$7Billion or 20K AUM in Landlord Friendly USA with Dmitri Bourchtein

Today’s guest has experience growing and managing a portfolio of 20,000 apartment units while serving as Executive Director of Investments at Canada’s largest apartment building owner.  Dmitri’s area of focus was not socialist Canada but rather the landlord friendly states of the USA.  He’s from Toronto but his next investments will be hundreds of miles south of Canada and Dmitri is going to explain why and what markets and property types he’s targeting. You’ll want to pay attention and take notes as I don’t know of an easier way to build a portfolio that will cash flow six figures as that is my plan. All this and more on this week’s Truth About Real Estate Investing for Canadians!

I’m Erwin Szeto, real estate investor since 2005, 4 time award winning Realtor and coach to investors since 2010. My team has transacted on over $440,000,000 worth of income properties, 350+ clients including 45 self made real estate investment millionaires. 

It is my desire to bring zero cost truths about how to successfully invest in real estate for mom and pop. We pull no punches, there are no get rich quick schemes, this is about what Canadian investors are doing, what mistakes they’ve made, what tips and tricks they have implemented so we may leverage their experiences.

Happy New Year, everyone! As we step into this fresh chapter of 2024, it’s not just the calendar that’s seeing a new beginning. This time of year is especially important to me as my daughter celebrated her 10th birthday on January 1st so I don’t come anywhere close to staying up past midnight on New Years Eve as I have one of my favourite days of the year to celebrate the next day.

As it was two special occasions on one day, I decided I’d try a new recipe: crispy skin, roasted pork as that’s what we Chinese do and it was delicious!

Yes we could have bought the same thing at a restaurant but I use higher quality ingredients, the cheap asian in me loves to take cheap cuts of meat and make them taste like one of the best things you’ve ever eaten.

Speaking of delicious! I’ve set a goal an ambitious as part of my new year’s resolution:. Over the next 2-3 years, I’m determined to transform my real estate portfolio here in Ontario that has appreciated wonderfully thanks to lots of cheap debt and immigration and NIMBYs but it’s a pain the the butt when I’d prefer something more passive.

With an aim to generate a cash flow of over $100,000 per year, something next to impossible to do in Canada. It’s a journey I’ve thoughtfully planned, and I’m eager to share the journey with you as $100,000 buys everyone a lot of financial peace and freedom. 

The first phase has nearly kicked off with the listing for sale my three student rentals near Brock and McMaster University. The final touches are being added—the repairs are almost complete, and the cleaning and photography teams are wrapping up their work. By the time this episode airs, these properties will be listed for sale, strategically timed at the peak of student rental demand.

From polling my clients with student rentals, there is really little supply of available rentals which is great news for savvy investor parents who want to make the financially correct decision to own my student rentals vs. pay rent.  It’s the prudent decision when the kid’s friends will pay rent that will cover the mortgage and the price of the house rises.

I’m bullish on the Ontario real estate market, specifically houses since the condo market is soft so I’ll closely observe how the market unfolds throughout 2024 and 2025. If the market returns to its peak, I’m ready to sell the remainder of my properties, mostly duplexes and reinvest my capital in a market that welcomes investors.

Phase 2: New Horizons

The next step in my journey takes me across the border, into the USA, where I’ve set my sights on acquiring income properties. I’ve already found a property that’s piqued my interest—a detached house built post-2000, nearly 1,800 square feet with 4 bedrooms, 2 full bathrooms, and a two-car garage. 

The location is super convenient between a new Walmart Super Center, brand new Starbucks, and a Samsung microchip manufacturing plant set to employ 2,000 people. As I mentioned to one client, I could do all the due diligence in the world and it would amount to a drop in the bucket compared to Walmart and Starbucks.  They have done the heavy lifting. With an asking price of only $325,000 in a seller’s market, I’m optimistic I can get it for less. The expected rent? A forecasted $2,100 per month plus utilities.

Note, this would be the appreciation play in my portfolio, for much better cash flow  I need to make a trip to Tennessee for my next property and today’s guest Dmitri explains why in the interview.

As my friends and clients can tell, I’m super excited about real estate investing again.  All you veteran Canadian landlords I know can appreciate it.

I should mention, my plan is to hire Share the asset manager to handle my investment. I like my investments to be boring. I also thankfully get enough excitement in helping my clients build successful portfolios so I don’t need to flip or develop housing.

I also despise risk hence I’m filling out my power team with an institutional grade asset manager.  I’ll let Dmitri who actually works for asset managers explain what that is.

Stay tuned as I embark on this exciting chapter. 

$7Billion or 20K AUM in Landlord Friendly USA with Dmitri Bourchtein

On to this week’s show!

Dmitri Bourchtein (CIO & Co-Founder of SHARE) was formerly an Executive Director of Investments at Starlight U.S. Residential, with direct involvement in over $7B of U.S. residential real estate transactions. Dmitri is a seasoned institutional investor with experience in all aspects of the real estate value-chain and is passionate about levelling the playing field for retail investors in the competitive landscape of U.S. SFRs and enabling everyday landlords to maximize their returns.

By the way, if you like what Dmitri has to say, he will be speaking at our US Investing Workshop this Saturday January 13th.  

Our guest speakers included Andrew the CEO, Carmen Da Silva, last week’s guest and CFO, and today’s guest Dmitri, CIO of Share.

We have owner of LendCity Scott Dillingham, the only investor focussed Mortgage Broker I know who can offer US commercial style mortgages to Canadians for income properties. Note commercial lending is better than residential mortgages. The property and the cash flow is the lender’s focus so it’s way easier to qualify and one can in theory have unlimited mortgages.

I’m your host and we are teaching direct investment as in the investor owns the property 100%. That is the definition of direct investment. No shares, no joint venture partners, not private lending. Good old fashioned income property ownership, in-line with how my client 350+ clients and I invest in real estate.  

Link for details or to register: https://USworkshop.eventbrite.ca/?aff=iwin

To connect with SHARE: https://sharesfr.com/partners/iwin


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

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

To Listen:

** Transcript Auto-Generated**

Erwin 0:00
This guest has experienced growing and managing a portfolio of 20,000 apartment units while serving as executive director of investments at Canada’s largest apartment building owner. For context, I think everyone considers Grant Cardone an expert in multifamily in the multifamily space, which he deserves, and he manages he manages 12,000 apartment units. Here, our guest today has 20,000 apartment units under his belt. Dimitris areas of focus, though is not socialist Canada, but rather the landlord friendly states of the USA. He’s from Toronto, but his new his next investment will be hundreds of miles south of Canada. And Dimitri is gonna explain why and what markets and property types he’s targeted. You want to pay attention and take notes as I don’t know if there’s any easier way to build a portfolio that will cashflow six figures, as that is my plan. All this and more on this week’s Truth about real estate investing show for Canadians. I’m Ron zero your host. I’ve been in real estate investors since 2005. Four time award winning realtor and coach to investors since 2010. I’ve owned over 40 properties my team and I have transacted on over $414 million worth of income properties. Three interactive past clients, including 45 self made real estate millionaires. It is my desire to bring zero cost truths about how to successfully invest in real estate to mom and pop investors pull no punches. There are no get rich quick schemes, none that are successful without excessive risk. This is about what can you investors are doing, what mistakes are made, what tips and tricks they have implemented, so they may so we all listeners all 17 listeners at all may leverage from their experiences. Happy New Year, everyone. That was a mouthful. Happy New Year everyone. As we step into this fresh chapter of 2024 is not just the calendar that’s seeing in the beginning. This time of year is especially important to me as my daughter celebrated her 10th birthday on January 1. So so on New Year’s Eve, I don’t come anywhere close to midnight, because I need to get up early. I need to buy strength the next day. Because we need to celebrate, as it was, as January 1 is to special occasions decided to try a new recipe. crispy skin roasted pork. And that’s what we Chinese do. That’s what we do celebrate special occasions, including the years it was delicious. Yes, we could have bought the same thing at a restaurant but I tend to use higher quality ingredients and what restaurants do. And but cheap agent me loves to take cheap cuts of meat and make them taste like one of the best things ever you’ve ever seen. Speak speaking and delicious, I set some ambitious goals. Consider it delicious. As part of my New Year’s resolution. Over the next two to three years, I’ve determined that I’m going to transform my real estate portfolio that is entirely here in Ontario. It’s appreciated wonderfully, thanks to lots of cheap debt and immigration and NIMBYs that restrict supply. But it is a pain in the butt to manage. And I prefer something a bit more passive with an aim to generate cash flow again of over $100,000 per year. Which is something next to impossible to do in Canada without you know, heavy heavy dash cash down payments, which I don’t want to do. It’s a it’s a journey I’ve been through and I thought we’ve thoughtfully planned through this and I’m eager to share how we’re gonna get to that $100,000 piece of financial, financial peace and freedom. That’s my goal. And I think it’s a very reasonable goal for everyone to have. And even if it’s not your goal, you can make it 50,000 You can make it 10,000 A year you can make it $200,000 A year you make a million dollars cash flow year. Again scale to your liking for myself on your start with $100,000 in cash flow per year. The first phase has nearly kicked off, which is the listing for sale of my three stun rentals near Brock and McMaster University’s I was just chatting with my clients one of my clients informed me that they heard a friend of theirs rented their property a six bedroom house for $850 per room plus utilities. Oh wow. Is the markets nuts supply is short for rentals. For my own properties the final touches are being added the repairs are almost complete. I should have started the repairs are complete No no, the repairs are almost complete. The cleaning photography teams are done. And by the time this episode airs, these properties will be listed for sale. And again absolutely absolutely time these properties to hit the market at the peak of student rental demand from pulling my clients were students there again like I mentioned there is very little supply out there which is great for great news for myself, as there are a moment For some savvy investor parents out there who want to make that financial correct decision, in my opinion, to own a student rental versus paying your rent, again, it’s 850 bucks rent per month that seems to be the going market for foreign okay, how is somebody I’m understanding, it’s a pretty decision when the kids friends will pay that pay the rent will pay rent, and that will tends to cover the mortgage. And I said prices of housing tend to rise. I’m personally bullish on on the entire real estate market specifically houses, not condos, condo markets quite soft right now. And we’re going to be competing continue to be soft until the market, the buyer market works through all of those, the excessive number of pre construction condos that are built available for assignment. Anyways, so I’m going to closely observe the market this year 20 in 2024, and next and at the market gets back to peak, you better believe I’m gonna sell off the remainder of my income properties, which are mostly duplexes in Hamilton and reinvest my capital in a market that welcomes investors. The next type to my journey, which I’ll start likely in q1 of this year, is it will take me over to the US border of course, I’ve set my sights on acquiring where I’ve set my sights on inquiring income property, I’ve already found a property had it actually underwritten by share. It is a detached house built post 2000 nearly 800 1800 square feet with four bedrooms, two bathrooms and a two car garage. Now think about that. What does that cost in your own neighborhood. The location is super convenient between a new Walmart Supercenter brand new Starbucks less than 12 month old Starbucks in a Samsung and microchip manufacturing plant set to employ 2000 people. So this word is property is located is just outside Austin, Texas, Austin being the state capital of Texas. Possible and the best places to invest in America from my from my research interests. So a property I’m looking at is in Taylor, Texas population just over 16,000. And they’re going to game to the mall, they have to gain 2000 people roughly, because that’s how many new employees the Samsung plant will get. So that’s an increase of well over 10%. And hopefully there’ll be fighting over my property, assuming I own it. Anyways. As I was trying to claim to mine, I could do all the due diligence in the world. And it would still amount to a drop in the bucket compared to what Walmart and Starbucks has already done. They’ve done they’ve already done the heavy lifting in terms of research and do diligence, in my opinion, and with an asking price of only 325,300 25,000 for an 1800 square foot detached home. And this is a seller’s market. So I expect I can get the property for less money, then, of course, naturally you weren’t, you’re wondering what the what the expected rents would be the forecast is 2100 per month plus utilities. So that is about an 8% gross rent yield. And if you are an investor, you know if you can find something that’s 8% gross rent yield, you should be digging into it further. Note that this is the appreciation play that I intend for my portfolio. For much better cash flow. I’m planning a trip to Tennessee for my next property. Property after after Texas. In today’s guests, Dimitri will explain why in the interview. As my friends in in clients can tell, I am super excited about real estate investing again. All you veteran Canadian landlords know you can appreciate what we all have been been through again, I’ve been in landlords for almost two decades, Holy Hannah.

Again, as I mentioned, shares are underwritten this property for me. And my plan is to let them handle the investment. I like my investments boring. I think we get enough excitement and satisfaction out of helping clients build successful portfolios. So I don’t need to do anything exciting, like flipping or developing. That’s just not for my risk appetite. I asked as in I despise risk. Hence, I’m Phil yet by Power team with an institutional grade asset manager. I’ll let Dimitri our guest today explain what the differences between the property manager and an asset manager since he actually works for one and has been working one for for over a decade. So stay tuned as I embark on this exciting chapter. onto this week’s show. Dimitri Borstein is CIO and co founder of share was formerly the executive director of investments at Starlight us real estate residential, with a direct involvement in over $7 billion of us residential real estate transactions. He is a seasoned institutional investor with experience in all aspects of real estate. For me he’s passionate about about just like I am about leveling the playing field for retail investors in the competitive landscape of us single family rentals, because for those who don’t know, the institutional investors are already gobbling up the same properties that that I’m looking at. And so if you enjoy this presentation, if you sorry if you enjoyed this interview if you enjoyed last week’s interview, which many people have the messaging that we did, with last week was Carmen with the CFO of share today as a co Chief Investment Officer, Dimitri, they will both be speaking at our us investing workshop this Saturday, January 13. Our guest speakers include Andrew, the CEO, Carmen last week, this week, we have Dimitri. So we have, again, a lot of heavy hitters, we have the owner of lens city, Scott Dillingham, the only investor focused market mortgage broker I know of who can offer us commercial style mortgages to Canadians for income properties. Not that commercial lending is better than residential mortgages, the property and the cash flow is what the lender focuses on. So it’s way easier to qualify, especially for those of you who have lots of corporations or self employed, it is way easier to qualify for a commercial property or commercial mortgage than it is a residential loan. Also, in theory, one can have unlimited mortgages. I’m your host of the event, and we will be teaching indirect investments, as in the owner owns 100% of the property investor owns 100% of the property. That is the definition of a direct investment, no shares, no jumper, no joint venture partnerships, no private lending, none of that little back and fashioned income property ownership in line with how my clients the number of 350 plus, and I invest in real estate. So the links are in the show notes. And We have indeed sold out the in person portion. Worse yet, my clients have been DMing me and texting me to asking if they can still come? Yes, you can. I saved you seats and owners row. For everyone else. Unfortunately, we do have plenty of seats available online. This is being broadcast, I presume we’re doing this as a hybrid event. So you do not want to miss this and also understand this is likely the last time we will do a live us workshop. As I mentioned, all of our guest speakers, they are very expensive, busy people. So that’s why this is last of all I talked last time we will do this live and in person. Alright, so and please enjoy the show.

Dimitri, what’s keeping you busy these days,

Speaker 1 12:34
everyone. Um, first and foremost, I’m very happy to be here, it’s really excited to be on your podcast. What’s keeping me busy these days, it’s work its share. It’s trying to, you know, build, build a platform for our clients that help them, help them compete with institutions when it comes to owning and buying real estate in the US.

Erwin 12:56
So that’s a mouthful. So I did ask you this question before we were recording, what advantages do the institutional investors have over the everyday Mom and Pop investor?

Speaker 1 13:11
I think first and foremost economies of scale, you know, buying power, you know, expense management, you know, a lot of those kind of allow them to operate things more efficiently operate their assets, you know, access to data to help, you know, formulate their decision making. Those would be really kind of at the forefront of what their advantages are. And, you know, having a team that, that you that does the investing for you, you know, whether it’s accounting, whether it’s, you know, market research, whether it’s underwriting, you know, there’s a lot that goes into, you know, buying a property investing and, you know, it’s it’s hard to do it yourself. And, you know, I kind of found that, even myself, when I was working in the institutional side of Indian suicide things, it’s still, you know, very time consuming and difficult to go do it on your own on the side.

Erwin 14:07
It is. And that’s probably the reason why I stayed out of the states because for forever, like, you know, I’ve been around real estate investors forever. And so I knew back in like 2008 Knology and really regret to say this, but even back in 2008 Like we everyone knew everyone that was in the community here investing in real estate here. All knew that there were landlord friendly states in the US, this is back and like, Oh 708 Yeah, and I’m kind of disappointed in do more something about it. But like I coach clients, I work with clients is realtor. So when I take clients out in the areas that I invest like St. Catharines, Hamilton, you know, I have I have a lot of access to information that they don’t so let’s say my client comes from like West Toronto, and we’re driving around Hamilton in the identify certain house and they say, oh, like what are the rents here? What the tenants like? Like okay, so my client owns a house just you know, for downs for four doors down or like the next street over. And this is what the tents are like, this is the rents, right? This rent looks like this was renovation budget, right? I have a lot of personal experience to give to them. And I’ll even set my own properties like four streets over. And like, so this is my tenants, this is the market rents, right? And a lot of that information is not available, because you can’t go on to GG and find historical rents and things like that. They won’t tell you anything about like, what the tenant profiles are like, and sorts of things like that. Now, you having the experience of working in an operation with 20,000 units have access to all sorts of different operational live information.

Speaker 1 15:40
Yeah, no, for sure. I mean, you know, if you’re trying to get an answer, about, you know, these questions that you posed, like, what are the tenants? What are the rents? You know, what kind of challenges could there be in this specific location, there is no better information than owning something nearby. Right, having, you know, your own financials or your own insights into that location and knowing, you know, what’s, you know, in the apartment world was, what was the traffic? You know, how’s the leasing? What’s your rent growth? What are your renewal growth, I think that’s always going to be even better than, you know, third party research that are calling around to try to get this information. And that’s, you know, part of, you know, part of how we want to have it at share as well, right, you know, we don’t have that skill, but we work with third party managers on the ground, that a lot of times do, right, so they are already managing for other clients. So they have that level of insight that, you know, help us you know, streamline our decision making and make us you know, more more informed when it comes to, you know, zeroing in on certain neighborhoods, and zip codes, etc.

Erwin 16:53
So, my local property managers are often small shop, often it can be one individual, in any sort of any sort of, like, significant work that needs to be done, they have to go third party, they have to go, you know, I know, I have a fence guy, I have a plumber, I have a concrete guy. Right? My point is, they don’t have anyone on staff. Like my, my bigger my, one of my property managers I use, it’s a little bit bigger. I think there’s four full time people within the company. What’s it like, in America? What is the scale of a property manager? In a target city that you invest in? Yes,

Speaker 1 17:31
so slightly different, I mean, slightly different. Yes. The reason I say that is because during the wrong there’s a lot of, you know, smaller Mom and Pop type managers, especially, you know, in the single family rental space, they’re the type of shops that, you know, we’ll look to kind of manage for an investor that owns one unit, maybe two units, etc. Right, very similar to, you know, what you just described, but then there’s the whole other side of things, which is, you know, the institutional manager. Now, these, you know, some of them will have 1000s, if not 10s of 1000s of units under management, you know, have, you know, significant economies of scale and specific markets, they, you know, some have been around for a good amount of time, some are more recent, kind of driven by the, all the innovation and tech. And they don’t, it’s not really worth that in their time and for for their business model to, you know, onboard one off investors. So their growth is, you know, with all the institutions with all the, you know, private equity shops, all these larger investors that are going in and buying in bulk, you know, that’s who they want to be managing for, they have, you know, the accounting capability. They have all the, you know, renovation maintenance team, you know, they have sometimes even GCS and how sometimes, you know, they just use ones in the market, which, again, they have good relationships with, and, and power over, just given their scale. And those types of firms, they want to, you know, they want you to have scale, right, so, what, what we’re doing and share is, we’re actually able to work with those institutional managers, because to them, they have share as the client, you know, they report into share, and we are the ones that are then, you know, really breaking it down to the individual owner, through our platform, right. And again, through that we do get economies of scale, you know, will will pay less in property management fees than you you would if you try to go to a local smaller mom and pop shop, but also, again, work with groups that you know, have more knowledge, better capability and are able to execute things more efficiently and these contracts are not very sticky. You know, a lot of times they will have outs so there is incentive from that pm side to make sure they’re, you know, they’re not forgetting about that. A property’s under shares management because, you know, there’s, there are alternatives. And you know, that’s why the third party model, I think works, works really great. Right?

Erwin 20:07
So as an outsider observing and researching the US market, what I noticed is that it seems like property managers are like fighting for your business, like you are, you are in demand as the customer, if you’re big enough, if you’re big enough,

Speaker 1 20:21
yeah. Ya know, for sure, I mean, both, you know, in the single family space, and, you know, across the other asset classes in real estate in the US, yeah, it’s a very competitive landscape. And it’s great for your, for your ability to manage expenses, because as as you grow bigger, you know, you have power on on lowering costs, right.

Erwin 20:42
So so you as the investor or as the real estate owner, you have power in that relationship. Yeah. Versus here. Property Managers can be picky on what properties and what clients they take on. Because that’s the market is just different. Because they there’s not many options for property managers, like I was just having. I was just golfing with Andrew Hines, for example. And he used to be heavily in London, Ontario, London, Ontario. And I was joking with him, like, I went to school in London. So I’ve been following London market forever. So that was a long time ago. So for 20 years, there has been no dominant property manager in London, Ontario, for example, that’s a big city for Ontario. Yeah, I call it Big City for Ontario. And there’s nothing for someone who travels regularly to the US. So, yeah, let’s get into it. So. So you were executive director, I start like investments. You’re, I don’t know what how you describe it, but you’re managing the portfolio I

Speaker 1 21:43
was working on for the Talon, they’re more focused on the investments, so sourcing, anything from sourcing opportunities to, you know, closing it. But throughout the time, I did have, you know, times I was spending with asset managing properties, and kind of involved in the operations of the assets as well.

Erwin 22:02
And then disposition to do much disposition, like you’re selling. So we

Speaker 1 22:07
definitely had dispositions along the way. I mean, you know, sometimes it would be m&a type transactions, where you’re selling mergers and acquisitions. Yeah, sorry, sorry, mergers and acquisitions. of selling kind of a portfolio or a full fund, but definitely one up disposition as well. And that would be kind of under my my realm as well. Right.

Erwin 22:24
So I know, from my own ignorance, I wasn’t actually really familiar with an asset manager does. Can you describe the difference between an asset manager and a property manager?

Speaker 1 22:33
Yeah, I mean, in a nutshell, the, you know, the property manager, they deal with, you know, the day to day operations of the property, right. They, you know, they’ll, they’ll handle the leasing, they’ll handle, you know, the repairs and maintenance. And, you know, their, their business model is, you know, try to keep their client happy, spend as little time as possible on, you know, their own costs and payroll to, you know, to manage these homes, from an asset manager point, well, you’re focused on is performance of the portfolio of, or of a specific property. And you’re focused on, you know, how do I maximize return? You know, how, you know, what are the decision making that needs to kind of go into in these critical times, and, you know, really analyzing those and, you know, coming to a conclusion that could be anything from Is now the right time to refi? You know, or what is your financing strategy? What kind of mortgage? Know what kind of term? What sort of flexibility options, but then also, you know, should I renovate to a high standard today? Right? Should I, you know, a lot of times you’re buying a home, there’s often opportunity to upgrade the kitchen, put in quartz countertops, and the backsplash and now the gooseneck faucet, but are you going to get paid for it? Is there going to be a return on your investment? Or is there a cap in that sub market on the tenants would the tenant will be able to pay? So those are the type of strategic decision making because if they’re, if you’re not going to get paid on it right now that you’re better off deferring, you know, that upgrade program until a later date. Right? So those are really a decision are like focusing on growth and liquidity and the overall returns of your investment. So

Erwin 24:23
I think most investors can appreciate what that what you just described, because most most investors if as long as we’re not in London, Ontario, they hire a property manager to take care of the property of the day. Their job is to do what you just described. And now you are part of a larger team, where you’re not. Yeah. And how big was the team that just that was just focused on how many people were on like your team.

Speaker 1 24:48
I mean, we would have had around seven people on the investments probably a bit over around 10. Again, it fluctuates because we grew fairly rapidly during my time when I was at Starlight, but I mean the company as a whole right now including everything kind of in Canada being the largest landlord. I think there are over four not 500 employees,

Erwin 25:09
but the largest landlord in Ontario, Ontario in

Unknown Speaker 25:11
Canada. Yep. Yeah.

Erwin 25:15
Surprise You guys are under the news more. Don’t know if you read the McLean’s article from from the December, Starlight was mentioned in there

Unknown Speaker 25:28
it’s a tough, tough business, tough business, but

Erwin 25:34
it’s just you have exposure to that, like I don’t know what you can share. But like, tenant, tenant unrest is significant in Canada. Like we’ve I’ve never seen it this bad before like to live in Queens article, for example. There’s hundreds of tenants, her rent striking in downtown Toronto. Yeah, right. Have you ever seen anything like that? In the USA? No.

Speaker 1 25:54
I mean, definitely not in the markets, you know, we were investing or, you know, where we’re focused, even right now. I gotten there’s a lot to be said about landlord, landlord friendly laws. But obviously, you know, that that tenant feedback is coming from, you know, an overall state where, you know, they have, they have things that they’re unhappy about, right, whether that’s affordability, kind of really driving it. And, you know, I think it’s there’s a lot to be said on why that’s an issue and you know, what can be what, what can be done about it? And you know, who’s really at fault when you understand I getting this

Erwin 26:34
on this show? I got? I think I 17 listeners know, I’m

Speaker 1 26:38
tapping out. I don’t want to be involved in these issues anymore. Exactly. But I think you know, those, but I

Erwin 26:43
think the better. Let me reframe the question is, in the areas that you target for investment in the US, what would happen if the tenant decided to rent strike?

Speaker 1 26:51
I mean, he would file an eviction and, you know, probably within anywhere from 30 to 60 days, you would regain possession of the premises and go back to releasing and, you know, a lot of the times, sorry,

Erwin 27:05
so here in Canada, for example, like we launch on a process, yeah. Eventually we get the sheriff to actually like, you know, let the tenant know, you need to move out and change, we’re changing the locks. What’s the process? Like? Because, say, because I know, I’m gonna be remote investor. Yeah, I’m not gonna be physically removing anyone. Yep. So what is

Speaker 1 27:25
Yeah, so our property management kind of handled that, and we would oversee it, but basically, you know, if a tenant stops paying rent, you kind of give them notice and file an eviction. And usually, you know, you’ll get your court hearing. And again, all of this will take anywhere from 30 to 60 days, 60 days, until especially a court order for, you know, for the Sheriff’s to come and, you know, clear out, you know, clear out your rental property and you getting back possession, kind of release it to a better paying tenant and try to pursue, you know, the uncollected amounts and damages from the evict a tenant. Now,

Erwin 28:05
again, I’m pretty ignorant on this. My understanding is that in the US, generally, they don’t like here in Ontario, for example, and if we please BC, as well, we have a separate almost legal system students have to residential tenancy. Like, it’s not the same in the States. Is it not like when you said like, you go to court or did a court order? Let’s regular court?

Speaker 1 28:26
I think it will vary a bit by by jurisdiction in the market. But yeah, I mean, there’s obviously a specific system for how you, you go about the process, but it’s, it’s definitely not like it is in Canada in terms of how long it takes and how backed up it is and the, the favorable terms that tenants get, even though they’re not, they’re not paying rent and are squatting for lack of a better word.

Erwin 28:56
It is a, like, I come from a bank, like, when I worked at IBM for seven years, I was the the business I worked in was, we were in risk management software. And, you know, and I don’t know, it’s just natural in my nature, I see risk everywhere. So, you know, I’m coming from Yeah, you stack and Ontario rental property, against the stuff that you’re targeting in the sunbelt states or even like Ohio, for example. Yeah. It’s, the risks are completely different.

Speaker 1 29:29
Yeah, it’s, it’s, I get, I think, what what you’ve seen over even the last, you know, 1824 months during this high interest rate environment is the resiliency of the asset class. Right, you again, compare it to other sectors of real estate or even performance of, you know, other large companies. Again, the resiliency has been at the forefront. And, again, it’s driven by, you know, driven by the strong fundamentals in the space

Erwin 30:00
Okay, I don’t even know where to go. So again, I had to congratulate you on your English, because from your bio that you sent to me, you came to Canada 10 years old. Can you talk to that? I know, this wasn’t an authorized question. Do you know why your family decided to move?

Speaker 1 30:22
Yeah, I mean, and in short, I think it was just more opportunity and the stability that a country like Canada offers. You know, for my parents, I’ve talked to my dad, who kind of was the driving force behind the decision about it, but, you know, a kind of the end of the Soviet Union. And then the fall of the Soviet Union, you know, in the turbulence and the uncertainties that you had, you know, kind of drove drove them to Canada, I think they visited a friend kind of in the in the early 90s. And, despite it being a massive snowstorm decided that it’s, it’s a good place to kind of relocate, and, you know, for having two young boys again, you know, Russia does have military service to a certain degree. So I think that stability is what drove the decision making

Erwin 31:13
instabilities. Like, yeah, like, basically invading, you’re leaving a country whose economy and currency is failing? Yeah.

Speaker 1 31:26
It’s hard. It’s hard to really kind of understand it, because Thank you, you’re never Well, young. And also, thankfully, we haven’t faced that here. So most people have, yeah.

Erwin 31:38
Are your good friend of mine. He’s been he’s, he, he lived in Moscow for quite some time. He’s been older than me. He’s Russian. Obviously. He’s been through two economy, economic and currency collapses. So like, who better to ask like, how do you survive these things? Because it’s pretty well documented how much debt we have in Canada. We’re pretty bad. We’re pretty bad. And his his advice was his experience. Sorry, was real estate gold, and earn money in US dollars? Yeah. And so I, you know, he’s not my dad. But you know, my point is that I kind of live by these things now. Right. And I think it’s rational for every Canadian listening to this is that it makes less sense to have some US dollars in your life. I couldn’t agree more, including US assets and all sorts of things. Yeah. Now, you went to business school in McGill, a superclean in exchange in Singapore. Now you intern in accounting? Do you have your CPA?

Speaker 1 32:35
No, I didn’t. I mean, I was an undergrad, I was considering kind of going down the accounting route. So that a few summers working in at a CPA shop and, you know, large consumer good company and then a kind of reporting division, or realize that’s not necessarily what what made me made me excited. So I kind of pivoted more towards kind of pursuing a career in real estate.

Erwin 33:04
Now, okay, so I, I was talking about this before we started recording. So I talked to many new people to real estate. And often someone’s goal is I want to be full time real estate, you know, and I want to make six figures a year. And after I get to know them, like, they don’t have much background real estate, oftentimes, they don’t have any, any sort of business or finance or economics background. So the point is, it’s gonna be the learning curve is gonna be steep. And now they’re gonna go about going buy apartment buildings, with their own money. And even worse, like mom and dad’s credit and their money and stuff. Yeah. So often they’ll say to people, like, why not get a job that pays you six figures, maybe not right away, but get a job in industry for a developer or REIT, and then learn the ropes. So that is the path that

Speaker 1 33:53
Yeah, exactly. So I found that I kind of started off my career on the debt side.

Erwin 34:01
Again, you know, to choose paying debt, so, yeah,

Speaker 1 34:04
so it was with a large Canadian private lender, CMOs financial, basically, in an underwriting capacity as an analyst, you know, helping, you know, put together the credit memos, the risk memos that get approved, you know, as you’re going through credit committee, you know, a real estate owners trying to get a mortgage, whether that’s on an acquisition or a refinancing. And I thought that was, you know, a really interesting way to start off my my career in real estate. Again, if on the debt side, you’re focused on what are the risks, and how are you mitigating them, right, you don’t get to share in the upside when things go well, so you really want to make sure you’re focused in on on the downside and the risks that you have no downside to your point earlier. You know, kind of wanting to you know, focus it on that seeing all the risks. You know, that’s something I always knew I wanted to have as well and you know, wanted to make sure, you know, you’re not just focused on the good, but you you’re cognizant of, you know, where hiccups can come and you know how to deal with them and have the foresight to, to kind of expect, expect things. But I always knew I did want to kind of transition to the buy side of real estate kind of in, you know, whether it’s real estate, private equity, or working out or REITs. So when an opportunity came to kind of join this new newly formed division of starlight focused on the US, I, I took, you know, I took my chance, and it worked out, I had a great, great time there and got to be part of a shop that was a rapidly expanding, very transaction oriented, super fast paced environment that keeps you keeps you on your toes. So, so yeah, and I think, to your point, it’s, you’re right, I think, you know, the the learnings you get a, the access to mentorship, right? You know, people that were running both CMOs and starlight, like, they’re industry veterans, they, you know, some have actually gone through downturns. And I’ve seen, you know, have seen things that, you know, me coming out of university and, you know, early 2010s, like, I didn’t have that, right. So, to a certain degree, you are learning from who you’re working with, from people from people’s experiences, and helping kind of formulate your own views and, and ideas about how, you know, both from a managerial style, but also from an investing style.

Erwin 36:36
Something, I warned you, I could tend to go off script, Corporal like this, I’m just teasing. Because when I was on a call with you to determine my own buying preferences, like, again, thank you for that. I thought it was awesome. And I cannot believe you don’t charge for it. I think I think so many people would benefit, especially people that are looking at deals locally. Like for example, I hear I hear Canadian investors, like BC, Ontario, they’re going to like New Brunswick and buying apartment buildings. I’m like, What is even the population in New Brunswick? It’s very small, are sorry to offend anyone? Or they’re going to like a city in northern Ontario I’ve never heard of. Right. I think they think they’d benefit from at least asking you for baseline. So sorry, let me let me take a step back. Again, from a camera from a business go back background, I look for baselines everywhere. And that was part of schooling as well. And you went through it as well. Like, for example, like the cap M model, like we had to have a risk free rate. Yeah. Right. What is the risk free return? Right? And that’s your baseline? And then and then I’ve just gone from there is like, you know, what is my baseline and other investments? You know, so for example, in the stock world, everyone always says, you know, s&p 500 was the average return of this of the stock of the index. Now, if you can beat it, great, how much risk return all those sorts of things? Yeah. And no different real estate. I can make money in real estate, very safe and boring in these certain ways, GIC whatever private land, whatever. And I’ve always been looking for what I consider the most passive as possible was boring as possible real estate, but direct ownership? Yeah, because I went upside, right? Because that was my experience, the path to, to actually generating a significant wealth is through direct ownership of real estate. Right, meaning I own it, with not sharing with anyone else. Right, other than the bank and my wife. Right. And that’s what led me to share. That’s why I really enjoy what I see in terms of your investments and share, because I think this is now my baseline that everyone should at least consider look at, when comparing their own investments to it.

Speaker 1 38:48
You know, I mean, yeah, no, definitely. I mean, look, I, again, you describe it very well, I think that’s what really drew me to, you know, teaming up with Andrew and Carmen on UNbuilding share, you know, as I mentioned earlier, you know, doing it yourself is very, you know, very time consuming, there’s a lot of nuance in venturing out into the US, which is where I always kind of knew I’d want to do it if I was buying myself, you know, having a private so

Erwin 39:17
let me just pause you there, because I want to frame the question in that, like, you live in Toronto. Yeah, you’re very well versed and have access to more information resources, and anyone who’s ever been on the show on buying a property in Canada. But where’s your next income property going to be?

Speaker 1 39:34
Yeah, I mean, I would I would look to the US for sure. That’s always kind of been my my viewpoint, a owning primary residence already in Canada, exposed to the Canadian real estate markets. You know, big believer, like both, you know, Andrew and Carmen and a lot of people like in diversification, I think you want to have exposure to different markets, different drivers. So for For me would definitely be looking to kind of buy something in the US. And that’s been the challenge, right? I looking forward to 2024 to kind of to start doing it myself.

Erwin 40:10
And to give the listener context like Andrew and Carmen cashflow a lot more than more than 90% have written vows to investors I know. And then so again, like looking at baselines and also again, like looking at opportunity. Like, what I was telling investors is, like, for example, a new investor, I always tell him like, it’s good idea to have a look at 20 100 houses, go through 100 open houses, for example. And then once you’ve done that, you kind of understand what the top 20% looks like. So Carmen and Andrew, in terms of cashflow are easily in the top 20% of investors. I know. So I want to learn more. Right? That makes sense.

Speaker 1 40:48
Yeah, definitely. I mean, I’m learning I’m learning from them, as well, right? Because, you know, what they’ve experienced what they’ve, what they’ve done. Now, there’s a lot of learning between all of us on the team. But But ya know, I think kind of diversifying into the US is, is a great, you know, is a great path for for Canadians for a number of reasons. So

Erwin 41:10
when I asked you about like, what, what is going to be your next income property that you purchase? Because I think that’s a good question. I have been Yeah, it’s a question I’ve been talking to, like, several other investors, like, what’s your next income property going to be like? Because, because, because that tells me a lot of information about them, talking about the risk, their risk preferences. You know, like, for example, a friend of mine, he says, he’s gonna He’s gonna tear down houses locally, and build eight and 10, plexes? And who will sell them or keep them? Like, I like, That’s awesome, man. I couldn’t do that. I don’t personally, I don’t want any more long term rental tenants. Right. And also development is not the easiest, right? So what would what would? What would? What are your next three properties? For example, what would they be like? Because I want what for listeners benefit? I want them understand, like, give them more specific yet, hands on mental picture yet on what it is that you think is a good investment? Based on? Yeah, a lot of experience. Yes.

Speaker 1 42:06
Again, and then there’s personal preference that comes into it. So, you know, this, this will just kind of be be mine. But I think, you know, what I’m, what I’m trying it for myself is I want to you said I want to kind of get to a handful of properties. So I think you know, my target is really get get into three properties as quickly as possible. Just so again, you know, different markets, have some diversification, no single tenant exposure, etc, you know, from my risk, risk profile, you know, and kind of being my personal entry point, direct investment. I’m kind of, I want to start off with more of your, you know, your lower risk type properties. So, you know, I probably target something, you know, in Austin, something in Atlanta. And, and something in Columbus is where, where I’ve kind of earmarked for myself, I think it gives you kind of a good diversifications of what’s driving those markets and the general US economy. And I want to look for, you know, the properties that are probably 2000s or newer.

Erwin 43:13
They don’t as in the yearbook. Yeah, yeah. Yeah. So built after a

Speaker 1 43:17
year. Yeah, that’s probably like less than 20 years old, you know, don’t require a lot of work right now. You know, they’re located Good, good access to schools, you know, but still have that relative affordability. Compared to, you know, some other markets in the US, right, so we track a lot of different data points and metrics for our clients. And obviously, you know, I look at those myself, but I think between, like,

Erwin 43:47
deposited there, when you did you have access to, to several different sources of data, you have access to way more information than any retail investor out there. Yeah,

Speaker 1 44:00
no, that’s definitely the case. I mean, I think that’s, you know, part of what we offer as the asset manager for for our clients. But yeah, and as you know, as we look at that data, you know, you you see certain patterns, certain trends, and that helps, you know, helps you narrow down your focus. So, you know, to kind of wrap up what I was what I was saying before is, you know, that newer profile Lescott will work because I, you know, I think I’d want to try to time it for myself where the renovations and that upgrade, I’m going to try to line that up with when I want to do refinancing when the interest rate environment improves, right. So as I go to look to up finance, probably opportunities to do the renovation there and maximize your your rents because now there is some strong headwind when it comes to rank growth in the single family space in the years to come.

Erwin 44:54
Can you tell us talk a little bit about what is the economic environment in the air Is that you targeted for investment? Like right now? Where’s it going? Because, you know, because again, you have more access to more information than most people do. So when people ask me my opinion, like, again, it’s, again, each markets quite different, is very different than Austin, Texas,

Speaker 1 45:15
for sure. But that’s but that is why, you know, you want to build a portfolio, right? You know, you want to have access to both, because in certain years, you know, with certain job announcements, you never, you never really know, what might kind of have a short period of time with outsides growth. That’s why you diversify. So, you know, you you get exposure to the different drivers. In terms of what’s happening. I mean, it’s been obviously an interesting time for for real estate investments, you know, there’s no hiding, hiding behind the impact that the rising interest rates have had. I think, you know, the single family space has been super resilient. Um, you’ve seen kind of no prices hold firm, partly driven by, you know, people are locked into long term mortgages and 30. Year, yeah, 30 year, they’re not really looking to sell. So there’s lower inventory. And while you know, there is more capital on the sidelines, and probably, you know, less deals being done, then, you know, in the peaks of 21 and early 2022, you know, it’s the assets performed well, so, you know, that capital will return and, you know, as, you know, as the interest rates drop, as kind of, a lot of things kind of normalize, you know, they’re the general fundamentals aren’t going away, the, you know, how, like the discount of renting versus homeownership, you know, the job growth, the resilient economy and, you know, access to, like you said, the US dollar and US assets, which is always going to be a draw for, for for investors, both retail and institutional.

Erwin 46:56
So I can make geeking out on this stuff for quite a while, ever since I started my my real journey down this rabbit hole of us investing, just understanding trying to get a better understanding of the US economy. For those who don’t know, like, for example, the, like the USA is, is by far and away the number one economy in the world. Like, it’s a very big gap between them in Chinese. And I’m not as convinced China to overtake them. And I don’t, I don’t know, even if they do doesn’t matter. Like, it’s still gonna be a great place to invest. I think partly because of the financial crisis of Oh, 720 10. They’ve had their correction. So they end in I think it’s part of the I’m guessing as part of it, that they have way less debt than we do. Right. If for Canada, for example, in pure Polly bear has made it much more apparent in today’s conversation. If you add our federal and provincial debt in Canada, I think we’re like the third highest debt to GDP in like the world, at least among the developing countries, I’ll pull up the upload the graph, and I’ll share it another time. And then when you add our our consumer debt is among the highest in the world on a GDP basis. And at the same time, our GDP per capita is falling, we’re gonna fall to the bottom of the g7, probably within a few years. Right. So like, I’ve been there again, the same time the Americans like they’re investing, I think it’s like $7 trillion in bringing manufacturing back to America, like, and then. And then on the Canadian story, like, I think we having you have two major manufacturing stories, one in St. Thomas, one in Windsor. Right. So that’d be like, about 6000 8000 jobs can be the two of them. That’s a drop in the bucket compared to what the Americans are doing. Yeah,

Speaker 1 48:43
I mean, it’s a different scale of, of a market as well.

Erwin 48:47
So what are you seeing in terms of the difference between, like, start at the macro level? What’s the macro argument? Why do you want to invest in the US?

Speaker 1 48:55
I mean, I think, again, it’s the stability behind it. Right. Again, the US dollar is still the reserve currency. That isn’t changing anytime soon. But look, US also has high high debt level they do. Right, so they’re nowhere near ours. I think reserve currency too. So

Erwin 49:18
a lot of different things. 100%. But I

Speaker 1 49:21
do think, you know, spending needs to get under control, not just in Canada, but not not just in the US, but probably in a lot of places. And that will be for the good of our global economy. You know, to your point on China, again, China’s facing some negative demographic headwinds, right with an aging population. You know, we see what’s happening there real estate birth

Erwin 49:45
rates crater. Yeah,

Unknown Speaker 49:46
unemployment is high. Right. So

Erwin 49:49
the US because their birthday is actually very healthy. Yeah. And their unemployment is their employment is wonderful is quite good.

Speaker 1 49:55
Oh, yeah. 100 100%. So, you know, I think a lot of the As factors like, aren’t really challenging us as kind of the, you know, the number one economy. And, again, you know, when you look specifically to, you know, single family rentals, and, you know, there’s a lot of talk about, you know, different innovation different, you know, like aI taken away, so people aren’t gonna need a place to live, right, the beauty of residential real estate is, you know, you were going to need, you know, we’re going to need a roof over over our heads when we’re sleeping. And, you know, these markets that are more affordable, that have the landlord friendly laws, you know, they’re driving employment growth, and they’re getting people to move there, because they have a better, you know, they have a better quality of life, whether it’s climate costs, etc. So, you know, looking at those macro trends and factoring in that it’s in the US, it’s safe, we’ve seen some of the resiliency, and we’ve been over the last, you know, two years, I think they’re so great, great story for, for why a long term investor should should have, you know, part of their part of their holdings in US single family rentals. So

Erwin 51:13
tell me more about what US single family rentals mean to you? Are you going to Airbnb them? Are you going to put in the basement suite?

Speaker 1 51:22
No. So I mean, you know, it’d be more kind of a traditional long term tenant, I mean, you always explore opportunities, if there is if there is for, you know, an additional unit, but it’s not nearly like it as a candidate, because you’re able to, a lot of times just cashflow them without any of that. And, you know, there is a strong demand preference from the renter for having the space, not having the noise you have in apartments, you know, post COVID and COVID. And post COVID really kind of shifted the trend in that direction. And there’s just an imbalance of, you know, the supply and demand between what’s available for living and, you know, the households that are looking for, for a place to live. And that’s been been great. And I think, you know, with short term rentals, it’s, again, you know, something we, we’ve chatted about, you know, he don’t know, kind of where where things go, I know, Andrews probably chatted with you about kind of looking into it, but, you know, the stability of the long term tenant, your ability to ride out any, you know, unforeseen macro changes, you know, that’s super helpful. And I think, you know, if you’re looking to invest in, you know, USSF Rs, like you’re looking for, you know, a good risk adjusted return, relative to what you’re buying and right, it’s not, it’s not crypto, it’s not high growth, you know, tech stocks, right. But that’s, that’s part of the equation, right? So for me, that’s, that’s what it means to me. Because if I’m looking for that, for that risk, I’m gonna go to something else. Right. For me, SFR means something stable, something predictable. So there’s our single family rental. Yeah, yeah, single family rental. And, and yeah, so, you know, growing up portfolios, allows you to kind of, you know, better plan for the future and really grow, grow your wealth and take advantage of a lot of tax incentives that come along with it.

Erwin 53:21
And what attracts me about this model, as well as that, again, I mentioned earlier that pretty much every investor that comes to me, their goal is six to generate six figures of cash flow a year. And to me, buying single family homes, under an asset management model, where you don’t have to share any of the profits or equity with anyone else, to me is the easiest way to get there, like, easy in terms of like its scalable findings available. And I can do it remotely, and not really have to worry about too much.

Speaker 1 53:55
Well, that that was the gap that that existed, and that’s what we were trying to kind of address was share, right? You know, building a portfolio retaining control, retaining the ownership, or having the upside, you know, having, you know, decision made control on when know, when you refi you know, when you sell, right, like, having that ability to notice your investment and ultimately, like, we’re suggesting what you should do, but you get to decide it, right. And the gap that existed was, how do I do that efficiently? Not just where I live, because, you know, I mean, you know, kind of locally, but, you know, if I wanted to buy an investment property, you know, a few years ago, my options were very much so like Canada, I have friends that are Realtors I know you know, know the trades know everything, but how do I how do I go to the US? How do I choose between the different markets and the realtor? That’s what really attracted me and I saw it and that’s kind of what I was talking with, with Andrew and Carmen kind of more than advice History capacity early on, when it was still like kind of a fractional, you know, fractional idea. You know, that’s what really drove me, because then this direct, like, with the change to kind of streamlining direct ownership, you know, you’re you’re leveling the playing field for retail investors that doesn’t exist today, right? Because, you know, the big institutional asset managers, right, they’ll have funds with, you know, high net worth individuals, as investors, they’ll also have funds, with the big institutions, pension funds, insurance companies, even in those you see the difference in controls that, you know, the pension funds, and the big LPS limited partners on those investments would have versus, you know, fractional or owners of, you know, a share from the retail side and those funds, but also the control, right, and the control and the fee structure, right? How much of the profits are giving up all of those, you already see a bit of an uneven playing field, so well, and let alone the benefits of direct ownership versus that that model. So filling that gap was something that I really resonated with me. And you know, why I kind of made that made the jump to pursue building it for for our clients.

Erwin 56:16
So let’s talk about some numbers that, for example, like we talked about, because someone listening will say, why don’t is buy a REIT, why don’t you do why don’t need to go through an asset manager, like a share, for example, and have direct ownership? What does what, what additional charges would an investor have to expect if they’re going through a REIT? In owning a property?

Speaker 1 56:36
Yeah, I mean, look, charges will vary. I mean, different ones have different structures. But I think, you know, we’re very, you know, we’re very competitive when it comes to the fees we charge, both on the acquisition and ongoing from an asset manager perspective. And in drops, as we grow, we help you grow your portfolio. I mean, a lot of no private funds, you know, you are giving up a share of the profits. Right? It’s, a lot of times it’s in fine print, and not always really understood by not fine print, but it’s in the legal in the legal definitions, not that people don’t know it, but that guy mechanics, right, they’re just passively putting in money, getting their dividends on a quarterly or monthly basis. And then, you know, when the asset manager or, you know, the executives of the fun decide to sell or do anything, they kind of get their distributions, right. But again, they don’t retain the control. And a lot of times they’re giving up a portion of the profits, because that’s how the asset manager is compensated, which I

Erwin 57:39
understand. Yeah. But here, at the small level here, like I’ve had guests on the show, and like any sort of real estate influencer out there is either usually generally generally selling courses, or they’re raising private money to borrow or to look to joint venture, as in like, say, you and I bought a property together, say it’s Hamilton. So I know more about Hamilton than you do. So I’m gonna get 50% equity, you’re gonna have to pay 50% equity, but generally, I’m gonna ask you to put up all the money and you get the mortgage as well. I mean, so versus in shares model, I get your guy’s level of experience and your relationships. And you don’t take an you don’t take an equity position on my property properties. No, so that’s what really excites me. Because most people again a lot of people get into that sort of stuff. But again, like you guys are just well above in terms of capability and relationships, experience and knowledge and track record than another retail investor. Like even myself, like I’ve got, you know, I’ve owned over 40 properties personally. Done. Don’t forget I forgot we’ve done like 440 million worth of real real estate transactions. I still know Jack compared to you guys.

Unknown Speaker 58:59
I’d be modest but yeah.

Erwin 59:05
So take me through an example. So like you mentioned Austin, so I’m going to selfishly ask about Austin just because I’m, I’m going to be going down there. What is it you’re looking for, in terms of a property like to paint us a picture? Like is it a detached Is it a triplex is what is Yeah,

Speaker 1 59:21
detached single family home, you know, typically, you know, it’s in the suburbs of these these major cities. You know, again, me personally, I for myself, I’m, I’m looking for something right now that doesn’t probably require the heavy renovations but has the potential for the value add in a few years time where you know, you can lift rents. I’m, you know, again, focusing on neighborhoods that have good accessibility to employment. Good Good schools. But again, it really depends on the what is the capital you’re you’re looking to invest in. And what’s your risk tolerance within within the space? Right? Obviously, Austin is a more expensive lower yielding market. More expensive, more more expensive relative to you know, you know, whether it’s a plant or for saving Dallas, right?

Erwin 1:00:25
Oh, sorry. Let me just get the listeners in context. I was like, a friend of mine sent me a house because a friend of mine was looking at Waterfront houses in Austin. So he sent me a listing and was like, this is just gorgeous. 2600 square foot for like, I think it had a huge lot. Lately, at least at least half an acre. Back down to the river. It was is it looks like a very nice cottage. Four bedrooms, three full bath. It was asking million US in Austin soft is a market so it’s sold for is currently pending? For 875 875,000. American for waterfront property, about 30 minutes from downtown. So that equivalent property and Ontario in on Toronto, again. So for the listeners benefit Austin, is the state capitol million populations, almost a million greater areas about 1.7. Yeah. This is no, this isn’t a small town. So you know, even if that, let’s just use a GTA that probably doesn’t the GTA it’d be well over 3 million. Yeah, right? Easy. This is 875 American. So when you say expensive, it’s, it’s different for Canadians. And sorry, and we’re not even talking about that price point, when you know, your target price, we’re

Speaker 1 1:01:43
talking about, you know, really barely below, even 500,000 in a market like Austin, but generally, you know, for our, what we call a kind of a Class A profile, which are newer, better located in these kind of large sundown markets, you’re probably looking sub, you know, under 350,000, for the home for for the type of investments we’re kind of gearing our clients towards, but again, you know, Austin would be higher than that you don’t generally see a lower yield there. But, you know, Austin’s got some great drivers for, you know, long term investors know, both from their economy being at the front forefront of tech, you know, the tons of company, federal tax environment for corporations. But, you know, there’s, there’s also supply, right, there’s lower barriers for new construction, you know, you know, all these things that we were tracking, as we, you know, we formulate our decision making. But, but yeah, and then, you know, it’s a high end, the reason there’s just just for the listeners, the reason why it’s it’s kind of lower yields in Austin and Texas, generally is because they have high property taxes. So again, all of that is factored into our underwriting and when we’re evaluating opportunities, but you know, for me, as a long term investor, I want to focus in on having exposure to that appreciation over the long term. And then that whole diversification kicks in where you then want to complement that with maybe something more, you know, straight down the fairway, like an Atlanta that’s got, you know, it’s not number one in any category, but it’s kind of doing well across the board, whether it’s new, you know, what’s being built, what is the job growth, employment, revenue, growth, etc. And then on top of that, you know, factor in, you know, that Ohio property, something a bit higher yielding, you know, something that might have not be one of the lowest places from from the big cities in terms of new construction, but you also don’t see the wage growth or, you know, the appreciation that you would in some markets, right, so I think on that on the balance helps you offset having no exposure to an Austin. That would be kind of my my approach.

Erwin 1:04:12
So the Austin property under 303 50. So it’d

Speaker 1 1:04:17
be an awesome Robinet probably be looking kind of in that sub 400

Erwin 1:04:20
range, and then what we’re to rent for,

Speaker 1 1:04:25
again, I’ll be depending on the neighborhood, but you know, they can push three if not even above $3,000 in rents, again, depending on where it is the size, etc.

Erwin 1:04:38
That’s really good. $3,000 of rent a month plus utilities for a property worth under 400,000.

Speaker 1 1:04:46
Yeah, yeah. Again, it’s sort of neighborhoods. But But yeah, I mean, mid 2000s. If you even go kind of to some of the B class type of neighborhoods within Austin, I think it’s it’s arguable

Erwin 1:05:00
so to give you context like for folks who’ve been around as long as I have, like, you know, I’ve been investing since oh five. So even like 1012 years ago, it was any anytime like we were all buying houses for like 200 grand detached house or to be in Hamilton can be Oshawa can be Cambridge, Ontario to be Barry. To undergrad we buy a detached bungalow, a three bedroom, one bath, one bath, right? And then that would rent for about 12 or 1300. And again, we all would love those days again. Right? So even use 1300 as because they’re 200 Plus utilities. So 1300 is about 15,600 per year. So your gross rent yield is about so your annual rent divided by the value of the house is almost 8%. Right? So you can still find a percent. Yeah. And boring. And using what I consider a boring investment model, like hasn’t It’s simple. It’s it’s safe. There’s no flipping here. No. Yes. renovations? Yeah, exactly. Because, you know, we’ve had conversations about, you know, you know, about the the level the extent of renovations we Canadians do Yeah, we do basement suites. Yeah, there’s 60,000 dwelling garden suites for 300,000. You know, even the garage renovation suite, that’s 120 130,000, you know, months of renovations permits all sorts of things. Versus you just walk into something. Yeah.

Speaker 1 1:06:31
And do I mean, you know, you’ll always have a little bit of money you you want to put into it. You know, how much you’re talking about? A couple $1,000 minimum, but renovation to me in rent, right. But it’s a lot of it is like, you know, smart appliance like like smart locks my thermostat. It’s just things that streamline management. But yeah, I mean, even you know, sometimes you’ll go in and maybe do new flooring, but yeah, you’re keeping things to kind of, you know, 10,000 on those homes pretty, pretty easily. And now, there’s always opportunities where you can go spend the 30, the 50 to 70,000 and really, kind of bring the property to a completely different standard. But yeah, again, it’s we evaluate each opportunity kind of on its on its own when when we get granular into it to see if that’s if the timing is right. And if there’s a return on investment to do that.

Erwin 1:07:24
So often you’re looking for like a seven, eight, gross rent yield.

Speaker 1 1:07:27
I mean, I get that could be a bit. Yeah, I mean, an optimistic scenario for sure. I mean, I think there’s definitely those opportunities that come by and

Erwin 1:07:37
you have to talk. Yeah, yeah.

Speaker 1 1:07:40
But But yeah, the price points, like, again, you know, to your point, like, somewhere in Austin, like there is. There’s a wide range to where the price points are. Where, no way. It’s

Erwin 1:07:52
75. Back in the water. Yeah, we’re looking for for investment. Exactly,

Speaker 1 1:07:55
exactly. And you’re not gonna get that type of yield, no. No’s,

Erwin 1:08:01
awesome. Also bring this up, because and then folks are willing, they are happy to welcome the challenge me, in my observation of how investors are doing right now, like local local investment community, generally, the folks who’ve been around since prior to Oh, seven are faring way better than any investors come in the last five years or so. Right. And I’ve mentioned this forever is that if you’re going to hire someone, like a realtor, or hire a coach, or an investment partner, who’s going to like the expert in the deal, they got to have at least 10 years experience. Right. And so that’s why I say like, when I talked, if I talked to the investor from who’s been investing in Ontario some or 10 years ago, then they would go gaga over these numbers. Versus someone who’s been consuming social media content over the last five years, is thinking I gotta Airbnb. I gotta basically, I got gardens. But I can just walk into the single family spend less than 10k in renovations and I can gross rent yield 78%, which is what we were doing 1012 years ago here. But again, the job story is way better there. And before we’re recording I was talking about like, I think we all appreciate AI is going to be very important to the future. And then large components AI is computing power, which means microchips. So then how do you invest in AI? AI friends at Microsoft, so they like we missed the boat on Nvidia? So, but again, I come from real estate context. How do I how do I how do I have an AI play in real estate as an investor, which drew me to following the microchip manufacturing story in the States, which led me to Austin, which led me to Taylor, Taylor, Taylor, Texas, which is a suburb of Austin, which is where Samsung is building their microchip manufacturing plant, which will have like two to 4000 jobs and stuff. It’s one of those numbers between two and 4000 new jobs. And so when people talk to me like isn’t like whatever it leaves, figuratively hold some headlines about the US economy like, what about this? What about this was this like, worried about the housing market? Like, you know, I’m gonna, I’m gonna have a house within a 10 minute drive of two fourths, two to 4000 people moving into into the town, who are making six figures as a job, let

Speaker 1 1:10:17
alone you know, the massive Apple campus you have in Austin and Dell, Tesla. There’s the the job story there has been has been great. And the quality of life is is really attractive to, to the, to renters. But, ya know, I think I mentioned I was looking at a deal. And back in my old life, on the institutional side, it was a new construction deal. And I think I was touring it, it was on the market, right before Samsung came to look to potential just by just the house, I was all the people working on building that plan. So it’s always, it’s always funny to see kind of that trend. You know, as the big the big relocations get announced, and a lot of these jobs come really, really does help the real estate industry. And I definitely agree with you that you know, you want to be tracking that and looking for that and having some foresight into like where you know, what is going to be kind of that next road cycle.

Erwin 1:11:17
And this is a wonderful analogy of the ability of a retail investor versus an institutional investor. I’m doing this from my computer, you’ve actually been to all these places, numerous times, and been inside buildings numerous times in all these target cities for investment.

Speaker 1 1:11:33
If I had to upgrade my iCloud on my iPhone many times based on all the photos I have saved from touring properties.

Erwin 1:11:43
So again, like this is the difference between what we’re capable of as a retail investor versus the resources and experience that you have. So I jokingly told you that I’m honored and humbled when people ask like, Erwin, what prop were you gonna buy in the States? And like, I’m gonna go ask them to a tree. Why should we buy it? And to be fair, like, I had this in conversation with clients? Yep. If you’re from Toronto, you’re not from Hamilton, and you’re not from St. Catharines. You know, it doesn’t serve as my client to ask them, what do they want to buy? Like, I’ll tell them like, this is where we make the most money? What option within it would you like? Right, so it’s kind of like, we’re in your sandbox now?

Speaker 1 1:12:26
Yeah, I mean, I think that’s, you’re you’re definitely spot on, I again, there is a personal side to it, where, you know, you want to be investing in something that you’re comfortable with, you know, you understand now we, you know, with our clients, you know, we spent you, you’ve seen it yourself, like a good amount of time kind of explaining things, or getting on the same page, really understanding what it is that fits best, as, you know, your specific by Basik, what is the criteria that you’re looking for? But it’s, you know, it’s a, you know, know, your customer kind of approach, where we zero and really what fits best? And, you know, there are people that have their own views on a market, that’s theirs, you can have that right. They might have some, they may have lived there before that you can come to us. Yeah, yeah, you can come to us, hey, I want to focus in here specifically. But there’s a lot of yeah, there’s a lot of definitely investors that have a general idea, but are more market agnostic, and, you know, rely on on shear as their asset manager to kind of, you know, guide them into where the opportunity is, you know, looking best based on an actual review of numbers based on discussing the assumptions with the stakeholders, you know, the PM, getting everyone on the same side. Now understanding what’s going to, you know, what are the costs going to be specific to that property. So I think that helps helps you make the decision.

Erwin 1:13:56
That’s the awesome thing about we get to talk to you, because it was your idea that I that I have, because I again, I was thinking your brain about my travel plans in Austin. And then you suggested, Why not look at the suburbs in the corridor between San Antonio and Austin? Yeah, I’m like, that makes a ton of sense. to San Antonio is also probably one of the best places to invest in Texas. Yeah.

Speaker 1 1:14:17
Yeah. I mean, that’s one of the four kind of major major markets in Texas. And, you know, I think, you know, from an investment standpoint, I definitely think that’s a great area I do during my run I love North Austin, a bit of a higher price point. You know, there is the job story there is phenomenal. The schools are, you know, very desirable. But South Austin has been seen massive, massive growth and you know, that proximity of having no attracting families that might work. And one person works in San Antonio, one works in Austin like that, that is common. Right, that’s a good demand driver for your rental and definitely worth which I can tell when you’re, you’re down there.

Erwin 1:15:03
It’s it’s interesting because my, my friends in Alberta invest in Alberta, they do the same strategy. they’ll invest halfway between Edmonton and Calgary. Right, because we have perfect hedge between the two cities. And again, same thing, like some people work there, some people work there. So again, man again, you better do, it’s a great hedge. I like that. I love that. I love to manage my risk. You mentioned a high yield in Columbus, can you paint us a picture about what you’re buying? In Columbus?

Speaker 1 1:15:29
Yes, so I mean, higher yield. I mean, you know, there’s obviously tiers to kind of, you know, the trade off between what, you know, what you can expect over the long term and appreciation versus today’s yields. In Columbus, like, you know, I’m probably trying to compensate for, you know, some of my, you know, what would be in my portfolio, it’s a bit lower yielding like Austin, and I’m looking, still probably sticking to a very similar type of property. I mean, it’s harder to find there’s less in terms of newer, newer construction, but maybe it’s already been renovated by a previous owner, again, somewhere where I’m not going in and spending a ton of rehab dollars day day one. And, you know, probably going outside of kind of, you know, the the really Class A type of neighborhoods and getting more of something with affordability where you know, you can, you can see kind of, you know, still have strong coverage from you know, what your rent what your tenant makes to what they’re paying in rent. And then that’s kind of what draws me to like a market like Columbus and Ohio, some of the other markets in Ohio is, you know, their household income to rent coverage. Is, is very strong, right. And I think that’s always very important. And you want to have some of that, because that does help you manage, you know, increasing rents, year over year, which you can without rent control.

Erwin 1:17:00
Well, you, you mentioned that that’s a bad word here. Now. You mentioned affordability, because that’s a massive problem here, right now is anyone anyone who’s an Ontario landlord, they know like, there were everyone’s receiving applications where people cannot afford, like, right on paper, immediately, they know right away, like their their income, started the the rent, to their income just does not work.

Unknown Speaker 1:17:21
What are you? Like? What are you seeing?

Erwin 1:17:24
Well, first of all, see me she’s guideline is that total household expense should not exceed 30% of gross income. But we’re seeing 4050 60% In terms of applications. It’s tough out there here, but you’re saying it’s

Speaker 1 1:17:40
Yeah, I mean, I like I mean, in the markets were looking, I mean, it generally, like you’d look to a requirement of three times, you know, three times rent. But, you know, what you’re seeing generally, would be, you know, high teens to low 20 percents, really rent income ratio, it’s not affordable. Ya know? That, yeah. And I think, you know, yeah, certain markets, it’s, yeah, it’s sub 20%. Again, you know, household income, and, you know, these people they have, no, they’re not going to move out because you’re increasing rents by $100.

Erwin 1:18:21
So, Ron Butler, who’s a pretty big influencer these days on social media, especially Twitter, he’s a mortgage guy. And what’s interesting about him is I guess he’s because he’s so successful, like, and he’s old, and he, he cares. He just says whatever he wants. So he, when he when he was on the show, he said, I asked him like, what’s your advice to young people? His advice was, go work for a major multinational that has had headquarters in the US and find your way there. Because I forget the name of the company said it was, I don’t know, like might have been like Procter Gamble, like wherever their head offices is like, you can get like a 3000 square foot there. And you can be making great money through this. This is Procter and Gamble’s an example. You make great money at Procter and Gamble, and you love a 3000 square foot house for like 500,000. Right, you can actually live a really good life. Affordability wise. Yep. And that’s kind of been what I’ve been telling young people these days as well, is you at least need to figure out options because I’m big on options hedging. You know, I mean, that you can probably get conversations

Unknown Speaker 1:19:28
with us relate on that end.

Erwin 1:19:32
Even for yourself, I bet you’d made a lot more money if you’ve just worked in the States.

Speaker 1 1:19:36
Yeah. Well, I mean, especially with kind of spending most of my career involved in us real estate. But and my brother actually lives my brother and his family actually live in the US or city. He’s in New York, he moved out there for undergrad. Um, it’s kind of kind of stayed there. But yeah, look, I’ve I’ve explored the US it’s partly why, you know, if I want to be buying In the US, I’m looking at some of the marks I don’t want to live in. I mean, Austin would kind of be at that forefront. I think for me. Yeah, I think for us if I was to move there and always kind of really be between Austin and Denver, kind of be the two cities I’d want to live in, personally. But, but yeah, look, I mean, I think my opportunities would have been great in the US. But you know, there’s also things that tie you down, and, you know, keep you in Toronto. And, you know, part of that is, you know, the sacrifices my family made to get us here. And, you know, being being close, helping out my, you know, my grandparents and getting all the wisdom that they pass on while they’re still with us. So that’s what’s kept me out. I’m happy about it. But I do know, traveling, traveling helps mitigate and helps you form your opinion, where, what, what may come next?

Erwin 1:20:51
Let’s come back to the Columbus example, what kind of price points are we looking at? What kind of range? You

Speaker 1 1:20:57
get? I mean, I think, you know, what, with with those type of opportunities, we’re probably looking at that too, I’d be probably looking at a kind of two to 300,000 range. Now Columbus, you know, within Ohio. It’s kind of more of the on the premium end of the markets, right, like you can kind of dip, or

Erwin 1:21:13
there’s ghettos over there. I think I think most of us know, visited Ohio, was all over Ohio.

Speaker 1 1:21:19
Kind of like, and, but But yeah, I think it’s just, you know, some some interesting trends and some interesting data points there that we’ll

Erwin 1:21:29
be doing the Intel plan. That’s yeah, yeah. I think that’s like, again, like 234 1000 jobs,

Speaker 1 1:21:34
the medical industry is doing very, you know, very well, there.

Erwin 1:21:38
I believe the tech industry is doing well. Yeah. Yeah, you know,

Speaker 1 1:21:42
there’s definitely, you know, always kind of looking at markets, I think, you know, we want to kind of expand where we’re really, we’re really focused, where we’re seeing our deal flow. I mean, it’s already pretty extensive. But, you know, zeroing in on markets, making sure we kind of know, you know, the, the experts as well that we can, you know, rely and discuss, you know, the micro locations, right, because your first view is you’re looking at things a little bit more of a high level, you know, whether it’s pictures of the listings, you know, general review of the area, but then during due diligence, like where we’re, you know, we’re making sure someone’s out there when zeroing in on the micro location. And, you know, that doesn’t mean we were going to move ahead with every deal we get under contract for our clients. And I think that’s, you know, that’s, that’s important, because that’s not that’s where we’re aligned with our with our clients. And I think that’s always important to mention.

Erwin 1:22:38
It because you guys, you guys don’t really make money on the first deal. Yeah, how you make money, as soon as the client buys numerous property

Speaker 1 1:22:45
Exactly. And builds, builds, builds that portfolio and unlocks, you know, the true fruits of the asset class.

Erwin 1:22:54
And I have lots of questions still, what is the rent but the rent the rent range be for your Columbus property? That’s two to 300k?

Speaker 1 1:23:03
Yeah, I mean, I think for for Columbus, I’m trying to think of some recent deals I look at so so many of them. So I don’t, I don’t want to misspeak. But I think I’ve definitely kind of seen some things that kind of renting and, you know, a bit more than, like, 1500 1600. Us Now, again, area dependent, you know, as we look at some of these older, you know, more inferior located properties, you know, your rents can be as low as, you know, low 100, low 1000s. But there are definitely opportunities where and, you know, tenants that can afford now even pushing, you know, closer to 2000 if it’s if it’s a larger property, again, per square foot sometimes will be more indicative in terms of in terms of rents, because property is even a three bedroom can vary in size dramatically. But yeah, that’s some some stuff I’ve seen. I’ve seen that recently. Yeah,

Erwin 1:23:56
cuz we buy three bedrooms here in Hamilton for like, 600 square feet and paid $700,000. So so let’s just let’s work with an even number house that rents in Columbus, Ohio for 1500. Why should I expect to pay for the house?

Speaker 1 1:24:14
Yeah, I think, you know, in that $300,000 range would probably be very, very realistic for for that

Erwin 1:24:23
policy. Rather being Austin.

Speaker 1 1:24:27
I yeah, I mean, I may be a bit either, because, again, we’d have to, I’d have to kind of check on some of the neighborhoods because I’ve been, I’ve been looking a little bit more kind of newer on the higher end, but I think I think you can, like you should be able to see it better, better rent yield. Sorry, a better like cap rate. Rent yields a bit trickier because, you know, taxes vary state by state. So I don’t necessarily always focusing on the right yield. Because I want to look at what is going to be my cash flow and my actual yields of the prop Pretty. But But ya know, I mean, I definitely kind of think you know what 300,000? You Yeah, you definitely probably push by probably low on that $1,500 estimate for for Columbus.

Erwin 1:25:12
That’s a good point. And I know you’ve had these challenges and working with Canadians is like everyone has their own way of doing cash flow analysis and writing their own portfolios. Most people don’t even have performance, you saw that when I sent you. For context, for listeners benefit, a client of mine asked me to have a look at the new construction condo deal in Hamilton, it was included pro formas. And I just laughed at it, because it omitted so many things, and the rent was completely overstated. And I know you you share your in your work that you’ve had challenges with communicating with investors and investors, that probably investors in general, about numbers, because you come from the institutional world where it has to be fully loaded costs. Yeah. And they have to be accurate, as much as you can be. Versus what someone who’s selling a piece of real estate is. And that’s and that’s an all spaces of selling real estate.

Speaker 1 1:26:10
Yeah. It’s the same. It’s the same institution same institutionally. Right. Right. Your brokers putting together their their projections for a year here will vary, it will differ greatly from what the the buyer thinks there. Yeah, year one, numbers are gonna look like.

Erwin 1:26:26
So not just paint anyone? For general? Yeah, it’s how it should be. In general, I always find sellers numbers are lights on expenses. In inverse very commonly, for example, in the small shop Mom and Pop home building, often Mom and Pop are doing a lot of the labor themselves. Yeah, and then those, so there’s no expense for that. So then, so then your net operating income, your cap rates are not right. Right, what they’re pitching is an eight cap is really five. Right? So but you share in your brain at work? It’s because you get called out? Yeah,

Speaker 1 1:27:04
look, I mean, look, you’re you’re looking for investments on a long term, you know, a lot of your assumptions, to a certain degree are straight lined with a view of like, what it will run over, you know, your whole period of, you know, call it that 10 years. But yeah, you know, where we’re trying to be granted, like, we want to, we want to have you thinking and kind of showing you that, hey, you’re gonna run into costs when it comes to this, you know, even on whether it’s on the purchase, you know, a lot of people admit, you know, thinking about what is it going to cost until I have a tenant in there, right? Because you close on a property or you have expenses right away, not just your, you know, mortgage, you’re on the hook for the utilities, you might be paying taxes, you should be kind of accruing for taxes, right. So all of that should kind of go into you thinking about how much money do I need to invest into displays to get me into a pain, like to get me to the point where I have a paying tenant, and I’m collecting rent of it. And you know, from that rent, what are the costs I’m going to incur? You know, what I should be factoring in and, you know, how is the next buyer when I when it comes time to sell, if I want to sell in 10 years or 15 years? And, you know, how are they going to look at it? And how are they going to underwrite, you know, is it going to be an attractive investment for them? Right. So I think those are very kind of important things that you want to look at when, when you’re buying.

Erwin 1:28:35
So for anyone running out of time to meet you, thank you for making me. It’s been, it’s been great. I’m glad you you enjoy it, because I could keep you for another seven hours if you have way more questions, and I’m sure the listener has way more questions to Martin trying to go to his is that. So we have a workshop January 13, Saturday, January 13, you’re gonna be there. You’ll be sharing your party your experience on? We’re gonna be going through some concrete examples. I think that’s part of it. Yeah. Awesome. Awesome, because everyone was once more numbers. So thank you for doing this. Anything else? We should share anything? I didn’t. I didn’t ask you about you want to cover?

Speaker 1 1:29:18
No, I mean, I think we’ve covered a pretty extensive amount of stuff I get, I think, you know, what’s always kind of important for me and, you know, you’ve asked me this question, you know, before is and really to summarize on what we talked about is like, what are what do we recommend for for landlords and, again, I can’t stress enough like that you want to aim to kind of build a portfolio, have it be diversified between the different markets, you know, between the type of properties, you know, within your portfolio. Again, I think having someone kind of be a partner for when it comes to asset management is just been a gap for retail index. astor’s and, you know, retaining that control. But, you know, having someone focused on strategy, rents, you know, tracking the data, I think, is super, super helpful to kind of, you know, eliminate some of the risks that you got to have doing it yourself. And a lot of times that pm that’s not what they’re focused on God conversations with property managers that want to work with us, because they’re like, you know, they might have retail clients, they’re like, they’re asking me these things, but that’s not what I’m paid for. Right. And that’s an important thing to remember. And then I do think, you know, and if we’ve had this conversation, you and I, but setting a goal, right, like, what am I trying to get to? You know, is it’s $100,000 in 10 years? In cash flow, yeah, in cash flow, right? And figure out like, what, what do I need to do to get there? Right, what does I mean, in terms of how many properties that shouldn’t be buying the next three, four years? You know, what am I doing with the capex, you know, et cetera, formula in that plan, I think, is always great, and kind of working backwards from it to try to, you know, to understand it, that’s what, you know, the, the session that you are referencing, we’re going to be doing like, that’s, you know, some of the stuff we want to we want to touch on to kind of help people get a better understanding of what these you know, long term goals looked at look like when you break it down to the next few years?

Erwin 1:31:23
Because I think I think everyone should at least gun $400,000 in cash flow a year. And then you’ve helped me model that for myself. And then, but then there’s always the first steps, like we kind of talked about in your example that we had is one of my first three properties. Right? Because Because I think that’s where people need to focus is what are the first three properties? And I think everyone needs to look at this, at least a baseline and Compare all other investments against it. Right? Yep, definitely. Makes sense. And you’re talking about risk. So I can’t I can’t let you go without asking. You call it climate risk. Yeah, and oh, what is? There’s, there’s I have a bias because, again, I have friends who’ve been hurt by hurricanes in Florida, specifically Florida. So again, I bias an emotion that’s in the headlines in the it’s an all over the news. What is what is it from an institutional investor standpoint?

Speaker 1 1:32:24
Yeah, look, I mean, I think the the cost for insurance, especially when it comes to Florida, has seen crazy increases over, you know, the last few years and even again, this year, you know, but for us, yeah, the climate risk is, you know, when a you don’t, you’re paying a lot more for insurance, because the insurer knows, they will probably incur losses on your property, and to where you don’t have visibility into, like, what those costs are going to be in the future, right? Like, you want to try to formulate an opinion of like, I’m going to be raising rents, my expenses are going to go up, but you want to be able to control that, right? insurances. I don’t have any control over what my insurance is going to be like, next year, that’s, you know, driven to me by, you know, the insurers and the reinsurance and everyone kind of involved in that industry. And that’s,

Erwin 1:33:17
that’s, that’s, but it’s specific to certain areas, and it’s not happening other places in the country. Well,

Speaker 1 1:33:23
is that right? But the amount of lat Yeah, oh, I mean, insurance is going up, somewhat nationally, but he’s out, but it’s really going up in the areas that have high climate risk, because, you know, insurers are getting tired of taking the losses on, you know, billions and billions of dollars due to, you know, climate related events that, you know, have caused significant damage. And, you know, Florida being kind of the driver behind it. And, you know, even us on our master policy, like we have a pretty cool, like Master policy for foreign clients. So if anything is managed under share, like we have a master agreement to ensure that’s able to provide our, you know, individual landlords, their standalone policy, the same coverage, they would get themselves, but at a cheaper cost, because they’re spreading the risk over a diversified portfolio where share has an interest in as the asset manager.

Erwin 1:34:16
So basically, a retail investor gets to pay wholesale prices. Yes, exactly. Exactly. For public management. Yeah,

Speaker 1 1:34:22
exactly. So on the insurance Island, right, we, you know, we pretty much were flat across the board in terms of our rates everywhere, except for Florida. And the highlight that the counties that were already very high, probably four times higher than anywhere else would pay for insurance went up another 25%. And the counties that were, you know, the Lower, lower risk counties in Florida, that probably would have been like, you know, two times higher than, you know, some of our other states that we’re targeting, you know, they went up almost double All right. So, again, that’s just, you know, insurers trying to offset the losses they took on that on that region. And I think the reality is not having visibility into it, if you told me, Hey, I’m underwriting these numbers right now, and the deal still works great, I just the trade, the risk, return trade off, isn’t there. So, again, not saying don’t invest into Florida, I think it’s good. In a large portfolio, you can take on some of that risk. You can’t have, you know, if you have 10 properties, or five, whatever, you can have something in Florida. You know, why? Because that’s diversification. Because if insurance in Florida goes up, 20%, but everyone else stays flat, you’re fine on your overall expense on insurance. But, you know, having myself be in there, like, with one property? I don’t like kind of that, that lack of visibility. But

Erwin 1:35:54
if my objectives cash flow, it’s probably not something I should include my portfolio.

Unknown Speaker 1:36:00
Yeah, I mean, in terms of like, when you say, like,

Erwin 1:36:04
I just think of a financial advisor advising you on stocks, we got this one where we know the dividend is gonna get worse.

Speaker 1 1:36:13
I mean, you know, to compensate for that Florida does have other great, you know, factors for why? Well, and why people are investing there to a certain degree and why people are moving there. Right. But, you know, I think you can still kind of cash flow there. And, you know, you can go to areas of Florida, where climate risk isn’t necessarily elevated. But you’re suffering because other parts of the states Yeah. Because

Erwin 1:36:44
you might get lumped in, you do as a whole, your insurance

Speaker 1 1:36:48
will just put my example, in terms of what we saw, in terms of our 2024 renewal rates, right. And, again, those are some interesting insights. You, I’ve talked to that with some of my old peers and people I know in the industry, and it’s just like, you don’t want to be mentioning insurance costs to people they’re not, they’re not pleased, especially if they hold Florida assets.

Erwin 1:37:08
Because then a friend of mine, he was telling me that he has a place in Florida, I believe, I don’t believe he is. I believe he owns a free and clear so he can have these you can consider these things. But he’s considering self insured. Yeah, that’s what

Speaker 1 1:37:22
that’s what like, it’s, you laugh, but that’s why the institutions

Erwin 1:37:28
How do you justify that conversation with your investors? How do you how do you have that conversation with your lender? You’re at the you’re at the show the funds and yeah,

Speaker 1 1:37:37
yeah, yeah. I mean, it’s, it’s insane. I mean, I, I wasn’t doing that. So I probably, you know, buffed up some people’s brains a little bit more, and we can kind of revisit that, but

Erwin 1:37:47
so good lord, they’re gonna have to basically have a reserve fund to cover repair costs related to climate risk, and

Speaker 1 1:37:55
then some other things. Yeah, yeah. But I mean, it’s just the costs are, I mean, my costs, but sometimes, like even finding someone to do it, right. Like, that’s, that’s the those are the negative headwinds that are kind of tracing back in those areas. And then again, for residential, it’s probably a bit better still than you know, for

Erwin 1:38:14
Dude, this is like self insuring your health care, right? Like for any pet owner already does this basically. Like you can’t it’s pet my own state pet insurance is extraordinary expensive. So peacefully, people self. Yeah. Self insurance, basically, you pay out of pocket. Yeah. It’s gonna be in sort of like nobody likes doing that. Now, imagine that for a property. Soften insured doesn’t basically pay out of pocket for damages. Good lord. Yeah, I don’t like risk. Again, I have my biases around. So this is not that’s

Speaker 1 1:38:46
where the personal preference really comes in. Right. I think that’s great. I

Erwin 1:38:50
mean, we’re not are you how many how many clients you advise him to go to Florida? No,

Speaker 1 1:38:54
I mean, we’re not right. I mean, unless unless someone’s coming to us with Florida being their mandates. Yeah. But, you know, if someone’s looking to buy a portfolio, and they want some exposure to Florida, like I’m not, I’m not pushing them away from it, because I do think there are rationales for that, but no, we’re not really pushing people to Florida, because most people will share your views.

Erwin 1:39:18
Crazy. Alright, Dimitri. Thanks again for doing this. Yeah, no, it’s

Speaker 1 1:39:22
my pleasure. I love listening to podcasts. It’s nice to kinda get to be on the other side.

Erwin 1:39:31
Thank you for watching. If you want to learn how to invest in real estate from scratch, my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month, go to investor training.ca/youtube To register for our next class. Then links also in the description as well. I publish at least two to three videos a week here. So subscribe if you want to keep learning from seasoned investors like myself, my guess? And if you’re just starting out, feel free to ask questions and comment below. And I do the best to answer each of those comments in questions myself again if you’re ready to learn the nitty gritty about real estate investing from a professional investor register for our next virtual class at that investor training.ca/youtube Thanks again for watching see you in the next video

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