyone else that I’ve ever gone to in either events or done anything. Like I tend to be there personally like watching someone for years or a long time before I’m willing to commit or like to their stuff. So it’s like the grind that eventually pays off. But it’s just for so long. It doesn’t seem like it is right, right. Right. So it brings

Erwin  

up two points. So I’ve been blogging since 2010. Yeah. And the podcast start in 2016. Oh, wow. Really? Yeah, I’m wondering, I’m probably number two in the space in terms of when I started

Matthew  

your 12 listeners, isn’t that 12 her? Some people,

Erwin  

I’ve had some people declaring they’re the 18th listener. So we’re growing, we’re growing, but I was always building an email database along the whole way. So my email database is over 10,000 now so my so my podcast for example, goes to that date of email database. So I that’s the thing that I don’t think a lot of people understand. Just like the new the new E commerce people don’t understand that you need a brand. The news newbie podcasters out there, they understand you have to have an audience, existing audience. I got in with an existing audience. I only had a couple 1000 on my email list at the time when I started the podcast, which is why it went well. It’s why continues to do well, while we continue to see like all these new people podcasting, but it’s going to be a tough slog. Yeah, right. Yeah, do not have a an audience already to share it with. Then the other thing you mentioned, you mentioned that you follow people for a long time. I think that’s wise, because you need to understand people’s track record before you’d ever invest in them. Yeah, right. And I bring that up now because we see the all these gurus who who only did real estate in this boom period, never saw correction before and you know, they’ve coached their clients and now their clients are failing and it’s really sad times.

Matthew  

I’ve seen some people that I’m like, they you know, made million selling, you know, courses on Airbnb and other things. And like, I find, like, yeah, people aren’t willing to actually share like, what they’re actually doing are making a lot of times it’s just like, the surface sloths, a lot of the Guru’s, right. They just show like, I think we’re talking earlier like, it’s all just

Erwin  

good. recording all the good stuff, right? Usually they’re selling something,

Matthew  

but I find like, no one’s willing to actually show you like their numbers and what they’re doing like a lot of people are like, Oh, I make you know, seven figures on Airbnb, but then you don’t actually see show me like the numbers show me what actually what you’re doing show me like the background show me like, there’s a big difference between gross and net to like, any business owner knows like, yeah, let me see the properties right. Like, I remember I like I was saw some people there on a different podcast and someone in the US that I like, and I follow and I heard these guys on in their time with Airbnb business. I was like, Oh, wow, like, that’s really cool. Impressive. So it’s like, oh, I want to see what their properties look like. took forever to find these guys. But like if you’re if you know what you’re doing on like DNA, you can find people find their listings, all their listings are like three stars rated poorly. Clearly, they’re not actually running their business. Well, meanwhile, they’re selling 1000s of dollars courses to teach people how to run an Airbnb business department for money there. Yeah, exactly. So it’s like, sure they had their 10 properties or whatever that they were saying. But like, like I said, I looked at and you’re like, Okay, three stars, no future bookings, like, get you’re telling people like, I’m gonna teach you how to make money on on this. It’s like, I think just people need to know like, there’s a lot of people out there like selling the snake oil. Right? And like, gotta like dive deep into it. I think if someone’s not willing to like, show you what they’re actually doing. Show some numbers show some like physical proof. Yeah, show me the property show me like what you’re doing. If you’re not willing to do that, then like, it’s probably cuz you’re full of BS. Yeah. Right. So I think like, or someone just come out of the woodwork where it’s like, like, I think you’ve made that point before. It’s someone who just got into real estate a year ago, or, you know, and then five years ago, even Yeah, even five years ago, it’s like, Well, you haven’t really been through the ups and downs and learned different stuff. So just be mindful, be mindful in our first

Erwin  

choice. But these groups that like they celebrate the deal, like a deal getting done, which is great. Celebrate getting a deal done. But often all these deals were not any good. Yeah. As in like, even the numbers going in weren’t any good, right? You don’t celebrate that. But in your to your point, like, show me the numbers. Yeah. And when I saw the numbers, I see these folks trying to raise money on online on social media, whatnot. I look at their deals. And like this is this deal is terrible. Yeah. Right. But they’re telling everyone it’s great. And all these people who don’t know how to better deal, they’re like, Oh, I like the person all they seem really fancy the drive the drive, whatever, XYZ car, it’s really nice, you know, nice sunglasses or some nice hair, you know, they speak really well. I’m gonna invest in them without knowing how to vet a deal. Right? And then it all falls apart.

Matthew  

Yeah, so I would just say to anyone who’s like doing looking for like, and I’m a firm believer in coaching and I think there’s value and there’s so many things that I that that’s like one of my downfalls like don’t do enough coaching and I’m really trying to like, get more into it. Like actually, like hire coaches for things. I tend to always be at the mindset of like, oh, just figure it out myself, which is like, not the best way but like, I’m stubborn sometimes. But I’m just like, oh, whenever I do, actually, like have a coach someone who’s teaching me or helping me it’s like I find like it makes a big difference. It’s just like fun. Finding the good people because now I think it’s well known that you can make a lot of money coaching people, because people are always willing to pay good money to like better their lives and do different things. So a lot of people take advantage of that. So I think just like said, doing that research and looking at the scenes and like, if you have someone that you want to get coaching from, like ass, asked to be like, show me what you’re doing, like, let’s see some numbers here. Versus your properties. Yeah. So it’s not willing to show you like, there’s a reason because like, why wouldn’t so if I’m coaching someone about Airbnb, and they’re like, Okay, well, like, Let’s see your progress. And like, sure, like your take a look, here’s my calendar, here’s this, like, here’s, here’s the numbers we’re making, like, why would I want to hide that if I am doing good, I should be proud of what I’m doing. And if I truly believe I can help people achieve something better their lives and like I should be showing them how it’s how I’m better in my life, by that way, to you know, show them what they can do if they put the effort into.

Erwin  

I don’t worry over time by how to estimate Florida. Sorry, you’re talking about your visa? Share? Yeah. What’s your plan? Like? What’s your plan to like? split time living?

Matthew  

Yeah. So right now,

Erwin  

I’m actually curious about Yeah, so

Matthew  

right now we’re working with our lawyers to get an E one visa, the typical visa people go for in the US when they’re like a real estate investor, or someone who’s Canadian trying to get into the US usually go for an E two. So a lot of the people I know who are applying for visas, they’re they’re going for an E two, which is like an investor visa. And usually that one, you need to invest a certain amount of money into starting a company or buying a company in the US show that you’re going to be enhancing the economy there and putting money into the system. And that’s the route that you can go to get like a an E two visa,

Erwin  

these guys are open to foreign buyers. Yeah,

Matthew  

like if you can, if you can show like hey, like, really offensive. Yeah, and you can go in and be like, Hey, I just bought this x business, it’s generating this much I’m gonna hire these people like I’m, I leased an office space, if you can show, hey, I’m putting money into the economy and I’m doing it then like applying for a visa is it takes a bit to get through it. But like most people can be approved for visa, because you’re you’re bettering the economy there. And that’s what they’re looking for. So we’re going to do an E one visa, which is a bit different. And it’s just because we have an online store. So we already do trade with the US. So that one, we’re doing basically like a sort of like an investor trading visa, but it’s because we already have a relationship with selling to the US sort of allows us to get a visa without having to put like, a big initial investment into the US. So like the EU usually have to like put, like, you know, they usually say the numbers like $100,000, sort of what they’re looking for to show that you’ve invested in and you’re, you know, doing things with the visa that we have just because of what we’ve been doing already, it allows us to not have to actually put any money upfront, we’re basically just saying, Hey, we already do a lot of trade with you, we’re already benefiting your economy, we just are looking to expand in the US and do more. So we need a visa to help us with that. So that’s the route that we’re going just because you don’t need to put that initial upfront cost. So it really works out for us. But our goal is to spend probably like, more time in the US thing thing Canada like I’m not a big fan of winters, my thought is I would always rather vacation somewhere cold for skiing and snowboarding, then like vacation somewhere warm for for a week. So that’s sort of, you know, what we’ve been working towards. So yeah, our plan is to move down to Florida, and start really growing our Airbnb business that are in our investing down there. So we’ve already been working with, you know, Canadian investors and US investors looking at properties to really grow our, our US presence down there. And just by getting a visa and being present in the US, it’ll just open up more doors, better financing opportunities, if you’re a Canadian trying to invest in the US, you typically have to put a larger down payment no different than an investor foreign investor buying in Canada yet to put a larger chunk down. So by us getting our visa there, it’s gonna allow us to work with our investors that put less money upfront to buy properties. And I just like I said, I just see a lot of opportunity in us real estate, like we’re talking about the the numbers down there. And I mean, those are just like solid cash flowing numbers on just sort of regular, you know, properties for air b&b. So the numbers just really speak to us. So we’re just looking to devote more time and energy down there. And, you know, our goal is to try to help Canadian investors invest in the US just because there is a lot of opportunity there. But there’s a hurdle of like learning how to invest in the US and what you need to do and how to set things up legally. And like I said, the financing stuff. And I think that scares a lot of Canadians away from investing in the US, like a lot of people reach out to me. It’s usually that like, I don’t really know how to do anything down there. Like it’s a different market. It just seems like everything’s so different. So this just allows us to help people who want to invest in the US have a better opportunity of doing it. And like I said, I just think that the numbers speak for themselves there. So

Erwin  

you’ve been really generous with your time.

Matthew  

Enjoy great commerce. Patience. So long, it’s been a couple of years

Erwin  

you’ve been away. Yeah. Any final words,

Matthew  

any final words that you feel like you need to have some, like wise words of wisdom, I just think for people, it’s just be open to looking at, like, different opportunities. And I mean, like, when I got started in real estate, it was the traditional long term buy and hold, which I think is like, you know, was a great business model at the time. And like, I still think there’s opportunity there for certain people who are looking for certain types of, you know, safe, easier investments. But I think there’s just like, so many different things that have opened up over the like, since I started investing and probably since you started investing with like, Airbnb arbitrage cash

Erwin  

flow and single family home back when I started,

Matthew  

yeah, exactly like, back then it’s like, oh, you could buy a property and be like, I’m making 500 bucks a month off this, you know, get a couple of those. And you could leave your nine to five and, you know, like, run real estate as like a full time business, which I feel like, you can’t really do that now. But with some of these other options, like you do have that, that ability, it’s just being creative getting outside of like, the typical box, I think, like we’re a lot of people are talking about with real estate, a lot of those take a little bit extra work, you know, but I think like the work pays for itself. And I think also not being like if you’re not in a an area, or a city or province or state that the numbers make sense. Like don’t be afraid to invest like elsewhere in different areas where the numbers make a bit more sense, the work upfront might be a little bit more, but you know, if you can, if you can get into a market, the numbers really make sense for you and can help you achieve like your actual goals in life. And I think it’s like worth it in the long run.

Erwin  

Fantastic. I have a selfish question. What do you think the market timing right now,

Matthew  

you would know more about like the Canadian market timing, I think US market talk to us timing is is fantastic. Right now, because I just think, like, I think earlier, there’s a lot of creative options, because people are sitting on properties for months and months at a time you’re seeing like, prices drop in a huge, huge drops, because rates are going up because rates are going up. And like a lot of people today. Yeah, rates went up again. So people aren’t able to unload their properties, there’s a lot of supply on the market. So people are willing to be creative. So if you can come in and offer them, you know, seller financing option that works subject to you know, like I’ve been learning more and more about that down there, which is like another great creative option where you just take over their mortgage payments for them. So you can actually look to do something like that, where you might be able to take advantage of their low interest rates that they had from locking in a mortgage like two years ago. And people are really open to that sort of stuff. And I also find even if you are looking at like the Airbnb arbitrage route, I find like I’m getting a lot of people in the US who are like really open to that when they probably wouldn’t have been a few years ago or last year because they would have been like, well, I can just do it myself or I can rent it long term. But now that there’s so much supply sitting on the market, like people are willing to give up two months rent free, lower security deposits, like different things are willing to like give concessions where you know, like we know a year two years ago, you rip roaring Yeah, like, like they were in the driver’s seat. And if you wanted to get something you just had to like, take what you were given and, you know, hope for the best words. Now I feel like people who are willing to like who are actively looking to buy or do things like you’re in the driver’s seat, you have a lot of opportunity to like, negotiate and talk to people if they’re not willing to be flexible or do what you want. And let’s move on to other properties

Erwin  

raising man, thanks so much for coming in.

Matthew  

Yeah, 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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**Transcripts are auto-generated.

 

Erwin  

Hello and welcome to the investing show. It’s Erwin Szeto. Interesting thing about the show is I never have any idea what episodes will perform well. And last week’s episode with Ben Bergen did indeed surprise who knew that you are some good listeners would be interested in a newer investor who almost lost it all. Even though they’d spent they spent around $50,000 In real estate investor education. Please allow me to reiterate based on my inner observation, what allowed Ben to survive with a he was local to his investments. So we had a local team, and he can be hands on beyond sight the hands on, he then has a construction background. And because he’s full time in real estate and allowed him to have more control in his project and control his renovation costs for an out of town investor who doesn’t understand renovations, or how to work with contractors and has no income coming in. Because they already quit their jobs on some sort of promise to retire on real estate investing that and plus investor we’re Flirting with Disaster. I’m not saying don’t go big, I would just say go about it slowly. Ideally have deep pockets from a quality portfolio of properties or security, and to have high quality mentorship and coaching than those who went bankrupt recently. I’ve had several guests on the show who follow that exact path. Charles was difficult. kowski can be in the panache, Ryan cars or Koechlin. Quint de Souza, St. Good, trotty. Nice and Stuart McPherson from Ottawa, cherry. All of the above investors benefit from the market. A lot of time in the market. They’re still investors, strong analyzers, it already made very good incomes before investing. Some have extensive renovation experience and construction experience, some benefited fitted from intergenerational wealth. The whole point of this show is to share with you my 17 listeners, what has worked and what does not work. None of the above, investors went as highly leveraged with expensive debt as the folks who are losing their shirts right now. That’s, I think that’s pretty obvious. None of them we’re trying to be nearly as aggressive and grow as this fast early on. Back to our last guest has been Bergen. What surprised me was how many folks DM Ben and I, their approval and sharing the truth about real estate investing, which include includes a near bankruptcy, one said it was refreshing to hear an episode that was not all about cheerleading rah rah, getting rich quick, let alone tie leverage in real estate. events during the same event had some big names in the industry sending along positive messages, folks who did not know Ben previously, it says investors derive value from learning from loss. So they made it void the same, which is why I don’t understand why some of these networking coaching groups are not open, about sharing about losses that are going on even within their own four walls. Even Warren Buffett, the greatest investor in the world, maybe because he is the greatest investor in the world. He’s willing to suck up his ego and share lessons from, for example, the Kraft Heinz merger that didn’t go perfectly well. Mostly the company did quite badly, or why his airline investments were losers. I do believe all educational groups mean well, but teaching excessive risk not sharing about losses in my experience. Well, note that I’ve seen this all before. I’ve seen people go belly up back in 2008. From excessive greed, ego investing back in 2008. During the credit crisis during the correction during the recession, those who failed to teach history failed to prevent their clients from repeating history. Shut up to professional real estate coach Elizabeth Kelly for referring Ben Berg into me and the guest of the show on a personal friend Jerry and I had a wonderful March Break. It wasn’t without bumps. We found out last minute that our short term rental we were sharing with our friends, short term rental STR for short, had a max limit of occupants. So when we were over it, so we had to borrow our friends College, thankfully, potentially Wasn’t she didn’t need it. At the time. She wasn’t using it at the time, while our friends stayed in an str. we skied for five days, while at least the kids and I did we see for five days as they were in heartbreak camp. Do the parents that we were with are mostly accountants. So they can see nearly as much as I did, some didn’t see at all as it is tax season including green cherry. So I booted around the hills checking on everyone’s kids. I hang around my kids camp for quite a bit as as well as 80% of the time I had no one else to ski with. I was welcome as I stayed away from the state of truckers way and I had some use to the kids. Because I happen to have a highly valued skill I was able to lower raise and lower the chairman restraint bar. For those who don’t know that’s the that’s like a seatbelt when riding a chairlift at a ski resort. By midweek the kids have learned how to lift and raise their own restring bar so I started getting ditched which makes me emotional this small moment is reminder how my kids are growing up in need me less and less I know they won’t be around next season. No, my dad jokes are pretty horrible. I tell them to their friend, I tell them to their friends anyways, they’re kind of at the laugh, but they are terrible. And soon enough, this old man will be able to keep up with all these young kids. I’m grateful to provide and enjoy these experiences with my kids as my parents. They immigrated here to Canada, when they were only 17 from a tropical climate of Hong Kong, with no money and no one to teach them the basics of university before so I only ever skied during school trips growing up, which is already grateful for an opportunity many hours. To this day. I remember seeing my friends at school, in their nice ski jackets, they would collect ski passes, so they leave like the ski pass attached to their jacket. And that was never me. So to this now to fast forward to today. I didn’t say I’ve had friends comment that you know, electricity tag on and like yes, and I’m keeping it there. It’s silly. I know it’s silly. Maybe I’m just making up for lost experiences. onto this week’s show. We have founder of property technology company, Bill Lika. On the show, he is the founder and CEO of SingleKey. And if you haven’t heard of them yet, you’re going to want to pay attention to the show, because in my experience, they are providing investors a tonne of value at affordable prices. SingleKey is now the largest tenant screening service out there especially with their last fall they acquired a company called Naborly. So if you been an investor for any amount of time, you likely know who Naborly is single T has consumed them. So now their their tenant screening services have, you know, scaled up and include best practices from both companies. The majority of professional investors I know, were already using a SingleKey before I ever met a biller, because it’s cheap. It’s cheaper than it was one of the great things about technology is it’s brought down the price of credit checking tenants. It’s done online, using their fast cheap encrypted software. And the reports are written in plain English. Even our local bank REIT uses SingleKey and they have I don’t know how many hundreds or 1000s attendance. Anyways, below is a smart, he’s super smart. As you can tell. He has both degrees in engineering, and an MBA from the same business school that I graduated from at Western University in London. On today’s show below shares his journey of graduating from school and starting up a real estate technology business. He was previously in financial services. And he’s brought to us this company that a small investors get to use the same tools that big corporate REITs use. SingleKey will even underwrite insurance on tenants, which can be purchased by the landlord, US or the tenant, the tenant can insure themselves. How amazing is that? For anyone who follows the news or has been around or have people have friends or family looking to rent places, then you know that the rental market is highly competitive in most many major sized cities. If I had to enter a bidding competition to rent a place, I personally would insure myself, I would buy insurance on myself to be able to pay rent in order to set myself apart. Hopefully no one thinks that’s a red flag that I have to buy insurance. I would do everything I’m big on winning, I enjoy winning, I will do everything in my power to be able to win in a multiple offer situation. Villa was also kind enough to share what features are coming up in the next few months that will forever change, change how we screen non Canadians and also report tenant rents on your credit, aka Equifax. This is not an episode to be missed. So please enjoy the show. You really need to know what’s on the horizon for for Best Practices and Technology for tenant screening. So you do not want to miss this. As a bonus biller was kind enough to provide us a discount code. It’s Irwin, five letter word starts with an E, my name. And now we get to 20% off of your tenant screening report, your tenant screening and background report. And it also works on Americans. I’ve included a link in the show notes. Please enjoy the show. 

 

Erwin  

Hi, Viler, what’s keeping you busy these days? 

 

Viler  

Erwin, how are you? Thanks for having this podcast. What’s keeping you busy? Well, running SingleKey is kind of like my day job. So that’s always a nonstop project. Some of the big things that we’re actually working on now in q1 of 2023 You know, we’ve got a brand new website coming out so keep an eye out for it two weeks from now it’ll be online and we’re working on completely refactoring our application. So all of the products you know and love the SingleKey are gonna have brand new look brand new features, all that stuff is coming up at the end of March. So as you can imagine, there’s there’s a bit of a spread now to the finish line to get a lot of these big initiatives out and excited to see kind of the results from them. 

 

Erwin  

So this is pretty exciting stuff and like we were chatting before we were recording. Tenant reporting has come a long way. I’ve been a landlord since 2005. So you know I was doing the old school and we didn’t even always get a cracked was having folks papers to fill up paper forms to fill out for tenant applications. And then like the process kept changing, like the regulations around privacy and whatnot. And like, I remember literally having a tenant fill out a form. And then the company that would that was going to actually run the check said, this one’s no good. It’s outdated. The Privacy language has been updated. Don’t do it again, like, oh, yeah, choice language for that. You know, I mean, it’s so much easier now, in terms of being a landlord and for tenants to submit, especially great tenants to deal to apply for rental property. 

 

Viler  

No, absolutely, I think I think there’s been a lot of changes kind of in the macro environment as well earned it because like, you know, 2005 was a very different real estate market than right. So I think the stakes have have increasing significantly where, you know, rents are higher property values are higher, also, it’s just a much more competitive rental market, there’s less stock available, there’s less vacancy than, then there was historically low vacancy. So you know, now we’re seeing kind of like, not only that, but also the risks are higher, too, right. You know, right now, we’re in an eight month backlog at the LTV, so you don’t lose a whole year’s worth of rental income. So 20 $30,000 is at stake, I tell people, it’s going to cost you more to have a baton in your property than if you total your car in an accident because of the losses. So what’s happening now is that you’d have to be crazy not to actually do due diligence on a tenant before you put them on the lease given how severe the losses can be. So where 10 or 15 years ago, were like doing a credit check was not really kind of the mainstream thing to do, people would just kind of like meet tenants, you don’t you kind of suss them out and get a good feel for them, and make a decision based on their income or whatever. Whereas now, people are going a lot deeper, and rightfully so because they have a lot more to lose if they don’t get it right. So for that reason, because it is much more of a need now that you’ve seen a lot of a lot more kind of products in the market like SingleKey like Naborly and so they have tools out there to help landlords kind of facilitate that process of tenant screen. Because you know, and we were talking about this before, as you mentioned, you know, before, you’d have to ask the tenant to go to Equifax or TransUnion. And actually, yep, I did that. And then just kind of by the report printed out and handed over, which takes a lot of time, probably why because you know, these are not consumer companies that they sell to banks and insurance companies in the volume of millions, boards of tenants isn’t really their priority. And they don’t have a great experience for that reason. So I think that’s where we kind of come in is that, hey, we looked at the rental application process, and they said, Okay, well, how do we make this super easy three clicks to order, like, you know, less than five minutes to get your report proposal entered, and the tenants make it a very simple, easy online mobile experience for both for both sides. And then don’t just stop with the credit report. But let’s ask for more questions. Let’s have a full on online rental application, let’s allow them to upload proof of income and pay stubs, an employment letters and IDs and pet photos and everything, they need to basically build that online kind of like tenant resume, and put together a nice package that they can hand over to the landlord. And then, you know, let’s do that in a compliant way, where lenders can get like a link directly from SingleKey and not just like a PDF that can be modified, etc. So the next frontier that we’re all kind of working on this year now is how do we build trust on that application? And how do we deal with some of the fraud that we’re seeing in the market now, especially given how competitive the market is right now, I don’t know if you’ve experienced any of that yourself. 

 

Erwin  

I see some crazy stuff. In terms of fraud. Like I was saying, before, we’re recording, like, you mentioned that you mentioned a lot of risks to the landlord, because properties are more expensive, or mortgages are bigger, right. So to be vacant, or sorry to be having non payment or rent is the risk is higher than ever. But for the listener, like don’t be scared. I’ve been at this for a long time, I think I’ve only had really one significant non payment of rent tenant. But it was it wasn’t a huge amount either. But my point is, the tools and technology are better than ever it kind of like you owe it to yourself to kind of go through that process and do their homework upfront, because I’ll go a step further. What I’ve been telling you, especially my clients have been telling you is you’re negligent to not do a proper tenant check. Absolutely. Right. Yeah, it’s no different if you’re, if you’re gonna loan someone $100,000 Here I am learning someone an asset worth $500 million, or half of that because they’re in the duplex of mine. That’s an asset worth, you know, 400,000 500,000. So a significant mount of due diligence is required. Absolutely. And it’s easier than ever. Right. And also, just to take it let’s take another step like I was telling you before, whenever you read about professional tenant stories in the media, I always tell people, like people always send it to me or people say, oh, what this happened this happened like, yeah, okay, read the whole thing. So that’s the first thing is read the whole article, get the entire story. And near the usually near the bottom, you find out that the landlord did not do a tenant checked, right? Or that the landlord did not Google the phone number that was given to them. Because literally, in one example the phone number led to a escort company. So if you just Google the phone number, they would have found out that that belonged to an escort company. 

 

Viler  

No, you’re right. It’s easy to kind of like check those things after the fact you know, like, oh, wow, I pay close attention like I could spot some red flags, you know, up front as opposed to being frustrating. 

 

Erwin  

So actually already recorded the time. missing men just with McKenzie on how to read your credit report. Sorry, let’s actually go back for anyone who doesn’t know SingleKey Naborly. What is it? 

 

Viler  

Yeah, at a high level, our mission as a company is let’s take the risk of renting for, you know, small landlords, independent lenders that are out there kind of, you know, building their real estate portfolio. And you know, as you know, very well are in real estate investing has become a very common practice now, for most agents to build, you know, to build wealth plan for retirement and kind of create greater a bit of a nest egg, right. So we want to do is make sure that they protect it. And what we found is where a lot of the landlords that are doing this out of their desk get in trouble is when it comes to these tenant issues, because they’re not, you know, they’re not like a big property management company. They’re not professionals, and they don’t have the team of paralegals and superintendents, and what have you do to really support you if anything goes wrong. So we decided, hey, why don’t we bring the tools and the scale and the risk management tools that the big multifamily guys have in the hands of the small mom and pop landlords are protected, basically, their investment and the way we do this in three easy steps. So first, we’ll help you screen your tenant do their proper due diligence that we just talked about upfront to make sure that you can reduce the risk as much as you can spot any issue that refines before you lease out to the tenant once you listen to them. Second step is we offer a kind of almost free rent collection tool that not only automates rent collecting for you, and, you know, basically through a pre authorised debit solution, but it also takes us payments or a portion to the Bureau, which is great for two reasons. First, it helps tenants build credit through their rent payment, which is very important. But secondly, it also incentivizes them to pay the rent on time, so that they don’t constantly miss it or late, which could affect their credit. And then thirdly, after we collect the rent, we then guaranteed even if tenants don’t pay, so that’s our rent guarantee programme, which is more of an insurance type product that basically, the lender pays us about 5% of their monthly rent. And in exchange, what we do is we guarantee up to 12 months of rental income, in case the tenants stopped paying. As part of that package, we also cover any property damage for up to $10,000. And we even support with the legal process of eviction, if required by hiring a local paralegal, having them assist you in covering their fees as part of that package. So the idea here is that, hey, let’s make sure you get your rent check no matter what even if a tenant stops paying. And then you know, if you do get in trouble with it, then we can step in to basically supporting the legal side. So you’re not stressed and worried about that process. And you know, one of the key principles around this is the fact that as a mom and pop, I’ve got maybe two, three properties Max, or on average that I’m managing, if one or two of those tenants stop paying the rent, who’s uncovered the mortgage, right, I don’t have the scale of 1000 units, like the big guys do, were bad rents is just part of my p&l, and now to 30%, I don’t really care about it. For me, as a small homeowner, if I lose that rental income, I’m a very difficult cash flow position. Now, because I can’t make I can’t make the mortgage, I’m at risk of losing my property. And we saw this happen during COVID, you know, when when we had those eviction bans in every province, where you know, some lenders want over a year, like getting your rent check. And some of them were in a very difficult situation, some of them have to sell their properties, oftentimes at a loss because there wasn’t liquid tenant in there, because they couldn’t afford to stay liquid. So the point with the rent guarantee programme is, hey, you can make use of our scale and our large portfolio to basically spread your risk over the 1000s of guarantees that we have, are just chipping in a little bit. But then hey, if you’re the unlucky laner that month that didn’t get take out that bad tenant, well, now we can actually dedicate resources towards covering your loss, Roski income, and then also providing kind of like the risk management solution and legal support that you need to kind of get the tenants out and, and go back to being liquid again. So that’s the whole concept behind the business, what I think is fascinating about your rental guarantee insurance businesses that tenants have to go through your application process. And then actually, quick question. So let’s say a tenant fills an application. I imagine you’re not going to insure all of them. Yeah, no, and I’ll get into that a second. But, you know, I love what we talked about before everyone we said hate you’d have to be negligent not to actually seen it that way. Oh, absolutely. Well put yourself in our shoes. Right, we’re guaranteeing up to $60,000 of Washington income for the Senate, that will be the same as us pretty much issuing the Senate a $60,000 line of credit. Now what bank? Can you go to and get a 60,000 credit without running a credit check? Yeah, you’re willing to put your money where your mouth is exactly the same thing for for the average landlord, even if you’re not on the rent guarantee, this tenant now pee, you know, if they stopped paying the rent, that you’re gonna lose tenant, it’s gonna cost you 10 or 12 months of rental last rental income, that’s a lot of money that you’re pretty much putting at stake. It’s the same as basically a right underwriting a loan for this tenant for that amount. And if they don’t pay, you’re in trouble, right? So that’s why it’s so important and critical for you to take the proper steps and go through that new diligence process. That’s the mindset, you have to think through that, hey, I’m giving this property to this applicant that’s worth 2000 $3,000 a month for 12 months. It’s the same as me, basically giving them a 20 $30,000 line of credit. Yeah.

 

Erwin  

I think it’s brilliant that you made this offering, because that’s usually the number one concern that investors have before becoming investors is one of 10 doesn’t pay with the trash property. So you have provided the solution for set problem.

 

Viler  

That’s how we came around to this. You know, we were talking earlier, Hey, how did you kind of guys think about how did you start SingleKey people with the original story? This was a concept that really kind of anchored, you know, with me, I’ll tell you kind of how we started. So basically, my background is I was an intern You hear the NBA same school, you went to the best business school in the world, we all know that. And then I spent about five years in kind of consumer risk and finance that you’re looking at the banks, the bank and Capital One. And then we were looking at, like, I was looking at credit cards at the time, we’re looking at, like the spend at the most people are spending spending 30% 40% of their of their monthly income on just rent. And there wasn’t much the bank was doing for them, right? There’s no financing behind it, there was no insurance, there’s no lending, there’s no you know, risk management. And we’re like, Okay, well, that’s a huge share of wallet. And you know, nowadays, you can go to clean tire and buy a fridge and put on a credit card and get some money behind it. There’s no financial instruments to help support rent payments or secure payments. So you know, we started digging in, started talking to homeowners started talking to tenants trying to get a sense of kind of what’s a problem that we can solve working, we add value as a financial institution. And that’s what we zeroed in on is that, hey, there’s a lot of challenges, you know, and yeah, you know, I need some help listing the property itself, finding good tenants need some help collecting rent, blah, blah, blah. But the one thing that was a need, like a must have was, I need to get that rent check at the end of the month, because I need that to be in a mortgage. Right? That was a real pain point that needed a solution. And once we looked into it and looked at the numbers, we’re like, Okay, well, this is a perfect use case for applying an insurance product to something that doesn’t happen very often. Because as you know, most tenants are good or great tenants. But you have a few bad apples there that when they do go bad, it cost a lot of money. So it’s the same as car insurance, right? You know, hey, you’re protecting yourself in case of a delinquent. In default, that could be very expensive. And we can put some sort of small premium against that to offset that risk and and spread that over large portfolio. And that’s what was seen when he was born. That’s a mouthful. Sorry, what you were, is that what you’re discussing lucky? Well, it’s 2017 was the initial kind of incorporation. So But five years ago, and then 2018, early 2020, right before COVID is only brought the rank guaranteed to market. Oh, nice timing. And that was a bit of a scary moment. You’re right, because the world pretty much kind of just completely flipped upside down during that period. And, you know, we thought as a risk management company, we’re like, Okay, well, it doesn’t get riskier than this, you know, you’ve got your global pandemic event, like, job loss, you have addiction banned. So you, we had Doug Ford go on TV and say, Hey, don’t worry about paying rent, make focus on paying your groceries, right, a nice guy out there, but you know, regardless, and, you know, it was a good kind of stress test, I think for us, because we were one of the few companies that was able to make it through that high risk period and come out the other side and still be successful and profitable. A large part of that is due to the fact that we always, we always kind of like focus on the underwriting first. So you know, like you mentioned, first, we don’t allow anybody to get on the rent guarantee without going through a proper screening, right? Getting a credit report, proof of income, all that stuff is part of the actual underwriting process. And while we actually have a very kind of a low hurdle for guaranteeing tenants, I would say 80% of the applicants that come our way get approved, we don’t even look at credit scores, we’re primarily focused on, you know, spotting any red flags, any recent bankruptcies, judgments, and then we’re looking at income, hey, do they have enough income or stable income to cover the rent payments, we’re looking for a 45%, you know, rental income ratio, or below, which as you know, is that’s actually a pretty low hurdle, because most lenders will look at more, probably more of a 30% Rent income ratio, so we’re able to go 45, and that’s based on gross income, you know, before taxes anything else altogether, including any assistance that you’re getting. So you know, as long as if he should be the primary checks and make sure that he, because you know, everything in life follows the 8020 rule, or 9010 rule where you know, 10% of difficult tenants are causing 90% of the headaches. So if you can figure out who he is the kind of really identify those folks in the application process, you can really manage risk very effectively for him or for him

 

Erwin  

The 80% of tenants getting approved is actually surprising to me, I thought I didn’t think I’d be so high. 

 

Viler  

We wanted to make sure that I mean, the point here is not to kind of basically put forth a barrier where we’re excluding people from this programme. And in the future, we’re looking to make it even more inclusive. And we’re looking for ways for now to actually also add in students or new to Canada, folks that have no credit, no income, hi, we kind of bring them in as well, right? The problem is constantly evolving and adding in more kind of segments. But the idea here is that he, you know, again, the vast majority of tenants aren’t good tenants, and bad credit score doesn’t necessarily mean a bad tenant. And I say that while we offer and sell a credit report product, but you have to take a bit more of a in depth look, you have to look at like, Okay, well, what are their debt payments? You know, how much? How much have the board? Have they been paying those those bills on time? Do they have any history of kind of constantly, you know, going to collections or kind of going through bankruptcy, you can just remember and kind of make a decision, it’s more of a holistic kind of view of that person. And we found that, you know, funnily enough, we found that credit scores are actually not the best predictor of tenant default, because somebody with a prime credit scores over 720 They’re gonna have their pick of the market right there, they’re gonna have an easy time finding a new place to rent. So we’re somebody with lower credit score closer 600 or below, they’re gonna have a hard time so when they do get that lease, they’re actually much more appreciative and more likely to kind of go the extra mile to be nice to their landlord and and kind of do what they can because they know they’re gonna have a hard time finding another place, you know, if they move on. So it’s an interesting concept. What makes the biggest difference in my opinion is just affordability making sure that you’re not biting more than you can chew. That’s why that that renting ratio Be matters. And on top of that, you probably want to layer on hey, what if they’re paying $2,000 in rent payments, do they have an extra 1000 bucks of that payments that they have on their on their credit, because at the end of the day, if you have money left over to just set aside in case of a rainy day, if you have access to credit, those are things that will help you get through a kind of like income shock, let’s say you lose your job, or you have unexpected expenses, having a bit of room in your income versus your expenses, is really going to make you a great tenant, and be able to get through those rough times. 

 

Erwin  

And just for the listeners benefit, like I’ve been through the SingleKey process and application from the tenant side, and it’s quite dynamic. And you can, like you mentioned, you can add, like your pay stub, you can add bank statements, your ID driver’s licence, you can add your whoever else is gonna be living with you. Right. So you know, if, for example, if you have two, three incomes in the family that doesn’t only help it will help their application. Actually quick question about that, that leads me to think, see, there’s three people on the application does the charge change for the tenant application? 

 

Viler  

Well, we do charge per applicant basis, because everybody will have their own credit history, their own background kind of information as well. So while we can kind of like it typically will ask for the household income, like you said, just to kind of assess the ability to pay for for the entire household, we will run individual credit checks and background checks for each of those applicants separately. But you know, it is kind of an approach on a per applicant basis. Yeah. 

 

Erwin  

And it’s only $25, retail. The Equifax was I think, like at least 36, if I remember correctly, and that was 10 years ago. Sorry, that was nearly 20 years ago. So it got cheaper. Right, yeah. 

 

Viler  

So I think more people use this. And now that the volume I think helps with it with that, and you know, keeping the price low is important for us as well, just to make sure that everybody, there’s no excuse not to use it. And everybody can go through that process. And it’s a product that’s constantly evolving, as I mentioned, at the end of March, that we’re actually releasing a new version of it, it’ll look a bit different, you have the option between the new and the old, but we’re adding new features. So for example, we’re looking towards adding an international credit checks, so you can actually scroll Wow, I’ve never seen that before. Brand new kind of feature now. And we’re working with a partner out in the US who has access to multiple credit bureaus across the world, and they’re able to cover about 60% of the world’s population, that will be a bit more expensive, but it will give lenders and property managers despise risk. Especially if you have no other kind of way of checking references for somebody that’s, you know, international business, at least, to kind of have a good kind of view of their, you know, financial standing. And the cool thing about this now is all the international reports, it doesn’t matter if you’re from India, or Europe or China, they’ll get standardised so they look just like an equipment, you know, the typical Equifax report. So you’ll be able to kind of read and understand it, they’ll even have a score that’s out of 800, similar to your Equifax standard credit score. So I’m very excited about that. Other really cool features that are adding, we’re adding kind of like an ID verification, again, to deal with some of these fraud issues or kind of remote screening. So folks that you know, if you can’t have them have a chance to meet them in person, but you just want to send them that application link, while we’re adding in a selfie and Id check where they’ll go through kind of an AI comparison of their liveness check, where they have to basically take a three dimensional selfie, and it’ll match your face with their ID and, and run their driver’s licence and make sure that they are. So that will be like an add on that you can add to your report. We’re looking into bank scans. So the ability for hey, if they have no credit, or you know, low credit, if you want to go one step further, and dig in deeper, we can allow you can allow the tenant to log in with their bank account, and we will look at 24 months of transaction history and assess money and money out. So you know, what’s their income? What are they? What are their spending look like? Do they have any savings? Even things like did they pay their last line or on time, because we can see the rent payments on their on their transaction history. So these are some of the really cool things that we’re kind of adding on to the technology stack. And these are the landlord benefits a lot more coming on the tenant side. Now we’re actually working towards building a tenant portal, where, you know, we realised that hey, you know, we’ve got 1000s of tenants coming to St. Louis being invited by landlords to run the rental application, what can we do to add value to them as they’re going through their kind of their own journey and moving into new home? Well, one thing that we realised early on is that, you know, lenders don’t like to see paper applications anymore, because they don’t trust them. Because they’re like, yeah, if you send me a PDF, or a screenshot, you can easily just modify those on Photoshop Photoshop, yes. 

 

Erwin  

So everything can be Photoshop, I trust nothing.

 

Viler  

So I’m not gonna accept that I’m just gonna run my own credit check again. Well, the problem with that is that you apply to five different listings, now you’re gonna get hit with five different credit checks, which is not great for your credit score. So what we’re doing is we’re building what’s called a universal rent obligation. So the tenant can basically get access to their SingleKey report for some line of runs before them, they can log in, and then just share a link for them from SingleKey directly with as many ones and it’s not non modifiable, they can just basically get it directly from us. So they don’t have a chance to change it. And even if you do print it out and hand it off to your landlord, it’ll actually have a QR code there. It says scan to verify me see actually, you can actually scan that report, it will take that SingleKey fee site and it’ll verify all information. So these are some of the things that we’re doing to kind of really kind of combat fraudulent credit reports, frozen income information because we can tap into your bank account and pull it directly, as opposed to just allowing you to upload an employment letter. So this is a great kind of use case of like, Hey, here’s the technology saves you from doing going through the manual steps by just automating a lot of these things through through different data providers. 

 

Erwin  

That’s super cool. Even other new features that you mentioned, like international credit checking, like that’s a huge win for international. Anyone, just for example, it’s actually interesting. It was always hard to get the data on how many work visas and student visas were being given out each year. So now we know the numbers over 400,000. And likely, these are all renters. Yeah, that’s a lot of volumes or process, right? 400,000 a year? Yeah, that’s a lot. How would we have ever processed their credit. And then what I saw in practice was people were usually asking you for six or 12 months rent upfront. 

 

Viler  

And I was just gonna bring it up as it that’s a big challenge now, especially like in the super competitive rental market that we’re in, you know, if you have no credit history, if you have no local income, you’re forced to basically pay up front and cash six to 12 months of rent, nobody has $30,000 in their bank account, to rent out a lease. So he puts he puts renters in a very difficult position. So we’re we’re actually kind of expanding, we’re actually running a test with our underwriting partner, where SingleKey will be offered as a as a guarantor service, meaning that hey, if you’re a tenant who has no credit history, and you need like a local guarantor, we’ll be your local guarantor as 

 

Erwin  

holy cow really, really willing to put your money where your mouth is 

 

Viler  

similar kind of spin off on the on the existing rent guarantee programme for landlords, we’re just taking that offering to tenants and saying, Hey, look, you know, we’ll guarantee your landlord and damages and legal fees, so that you in their eyes, you become a risk weekend, and now you get first line access to that property, and they won’t, they’ll feel more comfortable renting to you without asking for six months or 12 months, 

 

Erwin  

you’re coming to me as an insured a tenant. Exactly, that makes you much more better qualified candidate. 

 

Viler  

So that’s kind of a whole bit and the problem we’re trying to solve is basically how do we get people away from these large deposits and more of an insurance product. And this is a better solution for two reasons. First of all, the obvious solution is that it’s much, much more user friendly for the tenants, because they’re not having to write $30,000 checks in front, they’re just paying an extra 100 bucks a month for the for the insurance premium, on average. And then for the landlord is actually better risk management tool. Because, you know, I’ve had experiences where I’ve gone in front of the LTB with like a 12 month deposit, you know, needless to say, they frown upon that, right, and then keep in mind that a six month bonds it all it does is it just offsets the problem by six months, you know, like the risk doesn’t go away, he just gets pushed back six months, because what happens if the stock price went down month seven, now you still have an eight month eviction process ahead of you where you’re gonna lose a month. So it’s not it’s not a good solution. It makes it harder for you to be in fight those cases, it only does it offset the problem. The rent guarantee is a much better solution and is much more tenant friendly as well. So that’s kind of the mission we’re on now is let’s replace the deposit with the rent guarantees that you know, which were better for both parties.

 

Erwin  

This is exciting stuff. Oh. Viler. I apologise. I should ask the sooner just in case anyone’s confused. A SingleKey now owns Naborly so is Naborly effectively, just, it’s just not only a SingleKey as one company now. 

 

Viler  

Yeah, yeah. But we acquired Naborly in late 20, late last year, so about four months ago, that was a big kind of milestone for us. Because, you know, as you know, Naborly has had a great brand in the market. And they were probably the most popular where they know that, yeah, they were the most popular tool in Canada, especially since they offered the start offering a free report for a while, which made them very popular with a lot of lenders out there, they had built a great platform, very kind of easy to use very kind of a lot of focus on designing simplicity, and kind of getting as much information as possible from tenants and put together a great profile. And, you know, I think, you know, for us, that was a big milestone, because we got to basically acquire one of our main competitors, and also increase our reach by, you know, two or three fold and bring in their database of users on the SingleKey as well. And then on top of that, also getting their IP and their technology and being able to layer that on top of over offering the SingleKey. So some of these product releases that are coming to market now. And end of q1 is basically a combination of Naborly stack and SingleKey kind of coming together, putting forth the best of both worlds. So we’re excited to see how well received that that new solution will be. 

 

Erwin  

Viler, you mentioned something shocking before we were recording, you were saying that SingleKey is significantly more popular in Alberta than Ontario. Yeah, even though we are what like four times their size and population. 

 

Viler  

I wouldn’t say we sell more more in Alberta and Ontario, but on a per population or per capita basis. basis. Wow. Double or if not more Alberta than then in Ontario, because our risk is what’s greater here isn’t. Right. And it depends on the product. Some products for example, the report is really well in Alberta has been really kind of embraced by the community there and I think we’ve been lucky to kind of work with great partners and McKenzie being one of them. He welcomed us into His Alberta Linder community Facebook group and promoted us heavily and did a tonne of great get reviews. So we’ve been able to get awareness there much faster now, which is, which is great. So I think for this year, that’s the next challenge now is how do we kind of really get awareness get get everybody in Ontario, to know what we’re working on and how we can add value to their business. And you know, try to reach the same level of penetration here in Ontario that we have an Alberta, 

 

Erwin  

right, are you looking for penetration in Quebec and BC, where they also have difficult no laws? 

 

Viler  

You know, we are Canada why so we do well, in BC as well, we’re available in the Maritimes as well, Quebec is a bit more of a kind of a work in progress, because they have kind of their own laws and regulations. And also, there’s a few kind of language challenges that we’re wrestling with as well. So that that will be an ongoing challenge. Rocket back always gets like missed on everything. It is a market that does require these types of things, because are these types of solutions, because there are a lot of lenders out there having challenges, and we have a few kind of folks that use us and love us. And we want to do more there. If we have the opportunity 

 

Erwin  

Poor Quebec investors, for anyone interested investing in Quebec, you know, you can always talk to me, we can help you in Ontario. So I want to ask the startup story. So again, we went to the same business school, I studied startups, you know, I had the privilege of being lectured by one of our professors, or she wasn’t even really a professor, but the owner of Bombay company, or company, it’s no longer here. But it still is fascinating to hear his story he was, I think he was close to 80 years old. But he was so rich and so nice, that he flew himself in from, like, his house is built on a mountain, I think in California overlooking the ocean. So I’m pretty sure that the school cannot afford to pay him for his travel. But yeah, to give back. That’s what he did. He flew from California, to London, Ontario, the major metropolitan in Ontario, to teach us about entrepreneurship. So I personally have always enjoyed learning about businesses and businesses, I’m interested in learning about your own journey about you know, I imagine you had a lot, you’ve paid a lot for school. I’m guessing you’re paid a lot of money at your job when you’re working at the banks. Right, and you decided, screw it, I’ll start my own business. 

 

Viler  

You know what, I think there’s a lot of pros and cons to doing this Erwin. And you know, you’re an entrepreneur, so obviously, you know, kind of that very well, I think, on the pro side is that you get to do what you love. And you get to kind of like, you know, work doesn’t feel as, as kind of taxing as it does, you know, if you’re not doing what you love, you get a lot more kind of creative energy, because you get to kind of basically control your destiny and kind of do what you kind of think you get to respond to the market, you get to listen to customers and kind of do something that they appreciate and and kind of get that feedback, which is great. So you know, when you’re building that, that’s definitely the the benefit. The cons are that hey, now it’s just it is a very risky proposition, right, you lose a lot of, as you mentioned, you’d give up kind of stable income and kind of security for somebody that is a bit of a gamble. In that sense. I think I think also, I think by nature, you have to be somebody that enjoys this type of life, where you know, you’re not risk adverse, it doesn’t keep you up at night, you don’t have kids, so you can take a bit more risk. For sure, right. That being said, I see some of the more some of the most successful entrepreneurs I know are in their 40s. And they do really well because there cannot be they can leverage life experience and bring in a lot of transferable skills in the business. I think also, like, there’s something that, you know, it should be noted that it’s not for everyone, I think you have to stop there are certain I think traits and, and kind of characteristics that separate entrepreneurs from other people. And you know, you have to have the hustle and the grit and hard work, there’s no substitute for those things, you know, how smart you are a well educated, if you can’t do the work and kind of really kind of solve problems fast, you’re not gonna make it right. So you have to be a bit self aware as well. And I think for me, what gave me confidence is that this is my first business, I had another one. During school, I was out there kind of running my own landscaping business. And then afterwards, I heard all my buddies and we kind of had our summer jobs and kind of going door to door and selling and growing the business. So you know, at least I have kind of the fundamentals and the basics down on how to, you know, good run a business kind of sell to customers, talk to customers, build a team, manage them and all that. So which which was helpful for me, but I think you don’t really know until you try it. You know, the best thing that to do, especially at a young age during your 20s or you know, like you said you don’t have a lot of responsibilities. Take the shot, you won’t know if you’re good at it until you try.

 

Erwin  

It’s fantastic. And obviously, I’m guessing you’re pretty bright. You have your Bachelor’s in engineering from U of T, which I’m pretty sure it’s not that easy to get into. You have your master’s in business from the best business school in the world. Obviously, I have a biassed opinion. You’re no dummy. With a fair assessment, 

 

Viler  

Investing in yourself and your education. It’s probably one of the best things you can do. It’s by no means a requirement. I’ve seen a lot of fantastic entrepreneurs with no education at all right? Absolutely. But you know, it’s helped me I mean, hey, my first kind of like investors and kind of partners into the business. We’re all guys that I met at the ivy business school, right. Oh, the networking paid off this I love it. It opens doors, it also puts you in touch with people that kind of have the experience or the knowledge and the skills that you need. So it’s a good kind of supporting network in that sense, and people reach out to and get help and, and all that, right? Yeah. 

 

Erwin  

So for the listeners benefit, if you’re not familiar with how, at least how the MBA at Western works. Again, number one, number one business school and world does the requirement of entering the MBA is real world experience. So I imagined, from my own experience, when the MBAs that I met, it ranged. And on the top end, you would have occasionally someone who were serves on like six boards of like publicly traded companies. So again, the experience is vast in range, but there’ll be like top end, like literally, it’s actually funny, because that gentleman actually sat in the class by class was Managing Board of Governors. So they literally had someone who sat on like three or six boards, as a student in that class. So wonderful experiences to share in value and networking to be obtained at bat potentially, while doing an MBA. 

 

Viler  

Absolutely. You’re really selling me MBA or? 

 

Erwin  

No, no, no. So my own journey was right or wrong. I did consider doing an MBA at the time, I think the price tag was at least 30,000, before housing, travel costs, books, all those sorts of things. I literally chose to buy a house instead of an income property instead, instead. Not to say my point, though, is that networking, where there high value people is never a bad thing? Absolutely, it’s a great place to find high value networking opportunities would be at a business school. 

 

Viler  

Absolutely. And you know, what I, if I may add, I think, look, I think at the end of the day, the best way to kind of your life goal is to kind of build wealth and make money, entrepreneurship may not be the best way to do that. Because there’s a lot of risks, there’s a lot of things that go wrong, you may be better off just kind of working towards a high powered career as a lawyer or a doctor or what have you. Because, yes, it takes probably same amount of work, but the risk is much lower, because you know that if you have the skill set and the experience, you will have pretty much high a higher market market value. But I think the the X Factor is are you doing what you love, right? Is that kind of what gets out of bed in the morning and gives you energy and kind of kind of, you know, inspires you to kind of work hard and then push for some of the roadblocks. And if not, and if this is what kind of, you know, what drives you, then that’s what you should, 

 

Erwin  

just because I love options. One other option where view, for example, is I’m gonna guess that your executives are quite well paid. And they take considerably less risk than you take. Fair enough. So that’s it may still get a taste of the entrepreneurial world. So nothing wrong with that. 

 

Viler  

I mean, we do and look, at the end of the day, we’re still young business and fast growing business. So you know, everybody has a stake in our success, and we kind of all benefit, we all kind of go down together. And that’s, that’s right. So it’s, a lot of these guys took pay cuts to work as SingleKey as consulting or kind of banking or engineering careers. But they also have some upside. So if we do kind of really well, they’ll, you know, they’ll they’ll do well as well. Yeah, I think that’s that’s the main thing that to kind of think about, 

 

Erwin  

you know, I love it all. I don’t think there’s ever a wrong answer. I think everything’s great. 

 

Viler  

pointer as well. By the way, if if you want to try out your hand and kind of like working in a small business or startup, the best thing to do is go work for somebody else, right? Go work for somebody where you can learn on their dime. 

 

Erwin  

Yeah, let them take the risk while they pay you.

 

Viler  

Right, so it’s the best education you can get.

 

Erwin  

So I think we need to spend more time on SingleKeyKey because again, I think we just went through so quickly, for example, I’ve lost in rentals. Yes, that is that is your, your SingleKey accommodates for single student tenants. 

 

Viler  

Not currently but we are with a new programme with a new tenant passport that we’re offering around. So the one that kind of allows for new to Canada and students, etc. So we can kind of talk a bit about that. Sure. 

 

Erwin  

What about just like, you know, my typical tenants usually like you know, 20 years old. So again, my experience is majority of my tenants are Canadians, like they have driver’s licences. They’re Canadian. Actually, no law, young people don’t have driver’s licences these days. But for example, if I wanted to, and then in practice a lot of landlords student rental landlords do not and then give this to give context like my properties have usually around six students in them. I’m not talking about instrumental means a lot of the rooming I guess they already like Yeah. Oh, yeah. I think I don’t know how you lived when you went to Western. ruin a house that’s free? I said, Yeah, that’s that’s the scenario like a rooming house. Is that user like new? Yeah, it’d be house users can can apply using SingleKey as well. 

 

Viler  

They can definitely apply using SingleKey piece so we can run the credit, credit and background check and all that stuff and then process the rental application and show you know, the rent guarantee doesn’t currently support them yet, but it’s something we’re working towards. New Version. Yeah. 

 

Erwin  

Well, if they are willing to put a guarantor on it? 

 

Viler  

then yes, if they if they’re willing to put a guarantor that has income like a parent, then then we can guarantee them. Yeah. 

 

Erwin  

This is amazing, because like, for example, a client of mine, he listed I’m not listed whatever for rent, he had a five bedroom house, close to McMaster University, two kitchens, five bedroom in law suite. So two bathroom, two kitchens, not illegal duplexes in law suite, whatever, the single family home, he had 25 requests to see it. So if you’re one of those parties, and I show up with a SingleKey application, like we are guaranteed, yeah, you would really stand out. 

 

Viler  

That’s the goal here, right? So and yeah, that’s exactly it is, hey, this is a differentiator, it puts you ahead of the pack, especially now where it’s so difficult to, to basically compete and kind of there’s so much demand. And so that’s fine, you need any advantage you can get. So this is a great way for you to kind of really stand out and have a guarantor stand behind you. 

 

Erwin  

This is amazing. Because I’m I see this very low in the news, like people who are competing for for rentals. And they’re all looking to stand out. So for example, like it’s pretty common practice in downtown Toronto, where people show up, you know, driver’s licence, bank statement, you know, and they still lose, you know, they have, they have a six figure job, they still lose. Because again, like, if you have like six applicants, you don’t really, as a landlord, you don’t have the means to screen them all completely. Versus again, you show up with a guarantee, no guarantees in life, but 

 

Viler  

It sets you apart from other people, right. And it’s, you know, having a kind of professional kind of rental company also kind of guarantee you anything that goes a bit further than just having a regular guarantor, like a parent or so. Because we have a reputation to uphold, and, you know, we’ll make sure that, you know, we’ve seen you properly. And also, you know, hey, gave you a SingleKey, he’s willing to stand behind these people, it means that they are comfortable with taking on the risk or risk. So that’s, I think that’s a vote in their favour to say that, well, at least this tenant has been screened, they’ve been vetted, they are completely that, you know, they’ve SingleKey, he feels comfortable guaranteeing them, then as a landlord, I feel comfortable renting to them. 

 

Erwin  

And that’s so for example, if I was trying to rent in a competitive rental environment, so I could stand out by PrincipaI, versus your insurance as well on me. 

 

Viler  

Absolutely. Yeah, you’d basically approached us on the west side, it’s coming out in March. Now, there will be a landing page where you can actually sign up for that and go through the signup process and bet yourself and then we will kind of basically provide you a guarantee certificate that you bring with you, when you apply to to rental property over here, and say, hey, look, I am, I am a guaranteed guarantee kind of 10 by SingleKey. And then here’s the benefits of that is that, hey, if I if I default on rent payments, for whatever reason, if it was my job, or I can pay, you’re covered for the next 12 months of last rental income you cover for damages up to $10,000. You never for legal fees in case something goes wrong. So you can rent to me with peace of mind knowing that, you know if I can perform on this contract, SingleKey will backstop me. So that was amazing. That’s really the value proposition. 

 

Erwin  

I remember, back in a long time ago, I had this tenant who was an executive from the states who was relocating to Burlington, Ontario, for work, because he was he was the head of all of Canada. Right? He made a lot of money. I think he made close to $40,000 salary, but he had no credit. Absolutely. So the screening was difficult. This is back in like, you know, 2007 or something like that. So before SingleKey existed. I think you were still in University at the time. So the company could have just been the guarantor and insured him. And we could have sped up the whole application process 

 

Viler  

and attacked me if I wouldn’t be able to do things. So for Americans, we can actually right now we can actually screen them. So the SingleKey year report does work on American applicants as well. And secondly, we actually actively work with relocation agencies for exactly what you mentioned, we have, we have executives from Amazon coming over here making, you know, well into the six figures, and they want you they can’t get a lease because, you know, they have no credit, Canadian credit. And, you know, landlords are quick to kind of move on to the next applicant. So this is this is a great way for typically relocation agencies or realtors that work with these folks who will partner up with us to basically make sure that we guarantee them and then scan them. So that later feels comfortable ranking for them. 

 

Erwin  

That’s super cool. That’s super cool. And then what kind of security do you have in terms of like, protecting people’s data? For example, a friend of mine from their for SingleKey, for example, is the tenant who are filling up the application themselves on their own account? Is that correct? 

 

Viler  

Yeah, so right now typically, the way that works is that we you know, we have to be compliant with these because we you know, and we take security privacy very, very carefully, are very seriously probably want to talk to Mike and our team was spent the last three months kind of dealing with lawyers and the privacy commission, and everybody else to make sure that we’re compliance. And but we aren’t dealing with a lot of sensitive information. We’re dealing with kind of personal information, like your name, date of birth, potentially cin number, if you feel should fit, you know, if you share it, and then we’re also dealing with your credit data, which you know, if it falls in the wrong hands can be used to basically, you know, apply for a credit card or kind of fraudulent purposes. So, for that reason, we’re very careful in how we basically gather that information, how we share it, how we get consent from tenants, to make sure that we we do it properly. So the rule of thumb is typically we encourage people to or landlords to just invite the tenants to fill out our online rental application, that way, they’re voluntarily sharing their information. And going through that process, they’re also providing explicit consent to to actually, you know, run the report. So that’s a big kind of step towards that, we make sure that currently, the lender only gets access to what the report once the tenants fill out their information, and it’s available for the SingleKey people portal. That way we can kind of manage access, we can control the information, we encourage people to share kind of those reports through links, as opposed to just printing out PDFs and saving them on paper or handing them over. It’s going paperless. It’s a safer way to operate in general. But he also brought up Hey, do we have an offline version? Right? Yes, yes. Yeah. And the answer is yes. So we started to 

 

Erwin  

See the use case for for the listeners benefit. So for example, if I get a trades person who’s in their 50s, you know, you can tell by showing your shake their hand, they’re good at their job, if that’s what they do for a living, you know, typically they make a really good income. They’re pretty much all six figures are hardworking people, blue collar people, right? That’s likely someone I want to rent to. But in practice, some of them are not strong with a smartphone or a laptop, but I still want them to apply, right, I still would like to like to potentially have them as my tenant. So I’m in the past, literally, I’ve given people in that case, we asked him to do Naborly they weren’t, they didn’t have the tech savvy to do it. So we handed them a hardcopy. And so that’s available as well. 

 

Viler  

Yeah. So if you go to a SingleKey.com, go to the tenant report, and click order now, you’ll see two options there. And so one says invite the tenant, which is very similar to that Naborly application form. The second option says entertaining information. So we’ve had option that now you can actually just enter the tenants name, date of birth address, and potentially it’s a number is optional. And you can get the report basically run right away without having to invite the tenants to the online application that requires that you’ve gotten consent from them offline. So whether they’ve kind of submitted let’s say, a paper rental application to you giving you their information and their their kind of a consent, then that’s not probably you take a photo of that and just uploaded with along with your request. And we can basically just run the report and send it back to you. It’s also very helpful for folks, you know, for like you mentioned, folks that are having trouble with the technology, or you know, maybe more of an older applicants would be more comfortable kind of going down that path. But also I find that some folks have their own technology. So they’ll have their own tech for like property management tools, or kind of like they have their own rental application they like so no problem, you can keep using them. But when the tenant feels that you’re in publication, you can just take their info, entered the SingleKey and get the results right away, without having to send another invite to the tenant, and having them fill out the same information they’ve already provided. So it’s all about flexibility to give you more options to make it easier for you to basically run that report. You know, however you like, sir, 

 

Erwin  

anything guys don’t do. You don’t manage property?

 

Viler  

Finding tenants. Because that’s where we kind of you ever worked with partners like you guys, the house,

 

Erwin  

Viler, sorry, for the listeners benefit. Understand, like where we’ve come from, like I remember, I remember when things change, when paper, something changed in privacy where I can no longer I can no longer run someone’s credit report, even though they filled out the paper application. I remember having a discussion with one of these vendors that provide tenant checking services, they basically told us about all the hoops you have to jump through, we have to have like a filing cabinet that’s locked in there has to be inspected one time or something like that, to prove that it’s private was so then we actually moved towards, they will have to verbally tell us on the report and give us which was some bad actually, I actually didn’t mind it at all, because they were giving me my professional opinion.

 

Viler  

And that’s simply because we wanted to get her you know, API access to our credit bureaus. 

 

Erwin  

Right. Yeah, just so again, for folks, there’s a lot of hoops to jump through that you no longer have to jump through now that these technologies, what’s the term prop tech is real estate technology firms are doing for us? Absolutely. There’s really no excuse now to check your tenant. 

 

Viler  

Absolutely. Yeah, no. And I think as you know, there’s been a few data breaches, especially with some of the major credit bureaus in the past. So when that happened, they they really tighten up their policies, which is understandable. And I think it’s good for the market overall, to just have a better kind of better for the consumer, ultimately, and the tenants to take extra steps and protect their data and their private information. So it doesn’t get in the market. 

 

Erwin  

Oh, I didn’t actually the the credit reporting. Yeah, sorry. So SingleKey also reports rent to their Equifax. 

 

Viler  

Yeah. So now the way the way we do that already, is that we don’t we haven’t challenged with that, because we’ve seen some options available where you can just pay my tenant and pay the rent, I can just go and report it. We didn’t want to do that. Because I think that it’s kind of self serve. There’s no real you know, it’s hard to gather evidence. It’s very manual as a process. But why don’t we just kind of like, why don’t we pair this up with the rain collection tool and offer Canada’s first easy automated PD rain collection tool to small homeowners. And as you know, most property managers are out there, they’re doing volume, you know, 100 plus units. They’re all on peds because it makes life so much easier. Where you set it up what you set it and forget it and then just pull the rents automatically each month. So we said okay, so that’s that PD tool and then plug it in To Equifax is metric to formatting for reporting. Now, it’s the same as basically reporting payments on a credit card, that payment either went through or didn’t. And it’s black and white, there’s no evidence required. There’s no confusion around that. And there’s no debating it. So it’s a much more transparent, accountable, easy kind of solution to put in place. Currently, we’re offering it for, we’re offering the rent collection tool free for everyone to use for as long as you need to, for the first three applicants or first three tenants that they set up. And then we charge a small fee, I think three to $5 per month, that’s it. That might change them, because I think some of the A, we’re getting a lot of demand for it. So we may not be recreated more costs there. But be also the rules around kind of Canadian payment systems are changing a bit more. Some of them are good, some are bad. So like the cost is going up a bit. But also, payments are going a lot faster, we’re moving towards real time payments, which is a big innovation now, that payments Canada has been pushing towards for the past five years. It’s something that’s more akin to like the ACH system in the US as opposed to the for the processing EFT system we have in Canada. So we’ll be very excited when that’s one that’s up and running, because that means you can get your rents on the first of the month, as opposed to the third or the fourth. 

 

Erwin  

Okay, I have a weird question. There’s benefit, no one gets their questions in advance. What if I want to be paid? Can I charge rent in different currencies? Not yet. No, SingleKey is mainly for Canadians and 

 

Viler  

Mainly for Canadians. But we are enabling credit card payments for rent. And I’ll tell you why that’s important. Because for French nationals that, hey, I’m sending my son to study in Canada, he’s much easier for the parents and just basically put the rent on the credit card, and just say, Hey, I just wanna put on a credit card, see if you guys take AmEx, Visa union pay whatever MasterCard, I’ll just throw on my credit card, and I’ll pay the rent for them. And that was a worry about effects, I don’t have to worry about, you know, having to have a Canadian bank account, whatever, I can just put in a credit card, I’m done. And that’s great, because then we just basically build like that cars on a monthly basis as a subscription service. So whatever the rent is 2000 bucks a month, they just get the loan card, and anybody can pay from anywhere, which is great, because you’ll take your credit card from my Canadian to them. Right? Yeah, exact when the tenant gets the invite. Now, when your rent collection tool, so this will be available at about in about a quarters in about three months timeframe, when they get the invite to pay. 

 

Erwin  

Sorry, this was released in three weeks. And we’re talking about like, we’re talking on May, May 2023. Ish. 

 

Viler  

Yeah. So So and it’s hard to say now, because there’s a lot of competing priorities, a lot of stuff as you can see kind of coming coming online. But yeah, I would say probably around summertime, you’re looking at kind of having the option to pay rent with a credit card. So the way our rent collection tool works is that you set the terms you say, hey, rents 2000 bucks a month starting on March 1, recording on the first of the month, all right, and then you set up your bank account, then an invite gets sent to the tenant saying, Hey, are we inviting you to pay your rent online, click to set up your your payment method, and you can pay either through a Canadian bank account. So we can only take in a bank transfer now, three EFT payments, which are low costs are almost free. Or you can pay by putting a credit card in right now the credit card, it can be anybody that puts out from anywhere, you can pay that around. And there’s some benefits there because you can get you know, you can get points you can get, you know, credit by paying down the credit card, rewards, etc. It also gives flexibility for parents that pay on behalf of the student, 

 

Erwin  

especially my students. Yeah, that’s awesome. Yeah,

 

Viler  

I’ll definitely you know, as soon as it’s ready,

 

Erwin  

for example, like, well, one of the things I’m really jealous about Airbnb is, as an Airbnb host, you have their credit card. That’s incredibly powerful. Question, What about damages? For example, say they say they got drunk and fell and, you know, fell on top of the coffee table and broke it. Now I have a $60 damage. Can I put that through? I? 

 

Viler  

So it’s TBD? Because I think we have feature requests, feature requests. We’re looking at around the compliance aspect of that functionality. So if you’re on the rent guarantee, potentially, yes. But there’s still a few things to kind of work out there. Yeah. Okay. 

 

Erwin  

And then the longer term feature request is you guys ever want to collect rent and Bitcoin? Sure, yeah. Not right away. It’s okay. I don’t think they were falling onto the world’s falling apart yet. Yet? No. Viler, thanks. For more, so much like this is holy. Wow. So as we were discussing before, recording, like awareness, I think, was really the big problem for both yourself and for the public. 

 

Viler  

No, absolutely. Anything to kind of just like, you know, kind of summarise it all up, right, in terms of kind of what what are we doing? Why are we focusing on this problem? You know, if you look at kind of where the world is going, you know, five to 10 years, you know, there’s been a lot of changes to the real estate market and and just economy overall, right? We’re seeing more kind of long term renters out there folks that kind of can’t afford to buy real estate until later in life, so they rent for a lot longer. We’re seeing a lot of urban centres now become very expensive, right, and that we’re in a bit of an affordability crisis. Now that’s been an issue for over five years. And you know, as we started doing COVID, the government is now looking to take helps to protect the renters because there’s more of them. They’re staying renters for longer and then on guy that they are responsible for looking after. And then we saw them doing that during COVID, where they said, hey, you know, if you lose your job, don’t pay our conservative provincial government. Fair enough. And not just the same thing happened to all in every state in the US and had eviction moratoriums in some places a lot worse than than there were in Ontario. And now they thought California still has there is definitely a lot more. So, in my opinion, that’s a trend that’s not going to stop now. And you know, I think, you know, as we look to the future, housing is going to continue to get more expensive. Why, because there’s constant demand, there’s limited supply. So as affordability and vacancy crisis continues to loom, the government’s have to take legal action to protect tenants. But in doing so they’re making it more difficult and risky for lenders to do business, meaning Hey, hard to get tenants out, you know, more restrictions around kind of like what you can do and kind of flexibility there. So some of the tools that we’re offering, the rent guarantee, and these tenant screening tools are going to become more and more necessary as as time goes on, because the risk keeps going up and you know, keeps increasing in the rental market and our responsibilities. How do we kind of basically counteract that? How do we basically offer the tools, the scale, the the risk management, back office, that learners can count on to secure their rental income to protect their property and their investment, even as the as the kind of regulatory environment begins to tighten up around them? So that’s kind of where I see you kind of are positioned in markets. 

 

Erwin  

And it’s automated, and it’s inexpensive. 

 

Viler  

We automate it saves you time in the process as well. And yeah, absolutely. 

 

Erwin  

So thanks so much for coming on. Like you said, we needed more awareness, I am so much more aware of all these things, I had no idea, obviously, all these future future releases that no one knows about, like, I’m excited. 

 

Viler  

I’m glad you’re excited, because I’m hoping everybody else will be as well. And we’re definitely super excited to bring the stuff in market and see how our customers react. 

 

Erwin  

Or any final words about anything. You know, we’re the end of February, you know, some people think that real estate markets gonna collapse. I’m sure you’re hoping that’s not true. Yeah, no, I don’t have any more tenants. 

 

Viler  

Funny, because, you know, a lot of people ask the same thing, are you worried about your business collapsing, because the market is kind of turning right, engineers are going up, you know, prices are coming care, the price shock. And my response is that, you know, you couldn’t be in a safer business, because the housing is the is the most kind of necessary spending category that anybody has, right? Everybody needs housing, everybody needs to live somewhere. So if you’re a housing provider, or if you’re a grocery store, you’re not gonna go out of business anytime soon, regardless of what happens the economy. So I think that that should give you at least some peace of mind that you’re probably one of the safer sectors in the economy during this time. And you also have a big responsibility, right? Because investors and landlords play a big role that played a big role in bringing affordable housing quality housing to the market, we want to encourage more more landlords and to the market, go out there and kind of renovate properties, bring them in better state, and I can offer them to the tenants so that because that’s the limitation factor now is that we have a limited supply. We need more funding and more investment in that area to bring more housing stock to the market, because that’d be Yeah, 

 

Erwin  

I have no experience in this. But just give me a suggestion. I hope you let the media know in the government know when this when the international credit checks are available, because it’s there’s a bit of a disconnect in our governments and our universities, processing at post secondary schools in general, that they are regularly recruiting international students to come here, but we have a foreign buyer ban. So you may not buy hosts. So we landlords are the ones who are left to provide housing, but we have no means to properly screen them. 

 

Viler  

No, and if there’s any channels, or any reporters, you work with them, let us know because we’re looking to kind of find ways to kind of spread the word. But yeah, we’re very excited about that product. And I think we’ll be the exclusive provider for the international credit checks in Canada, at least for the next year or two. So we really want to rent that product companies as you said, 400,000 people, that’s a lot of folks in need. 

 

Erwin  

That’s like half of the new residents each year. That’s a lot of people.

 

Viler  

It’s a big problem that needs solving for sure.

 

Erwin  

Fantastic Viler. Thanks so much, again, for doing this.

 

Viler  

Thanks for having me. This is great. I appreciate it.

 

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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**Transcripts are auto-generated.

Erwin  

Boy, oh boy! Never had I seen so much drama going on in the real estate community. Maybe I spend too much time on social media and talking to people. Joint venture partnerships are falling apart. A real estate education, quote unquote University has sold off. But the bull run in real estate or the past 12 years, all these new investors and new investor trainers, they’ve only experienced the growth phase and never experienced the con the cons, not like pros and cons, but as in like the, like con artists or poor investment models from the credit crisis back in 2008. And nine, again, they never experienced it. So yeah. Hey, hi, my name is Erwin Szeto bringing you the truth about real estate investing. And by the way, no one’s talking about it yet gets it hasn’t made the media yet mid level developers selling off in Hamilton. They’re selling off numerous properties in Hamilton, you we got to be in the least $100 million mark somewhere around there. If not, it leases 10s of millions, if not $100 million property of property. The same developer that I warned friends about when they asked me when they reference checking, I’d personally seen there slumlord properties. I know people that these were fire traps. investment of cockroaches, I know people who personally have done business with them and been screwed over. But it didn’t matter to many people. Not many, some investors in business folks would still do business with this developer with a terrible reputation. It wasn’t even hidden. It’s actually quite quite well documented in the media, how disliked they were by their their tenants and their employees, but they were talented at making money. I always find it fascinating how many will bend or break their integrity of for money. I see it all the time in our industry. I think often I’m the only one talking about it. Maybe it’s just me. The money is great until the market turns like it has now capital and credit have tightened. Some investors have they’re unable to raise more capital for these capital intensive projects. And they’re forced to sell in order to pay out employees, partners, consultants, trades people, etc. I literally have a friend who’s an AJAX business who is owed a couple $100,000 and has placed a lien on one of these properties. Karma is that be as the saying goes. The truth is there are moral and ethical ways to be a successful real estate investor. And that’s been kind of the objective of the show for 17 listeners. I do my best to filter out the shysters from this show. They do come asking and trust me they do to come on the show, but they don’t pass my screening tests and reference checks. But do No, I am not perfect. No one is perfect. I can’t screen everything. And everyone diligence before any investment or relationship or partnership is always required. Is the market falling apart? No. With anything, these times are excellent for the smart money to invest as the fear is great. How can I tell if yours Hi, I’ve never seen so many individual investors looking to raise capital or credit. Many of them are even violating securities laws by soliciting investment from the public. Just to be clear, there are lots of good investors out there offering good opportunities. Cheering I invested in one recently, however, there was a lot more bad ones. And there’s a lot of investors in major financial difficulty who are just trying to do the last grasp, just try to save the ship. And attorneys are really picky. But we do invest from time to time and opportunities. My observation is that yeah, oh, so my observation is that I especially see more beginners, beginners who are recent graduates from weekend courses, or private group memberships, whatever. Desperate times call for desperate measures, I guess it was even mentioned in the Toronto Star article last week, I’ll include the link in the show notes. The headline was, more Canadians are taking it private mortgages and the rise in defaults could follow. So private money, private lending, private borrowing is just dragging up the situation. And whenever that runs out, we’ll see more problems. When that comes, it could be a year or two. And when we see more of these motivated sellers come on the market. But from what I can tell the problem is mostly isolated to speculators or those who grew rapidly too fast with significant vacancy. And you can expect vacancy anytime you’re flipping or doing major renovations or developments, or if you’re buying pre construction and the market rent will not cover when I cover your expenses. It’s better out there for some for some I don’t think it’s that wide, wide of an issue. I can’t say we’re past the bottom. But what we’re seeing is our clients who bought a property in August 2022 We can’t get those same prices today, we can’t get the same quality of property nor prices today, so the bottom may have passed the duplexes that Sherry and I bought in 2021. The markets actually recovered so the market fell to below what we paid for them. So, now the market seems to be back at or above what we paid for our properties back in 20. Oh 21 But honestly managed matters little there, duplexes, we get plenty of great rent, and they are tenure buying holds or longer for our plans, the market could dip the spring market as part of sales are expected. With anyone who bought recently or can’t afford these rates. We could see a temporary dip, especially the speculators who bought new construction with no well thought out exit plan. Sadly, they are out there. I’ve had calls with some of them. And some of them are in my DMs as well.

Erwin  

Yeah, it’s out there. There are deals out there for those who are able to buy, but there is a lot of smart money out there. Speaking of we are running into multiple offers on the properties that we target. And do keep in mind, we’re pretty specific on what kind of property we’re looking for. are typically looking for starter homes, that we can add value to force value into can be basement suites or garden Sweeting or we’ll be looking to do more larger conversions like triplex and fourplex. But we are literally having troubles finding property to for sale that fit our criteria to show our clients. So if you do have a property of potential income property, then please let me know agents send me your pocket listings and referrals. We do have buyers who are interested in purchasing investment property wholesalers, you too, we’re not afraid of renovation projects, we do have 350 plus past clients who have invested the right way. So we have clients that are quite successful financially, because they went slow, they did not over leverage the investor for cash flow. 45 of them are already Self Made Millionaires. And we are looking for more kind hearted people who want to invest smartly, to create more financial peace in their lives. So we are looking for sellers, and we are looking for more investor investors. And you make money investing by buying and owning property. So please don’t end up like one of these unfortunate speculators out there. I spoke to an investor last week, who is negative $1,500 a month. That’s just one. So imagine if he had multiple. So to me, this is hardly a scalable investment strategy for most investors most of the time. And then notice how I’m not raising capital and not looking for other people’s money. We never do, Charlie and I never do. We prefer to invest our own money in our own properties. This just keeps our lives simple that way. Again, what I’m looking for is a folks who do want to work with professional service providers, such as my team myself to guide them like Yoda did for like for Luke Skywalker. And folks who want to invest like the pros. Just be fair warning, it’s a slow, boring process, very systematic and low risk, but we do it for cash flow for the long term. If you’re interested in coming along for the journey on the light side, investing in real estate with morals, ethics and profits, then you don’t want to miss out our first ever real Island real estate meeting in Whitby, Ontario. On Saturday, March 25. I’ve included a link to get tickets in the show notes. Clients, it’s free for you. If you’re not my client, then tickets are about $20 Plus tax for each of the events. What we have planned for the event is I will be giving an economic and market update. I’ll probably talk about some of these now defunct investors very sad. I win real estate coach Steven Phillips of HGTV fame we’ll be sharing tactical advice on how to invest from Oshawa to Kingston. It’s also tax season for anyone who didn’t notice I’m sure you’ve all noticed. So we get lucky in being able to get everyone’s favourite real estate tax accountant cherry chan CPA ca. She’ll educate us on the most important tax implications that we must write this tax season to improve our tax savings and avoid most notably the under US housing tax act. Fines which range between five and $10,000 is brutal. It’s really brutal. Just FYI, I got a call from a friend who works with CRA, he shared with me that he thought that cherry is the best educator out there on these new rules. So those are his words. Obviously I’m biassed, those are my friends words, then he works for the CRA. Lastly, we will not lastly but following the meeting will go on an educational tour of some potential income properties in Oshawa, and where we will share our professional investor tactics and financial analysis and via handouts. We’ll have handouts before we go on the tour. After the tour, we’ll have a mastermind lunch with the folks that were on the tour. So you have an account chance to connect with them connect with Miss Stephen myself, and you’re going to be networking with some amazing people. I assure you it’s going to be an amazing event. Our track record of successful clients and integrity is second to none. So please feel free to spread the word to anyone you care about who’s interested in doing what’s best for their financial future, which is honestly only income producing hard assets in the form of real estate. We’re already 50% sold out on the meeting and the tour is 70% sold out there about their each but 20 bucks plus tax clients again, you have a discount code to go for free. All profits go to charity to outfit poor school children with warm winter clothing, investing with a heart. That’s what we specialise in. We’ll hopefully see you there. onto this week’s show. Again, there’s tonnes of craziness going on. So it’s so nice to have a palate cleanser with go getters like my old friend Amanda Belk and Marty Gordon. I first met Amanda around 10 years ago at Rockstar real estate when she was running the day to day as part of the in house property management business. I’ve been at Rockstar since 2010. And I’m still there. For those who don’t know, that’s for 10 years, she’s managed a team of coaches. She’s created educational content at key spire and together with her husband Marty, a licenced carpenter who’s gone from employee in a construction company to now general managing their own property management company and investment portfolio of small Maltese in Guelph to small farm buildings in London. Marty is busy and he’s a hands on kind of guy and he knows what he’s doing in terms of construction. Apparently, Marty does have extra free time between all of that in their a one year old son to coach as a key spire coaches Well, heck, I’ll never fault anyone for wanting multiple streams of income. It’s sure better than all the other trouble that’s out there, man and Marty’s journey from beginner investors in their early 20s. To the present, which is about 17 years in the making, they now have a fair sized portfolio. The eating really close to buying and building their dream home on a large acreage and to build a custom built mansion on that property. It’s honestly an inspiring and real journey. Amanda Marty, share how the journey was easy. That required a lot of hard work. Success is not guaranteed, but with hard work smart decisions over a large period of time. It’s honestly hard not to be successful. I’ll give you Marty and Amanda. Hello, Amanda. Marty, what’s keeping you busy these days?

Marty  

Where to begin? Do want to start? 

Amanda  

Well, I was gonna offer you but to share oh gosh, what are we doing? Well, our real estate business keeps us busy right now Marty and I, we self manage our portfolio. So there’s never a dull day in property management worlds and working on new projects. as well. We’ve got a big one that we’re that we’re currently working on. And dreaming we’re doing a lot of dreaming for ourselves is we’re reaching towards some big final goals and transitioning parts of our portfolio out and other pieces in

Marty  

Yeah, we actually thinking about it. We just walked our dream property last week actually, this has been for homework. Home Yeah. And it’s actually it’s actually kind of interesting to talk about that that’s actually been our entire like driving goal behind everything we do and why we got into real estate and sort of was this this prize at the end of the finish line. And looks like we’re kind of getting there now we’ve finally found the property but it’s been like 15 years of haunting and working in getting towards it and we’re like I’ve been teen years. Yeah 1717 years. Started in 2006. Yeah, and so it was just just a dream at that point. And we’re like just possibly getting there we’re just not set in stone yet but I think I think it’s within grasp

Amanda  

on it. We have

Marty  

it’s a property that’s off market so it’s without giving Okay, I’ll just tell you

Erwin  

don’t give away too much. We don’t want competition for you know

Marty  

52 acres so we always wanted this like 50 acre forest just so we can like have our own walking trails and basically our own nature reserve essentially. So we found this property and it’s like in the area specifically that we wanted and it’s within our price range and it’s off market but it was listed last year and they pulled the listing after a month so we approached them we approached their realtor couple weeks ago and they’re receptive to negotiating at this point, but we haven’t we haven’t got a deal together yet. So

Amanda  

they took off to Paris right now they’re on vacation in the middle of our negotiation which always seems to happen to us but okay, well patiently wait, but it’s exciting. You know, a lot of people say Oh, I’m really passionate about real estate and I love what I do and all of this we’re not passionate about really you know being a landlord and a property manager

Erwin  

here

Amanda  

I’m not doing it because I love real estate

Marty  

investing this vehicle to get someone that you

Amanda  

This is why yes why we’ve dealt with all of our you know, I could write memoirs about tenants scenarios over all these years and it’s not I’m not doing it because I’m passionate. I’m doing it because we want to buy our land we want to retire young we want to have freedom and and walk our trails and

Marty  

lots of babies. Yes, yeah.

Amanda  

We talked about animals

Marty  

we certainly do put our passion into it like if you’re gonna do something we tried to do it with effort you know, we don’t want to half ass anything or anything like that. But But yeah, there we have other passions and this is a way to get there. So anyways, you asked you asked what we’re doing. That’s not what we’re doing. That’s like that’s what we’re hoping to do. But that’s just Still in negotiation

Amanda  

in our brain, so

Erwin  

I got to build a you know, build a house on it. Yeah, yeah,

Marty  

absolutely. So So actually what we’re gonna score for like what? Yeah, pretty much. Yeah. So we have a plan picked out. And so the plan is to unload some of our more ripened investment properties, sell them off better already

Erwin  

highest and best use. Yeah, and optimise investments properties already. So we’ve had them.

Marty  

They’ve been maturing for maybe six, seven years or so. So they’ve got a bit of equity built up, and then they’re bought in like, 2015 2016. You know, when prices were less insane, we’re gonna cash them in. So catch those in and buy the land and then build over the next two or three years. And that’s kind of the the plan for that.

Amanda  

Yeah. own it outright have our land. Yeah. mortgage free. Yeah.

Marty  

Just transition into that. That final phase. The final phase, but it’s the next chapter.

Erwin  

Yeah, hobby farm. Yes.

Marty  

She’s way more sold on this goat idea. I maybe some chickens on the model on for your notes,

Amanda  

right. I told him that he doesn’t have to cut the grass if we have pet goats, at least two. So they have

Marty  

a friend. I’m open to like a little dwarf pig or something like that. But goats? I don’t know. I don’t know about that. Like a lot more work that I’m not interested in?

Amanda  

Well, we need more children so they can take care of the animals. This is this is the idea.

Erwin  

It was a busy Yeah.

Marty  

But on the business side of things, we’ve really, we’ve really focused on London, the past two years really been focusing on larger scale apartment buildings. Typically we target properties that are in disrepair, usually, they’re the type of property that’s been mismanaged by the previous owner, usually a lot of opportunity, you know, underperforming rents on the units, that sort of thing. So we’ll we’ll go in, we’ll renovate the entire building, bring it up to you know, code and everything, usually a lot of code violations on older buildings. Yeah, you know, so built in the 60s and 70s. You know, there’s, there’s a lot of left stuff that needs to be done. So

Erwin  

can you give some examples? Because we have a lot of novice listeners, for example, who wouldn’t know what a code violation is? Yeah. So okay,

Amanda  

so what about the 12 year that’s used as an exam. So currently,

Marty  

we’re doing a 12 unit, we’re actually just wrapping up, we had totally rehab, eight of the 12 units, the other four units will be coming up vacant in the next month or so. So then we’ll be focusing on those units. One of the biggest things that bothers me as a carpenter is not having the proper ventilation in in any, any kitchen, any bathrooms, you know, like these units, not only there, they’re on a boiler system, because it’s an old apartment building. So there’s no furnace, right? So there’s no airflow, there’s no air return. And then on top of that, there’s no exhaust fan in the bathroom, no rangehood in the kitchen. So it’s just like, the the only method of moving air is to open the windows. And so if the tenant in the winter and so you walk in there, you can literally smell all the food that everybody’s cooking, right? And every single unit and it doesn’t smell good. They’re not obviously not good cook sometimes.

Amanda  

But so the ventilation, you fix that. So

Marty  

that’s like, yeah, that’s one of the first things I’ll do. It’s not a thing that really adds value, per se. It’s more like it’s kind of my it’s time Saturday, it’s more for my mind, peace of mind, you know, adding a

Erwin  

small matters. Yes, certainly. Early. I remember like, like 2012 2013 before the market get really went nuts, any house. So I don’t mean to be culturally offending. But in my market, if a house smelled like curry, a lot of your buyers went off on it. Right. So we would totally target those properties to get better prices. Yeah, right. So I do think it likely I think smells would likely hold down your rent. It

Amanda  

stands out it definitely does. Impression it is a first impression.

Marty  

Yeah. And also the other thing too, like you know, putting a shower the steam builds up you end up with like peeling paint in the in the bathrooms and stuff and it just smells like maintenance. Yeah, so So exhaust fans are essential for that. And both in the kitchen and the bathroom. That’s just one item. Another item would be something like the wiring. A lot of people think oh, the electrical is pretty mandatory. You know, like we had decent electrical code in even in the 50s. But it’s come a long way since then. backsplash plugs are one of the biggest things and a lot of people don’t realise this, but they’re a different plug. If you don’t have the modern day plugs on your backsplash is kind of limited with your countertop appliances. If you have like a toaster and a microwave and like an air fryer fryer, you’re gonna constantly be tripping the breaker blowing the fuse. These are things that like we learned that a long time ago with tenants to be like, Why is this? Why I keep tripping the breaker every time I turn on the toaster,

Erwin  

and they call you the

Marty  

landlord? Yeah. And so we’ll go in and we’ll take care of those items right away. Once we’re getting ready to do this renovation. We’re gonna be ripping over them well, so you might as well start doing that sort of stuff. So it’s not like a code violation per se, it’s grandfathered in. It’s not a safety issue. But it is something that, that we take care of just so we don’t get those

Amanda  

things, right. If you can bust common complaints, and just set it up properly, then you’re

Marty  

we want less than Yeah, we wanted, the fewer the calls from tenants the better, right? So

Amanda  

yeah, definitely. And actually, while we’re speaking about electrical, we’re going to need to implement a plan to educate tenants about light bulbs. More recently, at our one property, one of the residential properties, she messaged me and said, the breaker is tripped and I can’t get it to turn back on. And I’m sure you know this, but some tenants they, they just try and turn it on without going all the way off and then on again, so I’m like trying to be as clear as possible. And she’s like, listen, I know how it works, it will not turn back on. So I’m like, Okay, fine, send over the electrician, and what she actually had done, or when she had put halogen light bulbs into just a regular

Marty  

call, like a boob light, you know, like a half, you know, one of those don’t.

Amanda  

And it had burned the wiring and because it was on a GFI breaker, it was doing its job by stopping that circuit. And she had done it in two of the light fixtures. If it wasn’t on the proper circuit, it would have been a fire. And this is a newly renovated property like this is done, what, three years ago,

Marty  

like every inch of this basement was brand new. And

Amanda  

it was an innocent mistake. This was not malicious, not malicious. Well, how many tenants does it take to change a light bulb? Like oh my goodness, now I’m thinking Who else has done this? Like, do we need to when we’re signing leases be like hey, by the way, like don’t have a

Marty  

warning on the box. This gets extremely hot do not put in the wrong fixture and then the fixture itself is that warning do not put allergens in

Amanda  

like putting diesel in your in your vehicle and gas powered vehicle. But anyway, so

Erwin  

you know it naturally take whatever the existing light bulb and match.

Marty  

Everything’s LEDs these days, so it’s doesn’t get hot at all right? So she didn’t anyway, she didn’t do that innocent mistake, but at least nobody got hurt, right? It was costly.

Amanda  

Yeah, it was, I think the bill was 500 bucks, it was for his time to go change the breaker change out to light fixtures as well, because they were both burned, and apakah light bulbs. So I mean, that’s not bad. And he went quickly for me as well. So we have we have good team of people with really good contacts who we’ve built over the years. We treat them good. They give us good service. And I mean, it’s it’s a win win situation. Fabulous. Yeah. But without the proper, the moral of the story is make sure that your wiring is done correctly, because if it wasn’t on the proper breaker, that would have been a much worse issue.

Erwin  

So the interesting thing about finding about YouTube is that I find this interesting most almost all of our guests is that you have not just an interesting investor journey, but you also have an interesting career journeys. Right? Because you both because of man, I’ve known you for over 10 years, I can’t believe calculating yours. we known each other Yeah, good lord. Yeah. So yeah, can you guys walk us through, I just wanted to take turns on your on our journey, because like, for example, Marty, you were, you’ve been a carpenter

Marty  

for how long? I guess it’s like 22 years not actually certified. I got certified in 2009. So yeah, okay, back up the story a little bit. So. So we bought our first investment property in 2006. It was, you know, like, that was our first property, not just our first investment, it was our very first like, I was living at home, she was living at her parents. And, you know, we were, we knew that we were not keen on even at that time, the price of houses, you know, like, we’re only making like, 15 or $16 an hour, I think. And we’re like, oh my god, I’m gonna be working my entire life to buy a house even then, you know, houses were like, you know, 150 or $200,000. Not crazy, right? But we’re like, we got to do something about this.

Amanda  

Yeah, I was 21. Marty was 24. So we’re just starting our adult lives, we

Marty  

had to figure out a way to get some additional income coming in. So we bought a bungalow. We created a basement apartment, lived in that basement apartment rented out the three main floor bedrooms, and lived mortgage free for the first two and a half years is about two and a half years. So yeah, so it was really nice to be like I remember, you know, everybody lives at home and they have like super cheap rent like my parents were charging me I think 201 time and then so that I’m gonna have this like, I think our mortgage would just like 1200 bucks or something. So is that crazy, but when you you know when you’re when you’re 24 you’re thinking it’s all a lot of money.

Amanda  

Yeah, we actually we set up our amortisation for our very first property for seven years, so they thought we were hammered on payment. Yeah,

Marty  

they’re like, we’re gonna do 25 year amortisation. I’m like, No, seven years, seven years. They started she laughed at us. The mortgage broker laughed at us. I said, No, no, seven years. So you can’t afford that. I’m like, do you think I haven’t ran the payments? We can we can put them We lived a mortgage free for two and a half years. So it was great. And we’d had like this huge amount of equity built up because our payments were so high. And then we just kind of transitioned from there we, we sold that property, bought another house to move into. And before

Amanda  

that actually we did a refinance, we drew the equity in bought a rental property right before we actually moved out. So we had figured out some of these tried and true strategies that nobody taught us but we had learned on our own at a very young age and you know, getting started getting that momentum going from you know, that that very first investment, and it’s monumental for us.

Marty  

Yeah, and at that time,

Erwin  

I’m sorry, how did you know to do this? Well, Aaron’s mentors

Marty  

know what it was consciously talking about. We’re talking about, you know, what, actually, at the time, student rental, like we live in Guelph, or we lived just outside of Guelph, so student rentals was really popular in Guelph. Yeah, so that was kind of our originally were like, Let’s buy a student rental. And we were originally planning on just staying at our parents house, I’m not going to move out, I’m gonna buy a student rental, and I’m going to keep living in my parents are gonna rent it out. And then we kind of just hit this point where we’re like, I can’t live here any longer, like, I gotta move out. So we kind of scrapped the student rental idea and did a basement apartment, I knew that one of me working in construction was for like, I worked for this small family run general contracting business. He did custom homes and stuff. Some of his clients were doing student rentals and basement apartments. So that’s was probably my first bit of exposure to it. And so that kind of got my mind. Turning a little, I think, I think I probably saw something about Tony Robbins flipping houses at the time. I

Amanda  

read a couple of books as well, a few books, but also the years before that when I was 18. serving at a restaurant in Guelph is when I had met Scott and Michael serving at the Greek garden. Right, well, so here’s these two cool guys,

Erwin  

for those who are Scotland.

Amanda  

Oh, sorry. So Michael saris Xenian Scott McGilvery. So so we just connected by chance serving at a restaurant. So there’s these guys University guys that owned rental properties in Guelph. So this is before the H. JCB This was long before then. So that was when I was 18. So I was picking their brain and they were talking about investing in real estate had actually gone to one of their properties one day after work, and was like, can you just tell me a bit about this? So we were influenced at that time. I mean, we eventually went our separate ways, and then came back through business, for business reasons in the future, but we were influenced at that time as well.

Erwin  

Please, you tell the story, because for folks who don’t know, I believe that was a large part of the how they started investing was university students. Yes,

Amanda  

exactly. Yeah, Guelph university students buying rental properties was what had set off their business. And

Erwin  

it’s funny because this exact same way how Skyline REIT started. Yeah, and their brothers and their partner. Yeah, and they’re now they’re Nautilus. Yeah,

Amanda  

really big. Yeah. So we, yeah, some influence. We had kind of

Marty  

touch with them though. McGilvery and Sara Seanie. And then we did our we did our first purchase there. And I’m just at that time, I already had like four or five years experience kind of just as a labourer though, I wasn’t a carpenter, I was kind of working towards it, but not committed to it. I was like, you know, still figuring out what I was really wanting to do. And then it was like, kind of a light bulb went off. I’m like, why don’t I just become certified carpenter and like, make this my career and I figured it would be essentially you know, like a really a really good tool to have if we were going to drive forward towards more investing and focusing on renovations and that sort of thing. So started going to trade school. I already because I’ve been working in it for so long. I already had enough hours to like, you know, knock that off of my my requirements for my certification. So by 2009 I graduated I was certified carpenter then

Amanda  

we got married was 2009 as well. Yeah,

Marty  

that happened to so then we just decided let’s push this as hard as we can. And let’s let’s see what we where we can take this right.

Erwin  

See where from worker to just more focus on your own portfolio. Yeah, it

Marty  

was really a fast transition. So like when I when I became certified, within less than a year we got married, sold that first property and bought three more properties. And I quit my job and became self employed

Amanda  

and moved into our own house and now law, we were no longer living with tenants as well. That’s right.

Marty  

We could no longer tolerate for tenants don’t

Erwin  

graduate from House hacking to living on your own. Exactly. Yeah, you got it. Yeah. Yeah. So just pause right there. I love that you’re sharing the journey because people need to understand it’s not you don’t go from zero to 1000 over like one year? Gosh, no, no, you don’t go from like, you know, having a day job. Having like 30k in the bank to talking about building a $4,000 4000 square foot custom home, right? There’s a, there was a lot of Blood Sweat Tears effort.

Amanda  

There’s a locker face went back as well.

Marty  

Toilets changing toilets on Christmas, midday. Yeah, yeah. Because your tenants are saying that, you know, by toilets not working and what do you do? Yeah. And we’d have the money to hire a plumber. So we went and did it ourselves.

Amanda  

And within our circle, like I mean, our friends at that time, because we’re in our early 20s. They’re going on vacations, and they’re starting their families, young, and Marty and I were like, no, we want to really work extremely hard in our 20s. So that we have freedom younger, and I mean, to each their own or their preference. We were not vacationing at that time. We were working on our rental properties in

Erwin  

four hours week, right for our work week.

Amanda  

Oh, yeah. Yeah, it’d be like, add a couple of dreams.

Marty  

You know, it’s funny to anybody, anybody that’s in real estate investing probably knows this, that when you first start, you’re excited, especially if you’re in your 20s, you’re excited to tell all of your friends about it, and tell them no, listen, I’ve got this, I’ve got this perfect plan to be a millionaire, I’m gonna be rich, and you’re gonna, you should do it too. And you want to convince them to do the same thing. And it never goes well, right?

Amanda  

Like, we lost a few people along the way.

Marty  

You just basically convince people that they don’t want to hang out with you anymore. Because it’s all you talk about, well, this is what I’m going to do. And

Amanda  

nobody’s interested in something you didn’t do, which are the words by the late Gord Downey so I mean, it’s true. If you’re always talking about what you’re gonna do, it’s a bit obnoxious.

Marty  

Yeah. And it takes time, there’s years, years and years of slow building, like back then, you know, there was not a lot of like, educational material. You know, there’s a few books out there and stuff, but not a lot of, you know, like, there’s so much out there nowadays with, you know,

Amanda  

to move your starting line community, Facebook

Marty  

groups, you know, mentorship programmes, all sorts of things like that, that, you know, a lot of people can learn a lot, learn not to make the mistakes that we made. And also just, you can, I don’t want to say fast track it because you do have to take it one step at a time. But there’s certain things you can, you can avoid mistakes that slow you down, you know, like we’ve done projects, you know, flipping houses, we flipped a house once and lost money, lost a lot of money on it. You know, we’ve made some major mistakes.

Erwin  

So let’s talk about real estate investing. And this also begins to go over 50,000 square foot view. You’ve talked about you bought your first property in 2006, your 4000 square foot home will be probably done by 20 years later. Yep. Yeah, it took 20 years. Yeah, it wasn’t. It wasn’t like Instagram, HGTV. 30

Amanda  

No, it was no weekends and sacrifice and work and saying no to a lot of things. And yeah, just having to be focused and diligent with our business. And you poured everything into

Marty  

1. Everything. Yeah, everything so waiting on that vacation.

Amanda  

Yeah, we’ve never we’ve never gone on a vacation. I believe that

Marty  

that’s not a joke at all. We’ve never been people think like we’re boring or something like what’s wrong with you guys don’t ever want to get out. We enjoy our life like we go we honestly we do not have a boring life. Very active. So we’re like restaurant people though. Like we are. That’s probably our biggest downfall.

Amanda  

downfalls like as far as like spending

Marty  

money where you know, it’s offers no return on investment is going to restaurants and you know,

Amanda  

hanging on patio hanging. Yeah, we like that. We could do that five days a

Marty  

week sometimes. So we have done it. So we find it get it kind of progresses, we’ll be like, Okay, we’ll go once a week and then it’s twice then it’s like as soon as the warm weather hits. It’s like five days a week. Really? Then we have to just cold turkey quit. Yeah. And stop. You’re like we’re not going out for another month because we need to reset and

Amanda  

make it two weeks and try again. But anyways, yeah, we I think we went off track you were answering a question about something that I remember the question. I know I’m like dreaming of being on a patio right now with

Erwin  

snow. We’re talking about your career journey.

Amanda  

Right? Yeah. So and how you got to self employed?

Marty  

I was buying. We were like, Okay, we had a few we tried a student rental and it was really not cash flowing well, but we’d already done the basement apartment thing and that had worked so well that we’re like, okay, the basement apartment things is a way to go. So we kept we pushed in that direction. We bought another one.

Erwin  

So sorry, those 2009 Like let’s try just still killing and golf. Yeah, yeah, totally.

Amanda  

Yeah. So this has been incredibly lucrative for us and most of our portfolio has been built with buying a single family home creating the basement apartments and we do this with joint ventures we do this with private lenders like we have done this it was our own many times over but it’s been our bread and butter. That’s

Erwin  

our bread and butter. So duplex homes and golf are renting for are like low 5000 a month. Yes. Yeah,

Amanda  

they are. They definitely are. They are last one

Marty  

was 5000 on the on the button, I think. Yeah. Which we tenanted in in August. Was it last August?

Amanda  

Yeah. Yes, it was August. So

Marty  

I knew if we’re going to do this next

Erwin  

Sorry. Sorry.

Amanda  

And it’ll go up again. Because there’s also that rule about when you’ve created a basement apartment the rent controls no longer apply. So we can increase the rent to market rents for the basement apartments because we created that new space. If it was good after which your money 1828 20

Erwin  

clarifies not because it’s a basement apartment is the strategy is working well not because it’s based on apartment, but it’s also you chose Guelph, which has been a wonderful city.

Marty  

Yeah, so Guelph regularly ranks near the top, top cities at one point it was number one city tree, but it’s not always number one. It’s usually in like the top five cities in the entire country, by the way, London as well now, so that kind of just was your luck after last year, London and Kitchener saw the highest average rent increase in the entire country, which was 30% increase in the

Amanda  

average new leases.

Marty  

So that, you know, it was kind of like, wow, we were investing in London now. And the kids

Amanda  

say that that was luck. You selected that market, not out of luck. You didn’t draw cities out of a hat.

Marty  

I saw there was opportunity there, but I didn’t know it was gonna be.

Amanda  

Yeah, we didn’t know that the it would be number one for that statistic. But there’s lots of good reasons to invest in London and good reasons to invest in Guelph. And that’s where we hold our entire portfolio. So two cities.

Erwin  

Okay, those two cities. So again, you’re having so much success in Guelph. How did you make the decision that you need to expand to a different city? Yeah. Okay. So we started, okay, just one second. A beginner mistake I find is like a beginner will have a property here like, like Innisfil. And then like Oshawa, and then and then like Peterborough, and then they’re like, Yeah, you know,

Amanda  

yeah, you nailed it. So we’ve consolidated actually, even within the city of Guelph, all of our houses are within like, 10 minutes of each other, like they are all in this little neighbourhood, that it’s the same thing we have washed, rinsed and repeated the same strategy over and over, and it has been so profitable, but we moved to London, when we entered into the multi residential. Okay, yeah. Because the numbers really

Erwin  

explain the numbers. There’s does that is that type of investment not available in Guelph? Yeah, no, there’s no buildings that size, like why, why, why

Marty  

there are, but people hold on to them. And then for example, there’s a six Plex for sale in Guelph right now. That’s been for sale for over a year. And it was

Erwin  

right then

Marty  

it was listed. It was listed for 1.95. And that was at the peak of the hot market, you know, back in January of last year. And at that time, I ran the numbers on it. And I was like, wow, this is like $500,000 overpriced, and here we are a year later, it’s still listed, they’ve dropped the price by 50,000. But and it’s you know, we’re like docket 400 days on market at this point. It’s largely because of shortage of inventory. People in Guelph don’t like to let go of properties just smaller. randomly. If I had one in Guelph, I wouldn’t be selling it a multifamily that is

Amanda  

they’re pricing it as if it’s the after Reno price. But so this is the answer. The numbers just don’t make sense. By the time you renovate it and get the rents up well, you have to make money on the buy if you purchased it for way too high of a price and it just doesn’t make sense. The numbers don’t work out.

Marty  

We just found London is a lot more a lot more opportunity there. And not just London by the way. You know, there’s a few other big cities like Hamilton, for example, that I think are very comparable to London with with their pricing and their opportunity. One of the things I like about Hamilton is they’re very friendly for development rezoning. They’re really trying to promote the idea of of building up so you can take a lot of a lot of the older buildings in the downtown area, more or less I don’t wanna say pre approved but would be easily approved to have them totally demolished and put up like a you know, a five Plex, some of my students are doing the exact same thing and that’s that’s kind of become their focus is to redevelop downtown properties in Hamilton into larger, larger you realise

Amanda  

you’re speaking to Mr. Hamilton himself.

Marty  

Actually, I didn’t realise free here

Erwin  

So for context, I’m friends with the with the head of the Economic Development Department and emerge, she was telling me that she poached the one of the head people at city planning in Burlington, because if you’re in Burlington, it has no you can’t get anything done. Right? You’re actually like to a place where developers go to die. Yeah. Right. So she was able to poach ports of that person in a short period of time. He got like, 10 developments approved. Right. All right. And that’s what planners want. They want to see progress towards housing, affordability, urbanisation, that’s what they want, when they went to school for Yeah, now

Marty  

it’s sounds like that’s about to change province wide with what is the bill? 23? Is that what is? Yeah. So it seems like they’re, they’re going to be kind of streamlining the process. I’m still interested to see how that actually plays out. But but you know, there’s still going to be an approval process, right. So, you know, somebody still has to make the final decision. So it’s not necessarily just a green light on everything. But yeah, anyways, back to like the London discussion. There’s just way more inventory. There’s a lot of underperforming properties there. There’s a lot of properties that are poorly managed. And probably I would, it seems to me, I mean, I’m guessing, but it seems like the owners either inherited the property, or they just owned it for so darn long, like 20 or 30 years, that they basically let it rot. Yeah. And they’re kind of ready to retire, like several of the properties we bought there, come in versus bailing. It was like in their mid to late 70s. Right. So you know, either, you know, they, they,

Amanda  

they’re not taking care of it at that point. So you know, we’ve come in, but there’s a lot of a lot of reasons to invest in London, I believe it’s the 10th largest city in Canada, which is huge, their population is very large. And, you know, the the immigration that is coming into London is massive as well that when people are moving to London, there truly is the like the housing crisis is real everywhere. But in a large city like that. It’s exaggerated, right? So why that’s beneficial to investors is your vacancy rate. And your choice of tenant your tenant selection is improve the quality of tenant that you can choose because their options are fewer, right. So London overall is very robust city from an employment standpoint, as well, our properties are very close to the Victoria hospitals. So you get health care workers, the education field is really big in London as well, not to mention the tech industry. So these are kind of the main tenant employment profile that we’re able to select from. So it’s very robust. It’s a good city. It’s a big city. It’s a growing city. And there’s there’s investment opportunities there for sure. And it’s in our opinion, currently the best city to invest in right now.

Marty  

It’s going to be our focus for the next little while, and we’re

Amanda  

setting up shop there too. So you know, back to what you were saying, Erwin, we don’t want to be spread out too thin, I don’t want to own in 10 different cities right now. So there’s a lot to be said, about setting up shop, really get to know your market, build your team of people there as well. Like we’re doing very large scale renovations. So I don’t want 15 carpenters on my roster, I want to know who is my go to who is my great electrician in this area. And you know, there’s there’s a lot of efficiencies to be gained about buttoning down your business and just running it really, really well rather than being spread out too far.

Marty  

Yeah, that’s to your point, or one. That’s another thing that I would say to anybody starting out, you know, what I tell my students as well is come an expert in your market, right? Like, there’s so much to learn about, you know, landlording and renovations and just there’s a lot to learn on a single property, right, if you’re, if you’re going to get into real estate, the list is long that you have to learn just on one property, it would be great to kind of automatically learn about that neighbourhood, rather than every time you’re buying a new property, you now have to become an expert on a new city, a new area, become an expert in one spot while you’re learning the operations, the landlording the property management, all of that sort of stuff, and try not to jump around now, obviously, that’s not always an option. Some people you know, Ontario is expensive. So you know, I do see a lot of people that can’t afford to buy here but want to get into some sort of investments. You know, like there’s Alberta is a great spot or the East Coast that’s there’s more entry level.

Erwin  

Focus, don’t don’t buy what

Marty  

exactly I tell people even that, you know, maybe maybe look at two or three pick two or three cities to look at and then move on Yeah, and then make a selection and wherever that is now that should become your your area of expertise. Just repeat that strategy for you know, years over as long as you can. And I’ve heard

Amanda  

people say like, oh yeah, Ontario is very expensive. So I want to go somewhere else that is cheaper. And Marty and I say this all often is, I don’t want to own cheap real estate, I want to own the best and the most profitable real estate. So it isn’t just about buying at the lowest the lowest point possible. I don’t want that real estate in those smaller markets, otherwise, you’re not going to get the return on your investment. It’s all about the ROI, right? Yeah,

Marty  

yeah, we always talked about like the primary markets in Canada versus secondary. So like Ontario’s Ontario and BC are always going to be always going to be the primary markets, the only time you see people sort of going into Alberta and the other other provinces is when you know, Ontario or BC kind of hit that peak, and then other areas become more favourable because of the price point. But if all things are created equal, if Alberta’s price ever rose to the level of Ontario, then people are always just going to pick Ontario. It’s it’s just there’s jobs. And you know, just there’s swings, and it’s a lot more. Yeah, there’s a lot more desirable desirability of Ontario and BC. So it’s always going to be a primary market.

Erwin  

But yeah, focus. Yeah. Yeah, to

Amanda  

focus not be spread too thin. And then another thing for people who are beginning is, it isn’t just about the, the fake it till you make it. And we see that oh, my God a lot. And if you’re, if you’re new, and you’re starting off, and you’re seeing people boasting about, you know, all these, you know, crazy deals, or what they’re looking at what they’re showing that they’re doing, as opposed to maybe what they’re actually doing behind the scenes is don’t be discouraged. It isn’t like you’re just suddenly going to buy your first property, and it is 50 unit building, all of a sudden, that isn’t where you start. That’s not realistic to believe that and if you don’t have the skills, well, how do you gain the experience, right? I started as a property manager. And this is actually when we met. Yeah, so I’ve self managed my properties before then. But I was hired as a property manager for a real estate brokerage. And I was looking after, I think at that time, it was around 50 single family homes, so they were all under my care. So what I got to do was actually learn Property Management School and get paid for it. Like, I feel like I went to property management University. And oftentimes those houses that go into management, they’re struggling, the the owners are having a hard time with them. And it was the best education possible because the amount of this is gonna sound weird, but the amount of evictions that I was able to go through, it taught me the ins and outs of the landlord tenant board. And I had done probably within my career, probably 50 through the landlord tenant board, like actually, through the system filling out the paperwork. And I learned like what I learned doing that in even just one year in that first year was incredible. So this was before there was

Marty  

a 16 month wait, function

Erwin  

if half of that.

Amanda  

Yeah, but

Marty  

we actually we’re dealing with one right now. But yes, we are. What What was it? Seven, seven months? We’ve got a hearing date for two weeks from now. But I’m 27 When did we apply was?

Amanda  

It was about seven months ago? Yeah. So I mean, where I was going with that is get the experience, you don’t need to fake it till you make it. If you want to be an investor, then go be an investor and go get the experience. And if you can do some property management, it’s a really great place to start. I mean, not everybody is a carpenter, not everybody is skilled hands like Marty has, you don’t need to be able to have scouts.

Marty  

You do not need to be a trade certainly great if you if you are but you know, if you’re not a trade then learn to work with trades. That’s really I mean, are you gonna always invest in turnkey properties, right, that’s gonna cost you more money in

Amanda  

the passive position. There’s other options, but if you want to be like a working partner,

Marty  

if you want to make the best bang for your buck, or best, best ROI for your time, focusing on rehab properties is almost always going to be you know, other than new builds you know, like if you can buy a lot for a good price and do some kind of new build there’s opportunity there as well but you don’t have time Yeah, and understand learning to work with contractors and building that team is is really helpful too. So you don’t have to you know, the goal is not to be on site. I know a lot of people you know they see the TV shows and they want to they want to go and swing a sledgehammer and you know knock some cabinets out and that’s fine for like your first one.

Amanda  

I think you can remove them with that with your drill right?

Erwin  

isn’t working on Instagram, I mean, always

Marty  

on the job site, and it’d be like no, we’re saving these cabinets Let’s unscrew them and you know the customer wants them for their garage or something so we would always unscrew them

Erwin  

off in our trades. People want them from their basements. Yeah. urges you to trash them. Yeah.

Marty  

TV you see them they’re like for no reason carry the like they want to swing this heavy sledge hammers like that thing’s heavy, and they want to swing this sledge hammer unless I have to. And I’m certainly not using it to take out a piece of drywall because you can just, you can just like pop the drywall off of the pry bar and take it out in one whole sheet. But people are like,

Erwin  

ah, and you’re saying trade skills are important. They’re wonderful. Even my own journey, my ex girlfriend and ex wife, I get the benefit of learning through about renovations because that family, my grandfather in law, now his father in law was a master plumber, had a plumbing business, my ex had a kitchen and bath renovation business. So I get to see it and live it renovating your own properties and also manage how she manages contractors how you manage sites and so yeah, but I find huge Yeah, but we were discussing before we’re recording how I and my experience with some of my office working clients, they don’t understand all the challenges that come with renovation projects. And I’ll even expand on that, for example, like where I’ve seen some novices get in trouble not my own clientele, but once I’ve talked about in the show is they’ll take on multiple distressed properties off market needs, you know, $100,000 word $1,000 worth of work, they don’t understand that all of them can go sideways, likely all of them will have delays, material delays, Labour delays and some of this is natural they don’t understand that they think this thing Gantt Chart contractor told me this they show up this day I’ll be done by this day my refi will be done on Monday

Amanda  

that’s it well there’s a guarantee with renovations you’re going over time and you’re going over by cheque guaranteed so I can’t put

Erwin  

my appraiser in six months time like knowing

Amanda  

that you’re gonna rebuild

Erwin  

You’re breaking my dream

Amanda  

yeah sorry bubble bursting

Marty  

I always try to explain to people it’s like dominoes with with trades are like dominoes like if you can imagine like your contractor might be delayed starting on your job because of something that somebody else did like five lines back or five dominoes back right like he could be working on a job and the electrician didn’t finish so that delayed him from finishings to delayed the whole job and so you can’t even start your job because it’s so perfectly good reason right and and so a lot of people you know, we were talking about this before a lot of people aim to punish their contractor for that sort of thing it’s like a lot of these things are out of their control obviously

Erwin  

just to elaborate on the punish the contractor I’ve actually seen it taught in certain places where they talk about you know, there will be a penalty if you’re beyond 60 days late oh my god beyond that to the contractor Wow. All right. Yeah, turn negotiating that or another

Amanda  

contractors like rip I’m not even signing this lose my number. Yeah. Yeah,

Marty  

or another thing when so a lot of contractors gave up prices pre pandemic for jobs that they’re going to be starting in six or eight months and then price of lumber just skyrocketed and so studs went from like a for one two by four by by footlong was like $3 and it went up to $12 and so their pricing you know that was based on the the price at that time and so then they would have to increase the price. And again, some customers

Amanda  

are feeling like haha too bad on you but that’s not true contracts. Yeah, we have a contract well, they’re like well you’re not actually forcing me to I’m not going to do the work then we know Yeah. Yeah, yeah. So that’s the end of the day if those studs are installed on your property Guess who’s paying for it it’s not coming out of the contractors pocket and why should it right they

Erwin  

Yeah, but and also life happens like for example my my clients has a fear which part I think drywall was delayed because the drywall was fall or pet past you right? So there needs to there’s gonna be a delay Yeah. All right. So but like these aren’t these obviously aren’t in the quote. Right? Yes. Yeah. Life happened

Amanda  

it says but even like working with trades, I have some experience minimal experience but having you on the job site this is where we divide and conquer. Yeah. When When Marty is doing the contracting because he is a trade the trades on site appreciate other skills. He’s the King in my world, but I mean, you know, other people don’t usually

Erwin  

trade the king. Okay. Let’s continue. I love this. I love where you’re going. Because the partnership, please continue.

Amanda  

Yeah. So when Marty’s on the job site, and he’s managing the trades, they appreciate that because they don’t have to explain all of the ins and outs and they’re speaking the same language, essentially. And then Marty understands like the flow of work as he was just saying the dominoes and there’s also like these little in between jobs that are not really specific to any trade that Marty can jump in and often do as well and just keep the job progressing forward and keep cost down. So he does a really, really good job. Managing all of that, and I know they appreciate it. And it’s something that I don’t want to do managing a construction job site is not my jam.

Marty  

I do want to add, like, I want to caveat what I was saying about, you know, not getting, you know, to not being to on top of your contract or to like if there’s a delay that can go very sideways as well, right? Like there’s obviously tonnes of terrible contractors out there that have no business touching my hammer at all. And you know, they’re not qualified. They’re, they’ve never been trained, they watched a YouTube video and started a company and now they’re doing trying to make up now they’re doing Amanda’s mother’s bathroom,

Amanda  

I was just gonna say, you recently fired somebody in the most dramatic fashion and I got this was I’ve never seen

Marty  

like that. And by the way, I’m, I’m very respectful to trades, even if typically, if I’ll have a trade, like, I’ve got this guy right now that I just fired, but he doesn’t know he’s fired. He’s just not going to be hired back. He’s been paid. But his workmanship for drywall was just terrible, right? And so he’s not going to be hired back. There’s no need to yell at him or give the royal you know, Royal firing. But Amanda’s mother,

Amanda  

I don’t want to get into should I get into this? So my mom’s gonna listen to this podcast, I’m sure but you keep things.

Erwin  

Listener? Yeah, thank you.

Marty  

So she, she hired, there’s this lever. She hired a contractor, and we gave her some tips. And we were going to help her, you know, select a few different contractors, we’ll review the the quotes with you and, and we’ll help you pick one. And I’m not sure what happened. We were busy or something. And somewhere along the line, I guess, by the time

Amanda  

we reviewed the quotes, they had already selected the ones. So I’m like, Okay, no problem my patient

Marty  

with us they select. And the site that they had hired him from, which was supposed to be like a middleman, mediation company that will will they take your money, and then they pay the contractor so that you don’t get burned? Like a Pay Pal? Yeah, it was kind of like one of those type of companies, I don’t want to name the company, but he talked them into going around it. He was like, Listen, you can save some money if you just pay me direct instead of paying in between the selected Pay Pal companies, unsuspecting people, but

Amanda  

tell us unsuspecting, and then this guy is showing up on the job site. And there’s issues and he’s showing red flags pretty early on. And you know, my mom, and my sister who is a mother of two now as well, they’re, they just want their bathroom renovated. Right? And they don’t know much about renovations to be managing trades. And my mom’s sending me pictures but as you know, it’s kind of difficult to see

Marty  

who’s starting to show the signs of like he’s showing up working an hour and then leaving on like a Saturday for set or he’d say he’ll be there tomorrow and then doesn’t

Amanda  

and it’s like a family friend who is working and doing the tile instead of him and my mom’s getting concerned and my sister is concerned so we go over on a Sunday or

Marty  

Sunday morning and she starts sending us pictures like I hope this looks right. Can you send them can get Marty to look at this. And to send me these pictures of the tubs installed in their laying tile and I’m looking at the tub and they’ve first of all the drywall around the tubs around super tile on you don’t use drywall in a shower, which is insane but I could just see like that’s drywall went behind the top and the tub was screwed into the drywall and like oh my god, this is completely wrong. Like it’s this guy does not instal the tub at all. But he’s already tiling the floor.

Erwin  

Did you make the effort to watch the YouTube how to do it?

Amanda  

He didn’t even watch the YouTube right so

Marty  

I’m like that says the worst.

Amanda  

It was the worst. It was the worst. So Marty’s

Marty  

like we got to get there next she’s like well he said he’d be here today and it’s Sunday like he’s working only we’re gonna be there in an hour. So we get there hope and I’m hoping I can go in and like look at his work before he shows up so I’m certain that I’m going to fire the guy or was it just like a bad picture or something? I get we pull in the driveway and then this contractor literally pulls up in the driveway as I’m the poser getting out of my my truck and I’m like, so I had like two seconds to run inside and I’m like no, I don’t have time to inspect this bathroom to actually make sure that was seen so I will just just I walk in to the bathroom before he sees me and I within one second I’m like no, he’s getting fired like this is there’s tile like falling off the floor cracking under my feet.

Amanda  

That was just done like 12 hours before the tub is like installed on

Marty  

a huge angle crooked like they the drywall mud look like he put it on with a hockey stick. Like it was just everything was wrong. So

Amanda  

so I’m upstairs with our baby. My sister’s up there with her two babies. And then my mom is like arm and arm with Marty and then this guy comes walking in and the dogs are barking like it’s just it’s a chaos scene. And he walks in.

Erwin  

I’m not gonna get I can’t

Marty  

get a lot of F relief but I’m like he was Like

Amanda  

he was like, you’re fired in a more I

Marty  

gave him I gave him 10 minutes of me, berating him and looking straight out and be like, Look, he kept wanting to look at the floor and like, look at me like you may, you don’t know what the hell you’re doing right? Like, that’s, I’m paraphrasing here, but you don’t know what the hell you’re doing. You’ve never used a bathroom in your life. You’ve never said a tub in your life, and he would keep repeating it back to me. Oh, really? I’ve never put in a tub in my entire life. Like that’s right. This was

Amanda  

a full blown scam. This wasn’t a matter of it wasn’t that good or anything like that? He was robbing my mom. He was robbing my sister and he was never gonna get the job done. You could see 1000s of dollars from them. And then he was then Marty was like, and there’s one more thing that you can do. Get the bleep outta here.

Erwin  

This gentleman the person that sold the job. Oh, boy. Yeah, okay, I thought this was the minions.

Marty  

INS were there. This was like the head honcho.

Amanda  

That’s like the worst of the worst that we’ve ever seen. The tile on the floor. Oh, that was the other thing in front

Marty  

of them. Because it came off. I’m like, Look at this. They’re loose. I picked it up. And I threw it on the floor and smash. Like it was very dramatic. But anyways, this is not how I normally conduct myself. I’ll like I said, normally if I fire somebody,

Erwin  

but this sounds like one of the worst thing is,

Marty  

it was just insane. But the reason I got so heated was because I it wasn’t a guy that was trying and had made some mistakes. It was a guy that clearly knew he’s scamming people, and my

Amanda  

mom and my sister, I mean, give me a break, like, you’re not going to come in here and do that to our family. So you know, it’s kind of a long and dramatic story to say to having an eye for managing your job site is extremely important so that you’re not taken by scammers, and that you are able to inspect along the way before you’re releasing paychecks as well. Like there’s like I don’t have a trained eye to go to a job site and say, well, this flooring is done properly. Where Marty does he understands how it actually needs to be installed. And what are the deficiencies? Do they need to come back and do the correction? So you know, for a new investor who’s getting into it? And they think, Oh, well, I’m just gonna hire a general contractor.

Erwin  

For our who was managing?

Amanda  

Yeah, before four hour workweek, who’s managing now for

Erwin  

my for my Burr? refi? Yeah, right.

Amanda  

Yeah, you got my

Erwin  

vacation? Because I don’t need to check on anything.

Amanda  

Exactly. Yeah, we manage the contractor is extremely important, because this guy was calling himself a general contractor. So if you’re writing those paychecks, those those checkpoints are so extremely important. And this was just one little bathroom renovation. Imagine this on scale. If you’re doing a six Plex, 12 Plex, you know, the numbers go up

Erwin  

different cities all over Ontario.

Amanda  

You’re investing out of province, people are you’re investing in a province as well. Oh, good lord. So you know, it’s just word of caution of stay in your lane, really, you know, work your way out and get those skills, build that team, you know, have people that you can trust on your team, I

Marty  

think to our level jumping, I guess, as well, since we’re on the topic, we saw this happen firsthand in the last year. Well, I don’t want to, like tell a huge long story. But there was a guy who’s like, basically branded himself as a house flipper like a pro, you know, an expert. And he had like, maybe 10 or 11 properties, and was flipping a lot like really flipping.

Erwin  

I don’t know who it is because it wasn’t there in London. Yeah.

Marty  

You might know as the story goes on, okay, you’re Yeah, they are. And so, but they’ve only been flipping for maybe two years. And it’s like, okay, the markets really been exploding since like 2020. So you could basically flip houses with your eyes closed, you know, you don’t even need to do anything you can, right?

Amanda  

Losing that you’re actually good at what you’re doing.

Marty  

created what that did for a lot of people, especially this one guy created a false perception of him and how good he was at what he was doing. And this is what I always taught try and tell people buy and hold is generally a fairly safe strategy, especially if you’re, you know, you’re building some value in. But if you’re looking to just do quick flips, you know, it’s like a game of hot potato, like, you’re flipping this potato to somebody and if the market changes, whoever’s caught holding that potato, you know, or I don’t even is that a game? Yeah. You know, then that person’s gonna go bankrupt. So we sold this guy he bought we had two properties we’re selling last year assignment and this was in February, like last week of February last year when the market is on fire. And he gave firm offers to us firm offers. We sold two

Amanda  

properties them, one of them close, and we made a pretty penny on the assignment fee and it was great. Second one, the market had started to change and they reached out and said, We’re not going to close and I said well this is firm. Do all like, what’s the problem? Can I help you? He had the coach in me, I was like, Oh, what is it you need private lending? Do you need a better mortgage broker? Like, what is the issue here? So

Marty  

put out

Erwin  

or aren’t they a coach to

Amanda  

wow. Presenting that way? I want real coach. So, you know,

Erwin  

by definition, there are coaches, they have coaching clients.

Amanda  

Yes. Yeah, they went through.

Erwin  

So these are paid to be a coach as well. Correct. So self

Amanda  

promoting, you know, the type that would like pay for a magazine to put their article.

Marty  

Go there. But yeah, so it turns out so the the one guy calls a man and he’s like, trying to explain his way out of the scenario like, Look, I’m sorry, I’m not going to close. But here’s what happened. I I put firm offers on like six other properties that same week, all over Ontario, you know, yeah. all over Ontario. And I’m recording the phone call. And his lender wanted suddenly, who only wanted 20% down suddenly wanted like, 35% down. And that’s, that’s I think there was more to it than just that. But

Amanda  

he was in over his head was no longer able

Erwin  

to say multiple private lenders, multiple private lender, I don’t even know about each other. Yeah. Right. They don’t know that. He’s moonlighting on them. Yeah, exactly.

Amanda  

So they don’t close. So then we’re like, Okay, well, we’re gonna sue you for our assignment fee, which is rightfully ours, right. And there was a deposit paid a small deposit of only 5k paid, but that’s held by the lawyer in trust and only released on closing, well, we find out that he’s clowns and claimed bankruptcy. And when you’re a part of a bankruptcy, so this was learning, you know, it’s kind of fascinating to go through the process.

Erwin  

When the market really turned, it was, it was just

Amanda  

as it was turning, and to be a part of the bankruptcy claim, it was fascinating to see because you actually see everybody that they owe debt to and the amounts and I’m and I received this list, and there was it was less than 200. But more than 100 100 people on the list, and I see the names, and I know a lot of these people are, and were on the list as well. And we’re like, Okay, well, yeah, yeah. So we’re never getting our money out of this. And it was just interesting to see how somebody had gotten themselves so over their head, and then the bankruptcy that there’s no money left, that we didn’t even get our deposit that that deposit that was held by the lawyer and trust goes through the bankruptcy claim. So

Erwin  

deposits gone, it’s gone. It’s not even your deposit

Amanda  

anymore. It’s not our deposit, because it could only be used to purchase the property. And it could only have been released by a judge or the the offender

Erwin  

realise that I did

Marty  

this out that way. But But yeah, security deposits did not, it’s not your good faith deposit. That doesn’t really mean anything, it’s an IOU. So I mean, in the event that they didn’t go bankrupt, it would have mattered. But But anyway, so just

Erwin  

to give some context on the on the watch list was so long, it’s because there was a broker, a mortgage broker involved, that had that connected a lot of those individual lenders, individuals

Marty  

are giving both secured and a lot of unsecured loans against probably a pile of unsecured loans against the same property.

Amanda  

Yeah. And he was expected they were expecting to do like the quick and dirty, right? In reality, real estate is not a quick and dirty game. It’s a long, slow process. It’s painful along the way, but he received calculating, right, yes, but that false perception of flipping properties, and making those quick bucks, it made them think that they could keep going like that, well, it all came crashing down. And there was a lot of people on that list that I feel badly for. I mean, ours, we didn’t lose anything. It was an assignment fee that we didn’t gain. So

Marty  

it was it was a fee we were owed that we weren’t paid, it’s hard to say isn’t alone, versus like the vast majority of people on that list, had lent money and lost it. I

Amanda  

wanted to build our hot tub with that money for the assignment fee. So I mean, it’s hard to be sad about something

Erwin  

you never had. I spoke to one of them that money was her tuition money. Oh, God, I

Amanda  

know. And I understand that. And some people it’s part of their retirement plans. And it’s tragic. We didn’t lend to him. We just didn’t receive our assignment fee. So you know, these other people are truly victims in that situation. Now also, I think it’s important to say that most people don’t behave that this is the first time I ever encountered this impact that those two business partners had on that many people and then the circle that it would impact beyond that is devastating. So you know, it’s not something to be taken lightly. But yeah, it’s serious when you’re investing somebody else’s dollars and should be taken seriously,

Erwin  

just to close the loop on the student I was speaking to whose tuition money was tied up, it looks like she will be paid out. Because the mortgage, the mortgage broker who did put that up All together took over that specific project. Oh, yeah, in order to finish the renovation, and then sell the property. Yeah. So and he’s doing everything as far as I understand doing everything he can to make everyone whole to salvage that payment their interest to Wow, that’s good. So there are good people out there.

Marty  

For sure. Yeah, like I said, this is the first time I’ve ever seen this in my entire career. But this is why, you know, it’s important for you to understand, you know, due diligence when when you’re doing this, whether you’re lending money, or you’re, you know, you’re hiring somebody, there’s a process of due diligence. It’s not foolproof, there’s no perfect way unless like if you’re especially when you’re dealing with unsecured loans, and that sort of thing, but But yeah, you there’s a lot of tools you can put in place to protect yourself and help minimise the chances of encountering somebody, like,

Erwin  

I love that you brought that up. Because the reason I spend way too much time researching these things, because I want to understand where things went wrong. So one of the things that went wrong is the gentleman that we’re talking about the gentleman who bought the property from you, that you signed to, I don’t believe they had any spare construction background. So they don’t have any sort of operational execution of a real estate, Burr flip whatever. Yeah, in terms of like, you know, and there’s two of them. Yeah, neither of them were strong in the execution. Yeah, right now, which is what so I’ll disagree with you. I think you should have a fair amount of trades understanding, yes. You shouldn’t

Marty  

do that little size of the business. If you’re gonna that’s you’re definitely like, I think it’s definitely an asset for sure. I’m just saying it’s not required for everyone like they had like, depending on your strategy, if yours like eight properties on that list, if your main scale, you should know how to execute. Sure. And if your main strategy is renovation focused, and those were then absolutely

Erwin  

one of the deal the students deal was for to build a brand new cottage. Lottery cottage. Yeah. Which Yeah, they just bought the only there was a little lot. Yeah, you need to know a lot about how to build a house. Yeah, yeah. So Muskoka, from London?

Marty  

I know. I’ve seen the place you’re talking about two, which I didn’t realise that was so that was taken over? Is that what you’re saying? Like that was taken over by the

Erwin  

I’m told by one of the investors in that one blenders in that deal? Yeah,

Marty  

yeah. So anyways, just to like, sort of reiterate what I was saying, when I say it’s not essential. What I meant is it’s not, it’s not essential for real estate investing as a whole. But if you’re going to be focusing on renovation based investments, as opposed to turnkey or you know, passive investments, then it certainly would be essential for you to have a good understanding, which is why, you know, get to know your trades this again, focus development team, you know, start slow. Don’t try and flip five houses at a time with firm offers. Like these are all No, no Hallmark. And even if you do know what you’re doing, you still don’t quit. Like there will never be a time where we’re gonna go out and put buy five properties all firm offers, like, that’s just not how you do things. Right. Yeah. So there’s people

Erwin  

who even the good environment, developers are still going under. Yeah, like there’s one in Vancouver, you answer about that. One, the bankruptcy protections. 700 million worth of debt 16 properties. The chief operating officer is a former city councillor of Vancouver. So they still couldn’t get through the red tape. Departments done. Right. Yeah. So even if you knew the law know how there are risks. Yeah, of

Amanda  

course. Right. Yeah. And to understand that, and I mean, these worst case scenarios are, you know, few and far between, but to know who you’re doing business with, is really important, not just like, Oh, hey, you’re in real estate, I’m in real estate, let’s go do a deal together. The due diligence is much more in depth than that other than just sharing an interest in real estate investing to understand who you’re doing business with, do they have a track record? How long have they been doing this? Is this their first deal? Which is fine. Everybody has their first deal? You want to know? Exactly. Yeah. Wouldn’t you want to know that? And what scale is their first deal, as well as their first deal? A duplex that makes sense? Is their first deal a 12 Plex. That doesn’t make sense to me anyways, so you know, to mitigate some of these risks, it is possible, but you know, understanding with your eyes wide open about what you’re getting into, from the financial partner perspective. And from a working partner perspective, like it’s it’s important,

Erwin  

and also good swung me to point you guys immersed yourselves into this business. Yes. Entirely. Yeah. For almost, it’s been 17 years. Yeah,

Amanda  

it has been Yeah. So beyond my property manager side hustle. But But beyond my private property management, I was working as a real estate coach since 2014. That we’re running out of time. Oh, geez. I know because we Babylon team. 2014. Yeah. So I coached and you know, led a team of coaches ran a content department for numbers a number of years out on the leadership team at Keystone are actually and went on maternity leave and haven’t really been able to return since then. So I’ve got eight years of real estate, investment coaching. And completely this is this is what our life is property management experience our investments along the way, plus Marty’s on site construction experience along the way that you know, we’ve been at it for a while.

Erwin  

So both you’re immersed in the business, you’re quite vertical in your integration in that you have your own property management business, you coach yourself, you raise your own capital, you teach it, right, you guys live it, breathe it. Alright, so it’s not it’s not quick. No money. Nor is it guaranteed rich. No, and it’s not verified if you go slow. And pragmatically, it’s pretty. It is

Marty  

pretty guaranteed if you go slow and steady. Yeah.

Erwin  

Smart. Versus Yeah, we’re discuss like people, some people are going down in flames. Yeah. Right and moving back in with their parents and or their in laws. Like it’s really, really sad,

Amanda  

right. And it’s hard work. Like last night, I worked past 9pm. Like, you have to deal with your business. They can’t be like, Oh, I’m self employed business will take care of itself. What?

Erwin  

Sorry, just to say it can be if you have different goals.

Amanda  

And if you got yourself there, right, like, you know, depending on how much time have you already put in. So you know, as we said, at the beginning of the conversation, we’re working towards this transitional period, but we’ve got a huge project to accomplish first, before and again, it’s like a your game of chess, you gotta move your pieces here. You know, planting seeds is another way that you can see it, but it takes time for the investments to grow. And you’ll go through periods where you expand your portfolio, your portfolio contracts a bit as well, you’re, you know, moving money around as you’re saying, Okay, if I sell this property, I can do X, Y, and Z with those funds. Like you’re always shuffling things around, it seems but you need to how much you get paid. Oh, are

Erwin  

we over time? Oh, boy. Oh, boy.

Amanda  

You invited very chatty people to your podcast. We can do this

Marty  

isn’t a like a five hour podcast.

Erwin  

So what is the project you’re currently working on?

Marty  

Well, we got to 23 units. It’s a rehab property rubber, I guess you call it a burr. Like calling it a burr we’re like rehab are

Erwin  

fully terms that we use, like like that are just been abused out there. Yeah.

Marty  

So why don’t you explain it since Amanda’s Amanda is the one who typically explains our deal to our potential investors. So

Amanda  

yeah, so we’ve got a 23 unit building in London, Ontario. And the overall plan here is to renovate the full building, our plan is to do 50% In year one 50% In year to trigger a refinance, do a large payout of profits, and then hold steady Eddy up until year five. So what we’re seeking is financial partners, silent partners to come and participate in this deal with us. They are completely hands off. passive investors, Marty and I handle all of the work keep in close contact from a reporting and update perspective. But if they want to come along the journey with us from a passive in position, then there’s room in the dealer or they want to learn more yet we offer coaching on a quarterly basis with the project. So I give very detailed reporting throughout the entire investment and with that coaching calls to make sure that they can decipher the reports, and that they understand how their investment is performing along the way and to learn and it’s a kind of a fun thing to see that we’re essentially turning over a full apartment building. So there’s a lot to see along the way. And we’re happy to share. So yeah, if any listeners are interested to come in the deal with us, then we do have some space available in this current opportunity, looking for funding up until February 28. So well, we have a little bit of flexibility beyond that as well. So they can reach out to me directly just by email. Amanda. Amanda, at elite rental management.ca Is my email. That’s how they can get in touch with me.

Erwin  

You’ve both done a lot of TV, where are you documenting this anywhere on social media, YouTube anywhere?

Marty  

Okay, so we actually we used to document everything on our YouTube channel, which is called House hustlers. But ever since my baby, it’s really pretty much been at a standstill since Montgomery was born. So I think we’re looking we’re looking to start ramping up on there a little bit more. Now that we’re kind of stabilised as new parents. But yeah, that’s so house hustlers,

Amanda  

a lot of past projects

Marty  

that it should be on there, that would be the best location to find it. But there’s a tonne of past projects on there. If anybody’s interested in looking at what we do. It’s kind of it’s kind of fun HGTV style and only I think mine’s better than HGTV is but but you know I I put my my expertise and my spin and I do all the production and video editing and all that sort of stuff.

Amanda  

Yeah. And it came

Erwin  

as one word on YouTube,

Marty  

towards house hustlers on YouTube house hustlers.

Amanda  

And Marty had done all the editing production and all those videos, is why when we had a baby

Marty  

trying to do a renovation, and you know, moving cameras around yourself without a camera crew, and then you finish the renovation, and you’ve just got this pile of, you know, raw footage is, you know, hours and hours and hours. So, yeah, it just became a little bit too difficult to do the high production values anymore, but we’ll see what the future holds. I do miss. I do miss it. Oh, yeah, for sure.

Erwin  

One thing earlier with putting out content is like a lot of it doesn’t have a return. But it feels like a public service. Yes. Like, literally, we know, we know people going down in flames. It’s incredibly sad. Yeah,

Amanda  

yeah. But to share the education along the way. I know within our jobs, like as coaches that key Spire, we’ve created a lot of content, but you would have to be a part of that community to actually access that content. So we have done a tonne of educational stuff. But that’s within a private group that people can join, of course, but content on our own. We kind of put on a pause. Yeah, thanks, Montgomery. Yeah, I’m sorry. He’s much more interesting.

Marty  

The old days may return still. So

Erwin  

perhaps we’ll see. So way over time, any final thoughts you want to share? Especially to anyone who’s like nervous about getting started in this market? Any final words?

Marty  

Yeah, I would say, you know, you need to find a way to make it happen. If you’re interested in getting into real estate, I think it’s an excellent idea. Some people are confused about, you know, prices and what’s going on, they don’t understand, you know, like, it’s always gonna be a good investment, you know, things seem higher than ever. And people think that the only direction prices are gonna go is down. I totally disagree. We might see little blips in the market. You know, the market, always zigzags, but it zigzags upward. And so, you know, I highly, highly recommend buying real estate and a good way to start, if you are having trouble to raise the funds yourself, then you need to work with other people, whether it’s teaming up with your siblings, and parents, colleagues, university friends, you know, pulling people together can make it feasible. And so, you know, like, it’s about sacrifice, too, right? Like, a lot of people will say, Well, I don’t want to live with my, you know, my university friends or whatever. And okay, but you know, the, if that’s going to make it happen, if that’s just sometimes you have to do it, you have to do even if it’s just for a short period of time. So that would be the recommendation I have. Otherwise, you know, it’s not gonna happen on its own, you got to make it happen. So

Amanda  

very nice. Yeah. And I think working within current market conditions, there’s no perfect time to buy or sell real estate, because by the time you knew it was perfect, that bad period is gone. Right? So working within current conditions, leverage people around you, there’s so many people doing amazing things in real estate, who are being incredibly successful with what they’re doing. So you can hook up with a community, a coach, a mentor is extremely helpful. You don’t have to go at it alone. And I wouldn’t suggest going at it alone. There’s there’s a lot of education out there. But yeah, understanding that it’s hard work. It’s not quick and dirty. But it is entirely possible to take control of your financial future, because it’s all about freedom, right? But if you have to work for your paycheck, you’re gonna run out of hours, by the time you actually achieve what you need to retire comfortably and reach those goals.

Marty  

And don’t worry about that passion thing. Pass. It’s simple math. Yeah. Do the math.

Amanda  

Yeah, yeah. And you’re gonna go through challenges and bumps along the way, but it’s about overcoming those obstacles. And that’s what you’re learning from that’s, you know, how you’re how you’re gonna grow. But yeah, it’s not easy, but it’s worth it.

Erwin  

Thank you both so much for coming in.

Amanda  

Thank you. Thank you very much blast Yeah.

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.

 

 

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**Transcripts are auto-generated.

Erwin  

Hello, welcome to the truth about real estate investing show for Canadians. My name is Erwin Seto. And thank you to listeners who took that next step to reach out and connect. I wish I could be that superhero like Batman or Superman, who I’ve grown up idolising and help people the way they do, but I can’t. So the closest thing I have to superpower is my ability to give real estate investing advice for both active and passive in the opportunities, I’m always looking for ways to improve in my search to be better in all areas of life. For example, I’m learning more about intermittent fasting, even though I’ve been doing so on and off for about four, four and a half years. But I don’t know how much understanding how it works. And so I’m listening to a podcast with Dr. Jason Fong, who is a proper medical doctor and University of Toronto trained medical doctor who has successfully prescribed intermittent fasting to obese patients of his to solve diabetes. I post the link to the podcast specific podcasts in my show notes. Of course, you know, don’t do any of this without professional help. I’ve been doing this under the supervision of my naturopath for my family’s martial arts journey, we’re switching Brazilian jujitsu clubs, back to previous club we belong to as the instruction there is so much better. I wasn’t happy with what my kids are going my kids classes at the current club that they’re in. So I reached out to our old club, our club, unfortunately, they got the they had to close down during the pandemic. Because as you can imagine, Brazilian jujitsu is not too fast. It’s not to social distance friendly, they only recently opened up, they’re not very public about it. So I had to call I had to call the owner. And to find out what’s up, he invited us for a trial class to come back and try it out which we had this past Saturday. And the nice thing about martial arts is the belt system. I think most of you are aware white belts in jujitsu, it’s white, and then blue, purple, brown and the black, black. Of course, I think if you’re really, really incredible, you can get a black belt in 10 years, likely it takes way longer, right, you got to be a prizeman especially gifted or have a lot of free time on their hands to take a lot of classes feel the black belt within 10 years. Anyways, we had a first class back in this past weekend on Saturday. And again, the nice thing with the belt system is well belts are awarded based on technical knowledge and practical skill within the ark. I so wish they had these in real estate investing. I’ll get back to that point. The kids, the kids class was led by three brown belts. So folks with seven to 10 years or more experience during a takedown drill. So the kids are, you know, they’re throwing another kid to the ground. For that drill, the leaders of the class invited the other adults onto the mat, adults that were also trained a blue belt and two purple belts. So that’s between two to seven years experience, respectively, roughly, they were invited to come on the mat to supervise the kids in smaller groups in order to make sure that they’re safe, because you know, getting thrown down to match can be dangerous. So they’re trying to you know, have some pretty smart people and helping the kids there’s about 18 kids who are generally pretty new to the sport, make sure that it’s safe. Now, when you compare that to the club that we’re leaving, they’d have a similar class size about 18 Kids roughly around there and only one or two purple belts from the same class and you’re in the for the same class size. So to me, the instructor, so the level of the level of instruction, they don’t have the same level of experience. And there’s a lot fewer of them. So, you know, to me, quality of coaching matters. So we’re making the switch Effective immediately, even though we’re going to leave behind over a month of unused, unused membership. Now in real estate investing, there are all these new coaching organisations out there, like during the front up a bunch started to the higher profile ones are very quiet, which leads me to believe that they’re probably closing doors are about to already have. So just an observation is when the founders opened up these coaching organisations during this bull run of real estate, all the hype, they were actually able to recruit a lot of students. And then they had to hire more coaches in order to handle to provide more one on one attention to all these new students like hundreds of students. And for my from what I have my observation, some of these organisations, they were hired coaches with like one or three years experience, and some of them had literally have no personal experience only investment properties. Some of them are transparent about it, which is cool. All right. I love transparency. If you’re new to this, there’s nothing wrong with transparency. All right, be honest people, let’s rock being honest errors. So having a coach like that may be fine for some people. Personally, that’s not for me, especially considering what their folks are paying for these level of services when there’s so many good options out there. For Real Estate coaches who have been through multiple real estate cycles. I would choose that instead of you know, I would choose coaches or programmes are investments that have demonstrated technical knowledge and practical skill over a few decades, a decade or more. That makes sense to me, right? My kids feel the same way. I asked them which club they preferred. And why both of our kids and their 79 years old, they both felt that they wanted to switch, because their fellow students are more serious because the instructors are honestly better. So it doesn’t hurt making the switch as well, because switching will actually save us money. So we’re gonna get better quality instruction, and we’re gonna save money, it honestly doesn’t get better than that. So speaking of quality and money saving, sharing, I will be hosting a networking meetup. And this will be our March I went event on Saturday, March 25, for the first time ever in Whitby, Ontario, followed by a street smart tour of an income property or two in Oshawa, followed by a mastermind lunch with like minded investors. So obviously, we’re starting the morning probably started at nine ish, we’re probably have lunch around one ish, something like that chair was sharing what you absolutely need to know about tax filing and 2023. There’s a lot changes this year. And I’ve spoken to some real pro investors folks with like 50 properties, and even even they’re not aware of all these changes that are happening. And some of them come with like some significant penalties or like five or $10,000. Anyways, so terribly sharing updates on that, I’ll be sharing a short economic and GTA market update, because I need to get more time to coach Dave Phillips, who’s on my team and we sharing what he’s honest with us sharing is much, much more important in my opinion, because I’ll be sharing best practices on investing in the Durham to Kingston regions, cash flow is harder to get than ever. So you honestly don’t want to miss this opportunity to meet up for again, this is our first time ever in Whitby, Ontario, Saturday, March 25. If the demand is there, we will make this more regular occurrence. The cost is nominal. And also all the profits will go to charity to outfit school children with more winter clothing. Our tour of conditional income properties will be in Asheville, and this will be a highly educational where we will share we will share professional investor tactics and the financial analysis that goes with it. If you’re new to investing, and you do not want to miss this opportunity to learn in a group environment, there’s no pressure honestly, there’s no pressure for anyone who works with us. And also honestly, if you want to buy for value, this is kind of the time to do it. As the housing market has dipped significantly. We’ll release details in about a week’s time. Space is limited for both the meetup and the tour. The tour we’re going to cap at about 30 people. Our last tour in Hamilton sold out in the first week. Again, we kept them on a 30 It was honestly excellent feedback was over the top. Some folks are saying you know it’s so nice to do a meet up on site inside an income property because most meetups out there, they just talk theory and present numbers. They don’t actually show you what a deal actually looks like. So again, see the date Saturday morning, March 25. After this week’s show today, we have my friends, Rob single, who is a real estate lawyer and litigation specialists out of Mississauga, Ontario Sourabh services, some of our clients, but he also has a whole lot more investor clients from the general public. So he’s seeing firsthand the financial difficulties that speculators and private lenders have put themselves into improper borrowers. Well, simply, here’s the number that shocked me. So Rob is his office is a lawyer of one he’s got two clerks is an officer one. And he himself is working on 32 files for power of sale. Power Cell means that the borrower is in default, the borrower’s default, the lender, which can be a bank, you know, like your, you know, your base Street banks, and the bank or the lender is forcing sale of the property, the house or whatever it is to repay the debt. That is enormous number. And that’s from one lawyer, we also discuss lessons from the many second mortgages out there that have gone bad. And also, again, he’s giving him basically a lawyer update on what he’s seeing on the streets. And unfortunately, many people who have unfortunately speculated on reconstruction are having a really difficult time. So to my 17, listeners, please do extra due diligence out there when vetting partnerships and private lending and any investment opportunity. And then public service announcement. I am observing exit scams going on where gurus are so called real estate experts, they’re raising capital, but it’s not going on raising capital. But some of these folks are already bankrupt or approaching approaching bankruptcy. So I don’t know what reason they’re raising capital for, and how what means they have an order to repay those investments to their investors, when the writing’s on the wall, that they’re in massive, massive financial trouble. So 17 listeners, please avoid these trashed Strophic investments. At the same time, fear is extremely high. And actually, it’s a little different for me, because I’m on the street and talking to investors regularly. It certainly seems like the smart money is feeling pretty greedy right now. And I can’t disagree with them.

Erwin  

I believe the timing is actually pretty good for the spring market. As always, my preference Chairman as preference is to invest in assets that we control personally, or within our corporation. And I only invest in markets where I am an expert, and I recommend my clients do the same. So that’s what I recommend to my clients to each their own. At these 32 investors going through power sell right now where to fold my advice, or even just listen to this podcast, this likely could have all been avoided. And this podcast is free. So please feel free to share it to those you care about. Unfortunately, these folks didn’t. And honestly, it’ll be my clients looking to buy these distressed properties, like we already are doing right now. So if you do enjoy working with professional service providers, such as such as my team myself, we can get you invested in like a professional. And all we charge is the realtor commission, which is paid for by the seller anyways. And yeah, so Sora our guest is a returning guests. So in the previous episode, we did cover his journey to move his family from India to Canada. While in India, he was a crown prosecutor. So he represented the government, the country, the people while prosecuting bad guys. To become now a Canadian lawyer. I recommend checking out that previous episode as it’s really an inspirational one. And it should definitely motivate a lot of people to connect with Zarrab. His website is www single dash law that ca that’s si ng ajl dash law, le w.ca. And his email is lawyers at single dash law dots. Yeah, please enjoy the show. Hi, sir.

Saurabh  

Hi, everyone. How are you?

Erwin  

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

Saurabh  

lot of legal advice. A lot of ways. Okay,

Erwin  

today is February 10. My guess is we’re still early stages in terms of financial challenges around homeownership carrying carrying costs. Yeah, so yeah, we’re just jumping right into it. So what are you seeing in terms of what clients are bringing forth

Saurabh  

okay. So there are like mix like it is problem from everywhere, some people are not able to afford the mortgage they want to sell it I will sell them I will turn them as for sale so they’re forced to sell their property and I have a lot of private investors who have invested in the property they have given private mortgages and the obviously the borrowers or the homeowners they are not able to keep up with the payments regular payments. So the private investors want to take the steps of power of sale, I always advise them you know, it is better to take these like the big step of power of sale only if you have the equity in the property. But you know, homeowners I think some of the homeowners are smart enough they know that the the person who is the investor who is sitting in second and third place won’t be getting any equity given in this market. So that is another issue that I’m dealing with in my office and the lot of pre construction advice like the people who have booked their pre construction houses and the it is up and ready for delivery now builders are insisting that you should close and they are asking for extensions builders are not budging off just in case you know they can like It’s like Unreal the expectation of the new homebuyers are unreal they are asking for six seven months of extension which is like no one will give them right but we just have to follow their instructions the clients instruction we write a letter to a builder and yeah it’s obviously it’s like it’s in a soft language because it’s okay no nothing doing

Erwin  

bills to pay right we have contractors pay for

Saurabh  

you know and it’s an unreasonable like the financing was never the condition it was at the time when you entered into the contract I I always explain to my clients that at the time when you entered into the contract you might have apprehended all these situations that yes, you will be able to afford this kind of house like the if they bought for 2 million 3 million house or let’s say 1.1 million also. So they might have done all the calculations based on those calculations only they might have entered into the contract. But as you know if anything goes sideways everyone blames their real estate agents, mortgage agents and uh no, we were not properly advised. We didn’t know the there will be eight eight rate height hikes by the Bank of Canada. So we didn’t knew that the bank you know, bank will appraise the property at a much lower value. So they won’t be able to qualify for the mortgage. I have a lot of things a lot of things for them to consider but this is like I talked to myself if I’m I’m an investor I should you know, be ready for all these situations and especially you should have proper knowledge that what is going to happen in 345 years down the line you cannot I know it is like everyone likes to think that everyone thinks that AI will do them if the market is going up. Everyone thinks that yes, it will keep going up and up and up. But real estate market just like another market is fluctuating especially in in Ghana that we have seen recently. So yeah, these things are keeping me busy. A lot and a lot of other things. It’s still early

Erwin  

days. How busy are you are you like at your limit? It’s or

Saurabh  

the like, honestly, like, since our real estate practice has like, gone really down the transactions that we did in last year had it’s almost own 60% down from my my law firm alone. And this is what I’m hearing from all of my real estate, lawyers, friends, that he has the practices down. There is there’s so close

Erwin  

to closings. Yeah. Not closing because they’re asking for extension extensions. Yeah, they’re just less sales last year as well. Yes. But your litigation, businesses,

Saurabh  

litigation, most of most of them are when you know, they want to directly see what the situation does not add up. Most of them, I try to set a like in at the initial because it’s, it’s very expensive to go to the code to. So if the person who is not able to give their mortgage in time they if they are not able to make the mortgage payments, or they’re going to afford the litigation, right. It’s an expensive step that anyone should enter. And for the private investors to earlier, what I remember is if there was equity in the property, even the lawyers were after the borrowers like after the private investors, if the to you know, initiate the power of sale process, because they can recover their fees from the equity. But now, since there is no equity in the property left, if the lawyers will initiate the power of sale, they have like, where are they going to recover their bills from? They can they can, you know, add it up, they can get a default judgement against the borrowers. But ultimately, like there is nothing that is coming to the lawyers directly. cash in hand is not coming from the equity.

Erwin  

So what are the expenses someone must go through to initiate a power sale? I don’t know, I don’t actually, I’m gonna guess there’s not a lot of private lenders and listen to this show, because I’ve been very, very against the strategy. Just because the worst case to me is too much for me to bear. That’s why personally, I had personal private land. And also, I don’t have access to really good deals. I’m well aware that there’s really good deals for private lands, I generally don’t have access to it, because I’m just not that space. So like, you know, you find a really good deal is probably a good investment. For most people. Most of the time. I personally don’t think private lending is a good investment. And now we’re seeing it come true. And doesn’t mean I’m smart or anything. I’ve been saying this for years. I’m finally right. Lots of people have made lots of money along the way. Yes, you know, even a broken clock is right twice a day. That’s me right now on the on the broken watch. But again, I don’t think most people understand what the process is like and what it costs to actually go to Power sale and see there is sufficient equity to make sense for a private lender to go power sale, what is the process and ballpark costs?

Saurabh  

Okay, so it depends on when if the defendant the borrower, let’s say if the private lender is sitting at the first place, I will still say that yes, if the market is has gone, like it depends on how much he has invested in the property, the one sitting at first place is always secured, right. So if the borrower does not object, or does not challenge the power of sale process, and does not make it more expensive, ultimately, it is going to come from the borrower’s pocket only, it depends from this stage to say if it is a simple process, you’re looking somewhere between 15 to $20,000, regardless. And you wouldn’t believe I have 15 to

Erwin  

20k, if not contested, if not centres,

Saurabh  

legal fees and the steps everything. And I have seen some case laws where the the only money that was to be recovered was $15,000 15,000 only, and the male client was sitting at the second place. But the borrower was challenging each and every step of the mortgage and the cost went to 55,000. Court granted $55,000 to be paid to the second lender. So the 15,000 that the borrower might have paid right away, it increased to 55,000 just because of the litigation, right. So it worries

Erwin  

senior this settle. Yes. And we’re dealing with human beings here, especially if this is our home, they may not be so be willing to let go of the property. But they

Saurabh  

have to understand if they have borrowed the money at the time. Maybe because maybe to increase their lifestyle or to buy another property. God knows for what reason, then everything comes with the consequences. And if you contest if you keep contesting and contesting no without having any reasonable basis, then it is just going to increase the cost which is going to be recovered from the homeowners itself.

Erwin  

And then correct me if I’m wrong. Like if you’re in second or third position. I have friends who had to do this they had to pay they had to take over the payments for the mortgages that were ahead of them. That’s so if you’re the second mortgage, you have to make payments of the first now right so that they don’t go to Power sale.

Saurabh  

Ah, that’s correct. So it could be a lot of money. It is it is a lot of money. So I don’t mind working parents are big. And otherwise also, let’s say if they are not able to keep up like if they do not want to pay the first mortgage default of second mortgage itself could be the default on the first mortgage itself. So it depends how the mortgage is construed, is structured. So most of the mortgages are structured that they should not be secondary financing permitted at the time of closing,

Erwin  

which is pretty much always.

Saurabh  

But everyone does that. Once the deal is closed bank is not going to pull the parcel bank is not going to look into your parcel register your title to the property, what you’re doing with the title as far as you’re paying the mortgages on time. But as the moment you obtain second mortgage or third mortgage, and you make default on those mortgage payments, it could constitute automatic default on the first or second mortgage to Oh, so it is it is one of the terms in the mortgage, that any any default on the second or third mortgage could be caused automatically constitute the default. On the first one. So the first mortgages second or third mortgage. Yeah, all of them have right to take the action for power of sale. Right.

Erwin  

So the first mortgage generally has the right to just ignore the other mortgages.

Saurabh  

Yes, yes.

Erwin  

They can trigger power. Right. Yeah. So in theory, they could trigger power sell themselves. And even if there is equity for the second or third mortgages, right, they could be out right. Now a lot of risk in private lending.

Saurabh  

Yes, it is. It is full of risk. And I recently like I cannot, it’s not specific to a case. But what happened with the properties? There is a property whose value came at $4 million at the time last year in 2020. I think we did it in February 2020. No, sorry, August 2021. And based on that, there was loan to value of 80%, or 80%. And my client gave $350,000 as a third mortgage. Okay. So what happened is that obviously, the borrowers defaulted. The first mortgages with the B lender, they did not initiate any power of sale process, yet, are the second mortgages with these with some other private lender. And the third, my client was sitting on the third position, not since the default occurred for second and third, it constituted the automatic default for the first one, and first one triggered the power of sale process. In the meantime, the borrowers managed to sell the property, okay, and means they entered into the agreement of purchase and sale. And they were trying to pay off the creditors, but there was no equity in the property because the property’s value fairly substantial, came substantially down. So instead of $350,000, they were offering my client to take $55,000 for their investment in total. So this is how you can you lose the equity in the property. So the first and second gets the full, and the remaining remaining money should go to the third party, but

Erwin  

that’s how it worked for 30 years. Do you remember the terms of the third? What was the loan? The value? What kind of rates they got?

Saurabh  

Yes, so it was like around I’m saying that, you know, at the time, when we structured the mortgage, it was still at the at 90%. I think 90% They went up to 90% loans. And yeah, there was an the property was valued at 4.1 or 4.2 million at that time. And at the time, when they entered into the agreement of purchase and sale, it’s worth 3.4 million. So it’s six 700 million down, there is hardly any 600,000 down, and there’s hardly any equity in the property.

Erwin  

And then just from my experience, I study, you know, I’ve been around long enough to see housing corrections. It’s always the high end market that that bears the most volatility. And it’s the what drops the most and it’s the most illiquid of the investments of properties and properties, not just investments. I would never have touched that if I was gonna line that up put on a starter home. Right,

Saurabh  

right. I don’t know if you remember from our our last podcast or when I told you that many people they just like to they do not like to invest in stocks. They just like to invest in their like their money in the in the private lending because they have the sense of security that our money is secured against the property. But these kinds of situations are classic example where you know, the Your Money is not as secured as you think it is.

Erwin  

I fucked up my kid my kids have a kids book from Ray Dalio to kids book on principles. Don’t forget about investing. And I flipped it open, just have a quick look. And the first page that I read was about how most people’s understanding of investing is their own context. Like, for example, we’ve only been like, prior to this correction. 12 years we’ve been in a bull run both real estate and stocks. So if that’s the only context, then that’s what they think is gonna keep going happening going forward going forward, that it’s just gonna, everything doesn’t keep going up stocks, real estate, it’s all just gonna keep going up again, 12 year bull run since the financial crisis, right, for those who never studied, crashes, corrections, right? I have a job, I have all this fear. I’m not perfect. You know, I wish the whole marine world forbid, reverses, we could have sold everything a year ago. And if he didn’t put everything in fixed mortgages, we did some hedges, like we’re not far from perfect. But like myself, my clients are not in the same positions that you’re talking about. Oh, that’s crazy. And you’re saying they all blame everyone else.

Saurabh  

Yeah, they’re all blaming real estate agents, mortgage brokers, some some of them came to me, I said, See, I never advise you to invest. I’m not your mortgage advisor. I’m so sorry. I never introduced you to the borrower’s. It’s I what I did is I just secured your investment, that was my job as a as a counsel. So yeah, and we did that. So nothing, nothing more than if your paperwork is good, and that they cannot touch you. Because if anything goes wrong, if you your job is to want them initially like but they say, if the clients are like, most of the clients come to you, and they said we know what we are doing. And we just want you to do this. So if your client is client is giving you instruction, as the lawyer Your job is to follow their instructions within the purview of the of the law. So

Erwin  

it’s interesting, the conversation around like, duty of care. So for example, I spoke to an investor who had lent money on a cottage build in Muskoka. So the investor bought a piece of land borrowing money for the construction of the cottage. Right. So to me, very risky, right? Right. The investor was like lent money. And she told me she needed that money back for tuition. Right. But the product is in limbo. Because the the investor has since gone bankrupt. The mortgage broker didn’t ask, like when you need the money back, right? Again, I don’t know where the duty of care is. In my opinion, a lot of people do not get paid enough to be providing full like to be acting as a full advisor provide complete duty of care D like a financial advisor night, right. You know, for for most lawyers and most mortgage folks, you’re there’s to process. Right, right. There’s not a time or money in the day to be able to go through someone’s No, right, because they’re getting their mortgage people not securities, securities advisory minutes. Great. So I asked her Do you want to ask when you needed the money back? Said No. But my thinking was like what are you doing investing in a build a builds always have delays. So I think

Saurabh  

she’ll get our money back on so yeah, and cost also increased with the bills, you know, it’s not like, you cannot have a certain cause that yes, you will complete the project. It always increases you don’t know. Yeah,

Erwin  

I think she was doing like 10% Right. That was her interest rate early. So I think she’ll it’ll be it should probably be like a year delay to get her money back if everything goes well. But again, like I think people people don’t understand this just do their own due diligence. I would say there’s a good number of people who were not qualified to do proper due diligence. That’s right.

Saurabh  

Most of them like I do not obviously it’s not personal opinion. But you know when it comes when we look at the deal closely, I see that most of the people most of the good so called good people who are working behind the deal they did not did their due diligence at all the some some of the private investors they didn’t even visit the property right. Now they come to me and they say hey, we never visited the property we don’t know where it exists is it CX it exists illegally it is there right? There is no title fraud that has happened in any of your investment but you should have done your due diligence properly. You should if you want to invest, you have to be careful in stocks what I see is if they still have the option that okay they will they can make I’m not a stock as specialist I already told you but what I can see is there is no rush to sell the stock if they have the money in there so they can just wait and

Erwin  

usually it’s not common where people borrow to buy stocks, right.

Saurabh  

So with this real estate transactions, if you are doing private investing of specially of the sky, you have that you indirect risk of losing your investment, like if the value of the property goes down, which has happened in so many so many circumplex deals,

Erwin  

I actually refer recording, we are discussing how, if you private land, you can only lose your investment, you can only lose them out your land, you can technically lose more, because at least there’s probably additional costs. That’s it. There’s no There’s no like infinite losses. Does he still have to imagine there’s some paperwork still to complete? And you imagine the lawyer to close it off, eventually, you know, my mortgage is worth nothing. Can we close this off? Right? So yeah, it’s not pretty, but like at least silver lining, maybe maybe silver lining is the investor, they’re losing beyond their investment, they’re liable for any other additional losses. That’s right. And legal fees from the lenders, especially the first if it’s a bank, or B lender, they’re coming after you for further legal costs as well.

Saurabh  

That’s right. And some of the investors are women, it is like shocking to note that some of the investors what they did, they use their HELOC or line of credit. They took that money out on interest from the bank, let’s say for 7% and they were lending the money at 12%. So just for that 5%, you know, a profit for the for the whole year, they were they’re risking so much. And now they’re like, since they do not have money they have to pay the pay back the bank’s money.

Erwin  

You mentioned preconstruction issues. Do you know the mix between like apartment building condo versus houses? Just roughly?

Saurabh  

And no, most of my clients, you know, they, they are the ones who have who have bought the hot Lake houses in comparison to the condos. So they are just asking for the extension because the bank has obviously appraised the value of the president at a much lower value.

Erwin  

Are the appraisals at least reasonable for market? Are they even more conservative,

Saurabh  

if we will look at it today’s markets even at the time with pre con, what I see is that, you know, at the time when you enter into the contract, the or cost is like, I’m not sure I’m not a specialist in that again, in this field again. But what I’ve heard is that before there was a time when the pre construction was we’re able to give you some profits because they were available at a lower cost at the time when you entered contract. But now what I’ve seen is that let’s say you entered into a contract in 2018. And the property will be delivered to you on in 2020. So the builder will structure the contract in such a way that they will price it for 2020 or 2021. And now since the market has gone down in 2021, or 2022, just fine. For instance, the appraisal is already like much lower value. So you’re following what I’m trying to explain.

Erwin  

I’ve been reading about in the news is like before we’re recording we’re talking about the lawyer gentleman, I think it was name was. So my context isn’t as probably as good as yours is out. I don’t know a lot of people who buy pre construction, but it’s for anyone who hasn’t seen it. There’s an article that came out the week of early February in Toronto Star where a lawyer from Brampton have bought two pre construction homes from Madami. in Oakville, he signed for over 2.4 for each of them. He’s committed to almost $5 million worth of real estate. And he put down $800,000 But he’s saying that the appraisals are like one well, no sorry that Mattamy the builder is now selling the exact same house for 1.8 1.2 1.9. Right, because that’s what’s market that’s not its market now. Right. And you know, builders are businesses they need to sell to pay their bills keep cashflow going, so they’re gonna sell for market

Saurabh  

so I’m not sure like I’m again you know, without being fat specific urban. What they’re trying to do is they’re trying to convey to the builder or to the community that you know, since the builder is selling it at a much lower value. So there is a frustration of contract, right? They’re trying to frustrate the contract but the test is is not easy to do. There’s so many steps that you have to prove for the frustration of the contract. I have seen cases like if we do a lot of legal research and some of some word I’ve came across is that if you have entered into the contract, if you were properly represented in builder’s contract you know there is always a clause that you should get it reviewed by a lawyer and you have entered it you know with full confidence you have taken in meaning aware the season so if you have entered into a contract, you should honour the contract no matter what. This is how they are structured, if

Erwin  

it’s how the world works, yes.

Saurabh  

I’m there unless you can prove above and beyond like the frustration in one of my matters that I personally you know, handled. My client was leasing the property And they took some loan from the bank, this small business loan from the bank, they fail to pay the bank’s money back bank sued them for the amount I told them initially that yes bank you are it since you were the personal guarantor. So you will be liable to pay this much amount. But they wanted me to contest the motion, as I mentioned earlier, that we as lawyers, we just we can advise our clients in their best interest. But if they instruct us otherwise, we have to follow their instructions. So they want to contest even though they wonder if they want to contest they said that, and the crown that they were taking is that since the COVID hit the market, they were not able to open their business, I will not name the business, what kind of business they were into. But yes, the they had like facts to support that, yes, COVID could have impacted their business and they were not able to function properly. They were not able to open it fully. God says no nothing doing. If you will take this objection, then you know that we will open it will open the floodgates and everyone will come to us. And we’ll say that here’s the contract is frustrated because we could not operate during the code. And it was during the COVID. So when the court is not ready to accept the year reasonability for COVID, which was declared as pandemic, then can you imagine that they will exert the harvest. So means they end up losing and they had to pay the other side’s costs too. In addition to paying my costs, they have to pay the other side’s costs. plus whatever the amount of data the bank was entitled.

Erwin  

Investors are not backstopped. You can’t expect the government. Justin Trudeau Bank of Canada builders to backstop investors. Right. Right. That’s just not how it works.

Saurabh  

It will stop.

Erwin  

Right? Who would work? Right? So you were the contractor? Oh, they don’t wanna close on the house. So you’re not getting paid? Like more contractors show up to work? No. Like, no one’s long bear that risk. That’s right. But that’s but some Yeah. So quick question. A quick question is what happens then if someone who bought pre construction cannot close? Okay, what happens?

Saurabh  

So in my view, if the builder ends up builder has to take the reasonable steps to list the property at the same mark value. And if they end up selling at a lower price, then they can come after you they can forfeit the deposit. And they can come after you for the differential amount.

Erwin  

Okay, so sounds very similar to a regular retail transaction. Yeah. If a buyer goes firm, and does not close, right, the seller can go after them for damages. That’s, it sounds very familiar. Yes. Okay. But in the pre con buyers can’t just walk away with a lockbox and deposit being No, no, no, no, they’re still liable

Saurabh  

is once we have entered into the contract, you have to perform the contract. Like I keep telling this to the client like to have to each of my clients, so don’t don’t come to me for advice and don’t keep telling them come to lawyer before entering into a contract not after entering into a contract. Right.

Erwin  

I certainly want to bring up earlier was a lot of people didn’t want to pay for advice. We see it in our businesses here, for example, but we’ll we’ll offer pay consultations, we actually get a lot of resistance saying, Oh, I can talk to my financial planner at the bank. There’s no charge there for advice, right. They don’t understand that they’re really paying for it to their, to their mutual fund fees. Right. But yeah, just a general apprehensions or paying for advice. So this is the challenges people will run into. Yes, you don’t pay for advice, you don’t get advice, you don’t get quality advice. Right. Right. Because I’ve been you know, I’ve been telling me something listeners, I don’t private lending, which I I believe that’s the correct thing for most people most of the time, there are great opportunities out there. Again, I don’t get to see them because I’m not active in that space. But it sounds like there’s a lot of folks who

Saurabh  

for some people even even if they have like private lending at the first place or when it’s not about the they’re sitting they are always on second or third place. But the market is such that even if there’s private lending i Okay, I’ll give you a very good example I’ll give you two example. So one of my client private lending the money for two months only he was sitting at the first place okay? the borrower’s bought the property in let’s say in in southern Ontario somewhere and the profile was good the borrower was like they were the whole family is on title everyone’s was everyone was making money. And the I think the mortgage brokers did good due diligence this time and the private lenders agreed to lend the money for two months only. And they had their own project they were constructing their own house I think custom made house somewhere in inoculum. Just I’m just giving an example. And they thought that okay, the money is sitting in my account, you know, let’s make some good commitment fee. Let’s we’ll try As 10% commitment we have to lend 800,000 We’ll charge some let’s say 10% or 5% commitment fee and interest let’s say 10% per annum for two months, we will make we’ll end up making 50 60,000 And you know, I need the money after two months after two three months, I’ll get the money back I’ll put that into my construction project I’ll complete it sounds very good, you know, cheesy deal. So enamoured the first place the loan to value 75 person the borrower’s are putting 25% How have low it can go profile is good, they will keep making the mortgage payments, it did not happen that way. So what happened after two months since the interest was already deducted, after two three months, the borrower said nothing doing we do not have money, do whatever you want. The mortgage brokers, you know, try to arrange another financing. And by the time I think it was in August, September, and the Bank of Canada started increasing the prices again and again, and they were not getting qualified from the from the bank from first lender, so they could not pay my clients more interest payments for at least like let’s say 345 months, okay, my clients was very gentle in the beginning he said okay, I do not want to, you know, initiate power of sale, let them give some more time, I do not want family to be out of their house, they said that he was being very generous. And finally in around like November, or December last year, they instructed me to initiate power of sale process. So when I sent out the notice of sale, I sent out the demand letter, I got the claim issued. Now they are defending the claim. Okay, so it’s almost a year has gone. And during that period, the private lender himself has to take money from the from private lending from other private lender to complete his construction project. And he was not getting interest from his previous investment to so now they are defending the I think countersuing they’re making a third party claim against the mortgage broker, the lawyer involved in the file. Can you imagine how long it will go in the code?

Erwin  

The problem be easy either no, because all the documents they signed probably cover the mortgage.

Saurabh  

Yeah, but it’ll like if they have the problem is that you know, when the at the time when it comes to prove like it takes too much time, it takes too much time, and you’re getting like I don’t know, like, if you will try to get a date from the court. For long motions, these are called Long motions, those who do litigation, they will understand the difference between long motions and short motions because these kinds of issues can be resolved in long versions only by way of summary judgement that too, if you have a strong case, you’re getting a date of February 2024 That is the earliest date that you’re getting. So two months investment

Erwin  

as cache lentilles we’ve been borrowing from a HELOC to lend where they still have carrying costs and the money that lends Oh my

Saurabh  

eventually they will end up you know, recovering but if the property itself will not be having that much equity and the borrower’s they’re living for free right now. Like from seven eight months or living for free. I think the borrowers might be thinking that okay, we have invested let’s say 200,000 in the house. And for almost a year and a half we are living like we were supposed to pay 6000 per month towards the interest I’m just giving you a rough estimate. So in a year we would have paid $72,000 So out of our $200,000 72,000 we already recovered and things remaining we will use up the money what they can do at the most the lender can have a judgement against the borrowers and you know garnish their wages that is another issue I have seen some people start doing cash jobs to avoid Notice of Garnishment also what can you do

Erwin  

so people are changing up their employment right to be working under the table so they can avoid

Saurabh  

condition and that the most you can only garnish 20%

Erwin  

So it’s funny because real estate investors often playing like boat like the worst case scenario was with the with real estate investors non payment of rent. Right? Right maybe for drags on for months. Right that that doesn’t sound so bad compared to this. Yeah, but like a private lender on bad.

Saurabh  

Yeah. And for LTB also, if you will see like, I don’t know, it’s like too much score delays or like what I want to mention here is that go delay should also be kept in mind while you invest like if it’s not that you are going through the code is sitting there just to entertain your application that 1000s of applications of your kind. So when you invest you have to factor in the code delays and cost as well. and make a wise decision that okay, how many in how much time I’ll be able to if anything goes out how much in how much time I’ll be able to recover this money from? You shouldn’t have that background. I’m saying that but most of the investors, especially private lenders do not. Especially I’ll not say unsophisticated because they know what they are doing. But they do not. Like,

Erwin  

it’s like, I know how to play chess and all the pieces move, right? I can’t beat anyone who’s any good. I probably categorise a lot of live the general public there are pieces move, right? Can you you know, when can you win on a consistent basis? If you can’t sit out? Right, because essentially, you’re betting? Yeah, nevermind. I would not put money on a chess game, like betting on myself. It’s the same idea, right? Like, do you really know what you’re doing? Do you really know how to qualify a private land deal? Right?

Saurabh  

And the moment you advise this, you know, what happens? I’ll tell you like, I don’t know I’m, uh, maybe I’m, I’m digging too much. And but your show is about truth about real estate investing, right? Most of the time, what I’ve seen if a lawyer tries to educate the investor that okay, do you know what you’re doing this and that. So investor will right away call the mortgage agent more?

Erwin  

Yep. What kind of lawyer

Saurabh  

you have referred me. So

Erwin  

as your wonderful point, because this industry is a bunch of capitalists, they will go they will want to use people who provide the least path of resistance. Right? So classic example is, I won’t use Realtors mentioned realtors, a lot of realtors will use their favourite home inspector. Right. Right. Who, you know, they may have like an unspoken relationship. I know. Right? Maybe I’m probably going to offer mortgages. It’s the mortgage agent who gets paid a commission on on putting together a private deal. private lending private borrow, right? We’ll want a lawyer who doesn’t ask them any questions. That’s to make sure the deal goes through. That’s right. That’s just dumb. I think I’m naturally pessimistic. I’m naturally cautious. So for example, I’d use one if I’m going to do something like this, I’d want to use my own lawyer. Right. Right. You know, I’ve even had a client do this to me, if she would not use any my recommendations for home inspectors. She got her own. Right, right. Just because she heard she heard like, don’t use the realtors home inspectors, which I completely appreciate. Right? Actually, I think she ended up using mine anyways. And she was she was completely happy. But again, my point is like, yeah, like do your own due diligence, like use your own, you don’t have to use who people recommend you use. Right? Well, I don’t think everyone understands that, though.

Saurabh  

No, and I don’t think most of the lawyers in Assam, most are not commenting upon anyone. But some people, like some offices, they do not meet with their clients, they do not advise them properly. And if anything goes, like the the example that I just mentioned, if the lawyer who has not if the lawyer, they are trying to sue the borrowers in the private investment that’s gone wrong. And they’re making a third party claim against the lawyer as well, who represented them in a deal and whose job was to explain the papers, market papers get designed identification, if they have not done the paperwork, well, then they could be

Erwin  

but difficult to prove is right. Actually, I have a good example, I spoke to an investor who was referred to a mortgage agent, who recommended that she take a home equity line of credit on her home, to invest in a development to invest in a syndicated mortgage, or with a developer. I don’t think she understood. So again, do your own due diligence, she did sign the paperwork, that likely said like the mortgage is getting getting paid for making the referral to the development project, right. But like you can see, this is like, this is obvious potential for conflict of interest. You’re telling someone to get a mortgage on their home, so that you can get paid to for them to invest in the development of syndicated mortgage, highly risky. And of course, you know, I’m talking to this investor reached out because the deal fell apart. Developer went to bankruptcy, she probably won’t see that money again, because again, syndicated mortgage, you know, you’re you’re well behind everybody else that needs to be paid is right. And she’s got to pay hundreds of the 1000s of dollars that she put into it, and she’s got pay the interest on it. And that money is gone. Right. And she’s wanting to sue us she even complained to Ontario excuse No, she did go to Ontario School District case Michigan to complain and not this girl. Margaret does a different group that for complaints from working in industry. Both said you signed the paperwork, right? Yeah, that’s right. Even though like the standoff. Yes. So she still wants to talk to a lawyer. fleurs gotta tell her the same you don’t think we can fight Your chances of winning are limited, right?

Saurabh  

Because once you sign the paperwork fine print, you know, this country has been wanting you since since beginning and you’re fine prints are fine prints. Yeah, if you sign them you and every professional does that, like every professional gets the paper signed? It’s that it’s just, you know, some some do it principally Correct? Some don’t do them ethically correct, some just, you know, get slides in and get it signed. So, it depends. And I will not blame the professionals. I mean, honestly, like, you me, we both are professionals also, sometimes, you know, clients are at the time and they want to do something, they are in different minds that come to you with a different mindset, they want to do it no matter what you will advise them, they have to do it sometimes, like you cannot change their decision, only then they offer you to do like only then they are coming to you directly, right? Otherwise, mortgage broker or any real estate agent or any light is not going to client and they don’t know how much money they’ve got. No one knows that. So they’re not going specific to each client that to each and every client and advising them, hey, I have got a deal. Do you want to invest? No, the first approach is always from the client,

Erwin  

the novice mistake I see often made is that the client will evaluate whatever deal is put in front of them. The sad thing is whatever is put in front of us often whatever’s in the best interest of what we’re putting in front of you. Right. And so what I often I often say this, my clients, my context is everything. So my opinion, you need a lot of context, you need to see many deals, right, right across whatever, even if it’s accurate, like we always talked about active investing, you know, I think it’s healthy to look at 100 houses so that you know what the top 20% looks like. And no different than passive investing, look at 100 passive investment opportunities. And now you’ll have context to see what top 20% looks at right now look for the top 20% of the top 20%, you’re in the top 4%, you’re probably looking at a pretty good investment at that point. Versus again, back to what I said with the novice, they often just look well, it’s presented in front of them, and then try to try to vet that. versus, you know, someone asked me about an American investment. Right. And I told I shared with him my due diligence was I’ve had to set up some sort of a US corporation to be an invest in it already too much work. Right. Right. That’s, it’s too expensive, right? Already too much work. And also with the top exchange rates not favourable right now to be investing in the US in my opinion. Right. So that’s not a stop there, versus the novice will just continue to do what was put in front of them. That’s good, which to me is not an efficient use of time. And whereas they should be looking for other investments. Yeah.

Saurabh  

And how many professionals do you think you know, have that kind of, like patience, I will use the word patience, because you need a lot of patience to you know, rightly guide your client and the resistance to you know, to not fall for anything, like keeping their self interest aside, and, you know, thinking in the best interest of the client, how many how many professionals within? If they did most of them, like, most of them, like thing, okay, client has come to me, he has money, he or she has money. My job is to you know, just get it invested, ASAP. Take my commission.

Erwin  

And you know,

Saurabh  

how many people do you think really, you know, invested time with the client and, you know, sit and guide them properly? What can be done? What should be doing, looking at their profile, how much cash flow they have, like, who who does all that? I’m not coming across, like, too many people who do this due diligence, right?

Erwin  

Again, it’s often a capitalist or a capitalist. So I’ve had so many requests for financial planners. So just even in my own research for financial planners, the challenge is, even if say that, dear ones, make a lot of money. And so for example, I found a friend of mine, a client of mine refer hers, but he won’t work with you unless you have a million dollars to place with them. Right? Right. Who has that? Right? You want quality? You want a quality financial advisor? That’s not available to most people, right? Because again, this is capitalism. He’s going to do what gives him the worst higher highest return for his time. That’s great. Right? And, you know, likely him and I have different values in terms of like, different investment philosophies. So then it’s not even effective for me, right. So yeah, difficult, difficult. Not easy. Yeah, I was even getting into with a financial adviser on one of my social media. Her point was that real estate is not everything. And then I commented, I’ve never seen so many successful real estate investors just within my own context, but my own clientele and I network with seven figure entrepreneurs regularly. I see the blood sweat and tears that they put in their family puts into those businesses, and too many times my client has a side how Selling real estate investors just buy and hold real estate investor has greater net worth than them as a side hustle. Right?

Saurabh  

So it’s about proper diet and guidance, I will say guidance and advice,

Erwin  

proper guidance. And again, I have a lot of context. I’m very, I’m very lucky that way. And I’m not saying like, don’t be an entrepreneur, I have some tech friends who’ve made a lot of money, like eight figure net worth type, folks. Right. So I’m not saying don’t, it’s just, it does take a special person to be able to be that successful. Right. Right. versus, you know, I have clients who didn’t pass high school and have, you know, 568 figure net worth I know, right, as a real estate investor. Yeah. All right. So it’s just, it’s just easier. It’s much easier business to be in. Again, that’s my that’s my understanding. But yeah, everyone else to understand the different. Yeah, well, so. So the question I want to ask you earlier was, where do you think we are, in terms of I don’t know what a better term is. I’m thinking it’s early in terms of like power of sales, financial challenges. I don’t think it’d be that bad. Because the unemployment rate, the unemployment number just came out this morning for January 150,000 new jobs in Canada, unemployment is like 5%, or just below 5%. So it’s a historic low. So for major recession, housing correction, we need joblessness that don’t have it at all.

Saurabh  

There’s no joblessness, again, the problem people are facing right now, like from my limited knowledge and skill is that most of the people who who are paycheck to paycheck right, they have their set amount for each and every expense in the household. So they have their set mortgage payments, they know how much to spend for grocery they have budget for everything. Now, due to this rate hike if the mortgage payment itself is consuming whole of their salary, whom do you blame? How are they going to keep up and the mortgage is coming up for renewal bank is knocking on the door bank is right outside Hey, your module is coming up for renewal you have to get the refinance your golden period of fixed of 2% is over. Now, this is what we are offering, we have to reassess your file we have to see whether you will be qualifying for the suit the clients are facing real problem and keeping up their mortgage payments. I had a client whom I recently closed for and at the time they there was a thing, it was a four month closing time in the APS. At the time when they entered into the contract they were promised that the mortgage payments won’t exceed 2700 or $800 per month.

Erwin  

This is a fixed rate mortgage fixed rate mortgage.

Saurabh  

And at the by the time they close the property they came to my office and I think they were not making too much money honestly their household income total was 5500 something dollars total per month. Yeah

Erwin  

5500 per month. Yeah.

Saurabh  

And when by the time they came to my office I went over the mortgage documents with them. I explained them that yeah, this is what their mortgage payment will be. And it was when I pointed out to 43,040 $340 They were like What the hell is this? They literally cried in my office they were calling everywhere and the mortgage and stuff it seemed like it was a day before closing or two days before closing I received the mortgage instructions. So they were like I can’t explain you how much shot the whole family was into because they were saying if we’re going to pay 4400 in mortgage how we are going to make our ends meet so this is another problem that I’ve seen on the right wasn’t held for them in this situations that is what my question is in this situation whom do you blame? The mortgage agent won’t bother because they’ll say the bank has done this. They were calling the mortgage and constantly they won’t pick up the call next is the closing are you gonna do I’m I’m like I sat with them for two hours and tried to explain them that what could go wrong if they choose not to close the house. So ultimately they had no other option but to offer the mortgage rates that were you know it was because they said oh we never looked at mortgage and called us yesterday only sir and they told us okay everything is good. Just sign his sign and we just signed everything and then when we came to you this is the first and we are seeing the fate of what will you do? This is a real problem.

Erwin  

That sucks the mortgage for people handed you the bag

Saurabh  

and they have two sons and it was to come out like it is like that I was taken aback I was thinking like this can happen with anyone. They had a set budget for everything and now the if the mortgage payment itself is like 4340 or $4,400 they both make 55 $5,400 Where are they going to go then? You Are they going to bring the rest of the money? So many things

Erwin  

that mean less noises make as much money as possible now, multiple streams.

Saurabh  

Now cash flow, you should have good cash flow to support you know, if you want to list. I know most of you know, people there are people who don’t even care how much how much their mortgage payment, but they have other businesses then but we are talking about real problem, like not everyone is rich enough to afford the mortgage. And you know, Gary the property, most of the people that we deal with on daily basis, they have these real problems. So either

Erwin  

why I’ve always grey here because I where I have these worries from my own family, my kids? Well, I’ve taken action. For any of our listeners, I have I bought a house for each kid, before they are one years old. That’s their RSP real estate saving plan. Right? Because, you know, if this was my child, I could wipe out that mortgage. Right, right, to very limited effect to my net worth. And this is by design. Since I’ve made that I’ve been planning like this for a long time. Yes. So I encourage everyone out today take as much action as possible. Yes. Yeah. Because like you’re saying there’s always power sales are coming.

Saurabh  

Yes. And there I read an article there will be 1000s more in March and April and thing, which isn’t even

Erwin  

that much. 1000s, more like 1000s It’s a province of what 14 million 30 million. We have, like the our province gains like 400,000 new people for the number and all I know the people who always quote immigration numbers like awesome, not we don’t just have immigration, we have visas, largely international visa students. So we have some are over 800,000 new folks in Canada, who all need housing. So yeah, and we don’t have massive unemployment, we’re missing the other shoe for a massive housing correction. It really sounds like this, these next few months will be the bottom of the market, in my opinion, for what I look at, for what I look at, for investment grade property. So versus you know, we’ve talked about much pain in the pre construction market. But you know, I have a friend who’s looking for home for himself. I’m like, I cannot look at these. Right. I even told him like if you’re on anatomy, and I’ll come with you. I’m just a real estate geek. Right. I want to I want to see what the listing for. Because Because specific, some contacts, Ajit, the lawyer and the article insurance article, his properties are in Oakville at the Madami build. So I want to go see those properties myself. See what they’re what they’re selling for what the markets like. But yeah, there’s opportunity for those who were discerning investors, right, people who know people who put in the work to get good jobs, like yourself, like yourself and your wife, you guys busted your ass is to become professionals. Not just once, but twice. Right? You do the second time and you came into Canada, right? busted your ass is to have good jobs. So like, you know, there’s opportunity for folks who have good income, good credit and save some money. Right? Right. So yeah, while there’s,

Saurabh  

but it takes time, you know, especially like, I know, this country, this land is full of opportunities. And there is no one should complain that they’re not making an affair. But everyone is like it takes time, or even for new immigrants to come in and settle and, you know, yeah, we are talking about the people who are settled here who are doing investments from like, 20 years, 15 years, that is a totally different story. But most of the people who are coming in, they are new immigrants at this point of time, and they I remember when I rented the apartment or the basement, the rent was only $1,100. And now Yeah, and I think in five to $600 we were able to do the groceries for the whole month. And now you’ve seen the prices, rented servers for the same same apartments 2000 minimum, and the grocery bill is 1000. And how much is the increase in the wages

Erwin  

norburn Norm mark up wages, which is why people need to hedge.

Saurabh  

Those are the real issues now. Yeah.

Erwin  

So we were talking about issues. There’s certain issues that are important.

Saurabh  

It’s she has a very big first world country issue. Yeah. So many of them.

Erwin  

So congratulations. I’m seeing you since so congratulations. You’re now Canadian.

Saurabh  

Thank you all right. Again,

Erwin  

you know you can you know, vote and be pissed off with our politics. It’s just that the rest of us but yeah, we truly have firstworldproblems your your daughter what was wrong with the donut tomorrow? So I should leave at the name. I was wrong. The donut

Saurabh  

Yes. I was talking to my wife the other day we were we were in drive thru and we asked for a donut. I don’t know whether it was the one that has a creamy layer on it. Boston Cream, okay. Okay. Yeah, so the cream was little bit of it’s still silly. And she was like, all over the daddy, they did not mean my donut drop at this and that and you know, I don’t want no and she was like, I can see the stress on her face. And I was like, you know, is this a? Is this really a problem? Is this real worth? Like? I told her that one and this is not a serious problem and like it is okay. It is okay, you should accept these imperfections. But No, Daddy, you know, I’m upset about this. And I said, look at this case, I was talking to my wife and I told her god, look at these kids, what kind of problems they have in their life, like this small issues are bringing stress in their life, remember our childhood, like back home, you know, in our country, what is happening around the world. So the point here is that, you know, we should not get we should first of all, we should be fortunate enough that these countries especially Ontario, and Canada, does not have like earthquakes and flood problem, you know, the beach, the other part of the world is facing a forest forest fires and learning. So there’s a lot a lot of opportunities and a lot to do in like you. There’s lots and lots of things to do. And you should consider yourself lucky that you do not have to face what all we have faced our parents have faced back home. Those were real serious problems,

Erwin  

or your kids were like the flooding that happened last year in India, Pakistan and Bangladesh,

Saurabh  

the moment that you you show them anything, they will say that is the reason I do not want to go to India. Because they think even though we are from different part of India, but the moment they see those things on TV, they think that you know it is happening everywhere. And this is how the country is

Erwin  

for listener, several 1000 people died just last year, late summer.

Saurabh  

It was around August, September,

Erwin  

massive flooding India that went through India, Pakistan, Bangladesh, and India alone probably lost 1000s of people he is a died as blood. Right. horrible effects of climate change, and probably poverty as well, because folks are forced to live in these areas that are flood prone. Right. Right. We don’t have these issues here in Ghana. No, nothing. Right. Our biggest problem in Toronto around poverty is that we don’t have winter around shelters for the poor. That’s our that’s our greatest problem. Right? It is a problem. But nothing on the level of 1000s of people die. No, nothing like that. Nothing it cannot be. Right. So yeah, I’m beyond grateful to be Canadian. Yeah. Those are third world problems are a real problem. Right?

Saurabh  

Yeah. Just like the earthquake happened. I think a week ago. Yeah. Syria, Syria, Turkey. Yeah, killing 1000s of people’s

Erwin  

apartment buildings completely falling over. And just what I’ve read is that they hadn’t had an earthquake in like, 105 years. So I can be wrong. But that’s just what I read in the paper in the news. Like, they didn’t know, like, how much of a risk is if it didn’t happen for five years? Right. So incredibly sad, and karma loss of life. Crazy. Thank God, we don’t have these issues here. I don’t even guess you didn’t tell your kids about that either. Sorry, we were time. Thank you so much for being so generous, giving us an update on what you’re seeing in the market. Any final words? You want to share anything without me asking about leading you towards this?

Saurabh  

Okay, so I since you know, the focus of this conversation today was the private lending, I will say, so my message is that, you know, if you’re interested in private lending, if you still feel that, yes, it is a secured investment, then you do your due diligence, look at the profile of the borrower, just don’t look at the property only look at the profile of the borrower, just, you know, look at the circumstances, you know, why why they need the money, and then make an informed decision and have the right people by your side, rather than someone just advising you, Hey, you, you have money, want to invest? And here’s the deal, go.

Erwin  

Right, right, because in general terms, you know, very people, Warren Buffett, quote, be fearful when others are greedy. So I’ve been very fearful, everyone was greedy. But now it’s very the markets very fearful. So now the time to me makes much more sense today with the new appraisals that have come down significantly from over the last four months. So that’s at least to me, on a safer environment we lending right.

Saurabh  

And people who have entered into the contract or who have, like, fail to close the Properties and and they just think they think that the the deposit will, it says that the deposit that the vendors can forfeit No, it’s not just a deposit, it’s the differential amount to be liable for any loss liable for the losses, legal fees, everything.

Erwin  

And builders are not allowing any delays. Because they have bills to pay to write. We don’t blame them. Yeah. This is business. Yes. For anyone doesn’t understand that. Like, it’s like, seriously, if builders had the backstop people’s financial problems, who would be a builder? Nobody, right. Already. landlords don’t want to backstop tenants. Right for proper reason. Right. So yeah. So again, thanks so much for doing this. Thank you. Congratulations, you do you enjoy tea for becoming Canadian. Thank

Saurabh  

you so much, everyone.

Erwin  

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